ITO, Ward-6(1), Kolkata, Kolkata V. M/s D.S. Stocks Securities Pvt. Ltd., Kolkata

ITA 1881/KOL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3904 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-10-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 23-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Source of fund; Assessment record
• Section: 142(1); 131; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI S. S. GODARA, JM ./I.T.A NO.1881/KOL/2017 ( [ [ / ASSESSMENT YEAR: 2012-13) ITO, WARD-6(1), KOLKATA VS. M/S D.S. STOCKS SECURITIES PVT. LTD. 63, RADHA BAZAR STREET, 3 RD FLOOR, ROOM NO.43, KOL-1. ./ ./PAN/GIR NO.: AAACD9254E (APPELLANT) .. (RESPONDENT) APPELLANT BY : SMT. RANU BISWAS, ADDL. CIT RESPONDENT BY : SHRI MIRAJ D. SHAH, A/R / DATE OF HEARING : 22/10/2019 /DATE OF PRONOUNCEMENT : 27/11/2019 / O R D E R PER SHRI S. S. GODARA: THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (A) - 23, KOLKATA DATED 01.06.2017 PASSED IN CASE NO.200/CIT(A)-23/WD-6(1)/16-17 INVOLVING PROCEEDINGS U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE RAISED DURING THE COURSE OF HEARING SEEKS TO REVERSE THE CIT(A)S ACTION DELETING SECTION 68 UNEXPLAINED CASH CREDITS ADDITION OF RS.6,23,00,000/- IN THE NATURE OF SHARE CAPITAL/PREMIUM ADDED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER DATED 17.03.2015. THE ASSESSING AUTHORITY HAD HELD THAT THE ASSESSEE HAD FAILED TO NOT ONLY TO PROVE GENUINENESS AND CREDITWORTHINESS OF THIS INVESTOR ENTITIES TURNING OUT TO BE SHELL COMPANIES BUT ALSO THERE IS NO EXPLANATION IN SUPPORT OF EXTRAORDINARY PREMIUM CHARGED PER UNIT OF SHARES. I.T.A NO.1881/KOL/2017 M/S D.S. STOCKS SECURITIES PVT. LTD. PAGE | 2 3. LEARNED DEPARTMENTAL REPRESENTATIVE QUOTES HONBLE DELHI HIGH COURTS DECISION IN [2015] 56 TAXMANN.COM 286 (DELHI) CIT V . JANSAMPARK ADVERTISING & MARKETING (P.) LTD. THAT THE OBLIGATION TO CONDUCT PROPER INQUIRY IN CASE THE ASSESSING OFFICERS FAILURE TO DISCHARGE HIS STATUTORY FUNCTION, SHIFTS TO THE CIT(A) AND TRIBUNAL AND LATTER AUTHORITIES CANNOT SIMPLY DELETE THE ADDITION MADE BY THE FORMER ON THE GROUND OF LACK OF INQUIRY. HONBLE APEX COURTS JUDGMENT IN NRA IRON & STEEL PVT. LTD. V. PCIT (SLP CIVIL NO.29855 OF 2018 DATED 05.03.2019) UPHOLDING SUCH AN UNEXPLAINED CASH CREDITS ADDITION INVOLVING SHARE APPLICATION/SHARE PREMIUM ON ACCOUNT OF ASSESSEES FAILURE IN THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF ITS INVESTOR PARTIES IS ALSO CITED IN SUPPORT OF THE REVENUES GRIEVANCE. 4. LEARNED AUTHORIZED REPRESENTATIVE SUBMITS THAT THE ASSESSING OFFICERS REMAND REPORT DATED 26.04.2017 MAKES IT CLEAR THAT ITS INVESTOR PARTIES HAVE BEEN FOUND GENUINE READING AS UNDER: SUB: REMAND REPORT UNDER RULE 46A OF INCOME TAX ACT, 1961 IN THE CASE OF M/S D.S. STOCKS & SECURITIES PRIVATE LIMITED, PAN-AAACD9254E AND THE ASSESSMENT YEAR 2012-13- SUBMISSION THEREOF. ON VERIFICATION OF PAPER BOOK, RECORDS CONTAINING IN RESPECTIVE ASSESSMENT FOLDER AND EXAMINATION OF DIRECTORS OF INVESTOR COMPANIES AND APPELLANT COMPANY IT HAS BEEN OBSERVED THAT NOTICE U/S 142(1) DATED 28.08.2014 ISSUED AND IN REPOSES OF WHICH ASSESSEE FILED BALANCE SHEET, P & L ACCOUNT DROWN AS AT 31.03.2012, TAX AUDIT REPORT, POWER OF ATTORNEY, COPY OF CERTIFICATE OF REGISTRATION, STOCK SUMMERY, LIST OF BONK ACCOUNTS, GAP,-7, FORM 2, LIST OF INVESTOR COMPANIES ALONG WITH ADDRESSES, STATEMENT OF UNSECURED LOONS PROVIDED ALONG WITH CONFIRMATION ACCOUNTS, LIST OF INVESTMENTS ON 24.09.2014. ON THE BASIS OF INFORMATION AS PROVIDED BY ASSESSEE SUMMON U/S 131 ISSUED TO DIRECTOR OF ASSESSEE COMPANY ON 29.01.2015. SUMMON ISSUED BY POST RETURN UNSERVED WITH POSTAL REMARK 'ADDRESSEE MOVED.' RECORD RELATED TO FRESH SUMMON ISSUED TO DIRECTOR OF ASSESSEE COMPANY NOT FOUND IN ASSESSMENT FOLDER. SIMILARLY, SHOW CAUSE NOTICE ISSUED TO ASSESSEE ON 02.03.2015 BY POST. NO COMPLIANCE RECEIVED. ASSESSMENT ORDER PASSED U/S 144 ON 17.03.2015. PAPER BOOK CONTAINS STATEMENT OF SHARE APPLICATION MONEY RECEIVED FROM NINE PRIVATE COMPANIES, AUDITED BALANCE SHEET AND P & L ACCOUNT, DETAIL OF INVESTMENT, STATEMENT OF BANK ACCOUNTS, SOURCE OF FUND IN THE CASE OF INVESTOR COMPANIES. RECEIPT OF RS.62300000/- AGAINST THE ISSUE OF 62300 EQUITY SHARE TO NINE PRIVATE COMPANIES AS CLAIMED BY ASSESSEE VERIFIED WITH DOCUMENTS AVAILABLE IN PAPER BOOK. NO DIFFERENCE COULD BE NOTICED. I.T.A NO.1881/KOL/2017 M/S D.S. STOCKS SECURITIES PVT. LTD. PAGE | 3 AS PER THE STATEMENT OF BALANCE SHEET WITH EXPLANATION NOTE IT WAS SEEN THAT BOOKS VALUE OF ASSET IN THE CASE OF ASSESSEE COMPANY AS ON 01.04.2011 WAS RS.68175797/-. MORE THAN 99% OF CAPITAL WAS APPLIED IN ASSETS OTHER THAN INVESTMENT IN UNQUOTED EQUITY SHARES. ASSESSEE ALSO WAS ENGAGED IN THE BUSINESS OF SHARE TRADING AND REPORTED INTEREST INCOME AGAINST UNSECURED LOANS PROVIDED. GROSS INCOME REPORTED FOR FY 2011-12 WAS RS.8683382/- ONLY. AS PER ASSESSMENT ORDER - 'THE DIRECTORS OF THE ASSESSEE COMPANY WERE ISSUED SUMMONS AND A SHOW CAUSE LETTER ISSUED TO THE ASSESSEE COMPANY. THEY HAVE NOTHING TO SAY IN THIS MATTER. THE COMPANY CREDITED THE AMOUNT OF RS. 62300000 IN ITS ACCOUNTS WITHOUT ANY REASON AND LOGIC. THE AMOUNT IS CREATED TO LEGALIZE BLACK MONEY. THE ACCOUNT OF SHARE PREMIUM INCLUDING FACE VALUES OF RS.62300000/- FOUND CREDITED IT ITS ACCOUNTS ARE UNEXPLAINED. ACCOUNTING THE PROVISION OF SECTION 68 OF INCOME TAX ACT, 1961 THE AMOUNT OF RS. 62300000/- IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. HOWEVER, ON VERIFICATION OF RECORDS IT WAS SEEN THAT SUMMON U/S 131 AND SHOW CAUSE NOTICE WERE RETURN UNSERVED. SUMMON OR NOTICE FOR PRODUCTION OF BOOKS OF ACCOUNTS FROM INVESTOR COMPANIES WERE NOT ISSUED THOUGH LIST OF SHARE SUBSCRIBERS WITH ADDRESSES WERE AVAILABLE IN ASSESSMENT RECORD. DIRECTORS OF SOME INVESTOR COMPANIES, WHILE EXAMINING CASE, ALSO DENIED HAVING RECEIVED ANY SUMMON OR NOTICE FROM RESPECTIVE AO DURING THE FY 2014-15. IN ORDER TO ASCERTAIN THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS DIRECTOR OF INVESTOR COMPANIES WERE EXAMINED AND THEY CONFIRMED THE STATEMENT OF ACCOUNTS AVAILABLE IN PAPER BOOK. DIRECTOR OF ASSESSEE COMPANY ALSO BEEN EXAMINED AND CROSS VERIFIED THE STATEMENT OF ACCOUNTS AVAILABLE IN RESPECTIVE ASSESSMENT FOLDER. BUT NO DIFFERENCE COULD BE FOUND. ON EXAMINATION OF STATEMENT OF ACCOUNTS MAINTAINED BY INVESTOR COMPANIES IT WAS FOUND THAT CAPITAL OF MOST OF THE INVESTOR COMPANIES WERE HUGE AND APPLIED IN INVESTMENT IN QUOTED AND UNQUOTED, STOCKS AND LOANS AND ADVANCE AND COMMERCIAL ACTIVITIES. DOCUMENTARY EVIDENCES IN SUPPORT OF SOURCES OF CAPITAL IN THE CASE OF INVESTOR COMPANIES FOUND IN PAPER BOOK. INVESTOR COMPANIES DURING FY 2011-12 MADE INVESTMENTS IN MORE THAN ONE COMPANY. PAYMENTS IN THE CASE OF ALL INVEST OR COMPANIES FOUND MADE THROUGH BANKING CHANNEL ON VERIFICATION OF STATEMENT OF BANK ACCOUNTS IN THE CASE OF INVESTOR COMPANIES REFERENCE OF DEPOSIT OF CASH AND IMMEDIATE WITHDRAWAL/TRANSFER NOT FOUND. INVESTOR COMPANIES MAINTAINED BOOKS OF ACCOUNTS AND AUDITED BY CA. INVESTOR COMPANIES WERE REGISTERED COMPANIES AND PAN HOLDERS. DOCUMENTARY EVIDENCE OF ITR FILED FOR AY 2012-13 AND REPORT TO ROC FOUND ENCLOSED IN PAPER BOOK. ON CIRCUMSTANCES AS STATED ABOVE NO INFIRMITY IN THE MATTER RELATED TO STANDARD SET FOR MODE OF FINANCIAL TRANSACTIONS, CREDITWORTHINESS OF INVEST ORS, GENUINENESS OF TRANSACTIONS FOUND. 5. THE ASSESSEE NEXT CONTENDS THAT THE ASSESSING OFFICER HAS FOUND ITS SHARE APPLICATION/PREMIUM IN ISSUE TO BE NOT SUFFERING FROM ANY INFIRMITY AND THEREFORE, THE REVENUES INSTANT APPEAL ITSELF IS NOT MAINTAINABLE AS PER HONBLE MADRAS HIGH COURTS JUDGMENT IN SMT. B. JAYALAKHMI V. ACIT [2018] 96 TAXMANN.COM 486 (MADRAS) TRIBUNALS COORDINATE BENCHS ORDER IN ITO V. M/S. DIGNITY DEALTRADE PVT. LTD. DECIDED ON 30.08.2019. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. IT HAS COME ON RECORD THAT THE ASSESSING OFFICERS REMAND REPORT EXTRACTED HEREINABOVE IN PRECEDING PARAGRAPHS HAS ACCEPTED GENUINENESS AND CREDITWORTHINESS OF THE IMPUGNED SHARE I.T.A NO.1881/KOL/2017 M/S D.S. STOCKS SECURITIES PVT. LTD. PAGE | 4 APPLICATION/PREMIUM. THIS TRIBUNALS COORDINATE BENCHS DECISION (SUPRA) HAS CONSIDERED HONBLE DELHI HIGH COURT AS WELL MADRAS HIGH COURTS JUDGMENTS AS WELL TO CONCLUDE THAT THE REVENUES APPEAL IN SUCH AN INSTANCE OF THE ASSESSING OFFICERS REMAND REPORT IN ASSESSEES FAVOUR IS NOT MAINTAINABLE. WE THEREFORE DECLINE THE REVENUES SOLE SUBSTANTIVE GRIEVANCE SEEKING TO REVIVE THE IMPUGNED ADDITION. THE CIT(A)S FINDINGS ARE AFFIRMED THEREFORE. 7. THIS REVENUES APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.11.2019. SD/- ( J. SUDHAKAR REDDY ) SD/- (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER /KOLKATA; / DATE:27/11/2019 RS / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT - ITO, WARD-6(1), KOLKATA 2. THE RESPONDENT- M/S D.S. STOCKS SECURITIES PVT. LTD. 3. ( ) / THE CIT(A), KOLKATA [SENT THROUGH EMAIL] 4. / CIT 5. , , / DR, ITAT, KOLKATA [SENT THROUGH EMAIL] 6. [ / GUARD FILE.