M/S AUROPLAS GOLD PVT LTD (FORMERLY KNOWN AS M/S - RANISATI DEALCOMM PVT LTD),KOLKATA vs. C.I.T KOLKATA - II, KOLKATA

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES :D : KOLKATA

BEFORE SHRI R.S. SYAL, AM & SHRI N.V. VASUDEVAN, JM ITA No.1488/Kol/2013 Assessment Year 2008-09 M/s. Auroplas Gold Pvt. Vs. Commissioner of Income Tax, Ltd.,(Formerly Known as M/s. Kolkata-II, Ranisati Dealcom Pvt. Ltd.) C/o Salarpuria Jajodia & Co., AayakarBhawan, 7, C.R.Avenue, Kolkata- P-7, Chowringhee Square, 700072. Kolkata – 700 069. PAN: AAECR 0440 C

ITA No.1753/Kol/2013 Assessment Year 2008-09 Sheetal City Realtors Pvt. Vs. Commissioner of Income Tax, Ltd., C/o Poddar & Kolkata-II, AayakarBhawan, Associates, 9/12, Lalbazar Street, ‘Mercantile Building; P-7, Chowringhee Square, 1st Floor, Block-D, Kolkata- Kolkata – 700 069. 700001. PAN: AABCE 8664 L ITA No.171/Kol/2015 Assessment Year 2009-10 M/s. Subhdhan Commodities Vs. Commissioner of Income Tax, Pvt. Ltd., C/o, Salarpuria Kolkata-III, Jajodia & Co., 7, Chittaranjan Avenue, 1

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 Kolkata-700072. AayakarBhawan, PAN: AAMCS 5760 J P-7, Chowringhee Square, Kolkata – 700 069.

ITA No.1487/Kol/2013 Assessment Year:2008-09

M/s.Pragati Financial Vs. Commissioner of Income Tax, Management Pvt. Ltd., Kolkata-III, Salarpuria Jajodia & Co., AayakarBhawan, 7, CR Avenue, Kolkata- P-7, Chowringhee Square, 700072. Kolkata – 700 069.

PAN : AAECP 4956 B ITA No.981/Kol/2014 Assessment Year:2009-10

M/s.Swift Tracom Pvt. Ltd., Vs. Commissioner of Income Tax, C/O.Salarpuria Jajodia & Co., Kolkata-II, 7, C.R.Avenue, Kolkata- AayakarBhawan, 700072. P-7, Chowringhee Square, Kolkata – 700 069. PAN : AAMCS 0353 B ITA No.1571/Kol/2013 Assessment Year:2008-09

M/s.Fence Projects Pvt. Ltd., Vs. Commissioner of Income Tax, C/O.Salarpuria Jajodia & Co., Kolkata-II, 7, C.R.Avenue, Kolkata- AayakarBhawan, 700072. P-7, Chowringhee Square, Kolkata – 700 069. PAN : AABCF 0208M

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 ITA No.1495/Kol/2013 Assessment Year:2008-09

M/s.Sukhsagar Goods Vs. Commissioner of Income Tax, Pvt.Ltd., M/S.Rajesh Mohan Kolkata-II, & Associates, Unit No.18, 5th AayakarBhawan, Floor, 34, G.C.Avenue, P-7, Chowringhee Square, Kolkata – 700013. Kolkata – 700 069.

PAN : AALCS 3152 K ITA No.1261/Kol/2013 Assessment Year:2008-09

M/s Shree Kartikey Vs. Commissioner of Income Tax, Commodities Pvt.Ltd., Kolkata-II, Rajesh Mohan & Associates, Bagati House, 5th Floor, Unit AayakarBhawan, No.18, 34, Ganesh Chandra P-7, Chowringhee Square, Avenue, Kolkata-700013. Kolkata – 700 069. PAN : AALCS 3153 J ITA No.1498/Kol/2014 Assessment Year 2008-09 M/s. East India Leasing Vs. Commissioner of Income Tax, Company Ltd., C/o Kolkata-I, Salarpuria Jajodia & Co., 7, C.R.Avenue, Kolkata- AayakarBhawan, 700072. P-7, Chowringhee Square, PAN : AADCB 3086 B

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 Kolkata – 700 069.

ITA No.1215/Kol/2014 Assessment Year 2009-10 Skylark Vincom Pvt. Ltd., Vs. Commissioner of Income Tax, 27, Narayani Building, 5th Kolkata-II, AayakarBhawan, Floor, Brabourne Road, P-7, Chowringhee Square, Kolkata-700001. Kolkata – 700 069. PAN : AALCS 5272 L

(Appellants) (Respondents)

Assessee By : Mr.Sujay Sen, Advocate Department By : Shri.S.Srivastava, CIT, DR. Date of Hearing : 4.11.2015 Date of Pronouncement : 4 .11.2015

ORDER Per Bench Appeal in Subhdhan Commodities P. Ltd. VS. CIT (ITA no.

171/K/2015) is delayed by 43 days. The assessed has filed petition for

condonation of delay. We are satisfied with the reasons of delay. As

such, the delay is condoned and the appeal is taken up for hearing on

merits.

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 2. Through these appeals, different assessees assail the correctness of

separate orders passed by the Commissioners of Income-tax (CIT) u/s

263 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in

relation to the captioned assessment years. Since these appeals are based

on largely similar facts and common grounds of appeal, we are

proceeding to dispose them off by this consolidated order for the sake of

convenience.

were filed by such companies with meagre income; intimations were

issued u/s 143(1); thereafter notices u/s 148 were issued either at the

instance of such companies divulging a paltry escapement of income or

otherwise ; assessment orders were passed u/s 143(3) read with section

147 after making nominal additions and the AOs, during the course of

such assessment proceedings, made some formal enquiries about shares

issued by such companies at huge premium by issuing notices u/s 133(6)

to some of the shareholders and getting satisfied without any further

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 investigation. The jurisdictional CITs have passed orders u/s 263 in all

such cases, which have been assailed before the Tribunal.

material on record. It is relevant to mention that we have disposed of

more than 500 cases involving same issue through certain orders with

the main order having been passed in a group of cases led by

Subhlakshmi Vanijya Pvt. Ltd. vs. CIT (ITA No.1104/Kol/2014) dated

30.7.2015 for the A.Y. 2009-10.

the cases under consideration are mutatis mutandis similar to those

decided earlier, except for the separate arguments made, which we will

advert to shortly. In our aforesaid order in Subhlakshmi Vanijya Pvt.

Ltd., vs. CIT (ITA No. 1104/Kol/2014 A.Y. 2009-10), we have drawn the

following conclusions: -

A. Contention of the assessee that since the AO of the assessee- company was not empowered to examine or make any addition on account of receipt of share capital with or without premium before

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 amendment to section 68 by the Finance Act, 2012 w.e.f. A.Y. 2013-14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so, is unsustainable. B. Failure of the AO to give a logical conclusion to the enquiry conducted by him gives power to the CIT to revise such assessment order, by holding that :- i) the enquiry conducted by the AO in such cases can’t be construed as a proper enquiry; ii) CIT u/s 263 can set aside the assessment order and direct the AO to conduct a thorough enquiry, notwithstanding the jurisdiction of the AO in making enquiries on the issues or matters as he considers fit in terms of section 142(1) and 143(2) of the Act, which is relevant only up to the completion of assessment ; iii) Inadequate inquiry conducted by the AO in the given circumstances is as good as no enquiry and as such, the CIT was empowered to revise the assessment order ; iv) The order of the CIT is not based on irrelevant considerations and further in the present circumstances, he was not obliged to positively indicate the deficiencies in the assessment order on merits on the question of issue of share capital at a huge premium ; and v) the AO in the given circumstances can’t be said to have taken a possible view as the revision is sought to be done on the premise that the AO did not make enquiry thereby rendering the assessment order erroneous and prejudicial to the interest of the revenue on that score itself. C. In the given facts and circumstances of all such cases, the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only 7

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases. D. Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit. E. The CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 andnot other CIT. F. Addition in the hands of a company can be made u/s 68 in its first year of incorporation. G. After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid. H. Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day. I. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT. J. Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. K. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. 6. Now we take up the arguments separately made on behalf of the 8

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 above assessees, which the ld. AR claimed to be relevant for all the

instant appeals. Firstly it was argued that section 68 uses the word `may’

and hence a discretion has been given by the legislature to the AO to

make or not to make any addition under this section if he is not satisfied

with the explanation furnished by the assessee. This proposition was

bolstered with the help of a judgment from the Hon’ble Supreme Court

in CIT vs. Smt. P.K. Noorjehan (1999) 237 ITR 570 (SC) in which it

has been held that if AO is not satisfied, then addition is not must. A

view was canvassed that when the AO chose not to make any addition

by exercising his discretion as per the mandate of section 68, then the ld.

CIT in the instant cases was not obliged to hold against the assessees.

aforenoted Apex Court that the discretion lies with the AO to make or

not to make any addition u/s 68, if he is not satisfied with the

explanation given by the assessee. But we are confronted with a

situation in which the AO did not make befitting inquiry in the given

circumstances and the CIT has held the assessment order to be erroneous

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 and prejudicial to the interest of the revenue on this count and directed

the AO to pass a fresh assessment order as per law. He has not

substituted his opinion for that of the AO and confirmed the addition. He

has simply restored the matter to the AO for deciding the issue as per

law and the decision of the AO may go either way. In such

circumstances, this argument of the ld. AR has no applicability.

satisfaction of the AO as to the explanation given for cash credit. He

accentuated on the words `in the opinion of the Assessing Officer’ as

used in the language of the section. It was argued that the satisfaction

should be that of the AO and not that of any other authority including

CIT. We are again not persuaded by this argument. We are concerned

with a case in which the AO did not discharge the burden cast on him as

regards the framing of assessment. In such circumstances, the ld. CIT

stepped in to check his action. All the aspects of the assessment are

required to be examined by the AO alone and no other authority. But if

such an examination has not been done which has rendered the

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 assessment order erroneous and prejudicial to the interest of the

Revenue, then it is not only the right but the duty of the CIT to revise

such an erroneous assessment, which is prejudicial to the interest of the

revenue. This is what has exactly happened in this case. If the

contention of the ld. AR is accepted and taken to a logical conclusion, it

will amount to rendering the provisions of section 263 otiose. We,

therefore, refuse to accept this contention.

Court dt. 16.4.2015 in CIT vs. Anshikha Consultants Pvt. Ltd. in which

the contention of the assessee as regards the genuineness of the receipt

of share capital at premium, has been accepted. This judgment has no

application to the facts of the instant case because in that case appeal

was filed against the tribunal order upholding the order of the CIT(A) in

which it was observed by the ld. CIT(A) as well as the tribunal that the

receipt of share application money with premium was through genuine

transactions. Moreover that was appeal against the deletion of addition

and not against the revisional order restoring the matter to the AO for

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 making a proper and adequate inquiry.

cannot be considered as retrospective in view of several judgments

including CIT VS. Vatika Township P. Ltd. (2014) 367 ITR 466 (SC), in

which the levy of surcharge on income tax in case of block assessment

has been held as prospective. We do not find any substance in the

argument for two reasons. First reason is that this judgment does not

deal with proviso to section 68 but with the levy of surcharge on income

tax in case of block assessment. There is a lot of difference between the

two provisions. There is no universal unimpeached rule that no

amendment can be construed as retrospective. It depends upon the nature

of provision and the amendment as to whether it is retrospective or

prospective. The second reason for our not sounding a concurring note

to the argument of the ld. AR is that this issue has already been

discussed threadbare in our order in Subhlakshmi Vanijya Pvt. Ltd.

(supra). Relevant discussion has been made in paras 13.u. to 13.ae.

After making an elaborate analysis of the nature of amendment,

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15 memorandum explaining the provisions of the Finance Bill, 2012, and

legal position as emanating from various judgments from the Hon’ble

Summit Court governing the retrospective or prospective effect of an

amendment, it has been held that insertion of proviso to section 68 is

retrospective. As such, this argument, being devoid of any merit,

deserves to meet the fate of dismissal. We order accordingly.

in Subhlakshmi Vanijya Pvt. Ltd. (supra), we uphold all the impugned

orders.

[R.S. SYAL] [N.V. VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated, 4th November, 2015. RG

ITA Nos. 1488, 1753, 1487, 1571, 1495, 1261 and 1498/Kol/13 & ITA No.1251 & 981/Kol/14 & ITA No. 171/Kol/15