M/S. UPADAN COMMODITIES PVT. LTD.,KOLKATA vs. ITO, WARD - 3(1), KOLKATA, KOLKATA

The present appeal is directed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeal) - 1, Kolkata (hereinafter the “ld. CIT(A)”) dt. 12/03/2018, passed u/s 250 of the Income Tax Act, 1961 (“the Act’), for Assessment Year 2012-13.

The assessee has taken eleven (11) grounds of appeal. However, its substantial grievance is that the ld. CIT(A) has erred in confirming the addition of Rs.10,01,00,000/- which was added by the Assessing Officer with the aid of Section 68 of the Act on account of bogus share capital as well as premium. Similarly, in the second fold, the grievance of the assessee is that the ld. CIT(A) has erred in confirming the addition of Rs.21,650/- which was added by the Assessing Officer with the aid of Section 14A of the Act.

Brief fact of the case are that the assessee has filed its return of income on 16/12/2012 electronically declaring total income of Rs.2,100/-. Its case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued and served upon the assessee. On scrutiny of the accounts it was revealed to the Assessing Officer that, the assessee has raised fresh paid up share capital of Rs.11,00,000/- and received share premium of Rs.9,90,00,000/-. The Assessing Officer directed the assessee to submit the identity of the share applicant, their creditworthiness and to demonstrate how the transactions are genuine transactions. The Assessing Officer also issued summons u/s 131 of the Act to the directors of the assessee company asking them to appear in person and also produce the directors of the share holding companies or the persons. All these things remained uncomplied with and accordingly, the Assessing Officer made addition of Rs.10,01,00,000/-.

Dissatisfied with the assessment order, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) had fixed hearing and issued notice but in spite of adjourning it on three to four occasions, no one came present. The ld. First Appellate Authority has dismissed the appeal by observing Assessment Year: 2012-13 M/s. Upadan Commodities Pvt. Ltd. 3 that the assessee has failed to produce any new material to buttress the appeal and to challenge the assessment order.

With the assistance of the ld. D/R, we have gone through the records. After perusal of the record, we are of the view that the assessee is a paper company without any real worth. Nobody is prosecuting this litigation. We fail to understand, as to how the assessee filed the appeal against orders of the authorities below but not interested in prosecuting the appeal before the revenue authorities and also before the Tribunal. However, there is nothing on the record which can demonstrate the genuineness of the transactions or the identity and creditworthiness of the alleged share applicant who have contributed Rs.9,90,00,000/- as premium. The assessee failed to demonstrate its financial health which can attract such huge premium on subscription of its shares. Therefore, we do not have any hesitation in concurring with the findings of the ld. CIT(A) and upholding the same.