ITO Vs Sharda Shree Agriculture & Developers Pvt. Ltd. (ITAT Raipur)
ITO vs. Sharda Shree Agriculture & Properties Pvt. Ltd. ITA NO.84/RPR/2017 (Date of Order : 05.08.2022) relating to addition on account of Share Application Money from two Kolkata based companies. Entire Addition was deleted
In our considered view, as the failure on the part of the A.O to call for the requisite information by issuing notices/letters u/s. 133(6) of the Act to the aforesaid investor companies well within a reasonable time had resulted to the delay in furnishing of the requisite reply by them, therefore, the same by no means can be attributed either to the assessee or to the investor companies. Be that as it may, it is a matter of fact borne from the record that the requisite details as were called for by the AO vide his notices/letters issue under Sec. 133(6) had been furnished by the investor companies and the same are found available on the assessment record. Before us the ld. DR had not rebutted the aforesaid factual position, i.e, furnishing of the requisite details by the investor companies pursuant to the queries that were raised by the AO vide notices/letters issued under Sec. 133(6) of the Act. Apart from that, we find that though the assessee in the course of the proceedings before the CIT(Appeals) had furnished substantial documentary evidences to support the authenticity of its claim of having received share application money from the aforesaid investor companies, i.e. M/s. Neel Kamal Vanijya Pvt. Ltd and M/s Chandrika Vanijya Pvt. Ltd., viz. copies of the share application forms, audited financial statements, copies of the bank statement, confirmations of the share applicants, copies of the resolution of board of directors etc. which though were forwarded by the CIT(Appeals) to the A.O with a direction to furnish his remand report, but the A.O had failed to rebut much the less dislodge the claim of the assessee of having received genuine share application money from the aforesaid share subscribers.
In our considered view, as both the aforementioned investor companies had placed on record supporting documentary evidences which duly substantiated their identity and creditworthiness, as well as the genuineness of the transaction in question, which had neither been rebutted by the A.O in the course of the original assessment proceedings; nor in the remand proceedings, therefore, the department without dislodging the primary onus that was duly discharged by the assessee could not have drawn adverse inferences as regards the transactions in question. Apart from that, we find substantial force in the claim of the Ld. AR that now when the A.O i.e. ITO, Ward-11(1), Kolkata while framing the assessment of one of the investor company, viz. M/s. Neel Kamal Vanijya Pvt. Ltd. had accepted the share capital of Rs.11.67 crore that was received by it in A.Y.2009-10 against which it had allotted 233470 shares, and thereafter it had not raised any fresh capital upto the date of subscription of the shares of the assessee company, therefore, it could safely be concluded that the source of availability of funds with the said investor company was not only proved to hilt, but in fact the same had also been accepted by the department. We, thus, in terms of our aforesaid observations concur with the view of the CIT(Appeals) that now when the source of the share application money of Rs.1,10,50,000/- received by the assessee company from one of the investor, viz. M/s. Neel Kamal Vanijya Pvt. Ltd. is proved beyond doubt and had not been rebutted by the A.O, therefore, there was no justification on his part in drawing adverse inferences qua the said transaction.
As regards the share application money of Rs.1,33,50,000/- that was received by the assessee company from the other investor company, viz. Chandrika Vanijya Pvt. Ltd., we find that though the documentary evidences substantiating the identity, creditworthiness and genuineness of the transaction in question that were filed by the assessee were confronted by the CIT(Appeals) to the A.O with a direction to file a remand report,, however, the A.O in the said case too had failed to rebut the documents as were available before him. Apart from that, the fact that the aforesaid share application money had been refunded by the assessee company in two tranches had also been lost sight of by the A.O while drawing adverse inferences as regards the authenticity of the transaction in question.
Be that as it may, we are of the considered view that now when the assessee company on the basis of substantial documentary evidences had proved to the hilt the identity and creditworthiness of the investor companies, as well as the genuineness of the respective transactions in question, which had not been dislodged by the A.O, as there is no whisper by him either in the course of the assessment proceedings or in the remand proceedings, therefore, the onus that was shifted upon him to disprove the claim of the assessee had remained undischarged. Accordingly, finding no infirmity in the view arrived at by the CIT(Appeals) who had rightly vacated the addition of Rs.2,44,00,000/- that was received by the assessee company as share application money from the aforementioned two investors company, we uphold the same.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the department is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 20.02.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 31.03.2015 for assessment year 2012-13. Before us the Revenue has assailed the impugned order on the following grounds of appeal:
“1. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.2,70,00,000/- made by the AO u/s 68 of the Act.”
2. “Whether on points of law and on facts & circumstances of the case the Ld. CIT(A) was justified in deleting the addition of Rs.1,33,50,000/- received from ChandikaVanijya Pvt. Ltd. by ignoring the facts as brought on record by the AO that the assessee company failed to prove the identity, genuineness and creditworthiness of the investor company as per the parameters of the legal provisions u/s 68 of the Act?”
3. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,33,50,000/- pertaining to M/s Chandika Vanijya Pvt. Ltd. made by the AO on account of unexplained cash credits u/s 68 of the Act, stating that the part of the amount was refunded during the instant assessment year and the rest of the amount was refunded in the A.Y. 201516, thereby giving a finding which is beyond the jurisdictions of the legal parameters as mandated in Section 68 of the Act.?”
4. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.1,10,50,000/- received from Neel Kamal Vanijya Pvt. Ltd. during the year by ignoring the facts as brought out by the—A0 on record, that the assessee company failed to prove the identity, genuineness and creditworthiness of the investor company as per the legal parameters u/s 68 of the Act?”
5. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,10,50,000/- from Neel Kamal Vanijya Pvt. Ltd. by stating that the same transaction was accepted by the jurisdictional AO of the investor company (i.e. M/s Neel Kamal Vanijya Pvt. Ltd.), whereas during the assessment proceedings before the AO, the assessee company failed to prove the authenticity, genuineness and creditworthiness of the investor company.? “
6. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in accepting fresh evidence produced by the assessee i.e. the finding of the AO having jurisdiction over the case of M/s Neel Kamal Vanijya Pvt. Ltd., Kolkata, without allowing the AO of the assessee company at Raipur, proper opportunity to examine the same, thereby violating the provisions on law under Ruje 46A of the I.T. Rules.?
7. “Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.26,00,000/- by ignoring the facts as brought out on record by the AO that the assessee company had not submitted any details and documentary evidences regarding share application money received from close relatives and directors whose identity, creditworthiness and genuineness of transaction could be justified in view of the legal provisions u/s 68 of the Act.?”
8. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in ignoring the established judicial precedent that the principle of res-judicata is not applicable to proceedings under the Income Tax Act, while giving adverse findings in the case of additions against the transactions of the assessee with the entities such as M/s ChandikaVanijya Pvt. Ltd. and M/s Neel Kamal Vanijya Pvt. Ltd.? “
9. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the ratio of the judgment of the Hon’ble High Court of Calcutta in the of M/s Rajmandir Estate Pvt. Ltd. Vs Pr. CIT Kolkata-III, Kolkata (G.A. No. 509/2016 with I.T.A. No. 113/2016 dated 13.05.2016)? “
10. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the ratio of the decisions of ITAT, Kolkata ’13’ Bench in the case of M/s SubhlakshmiVanijya (P) Ltd. Vs CIT-1, Kolkata in ITA No. 1104/Ko1/2014 and other cases dated 30.07.2015.?”
11. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) has erred by giving finding which is contrary to the ratio of the decision of Hon’ble ITAT, Kolkata Bench in the case of M/s Bisakha Sales (P) Ltd. Vs CIT-II, Kolkata [ITA No. 1493/Kolkata/2013]? “
12. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the identity, creditworthiness of the entities investing in the share capital and share premiums of the assessee company as genuine, a finding which is factually incorrect, thereby rendering the decision, which is perverse.? “
13. “Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in giving a decision in favour of the assessee and against the revenue though there is no nexus between the conclusion of fact and primary fact upon which without conclusion is based.? “
14. “The order if Ld. CIT(A) is erroneous both in law and on facts.”
15. “Any other ground that may be adduced at the time of hearing.”
2. Succinctly stated, the assessee company which is engaged in the business of trading of rice husk a/w. deriving of income from various other streams, viz. rental receipts, profit on sale of immovable properties, purchase/sale of shares and interest income, had filed its return of income for A.Y. 2012-13 on 30.03.2013, declaring an income of Rs.3,83,753/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3), dated 31.03.2015 determining the income of the assessee company at Rs.3,66,46,250/- after, inter alia, making the following additions:
