M/s. Bhupati Vinimay Pvt Ltd., Kolkata V. ITO, Ward 8(1), Kolkata, Kolkata

ITA 508/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9851 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: MANISH RASTOGI
• Keywords: Unexplained cash credit
• Section: 131; 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (A), KOLKATA [BEFORE SHRI P.M. JAGTAP, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 508/KOL/2017 ASSESSMENT YEAR: 2009-10 M/S. BHUPATI VINIMAY PVT. LTD.................................................APPELLANT 891, JASSORE ROAD, 2 ND FLOOR, KOLKATA 700 055 [PAN: AADCB 6359 H] ITO, WARD 8(1), KOLKATA.....................RESPONDENT KOLKATA. APPEARANCES BY: SHRI MANISH RASTOGI, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI P.K. SRIHARI, CIT(DR) APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 31, 2018 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 26, 2018 ORDER PER P.M. JAGTAP, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 16, KOLKATA DATED 17.02.2017 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS. 6,65,00,000/- 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. 2. THE ASSESSEE IN THE PRESENT IS AN INVESTMENT COMPANY. THE RETURN OF INCOME FILED BY IT FOR THE YEAR UNDER CONSIDERATION ON 18.09.2009 DECLARING A TOTAL INCOME AT NIL WAS INITIALLY PROCESSED BY THE AO U/S 143(1). THE ASSESSMENT HOWEVER WAS SUBSEQUENTLY REOPENED BY THE AO AND IN THE ASSESSMENT COMPLETED U/S 147/143(3) VIDE AN ORDER DATED 21.12.2011, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS. 39,954/-. THE RECORDS OF THE SAID ASSESSMENT CAME TO BE EXAMINED BY THE LD. CIT AND ON SUCH 2 I.T.A. NO. 508/KOL/2017 ASSESSMENT YEAR: 2009-10 M/S. BHUPATI VINIMAY PVT. LTD. EXAMINATION, HE FOUND THAT THERE WAS AN ERROR IN THE ORDER OF THE AO PASSED U/S 147/143(3) IN ACCEPTING THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED SHARE CAPITAL AND SHARE PREMIUM AGGREGATING TO RS. 6.65 CRORES WITHOUT MAKING PROPER AND SUFFICIENT ENQUIRY. SINCE THE SAID ERROR WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE LD. CIT SET ASIDE THE ORDER OF THE AO PASSED U/S 147/143(3) WITH THE DIRECTION TO COMPLETE THE SAME AFRESH AFTER MAKING A DETAILED ENQUIRY AS THE ISSUE OF SHARE CAPITAL AND SHARE PREMIUM CLAIMED TO BE RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION VIDE HIS ORDER DATED 10.03.2014 PASSED U/S 263 OF THE ACT. 3. IN PURSUANCE OF THE ORDER OF THE LD. CIT PASSED U/S 263, A SUMMON U/S 131 WAS ISSUED BY THE AO TO THE DIRECTOR OF THE ASSESSEE COMPANY ON 09.02.2015. HE WAS ASKED BY THE AO TO PRODUCE THE DIRECTORS OF THE SUBSCRIBER COMPANIES WHO HAD MADE INVESTMENT IN THE SHARES OF THE ASSESSEE COMPANY. HE HOWEVER FAILED TO COMPLY WITH THIS REQUIREMENT OF THE AO AND EXPRESSED HIS INABILITY TO PRODUCE THE DIRECTORS OF THE SUBSCRIBER COMPANIES. KEEPING IN VIEW THIS FAILURE OF THE ASSESSEE, THE FRESH ASSESSMENT WAS COMPLETED BY THE AO U/S 144/263 OF THE ACT VIDE AN ORDER DATED 10.03.2015 WHEREIN HE REPEATED THE ADDITION OF RS. 6.65 CRORES BY TREATING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT AS UNEXPLAINED CASH CREDIT U/S 68. 4. AGAINST THE ORDER PASSED BY THE AO U/S 144/263, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO DISMISSED THE SAID APPEAL AND CONFIRMED THE ADDITION MADE BY THE AO U/S 68 VIDE PARAGRAPH NO 4 TO 6 OF HIS IMPUGNED ORDER WHICH READ AS UNDER: 3 I.T.A. NO. 508/KOL/2017 ASSESSMENT YEAR: 2009-10 M/S. BHUPATI VINIMAY PVT. LTD. 4. THE AR HAS FILED VARIOUS DOCUMENTS ALONG WITH THE PAPER BOOK. THE AR HAS ARGUED THAT ALL THE APPLICANTS ARE REGULAR ASSESSEES. COPIES OF BANK ACCOUNTS WERE FILED BEFORE THE AO. THE CONTENTION OF THE AO IS THAT DURING THE COURSE OF ASSESSMENT, NO COMPLIANCE WAS MADE EITHER BY THE COMPANY OF THE AR TO PROVE THE GENUINENESS OF THE TRANSACTION. SUMMONS U/S 131 REMAINED UNCOMPLIED. RELIANCE IS MADE UPON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS NIPUN BUILDERS PVT. LTD. 30 TAXMAN 292 (2013). THE A.O. HAS RELIED UPON THE JUDGMENT OF CIT VS PRECISION FINANCE PVT. LTD., (1994) 208 ITR 465 AND OTHER VARIOUS JUDGMENTS. 5. HONBLE KOLKATA HIGH COURT IN MS. RAJMANDIR ESTATES PVT. LTD. VS PCIT, KOLKATA DEALT WITH ALL THE JUDGEMENTS ON THIS ISSUE AND CAME TO THE CONCLUSION THAT THE TRANSACTION WAS NOMINAL RATHER THAN REAL. THE CREDITWORTHINESS OF THE SHAREHOLDERS WAS NOT PROVED. EACH ONE OF THEM RECEIVED FROM SOMEBODY AND THAT SOMEBODY RECEIVED FROM A THIRD PERSON. THEREFORE, HONBLE KOLKATA HIGH COURT HELD THAT ALL THE SHAREHOLDERS ARE MERE NAME LENDERS. 6. HENCE, RELYING UPON THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT THE ADDITION OF THE A.O. WORTH RS. 6,65,00,000/- IS CONFIRMED, AND THE APPEALOF THE ASSESSEE IS DISMISSED. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE ORIGINAL ASSESSMENT MADE BY THE AO U/S 147/143(3) VIDE AN ORDER DATED 21.12.2011 WAS SET ASIDE BY THE LD. CIT VIDE HIS ORDER DATED 10.03.2014 PASSED U/S 263 WITH THE DIRECTION TO MAKE THE ASSESSMENT AFRESH AFTER MAKING THE FOLLOWING ENQUIRY ON THE ISSUE OF THE SHARE CAPITAL AND SHARE PREMIUM CLAIMED TO BE RECEIVED BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION: 4 I.T.A. NO. 508/KOL/2017 ASSESSMENT YEAR: 2009-10 M/S. BHUPATI VINIMAY PVT. LTD. I. EXAMINE THE GENUINENESS AND SOURCE OF SHARE CAPITAL, NOT ON A TEST CHECK BASIS, BUT IN RESPECT OF EACH AND EVERY SHAREHOLDER BY CONDUCTING INDEPENDENT ENQUIRY NOT THROUGH THE ASSESSEE. THE BANK ACCOUNT FOR THE ENTIRE PERIOD SHOULD BE EXAMINED IN THE COURSE OF VERIFICATION TO FIND OUT THE MONEY TRAIL OF THE SHARE CAPITAL. II. FURTHER THE AO SHOULD EXAMINE THE DIRECTORS AS WELL AS EXAMINE THE CIRCUMSTANCES WHICH NECESSITATED THE CHANGE IN DIRECTORSHIP IF APPLICABLE. HE SHOULD EXAMINE THEM ON OATH TO VERIFY THEIR CREDENTIALS AS DIRECTOR AND REACH A LOGICAL CONCLUSION REGARDING THE CONTROLLING INTEREST. II. THE AO IS DIRECTED TO EXAMINE THE SOURCE OF REALIZATION FROM THE LIQUIDATION OF ASSETS SHOWN IN THE BALANCE SHEET AFTER THE CHANGE OF DIRECTORS, IF ANY. 6. AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE ABOVE DIRECTIONS GIVEN BY THE LD. CIT U/S 263 HOWEVER WERE NOT PROPERLY FOLLOWED BY THE AO WHILE MAKING THE ASSESSMENT AFRESH IN AS MUCH AS NO INDEPENDENT ENQUIRY WAS MADE BY THE AO IN RESPECT OF EACH AND EVERY SHARE HOLDER IN ORDER TO EXAMINE THE GENUINENESS AND SOURCE OF SHARE CAPITAL. THE AO ALSO FAILED TO VERIFY THE BANK ACCOUNT TO FIND OUT THE MONEY TRAIL OF THE SHARE CAPITAL AND TO EXAMINE THE SOURCE OF REALISATION FROM THE LIQUIDATION OF ASSETS SHOWN IN THE BALANCE SHEET. AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE SPECIFIC DIRECTIONS GIVEN BY THE LD. CIT IN HIS IMPUGNED ORDER PASSED U/S 263 THUS WERE NOT COMPLIED WITH BY THE AO WHILE MAKING THE ASSESSMENT AFRESH AND THIS POSITION CLEARLY EVIDENT FROM THE RECORD INCLUDING THE ORDER OF THE AO PASSED U/S 144/263 IS NOT DISPUTED EVEN BY THE LEARNED DR. IT IS ALSO NOTED THAT THIS VITAL ASPECT HAS BEEN OVERLOOKED BY THE LD. CIT(A) AND THE APPEAL FILED BY THE ASSESSEE BEFORE HIM AGAINST THE ORDER OF THE AO U/S 144/263 HAS BEEN DISPOSED OF BY HIM BY PASSING A VERY CRYPTIC ORDER. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AS 5 I.T.A. NO. 508/KOL/2017 ASSESSMENT YEAR: 2009-10 M/S. BHUPATI VINIMAY PVT. LTD. PER THE DIRECTIONS SPECIFICALLY GIVEN BY THE LD. CIT IN THE ORDER DATED 10.03.2014 PASSED U/S 263. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26/09/2018 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. M/S. BHUPATI VINIMAY PVT. LTD., 981, JASSORE ROAD, 2 ND FLOOR, KOLKATA 700 055. 2. ITO, WD-8(1), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA