INCOME TAX OFFICER, WARD-9(2), KOLKATA V. FRONT LINE VYAPAR PRIVATE LIMITED , KOLKATA

ITA 1468/KOL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the ld. Commissioner of Income-tax (Appeals), Central NER, Guwahati, which had deleted the additions made by the Assessing Officer (AO) under section 68 of the Income Tax Act. The AO had added an amount of \\u20b9 2,25,00,000 as unexplained credit in the books of the assessee, Front Line Vyapar Private Limited, during the assessment year 2012-13. The CIT (A) had accepted the additional evidences produced by the assessee, which were not considered by the AO due to non-compliance in the assessment proceedings. The Tribunal found that the CIT (A) had not adequately addressed the non-compliance with Rule 46A of the Income Tax Rules, 1963, and thus restored the matter to the AO for a thorough examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652777 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: PCIT Vs. M/S Fast Flow Securities Pvt Ltd, PCIT Vs. Shreen Hire Purchase P Limited, PCIT Vs. M/S Mahalakshmi Vinimay P Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAPIL MANDAL
• Assessee Lawyers: GIRIDHAR DHELIA
• Keywords: Set aside; Additional evidence; Question of law; Unexplained cash credit
• Section: 143(3); 68; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JM AND SHRI RAKESH MISHRA, AM ITA No. 1468/KOL/2024 (Assessment Year: 2012-13) Income Tax Officer, Ward 9(2), Aaykar Bhavan, P-7, Chowringhee Square, Kolkata-700069 Vs. Front Line Vyapar Private Limited 3rd Floor, 46, Strand Road, Kolkata-700007, West Bengal (Appellant) (Respondent) PAN No. AABCCF8058R Assessee by : Shri Giridhar Dhelia, AR Revenue by : Shri Kapil Mandal, DR Date of hearing: 16.06.2025 Date of pronouncement : 16.06.2025 O R D E R PER BENCH: This is an appeal preferred by the Revenue against the order of the ld. Commissioner of Income-tax (Appeals), Central NER, Guwahati (hereinafter referred to as the “Ld. CIT(A)”] dated 27.01.2023 for the AY 2012-13. 02. Shri Giridhar Dhelia appeared on behalf of the assessee and Shri Kapil Mandal, Sr. DR appeared on behalf of the revenue. 03. It was submitted by the ld. Sr. DR that the assessment in the case of the assessee came to be completed u/s 143(3) on 23.03.2015. It was noticed that the assessee company had raised fresh paid-up share capital of ₹2,25,00,000/- including share premium during the impugned assessment year. It was the submission that in the course of assessment the ld. AO had wanted the assessee to prove the identity, creditworthiness and genuineness of the transactions. It was the submission that there was no compliance whatsoever in the course of the assessment proceedings. It was the submission that consequently, Page | 2 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 the ld. AO had treated the entire amount of ₹2,25,00,000/- as the unexplained credit in the books of the assessee and added the same to the total income of the assessee u/s 68 of the Act. It was the submission that on appeal the ld. CIT (A) had called for a remand report in sofaras the substantial documents had been produced before the ld. CIT (A). The copy of the remand report was shown on 535 of the Paper Book which reads as follows: - Page | 3 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 Page | 4 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 Page | 5 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 04. It was the submission that in the remand report the directors of the assessee company had been asked to appear in they were also share subscribers and one M/s Sunirmiti Mercantiles private Limited and Stronach Trade Private Limited so also Gangadham Tracon Private Limited, Sunidhi Fincom Private Limited and Aakansha Advisory Services Limited. had also brought in shares. The ld. AO had called for the directors of the assessee company. The directors nor the allottee companies made any appearance before the ld. AO even in the remand proceedings. The documents, however, were sent through email. The ld. AO had also mentioned that in respect of Akansha Advisories Services Pvt. Ltd., their share application was only for 72,000/- shares but 1,00,000/- shares have been issued to them. It was the submission by the ld. Sr. DR that the ld. CIT (A) did not consider the objections of the ld. AO but has, at page no. 126 of the order of the ld. CIT (A), recorded that in respect of the merits of the additional evidences adduced by the assessee, there is no adverse observation of the ld. AO in the remand report. The ld. CIT (A) has further gone on to hold that the remand report is completely bereft of any observations that the impugned amount of ₹2,25,00,000/- had emanated out of the coffers of the assessee or that the share capital subscribers did not have the capacity of making investments or that the share capital subscribers Page | 6 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 were tainted entities but the share capital subscribers have meagre financial strength. It was the submission that the ld. CIT (A), following various case laws and without appreciating that there has been no effective compliance before the ld. AO either during the original assessment proceedings or in the course of remand proceedings, had deleted the additions. It was the submission that the order of the ld. CIT (A) is liable to be reversed and that of the ld. AO to be restored. 05. In reply, the ld. AR submitted that the assessee has produced all the documents before the ld. Assessing Officer. It was the submission that even the memorandum of Association (MoU) of the assessee company clearly showed that the directors of the assessee company were at Meghalaya and consequently the assessee was unable to produce the directors before the ld. AO. It was the further submission that the assessee had produced the documents before the ld. AO in regard to all the share subscribers. It was the submission that there were two directors in the assessee company. It was the submission that in regard to other share subscribers, their books were audited and their audited reports have also been produced. It was the submission that the ld. CIT (A) has considered all the facts when he has deleted the addition as made by the ld. Assessing Officer. 06. We have considered the rival submissions. A perusal of the assessment order clearly shows that initially documents were submitted but there has been no co-operation before the ld. AO as any of the directors was not produced. The copy of the remand report shows that the remand reference is dated 08.06.2022 and the remand report is dated 24.06.2022. The AO admittedly could not have done anything in such short time in any case even before the ld. AO in the remand proceedings other than emails no personal appearance has been made. One of the primary conditions that the ld. AO had been repeatedly asking for the personal appearance of the directors. This has been continuously Page | 7 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 disregarded by the assessee even before the ld. CIT (A). The ld. CIT (A) has not explained as to how he has accepted these documents, especially when there was a violation of Rule 46A of the Income Tax Rules, 1963 (in short ‘the Rules’), what prevented the assessee to produce these documents before the ld. AO is not found anywhere in the order of the ld. CIT (A). The ld. CIT (A) has just taken all the documents dumped it to the ld. AO and asked for the remand report on the assumption that just calling for a remand report would be adequate compliance to Rule 46A of the IT Rules. This is not so. The primary conditions under Rule 46A of the IT Rules, is that the assessee needs to prove why he was unable to provide all the documents before the ld. Assessing Officer. This is not coming out of the order of ld. CIT (A). Normally, in such a situation, it is incumbent upon the appellate authority to restore the issue to the file of the ld. AO, so that the assessee can have the opportunity to provide all the details before the ld. Assessing Officer. Here, as it is noticed that the assessee has not produced the directors nor has co-operated in the assessment proceedings nor in the remand proceedings, in the interest of justice and so as to grant assessee adequate opportunity to substantiate its case, the issues in this appeal is restored to the file of the ld. AO for re- adjudication. The assessee shall produce its directors for examination and such other persons in regard to share applications as may be called for by the ld. AO. Should the persons who are called for by the ld. AO for examination be beyond a distance of 250 KM from the concerned person, then at the request of such person, the ld. AO shall institute a commission to examine such person at the nearest departmental office available. The ld. AO shall make it as comfortable as possible for the persons to appear before him and provide as the information sought for by the ld. AO. The ld. AR has also placed reliance on various decisions of the Hon'ble Jurisdictional High Court of Calcutta in case of PCIT Vs. M/S Fast Flow Securities Pvt Ltd. ITAT/197/2024 dated 20.12.2024, so Page | 8 ITA No. 1468/KOL/2024 Front Line Vyapar Private Limited; A.Y. 2012-13 also, in case of PCIT Vs. Shreen Hire Purchase P Limited in ITAT/196/2024 dated 20.12.2024 and also in case of PCIT Vs. M/S Mahalakshmi Vinimay P Ltd. in ITAT/249/2023 dated 13.12.2023. In all these decisions, the Hon'ble Jurisdictional High Court has confirmed the order of the Tribunal on the ground that the matter is entirely factual and no question of law much less substantial questions of law, arises. Thus, clearly the facts of those cases led to those decisions. In the present case, as there is absolute violation in respect of notice issued u/s 131 of the Act, in respect of personal appearance of the directors and the other share applicants or the authorities in connection with the share applicants, we are of the view that the assessee should be granted adequate opportunity to substantiate its case. In these circumstances, the order of the ld. CIT (A) is set aside and the issue in this appeal is restored to the file of the ld. AO with the above direction. The appeal of the Revenue is partly allowed for statistical purposes. 07. In the result, the appeal of the Revenue is partly allowed for statistical purposes. Order pronounced in the open court on 16.06.2025. Sd/- Sd/- (RAKESH MISHRA) (GEORGE MATHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Kolkata, Dated: 16.06.2025 Sudip Sarkar, Sr.PS Page | 9 ITA No. 1468/KOL/2024 Front Line Vyapar 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 "