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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri S.S.Godara & Shri, M. Balaganesh
आदेश /O R D E R PER S.S.Godara, Judicial Member:- This Revenue’s appeal for assessment year 2012-13 arises against Commissioner of Income Tax (Appeals)-3 Kolkata’s order dated 06.05.2016, passed in appeal No.818/CIT(A)-3/Cir.7(2)/15-16/Kol, reversing Assessing Officer’s addition of share subscription and share premium addition of ₹3,75,00,0000/-, in proceedings u/s 143(3) of the Income Tax Act, 1961; in short as ‘the Act’. We have heard both the parties. Case file perused.
DCIT, Cir-7(2) Kol. Vs. M/s Omkara Polyplat Pvt. Ltd. Page 2 2. Learned Departmental Representative quotes Revenue’s pleading first. His case before us is that the CIT(A) has erred in law as well as on facts in deleting the impugned addition of unexplained share subscription and premium amounting to ₹3.75 crores as made by the Assessing Officer in assessment order dated 20.03.2015. There is no dispute so far as the basic facts are concerned. The assessee has raised the amount in question of ₹3,75,00,000/- in the nature of share subscription and premium in the impugned assessment year. We do not see any detailed discussion in assessment order so far as identity, genuineness and creditworthiness of the concerned applicant(s) parties are concerned. The Assessing Officer appears to have discussed a catena of case law indicating that the impugned share premium did not justify assessee’s corresponding business activities. The Assessing Officer’s further case was that the same also lacked genuineness and creditworthiness as well. He therefore added impugned sum to be unexplained u/s 68 of the Act.
The assessee preferred appeal. It filed additional submissions during the course of lower appellate proceedings to the effect that three parties namely, Rachna Agarwal, White Collar Venture Capital Fund Ltd. and entity M/s Vaishnodevi Commosales Pvt Ltd. had subscribed to the above stake. The assessee placed on record the corresponding relevant dates, mode of payment as well as source of the said three parties. The CIT(A) sought remand report. The same came on 03.05.2016 reading as under:- “No. DCIT.Cir-7(2)/Kol./Omkara Remand Report/2016-17/58 Date:03/05/2016 To The Commissioner of Income Tax (Appeal-3), Kolkata, Aayakar Bhawan, 7th Floor, P-7,Chowringhee Square Kolkata-700 107. Sir, Sub:- Remand Report in case of M/s Omkara Polyplat Pvt. Ltd. of diamond jubilee 11, Dr. U.N. Brahmachari Street, A.Y 2012-13-matter regarding Ref: Your letter vide no. CIT(A)-3/ Remand report/Kol/16-17/ dated 28.04.2016 Kindly refer to the above.
DCIT, Cir-7(2) Kol. Vs. M/s Omkara Polyplat Pvt. Ltd. Page 3
The AO had added Rs.37500000/- being share capital and premium as unexplained income u/s. 68 of the IT act 1961 for AY 2012-13. The A/R of the assessee was directed to produce the share applicants for verification vide letter No.DCIT/Cir7(2)/Kol/2014-15/415 dated 13.03.2015 and the A/R vide letter dated 17.03.2016 cited the reasons for non appearance by the three shareholders/shareholder of director company and provided the requisite details. As directed, and for the purpose of verification, the undersigned had issued Summons notice u/s. 1321 of the IT Act to the three shareholders/director of shareholder company from whom share application money was received during the relevant period. In response to summons u/s. 131, the following appeared before the undersigned on 03.05.2016 and a statement was taken from them. 1) Smt Rachana Agarwal, spouse of Sri Sumit Kumar Agarwal 2) Shri Sumit Kumar Agarwal, Director of White Collar Venture Capital Fund Ltd and 3) Shri Chotu Paul, Addl. Director of Vaishnodevi Commosales (P) Ltd. They produced and submitted PAN details, Bank statements, board resolutions, Income Tax acknowledgements, memorandum and Articles of Association and other evidences in support of the share applications made. From the information provided, the details and source of investment are as overleaf:- No Name Relationship with Amount Date Mode Source promoters (Rs in lacs) 1 Rachana Spouse of Shri 10.00 12.10.11 RTGS Loan from Group Agarwal Sumit Kumar company, M/s Agarwal Omkara Steel & Wires (P) Ltd- director Shri Sumit Kumar Agarwal 10.00 13.10.11 RTGS Loan from Spouse Shri Sumit Kumar Agarwal 15.00 13.12.11 RTGS Loan from Green Valley Vincom (P) Ltd- business associates 2 White Group company. 90.00 27.03.12 RTGS Proceeds from the Collar Common 55.00 29.03.12 RTGS issu9e of share Venture Director- Shri 45.00 29.03.12 RTGS capital to business Capital Sumit Kumar 50.00 31.03.12 RTGS associates/group Fund Ltd Agarwal companies 3 Vaishnodevi Commosales (P) 25.00 27.03.12 Ch Proceeds from the Ltd No.51623 issue of share capital to business 25.00 29.03.12 Ch No. 51625 associates/group companies 25.00 29.03.12 Ch No. 51626 25.00 31.03.12 Ch No.51627 DCIT, Cir-7(2) Kol. Vs. M/s Omkara Polyplat Pvt. Ltd. Page 4 Prima facie, no adverse inference is drawn with respect to the genuineness, authenticity, correctness of the information provided by the share applicants. It is also seen from the assessment folder that no summons notice was issued to the directors during the course of assessment. However the appellant has given reason for non- appearance when the AO asked the authorized representative to produce them. As the report has to be submitted on or before 02.05.2016, due to paucity of time, no further enquiries could be made at this stage. Accordingly relief may be allowed by Learned. CIT(A), if he finds it in order. Submitted to the Learned. CIT(A)-22,Kolkata for necessary action at his end. Yours faithfully, Sd/- L. Sailo DCIT, Circle-7(2), Kolkata It is in view of the these remand report’s contents that the CIT(A) has deleted the impugned addition on the ground that the Assessing Officer has himself verified all the three investor(s) parties hereinabove, subscribing to assessee’s stake. This leaves the Revenue’s aggrieved.
We have given our thoughtful consideration to rival submissions in favour and against the impugned Sec 68 addition of share subscriptions and premium. It is clear from the above narrated facts that the Assessing Officer’s remand report has found all the three parties in question to be genuine, authentic and correct as they had filed their necessary confirmation(s) alongwith bank details, bank statements, board’s resolution, income tax acknowledgements etc. The Revenue fails to dispute that all three investor(s) are assessee’s related parties only (supra). We conclude in this view of these facts that the assessee has satisfied all the three relevant conditions of identity, genuineness and creditworthiness of the impugned share subscription and premium. Learned Departmental Representative reiterates Revenue’s plea that CIT(A) had not given sufficient time to the Assessing Officer to carry out necessary verification. We find no substance as the Assessing Officer’s of remand report’s contents already substantiate assessee’s case that the impugned Sec. 68 addition is not sustainable as all the three requirements DCIT, Cir-7(2) Kol. Vs. M/s Omkara Polyplat Pvt. Ltd. Page 5 thereof stand satisfied. The Revenue’s above sole argument therefore appears to be only a technical plea lacking merit. Its sole substantive grievance is declined accordingly.