M/s Protex Commotrade Pvt. Ltd., Kolkata V. Pr. CIT, Kolkata-2, Kolkata, Kolkata

ITA 2319/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1639 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANAND R BAIWAR
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 142(1); 133(6); 147; 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI J.SU DHAKAR REDDY, AM ] I.T.A NO. 2319/KOL/20 16 ASSESSMENT YEAR : 2009-1 0 PROTEX COMMOTRADE (P) LTD. -VS.- PR.C.I.T ., KOL-2, KOLKATA KOLKATA [PAN : AAECP 8855 F] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : SHRI ANAND R.BAIWAR, CI T DATE OF HEARING : 17.08.2017. DATE OF PRONOUNCEMENT : 23.08.2017. ORDER PER SHRI N.V.VASUDEVAN, JM THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 18.03.2015 OF C.I.T., KOL-2, KOLKATA PASSED U/S 263 OF THE INCOME TAX A CT, 196T1 (ACT). 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUS INESS OF MAKING INVESTMENTS. . FOR A.Y.2009-10 THE ASSESSEE FILED RETURN OF INCOME DE CLARING NIL INCOME. AN INTIMATION U/S 143(1) OF THE ACT WAS ISSUED TO THE ASSESSEE. SUBSEQUENTLY AT THE REQUEST OF THE ASSESSEE THAT INCOME OF RS.75,000/- ON ACCOU NT OF CONSULTANCY FEES RECEIVED WAS OMITTED TO DECLARED IN THE RETURN OF INCOME, THE AS SESSMENT WAS REOPENED U/S 147 OF THE ACT. THE AO PASSED AN ORDER OF ASSESSMENT U/S 143(3 ) R.W.S. 147 OF THE ACT DATED 30.07.2012 IN WHICH THE CONSULTANCY FEES NOT DISCLO SED WAS BROUGHT TO TAX. IN THE ASSESSMENT ORDER THE AO HAS ALSO MADE A REFERENCE T O THE FACT THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE RAISED A SUM OF RS.5,16, 00,000/- BY ISSUING 258000 EQUITY SHARES OF THE FACE VALUE OF RS.10/- EACH AT A PREMI UM OF RS.190/-. THERE IS NO REFERENCE IN THE ORDER OF ASSESSMENT TO ANY NOTICE U/S 133(6) OF THE ACT HAVING BEEN ISSUED TO ANY OF THE SHARE APPLICANTS. 2 ITA NO.2319/KOL/2016 M/S. PROTEX COMMOTRADE (P)LTD. A.YR.2009-10 2 3. THE CIT IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. THE CIT REFERRED TO THE FACT THAT SEVERAL SHELL COM PANIES WERE BEING PROMOTED FOR LAUNDERING UNACCOUNTED FUNDS AND THE FACT THAT THE ASSESSEE COMPANY WHICH HAS NO FINANCIAL BACKGROUND CAN ISSUE SHARES AT A HUGE PRE MIUM OUGHT TO HAVE ALERTED THE AO AND THE AO OUGHT TO HAVE MADE ENQUIRIES WHICH WERE NECESSARY IN LAW REGARDING RECEIPT OF SHARE CAPITAL BY THE ASSESSEE. THE CIT AFTER REF ERRING TO THE FAILURE OF THE AO TO MAKE DUE PROPER AND ADEQUATE ENQUIRY CAME TO THE CONCLUS ION THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR LACK OF PROPER ENQUIRY HAVING BEEN MADE BY THE AO. THE CIT IN THE IMPUGNED ORDER SET ASIDE THE ORDER OF AO AND DIRECTED THE AO TO DO THE FOLLOWING :- I) EXAMINE THE GENUINENESS AND SOURCE OF SHARE CAPITAL , NOT ON A TEST CHECK BASIS, BUT IN RESPECT OF EACH AND EVERY SHAREHOLDER BY CONDUCTING INDEPENDENT ENQUIRY NOT THROUGH THE ASSESSEE. II) THE BANK ACCOUNT FOR THE ENTIRE PERIOD SHOULD BE EX AMINED IN THE COURSE OF VERIFICATION TO FIND OUT THE MONEY TRAIL OF THE SHARE CAPITAL. III) FURTHER THE AO SHOULD EXAMINE THE DIRECTORS AS WELL AS EXAMINE THE CIRCUMSTANCES WHICH NECESSITATED THE CHANGE IN DIRE CTORSHIP IF APPLICABLE. HE SHOULD EXAMINE THEM ON OATH TO VERIFY THEIR CRED ENTIALS AS DIRECTOR AND REACH A LOGICAL CONCLUSION REGARDING THE CONTROLLIN G INTEREST. THE AO IS DIRECTED TO EXAMINE THE SOURCE OF REALIZA TION FROM THE LIQUIDATION OF ASSETS SHOWN IN THE BALANCE SHEET AFTER THE CHANGE OF DIRECTORS, IF ANY. AFTER CONDUCTING THE INQUIRIES & VERIFICATION AS DIRECTED ABOVE, THE AO SHOULD PASS A SPEAKING ORDER, PROVIDING ADEQUATE OPPORTUNITY OF B EING HERD TO THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF CIT THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING OF THE APPEAL IT WAS AC CEPTED BY THE PARTIES THAT THE FACTS AND CIRCUMSTANCES UNDER WHICH THIS APPEAL AROSE FOR CON SIDERATION ARE IDENTICAL TO THE CASE ALREADY DECIDED BY THIS TRIBUNAL IN THE CASE OF SUBHLAKSHMI VANIJYA PVT. LTD., VS. CIT IN 3 ITA NO.2319/KOL/2016 M/S. PROTEX COMMOTRADE (P)LTD. A.YR.2009-10 3 ITA NO. 1104/KOL/2014 A.Y. 2009-10. IN THE AFORESAI D ORDER WE HAVE DRAWN THE FOLLOWING CONCLUSIONS: - A. CONTENTION OF THE ASSESSEE THAT SINCE THE AO OF TH E ASSESSEE-COMPANY WAS NOT EMPOWERED TO EXAMINE OR MAKE ANY ADDITION ON ACCOUN T OF RECEIPT OF SHARE CAPITAL WITH OR WITHOUT PREMIUM BEFORE AMENDMENT TO SECTION 68 BY THE FINANCE ACT, 2012 W.E.F. A.Y. 2013-14 AND HENCE THE CIT BY MEANS OF IMPUGNED ORDER U/S 263 COULD NOT HAVE DIRECTED THE AO TO DO SO, IS UNSUSTAINABLE. B. FAILURE OF THE AO TO GIVE A LOGICAL CONCLUSION TO THE ENQUIRY CONDUCTED BY HIM GIVES POWER TO THE CIT TO REVISE SUCH ASSESSMEN T ORDER, BY HOLDING THAT :- I) THE ENQUIRY CONDUCTED BY THE AO IN SUCH CASES CA NT BE CONSTRUED AS A PROPER ENQUIRY; II) CIT U/S 263 CAN SET ASIDE THE ASSESSMENT ORDER AND DIRECT THE AO TO CONDUCT A THOROUGH ENQUIRY, NOTWITHSTANDING THE JUR ISDICTION OF THE AO IN MAKING ENQUIRIES ON THE ISSUES OR MATTERS AS HE CON SIDERS FIT IN TERMS OF SECTION 142(1) AND 143(2) OF THE ACT, WHICH IS RELE VANT ONLY UP TO THE COMPLETION OF ASSESSMENT ; III) INADEQUATE INQUIRY CONDUCTED BY THE AO IN THE GIVEN CIRCUMSTANCES IS AS GOOD AS NO ENQUIRY AND AS SUCH, THE CIT WAS EMP OWERED TO REVISE THE ASSESSMENT ORDER ; IV) THE ORDER OF THE CIT IS NOT BASED ON IRRELEVANT CONSIDERATIONS AND FURTHER IN THE PRESENT CIRCUMSTANCES, HE WAS NOT OB LIGED TO POSITIVELY INDICATE THE DEFICIENCIES IN THE ASSESSMENT ORDER O N MERITS ON THE QUESTION OF ISSUE OF SHARE CAPITAL AT A HUGE PREMIUM ; AND V) THE AO IN THE GIVEN CIRCUMSTANCES CANT BE SAID TO HAVE TAKEN A POSSIBLE VIEW AS THE REVISION IS SOUGHT TO BE DONE ON THE PREMISE THAT THE AO DID NOT MAKE ENQUIRY THEREBY RENDERING THE ASSES SMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON THAT SCORE ITSELF. C. IN THE GIVEN FACTS AND CIRCUMSTANCES OF ALL SUCH CASES, THE NOTICES U/S 263 WERE PROPERLY SERVED THROUGH AFFIXTURE OR OTHERWIS E. FURTHER THE LAW DOES NOT REQUIRE THE SERVICE OF NOTICE U/S 263 STRICTLY AS P ER THE TERMS OF SECTION 282 OF THE ACT. THE ONLY REQUIREMENT ENSHRINED IN THE PROVISIO N IS TO GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE, WHICH HAS BEEN COMPLIED WI TH IN ALL SUCH CASES. D. LIMITATION PERIOD FOR PASSING ORDER IS TO BE COUNT ED FROM THE DATE OF PASSING THE ORDER U/S 147 READ WITH SEC. 143(3) AND NOT THE DATE OF INTIMATION ISSUED U/S 143(1) OF THE ACT, WHICH IS NOT AN ORDER FOR THE PU RPOSES OF SECTION 263. IN ALL THE CASES, THE ORDERS HAVE BEEN PASSED WITHIN THE T IME LIMIT. E. THE CIT HAVING JURISDICTION OVER THE AO WHO PASSED ORDER U/S 147 READ WITH 4 ITA NO.2319/KOL/2016 M/S. PROTEX COMMOTRADE (P)LTD. A.YR.2009-10 4 SECTION 143(3), HAS THE TERRITORIAL JURISDICTION TO PASS THE ORDER U/S 263 ANDNOT OTHER CIT. F. ADDITION IN THE HANDS OF A COMPANY CAN BE MADE U/S 68 IN ITS FIRST YEAR OF INCORPORATION. G. AFTER AMALGAMATION, NO ORDER CAN BE PASSED U/S 263 IN THE NAME OF THE AMALGAMATING COMPANY. BUT, WHERE THE INTENTION OF T HE ASSESSEE IS TO DEFRAUD THE REVENUE BY EITHER FILING RETURNS, AFTER AMALGAMATIO N, IN THE OLD NAME OR OTHERWISE, THEN THE ORDER PASSED IN THE OLD NAME IS VALID. H. ORDER PASSED U/S 263 ON A NON-WORKING DAY DOES NOT BECOME INVALID, WHEN THE PROCEEDINGS INVOLVING THE PARTICIPATION OF THE ASSESSEE WERE COMPLETED ON AN EARLIER WORKING DAY. I. ORDER U/S 263 CANNOT BE DECLARED AS A NULLITY FOR THE NOTICE HAVING NOT BEEN SIGNED BY THE CIT, WHEN OPPORTUNITY OF HEARING WAS OTHERWISE GIVEN BY THE CIT. J. REFUSAL BY THE REVENUE TO ACCEPT THE WRITTEN SUBMIS SIONS OF THE ASSESSEE SENT AFTER THE CONCLUSION OF HEARING CANNOT RENDER THE O RDER VOID AB INITIO . AT ANY RATE, IT IS AN IRREGULARITY. K. SEARCH PROCEEDINGS DO NOT DEBAR THE CIT FROM REVI SING ORDER U/S PASSED U/S 147 OF THE ACT. 6. IT IS NOTICED AND IT WAS AGREED BY THE PARTIE S THAT SOME OF THE CONCLUSIONS AS ABOVE ARE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS WELL. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL REFERRED TO ABOVE, WE UPHO LD THE ORDER OF THE CIT AND DISMISS THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 23.08.2017. SD/- SD/- [J.SUDHAKAR REDDY] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23.08.2017. [RG PS] 5 ITA NO.2319/KOL/2016 M/S. PROTEX COMMOTRADE (P)LTD. A.YR.2009-10 5 COPY OF THE ORDER FORWARDED TO: 1.M/S. PROTEX COMMOTRADE PVT. LTD., 64, BVENTICK ST REET, 3 RD FLOOR, KOLKATA-700001. 2. PR. C.I.T., KOL-I2 KOLKATA. 3..CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE S ECRETARY HEAD OF OFFICE/D.D.O., ITAT KOLKATA BENCHES, KOLKATA