ACIT, CC - 3(4), KOLKATA V. UAL INDUSTRIES LIMITED, KOLKATA

ITA 2208/KOL/2024

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which had allowed the appeal of UAL Industries Ltd., concerning the addition of Rs. 2,59,00,000 to the assessee's income as share capital. The addition was initially made by the Assessing Officer (AO) under sections 153A/143(3) of the Income Tax Act, following a search and seizure operation. The CIT(A) found that the AO had relied solely on the statements of certain individuals, which were retracted shortly after being made, and there was no corroborative evidence or incriminating documents to support the addition. The tribunal agreed with the CIT(A)'s findings, emphasizing that the case should be decided on merits rather than technicalities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469704 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retraction; Search and seizure; Accommodation entries
• Section: 143(3); 131

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 ACIT, Central Circle-3(4), Kolkata Vs. UAL Industries Ltd. (PAN: AAACU 3497 L) Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 06.02.2025 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 25.02.2025 For the assessee / Ǔनधा[ǐरती कȧ ओर से Shri Tanmoy Kar, ACA For the revenue / राजèव कȧ ओर से Shri Subehndu Datta, CIT DR ORDER / आदेश Per Pradip Kumar Choubey: This is the appeal preferred by the revenue against order of Commissioner of Income Tax (Appeal)-21, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 31.07.2024 for AY 2011-12. 2. It appears from the report of the registry that the appeal has been filed after a delay of 60 days for this the Department has filed condonation petition. On perusal of 2 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited the condonation petition, the reason for delay in filing the appeal seems to be genuine and bonafide. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the condonation petition as well as judicial pronouncement that the case should be decided on merit not on technical issue, the delay is hereby condoned. 3. Brief facts of the case of the assessee are that search and seizure operation was conducted in the office premises of the assessee, the assessee filed return of income u/s 139 of the Act disclosing total income of Rs. 45,04,78,086/-. The AO u/s 153A/143(3) determined the total income of Rs. 47,64,78,090/- by making the addition of Rs. 2,59,00,000/- on account of share capital raised. 4. Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed. Being aggrieved and dissatisfied the revenue has preferred an appeal before us. 5. The ld. Sr. D.R challenges the impugned order thereby submitting that the Ld. CIT(A) has erred in deleting the addition of share capital to the tune of Rs. 2,59,00,000/- without appreciating the fact that during the course of assessment proceedings, the genuineness of transaction, identity and creditworthiness of the share subscribers was not established by the assessee. 6. Contrary to that the Ld. A.R supports the impugned order thereby submitting that the sole basis of making addition by the AO was the statement of Shri Suraj Kumar Saraf and Somnath Ghosh recorded u/s 131 in the course of survey operation. The Ld. Counsel submits that the conventional statement obtained by the revenue officer cannot alone justify the action of revenue to record the finding adverse to the assessee. The Ld. Counsel of the assessee submits that there was no material corroborating the contents of the statement could be brought on record and no incriminating documents in respect of alleged entry provider by M/s Somnath Ghosh were found. The Ld. Counsel has submitted that the assessee has received capital from the companies such as Shivmangal Realcom Pvt. Ltd., S. S. Dealmarks Pvt. Ltd., Information Synergies Pvt. Ltd., Dolphin Infotech Pvt. Ltd. and Suncani Vinimoy Pvt. Ltd.. The ld. Counsel further submits that 3 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited in course of appellate proceedings, the remand report has also been called for and the assessee has filed a rejoinder supported with various documentary evidences and the Ld. CIT(A) after going over the documentary evidences filed by the assessee, allow the appeal of the assessee thereby holding that there is no incriminating material have even been found from the premises of the assessee. The Ld. CIT(A) has clearly held that only on the basis of statement, the AO has relied and added the said amount ignoring the fact that the statement has been retracted within the next seven days of making such statement. The Ld. Counsel placed copy of retraction affidavit of Somnath Ghosh and Suraj Kumar Saraf. 7. Upon hearing the submissions of the Counsel for the respective parties, we have gone through the order passed by the Ld. CIT(A) and find that the Ld. CIT(A) has considered the facts of the case as well as documents submitted by the assessee. The details of share capital raised by the assessee company during FY 2010-11 are as follows: Sl No. Name of the share applicant concern PAN No. of shares Face value & premium charged Amount in Rs. 1. M/s Shiv Mangal Realcon Pvt. Ltd. AAPCS 1661 K 8000 Rs. 10/- face value and share premium of Rs. 990/- share Rs. 80,00,000/- 2. M/s S. S Dealmarks Pvt. Ltd. AAPCS 2386 H 3000 Rs. 10/- face value and share premium Rs. 30,00,000 4 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited of Rs. 990/- share 3. M/s Information Synergies Pvt. Ltd. AABCI 2408 J 5000 Rs. 10/- face value and share premium of Rs. 990/- share Rs. 50,00,000/- 4. M/s Dolphin Indotech Pvt. Ltd. AABCD 4226 F 5000 Rs. 10/- face value and share premium of Rs. 990/- share Rs. 50,00,000/- 5. M/s Suncani Vinimay Pvt. Ltd. AALCS 4867 P 5000 Rs. 10/- face value and share premium of Rs. 990/- share Rs. 50,00,000 8. It is pertinent to mention herein that the AO in its assessment order has not referred to any incriminating material which was seized from the assessee’s premises during the course of search. The AO has relied the statement made by Suraj Kumar Saraf and Somnath Ghosh. We find that statement of the above two persons is not supported by any corroborative evidence to substantiate the claim of providing accommodation entries being made by Shri Suraj Kumar Saraf and Somnath Ghosh. It is also important to mention herein that the statement of Shri Suraj Kumar Saraf and Somnath Ghosh were retracted on 27.01.2012 and 31.01.2012 respectively and both are filed supported with an affidavit. The Ld. CIT(A) in allowing the appeal of the assessee 5 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited has discussed the documentary evidences filed by the assessee company-wise,order of the CIT(A) in this context is essential to reproduce herein below: “From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.80,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 88,71,535/-. The source of source of such investments were also submitted before the AO which were not disputed by the AO. It is observed that the investments to the tune of Rs. 80,00,000/- were made in the following manner: 6 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited The appellant has furnished the source of these payments and these amounts were received by Shiv Mangal Realcon Pvt Ltd through banking channels only. The bank statement of Shiv Mangal Realcon Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. Furthermore the said share applicant M/s Shiv Mangal Realcon Pvt Ltd was also assessed u/s 143(3) for AY: 2011-12 by the same AO, DCIT,CC3(4), Kolkata and no adverse findings were made. The appellant company has also filed the audited accounts and the copy of ITR filed by Shiv Mangal Realcon Pvt Ltd for AY: 2023-24 to establish the said share applicant company is active as on date. There is therefore no such reason in the assessment order of the AO or otherwise to doubt the identity and creditworthiness of the share applicant Shiv Mangal Realcon Pvt Ltd and the genuineness of the transactions is also established. M/s S S Dealmark Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.30,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 33,02,549/-. The source of source of such investments were also submitted before the AO which were not disputed by the AO. It is observed that the investments to the tune of Rs. 30,00,000/- were made in the following manner: The appellant has furnished the source of these payments and these amounts were received by S S Dealmark Pvt Ltd through banking channels only. The bank statement of S S Dealmark Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. Furthermore the said share applicant M/s S S Dealmark Pvt Ltd was also assessed u/s 143(3) for AY: 2011-12 by the same AO, DCIT,CC-3(4), Kolkata and no adverse findings were made. The appellant company has also filed the audited accounts and the copy of ITR filed by S S Dealmark Pvt Ltd for AY: 2023-24 to establish the said share applicant company is active as on date. There is therefore no such reason in the assessment order of the AO or otherwise to doubt the identity and creditworthiness of the share applicant S S Dealmark Pvt Ltd and the genuineness of the transactions is also established. 7 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited M/s Information Synergies Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.50,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 10,89,77,441/-. Evidently the said share applicant company had adequate reserves and surplus for making such investment in the appellant company. The bank statement for the relevant period was also submitted to establish the source of source of such investments which were not disputed by the AO. It is observed that the investments to the tune of Rs. 50,00,000/- were made in the following manner: Sl No. Date Amount Mode of payment 1. 14.01.2011 Rs. 50,00,000/- RTGS from City Union Bank A/c The appellant has furnished the bank statement to establish the source of these payments and these amounts were received by M/s Information Synergies Pvt Ltd through banking channels only. The bank statement of M/s Information Synergies Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. The appellant company has also filed the audited accounts and the copy of ITR filed by M/s Information Synergies Pvt Ltd for recent AY`s: 2018-19, 2019-20 & 2020-21 to establish that the said share applicant company is still active. There is therefore no such reason in the assessment order of the AO or otherwise to doubt the identity and creditworthiness of the share applicant M/s Information Synergies Pvt Ltd and the genuineness of the transactions is also established. M/s Dolphin Indotech Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.50,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 11,02,04,844/-. Evidently the said share applicant company had adequate reserves and surplus for making such investment in the appellant company. The bank statement for the relevant period was also submitted to establish the source of source of such investments which were not disputed by the AO. It is observed that the investments to the tune of Rs. 50,00,000/- were made in the following manner: Sl No. Date Amount Mode of payment 1. 18.01.2011 Rs. 50,00,000/- RTGS from City Union Bank A/c The appellant has furnished the bank statement to establish the source of these payments and these amounts were received by M/s Dolphin Indotech Pvt Ltd through banking channels only. The bank statement of M/s Dolphin Indotech Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. The appellant company has also filed the audited accounts and the copy of ITR filed by M/s Dolphin Indotech Pvt Ltd for recent AY`s: 2018-19, 2019-20, 2020-21 to establish that the said share applicant company is 8 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited still active. In this case also, there is no such reason to doubt the identity and creditworthiness of the share applicant M/s Dolphin Indotech Pvt Ltd and the genuineness of the transaction is also established. M/s Suncani Vinimay Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.50,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 4,16,30,206/-. Evidently the said share applicant company had adequate reserves and surplus for making such investment in the appellant company. The bank statement for the relevant period was also submitted to establish the source of source of such investments which were not disputed by the AO. It is observed that the investments to the tune of Rs. 50,00,000/- were made in the following manner: Sl. No. Date Amount Mode of payment 1. 22.02.2011 Rs. 25,00,000/- RTGS from Axis Bank A/c 2. 23.02.2011 Rs. 25,00,000/- RTGS from Axis Bank A/c 9. Going over the order of the Ld. CIT(A) and documents furnished by the assessee, we do not find any infirmity in the impugned order of Ld. CIT(A). Accordingly, the appeal of the revenue is hereby dismissed. In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 25th February 2025 Sd/- Sd/- (Rajesh Kumar/राजेश क ुमार) (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) Accountant Member/लेखा सदèय Judicial Member/ÛयाǓयक सदèय Dated: 25th February, 2025 SM, Sr. PS 9 I.T.A. No. 2208/Kol/2024 Assessment Year: 2011-12 UAL Industries Limited Copy of the order forwarded to: 1. Appellant- ACIT 2. Respondent – UAL Industries Limited, 16, Konark Main Uday Ballygaunge, SO, Kolkata-700019 3. Ld. CIT(A)-21, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "