M/S RACHNA DEALERS(P) LTD.,KOLKATA vs. ITO, WARD-2(4), DURGAPUR, KOLKATA

The assessee in the present case is a Company, which is engaged in the business of investment and trading in shares. During the year under consideration, the assessee-company had received fresh share capital money including share premium amounting to Rs.10,00,50,000/-. In order to verify the identity and capacity of the share applicants as well as genuineness of the relevant transactions, summons under section 131 Assessment Year: 2012-2013 Rachna Dealers Pvt. Limited was issued by the Assessing Officer to the Director of the assessee- company with a request to produce the Directors of the share subscriber companies. The assessee sought some time to comply with the requirement of the Assessing Officer, but as the case was getting time- barred the Assessing Officer could not offer sufficient time as required by the assessee. He accordingly proceeded to hold the entire share capital and share premium amount of Rs.10,01,50,000/- as unexplained cash credit and an addition to that extent was made by him to the total income of the assessee under section 68 in the assessment completed under section 143(3) vide an order dated 27.03.2015. He also made a further addition of Rs.23,665/- on account of disallowance made under section 14A read with Rule 8D.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) and since there was no satisfactory compliance on the part of the assessee to the notices issued by him fixing the said appeal for hearing from time to time, the ld. CIT(Appeals) dismissed the appeal of the assessee vide his appellate order dated 31.10.2016 passed ex-parte. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. Besides explaining the non- compliance on the part of the assessee before the ld. CIT(Appeals), the ld. Counsel for the assessee has submitted that notices under section 133(6) were issued by the Assessing Officer to all the share subscriber- companies and in response to the said notices, the relevant documentary evidence required by the Assessing Officer in the form of their confirmations, Income tax returns, Bank statements, source of share subscription, audited balance-sheet, etc. were duly filed by them. He has invited our attention to the copies of the said documents placed at page Assessment Year: 2012-2013 Rachna Dealers Pvt. Limited no. 15 to 185 of his paper book and submitted that this entire evidence filed by the share subscriber companies has not been considered by the Assessing Officer. He has contended that since this evidence is very much relevant to adjudicate the issue relating to share capital and share premium amount received by the assessee during the year under consideration in terms of section 68, the matter may be sent back to the Assessing Officer for passing the assessment afresh after taking into consideration the said evidence. Although the ld. D.R. has contended that the matter should be remitted back to the ld. CIT(Appeals) in view of his impugned order passed ex-parte and not to the Assessing Officer, we find that the voluminous evidence filed by the concerned share subscriber companies is relevant to decide the main issue involved in the assessee’s case and since the Assessing Officer has neither discussed nor considered the said evidence, the matter should appropriately be sent to the Assessing Officer for deciding the issue afresh in the light of the said evidence. We, therefore, set aside the impugned order passed by the ld. CIT(Appeals) ex-parte and remit the matter back to the Assessing Officer for deciding the same afresh after verifying the relevant documentary evidence and after giving the assessee proper and sufficient opportunity of being heard.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on February 14, 2019.

Sd/- Sd/- (Satbeer Singh Godara) (P.M. Jagtap) Judicial Member Vice-President (KZ) Kolkata, the 14th day of February, 2019 Copies to : (1) M/s. Rachna Dealers Pvt. Limited, P.K. Himmatsinghka, 41, B.B. Ganguly Street, 2 nd Floor, Kolkata-700 012 Assessment Year: 2012-2013 Rachna Dealers Pvt. Limited