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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S. Viswanethra Ravi
Date of hearing : 08.01.2019 Date of pronouncement : 11.01.2019 ORDER Shri S.S. Viswanethra Ravi, JM:
This appeal by the Revenue against the order dated 17.08.2016 passed by the Commissioner of Income Tax (Appeals)-4, Kolkata for Assessment Year 2012-13.
Ground No.1 raised challenging the action of the CIT(A) in deleting the addition made by the Assessing Officer on account of unexplained cash credit u/s 68 of the Act.
Heard both the parties and perused the material available on record. The ld. AR submitted that the assessee is a non-banking financial corporation and referred to Page No.12 to show that certificate issued by the RBI to that effect. Further, he submitted that the assessee is engaged in money lending and referred to Page No.30 to show that assessee is a group company of BMW Industries Limited having engaged in various investment activities for the business of its M/s Jani Fincom Pvt. Ltd. Assessment Year: 2012-13 mentor company i.e. BMW Industries Ltd. The ld. AR argued that the addition made by the Assessing Officer u/s 68 of the Act is not maintainable as no money was received by the assessee in the year under consideration and referred to Para 5.1 of the impugned order. Further, he submitted that details relating objections raised by the Assessing Officer were submitted in the assessment proceedings and referred to Paper Book containing Pages 1 to 214. The ld. AR placed reliance on the decision of Hon’ble High Court of Calcutta which is placed on record at Page No.209 of the Paper Book in the case of Jatia Investments Co. vs. CIT and argued that when there is no real credit of cash in the books of accounts, the question of inclusion of the amount of the entry as unexplained cash credit cannot arise and supported order of CIT(A).
4. The ld. DR vehemently opposed the same. He submits that there is no basis for the finding of CIT(A) that no cash credit received during the relevant previous year. The CIT(A) did not refer any documentary evidence to arrive such conclusion. He simply proceeded to place reliance on the submissions of the assessee and deleted the addition. The ld. AR did not file any evidence before this Tribunal even to the effect showing that no money towards share capital and share premium was received during the year under consideration. Further, he submits that the Assessing Officer recorded no business activity in his assessment order, but, assessee has shown having business activity. Even to that effect no evidence was filed before the Assessing Officer to show that the assessee has engaged in business activity. Further the Assessing Officer issued summons u/s 131 of the Act to the Directors of the assessee company to produce investors for examination and there was no compliance by producing the directors of share subscribing companies. The assessee failed to prove the genuineness, creditworthiness and identity of the M/s Jani Fincom Pvt. Ltd. Assessment Year: 2012-13 share subscribing companies before the Assessing Officer and the entire share capital and share premium remained unexplained.
The ld. DR further submits that no proof of shares have been produced before the Assessing Officer and the Assessing Officer particularly mentioned the dumping of documents are not sufficient, that the onus is on the assessee to explain the same. The ld. DR argued that the assessee totally failed to prove the genuineness, creditworthiness and identity of the share investing companies. Further even if this appeal is covered by the decision of Hon’ble High Court of Calcutta in the case of Jatia Investments Co. vs. CIT as pointed out by the ld. AR, the ld. DR argued as there was no examination of documents by the Assessing Officer and the matter should be remanded to the file of Assessing Officer for his examination in terms of decision of Hon’ble High Court of Calcutta.
On perusal of the assessment order, it is noticed as rightly pointed out by the ld. DR, that the Assessing Officer recorded that there was no business income by the assessee, it is also borne by the record that no compliance was made by the assessee in bringing the directors of share subscribing companies for examination in the assessment proceedings. It is observed from Para 3 of the Assessing Officer’s order, it was recorded that non-compliance in respect of summons u/s 131 of the Act. It is also noted that the Assessing Officer placed reliance on the order of this Tribunal in the case of Bishaka Sales Pvt. Ltd. for the proposition that dumping papers and documents on the table of the assessing authorities does not in any way mean compliance and what has been created and knotted up by the assessee must be answered and unraveled only by the assessee and none else would know the facts better than the assessee itself. Though the contention was made by the ld. AR that all the details as filed before us through paper books from Pages 1 to 214 before
M/s Jani Fincom Pvt. Ltd. Assessment Year: 2012-13 Assessing Officer, they were not examined, in the assessment proceedings, therefore, we find force in the arguments of ld. DR in remanding the matter to the file of the Assessing Officer for his consideration.
Further on perusal of the order of the CIT(A), we find as rightly pointed out by the ld. DR that there was no reference to the documentary evidence to arrive at a finding that no amount was received by the assessee during the year under consideration. Therefore, we are unable to accept the contentions of the ld. AR in supporting the order of ld. CIT(A) in arriving such conclusion. Since discussed above regarding non-compliance in respect of summons issued u/s 131 of the Act and non-examination of documentary evidence, we deem it proper to remand the issue to the file of the Assessing Officer for his fresh consideration. The assessee is at liberty to file evidence, if any, in support of its claim. Therefore, Ground No.1 raised by the assessee is allowed for statistical purposes.
3. Ground No.2 is relating to disallowance as made u/s 14A of the Act as confirmed by the CIT(A). It is submitted that the assessee earned exempt income of Rs.6,45,457/- and the total expenditure incurred of Rs.10,500/-. It is noted that the Assessing Officer invoked Rule 8D(2)(iii) and disallowed Rs.5,01,835/-. It is noted that the CIT(A) recorded that the assessee earned no exempt income at Para 6.1 of his order and deleted the said disallowance as not maintainable by placing reliance on the decision of Hon’ble Delhi, Punjab & Haryana High Court and Allahabad High Court. Before us as discussed above, the ld. AR submitted that the assessee earned exempt income and incurred expenditure and we find contradictions in the submissions of the ld. AR as well as finding recorded by the CIT(A). Further, we find no finding was recorded by Assessing Officer that assessee earned exempt income and incurred expenditure in the M/s Jani Fincom Pvt. Ltd. Assessment Year: 2012-13 assessment record. Therefore, we deem it proper to remand the matter to the file of the Assessing Officer for his fresh adjudication. The assessee is in liberty to file evidence, if any, in support of its claim. Therefore, order of CIT(A) is set aside. Thus Ground No.2 raised by the assessee is allowed for statistical purposes.
In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 11.01.2019.
Sd/- Sd/- [J. Sudhakar Reddy] [S.S. Viswanethra Ravi] Accountant Member Judicial Member Dated : 11.01.2019 Place : Kolkata RS, Sr.PS Copy of the order forwarded to: Appellant –ITO, Ward-4(1), Kol, P-7, Chowringhee Square, 5th 1. Floor, Kol- 700 069. 2 Respondent – M/s. Jani Fincom Pvt. Ltd., 12/2, Park Mansion, 57A, Park Street, Kolkata – 700 016. 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata