Itat/80/2024 Ia No: Ga/2/2024 Principal Commissioner Of Income Tax, Central-1, Kolkata v. M/S. Narsingh Ispat Ltd

OD–12 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX) ORIGINAL SIDE ITAT/80/2024IA No: GA/2/2024PRINCIPAL COMMISSIONER OF INCOME TAX,CENTRAL-1, KOLKATAVS.M/S. NARSINGH ISPAT LTD. BEFORE :THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE SUPRATIM BHATTACHARYADate : 11[th] March, 2024 Appearance :M s. Smita Das De, Adv.Mr. Prithu Dudhoria, Adv.…for appellant Mr. Kartik Kurmy, Adv. (VC)Mr. Indranil Banerjee, Adv.Mr. Subrata Mukherjee, Adv.Mr. Debayan Dutta, Adv.…for respondent. The Court : We have heard Ms. Smita Das De, learnedstanding Counsel appearing for the appellant revenue and Mr.Kartik Kurmy, learned Counsel appearing for the respondentassessee. There is a delay of 59 days in filing the present appeal.We are satisfied with the reasons given by the appellantdepartment for not preferring the appeal within the period oflimitation. Hence, the condone delay petition is allowed anddelay in filing the appeal is condoned. This appeal filed by the revenue under Section 260A ofthe Income Tax Act, 1961 (the Act) is directed against theorder dated 26[th] July, 2023 passed by the Income Tax AppellateTribunal, `B’ Bench, Kolkata, in I.T.A No.255/Kol/2023 for theassessment year 2012-13. The revenue has raised the following substantial questions of law for consideration : a)Whether on the facts and in the circumstances of thecase the Tribunal was justified in law to delete theadditions under Section 68 of the said Act to thetune of Rs. 19,14,50,500/- despite the fact that thegenuineness of the share capital could not beestablished, as one of the major applicant M/s.Honesty Dealers Private Ltd. had subscribed to theshares of the assessee, whose source being receiptof the share capital from other companies wasalready held as bogus receipt and added in the handsof M/s. Honesty Dealers Private Ltd. ?b)Whether on the facts and in the circumstances of thecase the Tribunal was justified in law to delete theaddition under Section 68 of the said Act ignoringthe fact that the creditworthiness of both theapplicant companies namely, M/s. Honesty DealersPrivate Ltd. and M/s. Seaview Agencies Private Ltd.could not be proven as both the companies, withouthaving any business activities, have received sharepremium from other companies and in turn subscribedto shares of the assessee company as a premium whois the ultimate beneficiary ? After elaborately hearing the learned Advocates for theparties and carefully perusing the materials placed on record,we find that while contesting the correctness of theassessment order passed by the assessing officer under Section143(3) of the Act dated 4.3.2015 by which the assessingofficer added back the entire share application/allotmentmoney under Section 68 of the Act as undisclosed cash credit,the Commissioner of Income Tax (Appeals) Kolkata – 20 [CIT(A)]has done an elaborately factual exercise. There were twocompanies which were involved one being M/s. Honesty DealersPrivate Limited and the other M/s. Seaview Agencies PrivateLimited. The CIT(A) has examined the factual position inrespect of both the companies but in so far as M/s. HonestyDealers Private Limited the CIT(A) found in the assessmentyear 2009-10, which is a scrutiny assessment under Section 147of the Act dated 12.3.2015, the entire receipt of sharecapital has been added in the hands of M/s. Honesty DealersPrivate Limited. Further, on perusal of the balance-sheet ofthe said company, the CIT(A) found that the major chunk ofshare capital received in the assessment year 2009-10 has beeninvested in the shares of the assessee company and has beenout of the share capital raised in the assessment year 2009-10and in the very same assessment year the entire share capitalraised by M/s. Honesty Dealers Private Limited has been addedback in the hands of the party. Furthermore, on examining the facts the CIT(A) found that the creditworthiness of M/s.Honesty Dealers Private Limited vis-a-vis the investment inthe shares of the assessee company has been established. Thereis also a finding that there is a clear link between theraising of the share capital and in the assessment year 2009-10 by M/s. Honesty Dealers Private Limited and investing themajor share capital into the shares of the assessee companyfor the assessment year 2012-13. The CIT(A) has also done asimilar exercise in M/s. Seaview Agencies Private Limited. Itnoted that in the assessment year 2011-12 information wasreceived from the investigation wing of the departmentregarding unaccounted income received by M/s. Seaview AgenciesPrivate Limited and accordingly, addition was made treatingthe same as unexplained cash credit under Section 68 of theAct. Similarly, for the assessment year 2012-13 there wasanother information from the investigation wing regarding theunaccounted income and this amount was also added to the totalincome. The CIT(A) perused the assessment orders for those twoyears which showed that the assessing officer has not made anyadverse comment on the entries of the balance-sheet.Furthermore, on facts the CIT(A) found that the investigationwing has not found any adverse comments against share capitalraised by M/s. Seaview Agencies Private Limited in theassessment year 2009-10. Thus, it was concluded that there isnothing on record to suggest that the share capital raised by M/s. Seaview Agencies Private Limited in the assessment year2009-10 was not genuine. Further, the tribunal on factsconcluded that the identity and creditworthiness of theinvestors are not in doubt and the transaction was found to begenuine. The revenue challenged this order before the tribunal.The tribunal have once again re-appreciated the factualposition and more importantly found that the share applicationmoney received by the assessee from M/s. Honesty DealersPrivate Limited has already been added back in the hands ofthe share application and as the source has already beenadded, it upheld the action of the CIT(A). A similar exercise was also done by the tribunal in sofar as M/s. Seaview Agencies Private Limited is concerned.Apart from the fact the tribunal noted that the assesseecompany is having a huge turnover for the financial year 2012-13 amounting to Rs.145.38 crores and net profit fromcontinuing operation was Rs.145 crores (approximately) and thetotal income declared was Rs.1.74 crores. Therefore, thetribunal on facts found that the identity and creditworthinessof the share applicant was established. The tribunal apartfrom relying upon a decision of the co-ordinate Bench of thetribunal in the case of ITO Vs. Dharamvir Merchandise (P) Ltd.reported at [2023] 149 taxmann.com 221 (Kolkata – Trib.) took note of the decision of this Court in the case of PrincipalCIT Vs. Sreeleathers reported in [2022] 448 ITR 332 (Cal).After taking note of the legal position as set out in the saiddecisions, the tribunal affirmed the order passed by theCIT(A) by recording a factual finding that the three necessaryingredients, namely, identity, creditworthiness of the shareapplicants and genuineness of the transaction as providedunder Section 68 of the Act have been established and therewas no ground to interfere with the order passed by the CIT(A)dated 25.1.2023. Thus, we find no question of law much less substantialquestion of law is arising for consideration in this appeal.Hence, the appeal fails and is dismissed. The stay application GA/2/2024 also stands dismissed. (SUPRATIM BHATTACHARYA, J.)