Appeal details
Counselvise Citation
[2022] 103 COUNSELVISE.COM (IT) 7255 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 7 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-12-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
25-12-2022
Assessment Year
2012-2013
Appeal Filed On
13-05-2019
Judgement Text
ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Girish Agrawal, Accountant Member I.T.A. No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited,.......Appellant C/o. Agarwal Vishwanath & Associates, 133/1/1A, S.N. Banerjee Road, Pushkal Bhawan, 3 rd Floor, Kolkata-700013 [PAN: AALCS4112R] -Vs.- Income Tax Officer,.................................Respondent Ward-10(4), Kolkata, Aayakar Bhawan, 3 rd Floor, P-7, Chowringhee Square, Kolkata-700069 Appearances by: N o n e, appeared on behalf of the assessee Shri P.P. Barman, Addl. CIT, appeared on behalf of the Revenue Date of concluding the hearing : December 26, 2022 Date of pronouncing the order : December 28, 2022 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 24.01.2019 passed for A.Y. 2012-13. ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 2 2. The assessee has taken six grounds of appeal, out of them Grounds No. 1 & 6 are general in nature, which do not call for recording of any specific finding. 3. In Ground No. 2, the assessee has pleaded that ld. CIT(Appeals) has erred in confirming the addition of Rs.1,03,21,770/- and in Grounds No. 3 & 4, it has pleaded that ld. CIT(Appeals) has erred in confirming the addition of share capital and share premium amounting to Rs.1,00,94,000/-. In Ground No. 5, it has pleaded that ld. CIT(Appeals) has erred in confirming the addition of Rs.2,27,772/-, which was added by the ld. Assessing Officer with the help of Section 14A read with Rule 8D of the Income Tax Act and Rules. 4. Brief facts of the case are that the assessee has filed its return of income on 08.03.2013 showing total income of Rs.16,390/-. It’s case was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. According to the finding of ld. Assessing Officer, the assessee has raised fresh share capital. He passed the assessment order on 12.03.2015. It is a very brief assessment, which reads as under:- “ASSESSMENT ORDER The assessee filed return of income for the A.Y. 2012-13 on 08/03/2013 showing a total income of 16,390. The case was selected for Scrutiny through CASS and accordingly notice u/s 143(2) was duly served on the assessee. Requisition u/s 142(1) was also served on the assessee asking to produce relevant documents in support of the return. The A/R of the assessee,Sh Gopal Agarwal, ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 3 appeared on 13/10/2014 and the cash was partly discussed .The A/R of the assessee submitted documents/explanation as per records but failed to produce Books of accounts. The case was discussed and the A/R of the assesses was heard. The assessee was not engaged in any substantial business activity except investment in unquoted equity. On examination of information brought on record and during the course of hearing in connection with assessment proceedings u/s 143(3) of the Income Tax Act, 1961 for the A.Y. 2012-13, it revealed the following:- (i)Share Premium: It was found from the records that the assessee raised capital at a huge share premium during the year. But, the assessee failed to corroborate the high value and creditworthiness of receipt of such share premium, There was no such business activity or book value/EPS which could substantiate the value o premium of unquoted shares. The letters sent to the investors wee returned un-served. Even address of the registered office of the some company are same with common directors. All these prove the connivance of the assessee with the investor company. A summon u/s 131 of the I.T. Act, 1961 was also issued to the directors of assesse company to examine the basis of premium and the assesseee was also requested to produce directors of the investor company for their examination of identity, genuineness of transaction and their creditworthiness for such investments. But the Directors of assessee company failed to appear in compliance of summons u/s 131 and also failed to bring directors of investor company for their cross examination. The assessee failed to corroborate the creditworthiness of the investors despite reasonable opportunity. Hence just because the share application with huge and unjust4ified share premium was received from corporate entities through banking channel does not justify the creditworthiness of the shareholder. It is for the assessee to prove its claim of share capital introduction and its affairs in respect of its accounts. Merely dumping papers and documents on the table does not in any way mean compliance. The burden of proof cannot be shifted by filing loads of documents. The documents submitted should be property explained and summon must be appropriately complied. The Hon’ble Apex Court in the case of Sumati Dayal –vs.- CIT 214 ITR 801 has expounded that revenue authorities are also supposed to consider the surrounding circumstances and apply the test of human probability. Apparently there was no reason as to why the share of this company would command so much share premium. Any normal prudent person who makes investment in ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 4 shares would make the investment in accordance with the fair market value of the shares. Considering the above discussion and facts, it is evident that the assessee failed to justify the high value of share premium and also failed to corroborate the creditworthiness of the investors despite reasonable opportunity. Therefore, share premium received during the year for Rs.1,00,94,000/- is treated as cash credit and added to the total income for the assessee. (ii)Expenses: During the course of assessment proceedings, it appears from the records that during the relevant financial year, the assessee had investments in unquoted equities/others. Therefore, provisions of Rule 8D(2) r.w. section 14A is applicable in this case. However, the assessee company has not disallowed any amount of expenses u/s 14A in computation of total income whereas the assessee debited expenses in profit and loss account in relation to income, which does not form part of total income. Therefore, Rs.2,27,772/- of such expenses , is disallowed within the meaning of section 14A of I.T. Act read with Rule 8D of I.T. Rules and added back to the total income for the A.Y. 2012-13. In view of the above observation, the Total Income of the assessee is computed as per separate computation sheet attached. Penalty proceedings u/s 271(1)( c) has already been initiated for concealment of income and furnishing inaccurate particulars of income as stated above. Assessed u/s 143(3) for a total income of Rs 1,03,38,170/- Issue D/N. challan and copy of Order along with computation sheet. Sd/- ( Uttam Kumar) Income Tax Officer, Ward-10(4), Kolkata” 5. Dissatisfied with the assessment order, the assessee filed an appeal before the ld. CIT(Appeals) and ld. ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 5 CIT(Appeals) has dismissed the appeal for want of prosecution. 6. In response to the notice of hearing, no one has appeared. Thereafter we informed the assessee on the telephone number given in Form 36. Inspite of that, no one appeared but an adjournment application under the signature of Jhabarmal Agarwal has been moved by the assessee. Tribunal has adjourned the hearing to 26.12.2022. No one has appeared again, even nobody picked up the telephone. Since no material was filed either before the ld. Assessing Officer or before the ld. CIT(Appeals), it is a very easy task for us to concur with both the authorities, but we find glaring mistakes at the end of the Revenue Authorities. We have extracted the assessment order. It is just one & half page assessment order. In the discussion, the ld. Assessing Officer has not mentioned who are the share applicants? How much amount received by the assessee from which applicant? In the body of the assessment order, ld. Assessing Officer has worked out the share premium received during the year of Rs.1,00,94,000/-, which has been treated as a cash credit. The ld. Assessing Officer thereafter made an addition of Rs.2,27,772/- under section 14A read with Rule 8D. This Section authorizes the Assessing Officer to disallow all those expenditures, which were incurred by the assessee for earning exempt income. But again ld. Assessing Officer has nowhere discussed - which is the ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 6 exempt income and how these expenses are attributable to such income? In the concluding paragraph, ld. Assessing Officer has determined the taxable income at Rs.1,03,38,170/-. It gives an impression that it is an ex- parte cut and paste assessment order. The ld. Assessing Officer has pasted the general discussion made somewhere else when the assessment order was passed. 7. Sub-section (6) of section 250 contemplates that ld. CIT(Appeals) would state the points in dispute and thereafter record reasons in support of his conclusion on those points. This exercise has not been carried out by the ld. CIT(Appeals). He even failed to take notice of the grounds of appeal raised by the assessee alongwith statement of facts. He simply dismissed the appeal for want of prosecution. No doubt, the assessee might be a paper company without doing any serious business but there should be coherence in the material possessed by the Revenue, vis-a-vis income to be determined in the hands of the assessee. That coherence is totally missing from the orders of both the authorities. The major irregularity has crept at the level of ld. 1 st Appellate Authority because instead of deciding the appeal on merit, appeal has dismissed for want of prosecution. Therefore, we set aside the order of ld. CIT(Appeals) and restore this issue to the file of ld. CIT(Appeals) for re- adjudication. ITA No. 1143/KOL/2019 Assessment Year: 2012-2013 M/s. Sweta Commodities Pvt. Limited 7 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28 th December, 2022. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 28 th day of December, 2022 Copies to :(1) M/s. Sweta Commodities Pvt. Limited, C/o. Agarwal Vishwanath & Associates, 133/1/1A, S.N. Banerjee Road, Pushkal Bhawan, 3 rd Floor, Kolkata-700013 (2) Income Tax Officer, Ward-10(4), Kolkata, Aayakar Bhawan, 3 rd Floor, P-7, Chowringhee Square, Kolkata-700069 (3) Commissioner of Income Tax (Appeals)-4, Kolkata; (4) Commissioner of Income Tax- ; (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.
AI Insights
The case involves M/s. Sweta Commodities Pvt. Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata, concerning the assessment year 2012-2013. The primary issues in the appeal included the confirmation of additions to the assessee's income, such as Rs.1,03,21,770 and Rs.1,00,94,000 related to share capital and share premium, respectively, and an additional Rs.2,27,772 under Section 14A read with Rule 8D of the Income Tax Act. The Income Tax Officer had made these additions based on findings that the assessee failed to substantiate the creditworthiness of investors and the genuineness of the transactions. The Tribunal noted procedural lapses by the lower authorities, particularly the CIT(Appeals), in not addressing the substantive issues raised in the appeal and merely dismissing it for want of prosecution.
