ITO, WD-4(1), KOLKATA, KOLKATA vs. M/S RISHIKESH COMMERCIAL CO. PVT. LTD., KOLKATA

This appeal is filed by the revenue is directed against the order of Ld. CIT(Appeals) – 2, Kolkata dated 30.06.2015 and the solitary issue involved therein relates to the deletion by the Ld. CIT(A) of the addition of Rs. 4,32,80,000/- made by the A.O. by treating the share capital and share premium received by the assessee as unexplained cash credit u/s 68.

The assessee in the present is a company which filed its return of income for the year under consideration on 28.09.2012 declaring a total income of Rs. 33,064/-. During the course of assessment proceedings, the claim of the assessee of having received share capital and share premium aggregating to Rs. 4,32,18,000/- was examined by the A.O. In this regard, he issued a notice u/s 131 requiring the 2 Assessment Year: 2012-13 M/s. Rishikesh Commercial Co. Pvt. Ltd. assessee to appear personally along with the principal officer, Director of all Investors Company and /or individual investors as the case may be to verify the identity and creditworthiness of the share holders and genuineness of the transactions made by them with the assessee company. He also required the assessee to explain the basis of high share premium amount received by it and even the justification for the same. As noted by the A.O. in his order, the assessee however failed to comply with these requirements in spite of sufficient opportunity given to it and also failed to establish on evidence the identity and creditworthiness of the share holders and genuineness of the relevant transactions. He accordingly treated the entire amount of share capital and share premium received by the assessee during the year under consideration as unexplained cash credit by relying inter alia on the decision of Hon’ble Supreme Court in the cases of CIT vs Durga Prasad More 82 ITR 540 and Sumati Dayal vs CIT 214 ITR 801 and added the said amount to the total income of the assessee u/s 68 in the assessment completed u/s 143(3) vide an order dated 09.03.2015.

Against the order passed by the A.O. u/s 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) and after considering the submissions made by the assessee as well as the material available on record, the Ld. CIT(A) deleted the addition made by the A.O. u/s 68 for the following reasons given in his impugned order: “It is seen that complete details in respect of all the share applicants are filed by the appellant. No materials are brought on record by the A.O. to find any fault with the details submitted by the appellant company. It is further stated that case laws relied upon by A.O. are distinguishable both on facts as well as on law. Hon’ble Apex Court observations are factually

We have heard the arguments of both the sides and also perused the relevant material available on record. As rightly submitted by the learned DR, the primary onus was on the assessee to explain the relevant cash credit in the form of share capital and share premium in terms of section 68 by establishing the identity and creditworthiness of the concerned share holders as well as the genuineness of the relevant transactions. A perusal of the assessment order shows that the assessee had failed to discharge the said onus satisfactorily during the course of assessment proceedings before the A.O. in spite of sufficient opportunity given in this regard. It appears that the Ld. CIT(A) however overlooked this vital and important aspect and deleted the addition made by the A.O. u/s 68 by treating the share capital and share premium as unexplained by putting the entire onus on the Assessing Officer which actually was on the assessee. At the time of hearing before us, even the learned counsel for the assessee has not been able to dispute this position clearly evident from the orders of the authorities below. He, however has contended that one more opportunity may be given to the assessee to explain the relevant cash credits in the form of share capital and 4 Assessment Year: 2012-13 M/s. Rishikesh Commercial Co. Pvt. Ltd. share premium in terms of section 68 by sending the matter back to the A.O. We find merit in this contention of the learned counsel for the assessee and since the learned DR has also not raised any objection in this regard, we set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the A.O. for deciding the same afresh after giving the assessee one more opportunity to explain the relevant cash credits in terms of section 68.

In the result, the appeal of the revenue is treated as allowed for statistical purpose. Order Pronounced in the Open Court on 24th May, 2018.