ITO, WD-6(2), KOLKATA, KOLKATA vs. M/S JACKPOT TOWERS PVT. LTD., KOLKATA

The assessee is an investment company and filed its return of income declaring income of Rs.3253/- on 12/08/2011. The assessee company raised equity share capital of Rs.23,77,00,000/- at a premium of Rs.23,53,23,000/-. The Assessing Officer completed assessment u/s 143(3) of the Act, on 26/03/2014 wherein he made an addition of Rs.23,77,00,000/- u/s 68 of the Act of these receipts of share capital and share premium on the ground that the creditworthiness of the share holders could not be established. At page 5 of his order, he states that the notice u/s 131 of the Act, were issued to the Directors of the assessee company. He also states that the assessee failed to produce the investors who invested in shares at a premium, in spite of the repeated opportunities. Hence he made the addition u/s 68 of the Act. 2.1. On appeal, the ld. First Appellate Authority has granted relief by stating that the Assessing Officer has not verified the details, documents submitted by the assessee. He

Aggrieved, the revenue is in appeal before us. 3.1 The ld. Departmental Representative requested that the issue be restored to the file of the Assessing Officer for fresh adjudication as the material consideration by the ld. CIT(A) was not before the ld. Assessing Officer. The ld. Counsel for the assessee opposed the same.

We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 4.1. We find that in similar cases this Bench of the Tribunal has been restoring the matter to the file of the Assessing Officer for fresh adjudication, in accordance with law as the Assessing Officer has not granted sufficient opportunity to the assessee to substantiate its case and as the ld. CIT(A) has not applied the propositions of law laid down by the Tribunal on such matters where substantial share premium is charged by a company which has negligible turnover and negligible assets. Hence, the order of the ld. CIT(A) cannot be sustained. For the sake of brevity we extract one such order below. 5. The ‘D’ Bench of the ITAT Kolkata Bench, in the case of Wise Enclaves Pvt. Ltd. –vs- I.T.O. in Assessment Year : 2008-09, under similar circumstances held as follows:-

The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further enquiry' in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld." 7.2. In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the decision of Hon'ble Delhi High Court supra, we deem it fit and appropriate, in the interest of justice and fairplay, to remand the matter back to the file of the ld AO for de novo assessment and to decide the matter as mandated by the ld CIT in section 263 order, after giving sufficient opportunity of being heard to the assessee. Accordingly, the Grounds raised by the assessee are allowed for statistical purposes.”

In the result, appeal of the revenue is allowed for statistical purposes.