CSQUARE RETAIL INDIA PVT. LTD.,KOLKATA vs. ITO, WARD-7(1), KOLKATA, KOLKATA

The assessee’s only substantive ground challenges correctness of both the lower authorities’ action treating its share capital / premium of ₹9,48,00,000/- (correct figure 1,51,00,000) treated as unexplained cash credits during the course of assessment as upheld in lower appellate Csquare Retail India Pvt. Ltd. Vs. ITO Wd-7(1) Kol. Page 2 proceedings. Relevant facts are in a narrow compass. This assessee is a company engaged in investments business. There is no dispute about the assessee having issued shares of ₹10/- per at a premium of ₹312/- value each. The Assessing Officer issued section 131 notice to verify identity, shareholders as well as genuineness and creditworthiness of relevant transactions. It emerges from assessment order dated 28.03.2015 that the said notice sought copy of identity proof, annual return for assessment year 2012-13 with relevant Forms 2 & 5 etc., ROC service, audited accounts, bank statements, and income-tax acknowledgements. The Assessing Officer records in his assessment order that all this process failed to evoke any response. He thus took recourse to best judgement assessment. A detailed discussion followed regarding dubious mechanism adopted by such kind of assessees in issuing share premium at exorbitant rates through a circuitous route. The Assessing Officer therefore treated the assessee’s share capital / premium of ₹9.484 crores(correct of figure 1.5 crores) to be unexplained cash credits u/s. 68 of the Act as affirmed in lower appellate proceedings.

We have given our thoughtful considerations to rival contentions. Both parties reiterate their respective stands against and in support of the impugned addition. It transpires from the case file that both the lower authorities held the assessee not to have responded despite various hearings of notices so as to prove identity, genuineness and creditworthiness of the share capital / premium. Relevant records speak otherwise. Paper book comprising 140 pages suggests that the assessee had filed all the relevant details of investors with necessary documents of income-tax returns, bank statement, PAN card, shares allotted, premium per shareholder, audited balance-sheet, profit and loss account, confirmations of the parties. There is no dispute that neither of the lower authorities has considered the same. The Revenue fails to dispute any material to this effect during the assessment or lower appellate proceedings. We therefore deem it appropriate that the Assessing Officer needs to examine the entire issue afresh as per law after Csquare Retail India Pvt. Ltd. Vs. ITO Wd-7(1) Kol. Page 3 affording adequate opportunities of hearing to the assessee. He shall also undertake independent enquiries as well to verify the share application premium as well independently and not through the taxpayer.