| The Tax Publishers2020 TaxPub(DT) 5267 (Kol-Trib) : (2020) 084 ITR (Trib) 0432 INCOME TAX ACT, 1961
Section 68
Where AO was satisfied with the issue of share application money and its subscribers on basis of documents like PAN details, ITR details, RoC details, balance sheets, bank statement, etc., furnished by the assessee and all three ingredients of section 68 had been proved, enhancement of addition by CIT(A) was therefore, not justified, hence, deleted.
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Income from undisclosed sources - Addition under section 68 - Alleged bogus share application money -
AO issued notices to all the share applicants/shareholders and after having received their replies and supporting documents, had summoned under section 131 Manish Kumar Dubey, Director of the assessee-company and after recording his statement on oath, had accepted the share capital amount received from thirty-six (36) share applicants/shareholders out of total thirty-eight (38) share holders and made addition of Rs. 84 Lakhs in respect of share capital subscribed by two companies, namely, M/s. Omeshwar Tracom Pvt. Ltd. and M/s. Harmony Vanijya Pvt. Ltd. CIT(A) without serving of notice enhanced the addition to Rs. 21.38 Crores by enhancing an amount of Rs. 20.54 Crores. According to the AR, when all the results of enquiry by AO and documents collected were available in the assessment folder of the AO, the action of CIT(A) to have resorted to enhancement of addition without conducting any enquiry from his part was on the basis of surmises and conjectures. Held: AO after verifying the documents and other documents like PAN details, ITR details, ROC details, balance sheet and bank account details, etc., was satisfied with the explanation given by the assessee-company in respect of money credited in its books of account of the assessee-company and did not draw any adverse inference against the assessee-company and being satisfied, accepted the share capital raised by the assessee to the tune of Rs. 20.54 Crores. However, AO was not satisfied with the share capital raised by the assessee from M/s. Omeshwar Tracom Pvt. Ltd. Rs. 54 Lakhs and M/s. Harmony Vanijya Pvt. Ltd. Rs. 30 Lakhs and thus made the addition of Rs. 84 Lakhs against the assessee under section 68. Thus, assessee had discharged the onus cast on it about the creditworthiness of the shareholders. It is also noted that the source of the investments had been clearly brought to the notice of the AO during assessment proceedings. The share capital and premium have been subscribed by them through normal banking channel (NEFT or cheque) which goes on to show that the assessee had discharged the onus in respect of genuineness of the transaction. The CIT(A)'s omission to carry out any enquiry to show that the AO's enquiry was wrong, his opinion casting aspersions on the AO's action based on suspicions and conjectures cannot be accepted and so his action of enhancement made was reversed and the assessment order restored. And in addition, AO was directed to delete the addition of Rs. 84 Lakhs made by him.
Relied:CIT v. S. Kamaljee Singh (3005) 147 Taxman 18 (All) : 005 TaxPub(DT) 175 (All-HC), S.K. Bothra & Sons, HUF v. ITO, Ward-46(3), Kolkata (2012) 347 ITR 347 (Cal-HC) : 2012 TaxPub(DT) 815 (Cal-HC), Crystal Networks (P.) Ltd. v. CIT (2013) 353 ITR 171 (Cal-HC) : 2013 TaxPub(DT) 1470 (Cal-HC), CIT v. Smt. P.K. Noorjahan (1999) 37 ITR 570 (SC) : 1999 TaxPub(DT) 80 (SC), Dy. CIT v. Rohini Builders (00) 56 ITR 360 (guj) : (2003) 17 Taxman 53 (Guj) : 002 TaxPub(DT) 305 (Guj-HC), Orissa Corpn. (P) Ltd. (1986) 159 ITR 78 (SC) : 1986 TaxPubDT) 1425 (SC), Udhavdas Kewalram v. CIT (1967) 66 ITR 46 (SC) : 1967 TaxPub(DT) 350 (SC), CIT v. Nishan Indo Commerce Ltd., dated 2-1-2013 ITA No. 5 of 2001 : 2014 TaxPub(DT) 1934 (Cal-HC)/i> and CIT v. Leonard Commrl. (P) Ltd. 13-6-2011 ITAT No. 114 of 2011. CIT, Kolkata-III v. Dataware Private Limited ITAT No. 263 of 2011, dt. 21-9-2011 : 2013 TaxPub(DT) 1384 (Cal-HC), Lovely Exports as has been reported as judgment delivered by the CTR at (2009) 216 CTR 295 (SC) : 2009 TaxPub(DT) 261 (SC), CIT v. Roseberry Mercantile (P) Ltd. ITAT No. 241 of 2010, dated 10-1-2011, Dy. CIT v. Global Mercantiles Pvt. Ltd. ITA No. 1669/Kol/2009, dated 13-1-2016 : 2016 TaxPub(DT) 1420 (Kol-Trib), R.B. Horticulture & Animal Projects Co. Ltd. ITA No. 632/Kol/2011, dated 13-1-2016, ITA No. 1061/Kol/012 : 016 TaxPub(DT) 1414 (Kol-Trib) : ITO WD 3(2) (Kol) v. Steel Emporium Ltd., dated 5--2016, ITO v. Vygnus Developers (I) (P) Ltd. ITA No. 8/Kol/012, dated 2-3-2016 and CIT v. Gangeshwari Metal (P) Ltd. [ITA No. 597 of 2012, dated 21-1-2012) : 2013 TaxPub(DT) 1319 (Del-HC).
REFERRED : ITA No. 838/Kol/2019 : 2020 TaxPub(DT) 3145 (Kol-Trib, Amritrashi Infra Pvt. Ltd. v. Pr. CIT dated 12-8-2020 and ITA No. 2411/Kol/2017 : 2019 TaxPub(DT) 3200 (Kol-Trib), Kanchan Plywood Products Pvt. Ltd. v. ITO Order, dated 1-5-2019, Dy. CIT v. ITA No. 1916/Mum/2016 Order, dt. 28-8-2019, CIT v. (sic - Pr. CIT v. Chain House International (P.) Ltd.) Order, dt. 7-8-2018 98 Taxmann.com 47 (MP) : 2018 TaxPub(DT) 5193 (MP-HC) and Dy. CIT v. Infrastructure (P.) Ltd. & Green Infra Ltd. 38 Taxmann..
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, KOLKATA BENCH
P.M. JAGTAP, V.P. (KZ) & A.T. VARKEY, J.M.
Mataranivintrade (P) Ltd. v. ITO
I.T.A. No. 343/Kol/2018
4 November, 2020
In favour of assessee.
Appellant by: S.K. Tulsiyan, Advocate & Puja Somani, CA
Respondent by: Vijay Shankar, CIT, DR
A.T. Varkey, J.M.
This is an appeal preferred by the assessee against the order of learned Commissioner (Appeals)-5, Kolkata dated 31-3-2017 for the assessment year 2012-13.
2. The main grievance of the assessee is against the action of the learned Commissioner (Appeals) in enhancing the addition by violating the law inter alia in violation of section 251(2) of the Income Tax Act, 1961 (hereinafter, referred to as the 'Act'). According to assessee, the learned Commissioner (Appeals) is supposed to decide the appeal as per provisions of sub-section (6) of section 250 of the Act, wherein he [Commissioner (Appeals)] has to specify the points for determination and thereafter decide by passing a reasoned order. For convenience, sub-section (6) of section 250 of the Act reads as under :--
'(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.'
3. Shri S.K. Tulsiyan, the learned Authorised Representative (in short, the 'Ld. AR') of the assessee assailing the impugned order of the learned Commissioner (Appeals) contended that the learned Commissioner (Appeals) has enhanced the addition from Rs. 84 lakhs to Rs. 21.38 cr. (enhanced Rs. 20.54 cr.) in a haste, without even enquiring the veracity of the voluminous documents and the statement recorded by assessing officer which were available in the assessment folder. So, according to learned A.R. the impugned action of learned Commissioner (Appeals) is arbitrary, whimsical and against Rule of Law. According to learned AR, though the learned Commissioner (Appeals) enjoys coterminous powers of assessing officer, he while discharging his first appellate jurisdiction has to record his factual finding by disproving the finding/conclusion of assessing officer, if he has to differ from the view taken by the assessing officer.
According to learned AR, the learned Commissioner (Appeals) while adjudicating the appeal of the assessee against the addition of Rs. 84 lakhs as ordered by assessing officer, had in fact sent the first three notices to the old address [even though change of address was intimated to assessing officer & learned Commissioner (Appeals) by assessee vide Letter, dated 14-1-2015 which fact has been acknowledged by learned Commissioner (Appeals) at page 4, para 3.3] and the other three notices were sent in a span of twenty days, which was not served upon the assessee-company for reasons beyond its control for which the assessee-company has filed an affidavit of the director duly sworn in before the Notary explaining the cause for non-receipt of notice. According to learned AR, the assessing officer while passing the scrutiny assessment under section 143(3) of the Act had made thorough enquiry into the share capital amount received by the assessee for the assessment year 2012-13 by issuing notices under section 142(1) and 142(2) of the Act to the assessee and also has issued notices to all the share applicants/shareholders and after having received their replies and supporting document, had summoned under section 131 of the Act Shri Manish Kumar Dubey, director of the assessee-company and after recording his statement on oath had accepted the share capital amount received from thirty six (36) share applicants/shareholders out of total thirty eight (38) share holders and made addition of Rs. 84 lakhs in respect of share capital raised from two companies, namely M/s. Omeshwar Tracom Pvt. Ltd. and M/s. Harmony Vanijya Pvt. Ltd.
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