M/S. CEMFIL ENTERPRISES LTD.,KOLKATA vs. ITO, WARD - 6(1), KOLKATA, KOLKATA

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ITA 1743/KOL/2017Status: DisposedITAT Kolkata29 August 2018AY 2007-083 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee had provided substantial documentation in response to notices, which were not considered by the lower authorities. Therefore, the assessee deserves another opportunity to prove the investor details.

What were the facts?

The assessee's share capital of ₹104,31,70,000/- was added to its income as unexplained. The Assessing Officer and CIT(A) proceeded ex parte, alleging the assessee failed to prove the identity, genuineness, and creditworthiness of investors.

What were the issues?

Whether the lower authorities erred by not considering the evidence submitted by the assessee and proceeding ex parte, thus requiring a remand for proper examination of share capital and premium.

Which sections of the Income-tax Act were involved?

Section 68,Section 131,Section 133(6),Section 144,Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA

Before: Shri P.M.Jagtap & Shri S.S.Godara

आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2007-08 calls into question correctness of the Commissioner of Income Tax (Appeals)-23, Kolkata’s ex parte order dated 02.05.2017, passed in case No.143/CIT(A)-23/W-6(1)/16-17, upholding the Assessing Officer’s action adding its share capital of ₹104,31,70,000/- to be unexplained u/s 68 in assessment order dated 20.03.2015, involving proceedings u/s 144/263/143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

1.

No. 1743/Kol/2017 A.Y. 2007-08 M/ss Cemfil Enterprises Ltd. Vs. ITO Wd-6(1), Kol. Page 2 2. We notice at the outset that both the lower authorities have added assessee’s share capital of ₹104,31,70,000/- received in the relevant previous year to be unexplained on account of its alleged failure in proving identity, genuineness and creditworthiness of the investors concerned. The Assessing Officer had earlier framed the re-assessment in question on 07.05.201 assessing assessee’s total taxable income at ₹1,21,521/- against the returned income of ₹96,051/-. The CIT exercised his revision jurisdiction vested u/s. 263 of the Act thereafter and issued directions dated 28.03.2013 to the Assessing Officer for framing the above assessment afresh after carrying out through detailed enquiries of the share application money concerned. He accordingly treated the earlier assessment to be lacking necessary enquiries to be a fit case for exercising revision jurisdiction as the same was erroneous causing prejudice to the interest of the Revenue.

3.

We notice that the Assessing Officer thereafter took up consequential proceedings. He issued section 131 summons to both assessee as well as all the investor parties concerned. He alleged in assessment order dated 20.03.2014 that none of them appeared so as to satisfy the relevant parameters of identity, genuineness and creditworthiness of the share premium @ 990/- per share in issue. He therefore treated the above sum to be unexplained as well as its own money introduced in the garb of share capital including very hefty premium thereupon. Suffice to say, the CIT(A) has upheld the same in his lower appellate order passed ex parte.

4.

Both the learned counsel reiterate their respective stands against and in support of impugned unexplained cash credits addition in the nature of share capital / premium. Learned Departmental Representative vehemently contends that assessee had received the above premium as a device for ploughing back its own money through very exorbitant premium @ 990/- per share. He highlights that the Assessing Officer as well as CIT(A) have finalized ex parte proceedings in the event of assessee not filing any details at all in support. We find no reason to concur with Revenue’s instant arguments. It emerges first of all from page 1 to 3 that the assessee had changed its address as per the Ministry of Corporate Affairs details. Coupled with this, it emerges that assessee as well its investors had very well responded to section 133(6) notice by filing their respective bank statements, balance-sheet, profit and loss

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