Sansar Trading (P) Ltd. , Kolkata V. ITO, Ward-5(2), Kol , Kolkata

ITA 544/KOL/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8319 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 24-01-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 04-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BONNINE DEBARMA
• Assessee Lawyers: A. N. KESARI
• Keywords: Unexplained cash credit; Fair market value; Valuation report; Rule 8D
• Section: 131; 68; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.544/Kol/2023 Assessment Year: 2012-13 Sansar Trading Pvt. Ltd., 1, N. R. Mukherjee Road, Mezanine Floor, Kolkata-700001. (PAN: AAHCS8232Q) Vs. Income Tax Officer, Ward- 5(2), Kolkata. (Appellant) (Respondent) Present for: Appellant by : Shri A. N. Kesari, FCA Respondent by : Shri Bonnine Debarma, JCIT Date of Hearing : 25.01.2024 Date of Pronouncement : 08.03.2024 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NAC/S/250/2022-23/1051475366(1) dated 28.03.2023 passed against the assessment order by ITO, Ward-5(2), Kolkata u/s.143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 25.03.2015 for AY 2012-13. 2. Grounds of appeal raised by the assessee are reproduced as under: “1) Ld. .Commissioner of Income Tax (Appeals) is not justified and not legally correct in giving direction to Ld. A.O. to issue summon to the directors of the appellant company and the director of the investor company for establishing identity and creditworthiness of creditors. Further Ld. Commissioner of Income Tax (Appeals) has erred in law for his above direction in view of decision of Hon’ble Jurisdictional Kolkata High Court in G.A. No.1275 of 2011 in the case of Commissioner of income Tax vs. M/s. Leonard Commercial Pvt. Ltd. 2 ITA No.544/Kol/2023 Sansar Trading Pvt. Ltd. AY 2012-13 2) Ld. C.I.T.(A) has erred in law in asking and in directing Ld. A.O. for valuation report of the appellant company for the purpose of valuation of Share Premium of Rs.90/- charged by your appellant company on issue of new share capital at Rs.10/- per share. Because provision of Section 56(2)(viib) is effective from A.Y. 2013-14 relevant to determination of fair market value of share. Prior to above Section there has been no precedent for determination and valuation of Share Premium to be charged by the company issuing fresh share capital.” 3. Brief facts of the case are that assessee filed its return of income on 20.09.2012, reporting total income of Rs.5,767/-. In the course of assessment, Ld. AO noted from the Balance Sheet of the assessee that it has received share application money of Rs.1,50,00,000/- including share premium of Rs.1,35,00,000/-. Assessee was asked to furnish details of the said share application money received during the year to verify the genuineness of the said transaction and establish identity and creditworthiness of the subscribing shareholders. Ld. AO also issued notices u/s. 131 of the Act to the directors of the share subscribing companies as well as the director of the assessee, all of which remained uncomplied, as noted by the Ld. AO. 3.1. Ld. AO thus, concluded that the credit of Rs.1,50,00,000/- in the books of account is unexplained cash credit for which the addition was made by applying the provisions of sec. 68 of the Act. Ld. AO also made a disallowance u/s. 14A read with Rule 8D(2)(iii) of Rs.49,261/-. Aggrieved, assessee went in appeal before the Ld. CIT(A). 3.2. Before the Ld. CIT(A), assessee claimed that it has submitted the required documents in response to notice issued u/s. 142(1). According to assessee, it has discharged the primary onus casted upon it u/s. 68 of the Act. It was also claimed by the assessee that the directors of the subscribing companies could not appear before the Ld. AO but given a chance they shall appear and depose to the satisfaction of the revenue. 3 ITA No.544/Kol/2023 Sansar Trading Pvt. Ltd. AY 2012-13 3.3. Based on these submissions where the assessee had offered for personal examination of the directors, ld. CIT(A) gave direction to the AO to issue summons to the directors of the assessee and that of the share subscribing companies to examine the existence of the share subscribing companies. He also gave direction to the AO to examine the documentary evidence by calling from the assessee, for establishing the identity and creditworthiness as well as valuation of shares. He further directed the AO to examine necessary net worth to buy shares of the assessee as well as for proper valuation of the shares to justify the share premium of Rs. 90/- per share. According to the Ld. CIT(A), the Ld. AO shall accept the introduction of share capital as genuine transaction based on the directions given by him. Thus, the appeal was partly allowed. Aggrieved, assessee is in appeal before the Tribunal. 4. Before us, Ld. Counsel for the assessee submitted that Ld. CIT(A) is not justified and not legally correct in giving direction to the Ld. AO to issue summons to the directors of the assessee as well as the directors of share subscribing companies for establishing their identity and creditworthiness. According to him, Ld. CIT(A) has also erred in directing the AO for valuation, importantly, for the purpose of valuation of share premium of Rs. 90/- charged by the assessee on its share capital at Rs. 10/- per share. According to him, the provisions of section 56(2)(vii) is effective from AY 2013-14 which is relevant for determination of share value. Prior to this, there was no such requirement for determination and valuation of share premium to be charged by the company for issuing fresh share capital. 5. Per contra, Ld. CIT, DR placed reliance on the order of authorities below. 6. We have heard the rival contentions and perused the material available on record. We note from the paper book index that it is not 4 ITA No.544/Kol/2023 Sansar Trading Pvt. Ltd. AY 2012-13 certified in accordance with the sub-rule 3 of rule 18 of Income Tax (Appellate Tribunal) Rules, 1963 (hereinafter referred to as the “ITAT Rules”). The said sub-rule 3 requires that papers forming part of the paper book must be certified as a true copy and must also specify the authority before whom it was filed. The paper book index in the present case is not in accordance with Rule 18(3) of the ITAT Rules as it does not specify which of the documents were before which authority. 7. It is pertinent to note that the assessment has been completed by the Ld. AO by noting that no compliance has been made by the assessee after the initial compliance filed on 29.10.2013. Further, we note that Ld. CIT(A) has disposed of the appeal by giving directions to AO and then arrive at the decision of accepting the introduction of share capital as genuine transaction based on his examination and verification, 7.1. In this respect, we note that Section 250(6) cast a duty on Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. In the present case before us, even though assessee has made its submissions along with supporting documents which is duly acknowledged by the system generated e-proceeding response acknowledgment placed on record, compliance has not been met while disposing of the appeal by Ld. CIT(A). Accordingly, we find it proper to remit the matter back to the file of Ld. CIT(A) for meritorious disposal of the grounds taken by the assessee, by passing a speaking order. Needless to say that assessee be given reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal. Accordingly, ground no. 1 taken by the assessee is allowed for statistical purposes. 5 ITA No.544/Kol/2023 Sansar Trading Pvt. Ltd. AY 2012-13 8. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on8thMarch, 2024. Sd/- Sd/- (Sanjay Garg) (Girish Agrawal) Judicial Member Accountant Member Dated: 8th March, 2024 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent. 3. CIT(A), NFAC, Delhi 4. CIT 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata