Vinayak Shyam Enterprises Pvt. Ltd., JAIPUR V. ITO, BHILWARA

ITA 104/JODH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6510 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Reopening of assessment; Search and seizure; Accommodation entries
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 104/JODH/2014 (A.Y. 2006-07) VINAYAK SHYAM ENTERPRISES (P) LTD VS THE INCOME TAX OFFICER C/O. KALANI & CO., WARD-3, CHARTERED ACCOUNTANTS, BHILWARA 5 TH FLOOR, MILE STONE, GANDHINAGAR TURN, BAPUNAGAR, JAIPUR 15. PAN NO. AAJCS8072J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL, DEPARTMENT BY : SHRI N.A. JOSHI, DR. DATE OF HEARING : 09.05.2014 DATE OF PRONOUNCEMENT : 21.05.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE-COMPANY, FOR A.Y. 2006 - 07, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), AJ MER, DATED 16/12/2013. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT F OR A.Y. 2006-07, ASSESSEE-COMPANY FILED ITS (RETURN OF INCOME [ROI]) ON 31.07.2006 DECLARING LOSS OF RS. 14,672/-, WHICH WAS PROCESSED U/S 143(3) OF THE I.T. ACT, 1961 (THE ACT FOR SHORT, ON 03.01.2 007. SUBSEQUENTLY, ON RECEIPT OF INFORMATION FROM DDIT (INVESTMENT.-2) , UDAIPUR THAT ACCOMMODATION ENTRIES IN LIEU OF CASH IN THE FORM O F SHARE APPLICATION MONEY FROM M/S. ALLIANCE LIMITED, MUMBA I, TO THE TUNE OF RS. 5,00,000/- DURING THE PERIOD OF 2005-06. ON THE BASIS OF THIS INFORMATION THE A.O. HAS INITIATED ACTION U/S 147 A FTER RECORDING REASON U/S 148 OF THE ACT THAT INCOME TO THE EXTENT OF RS. 5 LAKHS HAS ESCAPED ASSESSMENT. THE A.O. ISSUED NOTICE U/S 148 OF THE ACT AND IN COMPLIANCE THEREOF THE ASSESSEE-COMPANY MADE A REQUEST TO TREAT THE RETURN OF INCOME [ROI] ORIGINALLY FILED O N 31.07.2006 DISCLOSING LOSS, AS THE RETURN FILED IN RESPONSE TO THIS NOTICE. DURING THE RE-ASSESSMENT PROCEEDINGS, THE A.R. OF THE ASSE SSEE-COMPANY, ON 24.08.2011, PRODUCED EVIDENCE TO PROOF OF THE FA CT THAT THIS WAS ONLY A SHARE APPLICATION MONEY. THE ASSESSEE-COMPAN Y ALSO OBJECTED TO THE ACTION TAKEN U/S 147/148 OF THE ACT WHEN THE A.O. HAS NOT FORMED HIS REQUISITE OPINION AND HAS SIMPLY FOLLOWED THE DIRECTIONS / OBSERVATIONS OF DIT(INV). ANOTHER OBJE CTION BEEN TAKEN 3 THAT UNLESS THERE IS ESCAPEMENT OF INCOME SUCH A AC TION CANNOT BE TAKEN. SINCE IN THIS CASE THE ASSESSEE-COMPANY RECE IVED SHARE APPLICATION MONEY THROUGH CHEQUE AND THE APPLICANT- COMPANY IS IDENTIFIED, AND THE SHARE APPLICATION MONEY RECEIVE D CANNOT BE TAKEN AS ASSESSEE-COMPANYS INCOME IN THE LIGHT OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CI T VS. 5 FIL STOCK BROKING LTD. (2010) 325 ITR 285 (DEL), THERE IS NO ESCAPEMENT OF INCOME. HOWEVER, THE A.O. WAS NOT AGREEABLE AND PRO CEEDED FURTHER IN THIS MATTER AND AFTER REJECTING ALL THE PROOF PRODUCED TO PROVE THE GENUINITY OF THIS RECEIPT OF RS. 5 LAKHS, HAS ADDED THIS SUM TO ITS INCOME OF THE YEAR BY HEAVILY REPLYING O N THE SEARCH AND SEIZURE ACTION UNDERTAKEN IN THE CASE OF MAHA SAGAR GROUP OF COMPANIES, MUMBAI, ON 25.11.2009, WHEREIN IT WAS NO TICED THAT MANY COMPANIES, RUN BY MUKESH CHOKSI GROUP WERE ENG AGED IN FRAUDULENT BILLING ACTIVITIES AND IN PROVIDING BOGU S SPECULATION PROFIT / LOSS ETC. 2.1 DURING FIRST APPEAL THE LD. CIT(A) HAS NOT FOUN D FAVOUR WITH THE ASSESSEE-COMPANY AND HAS DISMISSED ITS APPEAL. THE ASSESSEE- 4 COMPANY IS FURTHER AGGRIEVED. A SECOND APPEAL HAS B EEN FILED BY RAISING THE FOLLOWING GROUNDS :- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE A.O. IN REOPENING OF ASSESSMENT PROCEEDINGS U/S 147 OF THE I.T. ACT, 196 1. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 5 LAKHS U/S 68 BY TR EATING THE SHARE CAPITAL RECEIVED FROM M/S ALLIANCE INTERMEDIATORIES & NETWORKS (P). LTD. AS BOGUS 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 7,500/- ON ACCOUNT O F ALLEGED COMMISSION EXPENSES INCURRED ON RAISING THE SHARE CAPITAL. 2.2 WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFU LLY PERUSED THE ENTIRE RECORD. BOTH THE PARTIES HAVE REITERATED THEIR ARGUMENTS TAKEN BEFORE. WE HAVE FOUND THAT ON RECEIPT OF INFO RMATION FROM DDIT (INV) THE A.O. HAS ISSUED NOTICE U/S 148 OF TH E ACT. THE INVESTIGATION DONE IN A THIRD PARTYS CASH WAS NEVE R CONFRONTED TO THE ASSESSEE. THE LD. DDIT HAS EVEN GIVEN DIRECTION TO THE A.O. TO ISSUE A NOTICE U/S 148, WHICH THE A.O. HAS TREATED AS A VALID REASON 5 FOR INITIATING ACTION U/S 147/ 148. THUS, IN OUR CO NSIDERED OPINION THE A.O. HAS NOT APPLIED HIS MIND TO THIS INFORMATI ON TO INDEPENDENTLY ARRIVE AT A BELIEF THAT ON THE BASIS OF MATERIAL BEFORE HIM HAD ESCAPED ASSESSMENT. IN SO FAR AS THE SHARE APPLICATION MONEY OF RS. 5 LAKHS IS CONCERNED IT IS REGARDING I SSUANCE OF 25000 EQUITY SHARES OF RS. 10 DENOMINATION EACH WITH SHAR E PREMIUM OF RS. 10 EACH. THIS AMOUNT AS RECEIVED FROM THE ALLIA NCE INTERMEDIATORIES & NETWORKS (P). LTD., MUMBAI ON 22 .03.2006. THE ASSESSEE-COMPANY HAD PRODUCED THE RELEVANT EVIDENCE WHICH INCLUDED SHARE APPLICATION MONEY RECEIVED WITH RELE VANT DOCUMENTS FILED TO REGISTER OF COMPANIES (ROC), COPY OF BANK STATEMENTS, INCOME TAX RETURN, SHARE APPLICATION FORMS, COPY OF BOARDS RESOLUTION ETC. THE JUDGMENT OF HON'BLE DELHI HIGH COURT (SUPRA) DIRECTLY APPLIES TO THE FACTS OF THIS CASE. THE A.O . HAS BEEN HEAVILY CARRIED AWAY BY THE INFORMATION OF DDIT(INV) AND HA S IGNORED THE FACT THAT THE SHARE APPLICATION MONEY WAS RECEIVED ON 22.03.2006 THROUGH CHEQUE NO. 453639. M/S. ALLIANCE INTERMEDIA TORIES AND NETWORK P. LTD. IS ASSESSED TO TAX. BOARDS RESOLUT ION AND CONFIRMATION OF THIS COMPANY WAS FILED BEFORE A.O. ALL THESE DOCUMENTS ESTABLISH THE IDENTITY OF THE SHARE APPLI CANT AND THE 6 GENUINITY OF THE TRANSACTION IS ALSO PROVED ON RECO RD. THE STATEMENT OF SHRI MUKESH CHOKSI WAS RECORDED AT THE BACK OF T HE ASSESSEE AND NO OPPORTUNITY TO CROSS EXAMINE HIM WAS GIVEN TO TH E ASSESSEE. RATHER THE A.O. HAS NOT MADE HIS INDEPENDENT INQUIR IES AND VERIFICATION TO ASCERTAIN THE CORRECT FACTS. THEREF ORE, WE CAN SAFELY HOLD THAT THE ASSUMPTION OF JURISDICTION BY A.O. U/ S 147 R.W.S. 148 IS INVALID AND THE ASSESSMENT SO MADE BECOMES AUTHO RITIES BELOW INITIO VOID. HOWEVER, WE QUASH THE ORDER MADE U/S 1 47/143(3) OF THE ACT IN QUESTION AND ALSO HOLD THAT THE ADDITION OF RS. 5 LAKHS IN ASSESSEES HANDS IS NOT WARRANTED. ACCORDINGLY, WE ALLOW THE APPEAL BY THE ASSESSEE. 3. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 21 ST MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST MAY, 2014 VL/- 7 COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR