M/s. Jagdamba Petroleum India Pvt. Ltd, New Delhi V. ITO, New Delhi

CO 3/DEL/2010

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1000 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAURAV DEDEJA
• Assessee Lawyers: R KUMAR GUPTA
• Keywords: Bogus Share capital; Retrospective amendment; Tax effect
• Section: 68

Judgement Text

ITA NO. 4327 /DEL/ 2009 & CO NO. 3/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 4327 /DEL/20 09 A.Y. : 2005 - 06 ITO, WARD 4(2), ROOM NO. 413 - A, CR BUILDING, IP ESTATE, NEW DELHI VS. M/S JAGDAMBA PETROLEUM INDIA PVT. LTD., E - 125, GAUTAM NAGAR, NEW DELHI (PAN: AAACJ9089P) (APPELLANT) (RESPONDENT) AND C.O. NO. 3 / DEL/201 0 (IN ITA NO. 4327/ DEL/20 09 ) A.Y. : 2005 - 06 M/S JAGDAMBA PETROLEUM INDIA PVT. LTD., C/O : RAJ KUMAR & ASSOCIATES CHARTERED ACCOUNTANTS 4435/7, ANSARI ROAD, DARYAGANJ, NEW DELHI - 110002 VS. ITO, WARD 4(2), ROOM NO. 413 - A, CR BUILDING, IP ESTATE, NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. GAURA V DEDEJA, SR. DR ASSESSEE BY : SH. R. KUMAR GUPTA, CA & SH. SAURAV ROHATGI DATE OF HEARING : 29 - 6 - 201 5 DATE OF ORDER : 2 9 - 6 - 201 5 ORDER PER H.S. SIDHU: JM TH IS APPEAL FILED BY THE REVENUE AND CROSS O BJECTION S FILED BY THE ASSESSEE EMANATE OUT OF THE COMMON O RDER DATED 0 4 . 9 .20 09 PASSED BY THE LD. CIT(A) - VII, NEW D ELHI PERTAINING TO ASSESSMENT YEAR ITA NO. 4327 /DEL/ 2009 & CO NO. 3/DEL/2010 2 200 5 - 0 6 . FOR THE SAKE OF CONVENIENCE, WE ARE PROCEEDING TO DISPOSE O FF THE APPEAL AND CROSS OBJECTIONS BY THIS CONSOLIDATED ORDER. 2. THE GROUNDS RAISED IN THE REVENUE S APPEAL BEING ITA NO. 4327/DEL/2009 READ AS UNDER: - 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 10,00,000/ - MADE U/S. 68 OF THE I.T. ACT BEING THE BOGUS SHARE APPLICATION MONEY AND RS. 20,000/ - ON ACCOUNT OF UNACCOUNTED COMMISSION. 2.1 LD. CIT(A) HAS IGNORED THE FACT THAT THE ASSESSEE FA ILED TO DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. 2.2 THE LD. CIT(A) HAS IGNORED THE MATERIAL FINDING OF THE AO AND INVESTIGATION MADE DURING ASSESSMENT PROCEEDINGS. 3. THE APPLICANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE GROUNDS RAISED IN THE ASSESSEE S CROSS OBJECTION BEING 3 /DEL/201 0 (A.Y. 200 5 - 0 6 ) READ AS UNDER: - 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE PROCEEDINGS U/S. 147/148 ARE ABSOLUTELY ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION, THEREFORE, CONSEQUENTIAL ITA NO. 4327 /DEL/ 2009 & CO NO. 3/DEL/2010 3 ASSESSMENT FRAMED U/S. 147/143(3) IS ALSO ILLEGAL AND UNSUSTAINABLE. 2. THAT THE LD. CIT(A) HAS BEEN FULLY JUSTIFIED IN LAW AS WELL AS ON MERITS IN DELETING ADDITION OF RS. 10 LACS MADE U/S. 68 FOR SHARE CAPITAL RECEIVED DURING THE YEAR AND OF RS. 20,000/ - FOR ALLEGED COMMISSION ESTIMATED @2% THEREON. 4 . AT THE THRESHOLD WE FIND THAT THE TAX EFFECT IN THIS APPEAL IS LESS THA N RS. 4,00,000/ - , THEREFORE, THE DEPARTMENT OUGHT NOT TO HAVE FILED THIS APPEAL IN VIEW OF THE CIRCULAR ISSUED BY THE CBDT AND THE PROVISIONS CONTAINED IN THE SECTION 268A OF THE INCOME TAX ACT, 1961 (HEREINAFTER TO BE REFERRED AS THE ACT). 5 . LD. DR SU PPORTED THE ORDER OF THE AO. 6 . IN THIS CASE NOTICE WAS SENT TO BOTH THE PARTIES ON THE ADDRESS GIVEN BY THEM, HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY REQUEST FOR ADJOURNMENT IS FILED. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT NO USEFUL PURPOSE WOULD BE SERVED TO ADJOURN THE CASE AGAIN AND AGAIN. THEREFORE, WE ARE DECIDING THE APPEAL, EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS AVAILABLE ON RECORD. 7 . AFTER CONSIDERING THE SUBMISSIONS OF LD. DR AND THE MATERIAL ON RECORD, IT IS NOTICED THAT SECTION 268A HAS BEEN INSERTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01/04/1999. THE RELEVANT PROVISIONS CONTAINED IN SECTION 268A READ AS UNDER: 268A. (1) THE BOARD MAY, FROM TIME TO TIME, ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS TO OTHER INCOME - TAX AUTHORITIES, FIXING SUCH MONETARY LIMITS AS IT MAY DEEM FIT, FOR THE PURPOSE OF REGULATING FILING OF APPEAL OR APPLICATION FOR REFERENCE BY ANY INCOME - TAX AUTHORITY UNDER THE PROVIS IONS OF THIS CHAPTER. ITA NO. 4327 /DEL/ 2009 & CO NO. 3/DEL/2010 4 (2) WHERE, IN PURSUANCE OF THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB - SECTION (1), AN INCOME - TAX AUTHORITY HAS NOT FILED ANY APPEAL OR APPLICATION FOR REFERENCE ON ANY ISSUE IN THE CASE OF AN ASSESSEE FOR ANY ASSESSMENT YEAR, IT SHALL NOT PRECLUDE SUCH AUTHORITY FROM FILING AN APPEAL OR APPLICATION FOR REFERENCE ON THE SAME ISSUE IN THE CASE OF (A) THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR; OR (B) ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR; (3) NOTWITHSTANDING THAT NO APPEAL OR APPLICATION FOR REFERENCE HAS BEEN FILED BY AN INCOME - TAX AUTHORITY PURSUANT TO THE ORDERS OR INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB - SECTION (1), IT SHALL NOT BE LAWFUL FOR AN ASSESSEE, BEING A PARTY IN ANY APPE AL OR REFERENCE, TO CONTEND THAT THE INCOME - TAX AUTHORITY HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL OR APPLICATION FOR REFERENCE IN ANY CASE. (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL H AVE REGARD TO THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB - SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR NOT FILED IN RESPECT OF ANY CASE. (5) EVERY ORDER, INSTRUCTION OR DIRECTION WHICH HA S BEEN ISSUED BY THE BOARD FIXING MONETARY LIMITS FOR FILING AN APPEAL OR APPLICATION FOR REFERENCE SHALL BE DEEMED TO HAVE BEEN ISSUED UNDER SUB - SECTION (1) AND THE PROVISIONS OF SUB - SECTIONS (2), (3) AND (4) SHALL APPLY ACCORDINGLY. 8 . IT IS NOT IN DIS PUTE THAT THE BOARD S INSTRUCTION OR DIRECTIONS ISSUED TO THE OTHER INCOME - TAX AUTHORITIES ARE BINDING ON THOSE AUTHORITIES, THEREFORE, THE DEPARTMENT OUGHT NOT TO HAVE FILED THE APPEAL IN VIEW OF THE ABOVE MENTIONED SECTION 268A SINCE THE TAX EFFECT IN TH E INSTANT CASE IS LESS THAN THE AMOUNT PRESCRIBED FOR NOT FILING THE APPEAL. 9 . IT IS NOTICED THAT THE CBDT HAS ISSUED INSTRUCTION NO. 5/2014 DATED 10 TH JULY, 2014, BY WHICH THE CBDT HAS REVISED THE MONETARY LIMIT TO RS. 4,00,000/ - FOR FILING THE APPEAL BE FORE THE TRIBUNAL. 10 . KEEPING IN VIEW THE CBDT INSTRUCTION NO. 5 OF 2014 DATED 10 TH JULY, 2014 AND ALSO THE PROVISIONS OF SECTION 268A OF INCOME TAX ACT, 1961, WE ARE OF THE VIEW THAT THE REVENUE SHOULD NOT HAVE FILED THE ITA NO. 4327 /DEL/ 2009 & CO NO. 3/DEL/2010 5 INSTANT APPEAL BEFORE THE TRIBUNA L. WHILE TAKING SUCH A VIEW, WE ARE FORTIFIED BY THE FOLLOWING DECISIONS OF THE HON BLE PUNJAB & HARYANA HIGH COURT: 1. CIT VS. OSCAR LABORATORIES P. LTD. (2010) 324 ITR 115 (P&H); 2. CIT VS. ABINASH GUPTA (2010) 327 ITR 619 (P&H); 3. CIT VS. VARINDERA CONSTRUCTIO N CO. (2011) 331 ITR 449 (P&H) (FB). 1 1 . SIMILARLY, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. IN ITA NO. 128/2008, ORDER DATED 03.03.2011 BY FOLLOWING THE EARLIER ORDER DATED 02.08.2010 IN ITA NO. 179/1991 IN THE CASE OF CIT DELHI - III VS. M/S P.S. JAIN & CO. HELD THAT SUCH CIRCULAR WOULD ALSO BE APPLICABLE TO PENDING CASES. 1 2 . THUS, FROM THE RATIO LAID DOWN BY THE HON BL DELHI HIGH COURT, IT IS CLEAR THAT THE INSTRUCTIONS ISSUED IN THE CIRCULARS BY CBDT ARE APPLICABLE FOR PE NDING CASES ALSO. THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASE, WE ARE OF THE CONSIDERED VIEW THAT INSTRUCTION NO. 5 OF 2014 DATED 10 TH JULY, 2014 ISSUED BY THE CBDT ARE APPLICABLE FOR THE PENDING CASES ALSO AND IN T HE SAID INSTRUCTIONS, MONETARY TAX LIMIT FOR NOT FILING THE APPEAL BEFORE THE ITAT IS RS. 4,00,000/ - . 1 3 . IN VIEW OF THE ABOVE, WITHOUT GOING INTO MERIT OF THE CASE, WE DISMISS THE APPEAL FILED BY THE REVENUE. 1 4 . IN THE RESULT, APPEAL OF THE REVENUE IS DI SMISSED. ASSESSEE S CROSS OBJECTION 15. SINCE WE HAVE DISMISSED THE REVENUE S APPEAL AS AFORESAID, THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND AS SUCH DISMISSED. ITA NO. 4327 /DEL/ 2009 & CO NO. 3/DEL/2010 6 1 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE IS ALSO DISMISSED, AS INFRUCTOUS. ORDER PRONOUNCED IN THE OPEN COURT 2 9 - 6 - 201 5 . SD / - S D / - [ S.V. MEHROTRA ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 2 9 / 6 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, I T A T, DELHI BENCHES