ITO, Ward - 12(1), Kolkata , Kolkata v. M/s. Calcutta Carbide Pvt. Ltd., , Kolkata

ITA 81/KOL/2018 | 2012-2013
Pronouncement Date: 22-11-2019 | Result: Dismissed

Appeal Details

RSA Number 8123514 RSA 2018
Assessee PAN AACCC3730E
Bench Kolkata
Appeal Number ITA 81/KOL/2018
Duration Of Justice 1 year(s) 10 month(s) 10 day(s)
Appellant ITO, Ward - 12(1), Kolkata , Kolkata
Respondent M/s. Calcutta Carbide Pvt. Ltd., , Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2019
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 22-11-2019
Last Hearing Date 05-09-2019
First Hearing Date 18-09-2019
Assessment Year 2012-2013
Appeal Filed On 12-01-2018
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND DR. A.L. SAINI ACCOUNTANT MEMBER ITA NO. 81 / KOL / 2018 ASSESSMENT YEAR :2012-13 INCOME TAX OFFICER WARD-12(1) 7 TH FLOOR AAYAKAR BHAWAN P-7 CHORWINGHEE SQUARE KOLKATA-69 V/S . M/S CALCUTTA CARBIDE PVT. LTD. 8/53/1 FERN ROAD 1 ST FLOOR NEW GOAL PARK GARIAHAT KOLATA-700 019 [ PAN NO.AACCC3730 E ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SUPRIYO PAL JCIT-SR-DR /BY RESPONDENT SHRI V.N. PUROHIT FCA /DATE OF HEARING 07-11-2019 /DATE OF PRONOUNCEMENT 22-11-2019 / O R D E R PER S.S.GODARA JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-4 KOLKATAS ORDER DATED 16.10.2017 PASSED IN CASE NO.726 727/CIT(A)-4/WD.12(1)/2015-16 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED . 2. THE FIRST AND FOREMOST ISSUE THAT ARISES FOR OUR APT ADJUDICATION IS THAT OF CORRECTNESS OF SECTION 68 ADDITION INVOLVING RS.1 92 00 000/- TREATED AS UNEXPLAINED ITA NO.81/KOL/2018 A.Y. 2012-13 ITO WD-12(1) KOL. VS. M/S CALCUTA CARBIDE PVT. LTD. PAGE 2 CASH CREDITS IN THE COURSE OF ASSESSMENT AND DELETED IN CIT(A)S ORDER UNDER CHALLENGE AS FOLLOWS: GROUND NO. 3- IS AGAINST ADDITION OF RS. 192 50 000/- BEING ISSUE OF FRESH SHARE CAPITAL RS. 38 40 000/- AND RS. 153 60 000/- AS PREMIUM THEREON. AT THE OUTSET IT IS HUMBLY SUBMITTED THAT AO PASSED A CRYPTIC ORDER NOT AT ALL EXAMINING NUMBER OF EVIDENCES PRODUCED. FACTUAL POSITION IS FOLLOWS AS TO FRESH ISSUE IN THE YEAR UNDER REFERENCE: SHARE CAPITAL PREMIUM RECD. (RS.) (RS.) OPENING BALANCE 1 32 25 000 3 57 75 000 ADDITION IN 2011-12 40 00 000 1 60 00 000 ---------------- ---------------- 1 72 25 000 5 17 75 000 ========== ========== THUS TOTAL AMOUNT RECEIVED WAS RS. 2 CRORES DURING THE YEAR AS AGAINST RS. 192 50 000/- CONSIDERED BY AO. IN PARAGRAPH 6 (PAGE 3) OF HIS IMPUGNED ORDER HE ONCE SAYS THAT DURING THE YEAR SHARES AMOUNTING TO RS. 40 00 000/- AND PREMIUM RS. 1 60 00 000/- WERE ISSUED. HOW AO ARRIVED AT FIGURE OF RS. 1 92 50 000/- IS NOT KNOWN. AGAIN NO SHARES. NO NEW SHARES WERE ISSUED TO PIGEON SYNTEX PVT. LTD. OR ANY INDIVIDUAL. 3.1 THUS IN FACT ACTUAL ADDITION THIS YEAR TO SHARE CAPITAL AND PREMIUM WAS RS. 2 00 00 000/- AND NOT RS. 1 92 00 000/- IN FIRST PACE. ENTIRE FRESH CREDIT TOWARDS FACE VALUE OF SHARE RS. 40 00 000/- AND PREMIUM OF RS. 160 00 000/- WAS RECEIVED FROM JUST ONES SHAREHOLDER M/S. SAMAY COMMERCIAL P. LTD. (INVESTING CO.) WHICH IS AN EXISTING SHAREHOLDER HOLDING RS. 9 60 000/-WORTH SHARE OF RS. 10/- EACH AND SAID INVESTOR CO. AND THE ASSESSEE COMPANY HAVE TWO COMMON DIRECTORS NAMELY SIR BHAKTIRAM BHALOTIA AND SRI MANOJ KUMAR BHALOTIA. 3.2 U/S 68 OF THE ACT ASSESSEE CO. IS TO PROVE: (A) IDENTIFY OF CREDITORS (B) GENUINENESS OF TRANSACTION (C) CREDITWORTHINESS OF CREDITOR ALL ABOVE CONDITIONS HAVE BEEN COMPRISED (A)THE CREDITOR SAID SHAREHOLDER CO. BEING EXISTING SHAREHOLDER IDENTIFY CANNOT BE AT DISPUTE. (B) TRANSACTION IS GENUINENESS AS IT IS RECORDED IN BOOKS OF BOTH THE INVESTOR AND THE ASSESSEE CO. AND ARE ALL THROUGH BANKING CHANNELS. (C) AS TO CREDIT WORTHINESS INVESTORS AUDITED ACCOUNTS SHOWS THAT IT HAS OWN FUNDS OF RS. 10 51 84 526/-. IT IS A NON BANKING FINANCIAL COMPANY (NBFC) DULY REGISTER WITH RBI AND ENTIRE FUND ARE USED IN INVESTMENT LOANS OR LIQUID ASSETS. IN SUPPORT OF ABOVE ASSESSEE CO. HAS PRODUCED BEFORE AO FOLLOWING DOCUMENTS OF SAID INVESTOR CO. (I)ACKNOWLEDGE RECEIPT FOR I.T. RETURN OF A.Y. 2012-13 (PAGE NO. 22) (II) AUDITED ACCOUNT FOR 31.03.2014 AND WITH CERTIFICATE AS NBFT FROM RBI (PAGE NOS. 23 TO 43) (III) BANK ACCOUNT FOR Y.E. 31.03.2012 (PAGE NOS. 44 TO 46) (IV) LEDGER COPIES OF APPELLANT CO. AND LEDGER COPY OF SANJAY IN ASSESSEES A/C (PAGE NOS. 47 TO 50). (ALL ABOVE RELATE TO SANJAY COMMERCIAL P. LTD.) (V) AUDITED ACCOUNTS OF APPELLANT CO. (PAGES NOS. 51 TO 68) ITA NO.81/KOL/2018 A.Y. 2012-13 ITO WD-12(1) KOL. VS. M/S CALCUTA CARBIDE PVT. LTD. PAGE 3 3.3 FROM ASSESSMENT ORDER YOUR LD. SELF WILL NOTICE THAT AO HAS TO SAY NOTHING AS TO ABOVE DOCUMENTS FILED. AO IS NOT CORRECT IN SAYING THAT DIRECTOR OF THE INVESTOR CO. SHRI MANOJ KUMAR BHALOTIA IS A DIRECTOR IN BOTH COMPANIES AND PARAGRAPH NO. 4 AO ADMITS THAT SHRI M. BHALOTIA APPEARED AND HIS DEPOSITION WAS TAKEN. HE DIRECTLY JUMPED UPON THE DECISION IN BISAKHA SALES PVT. LTD. VS. CIT IN ITA NO. 1493/KOL/2013 WHICH RELATE TO SECTION 263 OF THE I.T. ACT 1961. 4. THUS THE ASSESSEE HAS PROCEED IDENTITY CREDITWORTHINESS AND GENUINITY OF TRANSACTION FROM ABOVE DOCUMENTS. THE APPEAL IS PRAYED TO BE ALLOWED IN FULL. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT THE ASSESSING OFFICER HAD RIGHTLY TREATED THE ASSESSEES SHARE CAPITAL AND PREMIUM AS UNEXPLAINED CASH CREDITS SINCE IT HAD FAILED TO PROVE GENUINENESS/CREDITWORTHINESS THEREOF BY PRODUCING DIRECTOR OF INVESTOR ENTITY M/S SAMAY COMMERCIAL PVT. LTD. AND ALSO THAT THERE IS NO JUSTIFICATION FORTHCOMING QUA THE ASSESSEES EXORBITANT SHARE PREMIUM IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND NO MERIT IN THE REVENUES INSTANT FORMER GRIEVANCE. IT HAS COME ON RECORD THAT THE ASSESSEES INVESTOR COMPANY M/S SAMAY COMMERCIAL PVT. LTD. IS AN EXISTING SHARE HOLDER TREATED AS A GENUINE ENTITY IN THE PAST. THE ASSESSEE HAS PLACED ON RECORD ALL OF ITS DETAILED EVIDENCE IN THE NATURE OF INCOME TAX ACKNOWLEDGMENT AUDITED ACCOUNTS BANK ACCOUNT LEDGER ACCOUNT ETC. DURING THE COURSE OF SCRUTINY. CASE FILE FURTHER INDICATES THAT THE SAID INVESTOR ENTITYS DIRECTOR MR. MANOJ BHALOTIA IS THE COMMON DIRECTOR WHO DULY PUT HIS APPEARANCE BEFORE THE ASSESSING OFFICER TO DEPOSE IN SUPPORT OF IMPUGNED SHARE CAPITAL/PREMIUM. THERE IS NO DENIAL TO THE FACT THAT THE ASSESSEE ITS DIRECTOR AND THE INVESTOR ENTITY; OF THREE PARTIES ARE ASSESSED IN THE SAME JURISDICTION AS WELL. HONBLE GUJARAT HIGH COURTS DECISION IN PCIT VS. GYSCOAL ALLOYS LTD. R/TAX APPEAL NO.1180 OF 2018 DECIDED ON 01.10.18 HAS UPHELD THE TRIBUNALS SIMILAR ACTION DELETING IDENTICAL ADDITION OF AN UNEXPLAINED SHARE CAPITAL/PREMIUM IN CASE OF A GROUP CONCERN AS UNDER: REVENUE IS IN APPEAL AGAINST THE JUDGMENT OF THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH {'TRIBUNAL' FOR SHORT} RAISING THE FOLLOWING SUBSTANTIAL QUESTION FOR OUR CONSIDERATION : 'WHETHER APPELLATE TRIBUNAL HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RS. 9 99 99 900/= AS PER THE PROVISION OF SECTION 68 OF THE INCOME-TAX ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF CASE AND THE MATERIAL BROUGHT ON RECORD ?' ITA NO.81/KOL/2018 A.Y. 2012-13 ITO WD-12(1) KOL. VS. M/S CALCUTA CARBIDE PVT. LTD. PAGE 4 C/TAXAP/1180/2018 ORDER THE ISSUE PERTAINS TO THE SHARE APPLICATION MONEY RECEIVED BY THE RESPONDENT-ASSESSEE-COMPANY. THE ASSESSING OFFICER ADDED A SUM OF RS. 9.99 CRORES [ROUNDED OFF] IN THE HANDS OF THE ASSESSEE WITH THE AID OF SECTION 68 OF THE INCOME- TAX ACT 1961 ['THE ACT' FOR SHORT]. CIT [A] DELETED SUCH ADDITION PRIMARILY ON THE GROUND THAT THE ASSESSEE HAD ESTABLISHED THE SOURCE GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE INVESTORS. IN FURTHER DETAILED CONSIDERATION THE TRIBUNAL CONFIRMED THE VIEW OF CIT [A] MAKING THE FOLLOWING OBSERVATIONS :- 'I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE APPELLANT HAS RECEIVED AN AMOUNT OF RS. 9 99 99 900/- ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM FROM M/S. GENERAL CAPITAL AND HOLDING CO. PVT. LTD AHMEDABAD DURING THE YEAR. THE AO HELD THAT THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION WERE NOT PROVED BY THE APPELLANT AND ACCORDINGLY MADE THE ADDITION UNDER SECTION 68 OF THE ACT FOR THE ABOVE AMOUNT. THE APPELLANT HAS SUBMITTED THAT ALL THREE INGREDIENTS SUCH AS CREDIT WORTHINESS GENUINENESS AND THE IDENTITY OF THE SHARE APPLICANT HAVE BEEN PROVED AND THEREFORE THE ADDITION SHOULD NOT HAVE BEEN MADE BY THE AO. C/TAXAP/1180/2018 ORDER DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSMENT RECORDS WERE ALSO OBTAINED FROM AO AND THE SAME HAVE ALSO BEEN EXAMINED BY ME TO ASCERTAIN THE FACTS CORRECTLY. THE SHARE APPLICANT COMPANY M/S. GENERAL CAPITAL HAS BEEN DULY CONFIRMED THE FACT OF MAKING INVESTMENT IN THE APPELLATE COMPANY. THE AMOUNTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL. THE SAME ARE DULY REFLECTED IN THE ANNUAL ACCOUNTS OF THAT COMPANY. THE EXTRACTS OF THE BANK STATEMENT WHICH HAVE BEEN FILED BEFORE ME DURING THE COURSE OF APPELLATE PROCEEDINGS AS WELL AS BEFORE THE AO CLEARLY SHOW THAT THERE ARE NO CASH DEPOSITS AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. THE OBSERVATION OF THE AO THAT THE CASH HAS BEEN DEPOSITED AND SUBSEQUENTLY CHEQUES WERE ISSUED IS FACTUALLY INCORRECT. THE DIRECTOR OF THE COMPANY ALSO ATTENDED BEFORE AO AND CONFIRMED THE FACT. IT IS ALSO NOTED THAT BOTH THE COMPANIES THAT IS THE APPELLANT COMPANY AS WELL AS THE SHARE APPLICANT ARE MANAGED BY THE SAME GROUP OF PERSONS. HONOURABLE HIGH COURT OF GUJARAT HAS CONSISTENTLY HELD THAT IF THE ASSESSEE HAS GIVEN SUFFICIENT PROOF IN RESPECT OF THE SHARE APPLICATION NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IF THE AO HAS ANY DOUBT ABOUT THE SOURCE OF THE SHARE APPLICANT FURTHER INVESTIGATION CAN BE MADE IN THE HANDS OF THE SHARE APPLICANT BUT NOT IN THE CASE OF THE APPELLANT. .' C/TAXAP/1180/2018 ORDER IT CAN THUS BE SEEN THAT THE ENTIRE ISSUE IS BASED ON APPRECIATION OF MATERIAL ON RECORD. CIT [A] AND THE TRIBUNAL CONCURRENTLY CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCHARGES ITS BASIC ONUS. THE INVESTORS HAVE CONFIRMED THE TRANSACTIONS. SUCH TRANSACTIONS WERE CARRIED OUT THROUGH THE BANKING CHANNEL. THE DIRECTOR OF THE INVESTING COMPANY HAD ALSO APPEARED BEFORE THE ASSESSING OFFICER AND ALSO CONFIRMED THE TRANSACTIONS. THE CIT [A] AND THE TRIBUNAL ALSO DID NOT CONFIRM THE ASSESSING OFFICER'S FINDING THAT THE ASSESSEE FAILED TO ESTABLISH THE CREDITWORTHINESS OR GENUINENESS OF THE TRANSACTIONS. NO QUESTION OF LAW ARISES. TAX APPEAL IS DISMISSED. WE HOLD IN THIS FACTUAL AND LEGAL BACKDROP THAT THE CIT(A) HAS RIGHTLY DELETED IMPUGNED UNEXPLAINED CASH CREDITS ADDITION QUA SHARE CAPITAL/PREMIUM COMING FROM ASSESSEES EXISTING STAKE-HOLDER ENTITY HAVING COMMON DIRECTOR. THE REVENUES INSTANT FORMER SUBSTANTIVE GRIEVANCE IS DECLINED. ITA NO.81/KOL/2018 A.Y. 2012-13 ITO WD-12(1) KOL. VS. M/S CALCUTA CARBIDE PVT. LTD. PAGE 5 4. NEXT COMES SECTION 14A R.W. RULE 8D DISALLOWANCE OF RS.6 09 826/-. SUFFICE TO SAY THE ASSESSEE HAS NOT DERIVED ANY EXEMPT INCOME IN THE IMPUGNED ASSESSMENT YEARS. HONBLE JURISDICTIONAL HIGH COURTS IN CIT VS. M/S ASHIKA GLOBAL SECURITIES LTD. GA 2122 OF 2014 HELD THAT THE IMPUGNED DISALLOWANCE EVEN DOES NOT APPLY IN ABSENCE OF EXEMPTED INCOME. THE REVENUES LATTER SUBSTANTIVE GROUND FAILS FOR THIS PRECISE REASON. 5. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 22/11/2019. SD/- SD/- ( ) ( ) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA RS SR. P.S - 22 / 11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-12(1) 7 TH FL. AAYAKAR BHAWAN P-7 CHOWRINGHEE SQ. KOL-69 2. /RESPONDENT-M/S CALCUTTA CARBIDE PVT. LTD. 8/53/1 FERN ROAD 1 ST FLOOR NEW GOAL PARK GARIAHAT KOLKATA-19 3. / CONCERNED CIT KOLKATA 4. - / CIT (A) KOLKATA 5. / DR ITAT KOLKATA 6. [ / GUARD FILE. BY ORDER/