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Facts
The revenue appealed against the CIT(A)'s order which deleted an addition of Rs. 2,59,00,000/- made by the AO on account of share capital. The AO's addition was based on statements from two individuals which were later retracted. The assessee provided documentary evidence for the share capital raised from various companies.
Held
The Tribunal held that the AO relied solely on retracted statements without corroborative evidence. The CIT(A) had examined the documentary evidence and found no incriminating material. Therefore, the Tribunal found no infirmity in the CIT(A)'s order.
Key Issues
Whether the AO's addition based on retracted statements without corroborative evidence is valid, and whether the CIT(A) was correct in deleting the addition after considering documentary evidence.
Sections Cited
139, 153A, 143(3), 131
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ORDER / आदेश Per Pradip Kumar Choubey: This is the appeal preferred by the revenue against order of Commissioner of Income Tax (Appeal)-21, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 31.07.2024 for AY 2011-12.
It appears from the report of the registry that the appeal has been filed after a delay of 60 days for this the Department has filed condonation petition. On perusal of Assessment Year: 2011-12 UAL Industries Limited the condonation petition, the reason for delay in filing the appeal seems to be genuine and bonafide. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the condonation petition as well as judicial pronouncement that the case should be decided on merit not on technical issue, the delay is hereby condoned.
Brief facts of the case of the assessee are that search and seizure operation was conducted in the office premises of the assessee, the assessee filed return of income u/s 139 of the Act disclosing total income of Rs. 45,04,78,086/-. The AO u/s 153A/143(3) determined the total income of Rs. 47,64,78,090/- by making the addition of Rs. 2,59,00,000/- on account of share capital raised.
4. Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed.
Being aggrieved and dissatisfied the revenue has preferred an appeal before us.
5. The ld. Sr. D.R challenges the impugned order thereby submitting that the Ld. CIT(A) has erred in deleting the addition of share capital to the tune of Rs. 2,59,00,000/- without appreciating the fact that during the course of assessment proceedings, the genuineness of transaction, identity and creditworthiness of the share subscribers was not established by the assessee.
Contrary to that the Ld. A.R supports the impugned order thereby submitting that the sole basis of making addition by the AO was the statement of Shri Suraj Kumar Saraf and Somnath Ghosh recorded u/s 131 in the course of survey operation. The Ld. Counsel submits that the conventional statement obtained by the revenue officer cannot alone justify the action of revenue to record the finding adverse to the assessee. The Ld. Counsel of the assessee submits that there was no material corroborating the contents of the statement could be brought on record and no incriminating documents in respect of alleged entry provider by M/s Somnath Ghosh were found. The Ld. Counsel has submitted that the assessee has received capital from the companies such as Shivmangal Realcom Pvt. Ltd., S. S. Dealmarks Pvt. Ltd., Information Synergies Pvt. Ltd., Dolphin Infotech Pvt. Ltd. and Suncani Vinimoy Pvt. Ltd.. The ld. Counsel further submits that Assessment Year: 2011-12 UAL Industries Limited in course of appellate proceedings, the remand report has also been called for and the assessee has filed a rejoinder supported with various documentary evidences and the Ld. CIT(A) after going over the documentary evidences filed by the assessee, allow the appeal of the assessee thereby holding that there is no incriminating material have even been found from the premises of the assessee. The Ld. CIT(A) has clearly held that only on the basis of statement, the AO has relied and added the said amount ignoring the fact that the statement has been retracted within the next seven days of making such statement. The Ld. Counsel placed copy of retraction affidavit of Somnath Ghosh and Suraj Kumar Saraf.
Upon hearing the submissions of the Counsel for the respective parties, we have gone through the order passed by the Ld. CIT(A) and find that the Ld. CIT(A) has considered the facts of the case as well as documents submitted by the assessee. The details of share capital raised by the assessee company during FY 2010-11 are as follows:
Sl No. Name of the PAN No. of Face value & Amount in Rs. share shares premium applicant charged concern
M/s Shiv AAPCS 1661 K 8000 Rs. 10/- face Rs. 80,00,000/- Mangal value and Realcon Pvt. share premium Ltd. of Rs. 990/- share
2. M/s S. S AAPCS 2386 H 3000 Rs. 10/- face Rs. 30,00,000 Dealmarks value and Pvt. Ltd. share premium
3. M/s AABCI 2408 J 5000 Rs. 10/- face Rs. 50,00,000/- Information value and Synergies Pvt. share premium Ltd. of Rs. 990/- share
M/s Dolphin AABCD 4226 F 5000 Rs. 10/- face Rs. 50,00,000/- Indotech Pvt. value and Ltd. share premium of Rs. 990/- share
M/s Suncani AALCS 4867 P 5000 Rs. 10/- face Rs. 50,00,000 Vinimay Pvt. value and Ltd. share premium of Rs. 990/- share
It is pertinent to mention herein that the AO in its assessment order has not referred to any incriminating material which was seized from the assessee’s premises during the course of search. The AO has relied the statement made by Suraj Kumar Saraf and Somnath Ghosh. We find that statement of the above two persons is not supported by any corroborative evidence to substantiate the claim of providing accommodation entries being made by Shri Suraj Kumar Saraf and Somnath Ghosh. It is also important to mention herein that the statement of Shri Suraj Kumar Saraf and Somnath Ghosh were retracted on 27.01.2012 and 31.01.2012 respectively and both are filed supported with an affidavit. The Ld. CIT(A) in allowing the appeal of the assessee Assessment Year: 2011-12 UAL Industries Limited has discussed the documentary evidences filed by the assessee company-wise,order of the CIT(A) in this context is essential to reproduce herein below:
“From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.80,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 88,71,535/-. The source of source of such investments were also submitted before the AO which were not disputed by the AO. It is observed that the investments to the tune of Rs. 80,00,000/- were made in the following manner:
The appellant has furnished the source of these payments and these amounts were received by Shiv Mangal Realcon Pvt Ltd through banking channels only. The bank statement of Shiv Mangal Realcon Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. Furthermore the said share applicant M/s Shiv Mangal Realcon Pvt Ltd was also assessed u/s 143(3) for AY: 2011-12 by the same AO, DCIT,CC3(4), Kolkata and no adverse findings were made. The appellant company has also filed the audited accounts and the copy of ITR filed by Shiv Mangal Realcon Pvt Ltd for AY: 2023-24 to establish the said share applicant company is active as on date. There is therefore no such reason in the assessment order of the AO or otherwise to doubt the identity and creditworthiness of the share applicant Shiv Mangal Realcon Pvt Ltd and the genuineness of the transactions is also established. M/s S S Dealmark Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.30,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 33,02,549/-. The source of source of such investments were also submitted before the AO which were not disputed by the AO. It is observed that the investments to the tune of Rs. 30,00,000/- were made in the following manner:
The appellant has furnished the source of these payments and these amounts were received by S S Dealmark Pvt Ltd through banking channels only. The bank statement of S S Dealmark Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. Furthermore the said share applicant M/s S S Dealmark Pvt Ltd was also assessed u/s 143(3) for AY: 2011-12 by the same AO, DCIT,CC-3(4), Kolkata and no adverse findings were made. The appellant company has also filed the audited accounts and the copy of ITR filed by S S Dealmark Pvt Ltd for AY: 2023-24 to establish the said share applicant company is active as on date. There is therefore no such reason in the assessment order of the AO or otherwise to doubt the identity and creditworthiness of the share applicant S S Dealmark Pvt Ltd and the genuineness of the transactions is also established.
Assessment Year: 2011-12 UAL Industries Limited M/s Information Synergies Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.50,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 10,89,77,441/-. Evidently the said share applicant company had adequate reserves and surplus for making such investment in the appellant company. The bank statement for the relevant period was also submitted to establish the source of source of such investments which were not disputed by the AO. It is observed that the investments to the tune of Rs. 50,00,000/- were made in the following manner: Sl No. Date Amount Mode of payment 1. 14.01.2011 Rs. 50,00,000/- RTGS from City Union Bank A/c The appellant has furnished the bank statement to establish the source of these payments and these amounts were received by M/s Information Synergies Pvt Ltd through banking channels only. The bank statement of M/s Information Synergies Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. The appellant company has also filed the audited accounts and the copy of ITR filed by M/s Information Synergies Pvt Ltd for recent AY`s: 2018-19, 2019-20 & 2020-21 to establish that the said share applicant company is still active. There is therefore no such reason in the assessment order of the AO or otherwise to doubt the identity and creditworthiness of the share applicant M/s Information Synergies Pvt Ltd and the genuineness of the transactions is also established. M/s Dolphin Indotech Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.50,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 11,02,04,844/-. Evidently the said share applicant company had adequate reserves and surplus for making such investment in the appellant company. The bank statement for the relevant period was also submitted to establish the source of source of such investments which were not disputed by the AO. It is observed that the investments to the tune of Rs. 50,00,000/- were made in the following manner: Sl No. Date Amount Mode of payment 1. 18.01.2011 Rs. 50,00,000/- RTGS from City Union Bank A/c The appellant has furnished the bank statement to establish the source of these payments and these amounts were received by M/s Dolphin Indotech Pvt Ltd through banking channels only. The bank statement of M/s Dolphin Indotech Pvt Ltd for the said period was also perused and no abnormal cash deposits were observed during the said period. The appellant company has also filed the audited accounts and the copy of ITR filed by M/s Dolphin Indotech Pvt Ltd for recent AY`s: 2018-19, 2019-20, 2020-21 to establish that the said share applicant company is Assessment Year: 2011-12 UAL Industries Limited still active. In this case also, there is no such reason to doubt the identity and creditworthiness of the share applicant M/s Dolphin Indotech Pvt Ltd and the genuineness of the transaction is also established. M/s Suncani Vinimay Pvt Ltd From the documents filed, it was observed that the said company during AY: 2011-12 had invested Rs.50,00,000/- in the appellant company in the form of share capital. As per the audited accounts submitted for the AY: 2011-12, its reserves and surplus as on 31.03.2011 was Rs. 4,16,30,206/-. Evidently the said share applicant company had adequate reserves and surplus for making such investment in the appellant company. The bank statement for the relevant period was also submitted to establish the source of source of such investments which were not disputed by the AO. It is observed that the investments to the tune of Rs. 50,00,000/- were made in the following manner: Sl. No. Date Amount Mode of payment 1. 22.02.2011 Rs. 25,00,000/- RTGS from Axis Bank A/c 2. 23.02.2011 Rs. 25,00,000/- RTGS from Axis Bank A/c
Going over the order of the Ld. CIT(A) and documents furnished by the assessee, we do not find any infirmity in the impugned order of Ld. CIT(A). Accordingly, the appeal of the revenue is hereby dismissed.
In the result, the appeal of the revenue is dismissed.
Order is pronounced in the open court on 25th February 2025 Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 25th February, 2025 SM, Sr. PS Assessment Year: 2011-12 UAL Industries Limited Copy of the order forwarded to: 1. Appellant- ACIT 2. Respondent – UAL Industries Limited, 16, Konark Main Uday Ballygaunge, SO, Kolkata-700019 3. Ld. CIT(A)-21, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)