GRAPES HOTELS RESORTS PRIVATE LIMITED ,GUWAHATI vs. ITO-WARD --3(5) GUWAHATI, GUWAHATI

Briefly stated the facts of the case are that the assessee filed return of income u/s 139 on 29.08.2012 declaring income of Rs. 1,73,542/-. A notice u/s 148 of the Act was issued after obtaining approval from the competent authority and the assessee was asked to file return of income. In response to the notice, the assessee declared sale income as per the return filed u/s 139 of the Act and other statutory notices were issued to the assessee. During the impugned assessment year, the assessee company received share application & share premium from the Kamna Sales Ltd. through RTGS having PAN No. AAECK1149H as and the address is as per records 4, Nabab Lane, Kolkata, West Bengal- 700007 and from Gliter Commosale Pvt. Ltd. received by RTGS towards share application money having PAN No. AADCG9840N having registered office 4, Nabab Lane, Kolkata, West Bengal – 700007 and the other address provided by the assessee, the AO issued notice u/s 133(6) of the Act duly returned unserved at postal remarks “address moved/left” and it was brought into knowledge of the assessee and an opportunity was granted to the assessee to produce representative of that entity alongwith books of accounts, resolution register, board of directors meeting, bank statement, bills and vouchers, rent receipts & copy of rent agreement, electricity bills, landline telephone bills, and corporation tax paid challan in respect of occupied premises from the said investor was operating in the relevant point of time. In response to this, the assessee filed which is incorporated in the order it was observed that in response to the notice, the assessee furnished that the assessee has not discharged its onus to satisfy the conditions u/s 68 of the Act and relied on some judgments. However, from the submissions, the AO observed that both the companies from whom the assessee company have received share application money are newly established and the assessee company is

Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) granted various opportunities to the assessee and assessee. The assessee filed written submissions and he relied on the submissions made before the AO. The Ld. CIT(A) observed that the company was incorporated on 01.09.2011 and he was surprised that it received huge share application money and the investor company was incorporated on 04.10.2010 and it has no source of income at the time to fund any investments, this company was struck off by the ROC, Kolkata for the violations to the provisions of Company Act, 2013. The AO received report from the Investigation Wing that investor company M/s Gliter Commosale Pvt. Ltd. is a shell company and was inter-alia, used to take bogus share capital introduction in the books of many beneficiaries companies based on the information. The assessee case was reopened u/s 147/148 of the Act. Even during the appellate proceedings before the Ld. CIT(A), the assessee could not satisfy the essential ingredients of section 68 of the Act and he dismissed the appeal of the assessee.

Aggrieved from the above order of the Ld. CIT(A), the assessee filed appeal before the ITAT.

The Ld. Counsel reiterated the submissions of the lower authorities and submitted that if one more chance may be given to the assessee, the assessee will be able to produce the requisite documents to prove the share application money received and requested for remand the matter to the AO.

Considering the rival submissions, we noted that the case was reopened u/s 147/148 on the basis of information that the assessee company has received share application money of Rs. 25 lacs from the shell company and during the assessment proceedings, the assessee could not prove the creditworthiness of the share applicants company even before the Ld. CIT(A) in spite of giving various opportunities to the assessee and both the authorities below have decided the issue on merits with detailed reasons. We also noted from the order of Ld. CIT(A) that the name of share applicant company has been struck off by the ROC as per the Companies Act, 2013. The Ld. CIT(A) and also observed the share applicant company has no business activity. Considering the prayer of the Ld. Counsel for the assessee that the assessee will be able to produce to the directors of the company for satisfy the condition of section 68 of the Act. Therefore, considering the facts of the case and in the interests of justice, we are remitting this issue back to the file of AO for fresh consideration after giving reasonable opportunity of being heard to the assessee decide the issue as per law. The assessee is directed to substantiate its case with cogent documents in support of its claim and not seek unnecessary adjournments for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee.