ITO, WD-5(1), KOLKATA, Kolkata V. M/s Shree Sati Finvest Pvt. Ltd., Kolkata

ITA 1192/KOL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6392 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 16-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 142(1); 68; 148; 263; 144

Judgement Text

I.T.A. NO . 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T. A. NO . 1177/KOL/2015 ASS ESSMENT YEAR: 2012-2013 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T.A. NO. 1177/KOL/2015 ASSESSMENT YEAR: 2012-2013 INCOME TAX OFFICER,................................ .....................................APPELLANT WARD-5(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, 8 TH FLOOR, AAYAKAR BHAWAN, KOLKATA-700 069 -VS.- M/S. SHREE SATI FINVEST PVT. LIMITED............... ..........................RESPONDENT 3, AMRATOLLA STREET, 1 ST FLOOR, KOLKATA-700 001 [PAN:AADCS 7168 K] APPEARANCES BY: SHRI SALLONG YADEN, ADDL. CIT, D.R., FOR THE DEPART MENT SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : MAY 10, 2018 DATE OF PRONOUNCING THE ORDER : MAY 18, 2018 O R D E R PER SHRI P.M. JAGTAP, A.M. :- THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS)- 2, KOLKATA DATED 30.06.2015 FOR ASSESSMENT YEARS 20 10-11 AND 2012-13 AND SINCE THE ISSUE INVOLVED THEREIN IS COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGL E CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2010-11 IN ITA NO. 1192/KOL/2015 , WHICH INVOLVES A SOLITARY ISSUE RELATING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.16.43 CRORES MADE I.T.A. NO . 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T. A. NO . 1177/KOL/2015 ASS ESSMENT YEAR: 2012-2013 PAGE 2 OF 6 BY THE ASSESSING OFFICER UNDER SECTION 68 BY TREATI NG THE SHARE CAPITAL AND SHARE PREMIUM AMOUNTS RECEIVED BY THE ASSESSEE- COMPANY DURING THE YEAR UNDER CONSIDERATION AS UNEXPLAINED CASH CR EDIT. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND INVESTMENT. THE R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2010-11 WAS FILED BY IT ON 12.10.2010 DECLARING TOTAL INCOME OF RS.17,370/-. I NITIALLY THE SAID RETURN WAS PROCESSED BY THE ASSESSING OFFICER UNDER SECTIO N 143(1) ON 14.04.2011. THE ASSESSMENT, HOWEVER, WAS REOPENED B Y HIM SUBSEQUENTLY AND AFTER RECORDING THE REASON, A NOTICE UNDER SECT ION 148 WAS ISSUED BY HIM TO THE ASSESSEE ON 22.02.2012. IN PURSUANCE OF THE SAID NOTICE, ASSESSMENT UNDER SECTION 147/143(3) WAS COMPLETED B Y THE ASSESSING OFFICER ON 27.03.2014 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.46,370/-. THE RECORDS OF THE SAID ASSESSMENT SUB SEQUENTLY EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION, HE FOUND TH AT THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED SHARE CAPITAL AND SHARE PREMIUM AGGREGATING TO RS.16.43 CRORES WAS ACCEPTED BY THE ASSESSING OF FICER WITHOUT MAKING PROPER ENQUIRIES AND EXAMINATIONS IN ORDER OF VERIF Y THE IDENTITY AND CAPACITY OF THE CONCERNED SHAREHOLDERS AS WELL AS T HE GENUINENESS OF THE RELEVANT TRANSACTIONS INVOLVING SHARE CAPITAL AND S HARE PREMIUM. HE, THEREFORE, ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE UNDER SECTION 263 AND SINCE THE SUBMISSIONS MADE BY THE ASSESSEE IN R ESPONSE TO THE SAID NOTICE WERE NOT FOUND ACCEPTABLE BY HIM, THE ASSESS MENT MADE BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) VIDE AN ORDER DATED 27.03.2014 WAS SET ASIDE BY THE LD. CIT VIDE HIS OR DER DATED 18.03.2014 PASSED UNDER SECTION 263 WITH A DIRECTION TO THE AS SESSING OFFICER TO MAKE THE ASSESSMENT AFRESH AFTER MAKING PROPER ENQU IRIES AND EXAMINATION IN ORDER TO VERIFY THE IDENTITY AND CAP ACITY OF THE CONCERNED SHAREHOLDERS AS WELL AS THE GENUINENESS OF THE TRAN SACTIONS. I.T.A. NO . 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T. A. NO . 1177/KOL/2015 ASS ESSMENT YEAR: 2012-2013 PAGE 3 OF 6 4. AS PER THE ORDER OF THE LD. CIT UNDER SECTION 26 3, NOTICE UNDER SECTION 142(1) WAS ISSUED BY THE ASSESSING OFFICER REQUIRING THE ASSESSEE TO PRODUCE THE RELEVANT DETAILS AND DOCUMENTS IN OR DER TO EXPLAIN THE RELEVANT CASH CREDITS REPRESENTING SHARE CAPITAL AN D SHARE PREMIUM IN TERMS OF SECTION 68. THE SAID NOTICE AS WELL AS THE SUBSEQUENT NOTICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 143(2 ) AND 142(1), HOWEVER, REMAINED UN-COMPLIED ON THE PART OF THE AS SESSEE. NOTICES UNDER SECTION 131(1), THEREFORE, WERE ISSUED BY THE ASSESSING OFFICER TO THE DIRECTORS OF THE ASSESSEE-COMPANY AS WELL AS TH E DIRECTORS OF THE ALLEGED SHARE SUBSCRIBER COMPANIES. THE SAID NOTICE S ALSO REMAINED UN- COMPLIED WITH. AS NOTED BY THE ASSESSING OFFICER, E VEN SOME OF THE NOTICES ISSUED TO THE DIRECTORS OF THE SHARE SUBSCR IBER COMPANIES WERE RETURNED UNDELIVERED WITH THE POSTAL REMARKS ADDRE SS CANNOT BE LOOKED OUT/ LEFT/ NOT KNOWN. KEEPING IN VIEW THIS NON-COM PLIANCE, A NOTICE WAS ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE ON 18.02.2015 REQUIRING THE ASSESSEE TO EXPLAIN WHY BEST JUDGMENT ASSESSMEN T UNDER SECTION 144 SHOULD NOT BE COMPLETED IN ITS CASE ON THE BASIS OF MATERIALS AND DETAILS AVAILABLE ON RECORD. THE ASSESSEE AGAIN FAILED TO C OMPLY WITH THE SAID NOTICE. THE ASSESSING OFFICER, THEREFORE, PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION 144/263/147/143(3) OF THE ACT VIDE AN ORDER DATED 23.03.2015 ON THE BASIS OF MATERIAL AND DETAI LS AVAILABLE ON RECORD. IN THE ASSESSMENT SO COMPLETED, HE MADE AN ADDITION OF RS.16.43 CRORES TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 6 8 BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED DURING THE YEAR UNDER CONSIDERATION AS UNEXPLAINED CASH CREDIT. 5. THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT AS UNEXPLAINED CASH CREDIT WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DELETED I.T.A. NO . 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T. A. NO . 1177/KOL/2015 ASS ESSMENT YEAR: 2012-2013 PAGE 4 OF 6 THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SE CTION 68 AFTER RECORDING HIS FINDINGS AND OBSERVATIONS IN HIS IMPU GNED ORDER AS UNDER:- (1) THE APPELLANT HAS MADE HIS CASE THAT THE IDENT ITY OF THE SHAREHOLDERS ARE ESTABLISHED BEYOND DOUBT AND ON EN QUIRIES MADE BY THE AO THERE IS NO ADVERSE FINDING ON THIS ASPECT. (2) THE VERY FACT THAT MOST OF THE SUBSCRIBERS ARE EXISTING TAX ASSESSEE AND SOME OF THEM WERE SUBJECT TO SCRUTINY ASSESSMENT DURING THE SAME PERIOD ESTABLISH THE IDENTITY AND A UTHENTICITY OF THE SUBSCRIBERS. (3) ABOUT THE GENUINENESS OF THE TRANSACTION THERE IS NO FINDING IN THE ASSESSMENT ORDER IN ADVERSE OR WHICH IS SUBVERSIVE TO THE FACTS STATED BY THE ASSESSEE DURI NG THE COURSE OF ASSESSMENT PROCEEDING. (4) THE CREDITWORTHINESS OF THE SUBSCRIBERS TO THE SHARE CAPITAL IS PROVED BY SUBMISSION OF THEIR AUDITED AN NUAL ACCOUNTS. THE NET WORTH OF SUCH SUBSCRIBERS ARE IN EXCESS OF THE AMOUNT INVESTED BY EACH OF THEM. (5) THE ADDITION MADE BY AO. IS BASED ON ASSUMPTION S AND SUSPICION NOT BACKED BY ANY AUTHENTICITY OR REASONS . (6) THE AO. HAD NOT DEALT LOGICALLY AND JUDICIOUSLY WITH THE DOCUMENTS SUBMITTED DURING THE COURSE OF HEARING BY THE ASSESSEE AND THE SUBSCRIBERS TO THE SHARE CAPITAL O F THE ASSESSEE TO DRAW THAT SUCH SHARE CAPITAL IS UNEXPLA INED CASH CREDIT. (7) THE APPELLANT HAS MADE OUT HIS CASE LOGICALLY A ND HAS RELIED ON THE DOCUMENTS WHICH ARE NOT IN DOUBT. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. D.R., THE RELEVANT DETAILS AND DOCUMENTS IN ORDER TO ESTABLIS H THE IDENTITY AND CAPACITY OF THE CONCERNED SHAREHOLDERS AS WELL AS T HE GENUINENESS OF THE RELEVANT TRANSACTIONS INVOLVING SHARE CAPITAL AND S HARE PREMIUM WERE NOT FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS I.T.A. NO . 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T. A. NO . 1177/KOL/2015 ASS ESSMENT YEAR: 2012-2013 PAGE 5 OF 6 BEFORE THE ASSESSING OFFICER INSPITE OF SUFFICIENT OPPORTUNITY GIVEN IN THIS REGARD. HE CONTENDED THAT THE PRIMARY ONUS THAT LAY ON THE ASSESSEE TO EXPLAIN THE RELEVANT CASH CREDITS IN TERMS OF SECTI ON 68 THUS WAS NOT DISCHARGED BY THE ASSESSEE AND THIS VITAL AND RELEV ANT ASPECT WAS COMPLETELY IGNORED BY THE LD. CIT(APPEALS) WHILE DE LETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68. AS RIGHTLY CONTENDED BY HIM, THE LD. CIT(APPEALS) WHILE DOING SO, PUT THE E NTIRE ONUS ON THE ASSESSING OFFICER, WHICH AS PER LAW, WAS ON THE ASS ESSEE AND THIS POSITION CLEARLY EVIDENT FROM THE ORDERS OF THE AUTHORITIES BELOW IS NOT DISPUTED EVEN BY THE LD. COUNSEL FOR THE ASSESSEE. HE, HOWEV ER, HAS CONTENDED THAT THE RELEVANT DETAILS AND DOCUMENTS TO ESTABLISH THE IDENTITY AND CAPACITY OF THE CONCERNED SHAREHOLDERS AS WELL AS THE GENUIN ENESS OF THE RELEVANT TRANSACTIONS ARE AVAILABLE WITH THE ASSESSEE AND ON E MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO DISCHARGE ITS PRIMA RY ONUS TO EXPLAIN THE RELEVANT CASH CREDITS IN TERMS OF SECTION 68 BY SEN DING THE MATTER BACK TO THE ASSESSING OFFICER. SINCE THE LD. D.R. HAS NOT R AISED ANY OBJECTION IN THIS REGARD, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFF ICER FOR DECIDING THE SAME AFRESH AFTER GIVING ONE MORE OPPORTUNITY TO TH E ASSESSEE TO ESTABLISH THE IDENTITY AND CAPACITY OF THE CONCERNE D CREDITORS AS WELL AS THE GENUINENESS OF THE RELEVANT TRANSACTIONS BY PRO DUCING THE RELEVANT DETAILS AND DOCUMENTS. THE APPEAL OF THE REVENUE FO R A.Y. 2010-11 IS TREATED AS ALLOWED. 7. AS REGARDS THE APPEAL OF THE REVENUE FOR A.Y. 20 12-13 BEING ITA NO. 1177/KOL/2015 , IT IS OBSERVED THAT THE SOLITARY ISSUE INVOLVED THEREIN RELATING TO DELETION BY THE LD. CIT(APPEALS ) OF THE ADDITION OF RS.4,66,52,000/- MADE BY THE ASSESSING OFFICER UNDE R SECTION 68 BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT S AS UNEXPLAINED CASH CREDIT IS SIMILAR TO THE ONE INVOLVED IN A.Y. 2010-11, INASMUCH AS, THE ADDITION UNDER SECTION 68 WAS MADE BY THE ASSES SING OFFICER IN THE I.T.A. NO . 1192/KOL/2015 ASSESSMENT YEAR: 2010-2011 & I.T. A. NO . 1177/KOL/2015 ASS ESSMENT YEAR: 2012-2013 PAGE 6 OF 6 BEST ASSESSMENT COMPLETED UNDER SECTION 144 FOR WAN T OF RELEVANT DETAILS AND DOCUMENTS AND THE SAME WAS DELETED BY THE LD. C IT(APPEALS) FOR THE SIMILAR REASONS AS GIVEN IN A.Y. 2010-11. SINCE THE ARGUMENTS RAISED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES FOR A.Y. 2012-13 ARE ALSO SIMILAR TO A.Y. 2010-11, WE FOLLOW OUR CONCLUSION DRAWN IN A.Y. 2010-11 AND RESTORE THE ISSUE RELATING TO THE ADDITION UNDER SE CTION 68 TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTION AS GIVEN IN THE A.Y. 2010-11. 8. IN THE RESULT, THE APPEALS OF THE REVENUE FOR A. YS. 2010-11 AND 2012-13 ARE TREATED AS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 18, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 18 TH DAY OF MAY, 2018 COPIES TO : (1) INCOME TAX OFFICER, WARD-5(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, 8 TH FLOOR, AAYAKAR BHAWAN, KOLKATA-700 069 (2) M/S. SHREE SATI FINVEST PVT. LIMITED. 3, AMRATOLLA STREET, 1 ST FLOOR, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKA TA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O. INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.