PIYUSH SUPPLIERS PVT. LTD.,KOLKATA vs. INCOME TAX OFFICER, WARD 9(3), KOLKATA, INCOME TAX DEPARTMENT, KOLKATA

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ITA 269/KOL/2024Status: DisposedITAT Kolkata17 March 2025AY 2012-134 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of ₹2,50,00,000 made by the AO and confirmed by the CIT(A) was not justified. The Tribunal noted that the assessee had provided all the necessary documentary evidence concerning the share subscribers, including their names, addresses, PANs, ITRs, audited annual accounts, bank statements, and confirmations. The Tribunal found that the AO had not commented on the merits of the evidence furnished by the assessee and had made the addition solely on the ground of non-compliance with the summons under Section 131. The Tribunal observed that the CIT(A) had also discussed the credentials of the investors and acknowledged that these companies had sufficient funds and had filed proof of identity and creditworthiness. The Tribunal opined that mere non-compliance with a summons under Section 131 cannot be the sole basis for making an addition when substantial evidence has been provided by the assessee. The Tribunal distinguished the decisions relied upon by the revenue and found support in the decisions cited by the assessee. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Piyush Suppliers Pvt. Ltd., filed its return of income for Assessment Year 2012-13 declaring a loss. The Assessing Officer (AO) selected the case for scrutiny and observed that the assessee had issued 2,50,000 equity shares at a premium of ₹90 per share, raising ₹2,50,00,000. The assessee provided details of five share subscribers, including names, addresses, PANs, ITRs, audited annual accounts, bank statements, and confirmations. The AO issued summons under Section 131 of the Income Tax Act, 1961, to the directors of the assessee company and the share subscribers, but these were unserved. Consequently, the AO held that the transaction could not be verified and added ₹2,50,00,000 to the assessee's income as unexplained share capital/premium. The National Faceless Appeal Centre, Delhi (NFAC) confirmed this addition. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the addition of ₹2,50,00,000 on account of unexplained share capital/premium is justified, considering the assessee provided details of share subscribers, when the AO's primary reason for addition was non-compliance with summons under Section 131 of the Income Tax Act, 1961? (Question of law and fact, concerning Section 68). Assessee's contentions: The assessee argued that it had furnished all necessary documents and proofs regarding the share subscribers, including names, addresses, PANs, ITRs, audited annual accounts, bank statements, and confirmations. The mere non-compliance with summons under Section 131 of the Act should not be the sole ground for making an addition, especially when evidence was provided. The assessee relied on decisions in CIT Vs. Orissa Corporation Pvt. Ltd., CIT Vs. Orchid Industries Ltd., Crystal Networks Pvt. Ltd. Vs. CIT, ITO Vs. M/s. Cygnus Developers India Pvt. Ltd., and Joy Consolidated Pvt. Ltd. Vs. ITO. Revenue's contentions: The revenue, through the AO and confirmed by the CIT(A), contended that the transaction could not be verified due to the failure of the directors of the assessee company and the share subscribers to appear in response to summons under Section 131. This failure prevented the establishment of the identity, creditworthiness, and genuineness of the transactions.

Which sections of the Income-tax Act were involved?

Section 68,Section 131

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(6)Show list

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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Dilip Kumar Patni, AR
For Respondent: Shri Raja Sengupta, DR
Hearing: 13.03.2025Pronounced: 17.03.2025

(Assessment Year:2012-13) Income Tax Officer, Ward 9(3) Piyush Suppliers Pvt. ltd. Income Tax Officer, 4, BBD Bag (East) Stephen House, 2 nd Floor, Ward 9(3), Aaykar Bhavan, Vs. Room No.24, Kolkata-700001 P-7, Chowrinjee Square, West Bengal 5th Floor, Kolkata-700069 West Bengal (Appellant) (Respondent) PAN No. AABCP7048P Assessee by : Shri Dilip Kumar Patni, AR Revenue by : Shri Raja Sengupta, DR Date of hearing: 13.03.2025 Date of pronouncement : 17.03.2025 O R D E R Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.12.2023 for the AY 2012-13.

2.

The only issue raised by the assessee is against the confirmation of addition of ₹2,50,00,000/- by the ld. CIT (A) as made by the ld. AO on account of unexplained share capital/ share premium.

3.

The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total loss of ₹54,478. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee along with questionnaire. The ld. AO on perusal of the assessment records observed that the assessee company has issued 2,50,000 equity share of face value of 10/- each

4.

In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee after taking into account the contentions/ submissions of the assessee by holding that the section 68 was correctly invoked by the ld. AO after discussing the details of the allottees on page no.8 and 9 of the appellate order and after following certain decisions as mentioned on page no.10 and 11 of the appellate order.

(i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020.

6.

Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as noted above , we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition.

7.

In the result, the appeal of the assesseeis allowed.

Order pronounced in the open court on 17.03.2025.

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