DCIT, CENTRAL CIRCLE - 4(2), KOLKATA, AAYAKAR BHAWAN POORVA, KOLKATA V. DHANLAXMI TIE-UP PRIVATE LIMITED, MUMBAI

ITA 1071/KOL/2024

AI Insights

The case involves appeals by the Revenue and a Cross Objection by the assessee, Dhanlaxmi Tie-up Private Limited, against the order of the Commissioner of Income-tax (Appeals), Kolkata-27, for the Assessment Year 2012-13. The primary contention was regarding the addition of Rs. 3,27,00,000 made by the AO under section 68 of the Income Tax Act, 1961, which pertained to unexplained cash credit from the sale of shares. The assessee challenged the addition on legal grounds, arguing the absence of incriminating material during an unabated assessment, while the Revenue appealed on merits. The Tribunal first addressed the legal issue, finding no jurisdiction for the AO to make the addition without incriminating material, and subsequently upheld the CIT(A)'s decision on merit, noting the issue had been previously scrutinized and no discrepancies were found.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25200 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Assessee Lawyers: AKKAL DUDHWEWALA; VIDHI LADIA; ARS
• Keywords: Unexplained cash credit; Bogus Share capital; Liquidation; Bogus
• Section: 147; 143(3); 153A; 139(1); 68; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1071/KOL/2024 (Assessment Year:2012-13) DCIT, Central Circle-4(2) Aaykar Bhavan Poorva, 5 th Floor, Room No.506, 110, Shantipally, Kolkata-700107, West Bengal Vs. Dhanlaxmi Tie-up Private Limited, 21 and 22, 2nd Floor, Plot 230,Sakhar Bhawan, Ramnath Goenka Marg, Mumbai-400021, Maharashtra (Appellant) (Respondent) PAN No. AACCD7769E CO No. 33/KOL/2024 (Arising in ITA No. 1071/K/2024 for A.Y. 2012-13) Dhanlaxmi Tie-up Private Limited, 21 and 22, 2nd Floor, Plot 230,Sakhar Bhawan, Ramnath Goenka Marg, Mumbai-400021, Maharashtra Vs. DCIT, Central Circle-4(2) Aaykar Bhavan Poorva, 5th Floor, Room No.506, 110, Shantipally, Kolkata-700107, West Bengal (Appellant) (Respondent) PAN No. AACCD7769E Assessee by : Shri Akkal Dudhwewala, & Ms. Vidhi Ladia, Ars Revenue by : Shri P.N. Barnwal, DR Date of hearing: 22.01.2025 Date of pronouncement : 29.01.2025 O R D E R Per Rajesh Kumar, AM: These are the appeals preferred by the Revenue and CO by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-27, (hereinafter referred to as the “Ld. CIT(A)”] dated 03.02.2024 for the AY 2012-13. Page | 2 ITA No.1071/KOL/2024 Dhanlaxmi tie-up Private Limited; A.Y. 2012-13 02. The assessee has filed the Cross Objection challenging the order of ld. CIT (A) not allowing the appeal of the appeal of the assessee on legal issue for the reason that addition made by the ld. AO of ₹3,76,00,000/- on account of sale of shares u/s 68 of the Act were without any incriminating material found during the course of search while the revenue has challenged the order of ld. CIT (A) deleting the addition on merit. Since, the assessee has raised legal issue before us, therefore, we are inclined to decide the issue raised by the assessee in the cross objection first. 03. The facts in brief are that the assessee filed the return of income u/s 139(1) of the Act on 28.09.2012 declaring loss of ₹11,536/-, after claiming deduction under Chapter VIA of the Act. A search action u/s 132(1) of the Act was conducted on 11.02.2020 and subsequent dates against the Rika group including the assessee. The AO, on the basis of the information before him, came to the conclusion that assessee had raised bogus share capital /premium to the tune of ₹7,83,00,000/- on 31.03.2008, which was raised from the companies which were either listed as paper / shell companies or lacked creditworthiness. Finally, notice u/s 153A was issued on 13.03.2022, which was duly complied with by the assessee by filing the return of income u/s 153A of the Act on 25.03.2022, declaring the same income as was declared u/s 139(1) of the Act. Thereafter the statutory notices were issued and duly served upon the assessee along with questionnaire. Finally, an addition of ₹3,27,00,000/- was made to the income of the asssessee on account of unexplained cash credit u/s 68 of the Act in respect of sale proceeds of shares. 04. The said order was challenged before the ld. CIT (A) on legal issue as well as merit. The ld. CIT (A) did not adjudicate the legal issue Page | 3 ITA No.1071/KOL/2024 Dhanlaxmi tie-up Private Limited; A.Y. 2012-13 whether the ld. AO has jurisdiction to make an addition in absence of any incriminating material found during the course of search in an unabated assessment however, allowed the appeal of the assessee on merit by directing the AO to delete the addition. 05. After hearing the rival contentions and perusing the materials available on record, we find that the instant assessment is an unabated assessment on the date of search as the assessment has already attained finality and also time limit for issuing notice u/s 143(2) of the Act had also expired. Therefore, in terms of provisions of section 153A of the Act , the ld. AO can only make an addition in an unabated assessment year on the basis of incriminating material found and seized during the course of search and not otherwise. In the present case we note that the ld. AO, on the basis of books of accounts of the assessee, balance sheet and other information available before him, has made the addition and apparently there was no incriminating material found and seized during the course of search. This has been specifically put to the ld. DR during the course of hearing and he relied simply on the order of the ld. AO so far as incriminating material is concerned. Therefore taking into facts of the case we hold that the ld AO has no jurisdiction to make addition of Rs. 3,27,00,000/- as there was no incriminating material seized during search qua the sale of shares. Accordingly ,the Cross Objection of the assessee is allowed. 06. Even on merit, we find that the ld. CIT (A) has passed a speaking and well reasoned order deleting the addition made by the ld. AO by holding that the AO has failed to consider the fact that the unlisted equity share investments was made in the earlier assessment year A.Y. 2008-09 and also was not questioned during assessment Page | 4 ITA No.1071/KOL/2024 Dhanlaxmi tie-up Private Limited; A.Y. 2012-13 proceeding in the A.Y. 2008-09. We also note that the assessee company was subjected to assessment u/s 147 r.w.s. 143(3) of the Act in A.Y. 2012-13 and sale of unquoted shares was examined and no adverse inference was drawn by AO for which ld CIT(A) recorded a categorical findings in the appellate order the ld. CIT (A), while allowing the appeal of the assessee. The ld. CIT (A) has held as under:- “5.2.5. After considering all the documents, evidences, paper book and information submitted by the Appellant and AO, the proceeds from sale of investments received by the appellant Company in A.Y. 2012-13 cannot be treated as Undisclosed income u/s 68 of the Income Tax Act, 1961. Further, the Appellant company has submitted all the requisite documents. Also, the Assessing Officer did not consider that the raising of share capital, making of investments and liquidation of funds were subject to scrutiny assessment earlier in the AY 2008-09 & 2012-13 and no negative inference were drawn by the then Assessing Officer. 5.2.6. In view of the above discussions and keeping the judgments of various courts, theassessee company’s investment in various unlisted equity shares related to the AY 2008-09. The source was not questioned by the AO for the AY 2008-09 and completed the assessment. Further, the assessee company was assessed for the AY 2012-13 u/s 147 r.w.s. 143(3) of the Act in which the AO has examined the share-sale receipts. They did not bring any discrepancies in their orders. It is logical to think if the source is assessed without any addition the sale can not be said unexplained credit. Further, the AO has not brought any corroborative evidence to disprove the assessee’s claim of genuineness of the sale receipts of the shares. Therefore, the addition u/s 69 of the Act is needs to be deleted. Hence, this ground of appeal raised by the assessee is allowed.” 07. Therefore, considering all these facts ,we do not find any merit in the Revenue’s appeal. 08. In the result, the appeal of the Revenue is dismissed and CO of the assessee is allowed. Order pronounced in the open court on 29.01.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 29.01.2025 Sudip Sarkar, Sr.PS Page | 5 ITA No.1071/KOL/2024 Dhanlaxmi tie-up Private Limited; A.Y. 2012-13 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "