M/S. CONCISE EXIM LTD., MUMBAI V. PR,. CIT, THANE-1, THANE

ITA 1085/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5921 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Revision of order; Principle of natural justice; Reason to believe; Set aside
• Section: 147; 131; 148; 263; 271(1)(c); 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALMUMBAI BENCH “C” MUMBAIBEFORE SHRI KULDIP SINGH (JUDICIAL MEMBER) ANDSHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)ITA No. 1085/MUM/2021Assessment Year: 2011-12M/s Concise Exim Ltd.,Room No. 16, Jogeshwari (E),Mumbai-401 101.Vs.Pr. CIT, Thane-1,Maharashtra-401 101.PAN No. AADCC 5668 AAppellantRespondentAssessee by:Mr. Ashwini Kumar &Mr. Adity Kumar, ARsRevenue by:Mr. Ashok Kumar Kardam, CIT-DRD a t e o f H e a r i n g:28/03/2022D a t e o f p r o n o u n c e m e n t:28/03/2022ORDERPER OM PRAKASH KANT, AMThis appeal has been preferred by the assessee against the revision orderdated 26/03/2021 passed by the Ld. Principal Commissioner of Income-Tax,Thane -1 (in short ‘the PCIT’) for assessment year 2011-12. The grounds raisedby the assessee are reproduced as under:1.That the order dated 26-03-2021 passed u/s 263 of the Income-tax Act,1961 (hereinafter called "the Act”) passed by the Ld. Pr. Commissioner ofM/s Concise Exim Ltd.ITA No. 1085/M/20212Income-Tax- 1, Thane is against law and facts on the file in as much as he wasnot justified to set aside the order dated 28.12.2018 passed u/s 143(3) r.w.s.147 of the Act for the A/Y 2011-12 by the Ld. Assessing Officer, Ward -2(1),Thane on the ground that the same is allegedly erroneous and prejudicial tothe interests of the Revenue in as much as the twin conditions as laid out inSection 263 of the Income-tax Act, 1961 were not fulfilled.2.That the order dated 26-03-2021 passed u/s 263 of the Income-tax Act,1961 (hereinafter called "the Act”) passed by the Ld. Pr. Commissioner ofIncome-Tax-1, Thane is against law and facts on the file in as much as he wasnot justified to set aside the order dated 28.12.2018 passed u/s 143(3) r.w.s.147 of the Act for the A/Y 2011-12 by the Ld. Assessing Officer, Ward -2 (1),Thane and direct the Assessing Officer to inquire into the issue of partly paidshares of₹1,60,00,000/- by the Appellant Company on the ground thatgenuineness of source of this receipt from whom it was received is not found onthe records by ignoring the fact that the same amount had already been addedback in the assessment order dated 28.12.2018 and which fact had also beenbrought to his notice vide submission filed on 16.03,2021.3.That the order dated 26-03-2021 passed u/s 263 of the Income-tax Act,1961 (hereinafter called "the Act”) passed by the Ld. Pr. Commissioner ofIncome-Tax- 1, Thane is against law and facts on the file in as much as he wasnot justified to hold that the order dated 28.12.2018 is erroneous andprejudicial to the interests of revenue on the ground that the investment madeby the Appellant Company in the various entities which are reflected in theBalance Sheet have not been examined to ascertain source of the investmentsas well as genuineness of the investments which are expected from theAssessing Officer before finalizing the assessment order.4.That the order dated 26-03-2021 passed u/s 263 of the Income-tax Act,1961 (hereinafter called "the Act"), passed by the Ld. Pr. Commissioner ofIncome-Tax- 1, Thane is against the principles of natural justice in as much asM/s Concise Exim Ltd.ITA No. 1085/M/20213the submissions dated 24.03.2021 were not taken into consideration by the Ld.Pr. Commissioner of Income-Tax - 1, Thane while passing the impugned order.2.Briefly stated facts of the case are that original assessment under section143(3) of the Income-Tax Act (in short ‘the Act’) was completed on 07/03/2014determining total income at ₹3,71,200/-as against total income of ₹3,534/- declared in the return of income filed on 29/09/2011. Subsequently, theAssessing Officer received an information from the investigation wing of theMumbai that the assessee issued shares at a premium of ₹190 per share to the shareholders/subscribers which were not found to be operating from theirgiven addresses. The Assessing Officer recorded reason to believe that incomeescaped assessment and thereafter issued notice under section 148 of the Acton 28/03/2018. In response, the assessee filed return of income on18/10/2018 declaring income of ₹3,534/-. The Assessing Officer held the fully paid shares capital of ₹15.00 crores and partly paid shares capital of ₹16 croresincluding the share premium received, totalling to ₹31 crores as unexplained cash credit and made the addition of the same in the reassessment order dated28/12/2018 passed in terms of section 143(3) read with section 147 of the Act.3.Thereafter, the Ld. PCIT called for the record and after examination, hewas of the opinion that order passed by the Assessing Officer was erroneousinsofar as prejudicial to the interest of the revenue due two the reasons, Firstly,M/s Concise Exim Ltd.ITA No. 1085/M/20214that details/genuineness of the source of the receipt for partly paid shares wasnot examined by the Assessing Officer, secondly that the investment made invarious entities reflected in the balance sheet was not examined by theAssessing Officer. Accordingly, the Ld. PCIT issued notice under section 263 ofthe Act on above two issues. In response the assessee submitted that additionfor partly paid shares capital of₹16 crores was already made by the AssessingOfficer after carrying out due inquiries. The Ld. PCIT, however held theassessment order as erroneous insofar as prejudicial to the interest of therevenue and set aside the order of the Assessing Officer with the direction toreassess, observing as under:“5.As discussed above that on perusal of the records it is noticed that theassessee had issued partly paid shares of₹1,60,00,000/-. However, thedocuments regarding genuineness of source of this receipt from whom it wasreceived is not found on the records. Therefore, there is requirement of furtherverification to examine the record. Further, investment made in the variousentities which are reflected in the Balance Sheet were also found not to havebeen examined in order to ascertain source of the investments as well asgenuineness of the investments, which was expected from the A.O beforefinalizing the assessment order.6.Considering the above mentioned facts, I am of the considered opinionthat the assessment made by the A.O. u/s 143(3) r.w.s 147 of the Act on dated28.12.2018 is erroneous in so far as it is prejudicial to the interests of theRevenue. I therefore, set aside the order of the AO with the direction toM/s Concise Exim Ltd.ITA No. 1085/M/20215examine the above discussed issues and to redo the assessment after affordingadequate opportunity to the assessee.”4.We have heard rival submission of the parties on the issue in dispute andperused the relevant material on record. We find that for verifying the sourceof share capital subscribed by the partly paid shares subscriber, the AssessingOfficer issued show cause notice under section 142(1) of the Act dated25/10/2018. Further,videnotice under section 142(1) dated 13/11/2018, theAssessing Officer asked for various details in respect of subscriber parties,inter-alia name and address, balance sheet and profit and loss account andreturn of income filed by those parties, registrar of company’s record includingannual return of all the shareholders etc. The Assessing Officer also asked theassessee to justify receiving of share application money at higher premium. TheAssessing Officer also issued summon under section 131 of the Act to the sharessubscriber companies, which were returned back. The inspector of the office ofthe Assessing Officer was deputed to locate share subscribers, but he also couldnot locate those persons at the address provided. In view of the failure on thepart of the assessee in establishing identity, creditworthiness of the subscriberparties and genuineness of the transaction, the Assessing Officer made theaddition for the party paid shares subscriber of ₹ 16 crores observing as under: M/s Concise Exim Ltd.ITA No. 1085/M/20216“19.After carefully going through the submissions of the assessee as well as thedata/details/documents available on record, it becomes crystal clear that :(a)The primary onus is on the assessee to establish the genuineness of thetransaction recorded by it in its books of account:(b)Since the primary facts are in the knowledge of the assessee, it is the duty ofthe assessee to provide the correct details with regard to the impugned transactions;(c) if the investigation done by the Department leads to doubt regarding thegenuineness of the transactions, it is incumbent on the assesse to produce the partiesalong with the necessary documents to establish the genuineness of the transactionwhich the assessee fails to do so in the instant case and(d)Payment be account payee cheque is not sacrosanct.20. From the various details filed by the assessee, it is apparent that all thetransactions carried out by the assessee company are nothing but layering of theirunaccounted funds and lacks genuinenity and creditworthiness. The assessee hasmade investments in share application money amounting Rs. 16,10,00,000/- detailsof which not furnished, Further, it is also seen that share application amount andshare premium received has been invested in the unquoted capital of (1) M/s.Vertical Power Pvt. Ltd., (2) Pace Iron & Steel Pvt. Ltd., (3) Janitor Infrastructure Pvt.Ltd. (4) Super Natural Resource Pvt. Ltd. The purpose of receipts of share capital of₹7,50,00,000 from M/s. Janitor Infrastructure Pvt. Ltd and investment ofRs.7,00,50,125/- again in M/s. Janitor Infrastructure Pvt. Ltd. and receipt of sharecapital of₹7,50,00,000 from M/s. Super Natural Resource Pvt. Ltd and investingRs.6,50,50,125/- again in M/s. Super Natural Resource Pvt. Ltd., cannot beacceptable as genuine transactions. It appears that the intention of the assesseecompany in such investment is nothing but to rotate the unaccounted money to givecolor of genuineness. Moreover, it is also seen that the Directors of all thesecompanies from whom share money is received and invested are common.M/s Concise Exim Ltd.ITA No. 1085/M/2021721.It is further noted from the MOA of the assessee placed on the assessmentrecord that the main object of the company is to carry on the business of buying,selling, reselling, importing, exporting and trading of all kind of good finished, rawmaterial items, articles, merchandise, products such as agricultural, Industrialchemical, or marine, stones, pieces of arts, antiques, handicrafts, machinery,equipments, capital good and item capable of purchasing selling, importing,exporting & trading and to be appointed as agents and / or distributors andcommission, allowance, retainer ship, incentive basis and also to act as an Import &Export house and to perform all the functions and undertake all the activitiesconnect herewith inciuding obtaining and dealing in licenses, quotas, certificatesand other rights. However, the documents placed on record: do not show that anysuch genuine activity is being carried out by the assessee. The assessee has shownreceipts of Rs.58,181/- only for A.Y. 2011-12. However total investment is30,77,64,375/- and compare to these investments the income is negligible indicatingno real business activities carried out by the assessee company.22.In the light above mentioned facts and circumstances, the assessee companyfailed to prove the identity, creditworthiness of the investor and genuineness of thetransaction. Hence, the amount of Rs.16,00,00,000/- received. in the form sharepremium from the following parties is added back to the total income of the assesseecompany u/s.68 of Income Tax Act, 1961 as unexplained cash credit.Sr.No.NameShare Premium₹1.Terrific Steel Pvt. Ltd.4,00,00,000/-2.Venus Recruiters Pvt. Ltd.4,00,00,000/-3.Navjyoti Farming Pvt. Ltd.4,00,00,000/-4.Prominent Hospitals Pvt. Ltd.4,00,00,000/-Total16,00,00,000/-Similarly, the amount of Rs.15,00,00,000/- received in the form share capital fromthe following parties is added back to the total income of the assessee companyu/s.68 of Income Tax Act, 1961 as unexplained cash credit.M/s Concise Exim Ltd.ITA No. 1085/M/20218DETAIL OF INCREASE IN SHARE CAPITAL FULLYShare Capital₹Total₹DateofPayment1.Janitor InfrastructurePvt. Ltd.7,50,00,000/-7,50,00,000/-16.11.20102.SuperbNaturalResources Pvt. Ltd.7,50,00,000/-7,50,00,000/-16.11.201015,00,00,000/-15,00,00,000/-Thus, the total addition on account of share premium and share capital works outto ₹31,00,00,000/- (Rupees Thirty One Crore Only) is added back to the total income of the assessee company W/s.68 of Income Tax Act, 1961 as unexplained cash credit.Penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 is initiated separately forfiling of inaccurate particulars of income.4.1In view of the detailed enquiries made by the Assessing Officer, thefinding of the Ld. PCIT that Assessing Officer has not examined the details inrespect of introduction of partly paid share subscription of ₹16/- crore, is without any basis and in complete ignorance of the facts on record. Therefore,finding of the Ld. PCIT on the first issue of non-examination of details in respectof share subscription are rejected. The Ld. PCIT has not only failed to point outany error in the assessment order on this issue, but he has also failed tosubstantiate that order was prejudicial to the interest of the revenue.4.2The second ground for revising the order is that source of investment inthe balance sheet has not been examined by the Assessing Officer. We are of theview that source of investment on the asset side of the balance sheet standexplained by way share capital and other items on the liability side of theM/s Concise Exim Ltd.ITA No. 1085/M/20219balance sheet. When the Assessing Officer has already made addition forholding the share capital as unexplained cash credit, no addition in respect ofinvestment made out of said capital is called for in the facts of the case. The Ld.PCIT has failed to point out any investment outside the sources mentioned inthe balance sheet. Thus there was no error in the assessment order on thisissue. The finding of the Ld. PCIT for revising the assessment order on thisground is also rejected.4.3In view of above discussion, we are of the opinion that order passed bythe Assessing Officer is neither erroneous nor prejudicial to the interest of therevenue and therefore the order passed under section 263 of the Act by the Ld.PCIT dated 26/03/2021 setting aside the order of the Assessing Officer ishereby quashed. The grounds of the appeal of the assessee accordingly allowed.5.In the result, the appeal of the assessee is allowed.Order pronounced in the open Court.Sd/-Sd/-(KULDIP SINGH)(OM PRAKASH KANT)JUDICIAL MEMBERACCOUNTANT MEMBERMumbai;Dated:28/03/2022Dragon Legal Software/Rahul Sharma, Sr. P.S.Copy of the Order forwarded to :M/s Concise Exim Ltd.ITA No. 1085/M/2021101.The Appellant2.The Respondent.3.The CIT(A)-4.CIT5.DR, ITAT, Mumbai6.Guard file.BY ORDER,//True Copy//(Sr. Private Secretary)ITAT, Mumbai