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Income Tax Appellate Tribunal, “C” BENCH : KOLKATA
Before: Hon’ble Sri N.V.Vasudevan, JM & Shri Waseem Ahmed, AM]
Date of Hearing : 13.11.2017. Date of Pronouncement : 17.11.2017. ORDER Per N.V.Vasudevan, JM
This is an appeal by the assessee against the order dated 02.03.2017 of CIT-(A)- 3, Kolkata relating to A.Y.2012-13.
Grounds of appeal
raised by the assessee read as follows :- “1. For that the appellant was prevented by reasonable cause in not being able to attend the one and the only hearing fixed by Ld CIT(A) on 16.02.2017 and that he ought to have given the appellant an other opportunity to represent the case
2. For that under the facts and circumstances of the case the Ld CIT(A) erred and was not justified in confirming the addition of Rs. 6,61,70,000/- made by the Ld AO on account of addition to share capital.
3. That the appellant craves to add, modify, amend and/or substitute any other ground before hearing of the appeal.”
The Assessee is a company. For A.Y.2012-13 the Assessee filed return of income on 18.09.2012 declaring total income of Rs.Nil. In the course of assessment proceedings u/s 143(3) of the Income Tax Act, 1961 (Act) the AO noticed that the Exodus Futura Knit (P)Ltd.. A.Y.2012-13 assessee had during the previous year raised fresh share capital by issuing 8,32,700 shares of the face value of Rs.10/- each at a premium of Rs.70/-(Approx.per share). The assessee had raised share capital and premium of Rs.6,61,70,000/- comprising of share value of Rs.83,27,000/- and share premium of Rs.5,78,43,000/-.
The AO in order to get an explanation regarding the identity of the investors, creditworthiness of the investors and genuineness of the transaction of investment in share capital of the assessee by the investors issued summons u/s 131 of the Act to the directors of the assessee calling for their personal appearance. The Assessee was also directed to produce all the directors of the companies which had invested in the share capital of the assessee. According to the AO none appeared in response to the notice. However, a letter was filed by the assessee giving the details of each of share holders and their addresses and Income tax particulars. There were in all 22 shareholders who subscribed share capital of the assessee. Income tax particulars of 20 such subscribers have been given and details were furnished by the assessee before the AO. The assessee also filed a copy of the return of allotment filed by the assessee before the Registrar of companies as required under the Companies Act, 1956.
The AO was of the view that since the directors of the assessee had not appeared in response to the summons nor the assessee produced the directors of the subscribers companies, the assessee failed to establish satisfactorily the receipt of share capital and therefore addition u/s 68 of the Act of share capital as unexplained cash credit has to be made. The AO referred to the requirements of section 68 of the Act and the judicial pronouncements u/s 68 of the Act ultimately came to the following conclusion :- “15. Considering the above judicial pronouncements and in the above facts and circumstances involved in the present case at hand Rs.6,61,70,000/- is hereby treated as unexplained cash credit found in the books of the assessee company during the AY 2012-13 and accordingly, added back to the total income of the assessee company u/s 68 of the Act. “
Exodus Futura Knit (P)Ltd.. A.Y.2012-13 6. Aggrieved by the order of the AO the assessee filed an appeal before the ld. CIT(A). The appeal before CIT(A) was filed by the assessee on 22..04.2015. The first hearing of the appeal before CIT(A) was fixed on 16.02.2017. It appears that none appeared on behalf of the assessee nor any request for adjournment was made. The CIT(A) therefore proceeded to decide the appeal on the basis of material on record. The CIT(A) was of the view that the assessee failed to establish satisfactorily the receipt of share capital by proving the identity and capacity of the investors and the genuineness of the transactions. CIT(A) therefore confirmed the order of AO.
Aggrieved by the order of CIT(A) the assessee is in appeal before the Tribunal.
We have heard the rival submissions. The ld. Counsel for the assessee brought to our notice the record of proceedings before the AO. A perusal of the same shows that on 06.08.2013 the assessee’s case was taken for scrutiny assessment through CASS and notice u/s 143(2) of the Act was issued on that date. On 12.08.2014 notice u/s 142(1) of the Act was issued. On 26.08.2014 the AR of the assessee appeared on behalf of the assessee in response to notice u/s 142(1) and submitted the details which we have already referred to in the earlier part of this order. On 16.02.2015 notice u/s 131 of the Act was issued to the directors of the assessee. On 20.02.2015 the AO has noted that none appeared. He also noted that the assessee has filed a reply in response to notice u/s 131 of the Act. Thereafter on 11.03.2015 the AO has passed the order u/s 143(3) of the Act. As we have already noticed in the proceedings before CIT(A) none appeared on behalf of the assessee. It is the plea of the assessee that they were unable to appear on 16.02.2017 which was the only date of hearing of the appeal before CIT(A). It is thus clear from the record that there was lack of proper opportunity of being heard to the assessee.
Before us the ld. Counsel has filed the following details :- 3
Exodus Futura Knit (P)Ltd.. A.Y.2012-13 Exodus Futura Knit (P)Ltd.. A.Y.2012-13 Exodus Futura Knit (P)Ltd.. A.Y.2012-13
Exodus Futura Knit (P)Ltd.. A.Y.2012-13 10. The ld. Counsel of the assessee has prayed that the aforesaid documents be admitted as additional evidence by the tribunal in terms of Rule 29 of Appellate Tribunal Rules 1963. Since there was lack of proper opportunity afforded to the assessee by the AO and CIT(A) and since the documents that are sought to be filed as additional evidence now before the Tribunal are necessary for proper adjudication of the issues involved in the case of the assessee, we admit the additional evidence. Since the additional evidence requires to be examined by the AO and since there was lack of opportunity before the AO, we deem it fit to set aside the order of CIT(A) and remand the issue with regard to receipt of share capital by the assessee for fresh consideration by the AO. The AO will decide the issue taking into account additional evidence filed before the Tribunal and also afford opportunity of being heard to the assessee with liberty to file such further evidence to prove the assessee’s case. The AO will afford proper opportunity of being heard before deciding the issues. For statistical purpose the appeal of the assessee is treated as allowed.
In the result the appeal is allowed for statistical purposes.
Order pronounced in the Court on 17.11.2017.