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Facts
The assessee, a private limited company, had Rs. 2 crores of share capital premium treated as unexplained income by the Assessing Officer (AO) for AY 2012-13. This addition was confirmed by the Ld. CIT(A) as the assessee failed to produce its directors for examination. Aggrieved, the assessee appealed to the ITAT.
Held
The Tribunal considered the assessee's affidavit undertaking that its directors would appear before the AO if given an opportunity. In the interest of justice, the Tribunal set aside the orders of the AO and Ld. CIT(A) and remanded the case back to the AO to pass a fresh order, providing the assessee an opportunity to produce the directors.
Key Issues
Whether the share capital premium could be treated as unexplained income without the appearance of the assessee's directors, and if the assessee should be granted another opportunity to present its case before the AO.
Sections Cited
143(2), 142(1), 133(6), 131
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Pradip Kumar Choubey&Shri Sanjay Awasthi]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Appeal)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 20.10.2023 for AY 2012-13.
Assessment Year: 2012-13 M/s Kanhaiya Commotrade Pvt. Ltd.
Brief facts of the case of the assessee are that the assessee is a private limited company engaged in the business of non-banking financial business, filed its return of income for AY 2012-13 declaring total income of Rs. 10,626/-. The case of the assessee was selected for scrutiny, notice u/s 143(2) and 142(1) were issued to the assessee company. Show cause notice has also been issued to the assessee company. The AO after considering the share capital claimed by the assessee company to have been issued during FY 2011-12 with high premium amounting to Rs. 2 crores treated it as an unexplained income and included in the total income of the assessee company for the AY 2012-13.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein also the appeal of the assessee has been dismissed by the Ld. CIT(A).
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
The Ld. Counsel in stead of arguing into the merit of the case has only prayed that the appeal of the assessee be remanded back to the file of AO as the AO as well as the Ld. CIT(A) has passed an order when the assessee failed to bring or appear the director of the company. The Ld. A.R has further submitted that all the share holders replied to the show cause notice u/s 133(6) and the requisition made u/s 131 of the Act. The Ld. A.R has filed an Affidavit before us by giving an undertaking that directors will appear before the AO if called for by the AO, hence his prayer is to restore the appeal of the assessee to the file of the AO by affording an opportunity to assessee to place his case before the AO.
Contrary to that the Ld. D.R supports the impugned order.
We have perused the order of AO as well as Ld. CIT(A) and find that the Ld. CIT(A) in its order has clearly held that unless director appears and filed relevant papers the share capital contribution could not have been examined. The Ld. CIT(A) has further held that the AO has rightly passed an order as the assessee failed to discharge the financial onus imposed upon him. The relevant portion of the order of AO is thus:
Assessment Year: 2012-13 M/s Kanhaiya Commotrade Pvt. Ltd. “Unless the assessee and applicant company appear with all its books, bank statements, copies of return and the income tax return of the director the answer to this question will not be found out.” 7. We have gone through the Affidavit filed by the assessee which is as follows:
Assessment Year: 2012-13 M/s Kanhaiya Commotrade Pvt. Ltd.
On perusal of the affidavit, it appears to us that the assessee company undertakes if the opportunity provided then the present director of the subscriber company, subscribed shares during the previous year will appear before the AO if called for. Going over the order passed by the AO and considering the facts of the case and for the interest of justice, we are inclined to restore the appeal back to the file of AO, to pass a fresh order by affording an opportunity to the assessee to produce the director of the subscribers company. Accordingly, the order passed by the AO confirmed by the Ld. CIT(A) is set aside.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 15th May, 2025