ITO, WARD-5(1), KOLKATA vs. M/S PANCHKOTI ENTERPRISES PVT. LTD, KOLKATA

The Department is aggrieved by the action of the CIT(A) in deleting the addition made by the Assessing Officer in respect of share capital and premium received by the assessee holding that the assessee had failed to establish the identity, creditworthiness of the share subscribers and genuineness of transaction.

At the outset, the ld. counsel for the assessee has invited our attention to the relevant part of the order of CIT(A) to submit that the ld. Assessment year: 2012-13 M/s Panchkoti Enterprises Pvt. Ltd CIT(A) after duly considering the submissions and evidences on file has passed a detailed order holding that the identity, creditworthiness of the two share subscribers were duly established and further the genuineness of the transaction was also proved. The ld. counsel, in this respect, has further submitted that there were only two share subscribers and that both the share subscriber companies were subjected to scrutiny assessment u/s 147/143(3) of the Act and their returned income was accepted without making any addition. Therefore, the identity and creditworthiness of the aforesaid companies was duly accepted by the department in both the cases of the share subscribers. The ld. counsel has further submitted that both the share subscribers were having enough net worth and only a small amount of their net worth was used for investment in assessee company. The ld. counsel, in this respect, has referred to page 10 of the impugned order of the CIT(A), wherein, capital, reserves, net worth of the assessee subscriber companies have been reproduced in a chart which, for the sake of convenience, is reproduced as under:

4.4 Further, I find the share subscribers have sufficient net worth of their own to make investments as elucidated below: Name of Capital Reserves Net worth Invested in Percentag the assessee e of NW(%) company company Bluerose 13,54,000/ 12,41,48,425/ 12,55,02,425/ 1,06,00,000/ 8.44 Promoter - - - - s Pvt. Ltd. Complete 9,42,400/- 20,97,61,345/ 21,07,03,745/ 1,06,00,000/ 5,03 Softech - - - Pvt. Ltd. Assessment year: 2012-13 M/s Panchkoti Enterprises Pvt. Ltd 4.5 That, as evident from the 2 (two) share subscriber’s information on record both of them were either subjected to assessment u/s 147/143(3) of the Act or the returns accepted by the A.O. That the profiles of the assessment status of the two subscriber companies are as follows: a) Bluerose Promoters Pvt. Ltd.: Assessing Officer was passed by [ITO, Ward-2(2), Kolkata] u/s 143(3) of the Act for the A.Y 2011-12 vide order dated 24.01.2014 and as such identity of the share applicant is established beyond doubt. For A.Y 2012-13 processing of the return were done u/s 143(1) of the Act and the returned income accepted. b) Complete Softech Pvt. Ltd.: Assessment year was passed by the jurisdictional A.O [ITO, Ward-6(2), Kolkata] u/s 147/143(3) of the Act for the A.Y 2012-13 vide order dated 06.12.2018 and as such identity of the share applicant is established beyond doubt.