The DCIT, 1(1), Indore V. M/s Akarshit Ice & Cold Storage P. Ltd., Indore

ITA 10/IND/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61988 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1998-1999
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: G J SHAH AND
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.10/IND/2012 A.Y. 1998-99 DY. COMMISSIONER OF INCOME TAX 1(1), INDORE :: APPELLANT VS M/S. AAKARSHIT ICE & COLD STORAGE P. LTD., INDORE PAN AAIFA 5997 N :: RESPONDENT APPELLANT BY SHRI ARUN DEWAN RESPONDENT BY SHRI G.J. SHAH AND PANKAJ SHAH DATE OF HEARING 21 .0 5 .2012 DATE OF PRONOUNCEMENT 21.05.2012 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 14.10.2011 OF LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-II, INDORE. 2 2. DURING HEARING, WE HAVE HEARD SHRI ARUN DEWAN, L EARNED SR. DR WHO SUPPORTED THE ASSESSMENT ORDER AND SHRI G.J. SHAH ALONG WITH SHRI PANKAJ SHAH, LEARNED COUNSEL FOR THE ASSE SSEE, WHO DEFENDED THE IMPUGNED ORDER. THE FIRST GROUND RAISE D BY THE REVENUE PERTAINS TO DELETING THE ADDITION OF RS.8,8 4,000/- ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY IN T HE NAME OF SHRI YOGESH MIDHA, SHRI SANDEEP PARASHAR, SHRI O.P. GUHA & SHRI RAJENDRA AHUJA AND OTHERS ESPECIALLY WHEN THE ASSES SEE DID NOT DISCHARGE ITS ONUS OF ESTABLISHING THE IDENTITY OF SHARE APPLICANTS. 3. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE I S IDENTICAL TO THE GROUND RAISED WHEREAS THE LD. COUNSEL FOR THE A SSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE IDENTITY OF SHARE APPLICANTS IS NOT IN DISPUTE ESPECIALLY WHEN SUCH SHARE APPLICANTS DULY APPEARED BEFORE THE LD. ASSESSING O FFICER AND FILED THEIR CONFIRMATIONS. 3.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON THE RECORD. THE FACTS, IN BRI EF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY IN THE BUSINE SS OF COLD STORAGE, DISCLOSED LOSS OF RS.15,14,635/- IN ITS RE TURN FILED ON 3 30.11.1998. THE ASSESSEE SHOWED RECEIPT OF RS.36,34 ,000/- AS SHARE APPLICATION MONEY FOR WHICH THE ASSESSEE WAS DIRECTED TO FURNISH THE REQUIRED DETAILS ALONG WITH EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. AS PER THE ASSES SING OFFICER, NO EVIDENCE REGARDING IDENTITY AND CREDITWORTHINESS OF THE CONCERNED SHARE APPLICANTS WAS FILED, THEREFORE, HE ADDED THE IMPUGNED AMOUNT U/S 68 OF THE ACT AS UNEXPLAINED CREDIT. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETE D THE ADDITION, WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL BY TH E REVENUE. 3.2 WE FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DULY EXAMINED THE CASES OF INDIVIDUAL SHARE APPLICANTS IN DETAIL ALONG WITH THE SUBMISSIONS OF THE ASSESSEE AND FOUND THAT THE IDENTITY IS CLEAR-CUT ESTABLISHED. E VEN THERE IS A FINDING IN THE IMPUGNED ORDER THAT PRIMA FACIE THE CREDITWORTHINESS WAS ALSO ESTABLISHED. EVEN THE ASSESSING OFFICER HA S ACCEPTED THAT THE CONTRIBUTIONS WERE FROM PARENTS OF BOTH THE DIR ECTORS. THE ASSESSING OFFICER MADE THREE SEPARATE ADDITIONS OF RS.5,30,000/-, RS.7,84,000/- AND RS.2,20,000/-. THE ALLEGED UNEXPL AINED MONEY OF RS.6,50,000/- WAS FROM SHRI CHOUHAN. SHRI CHOUHA N VERY MUCH 4 APPEARED BEFORE THE ASSESSING OFFICER AND HE FILED AN AFFIDAVIT DATED 20.3.2001 IN WHICH IT HAS BEEN SPECIFICALLY STATED THAT HE IS ENGAGED IN AGRICULTURAL OPERATION FOR THE LAST 25 Y EARS ON THE LAND MEASURING 11 ACRES. HE FURTHER CLAIMED THAT THE IMP UGNED AMOUNT WAS GIVEN BY HIM THROUGH CHEQUE AND FURTHER CONFIRM ED THAT THE ENTIRE AMOUNT WAS RECEIVED BACK. IN VIEW OF THESE F ACTS, WE FIND THAT THE RATIO LAID DOWN IN FOLLOWING DECISIONS FURTHER SUPPORTS THE CASE OF THE ASSESSEE: - A. CIT VS. LOVELY EXPORTS (2008) 6 DTR (SC) 308; B. CIT VS. SAMIR BIOTECH P. LTD. (2010) 325 ITR 294 (DEL); C. CIT VS. VICTOR ELECTRODES LTD. (2010) 329 ITR 27 1 (DEL); D. CIT VS. STL EXTRUSION P. LTD. (2011) 333 ITR 269 (MP); E. DCIT VS. STL EXTRUSION P. LTD. (2010) 15 ITJ 872 (IND TRIB); F. CIT VS. K.C. FIBRES LTD. (2010) 332 ITR 481 (DEL ); G. CIT VS. ORBITAL COMMUNICATIONS P. LTD. (2010) 32 7 ITR 560 (DEL); H. ACIT VS. DEVSHREE PROJECT P. LTD. (2011) 17 ITJ 607 (IND TRIB); I. ACIT VS. M/S. SHREE KELA PRAKASHAN P. LTD. (2010 ) 14 ITJ 539 (IND TRIB); J. ACIT VS. VENKTESHWAR ISAT P. LTD. (2010) 14 ITJ 83 (CG); K. PEOPLES GENERAL HOSPITAL P. LTD. VS. ACIT (2011) 17 ITJ 355 (IND TRIB); L. SWIFT INTERMEDIA CONVERGENCE LTD. VS. ACIT (2009 ) 13 ITJ 90 (IND TRIB); M. ACIT VS. RAJAT ISPAT P. LTD. (2009) 13 ITJ 201 ( BILASPUR); N. ACIT VS. JAGDAMBA SPONGE P. LTD. (2010) 15 ITJ 1 2 (BILASPUR); O. SUMER CHAND JAIN VS. CIT (2007) 292 ITR 241 (MP) ; P. UMA POLYMERS P. LTD. VS. DCIT (2006) 283 ITR 377 (RAJ); Q. ACIT VS. DHARAM DEVELOPERS & FINEST LTD. (2007) 8 ITJ 488/492 (IND TRIB); AND R. CIT VS. HIMATSU BIMAT LIMITED (2010) TIOL-467-HC -AHM-IT (GUJ) 3.3 IF THE LANGUAGE USED IN SEC. 68 OF THE IT ACT I S ANALYZED, IT SPEAKS ABOUT OFFERING OF EXPLANATION OF THE SUM FOU ND CREDITED IN THE BOOKS AND NATURE AND SOURCE THEREOF TO THE SATI SFACTION OF THE ASSESSING OFFICER. ON PERUSAL OF TOTALITY OF FACTS AVAILABLE ON RECORD, 5 WE ARE SATISFIED THAT THE ASSESSEE HAS DISCHARGED I TS ONUS BY ESTABLISHING THE IDENTITY OF THE SHARE HOLDERS. CON FIRMATION LETTER WAS ALSO FILED BY THE ASSESSEE. EVEN THE LD. ASSESS ING OFFICER HAS ACCEPTED IN THE ASSESSMENT ORDER THAT IDENTITY OF T HE SHARE APPLICANT IS NOT IN DOUBT, THEREFORE, THE DECISION FROM HONBLE APEX COURT IN THE CASE OF LOVELY EXPORT LTD. (2008) (216 CTR 195) (SC) CLEARLY COMES TO THE RESCUE OF THE ASSESSEE. THE HO NBLE COURT WHILE COMING TO A PARTICULAR CONCLUSION HELD AS UNDER: IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. IF THE AFORESAID CONCLUSION DRAWN BY HONBLE APEX C OURT IS KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, WE FIND THAT THE ASSESSEE HAS DISCHARGED ITS ONUS, CAST UPON IT. EVE N THE IDENTITY OF THE SHARE APPLICANT IS NOT DISPUTED BY THE LD. ASSE SSING OFFICER. EVEN OTHERWISE, THE LD. ASSESSING OFFICER HAS NOT B ROUGHT ANY ADVERSE MATERIAL ON RECORD TO PROVE OTHERWISE. THE DECISION FROM 6 HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. METACH EM INDUSTRIES (245 ITR 160) (MP), THE RATIO LAID DOWN IN CIT VS. STELLER INVESTMENT LTD. (115 TAXMAN 99) (SC), SHRI BARKHA SYNTHETICS L TD. VS. ACIT (155 TAXMAN 289) (RAJ) AND CIT VS. VALUE CAPITAL SE RVICES P. LTD. (307 ITR 334) (DEL) FURTHER SUPPORTS OUR VIEW. THE HONBLE DELHI HIGH COURT IN VALUE CAPITAL SERVICES (SUPRA) DULY C ONSIDERED THE DECISIONS FROM FULL BENCH IN CIT VS. SOPHIA FINANCE LTD. (205 ITR 98) (DEL) (FB) AND STELLER INVESTMENT LTD. (192 ITR 287) AND HELD THAT DEPARTMENT MUST SHOW THAT THE INVESTMENT MADE BY THE SUBSCRIBERS ACTUALLY EMANATED FROM COFFERES OF THE ASSESSEE AND THEN TO BE TREATED AS UNDISCLOSED INCOME U/S 68 OF THE ACT. THEREFORE, KEEPING IN VIEW THE TOTALITY OF THE FACT S AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, WE FIND NO IN FIRMITY IN THE STAND OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS). IT IS AFFIRMED, CONSEQUENTLY, THIS GROUND OF APPEAL OF TH E REVENUE IS HAVING NO MERIT, THEREFORE, DISMISSED. 4. THE NEXT GROUND PERTAINS TO DELETING THE SHARE APPLICATION MONEY OF RS.6,50,000/- IN THE NAME OF SHRI KANCHAN SINGH CHOUHAN. IN BRIEF, WE HAVE DISCUSSED THE SHARE APPL ICANTS IN THE 7 AFORESAID PARA ALSO. HOWEVER, WE FIND THAT SHRI KAN CHAN SINGH CHOUHAN IS ONE OF THE DIRECTORS OF THE ASSESSEE COM PANY, DULY APPEARED BEFORE THE ASSESSING OFFICER, AND THE AMOU NT WAS PAID BY CHEQUE FROM HIS ACCOUNT AND HE DULY CONFIRMED THAT THIS AMOUNT WAS DULY RECEIVED BACK BY HIM. THE CONTENTION OF TH E REVENUE THAT HE WAS HOLDING ONLY 11 ACRES LAND, WHICH IS NOT SUF FICIENT TO PROVE THE CREDITWORTHINESS, WE FIND NO JUSTIFICATION IN T HE APPREHENSION OF THE REVENUE BECAUSE THE APPEAL PERTAINS TO AY 1998- 99, THEREFORE, THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN METACHEM INDUSTRIES, 245 ITR 160 (MP) CLEARLY COMES TO ITS R ESCUE AND THE RATIO LAID DOWN BY HON'BLE APEX COURT IN LOVELY EXP ORTS (SUPRA). THE INTENTION OF THE LEGISLATURE FOR ENACTING SEC. 68 OF THE ACT IS TO CURB BLACK MONEY. HERE ALL THE THREE INGREDIENTS OF SEC.68 OF THE ACT HAS BEEN DULY DISCHARGED BY THE ASSESSEE, THERE FORE, WE FIND NO JUSTIFICATION IN MAKING THE ADDITION, CONSEQUENTLY, THERE IS NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) ON THIS GROUND ALSO. FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO ME RIT, CONSEQUENTLY, DISMISSED. 8 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 21.5.2012. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 21.5.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYS!