ITO, WARD-10(1), Kolkata, Kolkata V. M/s Pratibha Griha Nirman Private Limited, Kolkata

ITA 1483/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2451 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 14-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CITSRDR
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Bogus Share capital; Opportunity of being heard
• Section: 143(3); 142(1); 131; 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI P.M.JAGTAP, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1483/KOL/2016 ASSESSMENT YEAR:2012-13 INCOME TAX OFFICER, WARD-10(1), P-7, CHOWRINGHEE SQUARE 3 RD FLOOR, KOLKATA-69 / V/S . M/S PRATIBHA GRIHA NIRMAN PVT. LTD., 5, LUCAS LANE, KOLKATA-001 [ PAN NO.AAECP 0895 R ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI ROBIN CHOUDHURY, ADDL. CIT-SR-DR /BY RESPONDENT SHRI MANISH TIWARI, FCA /DATE OF HEARING 01-11-2018 /DATE OF PRONOUNCEMENT 14-11-2018 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATAS O RDER DATED 10.05.2016, PASSED IN CASE NO.352/CIT(A)-4/WARD-10(1)/KOL/15-16 IN REV ERSING THE ASSESSING OFFICERS ACTION ADDING THE TAXPAYERS SHARE APPLICATION / PR EMIUM MONEY OF 1,09,00,000/- TREATED AS UNEXPLAINED CASH CREDITS U/S 68., INVOLV ING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. LEARNED ADDL. CIT-DR VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN REVE RSING THE IMPUGNED SOLE SUBSTANTIVE ADDITION OF UNEXPLAINED SHARE CAPITAL / PREMIUM AMO UNTING TO 1,09,00,000/- TREATED ITA NO.1483/KOL/2016 A.Y. 2012-13 ITO WD-10(1), KOL. VS. M/S PRATIBHA GRIHA NIRMAN PVT. LTD. PAGE 2 AS UNEXPLAINED CASH CREDITS IN ASSESSMENT ORDER. HE QUOTES HON'BLE APEX COURTS LAND MARK DECISIONS IN SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) TO BUTTRESS THE REVENUES S TAND THAT MERE SUBMISSION OF DOCUMENTARY EVIDENCE IN ABSENCE OF GE NUINENESS / CREDITWORTHINESS OF THE INVESTOR PARTIES INVITES THE IMPUGNED SEC. 68 A DDITION IN THE NATURE OF UNEXPLAINED CASH CREDITS. WE ARE TAKN TO ASSESSMENT ORDER DATED 22.03.2015 INDICATING ASSESSEE TO HAVE RECEIVED SHARE CAPITAL OF 54,500 (EQUITY SHARES) OF 10/- EACH AND PREMIUM OF 1,08,45,500/- TOTALING TO SUM IN QUESTION OF 1,09,00,000/-. THE ASSESSING OFFICER SEC. 131 SUMMONS TO ALL CONCERNED TO VERIFY GENUINE NESS / CREDITWORTHINESS THEREOF. THE SAME STOOD UNREPLIED DURING THE COURSE OF SCRUT INY. THIS MADE THE ASSESSING OFFICER TO ADD ASSESSEES SHARE CAPITAL / PREMIUM A S ITS UNEXPLAINED CASH CREDITS IN ASSESSMENT ORDER DATED 22.03.2015. THE CIT(A) HAS R EVERSED THE SAME IN THE COURSE OF LOWER APPELLATE PROCEEDINGS AFTER HOLDING THAT THE ASSESSEE HAD SUFFICIENTLY DISCHARGED HIS ONUS OF PROVING IDENTITY, GENUINENESS AND CREDI TWORTHINESS OF ITS INVESTORS IN VIEW OF ITS SUFFICIENT DOCUMENTARY EVIDENCE FORMING PART OF THE CASE LIST. 3. WE ARE INFORMED THAT THE REVENUE HAD FILED ITA NO.1173/KOL/2015 AGAINST THE CIT(A)S IDENTICAL FINDINGS DELETING SEC. 68 ADDITI ON OF UNEXPLAINED SHARE CAPITAL / PREMIUM IN CASE INSTANT ASSESSEES SISTER CONCERN M/S PRATIBHA NIRMAN PVT. LTDS CASE . A CO-ORDINATE BENCHS ORDER DATED 01.06.2018 IS P LACED ON RECORD REMITTING THE ISSUE BACK TO THE ASSESSING OFFICER AS UNDER:- 5. IN THE ORDER OF THE AO, IT IS STATED THAT THE SUMMONS WAS SENT TO THE DIRECTORS OF THE ASSESSEE COMPANY AS WELL AS DIRECTORS OF THE IN VESTING COMPANIES BUT NONE OF THEM APPEARED. BEFORE THE LD. CIT(A), THE ASSESSEE HAS SPECIFICALLY STATED THAT NO SUMMONS U/S 131 OF THE INCOME TAX ACT, 1961 WERE R ECEIVED BY THE ASSESSEE. IT WAS ALSO ARGUED THAT THE ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT ENQUIRY AT HIS END, TO DISPROVE THE CLAIM OF THE ASSESSEE COMPANIE S. 6. IN THE CASE OF SRIRAM TIE UP PVT. LTD. SUPRA AT PARA 6 AND 7 HELD AS FOLLOWS : 6.IN THE CASE OF M/S. SUKANYA MERCHANDISE PVT. LTD . VS ITO (ITA 291/KOL/2016 DATED 15.12.2017) CITED BY THE LEARNED COUNSEL FOR THE AS SESSEE, A SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND THE S IMILAR ISSUE RELATING TO THE ADDITION MADE UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL C ONTRIBUTION BY TREATING THE SAME AS UNEXPLAINED CASH CREDITS IS RESTORED BACK BY THE TR IBUNAL TO THE FILE OF THE A.O. IN ALMOST SIMILAR SITUATION AFTER RECORDING ITS OBSERV ATIONS / FINDINGS AS UNDER: WE NOTE THAT THE AO PURSUANT TO THE ORDER OF LD. C IT HAD TAKEN NOTE OF THE DIRECTIONS OF THE LD. CIT AND ISSUED NOTICE U/S. 14 2(1) DATED 16.08.2013 AND HAS ACKNOWLEDGED THAT THE ASSESSEE HAD FURNISHED THE CO PY OF FINAL ACCOUNT, I. T. ACKNOWLEDGEMENT, BANK STATEMENT FOR THE RELEVANT PE RIOD EVIDENCING THE ITA NO.1483/KOL/2016 A.Y. 2012-13 ITO WD-10(1), KOL. VS. M/S PRATIBHA GRIHA NIRMAN PVT. LTD. PAGE 3 RECEIPT OF SHARE APPLICATION MONEY FROM THE SHARE A PPLICANTS. THEREAFTER, THE AO MAKES CERTAIN INFERENCES BASED ON THE LIST OF SH AREHOLDERS AND TAKING NOTE OF THE BANK STATEMENT FURNISHED BY THE ASSESSEE. WE N OTE THAT AFTER THE INITIAL NOTICE DATED 16.08.2013, THEREAFTER THE AO HAD ISSU ED THE NOTICE ON 26.02.2014 WHICH HAS BEEN REPRODUCED AT PAGE 3 OF THE REASSESS MENT ORDER, WHEREIN AO REQUIRED THE DIRECTORS OF THE ASSESSEE COMPANY TO B E PRESENT BEFORE HIM ON 06.03.2014. HOWEVER, ACCORDING TO THE LD. AR, THE ASSESSEE RECEIVED THE NOTICE ONLY ON 07.03.2014 AND THEREAFTER, THE ASSESSEE REQ UESTED THE AO TO PROVIDE ANOTHER OPPORTUNITY OF HEARING VIDE ITS LETTER DATE D 20.03.2014. THEREAFTER, THE AO FIXED THE DATE OF HEARING ON 12.03.2014 VIDE NOT ICE DATED 10.03.2014. SO, ACCORDING TO THE ASSESSEE COMPANY SINCE THE DIRECTO RS WERE NOT IN STATION TILL 23.03.2014, THE LD. AR HAD REQUESTED FOR ADJOURNMEN T TILL THAT TIME. THOUGH THE AO HAS STATED THAT HE HAS ISSUED SUMMONS ON 24.03.2 014 TO THE ASSESSEE COMPANY TO PRODUCE THE DIRECTORS OF THE COMPANY BEF ORE HIM ON 26.03.2014, THE ASSESSEE COMPANY CONTENDED THAT IT HAS NOT RECEIVED THE SAID SUMMON AND, THEREFORE, COULD NOT MAKE THE PERSONAL APPEARANCE. THE AO HAS DRAWN ADVERSE CONCLUSION BASICALLY BECAUSE OF NON-APPEARANCE OF T HE DIRECTORS OF THE ASSESSEE COMPANY AND THAT OF THE SHAREHOLDER COMPANIES. WE NOTE THAT INITIALLY THE AO STARTED THE ENQUIRY ON 16.08.2013 WHICH WAS COMPLIE D BY THE ASSESSEE BY SUBMITTING DOCUMENTS WHICH HAS BEEN ACKNOWLEDGED BY THE AO. THEREAFTER, THE ENQUIRY WAS STARTED ONLY AT THE FAG END OF FEBR UARY 2014 AND THE ASSESSEE COMPANY HAD INFORMED THE AO THAT THEIR DIRECTORS WE RE OUT OF STATION TILL 23.03.2014. IN THE LIGHT OF THE AFORESAID FACTS, W E ARE OF THE OPINION THAT THE ASSESSEE DID NOT GET FAIR OPPORTUNITY TO PRESENT TH E EVIDENCES BEFORE THE AO SO, THERE WAS A LACK OF OPPORTUNITY AS AFORESAID, THERE FORE, IT HAS TO GO BACK TO AO. 8. WE ALSO NOTE THAT LD. CIT WHILE SETTING ASIDE TH E ORDER OF THE AO WHICH WAS PASSED U/S. 147/143(3) OF THE ACT, THE LD. CIT GAVE CERTAIN GUIDELINES TO FOLLOW FOR CONDUCTING DEEP INVESTIGATION. WE ALSO NOTE THAT SIMILARLY PLACED ASSESSEES HAD CHALLENGED THE EXERCISE OF REVISIONAL JURISDICTION U/S. 263 OF THE ACT BEFORE THIS TRIBUNAL IN THOSE CASES ONE OF IT O F SUBHA LAKSHMI VANIJYA PVT. LTD. VS. CIT IN ITA NO. 1104/KOL/2014 DATED 30.07.2 015, WHEREIN THE TRIBUNAL WAS PLEASED TO UPHOLD THE ORDER PASSED BY THE LD. C IT PASSED U/S. 263 OF THE ACT, WHICH WE LEARN TO HAVE BEEN CONFIRMED BY THE H ONBLE JURISDICTIONAL HIGH COURT AND THE SLP PREFERRED AGAINST THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREM E COURT. THEREFORE, SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD. WE NOTE THAT THE AO WHILE GIVING EFFECT TO THE CITS 2 63 ORDER HAS NOTED THAT THE ASSESSEE COMPANY HAS IN FACT FURNISHED THE DOCUMENT S SOUGHT BY HIM TO HIS NOTICE U/S. 142(1) OF THE ACT. HOWEVER, THE AO TOO K THE ADVERSE VIEW AGAINST THE ASSESSEE ON THE PLEA THAT THE DIRECTORS OF THE ASSESSEE COMPANY AND SHARE SUBSCRIBING COMPANIES HAD NOT APPEARED BEFORE HIM O N 26.03.2014 AND T AFTER TAKING NOTE THAT NONE APPEARED ON 26.03.2014 CONCLU DED ON THE SAME DAY 26.03.2014 THAT ENTIRE AMOUNT OF SHARE APPLICATION MONEY RECEIVED ALONG WITH PREMIUM AMOUNTING TO RS.8,06,00,000/- WHICH HAS RE MAINED UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE. WE ALSO NOTE T HAT THE LD. CIT AFTER LOOKING INTO THE PERNICIOUS PRACTICE OF CONVERTING BLACK MO NEY INTO WHITE MONEY HAS GIVEN THE GUIDELINES TO AO AS TO HOW THE INVESTIGAT ION SHOULD BE CONDUCTED TO FIND OUT THE SOURCE OF SOURCE. SINCE SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD BY THE TRIBUNAL AS WELL AS BY THE HONBLE CALCUTTA ITA NO.1483/KOL/2016 A.Y. 2012-13 ITO WD-10(1), KOL. VS. M/S PRATIBHA GRIHA NIRMAN PVT. LTD. PAGE 4 HIGH COURT AS WELL AS THE SLP HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT, SIMILAR ORDER OF THE LD. CIT HAS TO BE GIVEN EFFECT TO AS DIRECTED BY THE LD. CIT. WE TAKE NOTE THAT THE LD. CIT WITH HIS EX PERIENCE AND WISDOM HAS GIVEN CERTAIN GUIDELINES IN THE BACKDROP OF BLACK M ONEY MENACE SHOULD HAVE BEEN PROPERLY ENQUIRED INTO AS DIRECTED BY HIM. TH E AO OUGHT TO HAVE FOLLOWED THE INVESTIGATING GUIDELINES AND METHOD AS DIRECTED BY HIM TO UNEARTH THE FACTS TO DETERMINE WHETHER THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS. WE NOTE THAT THE HONBLE SUPREME COUR T IN THREE JUDGES BENCH IN THE CASE OF TIN BOX, (SUPRA), HAS HELD THAT SINCE T HERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE AT THE ASSESSMENT STAGE ITSELF, THE AS SESSMENT NEEDS TO BE DONE AFRESH AND THEREBY REVERSED THE HONBLE HIGH COURT, TRIBUNAL AND CIT(A)S ORDERS AND REMANDED THE MATTER BACK TO AO FOR FRES H ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNITY AS AFORESTATED IT HAS TO GO BACK TO AO. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/2014 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHO RITIES BELOW HAVE HELD AS UNDER : 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS) , AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT T HE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY F OLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PART IES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEE N ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONC LUSION. BUT CIT(APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY , COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AN D DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGA TIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SE CTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDE R OF ITAT, AND CONSEQUENTLY THAT OF CIT(APPEALS), CANNOT BE APPROV ED OR UPHELD.' IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HON BLE DELHI HIGH COURTS ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SU PRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ITA NO.1483/KOL/2016 A.Y. 2012-13 ITO WD-10(1), KOL. VS. M/S PRATIBHA GRIHA NIRMAN PVT. LTD. PAGE 5 ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE T O LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DISPUTE AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH AFTER GI VING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD AND AFTER TAK ING INTO CONSIDERATION THE ENTIRE EVIDENCE ALREADY AVAILABLE ON RECORD AS WELL AS OTH ER DOCUMENTARY EVIDENCE WHICH THE ASSESSEE MAY CHOOSE TO FILE IN SUPPORT OF ITS CASE ON THE ISSUE. THE KOLKATA BENCH OF THE ITAT HAS PASSED SIMILAR OR DER IN MANY CASES ON THE SAME ISSUE AND THE CASE WAS SENT BACK TO THE AO FOR FRES H ADJUDICATION IN ACCORDANCE WITH LAW. 7. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CI RCUMSTANCES OF THE CASE AND ALSO THE ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN SIMILAR MATTERS, WE SET ASIDE THIS APPEAL TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND IN ACCORDANCE WITH LAW, AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. MR. TIWARI IS FAIR ENOUGH IN NOT DISPUTING ALL THES E INTERVENING DEVELOPMENTS DURING THE COURSE OF HEARING. MORE PARTICULARLY THE CLINCH ING FACT THAT SEC. 131 PROCESS ISSUED TO THE INVESTORS ENTITIES STOOD UNRESPONDED DURING SCRUTINY. WE ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTANDIS IN THIS FACTUAL BACKDROP TO RESTORE THE INSTANT SO LE SUBSTANTIVE ISSUE BACK TO ASSESSING OFFICER FOR FAC TUAL VERIFICATION AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE TA XPAYER. 4. THIS REVENUES APPEAL IS ACCEPTED FOR STATISTICA L PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 14/11/2018 SD/- SD/- ( !) (#$ ') (P.M.JAGTAP) (S.S.GODARA) VICE PRESIDENT JUDICIAL MEMBER *DKP-SR.PS ( - 14/11/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-10(1), P-7, CHOWRINGHEE SQ. 3 RD FL. KOLKATA-69 2. /RESPONDENT-M/S PRATIBHA GRIHA NIRMAN PVT. LTD.5, L UCAS LANE, KOL-001 3. + . / CONCERNED CIT 4. . - / CIT (A) 5. / $$+ , + / DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / +,