ITO, Ward-6(1), Kolkata, Kolkata V. M/s Daffodil Dealtrade Pvt. Ltd., Kolkata

ITA 1884/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0802 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-02-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 23-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Unexplained cash credit; Source of fund; Assessment record; Capital receipt
• Section: 142(1); 131; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA BEFORE SH. J.SUDHAKAR REDDY, ACCOUNTANT MEMBER & SH.S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1884/KOL/2017 (ASSESSMENT YEAR-2012-13) ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 07.06.2017 PASSED BY CIT(A)-23, KOLKATA FOR AY 2012-13 U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. THE ONLY ISSUE HAS TO BE DECIDED AS TO WHETHER THE CIT(A) JUSTIFIED TO DELETE THE ADDITION MADE U/S 68 OF THE ACT. 3. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED INITIALLY THAT THE AO COMPLETED ASSESSMENT U/S 144 OF THE ACT. THE CIT(A) DELETED THE ADDITION MADE BY THE AO CONSIDERING THE FINDINGS OF AO IN THE REMAND REPORT. THE SAID REMAND REPORT IS PLACED AT PAGE NO.304 OF THE PAPER BOOK WHEREIN IT IS NOTED THAT THE FINDING OF THE AO IN THE LAST PARAGRAPH AT PAGE 306 THAT NO INFIRMITY IN THE MATTER RELATED TO STANDARD SET FOR MODE OF FINANCIAL TRANSACTIONS, CREDITWORTHINESS OF INVESTORS, SOURCES OF FUND AND GENUINENESS OF TRANSACTIONS FOUND. IT IS NOTED AS DISCUSSED ABOVE, THE CIT(A) CONSIDERED THE SAID REMAND REPORT AND DELETED THE ADDITION MADE U/S 68 OF ITO, WARD-6(1), P-7, CHOWRINGHEE SQUARE, 6 TH FLOOR, KOLKATA-700069. VS M/S. DAFFODIL DEALTRADE PVT.LTD., 9/12, LAL BAZAR STREET, MERCANTILE BLDG., 2 ND FLOOR, KOLKATA -700001. PAN -AADCD4193M (APPELLANT) (RESPONDENT) APPELLANT BY SH. A.K.SINGH, CIT DR RESPONDENT BY SH. M.D.SHAH, AR DATE OF HEARING 13.02.2019 DATE OF PRONOUNCEMENT 27 .0 3 .2019 ITA NO.1884/KOL/2017 (ASSESSMENT YEAR-2012-13) THE ACT BY THE AO. LD.DR FAIRLY ACCEPTED THE FINDINGS OF THE AO AND STATED THAT THE DEPARTMENT OF REVENUE SHOULD NOT HAVE FILED THIS APPEAL BEFORE THIS TRIBUNAL. THE RELEVANT PORTION IS REPRODUCED HEREIN BELOW FOR READY-REFERENCE:- SUB:-REMAND REPORT UNDER RULE 46A OF THE INCOME TAX ACT, 1961 IN CASE OF M/S. DAFFODIL DEALTRADE PRIVATE LIMITED, PAN-AADCD4193M, A.Y.2012-13- SUBMISSION THEREOF. THE ASSESSEE HAD TAKEN A LEGAL GROUND ON THE VALIDITY OF THE ASSESSMENT UNDER SECTION 144 OF THE ACT. IT IS FOUND THAT NOTICE ISSUED 143(2) ON 23RD SEPTEMBER, 2013 WAS DULY COMPLIED BY THE ASSESSEE COMPANY ON 07,05.2014. THE NOTICES ISSUED SECTION 142(1) ON 228.08.2014 WAS ALSO COMPLIED BY THE ASSESSEE COMPANY ON 03.02.2015. SUMMONS WERE ISSUED U/S.131 TO SHRI J. K.GOYAL AND MR. PANKAJ MARDA, DIRECTORS OF THE ASSESSEE COMPANY ON 29.01.2015 ASKING HIM TO FURNISH VARIOUS DETAILS AND TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS ON 09.02.2015 . IN COMPLIANCE TO THE SAID SUMMONS, SHRI J. K. GOYAL FURNISHED ALL DOCUMENTS AS REQUISITIONED. HE, HOWEVER, DID NOT APPEARED PERSONALLY AND WANTED TIME OF THREE WEEKS FOR PERSONAL APPEARANCE, IF AT ALL REQUIRED. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT ANY OTHER SUMMONS WAS ISSUED U/S. 131. THE ASSESSMENT WAS COMPLETED U/S 144 AS DIRECTORS DID NOT PERSONALLY APPEARED IN RESPONSE TO THE SUMMONS ISSUED. THE REPLIES ALONG WITH ANNEXURES OF BOTH OF THE DIRECTORS OF THE COMPANIES FILED ON 09.02.2015 IS AVAILABLE ON RECORD. THE ASSESSMENT ORDER WAS PASSED U/S 144 IN THE INSTANT CASE ON 17.03.2015 BY THE ASSESSING OFFICER EXERCISING THE OPTION TO ASSESS THE TOTAL INCOME OF THE ASSESSEE TO THE BEST OF HIS JUDGMENT ON THE GROUND THAT IN RESPONSE TO THE NOTICES, ONLY JEW DETAILS WERE SUBMITTED AND NO ONE APPEARED IN PERSON TO EXPLAIN THE RETURN, MAKING ADDITION TO THE TUNE OF RS.9,70,00,000/-, ON ACCOUNT OF SHARE CAPITAL AND PREMIUM RAISED TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. THE PAPER BOOK, FILED DURING THE COURSE OF APPEAL PROCEEDING AND WHICH HAS BEEN FORWARDED TO ME, CONTAINS LIST OF ALLOTEES, FORM 2, FORM 5, COPY OF STATEMENT OF INVESTMENT WITH ADDRESS PARTICULARS AND PAN, AND COPY OF STATEMENT OF BANK ACCOUNT, BALANCE SHEET, P&L ACCOUNT, COPY OF LETTER FILED AGAINST NOTICE ISSUED U/S 143(2) DATED 23.09.2013, 142(1) DATED 28.08.2014 AND SUMMONS ISSUED U/S 131 DATED 29.01.2015 AND SHOW CAUSE NOTICE DATED 02.03.2015 IN CASE OF M/5 DAFFODIL DEALTRADE PRIVATE LIMITED. THE ASSESSEE COMPANY DURING THE F.Y.11-12 ALLOTTED 485000 NUMBER OF REDEEMABLE NON-CUMULATIVE CONVERTIBLE PREFERENCE SHARES OF THE FACE VALUE OF RS.10 EACH AT A PREMIUM OF RS. 190 PER SHARE TO 5 PRIVATE COMPANIES. IN SUPPORT OF CAPITAL RECEIPT ASSESSEE AT THE TIME OF APPEAL PROCEEDING FILED PAPER BOOK CONTAINING BALANCE SHEET, P&L ACCOUNT, NAME AND ADDRESS WITH PAN OF DIRECTORS, SOURCES OF FUND AND MODE OF PAYMENT MADE BY INVESTOR COMPANIES, COPY OF BANK STATEMENTS, COPY OF HR FILED, COPIES OF ALLOTMENTS LETTERS, COPIES OF SHARE APPLICATIONS FORMS, COPIES OF ANNUAL ACCOUNTS ETC. AND ALSO COPIES OF CERTIFICATE OF REGISTRATION AS NON- BANKING FINANCIAL COMPANIES UNDER RESERVE BANK OF INDIA IN THE CASE OF INVESTOR COMPANIES. ITA NO.1884/KOL/2017 (ASSESSMENT YEAR-2012-13) HOWEVER, IN TILE COURSE OF REMAND PROCEEDINGS, SHRI J. K. GOYAL, THE DIRECTOR OF THE ASSESSEE COMPANY HAS PERSONALLY APPEARED WITH DOCUMENTARY EVIDENCES, BANK STATEMENTS AND OTHER DETAILS TO PROVE IDENTITY, CREDITWORTHINESS OF INVESTOR COMPANIES AND GENUINENESS OF TRANSACTIONS. THESE HAVE BEEN VERIFIED WITH INFORMATION CONTAINED IN PAPER BOOK BUT NO DIFFERENCE COULD BE NOTICED. THE ASSESSEE COMPANY HAS CLAIMED THAT THE IDENTITY OF EACH OF THE INVESTOR COMPANIES HAVE BEEN PROVED IN AS MUCH AS : I. THESE INVESTOR COMPANIES ARE REGISTERED UNDER THE COMPANIES ACT, 1956 AND ARE ON THE RECORDS OF REGISTRAR OF COMPANIES FUNCTIONING UNDER MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA, AS WELL AS A NON- BANKING FINANCIAL COMPANY REGULATED BY THE RESERVE BANK OF INDIA. II. EACH OF THE SUBSCRIBER COMPANIES ARE INDEPENDENTLY AND REGULARLY ASSESSED TO TAX AND THEIR PERMANENT ACCOUNT NUMBERS (PAN) AND ITR ACKNOWLEDGEMENT WERE FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS. III. EACH OF THE SUBSCRIBER COMPANIES MAINTAINED THEIR BANK ACCOUNTS AND COPIES OF THEIR RESPECTIVE BANK ACCOUNTS STATEMENTS, FROM WHICH THEY MADE PAYMENTS TO THE ASSESSEE COMPANY FOR SUBSCRIBING THE SHARES ISSUED TO THEM AT PREMIUM, WERE FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS. I HAVE VERIFIED THE AFORESAID DOCUMENTS SUBMITTED BY THE ASSESSEE COMPANY WHICH PROVES THE IDENTITY OF THE INVESTOR COMPANIES. THE ASSESSEE COMPANY HAS CLAIMED THAT CREDITWORTHINESS OF THE INVESTOR COMPANIES HAVE ALSO BEEN PROVED IN AS MUCH AS THE NET WORTH OF THE EACH OF THE SUBSCRIBER COMPANIES, AS DISCLOSED IN THE AUDITED BALANCE SHEET OF EACH OF THE SUBSCRIBER COMPANIES, FAR EXCEEDED THE AMOUNT OF INVESTMENTS MADE BY THEM IN THE APPELLANT COMPANY. THE ASSESSEE COMPANY HAD ALSO REFERRED TO THE WRITTEN DECLARATION OF EACH OF THE INVESTOR COMPANIES ADMITTED TO HAVE SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE COMPANY SHOWING THE SOURCE OF FUND IN EACH CASE WITH NAME, PAN AND ADDRESS PARTICULARS OF ENTITIES FROM WHERE INVESTOR COMPANY RECEIVED FUNDS WERE AVAILABLE IN THE ASSESSMENT RECORDS. IN MOST OF THE CASES SOURCES OF FUND WERE SALE OF INVESTMENTS, REPAYMENT OF UNSECURED LOANS OR ADVANCES RECEIVED AS WELL AS RECEIPT OF SHARE APPLICATION MONEY. I HAVE VERIFIED THE SAID STATEMENT OF ACCOUNTS AS FURNISHED BY INVESTOR COMPANIES WITH STATEMENT OF BANK ACCOUNTS OF RESPECTIVE INVESTOR COMPANIES AND NO DISCREPANCY FOUND. THE ASSESSEE COMPANY HAS CLAIMED THAT THE ASSESSMENT RECORD CONTAINS INFORMATION ABOUT SOURCES OF FUND, ADDRESSES AND PAN OF ENTITIES FROM WHERE PAYMENT RECEIVED. BOOKS OF ACCOUNTS AS REQUIRED HAS BEEN MAINTAINED AND AUDITED BY QUALIFIED CHARTERED ACCOUNTANTS. THE ASSESSMENT RECORD AS WELL AS THE PAPER BOOK ALSO CONTAINS COPIES OF STATEMENT OF BANK ACCOUNTS RELATED TO ASSESSEE COMPANY AS WELL AS INVESTOR COMPANIES. ENTRIES FOUND IN BANK ACCOUNT MAINTAINED BY ASSESSEE COMPANY WITH CITY UNION BANK LTD, KOLKATA-700001 VERIFIED WITH RELEVANT ENTRIES RECORDED IN STATEMENT OF BANK ACCOUNTS MAINTAINED BY INVESTOR COMPANIES. NOTICES/SUMMONS ISSUED TO INVESTOR COMPANIES DURING THE ITA NO.1884/KOL/2017 (ASSESSMENT YEAR-2012-13) COURSE OF ASSESSMENT PROCEEDINGS WERE DULY REPLIED TO BY THE RESPECTIVE INVESTOR COMPANIES GIVING DETAILS WHICH ARE A MATTER OF RECORD. GROUNDS ON WHICH ADDITION MADE WAS NON-APPEARANCE AGAINST SUMMONS ISSUED U/S 131 TO THE DIRECTORS OF ASSESSEE COMPANY EVEN THOUGH REPLY FOR THE SAME WAS SUBMITTED ON 09.02.2015. ON EXAMINATION OF INFORMATION CONTAINED IN THE ASSESSMENT RECORDS, PAPER BOOK AND THE SUBMISSIONS MADE BY THE ASSESSEE IN REMAND PROCEEDINGS AS STATED ABOVE NO INFIRMITY IN THE MATTER RELATED TO STANDARD SET FOR MODE OF FINANCIAL TRANSACTIONS, CREDITWORTHINESS OF INVESTORS, SOURCES OF FUND AND GENUINENESS OF TRANSACTIONS FOUND. 4. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). THUS, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.03.2019. SD/- SD/- (J.SUDHAKAR REDDY) (S.S.VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER [ DATE:- 27.03.2019 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT- ITO, WARD-6(1), P-7, CHOWRINGHEE SQUARE, 6 TH FLOOR, KOLKATA- 700069. 2. RESPONDENT- M/S. DAFFODIL DEALTRADE PVT.LTD., 9/12, LAL BAZAR STREET, MERCANTILE BLDG., 2 ND FLOOR, KOLKATA-700001. 3. CIT-KOLKATA 4. CIT(APPEALS)-KOLKATA 5. DR: ITAT -KOLKATA BENCHES BY ORDER AR/H.O.O ITAT, KOLKATA