M/s Jainex Metaliks Ltd., Kolkata V. THE ACIT, CIR-3, KOLKATA, Kolkata

ITA 355/KOL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7017 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 06-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CIT DR REV
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained cash credit; Bogus Share capital
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI S.S. GODARA, JUDICIAL MEMBER & DR. A.L. SAINI, ACCOUNTANT MEMBER) ITA NO. 355/KOL/2015 ASSESSMENT YEAR: 2005-06 M/S. JAINEX METALIKS LTD.................................................APPELLANT 11, BRABOURNE ROAD 3 RD FLOOR KOLKATA 700 001 [PAN : AAACJ 6568 R] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, KOLKATA...........................RESPONDENT APPEARANCES BY: SHRI MIRAJ D. SHAH, A/R, APPEARED ON BEHALF OF THE ASSESSEE . SHRI ROBIN CHOUDHURY, ADDL. CIT D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : APRIL 22 ND , 2019 DATE OF PRONOUNCING THE ORDER : APRIL 26 TH 2019 ORDER PER S.S. GODARA, JM :- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005-06 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)- I, KOLKATAS ORDER DATED 31/12/2014 PASSED IN CASE NO. 56/CIT(A)-I/C-3/2007-08, CONFIRMING THE ASSESSING OFFICERS ACTION ADDITION OF RS.5,86,150/- ON ACCOUNT OF EXCISE DUTY & CESS U/145A AND SECTION 68 ADDITION OF SHARE APPLICATION MONEY AMOUNTING TO RS.4,50,000/- TREATED AS UNEXPLAINED CASH CREDITS; RESPECTIVELY IN PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEES FORMER SUBSTANTIVE GROUND CHALLENGES THE LOWER AUTHORITIES ACTION OF ADDING RS.5,86,150/- ON ACCOUNT OF EXCISE DUTY NOT INCLUDED IN CLOSING STOCK U/S 145A OF THE ACT. THE CIT(A)S DETAILED DISCUSSION ON THIS FORMER ISSUE READS AS FOLLOWS:- 2 ITA NO. 355/KOL/2015 ASSESSMENT YEAR: 2005-06 M/S. JAINEX METALIKS LTD 3 ITA NO. 355/KOL/2015 ASSESSMENT YEAR: 2005-06 M/S. JAINEX METALIKS LTD 4 ITA NO. 355/KOL/2015 ASSESSMENT YEAR: 2005-06 M/S. JAINEX METALIKS LTD 3. WE HAVE HEARD RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAD MADE IMPUGNED ADDITION AFTER NOTICING THE DIFFERENCE IN GROSS PROFIT OF RS.5,86,150/- ON ACCOUNT OF NON INCLUSION OF EXCISE DUTY IN CLOSING STOCK. THE ASSESSEE APPEARS TO HAVE FILED ITS AUDITORS EXPLANATORY NOTE DATED 12/12/2018 BEFORE THE CIT(A) WHILST SEEKING TO RECONCILE THE IMPUGNED DIFFERENCE. THE SAME STANDS SUMMARILY REJECTED FOR THE SOLE REASON THAT THIS RECONCILIATION OUGHT TO HAVE BEEN SUBMITTED WITH THE ORIGINAL TAX AUDIT REPORT DURING THE COURSE OF ASSESSMENT ONLY. NEITHER OF THE LOWER 5 ITA NO. 355/KOL/2015 ASSESSMENT YEAR: 2005-06 M/S. JAINEX METALIKS LTD AUTHORITIES HAS CONSIDERED THE ASSESSEES DETAILS IN ITS EXPLANATORY NOTICE RECONCILING THE IMPUGNED DIFFERENCE ON FACTUAL ASPECTS IN OTHER WORDS SO AS TO VERIFY THE CONSEQUENTIAL FIGURES IN EITHER OF THE TWO CONDITIONS NAMELY EXCLUSION AND INCLUSION OF EXCISE DUTY. WE THEREFORE DEEM IT PROPER TO RESTORE THE INSTANT ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FACTUAL VERIFICATION OF ASSESSEES RECONCILIATION. THE ASSESSEE IS DIRECTED TO PRODUCE ALL THE RELEVANT DETAILS WITHIN THREE EFFECTIVE OPPORTUNITIES OF HEARING SINCE WE ARE DEALING WITH ASSESSMENT YEAR 2005-06. THIS FORMER SUBSTANTIVE GROUND IS TREATED AS ACCEPTED FOR STATISTICAL PURPOSES IN ABOVE TERMS. 4. NEXT COMES THE ASSESSEES SECOND SUBSTANTIVE GROUND SEEKING TO DELETE THE ADDITION OF RS.4,50,000/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM S/SH. L.N. DASH, SHRI SURENDRA KOTHARI & SHRI RAJU KUMAR BHANSALI. BOTH THE LOWER AUTHORITIES APPEAR TO HAVE TAKEN A VERY STRONG NOTE OF CASH DEPOSITS MADE IMMEDIATELY BEFORE THE IMPUGNED SHARE SUBSCRIPTION IN SUBSCRIBERS ACCOUNTS TO CONCLUDE THAT IT IS THE ASSESSEES UNDISCLOSED INCOME WHICH HAS BEEN PLOUGHED BACK TO THE SYSTEM THROUGH THE SAID INVESTORS BY USING THEM AS A DUMMY. WE SEE NO REASON TO EXPRESS OUR AGREEMENT WITH THE IMPUGNED ADDITION. WE FIND THAT THE ASSESSEE HAS FILED ALL DETAILS OF ITS THREE SUBSCRIBERS I.E., ADDRESSES, PANS, INCOME TAX RETURNS AND BANK STATEMENTS ETC. RIGHT FROM SCRUTINY ONWARDS. IT HAD IN FACT PRODUCED ONE OF THE INVESTOR SHRI RAJU KUMAR BHANSALI DURING THE ASSESSMENT PROCEEDINGS AS WELL. THERE IS NO EVIDENCE MUCH LESS COGENT ONE QUOTED AT EITHER OF THE LOWER AUTHORITIES BEHEST TO DISPUTE THE SAME APART FROM MAKING THE ADDITION ON THE FOREGOING CONJECTURES AND SURMISES. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THAT THE SAID CASH DEPOSITS ALSO STAND ACCEPTED AS GENUINE IN THE HANDS OF THE THREE SUBSCRIBER PARTIES. WE CONCLUDE IN THESE FACTS THAT THE ASSESSEE HAS SUFFICIENTLY DISCHARGED ITS BURDEN OF HAVING PROVED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF ITS THREE INVESTORS. WE THEREFORE DELETE THE IMPUGNED CASH CREDIT ADDITION OF RS.4,50,000/- . 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. KOLKATA, THE 26 TH DAY OF APRIL, 2019. SD/- SD/- [A.L. SAINI] [S.S. GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26.04.2019 {SC SPS} 6 ITA NO. 355/KOL/2015 ASSESSMENT YEAR: 2005-06 M/S. JAINEX METALIKS LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. JAINEX METALIKS LTD 11, BRABOURNE ROAD 3 RD FLOOR KOLKATA 700 001 2. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES