DCIT, New Delhi V. M/s. Natraj Stationery Products Pvt. Ltd, New Delhi

ITA 1017/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9896 (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: 2002-2003
• 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 NOS.1016 & 1017/DEL./2009 (ASSESSMENT YEARS : 2001-02 & 2002-03) DCIT, CIRCLE 13 (1), VS. M/S. NATRAJ, STATIONERY PR ODUCTS (P)LTD. NEW DELHI. 206, VAISHALI, PITAMPURA, NEW DELHI. (PAN : AAACN0372K) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI MANISH GUPTA, DR ORDER PER I.P. BANSAL, JM : BOTH THESE APPEALS ARE FILED BY THE REVENUE. THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT (APPEALS) DATED 16.1.2009 IN RESPECT OF ASSESSMENT YEARS 2001-02 AND 2002-03. THE GROUN DS OF APPEAL IN BOTH THE YEARS ARE COMMON EXCEPT THE DIFFERENCE OF ADDIT ION, WHICH READ AS UNDER : ASSESSMENT YEAR : 2001-02 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.5,00,000/- MADE BY THE A.O. BY TREAT ING 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 ITA NOS.1016 & 1017/DEL./2009 2 ADDITION OF RS.10,000/- (RS.20,000/- IN ASSESSMENT YEAR 2002-03) MADE BY THE A.O. ON ACCOUNT OF COMMISSION PAID @ 2% FOR OBTAINING UNEXPLAINED CASH CREDIT OF RS.5,00,000/-. ASSESSMENT YEAR : 2002-03 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/-. 2. IN BOTH THE YEARS, ASSESSEE HAD RECEIVED SHARE A PPLICATION MONEY, WHICH HAS BEEN ADDED BEING UNEXPLAINED AND COMMISSI ON @ 2% HAS ALSO BEEN ADDED. THE DETAILS OF SHARE APPLICATION MONE Y RECEIVED BY THE ASSESSEE IN THE RESPECTIVE YEARS ARE AS UNDER : ASSESSMENT YEAR : 2001-02 S.NO. NAME AMOUNT CHEQUE NO. DATE PAN 1. CHINTPURNI CREDITS & LEASING P. LTD. 2,50,000/- 056657 12.12.2000 AABCC6357L 2. SH. DINA NATH LUHARIWALA SPINNING MILLS P. LTD. 2,50,000/- 057220 12.12.2000 AABCD0619E ITA NOS.1016 & 1017/DEL./2009 3 ASSESSMENT YEAR : 2002-03 S.NO. NAME AMOUNT CHEQUE NO. DATE PAN 1. K.R. FINCAP PVT. LTD. 2,50,000/- 011325 04.12.2001 AAPCK2901N 2. S.R.S. VIJAY SALES PVT. LTD. 2,50,000/- 928416 14.12.2001 AAACS4070R 3. NAV DURGA LEASING & FINANCE PVT. LTD. 2,50,000/- 127210 28.02.2002 AAACN9465D 4. ZEST SECURITIES PVT. LTD. 2,50,000/- 055366 15.03.2002 AAACZ0839K 3. FACTS AND CIRCUMSTANCES ARE SIMILAR IN BOTH THE YEARS. WE DISCUSS THE FACTS AND CIRCUMSTANCES OF THE ASSESSMENT YEAR 2002-03. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD SUBM ITTED DETAILS LIKE PAN, ASSESSMENT PARTICULARS AND CONFIRMATIONS TO PR OVE THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED BY IT. HOW EVER, ASSESSING OFFICER DID NOT ACCEPT SUCH EVIDENCE ON THE GROUND THAT SIMPLY FURNISHING THE PAN, ASSESSMENT PARTICULARS AND CONFIRMATION BY THE SHARE APPLICANT IS NOT SUFFICIENT AND THUS HE HAS ADDED THE SHARE A PPLICATION MONEY RECEIVED BY THE ASSESSEE AND COMMISSION THEREON TO THE INCOME OF THE ASSESSEE. 4. LD. CIT (APPEALS) RELYING ON THE FOLLOWING DECIS IONS HAS DELETED THE ADDITION: (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); ITA NOS.1016 & 1017/DEL./2009 4 (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 BE EN DELETED. AS THE ADDITION HAS BEEN DELETED, ADDITION ON ACCOUNT OF C OMMISSION HAS ALSO BEEN DELETED. DEPARTMENT IS AGGRIEVED AND HENCE IN APPEAL. 5. LEARNED SENIOR DR RELIED ON THE ORDER OF ASSESSI NG OFFICER. HE CONTENDED THAT ADDITION WAS RIGHTLY MADE BY THE ASS ESSING OFFICER AND ASSESSEE COULD NOT PROVE THE RECEIPT OF SHARE APPLI CATION MONEY AS PER REQUIREMENTS OF THE RELEVANT PROVISIONS OF THE ACT AND, THEREFORE, THE ADDITION HAS WRONGLY BEEN DELETED BY LEARNED CIT (A PPEALS). 6. 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 CASE THAT BOTH THE SHARE APPLICANTS ARE PRIVATE LIMITED COMPANY, THE WHEREABOUTS OF THE COMPANY WERE GIVEN TO THE ASSESSING ITA NOS.1016 & 1017/DEL./2009 5 OFFICER ALONG WITH PAN, ASSESSMENT PARTICULARS AND CONFIRMATIONS AND IN THIS MANNER, IDENTITY OF THE SHARE APPLICANTS ARE E STABLISHED. IF IT IS SO, THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CAS E OF LOVELY EXPORTS PVT. LTD. (SUPRA) WILL BE FULLY APPLICABLE. IT WOU LD BE RELEVANT TO REPRODUCE FOLLOWING OBSERVATIONS OF THE LORDSHIP FR OM THE SAID 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. 7. 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. 8. 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). 9. THE FACTS AND CIRCUMSTANCES OF ASSESSMENT YEAR 2 001-02 ARE SIMILAR, FOLLOWING OUR AFORESAID ORDER OF ASSESSMEN T YEAR 2002-03, WE DO ITA NOS.1016 & 1017/DEL./2009 6 NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (APP EALS) AND ACCORDINGLY UPHOLD THE SAME. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE 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.