Liberty Commodeal Pvt. Ltd., Kolkata V. ITO, Ward 6(2), Kolkata, Kolkata

ITA 834/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4771 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 24-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MURMU
• Assessee Lawyers: V K JAIN
• Keywords: Unexplained cash credit; Source of fund
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI A.T. VARKEY, JM & DR. A.L.SAINI, AM ITA NO.834/KOL/2017 (A.Y: 2012-13) LIBERTY COMMODEAL PVT. LTD., C/O RSVPC & COMPANY, 41A, A.J.C.BOSE ROAD, SUITE NO.613, KOLKATA-700014. VS. I.T.O., WARED-6(2), P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700069 ./ ./PAN/GIR NO. : AABCL 8280 D ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SHRI V.K.JAIN, FCA RESPONDENT BY : SHRI N.MURMU, JCIT / DATE OF HEARING : 19/07/2018 /DATE OF PRONOUNCEMENT:10/10/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA, IN APPEAL NO.795/CIT(A)-2/15-16, DATED 28.03.2017, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), DATED 21.03.2015. 2. THE GRIEVANCE RAISED BY THE ASSESSEE ARE AS FOLLOWS : 1. THAT THE LD COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 11,70,000 U/S 68 OF THE INCOME TAX ACT, MADE BY THE AO, IGNORING THE FACT THAT SAME SHARE APPLICANT HAVE JUST RENDERED THE RESIDUE AMOUNT TOWARDS SHARE APPLICATION TO THE AMOUNT GIVEN IN EARLIER YEAR. 2. THAT THE LD COMMISSIONER (APPEAL) ERRED IN CONFIRMING THE ADDITION MADE U/S. 68 OF THE ACT FOR RS. 1170000 WHERE IN THE ASSESSEE HAD DULY DISCHARGED ITS ONUS AND THERE IS NOTHING IN CONTRARY FINDING TO REBUT THE CLAIM OF THE ASSESSEE. LIBERTY COMMODEAL PVT. LTD. ITA NO.834/KOL/2017 A.Y: 2012-13 2 3. THAT THE APPELLANT CARVES LEAVE TO ADD MODIFY OR PLEAD FOR ADDITIONAL GROUNDS DURING THE APPEAL PROCEEDING. 3. THE FACTS OF THE CASE WHICH CAN BE STATED BRIEFLY ARE AS FOLLOWS. DURING THE ASSESSMENT PROCEEDINGS, THE LD AO NOTED THAT THE ASSESSEE HAS RAISED SHARE CAPITAL TO THE TUNE OF RS.1,51,30,000/- INCLUDING SHARE PREMIUM/SHARE APPLICATION BY ISSUING ITS SHARES TO DIFFERENT CONCERNS WITH HIGH PREMIUM. THE COMPANY HAS ISSUED SHARES AT A PREMIUM WHICH DOES NOT STAND THE TASTE OF REASONING AND DEFIES ALL PRINCIPLE OF PREPONDERANCE OF PROBABILITY THAT UNKNOWN PRIVATE LIMITED COMPANIES WHICH APPARENTLY DOES NOTHING TO SELL ITS SHARE AT A VERY HIGH PREMIUM. ANYBODY WHO HAS EVEN A RUDIMENTARY KNOWLEDGE OF CAPITAL MARKET KNOWS THAT EVEN BLUE CHIP COMPANIES DO NOT COMMANDS SUCH PREMIUM ON A BROGUE. THE AO NOTED THAT THE ASSESSEE COMPANY HAS NO TRACK RECORD OR ASSET BASE AND A NEARLY ZERO BALANCE SHEET COMPANY WITH NO VISIBLE FUTURE PROSPECT IS ASKING FOR SIGNIFICANTLY HIGH PREMIUM PER SHARE WHICH DEFIES ALL COMMERCIAL AND FINANCIAL PRUDENCE AND LOGIC. ON VERIFICATION OF THE DETAILS FROM MCA SITE IT WAS FOUND THAT THE DIRECTORS OF ONE COMPANY ARE DIRECTORS OF ANOTHER SEVERAL COMPANIES. ALL THESE CIRCUMSTANCES CLEARLY INDICATE THAT WHAT IS APPARENT IS PROBABLY NOT REAL AND IT NEEDS FURTHER EXAMINATION. THE AO NOTED THAT THE COMPANY WHOSE SHARE VALUE IS RS.10/- THE SHARE IS ISSUED AT A PREMIUM OF RS.490/- TOTAL VALUE OF THE SHARE BECOMES RS.500/-. THIS CONTAINS FIRST PORTION OF THE UNACCOUNTED CASH BROUGHT IN OR CONVERTED THROUGH THE ACCOMMODATION ENTRY. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN THE SHARE PREMIUM AND SHARE CAPITAL. THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO. EVEN THE ASSESSEE DID NOT MAKE THE COMPLIANCE OF THE SUMMON ENCLOSED WITH THE NOTICE. THEREFORE, THE LD AO MADE AN ADDITION TO THE TUNE OF RS.1,51,30,000/- U/S 68 OF THE ACT. 4. AGGRIEVED BY THE STAND SO TAKEN BY THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL OF THE LIBERTY COMMODEAL PVT. LTD. ITA NO.834/KOL/2017 A.Y: 2012-13 3 ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED ALL THE DOCUMENTS TO PROVE THE IDENTITY, CREDITWORTHINESS AND CAPACITY OF THE SHAREHOLDERS. IN CASE OF M/S. NILKANTH COMMERCIAL PVT. LTD, THE ASSESSEE PRODUCED BEFORE US THE RELEVANT DOCUMENTS VIDE PAPER BOOK PAGES 38 TO 71 WHICH CONTAINS THE DECLARATION OF THE SOURCE OF FUND, APPLICATION FOR ALLOTMENT OF EQUITY SHARES, BANK STATEMENT COPY EVIDENCING THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE, ALLOTMENT ADVICE OF SHARES, SALES CERTIFICATE, INCOME TAX RETURN FILED BY M/S. NILKANTH COMMERCIAL PVT. LTD., BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ETC. THEREFORE THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PROVED IDENTITY, CREDITWORTHINESS AND CAPACITY OF THE SHAREHOLDER AND HENCE THERE SHOULD NOT BE ANY ADDITION. THE LD. COUNSEL SUBMITTED BEFORE US THE SAME DOCUMENTS AND EVIDENCES IN RESPECT OF SKYLARK VANIJYA PVT. LTD, VIDE PAPER BOOK PAGES 72 TO 98. THE LD. COUNSEL EXPLAINED TO US THAT THE LD. AO MADE THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED TO THE TUNE OF RS.1,51,30,000/- U/S 68 OF THE ACT, AS UNEXPLAINED CASH CREDIT, WITHOUT VERIFYING THE FACTS ON RECORD THAT THE ASSESSEE HAS RECEIVED DURING THE YEAR UNDER CONSIDERATION ONLY RS.11,70,000/- AND OUT OF WHICH, THE ASSESSEE COMPANY REFUNDED RS.11,00,000/-, THUS THE NET RECEIPT WAS RS.70,000/- (RS.11,70,000- RS.11,00,000). IN CASE OF THE ASSESSEE, THE AMOUNT OF RS.1,50,60,000/- WAS NOT RECEIVED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE LD. CIT(A) WAS PLEASED TO DELETE THE ADDITION U/S 68 OF THE ACT. AFTER DELETING THE ADDITION TO THE TUNE OF RS.1,50,60,000/- THE BALANCE AMOUNT IS LEFT ONLY TO THE TUNE OF RS.70,000/- (RS.1,51,30,000 - 1,50,60,000) THEREFORE THE LD. COUNSEL REQUESTED THE BENCH TO REMIT THIS ISSUE TO THE FILE OF THE AO TO EXAMINE THE CORRECTNESS OF THE FACTS. LIBERTY COMMODEAL PVT. LTD. ITA NO.834/KOL/2017 A.Y: 2012-13 4 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE LD. AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA, AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE HAS SUBMITTED BEFORE US THE RELEVANT EVIDENCE VIDE PAPER BOOK PAGES 38 TO 71 IN RESPECT OF M/S NEELKANTH COMMERCIAL PVT LTD AND VIDE PAPER BOOK PAGES 72 TO 98 IN RESPECT OF M/S SKYLARK VANIJYA PVT. LTD. WE NOTE THAT THE ASSESSEE COMPANY HAD RECEIVED DURING THE YEAR UNDER CONSIDERATION ONLY RS.11,70,000/- OUT OF WHICH, THE ASSESSEE COMPANY HAS REFUNDED THE SUM OF RS.11,00,000/- ,THUS THE NET RECEIPT ON ACCOUNT OF SHARES WAS RS.70,000/- ONLY (RS.11,70,000- RS.11,00,000) . 8. WE NOTE THAT THE AMOUNT OF MONEY IS SHARE APPLICATION FOR EQUITY SHARES RECEIVED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR I.E. A.Y.2011-12 AT RS.1,50,60,000/- AND HENCE THE AMOUNT WAS NOT CREDITED DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. HOWEVER WE NOTE THAT THE ASSESSEE HAS SUBMITTED BEFORE US THE EVIDENCE AND DOCUMENTS REGARDING M/S. NEELKANTH COMMERCIAL PVT. LTD AND M/S SKYLARK VANIJYA PVT. LTD WHICH SHOWS THAT DURING THE YEAR THE ASSESSEE COMPANY HAD RECEIVED ONLY RS.11,70,000/- OUT OF WHICH, THE ASSESSEE REFUNDED RS.11,00,000/- THEREFORE THE NET RECEIPT ON ACCOUNT OF SHARES DURING THE ASSESSMENT YEAR UNDER CONSIDERATION IS RS.70,000/-. WE NOTE THAT THIS ASPECT, THAT IS, WITH REGARD TO THE DOCUMENTS SUBMITTED BEFORE US IN RELATION TO M/S. NEELKANTH COMMERCIAL PVT. LTD AND M/S SKYLARK VANIJYA PVT. LTD, SHOULD BE EXAMINED BY THE LD AO. THEREFORE, WE THINK IT FIT AND PROPER TO REMIT THE ISSUE BACK TO THE FILE OF THE AO TO EXAMINE THE CORRECTNESS OF THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE BENCH. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE ISSUE BACK TO THE FILE OF THE AO TO EXAMINE THE CORRECTNESS OF THE CONSIDERATION RECEIVED BY THE ASSESSEE OF RS.11,70,000/- AND AMOUNT REFUNDED BY THE ASSESSEE LIBERTY COMMODEAL PVT. LTD. ITA NO.834/KOL/2017 A.Y: 2012-13 5 TO THE TUNE OF RS.11,00,000/- DURING THE YEAR UNDER CONSIDERATION. HENCE, THIS APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10/10/2018. SD/- (A.T.VARKEY) SD/- (DR. A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED: 10/10/2018 RG, SPS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- LIBERTY COMMODEAL PVT. LTD. 2. / THE RESPONDENT.- I.T.O., WARD-6(2), KOLKATA 3. ( ) / THE CIT(A)-2, KOLKATA. 4. / CIT-2, KOLKATA. 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE. //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA .