Bogus Share Premium Property Attachment Upheld Despite SCN Error

Case Details: Deputy Commissioner of Income-tax (BPU-2) vs. Brook Multimedia (P.) Ltd. [2026] 185 taxmann.com 443 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Gopal Chandra Mishra & Rajesh Malhotra, Member
• Manmeet S. Arora, SPP for the Appellant.
• Ashwani Taneja, Ashish Tandon & Ms Gunjan Chauhan, Advs. for the Respondent.

Facts of the Case

The appellant-assessing officer (AO) filed the instant appeal against the order of the Adjudicating Authority (AA) revoking the provisional attachment order (PAO). The assessee was a shell company. During the assessment proceedings, it was found that the assessee received share capital at a premium. Subsequently, the assessee purchased an immovable property from such share premium. The assessee reported the acquisition of such property in its income tax return.

The AO provisionally attached such property as the source of share capital, which was not genuine. Further, the matter was referred to the AA, who revoked the attachment order. Aggrieved AO filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the assessee was incorporated on 30.11.2010. Within a year of its incorporation, the assessee received share capital at a premium. The assessee purchased an immovable property from such share premium. The following year, the assessee reported the acquisition of such property in its income tax return.

It was clear that the assessee was a shell company. It was never involved in any business activity. The entire share capital was received from a single source at a premium. Further, it had no income-generating activities and thus possessed all the principal characteristics associated with a shell company.

The fact that wrong property was mentioned in the Show Cause Notice (on account of misdeclaration in the ITR for the year 2019-20), the attachment proceedings cannot be set aside qua the share premium of Rs. 1,96,80,000/- transformed in the form of any investment/loan, as the infusion of bogus share premium was specifically mentioned in SCN which was utilized for purchasing the property.

Accordingly, the AO was permitted to attach the benami property of the assessee to the extent of Rs. 1,96,80,000 infused in the form of the bogus share premium obtained at the rate of Rs. 240 per share, without any basis.