SPANDAM TRADECOM (P) LTD. ,KOLKATA vs. ITO, WD- 5(1), KOLKATA. , KOLKATA

order

: September 18th, 2023 ORDER

Per Manish Borad, Accountant Member:

1. In the facts and circumstances of the case the learned CIT(A) erred in passing the order without giving the opportunity of hearing to the assessee.

2. In the facts and circumstances of the case the learned CIT(A) erred in confirming the addition of Rs. 10,50,000/- made by the Learned Assessing Officer by alleging that the investment of Rs. 10,50,000/- shown in M/s Kothari Containers Pvt Ltd is bogus investment which was actually assessee's investment in shares with M/s Kothari Containers Pvt Ltd and wrongly classified under the head ‘loans and advances’.

3. In the facts and circumstances of the case the learned Assessing Officer as well as the CIT(A) erred in not considering the fact mentioned in reply received in response to notice u/s 133(6) by M/s Kothari Containers Pvt Ltd.

4. In the facts and circumstances of the case the learned CIT(A) erred in not considering the facts submitted by the assessee along with form no. 35 in the statement of facts.

5. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.”

3. At the outset, ld. Counsel for the assessee did not press ground no. 1 hence, dismissed as not pressed. 4. ground nos. 4 & 5 are general in nature which needs no adjudication.

5. The only effective issue raised in ground nos. 2 & 3 is against the addition of Rs. 10.50 Lakh made by the Assessing Officer (in short ld. 'AO') for the alleged investment in shares of M/s. Kothari Containers Pvt. Ltd. holding it as bogus and action of ld. AO I.T.A. No.: 622/KOL/2023 Assessment Year: 2016-17 Spandan Tradecom Private Limited. confirmed by ld. CIT(A). The facts in brief are that assessee is a private limited company. Income of Rs. 66,510/- declared in the e- return for AY 2016-17 filed on 31.03.2017. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. The assessee’s main source of income is trading and investment. While carrying out complete scrutiny, ld. AO noticed that sum of Rs. 10.50 Lakh is appearing in the name of M/s. Kothari Containers Pvt. Ltd. on the asset side of the balance sheet. Ld. AO enquired the correctness of the said sum from M/s. Kothari Containers Pvt. Ltd. who stated that it has issued 35,000 equity shares for Rs. 15 Lakh on 31.03.2012. Based on this submission, ld. AO came to a conclusion that the investment of Rs. 10.50 Lakh is a bogus investment and made the addition thereof. The assessee failed to get any relief before ld. CIT(A). Aggrieved, the assessee is now in appeal before this Tribunal.

6. Ld. Counsel for the assessee submitted that investment was made in the equity shares of M/s. Kothari Containers Pvt. Ltd. in preceding years but it was wrongly shown under the head ‘loans & advances’. Further during the year under consideration, the assessee sold the equity shares at Rs. 4.50 Lakh and incurred a capital loss of Rs. 10.50 Lakh but failed to recognize the same as capital loss in the books as a result of which Rs. 10.50 Lakh was appearing in the balance sheet. He further, submitted that it is not a case of bogus investment. Therefore, no addition is called for.