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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SRI RAJESH KUMAR & PRADIP KUMAR CHOUBEY
order
: October 15th, 2024 ORDER
Per Pradip Kumar Choubey, Judicial Member:
The instant appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2012-13 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income- tax (Appeals)-21, Kolkata [in short ld. ‘CIT(A)’] dated 24.11.2022 arising out of the assessment order framed u/s 143(3) of the Act dated 23.03.2015. 1.1. The ld. Counsel for the assessee before entering into the merits of the case has pressed the petition for condonation of delay as appeal has been filed after a delay of 261 days. The ld. Counsel for the assessee submitted that the I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. impugned order passed by the ld. CIT(A)-21, Kolkata dated 24.11.2022 which was received by the office of the Pr. CIT, Central-2, Kolkata on 02.12.2022 and after receiving the said impugned order and upon completion of the Departmental procedure, the DCIT (Hqrs.), Central-2, Kolkata vide letter dated 08.12.2022 requested DCIT, Circle-3(4), Kolkata to prepare appeal scrutiny report and to send the same to the Pr. CIT to examine the issue of filing appeal u/s 253 of the Act. It has further been argued that appeal scrutiny report submitted to the office of the Addl./Joint CIT, Central, Range- 3, Kolkata on 28.06.2023 for onward transmission to the office of the Pr. CIT for his kind perusal and taking necessary action. The office of the Pr. CIT on 26.07.2023 vide letter no. Pr.CIT(C)/Kol-2/253/ASR/2023-24/2463 accorded his kind approval for filing second appeal u/s 253 of the Act before the Hon’ble ITAT, Kolkata. The ld. Counsel for the assessee submits that due to the said reasons which were beyond the control of the petitioner, the appeal could not be filed within the stipulated time. The ld. A/R did not raise any objection in condoning the delay. Keeping in view the above facts and the reason, as stated above, was beyond the control, the delay is hereby condoned and the appeal is admitted for adjudication.
The brief facts of the case of the appellant are that the assessee an Investment Company with investments in various unlisted manufacturing companies. During the relevant Financial Year, share applications amounting to Rs. 8,75,00,000/- were received from various share applicants to whom equity share allotted against share premium (face value being Rs. 100/- per share). The case of the appellant was selected for scrutiny through CASS. The appellant duly complied with one notice issued by the AO. Complete details of shares of the allottee were duly furnished along with the relevant documents. During the course of scrutiny proceedings, the appellant was asked to submit details with regard to the sheer application money received from various corporates, produce the investors in response to the notice u/s 131 of the Act for verification of the transaction between the appellant company and investor. The AO after proper verification, treated the entire amount raised on account of the share capital along with the premium as Page 2 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. unexplained money of the appellant. The said order has been challenged by the assessee before the ld. CIT(A) wherein after going over the entire papers submitted by the assessee before the AO and after going through several judgements pronounced by the Hon'ble High Court and the ITAT allowed the appeal of the assessee by setting aside the order of the AO. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred by the Department. 2.1. The ld. Counsel for the assessee has challenged the impugned order on the following grounds: “I. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 875,00,000/- made by the AO on account of Share Capital/Share Premium treating as Unexplained Credits u/s 68 of the IT Act, 1961. II. That the Department craves leave to add, modify or alter or withdraw any of the grounds of appeal before or at the time of hearing of the case.” 2.2. Contrary to that it has been argued by the ld. Counsel for the assessee that on the issuance of summons issued u/s 131 of the Act to the shareholder, they duly appeared before the AO, their statements were recorded with regard to the reasons for investment in the share premium. The source of funds invested with the appellant company with documentary evidences produced before the AO which were thoroughly gone through. It has further been argued by the ld. A/R that certified copy of the order sheet of the assessment transpires that the AO issued notices u/s 141(1) of the Act, compliance thereof made by the appellant. As per order sheet entry dated 13.03.2015 and 16.03.2015 the principal officers/directors of the share applicants duly appeared before the AO and vide various questionnaire raised by the AO, share applicants duly explained justification of applying for equity at the rate of share premium, the source of the investment along with the documentation in support. It has further been argued that details of share allotment to 19 companies have also been filed. The ld. Counsel for the assessee further submits that the ld. CIT(A) at the time of hearing of the case of the assessee has also asked the remand report from the AO and after going
Page 3 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. over the entire papers, documentation and statement allowed the appeal of the assessee. Ld. Counsel for the assessee submits that there is nothing wrong in the order of the ld. CIT(A). Ld. Counsel for the assessee cited several decisions which are as follows. Apart from that the cited decisions discussed in the order of the ld. CIT(A) the following decisions has also been brought for our notice. a) Hon'ble Calcutta High Court in the case of Sitka Mercantile P Ltd in GA No 2/2024 b) Hon'ble Calcutta High Court in the case of Hirak Vyapaar P Ltd in GA No. 1/2023 c) Hon'ble Calcutta High Court in the case of Outcome Buildcom P Ltd in GA No 1/2024 3. After hearing the rival submissions of the Counsels of the respective parties, we have perused the facts of the case as well as the order of the ld. CIT(A) which runs about in 62 pages. It is an admitted fact that the appellant company is holding/associate company of Dhanuka group of companies. The following facts have been appeared from perusal of the order of the ld. CIT(A) which according to us is essential to reproduce hereinbelow: “Appellant Company is the holding/associate company of Dhanuka group of companies, pioneer in wagon manufacturing industry & seamless pipes besides also holding equity in other group concerns. All shareholders served notices u/s 133(6) and compliances containing details and evidences wrt share allotment, bank statements, audited financials, IT Return copies, Board Resolutions, confirmation wrt source of funds, 2nd source documentations etc filed before the AO . No evidences contradicted by AO and no cash trail noticed in either the share applicant’s banks or in their immediate sources. During the course of hearing before the AO, the assessee had very well discharged its primary onus of proving identity, genuineness and creditworthiness of all the 19 investors by filing their audited accounts, income-tax return acknowledgements, certificates of incorporation, bank statements and as well as "source of source" as is evident from case records running into more than 500 pages. All shareholders served notices u/s 131 and further almost all shareholders appeared before AO as apparent from the order sheet entries and the copies of statements recorded u/s 131, as attested by the AO in the remand
Page 4 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. proceedings. The Ld. AO issued notice u/s 133(6) of the Act to the aforesaid share applicant companies asking them to submit bank statements, ledger account, copy of returns and other documents in respect of investments made with assessee company. All the share applicant companies complied with the same. The Ld. AO later issued summons u/s 131 of the Act to the Director of the share applicant companies which were also duly complied with. The Directors of the share subscriber companies appeared before the Ld. AO and they were examined by the Ld. AO, their statements were recorded wrt reason for investment at the share premium, the source of funds invested with appellant Company with documentary evidences produced before the AO which were thoroughly gone through , the reasoning and rationality behind the raising of Share capital by Appellant with share premium, there was nothing on record in contradiction to the submissions made by the shareholders. The shareholders stated that SDR Meghnath Investments (P) Ltd is the holding Company of Lalbaba Seamless Tube(P) Ltd having business of manufacturing Seamless pipes which is a premium category of product used in automobile, oil & gases Industry with high export demand & very few manufacturing facility available in India as on date of share subscription. Beside SDR Meghnath Investments (P) Ltd also holds majority stake in NF Forgings (P) Ltd, a pioneer Company registered with Railways for locomotives division wagon industry, so justification of share premium subscription made considering the future valuations of both these companies including other group manufacturing companies. These facts are recorded in Order sheet entries forming part of the assessment order itself along with the copies of statements recorded u/s 131 which were confirmed by AO in the remand report, documents filed were not controverted by AO either.” 3.1. We further find that the appellant has furnished detailed documentary evidences being the party names, PAN and ITR, bank statements and confirmations to discharge the onus cast upon them u/s 68 of the Act. In the ld. CIT(A)’s order we find that the details of share allotment, the moneys received in the form of share application money/premium and ld. CIT(A) has mentioned by preparing chart in this context as under:
“SDR MEGHNATH INVESTMENTS PVT. LTD. DETAILS OF SHARE ALLOTMENT DURING F.Y. 2011-12 FACE VALUE OF SHARES - Rs.100/- SHARE PREMIUM - Rs.4900/- PER SHARE DATE OF RATE NO. OF AMOUNT ALLOTMENT SHARES RECEIVED GURUJI MERCANTILE PVT. LTD. 27.03.2012 5000 200 1000000 DAYANIDHI MARKETING PVT. 27.03.2012 5000 500 2500000 LTD. SHALIMAR VINCOM PVT. LTD. 27.03.2012 5000 400 2000000 Page 5 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. DHANVANTI COMMODITIES 27.03.2012 5000 500 2500000 PVT. LTD. GOODVIEW TRADE COMM PVT. 27.03.2012 5000 300 1500000 LTD. BANSAL PROJECTS PVT LTD. 27.03.2012 5000 300 1500000 SANWARIA VINTRADE PVT. LTD. 27.03.2012 5000 300 1500000 R.B. VYAPAAR PVT. LTD. 27.03.2012 5000 360 1800000 SALONA DEALTRADE PVT. LTD. 27.03.2012 5000 500 2500000 MEHANDIPURA TRADELINK 27.03.2012 5000 600 3000000 PVT. LTD. BADAL COMOTRADE PVT. LTD. 27.03.2012 5000 900 4500000 CONTSHIP COMMODITIES PVT. 27.03.2012 5000 500 2500000 LTD. BACHCHI FINANCE PVT. LTD. 27.03.2012 5000 1800 9000000 DAISY ABHRA PVT. LTD. 27.03.2012 5000 1440 7200000 MAPLE MERCANTILE PVT. LTD. 27.03.2012 5000 400 2000000 CRITCARE MARKETING PVT. 27.03.2012 5000 1100 5500000 LTD. SHTIRLAKSHMI MERCANTILE 27.03.2012 5000 700 3500000 PVT. LTD. VANRAJ MERCHANTS PVT. LTD. 27.03.2012 5000 1200 6000000 12000 60000000 SDR MEGHNATH INVESTMENTS PVT. LTD. DETAILS OF SHARE ALLOTMENT DURING F.Y. 2011-12 FACE VALUE OF SHARES - Rs.100/- SHARE PREMIUM - Rs.1900/- PER SHARE NAME OF THE ALLOTTEE DATE OF RATE NO. OF AMOUNT ALLOTMENT SHARES RECEIVED DHARMIK COMMOSALES PVT. 16.08.2011 2000 1000 2000000 LTD. GURUJI MERCANTILE PVT. LTD. 16.08.2011 2000 1250 2500000 DAYANIDHI MARKETING PVT. LTD. 16.08.2011 2000 1500 3000000 SHALIMAR VINCOM PVT. LTD. 16.08.2011 2000 1500 3000000 DHANVANTI COMMODITIES PVT. 16.08.2011 2000 1000 2000000 LTD. GOODVIEW TRADE COMM PVT. 16.08.2011 2000 1250 2500000 LTD. BANSAL PROJECTS PVT. LTD. 16.08.2011 2000 1750 3500000 SANWARIA VINTRADE PVT. LTD.. 16.08.2011 2000 1750 3500000 R.B. VYAPAAR PVT. LTD. 16.08.2011 2000 1750 3500000 SALONA DEALTRADE PVT. LTD. 16.08.2011 2000 1000 2000000 13750 27500000 3.2. As we have already stated in our preceding paragraph that in order to verify the identity, creditworthiness of the share applicants, as well as check the genuineness of the transaction, the AO issued notice u/s 133(6) of the Act to the principal officers/directors of all the investor companies. It is also in the order sheet that books of accounts of the appellant company were also examined during assessment proceedings. It also reflects from the order sheet
Page 6 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. that in response to the summons u/s 131 of the Act the principal officers/directors of the appellant company and the investor companies made physical appearance and their statements were duly recorded, all those papers regarding the statement filed by the assessee before the ld. CIT(A). Investors have mentioned in their statement that they have submitted the details of the source of the investment. The dispositions of the principal investors reflect that detailed questions have been asked from these opponents in relation to the impugned the transaction. They have been asked to prove their creditworthiness and in answer to which they have mentioned in the depositions themselves that in response to the earlier notice u/s 133(6) of the Act they have produced all the necessary documents and the AO has accepted these statements. The appellant filed detailed submission in this regard in the form of two compressive paper books running into 920 pages. In these paper books, the appellant has submitted the entire set of documents that were submitted before AO as well as ld. CIT(A) and before us also during the investigation conducted by the later. These documents include thus:
Sl.No Name of Sources PB 1 Sources of the Sources . investor PB 1 company Share Sourc Balanc Bank ITR Resolutio Balanc Bank ITR applicatio e e sheet Statemen n e sheet Statemen n amount letter t t 1. Dayanidhi 55,00,000 5 & 18 2 & 3 11 4 34 49 26 Marketing 10 Pvt. Ltd.
Shalimar 50,00,000 53 & 67 51 & 56 60 52 90 & 79 & 104 80 & Vincom P. 58 113 105 Ltd. 3 Critcare 30,00,000 131 134 129 13 130 151 168 143 3 Marketing Pvt. Ltd. 4 Contship 25,00,000 183 174 170 17 171 196 188 189 Commodities 3 Pvt. Ltd. 5 Sthirlakshmi 35,00,000 227 216 210 21 211 240 232 233 Mercantile 3 Pvt. Ltd. 6 Badal 45,00,000 261 263 258 26 259 280 275 275 Commotrade 2 A Pvt. Ltd.
Page 7 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. 7 Vanraj 35,00,000 306 298 294 & 29 295 - - - Merchants 308 7 Pvt. Ltd. 8 Daisy Abhra 72,00,000 319 322 312, 314, 32 318 344 335 - Pvt. Ltd. 316 & 1 317 9 Maple 20,00,000 372 362 358 36 359 386 376 378 Mercantile 1 Pvt. Ltd. 10 Mehandipur 30,00,000 403 - 400 40 401 418 409 410 a Tradelink 4 Pvt. Ltd.
Srl. Name of Sources PB-2 Sources PB-2 No. investor company Share source Balance Bank ITR Resolution Balance Bank ITR applicatio letter n Sheet Statement Sheet Statement amount 11 Goodview 40,00,00 5 & 9 18 2 & 3 11 4 & 8 35 & 26 & 49 27 & Tradecom P. 58 50 Ltd. 12 Bachchi 90,00,00 78 83 70,74 & 82 77 102 93 94 Finance Pvt. 76 Ltd. 13 Dharmik 20,00,00 119 127 116 120 117 142 134 135 Commosales Pvt. Ltd. 14 Guruji 35,00,00 153 & 165 151 & 159 152 184 & 174 & 176 Mercantile P. 157 156 198 196 & Ltd. 197 15 Dhanvanti 45,00,00 296 304 289 & 297 293 - - - Commodities 292 P. Ltd. 16 Salona 45,00,00 317 & 331 315 & 324 316 348 339 340 Dealtrade P. 322 320 Ltd. 17 R.B. Vyapaar 53,00,00 209 & 223 208 & 216 212 234, 242, 243 233, P. 213 211 252 & 244& Ltd. & 277 267 269 18 Bansal 50,00,00 366 & 381 364 & 373 365 404 395, 418 391, Projects P. 371 369 & 396& Ltd. 393 417 19 Sanwaria 50,00,00 422 & 420 & 429 421 452, 443, 462 444A, Vintrade P. 427 425 472 & 463 464 Ltd. & 490 & 487
Page 8 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. 3.3. We further find that ld. CIT(A) in the course of hearing the appeal has found that appellant has submitted copies of depositions of various principal officers/directors of the investor companies made u/s 131 of the Act and for verification of these documents ld. CIT(A) after the remand report from the AO and ld. AO has submitted the remand report which is as follows:
“During appeal, the appellant has also submitted attested true copies of the depositions of the various principal officers/directors of the investing companies, made under oath u/s 131 of the Act. Since this was a matter, upon which the order of assessment was silent, these documents were verified from the AO through a remand report. In the letter, dated 20.09.2022, that was sent from this office to the AO for such verifications, the AO was informed that the appellant had stated that the entire investigation process including through issue of notice u/s 131 had already been conducted by the AO during assessment proceedings. The aforementioned letter also informed the AO that the appellant had submitted that all notices u/s 131 of the Act had been complied with and the share subscribers as well as directors of the appellant company had appeared before the AO in response to the summons and had duly deposed under oath before the AO. The AO was also informed that the appellant had been contending that the issues related to the genuineness, creditworthiness, identities of investors; the rationale for investment and premium and other related issues had already been examined during assessment. In addition, the AO was asked to conduct any injuries that he deemed fit for satisfying himself of the veracity of the appellant’s contentions. A remand report was duly obtained by this office. The AO submitted attested true copies of the statements made under oath by the various investors as well as the director of the appellant company. There was no further comment in terms of controverting what had been said by the appellant regarding examination of all issues during assessment.” 3.4. Ld. CIT(A) in order to prove the identity, creditworthiness of the investors has gone through the papers filed by the assessee with regard to the investor company and prepared a chart of 19 companies which are as follows:
“1. Investor Company: Dayanidhi Marketing Pvt Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 1. Dayanidhi 55,00,000 18 Bank Statement of 11 Marketing account Pvt. Ltd. maintained with South Indian Bank Page 2
Page 9 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. 30,00,000/- Page 5 Page 3 on 15.07.2011 25,00,000/- On Page 10 27.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 2. Investor Company: Shalimar Vincom P. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 2. Shalimar 50,00,000 67 Bank Statement of 60 Vincom P. account maintained Ltd. with South Indian Bank Page 51 30,00,000/- Page 53 Page 56 on 18.07.2011 20,00,000/- On Page 58 29.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 3. Investor Company: Critcare Marketing Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 3. Critcare 55,00,000 Page 131 134 Bank Statement of 133 Marketing 25,00,000/- account Pvt. Ltd. on maintained with 13.10.2011 Central Bank of 30,00,000/- India On Page 129 25.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant
Page 10 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 4. Investor Company: Contship Commodities Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 4. Contship 25,00,000 174 Bank Statement of 173 Commodities account Pvt. maintained with Ltd. Central Bank of India Page 170 25,00,000/- Page 183 on 13.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 5. Sthirlakshmi 35,00,000 216 Bank Statement of 213 Mercantile account Pvt. maintained with Ltd. Central Bank of India Page 210 35,00,000/- Page 227 on 18.10.2011 5. Investor Company: Sthirlakshmi Mercantile Pvt. Ltd. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 6. Badal 45,00,000 Page 261 263 Bank Statement of 262 Commotrade 45,00,000/- account Pvt. on maintained with Ltd. 18.10.2011
Page 11 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. Central Bank of India Page 258 6. Investor Company: Badal Commotrade Pvt. Ltd. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) (Pg. No. of Paperbook1) 7. Vanraj 60,00,000 Page 306 298 Bank Statement of 297 Merchants 25,00,000/- account Pvt. Ltd. on maintained with 28.10.2011 Central Bank of 35,00,000/- India on Page 294 24.10.2011 7. Investor: Vanraj Merchants Pvt. Ltd. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 8. Daisy 72,00,000 322 Bank Statement of 321 Abhra account maintained Pvt. with Central Bank of Ltd. India Page 312 Page 314 20,00,000/- Page 319 on 18.10.2011 27,00,000/- Page 316 on 25.10.2011 . 25,00,000/- on 10.10.2011
Page 12 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited.
Investor: Daisy Abhra Pvt. Ltd. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 9. Investor: Maple Mercantile Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 9. Maple 20,00,000 Page 372 362 Bank Statement of 361 Mercantile 20,00,000/- account Pvt. Ltd. on maintained with 12.10.2011 Central Bank of India Page 358 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. The share applicant in response to notice u/s 131 although did not appear before the AO but has furnished on 19.03.2015 the Balance Sheet, Bank Statement and ITR along with the source of sources, the same has been furnished during appeal.
Investor: Mehandipura Tradelink Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 10. Mehandipura 30,00,000 - Bank Statement of 404 Tradelink Pvt. account Ltd. maintained with Central Bank of India Page 400 30,00,000/- Page 403 on 13.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook 2) Paperbook2)
Page 13 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited.
Goodview 40,00,000 18 Bank Statement of 11 Tradecom account maintained P. with South Indian Ltd. Bank Page 3 25,00,000/- Page 5 Page 2 on 15.07.2011 15,00,000/- Page 9 on 22.10.2011 11. Goodview Tradecom P. Ltd. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 12. Bachchi Finance Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook 2) Paperbook2) 12. Bachchi 90,00,000 83 Bank Statement of 82 Finance account maintained Pvt. with Central Bank of Ltd. 25,00,000/- Page 78 India on Page 70 19.09.2011 Page 74 45,00,000/- Page 74 on 25.10.2011 20,00,000/- on 31.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 13. Dharmik Commosales Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 13. Dharmik 20,00,000 127 Bank Statement 120 Commosales of account Pvt. Ltd. maintained with Page 14 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. South Indian Bank 20,00,000/- Page 119 Page 116 on 22.07.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 14. Guruji Mercantile P. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook1) Paperbook1) Paperbook1) Paperbook1) 14. Guruji 35,00,000 165 Bank Statement of 159 Mercantile account P. Ltd. maintained with Andhra Bank Page 151 25,00,000/- Page 153 Page 156 on 15.07.2011 10,00,000/- On Page 157 01.11.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 15. Dhanvanti Commodities P. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook2) Paperbook2) 15. Dhanvanti 45,00,000 304 Bank Statement 297 Commodities of account P. Ltd. maintained with Central Bank of India Page 289 20,00,000/- Page 296 Page 292 on 21.07.2011 25,00,000/- On 12.10.2011
Page 15 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. The share applicant in response to notice u/s 131 although did not appear before the AO but has furnished on 19.03.2015 the Balance Sheet, Bank Statement and ITR along with the source of sources, the same has been placed on record. The immediate sources being out of sale proceeds of equity shares and refund of loan from Aradhana Commercial Pvt. Ltd, Aurangabad Auto Engg Pvt. Ltd, Invorex Trading Pvt. Ltd, Abharani Vinimay Pvt Ltd and Aditya Suppliers Pvt. Ltd 16. Salona Dealtrade P. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook2) Paperbook2) 16. Salona 45,00,000 331 Bank Statement of 324 Dealtrade account maintained P. with South Indian Ltd. Bank Page 315 20,00,000/- Page 317 Page 320 on 20.07.2011 25,00,000/- Page 322 On 10.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 17. R.B. Vyapaar P. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook2) Paperbook2) 17. R.B. 53,00,000 223 Bank Statement 216 Vyapaar of account P. Ltd. maintained with Andhra Bank Page 208 18,00,000/- Page 209 Page 211 on 01.11.2011 30,00,000/- On Page 213 19.07.2011 5,00,000/- on Page 213 15.07.2011
Page 16 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook2) Paperbook2) 18. Bansal 50,00,000 381 Bank Statement of 373 Projects account maintained P. with Andhra Bank Ltd. Page 364 35,00,000/- Page 366 Page 369 on 18.07.2011 15,00,000/- Page 371 On 29.10.2011 18. Bansal Projects P. Ltd. The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13 19. Sanwaria Vintrade Pvt. Ltd. Sl. Name Share letter before AO Balance Bank Statement ITR No. application explaining the sheet (Pg. No. of (Pg. No. of amount source (Pg. No. of Pg. No. of Paperbook2) Paperbook2) Paperbook2) Paperbook2) 19. Sanwaria 50,00,000 431 Bank Statement of 429 Vintrade account Pvt. Ltd maintained with South Indian Bank Page 420 35,00,000/- Page 422 Page 425 on 19.07.2011 15,00,000/- Page 427 On 29.10.2011 The appellant during appeal, has furnished the Balance Sheet, Bank Statement and ITR of the source of source, even though, since the amendment to section 68 was introduced from 1.4.2013, it was not applicable for the period relevant for the instant appeal. These were also produced before the AO as stated in the statement recorded u/s 131 on 13.03.2015 before the AO in response to Question No. 13” 3.5. We further find that ld. CIT(A) has also gone through the net worth of the investor companies during the impugned period and stated what Page 17 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. percentage of his net worth was invested in the appellant company. Ld. CIT(A) also made a chart which is as follows:
Srl. Name Sources No. MCA Status Share application NETWORTH SA/Networth amount 31/3/2022 % 1 Dayanidhi Marketting Active 55,00,000 3,55,95,532 15.45% Pvt. Ltd. 2 Shalimar Vincom P. Active 50,00,000 3,53,96,880 14.13% Ltd. 3 Critcare Marketting Pvt. Amalgamated 30,00,000 33,77,26,518 0.89% Ltd. 4 Contship Commodities Active 25,00,000 22,41,86,695 1.12% Pvt. Ltd. 5 Sthirlakshmi Active 35,00,000 32,28,72,148 1.08% Mercantile Pvt. Ltd. 6 Badal Commotrade Active 45,00,000 12,96,36,282 3.47% Pvt. Ltd. 7 Vanraj Merchants Pvt. Active 35,00,000 11,92,41,182 2.94% Ltd. 8 Daisy Abhra Pvt. Ltd. Active 72,00,000 12,62,67,143 5.70% 9 Maple Mercantile Pvt. Active 20,00,000 21,72,01,861 0.92% Ltd. 10 Mehandipura Tradelink Active 30,00,000 19,23,37,256 1.56% Pvt. Ltd. Sources PB 2 11 Goodview Tradecom P. Active 40,00,000 4,17,91,403 9.57% Ltd. 12 Bachchi Finance Pvt. Active 90,00,000 19,09,51,939 4.71% Ltd. 13 Dharmik Commosales Active 20,00,000 1,37,92,116 14.50% Pvt. Ltd. 14 Guruji Mercantile P. Active 35,00,000 3,74,49,845 9.35% Ltd. 15 Dhanvanti Active 45,00,000 16,79,26,405 2.68% Commodities P. Ltd. Page 18 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited.
16 Salona Dealtrade P. Active 45,00,000 2,66,07,965 16.91% Ltd. 17 R.B. Vyapaar P. Ltd. Active 53,00,000 3,24,09,865 16.35% 18 Bansal Projects P. Ltd. Active 50,00,000 2,79,05,511 17.92% 19 Sanwaria Vintrade P. Active 50,00,000 3,99,47,700 12.52% Ltd.
3.6. We further find that ld. CIT(A) has also discussed prospects of the appellant company to establish the high premium that was obtained by him and held thus:
“In this regard, the question that arises is whether the prospects of the appellant company were such as to warrant the high premium that was obtained by them. The rationale for keeping the face value of shares low, and adding a premium upon the shares have their roots in the duty paid by the assessee for allotment of shares, and is not a subject matter of consideration here. What is to be considered is whether the records indicate that the appellant company could indeed have commanded a high valuation of its shares and therefore have asked for and obtained the premium over and above the book value of its shares, based upon its prospects as well as its valuation at the time. The first issue - related to the prospects of the appellant company - was answered by the investor deponents themselves during their statements. The appellant company, it has been pointed out during the deposition, was an investment company, holding shares of various companies whose main activity was related to infrastructure projects, railway projects, CRF, Seamless pipes, manufacturing. These activities, it was felt by the investors, were representing prudent investments. There is nothing on record that controverts this conclusion. The AO also has not voiced any dissent in this regard. Coming to the matter of valuation of the appellant company at the time that these investments were made, since this is a matter of material on record, the appellant has submitted a valuation of the shares of the appellant company for the impugned period. The appellant, has, submitted a certified valuation from Chartered Accountants of the fair market value of the investments made by the appellant company as on 15.08.2011. The basis for working out the fair market value, based upon Rule 11UA(1)(c)(b) has also been submitted along with this valuation. They have arrived at the fair market value of the assets -liabilities at Rs 4212 lakhs. The fair market value of the equity shares is worked out to Rs 9013/- and the NAV per equity share is worked out to Rs. 6041/-. The appellant has contended that the appellant company continues, even in the future, to command a high Page 19 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. valuation. In support, the appellant has submitted another valuation of the appellant company as on 30.09.2019, which is about eight years after the impugned period. In this valuation, also place on record, once again, the fair market value of the equity shares of the appellant company comes to Rs 6105/-. The entire basis for these valuations were present before the AO and in any case can be obtained from the public domain. The AO has, however, not discussed these issues at all. The premium, paid at the time of allotment of the shares for the impugned period is found to be much lesser than these valuations that are based upon the book results of the appellant company during the same period or even later. This valuation, along with the earlier discussed appraisal of the prospects of the appellant company in the eyes of the investors further adds to the bona fide reason in the minds of the investors to make the impugned investments. Therefore, I find that in the case of all the investor companies, their identities and creditworthiness have been established.The genuineness of the transactions in terms of the channels used for making the transactions has been proved. The rationale for making the impugned investment as well as for the paying of premiums has been explained by the concerned parties and has been adequately justified. This explanation with regard to the premium is without prejudice to the fact that clause vii(b) of sub-section 56(2) has been inserted only with effect from 1.4.2013 and would not be applicable in the instant case. In any case it is found that the fair market value of the shares of the appellant company was much higher than the premium received. All this has also been accepted by the AO without any form of contradiction.”
Going over the discussions above as well as cited decisions of the assessee company, we find that the ld. CIT(A) before coming to the final conclusion has not only discussed the documentary evidences filed by the assessee whereas fully and elaborately explained the same and thereafter, allowed the appeal of the assessee thereby holding that the assessee has fully established the genuineness of the transaction. In the present case, it is important to mention here that the assessee has not only filed documents with regard to the shares such as shares, bank statements, IT acknowledgement, audited financial statement with regard to the source of funds rather in pursuant to the notices issued u/s 133(6) of the Act all the principal investors appeared and gave their statements on oath. Their statements have been verified by the AO as well as the ld. CIT(A). It is important to mention here that all the share subscribers are regularly
Page 20 of 21 I.T.A. No.: 1088/KOL/2023 Assessment Year: 2012-13 SDR Meghnath Investments Private Limited. assessed to tax, they are filing income tax, books of accounts were regularly maintained, financial statements are duly audited and transactions have been carried out through banking channels and all the formalities required by the Registrar of Companies for the purpose of issuing share capital, has been duly adhered. Hence, we are in this view that the order of ld. CIT(A) do not require any interference. Order of the CIT(A) is here by affirmed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 15th October, 2024. Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 15.10.2024 Bidhan (P.S.) Copy of the order forwarded to:
1. 1. DCIT, Kolkata.
2. SDR Meghnath Investments Private Limited, 13A, Govt. Place East, 2nd Floor, Kolkata, West Bengal, 700069.
3. CIT(A)-21, Kolkata.
4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata
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