DEPUTY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4(4),KOLKATA, AAYAKAR BHAWAN POORVA vs. PCJ FINVEST PRIVATE LIMITED, SILIGURI, WEST BENGAL
Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM DCIT Aaykar Bhavan Poorva, 5 th Floor, Room No.509, 110-Shanti Pally, Kolkata-700107, West Bengal Vs. PCJ Finvest Private Limited 4th Floor, Commercial Block 2nd Mile Metro Heights, Sevoke road, Siliguri-734001, West Bengal (Appellant) (Respondent) PAN No. AABCP8375R
Per Rajesh Kumar, AM:
This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.10.2023 for the AY 2008-09. 02. The only issue raised by the Revenue is against the deletion of addition of ₹25,56,00,000/- by the ld. CIT (A) as made by the ld. AO on account of share capital / share premium being unexplained credit u/s 68 of the Act.
03. The facts in brief are that the assessee filed the return of income on 31.03.2009, declaring total income at ₹16,889/-. The assessment was PCJ Finvest Private Limited; A.Y. 2008-09
originally framed u/s 147/143(3) of the Act vide order dated
25.11.2010, assessing the total income at ₹1,02,610/-, which was rectified on 30.03.2012, determining the total income at ₹1,23,627/-.
Thereafter, the ld. PCIT, observed from the assessment records that the assessee has received share capital/ share premium amounting to ₹25,56,00,000/- during F.Y. 2007-08 and the ld. AO has not made an in-depth enquiry while passing the order u/s 147/ 143(3) of the Act, dated 25.11.2010. Accordingly, the assessment was revised vide order dated 08.03.2013, passed u/s 263 of the Act by PCIT for de-novo assessment. Accordingly, in the set aside proceeding, the notice u/s 142(1) of the Act, along with questionnaires were issued. However, according to the AO no one attended the proceeding nor any documents/ details were filed explaining the share capital/ share premium. Thereafter, AO issued summons u/s 131 of the Act to the directors of the assessee company as well as to the directors of the share subscribers which again remained non-complied. Finally, the amount of share capital/ share premium was treated as unexplained cash credit u/s 68 of the Act and added to the income of the assessee in the assessment framed u/s 147/143(3)/ 263 of the Act vide order dated 21.03.2014. 04. In the appellate proceedings, before the ld. CIT (A), the assessee furnished all the evidences/ details concerning the 29 share subscribers who were all corporate entities and ld. CIT (A) also admitted the additional evidences under Rule 46A of the Income Tax
Rules, 1962, and called for the remand report from the ld. Assessing
Officer. In the remand proceedings, the assessee produced all the evidences/details qua 29 share subscribers proving the identity and creditworthiness of the investors as well as the genuineness of the transactions. The ld. AO submitted two remand reports, one dated
PCJ Finvest Private Limited; A.Y. 2008-09
09.2018 and 2nd dated 08.08.2022. The ld. CIT (A), after taking into consideration, the remand reports and the rejoinder filed by the assessee, allowed the appeal by observing and holding as under:- “7. I have carefully examined the entire material on record including the assessment order. the submissions of the appellant, including the paper book, remand report and rejoinder to remand report. 7.1 Since the grounds 6 & 7 agitate only a solitary issue and since these grounds are inter-related, they are being disposed as one. The only issue involved is whether the premium money (excluding share capital) received from 29 Investing companies, cumulatively amounting to Rs.25,56,00,000/- on issue of equity shares to these 29 companies, invites the provisions of sec. 68 of the Act or not. Facts are that during the year the appellant company raised share capital including share premium of Rs.25,56,00,000/- from 29 share subscribers who are body corporate entities. The appellant before me illustrated the entire facts along with all the relevant documentary evidence. The appellant before me has submitted that he furnished the relevant details of share applicant companies which included the address and PAN of the allottees, the identity and address proof of the directors of the share applicant companies, share application forms, bank statements highlighting the transactions, PAN Cards of the applicants, financial statements with ITR acknowledgements for AY 2008-09. along with details of sources of funds, with supporting documentary evidences. The documentary evidence along with submissions were send to the AO for remand on 10.06.2022. 7.2 During the remand proceedings, the AO issued notice for hearing and the same was attended by the A/R of the appellant. Upon the receipt of this remand report, the copy of report was forwarded to the appellant company and a rejoinder was filed by the appellant later on. The appellant in its rejoinder explained its case with reference to the assessment proceedings and remand proceedings by AO that the share capital along with share premium raised by it was explained with evidences and hence, it has discharged the onus cast upon it u/s 68 of the Act. Appellant, having furnished all the details and documents before the AO and the AO has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the appellant before him. As observed above, the appellant having discharged its initial burden casted upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. Again, reliance is placed in the case of "One Point Commercial Pvt. Ltd. Vs. ITO, ITA No. 473/Kol/2019, dated 23/02/2023" where the Hon'ble ITAT Kolkata held the following: "Considering the facts and circumstances of the case and the material placed on record, we find that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions towards sum of Rs.4,78,50,000/- received during the impugned year. Accordingly, considering these facts and in the light of the judicial precedence referred above, we set aside the order of the Ld. CIT(A) and direct the Ld. AO to delete the addition made towards share capital and share PCJ Finvest Private Limited; A.Y. 2008-09
premium u/s 68 of the Act. Accordingly, ground taken by the assessee in this respect is allowed.".
The same view has been taken by the Hon'ble Bombay High Court in the case of CIT vs.Gagandeep Infrastructure Pvt. Ltd. (80 Taxmann.com) and the Hon'ble Apex Court in the case of Pr.CIT vs. Chain House International (P) Ltd. (90 Taxmann.com 47) (MP) while dismissing the SLP filed by the Revenue.
Further, in the case of CIT, Dehi Vs. Ms.Mayawati, 338 ITR 563 (Def), 03/08/2011, the Hon'ble Delhi High court held the following:
"The capacity of any person does not mean how they earn monthly or annually but the term capacity is a wide term and that can be pursued by how wealthy he is. All the formalities, as per the law are made by the assessee and donors as well."
7.4 In the present case it is found that the corporate share applicants are registered under the companies Act, 1956/2013 and are on the records of