D.C.I.T CC - VII,KOLKATA, KOLKATA vs. M/S BANSIDHAR VYAPAR PVT LTD, KOLKATA

This appeal preferred by the revenue is against the order of the Ld. CIT(A), Central- 1, Kolkata dated 25.02.2013 for AY 2008-09.

At the outset itself, the Ld. DR brought to our notice that there is a mistake in the grounds of appeal wherein it has been stated that the assessment has been made on a protective basis on the assessee, however, the AO has actually made assessment on substantive basis against the assessee. We note that the appeal has been filed in the year 2013 and, therefore, we are inclined to adjudicate the appeal. The main grievance of the revenue is against the action of the Ld. CIT(A) in deleting the addition of Rs. 1 cr.

Brief facts of the case are that the AO noted that Shri Suresh Sethi, the director of the assessee company has given statement on oath before the DDIT (Inv.), Kolkata on 05.12.2006 that he got cash of equivalent amount from the companies and against the same cheque had been issued to various Mumbai based companies of Ketan Parekh Group. Thereafter, the AO notes that as per the statement of Shri Sethi Rs. 50 lacs were invested by the assessee company in the share capital of Mumbai based company connected with Ketan

We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Director of the assessee company Shri Suresh Sethi has made a statement on oath on 05.12.2006 before DDIT (Inv.), Kolkata that in lieu of cash, cheques were issued to companies of Ketan Parekh Group and the AO noted that Shri Sethi has stated that Rs. 50 lacs were invested by the assessee company in the share capital of Mumbai based company of Ketan Parekh Group has made the estimation of the income of the assessee to the tune of Rs. 1 cr. We note that even though the AO acknowledges that Shri Suresh Sethi by a sworn affidavit before the Notary Public has retracted the statement, however, he estimated the income of assessee at Rs. 1 cr. On appeal, it was brought to the notice of Ld. CIT(A) that no cheques were issued by the assessee company in this assessment year 2008-09 and therefore, the AO has not ventured to make any additions on this count. Before us also the Ld. DR could not controvert this fact. So, we note that estimation of income was based only on the plea that there was non-compliance on the part of the assessee at the assessment stage. However, we agree with the Ld. CIT(A) that the AO has not spelt out as to what all documents the AO directed the assessee to produce which could have thrown light to estimate the income of the assessee. We note that assessee is a Private Limited Company incorporated on 26.03.1993 and it files regularly its return of income and the same have been processed by the department every year. During the investigation of Shri Ketan Parekhs group only the DDIT (Inv.), Kolkata summoned the directors of the assessee company. So when the assessment under scrutiny was carried out, if the assessee failed to produce some documents cannot be the ground to make arbitrary ad- hoc estimation as done by the AO in this case. The financials of the assessee company are available in the assessment records of the department and, therefore, estimation should be reasonable and ought to have some link with the assessee’s business and there should be M/s. Bansidhar Vyapar Pvt. Ltd., AY 2008-09 some basis to estimate at Rs 1 crore. Therefore, the Ld. CIT(A) took the view that the action of AO is arbitrary and estimation of income at Rs. 1 cr. cannot be countenanced. Therefore, the Ld. CIT(A)’s decision to delete the addition cannot be faulted with, so, we are inclined to confirm the order of the Ld. CIT(A) and dismiss the appeal of the revenue.

In the result, appeal of revenue is dismissed. Order is pronounced in the open court on 17th May, 2019. Sd/- Sd/- (Dr. A. L. Saini) (A. T. Varkey) Accountant Member Judicial Member Dated: 17th May, 2019 Jd.(Sr.P.S.)