DCIT, Chandigarh V. M/s Loil Overseas Food Ltd., Chandigarh

ITA 1089/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8463 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Additional evidence
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1065/CHD/2013 (ASSESSMENT YEAR : 2004-05) M/S LOIL OVERSEAS FOOD LIMITED, VS. THE INCOME TAX OFFICER(OSD), SCO 18-19, SECTOR 9-D, RANGE 4, CHANDIGARH. NEW DELHI. PAN: AAACL7996H AND ITA NO.1089/CHD/2013 (ASSESSMENT YEAR : 2004-05) THE D.C.I.T., VS. M/S LOIL OVERSEAS FOOD LIMITED, CENTRAL CIRCLE-1, 4128, 2ND FLOOR, NAYA BAZAR DELHI, CHANDIGARH. NOW SCO 18-19, SECTOR 9-C, CHANDIGARH. PAN: AAACL7996H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY : SHRI MANOJ MISHRA, CIT DR DATE OF HEARING : 22.12.2015 DATE OF PRONOUNCEMENT : 15.02.2016 O R D E R PER RANO JAIN, A.M . : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX 2 (APPEALS)(CENTRAL), GURGAON DATED 27.9.2013 FOR ASSESSMENT YEAR 2004-05. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 AS ON 29.10.2005 DECLARING INCOME OF RS.62,45,810/-. DURING THE COURSE OF ASSESSMENT FO R ASSESSMENT YEAR 2005-06, IT WAS SEEN THAT DURING TH E FINANCIAL YEAR 2003-04, THE ASSESSEE HAD RECEIVED S HARE CAPITAL MONEY TO THE TUNE OF RS.41,50,000/- FROM VA RIOUS ENTRY OPERATORS. TO PROTECT THE INTEREST OF REVENU E THE AMOUNT OF RS.41,50,000/- WAS TREATED AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN THE ASSESSMENT YEAR 2005-06 ON PROTECTIVE BASIS. FOR THE RELEVANT ASSESSMENT YEAR , THE CASE WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AS PER THE ASSESSING OFFICER, THE DETAILS OF BOGUS SHARE CAPITAL MONEY RECEIVED BY THE ASSESSEE WAS AS UNDER : SI. NO NAME OF INVESTING CO. DIRECTOR OF INVESTING CO. NAME OF RECIPIENT CO. FY NO. OF SHARES RATE PER SHARE PREMIUM PER SHARE TOTAL INVESTMENT 1 S.G GLOBAL EXPORTS LTD SANJEEV GUPTA LOIL OVERSEAS FOODS LTD 2003- 04 20,000 10 40 10,00,000 2 NIKHIL BUILDERS & PROMOTERS SK SHARMA LOIL OVERSEAS FOODS LTD 2003- 04 25,000 10 10 5,00,000 O SPARROW MARKETING (P) LTD VINOD GARG LOIL OVERSEAS FOODS LTD 2003- 04 32,500 10 10 6,50,000 4 SG CAPITAL SERVICES LTD SANJEEV GUPTA LOIL OVERSEAS FOODS LTD 2003- 04 20,000 10 40 10,00,000 5 REGAL FINCAP (P) LTD ASHOK KUMAR LOIL OVERSEAS FOODS LTD 2003- 04 20,000 10 40 10,00,000 TOTAL 41,50,000 3 3. SINCE THE ASSESSEE FAILED TO ESTABLISH THE TRUE AND CORRECT IDENTITY, CREDIT-WORTHINESS AND GENUINE NESS OF THE CREDITS APPEARING IN THE BOOKS OF ACCOUNT ON TH E PRETEXT OF SHARE APPLICATION, AN ADDITION OF RS.41,50,000/- WAS MADE BY THE ASSESSING OFFICER UN DER SECTION 68 OF THE ACT. 4. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE FILED EVIDENCE WITH RESPECT TO SHARE HOLDERS IN THE FORM OF CONFIRMATION, BOARD RESOLUTION, CERTIFICATE OF INCORPORATION, SHARE APPLICATION MONEY, ITR, BALANC E SHEET, BANK ACCOUNT, ETC. AS ADDITIONAL EVIDENCE UN DER RULE 46A OF THE INCOME TAX RULE. A REMAND REPORT W AS CALLED FROM THE ASSESSING OFFICER BY THE CIT (APPEA LS), WHO IN TURN OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCES. A REJOINDER TO REMAND REPORT WAS FILED BY THE ASSESSEE. AFTER CONSIDERING ALL THIS, THE LEARNED CIT (APPEALS) ADMITTED THE ADDITIONAL EVIDENCES PLACED BEFORE HER. 5. THE MAIN ARGUMENT OF THE ASSESSEE, BEFORE THE LEARNED CIT (APPEALS) WAS THAT SINCE THE CASE WAS REOPENED ON THE BASIS OF INFORMATION ARRIVED FROM ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005-06, FROM THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005- 06, IT COULD BE SEEN THAT ALL THESE MONEYS HAVE COME TO TH E CREDIT OF THE ASSESSEE DURING THE FINANCIAL YEAR 20 02-03, 4 RELEVANT TO ASSESSMENT YEAR 2003-04. THE CONTENTIO N OF THE ASSESSEE WAS THAT SINCE THE CREDITS HAVE NOT AR ISEN IN THIS YEAR, NO ADDITION UNDER SECTION 68 OF THE ACT CAN BE MADE IN THIS YEAR. IT WAS ALSO STATED THAT THE SAM E IS ALSO EVIDENT FROM THE CONFIRMATION OF VARIOUS SHAREHOLDE RS AND IN THE BALANCE SHEET FOR ASSESSMENT YEAR 2004-05 WH ERE THERE IS A FIGURE FOR ASSESSMENT YEAR 2003-04, WHIC H REFLECTS THE SHARE APPLICATION MONEY PENDING FOR ALLOTMENT, WHICH GOES TO PROVE THAT SHARE APPLICATI ON MONEY HAD BEEN ARISING FROM EARLIER YEARS. 6. THE LEARNED CIT (APPEALS), AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE, MADE A COMPARISON OF T HE LIST OF SHARE APPLICANTS AS APPEARING AT PAGE 10 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-06 WITH T HAT APPEARING AT PAGE 1 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05. AFTER THIS ANALYSIS, SHE CONCLUDED THAT THE ASSESSING OFFICER HAS ERRED IN CONSIDERING THE INTRODUCTION OF SHARE CAPITAL FALLI NG IN FINANCIAL YEAR 2003-04, EXCEPT IN THE CASE OF S.G. GLOBAL EXPORTS LTD. AMOUNTING TO RS.10,00,000/-. AS REGAR DS S.G.GLOBAL EXPORTS LTD., SHE OBSERVED THAT THE ASSE SSEE HAS NOT BEEN ABLE TO PROVE THE IDENTITY, GENUINENES S AND CREDITWORTHINESS OF THE PARTY. IN THIS WAY, SHE DE LETED THE ADDITION OF RS.31,50,000/- AND CONFIRMED THE ADDITI ON OF RS.10,00,000/-. 5 7. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT (APPEALS), BOTH THE ASSESSEE AS WELL AS THE DEPARTM ENT HAS COME IN APPEAL BEFORE US. 8. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LEARNED CIT (APPEALS) AS REGARDS D ELETION OF RS.31,50,000/- AND FURTHER STATED THAT IT IS QUI TE CLEAR FROM THE ORDERS OF THE ASSESSING OFFICER FOR ASSESS MENT YEAR 2004-05 AND 2005-06 THAT HE HAS MISTAKEN THE D ATES AND SINCE THE CREDITS HAVE NOT APPEARED DURING THE YEAR, THE ADDITION COULD NOT BE MADE. AS REGARDS S.G.GLO BAL EXPORTS LTD., IT WAS STATED THAT THOUGH IN THE TABL E REPRODUCED IN THE ASSESSMENT ORDER, THE DATE BEFORE S.G.GLOBAL EXPORTS LTD. MENTIONED IS 6.5.2003, WHIC H IS RELEVANT FOR ASSESSMENT YEAR 2004-05. IT WAS STATE D THAT THE AMOUNT ACTUALLY WAS RECEIVED IN FINANCIAL YEAR 2002- 03, RELEVANT TO ASSESSMENT YEAR 2003-04, FOR WHICH OUR ATTENTION WAS INVITED TO PAPER BOOK PG 13, WHICH IS CONFIRMATION OF S.G.GLOBAL EXPORTS LTD., WHEREBY TH E CHEQUE IS STATED TO BE DATED 11.3.2003. PAGE 60 IS THE COPY OF SHARE APPLICATION FILED BY S.G.GLOBAL EXPOR TS LTD., WHEREBY THE DATE IS 11.3.2003, THE BOARD RESOLUTION PLACED AT PAPER BOOK PAGE 61 IS DATED 10.3.2003. A N AFFIDAVIT OF THE DIRECTOR OF S.G.GLOBAL EXPORTS LTD . IS PLACED AT PAPER BOOK PAGE 62, WHEREBY THE DETAILS O F SHARES APPLIED FOR IS GIVEN, THIS AFFIDAVIT IS DATE D 6.5.2003. IN THIS WAY, IT WAS ARGUED THAT THE AMOU NT WAS 6 RECEIVED AS ON 10.3.2003 I.E. RELEVANT TO ASSESSMEN T YEAR 2003-04, HOWEVER, THE DATE WRITTEN IN THE TABLE AS 6.5.2003, MAY HAVE BEEN TAKEN WRONGLY FROM THE DATE OF AFFIDAVIT. FURTHER A DETAIL OF SHARE APPLICATION M ONEY PENDING AS ON 31.3.2003 WAS ALSO SHOWN TO US, WHERE THE NAME OF S.G.GLOBAL EXPORTS LTD. IS APPEARING. 9. THE LEARNED D.R. RELIED ON THE ORDER OF THE LEARNED CIT (APPEALS) AS REGARDS S.G.GLOBAL EXPORTS LTD. HOWEVER, FOR THE REMAINING ADDITION DELETED BY THE LEARNED CIT (APPEALS), HE RELIED ON THE ORDER OF THE ASSESS ING OFFICER. 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. AS REGARDS THE DELETION OF ADDITION OF RS.31,50,000/- BY THE LEARNED CIT (APPEALS), WE SEE FROM THE ORDER OF THE ASSESSING OFFICER ITSELF THAT THESE AMOUNTS WERE AP PEARING IN THE EARLIER YEAR, I.E. RELEVANT FOR ASSESSMENT Y EAR 2003- 04. SINCE THE AMOUNT HAS NOT ENTERED IN THE BOOKS OF THE ASSESSEE IN THIS YEAR, NO ADDITION UNDER SECTION 68 OF THE ACT CAN BE MADE IN ASSESSMENT YEAR 2004-05. THE WORDINGS OF SECTION 68 OF THE ACT IS QUITE UNAMBIGU OUS IN THIS REGARD, WHICH STATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ASSESSEE MAINTAINE D FOR ANY PREVIOUS YEAR AND THE ASSESSEE O FFERS NO 7 EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM, IS NOT IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSES SEE IN THAT PREVIOUS YEAR. THEREFORE, NO ADDITION CAN BE MADE IN THIS YEAR, IF THE CREDITS HAVE APPEARED IN EARLIER YEAR. 11. THE APPEAL OF THE DEPARTMENT IS DISMISSED. 12. AS REGARDS S.G.GLOBAL EXPORTS LTD., THE FACT NOTED BY THE LEARNED CIT (APPEALS) THAT THE DATE IS 6.5.2003 IS WRONG AS IS SEEN FROM THE VARIOUS EVIDE NCES FILED IN THE PAPER BOOK, THE DATE OF THE CHEQUE IS 11.3.2003, WHICH IS ALSO EVIDENT FROM THE AFFIDAVIT PLACED IN THE PAPER BOOK. FURTHER FROM THE DETAILS OF SHA RE APPLICATION PENDING ALLOTMENT FOR THE YEAR ENDED 31.3.2003 AND 31.3.2004, IT IS ALSO EVIDENT THAT TH E AMOUNT WAS RECEIVED IN THE FINANCIAL YEAR 2002-03, RELEVANT TO ASSESSMENT YEAR 2003-04, NO ADDITION IN THE ASSESSMENT YEAR 2004-05 CAN BE MADE FOR THE REASONS GIVEN BY US WHILE DECIDING THE DEPARTMENTAL APPEAL. 13. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS GROUND NO.1, THE SAME IS DISMISSED AS BEING NOT PRESSED. 8 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2016. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH FEBRUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH