M/S. INVOREX TRADING PVT. LTD.,KOLKATA V. I.T.O., WARD-7(4), KOLKATA, KOLKATA

ITA 601/KOL/2022

AI Insights

The case involves M/s Invorex Trading Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of share capital and premium amounting to Rs.2,05,00,000 as unexplained cash credit under Section 68 of the Income Tax Act, 1961. Initially, the ITAT dismissed the appeal due to non-appearance of the assessee's representatives. However, following a directive from the Calcutta High Court, the ITAT reconsidered the case, allowing the assessee another opportunity to present its case. The assessee argued that substantial documents were available to prove the transactions were genuine and the subscribers were creditworthy. The Department of Revenue (DR) countered that the essential ingredients to escape the rigors of Section 68 were not met. The Tribunal decided to remand the case for a detailed examination of the new evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471016 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 143(3); 250

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA SHRI DUVVURU RL REDDY, VICE PRESIDENT SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 601/Kol/2022 Assessment Year: 2012-13 M/s Invorex Trading Pvt. Ltd., 18A, Ramakanta Bose Street, Kolkata - 700003 .....................…...…………….... Appellant [PAN: AABCI0257M] vs. Income Tax Officer, Ward – 7(4), Kolkata Aayakar Bhawan, 5th Floor, P-7, Chowringhee Square, Kolkata - 700069 ...............…..….................... Respondent Appearances by: Assessee represented by : Sujay Sen, AR Department represented by : A.R. Chatterjee, Sr. DR Date of concluding the hearing : 22.01.2025 Date of pronouncing the order : 04.02.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13, dated 10.10.2022, which has been passed against the assessment order u/s 143(3) of the Act dated 26.03.2015. 1.1 This case has a unique set of facts which deserves to be narrated. In this case, in ITA No. 601/Kol/2022 vide order dated 23.01.2024, the ITAT dismissed the assessee’s appeal with the following observations: 2 ITA No. 601/Kol/2022 M/s Invorex Trading Pvt. Ltd. “5. Heard the ld. D/R. The sole issue involved in this appeal is the addition of share capital including share premium amounting to Rs.2,05,00,000/- raised during the year from five share subscriber companies as unexplained cash credit u/s 68 of the Act, by the AO as confirmed by the Id. CIT(A). We find that the assessee has firstly failed to appear in-person before the Id. CIT(A) as well as before us. Secondly, the assessee has miserably failed to establish the three ingredients as prescribed u/s 68 of the Act i.e., identity, creditworthiness of the share subscribers and genuineness of the transactions. Under these given facts and circumstances, we do not find any reason to interfere with the findings of the Ld. CIT(A) in confirming the addition u/s 68 of the Act.” 1.2 Aggrieved with this action, the assessee approached the Hon’ble High Court of Calcutta, where through case No. ITAT/173/2024 IA No. GA/1/2024, order dated 06.11.2024, the Hon’ble High Court was pleased to order as under: “The assessee is aggrieved by the order passed by the Tribunal dismissing its appeal on the ground that the assessee did not appear. On perusal of the order, we find that the Tribunal cannot be faulted for passing the order dismissing the appeal since the assessee did not diligently prosecute the matter. However, we find that since the Tribunal is the last authority before whom the factual matrix can be agitated and adjudicated, we deem it appropriate to grant one more opportunity to the assessee to contest the matter on merits. However, this is subject to the condition that the appellant assessee pays a sum of Rs.50,000/- to the Bar Association, High Court at Calcutta within two weeks from the date of receiving the server copy of this order and upon getting receipt for such payment, the assessee shall produce the same in the office of the Learned Tribunal and upon production of the said receipt for payment of costs as directed above, the Learned Tribunal shall take up the matter for consideration and afford only one opportunity to the appellant assessee to appear in the matter and if the assessee avails the opportunity, the Learned Tribunal shall take a decision on merits and in accordance with law. However, if the assessee fails to avail such opportunity, the Tribunal is at liberty to pass appropriate orders. The appeal and the application stand disposed of.” 2. In compliance of the directions of the Hon’ble High Court, the Ld. AR of the assessee appeared on the last date of hearing and argued that the assessee had a strong case on merit since they had presented considerable number of documents to prove that the share premium received by them could not be hit by the provisions of Section 68 of the Act. The Ld. AR further stated that it was merely because the assessee could not ensure the presence of Directors for interrogation before the Ld. AO, that an adverse view was taken. The Ld. AR also took us through the grounds of appeal as per the Form 36 and said that the assessee deserves to be heard 3 ITA No. 601/Kol/2022 M/s Invorex Trading Pvt. Ltd. by the ITAT since it was the last fact-finding body. The Ld. AR also pointed out certain relevant pages from a paper book running into 150 pages. 3. Responding to the averments of the Ld. AR, the Ld. DR took us through various findings contained in the orders of authorities below and he emphasized that the critical ingredients for escaping the rigours of Section 68 of the Act, viz. proving the identity and creditworthiness of the creditors and proving the genuineness of the transaction, were missing. The Ld. DR stated that it was not only on account of the non-attendance of Directors of the assessee but other factors were also responsible for the impugned additions. 4. While concluding his arguments, the Ld. AR filed an affidavit before us with the following contentions: “I, VIKASH PRASAD son of Prabhu Narayan Prasad, residing at18A, Rama Kanta Bose street Kolkata-700 003 being the Director of, Invorex Trading Private Limited, (hereinafter referred to as \"the Company\") having Registered Office at 18A, Rama Kanta Bose street Kolkata-700 003, do hereby solemnly affirm that - 1. That, the Company had preferred an Appeal before the Hon'ble Income Tax Appellate Tribunal, Kolkata; 2. That the Appeal is for Assessment Year 2012-13 and the Appeal No. is ITA No. 601/Kol/2022 3. That, the Company is now undertaking the Hon'ble Income Tax Appellate Tribunal, Kolkata, that if opportunity is provided, then the present Directors will appear before the Assessing Officer or the Commissioner of Income Tax, if called for, to explain the facts and the merits of the case, involved in the Appeal; 4. That, the Company further undertakes the Hon'ble Income Tax Appellate Tribunal, Kolkata, that if opportunity is provided, then the present Directors of the subscriber Companies who subscribed shares during the previous year ended 31 March, 2012, relevant to the assessment year 2012-13, will also appear before the Assessing Officer or the Commissioner of Income Tax, if called for, to explain the facts and the merits of the case, involved in the Appeal; It is humbly submitted that this Hon'ble Income Tax Appellate Tribunal, at Kolkata, on scrutinising the facts and circumstances in the accompanying application, may please construe facts and circumstances to call the present Directors of the Company to explain the facts and merits of the case. The facts and circumstances elucidated in the accompanying application involves the question of \"substantial justice\", where such opportunity is prayed for in the overall interest of justice. On 4 ITA No. 601/Kol/2022 M/s Invorex Trading Pvt. Ltd. the other hand if such opportunity is being denied it would seriously undermine the cause of justice, resulting into miscarriage of justice for the appellant. VERIFICATION 1, VIKASH PRASAD son of Prabhu Narayan Prasad, residing at 18A, Rama Kanta Bose street Kolkata-700 003,, being the Director of, Invorex Trading Private Limited, (hereinafter referred to as \"the Company\" \") having Registered Office at18A, Rama Kanta Bose street Kolkata-700 003, do hereby verify that the contents of the above paragraphs are correct and true to the best of my knowledge and belief.” The Ld. AR requested that the assessee should be given a chance to establish their case before the Ld. AO, through fresh proceedings and in these proceedings, if allowed to commence, he emphasizes that the Directors were giving an undertaking to attend before the Ld. AO for verification. 5. We have carefully gone through the orders of authorities below, the previous order of ITAT (supra) and the directions given by the Hon’ble Calcutta High Court (supra). We have also considered the contention of both the Ld. AR/DR and also perused the affidavit filed by the Directors of the assessee company. It is seen that the Ld. AO was persuaded to make the impugned addition on account of an allegation that the creditworthiness etc. of the share capital subscribers could not be established up to his satisfaction. It is felt that now when the assessee is willing to cooperate fully with the assessment proceedings then in the interests of substantive justice this matter deserves to be remanded back to the file of Ld. AO for examining the evidences presented by the assessee to prove his bonafides. Since, the assessee has given an undertaking that the Directors would be present before the Ld. AO for any verification, hence this fact also deserves to be kept in mind by the Ld. AO so that once and for all the case is examined on merit, leading to a correct determination of the assessee’s income, in keeping with the income tax law. 6. With these remarks, the matter is remanded to the file of Ld. AO. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. 5 ITA No. 601/Kol/2022 M/s Invorex Trading Pvt. Ltd. Order pronounced in the court on 04.02.2025 Sd/- Sd/- (Duvvuru RL Reddy) (Sanjay Awasthi) Vice President Accountant Member Dated: 04.02.2025 AK, P.S. Copy of the order forwarded to: 1. M/s Invorex Trading Pvt. Ltd., Kolkata 2. Income Tax Officer, Ward – 7(4), Kolkata 3. CIT(A)- 4. CIT- 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches "