ITO, WD-5(1), KOLKATA, KOLKATA vs. M/S SHREE SATI FINVEST PVT. LTD., KOLKATA

Date of concluding the hearing : May 10, 2018 Date of pronouncing the order : May 18, 2018

O R D E R Per Shri P.M. Jagtap, A.M. :- These two appeals filed by the Revenue are directed against two separate orders passed by the ld. Commissioner of Income Tax (Appeals)- 2, Kolkata dated 30.06.2015 for assessment years 2010-11 and 2012-13 and since the issue involved therein is common, the same have been heard together and are being disposed of by a single consolidated order for the sake of convenience.

I.T.A. No. 1192/KOL/2015 Assessment year: 2010-2011 & Assessment year: 2012-2013 Page 2 of 6 by the Assessing Officer under section 68 by treating the share capital and share premium amounts received by the assessee-company during the year under consideration as unexplained cash credit.

I.T.A. No. 1192/KOL/2015 Assessment year: 2010-2011 & Assessment year: 2012-2013 Page 3 of 6 4. As per the order of the ld. CIT under section 263, notice under section 142(1) was issued by the Assessing Officer requiring the assessee to produce the relevant details and documents in order to explain the relevant cash credits representing share capital and share premium in terms of section 68. The said notice as well as the subsequent notices issued by the Assessing Officer under section 143(2) and 142(1), however, remained un-complied on the part of the assessee. Notices under section 131(1), therefore, were issued by the Assessing Officer to the Directors of the assessee-company as well as the Directors of the alleged share subscriber companies. The said notices also remained un- complied with. As noted by the Assessing Officer, even some of the notices issued to the Directors of the share subscriber Companies were returned undelivered with the postal remarks “address cannot be looked out/ left/ not known”. Keeping in view this non-compliance, a notice was issued by the Assessing Officer to the assessee on 18.02.2015 requiring the assessee to explain why best judgment assessment under section 144 should not be completed in its case on the basis of materials and details available on record. The assessee again failed to comply with the said notice. The Assessing Officer, therefore, proceeded to complete the assessment under section 144/263/147/143(3) of the Act vide an order dated 23.03.2015 on the basis of material and details available on record. In the assessment so completed, he made an addition of Rs.16.43 crores to the total income of the assessee under section 68 by treating the share capital and share premium received during the year under consideration as unexplained cash credit.

I.T.A. No. 1192/KOL/2015 Assessment year: 2010-2011 & Assessment year: 2012-2013 Page 4 of 6 the addition made by the Assessing Officer under section 68 after recording his findings and observations in his impugned order as under:- “(1) The appellant has made his case that the identity of the shareholders are established beyond doubt and on enquiries made by the AO there is no adverse finding on this aspect.

(2) The very fact that most of the subscribers are existing tax assessee and some of them were subject to scrutiny assessment during the same period establish the identity and authenticity of the subscribers.

(3) About the genuineness of the transaction there is no finding in the assessment order in adverse or which is subversive to the facts stated by the assessee during the course of assessment proceeding.

(4) The creditworthiness of the subscribers to the share capital is proved by submission of their audited annual accounts. The net worth of such subscribers are in excess of the amount invested by each of them.

(5) The addition made by AO. is based on assumptions and suspicion not backed by any authenticity or reasons.

(6) The AO. had not dealt logically and judiciously with the documents submitted during the course of hearing by the assessee and the subscribers to the share capital of the assessee to draw that such share capital is unexplained cash credit.

(7) The appellant has made out his case logically and has relied on the documents which are not in doubt”.

Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

I.T.A. No. 1192/KOL/2015 Assessment year: 2010-2011 & Assessment year: 2012-2013 Page 5 of 6 before the Assessing Officer inspite of sufficient opportunity given in this regard. He contended that the primary onus that lay on the assessee to explain the relevant cash credits in terms of section 68 thus was not discharged by the assessee and this vital and relevant aspect was completely ignored by the ld. CIT(Appeals) while deleting the addition made by the Assessing Officer under section 68. As rightly contended by him, the ld. CIT(Appeals) while doing so, put the entire onus on the Assessing Officer, which as per law, was on the assessee and this position clearly evident from the orders of the authorities below is not disputed even by the ld. Counsel for the assessee. He, however, has contended that the relevant details and documents to establish the identity and capacity of the concerned shareholders as well as the genuineness of the relevant transactions are available with the assessee and one more opportunity may be given to the assessee to discharge its primary onus to explain the relevant cash credits in terms of section 68 by sending the matter back to the Assessing Officer. Since the ld. D.R. has not raised any objection in this regard, we set aside the impugned order of the ld. CIT(Appeals) deleting the addition made by the Assessing Officer under section 68 and restore the matter to the file of the Assessing Officer for deciding the same afresh after giving one more opportunity to the assessee to establish the identity and capacity of the concerned creditors as well as the genuineness of the relevant transactions by producing the relevant details and documents. The appeal of the Revenue for A.Y. 2010-11 is treated as allowed.