M/S Righill Electricals P. Ltd., Bhopal V. THE ACIT 3(1), Bhopal

ITA 1059/IND/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4601 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-01-2019
• Assessment Year: 2004-2005
• Appeal Filed On: 25-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: S S DESHPANDE

Judgement Text

[ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1059/IND/2016 ASSESSMENT YEAR: 2004-05 M/S. RIGHILL ELECTRI CALS H-5/123, INDUSTRIAL AREA GOVINDPURA, BHOPAL / VS. ACIT - 3(1) BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AAACR7150R APPELLANT BY SHRI S.S. DESHPANDE, A.R. RESPONDENT BY SHRI K.G. GOYAL, SR.D.R. DATE OF HEARING: 17.01.2019 DATE OF PRONOUNCEMENT: 13.02.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-2, BHOPAL DATED 27.2.2016 PERTAINING TO THE [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 2 ASSESSMENT YEAR 2004-05. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE ASSESSEE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING ADDITION OF RS.20,00,000/- WITH REGARDS TO RECEIPT OF SHARE CAPITAL FROM M/S. PRESWELL INDUSTRIES LTD. SPECIALLY WHEN THE DIRECTO R OF THE COMPANY HAD APPEARED BEFORE THE AO AND HAVE CONFIRMED THE T RANSACTION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE OF THE ASSESSEE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING ADDITION OF RS.10,00,000/- WITH REGARDS TO RECEIPT OF SHARE CAPITAL FROM M/S. SAB COMPUTING P LTD. SPECIALLY WHEN THE ASSESSMENT OF THE RELEVANT PERIOD IN THE CASE OF THE SHARE HOLDER WAS COMPLETE D U/S 153C OF THE ACT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.70,00,000/- U/S 68. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.7,61,660/- ON 31.10.2004. THIS IS SECOND ROUND OF LITIGATION. IN THE EARLIER ROUND, THE MATTER TRAVELLE D UP TO THIS TRIBUNAL. THIS TRIBUNAL WAS PLEASED TO SUSTAIN REOPENING OF THE ASSESSMENT. HOWEVER, ON MERIT MATTE R WAS RESTORED TO THE A.O. FOR DECIDING AFRESH AS PER L AW. IN PURSUANT TO THE SAID DIRECTIONS, ASSESSING OFFICER AGAIN MADE ADDITION OF RS.70 LAKHS IN RESPECT OF THE SHARE [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 3 APPLICATION MONEY RECEIVED FROM SHREREEVAR OVERSEAS LTD ., NANADAN MERCANTILE PVT. LTD. & PRESSWELL INDUSTRIES LT D. 3. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSI ONS SUSTAINED THE ADDITION. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS SUSTAINING ADDITION OF RS.70 LAKHS. LD. COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE I N THE WRITTEN SUBMISSIONS, WHICH ARE REPRODUCED AS UNDER: [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 4 [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 5 [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 6 4. ON THE CONTRARY, LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE A.O. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A.O. WAS DIRECTED TO M AKE [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 7 ENQUIRY TO VERIFY THE VERACITY OF TRANSACTIONS IN QUESTI ON. THE OBJECTIONS OF THE A.O. WITH REGARD TO THE EXPLANAT ION OF THE ASSESSEE ARE REPRODUCED AS UNDER: [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 8 6. WE DO NOT SEE ANY INFIRMITY INTO THE ASSESSMENT OR DER. ADMITTEDLY, THE ASSESSEE COULD NOT EXPLAIN AS TO WHY THESE SHARES WERE BROUGHT BACK AT SUCH A LOWER PRICE. WE ARE OF THE CONSIDERED VIEW THE GENUINENESS OF ANY TRANSACTION IS TO BE DECIDED ON THE BASIS OF THE SURROUNDING CIRCUMSTANCES. THERE IS NO DISPUTE SO FAR THE CONTEN TION THAT A DECISION FOR ALLOTMENT OF SHARE BY THE ASSESSEE I S [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 9 PURELY IN ITS DOMAIN. THE CONSIDERATION OF TRANSACTION ON THE STAND POINT OF TAXABILITY WOULD BE CERTAINLY SUBJ ECT TO SCRUTINY BY THE ASSESSING AUTHORITY. THE TRANSACTIONS MADE IN CASH REMAINS UNDER DARK WITHOUT ANY RECORD. TH E ASSESSEE THEREFORE HAS TO OFFER A LOGICAL EXPLANATION THAT SUCH TRANSACTION(S) IS BONAFIDE AND NOT A DEVICE TO EVAD E TAX. THE CERTAIN TRANSACTIONS WHERE SHARES HAVE BEEN PURCHASED AT A HIGH PREMIUM AND SOLD WITHIN A SHORT TIME AT A THROW AWAY PRICE, SUCH TRANSACTION COULD CAUSE SUSPICION, HENCE, IT IS INCUMBENT UPON THE TRANSACTIN G PARTIES TO DISPEL SUCH SUSPICION BY PLACING MATERIAL EVIDENCE BEFORE THE A.O. IN THE ABSENCE OF SUCH EXPLANATION, A.O. WOULD BE JUSTIFIED TO MAKE ADDITION. MERELY, THE IDENTITY OF THE PARTIES, IN OUR VIEW WOU LD NOT BE SUFFICIENT TO COME TO CONCLUSION THAT THE TRANSACTION OF RECEIVING SHARE CAPITAL WAS GENUINE AND NO UNDISCLOSED CONSIDERATION HAD EXCHANGED HANDS. IN THE PRESENT CASE , [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 10 THE EXPLANATION OFFERED BY THE ASSESSEE IS WITHOUT SUPPORTED BY THE MATERIAL EVIDENCE TO PROVE THE GENUINENESS OF THE SHARES BEING SOLD BACK TO THE DIRE CTORS OF ASSESSEE COMPANY AT A VERY LOWER PRICE. OUR VIEW IS ALSO FORTIFIED BY THE JUDGEMENTS OF THE HON'BLE DELHI HI GH COURT IN THE CASE OF CIT VS. D.K. GARG (2017) 84 TAXMANN.COM 257 (DELHI), CIT VS. ULTRA MODERN EXPORTS PVT. LTD. (2013) 40 TAXMANN.COM 458 (DEL), SEEMA JAIN VS. ACIT CIRCLE- 59(1), NEW DELHI (2018) 96 TAXMANN.COM 307 (DELHI) AN D RENDERED IN THE CASE OF CIT VS. NOVA PROMOTERS & FINL EASE (P) LTD.(2012) 18 TAXMANN.COM 217 (DEL.) HENCE, NO INTERFERENCE IS CALLED FOR. GROUNDS RAISED BY THE ASS ESSEE ARE DISMISSED. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DIS MISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 . 02.2019. SD / - (MANISH BORAD) SD/ - (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 13/02/2019 VG/SPS [ITA NO.1059/IND/2016] [M/S. RIGHILL ELECTRICALS PVT. LTD., BHOPAL] 11 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE