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Income Tax Appellate Tribunal, ‘B’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi
Date of concluding the hearing : April 10th, 2019 Date of pronouncing the order : May 10th ,2019 O R D E R Per J. Sudhakar Reddy :- This appeal by the assessee directed against the order of the ld. Commissioner of Income Tax (Appeals)-5, Kolkata (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dated 19.05.2017 for Assessment Year 2012-13.
The assessee is a company. It filed its return of income on 25.09.2012 declaring Nil income. The Assessing Officer passed an order u/s 143(3) on 29.03.2015 determining total income of the assessee at Rs.3,65,00,000/-, inter alia, making an addition of Rs.50,00,000/- u/s 68 of the Act being share application money received on the ground that the same is unexplained cash credit and further an amount of Rs.3,15,00,000/- u/s 68 of the Act as cash credit being loan received from K.G. Constructions, on the ground that the same is unexplained cash credit.
Aggrieved the assessee carried the matter in appeal. The first appellate authority deleted both the additions.
Aggrieved the Revenue is in appeal. 1
M/s. L.D.S. City Projects Pvt. Ltd. 5. We have heard Mr. Robin Choudhury, Addl. CIT-DR on behalf of the Revenue and Mr. Abhinav Mehrotra, Advocate, on behalf of the assessee. On a careful consideration on the facts and circumstances of the case, perusing the papers on record and orders of the authorities below, we hold as follows.
As regards the addition of Rs.50,00,000/- as unexplained share capital, the ld. CIT(A) has disallowed the same on the ground that the share application money, in question, was received in the earlier year and not in the current year and hence no addition can be made u/s 68 of the Act in the current year. At Para 4.3 of his order, he held as follows:
4.3 In this case also the claim is that the name of K.G. Construction Pvt. Ltd. was a mistake. The copy of the balance sheet has been referred to and as per ‘Annexure-3(1)’ in the books of K.G. Construction, share application money of Rs.50 lakh has been shown as loans and advances. So, the claim that K.G. Construction Pvt. Ltd was a typographical mistake and the correct share applicant was K.G. Construction, as supported by the papers appearing in the assessment folder in respect of the appellant and the K.G. Construction. The A.O has made the addition mainly on the plea that the balance sheet mentions K.G. Construction Pvt. Ltd. but papers of K.G. Construction were submitted. Reason for addition is more or less same as that for addition of loans against K.G. Construction. The A.O has not established a clear-cut case rather he has mixed up irrelevant facts and made the addition without any basis. The assessment order confuses things rather than clarifying why the addition was made. I don’t see any basis for the A.O’ action of addition of the share application money. He has not collected materials to support its findings. Thus, the other part of the ground no.2 challenging the addition of share capital is also allowed.
The ld. Departmental Representative could not controvert these factual findings. In the result, we uphold the same and dismiss this ground of Revenue.
Regarding the addition of Rs.3,15,00,000/- being loan taken from K.G. Construction, we find that the ld. CIT(A) after producing the letter of M/s K.G. Construction dated 13.02.2015 at Page No.9 of his order and giving a finding that some of the papers are apparently missing from assessment folder at Para 3.8 of Page No.10- 11 held as follow:
“3.8 I, therefore, find it strange as to why the A.O picked up this mistake in the second half of March, 2015 when the assessment was to get time barred. It is also difficult to appreciate the difficulty in production of parties when the A.O wanted the partners to be produced. It thus, gives the idea that the appellant was not ready to cooperate to the full extent in second half of March, 2015. The A.O also cannot be excused from the blame that he did not carry out the required verifications in the early stage of the assessment proceedings. It is excessive on the part of the A.O to demand sudden production of partners of K.G. Construction who are seen to be placed far away in Lucknow or in other places of U.P. If the A.O thought it fit to examine the partners personally, he should have issued the summons for the personal production or appearance u/s M/s. L.D.S. City Projects Pvt. Ltd. 131 of the I.T. Act directly to the partners in the face of reluctance of these partners to appear before the A.O on claimed intimations to these partners by appellant’s A/R for their personal production or appearance before the A.O in terms of the Assessing Officer’s direction noted in the order sheet on 18.03.2015. The A.O could have even started the process of personal examination of the partners a bit earlier because raising this issue and insisting for appearance towards end of March, 2015, was bound to face hurdles and it ran the risk of being not complied with. Having regard to the papers furnished by the appellant in early stages of assessment, the reply of K.G. Construction confirming the transaction and its identity by furnishing copies of several relevant documents and also considering the fact that insistence on personal appearance of Directors of K.G. Construction was suddenly raised in the last half of March, 2015, I get the impression that the A.O was looking for some excuse to make some addition. The A.O did not show any inclination to examine the partners of K.G. Construction in early stage of assessment proceedings or at least before reasonable length of time from the time barring dead line. I, therefore, hold that the A.O had no reasonable basis to make addition of loans claimed to have been taken from K.G. Construction. This part of ground no.2, therefore, is allowed.”
This factual finding of the ld. CIT(A) could not be controverted by the ld. DR. Thus, we have no reason whatsoever to interfere in this order of the ld. CIT(A). Hence we uphold the same.
In the result, the appeal of the Revenue is dismissed. Kolkata, the 10th May, 2019.