ACIT, CENTRAL CIRCLE-2, PATNA vs. M/S MAXXON VANIJYA & RESOURCES PVT LTD, KOLKATA

That on the facts and in the circumstances of the case and in law, Ld. CIT(A) is not justified in deciding the issue, which was not even subject matter of impugned order.” ITA No.: 89/PAT/2021

Brief facts of the case are that a search u/s 132(1) of the Act was carried out in the Binoshiba group of cases, Patna on 18.09.2014. The Binoshiba group consists of a number of concerns which are in the business of manufacture and trade of liquor and the main concerns of the group are M/s. Binoshiba Liquors Pvt. Ltd., M/s. Salson Liquors Pvt. Ltd. and M/s. Goodhost Liquors Pvt. Ltd. The group of concerns are owned and managed by Shri Binod Kumar and Shri Sanjay Kumar, resident of Anugrah Narayan Path, Patna. The assessee, M/s. Maxxon Vanijya and Resources Pvt. Ltd. is related to M/s. Binoshiba Group of cases. A notice u/s 153C of the Act along with a questionnaire was issued to the assessee on 14.12.2016. The assessee filed a written submission and requested that the return of income filed u/s 139 of the Act may be treated as return filed u/s 153C of the Act and as per the return of income, the total income was shown at ₹5,840/-. A notice u/s 143(2) of the Act was also issued and the case was scrutinised. The books of accounts were examined, the documents produced, the replies and other documents filed by the assessee were perused and examined by the Assessing Officer (hereinafter referred to as ‘the Ld. AO'). The total income of the assessee assessed at ₹4,07,05,840/- u/s 153C r.w.s. 153A r.w.s. 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) allowed the appeal of the assessee by holding as under: “I have carefully considered the arguments/submissions/findings of the Assessing Officer and the appellant and I find considerable force in the argument/submission of the appellant. Further at the same time Assessing Officer has not done any independent enquiry with positive evidence to prove any infirmity or inaccuracy in any of the documents submitted by the appellant and merely proceeds to add on the basis of assessment order already passed under section 144 of the Act. The Assessing Officer simply rejected the submission of the appellant without bringing any defect/discrepancies in the papers and documents submitted during the course of assessment proceedings Further, the Assessing Officer did not make any verification of the document submitted by the appellant. Two types of cases have been indicated. One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer sits back with folded hands till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions and suspicion. The present case falls in the latter category. In the present case the Assessing Officer has simply rejected the evidence furnished by the appellant. Hon'ble High court in the case of Gangeshwari Metal Pvt Ltd has disapproved the action of the Assessing Officer wherein the Assessing Officer sits back with folded hands till the appellant exhaust all the evidence or material in his possession and then comes forward to merely reject the same on the presumption and suspicion. Here the assessing officer, after noting the facts, merely rejected the same. This would be apparent from the observations of the assessing officer in the assessment order. In NRA Iron & Steel (P) Ltd, the Assessing Officer had made independent and detailed inquiry including survey of the investor companies. The field report revealed that the shareholders were either non-existent or lacked credit-worthiness. It is in these circumstances, Supreme Court held that the onus to establish identity of the investor companies was not discharged by the assessee. The aforesaid decision is, therefore, clearly distinguishable on facts of the present case. In this context it is very important to know that upto A.Y.2012-13, the burden of proof u/s.68 of the Act oscillated between the assessee and the AO depending upon the nature and quality of evidence adduced with regard to any sum credited in the books of accounts of the assessee company (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called. However, from Α.Υ.2013-14 a proviso to section 68 was inserted by the Finance Act, 2012 w.e.f. 01.04.2013 wherein the onus of proving identity, genuineness and creditworthiness of the creditor to the satisfaction of the AO has entirely shifted to the assessee. In this regard the relevant proviso as inserted is reproduced hereunder. [Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any ITA No.: 89/PAT/2021