The Revenue Has Raised The Following Substantial Questions Of Law Forconsideration v. Was No Response From The Companies To Whom Shares Were Allottedduring The Course Of Assessment Proceedings. Thus, The Decisions Ofthe Hon’ble Itat Is Erroneous

OD-18 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTIONORIGINAL SIDE ITAT/36/2024IA NO: GA/2/2024PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKATAVS.ONE POINT COMMERCIAL PVT. LTD. BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 10[th] April, 2024 Appearance : Mr. Tilak Mitra, Adv.Mr. Prithu Dudhoria, Adv.… for appellant Ms. Sutapa Roy Chowdhury, Adv.Mr. Narendra Kedia, Adv.Ms. Aratrika Roy, Adv.…for respondent The Court : This appeal filed by the revenue under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the order dated February 23,2023 passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata in ITANo.473/Kol/2019 for the assessment year 2012-13. The revenue has raised the following substantial questions of law forconsideration :- a) b) c) Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal was erred in law in deletingthe addition of Rs.4,78,50,000/- under Section 68 of the Act onaccount of share capital and premium in the course of assessmentin absence of identity of the creditors, genuineness andcreditworthiness of the entire transaction ? Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal was erred in law in deletingthe addition of Rs.4,78,50,000/- made by the Assessing Officerwhere no personal attendance was made by any director of theshare allottee companies during the course of assessmentproceedings and as such identity and creditworthiness of thecreditors and genuineness of the transactions could not be verified ?Whether on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal was erred in law inappreciating the principle which has been laid down by the Hon’bleSupreme Court in the case of Pr. CIT (Central) –1, Kolkata vs. NRAIron & Steel Pvt. Ltd. (412 ITR 161) wherein it is suggested thatAssessing Officer is duty bound to investigate the creditworthinessof the creditors/subscriber, verify the identity of the subscribers andascertain whether the transaction is genuine or these are bogusentries of name lenders. In facts of the case, in spite of best effortsmade by the Assessing Officer, he could not verify the same as there was no response from the companies to whom shares were allottedduring the course of assessment proceedings. Thus, the decisions ofthe Hon’ble ITAT is erroneous in holding that the raised sharecapital was not the assessee’s own income. We have heard Mr. Tilak Mitra, learned standing Counsel appearing withMr. Prithu Dudhoria, learned Advocate for the appellant revenue and Ms. SutapaRoy Chowdhury, learned Counsel appearing for the respondent. The Assessing Officer while completing the assessment under Section143(3) of the Act by order dated 24[th] March, 2015 held that the assessee hasfailed to prove anyone of the three ingredients which are required to be provedunder Section 68 of the Act. Several decisions were referred to and the AssessingOfficer concludes that there was no documents produced by the assessee tosubstantiate their claim. This order was affirmed by the Commissioner of IncomeTax (Appeals)-9 [CIT(A)] by order dated 21[st] January, 2019 holding that merelyfurnishing documents in a routine way does not explain the source ofcreditworthiness of the party. Further, it has been held that the basis on whichpremium has been charged for the shares has not been explained; no effortshave been made with the help of financial statements to justify the quantum ofshare premium charged. The CIT(A) placed reliance on the decision of KolkataBench of the Tribunal in the case of M/s. Blessings Commercial Pvt. Ltd. in ITA271/Kol/2014, dated 28[th] June, 2017 and other judgments and ultimately theappeal was dismissed. On an appeal preferred by the assessee before the Tribunal, the concurrent findings recorded by the Assessing Officer and theCIT(A) have been set aside and the appeal has been allowed. The impugned orderpassed by the Tribunal runs to 14 pages and in paragraph 11 of the impugnedorder, the learned Tribunal has recorded that from the bare perusal of the paperbook and the documents placed, it is revealed thatall the share applicants areincome tax assessees, they are filing their income tax returns, share applicationform and allotment letter is available on record which were filed in response tothe notice under section 133(6), share application money was made by accountpayee cheques, details of the bank accounts belonging to the share applicantsand their bank statements have been furnished and all the share applicants arehaving substantial creditworthiness represented by their capital and reserves.Though such is the findings recorded by the Tribunal, it is not supported byfacts. The Assessing Officer has held that the assessee was a Private Limitedcompany which cannot issue shares in the same manner in which PublicLimited company does and in so far as creditworthiness of the share subscribersis concerned, there must be positive evidence to show the nature and source ofresources of the share subscribers and if the assessee was serious enough toestablish his case, it ought to have complied with the notices/letters issued bythe Assessing Officer and ought to have produced the directors of thesubscribing companies before the Assessing Officer so that they could explainthe sources from which the share subscription was made. It is stated that thereis no complaints either from the end of the assessee company or from the end ofthe alleged subscriber company. This finding recorded by the Assessing Officer as affirmed by the CIT(A), if required to be set aside by the learned Tribunal,reasons have to be assigned. Therefore, we find that the conclusion arrived at bythe learned Tribunal in paragraph 11 is insufficient to support its ultimateconclusion in allowing the assessee’s appeal. Therefore, we are of the view thatthe matter has to be remanded back to the Tribunal for fresh consideration. Accordingly, the appeal is allowed. The order passed by the learnedTribunal is set aside and the matter is remanded to the Tribunal to take a freshdecision on merits and in accordance with law and pass a reasoned order.Consequently, substantial questions of law are left open. The stay application GA 2 of 2024 stands disposed of. Considering the fact that the assessment is of the year 2012-13 and theassessment order was passed on 24.3.2013 pursuant to a direction issuedunder section 263 of the Act, we request the learned Tribunal to give someprecedence to the matter so that the appeal can be disposed of at the earliest. When this appeal was heard earlier, since the learned Counsel for therespondent assessee took a stand that all documents were placed before theAssessing Officer, direction was issued to the learned Standing Counsel for theDepartment to call for the assessment file and opportunity was granted to thelearned Counsel for the assessee to peruse the file and the learned Counsel uponperusal would submit that all documents which have been given by the assesseefind place in the assessment file except for one document. The learned Tribunalshall grant liberty to the assessee to file a paper book containing all documentswhich they have stated to have submitted before the learned Tribunal and if any further documents are to be submitted, leave of the Tribunal may be obtainedand thereafter submitted. (T.S. SIVAGNANAM, CJ.) (HIRANMAY BHATTACHARYYA, J.) SN.AR(CR)