A.C.I.T.,Circle-1(1), Kolkata V. Lal Baba Industrial Corporation Pvt. Ltd., Howrah

ITA 2210/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6178 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 26-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: VIKASH SURANA
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA BEFORE: SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 2210/KOL/2019 (ASSESSMENT YEAR: 2012-13) ACIT, CIRCLE 1(1), KOLKATA APPELLANT VS LAL BABA INDUSTRIAL CORPORATION PVT. LTD. RESPONDENT [PAN:AABCL 6851 A] FOR THE REVENUE : SMT. RANU BISWAS, ADDL. CIT FOR THE ASSESSEE : SHRI VIKASH SURANA, CA DATE OF HEARING : 04.02.2020 DATE OF PRONOUNCEMENT : 06.02.2020 ORDER PER S.S. VISWANETHRA RAVI, JM THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 03.04.2019 PASSED BY THE LD. CIT(A) 17, KOLKATA FOR A.Y. 2012-13. 2. WE FIND THAT THE REVENUE HAS FILED THIS APPEAL WITH A DELAY OF 25 DAYS. THE LD. DR REFERRED TO PETITION FILED TO CONDONE THE DELAY AND SUBMITTED THE REASONS FOR DELAY IN FILING THE APPEAL IN TIME. ON PERUSAL OF THE SAME AND UPON HEARING BOTH THE PARTIES, WE CONDONE THE DELAY OF 25 DAYS IN FILING THE APPEAL. 3. THE ONLY ISSUE RAISED BY THE REVENUE FOR OUR CONSIDERATION IS AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF SHARE CAPITAL U/S 68 OF THE ACT. 4. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF RAILWAY WAGON, COMPONENTS AND OTHER ENGINEERING PRODUCTS. THE ASSESSEE FILED RETURN OF INCOME OF RS. 71,80,477/-. THE AO ISSUED NOTICE U/S 143(2)/142(1) OF THE ACT. IN RESPONSE TO THE SAID NOTICES, AUTHORIZED 2 I.T.A NO.2210/KOL/2019 LAL BABA INDUSTRIAL CORPORATION PVT. LTD. REPRESENTATIVES ON BEHALF OF THE ASSESSEE APPEARED BEFORE THE AO AND PRODUCED VARIOUS DOCUMENTS IN SUPPORT OF CLAIMS. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO FOUND THE ASSESSEE HAD ALLOTTED AGGREGATE PAID UP SHARE CAPITAL AND SHARE PREMIUM TO THE TUNE OF RS. 1,92,03,000/-, OUT OF WHICH RS. 1,60,00,000/- WAS CREDITED DURING THE RELEVANT YEAR UNDER CONSIDERATION. THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IN TERMS OF SECTION 68 OF THE ACT. THE AO SPECIFICALLY DIRECTED TO PRODUCE THE DIRECTORS OF THE SUBSCRIBING COMPANY TO SUBSTANTIATE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBER AND GENUINENESS OF TRANSACTIONS. THE DIRECTOR OF THE ASSESSEE COMPANY APPEARED PERSONALLY BUT FAILED TO PRODUCE ANY DIRECTOR OF INVESTORS OR ANY CREDIBLE EVIDENCE IN SUPPORT RAISING SHARE CAPITAL DURING THE YEAR UNDER CONSIDERATION. HAVING NO NEW EVIDENCE IN TERMS OF PROVISIONS U/S 68 OF THE ACT, THE AO HELD THAT THE VERIFICATION COULD NOT COMPLETE FOR NON-COMPLIANCE OF SUMMONS AND ADDED SHARE CAPITAL ALONG WITH THE PREMIUM OF RS. 1,60,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE LD. CIT(A) DELETED THE SAID AMOUNT TAKING INTO CONSIDERATION, THE ADDITION INVOLVING THE SAME TRANSACTION MADE IN THE HANDS OF M/S. SNR TRADING CO. (P) LTD. ON ACCOUNT OF UNEXPLAINED INCOME FOR A.Y. 2012-13 BY PLACING RELIANCE ON THE ORDER OF KOLKATA TRIBUNAL IN THE CASE OF TRITIUM COMMODITIES PVT. LTD. 5. WE NOTE THAT THE M/S. SNR TRADING CO. (P) LTD. IS AN EXISTING SHAREHOLDER IN ASSESSEE COMPANY AND THE DIRECTOR OF THE SAID COMPANY ARE THE OWN FAMILY MEMBERS OF BOARD OF DIRECTORS OF ASSESSEE COMPANY. FURTHER, WE NOTE THAT THE ASSESSEE COMPANY HAS A TURNOVER OF 61 CRORES DURING THE YEAR UNDER CONSIDERATION AND M/S. SNR TRADING CO. (P) LTD. IS AN RBI REGISTERED NBFC COMPANY MAKING INVESTMENTS IN EQUITY OF GROUP COMPANIES. THE LD. CIT(A) HELD WHEN THE SAME AMOUNT INVOLVING THE SAME TRANSACTION BETWEEN THE SAME PARTIES WERE ASSESSED IN THE HANDS OF M/S. SNR TRADING CO. (P) LTD. AND THE ADDITION IN THE OTHER COMPANY I.E. ASSESSEE IS NOT MAINTAINABLE. THE LD. AR PLACED ON RECORD, THAT ASSESSMENT ORDER FOR A.Y. 2012-13 FOR M/S. SNR TRADING CO. (P) LTD. AND SUBMITTED THE SAME AMOUNT HAS BEEN ADDED IN THE HANDS OF THE SAID 3 I.T.A NO.2210/KOL/2019 LAL BABA INDUSTRIAL CORPORATION PVT. LTD. COMPANY ON ACCOUNT OF UNEXPLAINED INCOME AND THE APPEAL AGAINST WHICH IS PENDING BEFORE THE LD. CIT(A). FURTHER HE PLACED RELIANCE ON THE ORDERS OF THIS TRIBUNAL IN THE CASE OF HAPPY STRUCTURE (P) LTD., MAA AMBA TOWERS (P) LTD. AND M/S. C.P. RE-ROLLERS LTD. AND SUBMITTED WHEN THE SHARE APPLICATION COMPANY ARE BEING ASSESSED U/S 143(3) OF THE ACT AND THE SOURCE OF MONEY IN QUESTION WAS BROUGHT TO TAX IN THE HANDS OF SHARE SUBSCRIBING COMPANY AND NO ADDITION CAN BE MADE IN THE ASSESSEE COMPANY. 6. ON PERUSAL OF THE SAID ORDERS, WE FIND ON SIMILAR IDENTICAL FACTS, THE AO ADDED THE AMOUNTS IN THE HANDS OF ASSESSEE UNDER UNEXPLAINED CASH CREDIT AND THE LD. CIT(A) IN THE FIRST APPELLATE PROCEEDINGS THEREIN DELETED THE SAME ONLY ON THE GROUND THAT THE SAME AMOUNT WAS ADDED IN THE HANDS OF SHARE SUBSCRIBING COMPANY. THE FACT REMAINS ADMITTED THE SAID M/S. SNR TRADING CO. (P) LTD. WAS ASSESSED TO TAX U/S 143(3) OF THE ACT AND THE AMOUNT OF SHARE CAPITAL SAID TO HAVE BEEN INVESTED IN THE ASSESSEE COMPANY IS EXPLAINED BECAUSE SOURCE OF MONEY IN QUESTION WAS ASSESSED IN THE HAND OF INVESTOR COMPANY. THEREFORE, THE IDENTITY OF M/S. SNR TRADING CO. (P) LTD., GENUINENESS OF TRANSACTION AND CREDITWORTHINESS IS PROVED. THEREFORE, THE ADDITION MADE IN THE HANDS OF ASSESSEE IS NOT MAINTAINABLE TO THE FACT THE SOURCE OF SHARE CAPITAL AND PREMIUM IS FOUND TO BE EXPLAINED IN TERMS OF PROVISIONS U/S 68 OF THE ACT. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED. THUS, ONLY ISSUE RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.02.2020. SD/- SD/- [P.M JAGTAP] [S.S. VISWANETHRA RAVI] VICE-PRESIDENT JUDICIAL MEMBER DATED: 06/02/2020 BISWAJIT, SR.PS 4 I.T.A NO.2210/KOL/2019 LAL BABA INDUSTRIAL CORPORATION PVT. LTD. COPY OF ORDER FORWARDED TO: 1. ACIT, CIRCLE 1(1), KOLKATA. 2. LAL BABA INDUSTRIAL CORPORATION PVT. LTD., 78, LAL BABA SHIRE ROAD, BELUR, HOWRAH 711202. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA