Virat International Private Limited , Kolkata V. ITO, Ward - 8(2), Kolkata , Kolkata

ITA 722/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4310 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S ANKAR HALDER JCIT LD
• Assessee Lawyers: O P BAID CA LD
• Keywords: Unexplained cash credit; Opportunity of being heard; Set aside
• Section: 142(1); 201; 68; 263; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & HONBLE SHRI DR. ARJUN LAL SAINI,AM ] I .T . A NO. 722 /KOL/201 8 A.Y 20 1 2 - 13 M/S. VIRAT INTERNATIONAL P.LTD VS. I.T.O. WARD 8(2), KOLKATA PAN: A ADCV 0753 B (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI O.P. BAID, CA, LD.AR FOR THE RESPONDENT : SHRI SANKAR HALDER, JCIT, LD.DR DATE OF HEARING : 14 - 03 - 201 9 DATE OF PRONOUNCEMENT : 10 - 05 - 2019 ORDER SHRI S.S. GODARA, JM : 1. THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 20 1 2 - 13 ARISE S AGAINST THE CIT(A) , 3, KOLKATA S ORDER DATED 2 6 - 03 - 2018 PASSED IN CASE NO . 1058/CIT(A) - 3/WARD - 8(2)/15 - 16/KOL INVOLVING PROCEEDINGS U/S 14 4 OF THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND/ GRIEVANCE RAISED IN THE INSTANT APPEAL CHALLENGES THE CORR ECTNESS OF BOTH THE LOWER AUTHORITIES ACTION ADDING ASSESSEES S HARE APPLICATION/PREMIUM AMOUNTING TO RS. 3,05,00,000/ - AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT 3. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAD FRAMED HIS ASSESSMENT ON 11 - 03 - 20 15 U/S. 144 OF THE ACT . WE DO NOT FIND ANY DISCUSSION REGARDING THE ASSESSEES DETAILS OF ITS INVESTORS/SUBSCRIBERS FILED DURING THE COURSE OF ASSESSMENT BY THE ASSESSING OFFICER. 2 ITA NO. 722/KOL/2018 VIRAT INTERNATIONAL P.LTD 2 4. COMING TO CIT(A)S ORDER, IT EMERGES THAT ASSESSE E HAD PLACED ON RECORD THE RELEVANT DETAILS OF ITS 14 INVESTORS ENTITIES . THE CIT(A) HOLD S THAT SOME OF THEM DO NOT PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE IMPUGNED SHARE CAPITAL/PREMIUM I.E. SUBJECT TO THE MATTER OF ADDITION. 5. BOTH THE LEARNED REPRESENTATIVES REITERATED THEIR RESPECTIVE STAND AGAINST AND IN SUPPORT OF THE ADDITION. WE NOTICE THAT INSTANT SOLE ISSUE DESERVES TO BE RESTORED BACK TO THE ASSESSING OFFICER SINCE HE HAS NOT TAKEN RECOURSE TO FACTUAL VERIFICATION OF ASSESSEES INVESTORS/ SUBSCRIBERS ENTITIES. WE NOTICE IN THIS BACKDROP OF THE FACT THIS TRIBUNALS DECISION IN ITO V/S PRIMELINE SALES P.LTD ITA NO. 2264/KOL/16 DECIDED ON 16 - 01 - 2019 HAS RESTORED THE SIMILAR ISSUE BACK TO THE ASSESSING OFFICER ON ACCOUNT OF LACK OF VERIFICATION AS FOLLOWS: 2. THE ASSESSEE IS A COMPANY AND DURING THE PREVIOUS YEAR IT HAS RAISED SHARE CAPITAL AMOUNTING TO RS. 11,01,00,000/ - , INCLUDING SHARE PREMIUM OF RS. 9,96,00,000/ - . THE ASSESSING OFFICER MADE AN ADDITION U/S 68 OF THE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT AND GRANTED RELIEF TO THE ASSESSEE. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL C ONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS: - 4.1. BEFORE US, THE LD. D/R, SUBMITS THAT THE ASSESSING OFFICER WAS NOT GIVEN ADEQUA TE OPPORTUNITY TO EXAMINE ALL THE DETAILS FILED ON RECORD BEFORE THE LD. CIT(A) AND THAT NEW EVIDENCE WERE BROUGHT ON RECORD. HE PRAYED THAT THE ISSUE MAY BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN LIGHT OF ALL THE EVID ENCES ON RECORD. 4.2. THE LD. A/R, THOUGH NOT LEAVING HIS GROUND DID NOT RAISE ANY OBJECTION TO THE MATTER BEING SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. WE FIND THAT THIS BENCH OF THE ITAT IN ALL SUCH CASES HAS BEEN RESTO RING THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 5. IN THE CASE OF SRIRAM TIE UP PVT. LTD. SUPRA AT PARA 6 AND 7 HELD AS FOLLOWS: 6. IN THE CASE OF M/S. SUKANYA MERCHANDISE PVT. LTD. VS ITO (ITA 291/KOL/2016 DATED 15.12.2017 ) CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE, A SIMILAR VIEW HAS BEEN TAKEN BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL AND THE 3 ITA NO. 722/KOL/2018 VIRAT INTERNATIONAL P.LTD 3 SIMILAR ISSUE RELATING TO THE ADDITION MADE UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL CONTRIBUTION BY TREATING THE SAME AS U NEXPLAINED CASH CREDITS IS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A.O. IN ALMOST SIMILAR SITUATION AFTER RECORDING ITS OBSERVATIONS / FINDINGS AS UNDER: WE NOTE THAT THE AO PURSUANT TO THE ORDER OF LD. CIT HAD TAKEN NOTE OF THE DIRECTIONS OF TH E LD. CIT AND ISSUED NOTICE U/S. 142(1) DATED 16.08.2013 AND HAS ACKNOWLEDGED THAT THE ASSESSEE HAD FURNISHED THE COPY OF FINAL ACCOUNT, I. T. ACKNOWLEDGEMENT, BANK STATEMENT FOR THE RELEVANT PERIOD EVIDENCING THE RECEIPT OF SHARE APPLICATION MONEY FROM TH E SHARE APPLICANTS. THEREAFTER, THE AO MAKES CERTAIN INFERENCES BASED ON THE LIST OF SHAREHOLDERS AND TAKING NOTE OF THE BANK STATEMENT FURNISHED BY THE ASSESSEE. WE NOTE THAT AFTER THE INITIAL NOTICE DATED 16.08.2013, THEREAFTER THE AO HAD ISSUED THE NOTI CE ON 26.02.2014 WHICH HAS BEEN REPRODUCED AT PAGE 3 OF THE REASSESSMENT ORDER, WHEREIN AO REQUIRED THE DIRECTORS OF THE ASSESSEE COMPANY TO BE PRESENT BEFORE HIM ON 06.03.2014. HOWEVER, ACCORDING TO THE LD. AR, THE ASSESSEE RECEIVED THE NOTICE ONLY ON 07. 03.2014 AND THEREAFTER, THE ASSESSEE REQUESTED THE AO TO PROVIDE ANOTHER OPPORTUNITY OF HEARING VIDE ITS LETTER DATED 20.03.2014. THEREAFTER, THE AO FIXED THE DATE OF HEARING ON 12.03.2014 VIDE NOTICE DATED 10.03.2014. SO, ACCORDING TO THE ASSESSEE COMPANY SINCE THE DIRECTORS WERE NOT IN STATION TILL 23.03.2014, THE LD. AR HAD REQUESTED FOR ADJOURNMENT TILL THAT TIME. THOUGH THE AO HAS STATED THAT HE HAS ISSUED SUMMONS ON 24.03.2014 TO THE ASSESSEE COMPANY TO PRODUCE THE DIRECTORS OF THE COMPANY BEFORE HIM ON 26.03.2014, THE ASSESSEE COMPANY CONTENDED THAT IT HAS NOT RECEIVED THE SAID SUMMON AND, THEREFORE, COULD NOT MAKE THE PERSONAL APPEARANCE. THE AO HAS DRAWN ADVERSE CONCLUSION BASICALLY BECAUSE OF NON - APPEARANCE OF THE DIRECTORS OF THE ASSESSEE COMPANY AND THAT OF THE SHAREHOLDER COMPANIES. WE NOTE THAT INITIALLY THE AO STARTED THE ENQUIRY ON 16.08.2013 WHICH WAS COMPLIED BY THE ASSESSEE BY SUBMITTING DOCUMENTS WHICH HAS BEEN ACKNOWLEDGED BY THE AO. THEREAFTER, THE ENQUIRY WAS STARTED ONLY AT THE FAG END OF FEBRUARY 2014 AND THE ASSESSEE COMPANY HAD INFORMED THE AO THAT THEIR DIRECTORS WERE OUT OF STATION TILL 23.03.2014. IN THE LIGHT OF THE AFORESAID FACTS, WE ARE OF THE OPINION THAT THE ASSESSEE DID NOT GET FAIR OPPORTUNITY TO PRESENT THE EVIDENCES BEFO RE THE AO SO, THERE WAS A LACK OF OPPORTUNITY AS AFORESAID, THEREFORE, IT HAS TO GO BACK TO AO. 8. WE ALSO NOTE THAT LD. CIT WHILE SETTING ASIDE THE ORDER OF THE AO WHICH WAS PASSED U/S. 147/143(3) OF THE ACT, THE LD. CIT GAVE CERTAIN GUIDELINES TO FOLLO W FOR CONDUCTING DEEP INVESTIGATION. WE ALSO NOTE THAT SIMILARLY PLACED ASSESSEES HAD CHALLENGED THE EXERCISE OF REVISIONAL JURISDICTION U/S. 263 OF THE ACT BEFORE THIS TRIBUNAL IN THOSE CASES ONE OF IT OF SUBHA LAKSHMI VANIJYA PVT. LTD. VS. CIT IN ITA NO. 1104/KOL/2014 DATED 30.07.2015, WHEREIN THE TRIBUNAL WAS PLEASED TO UPHOLD THE ORDER PASSED BY THE LD. CIT PASSED U/S. 263 OF THE ACT, WHICH WE LEARN TO HAVE BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT AND THE SLP PREFERRED AGAINST THE DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. THEREFORE, SIMILAR ORDER OF THE 4 ITA NO. 722/KOL/2018 VIRAT INTERNATIONAL P.LTD 4 LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD. WE NOTE THAT THE AO WHILE GIVING EFFECT TO THE CITS 263 ORDER HAS NOTED THAT TH E ASSESSEE COMPANY HAS IN FACT FURNISHED THE DOCUMENTS SOUGHT BY HIM TO HIS NOTICE U/S. 142(1) OF THE ACT. HOWEVER, THE AO TOOK THE ADVERSE VIEW AGAINST THE ASSESSEE ON THE PLEA THAT THE DIRECTORS OF THE ASSESSEE COMPANY AND SHARE SUBSCRIBING COMPANIES HAD NOT APPEARED BEFORE HIM ON 26.03.2014 AND T AFTER TAKING NOTE THAT NONE APPEARED ON 26.03.2014 CONCLUDED ON THE SAME DAY 26.03.2014 THAT ENTIRE AMOUNT OF SHARE APPLICATION MONEY RECEIVED ALONG WITH PREMIUM AMOUNTING TO RS.8,06,00,000/ - WHICH HAS REMAINED UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE. WE ALSO NOTE THAT THE LD. CIT AFTER LOOKING INTO THE PERNICIOUS PRACTICE OF CONVERTING BLACK MONEY INTO WHITE MONEY HAS GIVEN THE GUIDELINES TO AO AS TO HOW THE INVESTIGATION SHOULD BE CONDUCTED TO FIND OUT THE SOURCE OF SOURCE. SINCE SIMILAR ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT HAS BEEN UPHELD BY THE TRIBUNAL AS WELL AS BY THE HONBLE CALCUTTA HIGH COURT AS WELL AS THE SLP HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT, SIMILAR ORDER OF THE L D. CIT HAS TO BE GIVEN EFFECT TO AS DIRECTED BY THE LD. CIT. WE TAKE NOTE THAT THE LD. CIT WITH HIS EXPERIENCE AND WISDOM HAS GIVEN CERTAIN GUIDELINES IN THE BACKDROP OF BLACK MONEY MENACE SHOULD HAVE BEEN PROPERLY ENQUIRED INTO AS DIRECTED BY HIM. THE AO OUGHT TO HAVE FOLLOWED THE INVESTIGATING GUIDELINES AND METHOD AS DIRECTED BY HIM TO UNEARTH THE FACTS TO DETERMINE WHETHER THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS. WE NOTE THAT THE HONBLE SUPREME COURT IN THREE JUDGES BENC H IN THE CASE OF TIN BOX, (SUPRA), HAS HELD THAT SINCE THERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE AT THE ASSESSMENT STAGE ITSELF, THE ASSESSMENT NEEDS TO BE DONE AFRESH AND THEREBY REVERSED THE HONBLE HIGH COURT, TRIBUNAL AND CIT(A)S ORDERS AND REMAND ED THE MATTER BACK TO AO FOR FRESH ASSESSMENT. SO, SINCE THERE WAS LACK OF OPPORTUNITY AS AFORESTATED IT HAS TO GO BACK TO AO. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525 /2014 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HAVE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS), AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTI ES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPEALS), HAVING NOTICED WAN T OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PA RTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE 5 ITA NO. 722/KOL/2018 VIRAT INTERNATIONAL P.LTD 5 THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MA TERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CIT(APPEALS), CANNOT BE APPROVED OR UPHELD.' IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX CO MPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACT THE ORDER OF THE LD. CIT PASSED U/S. 263 OF THE ACT IN SIMILAR CASES BEING UPHELD UP TO THE LEVEL OF APEX COURT, AND TAKING NOTE OF HONBLE DELHI HIGH COURTS ORDER IN JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. WE, THEREFORE, CONSI DER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DISPUTE AND RESTORE THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH AFTER GIVING THE ASSESSEE PROPER AND SUFFICIENT OPPORTUN ITY OF BEING HEARD AND AFTER TAKING INTO CONSIDERATION THE ENTIRE EVIDENCE ALREADY AVAILABLE ON RECORD AS WELL AS OTHER DOCUMENTARY EVIDENCE WHICH THE ASSESSEE MAY CHOOSE TO FILE IN SUPPORT OF ITS CASE ON THE ISSUE. 6. THE KOLKATA BENCH OF THE ITAT HAS PASSED SIMILAR ORDER IN MANY CASES ON THE SAME ISSUE OF ADDITIONS MADE U/S 68 OF THE SHARE CAPITAL. IT HAS SET ASIDE THE ASSESSMENT TO THE FILE OF THE AO FOR FRESH ADJUDICATION, ON THE LINES STATED IN THE ABOVE ORDER AF TER GIVING THE ASSESSING OFFICER AN OPPORTUNITY TO EXAMINE THE EVIDENCE ALREADY ON RECORD AS WELL AS OTHER DOCUMENTARY EVIDENCES WHICH THE ASSESSEE HAS FILED AT THE APPELLATE STAGE OR FURTHER MAY CHOOSE TO FILE IN SUPPORT OF HIS CASE. 7. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE ORDERS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN SIMILAR MATTERS, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW, AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 6 ITA NO. 722/KOL/2018 VIRAT INTERNATIONAL P.LTD 6 5 . WE ADOPT THE ABOVE DETAILED REASONING MUTADIS AND MUTANDIS TO RESTORE THE INSTANT ISSUE BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE TAXPAYER, ASSESSEE. 6 . TH IS ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE IN ABOVE TERMS. ORDER PRONOUNCED IN THE C OURT ON 10 - 05 - 2019 SD/ - SD/ - [ A.L. SAINI ] [ S.S.GODARA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 - 05 - 2019 **PRADIP, SR. PS C OPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ ASSESSEE: M/S. VIRAT INTERNATIONAL PVT. LIMITED C/O BAID & COMPANY, CHARTERED ACCOUNTANTS, 10C, BALLYGUNGE CIRCULAR ROAD, 2 ND FLOOR, KOLKATA - 19. 2. RESPONDENT/ DEPARTMENT; THE INCOME TAX OFFICER, WARD 8(2), AAYKAR BHAWAN, P - 7 CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA - 69. 3..C.I.T (A) . - 4. C.I.T. - KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR H.O.O/D.D.O KOLKATA