Rupali Financial Consultants Private Limited , Kolkata V. ACIT, Central Circle - 3(4) , Kolkata

ITA 2486/KOL/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9360 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Accommodation entries; Onus to prove; Set aside
• Section: 131; 68; 132; 143(3); 14A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘(B)’, KOLKATA [BEFORE SHRI P.M. JAGTAP, HON’BLE VICE PRESIDENT (KZ) & SHRI A. T. VARKEY, HON’BLE JUDICIAL MEMBER] [Through Virtual Court] I.T.A. No. 2486/Kol/2018 Assessment Year: 2012-13 M/s. Rupali Financial Consultants Pvt. Ltd.........................................................Appellant 53A, Mirza Ghalib Street, Kolkata – 700 016. [PAN: AAFCR 3050 F] Vs ACIT, Central Circle – 3(4), Kolkata...................................................................Respondent Appearances by: Shri Miraj D. Shah, AR appearing on behalf of the Assessee. Shri Kalyan Nath, CIT, DR appearing on behalf of the Revenue. Date of concluding the hearing : October 06, 2021 Date of pronouncing the order : October 08, 2021 ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) This appeal filed by the assessee is directed against the order of the Ld. CIT(A) - 3, Kolkata dated 03.09.2018 and the main issue involved therein relates to the addition of Rs. 9,27,30,000/- made by the AO and confirmed by the Ld. CIT(A) on account of share capital and share premium received by the assessee during the year under consideration by treating the same as unexplained cash credit u/s 68 of the Income Tax Act, 1961. 2. The assessee in the present case is a company which filed its return of income for the year under consideration on 25.09.2012 2 I.T.A. No. 2486/Kol/2018 M/s. Rupali Financial Consultants Pvt. Ltd. declaring a total income of Rs. 7,458/-. The said return was selected for scrutiny through CASS. During the course of assessment proceedings, the issue relating to the genuineness of the transactions involving receipt of share capital and share premium aggregating to Rs. 9,27,30,000/- by the assessee-company during the year under consideration was examined by the AO. In this regard, he issued letters u/s 133(6) of the Act to the subscribers of share capital calling for the relevant details. As noted by him in the assessment order, some of the letters so issued were returned back by the postal authority unserved with the remark “Not Found/Not Known”. On perusal of the replies received from other subscribers in response to the letters issued u/s 133(6) of the Act, the AO found that the said subscribers were companies having no substantial assets in their balance sheets except investment an unquoted shares of private limited companies. He also noted that the said replies were in a specific pattern which was similar. He, therefore, issued summons u/s 131 to the Directors of the assessee- company as well as to the Directors of the subscriber companies requiring them to appear before him to examination allowing with the relevant details and documents to establish the identity and creditworthiness of the subscribers as well as the genuineness of the relevant transactions. As noted by the AO in the assessment order, the Directors of the assessee-company as well as the subscriber companies however evaded personal appearance by citing same excuses and also failed to furnish the relevant details and documents as called for. The AO accordingly held that there was a failure on the part of the assessee to establish the identity and creditworthiness of the share subscriber companies as well as the genuineness of the transactions involving share capital and share premium and the entire amount of Rs. 3 I.T.A. No. 2486/Kol/2018 M/s. Rupali Financial Consultants Pvt. Ltd. 9,27,30,000/- received by the assessee-company during the year under consideration on account of share capital and share premium was added by him to the total income of the assessee by treating the same as unexplained cash credits u/s 68 of the Act. He also made further addition of Rs. 66,903/- on account of disallowance u/s 14A and assessed the total income of the assessee-company at Rs. 9,28,04,361/- in the assessment completed u/s 143(3) of the Act vide an order dated 23.03.2015. 3. Against the order passed by the AO u/s 143(3), an appeal was filed by the assessee before the Ld. CIT(A) challenging the inter alia, the addition of Rs. 9,27,30,000/- made by the AO on account of share capital and share premium received during the year under consideration by treating the same as unexplained cash credit u/s 68 of the Act. The submissions made by the assessee-company in support of this issue however were not found acceptable by the Ld. CIT(A) inter alia for the following reasons given in his impugned order: “It is observed that a company which has been recently incorporated without any track record does not in any way justify a premium. It is the onus of the assessee to prove with all the relevant details regarding raising of the share capital and the genuineness of the transaction. It is not clear as to whether any due diligence was done by the subscribing companies, whether any peculiar or personal reason was valid for the investment or whether any arrangement was made for the protection of the fund. In this case certain documents were filed before the AO however genuineness of the transaction could not be substantiated. Mere filing of documents before the AO does not absolve the assessee of its duty cast u/s. 68. An assessee’s duty to establish the source of the funds does not cease by merely furnishing the names, address and PAN particulars or relying on entries in the Registrar of company’s website. The relationship of the assessee to the applicants should be at arm’s length in such cases and this is what the appellant was required to establish. Also the concept of “shifting onus” does not mean that once certain facts are provided, the 4 I.T.A. No. 2486/Kol/2018 M/s. Rupali Financial Consultants Pvt. Ltd. assessee’s duties are over. If on verification, the information becomes false, unsatisfactory or unverifiable, the onus shifts back to the assessee. Therefore, the assessee was required to present himself before the AO for examination and verification of the documents. The onus to prove the three factum is on the assessee as the facts are within the assessee’s knowledge. The details available reflect some paper work or documentation but genuineness, creditworthiness and identity are deeper and obtrusive.” For the reasons given above and relying on the very judicial pronouncements referred to in his impugned order, the Ld. CIT(A) confirmed the entire addition of Rs. 9,27,30,000/- made by the AO to the total income of the assessee u/s 68 by treating the share capital and share premium as unexplained cash credit. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal. 4. We have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has submitted that a search and seizure operation was conducted u/s 132 of the Act in the case of Ravi Kumar Newatia, Ritesh Kumar Newatia and Asha Newatia during the course of which a statement of Shri Ravi Kumar Newatia u/s 132(4) of the Act was recorded on 03.01.2018. He has invited our attention to the copy of the said statement placed at page no. 1 to 17 of the Paper Book and pointed out that Shri Ravi Kumar Newatia while answering question no. 9 admitted that he was the Director of various companies including the assessee-company and M/s. Darshan Consultants Pvt. Ltd. and all these companies were shell companies which were involved in providing accommodation entries and not in any active business. He also admitted that these companies were controlled and managed by him and they 5 I.T.A. No. 2486/Kol/2018 M/s. Rupali Financial Consultants Pvt. Ltd. were paper/shell companies formed with the sole purpose of providing accommodation entries in the form of bogus share premium/bogus unsecured loans to different beneficiaries. The learned counsel for the assessee has submitted that this statement having direct bearing on the main issue involved in the present case was recorded after the completion of assessment by the AO on 23.03.2015 and taking note of this new development, the Ld. DR in the case of M/s. Darshan Consultants Pvt. Ltd. had made a request before the Tribunal to restore the matter to the file of the AO for de novo adjudication in the light of this new development. He has submitted that the matter was accordingly restored to the file of the AO by the Tribunal vide its order dated 31.12.2018 passed in ITA No. 1947/Kol/2017 in the case of M/s. Darshan Consultants Pvt. Ltd. as per paragraph no. 2 which reads as under: “2. At the outset the Id .DR brought to our knowledge that a new development has taken place in the case of assessee. As per the Id. DR, after the assessment was framed against the assessee, a search was carried out on 03.01.2018 wherein the statement of director of this assessee company was also recorded u/s 132(4) of the Act wherein for question no. 9 the director has accepted that the assessee company which is seen at serial no. 6 of the table given under answer to question no. 9 that it was controlled and managed by him and that the assessee company is a paper / shell company formed with the sole purpose of providing accommodation entries in the form of bogus share premium / bogus unsecured loans to different beneficiaries. In the light of the aforesaid development, in the interest of justice and fair play, the assessment made, need to be framed afresh. The Id. A/R could not controvert the fact of the search conducted on the assessee on 03.01.2018 and the statement of the director of the assessee company as h recorded above. In the light of the aforesaid new development, and keeping in mind, the settled position of law that the tax has to be assessed on the right person, right income and in the right assessment year, we set aside the impugned order and remit the matter back to the file of the Assessing Officer for de novo adjudication in the light of the new development after the search which happened on 03.01.2018.” 6 I.T.A. No. 2486/Kol/2018 M/s. Rupali Financial Consultants Pvt. Ltd. 5. Keeping in view the decision of coordinate bench of this Tribunal in the case of M/s. Darshan Consultants Pvt. Ltd. (supra) and having regard to the fact that the issue involved in the present case as well as all the material relevant thereto are similar to the case of M/s. Darshan Consultants Pvt. Ltd., the ld. representatives of both the sides have agreed and urged that the issue involved in the present case relating to the addition made u/s 68 on account of share capital and share premium may also be restored to the file of the AO for de novo adjudication in the light of the new development which happened consequent to the search and seizure operation conducted on 03.01.2018 in the case of Ravi Kumar Newatia. Accordingly, the impugned order of the Ld. CIT(A) is set aside and the matter is restored to the file of the AO for deciding the same afresh after taking into consideration the said new development and after giving the assessee a proper and sufficient opportunity of being heard. 6. In the result, the appeal of the assessee is treated as allowed for statistical purpose. Order Pronounced in the Open Court on 8 th October, 2021. Sd/- Sd/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE PRESIDENT Dated: 08/10/2021 Biswajit, Sr. PS 7 I.T.A. No. 2486/Kol/2018 M/s. Rupali Financial Consultants Pvt. Ltd. Copy of order forwarded to: 1. M/s. Rupali Financial Consultants Private Limited, 53A, Mirza Ghalib Street, Kolkata – 700 016. 2. ACIT, Central Circle – 3(4), Kolkata. 3. The CIT(A) 4. The CIT 5. DR True Copy, By order, Sr. Private Secretary / DDO ITAT, Kolkata Benches Kolkata