INCOME TAX OFFICER, WARD-1(1), KOLKATA, KOLKATA vs. BLACKPOOL VINIMAY PRIVATE LIMITED, KOLKATA

The only issue raised by the Revenue is against the deletion of addition of ₹5,53,50,000/- as made by the ld. AO u/s 68 of the Act in respect of share application money being unexplained cash credit.

The facts in brief are that the assessee filed the return of income on 28.09.2012, declaring total income at ₹10,352/-.

In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee on this issue on merit by holding that the no addition can be made for non-appearance of directors of the assessee company in compliance to summons issued u/s 131 of the Act where the assessee has filed all the documents, details/ evidences before the ld. AO and the ld. AO did not point out any defect or deficiency in the said evidences. The ld. CIT (A) recorded a finding of fact that assessee has duly discharged its onus cast upon the assessee u/s 68 of the Act by furnishing the evidences qua the

After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has raised share capital/ share premium during the year. We note that the assessee has filed all the evidences comprising the names, addresses, PANs, ITRs, audited balance sheets, confirmations from the subscribers and bank statements of the subscribers as well. The ld. AO also issued notice u/s 131 of the Act to the Director of the assessee company, which were not complied with. The ld. AO without doing any further verification or enquiry on the basis of evidences filed by the assessee treated the share capital / share premium as unexplained cash credit u/s 68 of the Act without pointing out any defect or deficiency filed by the assessee. We note that the addition made by the ld. AO on the basis of non- compliance of summons u/s 131 of the Act by the Director of the assessee company is not a valid ground for making the addition u/s 68 of the Act, when the assessee has furnished all the evidences qua the share subscribers as stated hereinabove. Therefore, the additions made by the ld. AO is not sustainable under the Act. We have perused the order of the ld. CIT (A) who have rightly appreciated the facts and deleted the addition by recording a finding of fact that the assessee has filed all the evidences before the ld. AO and the

The factual matrix, as can be gleaned from the records, reveals that the respondent-assessee is a Non-Banking Financial Company (NBFC) duly registered with the Reserve Bank of India. For the relevant Assessment Year, its retum was selected for scrutiny specifically to examine the receipt of a large share premium. During the assessment proceedings, the Assessing Officer (AO) noted that the assessee had raised share capital and premium from fifteen corporate entities. 4. It is seen from the record that the assessee had placed before the AO a voluminous "Paper Book" containing all requisite documents, including PAN details, Income Tax Retum acknowledgments, and audited financial statements of all fifteen subscriber companies. Notwithstanding the availability of this documentary evidence, the AO issued summons under Section 131 of the Act to the directors of these companies. When they failed to appear personally, the AO proceeded to brand these companies as "shell entities" and added the entire amount of Rs 6,22,00,000/- as unexplained cash credit. This view was subsequently affirmed by the CIT (Appeals).

In the result, the appeal of the Revenue is dismissed.