Rudrani Healthcare Services Ltd., Latur V. Income-tax Officer, Ward - 3(3),

ITA 120/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1126 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUHAS P BORE
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 120 /PN/201 6 / ASSESSME NT YEAR : 20 1 0 - 1 1 RUDRANI HEALTHCARE SERVICES LTD., ANANDMAYEE MARG, UDGIR, DIST. LATUR - 413517 . / APPELLANT PAN: A A ECR8157Q VS. THE INCOME TAX OFFICER , WARD 3 ( 3 ), LATUR . / RESPONDENT / APPELL ANT BY : SHRI SUHAS P. BORE / APPELL ANT BY : SHRI SUHAS P. BORE / RESPONDENT BY : SHRI ANIL KUMAR CHAWARE / DATE OF HEARING : 08 . 0 8 .201 6 / DATE OF PRONOUNCEMENT: 12 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL F ILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , AURANGABAD, DATED 13 . 11 .20 1 5 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL : - ITA NO. 120 /PN/20 1 6 RUDRANI HEALTHCARE SERVICES LTD. 2 1. THE LEARNED CIT(APPEAL - 2), AURANGABAD ERRED IN CONFIRMING THE ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 IN SPITE OF THE FACT THAT ASSESSEE HAS PRODUCED THE COPIES OF SHARE APPLICATION FORMS ALONG WITH BANK STATEMENT OF PERSO NS REFERRED BY AO IN ITS ORDER WHICH IS UNJUSTIFIED AND REQUIRES TO BE QUASHED. 2. THE LEARNED CIT(APPEAL), AURANGABAD ERRED IN CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICER ESTIMATING INCOME OF RS.5,05,000 IN SPITE OF THE FACT THAT ASSESSEE HAD PRODU CED COPY OF BANK STATEMENT AND STATED THAT AMOUNT IN QUESTION IS RECEIVED THROUGH BANKING CHANNELS. RELIEF CLAIMED 1. THE APPEAL ORDER OF CIT(APPEAL), AURANGABAD CONFIRMING THE ASSESSMENT ORDER PASSED BY LEARNED ITO U/S 143(3) OF INCOME TAX ACT, 1961 MAY PLEASE BE QUASHED. 2. DEMAND RAISED AS PER ASSESSMENT ORDER OF RS.2,21,570/ - REFERRED ABOVE MAY PLEASE BE DROPPED. 3. THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ADDITION OF RS.5,05,000/ - UNDER SECTION 68 OF THE ACT. THE ASSESSEE IS AGGRIEV ED BY THE ORDERS OF ASSESSING OFFICER AND CIT(A) IN MAKING ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY TOTALING RS.5,05,000/ - . APPLICATION MONEY TOTALING RS.5,05,000/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS A PRIVATE LIMITED COMPANY ESTABLISHED ON 09.06.2006, WHICH WAS CONVERT ED INTO PUBLIC LIMITED COMPANY. THE ASSESSEE HAD NOT STARTED ITS ACTIVITY IN THE YEAR UNDER CONSIDERATION AND THE PROJECT WAS STILL UNDER CONSTRUCTION. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED TOTAL SHARE APPLICATION AT RS.29,20,000/ - , OUT OF WHICH SUM OF RS. 7,65,000/ - WAS RECEIVED FROM VARIOUS PERSONS. IN ADDITION, THE ASSESSEE HAD ALSO ISSUED PREFERENCE SHARE CAPITAL OF RS.6,80,000/ - . THE ASSESSING OFFICER IN ORDER TO VERIFY THE CLAIM OF ASSESSEE BOTH IN RESPECT OF SHARE APPLICATION MONEY AND THE PREFERENCE SHARES , ISSUED NOTICES TO THE RESPECTIVE PARTIES AT THE KNOWN ADDRESSES. HOWEVER, SOME OF THE PERSONS DID NOT ATTEND NOR FURNISH ED ANY REPLY TO THE SUMMONS ISSUED AND ITA NO. 120 /PN/20 1 6 RUDRANI HEALTHCARE SERVICES LTD. 3 THE ASSESSING OFFICER THUS, MADE AN ADDITION OF RS.5,05,000/ - FOR NON - VERIFICATION OF SHARE APPLICATION MONEY. THE SAID ADDITION WAS MADE UNDER SECTION 68 OF THE ACT. 5. BEFORE THE CIT(A), THE ASSESSEE CLAIMED THAT THREE PERSONS HAVE MADE PAYMENTS THROUGH CHEQUES AND SINCE THE AMOUNTS WERE THROUGH BANKING CHANNEL, THE SAME SHOULD HAVE BEEN ACCEPTED. HOWEVER, THE ASSESSEE WAS UNABLE TO PRODUCE THE BANK STATEMENT OF SAID PERSONS I.E. CREDITWORTHINESS COULD NOT BE PROVED. THE CIT(A) HELD THAT WHERE THE ONUS WAS UPON THE ASSESSEE TO PROVE THE IDENTITY OF CREDITORS, GE NUINENESS OF TRANSACTION AND THE CREDITWORTHINESS OF CREDITORS AND IN CASE THE SAME ARE NOT COMPLIED WITH, THEN THE ADDITION IS WARRANTED UNDER SECTION 68 OF THE ACT AS UNEXPLAINED CASH CREDIT. THE ASSESSEE HAD FAILED TO PRODUCE ANY INFORMATION TO ESTABLI SH THE CREDITWORTHINESS OF PERSONS AND MERE IDENTIFICATION OF CREDITORS AND PAYMENTS THROUGH BANKING CHANNEL WAS HELD NOT TO FULFILL THE CONDITIONS OF SECTION 68 OF THE ACT AND HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE TRIBUNAL HAS FURNISHED WRITTEN SUBMISSIONS, IN WHICH HE CLAIMS THAT SUM OF RS.2,50,000/ - WAS RECEIVED FROM SHRI MILIND GHANPATHI THROUGH CHEQUE. THE ASSESSEE CLAIMS TO HAVE FILED THE CONFIRMATION LETTER AND ALSO PHOTO COPY OF PAN CARD. HOWEVER, THE BANK STATEMENT COULD NOT BE PROVIDED DUE TO TECHNICAL REASONS. IN RESPECT OF SHRI PATIL SIDHESHWAR GUNWANTRA FROM WHOM SUM OF RS. 1,00,000/ - WAS RECE IVED, SIMILAR PLEA WAS RAISED BY THE LEARNED AUTHORIZED ITA NO. 120 /PN/20 1 6 RUDRANI HEALTHCARE SERVICES LTD. 4 REPRESENTATIVE FOR THE ASSESSEE. IN RESPECT OF THIRD PERSON SHRI MANGNALE UMASHANKAR VITHAL , THE ASSESSEE CLAIMS THAT IT HAS PRODUCED THE BANK STATEMENT ALONG WITH CONFIRMATION AND ALSO ACKNOWLEDGEME NT OF FILING OF RETURN OF INCOME BY THE SAID PERSON FOR ASSESSMENT YEAR 2009 - 10. IN RESPECT OF SHRI BARGAL DEEPA MAHANTAPPA, THE ASSESSEE CLAIMS THAT THE AMOUNT WAS RECEIVED FROM THE FATHER OF SAID PERSON, WHO WAS HOLDING AGRICULTURAL LAND. THE SAID AMOU NT WAS ADMITTEDLY, RECEIVED IN CASH. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT IN RESPECT OF SHRI PATIL SIDHESHWAR GUNWANTRAO , THE CLAIM WAS THAT THE SAID ADVANCE OF RS.1,00,000/ - WAS OUT OF AGRICULTURAL INCOME EARNED BY THE ASSESSEE AND IN SUPPORT, THE ASSESSEE FURNISHED 7/12 EXTRACT OF CROP S GROWN BY THE ASSESSEE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). 9. IN THE TOTALITY OF THE EVIDENCE FILED BY THE ASSESS EE, THE ISSUE NEEDS TO BE ADJUDICATED VIS - - VIS ADDITION MADE UNDER SECTION 68 OF THE ACT . THE ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AND NON - FILING OF THE EVIDENCE TO PROVE THE CREDI TWORTHINESS OF PERSONS ADVANCING THE SAID SHARE APPLICATION MONEY. THE ASSESSEE HAD FURNISHED CONFIRMATION LETTER FROM THE ABOVE SAID PERSONS ALONG WITH PHOTO COPY OF PAN CARDS. HOWEVER, THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH THE CREDITWORTHINESS OF ABOVE SAID PERSONS , WHO HAD ADVANCED THE SAID AMOUNTS. MERELY BECAUSE THE AMOUNTS WERE TRANSACTED THROUGH BANKING CHANNEL DOES NOT ESTABLISH THE CASE OF ASSESSEE, WHERE THE BANK STATEMENT OF PERSONS ADVANCING THE SHARE APPLICATION MONEY COULD NOT BE ITA NO. 120 /PN/20 1 6 RUDRANI HEALTHCARE SERVICES LTD. 5 PROD UCED BEFORE THE ASSESSING OFFICER. IN THE CASE OF SHRI MILIND GHANNPATHI, THE ASSESSEE HAS NOT EVEN FURNISHED THE BANK STATEMENT FROM WHOM IT HAD RECEIVED RS.2,50,000/ - AS SHARE APPLICATION MONEY. IN VIEW THEREOF, THE ASSESSEE HAVING NOT DISCHARGED ITS O NUS, THE ADDITION TO THE EXTENT OF RS.2,50,000/ - MERITS TO BE UPHELD IN THE HANDS OF ASSESSEE. FURTHER, WITH REGARD SHARE APPLICATION MONEY RECEIVED FROM BARGAL DEEPA MAHANTAPPA OF RS.55,000/ - , WHERE THE ASSESSEE HAS FAILED TO ESTABLISH THE SOURCES FROM W HICH SHE HAD ADVANCED THE SAID AMOUNT AND THE MERE CLAIM THAT THE AMOUNT WAS ADVANCED OUT OF AGRICULTURAL INCOME OF THE FATHER DOES NOT DISCHARGE THE ONUS UPON BY THE ASSESSEE AND HENCE, THE ADDITION OF RS.55,000/ - MERITS TO BE UPHELD. 10. NOW, COMING T O THE CASE OF SHRI MANGNALE UMASHANKAR VITHAL , THE ASSESSEE HAS FURNISHED ON RECORD THE PHOTO COPY OF RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2009 - 10, IN WHICH HE HAS DECLARED INCOME OF RS.10,18,290/ - . THE SAID PERSON HAD ADVANCED SUM OF RS.1,00,000/ - TO THE ASSESSEE AND IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAME MERITS TO BE ACCEPTED. IN RESPECT OF FOURTH PERSON I.E. SHRI PATIL SIDHESHWAR GUNWANTRAO , THE ASSESSEE HAS EXPLAINED THAT THE SAID PERSON OWNS AGRICULTURAL LAND AND H AS ADVANCED THE AMOUNT OUT OF HIS AGRICULTURAL RECEIPTS. IN SUPPORT, THE ASSESSEE HAS FURNISHED NECESSARY CONFIRMATION BY WAY OF 7/12 EXTRACT OF THE CROP S GROWN BY THE SAID PERSON. THE SAID SHARE APPLICATION OF RS.1,00,000/ - THUS, MERITS TO BE ACCEPTED A S THE ASSESSEE HAS PROVED THE CREDITWORTHINESS OF SAID PERSON. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION TOWARDS SHARE APPLICATION MONEY TO THE EXTENT TO RS. 2 LAKHS IS DELETED ITA NO. 120 /PN/20 1 6 RUDRANI HEALTHCARE SERVICES LTD. 6 AND RS.3,05,000/ - IS UPHELD. THE GRO UNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF AUGUST , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 12 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPO NDENT; 3. ( ) / THE CIT(A) - 2 , AURANGABAD ; ( ) 4. / THE PR. CIT 2, AURANGABAD ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE