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TMI Blog2018 (5) TMI 1582X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee for statistical purposes. - I.T.A No. 323/Kol/2017 - - - Dated:- 23-5-2018 - Shri A.T.Varkey, JM And Shri M. Balaganesh, AM For The Appellant : Shri Miraj D.Shah, AR For The Respondent : Shri Arindam Bhattacharjee, Addl. CIT ORDER Per M.Balaganesh, AM 1. This is an appeal by the assessee directed against the order passed by the Learned Commissioner of Income Tax(Appeals)-6, Kolkata [in short the ld CIT(A)] in Appeal No.424/CIT(A)-6/Kol/2015-16 dated 01.11.2016 against the order of assessment framed by the Learned Income Tax Officer, Ward-6(4), Kolkata [ in short the ld AO] under section 263/144 of the Income Tax Act, 1961 (in short the Act ) dated 31.03.2014 for the Assessment Year 2008-09. 2. The only to be decided in this appeal is as to whether the ld CITA was justified in upholding the addition made u/s 68 of the Act towards share application money in the sum of ₹ 3,68,00,000/- and enhancement by the ld CITA from ₹ 3,68,00,000/- to ₹ 3,69,01,543/-, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is an investment company. The return of income for the Asst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re directors of the assessee during the relevant period, failed to produce the shareholders before the ld AO for verification of share capital investments obtained from them. He also observed that the identity and creditworthiness of the shareholders could not be explained. The ld AO further observed that since the source of fund of the huge investments made by the assessee during the financial year was the share capital raised together with share premium, which have remained unexplained, it can be said that the source of such investment in shares of other corporate bodies have also remained unexplained within the meaning of section 69 of the Act. Therefore the unexplained investment to the tune of ₹ 3,68,00,000/- was added to the total income of the assessee u/s 69 of the Act. 4. The ld CITA observed that since the assessee company s share capital which was the source of investment remained unexplained in the light of the failure of the directors to attend personally and explain the business prudence of the investments and their own credentials, the addition on the facts of the case should have been made u/s 68 of the Act in respect of share capital of ₹ 3,69,01,543 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity of being heard. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ? In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the assessee. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as afore stated. 6. In response to this, the ld DR vehemently opposed this plea of the assessee and contended that the assessee company was very well aware of the revisional order passed by the ld CIT and should have brought all evidences before the ld AO to substantiate the identity, genuineness and creditworthiness of share subscribers. The ld AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by conducting independent enquiry not through the assessee. The bank account for the entire period should be examined in the course of verification to find out the money trail of the share capital. ii) Further the A.O. should examine the directors as well as examine the circumstances which necessitated the change in directorship if applicable. He should examine them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest. iii)The A. O is directed examine the source of realization from the liquidation of assets shown m the balance sheet after the change of Directors, if any. After conducting the inquiries verification as directed above, the A. O. should pass a speaking order, providing adequate opportunity of being heard to the assessee. 7. With the aforesaid direction, the ld CIT set aside the order of the ld AO which was passed u/s 147 / 143(3) of the Act. 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 Subhalakshmi Vanijya Pvt Ltd vs CIT in ITA No. 1104/Kol/2014 dated 30.7.2015, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the shareholders and not through the assessee. Hence non-appearance of the assessee before the ld AO intentionally or unintentionally does not make any relevance here. The ld AO admittedly did not resort to make enquiries in the manner stated by the ld CIT u/s 263 of the Act inspite of the fact that all the necessary details were very much available before him. The ld CIT had directed the ld AO to investigate into multiple layers of the investment in shares made by respective shareholders and identify the ultimate person holding controlling interest including the change in shareholding, directorship etc and then take the entire matter to its logical conclusion to bring out the facts on record. From the perusal of the assessment order, we find that this has not been done by the ld AO. In this regard, we would like to place reliance on the decision of Hon ble Delhi High Court in the case of CIT vs Jansampark Advertising Marketing Pvt Ltd in ITA No. 525/2014 dated 11.3.2015 wherein after noticing inadequate enquiry by authorities below, the court had held as under:- 41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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