M/s. Dhanvarsha Properties Pvt. Ltd., Kolkata V. ITO, Ward-8(2), Kolkata, Kolkata

ITA 1803/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1371 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: R K TRIPATHI
• Keywords: Bogus Share capital; Opportunity of being heard; Application of stay
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENCH KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM SA NO.4/KOL/2018 (ARISING OUT OF ITA NO.1803/KOL/2017) ( [ [ / ASSESSMENT YEAR: 2012-13) M/S. DHANVARSHA PROPERTIES PVT. LTD. 7A, POONAM BUILDING, 5/2, RUSSEL STREET, KOLKATA 1. VS. ITO, WARD-8(2), KOLKATA AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. ./ ./PAN/GIR NO. : AADCD 1419 J (APPELLANT) .. (RESPONDENT) & ITA NO.1803/KOL/2017 ( [ [ / ASSESSMENT YEAR: 2012-13) M/S. DHANVARSHA PROPERTIES PVT. LTD. 7A, POONAM BUILDING, 5/2, RUSSEL STREET, KOLKATA 1. VS. ITO, WARD-8(2), KOLKATA AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. ./ ./PAN/GIR NO. : AADCD 1419 J (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI R. K. TRIPATHI, ADVOCATE RESPONDENT BY :SHRI ARINDAM BHATTACHARJEE, ADDL. CIT(DR) / DATE OF HEARING : 09/02/2018 /DATE OF PRONOUNCEMENT : 14/03/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: S.A.NO.04/KOL/2018 IS A STAY APPLICATION FILED BY THE ASSESSEE PRAYING FOR AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND OF A SUM OF RS.1,18,65,630/- IN RELATION TO A.Y.2012-13. ASSESSEES APPEAL IN ITA M/S. DHANVARSHA PROPERTIES PVT. LTD. SA NO.4/KOL/2018 & ITA NO.1803/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | 2 NO.1803/KOL/2017 IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.03.2017 OF CIT(A)-16, KOLKATA RELATING TO A.Y.2012-13. 2. WHEN THE STAY APPLICATION CAME UP FOR HEARING IT WAS AGREED BY THE PARTIES THAT THE STAY APPLICATION AS WELL AS THE APPEAL CAN BE DECIDED TOGETHER AS THE ISSUE INVOLVED IN THE APPEAL LIES A VERY NARROW COMPASS. 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. FOR A.Y 2012-13, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.NIL. THE ASSESSMENT WAS COMPLETED BY THE AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THE DETAILS REGARDING THE FRESH SHARE CAPITAL (INCLUDING SECURITY PREMIUM) OF RS.3,30,40,000/- CONSISTING SHARES AT A FACE VALUE OF RS.10/- EACH WITH A PREMIUM OF RS.50/-. AS THE ASSESSEE COMPANY FAILED TO PRODUCE THE DIRECTORS OF THE SUBSCRIBER COMPANIES, THEREFORE, NOTICE U/S 131 OF THE ACT WAS ISSUED TO ALL SUBSCRIBER COMPANIES REQUESTING THEIR PERSONAL APPEARANCE. BUT NONE OF THE SUBSCRIBER COMPANIES CHOSE TO COMPLY WITH THE SUMMON ISSUED. HOWEVER, IN RESPONSE TO THE SUMMON ISSUED TO THE SUBSCRIBER, SHRI RAHUL BANSAL, A/R OF THE ASSESSEE COMPANY APPEARED AND SUBMITTED COPIES OF RETURNS, AUDITED ACCOUNTS, SHARE APPLICATION FORMS ETC. IN RESPECT OF ALL SUBSCRIBER COMPANIES. THE AO NOTED THAT THE SUBSCRIBER COMPANIES CHOOSE NOT TO APPEAR IN RESPONSE TO SUMMON U/S 131 OF THE ACT, AND EVEN THE ASSESSEE COMPANY COULD NOT PRODUCE THEM, THEREFORE, THE IDENTITY OF THE SHARE SUBSCRIBERS REMAINED UNEXPLAINED. UNDER SECTION 68 OF THE ACT THE ONUS IS ON THE ASSESSEE TO PROVE THE THREE INGREDIENTS, I.E. IDENTITY AND CREDITWORTHINESS OF THE PERSON FROM WHOM THE MONIES WERE TAKEN AND THE GENUINENESS OF THE TRANSACTIONS. SINCE, THE ASSESSEE COMPANY HAD FAILED TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS, THEREFORE, THE AO NOTED THAT IT WAS THE BOGUS SHARE CAPITAL AND UNACCOUNTED CASH WAS DEPOSITED IN ACCOUNT OF DIFFERENT PERSONS. THE AO NOTED THAT THE MODUS OPERANDI OF INTRODUCTION OF SUCH BOGUS SHARE CAPITAL IS THAT UNACCOUNTED CASH IS GENERALLY DEPOSITED IN ACCOUNT OF DIFFERENT M/S. DHANVARSHA PROPERTIES PVT. LTD. SA NO.4/KOL/2018 & ITA NO.1803/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | 3 PERSONS/COMPANIES AND FROM THESE ACCOUNTS, CHEQUES ARE ISSUED TO VARIOUS OTHER COMPANIES AND AFTER ROTATING IN 3 TO 4 LAYERS, THE MONEY IS INTRODUCED AS SHARE CAPITAL IN OTHER COMPANIES AND THIS CYCLE CONTINUES TILL THE TIME UNACCOUNTED MONEY REACHES ITS INTENDED DESTINATION. SINCE, THE ASSESSEE COMPANY HAS FAILED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE SUBSCRIBER, THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION U/S 68 OF THE ACT TO THE TUNE OF RS.3,30,40,000/-. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(APPEALS) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. BEFORE THE LD. COMMISSIONER OF INCOME TAX(APPEALS), NONE APPEARED THEREFORE, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) PASSED THE EX PARTE ORDER AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. AGGRIEVE BY THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 6. BEFORE US, THE ASSESSEE HAS SUBMITTED THAT HE COULD NOT APPEAR BEFORE THE LD. COMMISSIONER OF INCOME TAX(APPEALS) AND COULD NOT PLEAD HIS CASE BEFORE THE LD. COMMISSIONER OF INCOME TAX(APPEALS), THEREFORE, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS NOT ADJUDICATED THE ISSUE IN ACCORDANCE WITH LAW AND MERIT. THE LD. COUNSEL ALSO SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE RELEVANT DOCUMENTS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS BEFORE THE ASSESSING OFFICER WHO HAS NOT CONSIDERED THE DOCUMENTS AND EXPLANATIONS SUBMITTED BY THE ASSESSEE IN RIGHT PERSPECTIVE. ON APPEAL TO THE COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE COULD NOT APPEAR BECAUSE OF CERTAIN EXCEPTIONAL CIRCUMSTANCES AND, THEREFORE, HE COULD NOT PLEAD THE CASE BEFORE THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE SAID ISSUE OF THE ASSESSEE SHOULD BE REMANDED BACK TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE THE ISSUE AFRESH. THEREFORE, THE LD. COUNSEL PRAYED THAT THE ORDER OF CIT(A) MAY BE SET ASIDE AND THE ISSUE RAISED BY THE M/S. DHANVARSHA PROPERTIES PVT. LTD. SA NO.4/KOL/2018 & ITA NO.1803/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | 4 ASSESSEE ON THE ADDITION OF RS. 3,30,40,000/- SHOULD BE REMANDED BACK TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION. THE LD. CIT(A) SHALL EXAMINE THE MATTER IN DEPTH AFTER DUE COMPLIANCE BY THE ASSESSEE. THE LD. DR FOR THE REVENUE, OPPOSED THE PRAYER OF THE ASSESSEE FOR GRANT OF AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND. WITH REGARD TO THE PRAYER SEEKING FOR SETTING ASIDE OF ORDER OF CIT(A) AND REMAND TO THE CIT(A), THE LD. DR PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND WE ARE OF THE VIEW THAT THE ASSESSEES NON APPEARANCE BEFORE CIT(A) WAS NOT WILLFUL AND THERE WAS SUFFICIENT CAUSE FOR HIS NON APPEARANCE. WE ALSO FIND THAT THE AO HAS FRAMED THE ASSESSMENT EX PARTE ORDER. WE NOTE THAT LD. CIT(A) FIXED THE ASSESSEES CASE FOR HEARING ONLY ONCE ON DATED 10.01.2017, THEREFORE, LD. CIT(A) DID NOT SEND NOTICE TO ASSESSEE FURTHER TO FIX HEARING. WE ARE OF THE VIEW THAT ONE MORE OPPORTUNITY OUGHT TO BE GIVEN BY CIT(A) TO HEAR THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT IT WOULD BE IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDER OF CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A). THE CIT(A) SHALL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. FOR STATISTICAL PURPOSES THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. IN VIEW OF THE DECISION, IN THE APPEAL, THE STAY APPLICATION DOES NOT REQUIRE ANY CONSIDERATION AND THE SAME IS DISMISSED AS INFRACTUOUS. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED WHILE THE STAY APPLICATION FOR GRANT OF STAY WAS DISMISSED AS INFRACTUOUS. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14.03.2018. SD/- (N.V. VASUDEVAN) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 14/03/2018 [ RS SPS] M/S. DHANVARSHA PROPERTIES PVT. LTD. SA NO.4/KOL/2018 & ITA NO.1803/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | 5 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE ASSESSEE M/S. DHANVARSHA PROPERTIES PVT. LTD. 2. / THE RESPONDENT- ITO, WARD-8(2), KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE.