M/S. GANRAJ VINIMAY (P) LTD., ,KOLKATA vs. ITO, WARD - 9(2) , KOLKATA

The assessee is a company and had filed its return of income on 28/09/2012, disclosing loss of Rs. 31,431/-. The company had issued shares at a premium during the year. The Assessing Officer selected the case for scrutiny and issued notices u/s 143(2) and 142(1) of the Act. The assessee did not appear. Summons u/s 131 of the Act were issued to the directors of the share subscriber companies for personal attendance on 24/02/2015. None appeared. The Assessing Officer drew adverse inference and made an addition u/s 68 of the Act of the share capital and share premium received by the assessee during the year. On appeal, the ld. CIT(A) passed an ex-parte order.

Aggrieved the assessee is in appeal before us.

The ld. Counsel for the assessee submitted that, the notice of hearing sent by the ld. CIT(A) was on a wrong address and consequently, the assessee did not receive the notice and thus, none appeared before the ld. CIT(A) and the ld. CIT(A) passed an ex-parte order. He further pointed out that the Assessing Officer also passed an ex-parte order and has not afforded proper opportunity to the assessee and share subscriber companies, as Assessment Year: 2012-13 M/s. Ganraj Vinimay (P) Ltd. the summons u/s 131 of the Act, were the summons u/s 131 of the Act, were not served on any of them. He submitted that, the . He submitted that, the assessee undertakes to produce the directors of the subscriber companies before the assessee undertakes to produce the directors of the subscriber companies before the assessee undertakes to produce the directors of the subscriber companies before the Assessing Officer and also to file all necessary evidence as required by the Assessing and also to file all necessary evidence as required by the Assessing and also to file all necessary evidence as required by the Assessing Officer, if the matter is restored back to the file of the Assessing Officer for fresh Officer, if the matter is restored back to the file of the Assessing Officer for fresh Officer, if the matter is restored back to the file of the Assessing Officer for fresh adjudication, in accordance with law and has been done in adjudication, in accordance with law and has been done in many such case. He relied on such case. He relied on certain case-law, which we would be considering during the course of our finding. law, which we would be considering during the course of our finding. law, which we would be considering during the course of our finding.

The ld. D/R, did not object to this request of the assessee that the matter be The ld. D/R, did not object to this request of the assessee that the matter be The ld. D/R, did not object to this request of the assessee that the matter be restored to the file of the Assessing Officer. He submitted that the Tribunal should make it restored to the file of the Assessing Officer. He submitted that the Tribunal should make it restored to the file of the Assessing Officer. He submitted that the Tribunal should make it clear that the assessee should co the assessee should co-operate with the lower authorities in completion of the operate with the lower authorities in completion of the assessment.

We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities circumstances of the case, perusal of the papers on record, orders of the authorities circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows: elow as well as case law cited, we hold as follows:- 7. In the case of Sriram Tie Up Pvt. Ltd Sriram Tie Up Pvt. Ltd vs. ITO in I.T.A. No. 1104/Kol/2016, Assessment Year: 2009-10 order dt. March 21, 2018, 10 order dt. March 21, 2018, at para 6 and 7 held as follows: at para 6 and 7 held as follows: “6. In the case of M/s. Sukanya Merchandise Pvt. Ltd. vs ITO (ITA In the case of M/s. Sukanya Merchandise Pvt. Ltd. vs ITO (ITA In the case of M/s. Sukanya Merchandise Pvt. Ltd. vs ITO (ITA 291/Kol/2016 dated 15.12.2017) cited by the learned counsel for the assessee, a 291/Kol/2016 dated 15.12.2017) cited by the learned counsel for the assessee, a 291/Kol/2016 dated 15.12.2017) cited by the learned counsel for the assessee, a similar view has been taken by the Co similar view has been taken by the Co-ordinate Bench of this Tribunal and the ordinate Bench of this Tribunal and the similar issue relating to the ad similar issue relating to the addition made under section 68 on account of share dition made under section 68 on account of share capital contribution by treating the same as unexplained cash credits is restored capital contribution by treating the same as unexplained cash credits is restored capital contribution by treating the same as unexplained cash credits is restored back by the Tribunal to the file of the A.O. in almost similar situation after back by the Tribunal to the file of the A.O. in almost similar situation after back by the Tribunal to the file of the A.O. in almost similar situation after recording its observations / findings as under recording its observations / findings as under: We note that the AO pursuant to the order of Ld. CIT had taken note of the We note that the AO pursuant to the order of Ld. CIT had taken note of the We note that the AO pursuant to the order of Ld. CIT had taken note of the directions of the Ld. CIT and issued notice u/s. 142(1) dated 16.08.2013 and has directions of the Ld. CIT and issued notice u/s. 142(1) dated 16.08.2013 and has directions of the Ld. CIT and issued notice u/s. 142(1) dated 16.08.2013 and has acknowledged that the assessee had furnished the copy of final account, I. T. acknowledged that the assessee had furnished the copy of final account, I. T. acknowledged that the assessee had furnished the copy of final account, I. T. Acknowledgement, bank statement for the relevant period evidencing the receipt of k statement for the relevant period evidencing the receipt of k statement for the relevant period evidencing the receipt of share application money from the share applicants. Thereafter, the AO makes share application money from the share applicants. Thereafter, the AO makes share application money from the share applicants. Thereafter, the AO makes certain inferences based on the list of shareholders and taking note of the bank certain inferences based on the list of shareholders and taking note of the bank certain inferences based on the list of shareholders and taking note of the bank statement furnished by the assessee. statement furnished by the assessee. We note that after the initial notice dated We note that after the initial notice dated 16.08.2013, thereafter the AO had issued the notice on 26.02.2014 which has been 16.08.2013, thereafter the AO had issued the notice on 26.02.2014 which has been 16.08.2013, thereafter the AO had issued the notice on 26.02.2014 which has been reproduced at page 3 of the reassessment order, wherein AO required the directors reproduced at page 3 of the reassessment order, wherein AO required the directors reproduced at page 3 of the reassessment order, wherein AO required the directors of the assessee company to be present before hi of the assessee company to be present before him on 06.03.2014. However, m on 06.03.2014. However, according to the Ld. AR, the assessee received the notice only on 07.03.2014 and according to the Ld. AR, the assessee received the notice only on 07.03.2014 and according to the Ld. AR, the assessee received the notice only on 07.03.2014 and thereafter, the assessee requested the AO to provide another opportunity of hearing thereafter, the assessee requested the AO to provide another opportunity of hearing thereafter, the assessee requested the AO to provide another opportunity of hearing vide its letter dated 20.03.2014. Thereafter, the AO fixed the vide its letter dated 20.03.2014. Thereafter, the AO fixed the date of hearing on date of hearing on 12.03.2014 vide notice dated 10.03.2014. So, according to the assessee company 12.03.2014 vide notice dated 10.03.2014. So, according to the assessee company 12.03.2014 vide notice dated 10.03.2014. So, according to the assessee company since the directors were not in station till 23.03.2014, the Ld. AR had requested for since the directors were not in station till 23.03.2014, the Ld. AR had requested for since the directors were not in station till 23.03.2014, the Ld. AR had requested for adjournment till that time. Though the AO has stated that he has issued adjournment till that time. Though the AO has stated that he has issued adjournment till that time. Though the AO has stated that he has issued summons on 24.03.2014 to the assessee company to produce the directors of the company on 24.03.2014 to the assessee company to produce the directors of the company on 24.03.2014 to the assessee company to produce the directors of the company Assessment Year: 2012-13 M/s. Ganraj Vinimay (P) Ltd. before him on 26.03.2014, the assessee company contended that it has not received before him on 26.03.2014, the assessee company contended that it has not received before him on 26.03.2014, the assessee company contended that it has not received the said summon and, therefore, could not make the personal appearance. The AO the said summon and, therefore, could not make the personal appearance. The AO the said summon and, therefore, could not make the personal appearance. The AO has drawn adverse conclusion basically because of non wn adverse conclusion basically because of non-appearance of the directors appearance of the directors of the assessee company and that of the shareholder companies. We note that of the assessee company and that of the shareholder companies. We note that of the assessee company and that of the shareholder companies. We note that initially the AO started the enquiry on 16.08.2013 which was complied by the initially the AO started the enquiry on 16.08.2013 which was complied by the initially the AO started the enquiry on 16.08.2013 which was complied by the assessee by submitting docu assessee by submitting documents which has been acknowledged by the AO. ments which has been acknowledged by the AO. Thereafter, the enquiry was started only at the fag end of February 2014 and the Thereafter, the enquiry was started only at the fag end of February 2014 and the Thereafter, the enquiry was started only at the fag end of February 2014 and the assessee company had informed the AO that their directors were out of station till assessee company had informed the AO that their directors were out of station till assessee company had informed the AO that their directors were out of station till 23.03.2014. In the light of the aforesaid fa 23.03.2014. In the light of the aforesaid facts, we are of the opinion that the cts, we are of the opinion that the assessee did not get fair opportunity to present the evidences before the AO so, there assessee did not get fair opportunity to present the evidences before the AO so, there assessee did not get fair opportunity to present the evidences before the AO so, there was a lack of opportunity as aforesaid, therefore, it has to go back to AO. was a lack of opportunity as aforesaid, therefore, it has to go back to AO. was a lack of opportunity as aforesaid, therefore, it has to go back to AO.

8. We also note that Ld. Cit while setting aside the ord We also note that Ld. Cit while setting aside the order of the AO which was er of the AO which was passed u/s. 147/143(3) of the Act, the Ld. CIT gave certain guidelines to follow for passed u/s. 147/143(3) of the Act, the Ld. CIT gave certain guidelines to follow for passed u/s. 147/143(3) of the Act, the Ld. CIT gave certain guidelines to follow for conducting deep investigation. We also note that similarly placed assessees had conducting deep investigation. We also note that similarly placed assessees had conducting deep investigation. We also note that similarly placed assessees had challenged the exercise of revisional jurisdiction u/s. 263 of the challenged the exercise of revisional jurisdiction u/s. 263 of the Act before this Act before this Tribunal in those cases one of it of Subha Lakshmi Vanijya Pvt. Ltd. Vs. CIT in ITA Tribunal in those cases one of it of Subha Lakshmi Vanijya Pvt. Ltd. Vs. CIT in ITA Tribunal in those cases one of it of Subha Lakshmi Vanijya Pvt. Ltd. Vs. CIT in dated 30.07.2015, wherein the Tribunal was pleased to uphold No. 1104/Kol/2014 dated 30.07.2015, wherein the Tribunal was pleased to uphold No. 1104/Kol/2014 dated 30.07.2015, wherein the Tribunal was pleased to uphold the order passed by the Ld. CIT passed u/s. 263 of the Act, which we learn to the order passed by the Ld. CIT passed u/s. 263 of the Act, which we learn to the order passed by the Ld. CIT passed u/s. 263 of the Act, which we learn to have been confirmed by the Hon’ble jurisdictional High Court and the SLP preferred been confirmed by the Hon’ble jurisdictional High Court and the SLP preferred been confirmed by the Hon’ble jurisdictional High Court and the SLP preferred against the decision of the Hon’ble jurisdictional High Court has been dismissed by against the decision of the Hon’ble jurisdictional High Court has been dismissed by against the decision of the Hon’ble jurisdictional High Court has been dismissed by the Hon’ble Supreme Court. Therefore, similar order of the Ld. CIT passed u/s. 263 the Hon’ble Supreme Court. Therefore, similar order of the Ld. CIT passed u/s. 263 the Hon’ble Supreme Court. Therefore, similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld. We note that the AO while giving effect to the CIT’s 263 e Act has been upheld. We note that the AO while giving effect to the CIT’s 263 e Act has been upheld. We note that the AO while giving effect to the CIT’s 263 order has noted that the assessee company has in fact furnished the documents order has noted that the assessee company has in fact furnished the documents order has noted that the assessee company has in fact furnished the documents sought by him to his notice u/s. 142(1) of the Act. However, the AO took the adverse sought by him to his notice u/s. 142(1) of the Act. However, the AO took the adverse sought by him to his notice u/s. 142(1) of the Act. However, the AO took the adverse view against the assessee on the plea that the directors of the assessee company t the assessee on the plea that the directors of the assessee company t the assessee on the plea that the directors of the assessee company and share subscribing companies had not appeared before him on 26.03.2014 and t and share subscribing companies had not appeared before him on 26.03.2014 and t and share subscribing companies had not appeared before him on 26.03.2014 and t after taking note that none appeared on 26.03.2014 concluded on the same day after taking note that none appeared on 26.03.2014 concluded on the same day after taking note that none appeared on 26.03.2014 concluded on the same day 26.03.2014 that entire amou 26.03.2014 that entire amount of share application money received along with nt of share application money received along with premium amounting to Rs.8,06,00,000/ premium amounting to Rs.8,06,00,000/- which has remained unexplained and which has remained unexplained and added to the income of the assessee. We also note that the Ld. CIT after looking into added to the income of the assessee. We also note that the Ld. CIT after looking into added to the income of the assessee. We also note that the Ld. CIT after looking into the pernicious practice of converting black m the pernicious practice of converting black money into white money has given the oney into white money has given the guidelines to AO as to how the investigation should be conducted to find out the guidelines to AO as to how the investigation should be conducted to find out the guidelines to AO as to how the investigation should be conducted to find out the source of source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has source of source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has source of source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld by the Tribunal as well as by the Hon’ble been upheld by the Tribunal as well as by the Hon’ble Calcutta High Court as well as Calcutta High Court as well as the SLP has been dismissed by the Hon’ble Supreme Court, similar order of the Ld. the SLP has been dismissed by the Hon’ble Supreme Court, similar order of the Ld. the SLP has been dismissed by the Hon’ble Supreme Court, similar order of the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT with his experience and wisdom has given certain guide CIT with his experience and wisdom has given certain guidelines in the backdrop of lines in the backdrop of black money menace should have been properly enquired into as directed by him. black money menace should have been properly enquired into as directed by him. black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed The AO ought to have followed the investigating guidelines and method as directed The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuin by him to unearth the facts to determine whether the identity, genuin by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court in three judges bench in the case of Tin Box, (supra), has held that since there was in three judges bench in the case of Tin Box, (supra), has held that since there was in three judges bench in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assess lack of opportunity to the assessee at the assessment stage itself, the assess lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon’ble High Court, Tribunal and needs to be done afresh and thereby reversed the Hon’ble High Court, Tribunal and needs to be done afresh and thereby reversed the Hon’ble High Court, Tribunal and CIT(A)’s orders and remanded the matter back to AO for fresh assessment. So, CIT(A)’s orders and remanded the matter back to AO for fresh assessment. So, CIT(A)’s orders and remanded the matter back to AO for fresh assessment. So, since there was lack of opportunity as aforestated it has to go back to AO. We also since there was lack of opportunity as aforestated it has to go back to AO. We also since there was lack of opportunity as aforestated it has to go back to AO. We also note that the Hon’ble Delhi High Court in the case of CIT Vs. Jansampark hat the Hon’ble Delhi High Court in the case of CIT Vs. Jansampark hat the Hon’ble Delhi High Court in the case of CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. in ITA No. 525/2014 dated 11.03.2015 wherein Advertising & Marketing Pvt. Ltd. in ITA No. 525/2014 dated 11.03.2015 wherein Advertising & Marketing Pvt. Ltd. in ITA No. 525/2014 dated 11.03.2015 wherein after noticing inadequate enquiry by authorities below have held as under: after noticing inadequate enquiry by authorities below have held as under: after noticing inadequate enquiry by authorities below have held as under: “41. We are inclined to agree w “41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to ith the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof the extent of their conclusion that the assessee herein had come up with some proof the extent of their conclusion that the assessee herein had come up with some proof Assessment Year: 2012-13 M/s. Ganraj Vinimay (P) Ltd. of identity of some of the entries in question. But, from this inference, or form the of identity of some of the entries in question. But, from this inference, or form the of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were t fact that the transactions were through banking channels, it does not necessarily hrough banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the following that satisfaction as to the creditworthiness of the parties or the following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established. genuineness of the transactions in question would also have been established. genuineness of the transactions in question would also have been established.

The AO here may have failed to discharge his ob 42. The AO here may have failed to discharge his obligation to conduct a proper ligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the want of proper inquiry, could not have closed the chapter simply by allowing the want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligat appeal and deleting the additions made. It was also the obligation of the first ion of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was appellate authority, as indeed of ITAT, to have ensured that effective inquiry was appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the carried out, particularly in the fact of the allegations of the Revenue that the carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts account statements reveal uniform pattern of cash deposits of equal amounts account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a respective accounts preceding the transactions in question. This necessitated a respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice detailed scrutiny of the material submitted by the assessee in response to the notice detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the AO, as also the material submitted at the stage of under Section148 issued by the AO, as also the material submitted at the stage of under Section148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further appeals, if deemed proper by way of making or causing to be made a 'further appeals, if deemed proper by way of making or causing to be made a 'further inquiry’ in exercise of the power under Section 250(4). His approach not having inquiry’ in exercise of the power under Section 250(4). His approach not having inquiry’ in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld." or upheld." In view of the aforesaid order and in the light of the Hon’ble Supreme Court’s In view of the aforesaid order and in the light of the Hon’ble Supreme Court’s In view of the aforesaid order and in the light of the Hon’ble Supreme Court’s decision in Tin Box Company (supra) and taking into consideration the fact the decision in Tin Box Company (supra) and taking into consideration the fact the decision in Tin Box Company (supra) and taking into consideration the fact the order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld up to order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld up to order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld up to the level of Apex Court, and taking note of Hon’ble Delhi High Court’s order in e level of Apex Court, and taking note of Hon’ble Delhi High Court’s order in e level of Apex Court, and taking note of Hon’ble Delhi High Court’s order in Jansampark Advertising & Marketing Pvt. Ltd. (supra), we set aside the order of the Jansampark Advertising & Marketing Pvt. Ltd. (supra), we set aside the order of the Jansampark Advertising & Marketing Pvt. Ltd. (supra), we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard he matter in accordance to law after giving opportunity of being heard he matter in accordance to law after giving opportunity of being heard to the assessee.

We, therefore, consider it fair and proper and in the interest of justice to set We, therefore, consider it fair and proper and in the interest of justice to set We, therefore, consider it fair and proper and in the interest of justice to set aside the orders of the authorities below on the issue in dispute and restore the aside the orders of the authorities below on the issue in dispute and restore the aside the orders of the authorities below on the issue in dispute and restore the matter to the file of the A.O. to decide the same afresh after giving the assessee matter to the file of the A.O. to decide the same afresh after giving the assessee matter to the file of the A.O. to decide the same afresh after giving the assessee proper and sufficient opportunity of being heard and after taking into proper and sufficient opportunity of being heard and after taking into proper and sufficient opportunity of being heard and after taking into consideration the entire evidence already available on record as well as other consideration the entire evidence already available on record as well as other consideration the entire evidence already available on record as well as other documentary evidence wh documentary evidence which the assessee may choose to file in support of its case ich the assessee may choose to file in support of its case on the issue.”

The Kolkata Bench of the ITAT has passed similar order The Kolkata Bench of the ITAT has passed similar orders in many cases on the in many cases on the same issue of additions made u/s 68 of share capital and ade u/s 68 of share capital and has set aside the assessment to has set aside the assessment to the file of the AO for fresh adjudication the file of the AO for fresh adjudication with a direction that Assessing Officer may with a direction that Assessing Officer may examine the evidence already on record as well as other documentary evidences which examine the evidence already on record as well as other documentary evidences which examine the evidence already on record as well as other documentary evidences which the assessee may file before him and adjudicate the i the assessee may file before him and adjudicate the issue in accordance with law. ssue in accordance with law. There is violation of the principles of natural justice in this case. violation of the principles of natural justice in this case.

Keeping in view the totality of the facts and circumstances Keeping in view the totality of the facts and circumstances Keeping in view the totality of the facts and circumstances of the case, the submissions of both sides and submissions of both sides and also the orders of the Co-ordinate Bench of th ordinate Bench of the Tribunal in Assessment Year: 2012-13 M/s. Ganraj Vinimay (P) Ltd. similar matters, we set aside this similar matters, we set aside this issue to the file of the AO for fresh adjudication in esh adjudication in accordance with law, after giving the assessee adequate opportunity of being heard. after giving the assessee adequate opportunity of being heard. after giving the assessee adequate opportunity of being heard.

In the result, appeal of the assessee In the result, appeal of the assessee is allowed for statistical purposes al purposes.