ITO, WARD-5(1), KOLKATA V. M/S. SHIVRASHI INFRAPROJECTS PRIVATE LIMITED, KOLKATA

ITA 2328/KOL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which had deleted the addition of Rs 2,97,30,000 on account of unexplained cash credit under section 68 of the Income Tax Act, 1961. The assessee, M/s. Shivrashi Infraprojects Private Limited, had received share allotment money and securities premium, which the Assessing Officer (AO) added to the income as unexplained cash credit. The CIT(A) reversed this decision, leading to the Revenue's appeal. The Tribunal found that the CIT(A) had not adequately addressed the issues of the genuineness and creditworthiness of the transactions, nor the compliance with summons issued under section 131 of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 653119 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Ruby Traders and Exporters Ltd, Pr. CIT2, Kolkata(C)-2, Kolkata Vs M/s BST Infratech Ltd, Pr. CIT (Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd., Pr. CIT Vs. Swati Bajaj, Sumati Dayal v. CIT, CIT Vs. Durga Prasad More, CIT vs. Independent Media (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Unexplained cash credit
• Section: 143(3); 68; 131; 14A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री जॉजज माथान, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 ITO, Ward-5(1), Kolkata Vs. M/s. Shivrashi Infraprojects Private Limited (Appellant) (Respondent) PAN: AAQCS7270P Appearances: Department represented by : Praveen Kishore, CIT DR. Assessee represented by : None. Date of concluding the hearing : 22-May-2025 Date of pronouncing the order : 18-June-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13 dated 24.06.2024, which has been passed against the assessment order passed u/s 143(3) of the Act, dated 27.03.2015. Page | 2 I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. 1.1. The Registry has informed that the appeal is barred by limitation by 82 days. At the time of hearing, Ld. DR submitted the reasons for the delay in filing the appeal. After perusing the same, we find force in the reasons mentioned therein and are satisfied that the Revenue had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The Revenue has raised the following grounds of appeal before the Tribunal: “1. That on the facts of the case and in law, the CIT(A) erred in deleting the addition of Rs 2,97,30,000/- on account of unexplained cash credit, ignoring the facts that the appellant failed to provide satisfactory explanation for the transaction in question. 2. That the Ld. CIT(A) has erred on facts and in law in coming to the conclusion that the assessee had discharged the initial onus which lay upon him in terms of section 68 of the Act. 3. The Ld. CIT(A) has erred on facts and in law in ignoring the settled position of law in respect of provision of Section 68 of the Act that onus of proving the identity & creditworthiness of the parties from whom the assessee received money and genuineness of such transaction is on the assessee and the assessee miserably failed to prove so in the instant case. Reliance has been placed on the judgment in the case of CIT vs. Ruby Traders and Exporters Ltd [134 Taxman 29 (Cal)]. 4. Whether on the facts and circumstances of the case, the Hon'ble High Court has committed substantial error in law in not following the judicial Principles laid down in the matter of Pr. CIT2, Kolkata(C)-2, Kolkata Vs M/s BST Infratech Ltd.in 161 taxmann.com 668 (Cal) dated 23.04.2024, which is an earlier decision of Hon'ble High Court having a Precedence value? 5. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) has failed to appreciate the principle which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) [2020] 117 taxmann.com 752 (SC). 5.. The Ld. CIT(A) has erred in facts and in law in not appreciating the judicial principles laid down in the matter of Pr. CIT Vs. Swati Bajaj reported in 2022 SCC Online 1572 (Cal) wherein the Hon'ble High Court at Calcutta Page | 3 I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. laid down guidelines on the manner in which the allegation against the assessee has to be considered. 6. The Ld. CIT(A) has erred in facts and in law in ignoring the judicial principles laid down in the matter of Sumati Dayal v. CIT [1995] 214 ITR 801 (SC). 7.. The Ld. CIT(A) has erred in facts and in law in not taking cognizance of the judicial principles laid down in CIT Vs. Durga Prasad More 1973 CTR (SC) 500: [1971] 82 ITR 540 (SC). 8. The Ld. CIT(A) has erred in facts and in law in ignoring the judicial principles laid down in the matter of CIT vs. Independent Media (P) Ltd. [2012] 25 taxmann.com 276 (Delhi) and cases adopting a similar view. 9. That the appellant craves leave to add to and/or alter, amend, modify or rescind the grounds hereinabove before or at the time of hearting of this appeal.” 3. Brief facts of the case are that assessee is a Private Limited Company engaged in the business of investment in shares and securities, financing activities etc. during the FY 2011-12 corresponding to AY 2012-13. The return of income was e-filed showing total income of Rs. 404/- which was selected for scrutiny. During scrutiny, the Ld. AO found from the balance sheet of the assessee that it had received share allotment money of Rs. 19,90,000/- and securities premium of Rs. 98,90,1000/- as is mentioned in the order of the Ld. CIT(A). The assessee claimed to have furnished the required documents/accounts/details during the scrutiny proceedings to the Assessing Officer (hereinafter referred to as Ld. 'AO') within time, apart from appearing and making submissions. During the year, the assessee had allotted equity shares for ₹ 9,91,00,000/- to several persons, who are claimed to be registered body corporates. It is stated that in the statement of facts filed before the Ld. CIT(A) that the assessee allotted the shares fully paid up against the respective debts due to each of such companies. The list of subscribers to the share capital to whom fresh Page | 4 I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. shares were allotted during the year was furnished before the Assessing Officer during the course of the hearing. The Ld. AO issued summons u/s 131 of the Act and in response to which the assessee submitted the replies via speed post. It is alleged that the Ld. AO refused to take the depositions despite the request made. The Ld. AO made the additions u/ss 68 and 14A of the Act at Rs. 9,91,00,000/- and Rs. 6,596/- respectively. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who allowed the appeal of the assessee relying upon the decision of Hon'ble Supreme Court in the case of CIT v. Orissa Corpn, (P.) Ltd. [1986] 159 ITR 78 (SC), the decision of Hon'ble Punjab & Haryana High Court in the case of Jawahar Lal Oswal reported in 382 ITR 453 and the decision of Hon'ble Delhi High Court in the case of CIT v. Navodaya Castles (P.) Ltd. [2014] 50 taxmann.com 110/226 Taxman 190 (Mag.)/367 ITR 306 and has held in para 7.4 that “The AO has not discussed the contents of the assessee's submissions in the assessment order and has decided the case solely on the basis of high premium. No enquiries have been made to rebut the information filed by the appellant. Therefore, the case clearly falls under the first category as discussed by the Hon'ble Delhi High Court. Under the circumstances, the addition u/s 68 made by the AO is liable to be deleted”. Another sum of ₹ 6,596/- added u/s 14A of the Act has also been deleted. Aggrieved with the order of the Ld. CIT(A) the Revenue has filed the appeal before this Tribunal. 4. None appeared on behalf of the assessee and the appeal was heard with the assistance of Ld. DR.. The Ld. AR submitted that the Ld. CIT(A) allowed the appeal even though the assessee did not appear before the Ld. CIT(A). In the grounds of appeal the Revenue has relied upon the following decisions: Page | 5 I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. i) CIT vs. Ruby Traders and Exporters Ltd (134 Taxman 29 (Cal)]. ii) Pr. CIT-2, Kolkata(C)-2, Kolkata Vs M/s. BST Infratech Ltd. in 161 taxmann.com 668 (Cal). iii) Pr.CIT (Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) [2020] 117 taxmann.com 752 (SC). iv) Pr. CIT Vs. Swati Bajaj reported in 2022 SCC Online 1572 (Cal). v) Sumati Dayal v. CIT [1995] 214 ITR 801 (SC). vi) CIT Vs. Durga Prasad More 1973 CTR (SC) 500: [1971] 82 ITR 540 (SC). vii) CIT vs. Independent Media (P) Ltd. [2012] 25 taxmann.com 276 (Delhi). 5. The Ld. DR requested that the order of the Ld. CIT(A) may be set aside as no opportunity was provided to the Ld. AO and before the Ld. AO the assessee could not justify the receipt of high premium and the genuineness of the transactions for the receipt of share application money along with share premium. 6. We have heard the Ld. DR and as pointed out by the Ld. DR, also noted that there was no representation before the Ld. CIT(A) as well. The assessee had raised share capital along with share premium although the returned income was ₹ 404/- only and the huge premium charged by the assessee was not justified on the basis of financial results of the assessee. In the case of Swati Bajaj (supra) and in other cases relied upon by the Revenue, it has been laid down that in the present era of shell companies, the source of the share capital and the genuineness of the transactions has to be established. The Ld. CIT(A) has mentioned that the Ld. AO has not discussed the reply received, however, the Ld. CIT(A) has not commented as to how on share allotment money of ₹ 19,90,000/-, receipt of security premium of ₹ 98,90,1000/- was justified. There was no response to the final show cause notice issued nor the Directors of the share holding companies from whom maximum amounts were received responded to the summons issued, yet replies were filed on their behalf by the assessee. Page | 6 I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. As no compliance was made to the summons issued, the assessee was not engaged in any business activity even during the impugned A.Y. 2012-13, the identity of the companies in which investment was made was not disclosed despite several notices being issued and the investment was not made in listed companies with proven track record which were well exposed to the market and no details have been mentioned on the basis of which relief has been allowed, therefore the order of the Ld. CIT(A) is not sustainable. Neither the creditworthiness nor the genuineness of the transactions was established yet the Ld. CIT(A) allowed the relief which is not in accordance with the judicial pronouncements of the Hon'ble Jurisdictional High Court in the case of Swati Bajaj (supra) and also in the case of M/s. BST Infratech Ltd. (supra). Therefore, we hereby set aside the order of Ld. CIT(A) and remand the matter to him with the direction that the appeal may be decided in accordance with the principles laid down by the Hon'ble High Courts and Hon'ble Supreme Court in the decisions relied upon by the Revenue and which are also mentioned in the grounds of appeal and after providing an opportunity of being heard to the Ld. AO as required under Rule 46A of the Income Tax Rules, 1962. Hence, all the grounds of appeal are allowed for statistical purposes. 7. In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 18th June, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 18.06.2025 Bidhan (P.S.) Page | 7 I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. Copy of the order forwarded to: 1. ITO, Ward-5(1), Kolkata. 2. M/s. Shivrashi Infraprojects Private Limited, 27, Brabourne Road, 5th Floor, Kolkata, Kolkata, West Bengal, 700001. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "