TMI Blog2021 (1) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... resses of those companies. In the result, ground allowed for statistical purposes. - I.T.A. No. 1829/Kol/2018 - - - Dated:- 12-1-2021 - Sri J. Sudhakar Reddy, Accountant Member And Sri S.S. Godara, Judicial Member For the Assessee : Sh. Manish Tiwari, FCA For the Revenue : Sh. Supriyo Paul, Addl. CIT ORDER PER J. SUDHAKAR REDDY, AM: This is an appeal filed by the assessee directed against the order of the Learned Commissioner of Income Tax (Appeals)-4, Kolkata, [hereinafter the CIT(A) ], passed u/s. 250 of the Income Tax Act, 1961 (the Act ), dated 31.07.2018 for the Assessment Year 2012-13. 2. The assessee is a company and is in the business of civil construction and other allied activities and hiring of heavy machineries. It filed its return of income on 30.09.2012 for the AY 2012-13 declaring the total income of ₹74,43,596/-. The AO passed an order u/s 143(3) of the Act on 30.03.2015 determining the total income of the assessee at ₹3,46,50,520/- inter alia making an addition as Gross Profit of ₹1,33,89,565.44 at the rate of 8% of the total turnover of the assessee of ₹16,73,69,568.06 and an addition of ₹2,10,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 68 of the Act. The ld. CIT(A), during the course of appellate proceedings, called for the remand report from the AO. He directed the AO to conduct further enquiry into the share application money received by the assessee company from the five companies. After receiving the remand report from the DCIT, Circle-10(1), Kolkata on the cash credits from these five companies, the ld. CIT(A) issued an enhancement notice to the assessee, proposing to enhance the assessment by, making an addition u/s 68 of the Act of share application money received from the three companies M/s. Khetrapati Vinimay Pvt. Ltd. and M/s. BPMK Energy Systems Pvt. Ltd. in addition to the ₹2,10,00,000/- received from two companies. After considering the replies, the ld. CIT(A) not only confirmed the addition of ₹2,10,00,000/- made u/s 68 of the Act by the AO, of share application money received by the assessee company from three share applicant companies i.e. M/s. Shivrashi Construction Pvt. Ltd., M/s. Sidhant Residency Pvt. Ltd. and M/s. Panghat Textiles Pvt. Ltd., but also enhanced the addition u/s 68 of the Act by adding the share application money received from M/s. Khetrapati Vinimay Pvt. Ltd. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant companies due to elapse of time and that the notices were not served on the correct present addresses and hence, none appeared before the AO and pleaded that the matter be set aside to the file of the AO for fresh adjudication in accordance with law. He submitted that the assessee has submitted each and every document in support of the transactions such as audited books of accounts, confirmation letters, details of the transactions, photocopy of the bank pass book, PAN details and in some cases assessment order passed u/s 143(3) of the Act for the earlier assessment year to prove the genuineness of the transactions and to prove the identity and creditworthiness of the shareholders. 6. The ld. D/R, on the other hand submitted that in case the assessee wants to set aside the matter to the file of the AO, then the entire addition, as enhanced by the ld. CIT(A), u/s 68 of the Act, may be restored to the file of the AO for fresh adjudication in accordance with law. He submitted that the ld. CIT(A) had given a notice of enhancement to the assessee and after considering the reply of the assessee, the remand report of the AO, the inspector s report, as well as the other pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kol/2018 M/s. Matarani Vintrade Pvt. Ltd. vs. ITO, order dated 04.11.2020 wherein at para 7 page 8 to para 10 page 13 held as follows: 7. We have heard both the parties and perused the records. We note that the assessee had filed before us three (3) paper book. [P.B-1 contains 93 pages. P.B-2 contains 843 pages and P.B-3 contains case law]. We note that the Ld. CIT(A) has fixed the matter on six (6) occasions. However, it was brought to our notice that though the Ld. CIT(A) sent notice of hearing, those notices were returned back by the postal authority with the comments Refuse/ No such company was found . Therefore, he passed an ex parte order qua the assessee on merits after going through the documents kept in the assessment folder. According to the Ld. CIT(A), the assessment order was passed by the AO accepting the share capital collected by assessee of ₹ 20.54 crs, which action of AO, according to the Ld. CIT(A), was prejudicial to the interest of the revenue and consequently he issued notice for enhancement of addition made u/s. 68 by a letter dt. 8-3-2017 fixing the matter on 17/3/2017. According to the Ld. CIT(A), the notice of enhancement returned back un-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st two notices of enhancement as issued/sent by the Ld. CIT(A) in the premises at 21,HemantaBasuSarani, Fifth Floor, Room No. 506, Kolkata-700 001. However, according to the Ld. AR before any enhancement of addition could have been made, the Ld. CIT(A) ought to have given reasonable opportunity as contemplated in sub-section (2) of section 251 of the Act. Section 251(2) of the Act reads as under:- (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.(emphasis given by us) 8. We note that as per provisions of section 251(2) of the Act, unless the assessee has been offered a reasonable opportunity of showing cause of such enhancement, the Ld. CIT(A) could not have enhanced the assessment made by the AO. In this context, we note from a perusal of the impugned order that first enhancement notice was issued by Ld. CIT(A) on 8/3/2017 fixing the appeal for hearing on 17/03/2017 and thereafter a second notice was issued on 24/3/2017 fixing the appeal for hearing on 31/03/2017 and the Ld. CIT(A) has passed the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicant companies. 5. Detailed Fund Flow Statement for the year. 6. Copy of Bank Statement. 7. Details of Business Activities 8. Details of Fixed Assets and depreciation 9. Computation of total income. 10. Thus, the aforesaid documents were received by the Assessing Officer during assessment proceedings and thereafter he issued notices u/s 133(6) of the Act to all the thirty eight (38) share applicant companies and after perusal of the documents furnished by them (PB-II pages 1-843) and thereafter, summoned the director of assessee company questioned examined him and has recorded his statement on oath u/s 131 of the Act. From the aforesaid exercise and verification made, it can be discerned that all the thirty eight (38) share applicants are income tax assessee s and their financials shows financial credibility and the bank statement reflected the entire inflow and outflow of funds and that there is no cash deposits in their respective bank account, thus the AO took a view to accept share capital raised by assessee from thirty six (36) out of thirty eight (38) share applicants, and made an addition of ₹ 84 lakhs u/s 68 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company nor the Directors of the share applicant companies. And it is not the case of ld. CIT(A) that ITR, balance sheet, bank statement, ROC documents, PAN etc. of assessee as well as of all or any of the share applicants or any documents filed / found in assessment folder are bogus or not genuine. So the action of Ld. CIT(A) to overturn the decision of Assessing Officer without any enquiry or investigation cannot be countenanced. The Hon ble Delhi High Court in the case of Gurinder Mohan Singh Nindrajog vs. CIT [2012] 348 ITR 170 (Delhi) held as follows: We have considered the submissions of both the parties. There is no doubt about the fact that while framing the assessment even under section 143(3) of the Act, the Assessing Officer may omit to make certain additions of income or omit to disallow certain claims which are not admissible under the provisions of the Act thereby leading to escapement of income. The Income-tax Act provides for remedial measures which can be taken under these circumstances. While framing an assessment under section 143(3) of the Act, any of the following situation may occur: (a) the Assessing Officer may accept the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal before the Commissioner of Income-tax (Appeals) against the said addition and disallowance, the said disallowance and addition being the subject-matter of appeal before the Commissioner of Income-tax (Appeals) has been empowered under section 251(1)(a) of the Act to enhance such an income where the Assessing Officer had proceeded to make addition or disallowance by dealing with the same in the body of order of assessment by underassessing the same as the same was the subject-matter of the appeal as per the grounds of the appeal raised before him. In other words, the Commissioner of Income-tax (Appeals) has a power of enhancement in respect of such item or items of income which has been dealt with in the body of the order of the assessment, and arose for his consideration as per the grounds of appeal raised before him, being the subject-matter of appeal. This is succinctly stated in CIT vs. Edward Keventer (Successors) P. Ltd. [1980] 123 ITR 200 (Delhi). The case on hand falls in category (c) as the AO made no addition in respect of these items of cash credit, though in the course of hearing before him he holds the discussion of such items of income. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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