M/s Mayfair Commotrade Pvt.Ltd., Kolkata V. I.T.O.,Ward-2(1), Kolkata

ITA 2434/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 5066 (ITAT-KOLKATA)
• Duration Of Justice: 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Unexplained cash credit; Set aside
• Section: 143(3); 147; 131; 68; 263

Judgement Text

ITA NO. 2434/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. MAYFAIR COMMOTRADE PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 2434/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. MAYFAIR COMMOTRADE PVT. LIMITED,.............. .......................APPELLANT 9, JAGMOHAN MULLICK LANE, KOLKATA-700 007 [PAN: AAFCM2895P] -VS.- INCOME TAX OFFICER,................................ ......................................RESPONDENT WARD-2(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI SOUMITRA CHOUDHURY, ADVOCATE, FOR THE APPELLAN T SHRI SUPRIYO PAL, JCIT (D.R.), FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : NOVEMBER 22, 2019 DATE OF PRONOUNCING THE ORDER : NOVEMBER 22, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKATA DA TED 28.10.2019 PASSED EX-PARTE, WHEREBY HE CONFIRMED THE ADDITION OF RS.5.68 CRORES MADE BY THE ASSESSING OFFICER UNDER SECTION 68 BY T REATING THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE DURING T HE YEAR UNDER CONSIDERATION ALONG WITH SHARE PREMIUM AS UNEXPLAIN ED CASH CREDIT. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND INVESTMENT. IN TH E ASSESSMENT COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7 VIDE AN ORDER DATED 29.04.2010, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.12,140/- AS AGAINST THE TOT AL INCOME OF RS.340/- RETURNED BY THE ASSESSEE. THE RECORDS OF THE SAID A SSESSMENT CAME TO BE ITA NO. 2434/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. MAYFAIR COMMOTRADE PVT. LIMITED 2 EXAMINED BY THE CONCERNED LD. CIT AND ON SUCH EXAMI NATION HE FOUND THAT THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT OF RS.5. 68 CRORES RECEIVED BY THE ASSESSEE-COMPANY DURING THE YEAR UNDER CONSI DERATION WAS ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING TH E REQUIRED ENQUIRIES AS WERE CALLED FOR IN THE FACTS AND CIRCUMSTANCES O F THE CASE. HE FOUND THAT THE IDENTITY AS WELL AS CREDITWORTHINESS OF TH E CONCERNED SHARE APPLICANTS AND GENUINENESS OF THE RELEVANT TRANSACT IONS WAS ACCEPTED BY THE ASSESSING OFFICER MERELY BY RELYING ON THE PRIM ARY DOCUMENTS FILED BY THE ASSESSEE AND THERE WAS NO FURTHER INDEPENDENT E NQUIRY THAT WAS CONDUCTED BY THE ASSESSING OFFICER REGARDING THE SO URCE OF FUNDS FOR THE INVESTMENT IN THE SHARES OF THE ASSESSEE-COMPANY AT THE PREMIUM AS HIGH AS RS.190/- PER SHARE. HE ALSO FOUND THAT NO EXERCI SE HAD EVEN BEEN MADE BY THE ASSESSING OFFICER TO EXAMINE THE VERACITY OF THE DOCUMENTS FURNISHED BY THE CONCERNED SHARE APPLICANTS. HE ALS O NOTED THAT NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER TO EXAMINE THE GENUINENESS OF THE COMPANY OR ITS DIRECTORS. TH E ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SE CTION 147 ON 29.04.2010 ACCORDINGLY WAS HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE BY THE LD. CIT AND BY S ETTING ASIDE THE SAME VIDE HIS ORDER PASSED UNDER SECTION 263, THE ASSESS ING OFFICER WAS DIRECTED BY THE LD. CIT TO MAKE THE ASSESSMENT AFRE SH AS PER THE FOLLOWING DIRECTIONS:- THE A.O. SHOULD MAKE COMPREHENSIVE AND DETAILED EN QUIRIES INTO THE SOURCE OF SUBSCRIPTION TO THE SHARE CAPITA L. THE A.O. SHOULD PASS THE ASSESSMENT ORDER AFTER CONDUCTING INDEPENDENT DETAILS AND COMPLETE ENQUIRIES INTO THE SUBSCRIPTION TO THE SHARE CAPITAL AND PREMIUM TO TH E EXTENT OF RS.5.68 CRORES INTRODUCED IN THIS CASE. THE A.O. SHOULD TRACE THE SOURCE OF SHARE CAPITAL BY ENQUIRING INTO THE VARIOUS LAYERS THROUGH WHICH THE MONEY HAS BEEN INT RODUCED IN THIS COMPANY BY ISSUING SUMMONS U/S 131 OF THE I .T. ACT. THE A.O. SHOULD NOT CONFINE HIMSELF TO CONDUCTING E NQUIRIES INTO THE SUBSCRIBERS TO THE SHARE CAPITAL ONLY ON S ELECTIVE BASIS. THE A.O. SHOULD ALSO SEND INFORMATION TO THE A.OS HAVING JURISDICTION OVER THE SUBSCRIBER COMPANY TO THE SHARE CAPITAL REGARDING ITS INVESTMENT INTO SHARE CAPITAL & PREMIUM PAID. THE A.O. SHOULD CALL UPON THE ASSESSE E TO IDENTIFY THE PERSONS WHO ARE SHOWN AS DIRECTORS OF THESE ITA NO. 2434/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. MAYFAIR COMMOTRADE PVT. LIMITED 3 COMPANIES AND EXAMINE THEM ON OATH TO VERIFY THEIR CREDENTIAL AS DIRECTORS. THE A.O. SHOULD PASS A SPE AKING ORDER AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE AND VERIFYING THE SOURCE OF SHARE CAPITAL INCLUDING THE SHARE PREMIUM OF ALL THE SUBSCRIBERS AND ROTATION OF MONE Y THROUGH VARIOUS HANDS SO AS TO ASCERTAIN THE TRUE N ATURE OF TRANSACTION WHICH WILL BRING TO THE FORE, THE REALI TY OF THE TRANSACTIONS. 3. IN PURSUANCE OF THE ORDER PASSED BY THE LD. CIT UNDER SECTION 263, NOTICES UNDER SECTION 131 WERE ISSUED BY THE ASSESS ING OFFICER TO THE CONCERNED SHAREHOLDERS ASKING THEM TO PERSONALLY AP PEAR FOR EXAMINATION/VERIFICATION. THERE WAS, HOWEVER, NO RE SPONSE FROM THE CONCERNED SHAREHOLDERS TO THE SAID NOTICES ISSUED B Y THE ASSESSING OFFICER. EVEN THE ASSESSEE-COMPANY ALSO FAILED TO P RODUCE THE CONCERNED SHAREHOLDERS ALONG WITH THE RELEVANT SUPPORTING DOC UMENTS FOR VERIFICATION BEFORE THE ASSESSING OFFICER. THE ASSE SSING OFFICER, THEREFORE, TREATED THE ENTIRE AMOUNT OF SHARE CAPITAL INCLUDIN G SHARE PREMIUM OF RS.5.68 CRORES AS UNEXPLAINED CASH CREDIT AND ADDIT ION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE UND ER SECTION 68 IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT VIDE AN ORDER DATED 28.03.2014. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) READ WITH SECTION 263, AN APPEAL WAS PREFERR ED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AND SINCE THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE TO THE NOTICES ISSUED BY HIM FIXING THE SAID APPEAL FOR HEARING FROM TIME TO TIME, THE LD. CIT(APPEALS) DIS MISSED THE APPEAL OF THE ASSESESE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 VIDE HIS APPELLATE ORDER DATED 28. 10.2019 PASSED EX- PARTE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEAL S), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS ITA NO. 2434/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. MAYFAIR COMMOTRADE PVT. LIMITED 4 SUBMITTED THAT THE NOTICES STATED TO BE ISSUED BY T HE LD. CIT(APPEALS) FIXING THE APPEAL OF THE ASSESSEE FOR HEARING ON TH E VARIOUS DATES WERE NEVER RECEIVED BY THE ASSESSEE AND SUCH NON-RECEIPT OF NOTICES RESULTED INTO NON-APPEARANCE OF THE ASSESSEE WHEN ITS APPEAL WAS CALLED FOR HEARING BEFORE THE LD. CIT(APPEALS). HE HAS ALSO SU BMITTED THAT A BULK PAPER BOOK WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CONTAINING ALL THE RELEVANT DOCUMENTS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CONCERNED SHAREHOLDERS AS W ELL AS THE GENUINENESS OF THE RELEVANT TRANSACTIONS BUT THE SA ME WERE NOT TAKEN INTO CONSIDERATION BY HIM WHILE DISPOSING OF THE AP PEAL OF THE ASSESSEE VIDE HIS IMPUGNED ORDER EX-PARTE CONFIRMING THE ADD ITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68. HE HAS ALSO SUB MITTED THAT PROPER AND SUFFICIENT OPPORTUNITY WAS NOT GIVEN BY THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO PRODUCE THE CON CERNED SHARE APPLICANTS ALONG WITH THE NECESSARY SUPPORTING DOCU MENTS FOR VERIFICATION. IT IS ALSO OBSERVED THAT SPECIFIC DIR ECTIONS WERE GIVEN BY THE LD. CIT IN HIS ORDER UNDER SECTION 263 TO BE FOLLOW ED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT AFRESH AND A PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER SH OWS THAT THE ASSESSING OFFICER HAS FAILED TO COMPLY OR FOLLOW TH E SAID DIRECTIONS. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS IN A POSITION TO PRODUCE THE CONCERNED SHAREHOLDERS ALON G WITH THE RELEVANT DOCUMENTARY EVIDENCE FOR VERIFICATION OF THE ASSESS ING OFFICER AND URGED THAT ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSES SEE FOR THIS PURPOSE BY SENDING THE MATTER BACK TO THE ASSESSING OFFICER . KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INC LINED TO ACCEDE TO THIS REQUEST MADE BY THE LD. COUNSEL FOR THE ASSESSEE. E VEN THE LD. D.R. HAS NOT RAISED ANY OBJECTION FOR SENDING THE MATTER BACK TO THE ASSESSING OFFICER FOR THE NECESSARY VERIFICATION. THE IMPUGNED ORDER PASSED BY THE LD. CIT(APPEALS) IS ACCORDINGLY SET ASIDE AND THE MATTE R IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AS PER THE SPECIFIC DIRECTION GIVEN BY THE LD. CIT IN THE ORDE R UNDER SECTION 263 AFTER ITA NO. 2434/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. MAYFAIR COMMOTRADE PVT. LIMITED 5 GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUNI TY TO PRODUCE THE CONCERNED SHARE APPLICANTS ALONG WITH THE NECESSARY SUPPORTING DOCUMENTARY EVIDENCE FOR VERIFICATION. AS UNDERTAKE N BY THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE SHALL MAKE DUE COMPL IANCE BEFORE THE ASSESSING OFFICER AND WILL EXTEND ALL THE POSSIBLE COOPERATION IN ORDER TO ENABLE THE ASSESSING OFFICER TO COMPLETE THE ASSESS MENT AFRESH EXPEDITIOUSLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 22, 2019. SD/- SD/- (A.T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT) KOLKATA, THE 22 ND DAY OF NOVEMBER, 2019 COPIES TO : (1) M/S. MAYFAIR COMMOTRADE PVT. LIMITED, 9, JAGMOHAN MULLICK LANE, KOLKATA-700 007 (2) INCOME TAX OFFICER, WARD-2(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKA TA; (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.