M/S. AKSHAYAKALPA FARMS AND FOODS PVT LTD,TIPTUR vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, TUMKUR

This appeal by the assessee is directed against the order of CIT(Appeals)-7, Bengaluru dated 24.11.2017.

The assessee has raised the following grounds:-

The learned CIT (Appeals) has erred in not appreciating the fact that a subscription of share amounting to Rs. 3,57,143/- from a tax payer is genuine.

The appellant denies liability to pay interest. The interest being levied erroneously is to be deleted. 5. In view of the above and on other grounds to be adduced at the time of hearing, it is requested that the impugned order be quashed or atleast the addition made to income be deleted and interest levied be deleted.” 3. The appellant, a Company, filed the return of income on 28/11/2014 declaring nil income and current year loss of Rs. 83,06,772/-. The Company is engaged in business of production of organic Milk and Milk products. The income consists of Income from Business.

During the year the company issued 1000 compulsorily convertible preference shares (`CCPS") having face value of Rs. 14,240/- each at a premium of Rs. 10,760/-. During the year the CCPS were partly paid with face value of Rs. 5,696/- each at a premium of Rs. 4,304/-. The amount received on account of CCPS and securities premium have been received through normal banking channel and persons are assessed to tax and having valid Permanent Account Number [PAN]. During the assessment proceedings, the appellant submitted complete postal address of the investors from whom the securities premium amount was received.

The Assessing Officer completed the assessment by treating subscription amount of Rs. 3,57,143/- towards 35 CCPS from Mr. Ashirwad Agarwal as unexplained credits under section 68 of Income Tax Act, 1961. The subscription for Rs,3,57,143/- was made by Mr.Ashirwad Agarwal, who is assessed to tax under PAN : AAQPA0712P. Tax u/s 115BBE and interest u/s 234B are calculated accordingly and a demand of Rs 1,46,790/- has been raised.

Against this, the assessee went in appeal before the CIT(Appeals). The CIT(A) confirmed the addition observing that the assessee has not provided any supporting evidence to the satisfaction of AO that the transaction was genuine one. Against this, the assessee is in appeal before us.

We have heard both the parties and perused the material on record. The ld. AR submitted that before the lower authorities, the assessee could not produce supporting documents to substantiate the capacity of Ashirwad Agarwal to invest in assessee company. Now it is submitted that the assessee is having supporting document to substantiate the same and pleaded for an opportunity to produce the same before the AO. We agree with this contention of the ld. AR and accordingly the issue in dispute is remitted back to the file of the Assessing Officer for fresh consideration, after giving opportunity to the assessee and verification of documents to be produced before him.

In the result, the assessee is allowed for statistical purposes.