INCOME TAX OFFICER WARD 11(1), KOLKATA, INCOME TAX DEPARTMENT vs. KALYANKARI WHOLESELLER PVT. LTD., KOLKATA

The ld. Authorized Representative vehemently submitted before us that the assessee has filed all the evidences before the ld. AO such as names, addresses, PANs, audited financial statements, bank statements, etc. evidencing that the shareholders have invested money in the assessee company and all the money has been received through banking channels. The ld. Authorized Representative further submitted that the ld. AO, in order to independently verify the transactions, issued notices u/s 133(6) of the Act to the subscribers of shares and all the subscribers duly furnished their replies along with the evidences as were called for by the ld. AO. The ld counsel for the assessee submitted that ld. AO has not disputed or drawn any adverse inference against the shareholders. Pertinent to state that these enquiry letters were issued in the course of first assessment proceedings. The ld. Authorized Representative stated that the assessee had issued shares to six share subscribers. The assessments were framed u/s 143(3) of the Act in the case of 5 subscribers out of total 6 subscribers. The ld. Authorized Representative further referring to the paper book submitted that all the evidences qua the subscribers were filed before the authorities below and also before this tribunal which is available very page nos. 15 to 261 of the paper books.

The ld. DR on the other hand fairly agreed when a query was put as to how the appellate authority estimated the profit at 50% of the share capital/ share premium amount that this was a wrong conclusion drawn by the ld. CIT (A) however , relied stongly on the order of the ld. AO wherein the addition was made of total amount of share capital/share premium.The ld DR submitted that the order of ld CIT(A) may be reversed and that of AO may be restored fully by dismissing the appeal of the assessee and by allowing the appeal of the revenue.

After hearing the rival contentions and perusing the materials available on record, we find that this is second round of litigation before the Tribunal and in the first round vide order dated 20.11.2020, passed in A.Y. 2012-13, in para 4 the coordinate bench observed that though the documents filed by the assessee comprising cash book ledger, bank statements, audited accounts of the subscribers were submitted before the ld. AO which were not examined by the AO and consequently restored the matter back to the file of the AO for fresh adjudication after examining all these evidences and after affording reasonable opportunity of hearing to the assessee. We note that in the set aside assessment proceedings, the assessee furnished all the details before the ld. AO qua the share subscribers comprising names, addresses, PANs, audited bank statements, assessment orders u/s 143(3) etc.

In the appellate proceedings, the ld. CIT (A) simply in order to put litigation to end estimated the profit on share capital/ share premium at 50% thereby partly allowing the appeal by directing the deletion of the addition to the extent of ₹6,20,87,580/- and sustaining the addition by a similar amount. In our opinion, the conclusion drawn by the ld. CIT (A) is completely flawed and wrong and cannot be sustained. The ld. CIT (A) instead of commenting on the evidences filed by the assessee as well as the replies of the subscribers available in the assessment records chose a very cryptic and wrong manner while disposing off the appeal. In our opinion, the assessee has filed all the evidences before the ld. AO as well as before the ld. CIT (A) and both the authorities below have failed to carry out any meaningful and purposeful enquiry and draw any legal conclusion based on the said enquiry. For the aforesaid reasons , we are not in a position to sustain the order of the ld. CIT (A). Having examined and considered all the facts on records and in the paper book , we are of the considered view that the assessee has discharged its burden by furnishing all the evidences and both the authorities below have failed to conduct any enquiry intio the same despite the tribunal specific direction. Accordingly, we set aside the order of ld. CIT (A) on this issue and direct the ld. AO to delete the addition.The appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed.