Encord Refri Cool Private Limited , Kolkata V. I.T.O.,Ward-8(2), Kolkata

ITA 1737/KOL/2019

AI Insights

Encord Refri Cool Private Limited appealed against the order of the Commissioner of Income Tax (Appeals) which sustained the addition of Rs. 1.36 Crore as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer during the scrutiny assessment for the Assessment Year 2012-13, where it was found that the company had issued shares at a premium significantly higher than its book value, without satisfactory explanation of the source of funds. The tribunal, after hearing the Departmental Representative and reviewing the records, dismissed the appeal due to the assessee's failure to appear or provide necessary documentation to substantiate the source of the share application money.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128783 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 23-07-2019
• Other Referred Cases: CIT vs. Durga Prasad More, Sumati Dayal vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Condonation of delay
• Section: 68; 6; 143(3); 142(1); 250; 143(2)

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री संजय गग ग , न्याधयक सदस्य एवं डॉ. मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited............................Appellant [PAN: AABCE 6922 D] Vs. ITO, Ward-8(2), Kolkata........................................Respondent Appearances: Assessee represented by: None. Department represented by: Sh. P.P. Barman, Addl. CIT, Sr. D/R. Date of concluding the hearing : July 3 rd , 2023 Date of pronouncing the order : September 11 th , 2023 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2012-13 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income Tax (Appeals)-3, Kolkata [in short ‘ld. CIT(A)’] dated 30.07.2018 arising out of the assessment I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 2 of 8 order framed by the Assessing Officer (in short ld. ‘AO’) u/s 143(3) of the Act dated 11.03.2015. 2. When the case was called for none appeared on behalf of the assessee. In the past also, on various dates of hearing i.e. on 12.09.2022, 10.11.2022, 09.01.2023, 20.02.2023, 27.04.2023 none appeared on behalf of the assessee. On 27.04.2023, the assessee was informed by telephone and Mr. Narayan Bhattacharya responded and the next date of hearing was informed to him but again on 03.07.2023 i.e. on the date of hearing, none appeared. Records also show that several notices through RPAD have been sent but there is no reply of the same. It, therefore, seems that the assessee only wants to prolong the issue but is not interested in contesting the appeal filed by it. It also gives an indication that assessee itself seems to have felt that it does not have any merit in its case and therefore, do not want to appear or appoint some authorized representative to appear before this Tribunal. Under these given circumstances, we cannot keep the appeal pending and thus, have decided to hear it with the assistance of ld. D/R and available records. 3. Registry has informed that the appeal is time barred by 296 days. Application for condonation of delay has been filed. Reasons for the same have been mentioned in the affidavit dated 23.07.2019 based on record and the content of the same are as follows: “On 02.08.2018, your petitioner company received the order dated 30.07.2018 passed by Ld. Commissioner of Income tax (Appeals)- Kolkata - 3 [CIT(A)] sustaining the major addition made in assessment order u/s 143(3) of the Income tax Act, 1961 passed by Ld. Assessing I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 3 of 8 Officer (A/O) on 11.03.2015 for asst. yr. 2012-13, against which an appeal was due to be filed by 01.10.2018 before Hon’ble Income tax Appellate Tribunal (ITAT). Smt. Sujata Banerjee, who as a director of the petitioner company, was looking after income tax matters of petitioner company at the material time, due to being upset by sudden and serious illness of one of her close family friend in or around the said due date of 01.10.2018, forgot altogether to take steps to get the appeal of petitioner company filed before Hon’ble ITAT against aforesaid order of Ld. CIT(A). In or around 2nd week of July, 2019, when an appeal of petitioner company against order of Ld. A/O passed u/s 271(l)(c) of Income tax Act, 1961 for same year i.e. asst. yr. 2012-13 was being prepared for filing before Ld. CIT(A), the concerned director of petitioner company, after going through the relevant records, could realise that quantum appeal of petitioner company which was due to be filed before Hon’ble ITAT by 01.10.2018 against order of Ld. CIT(A) sustaining major addition made by Ld. A/O in the asst, order on 11.03.2015 u/s 143(3) of Income tax Act, 1961, had been omitted to be filed so due to the concerned director of petitioner company failing to remember to do so because of being upset by sudden and serious illness of one of the very close family friend of such director as mentioned above. Upon realising that omission, the petitioner company, immediately approached the tax consultant who after going through all the relevant papers for the year under reference, advised to immediately take steps to file the quantum appeal of petitioner company before Hon’ble ITAT against the order of ld. CIT(A) in respect of Ld. A/O’s order u/s 143(3), with a petition to condone delay in filing the said appeal and immediately thereafter the petitioner company took steps for filing the said quantum appeal before Hon’ble ITAT and engaged the tax consultant to do the needful in this regard. Your honour may kindly appreciate that your petitioner company has acted bonafide and was prevented by sufficient causes in filing appeal before the Hon’ble ITAT within 01.10.2018. The delay in filing the appeal by the petitioner company was unintentional and caused due to circumstances mentioned above. (An affidavit by the concerned director affirming above facts is annexed hereto and marked ‘A’) In the premises, your petitioner company prays before your honours to kindly condone the delay in filing the said quantum appeal before Hon’ble ITAT which may kindly be admitted for hearing on merits of I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 4 of 8 the case as the Ld. CIT(A) confirmed the addition of whole of the share application money received without finding anything wrong in the documents filed by petitioner company duly discharging its primary onus to explain nature and source of such share application money received. If the said appeal is not admitted and heard on merits, your petitioner will suffer irreparable loss and injury as heavy tax burden and other liabilities will befall upon it. This petition is made bonafide and for the ends of the justice. And your petitioner as in duty bound shall ever pray.” 3.1. Ld. D/R opposed the request of condonation of appeal. We, however, considering the reasons mentioned in the said affidavit along with another affidavit of Smt. Sujata Banerjee the director of Encord Refri Cool Private Limited who has accepted to forego to take necessary steps to file the appeal before ld. CIT(A), come to a conclusion that the said delay is not intentional and the assessee would not have gained anything from delaying the filing of appeal. We, therefore, in the larger interest of justice condone the delay in filing the said appeal and admit the appeal for adjudication on merits. 4. The sole issue raised by the assessee is that ld. CIT(A) erred in sustaining the addition made by ld. AO amounting to Rs. 1.36 Crore as unexplained cash credit u/s 68 of the Act on account of share application money received by the appellant. 5. The facts in brief are that the assessee is a private limited company and NIL income declared in the e-return filed for AY 2012-13 dated 29.09.2012. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. During the course of assessment proceedings ld. AO observed that the assessee has issued 13,600 equity shares of face value of Rs. I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 5 of 8 10/- and charged a premium of Rs. 990/- and thus, received Rs. 1.66 Crore as share application money towards issue of 13,600 equity shares. Ld. AO asked the assessee to explain the nature and source of alleged sum which the assessee miserably failed to prove by filing necessary documents. Ld. AO accordingly, applying the ratio laid down by the Hon'ble Apex Court CIT vs. Durga Prasad More reported in 82 ITR 540 and Sumati Dayal vs. CIT reported in 214 ITR 801 came to a conclusion that the book value of the assessee is approximately Rs. 200/- but it has charged the shares a high premium of Rs. 990/- which is beyond human probability. Thereafter, ld. AO applying the decisions and judicial pronouncements mentioned in the assessment order held that the assessee failed to discharge its burden to explain the share capital and the same calls for the addition u/s 68 of the Act. 6. Thereafter, the assessee challenged the said addition before ld. CIT(A) but failed to succeed who also observed that the perusal of the audited statement of the share applicant companies demonstrate that financial are not in line with the premium charged and since the assessee could not prove the genuineness of the alleged credits as well as the creditworthiness of the creditors, addition u/s 68 of the Act is confirmed. 7. Aggrieved, the assessee is now in appeal before this Tribunal. 8. We have heard rival contentions and perused the records placed before us. Addition u/s 68 of the Act for unexplained share application money at Rs. 1.36 Crore is in challenge before us. we notice that the assessee has issued 13,600 equity shares at the face value of Rs. 10/- and share premium of Rs. 990/-. As per I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 6 of 8 Section 68 of the Act if any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income- tax as the income of the assessee of that previous year. In the instant case, the assessee was required to explain the nature and source of the alleged sum of Rs. 1.36 Crore received during the year. The assessee miserably failed to file any such details before ld. AO. Before ld. CIT(A) the assessee filed the details about the five share subscribers. These details were not sufficient to explain the nature and source of the alleged sum. Ld. CIT(A) confirmed the addition. Before us, the assessee has only filed the appeal and has given an affidavit for condonation of delay in filing the appeal but apart from this, no other details have been filed. The assessee was required to submit the financial statement, income tax return, bank statement, identity proof, annual return filed with the Ministry of Corporate Affairs, account confirmations and all other necessary details which are required to explain the nature and source of the alleged sum. The assessee is required to proof the identity and creditworthiness of the share subscribers and the genuineness of the transaction. We notice that the book value of the assessee company is much less than the share premium charged by it. There is no justification as to why the share applicants who themselves have very meagre income (as observed by ld. CIT(A)) would like to invest in a company at a price much higher than the book value. If, the assessee had filed all these details and discharged its primary onus casted upon it to explain I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 7 of 8 the nature and source then the burden may have shifted to the Revenue authority to find out any discrepancy or defect in such details. In absence of all these details and on perusal of the finding of ld. CIT(A) we notice that the source of the alleged share application money is not proved by the assessee. Since the two ingredients i.e. creditworthiness of the share applicants and genuineness of the transaction is not proved, we fail to find any infirmity in the detailed finding of ld. CIT(A) which is supported by judicial pronouncements. Thus, addition of Rs. 1.36 Crore made u/s 68 of the Act by ld. CIT(A) is confirmed. Therefore, ground no. 1 is dismissed. 9. In the result, the appeal filed by the assessee is dismissed. Kolkata, the 11 th September, 2023 Sd/- Sd/- [Sanjay Garg] [Manish Borad] Judicial Member Accountant Member Dated: 11.09.2023 Bidhan (P.S.) I.T.A. No.: 1737/KOL/2019 Assessment Year: 2012-13 Encord Refri Cool Private Limited. Page 8 of 8 Copy of the order forwarded to: 1. Encord Refri Cool Private Limited, Chatterjee International, 17 th Floor, Room No. A-10, 33A, Jawaharlal Nehru Road, Kolkata-700 071. 2. ITO, Ward-8(2), Kolkata. 3. CIT(A)-3, Kolkata. 4. CIT- 5. CIT(D/R), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata