Itat/234/2023 Ia No: Ga/1/2023 Dv Re-Rolling Mills Pvt Ltd v. Principal Commissioner Of Income Tax 3, Kolkata …

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION ORIGINAL SIDE ITAT/234/2023IA NO: GA/1/2023DV RE-ROLLING MILLS PVT LTD.VSPRINCIPAL COMMISSIONER OF INCOME TAX 3, KOLKATA… BEFORE :THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 10[th] October, 2023 Appearance : Mr. J. P. Khaitan, Sr. Adv.,Mr. Pratyush Jhunjhunwala, Adv.Mr. Samit Rudra, AdvMs. Sretapa Sinha, Adv.…for appellants.Mr. Prithu Dudheria, Adv.…for respondent. The Court : This appeal filed by the assessee under section 260A of the IncomeTax Act, 1961 [the Act] is directed against the order dated 9.5.2022 passed by theIncome Tax Appellate Tribunal “A” Bench, Kolkata in ITA No.573/Kol/2020 for theassessment year 2012-13. The assessee has raised the following questions of law forconsideration. A] Whether the findings and observations of the Tribunal that the appellanthad not provided any documents or details before the lower authorities withrespect to the identity and creditworthiness of the share subscribers and thegenuineness of the transaction and/or not participated in the proceedings beforethe Commissioner of Income Tax [Appeals], perverse ? B]Whether the appellant having provided the details of share subscribers,copies of their income tax returns and audited accounts and the bank statementsand cheque details for the transactions and replies were also filed by the sharesubscribers to notices under section 133[6] of the Income Tax Act, 1961, theonus had shifted on the Assessing Officer to bring on record material and/or evidence which should show that the transaction is not genuine or that theidentity and creditworthiness of the share subscribers was doubtful ?C]Whether the identity and creditworthiness of the share subscribers andgenuineness of the transaction of share subscription be doubted only on thebasis of non-appearance of the appellant’s director to summons issued undersection 131 of the Act when the appellant had duly provided all the necessarydocuments pertaining to the share subscribers including their PAN details,audited accounts and income tax returns and the share subscribers had alsoreplied to enquiry made vide notice issued under section 133[6] of the IncomeTax Act, 1961 ? We have heard Mr. J. P. Khaitan, learned senior advocate appearing forthe appellant and Mr. Prithu Dudheria, learned advocate for the revenue, who hasrequested to accept notice on behalf of the respondent department and his appearanceshall be regularised by the department. The tribunal by the impugned order dismissed the appeal filed by the assesseechallenging the correctness of the order passed by the Commissioner of Income Tax[Appeals] – 3, Kolkata [CIT(A)] dated 16.9.2020. The appellant did not appear before thetribunal and the tribunal records that the assessee is not appearing despite notice beingserved through e-mail as well as telephonically. Accordingly, the tribunal proceeded tohear the representative of the department and dismissed the appeal. The learnedtribunal is of the view that the assessee has not filed any evidence to prove identity andcreditworthiness of the investors as well as genuineness of the transaction and there isno material before the tribunal so as to take contrary view. Therefore, the tribunal cameto the conclusion that there is no reason to interfere with the order passed by the[CIT(A)]. The correctness of the order passed by the tribunal is challenged in this appeal.As could be seen from the assessment order dated 29.3.2015 under section 143[3] ofthe Act, notices were issued to the assessee under section 143[2] and 142[1] of the Actand the assessee appeared before the assessing officer from time to time and furnished details and submissions and explanations. Subsequently, summons under section 131of the Act was issued to the Director of the assessee for personal deposition and alsoproducing the certain details. However, the Director failed to appear before theassessing officer. Therefore, the assessing officer proceeded to complete the assessmenton the basis of the documents available and held that the assessee could not establishthe creditworthiness of the shareholders as shown in the share capital investmentduring the relevant financial year and, accordingly, it was added back under section 68of the Act. Aggrieved by the same, the assessee preferred appeal before the [CIT(A)]. Onperusal of the order dated 16.9.2020 passed by the [CIT(A)] we find that the assesseethough did not appear in person they had filed written submissions electronically. Thishas been reproduced by the [CIT(A)] in paragraph 5.2 of its order. the [CIT(A)] alsotakes note of the various conditions which were raised by the assessee on facts. Inparagraph 5.3, the [CIT(A)] records that he has gone through the submissions made bythe assessee and perused the assessment order and relevant records. Further, the[CIT(A)] also perused the ITR of the share allottee companies and the balance-sheet ofthe share allottee companies, etc. Apart from that the [CIT(A)] has also perused theaudited balance-sheet of the assessee company wherein they brought in the sharecapital including share premium for the assessment year 2012-13. Further, the [CIT(A)]examined the bank account of the assessee and recorded his opinion, apart fromperusing the bank statement. Further, the [CIT(A)] records that the assessee had triedto make out a case that the identity, creditworthiness and genuineness of thetransaction have been established on the ground that PAN, Income Tax Return, bankstatement of the share allottee have been provided and, ultimately, while dismissing theappeal the [CIT(A)] recorded that he has considered the submissions of the assessee, therelevant assessment records, and the various judicial decisions and has come to aconclusion that the assessee has made out a case for interference of the order passed bythe assessing officer. Further, it is seen that the [CIT(A)] had called for a remand report and pursuant to which the assessing officer issued notice dated 2.8.2019 to theassessee calling for documentary evidence in the form of paper book. This wassubmitted by the assessee to the assessing officer as well as the [CIT(A)] on 23.8.2019.Thus, it is seen that [CIT(A)] had come to a conclusion upon considering the documentsand the submissions made by the assessee. Therefore, it may not be correct to statethat no evidences have been produced by the assessee to prove the identity andcreditworthiness of the investors as well as the genuineness of the transaction. Whatwas required to be considered was whether the documents produced by assessee andthe stand taken by them to the identity and creditworthiness of the investors as well asthe genuineness of the transaction on the materials which were on the file of [CIT(A)] aswell as the assessing officer. The assessee has to be partly blamed for the presentsituation as the assessee failed to respond to the notice issued to the assessee throughe-mail as well as electronically. In any event, since the appellant’s remedy before thelearned tribunal is a very valuable remedy as the learned tribunal is the last fact findingforum which will be able to appreciate and re-appreciate the facts, we are of the opinionthat the appeal should be decided by the learned tribunal on merits. For the above reasons, the appeal is allowed and the order passed by the learnedtribunal is set aside and the matter stands remanded to the learned tribunal for freshconsideration of the appeal on merits and in accordance with law. For the above reasons, the appeal is allowed and the order passed by the learnedtribunal is set aside and the matter stands remanded to the learned tribunal for freshconsideration of the appeal on merits and in accordance with law. We make it clear that we have not gone into the merits of the matter and it is wellopen to the assessee to canvas all questions of fact and law before the learned tribunal.Consequently, the substantial questions of law are left open. The application, GA/1/2023stands closed. CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.)