DCIT, New Delhi V. M/s. Natraj Album Industries Pvt. Ltd, New Delhi

ITA 1015/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9878 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 18-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.1015/DEL./2009 (ASSESSMENT YEAR : 2001-02) DCIT, CIRCLE 13 (1), VS. M/S. NATRAJ ALBUM INDUSTRI ES PVT. LTD., NEW DELHI. (NOW NATRAJ STATIONERY PRODUCTS (P)LT D.) B 109, G.T. KARNAL ROAD, NEW DELHI. (PAN : AAACN0373Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI MANISH GUPTA, DR ORDER PER I.P. BANSAL, JM : THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF CIT (APPEALS) DATED 11.10.2007 FOR ASSESSM ENT YEARS 2001-02. THE GROUNDS OF APPEAL ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.10,00,000/- MADE BY THE A.O. BY TREA TING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT U/S 68 OF INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.20,000/- MADE BY THE A.O. ON ACCOUNT OF COMMISSION PAID @ 2% FOR OBTAINING UNEXPLAINED CASH CREDIT OF RS.10,00,000/-. ITA NO.1015/DEL./2009 2 2. A SUM OF RS.10 LACS WAS ADDED BY THE ASSESSING O FFICER AS UNEXPLAINED SHARE APPLICATION MONEY. THE ASSESSING OFFICER HAS MENTIONED THE DETAILS OF TWO PARTIES FROM WHOM THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY AT PAGE 4 OF THE ASSESSMENT ORDER, WHICH IS AS UNDER :- S.NO. NAME AMOUNT CHEQUE NO. DATE 1. M/S. CHINTPURNI CREDITS & LEASING P. LTD. 2,50,000/- 056656 12.12.2000 2. M/S. SH. DINA NATH DUHARIWALA SPINNING MILLS P. LTD. 2,50,000/- 057219 12.12.2000 TOTAL 5,00,000/- BUT, IN RESPECT OF OTHER TWO PARTIES, HE DID NOT GI VE THE DETAILS AND HE OBSERVED THAT INCREASE IN SHARE APPLICATION MONEY W AS TO THE EXTENT OF RS.10 LACS. 3. BEFORE CIT (APPEALS), IT WAS SUBMITTED THAT DURI NG THE YEAR, INTRODUCTION OF SHARE APPLICATION MONEY IS ONLY TO THE EXTENT OF RS.5 LACS AND, THEREFORE, ADDITION MADE AT RS.10 LACS WAS WRO NG AND A SPECIFIC GROUND IN THIS REGARD WAS TAKEN. IT WAS SUBMITTED THAT THERE WAS TYPOGRAPHICAL MISTAKE IN THE PAID-UP CAPITAL OF THE COMPANY FOR THE YEAR ENDING 31.3.2000 AND LEARNED ASSESSING OFFICER MADE ADDITION OF RS.10 LACS TAKING THE DIFFERENCE OF PAID-UP CAPITAL OF TH E PREVIOUS YEAR WITH THE PAID-UP CAPITAL OF 31.3.2000. COPIES OF BALANCE SH EET FOR THE YEAR ENDING 31.3.2000 AND 31.3.2001 WERE SUBMITTED TO SHOW THAT IT WAS A ITA NO.1015/DEL./2009 3 TYPOGRAPHICAL MISTAKE. WITH REGARD TO THIS SUBMISS ION, LEARNED CIT (APPEALS) HAS OBSERVED THAT DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY OF RS .5 LACS. HOWEVER, DUE TO TYPOGRAPHICAL ERROR, THE SHARE APPLICATION M ONEY RECEIVED DURING THE YEAR WAS SHOWN AT RS.10 LACS IN THE BALANCE SHE ET FILED WITH THE RETURN OF INCOME. THE ASSESSEE DURING THE COURSE OF ASSES SMENT PROCEEDINGS HAD POINTED OUT THIS MISTAKE AND IN RESPONSE TO THE DET AILS OF SHARE APPLICATION MONEY RECEIVED DURING THE YEAR CALLED FOR BY THE AS SESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD GIVEN DETAILS OF SHARE APPLICATION MONEY OF RS.5 LACS RECEIVED BY IT. THE ASSESSING OFFICER WITHOUT GIVING ANY REASON AND WITHOUT VERIFYING THE BOOKS OF ACCOUNT, BANK STATEMENTS AND OTHER DOCUMENTS HAS ON THE BASI S OF BALANCE SHEET STATED THAT THE ASSESSEE HAD RECEIVED RS.10 LACS AS SHARE APPLICATION MONEY DURING THE YEAR. THUS, LEARNED CIT (APPEALS ) HAS OBSERVED THAT ASSESSING OFFICER HAS NEITHER APPLIED HIS MIND NOR MADE ANY INVESTIGATION WHILE FRAMING THE ASSESSMENT ORDER AN D THE ASSESSMENT ORDER HAS BEEN FRAMED ONLY ON THE BASIS OF INFORMAT ION RECEIVED FROM INVESTIGATION WING WITHOUT MAKING ANY FURTHER INVES TIGATION. IT HAS BEEN FURTHER OBSERVED BY THE LEARNED CIT (APPEALS) THAT THE ASSESSEE HAS PROVIDED EVIDENCE WITH REGARD TO SHARE APPLICATION MONEY RECEIVED BY IT IN THE FORM OF PAN, ROC DETAILS, COPY OF I.T. RETUR N FILED AND COPY OF ITA NO.1015/DEL./2009 4 CONFIRMATION TO ESTABLISH THE GENUINENESS OF THE TR ANSACTION. THE CIT (APPEALS) HAS RELIED ON THE FOLLOWING DECISIONS : (I) DIVINE LEASING & FINANCE LTD. 299 ITR DELHI; (II) GENERAL EXPORTS & CREDIT PVT. LTD. 880/2006 (S C); (III) LOVELY EXPORTS PVT. LTD. (2008) 299 ITR 268 ( SC); (IV) A-ONE HOUSING COMPLEX LTD. VS. ITO WARD 1(1), 110 ITD 361 (DELHI); (V) CIT VS. VALUE CAPITAL SERVICE PVT. LTD. 307 ITR 334 (DELHI); (VI) CIT VS. ORISSA CORPORATION PVT. LTD. 159 ITR 7 8 (SC). IN VIEW OF THIS SITUATION, LEARNED CIT (APPEALS) HA S DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND ADDITION HAS BEEN DELETE D. AS THE ADDITION HAS BEEN DELETED, ADDITION ON ACCOUNT OF COMMISSION HAS ALSO BEEN DELETED. DEPARTMENT IS AGGRIEVED AND HENCE IN APPEAL. 4. LEARNED SENIOR DR RELIED ON THE ORDER OF ASSESSI NG OFFICER AND PLEADED THAT THE ASSESSING OFFICER HAD MADE ADDITIO N OF RS.10 LACS AND THE LEARNED CIT (APPEALS) WITHOUT CONFRONTING THE A SSESSING OFFICER HAS OBSERVED THAT SHARE APPLICATION MONEY WAS TO THE EX TENT OF RS.5 LACS. LEARNED DR FURTHER CONTENDED THAT ADDITION WAS RIGH TLY MADE BY THE ASSESSING OFFICER AND ASSESSEE COULD NOT PROVE THE RECEIPT OF SHARE APPLICATION MONEY AS PER REQUIREMENTS OF THE RELEVA NT PROVISIONS OF THE ACT AND, THEREFORE, THE ADDITION HAS WRONGLY BEEN D ELETED BY LEARNED CIT (APPEALS). ITA NO.1015/DEL./2009 5 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LEARNED SENIOR DR. WE HAVE ALSO CAREFULLY GONE THROUGH THE ASSESS MENT ORDER AS WELL AS ORDER OF CIT (APPEALS). THE ASSESSING OFFICER OBSE RVED AT PAGE 5 OF THE ASSESSMENT ORDER THAT MERELY FURNISHING PAN, ASSESS MENT PARTICULARS AND CONFIRMATION BY THE SHARE APPLICANTS IS NOT ENOUGH. THIS OBSERVATION OF ASSESSING OFFICER IS CONTRARY TO THE LAW EXPLAINED BY HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. (SUPR A). IT IS NOT DISPUTED IN THE PRESENT THAT BOTH THE SHARE APPLICANTS ARE P RIVATE LIMITED COMPANY, THE WHEREABOUTS OF THE COMPANY WERE GIVEN TO THE AS SESSING OFFICER ALONG WITH PAN, ASSESSMENT PARTICULARS AND CONFIRMA TIONS AND IN THIS MANNER, IDENTITY OF THE SHARE APPLICANTS IS ESTABLI SHED. IF IT IS SO, THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF L OVELY EXPORTS PVT. LTD. (SUPRA) WILL BE FULLY APPLICABLE. IT WOULD BE RELEVANT TO REPRODUCE FOLLOWING OBSERVATIONS OF THE LORDSHIP FROM THE SAI D DECISION : 2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S. 68 OF IT ACT, 1961 ? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY W ITH THE IMPUGNED JUDGMENT. 3. SUBJECT TO THE ABOVE, SPECIAL LEAVE PETITION IS DISMISSED. ITA NO.1015/DEL./2009 6 6. IN THIS VIEW OF THE SITUATION, WE ARE OF THE OPI NION THAT ADDITION HAS RIGHTLY BEEN DELETED BY THE LEARNED CIT (APPEALS) A S THE NECESSARY PARTICULARS WERE PLACED ON RECORD BY THE ASSESSEE T O PROVE THE IDENTITY OF THE SHARE APPLICANTS. 7. SO AS IT RELATES TO DELETION OF ADDITION MADE ON ACCOUNT OF COMMISSION, IT IS OBSERVED THAT SINCE PRINCIPAL AMO UNT IS DELETED, THE QUESTION OF ASSESSABILITY OF COMMISSION PAID THEREO N DOES NOT ARISE AND ADDITION OF THE SAME IS RIGHTLY DELETED BY THE LEAR NED CIT (APPEALS). 8. SO AS IT RELATES TO THE DIFFERENCE IN THE ADDITI ON AS A SUM OF RS.10 LACS MADE BY THE ASSESSING OFFICER AND AS THE SAME WAS CONSIDERED BY THE LEARNED CIT (APPEALS) AT RS.5 LACS, IT HAS BEEN SPECIFICALLY POINTED OUT BY THE LEARNED CIT (APPEALS) THAT THE SAME WAS DUE TO TYPOGRAPHICAL ERROR AND DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, SUCH A MISTAKE WAS POINTED OUT BY THE ASSESSEE IN RESPONSE TO DETA ILS OF SHARE APPLICATION MONEY CALLED FOR BY THE ASSESSING OFFICER AND ASSES SING OFFICER IGNORED THAT EXPLANATION OF THE ASSESSEE. IF SUCH IS A POS ITION THEN WE FIND NO INFIRMITY IN THE ORDER OF CIT (APPEALS) VIDE WHICH AFTER GOING THROUGH THE BALANCE-SHEET OF BOTH THE YEARS, HE HAS FOUND THAT SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR WAS ONLY RS.5 LACS. THEREFORE, ON THIS ACCOUNT ALSO, THERE IS NO INFIRM ITY IN THE ORDER OF CIT (APPEALS) WHICH IS BEING CONFIRMED. ITA NO.1015/DEL./2009 7 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE 28 TH DAY OF AUGUST, 2009. SD/- SD/- (K.D. RANJAN) (I.P. BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : THE 28 TH DAY OF AUGUST, 2009/DK COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XVI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.