Income Tax Appellate Tribunal - Kolkata
M/S Saltlake Energy Pvt. Ltd., Kolkata vs Ito, Wd-5(2), Kolkata, Kolkata on 14 September, 2018
ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 1
IN THE INCOME TAX APPELLATE TRIBUNAL, 'C 'BENCH KOLKATA
[Before Hon'ble Shri J.Sudhakar Reddy, AM & Smt. Madhumita Roy, JM ]
ITA Nos.561 & 562/Kol/2016
Assessment Years : 2009-10 & 2010-11
M/s Saltlake Energy (P)Ltd. -versus- I.T.O., Ward-5(2),
Kolkata Kolkata
(PAN: AADCS 5605F)
(Appellant) (Respondent)
For the Appellant: Shri Miraj D.Shah, AR
For the Respondent: Shri G.Hangshing, CIT(DR) &
Shri Saurabh Kumar, Addl. CIT, Sr.DR
Date of Hearing : 11.09.2018
Date of Pronouncement : 14.09.2018.
ORDER
PER MADHUMITA ROY, JM
The instant appeals have been filed by the assessee against separate orders dated 14.01.2016 passed by the ld. CIT(A)-2, Kolkata u/s 250 of the Income Tax Act, 1961 (in short the ' Act ' ) arising out of the order dated 31.03.2014 passed by the I.T.O., Ward-5(2), Kolkata for A.Y.2009-10 and against the order dated 04.02.2016 passed by the ld. CIT(A)-2, Kolkata arising out of the order dated 19.03.2015 passed the I.T.O., Ward-5(2), Kolkata for A.Y.2010-11. Since the issue is identical in both the appeals they are heard together and disposed of by a common order for the sake of convenience.
ITA No.561/Kol/2016 A.Y.2009-102. The facts of the case is this that the assessee is a company engaged in the business of investment and trading of shares and securities. The assessee has filed the return of income electronically on 22.09.2009 disclosing total income of Rs.8195/-. Upon scrutiny notice u/s 142(1) of the Act was made. The original assessment order ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 2 u/s 143(3)/147 of the Act was completed on 30.03.2011 assessing total income of Rs.32,700/-.
3. The ld. AO disallowed the filing fees of Rs.24,500/-. Further that the ld. AO accepted that the assessee issued fresh equity share capital of Rs.46,00,000/- on premium of Rs.4,14,00,000/- upon accepting the papers filed by the assessee as evidence of the genuineness of the transactions and thereby gave a certificate of genuineness of share capital and share premium in a routine manner.
4. In appeal the observation and finding of the ld. AO was not accepted by the ld. CIT(A). He further took note of a racket under which a large number of identical companies were floated in identical manner apparently showing to have introduced the share capital on a huge premium by rotating the unaccounted money. Considering the fact the issue of the share with a face value of Rs.10/- by the assessee company at a premium of Rs.9 per share require thorough examination by the AO. The AO failed to carry out. The ld CIT(A) considering the objections of the assessee held the assessment order was rendered erroneous and prejudicial to the interest of the revenue and upon setting aside the assessment order directed the AO to make a fresh assessment order upon conducting independent detail and complete enquiries in which the suppression of the share capital and premium introduced in the case and also to examine the source of realisation from the liquidation of assets shown in the balance sheet after the change of the directors.
5. During the reassessment proceedings the ld. AO treated the entire share capital including share premium of Rs.4,60,00,000/- as unexplained cash credit in the hands of the assessee. Such amount of share capital including share premium was raised during the relevant financial year by the assessee company. The AO issued notice u/s 131 of the Act to the director of the share applicant company and the directors of three subscribed companies with a direction to produce authenticated papers in support of the subscription made in effect to verify the genuineness, identity and creditworthiness of the share holders of the assessee company. None of them appeared before the AO. A show cause notice was issued on 28.03.2014 failing which another show cause ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 3 notice issued to the assessee to explain as to why the share application amount of Rs.4,60,00,000/- should not be treated as bogus, unaccounted money introduced in its books of accounts as share application money as also unaccounted cash credit in its books in terms of provision of section 68 of the Act. However, no explanation has been given by the assessee. Ultimately the entire share application money of Rs.460,00,000/- received by the assessee during the year has been disallowed and added to the total income of the assessee against which the appeal has been preferred before the ld. CIT(A) and who in turn confirmed the same on the basis of the finding made by the AO.
6. The ld. representative of the assessee at the time of hearing of the matter relied upon the judgments passed by this Coordinate Bench of this Tribunal in the case of ITO vs M/s Deepshika Distributors Pvt. Ltd. as well as Shriram Tie Up Ltd where an identical case was considered and upon setting aside the order passed by the authorities below the matter was remanded to the ld. AO for fresh adjudication of the same. The main issue which was considered by the Ld. Co-ordinate Bench was the guidelines/mandate framed/directed in the matter u/s 263 of the Act by the ld. CIT(A) on 30.03.2011 were followed or not. In this particular case the Ld. Representatives argued before us that merely because the directors did not appear before the ld. AO addition cannot be made in the hands of the assessee without taking recourse the formalities/steps to be taken into for conducting deep investigation to unearth the facts to determine the identity, creditworthiness and genuineness of the share holders as mandated by the order dated 30.03.2011. On the other hand, the ld. DR relies upon the orders passed by the authorities below.
7. We have heard the ld. Representative appearing for the parties and have perused the relevant materials available on record and have gone through the orders passed by the AO and the CIT(A) as well. We find that since the director did not appear before the ld. AO the entire amount has been added to the income of the assessee. The guidelines as framed in an identical matter by the ld. CIT(A) on 30.03.2011 has not been followed. The ld. Advocate has argued before us that the AO ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 4 has not made independent enquiry at his end to disprove the claim of the assessee company is really evident from the conduct of the AO which is placed before us. We find that the ld. CIT(A) also purposely overlooked such conduct of the AO and confirmed the same on the basis of the finding by the AO in a stereotyped manner without considering the relevant laws, the present legal position in the identical facts of the case, the judgements passed by this ld. Tribunal which has attained finality by the pronouncement of the Apex Court. The identical case which was disposed of by this Coordinate Bench of the ld. Tribunal in ITA No.1240/Kol/2012 in the case of ITO vs M/s Deep Shikha Distributors Pvt. Ltd. specifically observe as follows :
"5. Coming to the order of the AO at para13 it is stated that the summons was sent to the Directors of the assessee company as well as Directors of the investing companies but none of them appeared. Before the Ld. CIT(A), the assessee has specifically stated that no summons u/s 131 of the Income Tax Act, 1961 were received by the assessee. It was also argued that the assessing officer has not made any independent enquiry at his end, to disprove the claim of the assessee companies. The sum and substances of the arguments of the revenue is that the Ld. CIT(A) has passed a mechanical order without considering the legal position and the facts of the case as brought out by the AO. The ld. Counsel for the assessee submits that the AO has not given adequate opportunity and has passed an order without enquiring. He supports the order of the Ld. CIT(A).
6. In the case of Sriram Tie Up Pvt. Ltd. supra at para 6 and 7 held as follows:
"6. In the case of M/s. Sukanya Merchandise Pvt. Ltd. vs ITO (ITA 291/Kol/2016 dated 15.12.2017) cited by the learned counsel for the assessee, a similar view has been taken by the Co-ordinate Bench of this Tribunal and the similar issue relating to the addition made under section 68 on account of share capital contribution by treating the same as unexplained cash credits is restored back by the Tribunal to the file of the A.O. in almost similar situation after recording its observations / findings as under:
We note that the AO pursuant to the order of Ld. CIT had taken note of the directions of the Ld. CIT and issued notice u/s. 142(1) dated 16.08.2013 and has acknowledged that the assessee had furnished the copy of final account, I. T. Acknowledgement, bank statement for the relevant period evidencing the receipt of share application money from the share applicants. Thereafter, the AO makes certain inferences based ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 5 on the list of shareholders and taking note of the bank statement furnished by the assessee. We note that after the initial notice dated 16.08.2013, thereafter the AO had issued the notice on 26.02.2014 which has been reproduced at page 3 of the reassessment order, wherein AO required the directors of the assessee company to be present before him on 06.03.2014. However, according to the Ld. AR, the assessee received the notice only on 07.03.2014 and thereafter, the assessee requested the AO to provide another opportunity of hearing vide its letter dated 20.03.2014. Thereafter, the AO fixed the date of hearing on 12.03.2014 vide notice dated 10.03.2014. So, according to the assessee company since the directors were not in station till 23.03.2014, the Ld. AR had requested for adjournment till that time. Though the AO has stated that he has issued summons on 24.03.2014 to the assessee company to produce the directors of the company before him on 26.03.2014, the assessee company contended that it has not received the said summon and, therefore, could not make the personal appearance. The AO has drawn adverse conclusion basically because of non-appearance of the directors of the assessee company and that of the shareholder companies. We note that initially the AO started the enquiry on 16.08.2013 which was complied by the assessee by submitting documents which has been acknowledged by the AO. Thereafter, the enquiry was started only at the fag end of February 2014 and the assessee company had informed the AO that their directors were out of station till 23.03.2014. In the light of the aforesaid facts, we are of the opinion that the assessee did not get fair opportunity to present the evidences before the AO so, there was a lack of opportunity as aforesaid, therefore, it has to go back to AO.
8. We also note that Ld. Cit while setting aside the order of the AO which was passed u/s. 147/143(3) of the Act, the Ld. CIT gave certain guidelines to follow for conducting deep investigation. We also note that similarly placed assessees had challenged the exercise of revisional jurisdiction u/s. 263 of the Act before this Tribunal in those cases one of it of Subha Lakshmi Vanijya Pvt. Ltd. Vs. CIT in ITA No. 1104/Kol/2014 dated 30.07.2015, wherein the Tribunal was pleased to uphold the order passed by the Ld. CIT passed u/s. 263 of the Act, which we learn to have been confirmed by the Hon'ble jurisdictional High Court and the SLP preferred against the decision of the Hon'ble jurisdictional High Court has been dismissed by the Hon'ble Supreme Court. Therefore, similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld. We note that the AO while giving effect to the CIT's 263 order has noted that the assessee company has in fact furnished the documents sought by him to his notice u/s. 142(1) of the Act. However, the AO took the adverse view against the assessee on the plea that the directors of the assessee company and share subscribing companies had not appeared before him on 26.03.2014 and t after taking note that none appeared on 26.03.2014 concluded on the same day 26.03.2014 that entire amount of share ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 6 application money received along with premium amounting to Rs.8,06,00,000/- which has remained unexplained and added to the income of the assessee. We also note that the Ld. CIT after looking into the pernicious practice of converting black money into white money has given the guidelines to AO as to how the investigation should be conducted to find out the source of source. Since similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld by the Tribunal as well as by the Hon'ble Calcutta High Court as well as the SLP has been dismissed by the Hon'ble Supreme Court, similar order of the Ld. CIT has to be given effect to as directed by the Ld. CIT. We take note that the Ld. CIT with his experience and wisdom has given certain guidelines in the backdrop of black money menace should have been properly enquired into as directed by him. The AO ought to have followed the investigating guidelines and method as directed by him to unearth the facts to determine whether the identity, genuineness and creditworthiness of the share subscribers. We note that the Hon'ble Supreme Court in three judges bench in the case of Tin Box, (supra), has held that since there was lack of opportunity to the assessee at the assessment stage itself, the assessment needs to be done afresh and thereby reversed the Hon'ble High Court, Tribunal and CIT(A)'s orders and remanded the matter back to AO for fresh assessment. So, since there was lack of opportunity as aforestated it has to go back to AO. We also note that the Hon'ble Delhi High Court in the case of CIT Vs. Jansampark Advertising & Marketing Pvt. Ltd. in ITA No. 525/2014 dated 11.03.2015 wherein after noticing inadequate enquiry by authorities below have held as under:
"41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established.
42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 7 AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further inquiry' in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld."
In view of the aforesaid order and in the light of the Hon'ble Supreme Court's decision in Tin Box Company (supra) and taking into consideration the fact the order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld up to the level of Apex Court, and taking note of Hon'ble Delhi High Court's order in Jansampark Advertising & Marketing Pvt. Ltd. (supra), we set aside the order of the Ld. CIT(A) and remand the matter back to the file of AO for de novo assessment and to decide the matter in accordance to law after giving opportunity of being heard to the assessee.
7. We, therefore, consider it fair and proper and in the interest of justice to set aside the orders of the authorities below on the issue in dispute and restore the matter to the file of the A.O. to decide the same afresh after giving the assessee proper and sufficient opportunity of being heard and after taking into consideration the entire evidence already available on record as well as other documentary evidence which the assessee may choose to file in support of its case on the issue."
The Kolkata Bench of the ITAT has passed similar order in many cases on the same issue of additions made u/s 68 of the share capital, has set aside the assessment to the file of the AO for fresh adjudication in the lines stated above after giving the assessee adequate opportunity of being heard.
7. Keeping in view the totality of the facts and circumstances of the case and also the orders of the Co-ordinate Bench of the Tribunal in similar matters, we set aside this appeal to the file of the AO for fresh adjudication and in accordance with law, after giving the assessee adequate opportunity of being heard."
8. We, therefore keeping in mind the entire facts and circumstances of the case respectfully following the judgement of this Coordinate Bench consider it fair and proper in the interest of justice to set aside the orders passed by the authorities below and restore the issue to the file of the AO to decide the same afresh positively upon ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 8 making compliance of the guidelines/mandate as mentioned above in accordance with law.
9. In the result ITA No.561/Kol/2016 is allowed for statistical purposes.
10. The issue involved in ITA No.562/Kol/2016 is identical with that of the issue involved in ITA No.561/Kol/2016.The decision taken in ITA No.561/Kol/2016 will apply in this case also.
11. In the result ITA No.562/Kol/2016 is allowed for statistical purposes.
12. In the result both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the Court on 14.09.2018.
Sd/- Sd/-
[J.Sudhakar Reddy] [ Madhumita Roy ]
Accountant Member Judicial Member
Dated : 14.09.2018.
[RG Sr.PS]
Copy of the order forwarded to:
1. M/s Saltlake Energy Pvt. Ltd., 28, Strand Road, 2nd Floor,Kolkata-700001.
2. I.T.O., Ward-5(2), Kolkata.
3. C.I.T.(A)-2, Kolkata. 4. C.I.T-2, Kolkata
5. CIT(DR), Kolkata Benches, Kolkata.
True Copy By order, Senior Private Secretary ITAT Kolkata Benches Kolkata ITA Nos.561 & 562/Kol/2016M/s Saltlake Energy (P)Ltd. A.Y.2009-10 & 2010-11 9