ITO, WARD-5(1),, KOLKATA vs. M/S. SHIVRASHI INFRAPROJECTS PRIVATE LIMITED, KOLKATA

Brief facts of the case are that assessee is a Private Limited Company engaged in the business of investment in shares and securities, financing activities etc. during the FY 2011-12 corresponding to AY 2012-13. The return of income was e-filed showing total income of Rs. 404/- which was selected for scrutiny. During scrutiny, the Ld. AO found from the balance sheet of the assessee that it had received share allotment money of Rs. 19,90,000/- and securities premium of Rs. 98,90,1000/- as is mentioned in the order of the Ld. CIT(A). The assessee claimed to have furnished the required documents/accounts/details during the scrutiny proceedings to the Assessing Officer (hereinafter referred to as Ld. 'AO') within time, apart from appearing and making submissions. During the year, the assessee had allotted equity shares for ₹ 9,91,00,000/- to several persons, who are claimed to be registered body corporates. It is stated that in the statement of facts filed before the Ld. CIT(A) that the assessee allotted the shares fully paid up against the respective debts due to each of such companies. The list of subscribers to the share capital to whom fresh I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. shares were allotted during the year was furnished before the Assessing Officer during the course of the hearing. The Ld. AO issued summons u/s 131 of the Act and in response to which the assessee submitted the replies via speed post. It is alleged that the Ld. AO refused to take the depositions despite the request made. The Ld. AO made the additions u/ss 68 and 14A of the Act at Rs. 9,91,00,000/- and Rs. 6,596/- respectively. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who allowed the appeal of the assessee relying upon the decision of Hon'ble Supreme Court in the case of CIT v. Orissa Corpn, (P.) Ltd. [1986] 159 ITR 78 (SC), the decision of Hon'ble Punjab & Haryana High Court in the case of Jawahar Lal Oswal reported in 382 ITR 453 and the decision of Hon'ble Delhi High Court in the case of CIT v. Navodaya Castles (P.) Ltd. [2014] 50 taxmann.com 110/226 Taxman 190 (Mag.)/367 ITR 306 and has held in para 7.4 that “The AO has not discussed the contents of the assessee's submissions in the assessment order and has decided the case solely on the basis of high premium. No enquiries have been made to rebut the information filed by the appellant. Therefore, the case clearly falls under the first category as discussed by the Hon'ble Delhi High Court. Under the circumstances, the addition u/s 68 made by the AO is liable to be deleted”. Another sum of ₹ 6,596/- added u/s 14A of the Act has also been deleted. Aggrieved with the order of the Ld. CIT(A) the Revenue has filed the appeal before this Tribunal.

None appeared on behalf of the assessee and the appeal was heard with the assistance of Ld. DR.. The Ld. AR submitted that the Ld. CIT(A) allowed the appeal even though the assessee did not appear before the Ld. CIT(A). In the grounds of appeal the Revenue has relied upon the following decisions: I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. i) CIT vs. Ruby Traders and Exporters Ltd (134 Taxman 29 (Cal)]. ii) Pr. CIT-2, Kolkata(C)-2, Kolkata Vs M/s. BST Infratech Ltd. in 161 taxmann.com 668 (Cal). iii) Pr.CIT (Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) [2020] 117 taxmann.com 752 (SC). v) Sumati Dayal v. CIT [1995] 214 ITR 801 (SC). vi) CIT Vs. Durga Prasad More 1973 CTR (SC) 500: [1971] 82 ITR 540 (SC). vii) CIT vs. Independent Media (P) Ltd. [2012] 25 taxmann.com 276 (Delhi).

The Ld. DR requested that the order of the Ld. CIT(A) may be set aside as no opportunity was provided to the Ld. AO and before the Ld. AO the assessee could not justify the receipt of high premium and the genuineness of the transactions for the receipt of share application money along with share premium.

We have heard the Ld. DR and as pointed out by the Ld. DR, also noted that there was no representation before the Ld. CIT(A) as well. The assessee had raised share capital along with share premium although the returned income was ₹ 404/- only and the huge premium charged by the assessee was not justified on the basis of financial results of the assessee. In the case of Swati Bajaj (supra) and in other cases relied upon by the Revenue, it has been laid down that in the present era of shell companies, the source of the share capital and the genuineness of the transactions has to be established. The Ld. CIT(A) has mentioned that the Ld. AO has not discussed the reply received, however, the Ld. CIT(A) has not commented as to how on share allotment money of ₹ 19,90,000/-, receipt of security premium of ₹ 98,90,1000/- was justified. There was no response to the final show cause notice issued nor the Directors of the share holding companies from whom maximum amounts were received responded to the summons issued, yet replies were filed on their behalf by the assessee. I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. As no compliance was made to the summons issued, the assessee was not engaged in any business activity even during the impugned A.Y. 2012-13, the identity of the companies in which investment was made was not disclosed despite several notices being issued and the investment was not made in listed companies with proven track record which were well exposed to the market and no details have been mentioned on the basis of which relief has been allowed, therefore the order of the Ld. CIT(A) is not sustainable. Neither the creditworthiness nor the genuineness of the transactions was established yet the Ld. CIT(A) allowed the relief which is not in accordance with the judicial pronouncements of the Hon'ble Juri ictional High Court in the case of Swati Bajaj (supra) and also in the case of M/s. BST Infratech Ltd. (supra). Therefore, we hereby set aside the order of Ld. CIT(A) and remand the matter to him with the direction that the appeal may be decided in accordance with the principles laid down by the Hon'ble High Courts and Hon'ble Supreme Court in the decisions relied upon by the Revenue and which are also mentioned in the grounds of appeal and after providing an opportunity of being heard to the Ld. AO as required under Rule 46A of the Income Tax Rules, 1962. Hence, all the grounds of appeal are allowed for statistical purposes.

In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 18th June, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 18.06.2025 Bidhan (P.S.) I.T.A. No.: 2328/KOL/2024 Assessment Year: 2012-13 M/s. Shivrashi Infraprojects Private Limited. Copy of the order forwarded to:

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order