ITEC MEASURES PRIVATE LIMITED,VAPI V. INCOME TAX OFFICER WARD 3, VAPI

ITA 1250/SRT/2024

AI Insights

The case involves ITEC Measures Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) confirming an addition of Rs.25,70,224 to the company's income under section 68 of the Income-tax Act, 1961. This addition was initially made by the Assessing Officer due to the failure of the company to substantiate the identity, creditworthiness, and genuineness of a share capital contribution from Shri Tejas Mehta, a former director and NRI. The Tribunal found that the CIT(A) had not adequately addressed the new evidence and contentions raised by the assessee and did not seek a remand report from the AO on these fresh submissions. Consequently, the Tribunal restored the matter to the AO for a detailed examination of the new evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397981 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: ACIT vs. Kansur Developers India Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEERJA SHARMA
• Assessee Lawyers: KHUSHBU BAGRECHA
• Keywords: Set aside; Additional evidence; Capital receipt
• Section: 142(1); 68; 133(6)

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1250/SRT/2024 Assessment Year: (2014-15) (Hybrid Hearing) ITEC Measures Pvt. Ltd., Plot No.397-398, Silvassa Road, GIDC, Gujarat - 396195 Vs. The ITO, Ward - 3, Vapi èथायीलेखासं./जीआइआरसं./PAN/GIR No: AAFCP8921K (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) Appellant by Ms. Khushbu Bagrecha, CA Respondent by Ms. Neerja Sharma, Sr. DR Date of Hearing 09/04/2025 Date of Pronouncement 05/06/2025 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 12.11.2024 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘CIT(A)’] for the Assessment Year (AY) 2014-15. 2. Grounds of appeal raised by the assessee are as under: “The Ld. AO has not considered various proof regarding source of share capital and share premium introduced by Shri Tejas Mehta submitted during the course of assessment proceedings and made addition of Rs.25,70,224/- in total income of the assessee company which has been further confirmed by CIT(Appeals), Valsad.” 3. The facts of the case in brief are that the assessee e-filed its return of income on 18.09.2014 for AY.2014-15, disclosing total income of Rs.21,41,820/-. The assessee is engaged in the business of manufacturing of process control 2 ITA No.1250/SRT/2024/AY.2014-15 ITEC Measures Pvt. Ltd. instruments like pressure gauge and temperature gauge etc. The case was selected for limited scrutiny under CASS. In response to the notices issued u/s 143(2) and 142(1) of the Act, the assessee filed various details. The Assessing Officer (in short, ‘AO’) noticed that assessee has introduced share capital of Rs.5,12,45,000/- during the year. The shares were having face value of Rs.10/- per share and premium of Rs.8.50/- per share. The above share capital and premium includes Rs.25,70,224/- from Shri Tejas Mehta. The AO asked assessee to furnish details regarding the identity, creditworthiness and genuineness of transaction of share capital of Shri Tejas Mehta. The assessee could not furnish the bank statement, confirmation and other details of Shri Tejas Mehta. In response to the subsequent show cause notice, the assessee furnished PAN, Form No. DIN-1 and submitted that Shri Tejas Mehta was a director of the assessee-company from 06.12.2013 to 03.04.2014. Subsequently, Shri Tejas Mehta sold his shares to another person, and he has no in connection with the appellant-company. The AO, on further inquiry, found that the present residential address of Shri Tejas Mehta is Dubai. The AO issued notice u/s 133(6) of the Act to Shri Tejas Mehta via e-mail, but no reply was received by him. Hence, identity, creditworthiness and genuineness were not established by the assessee. Therefore, addition of Rs.25,70,224/- was made u/s 68 of the Act. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The assessee filed reply dated 27.11.2023 and 15.10.2024, which are reproduced at para 3 of the appellate order. The CIT(A) observed that AO 3 ITA No.1250/SRT/2024/AY.2014-15 ITEC Measures Pvt. Ltd. granted various opportunities during assessment proceedings to prove the identity and creditworthiness of Shri Tejas Mehta and genuineness of the transaction, but appellant failed to prove the same. He further observed that creditworthiness of the transactions remains unexplained, and the explanation given by the appellant during appellate proceedings is not sufficient to allow claim of the assessee. The assessee failed to discharge the primary onus by producing necessary documents/evidences as called for by AO during assessment proceeding. Since the assessee failed to offer any explanation with respect of the transaction, the appeal was dismissed. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a paper book containing 140 pages. In the written submission, the ld. AR submitted that Shri Tejas Mehta is currently staying at Dubai and he is a Director of Ventil Floserve Pvt. Ltd. Shri Tejas Mehta was allotted share in FY.2010-11 and 2012-13. He was holding shares of Rs.12,95,450/- up to 31.03.2013. Shri Mehta was director of company for the period from 06.12.2013 to 03.04.2014. He has sent the share application money through banking channel, i.e., Rs.23,68,743/- on 0310.2013 vide Remittances ID – 0179SXR00006314 and Rs.2,01,845/- on 18.12.2013 vide Remittances ID – 0179SXR00009314. This is reflected in ICICI bank statement, which was also submitted during the assessment proceedings (pages 104 and 105 of the paper books). It was also submitted that the appellant should not be penalized for fault of Shri Tejas 4 ITA No.1250/SRT/2024/AY.2014-15 ITEC Measures Pvt. Ltd. Mehta in not replying to the notice u/s 133(6) of the Act. The ld. AR further submitted that Shri Tejas Mehta left the company due to some grievance, and he has not co-operated to give his bank account details and personal income tax details. The ld. AR further submitted that the decisions relied on by the AO are not applicable. It was also submitted that addition u/s 68 of the Act is not applicable to remittances made by non-resident. In case of the appellant, the subscriber, Shri Tejas Mehta is a non-resident Indian (NRI), settled in Dubai. It is submitted that the 2nd proviso to section 68 of the Act regarding share application money, share capital and share premium is applicable in case of resident persons and not applicable for NRI investors. For this, the ld. AR placed reliance of the Bangalore Tribunal in case of ACIT vs. Kansur Developers India Pvt. Ltd., in ITA No.442/Bang/2018, dated 28.10.2022. It is further submitted that the appellant has complied with all formalities as per the FDI norms such as RBI permission for FDI, FIRC copy, KYC norms certified by ICICI bank and certificate from the company secretary. The company has also complied with the FEMA regulations. It was also submitted that the assessee’s name earlier was M/s Parth Technocrafts Pvt. Ltd. 6. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that the reliance placed by the ld. AR, on the proviso to section 68 of the Act regarding source of source will come into play after the basic requirements of section 68 of the Act regarding identity, creditworthiness and genuineness of transaction proved. The appellant has not 5 ITA No.1250/SRT/2024/AY.2014-15 ITEC Measures Pvt. Ltd. given any other details apart from the name and PAN of Shri Tejas Mehta. He further submitted that the details of foreign remittances etc. were not submitted to the AO. Therefore, the issue contended before the Tribunal has not been canvassed before AO. 7. In short rejoinder, ld. AR of the assessee admitted that details of foreign remittances were submitted to CIT(A) and not to the AO. Further, it was submitted that Shri Tejas Mehta did not co-operate with the assessee. It was also submitted that provisions of section 68 of the Act are not applicable in case of the impugned share capital receipt by the appellant. 8. We have heard both parties and perused the materials available on record. We have also deliberated upon the decision relied upon by ld. AR. There is no dispute regarding the fact that the amount of Rs.25,70,224/- was received by the appellant from Shri Tejas Mehta towards share capital and share premium. The address of Shri Tejas Mehta at the time of completion of assessment on 13.12.2017 was Dubai. However, the appellant has received share capital and share premium much earlier on 03.10.2013 and 18.12.2013. It is not clear whether Shri Tejas Mehta was a non-resident during the said period. We also find that this plea of foreign remittances has not been taken by the assessee before the AO during the assessment proceedings. Such a contention was raised for the first time before the CIT(A), which is also admitted by the ld. AR of the assessee. We find that the CIT(A) has not given reasons for acceptance of the additional evidence filed by the assessee. He has also not called for a 6 ITA No.1250/SRT/2024/AY.2014-15 ITEC Measures Pvt. Ltd. remand report from the AO on the fresh evidence and new contention of the appellant. It is altogether a different matter that he has upheld the action of the AO in adding the impugned sum u/s 68 of the Act. Therefore, we deemed it proper to set aside the order of CIT(A) and restored the matter to the file of AO to verify the claim of the assessee and decide the matter in accordance with law. We make it very clear that we are not expressing any opinion as to whether the 2nd proviso to section 68 of the Act is applicable in the present case. The AO shall be at liberty to decide the issue in accordance with law after calling for necessary details and explanation from the assessee. Accordingly, the grounds are allowed for statistical purposes. 9. In the result, appeal of the assessee is allowed for statistical purpose. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 05/06/2025. Sd/- Sd/- (SANJAY GARG) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 05/06/2025 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "