2025 (11) TMI 279

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....he assessee. There was no compliance to the notice issued by the ld. AO u/s 143(2) and 142(1) of the Act. Therefore, the ld. AO issued summon u/s 131 of the Act to the Director of the assessee company which was not complied with. Thereafter, final show cause notice was given to the assessee for which also, according to the ld. AO there was also not complied but the facts on records showed otherwise. However without taking into account the reply/submissions/documents by the assessee framed the assessment u/s 144 of the Act. The ld. AO observed from the details available in the assessment folder that the assessee has received dividend of Rs.56,800/- and incurred expenditure of Rs.1,63,337/-. The ld. AO also noted that the company was formed on 15.03.1996. The ld. AO noted that during the year the assessee raised share capital/ share premium of Rs.7,11,000/-. The ld. AO also issued summons u/s 131 of the Act to the Director of the subscribing companies to explain the money invested in the assessee company as share capital/share premium. The ld. AO noted that only one director Shri Pradeep Goyal appeared and his statement was recorded. It was also noted by the ld. AO that the said pers....

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....id Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020. 06. The Ld. D.R strongly controverted and opposed the arguments as put forth by the Ld. A.R by submitting that the share application money was received by the assessee from various subscribers who were not having any creditworthiness. The Ld. D.R submitted that replying to the summons issued u/s 131 of the Act did not mean that the ingredients as envisaged in section 68 of the Act were duly satisfied. Besides the ld DR stated that the enquiries and investigation could not be carried out by the AO when the subscribers did not appear personally in compliance to summons issued u/s 131 of the Act. Therefore the Ld. D.R, therefore, submitted that the addition was rightly made by the AO and also confirmed by the Ld. CIT(A) after taking into account the reply of the assessee and the various circumstantial evidences. 07. After hearing the rival contentions and perusing the materials available on record, we find that in this....

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.... share subscribers before both the authorities below and they have failed to carry out any meaningful enquiry into the same nor any defect or deficiency was ever pointed out. In our opinion, the share capital / share premium cannot be treated as unexplained and added to the income of the assessee merely on the ground that there was no compliance on the part of the share subscribers or directors of the assessee company. The case of the assessee is squarely covered by the series of decisions relied by the ld. AR. Under these circumstances, we are not in a position to sustain the order of Ld. CIT(A). We find support from the decision of Hon'ble Supreme Court in the case of Orissa Corporation Ltd. (supra) "That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credi....

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.... to decide in this situation. In the said judgment noted by us at page 463, the Supreme Court has observed as follows: "The Income-Tax Appellate Tribunals performs a judicial function under the Indian Income-tax Act. It is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law." The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. Taking inspiration from the Supreme Court observation we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Ld. ....