NEHA CASSETTES PVT. LTD.,KOLKATA vs. ACIT, (OSD), KOLKATA

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ITA 437/KOL/2024Status: DisposedITAT Kolkata23 June 2025AY 2010-11Bench: the Assessing Officer to explain the nature of source of such credits being the share application money received by the assessee.5 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that despite opportunities, the assessee had not produced sufficient material. It restored the matter to the Assessing Officer for readjudication, directing the assessee to produce the directors of the share applicant companies, their bank accounts, and identification numbers for cross-examination to verify the genuineness of the share application money.

What were the facts?

The assessee appealed against an addition of Rs. 17,21,28,330/- to its income, representing share application money and share premium. The assessee claimed a significant portion was an old balance carried forward, but the lower authorities found that the assessee failed to provide adequate evidence to establish the identity, genuineness, and creditworthiness of the share applicants, many of whom were alleged to be paper companies.

What were the issues?

Whether the addition of share application money and share premium could be sustained due to the assessee's failure to prove the identity, genuineness, and creditworthiness of the share applicants.

Which sections of the Income-tax Act were involved?

Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI SANJAY AWASTHI

Hearing: 26/06/2025Pronounced: 03/07/2025

(निर्धारण वर्ा / Assessment Year : 2010-2011) Neha Cassettes Private Limited Vs ACIT(OSD), Ward-1(4), Kolkata P-27, Princep Street, 3rd Floor, Kolkata PAN No. :AABCN 6212 F (अपीलधर्थी /Appellant) (प्रत्यर्थी / Respondent) .. निर्धाररती की ओर से /Assessee by : Shri Avijit Ghoshal, Advocate रधजस्व की ओर से /Revenue by : Shri P.N.Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 26/06/2025 घोषणा की तारीख/Date of Pronouncement : 03/07/2025 आदेश / O R D E R

Per George Mathan, JM :

1.

This is an appeal filed by the assessee against the order dated 08.01.2024 of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, passed in DIN & Order No.ITBA/NFAC/S/250/2023- 24/1059447340(1) for the assessment year 2010-2011.

2.

It was submitted by the ld.AR that the issues in this appeal may be restored to the file of Assessing Officer insofar as the ld. CIT(A) has categorically mentioned in his order that the assessee has not produce enough material before the Assessing Officer to explain the nature of source of such credits being the share application money received by the assessee.

3.

In reply, ld.CIT-DR submitted that the assessee had been given adequate opportunity by the Assessing Officer and the assessee has not produced the evidence.

4. We have considered the rival submissions. A perusal of the assessment order shows that opportunities had been granted to the assessee but the assessee has not been able to produce the evidence. A perusal of the assessment order also shows that the assessee has received share application money from various alleged paper companies. The list of companies had also not been brought out by the Assessing Officer. The ld. CIT(A) also observed that the assessee has not produce enough material therefore, the ld. CIT(A) upheld the addition made by the Assessing Officer. The relevant observations of the ld. CIT(A) in paras 5, 6 & 7, read as under:- 5. In its submission filed on 19.3.2021, appellant stated that out of total Rs. 17,21,28,330/- in securities premium account, Rs. 7,72,56,630/- was balance carried forward from last year and Rs. 9,48,71,700/- only was fresh amount received this year but still AO added the entire amount. Next, appellant argued that it maintained books of accounts which were audited and where these transactions were duly recorded. Assessee furnished explanation for the same. Appellant also claimed that it had filed identity proof, address proof, copy of ITR, copy of computation sheet, bank statements, sources of fund and share allotment advice etc before the AO. Appellant claimed that all notices were complied with and identity of share applicants was established. Further, such transactions were recorded in balance sheets and Income tax records of share applicant companies. Next, appellant argued that when evidences were produced, there was no necessity of physical appearance of directors of share applicants before AO. Appellant alleged that the information on the basis of which AO acted and added was statement of an unknown third party.

6.

I have perused the assessment order and considered the submissions of the appellant. The only issue is addition of Rs. 17,21,28,330/- which was alleged to have been credited to the books of assessee as share application money and share premium amount for which satisfactory explanation was not provided. In the appellate proceeding before me, the appellant filed submissions on 19.3.2021, 15.9.2021, 12.11.2021 and 5.12.2023. One of the main arguments of appellant is that out of total Rs. 17,21,28,330/- in securities premium account, Rs. 7,72,56,630/- was old balance carried forward from last year and Rs. 9,48,71,700/- only was fresh amount received this year.

On 5.12.2023 appellant filed copy of balance sheet as on 31.3.2010. Relevant portion looked as under: Particulars Schedule As on 31.3.2010 As on 31.3.2009 Share capital 1 18,38,670.00 8,80,370.00 Reserves and surplus 2 17,21,39,247.38 7,72,59,277.80 Share application 75,000.00 75,000.00 (pending allotment)

The claim of appellant that Rs. 7,72,56,630/- was old balance in 'securities premium account is not proved by the above balance sheet. Page containing Schedule 2 has not been filed. In its submission appellant mainly cited large number of case laws but very little has been stated on relevant facts. Even documents like (a) certificate of incorporation, ITR, MCA return etc of share allottee companies in support of genuineness of their existence (b) bank statements of share allottees and Neha Cassettes and (c) P&L account and balance sheet of share allottees pertaining to the issue have not been filed before me on any of the four dates on which appellant filed submissions. Therefore, such claim is rejected. As a result, the subject matter for adjudication remains Rs. 17,21,28,330/- and not get reduced to Rs. 9,48,71,700/- (alleged fresh credit as share capital and premium).

7.

Now I examine whether AO had enough material before him which proved genuineness of identity of share allottee companies, genuineness of their transactions with assessee and creditworthiness of them including bona fide reason why they suddenly shoes to buy shares in the company paying hefty premium money. I find that though appellant has claimed in its submission before me that it had filed identity proof, address proof, copy of ITR, copy of computation sheet, bank statements, sources of fund and share allotment advice etc before the AO, none of these have been produced before me in spite of getting reasonable opportunities. Assessment order passed by AO does not mention any such production by assessee before him. Therefore, in absence of any evidence, appellant's argument cannot be accepted. On the other hand, the entry provider, Shri Purohit, described in great detail about the modus operandi and names of beneficiaries and such admissions have been verified and found correct by investigation directorate and passed to AO. In view of the above, I feel that assessee did not produce enough material before AO explaining nature and source of such credits. Hence, the addition of Rs. 17,21,28,330/- Is confirmed.

5. Here also, the ld. CIT(A) has held that adequate documents have not been produced. Admittedly the issue involved in this appeal is in respect of share application money received to an extent of Rs.17,21,28,330/-. The paper book filed by the assessee consists of nearly 787 pages. These are basically the balance sheets, profit and loss accounts of various companies and the bank statements of the assessee and its profit and loss account, balance sheet and returns of income. A perusal of the details produced clearly shows that none of the share applicant companies have provided copies of their bank account. A perusal of the letter head of each of the companies shows that all the letter heads are computer printed letter heads. The confirmation letters did not contain the names of the directors, nor do they contain the director’s identification numbers as provided. The application for equity shares similarly shows only the name of the company and the various signatory of the directors, the name of the directors again is a conspicuous by its business. This being so, we are of the view that in the interest of justice, the issues in this appeal are restored to the file of Assessing Officer for readjudication. The Assessing Officer shall not issue notice u/s.131 of the Act to any of the directors. The assessee shall produce the directors of the said share applicant companies, who had applied for the shares. The assessee similarly has the directors of the said companies and also directed to produce their bank accounts along with the director’s identification number when before the Assessing Officer. The Assessing Officer shall cross examine such directors to verify the genuineness of the

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