Principal Commissioner Of Income Tax-1, Kolkata v. M/S. Ambition Agencies Private Limited

OD – 2 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/143/2017IA NO:GA/1/2017(OLD NO. GA/1267/2017) IN THE MATTER OF : PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATAVS M/s. AMBITION AGENCIES PRIVATE LIMITED BEFORE :THE HON’BLE JUSTICE T.S.SIVAGNANAM A N DTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADATED : NOVEMBER 15, 2021. [Via Video Conference] Appearance :Mr. P.K. Bhowmick, Advocate …for the appellantMr. Pranit Bag, Advocate …for respondent The Court :- This appeal by the revenue filed under Section260A of the Income Tax Act, 1961 (the Act in brevity) is directed againstthe order dated 9[th] November, 2016 passed by the Income Tax AppellateTribunal “C” Bench Kolkata (Tribunal) in I.T.A. No.713/Kol/2011 for the assessment year 2006-07. The revenue has raised the followingsubstantial questions of law for consideration in this appeal;- (a)Whether on the facts and in the circumstances of the case theLearned Tribunal, erred in law in upholding the order of theCIT (Appeals) by deleting the addition of Rs.11,39,00,000/-made by the Assessing Officer under Section 68 of Income TaxAct, 1961 by disregarding that the assessee could notsatisfactorily explain the genuineness of the transactions andcreditworthiness of the share applicants in question ?Learned Tribunal, erred in law in upholding the order of theCIT (Appeals) by deleting the addition of Rs.11,39,00,000/-made by the Assessing Officer under Section 68 of Income TaxAct, 1961 by disregarding that the assessee could notsatisfactorily explain the genuineness of the transactions andcreditworthiness of the share applicants in question ? (b)Whether on the facts and in the circumstances of the case theLearned Tribunal, erred in law in holding that the manner inwhich the Learned CIT (Appeals) remanded the issue to theAssessing Officer was in consonance with the provision ofSection 250(4) of Income Tax Act, 1961 read with Rule 46A ofIncome Tax Rules, 1962?Learned Tribunal, erred in law in holding that the manner inwhich the Learned CIT (Appeals) remanded the issue to theAssessing Officer was in consonance with the provision ofSection 250(4) of Income Tax Act, 1961 read with Rule 46A ofIncome Tax Rules, 1962? (c)Whether on the facts and in the circumstances of the caseconclusion arrived at by the Learned Tribunal in dismissing theAppeal of the revenue, is perverse ?conclusion arrived at by the Learned Tribunal in dismissing theAppeal of the revenue, is perverse ? The assessee filed its return to Income Tax on 8[th] November,2006 for the assessment year under consideration 2005-2006. The casewas selected for scrutiny and notice under Section 143(2) of the Act wasissued. However, notices were issued in terms of Section 142(1) of the actalong with the questionnaire. It appears that the inspector of the Income (c)Whether on the facts and in the circumstances of the caseconclusion arrived at by the Learned Tribunal in dismissing theAppeal of the revenue, is perverse ?conclusion arrived at by the Learned Tribunal in dismissing theAppeal of the revenue, is perverse ? The assessee filed its return to Income Tax on 8[th] November,2006 for the assessment year under consideration 2005-2006. The casewas selected for scrutiny and notice under Section 143(2) of the Act wasissued. However, notices were issued in terms of Section 142(1) of the actalong with the questionnaire. It appears that the inspector of the Income Tax Department attempted to serve notice, but failed to serve notice atthe address, which is stated to be available on record, and thereafterresorted to service by affixation on 1[st] September, 2008. Thereafter, afresh notice was issued under Section 142(1) dated September 12, 2008which was dispatched by registered post, which returned unserved withthe postal endorsement “not known”. The Assessing Officer found thatassessment was getting time barred. Therefore, he proceeded to completethe assessment and passed an order on 8[th] December, 2008 raising adoubt that none of the shareholders appeared to be benefited.Thereafter, the entire sum of share capital along with the share premiumwas added back as unexplained cash credit under Section 68 of the Act.Further the order stated that penalty proceedings under Section 271(1)(b)and 271(1)(c) will be initiated separately. Aggrieved by such orderassessee preferred an appeal before Commissioner of Income Tax(Appeals)-I, Kolkata, C88 contending that the Assessing Officercommitted an error in treating the entire share capital as undisclosedcash credit in the absence of proper opportunity to provide details.Further contentions were also raised before the appellate authority.Further during the hearing of the appeal before the CIT(A) the assesseecontended that they were carrying on business at the given address andall correspondence and direct transactions were conducted from the saidaddress and the copy of the said document were filed before CIT(A) alongwith written submissions. Further the assessee contended that as per the Income Tax return filed by the assessee the details of the directorsalong with the address were available with the Assessing Officer and theAssessing Officer could have contacted the directors of the company toensure compliance of the direction issued in the notices. Furtherassessee contended that the entire details about assessee company wasavailable on the website and no attempt was made by the AssessingOfficer to contact the assessee and resorting to service of notice byaffixation is erroneous. The CIT(A) on facts found that Assessing Officerdid not make any serious attempt to service notices on the assessee andalso accepted the submissions made on behalf of the assessee thatthough it is alleged that notices could not be served on the assessee inthe given address the assessment order and the demand notices wereserved in the very same address. Therefore, the CIT(A) held an orderunder Section 144 of the Act was not warranted and proceeded to decidethe matter on merits. The CIT(A) also took note of the fact that theassessment was getting time barred and this fact was specificallymentioned by the Assessing Officer in the order of assessment. Thereforeto obtain the full facts the CIT(A) thought fit to call for a remand reportfrom the Assessing Officer which was submitted vide letter dated 27[th]January, 2011. Taking note of the fact placed by the Assessing Officer inthe remand report, the CIT(A) noted that after examination of all theshare applications the Assessing Officer has come to the conclusion thatthe transactions with all the share holders were duly cross verified and found in order and the replies received from all the shareholders werealso forwarded by the Assessing Officer along with remand report. Thustaking on record the said remand report and noting that there has beenthorough cross verification done by the Assessing Officer, the CIT(A)allowed the appeal deleting the additions. Aggrieved by the same, theRevenue preferred appeal before the Tribunal. The Revenue, sought tosustain the order passed by the Assessing Officer and raised thecontention which were canvassed before us in this appeal. The Tribunalafter taking note of the fact approved the view taken by the CIT(A) as theappeal filed by the assessee was allowed taking note of the remand reportsubmitted by the Assessing Officer, who in no uncertain terms has statedthat the creditworthiness of the share applicants and the genuineness ofthe transactions stood established. Therefore, the Tribunal upheld theview taken by CIT(A) holding that CIT (A) was fully justified in deletingthe addition considering the facts and circumstances of the case.Furthermore, the Tribunal observed that CIT (A) was right in itsobservation that Assessing Officer did not make attempt to serve noticeon the assessee and completed the assessment hurriedly, presumablydue to the fact that assessment was getting time barred. Before us theLearned Counsel for the appellant/revenue contended that in thememorandum of appeal filed by the Assessee before the CIT(A) it wascontended that assessee did not get adequate opportunity. Therefore, ifthe CIT(A) was of the view that adequate opportunity was not afforded to the assessee then the matter ought to have been remanded to theAssessing Officer for a fresh decision and the appeal could not have beenallowed. It is further submitted that the same error was committed bythe Tribunal. In support of his contention learned Counsel referred to thedecision of the Hon’ble Supreme Court in (TIN BOX COMPANY v.COMMISSIONER OF INCOME TAX) 2001(249) ITR Page 216 (SC). Wehave heard the learned Counsel for assessee on the above submission. Atthe first blush the submission made by the learned Counsel for therevenue appears to be convincing. However on a close scrutiny we findthat the order passed by the CIT(A) does not suffer from any error. TheCIT(A) is entitled to exercise the power of the Assessing Officer. Therefore,two options were available before the CIT(A), in the event he found thatfacts were required to be brought on record. The first of the optionsavailable was to remand the matter to the Assessing Officer for freshconsideration. The second option would be to call for the remand reportfrom Assessing Officer by keeping the appeal pending. The CIT(A)exercised the second option which undoubtedly could go to save a lot oftime in the matter of completion of the assessment. Upon direction beingissued by the CIT(A) calling for a remand report, the Assessing Officerbefore us treated the matter with more seriousness and after thoroughfactual exercise reported that genuineness and creditworthiness of theshare applicants have been established. In absence of any materialavailable with the revenue to discard the remand report we find the CIT(A) was fully justified in accepting the remand report in deleting theaddition. The decision in TIN BOX COMPANY (supra) may not be ofassistance to the revenue which is a decision wherein the question waswhether an opportunity afforded to an assessee at the appellate levelwould be sufficient opportunity and it was held that the opportunity atthe appellate level cannot be a substitute for an opportunity at the stageof initial adjudication. We find this decision to be wholly inapplicable tothe facts and circumstances of the case. As pointed out earlier theTribunal has also re-examined the facts and rightly accepted theconclusion arrived at by the CIT (A). Thus we find there is no questions oflaw much less substantial questions of law arising for consideration inthis appeal. Consequently, the appeal fails and the same standsdismissed so also the connected applications.