SAMRIDDHI TRADELINK PVT. LTD.,HOWRAH vs. ITO, WARD - 13(4), KOLKATA, KOLKATA

The assessee’s sole substantive grievance canvass instant appeal challenges the correctness of both the lower authorities action treating its share application / premium of ₹16,12,08,980/- u/s 68 of the Act. Case file suggests that the Assessing Officer had framed the assessment / re- Samriddhi Tradelink Pvt. Ltd. Vs. ITO Wd-113(4), Kol. Page 2 assessment on 04.06.2012 not making any addition or disallowance under the instant issue. The PCIT thereafter exercised his revision jurisdiction vested u/s 263 of the Act on 20.03.2015 directing the Assessing Officer to examine identity genuineness and creditworthiness alongwith source of realization from the liquidation of assets in the balance-sheet after the changes of directors, if any, so far as the above stated share capital is concerned.

The Assessing Officer took up consequential proceedings. He appears to have issued sec. 131 notice, 133(6) process and other show-cause notice(s) as well to verify the above aspects relating to assessee’s share application money. He concluded in his assessment order dated 22.02.2016 that the assessee had failed to appear in compliance of PCIT’s directions. All this made into treat the impugned share application money of ₹16,12,08,980/- as unexplained cash credits. The CIT(A) has confirmed the same in his lower appellate order ex parte after observing that the relevant notice of hearing could not be served on the assessee.

We have given our thoughtful consideration to rival contentions against and in support of the impugned addition of unexplained cash credits relating to assessee’s share application money of ₹16,12,08,980/-. A perusal of the case file suggests that both the Assessing Officer as well as the CIT(A) have not complied with the PCIT’s revision directions to examine genuineness and source of assessee’s share capital in respect of each and every shareholders by conducting independent inquiry not through the taxpayer itself. Learned Departmental Representative fails to dispute this clinching fact during the course of hearing. It further emerges that the CIT(A) has also not even dealt with the assessee’s details on record in support of its share application money as stipulated u/s 250(6) of the Act requiring formulation of points determination followed by a detailed adjudication. We therefore conclude in this peculiar factual backdrop of fact that Assessing Officer needs to re-do the Samriddhi Tradelink Pvt. Ltd. Vs. ITO Wd-113(4), Kol. Page 3 entire exercise afresh in light of PCIT’s revision directions after affording adequate opportunityof hearing to the taxpayer.