DCIT, CHENNAI V. M/s. Manoj Prakashan P. Ltd., CHENNAI

ITA 107/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9161 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 10-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Section: 133(6); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.107/MDS/2014 ' (' / ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI - 600 034. V. M/S MANOJ PRAKASHAN P. LTD., DOOR NO.4/7, SRINIVASA AVENUE ROAD, R.A. PURAM, CHENNAI - 600 028. PAN : AADCM 1285 D (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI A.V. SREEKANTH, JCIT ,-*+ . / / RESPONDENT BY : NONE 0 . 1$ / DATE OF HEARING : 03.05.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 09.06.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, CHENNA I, DATED 02.09.2013 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. THE NOTICE OF HEARING WAS SERVED ON THE ASSESSEE BY AFFIXTURE THROUGH THE ASSESSING OFFICER. THE ASSES SING OFFICER HAS 2 I.T.A. NO.107/MDS/14 FILED A REPORT THROUGH INSPECTOR OF INCOME-TAX THAT THE PREMISES OF THE ASSESSEE WAS LOCKED. THEREFORE, THE NOTICE WAS AFFIXED AT THE LAST KNOWN ADDRESS. NO ONE APPEARED FOR ASSESSEE W HEN THE APPEAL WAS TAKEN UP FOR HEARING. IN VIEW OF THE AB OVE FACTUAL SITUATION, WE HAVE HEARD THE LD. DEPARTMENTAL REPRE SENTATIVE AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT. 3. SHRI A.V. SREEKANTH, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE-COMPANY DISCLOSED SHARE APPLICATION MONEY TO THE EXTENT OF ` 1,16,00,000/- IN THE BALANCE SHEET. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT 16 INDIVIDUAL PERSONS HAD APPLIED TO SHARE APPLICATION. THE ASSE SSING OFFICER DOUBTED THE TRANSACTION SINCE ALL THE AMOUNTS WERE RECEIVED IN CASH. THE ASSESSING OFFICER ISSUED SUMMONS UNDER S ECTION 133(6) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ONE SHRI LALITH KUMAR SHARMA AND SMT. MAYURI SHARMA WERE SAID TO HA VE CONTRIBUTED TO THE SHARE APPLICATION. ON INVESTIGA TION, THE ASSESSING OFFICER FOUND THAT THE ADDRESS GIVEN BY T HE ASSESSEE WITH REGARD TO ABOVE SAID TWO PERSONS IS NOT CORREC T. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT BOTH OF T HEM LEFT FOR RAJASTHAN LONG BACK AND THE ASSESSEE HAS NOT PRODUC ED THE CORRECT 3 I.T.A. NO.107/MDS/14 ADDRESS EVEN AFTER SEVERAL REQUESTS MADE BY THE ASS ESSING OFFICER. AS FOR OTHER INVESTORS, NAMELY, SHRI JITENDRA KUMAR SHARMA, SMT. ANITHA SHARMA, SMT. MEENAKSHI SHARMA AND SHRI MANOJ KUMAR SHARMA, THE ASSESSING OFFICER FOUND THAT THEY DO NO T HAVE ENOUGH INCOME FOR MAKING INVESTMENT IN THE ASSESSEE-COMPAN Y. THOUGH THEY ARE INCOME-TAX ASSESSEES AND FILED THEIR RESPE CTIVE RETURNS, THEY DO NOT HAVE SUFFICIENT MONEY FOR MAKING INVEST MENT. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE TRA NSACTION WAS NOT GENUINE AND CREDITWORTHINESS OF SO-CALLED INVESTORS FOR THE SHARE APPLICATION WAS NOT ESTABLISHED. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS FAILE D TO SUBMIT DOCUMENTS OR PROOF TO EXPLAIN THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. SINCE THE ASSESSEE COULD NOT DISCHARGE ITS ONUS, THE SHARE APPLICATION MONEY TO THE EXTENT OF ` 1,16,00,000/- WAS CONSIDERED AS UNEXPLAINED CASH CR EDIT UNDER SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND T HAT EVEN IF THE TRANSACTION WAS NOT GENUINE, THE SAME CANNOT BE ADD ED IN THE 4 I.T.A. NO.107/MDS/14 HANDS OF THE ASSESSEE AS UNDISCLOSED INCOME. IN FA CT, THE CIT(APPEALS) PLACED HIS RELIANCE ON THE JUDGMENT OF DELHI HIGH COURT IN CIT V. STELLER INVESTMENT LTD. (192 ITR 28 7). ACCORDINGLY, THE CIT(APPEALS) DELETED THE ADDITION. 5. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE , ALL THE MONIES WERE RECEIVED BY THE ASSESSEE IN CASH, THERE FORE, THE GENUINENESS OF TRANSACTION IS DOUBTFUL. PLACING RE LIANCE ON THE JUDGMENT OF DELHI HIGH COURT IN CIT V. NIPUN BUILDE RS & DEVELOPERS (P.) LTD. (2013) 350 ITR 407, THE LD. D.R. SUBMITTE D THAT THE DELHI HIGH COURT FOUND THAT IN THE ABSENCE OF ANY ENQUIRY TO SUPPORT THE CLAIM OF INVESTMENT BY SHAREHOLDERS, THE ADDITION W AS CONFIRMED BY THE DELHI HIGH COURT. IN VIEW OF THIS JUDGMENT OF DELHI HIGH COURT, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT CORRECT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. D.R. A ND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT 16 PERSONS INVESTED IN THE SHARE APPLIC ATION OF THE ASSESSEE-COMPANY. THE ASSESSMENT ORDER INDICATES T HAT THE ASSESSEE HAS FURNISHED A LIST OF ALL THE 16 CREDITO RS. THOUGH THE ASSESSING OFFICER OBSERVED THAT THE LIST OF THE INV ESTORS WAS 5 I.T.A. NO.107/MDS/14 ANNEXED WITH THE ASSESSMENT ORDER, THE ASSESSMENT O RDER FILED BEFORE THIS TRIBUNAL DOES NOT HAVE SO-CALLED LIST O F THE INVESTORS. THE ASSESSING OFFICER, IN FACT, ISSUED SUMMONS UNDE R SECTION 133(6) OF THE ACT TO SEVEN OF THE INVESTORS. THE F IRST TWO INVESTORS, NAMELY, SHRI LALITH KUMAR SHARMA AND SMT. MAYURI SH ARMA WERE FOUND TO BE LEFT FOR RAJASTHAN. THE ADDRESS GIVEN BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING WAS FOUND TO BE NOT CORRECT. IN RESPECT OF OTHERS, NAMELY, SHRI JITEND RA KUMAR SHARMA, SMT. ANITHA SHARMA, SMT. MEENAKSHI SHARMA AND SHRI MANOJ KUMAR SHARMA, THE ASSESSING OFFICER FOUND THAT THEY DO NOT HAVE SUFFICIENT SOURCE OF INCOME FOR MAKING THE INVESTME NT IN THE ASSESSEE-COMPANY. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE CLAIM AND MADE ADDITION. HOWEVER, THE CIT(APPE ALS) DELETED THE ADDITION BY PLACING RELIANCE ON THE JUDGMENT OF DELHI HIGH COURT IN STELLER INVESTMENT LTD. (SUPRA). 7. NOW, THE QUESTION ARISES FOR CONSIDERATION IS WH ETHER THERE CAN BE ANY ADDITION IN RESPECT OF THE MONEY INVESTE D IN THE SHARE APPLICATION OF THE ASSESSEE BY THIRD PARTIES? THE ASSESSING OFFICER AFTER EXAMINATION, FOUND THAT FOUR INVESTORS DO NOT HAVE SUFFICIENT SOURCE OF INCOME FOR MAKING INVESTMENT AND TWO OF T HE INVESTORS 6 I.T.A. NO.107/MDS/14 WERE FOUND TO BE FROM RAJASTHAN AND THEY LEFT FOR R AJASTHAN LONG BACK. THE ASSESSING OFFICER HAS NOT EXAMINED THE A VAILABILITY OF FUNDS WITH THE ASSESSEE-COMPANY. THE ASSESSING OFF ICER HAS NOT EXAMINED THE FLOW OF FUNDS FROM THE CORPUS OF THE A SSESSEE- COMPANY. THE CIT(APPEALS) HAS NOT CONSIDERED THE F LOW OF FUNDS FROM THE ASSESSEE-COMPANY. UNDER NORMAL CIRCUMSTAN CES, THE INVESTMENT MADE BY THE RESPECTIVE PARTIES ON THE SH ARE APPLICATION MONEY CANNOT BE TAKEN AS INCOME OF THE ASSESSEE-COM PANY. SINCE THE ASSESSING OFFICER HAS NOT EXAMINED ALL TH E APPLICANTS WHO HAVE INVESTED IN THE SHARE APPLICATION, THIS TR IBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECO NSIDERED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXA MINE ALL THE SHARE APPLICANTS AND FIND OUT THE AVAILABLE FUNDS W ITH THE ASSESSEE- COMPANY AND WHETHER ANY MONEY WAS FLOWN FROM THE CO RPUS OF THE ASSESSEE-COMPANY. ACCORDINGLY, THE ORDERS OF THE A UTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTE D BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SH ALL RE-EXAMINE THE ISSUE AFTER EXAMINING THE AVAILABLE FUNDS WITH THE ASSESSEE AND WHETHER THE ASSESSEE HAS INTRODUCED ITS OWN MONEY I N THE FORM OF SHARE APPLICATION MONEY, THEREAFTER THE ASSESSING O FFICER SHALL 7 I.T.A. NO.107/MDS/14 DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTE R GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9 TH JUNE, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 9 TH JUNE, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-IV, CHENNAI 4. 0 81 /CIT-IV, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.