M/s H.S.Mercantile Ltd., Kolkata V. I.T.O.,Ward-9(2), Kolkata

ITA 531/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1121 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Next Hearing Date: 03-06-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 18-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS JCIT D R RESPONDEN
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Unexplained cash credit; Opportunity of being heard; Validity of assessment; Set aside
• Section: 133(6); 143(1); 68; 148; 6

Judgement Text

ITA NO. 531/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. H.S. MERCANTILE LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 531/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. H.S. MERCANTILE LIMITED,...................... ..........................APPELLANT 204, 208, M.G. ROAD, KOLKATA-700007 [PAN: AAACH9467P] -VS.- INCOME TAX OFFICER,................................ ................................RESPONDENT WARD-9(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI MANOJ KATARUKA, ADVOCATE, FOR THE APPELLANT SMT. RANU BISWAS, ADDL. JCIT, D.R., FOR THE RESPOND EN T DATE OF CONCLUDING THE HEARING : JUNE 03, 2020 DATE OF PRONOUNCING THE ORDER : JUNE 03, 2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, KOLKATA DAT ED 06.03.2019, WHEREBY HE UPHELD THE VALIDITY OF THE ASSESSMENT MA DE BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) OF THE ACT AND ALS O CONFIRMED THE ADDITION MADE IN THE SAID ASSESSMENT AMOUNTING TO R S.15,00,000/- UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL AND SHARE PR EMIUM RECEIVED BY THE ASSESSEE BY TREATING THE SAME AS UNEXPLAINED. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF TRADING. THE RETURN OF INCOME FOR T HE YEAR UNDER CONSIDERATION ORIGINALLY FILED BY IT ON 29.09.2008 DECLARING TOTAL INCOME OF RS.94,950/- WAS INITIALLY PROCESSED BY THE ASSES SING OFFICER UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ON 18.06 .2009. DURING THE ITA NO. 531/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. H.S. MERCANTILE LIMITED 2 YEAR UNDER CONSIDERATION, THE ASSESSEE-COMPANY HAD RECEIVED SHARE CAPITAL AND SHARE PREMIUM AGGREGATING TO RS.15,00,0 00/- FROM M/S. HITESHWARI MARKETING PVT. LIMITED. AS PER THE INFOR MATION RECEIVED BY THE ASSESSING OFFICER FROM FIU-IND, THE SAID TRANSA CTION INVOLVING THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM FROM M/S . HITESHWARI MARKETING PVT. LIMITED REPRESENTED AN ACCOMMODATION ENTRY RECEIVED BY THE ASSESSEE. HE, THEREFORE, REOPENED THE ASSESSMEN T AND ISSUED A NOTICE UNDER SECTION 148 ON 31.03.2015 TO THE ASSESSEE AFT ER RECORDING THE REASONS. IN REPLY, A LETTER WAS FILED BY THE ASSESE SE STATING THAT THE ORIGINAL RETURN FILED BY IT ON 29.09.2008 MAY BE TR EATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148. THE ASSESSEE ALSO FILED OBJECTIONS TO THE REASONS RECORDED BY THE ASSESSING OFFICER FO R REOPENING THE ASSESSMENT. THE ASSESSING OFFICER, HOWEVER, REJECTE D THE SAID OBJECTIONS AND PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECT ION 147/143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE- COMPANY WAS CALLED UPON BY THE ASSESSING OFFICER TO EXPLAIN THE CASH CREDIT REPRESENTING THE RECEIPT OF SHARE CAPITAL AN D SHARE PREMIUM AMOUNTING TO RS.15,00,000/- IN TERMS OF SECTION 68. IN REPLY, ITS BANK STATEMENT WAS FURNISHED BY THE ASSESSEE SHOWING THE RECEIPT OF RS.15,00,000/- BY CHEQUE FROM M/S. HITESHWARI MARKE TING PVT. LIMITED ON 25.09.2007 ALONGWITH THE ACKNOWLEDGMENT OF INCOME-T AX RETURN, BOARDS RESOLUTION, CERTIFICATE OF INCORPORATION AND MEMORA NDUM OF ASSOCIATION OF M/S. HITESHWARI MARKETING PVT. LIMITED. IN ORDER TO CROSS VERIFY THE SAID TRANSACTION, A NOTICE UNDER SECTION 133(6) OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER TO M/S. HITESHWARI MARKETING PVT. LIMITED. THERE WAS, HOWEVER, NO RESPONSE RECEIVED BY THE ASSESSING OFFICER TO THE SAID NOTICE. HE, THEREFORE, TREATED THE AMOUNT OF RS.15, 00,000/- IN QUESTION RECEIVED FROM M/S. HITESHWARI MARKETING PVT. LIMITE D AS UNEXPLAINED CASH CREDIT AND AN ADDITION TO THAT EXTENT WAS MADE BY HIM UNDER SECTION 68 TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSES SMENT COMPLETED UNDER SECTION 147/143(3) VIDE AN ORDER DATED 31.03.2016. ITA NO. 531/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. H.S. MERCANTILE LIMITED 3 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 147/143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY T HE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE VALIDITY OF TH E ASSESSMENT MADE BY THE ASSESSING OFFICER AS WELL AS DISPUTING THE ADDI TION OF RS.15,00,000/- MADE THEREIN UNDER SECTION 68 ON MERIT. THE LD. CIT (APPEALS) DID NOT FIND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSE SESE CHALLENGING THE VALIDITY OF ASSESSMENT MADE BY THE ASSESSING OFFICE R UNDER SECTION 147/143(3) AND REJECTING THE SAME, HE UPHELD THE VA LIDITY OF THE SAID ASSESSMENT. HE ALSO CONFIRMED THE ADDITION OF RS.15 ,00,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 BY TREATING THE AMOUNT OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM M/S. HITESHWARI MAR KETING PVT. LIMITED AS UNEXPLAINED CASH CREDIT FOR THE FOLLOWING REASON S GIVEN IN HIS IMPUGNED ORDER:- ON PERUSAL OF THE ABOVE ORDER OF THE APEX COURT, IT IS OBSERVED THAT THE APPELLANT HAS TO OFFER A CREDIBLE EXPLANATION FOR THE SHARE APPLICATION MONEY ALONG W ITH EVIDENCES. IN THIS CASE, THERE IS NO EXPLANATION WH ATSOEVER AS TO WHY APPLICATION FOR SHARES WERE MADE AT SUCH HIGH RATE OF PREMIUM. THE ASSESSEE HAS NOT EVEN FURNISHE D THE BASIS DOCUMENTS TO SUBSTANTIATE ITS CLAIM. EVEN THE AUDITED ACCOUNTS OF THE SHARE APPLICANT COMPANY ARE NOT FUR NISHED. ACCORDINGLY, THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN ESTABLISHED. IN THIS CASE SHARES OF FACE VALUE OF RS.10/- HAS BE EN ISSUED AT A PREMIUM OF RS.90/-. THE HIGH PREMIUM CHARGED O F RS.90/- HAS ALSO NOT BEEN JUSTIFIED. RESPECTFULLY A PPLYING THE PROPOSITIONS OF LAW LAID DOWN BY THE COORDINATE BEN CH OF THE TRIBUNAL TO THE FACTS OF THE CASE, WE FIND THAT SEC TION 68 OF THE ACT APPLIES TO THE FACTS OF THIS CASE AS A SUM OF MONEY WAS CREDITED, IN THE BOOKS OF THE ASSESSEE AND THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THESE CREDITS AS WELLA S THE CREDITWORTHINESS OF THE CREDITOR. HENCE IN OUR INFORMED VIEW THE ADDITION HAS RIGHTLY BEEN MADE BY THE AO. ACCORDINGLY, THE APPEAL OF THE APPELLANT IS HEREBY DISMISSED AS THE FACTUAL MATRIX IS MORE OR LESS SIMILAR. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. ITA NO. 531/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. H.S. MERCANTILE LIMITED 4 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH AS MANY AS EIGHT GROUNDS ARE RAISED BY THE ASSESSEE IN THIS APPEAL CHALLENGI NG THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECT ION 147/143(3) OF THE ACT AS WELL AS DISPUTING THE ADDITION OF RS.15, 00,000/- MADE THEREIN UNDER SECTION 68 ON MERIT, THE LIMITED CONTENTION R AISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE AMOUNT OF RS.1 5,00,000/- IN QUESTION RECEIVED BY THE ASSESSEE FROM M/S. HITESHWARI MARKE TING PVT. LIMITED TOWARDS SHARE CAPITAL AND SHARE PREMIUM WAS TREATED BY THE ASSESSING OFFICER AS UNEXPLAINED MAINLY FOR THE REASON THAT T HERE WAS NO REPLY RECEIVED BY HIM FROM THE SAID PARTY TO THE NOTICE I SSUED UNDER SECTION 133(6) OF THE ACT. HE HAS SUBMITTED THAT WHEN THE P RIMARY ONUS UNDER SECTION 68 WAS DISCHARGED BY THE ASSESSEE BY FILING THE RELEVANT DOCUMENTARY EVIDENCE IN THE FORM THE BANK STATEMENT , INCOME TAX RETURN ACKNOWLEDGMENT, BOARDS RESOLUTION, CERTIFICATE OF INCORPORATION, ETC., THE ASSESSING OFFICER SHOULD HAVE GIVEN AN OPPORTUN ITY TO THE ASSESSEE TO PRODUCE M/S. HITESHWARI MARKETING PVT. LIMITED FOR EXAMINATION. HE HAS SUBMITTED THAT THE LD. CIT(APPEALS), ON THE OTHER H AND, CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 68 ON AN ALTOGETHER DIFFERENT GROUND THAT THE PREMIUM CHARGED AT A HIGH ER RATE OF RS.90/- PER SHARE WAS NOT SATISFACTORILY JUSTIFIED BY THE ASSES SEE. HE HAS CONTENDED THAT NO OPPORTUNITY WHATSOEVER WAS GIVEN BY THE LD. CIT(APPEALS) DURING THE COURSE OF APPELLATE PROCEEDINGS TO THE ASSESSEE TO JUSTIFY THE PREMIUM OF RS.90/- PER SHARE CHARGED BY IT. HE HAS CONTENDED THAT THE ASSESSEE-COMPANY THUS WAS NOT GIVEN PROPER AND SUFF ICIENT OPPORTUNITY OF BEING HEARD EITHER BY THE ASSESSING OFFICER OR B Y THE LD. CIT(APPEALS) BEFORE MAKING THE IMPUGNED ADDITION UNDER SECTION 6 8 AND THIS POSITION CLEARLY APPARENT FROM THE ORDERS OF THE AUTHORITIES BELOW IS NOT DISPUTED EVEN BY THE LD. D.R. SHE, HOWEVER, HAS CONTENDED TH AT IF THE ASSESSEE- COMPANY IS IN A POSITION TO PRODUCE THE CONCERNED S HAREHOLDER M/S. HITESHWARI MARKETING PVT. LIMITED FOR VERIFICATION BEFORE THE ASSESSING OFFICER ALONG WITH THE RELEVANT DOCUMENTARY EVIDENC E AND ALSO TO JUSTIFY ITA NO. 531/KOL/2019 ASSESSMENT YEAR: 2008-2009 M/S. H.S. MERCANTILE LIMITED 5 THE PREMIUM OF RS.90/- PER SHARE, THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR PROPER VERIFICATION. I FIND M ERIT IN THIS CONTENTION OF THE LD. D.R. AND SINCE THE LD. COUNSEL FOR THE ASSE SSEE HAS ALSO UNDERTAKEN TO PRODUCE M/S. HITESHWARI MARKETING PVT. LIMITED F OR EXAMINATION BEFORE THE ASSESSING OFFICER ALONG WITH THE RELEVAN T DOCUMENTARY EVIDENCE AND ALSO TO JUSTIFY THE PREMIUM OF RS.90/- PER SHARE CHARGED BY THE ASSESSEE-COMPANY, I SET ASIDE THE IMPUGNED ORDE R OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTE R GIVING THE ASSESSEE AN OPPORTUNITY TO PRODUCE M/S. HITESHWARI MARKETING PVT. LIMITED FOR EXAMINATION ALONG WITH THE RELEVANT DOCUMENTARY EVI DENCE AND TO JUSTIFY THE PREMIUM OF RS.90/- PER SHARE CHARGED BY IT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 03, 2020 . SD/- (P.M. JAGTAP) VICE- PRESIDENT) KOLKATA, THE 3 RD DAY OF JUNE, 2020 COPIES TO : (1) M/S. H.S. MERCANTILE LIMITED, 204, 208, M.G. ROAD, KOLKATA-700007 (2) INCOME TAX OFFICER, WARD-9(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-3, KO LKATA; (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.