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Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
Before: DR. MANISH BORAD, HON’BLE & SHRI SONJOY SARMA, HON’BLE
O R D E R
PER SONJOY SARMA, JM:
This appeal of the assessee for the assessment year 2012-13 is directed against the order dated 11.09.2020 passed by the ld. Commissioner of Income-tax (Appeals) – Guwahati-2, Guwahati [hereinafter referred to as ‘the ‘ld. CIT(A)’]. The assessee has raised the following grounds of appeal:
i. That the ld. CIT(A) was not justified in law as well as on facts while confirming an addition of Rs. 20,00,000/- made by the assessing officer while passing assessment order u/s 143(3) r.w.s. 147 of the Act. ii. That the appellant craves leave to submit additional grounds and/or amend or alter the grounds already taken either at the time of hearing of the appeal or before.”
Brief facts of the case are that notice u/s 148 was issued and served on the assessee by stating that M/s. Plasma Dealtrade Pvt. Ltd.
Remix Dealers Private Limited A.Y. 2012-13 a paper / shell company had transferred transferred fund through RTGS credit to the assessee company. Thereafter notice u/s 143(2) and 142(1) were issued and duly served on the assessee. An order u/s 143(3)/147 of the I.T. Act has been passed by making an addition of Rs. 20,00,000/- stating that it was assessee’s undisclosed income during the assessment year under consideration and added to the income of the assessee.
Dissatisfied with the above order, assessee went into appeal before the ld. CIT(A) where the appeal of the assessee was dismissed by observing hereunder: “The above ground of appeal challenges the sole addition of Rs. 20,00,000/- made by the AO by holding that the appellant is a beneficiary of accommodation entry aggregating to Rs. 20,00,000/- during the impugned assessment year.
During the course of appellate proceedings, the appellant has submitted as under: ‘That it may be pertinent to note that one of the director Shri Madhu Sudan Sahi has opted IDS Scheme 2016 by declaring Rs. 10 crore as his undisclosed income and accordingly paid tax thereon. Out of this Rs. 5,61,77,025/- relates to Remix Dealers Pvt. Ltd. in the form of whole amount of share capital and reserves. Please find the copy of IDS 2016 for you kind verification and perusal. (Copy of IDS is enclosed for your kind verification and perusal).’
In this case from a perusal of the Form No. 1 filed by the appellant under IDS, 2016 and which was subsequently accepted vide Form No. 2 issued to the appellant by the then ld. Pr. CIT-2, Guwahati, it is noted that the contention of the appellant that one of the directors of the appellant had made a declaration under IDS, 2016 wherein an aggregate amount of Rs. 5,61,77,025/- was declared with respect to the acquisition of shares of the appellant is correct.
However, it is noted from a perusal of the aforesaid declaration that what the director of the appellant had declared was the shares acquired by the Remix Dealers Private Limited A.Y. 2012-13 said director on 21.05.2010 and not the share capital added by the AO in the impugned assessment year. Clearly, the appellant has raised a false and frivolous contention, more so when the impugned share capital subscription was received by the appellant during AY 2012-13 and clearly not on 21.05.2010. In this regard, it is stated that the appellant had itself furnished the said declaration made by its director under IDS 2016 in this officer. Since the IDS declaration(s) are confidential, nonetheless only in order to dispel the aforesaid wrong, false and frivolous contention of the appellant, on image of the relevant portion of Form No. 1 of the declaration (to the extent it pertains to the declaration made in respect of the share of the appellant) is being reproduced hereunder for reference:
The above contention of the undersigned that the said director of the appellant did not make any declaration under IDS 2016 with respect to the share capital subscription received by the appellant during the impugned assessment year is further fortified by the fact that as per the NOTE appended to the above declaration (per supra), it has been clarified that the names of the shares declared by the director of the appellant as income in his own hands were held by the director of the appellant under different names at various period and that the name of the holder of share have been shown as per the annual return filed (i.e. the appellant’s annual return) for the annual general meeting as on 30.09.2010.
Thus, since the declaration under IDs 2016 was made with respect to share held by the director of the appellant under different names as per
Remix Dealers Private Limited A.Y. 2012-13 the annual return filed (i.e. the appellant’s annual return) for the annual general meeting as on 30.09.2010, it is obvious that the subsequent receipt of share capital during the above assessment year did not pertain to shares held on 30.09.2010. In view of the above discussion, the above ground of appeal is dismissed.”
The assessee has raised two grounds of appeal by challenging the order of ld. CIT(A). Ground no. 2 is general in nature therefore need not required to be adjudicated. However in ground no. 1, the main grievance of the assessee is in relation with the impugned order of ld. CIT(A) by which confirming the addition of Rs. 20,00,000/- made by the assessing officer while passing the assessment order u/s 143(3) r.w.s. 147 of the Act. On this issue, the ld. AR of the assessee submitted that while passing the impugned order ld. CIT(A) fails to appreciate the fact without going to the provision made under IDS, 2016 and simply jumped into conclusion that year of subscription of capital and year of declaration of IDS is not same. He further invited the attention of the bench by stating that under the IDS, 2016, the assessee was free to declare any income chargeable to tax in the form of investment in relation to any assets. The scheme provides that only the fair market value of such assets as on the date of commencement of scheme shall be deemed to be the undisclosed income of the assessee. In such a situation, the impugned order passed by the ld. CIT(A) was very much erred while observing that assessee has made disclosure under IDS on account of share capital relating to the F.Y. 2010-11 and not for the year 2012-13 under appeal in consideration. On this issue, the ld. AR further contended that the director of present company, Shri Madhu Sudan Shahi has opted IDS Scheme 2016 by declaring Rs. 10 crore and necessary tax paid thereon. Out of total disclosure Rs. 5,61,77,025/- relates to the present assessee i.e. Remix Dealers Pvt. Ltd. by which Remix Dealers Private Limited A.Y. 2012-13 entire balance amount of share capital and reserves has been offered as income under IDS Scheme, 2016 by the director of the company. He further submitted when the entire balance of capital and reserves has been offered as income under IDS, 2016 by the director of the company in that case no addition can be made in the hands of company and the ld. AR in order to prove the fact that he brought to our notice by referring to page no. 72 of the paper book by showing a balance amount of Rs. 5,61,77,025/- as undisclosed income in IDS, Scheme. For the sake of convenience and brevity following are the balance of capital & reserve shown by the company under different financial year which are here under: As on Amount of capital & reserve (Rs.) 31.03.2010 5,60,98,239.50 (P) refer P.N. 08 31.03.2011 5,61,01,569.50 (P) refer P.N. 08 31.03.2012 5,61,16,516.50 (P) refer P.N. 18 31.03.2013 5,61,20,223.50 (P) refer P.N. 18 31.03.2014 5,61,37,835.05 (P) refer P.N. 32 31.03.2015 5,61,77,026.87 (P) refer P.N. 42
5. From the above details, he contended that it can be seen that entire balance of share capital including balance of reserves has been shown as income and paid tax accordingly by the assessee. He further brought to our notice that when entire capital and reserve has been offered as income there is no meaning to check the list of shareholders under which name shares have been shown or allotted during the year. Therefore, the impugned order passed by the ld. CIT(A) has made feeble observation in holding that the year of IDS Scheme and year of addition are not same. Therefore, the impugned order may be set aside by this Tribunal.
Remix Dealers Private Limited A.Y. 2012-13 6. On the other hand, ld. DR supported the decision rendered by the authorities below.
We after going through the contention of the assessee and perusal of the impugned order find that one of the director Shri Madhu Sudan Shahi has opted IDS Scheme, 2016 by declaring Rs. 10 crore had paid the due tax thereon. Out of the total disclosure Rs. 5,61,77,025/- relates to assessee i.e. Remix Dealers Pvt. Ltd. whereby the assessee has shown entire balance amount of share capital and reserve has been offered under IDS Scheme, 2016. From the facts of the case, we find that when the assessee disclosed entire balance of capital and reserve as income under the IDS, 2016 the addition made by the authorities below is not justified. Accordingly, we viewed that there is no meaning to check the list of shareholders under which name shares have been shown or allotted during the year. Therefore, the impugned order passed by the ld. CIT(A) by sustaining the order of AO is uncalled for. Accordingly, we set aside the order passed by the ld. CIT(A) with the direction to the AO to delete the addition made by him while framing the assessment order. In terms of the above, the ground taken by the assessee is hereby allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20.10.2023