ITO, WARD - 6(1), KOLKATA, KOLKATA vs. M/S. COOLHUT MARKETING PVT. LTD., KOLKATA

- This Revenue’s appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (Appeals)-23 Kolkata’s order dated 03.07.2017 passed in case No.181 CIT(A)-23/Wd-6(1)/16-17, involving proceedings u/s 144 of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

The Revenue’s sole substantive grievance canvassing in instant appeal seeks to reverse the CIT(A)’s action deleting the sec. 68 addition of unexplained cash credits amounting to ₹252,00,000/- lac in the nature of share capital / premium made by the Assessing Officer in assessment order dated 13.03.2015. Learned CIT-DR vehemently contends during the course of hearing that the Assessing Officer had rightly made the impugned addition which ought to have been affirmed in the lower appellate proceedings. The assessee on the other hand files before us a copy of Assessing Officer’s ITO Wd-6(1), Kol. Vs. M/s Ccolhut Marketing Pvt. Ltd. Page 2 remand report submitted before the CIT(A) holding its impugned share capital / premium to be well in order as follows:- Sub: Remand Report under Rule 46A of Income Tax Act, 1961 in the case of M/SCoolhut Marketing, PAN - AAECC7664F and the assessment year 2012-13 - Submission thereof. On verification of paper book, records containing in respective assessment folder it has been observed that Notice u/s 142( 1) dated 27.08.2014 issued by post but return unserved with post mark" Insufficient address", Reminder for compliance issued, to assessee company vide letter dated 26.12.2014 which again return unserved. Summon u/s 131 issued to Directors of assessee company on 27.01.2015. Date fixed for personal attendance along with books of accounts was on 06.02.2015. Summon notice dated 27.01.2015 return unserved with postal mark "Moved." On 12.02.2015 assessee company filed copy of audited balance sheet, P&L Account &ITR. A show cause notice also been issued to assessee company vide letter dated 02.03.2015 by post. Assessment order u/s 144 passed on 13.03.2015. One of the reason for addition was-" The director of assessee company were say in this matter. The company credited the amount of Rs.25200000/- in its account without any reason and logic. The amount is created to legalized black money. The amount of share premium including face value of Rs.252000001-found credited to its account are unexplained. Accordingly provision of section u/s 68 of Income Tax At, 1961 the amount of Rs.25200000/- is added back to total income of the assessee company." As per the paper book investor companies submitted list of directors, audited balance sheet and P&L Account of investor companies, ITR acknowledgement in the case of investor companies, ledger, 'source of investment, agreement made between assessee and investor company in non-judicial paper ,copy of GAR-7, copy of Form 2 and copy of allotment letters. On cross verification of accounts maintained by investor companies as available in paper book and claim of allotment of equity shares at premium by assessee company no difference could be found. At the time of examination of 'paper book Sri V.K Jain, FCA said that company received no summon and show cause notice as referred in assessment order. In support of case assessee cited the order of ITA, Kolkata in the case of Wellman Wacoma ltd Vs DCIT-Circle-8 pronounced on 13.04.2016 (ITA Nö.282/KoI/2012 & 216 CTR195 (SC). Copy of order passed by Kolkata High Court says in the case of CIT Vs. Roseberry Mercantile(P)Ltd dated 10.01.2011 - " On appeal the Learned CIT(A) by following the decision of the supreme Court in the case of CIT Vs M/s Lovely Exports Pvt. Ltd reported in (2008) 216CTR 195 allowed the appeal by holding that share capital/premium of Rs.2400000/- received from the investors was not liable to be treated under section 68 as unexplained credits and it should not be taxed in the hands of the appellant company. On examination of statement of accounts maintained by investor companies it was found that • Most of the investors had sufficient funds • Capital of most of the investor companies were huge and applied in investment in quoted shares/unquoted shares. • Investor companies during FY 2011-12 purchased quoted and unquoted shares of than one company. • Investor companies maintained books of accounts and audited by CA.