M/s Bhalgo Drillings Pvt. Ltd., Kolkata V. Income Tax Officer, Ward-3(4), Kolkata, Kolkata

ITA 2732/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4652 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2013
• Court: TRIBUNAL
• Assessee Lawyers: PARTHA CHOWDHURY
• Keywords: Business expenditure; Revenue expenditure; Capital expenditure
• Section: 133(6); 68

Judgement Text

I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2732/KOL/ 2013 ASSESSMENT YEAR: 2006-2007 M/S. BHALGO DRILLINGS PVT. LIMITED,................ ...............APPELLANT 64, SAMBHUNATH PANDIT STREET, KOLKATA-700 025 [PAN: AACCB 4626 N] -VS.- INCOME TAX OFFICER,................................ ........................RESPONDENT WARD-3(4), KOLKATA, AAYAKAR BHAWAN,4 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI PARTHA CHOWDHURY, A.R., FOR THE ASSESSEE SHRI RAJAT KUMAR KUREEL, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 21, 2016 DATE OF PRONOUNCING THE ORDER : JUNE 29, 2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA DA TED 12.09.2013 FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUND S:- (I) THAT THE ORDER OF LD. CIT(A)-XX, KOLKATA DATED 12.09.2013 WHICH WE RECEIVED ON 09.10.2013 SEEMS TO VINDICTIVE AND BAD IN LAW AND IS LIABLE TO BE MODIF IED IN LIGHT OF THE FOLLOWING FACTS AND CIRCUMSTANCES: 02. THAT THE LD. CIT(A)-XX, KOLKATA ALLOW PART OF T HE FORM 2 WHICH IS BAD IN LAW. EITHER HE ACCEPTS THE FORM 2 OR HE MAY REJECT THE FORM 2. HE MAY NOT ACCEPT PART OF TH E FORM 2. I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 11 03. LD. CIT(A)-XX, KOLKATA PASSED HIS ORDER BASED O N THE REMAND REPORT DRAWN AND SUBMITTED BY THE ITO 3(4), KOLKATA. FROM THE REMAND REPORT IT IS CLEAR THAT TH E ITO, WARD 3(4) KOLKATA SENT HIS INSPECTOR TO THE ROC, KO LKATA FOR VERIFICATION OF THE FORM 2 BUT UNFORTUNATELY TI LL DRAWING OF THE REMAND REPORT DATED 27.06.13, THE RO C HAS NOT GIVEN ANY RESPONSE. WHEN ANY GOVT. OF INDIA OFF ICE (MINISTRY OF CORPORATE AFFAIRS) FAILS / DELAY TO GI VE THEIR RESPONSE TO ANOTHER GOVT. OF INDIA OFFICE (INCOME T AX OFFICE), IN THAT SITUATION IT WAS THE DUTY OF THE I NCOME TAX OFFICE TO SEND THE REMINDER TO THE ROC FOR REPLY BE FORE ADDING THE HUGE AMOUNT AS UNDISCLOSED INCOME / CASH CREDIT U/S 68 OF THE IT ACT, 1961. IN THIS CASE OUR HUMBLE SUBMISSION BEFORE YOU THAT PLEASE MAKE A ADDED PART Y TO THE REGISTRAR, REGISTERED OF COMPANIES, NIZAM PALAC E, AJC BOSE ROAD, KOLKATA FOR PROPER VERIFICATION OF SUCH FORM 2 WHICH WAS FIELD ON 15.07.2005. 04. THAT LD. CIT(A)XX, KOLKATA DISALLOW SOME GENUIN E BUSINESS EXPENSES OF RS.1,05,550.00 TREATING THE EXPENDITURE AS A CAPITAL EXPENDITURE. WE EXPLAINED THAT WE INCURRED SOME EXPENSES IN THIS YEAR AND BENEFIT OF THE ENTIRE EXPENSES ENJOYED IN SAME YEAR (BENEFIT NOT C ARRY FORWARDED FOR NEXT AND SUBSEQUENT YEARS). SO, THIS IS A REVENUE EXPENDITURE. 05. THAT THE APPLICANT RESERVE THE RIGHT OF RAISING ANY FURTHER GROUND AND OR GROUNDS AND OR ADDUCTING ANY FURTHER SUBMISSION EITHER ON OR BEFORE THE FINAL DA TE OF HEARING LIKELY TO BE FIXED BY YOUR OFFICE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF TRADIN G OF IRON AND STEEL. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON WAS FILED BY IT ON 30.11.2006 DISCLOSING TOTAL INCOME OF RS.98,270/-. 3. GROUND NO-3 RELATES TO AN ADDITION ON ACCOUNT OF SHARE CAPITAL OF RS.38,10,000/-. THE AO FOUND THAT THE ASSESSEE COMP ANY HAD ISSUED SHARE CAPITAL OF RS. 38,10,000/- FROM THE AUDITED BALANCE SHEET AS ON 31.3.2006. THE ASSESSEE WAS REQUESTED TO PRODUCE FORM NO. 2 FI LED WITH ROC ALONG WITH NAMES AND ADDRESSES OF THE SHARE APPLICANTS. T HE AR OF THE ASSESSEE HAS SUBMITTED ONLY NAMES, ADDRESSES AND AMOUNT INVO LVED BUT NOT SUBMITTED FORM NO- 2. THE AO ISSUED NOTICES U/S. 13 3(6) OF THE ACT TO I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 11 VERIFY THE GENUINENESS OF SHARE CAPITAL RAISED BY T HE ASSESSEE TO THE FOLLOWING PARTIES: 1. PALPIT VINIYOG (P) LTD. 2. KAYAL VAYAAPAR (P) LTD 3. LAXMI VAYAAPAR (P) LTD 4. TOUCHSTONE COMTRADE (P) LTD. 5. SULAKE STEELS LTD. 4. THE AO OBSERVED THAT THE SAID NOTICES WERE RETUR NED AS NOT FOUND AND DEPARTMENTAL NOTICE SERVER COULD NOT SERVE THE SAID NOTICES AND ON SOME PARTIES NOTICES U/S. 133(6) WERE SERVED BUT NO ONE RESPONDED TO SUCH NOTICES. THE INSPECTOR WAS DEPUTED TO VERIFY T HE EXISTENCE AND GENUINENESS OF SUCH PARTIES AND ADDRESSES RESPECTIV ELY AND HE COULD NOT TRACE SUCH COMPANIES AT THE GIVEN ADDRESS PROVIDED BY THE ASSESSEE. AS THE ASSESSEE FAILED TO FILE ANY DOCUMENTARY EVIDENC E IN SUPPORT OF ITS CLAIM AND IN ABSENCE OF WHICH, THE AO WAS OF THE VI EW THAT THE ASESSEE HAD INTRODUCED ITS OWN UNDISCLOSED MONEY FOR ENHANC EMENT OF SHARE CAPITAL. THE AO ADDED THE ALLEGED SHARE CAPITAL AMO UNT OF RS.38,10,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME U/S.68 OF THE ACT. 5. THE ASSESSEE HAVING AGREIVED BY THE ORDER OF AO, CHALLENGED THE SAME, CONTENDING THAT IT INCREASED CAPITAL AND NECE SSARY FORM NO-5 HAVE BEEN FILED BEFORE THE REGISTRAR OF COMPANIES AND AN NEXED THE SAME FOR HIS REFERENCE FOR THE FIRST TIME. THE ASSESSEE ALSO SUBMITTED THAT THE RBI DECLARED IT AS NON PERFORMING ASSET (IN SHORT NPA) AND A CASE WAS PENDING BEFORE THE DEBT RECOVERY TRIBUNAL, KOLKATA IN RESPE CT OF BANK LOAN DEFAULT. THE CIT-A SOUGHT REMAND REPORT FROM THE AS SESSING OFFICER, WHO SUBMITTED HIS REPORT ON 27.06.2013 WHICH READS AS U NDER:- 'AS DESIRED, THE REPORT IS REGARDING THE GENUINENES S OF ACQUIRING THE SHARE CAPITAL OF RS.38,10,000/- CLAIMED TO HAVE HAD BEEN INTRODUCED BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSI DERATION I.E. FINANCIAL YEAR 2005-06. I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 11 AS REPORTED EARLIER THAT FOR A CROSS VERIFICATION F ROM THE ROC, KOLKATA, HIS OFFICE ISSUED LETTER AND ALSO SENT INS PECTOR PHYSICALLY TO THE ROC, KOLKATA FOR A PRIMARY VERIFICATION OF THE SUBMISSION OF THE REQUIRED FORMS(NO.-2 ETC.). THE ROC, KOLKATA YET TO GIVE ANY WRITTEN CONFIRMATION REGARDING THE MATTER. WHO RATHER INSIS TED TO CHECK FROM ONLINE SYSTEM. HOWEVER, THOUGH AS ON TODAY, THE ROC HAS NOT GIVEN ANY WRITTEN CLARIFICATION BUT THE AUTHORIZED REPRESENTATIVE (AU THORIZED REPRESENTATIVE) OF THE ASSESSEE COMPANY HAS PRODUCE D THE ORIGINAL ACKNOWLEDGEMENT SLIP ISSUED BY ROC IN SUPPORT OF AS SESSEE'S SUBMISSION OF FORM NO.2. OBTAINED A COPY OF SUCH AC KNOWLEDGEMENT WHICH IS DT. 15-07-2005 BEARING REG NO.1198839 AND REG. NO.21092383 ALONG WITH THE ANNEXURE REFLECTING THE NAMES AND ADDRESSES OF FIVE SHARE ALLOTTEES. THEREFORE, APPAR ENTLY IT CAN BE SAID THAT ROC FORMALITIES WERE ACCOMPLISHED FOR RAISING THE SHARE CAPITAL CONSIDERING THE SURROUNDINGS. FURTHER, FOR NECESSARY VERIFICATION OF ALL THE FIVE SUCH APPLICANTS ABOUT THEIR PHYSICAL EXISTENCE, GENUINENESS OF THE TRANSACTIONS, CREDITWORTHINESS TO A POSSIBLE EXTENT, ETC., THIS O FFICE COMMUNICATED THE ASSESSEE REQUESTING TO CLARIFY ABOUT THE ADDRES SES OF THE SHARE APPLICANTS GIVEN AS IN THE FORM NO. 2 AND THE STATE MENT OF THE BANK ACCOUNTS CONCERNED OF THE ASSESSEE WHEREIN THE SHAR E APPLICATION MONEY HAD BEEN CREDITED. IN RESPONSE, THE AUTHORIZED REPRESENTATIVE MR. PART HA CHOWDHURY APPEARED, WHO WAS REQUESTED TO FURNISH THE STATEMEN T OF THE CORRESPONDING BANK A/C OF THE ASSESSEE AND CLARIFY ALL THE TRANSACTION IN RESPECT OF THE SHARE APPLICATION MONEY CLAIMED T O HAVE HAD BEEN RECEIVED BY THE ASSESSEE. THE CHEQUE NOS., DATE OF RECEIPT, AMOUNT INVOLVED, BANK DETAILS OF EACH OF THE SHARE APPLICA NTS WERE ALSO REQUESTED TO BE CLARIFIED. THE AUTHORIZED REPRESENT ATIVE WAS EVEN GIVEN WITH A LIBERTY TO ARRANGE TO PRODUCE THE PERS ON CONCERNED OF THE SHARE APPLICANTS WITH THEIR DOCUMENTS CONCERNED IN SUPPORT OF THEIR TRANSACTIONS WITH THE ASSESSEE TO BUY THE SHA RES. AS REQUESTED BY THE AUTHORIZED REPRESENTATIVE, REPE ATED OPPORTUNITIES WERE EXTENDED BUT NONE OF THE REPRESE NTATIVE OF ANY OF THE SHARE APPLICANT COMPANIES COULD BE BROUGHT BEFO RE THIS OFFICE. WHEREAS FROM A COPY OF A DOCUMENT I.E. A LETTER ISS UED FROM 'DEBTS RECOVERY TRIBUNAL NO.1, KOLKATA,' TO THE ASSESSEE, IT APPEARS THAT ONE OF THE SHARE APPLICANTS, NAMELY M/S LAXMI VYAPAAR P LTD., IS AN ASSOCIATED CONCERN OF THE ASSESSEE. (COPY ENCLOSED) SIGNIFICANTLY, WITHOUT ANY LETTER BEING SENT TO THE SHARE APPLICANTS FROM THIS OFFICE, ALL THE FIVE SUCH SHARE APPLICANT COMPANIES HAVE MADE CERTAIN WRITTEN REPRESENTATION TO THIS OFFICE BY THEMSELVES, IN COURSE OF THE CURRENT REMAND PROCEEDINGS, THAT THEY ACQUIRED THE I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 5 OF 11 SHARES FROM THE ASSESSEE AND PAID THE AMOUNT CONCER NED , WHICH PROBABLY, AS INSISTED AND/OR ARRANGED BY THE ASSESS EE, AS OBVIOUS. HOWEVER, FROM SUCH INTIMATIONS RECEIVED, IT IS OBSE RVED THAT ONLY TWO OF THE APPLICANTS HAVE MENTIONED THE BANK CHEQUE NO S. AND DATE THAT THEY ISSUED TO THE ASSESSEE. OTHER THREE HAVE NOT G IVEN ANY SUCH INFORMATION . THE AUTHORIZED REPRESENTATIVE SUBSEQUENTLY ADMITT ED A FACT THAT THREE OUT OF FIVE OF THE SHARE APPLICANT COMPANIES ARE CLOSELY ASSOCIATED COMPANIES OF THE ASSESSEE AND MI GHT HAVE TRANSFERRED THE MONEY FROM A/C TO A/C IN THE SAME B RANCH. THIS OFFICE, IN THE MEANTIME OBTAINED THE STATEMENT OF T HE BANK ALC CONCERNED OF THE ASSESSEE (CURRENT NO.55049017602 W ITH SBI, CAMAC ST. BR.) SHOWN TO THE AUTHORIZED REPRESENTATIVE AND REQUESTED FOR HIS CLARIFICATION. WHO, ON GOING THROUGH, COULD NOT CON CLUSIVELY CLARIFY ANY OTHER TRANSACTIONS OTHER THAN THOSE WHO MENTION ED THE CHEQUE NOS. AND THE AMOUNT OF CHEQUE, VALUE OF SHARES . THE INSPECTOR ATTACHED TO THIS OFFICE HAVE BEEN SEN T TO ALL THE GIVEN ADDRESSES OF THE SHARE APPLICANT COMPANIES, WHO, IN HIS REPORT CLEARLY STATES THAT ALL THE COMPANIES ARE FOUND TO BE NOT OPERATIVE AT PRESENT, THE PREMISES ARE CLOSED, NO NAME BOARD OF THE COMPANIES ARE FOUND, ETC. A COPY OF THE REPORT IS ENCLOSED FOR YO UR KIND PERUSAL . THE ABOVE STATED DETAILS WITH THE VALUE OF THE SHAR ES AND A BRIEF REMARKS ARE GIVEN IN A TABULAR FORM FOR YOUR REFERE NCE AT A GLANCE AS FOLLOWS:- NAMES OF THE SHARE APPLICANT COS. NOS. OF SHARES ALLOTTED VALUE IN (RS.) INVOLVED CHEQUE NOS. MENTION ED BY APPLICAN T DATE OF CREDIT TO ASSESSEES A/C REMARKS PALPIT VINIYOG P. LTD. 1500000 150000/- NOT MENTION ED NOT CLARIFIED COULDNT BE CLARIFIED BY THE AUTHORIZED REPRESENTA TIVE (ASSOCIATED CONCERN) KAYAL VYAPAR P. LTD. 50000 500000/- 965722 &965723 25.06.05 & 28.06.05 CLARIFIED LAXMI VYAPAR P. LTD. 60000 600000/- NOT MENTION ED NOT CLARIFIED THE AUTHORIZED REPRESENTA TIVE ONLY HINTED AT A CREDIT I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 6 OF 11 ENTRY DT. 8.6.05 OF RS. 6 LACS MATCHING WITH THE FIGURE BUT NO CONCLUSIVE EVIDENCE PRODUCED TOUCHSTONE COMTRADE P. LTD. 100000 1000000/ - 922416 & 922417 20.05.05 CLARIFIED SULAKE STEELS P. LTD. 21000 210000/- NOT MENTION ED COULDNT BE CLARIFIED BY THE AUTHORIZED REPRESENTA TIVE (ASSOCIATED CONCERN) TOTAL 38,10,000 /- THEREFORE, THIS OFFICE REPORTS THAT GENUINENESS OF BANKING TRANSACTION ONLY IS OBSERVED IN RESPECT OF TWO PART IES INVOLVING A TOTAL AMOUNT OF RS.15,00,000/-. 6. BASING ON REMAND REPORT, CIT(APPEALS) OBSERVED A S UNDER: 5-1. I HAVE PERUSED THE ASSESSMENT ORDER AND CONSI DERED THE SUBMISSION OF THE APPELLANT. THE FACT OF THE CA SE IS THAT THE AO NOTED THAT THE APPELLATE COMPANY CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS.38,10,000/- AS SHARE APPLI CATION MONEY FROM 5 DIFFERENT PERSONS. THE A.O. DURING THE ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDING S TRIED TO VERIFY THE GENUINENESS OF THE SHARE APPLIC ATION MONEY/SHARE APPLICANTS THROUGH THE APPELLANT BUT HE FOUND FROM THE DETAILS RECEIVED THAT IN THE CASES O F M/S. PALPIT VINIYOG P. LTD., M/S. LAXMI VYAPAAR P. LTD. AND M/S. SULAKE STEEL P. LTD., NO CHEQUE NOS. WITH REGARD TO APPLICATION MONEY WAS MENTIONED BY WHICH IT COULD N OT BE PROVED THAT THE TRANSACTION WAS MADE THROUGH BANKS. HOWEVER, IN THE CASES OF M/S. KAYAL VYAPAR P. LTD. AND M/S. TOUCHSTONE COMTRADE P. LTD., THE A.O COULD CONCLUDE THAT IN THESE CASES THE TRANSACTION WAS MADE THROUGH BAN KING CHANNEL. BEFORE ME, THE APPELLANT FILED A COPY OF F ORM NO. 2 FILED BEFORE THE ROC AND ALSO COPIES OF BANK STAT EMENTS IN THE CASES OF M/S. KAYAL VYAPAAR P. LTD., M/S. TO UCHSTONE I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 7 OF 11 CORN TRADE P. LTD. AND M/B. LAXMI VYAPAAR P. LTD. B Y WHICH IT IS PROVED THAT THE SHARE APPLICATION MONEY WAS P AID THROUGH BANKS, HOWEVER, IN THE CASES OF M/S. PALPIT VINIYOG P. LTD. AND M/S. SULAKE STEEL P. LTD. COPIES OF CON FIRMATIONS FROM THE PARTIES CONCERNED WAS FILED BUT NO COPIES OF RELEVANT BANK STATEMENTS WERE FILED BY WHICH IT COU LD NOT BE PROVED THAT THE SHARE APPLICATION MONEY WAS PAID THROUGH BANKS. THEREBY, THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS COULD NOT BE PROVED IN ABSENCE OF PROVING THE SOURCE OF MONEY. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O. IS DI RECTED TO DELETE ADDITION OF RS.21,00,000/- AND THE BALANCE A DDITION IN CONNECTION WITH THE CASES OF M/S. PALPIT VINIYOG P. LTD. AND M/S. SULAKE STEEL P. LTD. OF RS.15,00,000/- AND RS.2,10,000/- RESPECTIVELY ARE CONFIRMED. THEREBY, THE APPEAL IS PARTLY ALLOWED. 7. THUS, THE CIT(APPEALS) CONFIRMED THE ADDITION AG GREGATING TO RS.17,10,000/- IN RESPECT OF M/S. PALPIT VINIYOG PV T. LTD. AND M/S. SULAKE STEEL PVT. LIMITED AMOUNTING TO RS.15,00,000/- AND RS.2,10,000/- RESPECTIVELY, OUT OF THE TOTAL ADDITION OF RS.38,10 ,000/- AND HE DELETED THE BALANCE ADDITION OF RS.21,00,000/- IN RESPECT O F M/S. KAYAL VYAPAR PVT. LIMITED, M/S. LAXMI VYAPAR PVT. LIMITED AND M/ S. TOUCHSTONE COMTRADE PVT. LTD. AMOUNTING TO RS.5,00,000/-, 6,00 ,000/- & RS.10,00,000/- RESPECTIVELY. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WITH REGARD TO THE ADDITION OF RS.38,10,000/- UNDER SECTION 68 OF THE ACT IN GROUN D NO. 3 ON ACCOUNT OF SHARE APPLICATION MONEY, WE FIND THAT THE AO NOTED THAT THE APPELLATE COMPANY CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS.38 ,10,000/- AS SHARE APPLICATION MONEY FROM 5 DIFFERENT PERSONS. THE A.O . DURING THE ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDING S TRIED TO VERIFY THE GENUINENESS OF THE SHARE APPLICATION MONEY/SHARE AP PLICANTS THROUGH THE APPELLANT BUT HE FOUND FROM THE DETAILS RECEIVED TH AT IN THE CASES OF M/S. PALPIT VINIYOG P. LTD., M/S. LAXMI VYAPAAR P. LTD. AND M/S. SULAKE STEEL P. LTD., NO CHEQUE NOS. WITH REGARD TO APPLICATION MON EY WAS MENTIONED BY I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 8 OF 11 WHICH IT COULD NOT BE PROVED THAT THE TRANSACTION W AS MADE THROUGH BANKS. HOWEVER, IN THE CASES OF M/S. KAYAL VYAPAR P . LTD. AND M/S. TOUCHSTONE COMTRADE P. LTD., THE A.O COULD CONCLUDE THAT IN THESE CASES, THE TRANSACTION WAS MADE THROUGH BANKING CHANNEL. W E ALSO FIND THAT THE ASSESSEE-COMPANY FILED A COPY OF FORM NO. 2 FILED B EFORE THE ROC AND ALSO COPIES OF BANK STATEMENTS IN THE CASES OF M/S. KAYA L VYAPAAR P. LTD., M/S. TOUCHSTONE CORN TRADE P. LTD. AND M/B. LAXMI VYAPAA R P. LTD. BY WHICH IT WAS PROVED THAT THE SHARE APPLICATION MONEY WAS PAI D THROUGH BANKS, HOWEVER, IN THE CASES OF M/S. PALPIT VINIYOG P. LTD . AND M/S. SULAKE STEEL P. LTD. COPIES OF CONFIRMATIONS FROM THE PARTIES CO NCERNED WAS FILED BUT NO COPIES OF RELEVANT BANK STATEMENTS WERE FILED BY WHICH IT COULD NOT BE PROVED THAT THE SHARE APPLICATION MONEY WAS PAID TH ROUGH BANKS. THEREBY, THE CREDITWORTHINESS AND GENUINENESS OF TH E TRANSACTIONS COULD NOT BE PROVED IN ABSENCE OF PROVING THE SOURCE OF M ONEY. THEREFORE, THE LD. CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO DELETE ADDITION OF RS.21,00,000/- AND THE BALANCE ADDITIONS IN CONNECT ION WITH THE CASES OF M/S. PALPIT VINIYOG P. LTD. AND M/S. SULAKE STEEL P . LTD. OF RS.15,00,000/- AND RS.2,10,000/- RESPECTIVELY WERE CONFIRMED. WE, THEREFORE, DO NOT FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS) A ND UPHOLD THE SAME. GROUND NO. 3 OF THE ASSESSEES APPEAL IS DISMISSED. 9. GROUND NO. 4 IS RELATING TO AN ADDITION OF RS. 1 ,06,050/- CLAIMED TOWARDS FILLING FEES. THE ASSESSING OFFICER FOUND F ROM THE BALANCE SHEET THAT THE ASSESSEE CLAIMED EXPENSES OF RS. 1,06,050/ - AS FILING FEES FROM THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER RE QUESTED THE ASSESSEE TO PRODUCE THE DETAILS OF FILING FEES, BUT, HOWEVER, N EITHER THE ASSESSEE NOR THE AR OF THE ASSESSEE APPEARED OR SUBMITTED ANY WR ITTEN EXPLANATION IN RESPECT OF ABOVE CLAIM. THE ASSESSING OFFICER OBSER VES THAT, IN SPITE OF ADEQUATE OPPORTUNITIES, THE ASSESSEE FAILED TO SUBS TANTIATE ITS CLAIM AND THE ASSESSEE FAILED TO FILE ANY DOCUMENTARY EVIDENC E IN SUPPORT OF ITS CLAIM. THE ASSESSING OFFICER TREATED THE SAID AMOUN T AS CAPITAL I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 9 OF 11 EXPENDITURE AND DISALLOWED AND ADDED TO THE TOTAL I NCOME OF THE ASSESSEE FINDING AS UNDER: 5.3. SECTION 35D OF THE INCOME TAX ACT CLEARLY STAT ES THAT THE EXPENDITURE INCURRED ON ACCOUNT OF INCREASE IN AUTH ORIZED CAPITAL IS ALLOWABLE FOR THE FIRST TIME ONLY. IT AL SO STATES THAT IF THE ASSESSEE IS PAID ANY AMOUNT TOWARDS THE RAISING / ENHANCEMENT OF AUTHORISED CAPITAL FOR THE SECOND TI ME AS WELL AS SUBSEQUENT TIMES THE SAME WILL BE TREATED AS CAP ITAL EXPENDITURE AND WILL NOT BE ALLOWED. HENCE THE AMOU NT OF RS 1,05,550/- (RS.1,06,050 - RS.500/-) WHICH WAS INCUR RED TOWARDS THE PAYMENT OF FEES FOR INCREASE IN AUTHORI ZED CAPITAL FOR SECOND TIME IS TREATED AS CAPITAL EXPENDITURE A ND DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE COMPANY. 10. THE ASSESSEE QUESTIONED THE ORDER OF ASSESSING OFFICER IN RESPECT OF DISALLOWANCE OF EXPENSES INCURRED ON ACCOUNT OF ENH ANCEMENT OF AUTHORIZED SHARE CAPITAL AMOUNTING TO RS.1,06,050/- BEFORE THE CIT(APPEALS). THE CIT (APPEALS) CONFIRMED THE ADDIT ION MADE BY THE ASSESSING OFFICER BY TREATING THE SAME AS CAPITAL E XPENDITURE. THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER OBSERVED AS UNDE R:- 7. GROUND NO. (III) RELATES TO ADDITION OF RS. 1, 05,550/- ON ACCOUNT OF FILING FEES. THE FACT OF THE CASE IS THAT THE APPELLANT INCURRED CERTAIN EXPENSES WITH REGARD TO INCREASE IN AUTHORIZED CAPITAL. SINCE, THE NATURE O F EXPENDITURE IS OF CAPITAL, THE A.O. WAS JUSTIFIED T O TREAT THE SAME AS CAPITAL EXPENDITURE. HENCE, APPEAL ON THIS GROUND IS DISMISSED. 11. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 12. AT THE TIME OF HEARING BEFORE US, THE LD AR FOR THE ASSESSEE URGED THAT THE ORDER OF THE CIT(APPEALS) BE REVERSED BY C ONTENDING THAT THE EXPENSES WERE INCURRED AS FILING FEES FOR SUBMISSIO NS OF NECESSARY ENTRIES BEFORE THE ROC I.E. FORM NO. 5, FORM NO. 2, FORM NO . 23 AND FORM NO. 20B AND SUCH BENEFIT REMAINS FOR THAT YEAR ITSELF AND D OES NOT CARRY BENEFIT TO SUBSEQUENT YEARS AND IT IS REVENUE IN NATURE. ON TH E OTHER HAND, THE LD. D.R. VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(APPE ALS). I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 10 OF 11 13. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT THE ASSESSEE INCURRED CERTAIN EXPENSES BY WAY OF FILING FEES TO ROC TO INCREASE AUTHORIZED CAPITAL AND IN OUR OPINI ON THE ISSUE ON HAND IS HIT BY JUDGEMENT HONBLE SUPREME COURT IN THE CASE OF BROOK BOND INDIA LTD VS CIT REPORTED IN 225 ITR 798. THE RELEVANT OF PORTION OF WHICH IS REPRODUCED HEREIN BELOW: 5. DR. PAL HAS, HOWEVER, SUBMITTED THAT THIS DECISION DO ES NOT COVER A CASE, LIKE THE PRESENT CASE, WHERE THE OBJECT OF ENHANCEMENT OF THE CAPITAL WAS TO HAVE MORE WORKING FUNDS FOR THE ASSESSEE TO CARRY ON ITS BUSINESS AND TO EARN MORE PROFIT AND THAT IN SUCH A CASE THE EXPENDIT URE THAT IS INCURRED IN CONNECTION WITH ISSUING OF SHARES TO INCREASE THE CAPI TAL HAS TO BE TREATED AS REVENUE EXPENDITURE. IN THIS CONNECTION, DR. PAL HAS INVITED OUR ATTENTION TO THE SUBMISSIONS THAT WERE URGED BY THE LEARNED COUNSE L FOR THE ASSESSEE BEFORE THE AAC AS WELL AS BEFORE THE TRIBUNAL. IT IS NO DOUBT TRUE THAT BEFORE THE AAC AS WELL AS BEFORE THE TRIBUNAL IT WAS SUBMIT TED ON BEHALF OF THE ASSESSEE THAT INCREASE IN THE CAPITAL WAS TO MEET THE NEED FOR WORKING FUNDS FOR THE ASSESSEE-COMPANY. BUT THE STATEMENT OF CASE S ENT BY THE TRIBUNAL DOES NOT INDICATE THAT A FINDING WAS RECORDED TO THE EFFECT THAT THE EXPANSION OF THE CAPITAL WAS UNDERTAKEN BY THE ASSESSEE IN ORDE R TO MEET THE NEED FOR MORE WORKING FUNDS FOR THE ASSESSEE. WE, THEREFORE, C ANNOT PROCEED ON THE BASIS THAT THE EXPANSION OF THE CAPITAL WAS UNDERTAKEN BY THE ASSESSEE FOR THE PURPOSE OF MEETING THE NEED FOR WORKING FUNDS FOR THE ASSESSEE TO CARRY ON ITS BUSINESS. IN ANY EVENT, THE ABOVE QUOTED OB SERVATIONS OF THIS COURT IN PUNAJB STATE INDUSTRIAL DEV. CORPN. LTD. VS. CIT (S UPRA) CLEARLY INDICATE THAT THOUGH THE INCREASE IN THE CAPITAL RESULTS IN EXPANSION OF THE CAPITAL BASE OF THE COMPANY AND INCIDENTALLY THAT WOULD HELP IN THE BU SINESS OF THE COMPANY AND MAY ALSO HELP IN THE PROFIT-MAKING, THE EXPENSES INCURRED IN THAT CONNECTION STILL RETAIN THE CHARACTER OF A CAPITAL EX PENDITURE SINCE THE EXPENDITURE IS DIRECTLY RELATED TO THE EXPANSION OF THE CAPITAL BASE OF THE COMPANY. 14. IN THE LIGHT OF AFORE LAID LAW BY THE HONBLE S UPREME COURT, SINCE THE NATURE OF EXPENDITURE INCURRED IN THE PRESENT C ASE ALSO PAID TOWARDS FILING FEES ROC AND THEREFORE, IS OF CAPITAL IN NAT URE, THUS, WE ARE OF THE VIEW THAT THE FACTS OF THE CASE ON HAND AND THAT OF CASE INVOLVED THEREIN ARE SIMILAR AND THE LAW LAID DOWN THEREIN IS APPLIC ABLE TO THE PRESENT CASE AND THE ORDER OF CIT(APPEALS) IS JUSTIFIED IN TREAT ING THE SAME AS CAPITAL EXPENDITURE. ACCORDINGLY, RS.70,000/- CLAIMED BY TH E ASSESSEE IS I.T.A. NO. 2732/KOL./2013 ASSESSMENT YEAR: 2006-2007 PAGE 11 OF 11 DISALLOWED. WE FIND THAT THE REMAINING SUM OF RS.36 ,050/- IS INCURRED TOWARDS REGULAR FILING FEES PAID TO ROC, WHICH ARE SQUARELY ALLOWABLE AS DEDUCTION. ASSESSING OFFICER IS DIRECTED ACCORDINGL Y. 15. GROUNDS NO. 1, 2 & 5 OF THE ASSESSEES APPEAL A RE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 29 TH , 2016. SD/- SD/- (M. BALAGANESH) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 29 TH DAY OF JUNE, 2016 COPIES TO : (1) M/S. BHALGO DRILLINGS PVT. LIMITED, 64, SAMBHUNATH PANDIT STREET, KOLKATA-700 025 (2) INCOME TAX OFFICER, WARD-3(4), KOLKATA, AAYAKAR BHAWAN,4 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XX, KOLKAT A (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.