ITO, Ward-5(1), Kolkata V. M/s Panchkoti Enterprises Pvt. Ltd , Kolkata

ITA 23/KOL/2021

AI Insights

The case involves the Income Tax Department appealing against the order of the Commissioner of Income Tax (Appeals) which had favored M/s Panchkoti Enterprises Pvt. Ltd by deleting the additions made by the Assessing Officer concerning share capital and premium. The primary contention was whether the assessee had sufficiently established the identity and creditworthiness of the share subscribers and the genuineness of the transactions. The CIT(A) had found that these were adequately demonstrated through various evidences including the financial scrutiny of the share subscriber companies, which were accepted without any additions by the Assessing Officer in their respective assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128189 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 02-02-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 143(1); 69B; 250; 69A; 64

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी मनीष बोरड, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member I.T.A No.23/Kol/2021 Assessment year: 2012-13 ITO, Ward-5(1), Kolkata.......................................................................Appellant vs. M/s Panchkoti Enterprises Pvt. Ltd .................................................Respondent 86, Canning Street, Kolkata-1. [PAN: AAGCP4898L] Appearances by: Shri Manoj Kataruka, Advocate, appeared on behalf of the appellant. Shri Vijay Kumar, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : January 18, 2023 Date of pronouncing the order : February 08, 2023 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 19.08.2020 of the Commissioner of Income Tax(Appeals)-7, Kolkata [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The Department is aggrieved by the action of the CIT(A) in deleting the addition made by the Assessing Officer in respect of share capital and premium received by the assessee holding that the assessee had failed to establish the identity, creditworthiness of the share subscribers and genuineness of transaction. 3. At the outset, the ld. counsel for the assessee has invited our attention to the relevant part of the order of CIT(A) to submit that the ld. I.T.A No.23/Kol/2021 Assessment year: 2012-13 M/s Panchkoti Enterprises Pvt. Ltd 2 CIT(A) after duly considering the submissions and evidences on file has passed a detailed order holding that the identity, creditworthiness of the two share subscribers were duly established and further the genuineness of the transaction was also proved. The ld. counsel, in this respect, has further submitted that there were only two share subscribers and that both the share subscriber companies were subjected to scrutiny assessment u/s 147/143(3) of the Act and their returned income was accepted without making any addition. Therefore, the identity and creditworthiness of the aforesaid companies was duly accepted by the department in both the cases of the share subscribers. The ld. counsel has further submitted that both the share subscribers were having enough net worth and only a small amount of their net worth was used for investment in assessee company. The ld. counsel, in this respect, has referred to page 10 of the impugned order of the CIT(A), wherein, capital, reserves, net worth of the assessee subscriber companies have been reproduced in a chart which, for the sake of convenience, is reproduced as under: “4.4 Further, I find the share subscribers have sufficient net worth of their own to make investments as elucidated below: Name of the company Capital Reserves Net worth Invested in assessee company Percentag e of NW(%) Bluerose Promoter s Pvt. Ltd. 13,54,000/ - 12,41,48,425/ - 12,55,02,425/ - 1,06,00,000/ - 8.44 Complete Softech Pvt. Ltd. 9,42,400/- 20,97,61,345/ - 21,07,03,745/ - 1,06,00,000/ - 5,03 I.T.A No.23/Kol/2021 Assessment year: 2012-13 M/s Panchkoti Enterprises Pvt. Ltd 3 4.5 That, as evident from the 2 (two) share subscriber’s information on record both of them were either subjected to assessment u/s 147/143(3) of the Act or the returns accepted by the A.O. That the profiles of the assessment status of the two subscriber companies are as follows: a) Bluerose Promoters Pvt. Ltd.: Assessing Officer was passed by [ITO, Ward-2(2), Kolkata] u/s 143(3) of the Act for the A.Y 2011-12 vide order dated 24.01.2014 and as such identity of the share applicant is established beyond doubt. For A.Y 2012-13 processing of the return were done u/s 143(1) of the Act and the returned income accepted. b) Complete Softech Pvt. Ltd.: Assessment year was passed by the jurisdictional A.O [ITO, Ward-6(2), Kolkata] u/s 147/143(3) of the Act for the A.Y 2012-13 vide order dated 06.12.2018 and as such identity of the share applicant is established beyond doubt.” 4. The ld. counsel has invited our attention to pages 38 to 40 of the paper-book to show that the Assessing Officer had issued notices to the share subscribers to verify the investments in question and that the share subscribers have duly filed replies accepting the share subscription and also mentioning the mode of payment and source thereof. The copy of the said replies has been placed at pages 40A and 40B of the paper-book. The ld. counsel has further invited our attention to pages 67 to 69 of the paper-book to submit that the notices were again issued to the director of the assessee company and further has invited our attention to pages 69A and 69B of the paper-book to submit that the necessary details, such as copy of audited accounts of the share subscriber company, ITR acknowledgement for the relevant financial year, copy of ledger account of relevant transactions, details of source of fund and details of investment for the relevant year, were duly furnished to the Assessing Officer. The ld. counsel has further invited our attention to the paper-book pages 64A and 64B to submit that even the notices I.T.A No.23/Kol/2021 Assessment year: 2012-13 M/s Panchkoti Enterprises Pvt. Ltd 4 were also issued to the alleged source of source companies which were also duly replied by them to the Assessing Officer. The ld. counsel has also invited our attention to the paper-book pages 61 to 64 and further pages 94 to 96 which are the copies of the assessment orders framed in the cases of the share subscriber companies, wherein, no additions have been made in the case of the said companies in respect of investments received by them i.e. in respect of source of source. Therefore, the source in the hands of investor companies was duly accepted by the department. 5. The ld. CIT(A) considering the above facts and in the light of various case laws has accepted the contentions of the assessee and deleted the additions. 6. The ld. DR could not point out any convincing reason warranting our interference. 7. In view of the above, we do not find any merit in the appeal of the revenue and the same is hereby dismissed. 8. In the result, the appeal of the Revenue stands dismissed. Kolkata, the 8 th February, 2023. Sd/- Sd/- [डॉÈटर मनीष बोरड /Dr. Manish Borad] [संजय गग[ /Sanjay Garg] लेखा सदèय /Accountant Member ÛयाǓयक सदèय /Judicial Member Dated: 08.02.2023. RS I.T.A No.23/Kol/2021 Assessment year: 2012-13 M/s Panchkoti Enterprises Pvt. Ltd 5 Copy of the order forwarded to: 1. ITO, Ward-5(1), Kolkata 2. M/s Panchkoti Enterprises Pvt. Ltd 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches