M/S. DADHEECH FURNITURE PVT. LTD. ,KOLKATA vs. ITO, WARD 7(3), KOLKATA, KOLKATA

The assessee in the present case is a Company, which is engaged in the business of trading in furniture. The return of income for the year under consideration was filed by it on 15.09.2011 declaring total income at Rs.1,380/-. During the course of assessment proceedings, the claim of the assessee of having received share capital and share premium amount Assessment Year: 2012-2013 M/s. Dadheech Furniture Pvt. Limited aggregating to Rs.1,26,65,000/- was examined by the Assessing Officer. During the course of the said examination, summons under section 131 was issued by the Assessing Officer requiring the Director of the assessee-company to appear before him in person and also to produce all the share subscribers along with the relevant documentary evidence to establish their identity and creditworthiness as well as the genuineness of their relevant transactions. Although the Director of the assessee- company appeared before the Assessing Officer in response to summons under section 131, he could not produce the share subscribers along with their relevant documentary evidence for the verification of the Assessing Officer. Keeping in view this failure of the assessee, the Assessing Officer treated the entire share capital and share premium amount aggregating to Rs. 1,26,65,000/- as unexplained cash credit and addition to that extent was made by him to the total income of the assessee under section 68 in the assessment completed under section 143(3) vide an order dated 30.03.2015.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals). During the course of appellate proceedings, a paper book was filed by the assessee containing the documentary evidence, which was filed before the Assessing Officer in order to explain the relevant cash credits representing receipt of share capital and share premium amount in terms of section 68. The ld. CIT(Appeals), however, did not accept the same and proceeded to confirm the addition made by the Assessing Officer under section 68 by treating the share capital and share premium amount aggregating to Rs. 1,26,65,000/- as unexplained cash credit by relying on the decision of the Hon’ble Calcutta High Court in the case of Rajmandir Estates Pvt. Limited –vs.- PCIT, Kolkata. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. The preliminary issue raised by the ld. Counsel for the assessee is that no proper and sufficient opportunity was afforded either by the Assessing Officer during the course of assessment proceedings or even before the ld. CIT(Appeals) during the appellate proceedings to explain the relevant cash credits representing share capital and share premium amount aggregating to Rs. 1,26,65,000/- in terms of section 68 by establishing the identity and creditworthiness of the concerned share subscribers as well as the genuineness of the relevant transactions. He has submitted that the Assessing Officer required the assessee to produce the concerned share subscribers along with the documentary evidence for verification, but never issued any summons under section 131 directly to the said share subscribers for appearing before him for examination. He submitted that even the ld. CIT(Appeals) did not appreciate the documentary evidence placed on record by the assessee to establish the identity and creditworthiness of the concerned creditors as well as the genuineness of the relevant transactions and proceeded to confirm made by the Assessing Officer under section 68 by simply relying on the decision of the Hon’ble Calcutta High Court in the case of Rajmandir Estates Pvt. Limited (supra), which was rendered in the context of the order passed by the ld. CIT under section 263. He has submitted that the assessee is in a position to produce the concerned share subscribers along with the relevant documentary evidence for verification before the Assessing Officer and urged that an opportunity may be given to the assessee to do so by sending the matter back to Assessing Officer. Keeping in view all the facts and circumstances of the case, we are inclined to accept this contention of the ld. Counsel for the assessee. Even the ld. D.R. has not raised any objection for sending the matter back to the Assessing Officer. We accordingly set aside the impugned order passed by the ld. CIT(Appeals) on the issue under consideration and restore the matter to the file of the Assessing Officer for deciding the same afresh after giving one more Assessment Year: 2012-2013 M/s. Dadheech Furniture Pvt. Limited opportunity to the assessee to produce the concerned share subscribers along with the relevant documentary evidence for verification.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on October 23, 2019.