TMI Blog2017 (12) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained cash credit by invoking the provisions of sec. 68 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 3. Brief facts of the case are that assessee filed its original return of income declaring total income of ₹ 2,802/- which was processed u/s. 143(1) of the Act. Later on, AO took note that the assessee has brought to his notice by filing a letter that an amount of ₹ 10,732/- as preliminary expenses raised in the form of authorized capital was not allowable as deduction. Therefore, the AO reopened the assessment, since the income of ₹ 10,732/- had escaped assessment by issuing notice u/s. 148 of the Act. Later, the ITA No.291/Kol/2016 M/s. Sukanya Merchandise Pvt. Ltd ., AY 2008-09 assessment was processed u/s. 147/143(3) of the Act by making addition on preliminary expenses written off of ₹ 10,732/-. 4. The Ld. CIT-2, Kolkata on perusal of the assessment record observed that assessee had infused fresh equity share capital of ₹ 16,12,000/- on a premium of ₹ 490/- per share and the assessee company received ₹ 8,06,00,000/-. The Ld. CIT noted that the AO had not issued any notice u/s. 133(6) of the Act to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikash Agarwal, Shri Manoj Mondal and Shri Rohit Agarwal. Thereafter, the AO notes that from the details of the accounts filed in response to the notice u/s. 133(6) of the Act, the shareholder companies do not have any activities as such and have no fixed assets and return of income is also very nominal. He notes that the immediate source of funds were mainly from transfer from another company as against the sale of shares. The AO after verification of the bank account further noted that in respect of share applicant companies, the entire money has come through sale proceeds received from sale of shares of another such company on the very same day or immediate earlier day and the average balance in the bank account was very nominal. Thereafter the AO in order to unearth the real fact behind the investment made by the share applicants to the assessee company, the AO summoned vide notice dated 26.02.2014 for recording statement on oath of the directors of the assessee company. The AO had reproduced the summons issued on 26.02.2014 at page 4 of his order. Thereafter, the AO notes that the assessee had asked for adjournment to 14.03.2014 and since there was no compliance he summoned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company was summoned vide notice dated 24.03.2014 for personal appearance of the directors on 26.03.2014. However, the said notice was not served upon them or they could have definitely complied with the aforesaid notice of the AO. We note that the reassessment order passed by AO, pursuant to the order passed u/s. 263 of the Act by Ld. CIT was passed on 26.03.2014, the main grievance of the assessee is that it did not get proper opportunity to place the evidence before the AO to satisfy him as to the identity, genuineness and creditworthiness of the shareholders. Therefore, the Ld. AR relied on the order of (three judge bench) the Hon'ble Supreme Court in Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) wherein the Hon'ble Supreme Court has held as unde It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard. That the assessee could have placed evidence before the first appellate authority or bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the identity, genuineness and creditworthiness of the shareholders, the Ld. CIT found that the AO while doing assessment did not exercise the role of investigator and, therefore, the order of AO was found to be erroneous so far as prejudicial to the interest of the revenue and directed the AO to make fresh assessment after taking into consideration the pernicious practice of converting black money by the modus operandi as described by the Ld. CIT. We also note that in the said backdrop the Ld. CIT has given certain guidelines which we can say was in order to facilitate a thorough deep investigation into the case and for that we note that the Ld. CIT had given the following directions: xxxiv) Examine the genuineness and source of share capital, not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the ITA No.291/Kol/2016 M/s. Sukanya Merchandise Pvt. Ltd., AY 2008-09 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. xxxv) Further the AO should examine the directors as well as examine the circumstances which ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITA No.291/Kol/2016 M/s. Sukanya Merchandise Pvt. Ltd., AY 2008-09 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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