UDAY OVERSEAS PVT. LTD.,KOLKATA V. I.T.O., WARD - 6(4), KOLKATA, KOLKATA

ITA 1553/KOL/2024

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The case involves Uday Overseas Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming an addition of Rs.6,62,20,000 to the assessee's income for the Assessment Year 2012-13. The addition was initially made by the Assessing Officer, who treated the share application/share premium received by the assessee as income from unexplained sources. The Tribunal examined the documents and explanations provided by the assessee and the share subscriber companies, noting that the Assessing Officer had not discussed these in his order and had incorrectly stated that summons issued under section 131 of the Act were returned, which was not true. The Tribunal also highlighted that the share subscriber companies had been assessed under section 143(3) of the Act, and additions had been made in their hands, thus any further addition in the hands of the assessee would amount to double taxation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 475575 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Other Referred Cases: Abhoy Mineral (P) Ltd., Kolkata Vs. ITO, DCIT vs. M/s Maa Amba Towers Ltd., Steelex India (P) Ltd vs. ITO, Ward-3(2), Kolkata
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Unexplained cash credit; Source of fund
• Section: 143(3); 250; 68; 131; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA Before SRI SANJAY GARG, JUDICIAL MEMBER & SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No.: 1553/KOL/2024 Assessment Year: 2012-13 Uday Overseas Pvt. Ltd. … Appellant 25, Strand Road, Room No. 167, Marshall House, Kolkata-700001. (PAN: AAACU3034F) Vs. ITO, Ward-6(4), Kolkata ... Respondent Appearances: Appellant represented by: Shri Narendra Kedia, Advocate Respondent represented by: Shri Subhendu Datta, CIT, DR Date of concluding the hearing : 11.12.2024 Date of pronouncing the order : 29.01.2025 ORDER Per Sanjay Garg, Judicial Member: The captioned appeal has been preferred by the assessee against the order dated 22.05.2024 of the Ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi [hereinafter referred to as Ld. ‘CIT(A)’] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Year (AY) 2012-13. 2. The assessee in this appeal is aggrieved by the action of the Ld. CIT(A) in confirming the addition made by the Assessing Officer of Rs.6,62,20,000/- by treating the share application/share premium received by the assessee as income of the assessee from unexplained sources. 4. Brief facts of the case are that during the assessment proceedings carried out u/s. 143(3) of the Act, the Assessing Officer noticed that the assessee during the Financial Year (FY) 2011-12 relevant to assessment year under consideration had issued fresh shares to different Private Limited I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 2 of 10 Companies by providing placement and thereby received huge share application/share premium. On being asked to explain the identity and creditworthiness of the share subscribers and genuineness of the transaction, the assessee filed the requisite details and documents which have been mentioned in para 4 of the assessment order. That the Assessing Officer observed, the assessee company remains ready with the papers like Memorandum & article of Association, From-2, Form-5 etc. filed before ROC for raising share capital & issuance, share application by the allottee companies, share allotment advices, PAN Card, Form-if etc in support of the registered address of the assessee companies and allottee companies as well, and resolution book in support of board meetings held, bank statement of both assessee company and the allottee companies etc. Regarding justification of high premium, one of the common replies was as per decision taken in the board meeting. The Assessing Officer further observed that the assessee company was not having any asset base for justifying investment of such a high share application money/share premium by the investor companies. To verify the genuineness of the transaction, the Assessing Officer also issued summons u/s. 131 of the Act to the directors of the assessee company as well as director of the investing companies. However, in most of the cases, the summons were returned by the postal authorities. The Assessing Officer, thereafter, held that the assessee had failed to prove the genuineness of the transaction and treated the aforesaid share application /share premium received by the assessee as income of the assessee from unexplained sources and made the impugned addition. 4.1. The Ld. CIT(A) confirmed the addition so made by the Assessing Officer. Being aggrieved, the assessee is in appeal before us. 5. We have heard the rival contentions and gone through the records. The Ld. Counsel for the assessee, at the outset, has submitted that the assessee had duly furnished all the relevant documents to prove the identity, creditworthiness of the share subscribers and genuineness of the transaction. He has further submitted that even the source of source through I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 3 of 10 comprehensive information, explanation and documentary evidences was furnished. In this respect, the Ld. AR has relied on the following chart: I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 4 of 10 I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 5 of 10 5.1. The Ld. Counsel for the assessee has further submitted that the Assessing Officer has omitted to mention a very peculiar fact in this case. He inviting our attention to paper book pages 95 to 406 and has submitted that in this case, the Assessing Officer had issued notices u/s. 133(6) of the Act to all the share subscriber companies calling for the requisite details and information. That all the share subscriber companies had filed replies to the notices issued u/s. 133(6) of the Act. The Ld. Counsel for the assessee, in this respect has placed reliance upon the copies of notices as well as replies along with the various documents filed by the share subscribing companies to the Assessing Officer. The Assessing Officer, however, has omitted to mention that he had issued notices u/s. 133(6) of the Act whereupon the replies along with documents were received from the share subscribing companies. The Ld. Counsel for the assessee has submitted that the Assessing Officer has not bothered even to go through and discuss any of the evidences and explanations furnished by the share subscribing companies to prove their identity and creditworthiness and genuineness of the I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 6 of 10 transactions. The Ld. Counsel for the assessee has further submitted that the Assessing Officer has mentioned that summons sent u/s. 131 of the Act had returned back, however, the said fact was not true. He inviting our attention to page 39 of the paper book has demonstrated that notice u/s. 131 dated 02.03.2015 was sent to Shri Pravin Kumar Khetan, director of the assessee company with a direction to appear before the Assessing Officer on 18.03.2015. However, the said notice was received in the office of the director of the assessee company on 19.03.2015 at 6 PM. The Ld. Counsel for the assessee has further invited our attention to page 41 of the paper book, which is a copy of the letter dated 20.03.2015, whereby, the director of the assessee company had requested the Assessing Officer that the notice sent by him u/s. 131 of the Act was received by him on 19.03.2015, whereas, the date given in the notice to appear was 18.03.2015. The director of the assessee company through the said letter requested the Assessing Officer to give him a reasonable opportunity of being heard and grant him at least one week’s time to allow him to gather all the shareholders of his company and make ready all the documents and give opportunity of personal appearance. The Ld. Counsel for the assessee inviting our attention to assessment order has submitted that the Assessing Officer has totally skipped the aforesaid fact and simply wrote that the summon sent u/s. 131 of the Act had returned back. The Ld. Counsel for the assessee has further invited our attention to another peculiar fact to submit that all the share subscribers were income tax assessees. That assessment was carried out in the cases of all the share subscribers u/s. 143(3) of the Act and certain additions were made. The Ld. Counsel for the assessee has submitted that once the addition was made in the case of share subscriber companies, then the source of investment by these companies in the assessee company stood automatically explained. Now, making the addition in the case of the assessee of the same amount will amount to double addition of the same amount. The Ld. Counsel for the assessee in this respect has relied on the paper book pages 408 to 488 which are copies of the assessment framed u/s. 143(3) of the Act in the cases of share subscribers which have been tabulated in the chart below: I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 7 of 10 5.2. The Ld. Counsel for the assessee referring to the aforesaid chart has submitted that in case of each of the share subscriber, the assessment u/s. 143(3) of the Act was carried out, therefore, the identity of the said share subscribers duly established. Further, considering the additions made in the hands of the share subscriber companies, investment made by them in the assessee company was a meagre investment. Since the addition has been made in their hands, therefore, the activity of making investment by these companies in the assessee company would be application of their income/capital and making addition of the said investment in the hands of the assessee company would amount to double addition. 6. The Ld. DR, on the other hand, has relied on the finding of the lower authorities. 7. We note that in this case the assessee has duly furnished all the required documents including the bank statements, copy of income tax returns, copy of share application form, copy of ledger account of the assessee, copy of statement of investments, copy of audited accounts/Balance Sheet of share subscriber companies, the details of which has already been given in the chart as reproduced above. Apart from that, the notices u/s. 133(6) of the Act were issued by the Assessing Officer and each of the share I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 8 of 10 subscriber companies duly replied to the said notices and furnished the requisite details and documents as were called upon by the Assessing Officer. However, the Assessing Officer omitted to mention the aforesaid peculiar fact in his assessment order for the reasons best known to him. But the fact is established that all the share subscribers duly responded to the notice issued u/s. 133(6) of the Act and furnished the requisite details. The Assessing Officer has not discussed even any of the documents, either furnished by the assessee or by the share subscriber companies and did not find any infirmity or lacuna in the same. Even the Ld. Counsel for the assessee has also duly established on record that summon issued u/s. 131 of the Act to the director of the assessee company was received late i.e. after the stipulated date of personal appearance mentioned in the said notice. The director of the assessee company duly requested the Assessing Officer to give him at least one week’s time not only for his personal appearance but also of the directors of the share subscriber companies and also to furnish all the other details and documents as required by the Assessing Officer. However, the Assessing Officer totally skipped these peculiar facts and did not mention about it in the assessment order. Moreover, all the share subscriber companies have been duly assessed u/s. 143(3) of the Act. As per the chart given above, additions have been made in the case of all the share subscribers. Once the addition more than the amount invested by the said share subscriber companies have been made in their hands, thereafter, no further addition could have been made in the hands of the assessee as the same would amount to double addition of the same amount. Reliance in this respect can be placed on the decision of co-ordinate Kolkata Bench of the Tribunal in the case of Abhoy Mineral (P) Ltd., Kolkata Vs. ITO, ITA No. 722/Kol/2023 order dated 26.09.2023, wherein the co-ordinate Bench had relied upon another co- ordinate Bench decision, the relevant fact of the said order is reproduced as under: “6.1 Even, as pointed out by the ld. Counsel for the assessee, the share subscribers have been assessed u/s 143(3) on substantive basis. Copies of their assessment orders have been placed on the file. Even in case of the two share subscribers namely Mahalaxmi Promotion and Nikhar Commodities Pvt. Ltd, the share capital being the source of funds invested in assessee company has already been taxed u/s 68. Hence once any addition made in hands of share subscribers, there cannot be double addition in hand's of Appellant company. Reliance has been placed in I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 9 of 10 this respect on the decision of the Coordinate Kolkata bench of the Tribunal in the case in the case of DCIT vs. M/s Maa Amba Towers Ltd. in ITA No.1381/Kol/2015 vide order dated 12.10.2018 wherein, the Coordinate bench under similar circumstances has made the following submissions: \"We find no merit in the Revenue's instant grievance in the light of relevant facts on record. There is no dispute about the assessee's having declared its share subscription premium from M/s Agrani Credit & Finvest Pvt. Ltd., Crown Mansion Pvt. Ltd., Liberal Infrastructure Pvt. Ltd., Darshan Enclave Pvt. Ltd., Snow Fall Impex Pvt. Ltd. involving corresponding sums of ₹27,60,000/-, ₹55,20,000/-, ₹82,80,000/- in case of third and fourth and ₹48,30,000/- in last entity's case; respectively totalling to ₹3,01,00,000/-. Case file suggests that the assessee has placed on record their income tax acknowledgement of the impugned assessment year 2012- 13, directors' report alongwith audited financial statements, explanation regarding source of investments, bank statements, share application forms and board's resolution(s) followed by their respective regular assessment orders pertaining to very assessment year u/s. 143(3) of the Act. Their Assessing Officer(s) made u/s 68 unexplained cash credits additions of share premium amounting to ₹67,03,00,000, ₹44,85,00,000/-, ₹24,42,00,000/- & ₹21,70,00,000/- in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of the impugned additions to be accepted as genuine in respective investors entities' end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients' hands u/s 68 of the Act. We therefore see no reason to accept Revenue's instant former substantive ground. We affirm CIT(A)'s findings under challenge qua the instant former issue.\" 6.2. The aforesaid decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of \"Steelex India (P) Ltd vs. ITO, Ward-3(2), Kolkata\" I.T.A. No.2666/Kol/2019 decided vide order dated 09.09. 2022.” 8. Respectfully following the aforesaid decision of co-ordinate Bench, the impugned addition made by the Assessing Officer is not sustainable on this ground. Therefore, the impugned addition as made by the Assessing Officer is not sustainable and the same is accordingly ordered to be deleted. 9. In the result, the appeal of the assessee is treated as allowed. Order pronounced in the open Court on 29th January, 2025. Sd/- Sd/- (Sanjay Awasthi) (Sanjay Garg) Accountant Member Judicial Member Dated: 29.01.2025 J. Dey, Sr. P.S. I.T.A. No.: 1553/Kol/2024 Uday Overseas Pvt. Ltd., AY : 2012-13 Page 10 of 10 Copy of the order forwarded to: 1. Appellant : Uday Overseas Pvt. Ltd. 2. Respondent : ITO,Ward-6(4), Kolkata 3. CIT(A), NFAC, Delhi 4. CIT 5. DR, ITAT, Patna Bench, Patna. 6. Guard File. //True copy // By order Assistant Registrar, ITAT, Kolkata "