M/S. GOVINDAM PROJECTS PVT. LTD.,KOLKATA vs. DCIT, CIRCLE-9(1), KOLKATA, KOLKATA

Learned counsel pleads during the course of hearing that assessee had very well engaged its counsel for main appeal’s hearing on 21.06.2018 instituted on 07.04.2017. It is thereafter submitted that the said counsel could not appear because of some wrong date noted in the daily register. The assessee also highlights the fact that its default in not putting in appearance on 21.06.2018 was first instance of hearing and therefore, the same is neither intentionally nor deliberate. Learned Departmental Representative is very fair in not disputing all these averments in the instant miscellaneous application. We thus restore assessee’s main appeal at its original number. Assessee’s miscellaneous application No. 128/Kol/2018 is accepted.

Both the Learned Representative(s) thereafter agree that instant main appeal ITA 679/Kol/2017 can also be disposed of since the CIT(A) has passed his lower appellate order ex parte order in affirming the Assessing Officer’s action treating its share application / premium amount of ₹1.50 crores to be unexplained cash credits u/s. 68 of the Act. We thus take up main appeal itself for hearing.

There is no dispute about the basic fact that assessee had received the share application / premium money of ₹1,50,00,000/- in the impugned assessment year by issuing ₹10/- share each at a premium of ₹40/- to eight parties namely, M/s Anant Holding Pvt. Ltd, Paxton Commodities Pvt. Ltd., Aroto Trade India Pvt. Trimudra Credit Ltd., Pronoma Fiscal Services, Spotlite Dealer Pvt. Ltd., Pingle Commodtrade MA No128/Kol/201& & M/s Govidam Project Pvt. Ltd. vs. DCIT, Cir-9(1), Kol Page 3 Pvt. Ltd. & Ultra Marketing Pvt. Ltd. involving various amounts ranging between ₹ 5 lac to ₹ 25 lac. It emerges from the case file that the said parties had placed on record their documents in the nature of bank statements, income tax returns, balance-sheets, returned income, revenue from operations etc., in response to sec. 133(6) notices. The Assessing Officer observed in assessment order dated 16.03.2015 that the said material indicated meagre sources of income of the concerned entities. He thus treated the said investors as mere sham companies without having operations as well as any substantive source of income. He was of the opinion that the assessee had issued its shares at the above high rate of premium by adopting the layering of transactions raising serious doubts on identity, genuineness and creditworthiness were raised thereupon in light of case law Sumati Dayal vs. CIT (1995) 80 Taxman 89/214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) to hold the share premium in question of 150,00,000 as unexplained cash credits as affirmed in the lower appellate proceedings vide CIT(A)’s order under challenge.

We have given our thoughtful consideration to rival contentions. Both parties reiterate their respective stands against and in support of the impugned addition. It emerges from the case file that assessee had prima facie discharged its burden in producing all details of its share investors before the Assessing Officer who did not take recourse to sufficient independent enquiries for verification thereof during the course of assessment. This tribunal’s decision in Shubh Laxmi Vanijya Pvt. Ltd. vs. CIT 155 ITD 171 (Kol) as upheld upto the hon'ble apex court has affirmed the CIT’s sec. 263 directions to assessing authority for conducting such independent verification of the investors entities. We draw strong support therefrom to resolve the instant lis back to the MA No128/Kol/201& & M/s Govidam Project Pvt. Ltd. vs. DCIT, Cir-9(1), Kol Page 4 Assessing Officer for finalizing afresh proceedings as per law after affording adequate opportunity of hearing to assessee in light thereof.