Khushi Conbuild (P) Ltd., Kolkata V. I.T.O.,Ward-9(3), Kolkata

ITA 31/KOL/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9769 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Revision of order; Set aside
• Section: 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (D), KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT (KZ) & SHRI A. T. VARKEY, JM] [THROUGH VIRTUAL COURT] I.T.A. NO. 31/KOL/2020 KHUSHI CONBUILD (P) LTD......................................................................................................APPELLANT C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA 700069. [PAN: AADCK 1436 G] VS ITO, WARD 9(3), KOLKATA...............................RESPONDENT P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI VIJAY SHANKAR, JCIT APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 02, 2020 DATE OF PRONOUNCING THE ORDER : JULY 02, 2020 ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) - 2, KOLKATA DATED 02.01.2017 PASSED EX-PARTE WHEREBY HE DISMISSED THE APPEAL OF THE ASSESSEE FOR NON-PROSECUTION. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES RELATED TO TRADING ETC. IN THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3)/147 OF THE ACT VIDE AN ORDER DATED 09.08.2010, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS. 29,960/- AS AGAINST THE LOSS OF RS. 8,040/- DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. SUBSEQUENTLY, THE SAID ORDER PASSED BY THE AO U/S 143(3)/147 WAS SET ASIDE BY THE CONCERNED LD. CIT VIDE ORDER DATED 15.03.2013 PASSED U/S 263 OF THE 2 I.T.A. NO. 31/KOL/2020 KHUSHI CONBUILD (P) LTD. ACT WITH THE DIRECTION TO THE AO TO MAKE THE ASSESSMENT AFRESH AFTER CARRYING OUT THOROUGH AND DETAILED ENQUIRY ON THE ISSUE OF SHARE CAPITAL OF RS. 16,62,50,000/- RAISED BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION WHICH INCLUDED SHARE PREMIUM OF RS. 15,78,42,500/-. AS PER THE DIRECTION OF THE LD. CIT AS GIVEN IN THE ORDER U/S 263, SUMMONS U/S 131OF THE ACT WERE ISSUED BY THE AO TO THE DIRECTORS OF THE ASSESSEE COMPANY AS WELL AS TO THE DIRECTORS OF SHARE SUBSCRIBER COMPANIES. THE SAID SUMMONS HOWEVER REMAINED UNCOMPLIED WITH. AS NOTED BY THE AO, THE ASSESSEE COMPANY WAS PRACTICALLY HAVING VERY INSIGNIFICANT BUSINESS ACTIVITIES AND THE HIGH SHARE PREMIUM COLLECTED BY IT WAS TOTALLY UNJUSTIFIED. KEEPING IN VIEW THIS MATERIAL FACTUAL ASPECT OF THE CASE AS WELL AS THE FAILURE OF THE ASSESSEE COMPANY TO ESTABLISH THE GENUINENESS OF THE RELEVANT TRANSACTIONS INVOLVING RAISING OF SHARE CAPITAL WITH A VERY HIGH PREMIUM AS WELL AS THE CREDITWORTHINESS OF THE CONCERNED SHARE SUBSCRIBERS, THE AO TREATED THE ENTIRE SHARE CAPITAL AND SHARE PREMIUM AGGREGATING TO RS. 16,62,50,000/- AS UNEXPLAINED CASH CREDIT AND ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT BY RELYING INTER ALIA ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT (214 ITR 801). 3. THE ADDITION OF RS. 16,62,50,000/- MADE BY THE AO U/S 68 BY TREATING THE ENTIRE SHARE CAPITAL AND SHARE PREMIUM AS UNEXPLAINED CASH CREDIT WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A) AND SINCE THERE WAS NO SATISFACTORY COMPLIANCE ON THE PART OF THE ASSESSEE TO THE NOTICES ISSUED BY HIM FIXING THE SAID APPEAL 3 I.T.A. NO. 31/KOL/2020 KHUSHI CONBUILD (P) LTD. FOR HEARING FROM TIME TO TIME, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE FOR NON-PROSECUTION VIDE HIS APPELLATE ORDER DATED 02.01.2017 PASSED EX-PARTE. 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. IN SUPPORT OF THE PRELIMINARY ISSUE RAISED BY THE ASSESE IN THIS APPEAL CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) EX-PARTE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE APPEAL OF THE ASSESSEE WAS INITIALLY FIXED FOR HEARING BEFORE THE LD. CIT(A) ON 04.08.2016 AND 28.09.2016. HE HAS SUBMITTED THAT THE ASSESSEE DULY SOUGHT ADJOURNMENT ON BOTH THESE OCCASIONS BY FILING THE APPLICATIONS IN WRITING AND ACCEPTING THE SAME, THE LD. CIT(A) ALSO ADJOURNED THE HEARINGS AND FIXED IT ON 23.12.2016. HE HAS SUBMITTED THAT SINCE THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS OUT OF STATION ON 23.12.2016, HE COULD NOT APPEAR BEFORE THE LD. CIT(A) ON THE SAID DATE NOR COULD HE FILE THE APPLICATION SEEKING ADJOURNMENT. HE HAS SUBMITTED THAT THERE WAS THUS A SUFFICIENT CAUSE FOR THE NON- APPEARANCE OF THE ASSESSEE BEFORE THE LD. CIT(A) ON 23.12.2016, BUT THE LD. CIT(A) WITHOUT GIVING ANY FURTHER OPPORTUNITY OF HEARING TO THE ASSESSEE PROCEEDED TO DISMISS THE APPEAL OF THE ASSESSEE VIDE HIS IMPUGNED ORDER PASSED EX-PARTE. HE HAS ALSO SUBMITTED THAT THE ADDITION U/S 68 WAS MADE BY THE AO BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT RECEIVED DURING THE YEAR UNDER CONSIDERATION AS UNEXPLAINED CASH CREDIT MAINLY FOR THE FAILURE OF THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE SHARE SUBSCRIBING COMPANIES FOR 4 I.T.A. NO. 31/KOL/2020 KHUSHI CONBUILD (P) LTD. EXAMINATION BEFORE THE AO. HE HAS SUBMITTED THAT THE ASSESSEE COMPANY IS NOW IN A POSITION TO PRODUCE THEM ALONG WITH THE RELEVANT SUPPORTING DOCUMENTS FOR THE EXAMINATION/VERIFICATION OF THE AO AND URGED THAT AN OPPORTUNITY MAY GIVEN TO THE ASSESSEE TO DO SO BY SENDING THE MATTER BACK TO THE AO. ALTHOUGH THE LD. DR HAS INITIALLY RAISED STRONG OBJECTION FOR GIVING SUCH OPPORTUNITY TO THE ASSESSEE IN VIEW OF THE NON-COMPLIANT ATTITUDE OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO AS WELL AS DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), HE HAS FINALLY SUBMITTED THAT IF THE TRIBUNAL IS INCLINED TO GIVE SUCH OPPORTUNITY TO THE ASSESSEE, THE ASSESSEE SHOULD UNDERTAKE TO PRODUCE THE DIRECTORS OF THE SHARE SUBSCRIBING COMPANIES ALONG WITH THE RELEVANT DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE RELEVANT TRANSACTIONS AS WELL AS CREDITWORTHINESS OF THE SHARE SUBSCRIBER COMPANIES WITHOUT ANY FURTHER DELAY. SINCE THE LEARNED COUNSEL FOR THE ASSESSEE HAS UNDERTAKEN TO MAKE A DUE COMPLIANCE BEFORE THE AO IN THIS REGARD WITHOUT ANY FURTHER DELAY AND HAS ALSO UNDERTAKEN TO EXTEND ALL THE POSSIBLE COOPERATION IN ORDER TO ENABLE THE AO TO COMPLETE THE ASSESSMENT IN THE SET ASIDE PROCEEDINGS EXPEDITIOUSLY, WE CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) EX-PARTE AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AFTER GIVING THE ASSESSEE ONE MORE OPPORTUNITY TO PRODUCE THE DIRECTORS OF THE CONCERNED SUBSCRIBING COMPANIES ALONG WITH THE RELEVANT DOCUMENTARY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE RELEVANT TRANSACTIONS INVOLVING RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM 5 I.T.A. NO. 31/KOL/2020 KHUSHI CONBUILD (P) LTD. AMOUNT AS WELL AS THE CREDITWORTHINESS OF THE SHARE SUBSCRIBER COMPANIES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JULY, 2020. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE PRESIDENT DATED: 02/07/2020 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. KHUSHI CONBUILD (P) LTD., C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA 700 069. 2. ITO, WARD 9(3), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA