Principal Commissioner Of Income Tax-1, Kolkata v. M/S. Hirak Vyapaar Pvt. Ltd

OD–12 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/242/2023IA No: GA/1/2023 PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATAVS.M/S. HIRAK VYAPAAR PVT. LTD. BEFORE : THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 3[rd] May, 2024 Mr. Om Narayan Rai, Adv.Mr. Amit Sharma, Adv.…for appellantMr. Abhratosh Majumder, Sr. Adv.Mr. Pratyush Jhunjhunwalla, Adv.Ms. Sretapa Sinha, Adv.Mr. Kausheyo Roy, Adv.…for respondent The Court : This appeal by the revenue filed under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the order dated 13[th] April,2023 passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata in ITANo. 26/Kol/2019 for the assessment year 2008-09. The revenue has raised the following substantial questions of law forconsideration :- i) Whether the Learned Income Tax Appellate Tribunal has committedsubstantial error in law in deleting the addition of Rs.10,60,50,000/- onaccount of share capital including premium without going into the factsand materials of the case ? ii) Whether the Learned Income Tax Appellate Tribunal has substantiallyerred in law in ignoring the fact that when the assessee did not appearduring hearing of the appeal before the Commissioner of Income Tax(Appeals) and did not pursue its own appeal then it became obvious thatthe respondent assessee did not have any clarification or explanation tooffer regarding the said share capital and share premium alleged to bepaid by the investors to the respondent ? iii) Whether the Learned Tribunal has substantially erred in law in ignoringthat the respondent assessee has failed to discharge its onus of provingthe identity, genuineness and creditworthiness of the subscribingcompanies as well as genuineness of the share transactions ? We have heard Mr. Om Narayan Rai, learned standing Counsel for theappellant and Mr. Abhratosh Majumder, learned senior Advocate for therespondent. The assessment for the year under consideration was completed by theAssessing Officer under Section 143(3) of the Act. Subsequently, theCommissioner of Income Tax exercised power under Section 263 of the Act andpassed an order on 30[th] March, 2013 setting aside the assessment order anddirecting the Assessing Officer to examine the genuineness of the transaction,directing examination of the directors of the company and other matters.Thereupon the Assessing Officer took up the matter for consideration andcompleted the assessment by order dated 31[st] March, 2014 holding that theshare application money received by the assessee during the year has to bedisallowed and added back to the total income of the assessee as unaccountedcash credit as per the provisions of Section 68 of the Act. Aggrieved by the same, the assessee preferred appeal before theCommissioner of Income Tax (Appeals)-17, [CIT(A)]. Before the Appellateauthority the assessee did not appear and the Appellate authority by order dated20[th] March, 2017 dismissed the appeal. The assessee carried the matter inappeal to the learned Tribunal. Learned Tribunal, as we find from the impugnedorder, has done a thorough and elaborate examination of the facts. It also tooknote of the response filed to the notices issued under Section 133(6) of the Act.Thereafter it proceeded to examine the resource and surplus of the companieswhich had subscribed to the shares of the assessee company and found that allthe share subscribers are regularly assessed to tax, they are filing Income tax Returns; books of accounts were regularly maintained, financial statements wereduly audited under the Income Tax Act and transactions have been carried outthrough banking channel and all the formalities required by the Registrar ofCompanies for the purpose of issuing share capital has been duly adhered andas on the date when the Tribunal considered the matter it found that all theshare subscribers are active companies. Returns; books of accounts were regularly maintained, financial statements wereduly audited under the Income Tax Act and transactions have been carried outthrough banking channel and all the formalities required by the Registrar ofCompanies for the purpose of issuing share capital has been duly adhered andas on the date when the Tribunal considered the matter it found that all theshare subscribers are active companies. Thus, after taking into consideration the factual position, the Tribunalcame to the conclusion that the assessee has successfully discharged theprimary onus cast upon them to explain the investment. Thus, we find that the Tribunal upon appreciation of the factual positionhas granted relief to the assessee and therefore, we hold that there is noquestion of law, much less substantial questions of law, arising forconsideration. The appeal is thus dismissed. The stay application IA No: GA/1/2023 is also dismissed. (T.S. SIVAGNANAM, C.J.) (HIRANMAY BHATTACHARYYA, J.)