Mukhtar Ahmad & Sons Developers Pvt. Ltd., Kolkata V. I.T.O,Ward-1(4), Kolkata

ITA 2583/KOL/2019

AI Insights

The case revolves around an appeal by Mukhtar Ahmad & Sons Developers Pvt. Ltd. against the order of the Commissioner of Income Tax-17, Kolkata, which upheld an addition of Rs. 80,00,000 as unexplained investment under section 68 of the Income Tax Act, 1961. The addition was initially made by the Income Tax Officer, Ward 1(4), Kolkata, who treated the share capital and premium received by the appellant as investments from unexplained sources. The appellant contested that the conditions for invoking section 68 were not met and provided substantial documentary evidence to prove the legitimacy of the investment. The Tribunal, after reviewing the evidence, concluded that the lower authorities had erred in their assessment and allowed the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128300 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-04-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 12-12-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Capital Gains
• Section: 68; 250

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘सी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी ͬगरȣश अĒवाल, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T.A. No.2583/Kol/2019 Assessment Year: 2012-13 Mukhtar Ahmad & Sons Developers Pvt. Ltd.............................Appellant C/o S. N. Ghosh & Associates, Advocates, 2, Garstin Place, 2 nd Floor, Suite No.203, Off Hare Street, Kolkata-1. [PAN:AACCJ0584F] vs. ITO, Ward-1(4), Kolkata.................................................................. Respondent Appearances by: Shri Abhishak Bansal, AR, appeared on behalf of the appellant. Shri Vijay Kumar, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : April 27, 2023 Date of pronouncing the order : June 21, 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 23.07.2019 of the Commissioner of Income Tax-17, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-17, Kolkata failed to appreciate that none of the conditions precedent existed for and/or were fulfilled by the Ld. Income Tax Officer, Ward 1(4), Kolkata for his specious action of assuming jurisdiction u/s. 68 of the Income Tax Act, 1961 in respect of the share capital including share premium received by the appellant in the instant case and the alleged addition in I.T.A. No.2583/Kol/2019 Assessment Year: 2012-13 Mukhtar Ahmad & Sons Developers Pvt. Ltd. 2 the amount of Rs. 80,00,000/- upheld under such pretext is therefore ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT on a true and proper interpretation of the scope of the provisions of s. 68 of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals)-17, Kolkata was absolutely in error in upholding the specious addition of Rs. 80,00,000/- resorted to by the Ld. Income Tax Officer, Ward 1(4), Kolkata on account of share capital along with premium received without considering the matter in the proper perspective and such spurious conclusion reached on extraneous considerations not germane to the issue in dispute is totally arbitrary, unwarranted and perverse. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-17, Kolkata unlawfully sustained the purported addition in the sum of Rs.80,00,000/- on account of share capital along with premium received made by the Ld. Income Tax Officer, Ward 1(4), Kolkata within the province of s. 68 of the Income Tax Act, 1961 by misreading the facts and circumstances of the instant case and the adverse conclusion reached on that behalf in violation of the statutory prescription is completely unfounded, unjustified and untenable in law.” 3. A perusal of the grounds of appeal would reveal that the assessee in this appeal has agitated the action of the lower authorities in making confirmation of addition of Rs.80,00,000/- u/s 68 of the Act on account of share capital and share premium received by the assessee which has been treated by the lower authorities as investment from unexplained sources. 4. At the outset, the ld. counsel for the assessee has invited our attention to the impugned assessment order dated 20.03.2015 to submit that the assessee during the year had received the aforesaid share capital/share premium from only one individual namely Shri Chandra Kumar Sah. That on being asked to explain the sources of the investment, the said Chandra Kumar Sah duly furnished a letter to the Assessing Officer, a copy of which has been placed at page 55 of paper- book, wherein, it has been stated by the said Chandra Kumar Sah that he has made investment of Rs.80,00,000/- in assessee company during the financial year 2011-12. The source of the said amount was I.T.A. No.2583/Kol/2019 Assessment Year: 2012-13 Mukhtar Ahmad & Sons Developers Pvt. Ltd. 3 explained as from sale value received from house property. The amount was transferred through bank account. The details of the property sold have also been mentioned and the total sale consideration of Rs.5,35 crores has been stated to have been received by the said Chandra Kumar Sah vide cheque no.020022 drawn at HDFC, Rathyatra, Varanasi. The PAN no. and address and copy of income-tax return have also been duly furnished. The ld. counsel further brought to our attention to page 56 of the paper-book which is a copy of the ITR acknowledgment for F.Y 2011-12 to show that the said Chandra Kumar Sah has paid advance tax of Rs.90,00,000/-. Furthe the computation of the income of the said Chandra Kumar Sah has also been placed on file, wherein, after claiming indexed cost of acquisition and deduction u/s 54 of the Act, the total tax on capital gains including education cess etc. has been calculated at Rs.90.72 lakhs. The ld. counsel has submitted that the Assessing Officer without examining the submissions of the assessee passed the assessment order in a casual manner. That the Assessing Officer had insisted for personal presence of the directors of the assessee company and the share subscribers. The Assessing Officer thereafter held that the identity, creditworthiness of the share subscriber was not proved and treated the aforesaid investment of Rs.80,00,000/- as unexplained investment. The ld. counsel has further invited our attention to the impugned order of the CIT(A) to show that the same is an ex parte order and that the ld. CIT(A) has just confirmed the order of the Assessing Officer without any discussion on the material facts of the case. 5. The ld. DR could not rebut the aforesaid evidences on record. 6. Since, in this case, the assessee has duly explained with documentary evidence that only one share subscriber namely Chandra I.T.A. No.2583/Kol/2019 Assessment Year: 2012-13 Mukhtar Ahmad & Sons Developers Pvt. Ltd. 4 Kumar Sah has invested Rs.80,00,000/- in equity shares with premium. The name, identity, PAN no., Income Tax Return etc. have been duly furnished which establishes identity of Chandra Kumar Sah. The creditworthiness of Chandra Kumar Sah has also been established. It has been duly confirmed and explained by Chandra Kumar Sah that he has invested Rs.80,00,000/- in the assessee company during F.Y 2011-12. The details of the investment along with date and cheque no. etc. have been duly mentioned. The source of the funds has been duly explained as from sale value of the house property received from M/s Swastik City Planners Pvt. Ltd. from whom the assessee company received 5.35 crores through cheque. The PAN number of the said purchaser of the property has also been mentioned. The assessee even has duly paid taxes of approximately Rs.90,00,000/- as capital gains tax on the said sale value of the said property. The copy of the sale deed has also been placed on file. The genuineness of the transaction of the share subscriber and the creditworthiness on transaction has been duly proved by the assessee. The lower authorities without examining the evidences on record have simply confirmed the addition which is not sustainable in the eyes of law and the same is accordingly ordered to be deleted. 7. In the result, the appeal of the assessee stands allowed. Kolkata, the 21 st June, 2023. Sd/- Sd/- [ͬगरȣश अĒवाल /Girish Agrawal] [संजय गग[ /Sanjay Garg] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 21.06.2023. RS I.T.A. No.2583/Kol/2019 Assessment Year: 2012-13 Mukhtar Ahmad & Sons Developers Pvt. Ltd. 5 Copy of the order forwarded to: 1. Mukhtar Ahmad & Sons Developers Pvt. Ltd 2. ITO, Ward-1(4), Kolkata 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches