I.T.O.,WARD-2(3), KOLKATA vs. GORSIA MARINE EQUIPMENT PVT. LTD., KOLKATA

With the consent of both the learned representative(s) and in view of the Revenue’s averments in its condonation petition / affidavit dated 20.02.2020, we Assessment Year 2013-14 ITO Wd-2(3), Kol. Vs. Gorsia Marine Equipment Pvt. Ltd. Page 2 condone the impugned delay of eleven days’ in filing the case. The case is now taken up for adjudication on merits.

The Revenue’s first and foremost substantive grievance pleads that the CIT(A) has erred in law and on facts in deleting the sec. 68 of unexplained cash credits addition of ₹2,50,000/- in the nature of assessee’s share application money added in the course of assessment framed on17.03.2016 despite the fact that the same lack of genuineness / creditworthiness. It transpires at the outset qua the instant issue that the CIT(A) has deleted the impugned addition for the precise reason that the amount in question had not been credited in the assessee’s books in the relevant previous year from 01.04.2012 to 13.03.2013. Learned authorized representative has invited our attention to assessee’s audited financial statement including balance-sheet, profit & loss account, notes to account as well as bank statement in pages 1 to 11 to this effect in the paper book. The CIT(A)’s discussion in page-3 has also taken note of the said material only as under:- “There is merit in the submissions made by the appellant. The AO in the assessment order had disallowed share premium received in earlier years as unexplained cash credits u/s 68 of the Act in A.Y 2013-14/-. On verification form the balance sheet of the appellant for earlier years, it is found that share premium of Rs.2,50,00,000/- has been appearing in the balance sheet of the appellant from A.Y 2008-09. It is apparent that the share premium of Rs.2,50,00,000/- has been added back in the wrong assessment year u/s. 68 of the Act. The assessment order was passed u/s 144 of the I T Act, 1961 due to non-cooperation by the appellant. However, the AO should have examined the balance sheet of the appellant which was available to him, where it has been clearly shown the share premium of Rs.2,50,00,000/- was reflected as on 31.032011 and as on 31.03.2012. From the above details s it is clear that the no share premium was raised in A.Y 2013-14. As discussed above, the share premium was raised earlier years. Therefore, the addition is bad in law and cannot be sustained. The order passed u/s 144 of the Income-tax Act, 1961 is best judgment assessment in which the AO shall take into account all relevant material which he has gathered and after giving the appellant sufficient opportunity being heard, make assessment of the total income or loss to best of judgment and determined the sum payable by the appellant. This section does not give arbitrary power to the AO to make the assessment on his whims and fancies. The assessment order should be based on material available with the AO and shall be reasonable estimate. It appears that the AO has not considered the audited accounts available with him while making the addition. Three are plethora of case laws referred to below which have held that the order u/s. 144 should be decided with wisdom and not based on arbitrary caprice of the AO but on settled and invariable principles of justice.”

Next comes the Revenue’s second substantive grievance challenging the CIT(A)’s action partly / restricting assessee’s expenditure disallowance of ₹5,62,738/- to ₹56,274/- i.e. @ 10% in the lower appellate discussion. Suffice to say, there is no rebuttal coming from the Revenue’s side that the assessee had very well filed all the corresponding details and evidence on records and the Assessing Officer had disallowed the entire claim amount under various head(s). We therefore see no merit in the Revenue’s second substantive grievance as well.

Now comes to Revenue’s third substantive grievance seeking to revive unexplained cash credits addition of ₹11,01,350/- made in the course of assessment and restricted to ₹20,694/-. We notice with the able assistance of both the learned representative(s)that the assessee’s cash-in-hand-cum-books of account as on 01.04.2012 was ₹3,98,519/- followed by similar withdrawals / deposit his cash-in- hand on 31.03.2013 was at ₹,06,974/- only remaining unexplained from the taxpayer’s side. This is what appears to have been prompted the CIT(A) could add the balance figure of ₹2,06,974/- only. All these facts and figures have remained undisputed from the Revenue’s side. We thus see no reasons to revive the entire addition figure in question. This third and last substantive ground is also rejected therefore.