ACIT, C.C-2(1), KOLKATA. , KOLKATA vs. SHALIMAR NUTRIENTS PVT. LTD. , KOLKATA

O R D E R

PER DR. MANISH BORAD, ACCOUNTANT MEMBER:

2. The Registry has pointed out that there is a delay of 1 day in filing the present appeal by the revenue. Petition for condonation of delay is placed on record explaining the reasons. On perusing the same, we are convinced that the revenue was prevented by sufficient cause from filing this appeal in time. Accordingly, we condone the delay and proceed to admit the appeal for hearing.

Assessment Year: 2015-16 Shalimar Nutrients Private Limited

3. The revenue has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in law by deleting the additions made u/s. 68 of the I.T. Act,1961 on account of share application money receipt of Rs. 2,50,00,000/- ignoring the facts that A.O. has made the addition based on the facts that all the limbs u/s. 68 of the I.T. Act. are not satisfied in this case.

2. Whether on the facts and circumstances of the case, the CIT (A) erred in law in deleting the addition of Rs. 2,50,00,000/- made u/s 68 of the I.T. Act, 1961 without going into the merits of the case and the facts that creditworthiness of the share applicants could not be proven as there was no rational of the fund received by the share applicants and in turn transferred the fund in the form of share application money to the assessee company who is the ultimate beneficiary.

3. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in law by deleting the additions made u/s 69C of the I.T. Act, 1961 of Rs. 50,000/- ignoring the facts that A.O. has made the based on the evidences material on record.

4. Whether on the facts and circumstances of the case, the CIT (A) erred in law in ignoring the observations of the Hon’ble Apex Court in case of NRA Iron & Steel P Ltd 103 Taxmann.com 48, as the inquiry and analysis made by the AO established that assessee has failed to prove identity, creditworthiness and genuineness of the transaction.

5. That department carves leave to add, alter or modify any or all grounds of appeal either before or during course of Appellate Proceedings.”

Assessment Year: 2015-16 Shalimar Nutrients Private Limited Old Postal Address : 75, Metcalfe Street, Kolkata – 700 013 New Postal Address : 9, A J C Bose Road, Ideal Centre, 5th Floor, Kolkata – 700 017 We are enclosing herewith the copy of Form No. INC-22 i.e., “Notice of situation or change of situation of registered office”. From the said form, it is very much evident that the registered office of the company has been changed w.e.f. 15.03.2017 and the information w.r.t. the said change of address has been intimated to ROC vide Form No. INC-22 on 17.03.2017. Therefore, the notice/letter issued to M/s Pratik Merchants Pvt Ltd after March, 2017 should have been issued to the current postal address. In view of the above, no adverse view may kindly be taken against the assessee company. M/s Pratik Merchants Pvt Ltd is now our group company.

4. In connection with the substantiation of the identity of the party and genuineness of the transaction, we would like to submit as under: a) M/s Pratik Merchants Pvt Ltd is an Income Tax Assessee vide PAN AADCP3927B b) M/s Pratik Merchants Pvt Ltd has got its books of accounts audited. c) The said party has filed its annual return to ROC on regular basis. d) The assessment w.r.t. M/s Pratik Merchants Pvt Ltd has been completed vide order u/s 143(3) dated 23.11.2016 w.r.t. Asst. Year 2014-15. Copy of the said order is enclosed. e) The said party is maintaining a regular bank account and the transaction w.r.t. the share application has been duly made by the said bank account. Copy of the relevant page of the bank statement has already been submitted vide letter dated 02.11.2017. Therefore, the identity of the said party to whom the department has itself allotted the PAN and has completed the assessment cannot be doubted. Hence, the identity of the said party is proved. Further, the transaction made through regular and disclosed bank account of the said party are very much genuine.

Assessment Year: 2015-16 Shalimar Nutrients Private Limited 7. Further, the Ld. AO had taken note of the investigation carried out by the Income Tax Department against Mr. Amit Kedia and observed that he was engaged in providing accommodation entries in form of share capital/share premium to various beneficiaries in lieu of commission. Ld. AO further observed that the alleged sum received by the assessee through shell company is controlled by Mr. Amit Kedia. Ld. AO also gave reference to statement of Mr. Amit Kedia. In reply to the said allegation, the assessee vide letter dated 16.11.2017, stated as under: “5. In the said letter dated 09.11.2017, you have stated that Mr. Amit Kumar Kedia has given statement that M/s Pratik Merchants Pvt Ltd was involved in arranging accommodation entries, etc. In this connection, we would like to submit as under: a) Vide Annexure A of the said letter dated 09.11.2017, it is very much evident that Mr. Amit Kumar Kedia was director of M/s Pratik Merchants Pvt Ltd from 03.07.2006 to 11.01.2011. Therefore, Mr. Amit Kumar Kedia ceases to be the director of M/s Pratik Merchants Pvt Ltd w.e.f. 11.01.2011 and has no relation with the said company hence forth. Now, the said party has invested an amount of Rs. 2,50,00,000/- in the assessee company after 11.01.2011. Therefore, there is no relation with the said statement and amount of investment made by the said party after 11.01.2011. b) Hence, the allegation by the Ld. AO that the share capital was raised by way of accommodation entry through the entry operator Mr. Amit Kumar Kedia is grossly wrong. It is quite impossible to say that Mr. Amit Kedia had any control over the company even after cessation of directorship. Therefore, no adverse inference may kindly be drawn against the issue. c) Further, the alleged statement of Mr. Amit Kumar Kedia, even if recorded on the back of the assessee, and if relied upon by the Ld. AO, the assessee must be provided an opportunity to cross examine Mr. Amit Kumar Kedia. d) It is well settled law that an adverse finding cannot be made against an assessee on the basis of such statements without allowing opportunity to assessee Assessment Year: 2015-16 Shalimar Nutrients Private Limited to cross examine the person on whose statements reliance is placed against the assessee. The same has also been decided by the Hon’ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises (1994) 201 ITR 105 (Cal). On the issue of cross examination, we further place our reliance on the following judicial pronouncements: (i) Bangodaya Cotton Mills Ltd v CIT (2011) 330 ITR 104, Hon’ble Calcutta High Court “AO having made the impugned addition simply on the basis of some letters seized from a third party in the absence of any corroborative evidence and without issuing summons to the concerned person or making him available for cross examination, the order passed by the Tribunal upholding the addition is set aside and the matter is remanded back to the AO to consider the matter afresh” (ii) CIT v. Eastern Commerical Enterprise (2011) 210 ITR 103, Hon’ble Calcutta High Court “Revenue making addition on the basis of a witness examined at the back of the assessee, matter remanded for cross examination of the witness with opportunity to assessee to produce further evidence to rebut the aforesaid statement” (iii) Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (Hon’ble Supreme Court Court) “…. IT is true that the proceedings under the IT law are not governed by the strict rules of evidence and, therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But, before the IT authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him…..” (iv) Andaman Timber Industries v. CCE (2015) 281 CTR 241 (Hon’ble Supreme Court) (v) M/s R W Promotions (P) Ltd v. ACIT, Circle-9(3) in ITAT No. 1489 of 2013 (Hon’ble Bombay High Court) (vi) Heirs and LRs of Late Laxmanbhai S. Patel v. CIR (2010) 327 ITR 290 (Hon’ble High Court of Gujarat) (vii) DCIT v. Mahendra Ambalal Patel (2010) 40 DTR (Guj) 243 Hon’ble High Court of Gujarat Assessment Year: 2015-16 Shalimar Nutrients Private Limited

6. As far as to produce the director of M/s Pratik Merchants Pvt Ltd is concerned, it is submitted that the said company is our group company and Mr. Sameer Agarwal who is the director of the assessee company is also the director of M/s Pratik Merchants Pvt Ltd.”