REMIX SUPPLIERS PVT LTD,KOLKATA vs. WORD-2(1) KOLKATA, KOLKATA

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ITA 510/KOL/2024Status: DisposedITAT Kolkata21 May 2025AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that in the interest of substantive justice, the assessee deserves a chance to present evidence and facts before the Assessing Officer (AO) for a correct determination of income. The Tribunal acknowledged the ex-parte nature of the orders passed by the lower authorities and the assessee's plea for an opportunity to present their case. However, the Tribunal also noted that the jurisdictional High Court had passed two relevant orders, namely BST Infratech Ltd. reported in 468 ITR 111 (Cal) and Balgopal Merchants reported in 468 ITR 136 (Cal), which should guide the AO. The Tribunal set aside the impugned order and remanded the matter to the AO for a fresh assessment, directing the AO to refer to and be guided by the aforementioned case laws in conducting enquiries. The assessee is expected to cooperate in these enquiries. The Tribunal allowed the appeal for statistical purposes.

What were the facts?

The appeal concerns Assessment Year 2012-13, filed by Remix Suppliers Pvt. Ltd. against an order passed by the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi. The Assessing Officer (AO) initiated enquiries regarding share premium of Rs. 35,16,48,000 on shares with a face value of Rs. 3,52,000, and also added sundry creditors of Rs. 10,82,500 and certain expenses. The assessee did not comply with notices from the AO. Similarly, the assessee failed to respond to notices from the CIT(A), who affirmed the AO's actions. The assessee has not appeared before either authority. The assessee's grounds of appeal challenge the disallowance of share capital increase, sundry creditors, and expenses, asserting that all procedures were fulfilled and the amounts related to ordinary business.

What were the issues?

1. Whether the disallowance of Rs. 35,20,00,000 relating to the increase in share capital is justified, considering the assessee claims all procedures under the Companies Act, 1956, including filing Form 2 with the Registrar of Companies, were fulfilled? (Question of law and fact, concerning provisions related to share capital). 2. Whether the disallowance of Rs. 10,82,500 on account of sundry creditors is justified, when the assessee contends these amounts relate to the ordinary business of the company? (Question of law and fact, concerning provisions related to trade creditors). 3. Whether the disallowance of Rs. 1,71,407 on account of expenses is justified, when the assessee argues these expenses were incurred in the ordinary course of business? (Question of law and fact, concerning provisions related to business expenses). Assessee's Contentions: The assessee argued that both orders were passed ex-parte, denying an opportunity to present documents and evidence. They sought another chance to present documents before the authorities below, citing difficulty in collection and requesting adjournments before the CIT(A) which were not granted. Revenue's Contentions: The Revenue relied on the orders of the authorities below, arguing that no worthwhile purpose would be served by remanding the matter as the assessee faces difficulty in collecting evidence.

Which sections of the Income-tax Act were involved?

Section 250

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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Appearances by: Assessee represented by : Ramawatar Dhoot, AR Department represented by : Praveen Kishore, CIT(DR) Date of concluding the hearing : 14.05.2025 Date of pronouncing the order : 21.05.2025 O R D E R

PER SANJAY AWASTHI, ACCOUNTANT MEMBER

1.

The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereinafter “the Act”), passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)”] vide order dated 03.01.2024 for AY 2012-13.

1.1 In this case, the Ld.AO is seen to have initiated enquiries regarding the share premium charged on shares of face value of Rs 3,52,000/- on which a premium of Rs. 35,16,48,000/- have been charged by the assessee. Apart from this, sundry creditors of Rs. 10,82,500/- and some expenses have also been added by the Ld. AO. It is recorded in the Ld. AO’s order that the assessee did not comply with any of the notices served from his 1.2 The assessee carried this matter in appeal where also it is recorded in para 3 at page 2 of the impugned order that several notices issued from the office of Ld. CIT(A) were not responded to by the assessee. Thereafter, the Ld. CIT(A) affirmed the action of Ld. AO. It is noteworthy that the assessee has not appeared before any of the authorities below till now.

1.3 However, the assessee has been further aggrieved with the action of Ld. CIT(A) and has filed the present appeal with the following grounds:

“1. The Leamed AO has wrongfully disallowed Rs. 35,20,00,000/-relating to increase in share capital of the assessee company. The same was received by the company on account of increase in share capital for which all the relevant procedure was taken fulfilled and Form 2 under companies Act, 1956 was also filed with the Registrar of Companies. Hence the contention of the Learned AO cannot be justified in adding the same.

2.

The Learned AO has disallowed Rs 10,82,500/- on account of sundry creditors of the company: The amount shown as creditors in the books of the assessee company was in relation to the ordinary business of the company Hence the same should not be disallowed by the Learned AO.

3. The Learned AO has disallowed Rs. 1,71,407/-on account of expenses incurred by the assessee company. The amount incurred as expenses by the company was done in relation to the ordinary course of business of the company. Hence the same should not be disallowed by the Learned AO.

4. That the appellant craves leave, to add, alter, amend, amplify or modify any or all of the above grounds of appeal

or before the time of hearing of the appeal.”

2. Before us, the Ld. AR pointed out that both of the orders were passed in an exparte manner and hence the assessee was denied an opportunity to present the necessary documents and evidences before the Ld. AO/CIT(A). The Ld. AR mentioned that since the assessee was finding it difficult to collect the necessary documents hence, they asked for adjournment before the Ld. CIT(A), but the exparte order was passed nevertheless. The Ld. AR pleaded for another chance to present the documents and evidences before the authorities below.

2.1 The Ld. DR, on the other hand, relied on the orders of authorities below and stated that no worthwhile purpose would be served by sending

3.

We have perused the documents before us and also heard the submissions. It is clear that in the interest of substantive justice, the assessee deserves a chance to present the evidences and facts before the Ld. AO so that his correct income can be determined. However, we are also conscious of the fact that the Hon’ble jurisdictional High Court has passed two orders which should guide the Ld. AO in completing the assessment in this case. Thus, the Ld. AO must refer to the case of BST Infratech Ltd. reported in 468 ITR 111 (Cal) and Balgopal Merchants reported in in 468 ITR 136 (Cal). The Ld. AO would need to be guided by these case laws in conducing enquiries and the assessee would be expected to cooperate in such enquiries. With these remarks, the impugned order is set aside and the matter is remanded to the file of Ld. AO for fresh assessment.

4.

In result, appeal filed by the assessee is allowed for statistical purposes.

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