M/S. EMERALD PROPERTIES PVT. LTD.,KOLKATA V. ITO,WARD-5(3), KOLKATA. , KOLKATA

ITA 1043/KOL/2023

AI Insights

M/s. Emerald Properties Pvt. Ltd., the successor to Business Function Consultancy Pvt. Ltd., appealed against the order of the Commissioner of Income Tax (Appeals)-23, Kolkata, which was passed under section 250 of the Income Tax Act, 1961. The appeal was initially filed in the name of the amalgamating company and was dismissed with liberty to file a fresh appeal in the name of the amalgamated company. The Tribunal admitted the appeal after condoning the delay in filing. The main issues in the appeal included the ex-parte nature of the appellate order, unjustified additions under section 68 for non-compliance with summons, and the confirmation of interest under sections 234 A/B/C. The Tribunal noted that the additions made as unexplained cash credit under section 68 required a detailed examination of the evidences and submissions which were not adequately addressed in the initial proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36261 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: ITO vs. M/s. Blessings Commercial Pvt. Ltd. in ITA No. 271/Kol/2014 for AY 2010-11, Cheminvest Ltd. vs. CIT reported in [2015] 61 taxmann.com 118 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Additional evidence; Unexplained cash credit; Principle of natural justice
• Section: 144; 143(3); 250; 68; 131; 14A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'डी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA श्री दुव्वुरु आरएल रेड्डी, उपाध्यक्ष (कोलकाता क्षेत्र) एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI DUVVURU RL REDDY, VICE PRESIDENT (KZ) & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.) Vs. ITO, Ward-5(3), Kolkata (Appellant) (Respondent) PAN: AAACE5407E Appearances: Assessee represented by : Miraj D Shah, AR. Department represented by : Subhendu Datta, CIT-DR. Date of concluding the hearing : February 19th, 2025 Date of pronouncing the order : March 6th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)- 23, Kolkata [hereinafter referred to as the ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 Page | 2 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). (hereinafter referred to as ‘the Act’) for AY 2012-13 dated 19.07.2018, which has been passed against the assessment order u/s 143(3) of the Act, dated 13.03.2015. 1.1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 1837 days. An application along with appeal memo seeking condonation of delay has been filed by the assessee for condoning the delay stating as follows: “1. The appeal in this case was erroneously filed in the name of M/s. Business Function Consultancy Pvt Ltd and said appeal was numbered as Ι.Τ.Α. No. 1972/Kol/2018 filed on 13/09/2018. 2. The said Company M/s. Business Function Consultancy Pvt Ltd had merged with M/s. Emerald Properties Pvt Ltd by an order of the competent authority dated 23/12/2015. These facts were brought to the notice of the Hon'ble Bench and hence the appeal no. I.T.A. No.1972/Kol/2018 was disposed vide an order passed by the Hon'ble \"C\" Bench, ITAT, Kolkata which was pronounced on 22/08/2023 with the following direction: \"After hearing rival contentions and perusing the material on record, we observe that the assessee has filed the instant appeal in the name of amalgamating company which has merged with M/s Emerald Properties Put Ltd. vide order dated 23.12.2015 passed by the Hon'ble High Court. We are of the view that the appeal in the name of amalgamating company cannot be adjudicated as being non- existent entity and it has to be the name of amalgamated company. Accordingly, we are dismissing this appeal with liberty to file fresh appeal in the name of amalgamated company. Pertinent to state that the time period from the date of filing of this appeal till communication of this order plus 60 days would not be considered while reckoning period for filing fresh appeal in the name amalgamated company.\" 3. Thus the delay in filing of this appeal be condoned.” 1.2. It was submitted by the Ld. AR that after the amalgamation, the appeal filed in the name of the amalgamating company was dismissed with the liberty to file a fresh appeal in the name of the amalgamated Page | 3 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). company and the appeal was thereafter, filed in the correct name. The order of the Hon'ble ‘C’ Bench of the ITAT, Kolkata was pronounced on 22.08.2023 and the appeal was filed on 29.09.2023 i.e. within a month of the Tribunal’s order, hence the same was stated to be filed in time. 1.3 We have considered the application seeking condonation of delay and find that there is sufficient cause for the delay. Hence, the delay is condoned and the appeal is admitted for adjudication. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1) For that in the facts and circumstances of the case the appellate order was passed on ex-parte basis by the learned CIT(Appeals) was without considering the submission made on 24/01/2017 by the appellant is bad in law and hence the appellate order be quashed. 2) For that in the facts and circumstances of the case the addition made u/s 68 of the Income Tax Act, 1961 for non-compliance of summon u/s 131 of the Income Tax Act, 1961 is not justified and hence the same be deleted. 3) For that in the facts and circumstances of the case the order passed by the learned CIT (Appeals) is bad in law and therefore the same be set aside. 4) For that in the facts and circumstances of the case the addition of Rs.7,25,67,000/ made on account of unexplained cash credit being share capital and premium u/s 68 of the Income Tax Act, 1961 this was not justified and thus the same be deleted. 5) For that in the facts and circumstances of the case the Appellate order passed on the order based on an Assessment order passed which was in violation of principals of natural justice and hence the entire proceeding was bad in law and thus the same be cancelled/quashed. 6) For that the learned CIT (Appeals) erred in confirming the interest u/s 234 A/B/C the same was unjustified and hence the same be deleted. 7) The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. Page | 4 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). 8) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal.” 3. Brief facts of the case are that the assessee had filed the return of income declaring total income of Rs. 19,740/- and was assessed on the income of Rs. 7,28,78,870/- vide order dated 13.03.2015 made u/s 143(3) of the Act. A sum of Rs. 7,25,67,00/- received as share capital and share premium was added as cash credit u/s 68 of the Act and another sum of Rs. 2,92,132/- was disallowed u/s 14A of the Act. The assessee claimed before the Ld. CIT(A) that it had submitted details and evidences in support of the share capital and had demonstrated the genuineness, creditworthiness and identity of the share applicants, but the Ld. AO ignored the evidences and made the additions purely on conjectures and surmises. It was also submitted that the Ld. AO also refused to take material evidences and statements in the course of assessment proceedings with intent to make additions with a pre- determined mind and due to influence from higher authorities which caused prejudice to the assessee. The assessment order was passed u/s 143(3) of the Act (which is mentioned as u/s 144 of the Act in para III of the appeal order of the Ld. CIT(A) and the addition of Rs. 7,25,67,000/- included a sum of Rs. 6,59,700/- as share capital and Rs. 7,19,07,300/- as share premium. The Ld. CIT(A) went through the facts of the case and noted that there were 40 companies which were share applicant companies. The financial results and the credentials or the business performance of each of the companies who had subscribed to the share capital and premium of the assessee were still unknown to the assessee and even the copy of audited accounts of the share Page | 5 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). applicant companies had not been filed by the assessee. The Ld. AO required the assessee to furnish several details including producing the Directors and the bank statements and individual balance sheet and to produce all shareholders to establish their identity and creditworthiness of the shareholders and genuineness of the transactions along with the balance sheet, profit and loss account and bank statement. It was observed that the companies which had subscribed to the shares of the assessee company on substantial premium do not have the capacity or the financial standing to do so and the companies were exhibiting all the characteristic of a shell company. The assessee had not given any clarification as to why high premium had been charged from the parties as the capital was raised by way of issue of 65970 shares of Rs. 10/- each at the premium of Rs. 1,090/- per share which were issued to 40 share applicants. Relying upon the decision of the Coordinate Bench of the Tribunal in the case of ITO vs. M/s. Blessings Commercial Pvt. Ltd. in ITA No. 271/Kol/2014 for AY 2010-11 order dated 28.06.2017, as there was no justification for the share premium charged, the appeal of the assessee on this ground was dismissed as the factual matrix was more or less similar. As regards the disallowance u/s 14A of the Act, the Ld. CIT(A) relied upon the decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT reported in [2015] 61 taxmann.com 118 (Delhi) in which it has been held that section 14A of the Act cannot be made if no exempt income is received or receivable during the previous year and the addition of Rs. 2,92,132/- made u/s 14A of the Act was deleted and the appeal was partly allowed. Aggrieved with the order of the Ld. CIT(A) the assessee has filed the appeal before this Tribunal. Page | 6 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). 4. Rival contentions were heard and the submissions made have been examined. The Ld. AR argued that there was no application of mind by the Ld. AO and requested that the matter may be remitted to the Ld. AO as majority of share capital was received in the earlier year. 5. We have considered the submissions made. It appears that though the order is made u/s 143(3) of the Act yet in the absence of proper representation before the Ld. AO and as the Directors of the shareholder companies did not appear before the Ld. AO, the sum of Rs. 7,25,67,000/- credited as share application money along with premium was added to the income of the assessee u/s 68 of the Act. The Ld. AR submitted that most of the share application money was received in the earlier years and was not liable to be added in the year under consideration in which the shares were allotted. Since this is a matter which requires verification at the end of the Ld. AO as in the course of assessment proceedings proper submission could not be made, therefore, in the interest of justice the Bench was of the view that another opportunity may be allowed to the assessee to furnish necessary evidence before the Ld. AO, who shall examine the same and pass the assessment order afresh after considering the submission and evidence filed by the assessee in accordance with law. Hence, the order of the Ld. CIT(A) as well as the Ld. AO are hereby set aside and the Ld. AO is directed to frame the assessment order de novo after considering the submission and evidence to be filed by the assessee. The assessee shall not seek unnecessary adjournment and shall be at liberty to file the required evidence in support of the relief claimed. Page | 7 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 6th March, 2025. Sd/- Sd/- [Duvvuru RL Reddy] [Rakesh Mishra] Vice President (KZ) Accountant Member Dated: 06.03.2025 Bidhan (P.S.) Page | 8 I.T.A. No.: 1043/KOL/2023 Assessment Year: 2012-13 M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.). Copy of the order forwarded to: 1. M/s. Emerald Properties Pvt. Ltd. (Successor to Business Function Consultancy Pvt. Ltd.), 113, Netaji Subhash Road, 5th floor, Room No. 93, Kolkata, West Bengal, 700001. 2. ITO, Ward-5(3), Kolkata. 3. CIT(A)-23, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "