ITO, New Delhi V. M/s Mayur Resorts Pvt. Ltd., New Delhi

ITA 1160/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1849 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Question of law
• Section: 143(3); 68

Judgement Text

ITA NO. 1160/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1160 /DEL/2013 A.Y. 200 7 - 0 8 INCOME TAX OFFICER, WARD-6(3), NEW DELHI ROOM NO. 185, C.R. BLDG., NEW DELHI VS. M/S MAYUR RESORTS PVT LTD., 49, ARAKASHAN ROAD, PAHAR GANJ, NEW DELHI - 55 (PAN: AAACM0922G) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. P. DAM KANUNJNA, SR. DR ASSESSEE BY : SH. VED JAIN, ADV. DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 1 11 17 77 7- -- -11 1111 11- -- -201 201 201 2015 55 5 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 18 1818 18- -- -11 1111 11- -- -201 201 201 2015 55 5 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDE R DATED 31.12.2012 PASSED BY THE LD. CIT(A)-IX, NEW DELHI ON THE FOLLO WING GROUNDS:- 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CONTRA RY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 59 ,00,000/- MADE U/S. 68 AS ALL THE 17 SHARES APPLICANTS FAILED TO E STABLISH CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ONUS OF ESTABL ISHING THE ITA NO. 1160/DEL/2013 2 CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF TR ANSACTION WAS ON ASSESSEE WHICH THE ASSESSEE FAILED TO DISCHARGE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE RECENT LANDMAR K JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF NOVA PROMO TERS AND FINLEASE PVT LTD. (2012) 342 ITR 169 IN WHICH THE HONBLE DE LHI HIGH COURT HAS INTERPRETED THE JUDGMENT OF HONBLE APEX COURT GIV EN IN LOVELY EXPORTS. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AM END ON THE GROUND OF AT THE APPEAL RAISED ABOVE AT THE TIME OF HEARI NG. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME FOR THE AY 2007-08 ON 25.10.2007 DECLARING INCOME O F RS. 2,50,220/- AND THE SAME WAS PROCESSED U/S. 143(1) OF THE ACT. SUB SEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICE U/S. 143 (2) WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/ S. 143(3) VIDE ORDER DATED 24.12.2009 BY THE AO AT AN INCOME OF RS. 61,50,220/ - MAKING AN ADDITION OF RS. 59,00,000/- U/S. 68 OF THE I.T. ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE APPE ALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 31.12.2012 H AS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE ORDER DATED 31.12.2012 PASSED BY THE LD. FIRST APPELLATE AUTHORITY, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 5. LD. DR RELIED UPON THE ORDER PASSED BY THE AO AN D REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. HE STATED THAT THE AO HAS ASKED THE ASSESSEE TO FURNISH THE REQUISITE INFORMATION T O ESTABLISH THE GENUINENESS OF ITA NO. 1160/DEL/2013 3 RECEIPTS OF SHARE APPLICATION MONEY AND ESTABLISH T HE GENUINENESS THEREOF AND CREDITWORTHINESS AND IDENTITY OF THE SHARE HOLDERS. IN RESPONSE TO THE SAME, ASSESSEE FILED SOME INFORMATION. THE AO EXAMINED T HE SAME AND FOUND THAT THE MONEY DEPOSITED IN THE BANK ACCOUNT OF THE SHARE AP PLICANT AND LATER ON ISSUANCE OF CHEQUE TO THE ASSESSEE COMPANY WERE ORI GINATED FROM THE ASSESSEE COMPANY AND THE SOCALLED ALLEGED SHARE APPLICANTS A RE BENAMI PERSONS OF THE COMPANY. HE FURTHER SUBMITTED THAT LD. CIT(A) HA S WRONGLY DELETED THE ADDITION IN DISPUTE, WITHOUT EXAMINING THE GENUINEN ESS OF THE TRANSACTION, CREDITWORTHINESS AND IDENTITY OF THE SHARE APPLICAN TS AND THEREFORE, REQUESTED THAT THE ORDER PASSED BY THE LD. CIT(A) MAY BE CANC ELLED AND THE ASSESSMENT ORDER MAY BE UPHELD. 6. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE REL IED UPON THE ORDER OF THE LD. CIT(A). IN SUPPORT OF THE IMPUGNED ORDER, HE HA S ALSO FILED THE SYNOPSIS IN WHICH HE HAS NARRATED THE FACTS OF THE CASE SUPPORT ED WITH THE VARIOUS DECISIONS RENDERED BY THE HONBLE JURISDICTIONAL HI GH COURT. HE FURTHER STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT PASSED IN THE CAS E OF PR. CIT VS. RAKAM MONEY MATTERS PVT. LTD. 2015 (10) TMI 2057 DELHI HIGH C OURT DECIDED VIDE ITA NO. 778 OF 2015 DATED 13.10.2015. HE HAS FILED THE COPY OF THE SAID JUDGMENT WITH THE ADVANCE COPY OF THE LD. DR. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH SYNOPSIS FILED BY THE ASSESSEES COUNSEL AND THE JUDGMENT DATED 13.10.201 5 PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS . RAKAM MONEY MATTERS PVT. LTD. (SUPRA). THE RELEVANT PORTION OF THE SAID JUDG MENT IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE. ITA NO. 1160/DEL/2013 4 13. IT IS NOT IN DISPUTE THAT EXTENSIVE MATERIAL WAS PRODUCED BY THE ASSESSEE IN THE PRESENT CASE TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE COMPANIES WHO HAD SUBSCRIB ED TO ITS SHARES. AMONG THE MATERIALS PRODUCED WERE THE INC OME TAX RETURNS AND THE PAN CARD DETAILS OF THE EIGHT COMPA NIES. EVEN IF THE DIRECTORS OF THESE COMPANIES DID NOT RESPOND TO THE SUMMONS ISSUED BY THE AO, IT WAS NOT IMPOSSIBLE FOR THE AO TO MAKE PROPER ENQUIRIES TO ASCERTAIN THE GENUINENESS OF THESE ENT ITIES AND SATISFY HIMSELF OF THEIR CREDITWORTHINESS. AS POINTED OUT BY THE CIT(A), THE AO FAILED TO MAKE ANY EFFORT IN THAT DIRECTION. H E DID NOT TAKE TO THE LOGICAL END THE HALF-HEARTED ATTEMPT AT GETTING THE DIRECTORS TO APPEAR BEFORE HIM. HE DID NOT EVEN SEEK THE ASSISTA NCE OF THE AOS OF THE CONCERNED COMPANIES WHOSE ITRS AND PAN CARD COPIES HAD BEEN PRODUCED. 14. THE VIEW TAKEN BY THE CIT(A) THAT THE AO FAILED TO COME UP WITH THE MATERIAL TO DISPROVE WHAT HAD BEEN PRODUCED BY THE ASSESSEE IS CERTAINLY A PLAUSIBLE VIEW IN THE FACTS AND CIRCUMS TANCES OF THE CASE. LIKEWISE, THE VIEW TAKEN BY THE ITAT CONCURRI NG WITH THE CIT(A) ON FACTS CANNOT BE SAID TO BE PERVERSE. 15. THE DECISIONS CITED BY MR. SAHNI TURN ON THEIR OWN FACTS. AS FAR AS THE BROAD PRINCIPLES GOVERNING THE LAW UNDER SECTI ON 68 OF THE ACT IS CONCERNED, THE COURT IS SATISFIED THAT THE ORDER OF THE CIT(A) AS CONFIRMED BY THE ITAT SUFFERS FROM NO LEGAL INFIRMI TY. NO SUBSTANTIAL QUESTION OF LAW ARISES. 16. THE APPEAL IS DISMISSED. ITA NO. 1160/DEL/2013 5 7.1 AFTER GOING THROUGH THE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT AS WELL AS THE IMPUGEND ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN DISPUTE, BECAUSE THE ASSESSEE HAS FURNISHED ALL NECESSARY D OCUMENTARY EVIDENCE FOR SUBSTANTIATING THE CLAIM IN DISPUTE. FOR THE SAKE OF CONVEINENCE, THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) AT PAGES 6 TO 8 VID E PARA NO. 5.1.3 TO 5.1.4 IS REPRODUCED BELOW:- 5.1.3 THE APPELLANT HAS FURNISHED THE FOLLOWING: A. NAME, ADDRESS, PAN, ACKNOWLEDGEMENT OF IT RETU RN, CHEQUE NUMBER THROUGH WHICH THE PAYMENT WAS RECEIVED, COPY OF BANK ACCOUNT, COPY OF DRIVING LICENSE/RATION CARD, SHARE APPLICAT ION FORM AND SIGNED CONFIRMATION OF ALL THE INVESTORS TO THE AO DURING THE ASSESSMENT PROCEEDINGS. B. COPIES OF INCOME TAX RETURNS ALONG WITH COMPUTAT ION AND BALANCE SHEETS OF ALL THE INVESTORS FILED BY THEM FOR THE A IY. 2006-07 BEFORE YOUR GOOD SELF. PERUSAL CASH IN HAND AS ON 31.03.2006 TO DEPOSITED THE SAME IN THEIR RESPECTIVE BANK ACCOUNTS. COPIES OF ALL TH E ABOVE MENTIONED DOCUMENTS HAVE ALSO BEEN SUBMITTED FOR THE AIY. 200 8-09, 2009-10, 2010-11 AND 2011-12 BEFORE YOUR GOOD SELF WHICH PRO VES THAT THE INVESTORS ARE GENUINE PEOPLE, EXISTING AND DOING GAINFUL VOCA TIONS. C. ALL THE INVESTORS, IN RESPONSE TO NOTICE U/S. 13 3(6) ISSUED BY THE AO TO VERIFY THE GENUINENESS OF TRANSACTIONS, HAVE RES PONDED WITH CONFIRMATION OF ACCOUNT, COPY OF BANK STATEMENT, PR OOF OF FILING RETURNS OF INCOME AND A SWORN AFFIDAVIT AFFIRMING THE INVESTME NTS MADE BY THEM WITH THE APPELLANT COMPANY.' ITA NO. 1160/DEL/2013 6 5.1.4 THE APPELLANT HAS RELIED ON THE LEGAL PREPOSI TIONS AS LAID OUT IN THE FOLLOWING CASES:- 1. IN CASE OF COMMISSIONER OF INCOME TAX VS. DOLPHI N CAN PACK LTD [2006] 283 ITR 190 (DELHI) DELHI HIGH COURT INTER-A LIA HELD THAT: 'WHERE THE CREDIT ENTRY RELATES TO THE ISSUE OF THE SHARE CAPITAL, THE ITO IS ENTITLED TO EXAMINE WHETHER THE ALLEGED SHAREHOLDERS DO IN F ACT EXIST OR NOT. IN THE COURSE OF SAID ENQUIRY, 'THE ASSESSEE HAD DISCLOSED TO THE ASSESSING OFFICER NOT ONLY THE NAMES AND THE PARTICULARS OF T HE SUBSCRIBERS OF THE SHARES BUT ALSO THEIR BANK ACCOUNTS AND THE PERMANE NT ACCOUNT NUMBERS ISSUED BY THE INCOME TAX DEPARTMENT. SUPERADDED TO ALL THIS WAS THE FACT THAT THE AMOUNT RECEIVED BY THE COMPANY WAS ALL BY WAY OF CHEQUES. THAT MATERIALS WAS, IN THE OPINION OF THE TRIBUNAL, SUFFICIENT TO DISCHARGE THE ONUS THAT LAY UPON THE ASSESS.' 2. IN ANOTHER CASE OF COMMISSIONER OF INCOME-TAX VS . GANGOUR INVESTRPENT LTD [2009] 179 TAXMAN 1 (DELHI) DELHI H IGH COURT. INTER-ALIA HELA AS UNDER: 'THE REVENUE CAN MAKE ADDITION UNDER SECTION 68 ONLY IF THE ASSESSEE IS UNABLE TO EXPLAIN THE CREDITS APPEA RING IN ITS BOOKS OF ACCOUNT. IN THE INSTANT CASE, THE ASSESSEE HAD FILE D SUBSCRIPTION FORM OF EACH OF THE INVESTORS. THE SAID SUBSCRIPTION FORMS CONTAINED DETAILS, WHICH SET OUT NOT ONLY THE IDENTITY OF THE SUBSCRIBER, BU T ALSO GAVE INFORMATION WITH RESPECT TO THEIR ADDRESSES AS WELL AS PANS. DU RING THE COURSE OF SCRUTINY, THE ASSESSING OFFICER HAD ALSO ASKED FOR AND WAS SUPPLIED WITH A COPY OF THE STATEMENT OF THE BANK ACCOUNTS OF SUBSC RIBERS. THE PAYMENTS WERE MADE BY WAY OF A CREQUE. FINDING OF FACT IN RE SPECT OF THOSE INGREDIENTS HAD BEEN RETURNED BOTH BY THE COMMISSIO NER (APPEALS) AS WELL AS THE TRIBUNAL. IN THOSE CIRCUMSTANCES, IT CO ULD BE SAID THAT THE ITA NO. 1160/DEL/2013 7 ASSESSEE HAD DISCHARGED ITS ONUS IN RESPECT OF THE VERACITY OF TRANSACTIONS. 3. CIT VS. STELLER INVESTMENT LTD. [1991] 59 TAXMAN 568 (DELHI) DELHI HIGH COURT INTER-ALIA HELD AS UNDER: 'EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTAN CES CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS ON UNDISCLOSED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE ARE SAME BOGUS SHAREHOLDERS IN WH OSE NAME THE SHARES HAD BEEN ISSUED AND THE MONEY MAY HAVE BEEN PROVIDE D BY SOME OTHER PERSONS. IF THE ASSESSMENT OF THE PERSONS, WHO ARE ALLEGED TO HAVE REALLY ADVANCED THE MONEY, IS SOUGHT TO BE REOPENED, THAT WHOULD HAVE MADE SOME SENSE BUT WE FAIL TO UNDERSTAND AS TO HOW THIS AMOUNT OF INCREASED SHARE CAPITAL CAN BE ASSESSED IN THE HANDS OF THE C OMPANY ITSELF' 4. IN CASE OF CIT VS. DIVINE LEASING & FINANCE LTD [2007] 158 TAXMAN 440 (DELHI) THE HIGH COURT OBSERVE INTER ALIA THAT: 'THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDEN TITY OF THE SUBSCRIBER; (2) GENUINENESS OF THE TRANSACTION, NAMELY: WHETHER SUC H TRANSACTION HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER UNDISPUTE D CHANNELS; (3) CREDITWORTHINESS OF THE SUBSCRIBER; (4) IF RELEVANT DETAILS OF THE ADDRESS, PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISH ED TO THE DEPARTMENT ALONG WITH THE COPIES OF SHARE APPLICATION FORM ETS ., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE.' 5. COMMISSIONER OF INCOME TAX VS. OASIS HOSPI TALITIES (P) LTD. (2011) 238 CTR (DEL) 402: (2011) 333 ITR 119 ITA NO. 1160/DEL/2013 8 6. COMMISSIONER OF INCOME TAX VS. DWARKADHISH INVES TMENT(P) LTD. (211) 239 CTR (DEL) 478: (2011) 330 ITR 298. 7.2 FROM THE ABOVE, WE FIND THAT THE LD. CIT(A) HA S DELETED THE ADDITION IN DISPUTE ON THE BASIS OF THE AFORESAID DOCUMENTARY E VIDENCES AS WELL AS THE DECISIONS RENDERRED BY THE HONBLE JURISIDCTIONAL H IGH COURT. WE FURTHER FIND THAT THE ISSUE IN DISPUTE IS ALSO SQUARELY COVERE D BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT DATED 13.10.2015 PASSED I N THE CASE OF PR. CIT VS. RAKAM MONEY MATTERS PVT. LTD. 2015 (10) TMI 2057, A S REFERRED ABOVE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), HENCE, WE UPHOLD THE IMPUGEND ORDER ON THE ISSUE IN DISPUT E AND DISMISS THE APPPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/11/2015. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE: DATE: DATE: DATE: 18 1818 18- -- -11 1111 11- -- -2015 2015 2015 2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR