M/S JAINEX METALIKS LTD.,KOLKATA vs. THE ACIT, CIR-3, KOLKATA, KOLKATA

We have heard rival submissions. There is no dispute that the Assessing Officer had made impugned addition after noticing the difference in gross profit of Rs.5,86,150/- on account of non inclusion of excise duty in closing stock. The assessee appears to have filed its auditor’s explanatory note dated 12/12/2018 before the CIT(A) whilst seeking to reconcile the impugned difference. The same stands summarily rejected for the sole reason that this reconciliation ought to have been submitted with the original tax audit report during the course of assessment only. Neither of the lower 5 Assessment Year: 2005-06 M/s. Jainex Metaliks Ltd authorities has considered the assessee’s details in its explanatory notice reconciling the impugned difference on factual aspects in other words so as to verify the consequential figures in either of the two conditions namely exclusion and inclusion of excise duty. We therefore deem it proper to restore the instant issue back to the file of the Assessing Officer for factual verification of assessee’s reconciliation. The assessee is directed to produce all the relevant details within three effective opportunities of hearing since we are dealing with Assessment Year 2005-06. This former substantive ground is treated as accepted for statistical purposes in above terms.

Next comes the assessee’s second substantive ground seeking to delete the addition of Rs.4,50,000/- on account of share application money received from S/Sh. L.N. Dash, Shri Surendra Kothari & Shri Raju Kumar Bhansali. Both the lower authorities appear to have taken a very strong note of cash deposits made immediately before the impugned share subscription in subscribers’ accounts to conclude that it is the assessee’s undisclosed income which has been ploughed back to the system through the said investors by using them as a dummy. We see no reason to express our agreement with the impugned addition. We find that the assessee has filed all details of its three subscribers i.e., addresses, PANs, income tax returns and bank statements etc. right from scrutiny onwards. It had in fact produced one of the investor Shri Raju Kumar Bhansali during the assessment proceedings as well. There is no evidence much less cogent one quoted at either of the lower authorities behest to dispute the same apart from making the addition on the foregoing conjectures and surmises. Learned Departmental Representative fails to dispute that the said cash deposits also stand accepted as genuine in the hands of the three subscriber parties. We conclude in these facts that the assessee has sufficiently discharged its burden of having proved the identity, genuineness and creditworthiness of its three investors. We therefore delete the impugned cash credit addition of Rs.4,50,000/- .

This assessee’s appeal is partly allowed in above terms. Kolkata, the 26th day of April, 2019. Sd/- Sd/- [A.L. Saini] [S.S. Godara] Accountant Member Judicial Member Dated : 26.04.2019 {SC SPS} Copy of the order forwarded to: 1. M/s. Jainex Metaliks Ltd 11, Brabourne Road 3rd Floor Kolkata – 700 001

Assistant Commissioner of Income Tax, Circle-3, Kolkata