ITO, WD-6(2), KOLKATA, Kolkata V. M/s Gemini Infras Properties Pvt. Ltd., Kolkata

ITA 1203/KOL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7756 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 17-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: V K JAIN
• Keywords: Unexplained cash credit; Capital receipt; Set aside
• Section: 131; 68

Judgement Text

1 ITA NO. 1203/KOL/2015 GEMINI INFRA PROPERTIES P. LTD.., AY- 2011-12 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA ( ) . . , . . , ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT & SHRI A. T. VARKEY, JM] I.T.A. NO. 1203/KOL/2015 ASSESSMENT YEAR: 2011-12 INCOME-TAX OFFICER, WD-6(2), KOLKATA VS. M/S. GEMINI INFRA PROPERTIES PVT. LTD. (PAN: AAECG1209N) APPELLANT RESPONDENT DATE OF HEARING 15.07.2019 DATE OF PRONOUNCEMENT 24.07.2019 FOR THE APPELLANT DR. P. K. SRIHARI, CIT, DR FOR THE RESPONDENT SHRI V. K. JAIN, FCA ORDER PER SHRI P. M. JAGTAP, VP(KZ) THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-2, KOLKATA DATED 26.06.2015 FOR AY 2011-12. 2. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS.35,77,00,000/- MADE U/S. 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BY THE AO. 3. BRIEFLY STATED FACTS OF THE CASE AS NOTED BY THE AO AT PAGE 3 OF THE ASSESSMENT ORDER ARE THAT THE ASSESSEE A PRIVATE LIMITED COMPANY HAD ISSUED 14,30,800 NUMBERS OF SHARES TO FIFTEEN (15) DIFFERENT PRIVATE LIMITED COMPANIES AND RECEIVED RS.35,77,00,000/- DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO AO, THESE INVESTORS PAID RS.14,30,800/- @ RS. 1/- PER SHARE TOWARDS FACE VALUE OF SHARE AND RS.35,62,69,200/- AS SHARE PREMIUM @ RS. 249/- PER SHARE AS SHARE PREMIUM. THE AO OBSERVED THAT THE SHARE CAPITAL SO RECEIVED BY THE ASSESSEE HAS BEEN INVESTED IN SHARES OF OTHER PRIVATE LIMITED COMPANIES. IT WAS NOTED BY THE AO THAT ASSESSEE COMPANY IS IN THE FIRST YEAR OF OPERATION AND IT DEALS IN INVESTMENT IN THE TRADING IN SHARES AND SECURITIES. THE AO NOTED THAT THE AUTHORIZED SHARE CAPITAL OF THE ASSESSEE COMPANY WAS RS. 41 LAKHS DURING THE YEAR UNDER CONSIDERATION, SUBSCRIBED AND 2 ITA NO. 1203/KOL/2015 GEMINI INFRA PROPERTIES P. LTD.., AY- 2011-12 ISSUED CAPITAL WAS RS.14,30,800/- AND SHARE PREMIUM ACCOUNT WAS RS.35,62,69,200/-. THEREAFTER THE AO ACKNOWLEDGED THAT THE ASSESSEE COMPANY HAD FURNISHED THE COPY OF FINAL ACCOUNT, I. T. RETURN ACKNOWLEDGMENT AND COPY OF BANK STATEMENT. HOWEVER, HE FOUND THAT THERE WERE HUGE TRANSACTION FOR A VERY LIMITED PERIOD OF TIME AND VERY NOMINAL BANK BALANCE ONLY IN THE ASSESSEES BANK ACCOUNT. THUS, THE AO WAS OF THE OPINION THAT THE DETAILS OF TRANSACTION DO NOT INDICATE A NORMAL BUSINESS TRANSACTION. THEREAFTER, ACCORDING TO THE AO, HE ISSUED NOTICE ON 26.02.2014 U/S. 131 OF THE ACT TO THE DIRECTOR OF THE ASSESSEE COMPANY FOR RECORDING HIS STATEMENT ON OATH TO UNRAVEL THE REAL FACTS BEHIND THE INVESTMENT MADE BY THE SHARE APPLICANTS. ACCORDING TO AO, THE SUMMONS ISSUED TO THE ASSESSEE WAS RETURNED BACK BY POSTAL AUTHORITY WITH THE REMARK NO SUCH COMPANY AT THIS ADDRESS. ACCORDING TO AO, SIMULTANEOUSLY HE HAD ISSUED SUMMONS U/S. 131 OF THE ACT TO THE DIRECTORS OF SOME OF THE SHARE APPLICANT COMPANIES. ACCORDING TO AO, THERE WAS NO COMPLIANCE ON THE PART OF THE DIRECTORS OF THE SAID SHARE APPLICANT COMPANIES EVEN THOUGH NOTICES WERE SENT THROUGH POST AS WELL AS AT THEIR E-MAIL ADDRESS AND THE AO NOTED THAT THE ASSESSEE ALSO FAILED TO PRODUCE ANY OF ITS SHAREHOLDERS/DIRECTORS FOR EXAMINATION BEFORE HIM. THEREAFTER THE AO WAS OF THE OPINION THAT THE INTENTION OF INTRODUCING SUCH HUGE AMOUNT IN THE FORM OF SHARE CAPITAL IS ONLY TO INTRODUCE UNACCOUNTED MONEY IN THE FORM OF SHARE CAPITAL AND FOR EVADING TAX IN THE WAY DISCUSSED IN SEVERAL CASE LAWS WHICH AO CITED. THEREAFTER, THE AO MADE AN ADDITION OF THE ENTIRE AMOUNT OF SHARE APPLICATION MONEY TO THE TUNE OF RS.35,77,00,000/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO ALLOW THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE SUBMISSIONS AND RECORDS AND HAS OBSERVED THAT THE ADDITION MADE BY AO IS MADE WITHOUT ANY PROPER FINDING AND IS DEVOID OF ANY REASON AND LOGIC. ON THE EVIDENCES AND CORROBORATIVE FINDINGS ABOUT THE ASSESSMENT OF INCOME AND PARTICULARS OF RETURN OF INCOME BY OTHER JURISDICTIONAL ASSESSING OFFICERS OF THE SUBSCRIBERS, WE CANT ADJUDICATE THAT THE IDENTITY OF SUBSCRIBERS TO THE CAPITAL IS NOT PROVEN AND THE AUTHENTICITY OF THE TRANSACTIONS ARE IN DOUBT. THE MONEY WAS CREDITED AS SHARE APPLICATION MONEY FOR ALLOTMENT OF SHARES AT PREMIUM. THE SHARES WERE ALLOTTED WITHIN 31 ST MARCH 2011. THE INVESTORS ARE BODY CORPORATE(S). THE INVESTOR IS ASSESSED TO INCOME TAX. THE AMOUNT WAS RECEIVED THROUGH PROPER BANKING CHANNEL AND RECEIVED BY ACCOUNT PAYEE CHEQUES. THE INVESTOR IS IDENTIFIABLE AND HAVING ADEQUATE CAPACITY TO INVEST. THE INVESTORS NET WORTH ARE MANY FOLD MORE THAN THE AMOUNT INVESTED BY THEM. THE AO BEFORE ARRIVING AT ANY CONCLUSION SHOULD HAVE VERIFIED THE INCOME TAX RECORDS OF THE SUBSCRIBERS TO THE CAPITAL TO FIND OUT THE TRUTH. AS STATED IN INSTRUCTION 2.2015 (F. NO. 500/15/2014-APA-I) DATED 29.01.2015, THE RECEIPT OF SHARE PREMIUM IS A CAPITAL RECEIPT AND DONT GIVE RISE TO ANY INCOME. THUS THE ADDITION OF SHARE 3 ITA NO. 1203/KOL/2015 GEMINI INFRA PROPERTIES P. LTD.., AY- 2011-12 PREMIUM AND CAPITAL AS INCOME U/S. 68 IS IN CONTRARY TO SAID INSTRUCTION ISSUED BY CBDT IN LIGHT OF VODAFONE CASE. HENCE, THE SHARE CAPITAL AND SHARE PREMIUM IS NOT AN UNEXPLAINED CASH CREDIT, HENCE THE ADDITION MADE UNDER SECTION 68 OF RS.35,77,00,000 BE DELETED IN FULL. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT(A), THE REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. DR SUBMITTED THAT THOUGH THE AO ISSUED SUMMONS, THE DIRECTORS OF THE ASSESSEE COMPANY/SHARE SUBSCRIBING COMPANIES DID NOT APPEAR THUS GIVING AN IMPRESSION THAT THE SHARE SUBSCRIBERS ARE NOT GENUINE AND DOES NOT WANT TO STAND THE SCRUTINY AND INVESTIGATION AT THE HANDS OF THE AO. ACCORDING TO THE LD. DR, ON APPEAL, THE LD. CIT(A) HAS SIMPLY GULPED THE CONTENTIONS OF THE ASSESSEE AND HAS GIVEN THE RELIEF WITHOUT GIVING ANY SPECIFIC FINDING OF FACT AS TO THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WHEREIN THE ASSESSEE COMPANY IN ITS FIRST YEAR OF OPERATION HAS COLLECTED RS.35,77,00,000/- AND THAT TOO SHARE PREMIUM OF RS.249/- PER SHARE IS UNHEARD OF AND UNBELIEVABLE. ACCORDING TO LD. DR, THE SHARE SUBSCRIBERS BEING PRIVATE LIMITED COMPANIES SHOULD HAVE PRODUCED THEIR DIRECTORS BEFORE THE AO AND WITHOUT DOING SO, THE ACTION OF THE AO CANNOT BE FAULTED WITH. ACCORDING TO LD. DR, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION WHEN THE ASSESSEE COMPANY AS WELL AS THE SHARE SUBSCRIBING COMPANIES FAILED TO PRODUCE THEIR DIRECTORS BEFORE THE AO. THEREFORE, HE WANTS US TO REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE AO. PER CONTRA, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD PRODUCED ALL THE DOCUMENTS TO SUBSTANTIATE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS AND SHARE PREMIUM INVESTED IN THE ASSESSEE COMPANY AND HAS THUS, DISCHARGED THE ONUS CASTED UPON IT TO PROVE THE SHARE CAPITAL COLLECTED BY THE ASSESSEE COMPANY. ACCORDING TO LD. AR, OUT OF 15 SHARE SUBSCRIBERS, 11 OF THEM WERE SUBJECT TO SCRUTINY ASSESSMENT BY THE DEPARTMENT AND, THEREFORE, THE QUESTION OF DISBELIEVING IDENTITY DOES NOT OR CANNOT ARISE. ACCORDING TO LD. AR, ALL THE SHARE SUBSCRIBERS HAVE CERTIFICATE OF INCORPORATION, PAN, INCOME TAX ACKNOWLEDGMENT AS WELL AS ASSESSMENT ORDERS AND ALL THE TRANSACTIONS HAVE TAKEN PLACE THROUGH PROPER BANKING CHANNEL AND THAT THE INVESTORS HAVE ADEQUATE CAPACITY TO INVEST IN THE SHARE CAPITAL/SHARE PREMIUM. THEREFORE, THE LD. CIT(A) HAS RIGHTLY GIVEN RELIEF TO THE ASSESSEE. THEREFORE, HE DOES NOT WANT US TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). 4 ITA NO. 1203/KOL/2015 GEMINI INFRA PROPERTIES P. LTD.., AY- 2011-12 5. IN HIS REJOINDER, THE LD. DR SUBMITTED THAT IF THE LD. ARS SUBMISSIONS ARE CORRECT THEN HE SHOULD PRODUCE THE DIRECTORS OF THE SHARE SUBSCRIBING COMPANIES AS WELL AS THE ASSESSEE COMPANY BEFORE THE AO FOR WHICH SUGGESTION THE LD. AR HAS GOT NO OBJECTION, THEREFORE, FOR THE ENDS OF JUSTICE AND FAIR PLAY, WE ARE INCLINED TO DIRECT THE ASSESSEE TO PRODUCE THEIR DIRECTORS/SHARE SUBSCRIBING COMPANIES BEFORE THE AO AND PROVE THEIR BONAFIDENESS OF INVESTMENT MADE IN THE ASSESSEE COMPANY. WE SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR FRESH ASSESSMENT AS DIRECTED ABOVE. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2019. SD/- SD/- (ABY. T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE PRESIDENT DATED : 24 TH JULY, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WD-6(2), KOLKATA. 2 RESPONDENT M/S. GEMINI INFRA PROPERTIES PVT. LTD., MERCANTILE BUILDING, 2 ND FLOOR, 9/12, LAL BAZAR STREET, BLOCK-E, KOLKATA-700 001. 3. 4. CIT(A)-2, KOLKATA (SENT THROUGH E-MAIL) CIT-, , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR