PIYUSH SUPPLIERS PVT. LTD.,KOLKATA V. INCOME TAX OFFICER, WARD 9(3), KOLKATA, INCOME TAX DEPARTMENT, KOLKATA

ITA 269/KOL/2024

AI Insights

The case involves Piyush Suppliers Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, confirming an addition of \\u20b925,00,000 to the assessee's income for the Assessment Year 2012-13. The addition was initially made by the Assessing Officer (AO) on account of unexplained share capital/share premium. The AO had issued summons under section 131 of the Income Tax Act to the directors of the assessee company and the share subscribers, which were returned unserved. The Tribunal noted that the assessee had provided comprehensive details and documents regarding the share subscribers, including their identities and financial credibility, which were not adequately addressed by the AO or the CIT(A). The Tribunal referenced several precedents to support its decision that the addition was unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473868 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: Govindarajulu Mudaliar vs. CIT, CIT vs. Durga Prasad More, PCIT vs. NRA Iron & Steel (P.) Ltd., CIT vs. Orissa Corporation Pvt. Ltd., CIT vs. Orchid Industries Ltd., Crystal Networks Pvt. Ltd. vs. CIT, ITO vs. M/s. Cygnus Developers India Pvt. Ltd., Joy Consolidated Pvt. Ltd. vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJA SENGUPTA
• Assessee Lawyers: DILIP KUMAR PATNI
• Keywords: Set aside; Unexplained expenditure; Source of fund; Assessment record; Bogus Share capital
• Section: 142(1); 68; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.269/KOL/2024 (Assessment Year:2012-13) Piyush Suppliers Pvt. ltd. 4, BBD Bag (East) Stephen House, 2 nd Floor, Room No.24, Kolkata-700001 West Bengal Vs. Income Tax Officer, Ward 9(3) Income Tax Officer, Ward 9(3), Aaykar Bhavan, P-7, Chowrinjee Square, 5th Floor, Kolkata-700069 West Bengal (Appellant) (Respondent) PAN No. AABCP7048P Assessee by : Shri Dilip Kumar Patni, AR Revenue by : Shri Raja Sengupta, DR Date of hearing: 13.03.2025 Date of pronouncement : 17.03.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.12.2023 for the AY 2012-13. 02. The only issue raised by the assessee is against the confirmation of addition of ₹2,50,00,000/- by the ld. CIT (A) as made by the ld. AO on account of unexplained share capital/ share premium. 03. The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total loss of ₹54,478. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee along with questionnaire. The ld. AO on perusal of the assessment records observed that the assessee company has issued 2,50,000 equity share of face value of 10/- each Page | 2 ITA No.269/KOL/2024 Piyush Suppliers Pvt. ltd; A.Y. 2012-13 at a premium of ₹90/- thereby, raising share capital/premium of ₹2,50,00,000/-. The assessee filed the necessary information/ details with the ld. AO, in response to notice u/s 142(1) of the Act comprising names, addresses, PANs, ITR’s, computations of income, audited annual accounts, bank statements along with confirmations from the investors qua the investments made in the equity capital of the assessee company. All these details qua five share subscribers are available at page no.77 to 185. The ld. AO also issued summons u/s 131 of the Act on 12.02.2015, to the directors of the assessee company for personal deposition, and also to produce certain details as mentioned at page no.2 of the assessment order besides produicing the share subscribers. However, the said summons to the directors of the assessee company returned unserved on 28.02.2015. Finally, the ld. AO held that the assessee company has failed to comply with the summons u/s 131 of the Act and also produce the share subscribers and therefore, the transaction of issuance of shares/ subscriptions could not be verified. The ld. AO accordingly observed that the investments in the assessee company were out of the undisclosed funds of the assessee and since the identity and creditworthiness of the investors and genuineness of the transactions could not be established, the addition of ₹2,50,00,000/- was made by the AO to the total income of the assessee. 04. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee after taking into account the contentions/ submissions of the assessee by holding that the section 68 was correctly invoked by the ld. AO after discussing the details of the allottees on page no.8 and 9 of the appellate order and after following certain decisions as mentioned on page no.10 and 11 of the appellate order. Page | 3 ITA No.269/KOL/2024 Piyush Suppliers Pvt. ltd; A.Y. 2012-13 05. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the assessee has issued 2,50,000 equity shares of face value of 10/- each at a premium of ₹90/- to five subscribers. We note that the assessee has filed before the ld. AO all the evidences and proofs relating to the share subscribers comprising names, addresses, PANs, ITR’s, audited annual accounts, bank statements and confirmations from the investors. Details of these evidences are available at page no.77 to 99 of the Paper Book. The ld. AO has not commented on the evidences furnished by the assessee and also has not pointing out any defect or deficiency and simply made the addition by treating the share capital/ share premium as unexplained expenditure u/s 68 of the Act on the ground that there was no compliance to the summons u/s 131 of the Act, as neither the directors of the assessee company nor the directors of the share subscribers company appeared before the AO and therefore, the identity, creditworthiness of the invetors and genuineness of the transactions could not be examined. Similarly, the ld. CIT (A) after discussing the credentials of each of the investors affirmed the order of the ld. Assessing Officer. We note from the analysis and discussion made by the ld CIT(A) about the subscribing companies on page no.8 and 9 of the appellate order that these company have sufficient avaialbe source of funds in their respective hands and even filed the proof of identity, creditworthiness before the ld. AO as well as before the ld. Commissioner of Income-tax (Appeals). The ld. CIT (A) has relied on the decision of Govindarajulu Mudaliar (A. Vs. CIT (1959) 34 ITR 807 (SC), CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC), PCIT vs. NRA Iron & Steel (P.) Ltd. (SC) (2019) 412 ITR 161. However, in our opinion these decisions are distinguishable on facts. We find that the assessee has filed all the Page | 4 ITA No.269/KOL/2024 Piyush Suppliers Pvt. ltd; A.Y. 2012-13 evidences before the authorities below and mere non-compliance to the summons u/s 131 of the Act cannot be ground for making an addition. The case of the find force from the decision of the following decisions namely In defense of his argument he relied on the following decisions: (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020. 06. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as noted above , we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition. 07. In the result, the appeal of the assesseeis allowed. Order pronounced in the open court on 17.03.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 17.03.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "