M/s Rewa Green Agrotech Pvt. Ltd., V. Assistant Commissioner Of Income Tax, SATNA

CO 51/JAB/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1122 (ITAT-JABALPUR)
• Duration Of Justice: 5 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2013
• Court: TRIBUNAL
• Department Lawyers: V B SARGOR
• Assessee Lawyers: SUNIL NEMA ADVS
• Keywords: Unexplained cash credit; Bogus Share capital
• Section: 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T(S.S.).A.NOS. 57 & 58/JAB/2013 A.YS. : 2004-05 & 2006-07 ACIT, CIRCLE SATNA VS M/S.REWA GREEN AGROTECH PRIVATE LIMITED, MIG-3,HEDGEWAR NAGAR, CIVIL LINES, REWA APPELLANT RESPONDENT PAN NO. : AACCR6971N C.O. NOS.50 & 51/JAB/2013 (ARISING OUT OF I.T(S.S.).A.NOS. 57 & 58/JAB/2013) A.YS. : 2004-05 & 2006-07 M/S.REWA GREEN AGROTECH PRIVATE LIMITED, MIG-3,HEDGEWAR NAGAR, CIVIL LINES, REWA VS ACIT, CIRCLE SATNA CROSS OBJECTOR RESPONDENT -: 2: - 2 DEPARTMENT BY : SHRI V.B.SARGOR, DR ASSESSEE BY : SHRI K.P.DEWANI AND SHRI SUNIL NEMA, ADVS. DATE OF HEARING : 28.05.2015 DATE OF PRONOUNCEMENT : 25 .06.2015 O R D E R PER BENCH THESE TWO APPEALS OF THE REVENUE AND CROSS OBJECTIO NS OF THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDE RS OF THE CIT-28, MUMBAI, ALL DATED 22.05.2015 AND RELATE TO ASSESSMENT YEARS 2004-05 AND 2006-07. FOR THE SAKE OF CONVENIENCE, WE ARE DISPOSING OF ALL THESE APPEALS AND CROSS OBJECTIONS BY THIS COMMON ORDER. -: 3: - 3 I.T.(SS).A.NOS. 57/JAB/2013 & 58/JAB/2013 : 2. THE COMMON GROUND TAKEN BY THE REVENUE IN THESE APPEALS ARE THAT ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) ERRED IN FACTS AND IN LAW IN D ELETING THE ADDITION OF RS. 19,00,000/- AND RS. 39,10,200/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED SHARE A PPLICATION MONEY U/S 68 OF THE INCOME-TAX ACT, 1961. 3. THE ASSESSEE COMPANY IS DEALING IN AGRICULTURAL PRO DUCT ENGAGED IN AGRICULTURAL OPERATION. THE ASSESSEE HAS ACCEPTED THE CAPITAL OF KOLKATA BASED SHAREHOLDERS. ALL THE PAYMENTS HAVE BEEN RECEIVED THROUGH CHEQUES AND ALL THE COPI ES OF SHARE APPLICATIONS, ACKNOWLEDGEMENT OF THE RETURN A ND OTHER DETAILS HAVE BEEN FILED. HOWEVER, THESE SHARE APPL ICATIONS WERE RECEIVED FROM KOLKATA BASED PARTIES. THEREFOR E, IT WAS TREATED AS UNEXPLAINED AND ADDED TO THE INCOME OF T HE ASSESSEE. 4. THE FOLLOWING SHARE APPLICATION MONEY WERE RECEIVED FROM THE KOLKATA BASED SHAREHOLDERS IN I.T.(SS).A.N O. I.T.A.NO. 57/JAB/2013 :- -: 4: - 4 S.NO. NAME ADDRESS PAN AMOUNT MODE OF PAYMENT 1. BALARAM DOKANIA PO NALA DIST JAMTARA, JHARKHAND,815355 ACGPD2902G 500000 CHEQUE 2. SUMAN BAJAJ 2A, G.C.AVENUE, 7 TH FLOOR, ROOM NO.10A, KOLKATTA 700013 AGVPB616C 200000 CHEQUE 3. DEEPAK DOKANIA 2A, G.C.AVENUE, 7 TH FLOOR, ROOM NO.10A, KOLKATTA 700013 ADQPD4151Q 200000 CHEQUE 4. M/S.MADAN REAL ESTATE (P) LTD. 4, BALLAV DAS STREET, 4 TH FLOOR, ROOM NO. 418, KOLKATA 700 007 AAB PT7357E 300000 CHEQUE 5. PAWAN TEWARI B-100, BANGUR AVENUE, KOLKATTA 700055 AC BPT7357E 200000 & 100000 CHEQUE 6. ANIL KUMAR GHOSH 4, BALLAV DAS STREET, KOLKATA 700007 AFCPG6519B 200000 CHEQUE 7. PRABHAWATI DEVI AGRAWAL 33/4F, CHETLA CENTRAL ROAD, KOLKATTA-700 027 AFUPA5935R 200000 CHEQUE 5. THE FOLLOWING SHARE APPLICATION MONEY WERE RECEIVED FROM THE KOLKATA BASED SHAREHOLDERS IN I.T.(SS).A.N O. I.T.A.NO. 58/JAB/2013 :- S.NO. NAME ADDRESS PAN AMOUNT MODE OF PAYMENT 1. PRASAD EXIM PVT.LTD. 2/34, ASHOK NAGAR, GROUND FLOOR, TOLLYGUNGE, KOLKATA 700 040 AADCPO266F 1500000 CHEQUE 2. KHAITAN UDYOG PVT.LTGD. 27, BRABOURNE ROAD, 3 RD FLOOR, ROOM NO. 305, KOLKATA 700001 AABCK3191C 660000 750000 CHEQUE 3. FANTASTIC CONSTRUCTIONH LIMITED 27, WESTON STREET, 6 TH FLOOR, ROOM NO.601C, KOLKATA 700012 AAACF4079K 600000 CHEQUE 4. PKB FINVEST PVT.LD. 3,BENTICK STREET, KOLKATA 700001 AABCPS197K 400200 CHEQUE -: 5: - 5 6. THE MATTER CARRIED TO LD. CIT(A) AND THE LD. CIT(A) ALLOWED BOTH THE APPEALS BY OBSERVING AS UNDER. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING THE OBSERVATIONS MADE IN I.T.(SS).A.NO. 57/IND/2014, WHICH IS COMMON EXCEPT THE FIGURES :- 14.1 I HAVE CONSIDERED THE SUBMISSIONS MADE BY LD. COUNSEL OF THE APPELLANT, PERUSED THE MATER IAL AND EVIDENCE ON RECORD AND CASE LAWS CITED BEFORE ME. IN ASSESSMENT YEAR UNDER CONSIDERATION SHARE APPLICATION MONEY OF RS 19,00,020/- IS RECEIVED FRO M THE PERSONS AS MENTIONED ABOVE. THE AO HAS HELD THAT VARIOUS SHARE CAPITAL CONTRIBUTIONS RECEIVED B Y APPELLANT ARE ASSESSABLE AT THE HANDS OF APPELLANT AS UNEXPLAINED CASH CREDIT. FROM THE ASSESSMENT ORDER IT APPEARS THAT THE AO HAS MADE THE ABOVE ADDITION, BY MAKING GENERAL OBSERVATIONS, WITHOUT FINDING SPECIFIC INFIRMITY WITH RESPECTIVE INVESTME NTS. THE AO HAS GIVEN REFERENCE TO CERTAIN ENQUIRIES CONDUCTED BY HIM AND THROUGH INVESTIGATION WING OF INCOME TAX DEPARTMENT, KOLKATA AND THROUGH -: 6: - 6 JURISDICTIONAL A.OS AT KOLKATA. THE PERUSAL OF ASSESSMENT ORDER INDICATES THAT AO HAS NOT RECORDED ANY FINDINGS WITH REFERENCE TO EACH AND EVERY SHAREHOLDER OF THE COMPANY AS TO HOW IT WAS EXPLAINED. THE APPELLANT ON THE OTHER HAND HAS SUBMITTED SHARE APPLICATION FORMS DULY SIGNED BY AUTHORIZED PERSON WITH THEIR ADDRESSES, CONFIRMATIO N LETTER DULY SIGNED BY AUTHORIZED PERSON AND CONFIRMING INVESTMENT IN ASSESSEE COMPANY, COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN CLEARLY INDICATING THE DETAIL OF WARD/CIRCLE WHERE THE INVESTING PERSON ASSESSED TO INCOME TAX, AND COPY O F BANK STATEMENT ETC. INDICATING THAT AMOUNT IS INVESTED THROUGH BANKING CHANNEL IN MOST OF THE CASES. THE APPELLANT HAS SUBMITTED RELEVANT DETAILS IN RESPECT TO EACH OF SHAREHOLDERS OF THE APPELLANT COMPANY TO ESTABLISH IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SHARE APPLICANT. THE AO HAS NOT BROUGHT ANY THING ON RECORD TO DISPUTE THE DETAILS FURNISHED BY APPELLANT. ALL THE SHARE APPLICANTS AR E -: 7: - 7 ASSESSED TO INCOME TAX. THE AMOUNT RECEIVED IS THROUGH PROPER BANKING CHANNEL. THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN THE DOCUMENTS SUBMITTED BY APPELLANT. THE AO HAS ALSO NOT DISPUTED THE AUTHENTICITY OF THE EVIDENCE SUBMITTED BEFORE HIM. 14.2 IT APPEARS THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH INDICATING THAT SHARE CAPITAL IS IN THE NATURE OF ACCOMMODATION ENTRY. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND ADDITION CANNOT BE JUSTIFIED. THE AO, HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT INVESTMENT IN SHARE CAPITAL IN NAME OF THE DIFFERENT PERSONS ARE ASSESSEES OWN MONEY. THE APPELLANT IN THIS REGARD HAS PLACED RELIANCE UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALUE CAPITAL IN THIS REGARD HAS PLACED RELIANCE UPON THE SERVICES PVT. LTD. REPORTED AT 307 -: 8: - 8 ITR 334 (DEL.). IN THE SAID JUDGMENT THE HON'BLE DELHI HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY EVIDENCE TO THE EFFECT THAT MONEY HAS FLOWN FROM COFFERS OF APPELLANT NO ADDITION U/S 68 OF I.T. ACT 1961 IN RESPECT TO SHARE CAPITAL CONTRIBUTION MADE WITH APPELLANT COMPANY CAN BE MADE. THE RATIO OF THIS JUDGMENT SQUARELY APPLIES TO THE FACTS OF THE APPELLANT. 14.3 IN THE PRESENT CASE, IT IS EVIDENT THAT SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH CHEQUE, THROUGH PROPER BANKING CHANNEL. THE CAPITAL CONTRIBUTION IS BY VARIOUS INDIVIDUALS WHO ARE ASSESSED TO TAX. ON THE BASIS OF ABOVE FACTS THERE IS SUFFICIENT EVIDENCE ON RECORD TO SHOW THAT IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SHARE HOLDERS MAKING CONTRIBUTION TOWARDS SHARE CAPITAL. 14.4 THE A.O., WITH A VIEW TO EXAMINE -: 9: - 9 GENUINENESS OF SHARE APPLICATION MONEY HAS CALLED FOR INFORMATION U/S 133(6) OF INCOME TAX ACT 1961 AND HAS ALSO ISSUED SUMMONS U/S 131 OF THE INCOME-TAX ACT, 1961. THE AO HAS OBSERVED IN THE ASSESSMENT ORDER FOR ASSTT. YEAR 2010-11 THAT INVESTORS DID NOT FURNISH THE I NFORMATION AND DID NOT ATTEND ON THE DATE FIXED, WHICH DOES NOT APPEAR TO BE CORRECT. IT IS SEEN FROM RECORD THAT MANY OF SHAREHOLDERS HAD SUBMITTED DETAILS CALLED FOR, IN PURSUANCE TO SUMMON ISSUED U/S 131 OF INCOME- TAX ACT, 1961. MAY BE IN SOME CASES, AFTER THE DATE GIVEN BY THE ASSESSING OFFICER. IN FACT MANY SHARE HOLDERS HAD GIVEN REPLY OF NOTICE ISSUED U/S 133(6) OF INCOME-TAX ACT WHICH ARE PLACED IN PAPER BOOK SUBMITTED. MERELY BECAUSE NOTICE ISSUED TO SOME SHARE HOLDERS WAS NOT RESPONDENT WITHIN DUE DATE, THEIR SHARE APPLICATION MONEY CANNOT BE TREATED AS UNEXPLAINED AMOUNT. IN FACT THIS ISSUE HAS BEEN -: 10: - 10 EXAMINED AGAIN BY THE A.O. DURING REMAND PROCEEDINGS AND HE HAS SUBMITTED A REMAND REPORT VIDE LETTER DATED 12.04.2013, IN WHICH NO DOUBTS HAS BEEN RAISED, ABOUT THE GENUINENESS OF THE TRANSACTION OR ABOUT THE IDENTITY OF THE PERSON AND THEIR CAPACITY. 14.5 THE AO IN THE ASSESSMENT ORDER FOR ASSTT. YEAR 2010-11 HAS OBSERVED THAT PHYSICAL EXISTENCE OF SHARE APPLICANTS IS NOT ESTABLISHED. THE APPELLANT HAS SUBMITTED DETAILS OF PAN OF EACH AND EVERY SHARE HOLDERS AND ACKNOWLEDGEMENT OF INCOME TAX RETURN CLEARLY INDICATING THE DETAIL OF WARD/CIRCLE WHETHER SHARE APPLICANT IS ASSESSED TO INCOME TAX WHICH IS PACED IN PAPER BOOK. IT IS SEEN THAT ALL THE SHARE APPLICANTS ARE ASSESSED TO INCOME TAX AND ARE MAKING REGULAR COMPLIANCE UNDER THE PROVISIONS OF I.T. ACT 1961. ON THE FACE OF -: 11: - 11 ABOVE UNDISPUTED FACTUAL POSITION THE PHYSICAL EXISTENCE OF SHARE APPLICANTS CANNOT BE QUESTIONED. IN VIEW OF ABOVE, THE OBSERVATION OF AO THAT SHARE APPLIANCE HAS NO PHYSICAL EXISTENCE OR CONTRIBUTION OF SHARE CAPITAL IS MERELY ACCOMMODATION ENTRY IS UNJUSTIFIED. IN FACT THIS ISSUE HAS BEEN EXAMINED BY THE A.O., AGAIN DURING THE REMAND PROCEEDINGS AND HAS SUBMITTED A DETAILED REPORT VIDE LETTER DATED 12.04.2013 WHICH IS REPRODUCED IN THE FOREGOING PARAGRAPHS, AND NO DOUBTS HAS BEEN RAISED BY THE A.O. ABOUT THE GENUINENESS OF THE ABOVE PERSONS OR ABOUT THE GENUINENESS OF THE TRANSACTIONS. 14.6 THE HON'BLE APEX COURT IN THE CASE OF CIT VS LOVELY EXPORTS HAS HELD THAT ONCE THE NAME OF SHARE HOLDERS ARE PROVIDED TO AO IT CANNOT BE REGARDED AS UNDISCLOSED INCOME UNDISCLOSED INCOME OF -: 12: - 12 THE APPELLANT. THE RATIO AS LAID DOWN HAS BEEN FOLLOWED BY HON'BLE DELHI HIGH COURT IN THE CASE OF DWARKADISH INVESTMENT PVT. LTD. IN ITS JUDGMENT DATED 2 ND AUGUST 2010. IN THE AFORESAID JUDGMENT OF HON'BLE DELHI HIGH COURT IT HAS BEEN HELD THAT DECISION RENDERED BY APEX COURT IN THE CASE OF LOVELY EXPORTS IS A BINDING PRECEDENT AND APPELLANT HAVING ESTABLISHED IDENTITY OF SHAREHOLDERS NO ADDITION IN RESPECT TO SHARE CAPITAL CAN BE MADE AT THE HANDS OF COMPANY. IN THE CASE OF APPELLANT COMPANY IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SHARE HOLDERS HAVING BEEN ESTABLISHED NO ADDITION IN RESPECT TO SHARE CAPITAL CONTRIBUTION CAN BE MADE BY AO AND IS SUSTAINABLE IN THE LIGHT OF DECISION OF HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. 14.7 DURING THE COURSE OF APPELLATE PROCEEDINGS A REMAND REPORT WAS CALLED FOR, -: 13: - 13 FROM THE A.O. THE AO IN THIS REGARD HAS SUBMITTED A REPORT DATED 12.04.2013 , WHICH HAS BEEN REPRODUCED IN THE FOREGOING PARAGRAPHS. THE AO IN HIS REMAND REPORT HAS MENTIONED THAT IN RESPECT OF SHRI PAWAN TEWARI AND AMIT KUMAR GHOSH, THE ASSESSEE HAD SUBMITTED ONLY SHARE APPLICATION FORM. HOWEVER, THESE PERSONS ARE ALSO BEING ASSESSED TO TAX INDEPENDENTLY AND THEIR PAN IS ACBPT7357E AND AFCPG6519B RESPECTIVELY. FURTHER THEY HAVE INVESTED ENTIRE AMOUNT OF RS. 1,00,000/- AND 2,00,000/- RESPECTIVELY THROUGH CHEQUE AND THEREFORE GENUINENESS OF TRANSACTION IN RESPECT OF THESE TWO PERSONS CANNOT BE DOUBTED. FROM THE PERUSAL OF THIS REPORT, AS ALSO THE MATERIAL PRODUCED BY THE APPELLANT, IT MAY BE CONCLUDED THAT SUFFICIENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT INVESTMENT TOWARDS SHARE CAPITAL BY DIFFERENT -: 14: - 14 COMPANIES IS EXPLAINED. 15. IN VIEW OF THE ABOVE FACTS, I AM OF THE OPINION THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION STAND SATISFACTORILY EXPLAINED BY APPELLANT AND THERE IS NO JUSTIFICATION FOR MAKING ANY ADDITION IN THE CASE OF APPELLANT ON ACCOUNT OF SHARE CAPITAL CONTRIBUTION AS UNEXPLAINED CASH CREDIT. IN VIEW OF THE ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD., AND THAT OF HON'BLE DELHI HIGH COURT IN THE CASE OF DWARKADISH INVESTMENTS PVT. LTD., AND VALUE CAPITAL SERVICES PVT. LTD., ADDITION OF RS. 41,00,000/- MADE AS UNEXPLAINED SHARE CAPITAL/SHARE APPLICATION MONEY IS ORDERED TO BE DELETED. THEREFORE, THE GROUND NO.2 AND GROUND NO. 3 OF THE ASSESSEE ARE ALLOWED. -: 15: - 15 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS CALLED FOR THE REMAND REPOR T, THE ASSESSEE ESTABLISHED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SHAREHOLDERS AND SHARE CAPITAL WAS FULLY EXPLAINED. THEREFORE, THE LD. CIT(A) HAS DELETED TH E ADDITIONS. WE FIND THAT THE LD. CIT(A) HAS ALSO, HELD THAT THE ASSESSMENT ORDER IS FRAMED U/S 153C OF THE INCOME-TAX ACT, 196 1. THIS IS A SEARCH CASE, WHEREIN NO INCRIMINATING DOCUMENTS W ERE FOUND AGAINST THE ASSESSEE. THEREFORE, THE LD. CIT( A) HAS DELETED THE ADDITIONS ON ACCOUNT OF SECTION 143 REA D WITH SECTION 153-C. THE LD. CIT(A) HAS ALSO HELD THAT TH E AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT FOR CONTRIBUTION OF SHARE MONEY HAD BEEN FLOWN FROM THE ASSESSEE COMPANY. THE ASSESSEES TAX HAS BEEN COMPUTED AS PE R BOOKS OF ACCOUNT IN RESPECT OF ACTIVITIES OF BUSINESS AND NO DEFECT OR MISTAKE HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUN T OF THE ASSESSEE. THERE WAS NO EVIDENCE TO SHOW THAT THE AS SESSEE HAD ANY OTHER INCOME EXCEPT SHOWN IN THE BOOKS OF A CCOUNT -: 16: - 16 FROM HIS BUSINESS. BEFORE THE LD. CIT(A), THE SHARE CONTRIBUTION WAS ALSO DISCLOSED IN THE COMPANY IN HIS REGULAR RE TURN OF INCOME. THEREFORE, THE LD. CIT(A) HAS DELETED THE A DDITION. 8. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. SENIOR D.R. COULD NOT POINT OUT ANY INCRIMINATING M ATERIAL AGAINST THE FINDING OF THE LD. CIT(A). THEREFORE, W E DO NOT HAVE ANY ALTERNATIVE EXCEPT TO ENDORSE THE ACTION OF THE LD. CIT(A). 9. IN THE RESULT, THE DEPARTMENTAL APPEALS ARE DISMISS ED. 10. C.O.NOS. 50 & 51/JAB/2013 FILED BY THE ASSESSEE AR E MERELY IN SUPPORT OF THE APPEAL. THE CROSS OBJECTIO NS ARE DISMISSED AS THE SAME ARE SUPPORTIVE TO ORDER. 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND CROSS OBJECTIONS ARE ALSO DISMISSED. THIS ORDER IS PRONOUNCED IN ACCORDANCE WITH RULE 34 (4) OF I.T.A.T. RULES, BY PUTTING THE COPY OF THE SAME ON NOTICE BOARD ON 25 TH JUNE, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 25 TH JUNE, 2015. CPU* -: 17: - 17 16246