ITO, WARD-10(1), Kolkata, Kolkata V. M/s Dharmik Tradecom Private Limited, Kolkata

ITA 1696/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7050 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: M D SHAH
• Keywords: Unexplained cash credit; Set aside
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA [BEFORE SHRI P.M. JAGTAP, VP (KZ) AND SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 1696/KOL/2016 ASSESSMENT YEAR: 2012-13 ITO, WARD 10(1) KOLKATA...................................................................APPELLANT AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. M/S. DHARMIK TRADECOM PVT. LTD.....................RESPONDENT 369/14, DAKSHINDARI ROAD, 4 TH FLOOR, NARMADA APARTMENT, KOLKATA 700 048. [PAN: AADCD 8294 P] APPEARANCES BY: SHRI A.K. NAYAK, CIT (DR) APPEARING ON BEHALF OF THE REVENUE. SHRI M.D. SHAH, AR APPEARING ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : JULY 03, 2019 DATE OF PRONOUNCING THE ORDER : JULY 31, 2019 ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) 4, KOLKATA DATED 08.07.2016 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION OF RS. 10,82,00,000/- MADE BY THE AO BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT AGGREGATING TO RS. 10.82 CRORES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF INVESTMENT AND TRADING OF SHARES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.03.2013 DECLARING A TOTAL INCOME OF RS. 1,231/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD RECEIVED SHARE CAPITAL AND 2 I.T.A. NO. 1696/KOL/2016 ASSESSMENT YEAR: 2012-13 M/S. DHARMIK TRADECOM PVT. LTD. SHARE PREMIUM AMOUNT AGGREGATING TO RS. 10.82 CRORES. IN ORDER TO VERIFY THE RECEIPT OF THIS AMOUNT IN TERMS OF SECTION 68, SUMMONS U/S 131 WAS ISSUED BY THE AO TO THE DIRECTORS OF THE ASSESSEE COMPANY. ALTHOUGH THE ASSESSEE COMPANY FILED CERTAIN DETAILS AND DOCUMENTS REQUIRED BY THE AO, THE DIRECTOR OF THE ASSESSEE COMPANY DID NOT APPEAR BEFORE THE AO FOR THEIR PERSONAL DEPOSITION. HE ALSO FAILED TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES ALONG WITH THE RELEVANT DOCUMENTARY EVIDENCE FOR EXAMINATION BEFORE THE AO. THE AO, THEREFORE, HELD THAT THE PRIMARY ONUS TO ESTABLISH THE IDENTITY AND CAPACITY OF THE CONCERNED SHAREHOLDERS AS WELL AS THE GENUINENESS OF THE RELEVANT TRANSACTION WAS NOT ESTABLISHED BY THE ASSESSEE AND BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT AGGREGATING TO RS. 10.82 CRORES AS UNEXPLAINED CASH CREDIT, ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 31.03.2015. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO U/S 68 BY HOLDING THAT THE SAID ADDITION MADE BY THE AO WAS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED DR HAS 3 I.T.A. NO. 1696/KOL/2016 ASSESSMENT YEAR: 2012-13 M/S. DHARMIK TRADECOM PVT. LTD. SUBMITTED THAT THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT AGGREGATING TO RS. 10.82 CRORES WAS TREATED BY THE AO AS UNEXPLAINED CASH CREDIT BECAUSE OF THE FAILURE OF THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES ALONG WITH THE RELEVANT DOCUMENTARY EVIDENCE FOR VERIFICATION / EXAMINATION BEFORE THE AO INSPITE OF SUFFICIENT OPPORTUNITY AFFORDED IN THIS REGARD. HE HAS CONTENDED THAT THE PRIMARY ONUS THAT LAY ON THE ASSESSEE TO EXPLAIN THE RELEVANT CASH CREDIT REPRESENTING SHARE CAPITAL AND SHARE PREMIUM AMOUNT THUS WAS NOT SATISFACTORILY DISCHARGED AND THIS VITAL ASPECT WAS COMPLETELY OVERLOOKED BY THE LD. CIT(A) WHILE DELETING THE ADDITION MADE BY THE AO U/S 68. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT THE ASSESSEE COMPANY IS IN A POSITION TO PRODUCE THE DIRECTORS OF THE SHAREHOLDER COMPANIES FOR VERIFICATION / EXAMINATION BEFORE THE AO ALONG WITH THE RELEVANT DOCUMENTARY EVIDENCE AND URGED THAT THE MATTER MAY BE SENT BACK TO THE AO FOR GIVING THE ASSESSEE ONE MORE OPPORTUNITY TO DO SO. KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO ACCEPT THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. EVEN THE LEARNED DR HAS NOT RAISED ANY OBJECTION FOR SENDING THE MATTER BACK TO THE AO. THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE IS ACCORDINGLY SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AFTER GIVING THE ASSESSEE ONE MORE OPPORTUNITY TO PRODUCE THE DIRECTORS OF THE CONCERNED SHAREHOLDERS COMPANY ALONG WITH THE RELEVANT EVIDENCE. 4 I.T.A. NO. 1696/KOL/2016 ASSESSMENT YEAR: 2012-13 M/S. DHARMIK TRADECOM PVT. LTD. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE PRESIDENT DATED: 31/07/2019 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. M/S. DHARMIK TRADECOM PVT. LTD., 369/14, DAKSHINDARI ROAD, 4 TH FLOOR, NARMADA APARTMENT, KOLKATA 700 048. 2. ITO, WARD 10(1), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O. ITAT, KOLKATA