M/s. Epica Finance (P) Ltd., Kolkata V. ITO, Ward - 5(3), Kolkata, Kolkata

ITA 2056/KOL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8059 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2010
• Court: TRIBUNAL
• Department Lawyers: A K MAHAPATRA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Unexplained cash credit; Bogus Share capital; Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 142(1); 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NOS . 2056 & 2057/KOL/2010 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) M/S.EPICA FINANCE (P) LTD., KOLKATA. (PAN:AABCE 3608 E) (,-*+/ RESPONDENT ) I.T.O., WARD-5(3), KOLKATA. *+ . / '/ FOR THE APPELLANT: SHRI S.K.TULSIYAN, ADVOCATE ,-*+ . / '/ FOR THE RESPONDENT: SHRI A.K.MAHAPATRA, CIT(DR) 0%1 . !# /DATE OF HEARING : 10.10.2012. 2' . !# /DATE OF PRONOUNCEMENT : 12.10.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THE ABOVE APPEALS ARE FILED BY ASSESSEE AGAINST ORD ER DATED 29.01.2010 OF THE LD. CIT-(A)-VI, KOLKATA PERTAINING TO A.YR. 2005-06 . 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS :- 1. THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE A RBITRARY, ERRONEOUS, WITHOUT PROPER REASONS, INVALID AND BAD IN LAW. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APP EAL FILED BY THE APPELLANT BEFORE HIM ON 31.07.2008 AFTER HAVING RECEIVED THE ASSESSMENT ORDER ON 02.07.2008 WAS TECHNICALLY TIME-BARRED AS THE SAME WAS BEYOND THE PERIOD OF 30 DAYS FROM THE DATE OF SERVICE OF THE NOTICE OF DEMAND, ALTHOUGH HE HIMSEL F HAD DISCUSSED EARLIER THAT NONE OF THE EARLIER NOTICES COULD ACTUALLY BE SERVED ON THE APPELLANT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE AMOUNT OF RS.1,85,00 ,000/- OUT OF THE SHARE CAPITAL OF RS.4,00,00,000/- BY CONSIDERING THE SAME AS UNEXPLA INED SHARE CAPITAL. 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE AMOUNT OF RS.68,41,0 00/- BY CONSIDERING THE SAME AS UNEXPLAINED CASH CREDIT. 5. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, MODI FY, REVISE, ADD TO, ABRIDGE OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL APPEARING ON BEHALF OF ASSESSEE PRAYED UNDER RULE 29 OF THE INCOME TAX APP ELLATE TRIBUNAL RULES PERMITTING FILING OF THE FOLLOWING ADDITIONAL EVIDENCES : IN THE INSTANT CASE, THE COMPANY HAD RECEIVED SHAR E APPLICATION MONEY FROM UNDER- NOTED 12 SHARE APPLICANTS. BALIRAJA DISTRIBUTORS PVT. LTD. (ALREADY SUBMITTED & ACCEPTED) > RALLIWOLF VINIMAY PVT. LTD. (ALREADY SUBMITTED & ACCEPTED) > AAKOOTI DEALCOMM PVT. LTD. (ALREADY SUBMITTED & A CCEPTED) > WRAPPERS & PACKERS (INDIA) PVT. LTD. (ENCLOSED AT PAGE NOS. 54 TO 81 OF THE PAPERBOOK) > AVINASHI CONSULTANCY & MARKETING (P) LTD. (ENCLOS ED AT PAGE NOS. 82 TO 117 OF THE PAPERBOOK) PASSED DEALCOMM PVT. LTD. (ENCLOSED AT PAGE NOS. 11 8 TO 125 OF THE PAPERBOOK) > YERI VINCOM PVT. LTD. (ENCLOSED AT PAGE NOS. 126 TO 147 OF THE PAPERBOOK) PNEUMA SALES AGENCY PVT. LTD. (ENCLOSED AT PAGE NOS . 148 TO 153 OF THE PAPERBOOK) JAITPURAVINCOM PVT. LTD. (ENCLOSED AT PAGE NOS. 154 TO 162 OF THE PAPERBOOK) > AHILYA COMMERCE PVT. LTD. (ENCLOSED AT PAGE NOS. 163 TO 165 OF THE PAPERBOOK) RAMESH KUMAR KABRA & CO. (ENCLOSED AT PAGE NOS. 166 TO 169 OF THE PAPERBOOK) >- K P DALMIA (ENCLOSED AT PAGE NOS. 170 TO 172 OF THE PAPERBOOK) IN COURSE OF ASSESSMENT AND APPELLATE PROCEEDING, T HE APPELLANT COULD PROCURE SUPPORTING EVIDENCES FROM THREE SHARE APPLICANTS I. E. BALIRAJA DISTRIBUTORS PVT. LTD., RALLIWOLF VINIMAY PVT. LTD. AND AAKOOTI DEALCOMM PV T. LTD. TO SUBSTANTIATE ITS CLAIM ABOUT RECEIPT OF SHARE APPLICATION MONEY. AFTER EXA MINATION OF THOSE EVIDENCES, THE CIT(A) GRANTED NECESSARY RELIEF. AFTER MUCH EFFORT ASSESSEE HAS BEEN ABLE TO OBTAIN DETAILS FROM ALL THE SHARE APPLICANTS WHICH HAS BEE N FURNISHED AT PAGES REFERRED TO AGAINST THE RESPECTIVE NAME OF THE SHAREHOLDERS TO SUBSTANTIATE THAT SHARE APPLICANTS ARE GENUINE, THEY ARE ASSESSED TO TAX, THEY HAVE FILED THEIR RESPECTIVE INCOME TAX RETUR N REGULARLY, THAT THE IMPUGNED TRANSACTION OF INVESTMENT IN SH ARE OF THE COMPANY IS DULY DISCLOSED AND APPEARING IN THE AUDITED ACCOUNTS, AND THAT THE PAYMENTS WERE EFFECTED BY ACCOUNT PAYEE CHEQUE. IN THAT VIEW OF THE MATTER, IT IS REQUESTED THAT TH E AFORESAID DOCUMENTS BEING THE ADDITIONAL EVIDENCES WHICH ARE ESSENTIAL TO DECIDE THE ISSUE FOR GIVING PROPER JUSTICE IN THIS CASE, BE ADMITTED AS ADDITIONAL NEW EVIDENCES SO AS TO REFER THE MATTER BACK TO THE ASSESSING OFFICER TO EXAMINE THESE ADDITIONAL EVIDE NCES AT HIS END TO FORM AN OPINION IN RESPECT OF IDENTITY, CREDIT-WORTHINESS AND GENUINEN ESS OF THE SHARE APPLICATIONS. 3 IN SUPPORT OF THE ABOVE SUBMISSION, UNDERSIGNED WOU LD LIKE TO RELY UPON THE FOLLOWING CASE LAWS, WHEREIN THE COURTS UNDER SIMILAR CIRCUMS TANCES, HAS HELD THAT THE APPELLANTS PRAYER FOR FURNISHING OF ADDITIONAL EVIDENCES SHOUL D BE ACCEDED TO. CIT VS. MUKTA METAL WORKS, REPORTED IN 336 ITR 05 55 (P8TH) CIT VS. G.V. RATTAIAH& CO., REPORTED IN 256 ITR 0 351 (AP) CIT VS. JAIPUR UDYOG LTD., REPORTED IN 227 ITR 03 45 (RAJ) UNDERSIGNED, THEREFORE, REQUEST YOUR GOODSEIF IN TE RMS OF RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES TO GRANT NECESSARY PERMISS ION AND ADMIT THESE EVIDENCES AS ADDITIONAL EVIDENCE. 4. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE CONTENDED THAT THE AO AS WELL AS LD. CIT(A) HAS GIVEN SEVERAL OPPORTUNITIES TO ASSESSEE BUT HE FAILED TO AVAIL THE SAME. THEREFORE, HE OBJECTED FO R ACCEPTANCE OF THE ADDITIONAL EVIDENCES AND FOR SETTING ASIDE THE SAME FOR FRESH ADJUDICATION OF AO. THEREFORE, HE REQUESTED TO REJECT THE PLEA OF ASSESSEE SINCE THE REVENUE HAS GIVEN SEVERAL OPPORTUNITIES. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT THE AO PAS SED ASSESSMENT U/S 144 BY STATING THAT IN THIS CASE, NOTICE U/S. 143(2) WAS SERVED ON TH E ASSESSEE ON 26/09/2006. THEREAFTER, NOTICE U/S. 142(1) WAS ISSUED VIDE LETTER NO. 1591 DATED 05/02/07, BUT THE SAME WAS SERVED BY AFFIXATION AS THE NOTICE SERVER FAILED TO LOCATE THE ASSESSEE AT ITS LAST KNOWN ADDRESS. THEREAFTER, THE CASE WAS FIXED FOR HEARING ON DIFFERENT DATES, BUT NOTICES OF REFIXATION REMAINED UNSERVED DUE TO NON-AVAILABILIT Y OF THE ASSESSEE AT THE LAST KNOWN ADDRESS. IN THIS YEAR THE ASSESSEE HAS INCREASED ITS SHARE C APITAL BY A SUM OF RS.4 CRORES. IN RESPONSE TO NOTICE U/S 143(2) OR NOTICE U/S 142(1) (AS SERVED BY AFFIXATION), THE ASSESSEE DID NOT COMPLY SO THE RECEIPT OF THE SAID SHARE CAP ITAL CONTRIBUTIONS OF RS.4 CRORES HAS BEEN TREATED AS UNEXPLAINED MONEY CREDITED IN ASSES SEES BOOKS OF ACCOUNTS. 5.1. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION OF THE MATERIAL PRODUCED BEFORE HIM AND AFTER OBTAINING THE REMAND REPORT HAS GIVEN PART RELIEF TO ASSESSEE BY OBSERVING AS UNDER :- . HOWEVER, TAKING INTO CONSIDERATION THE FACTS OF THE CASE AND REMAND REPORT OF A.O. THE SHARE APPLICATION MONEY FROM BALIRAJA DISTRIBUTORS PVT. LTD. [RS.62,00,000], AAKOOTI DEALCOM PVT. LTD. [RS.63,00,000], RALLIWORIF VINIMA Y PVT.LTD. [RS.30,00,000] HAS TO BE ACCEPTED. IN THE CASE OF M/S. WRAPPERS & PARKERS (I NDIA) PVT. LTD. THE COMPANY IS NOT 4 EXISTENT AT THE GIVEN ADDRESS THERE ARE HUGE CASH D EPOSITS FROM WHICH CHEQUES WERE GIVEN. THE APPELLANT COULD NOT PROVIDE DIRECTOR DET AILS TO VERIFY THE GENUINENESS OF THE SHARE APPLICANT. THE COMPANY BANK ACCOUNT IS SHARE BAZAR BRANCH OF STANDARD CHARTERED BANK. THE GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED. TAKING INTO CONSIDERATION THE A.OS REMAND REPORT, AN AMOUNT OF RS,2,15,00,000/- IS TO BE REDUCED FROM THE ADDITION MADE BY A.O. REGARDING UNEXPLAINE D SHARE APPLICATION MONEY IN THE ASSESSMENT. THE APPELLANT COULD NOT PRODUCE THE BAS IS OF PREMIUM CHARGED FOR THE SHARE. IT IS RELEVANT TO NOTE THAT IN NONE OF THE CASE OF SHARE APPLICANTS, SHARES WERE ALLOTTED. THE APPELLANT WAS ASKED TO PRODUCE THE SHARE ALLOTM ENT DETAILS/REGISTER. THE LD.A.R. COULD NOT FURNISH ANY OF THESE DETAILS. THE WHOLE E XERCISE IS TO ROTATE THE CASH THROUGH DIFFERENT MEANS TO BUILD UP CAPITAL. TAKING INTO CO NSIDERATION THE ABOVE DISCUSSION, ADDITION MADE ON ACCOUNT UNEXPLAINED SHARE CAPITAL TO THE EXTENT OF [RS.4 CRORES 2.15 CROR RS1,85,00,000/- IS CONFIRMED. 5.2. WHILE COMING TO THE ABOVE CONCLUSION THE LD. C IT(A) HAS GIVEN THREE HEARINGS I.E. ON 08.01.2010, 14.01.2010 AND 27.01.2010 AND F INALLY PASSED THE IMPUGNED ORDER ON 29.01.2010. KEEPING IN VIEW OF THE ABOVE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE CONTENTION OF THE LD. DR THAT AO AS WELL AS CIT (A) HAS GIVEN SEVERAL OPPORTUNITIES TO ASSESSEE IS NOT ACCEPTABLE. IT IS FURTHER OBSERV ED THAT AT THE TIME OF HEARING THE LD. COUNSEL FOR ASSESSEE HAS SUBMITTED THAT THE DOCUMEN TS PLACED AT PAGES 54 TO 172 OF THE PAPER BOOK ARE ACQUIRED SUBSEQUENT TO THE COMPL ETION OF THE APPEAL BY LD. CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF TH E VIEW THAT THE ADDITIONAL EVIDENCES ARE ESSENTIAL TO DECIDE THE ISSUE INVOLVED. THEREFO RE WE ACCEPT THE ADDITIONAL EVIDENCES AND RESTORE THE MATTER TO THE FILE OF AO TO RE-ADJUDICATE THE ISSUE OF SHARE APPLICATION MONEY AFRESH. AT THIS JUNCTURE WE WOULD LIKE TO MENTION THAT THE LD. DR REQUESTED TO RE-CONSIDER THE ENTIRE ISSUE INCLUDING THE RELIEF GIVEN BY LD. CIT(A) BUT HOWEVER, WE ARE UNABLE TO ACCEPT HIS CONTENTION SIN CE THE LD.CIT(A) DELETED THE ADDITION OF RS.2.5 CRORES BASED ON THE REMAND REPOR T OF AO THERE IS NO APPEAL OF THE REVENUE AGAINST THE ORDER OF LD. CIT(A). THEREFORE, WE DIRECT THE AO TO RE-ADJUDICATE THE ADDITION OF RS.1,85,00,000/- SUSTAINED BY LD. CIT(A). 5.3. AS REGARDING THE OTHER ISSUE ALSO KEEPING IN V IEW OF THE DECISION OF THE HONBLE HIGH COURTS REFERRED BY THE LD. COUNSEL FOR ASSESSE E (SUPRA) SINCE WE SET ASIDE THE MATTER TO THE FILE OF AO, IN THE INTEREST OF JUSTIC E WE CONSIDER IT FIT TO RESTORE THIS ISSUE ALSO TO THE FILE OF AO TO DECIDE AFRESH AS PER LAW AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD. 5 6. IN ITA NO.2057/KOL/2010 THE GROUND RAISED BY ASS ESSEE IS RELATING TO THE PENALTY WHICH IS CONSEQUENTIAL TO THAT OF THE QUANT UM APPEAL IN ITA NO.2056/KOL/2010. SINCE WE HAVE SET ASIDE THE ISSUE S INVOLVED IN ITA NO.2056/KOL/2010 WE DIRECT THE AO TO RE-CONSIDER TH E ISSUE OF PENALTY AFTER TAKING INTO CONSIDERATION OF THE ADDITIONAL EVIDENCES AND AFTER MAKING FRESH ASSESSMENT. 7. IN THE RESULT BOTH THE APPEALS OF ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12.10.2012. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 12.10.2012. R.G.(P.S.) 6 '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. M/S.EPICA FINANCE (P) LTD., 71, CANNING STREET, KOL KATA-700001. 2 I.T.O., WARD-5(3), KOLKATA. 3. THE C.I.T. 4. CIT(A)-VI, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES 7