The Kolkata Bench held that the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee, thus set aside the order of Commissioner of Income Tax (Appeals) [CIT(A)] by directing the AO to delete the addition.
The assessee Prompt Barter Private Limited filed the return of income declaring income of Rs.3,41,310/- which was processed under Section 143(1) of the Income Tax Act,1961. Thereafter, the case of the assessee was selected for scrutiny under CASS and notices were issued and duly served on the assessee.
The reason for selecting the scrutiny of the assessee’s case was large share capital received during the year and accordingly the Assessing Officer (AO) called upon the assessee to prove the identity and creditworthiness of the shareholders and genuineness of the transactions.
The assessee filed before the AO necessary evidences comprising annual audited accounts, PANs and Identity cards of the directors, share allotment advice, bank statemenst etc.
The AO also issued notices under Section 133(6) of the Income Tax Act as well as summon under Section 131 of the Income Tax Act calling for various details and information from the subscribers which were duly complied with by filing replies.
However, the personal attendance was not made before the AO, so he added the aggregate amount of share capital and share premium raised during the year of Rs.2,73,00,000/- to the income of the assessee on the ground that no compliance was made to the summons issued under Section 131 of the Income tax Act without commenting on the evidences filed by the assessee as well as by the subscribers nor conducting any further enquiries.
The aggrieved assessee challenged the assessment before the CIT(A), who confirmed the order of AO.
The Authorised Representative (AR) of the assessee S. M. Surana,while referring to the evidences filed by the assessee as well as by the subscribers, submitted that the assessee as well as the subscribers have filed all the evidences proving the identity and creditworthiness of the subscribers as well as genuineness of the transactions.
The AR stated that where the assessee has filed all the evidences qua the subscribers consisting of names and addresses, PANs, audited accounts, bank statements etc. and AO has not carried out any further verification, then the addition cannot be made merely on the ground that there was no compliance to summon issued under Section 131 of the Income Tax Act .
The Departmental Representative (DR) P. P. Barman, submitted that the addition was rightly made by the AO and also confirmed by the CIT(A) after taking into account the reply of the assessee and the various circumstantial evidences.
The Bench comprising of Rajesh Kumar, Accountant Member and Sonjoy Sarma, Judicial Member observed that the AO, instead examining and enquiring into the material further, has straightaway jumped to the conclusion that these are unexplained cash credit within the meaning of Section 68 of the Income Tax Act. Similarly the CIT(A) has affirmed the findings of AO.
Further the Tribunal held that the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity , creditworthiness of investors and genuineness of the transactions.
Therefore the Tribunal set aside the order of CIT(A) by directing the AO to delete the addition, and so the appeal of the assessee was allowed.
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