ITO, New Delhi V. M/s. Hira Realotors Pvt. Ltd., New Delhi

ITA 117/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6533 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Section: 133(6); 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 117/DEL/2012 (ASSESSMENT YEAR: 2008 - 09 ) ITO, WARD - 12(4), ROOM NO.331, C. R. BUILDING, NEW DELHI VS. HIRA REALTORS PVT. LTD., D - 26, DEFENSE COLONY, NEW DELHI, NEW DELHI PAN:AABCH6352E (APPELLANT) (RESPONDENT) ASSESSEE BY SH. G.C.SRIVASTAVA, ADV SH. ANUBHAV JAIN, ADV REVENUE BY SH.T.VASANTHAN, SR. DR DATE OF HEARING 07 / 03 /2016 DATE OF PRONOUNCEMENT 08 / 03 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1 . THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DATED 18.10.2011, WHEREIN AN ADDITION OF RS. 49 LACS IS MADE BY AO U/S 68 OF THE INCOME TAX ACT , WAS DELETED. 2 . THE BRIEF GROUNDS OF THE APPEAL ARE AS UNDER: - 1. WHETHER ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE THE CIT (A) ERRED IN DELETIN G THE ADDITION OF RS. 49,00,000/ - - MADE BY THE AO UNDER SECTION 68 OF IT ACT, 1961, IGNORING THE FACT THAT CREDIT WORTHINESS OF THE SHARE APPLICANT WAS NOT PROVED. 2. WHETHER ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE THE CIT (A) ERRED IN HOLDING THE RECEIPT OF RS. 49,00,000/ - AS GENUINE TRANSACTION WHICH WERE ESTABLI SHED TO BE DOUBTFUL IN VIEW OF THE FACT THAT THE ENTIRE TRANSACTION WAS MADE IN CASH AND THE SHARE APPLICANT COMPANY DID NOT HAVE SUFFICIENT CAPACITY TO MAKE SUCH PAYMENT . 3. SINCE ENTIRE AMOUNT OF SHARE APPLICATION WAS RECEIVED IN CASH AND REMAINED AS SUCH, WHETHER THE CIT (A) ERRED IN HOLDING TRANSACTION AS GENUINE IGNORING THE FACT THAT THIS CASH WAS NOT APPEARING IN THE BOOKS OF ACCOUNTS. 3 . ALL THESE THREE GROUNDS INVOLVED COMMO N ISSUE AND THEREFORE THEY ARE DEALT WITH AS UNDER . PAGE 2 OF 6 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY FILED IS RETURN OF INCOME ON 30.09.2008 SHOWING NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT AN AMOU NT OF RS.4851000/ - WAS RECEIVED DURING THE YEAR TOWARDS SHARE CAPITAL FROM M/S. ANSHU TRADEX PRIVATE LIMITED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED FOLLOWING DETAILS REGARDING THAT COMPANY: - I. CONFIRMATION OF ACCOUNT II. MEMOR ANDUM OF ARTICLES OF ASSESSMENT III. AUDITED FINANCIAL RESULTS OF THE COMPANY AS ON 31.03.2008 IV. COPIES OF RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008 - 09 TO ASSESSMENT YEAR 2010 - 11 V. AFFIDAVIT FROM AUTHORIZED PERSON OF M/S. ANSHU TRADEX PRIVATE LIMITED THAT SHARE APPLICATION MONEY WAS GIVEN TO THE ASSESSEE IN CASH. VI. A COPY OF LEDGER ACCOUNT OF M/S ANSHU TRADEX PVT. LTD IN THE BOOKS OF THE ASSESSEE COMPANY. 5 . BASED ON THE ABOVE INFORMATION THE LD AR ISSUED NOTICE U/S 133(6) OF THE ACT TO THE DEPO SIT OR FOR INDEPENDENTLY CONFIRMING THE TRANSACTION, WHICH REMAINS UN - RESPONDED. THE AO THEREFORE MADE THIS ADDITION U/S 68 OF THE ACT FOR THE REASONS THAT: - A. THE AMOUNT OF SHARE CAPITAL OF RS.4851000/ - HAS BEEN RECEIVED IN CASH B. NOTICES U/S 133(6) OF THE ACT REMAINED UN - RESPONDED C. ACCORDING TO THE AO THE FURNISHING OF INCOME TAX FILE NUMBER ETC IS NOT ENOUGH TO PROVE THE GENUINENESS OF THE CASH CREDIT. 6 . THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), WHO DELETED THE ADDITION U/S 68 BECAUSE OF THE REASON THAT THE ASSESSEE HAS SHOWN COMPLETE DETAILS OF THE TRANSACTION IN CASH PRODUCING CASH BOOK OF M/S. ANSHU TRADEX PVT. LTD. AND ALSO CASH BOOK OF GODAVARI BUILD WELL PVT. LTD. WHERE FROM M/S. ANSHU TRADEX P VT. LTD RECEIVED THE ABOVE SUM. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WAS OF THE VIEW THAT COMPLETE TRAIL OF THE MONEY WHICH IS CREDITED IN THE BOOKS OF ASSESSEE COMPANY AS SHARE CAPITAL IS EXPLAINED. THEREFORE THERE IS NO DOUBT ABOUT THE IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION ENTERED INTO BY THE ASSESSEE COMPANY. PAGE 3 OF 6 7 . AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) REVENUE IS IN APPEAL BEFORE US C ONTESTING THAT ADDITION W AS WRONGLY BEEN DELETED BY T HE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS NOT PROVED. 8 . BEFORE US THE LD DR SUBMITTED AS UNDER: - I. THAT THE AMOUNT DEPOSIT ED IN CASH OF THE DEPOSITOR INTO THE BOOKS OF THE ASSESSEE COMPANY AN D DEPOSITOR HAS ALSO RECEIVED THE CASH FROM M/S. GODAVARI BUILD WELL PVT. LTD AND THEREFORE IT DOES NOT PROVE GENUINENESS OF THE TRANSACTION. HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE COMMISSIONER OF INCOME - TAX VS. NAVODAYA CASTLES (P.) LTD. 367 ITR 306 (DEL) WHICH HAS BEEN UPHELD BY HONBLE SUPREME COURT IN 230 TAXMANN 268. II. IT WAS ALSO HIS CONTENTION THAT WHEN NOTICES ISSUED U/S 133(6) OF THE ACT REMAINED UN - RESPONDED AND WHEN IT IS SUBMITTED THAT IT BELONGS TO A GROUP OF THE WELL KNOWN BUILDER SUCH AS EMAAR MGF , TRANSACTION SHOULD HAVE BEEN INITIATED NOT IN CASH BUT THROUGH THE BANKING CHANNEL. HE FURTHER SUBMITTED THAT THERE IS NO EVIDENCE THAT COMPANY BELONGS TO THE SAME GROUP. HE FURTHER SUBMITTED THAT NO REMAND REPORT HAS BEEN CALLED FOR BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND THEREFORE HE SUBMITTED THAT THE TRIBUNAL IS DUTY BOUND TO CORRECT WHATEVER ERROR HAVEN BEEN LEFT INTO THE ASSESSMENT ORDERS ETC. FOR THIS HE RELIED ON THE DECISION OF HONBLE DELHI HI GH IN THE CASE OF CIT V MANISH BUILD WELL PRIVATE LIMITED 928/2011 (DEL) 15.11.2011 AND ALSO OF HONBLE SUPREME COURT IN THE CASE OF M/S. DEEPAK AGRO FOODS VS. STATE OF RAJASTHAN IN CIVIL APPEAL NO.4327 - 28/2008. HE FURTHER RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S. JAN SAMPARAK ADVERTISING AND MARKETING PVT. LTD. ITA 525/2014 DATED 11.03.2015. 9 . THE LD AR OF THE ASSESSEE EXPLAINED THAT THE COMPLETE MONEY TRAIL IS AVAILABLE WHICH IS GIVEN AT PAGE 5 OF ORDER OF LEARNED COMMI SSIONER OF INCOME - TAX (APPEALS) AND THEREFORE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE U/S 68 OF THE ACT. HE FURTHER SUBMITTED THAT THE MONEY IN CASH IS RECEIVED BY THE ASSESSEE FROM M/S. ANSHU TRADEX PVT. LTD WHO IN TURN RECEIVED CASH FROM M/ S. GODAVARI BUILD WELL PVT LTD AND GODAVARI BUILD WELL PAGE 4 OF 6 PVT LTD PVT. LTD IN TURN WITHDREW THIS MONEY FROM ITS BANK ACCOUNT WHICH WAS RECEIVED BY IT ON SALE OF LAND. FOR THIS HE DREW OUR ATTENTION TO THE CASH BOOK OF M/S. ANSHU TRADEX PVT. LTD. WHICH REFLECTS THE AMOUNT RECEIVED FROM M/S. GODAVARI BIDWELL PVT. LTD AND REGARDING SOURCE OF THE MONEY RECEIVED BY THE GODAVARI BUILD WELL PVT. LTD. HE SUBMITTED THE COPY OF THE CASH BOOK AND BANK STATEMENT OF THAT PARTY. DURING THE COURSE OF HEARING HE REFER RED TO THE VARIOUS PAGES OF THE PAPER BOOK, WHEREIN THE CONFIRMATION, THE INCOME TAX DETAILS, THE CASH BOOK OF THE LENDER WHICH SHOWS THE RELEVANT TRANSACTION , SOURCE OF THE SOURCE OF MONEY DEPOSIT ED WITH THE ASSESSEE HE SUBMITTED RELEVANT PAGES OF THE CASH BOOK AND BALANCE - SHEET OF THE COMPANY FROM WHOM THE CASH IS RECEIVED BY ANSHU TRADEX PRIVATE LIMITED . THEREFORE HE CONTENDED THAT IN ABSENCE OF ANY FLAW IN THE TRAIL OF MONEY THOUGH IN CASH WHERE ALL THE PARTIES ARE TAX ASSESSEE AND THE TRAIL OF TH E FUNDS IS CORROBORATED BY THE ADEQUATE EVIDENCE. HE FURTHER SUBMITTED THAT MERELY THE RETURN OF INCOME IS AT LOW AMOUNT CANNOT BE THE BASIS FOR DISBELIEVING THE TRANSACTION. FOR THIS HE SUBMITTED THAT THE AMOUNT IS RECEIVED FROM SALE OF LAND BY GODAVARI BUILD WELL LIMITED WHICH IS APPARENT FROM THE PROFIT AND LOSS ACCOUNT OF THAT PARTY. THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. HE SUPPORTED THE ORDER OF CIT (A) . 10 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTE NTION AND ALSO PERUSED THE RELEVANT PAGES OF THE PAPER BOOK TO WHICH OUR ATTENTION WAS DRAWN. THE AMOUNT OF RS.48,51,000/ - WAS RECEIVED IN CASH BY THE ASSESSEE DURING THE YEAR FOR SHARE ALLOTMENT BY THE COMPANY IN FAVOUR OF M/S. ANSHU TRADEX PVT. LTD. THE CASH BOOK OF M/S. ANSHU PVT. LTD SHOWS THAT ON 10.12.2007 AN AMOUNT OF RS. 4851000/ - WAS DEPOSITED BEING SHARE APPLICATION FOR 485100 SHARES @ RS. 10 / - EACH OF THE ASSESSEE COMPANY . THE SOURCE OF THESE FUNDS IS THAT ON 09.12.2007 AN AMOUNT OF RS.50 LACS WAS RECEIVED AS SHARE APPLICATION MONEY IN THE BOOKS OF M/S. ANSHU TRADEX PVT LTD. FROM M/S. GODAVARI BUILD WELL PVT. LTD. REGARDING THE SOURCE OF MONEY IN THE BOOKS OF GODAVARI BUILD WELL PVT. LTD AN AMOUNT ON 09.12.2007 OF RS.50 LACS WAS DEPOSITED IN CAS H BOOK SHOWING THE NARRATION THAT AMOUNT PAID TO M/S. ANSHU TRADEX PVT. LTD AS SHARE APPLICATION MONEY FOR PURCHASES OF SHARES. THE SOURCES OF MONEY IN THE BOOKS OF THE GODAVARI BUILD WELL LIMITED IS PAGE 5 OF 6 WITHDRAWAL FROM THE BANK MONEY WHICH WAS RECEIVED ON SALE OF PLOT OF LAND WHICH IS DEPICTED IN THE PROFIT AND LOSS ACCOUNT OF THE GODAVARI BUILD WELL PRIVATE LIMITED. ALL THESE TRANSACTIONS ARE REFLECTED IN THE BOOKS OF ACCOUNT OF THE GODAVARI BUILD WELL PVT LTD WHO DEPOSITED MONEY IN FAVOUR OF M/S. ANS HU TRADEX PVT. LTD. AND IN THE BOOKS OF M/S. ANSHU TRADEX PVT. LTD WHO DEPOSIT ED MONEY WITH THE ASSESSEE COMPANY. ALL THE PARTIES INVOLVED IN THESE TRANSACTIONS ARE SUBMITTED TO BELONG TO EMMAR MGF. THE TRANSACTIONS ARE ALSO REFLECTED IN THE BALANCE SHEET OF VARIOUS COMPANIES INVOLVED IN THESE TRANSACTIONS AND EACH OF THE PARTIES HAVE CONFIRMED THESE TRANSACTIONS. FURTHER AN AMOUNT OF CASH RECEIVED DURING THE YEAR IS ONLY RS.4851000/ - AND NOT RS.49 LACS AS ADDED BY THE AO. THE AMOUNT OF RS.49000/ - WAS OUTST ANDING AS AN INVESTMENT IN THE BOOKS OF M/S ANSHU TRADEX PVT. LTD AS OPENING BALANCES AND DURING THE YEAR ONLY RS.4851000/ - IS RECEIVED. MERELY BECAUSE THE TRANSACTION HAVE BEEN ENTERED BY THESE COMPANIES IN CASH INSTEAD OF REGULAR BANKING CHANNEL , SAM E CANNOT BE LOOKED AT WITH BARE SUSPICION WITHOUT ANY OTHER EVIDENCE SUGGESTING INTRODUCTION OF ASSESSEE'S OW N MONEY. IN THIS CASE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF ASSUMPTION THAT AS MONEY IS DEPOSITED IN CASH TRANSACTION IS NOT GENUINE. WE DO NOT FIND ANY DISTINCTION BETWEEN THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE THROUGH BANKING CHANNEL OR IN CASH UNLESS PROHIBITED BY THE LAW. THEREFORE FOR THE PURPOSES OF APPLICABILITY OF SECTION 68 OF THE ACT B OTH ARE LOOKED AT IN SIMILAR MANNER . IT MAY BE POSSIBLE THAT IN TRANSACTION IN CASH FURTHER ENQUIRIES MAY BE MADE IN ABSENCE OF TRAIL WHICH IS GENERALLY AVAILABLE IN TRANSACTIONS THROUGH BANKING CHANNEL . IN VIEW OF THIS WE ARE OF THE OPINION THAT THE ASSESSEE HAS ADEQUATELY EXPLAINED THE ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF SHARE APPLICATION MONEY OF RS.4851000/ - DEPOSIT IN CASH IN NAME OF M/S. ANSHU TRADEX PVT. LTD WITH THE ASSESSEE. HENCE WE CONFIRM THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DELE TING THE ADDITION U/S 68 OF THE ACT OF RS.49 LACS. 11 . MEANWHILE WE WOULD ALSO LIKE TO DWELL UPON THE CASES RELIED UP ON BY THE LD DR. F IRST CASE RELIED UP ON IS N AVODAYA CASTLES PRIVATE LIMITED OF HONORABLE DELHI HIGH COURT AGAINST WHICH THE SLP OF ASSESSEE IS DISMISSED BY HONORABLE SUPREME COURT. IN THAT CASE THE SUMMONS U/S 131OF THE ACT WERE PAGE 6 OF 6 ISSUED TO THE DIRECTORS/ PRINCIPAL OFFICERS OF THE COMPANY AND REOPENING WAS BASED ON THE REPORT OF INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. THESE SUMMONS WERE RECEIVED BACK UNSERVED AND THEREFORE OA GOT HOLD OF THE BANK STATEMENTS OF THE DEPOSITORS. IN THE BANK STATEMENTS HUGE CASH IS DEPOSITED AND LARGE NUM BER OF CHEQUES WERE ISSUED. MOST IMPORTANTLY THAT CASE WAS IN RELATION TO ENTRY OPERATORS AND ACCOMMODATION ENTRY PROVIDERS. WE ARE OF THE VIEW THESE ARE NOT THE FACTS OF THE PRESENT CASE. SECOND BUNCH OF CASES RELIED UP ON BY THE LD DR. IS RELATING T O THE DUTY OF THE TRIBUNAL TO MAKE/ DIRECT INQUIRY IN CASE THE LOWER AUTHORITIES FAIL TO MAKE INQUIRIES. WE ARE NOT OF THE VIEW THAT THERE IS LACK OF INQUIRY BY AO AS THE TRANSACTION BASED ON THE EVIDENCE FURNISHED IS FULLY EXPLAINED BY THE APPELLA NT AND THERE IS NO MATERIAL ALSO WHICH COULD SUGGEST FURTHER INQUIRY. THEREFORE THOSE CASES DO NOT APPLY TO THE FACTS OF THIS CASE. 12 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 / 03 /2016 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 / 03 / 2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI