GIRISH CHANDRA GUPTA,J. - (1.) The appeal is directed against a judgement and order dated 3rd November, 2015 passed by the learned Income Tax Appellate Tribunal, Kolkata, 'D' - Bench in ITA No.882/KOL/2013 pertaining to the assessment year 2009 -10 upholding an order dated 22nd March, 2013 passed under Section 263 of the Income Tax Act, 1961. The assessee has come up in appeal. Briefly stated the facts and circumstances of the case are as follows: - The share capital of the assessee as at 31st March, 2008 was Rs.55,15,000/ -. During the relevant previous year share capital of the assessee rose to a sum of Rs.1,34,42,370/ -. The reserve and surplus which as at 31st March, 2008 was a sum of Rs.77,398.31 paise rose to a sum Rs.39,92,61,247.60 paise. The increase in the share capital and the reserve and surplus is consequent to the issuance of 7,92,737 shares of Rs.10/ - each at a premium of Rs.390/ -. The authorised share capital of the assessee during the relevant assessment year was Rs.1,36,00,000/ -. The assessee originally filed a return showing a gross total income of Rs.24,658/ -. The assessee thereafter wrote to the assessing officer that due to inadvertence it had not disclosed receipt of a sum of Rs.61,000/ - on account of consultancy fees. The mistake, it was pointed out, was due to the fact that the sum of Rs.61,000/ - had been spent in making donation to a club. In the circumstances a notice dated 15th February, 2011 under Section 148 was issued. A notice dated 23rd February, 2011 under Section 142(1) of the Income Tax Act was also issued, seeking amongst other the details of share application money received by the assessee, including the names of the applicants, their address, date of receipt and the total amount received. It was submitted by Mr. Poddar that consequent to the notice dated 23rd February, 2011 the assessee disclosed full particulars as regards the applicants of shares including the money received from them. The aforesaid increase in the share capital is stated to have been subscribed by 39 corporate applicants. 15 out of them were issued notices under Section 133(6) of the Income Tax Act. Those 15 applicants were directed amongst others to disclose the source of money contributed to the share capital of the assessee.
(2.) Mr. Poddar contended that though the notices under Section 133(6) were issued to only 15 out of 39 applicants of share, the source of money in respect of each of the applicants of shares including their confirmation and bank statements were disclosed by the assessee. From the information made available by the assessee, it appears that 19 out of 39 applicants secured funds, for the purpose of contributing to the share capital of the assessee, on account of share application money. In other words, those 19 applicants collected funds on account of share application money in their respective companies and that money was contributed to the share capital of the assessee. 15 out of the 39 applicants, it appears, procured the fund by selling shares. The balance applicants of shares in the share capital of the assessee company did not however disclose the nature of receipt though source of fund was disclosed. What has not been specified is, as to on what account was the money received. The forms of share application purporting to have been signed by the applicant companies have also been disclosed from which it appears that the date of allotment, number of allotment, number of shares allotted, share ledger folio, allotment register folio, application number, have all been kept blank. These particulars, Mr. Poddar, submitted should have been filled up by the assessee, but that has not been done. Another significant fact admitted by the assessee in reply to the notice to show cause under Section 263 is that the "shares were offered to, and subscribed by the closely held companies owned by the Promoters/Directors or their close relatives and friends". Assessment under Section 143(3) read with Section 147 of the Income Tax Act was completed on 30th March, 2011. A notice dated 22nd February, 2013 was issued under Section 263 of the Income Tax Act alleging that the assessment under Section 143(3) / 147 was completed without application of mind and without requisite enquiry into the increase of the share capital including the premium received by the assessee. The assessee replied stating, inter alia, as follows: - "On a bare perusal of the impugned Showcause Notice, it would appear that the allegations of the Revenue may be summarized as under: (i) That the Assessing Officer did not make requisite enquiry on the issue as to "what prompted the subscribers" to subscribe Shares at a high premium, issued by a closely held company. (ii) That there is no evidence on record which can show that the issue of subscription of Shares had been examined objectively and, therefore, it appeared to the Revenue that the assessment order was passed without application of mind. Before proceeding to reply to the aforesaid allegations, which, in our humble view, are wholly unfounded, it would be appropriate to recall the undisputed facts borne out by record, as under: In the previous year relevant to the assessment year 2009 -10 the assessee - company had issued 7,92,737 Equity Shares of the Face Value of Rs.10/ - each at a premium of Rs.390/ -. Such shares were offered to, and subscribed by the closely held companies owned by the Promoters/Directors or their close relatives and friends. From the List of Allottees of such Shares (copy given herewith), it would be kindly found that all the Shares were offered to, and subscribed by the corporate entities and therefore, there was no question of any outsider making investment in Shares of the assessee -company. It bears importance to state here that the investor companies of Shares were interested to subscribe Shares of the assessee -company as, according to them, the assessee -company had great prospect in future."
(3.) The CIT in his order dated 22nd March, 2013 passed under Section 263 opined that this was or could be a case of money laundering which went undetected due to lack of requisite enquiry and non -application of mind. He entertained the belief "that unaccounted money is laundered as clean share capital by creating a façade of paper work, routing the money through several bank accounts and getting it the seal of statutory approval by getting the case reopened u/s.147 suo motu". The order dated 30th March, 2011 passed under Section 143(3)/ 147 was thus erroneous and prejudicial to the interest of the revenue. He, therefore, set aside the same and issued directions for a thorough enquiry. To be precise the following directions were issued. "A.O. is directed to carry out through and detailed enquiries in the case. He should carry out inquiries about the various layers through which the share capital has been rotated. The A.O. is also directed to summon the present and past Directors of the assessee company and the subscriber companies and examine them. The A.O. should also examine as to when this company was sold. At that point of time the fictitious assets such as shares in other companies or loans given to other companies is converted back into cash by credit in the assessee company's bank account. The source of this money also needs to be examined. Further, information should be sent to the A.Os of the subscriber companies and to the other companies through which the capital has been rotated regarding the findings of the A.O. Subsequent to the inquiries and verification of all relevant aspects of the case, the A.O. should pass a speaking order after providing adequate opportunity to the assessee." ;