M/S SAMBHABNA REALTORS PVT. LTD.,KOLKATA vs. ITO, WARD-1(3),KOLKATA, KOLKATA

Per Shri A.T.Varkey, JM

M/s. Sambhabna Realtors Pvt. Ltd., AY 2012-13 subscribers. Since the said exercise of the AO had been carried out behind the back of the assessee and assessee could not assist the department to bring the directors of the share subscribing companies and since the addition was based only on the basis that the directors of the share subscribing companies did not turn up before the AO, the assessee pleads for one more opportunity before the AO, so that the assessee company can make all endeavors to help the AO to locate the directors of the share subscribing companies and prove the identity, creditworthiness and genuineness of the share capital and share premium to his satisfaction. We note that the assessee had filed documents to substantiate the identity, creditworthiness and genuineness of the share subscribers/shareholders. However, the AO has not made any adverse remark against the documents filed before him. Only on the basis that AO’s notice u/s. 131 was not responded to by the directors of the share subscribers that the AO has made the additions. According to the Ld. AR of the assessee, the shares for premium was issued in AY 2012-13 i.e. for transaction between 01.04.2011 to 31.03.2012 and chances of the Directors of the share subscribers changing their address cannot be ruled out. So if the assessee was aware that AO intended to summon the directors of the share subscribing companies, then the assessee would have made all endeavors to collect the change in address if any, and inform the AO, so we note that in the aforesaid factual matrix as discussed, no proper opportunity was given to assessee by AO during the assessment proceedings and so we are, therefore, of the opinion that assessee did not get proper opportunity before the AO during assessment proceedings. The Hon’ble (three judge bench) of the Hon’ble Supreme Court in Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) has held as under:

“It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : “We will straightaway agree with the assessee’s submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard.” That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 2 M/s. Sambhabna Realtors Pvt. Ltd., AY 2012-13 Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus : “1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income- tax Officer had not given a proper opportunity of hearing to the assessee ?” In our opinion, there can only be one answer to this question which is inherent in the question itself : in the negative and in favour of the assessee. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated.”

……We also note that the Ld. CIT after looking into the pernicious practice of converting black money into white money has given the guidelines to AO as to how the investigation should be conducted to find out the source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld by the Tribunal as well as by the Hon’ble Calcutta High Court as well as the SLP has been dismissed by the Hon’ble Supreme Court, similar order of the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon’ble Supreme Court (three judges bench) in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon’ble High Court, Tribunal and CIT(A)’s orders and remanded the matter back to AO for fresh assessment. So, since there was lack of opportunity as aforestated it has to go back to AO…….

“41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established.

Order is pronounced in the open court on 20.07.2018. Sd/- Sd/- [ Dr. A. L. Saini] [A.T. Varkey] Accountant Member Judicial Member

Dated : 20th July, 2018 JD.(Sr.P.S.)

Copy of the order forwarded to: