RAVILOCHANAH MERCANTILE PRIVATE LIMITED,KOLKATA vs. ITO, WARD 4(1), KOLKATA, KOLKATA

Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Pr. Commissioner of Income Tax-2 (hereinafter referred to as the “Ld. PCIT”] dated 02.01.2017 for the AY 2012-13. 02. The only issue pressed at the time of hearing by the counsel, is against the order of ld. CIT (A) confirming the addition of ₹1,02,00,000/- as made by the ld. AO u/s 68 of the Act by treating the share capital/ share premium as unexplained cash credit. 03. The facts in brief are that the assessee filed the return of income on 08.09.2012, declaring total income at ₹427, which were selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) for the reason of large share premium received by the assessee. Accordingly, the statutory notices along with questionnaire was issued. The Ravilochanah Mercantile Private Limited; A.Y. 2012-13

assessee filed the necessary information/ details of the subscribers with the ld. AO during the course of assessment proceedings comprising names, addresses, PANs, audited Accounts , copies of bank statements of the allottees as well its own information/details such audited accounts, allotment return , form No. 18 , Board
Resolutions and bank statement etc relating to the assessee itself.
However, the ld. AO relying on the decision of the Apex Court in the case of Commissioner of Income-tax vs. Durga Prasad More [1971] 82
ITR 540 (SC)[26-08-1971] and Sumati Dayal vs. Commissioner of Income-tax [1995] 80 Taxman 89 (SC)/[1995] 214 ITR 801
(SC)/[1995] 125 CTR 124 (SC)[28-03-1995], treated the share capital/ share premium of ₹1,02,00,000/- as unexplained income of the assessee and added the same to the income of the assessee.
04. The ld. CIT (A) in the appellate proceedings also dismissed the appeal of the assessee by upholding the order of ld. Assessing Officer.
05. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has raised the share capital from four share subscribers during the impugned financial year. All four subscribers were subjected to the scrutiny proceedings u/s 143(3) of the Act. Out of the said four share subscribers two subscribers namely M/s Campus Tradelink P. Ltd. and Sonali Suppliers
Pvt. Ltd., the entire share capital/ share premium out of which the investments were by subscribers in the assessee company were added to the income of the subscribers and the copies of the assessment orders are available at page no. 2 to 6 and 76 to 77 of the PB.
Similarly, in the other two cases namely Khetan Tracon P. Ltd. and Nihon Impex P. Ltd. , the revenue accepted the investments made by these companies in the assessee company by way of share subscription and the assessment orders are available at page no. 43
Ravilochanah Mercantile Private Limited; A.Y. 2012-13

to 44 and 60 and 62 of the paper book. Moreover the assessee has filed all the evidences before the AO as well as ld CIT(A) and the authorities have not pointed any defect or deficiency in the documents filed by the assessee. Even the summons issued u/s 131 of the Act were complied with by the directors of the assessee company by filing all the evidences as called for by the AO which has not been discussed by the AO in the assessment order. The case of the assessee is squarely covered by the decisions of the Hon’ble Calcutta High Court in the case of PCIT Vs Outcome Buildcom Pvt Ltd ITAT/3/2024 ,IA
No.:GA/1/2024 order dated 3rd May, 2024 and PCIT Vs Indus Reality
Pvt Ltd. ITAT/191/2024 ,IA No.:GA/2/2024 order dated 8th
November, 2024. Considering these facts on record, we are of the view that the additions in respect of share capital/ share premium cannot be made in the hands of the assessee company. Moreover, the issue of shares at a premium is management decision and has to be decided by the management at what rate the premium to be taken in lieu of allotment of shares and the Revenue has no role to play in this matter. Accordingly, we are inclined to set aside the order of the ld.
CIT (A) and direct the ld. AO to delete the addition.
06. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 12.03.2025. (PRADIP KUMAR CHOUBEY)
(RAJESH KUMAR)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)

Kolkata, Dated: 12.03.2025
Sudip Sarkar, Sr.PS
Ravilochanah Mercantile Private Limited; A.Y. 2012-13

Copy of the Order forwarded to :

Sr. Private Secretary/ Asst.