Pinnacle Tie Private Limited, Kolkata v. ITO, Ward-9(3),Kolkata, Kolkata

ITA 241/KOL/2017 | 2009-2010
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 24123514 RSA 2017
Assessee PAN AAEGP8712F
Bench Kolkata
Appeal Number ITA 241/KOL/2017
Duration Of Justice 9 month(s) 21 day(s)
Appellant Pinnacle Tie Private Limited, Kolkata
Respondent ITO, Ward-9(3),Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Assessment Year 2009-2010
Appeal Filed On 08-02-2017
Judgment Text
B IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI JUDICIAL MEMBER ITA NO.241/KOL/2017 ASSESSMENT YEAR:2009-10 PINNACLE TIE UP PVT. LTD. C/O RSVPC & CO. 41A A.J.C BOSE ROAD 6 TH FLOOR ROOM NO.613 KOLKATA-17 [ PAN NO.AAEGP 8712 F ] / V/S . INCOME TAX OFFICER WARD-9(3) AAKAR BHAVAN 5 TH FLOOR P-7 CHOWRINGHEE SQUARE KOLKATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI D.S. DAMLE FCA /BY RESPONDENT MD. USMAN CIT-DR /DATE OF HEARING 18-09-2017 /DATE OF PRONOUNCEMENT 30-11-2017 /O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3 KOLKATA DATED 05.12.2016. ASSESSME NT WAS FRAMED BY ITO WARD- 9(3) KOLKATA U/S 144/263/147/143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 18.0 3.2015 FOR ASSESSMENT YEAR 2009-10. SHRI D.S. DAMLE LD. AUTHORIZED REPRESENTATIVE APPE ARED ON BEHALF OF ASSESSEE AND MD. USMAN LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 2 2. GROUND NO. 1 TO 3 ARE INTER-RELATED AND THEREFOR E BEING TAKEN UP TOGETHER. THE ISSUE RAISED BY THE ASSESSEE IS THAT LD. CIT(A) ERR ED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAINING THE DISALLOWANCE OF 13.49 CRORES U/S 68 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARE AND SECURITI ES. THE ASSESSEE DURING THE YEAR HAS ISSUED 337250 EQUITY SHARES HAVING FACE VALUE OF 10/-ALONG WITH THE PREMIUM OF 390/- PER SHARE. THE ASSESSEE GOT A SHARE CAPITAL O F 13.49 CRORES DURING THE YEAR. THE AO DURING THE PROCEEDING TO CHECK THE VERACITY OF THE TRANSACTIONS REQUIRED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS: 1. PROOF OF IDENTIFY-VOTER CARD/PASSPORT/DRIVING L ICENSE/PAN CARD 2. LIST OF COMPANIES WHERE YOU WERE DIRECTORS/SHARE HOLDERS WITH DATES OF APPOINTMENT WITH DIN 3. PROOF OF ACKNOWLEDGEMENT OF FILING IT RETURN ALO NG WITH COPIES OF ACCOUNTS. 4. DETAILS OF TRANSACTION WITH THE ABOVE ASSESSEE C OMPANY ALONG WITH COMPLETE BANK STATEMENTS 5. DECLARATION OF ALL SOURCES OF INVESTMENT/TRANSAC TIONS WITH THE ABOVE PARTY FOR THE RELEVANT ASSESSMENT YEAR. 6. PLEASE IDENTIFY YOUR FAMILY MEMBERS WHO ARE DIRE CTORS IN THE COMPANIES MENTIONED IN SL. NO.2 AND THEIR RELATIONSHIP WITH T HEM. 7.A WRITE-UP ON JUSTIFICATION OF LARGE SHARE PREMIU M RECEIVED/PAID. HOWEVER THE ASSESSEE IN SUPPORT OF ITS SHARE CAPIT AL FILED CERTAIN DETAILS OF SHAREHOLDERS BEFORE THE AO AT THE TIME OF ASSESSMEN T PROCEEDINGS. HOWEVER THE AO WAS NOT SATISFIED WITH THE DETAILS FILED BY THE ASS ESSEE IN SUPPORT OF ITS SHARE CAPITAL. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO ISSUED SUMMONS U/S 131 OF THE ACT TO THE DIRECTORS OF THE ASSESSEE-COMPANY AS WELL AS SUBSCRIBERS OF THE SHARES OF THE COMPANY FOR PERSONAL DEPOSITION. BUT THERE WAS NO COMPLIANCE BY THE DIRECTORS OF ASSESSEE-COMPANY AND IN VIEW OF THE ABOVE THE AO T REATED THE SHARE CAPITAL OF 13.49 CRORES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ACCORDINGLY ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE PROCEEDINGS WE RE INITIATED BY AO IN TERMS OF THE DIRECTION ISSUED BY THE LD. CIT U/S 263 OF THE ACT. THE NECESSARY DIRECTIONS ISSUED BY THE LD. CIT UNDER SECTION 263 OF THE ACT ARE GIVEN BELOW:- ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 3 I. THE AO SHOULD CONDUCT INDEPENDENT DETAILED AND C OMPLETE INTO SUBSCRIPTION TO SHARE CAPITAL AND PREMIUM. II. THE AO SHOULD TRACE THE SOURCE OF SHARE CAPITAL BY ENQUIRING INTO VARIOUS LAYERS THROUGH WHICH THE MONEY HAS BEEN INTRODUCED IN THE ASSESSEE COMPANY AS SHARE CAPITAL AND PREMIUM. III. FURTHER THE AO SHOULD EXAMINE THE DIRECTORS OF SUBSCRIBING COMPANIES BY ISSUING SUMMONS U/S. 131 OF THE ACT HAVING JURISDICTION OVE R SUBSCRIBER COMPANY. IV. THE AO SHOULD CONDUCT INDEPENDENT ENQUIRIES TO VERIFY THE DOCUMENTS FILED BEFORE HIM IN RESPECT OF PROOF OF SUBSCRIPTION TO THE HARE CAPITAL. V. THE AO SHOULD PASS A SPEAKING ORDER PROVIDING A DEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND VERIFYING THE SOURCE IN ROTATION OF MONEY THROUGH VARIOUS HANDS. BUT THE AO HAS NOT COMPLIED WITH THE DIRECTION ISSU ED BY LD.CIT U/S 263 OF THE ACT FOR MAKING FRESH ASSESSMENT. BESIDES THE ABOVE THE ASSESSEE ALSO SUBMITTED THAT ALL THE NECESSARY DETAILS WITH REGARD TO IDENTITY CREDITWORTHINESS AND GENUINENES S OF TRANSACTIONS OF SHARE CAPITAL WERE DULY FILED IN THE ORIGINAL ASSESSMENT PROCEEDI NGS U/S 143(3) OF THE ACT. HOWEVER LD. CIT(A) DISREGARDED THE CONTENTION OF ASSESSEE B Y OBSERVING AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E THE MATERIAL ON RECORD AND HAVE ALSO PERUSED THE ACCOUNTS IN THE ITR FILED. IT IS S EEN THAT THE SHAREHOLDERS HAVE MADE SUBSCRIPTION TOWARDS SHARE CAPITAL OF THE NEWLY INC ORPORATED APPLICANT COMPANY AT A HUGE PREMIUM. THE ASSESSEE COMPANY HAS ISSUED 3 37 250 EQUITY SHARES WITH A FACE VALUE OF RS.10/- AT A PREMIUM OF RS.390/-. THERE IS VIRTUALLY NO BUSINESS ACTIVITY AND NO DIVIDEND INCOME THE PROFIT & LOSS ACCOUNT SHOWS AN INCOME OF RS.621/. THERE IS NO FIXED ASSET IN THE BALANCE SHEET AND THE CLOSING BANK BALANCE RS.10 821/-. THE SHARE CAPITAL RECEIVED HAS BEEN UTILIZED ALMOST IN ENTIRELY INVESTING IN UNQUOTED SHARES OF OTHER PRIVATE COMPANIES AS SUCH PROFIT M OTIVE APPEARS TO BE ENTIRELY ABSENT IN THIS CASE. THE PIECES OF EVIDENCE POINTED OUT GO TO SHOW THAT THERE IS REASON TO ENTERTAIN THE BELIEF IT COULD BE A CASE OF MONEY LA UNDERING THE KIND OF SHARE CAPITAL BUILD UP CASES THAT WERE DISCUSSED THREADBARE IN TH E HON'BLE JURISDICTIONAL ITAT ORDER IN THE CASE OF M/S SUBHA LAKSHMI VANIJYA PVT. LTD. VS. CIT [ ITA NO.1104/KOL/2014 DT. 30/07/2015 AND AN INTRUSIVE ENQUIRY WAS REQUIR ED. IN PRIVATE LTD. COMPANIES GENERALLY PERSONS KNOWN T O DIRECTORS OR SHAREHOLDERS DIRECTLY OR INDIRECTLY SUBSCRIBE TO THE SHARES. UPO N RECEIPT OF MONEY THE SHARE SUBSCRIBERS DO NOT BECOME INCOMMUNICADO. IN SUCH CA SES ASSESSEE CANNOT SIMPLY FURNISH DETAILS AND REMAIN QUIET WHEN SUMMONS ARE R ESERVED UPON IT FOR DEEPER INQUIRY. NOTICES AND SUMMONS HAVE BEEN ISSUED AND OPPORTUNIT Y GIVEN TO ASSESSEE CAN BE SEEN FROM THE BODY OF ASSESSMENT ORDER. A COMPANY WHICH HAS BEEN RECENTLY INCORPORATED WITH OUT ASSESSMENT YEAR TRACK RECORD DOES NOT IN ANY WAY JUSTIFY A PREMIUM. UNLES S THE ASSESSEE FILES ALL THE RELEVANT DETAILS REGARDING RAISING OF SHARE CAPITAL AND UNLESS THE DIRECTORS APPEAR AND DEPOSE IT IS NOT CLEAR AS TO WHETHER ANY DUE D ILIGENCE WAS DONE BY THE SUBSCRIBING COMPANIES WHETHER ANY PECULIAR OR PERS ONAL REASON WAS VALID FOR THE INVESTMENT OR WHETHER ANY ARRANGEMENT WAS MADE FOR THE PROTECTION OF CEASE BY ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 4 MERELY FURNISHING THE NAMES ADDRESS AND PAN PARTIC ULARS OR RELYING ON ENTRIES IN THE REGISTRAR OF COMPANIES WEBSITE. THE RELATIONSHIP OF THE ASSESSEE TO THE APPLICANTS IS CLOSER THAN ARMS LENGTH IN SUCH CASES. ALSO THE CON CEPT OF SHIFTING ONUS DOES NOT MEAN THAT ONCE CERTAIN FACTS ARE PROVIDED THE ASSE SSEES DUTIES ARE OVER. IF ON VERIFICATION THE INFORMATION BECOMES UNVERIFIABLE THE ONUS SHIFTS BACK TO THE ASSESSEE. FALTERING AT THIS STAGE THE CONSEQUENCE IS ADDITION U/S. 68. NEITHER THE DIRECTORS OF THE ASSESSEE COMPANY NOR THE SHARE SUB SCRIBERS APPEARED BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE SUMMONS. ONUS TO PROVE THE THREE INGREDIENTS IS ON THE ASSESSEE AS THE FACTS ARE ONLY WITHIN THE AS SESSEES KNOWLEDGE. THE DETAILS AVAILABLE REFLECT SOME PAPER WORK OR DOCUMENTATION BUT GENUINENESS CREDITWORTHINESS AND IDENTITY ARE DEEPER AND OBTRUS IVE. VERIFICATION OF ALL ASPECTS WAS NEEDED BUT DUE TO COMPLETE NON-COMPLIANCE THE APPLI CANTS CASE FALLS FLAT. THE HIGHEST COURT OF THE LAND HAS LAID DOWN THE HUMAN PROBABILI TY TEST TO ANALYZE THE GENUINENESS OF THE ENTRY THROUGH LOGICAL ANALYSIS I N THE CASE OF CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) AND ALSO FOLLOWE D IN THE CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) APPLYING THE TEST OF HUMAN PROBABILITY AND PREPONDERANCE OF PROBABILITY AS LAID DOWN BY THE AP EX COURT TO THE SURROUNDING FACTS AND CIRCUMSTANCES OF THIS CASE THE CLAIM BEING MAD E CANNOT BE SUSTAINED BEFORE THE TEST OF HUMAN PROBABILITIES. THE ADDITION OF RS.13 49 00 000/- U/S 68 IS CONFIRMED. THE ASSESSEE BEING AGGRIEVED BY THIS ORDER OF LD. C IT(A) CAME IN 2 ND APPEAL BEFORE US. 5. LD. AR BEFORE US FILED PAPER BOOK WHICH IS RUNNI NG FROM PAGES 1 TO 413 AND SUBMITTED THAT ALL THE DETAILS OF THE SUBSCRIBERS O F SHARES WERE DULY FILED BEFORE THE AO AT THE TIME OF ORIGINAL PROCEEDINGS. ALL THE SUBSCR IBERS OF SHARES OF THE COMPANY DULY FILED THEIR REPLIES IN RESPONSE TO THE NOTICE ISSUE D U/S 133(6) OF THE ACT. LD. AR FURTHER DREW OUR ATTENTION ON PAGES 83 TO 413 WHERE FOLLOWI NG DETAILS WERE PLACED:- (I) REPLY IN RESPONSE TO THE NOTICE U/S. 133(6) O F THE ACT; (II) COPY OF SHARE APPLICATION FORM; (III) COPY OF SHARE ALLOTMENT LETTER; (IV) COPY OF BANK STATEMENT HIGHLIGHTING TRANSACTI ONS (V) COPY OF ITR ACKNOWLEDGEMENT FOR ASSESSMENT YEA R 2009-10 ALONG WITH AUDITED ACCOUNTS; (VI) CONFIRMATION WITH THE SOURCE OF FUND UTILIZED FOR THE PURCHASE OF SHARES; (VII) COPY OF ASSESSMENT ORDER PASSED U/S. 147/143 (3) OF THE ACT. ON THE OTHER HAND LD. DR SUBMITTED THAT ALL THE SU BSCRIBERS OF THE SHARES OF THE ASSESSEE COMPANY ARE BOGUS COMPANIES WHICH ARE INDU LGED IN CONVERTING UNACCOUNTED MONEY IN ACCOUNTING FORM. THE ASSESSEE HAS NOT FILE D NECESSARY DETAILS IN SUPPORT OF SHARE CAPITAL TRANSACTIONS BEFORE THE LD. CIT(A) DU RING APPELLATE STAGE. ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 5 IN REJOINDER LD. AR SUBMITTED THAT LD. CIT(A) REFUS ED TO ACCEPT THE DOCUMENTS WHICH WERE FILED BEFORE THE AO. IN SUPPORT OF ASSESSEES CLAIM LD. AR HAS FILED THE COPY OF AFFIDAVIT WHICH IS PLACED ON RECORD. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE AFORESAID DI SCUSSIONS WE OBSERVE CERTAIN UNDISPUTED FACTS AS DETAILED BELOW:- A) THE ASSESSEE DURING THE YEAR HAS NO BUSINESS BU T IT HAD ISSUED SHARES AT THE EXORBITANT PREMIUM; B) THE SHARE CAPITAL AND PREMIUM OF THE ASSESSEE WA S ACCEPTED IN ASSESSMENT MADE U/S 143(3)/147 OF THE ACT; C) SUBSEQUENTLY THE MATTER WAS PICKED UP FOR REVISI ON U/S 263 OF THE ACT AND THE SAME WAS REVISED VIDE ORDER DATED 13.03.2014 WI TH THE DIRECTION TO MAKE DE NOVO ASSESSMENT. THE RELEVANT EXTRACT OF THE ORDER IS R EPRODUCED BELOW:- 18. IN VIEW OF THE ABOVE THE ORDER PASSED BY THE A SSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E & HENCE THE ORDER PASSED BY THE AO IS SET-ASIDE WITH THE DIRECTION THAT HE/S HE SHOULD PASS THE ASSESSMENT ORDER AFTER CONDUCTING INDEPENDENT DETAI LED AND COMPLETE ENQUIRIES INTO THE SUBSCRIPTION TO THE SHARE CAPITA L AND PREMIUM TO THE EXTENT OF RS.13 49 00 000/- INTRODUCED IN THIS CASE. THE A O SHOULD TRACE THE SOURCE OF SHARE CAPITAL BY ENQUIRING INTO THE VARIOUS LAYE RS THROUGH WHICH THE MONEY HAS BEEN INTRODUCED IN THIS COMPANY AS SHARE CAPITA L AND ALSO EXAMINE THE DIRECTORS OF SUBSCRIBER COMPANIES BY ISSUING SUMMON S U/S.131 OF THE IT ACT. THE AO SHOULD SEND INFORMATION TO THE AOS HAVING JU RISDICTION OVER THE SUBSCRIBER COMPANY TO THE SHARE CAPITAL REGARDING I TS INVESTMENT INTO SHARE CAPITAL & PREMIUM PAID. THE AO SHOULD CONDUCT INDEP ENDENT ENQUIRIES TO VERIFY THE DOCUMENTS FILED BEFORE HIM IN RESPECT OF PROOF OF SUBSCRIPTION TO SHARE-CAPITAL. THE AO SHOULD NOT CONFINE HIMSELF TO CONDUCTING ENQUIRES INTO THE SUBSCRIBERS TO THE SHARE CAPITAL ONLY ON SELECT IVE BASIS. THE AO SHOULD ALSO CALL UPON THE ASSESSEE TO IDENTIFY THE PERSONS WHO ARE SHOWN AS DIRECTORS OF THE ASSESSEE COMPANY AND EXAMINE ON OATH TO VERI FY THEIR CREDENTIAL AS DIRECTORS. THE AO SHOULD PASS SPEAKING ORDER AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE AND VERIFYING THE SOURC E OF SHARE CAPITAL INCLUDING THE SHARE PREMIUM OF ALL THE SUBSCRIBERS AND ROTATI ON OF MONEY THROUGH VARIOUS HANDS SO AS TO ASCERTAIN THE TRUE NATURE OF TRANSACTIONS WHICH WILL BRING TO THE FORE THE REALITY OF THE TRANSACTIONS. IN VIEW OF THE ABOVE AO INITIATED THE ASSESSMENT P ROCEEDINGS U/S. 144/263/147/143(3) OF THE ACT. ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 6 6.1 ON PERUSAL OF THE ABOVE FACTS WE NOTE THAT THE DIRECTION ISSUED BY LD. CIT U/S. 263 OF THE ACT HAS NOT BEEN COMPLIED WITH BY THE AO IN THE CONSEQUENTIAL ORDER. THE NECESSARY DIRECTIONS CAN BE SUMMARIZED AS UNDER:- I) THE AO SHOULD CONDUCT INDEPENDENT DETAILED AND COMPLETE INTO SUBSCRIPTION TO SHARE CAPITAL AND PREMIUM. II) THE AO SHOULD TRACE THE SOURCE OF SHARE CAPITAL BY ENQUIRING INTO VARIOUS LAYERS THROUGH WHICH THE MONEY HAS BEEN INT RODUCED IN THE ASSESSEE COMPANY AS SHARE CAPITAL AND PREMIUM. III) FURTHER THE AO SHOULD EXAMINE THE DIRECTORS OF SUBSCRIBING COMPANIES BY ISSUING SUMMONS U/S 131 OF THE ACT. HE SHOULD AL SO SEND INFORMATION TO AOS HAVING JURISDICTION OVER SUBSCRIBER COMPANIE S. IV) THE AO SHOULD CONDUCT INDEPENDENT ENQUIRIES TO VERIFY THE DOCUMENTS FILED BEFORE HIM IN RESPECT OF PROOF OF SUBSCRIPTIO N TO THE SHARE CAPITAL. V) THE AO SHOULD PASS A SPEAKING ORDER PROVIDING AD EQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND VERIFYING THE SOURC E IN ROTATION OF MONEY THROUGH VARIOUS HANDS. THE ORDER OF AO JUST RECORDS THE FACT THAT THE SUMM ONS WERE ISSUED TO THE DIRECTORS OF ASSESSEE-COMPANY AS WELL AS TO SOME SUBSCRIBERS OF THE SHARE CAPITAL. THE RELEVANT EXTRACT OF THE AOS FINDING IS REPRODUCED BELOW:- HENCE SUMMONS U/S. 131(1) OF THE INCOME TAX A CT 1961 WAS ISSUED ON 04/02/2015 TO THE DIRECTORS OF THE ASSESS EE COMPANY AND ALSO SOME SUBSCRIBER COMPANIES FOR PERSONAL DEPOSITION A ND ALSO TO PRODUCE THE FOLLOWING DETAILS. THUS AN INFERENCE CAN BE DRAWN THAT THE AO HAS NOT CONDUCTED THE ENQUIRY FOR EXAMINATION IN THE MANNER AS DIRECTED BY THE LD. CI T U/S 263 OF THE ACT. SIMILARLY WE ALSO NOTE THAT THE ASSESSEE IN THE IN STANT CASE HAS FILED WRITTEN SUBMISSION BEFORE LD. CIT(A) AND IT HAS NOT APPEARE D PERSONALLY DURING APPELLATE PROCEEDINGS. THUS IT IS TRANSPIRED THAT ASSESSEE D ID NOT APPEAR BEFORE LD. CIT(A) PERSONALLY TO ATTEND THE HEARING. IN THIS REGARD IT WAS SUBMITTED THAT LD. CIT(A) REFUSED TO ACCEPT THE NECESSARY SUPPORTING EVIDENCE DESPITE A SPECIFIC REQUEST WAS MADE BY ASSESSEE VIDE LETTER DATED 18.11.2016. THE RELEVANT EXTRACT OF THE LETTER IS REPRODUCED BELOW:- 13. WE SEEK PERMISSION TO PRODUCE THE COPIES OF DOC UMENTS RELATED TO THE TRANSACTIONS WITH REGARD TO IDENTITY CREDITWORTHIN ESS AND GENUINENESS OF SHARE APPLICANTS TO WHOM SHARES WERE ALLOTTED DURING THE YEAR. ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 7 DURING COURSE OF ARGUMENTS LD. AR FOR THE ASSESSEE FILED AN AFFIDAVIT IN SUPPORT OF ASSESSEES CLAIM WHICH READS AS UNDER:- I PRAMOD SHARMA SON OF LATE SH. RAMDIN SHARMA THE DIRECTOR OF PINNACLE TIE-UP PRIVATE LIMITED SITUATED AT 14C MAHARSHI DEVENDRA ROAD 4 TH FLOOR KOLKATA-700007 AGED ABOUT 57 YEARS DO HEREBY SOLEMNLY DECLARE AND AFFIRM AS FOLLOWS: 1. THAT I AM DIRECTOR OF PINNACLE TIE-UP PRIVATE L IMITED SITUATED AT 14C MAHARISHI DEVENDRA ROAD 4 TH FLOOR KOLKATA-700007. 2. THAT I AM DULY AUTHORIZED AND COMPETENT TO SWEAR THIS AFFIDAVIT ON BEHALF OF THE COMPANY. 3. THAT THE DOCUMENT IN THE PAPER BOOK HAVING SERI AL NO. 18 TO 27 CONSISTING OF PAGE NO. 83 TO 252 ARE THE COPIES OF DOCUMENTS WHICH WER E FILED BEFORE THE ASSESSING OFFICER ITO-WARD-9(3) KOLKATA DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING. 4. THAT THE DOCUMENT IN THE PAPER BOOK HAVING SERIA L NO. 29 TO 38 CONSISTING OF PAGE NO. 253 TO 413 WERE OBTAINED FROM THE SHAREHOLDERS AND PRESENTED BEFORE THE LD. CITA-3/KOLKATA DURING THE COURSE OF APPELLATE PROCE EDING. THE LD. CITA-3/KOLKATA REFUSED TO ADMIT THE SAME. THESE DOCUMENTS WERE NEC ESSARY TO SUPPORT THE GROUND OF APPEAL OF THE APPELLANT. 5. THAT THE STATEMENTS ARE BASED ON RECORDS AND ARE TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF. SD/- PRAMOD SHARMA SWORN IN PRESENT OF AT KOLKATA DECLARANT ON THIS THE 1ST DAY OF AUGUST 2017 IDENTIFIED BY ME KAML KUM AR PAUL SD/- ARUN KR. SARKA NOTARY GOVT . OF INDIA C.M.M.S COURT KOLKATA REGD.NO.2700/04 2 & 3 BANSHALL STREET KOLKATA-001 FROM THE ABOVE WE NOTE THAT THE LD. CIT-A REFUSED T O ACCEPT THE DOCUMENTS WHICH ASSESSEE WANTED TO FILE DURING THE PROCEEDINGS. INDEED THE CO-ORDINATE BENCH IN THE CASE OF SUBHA LAKSHMI VANIJYA PVT. LTD. VS. CIT [ ITA NO.1104/KOL/2014 DATED 30.07.2015] HAS UPHELD THE ORDER PASSED U/S 263 OF THE ACT BUT THERE THE ISSUE WAS THAT WHETHER THE ORDER OF THE AO IS ERRONEOUS IN SO FAR PREJUDICIAL TO THE INTEREST OF REVENUE. THUS IT CAN BE INFERRED THAT THE ISSUE ON MERIT WAS NOT DECIDED BY THE HONBLE ITAT IN THE CASE OF SUBHA LAKSHMI VANIJYA PVT. LTD.(SUPRA). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BEL OW : IT IS THEREFORE HELD THAT THE PROCEEDINGS U/S. 2 63 OF THE ACT TO REVISE THE ORDER DATED 21.2.2013 PASSED BY THE AO U/S. 147 OF THE ACT ARE VALID AND CANNOT HELD TO BE WITHOUT JURISDICTION. ACCORDINGLY THIS ISSUE IS AL SO DECIDED AGAINST THE ASSESSEE. 6.2 WE ALSO NOTE THAT THE ORDER OF LD. CIT U/S 263 OF THE ACT IN THE CASE OF SUBHA LAKSHMI VANIJYA PVT. LTD. (SUPRA) GOT MERGED WITH THE ORDER OF HONBLE ITAT WHICH ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 8 WAS SUBSEQUENTLY CONFIRMED BY THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF RAJMANDIR ESTATE PVT. LTD. VS. PR. CIT REPORTED IN 386 ITR 162. THUS WE ACCORDINGLY NOTE THAT THE DIRECTION ISSUED BY THE LD. CIT U/S 2 63 OF THE ACT WAS AFFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT. THEREFORE IN OU R CONSIDERED VIEW THE AO WAS UNDER THE OBLIGATION TO FOLLOW THE DIRECTION GIVEN BY THE LD. CIT U/S 263 OF THE ACT. THE FACTS OF THE PRESENT CASE ARE EXACTLY IDENTICAL OF SUBHA LAKSHMI VANIJYA PVT. LTD. (SUPRA) . THEREFORE WE HOLD THAT THE AO WAS UNDER THE OBLIG ATION TO FOLLOW THE DIRECTIONS ISSUED BY THE LD. CIT IN HIS ORDER U/S 2 63 OF THE ACT. HOWEVER ON PERUSAL OF THE CONSEQUENTIAL ORDER OF THE AO WE FIND THAT DIRE CTION HAS NOT BEEN COMPLIED WITH IN TOTALITY AS DISCUSSED ABOVE. 6.3 WE ALSO NOTE THAT THE PRINCIPLES LAID DOWN IN B Y THE HONBLE ITAT IN THE CASE OF SUBHA LAKSHMI VANIJYA PVT. LTD. (SUPRA) CANNOT BE APPLIED TO THE PRESENT CASE AS I T IS ARISING OUT OF THE GIVING EFFECT ORDER IN PURSUA NCE TO THE PROVISIONS OF SECTION 263 OF THE ACT. THUS THE IMPUGNED ORDER PASSED U/S. 263 O F THE ACT IS THE MOTHER ORDER ON THE BASIS OF WHICH FRESH PROCEEDINGS WERE INITIATED . THUS THE DIRECTIONS ISSUED U/S. 263 OF THE ACT CANNOT BE BRUSHED ASIDE. IN OUR CONS IDERED VIEW THE COGNIZANCE OF THE DIRECTIONS ISSUED U/S. 263 OF THE ACT IS VERY IMPOR TANT TO THE SHARE CAPITAL TRANSACTIONS. 6.4 WE ALSO DRAW SUPPORT FROM THE PRINCIPLES LAID D OWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD . IN ITA 525/2014 VIDE ORDER DATED 11 MARCH 2015 WHEREIN IT WAS HELD AS UNDER:- 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. B UT CIT(APPEALS) HAVING NOTICED WANT OF PROPER INQUIRY COULD NOT HAVE CLOSED THE C HAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY AS INDEED OF ITAT TO HAVE ENS URED THAT EFFECTIVE INQUIRY WAS CARRIED OUT PARTICULARLY IN THE FACT OF THE ALLEGA TIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. TH IS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPON SE TO THE NOTICE UNDER SECTION 148 ISSUED BY THE AO AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A FU RTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). THIS APPROACH NOT HAVIN G BEEN ADOPTED THE IMPUGNED ORDER OF ITAT AND CONSEQUENTLY THAT OF CIT(APPEALS ) CANNOT BE APPROVED OR UPHELD. ITA NO.241/KOL/2017 A.Y. 200 9-10 PINNACLE TIE UP PVT.LTD. VS. ITO WD-9(3) K OL. PAGE 9 6.5 IN VIEW OF ABOVE PROPOSITION AND IN THE INTERES T OF NATURAL JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE THE MATTER TO THE FILE O F AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW AND IN THE LIGHT OF ABOVE S TATED DISCUSSION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. CONSEQUENTLY GROUND OF ASSESSEES IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT FOR STATISTICAL PURPOSE THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2017 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP SR.P.S ) - 30/11/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-PINNACLE TIE UP PVT. LTD. C/O RSVPC & C O. 41A A.J.C. BOSE ROAD 6 TH FLOOR ROOM NO.613 KOLKATA-17 2. /RESPONDENT-ITOWARD-9(3) AAKAR BHAVAN 5 TH FL P-7 CHOWRINGHEE SQUARE KOLKATA -69 3. - / CONCERNED CIT 4. - - / CIT (A) 5. . %% / DR ITAT KOLKATA 6. 2 / GUARD FILE. BY ORDER/ /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO