M/S. JAGADAMBA DEALCOM PVT. LTD.,KOLKATA vs. ITO, WARD-6(2), KOLKATA, KOLKATA

- This assessee’s appeal for assessment year 2008-09 arises against Commissioner of Income Tax (Appeals)-6, Kolkata’s order dated 09.03.2017 passed in case No.298/CIT(A)-6/Kol/2015-16, ex parte affirming Assessing Officer’s action adding unexplained share capital amount of ₹7,65,00,000/- in assessment order dated 19.03.2014 involving proceedings u/s. 144/263 of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

We come to the relevant facts pertaining to above sole issue of section 68 unexplained share capital addition of ₹7,65,00,000/- lakh. This assessee is a company engaged in investment and share trading business. It filed its return on 25.03.2009 stating nil income. The same stood processed. The Assessing Officer thereafter formed reasons to believe that assessee’s M/s Jagadamba Dealcom Pvt. Ltd. Vs. ITO Wd-6(2) Kol. Page 2 taxable income liable to be assessed had escaped assessment since an amount of 75,000/- in the nature of service charges had not been considered in its books of account. He initiated section 148 proceedings. This followed the re-assessment in question framed on 28.05.2010 determining total income as ₹52,810/-.

It transpires that the CIT thereafter revised the above assessment vide order dated 28.03.2013 in respect of share capital in question amounting to ₹7,65,00,000/- consisting of 3,82,500 shares of having face value of 10/- each issued at a premium of ₹190/- per share. He directed the Assessing Officer to frame afresh assessment after initiate examining its genuineness along with source of share capital in respect of each and every shareholder by conducting independent enquiry not through assessee, examine directors’ vis- à-vis corresponding change in directorship on oath as well as their credentials to arrive at a logical conclusion regarding their controlling interest and to consider the source of realization from liquidation of the assets shown in the balance-sheet after such a change; if any. There is no doubt that these revision directions have attained finality.

The Assessing Officer took up consequential proceedings. He issued u/s. 133(6) notice(s) to all the corresponding nine entities subscribing the impugned sham premium. These notices stood returned with identical remarks “not known” by the postal authorities. The Assessing Officer then issued section 131 to assessee’s directors dated 26.02.2014. We notice from the assessment order dated 19.03.2014 that assessee did not appear. This made the Assessing Officer to conclude that the impugned amount of ₹7,65,00,000/- did not satisfy the relevant criteria of identify, genuineness and creditworthiness so as to justify the share premium in question. Needless to say, he also made other disallowance(s) of preliminary expenditure consultancy fees as well as u/s 14A of the Act in his ex parte order. The CIT(A) confirms the same on account of assessee’s failure to appear in lower appellate proceedings.