M/s. Prayag Polytech Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1260/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6879 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANRAGI
• Assessee Lawyers: M P GUPTA SHRI M K GUPTA
• Keywords: Depreciation; Tax effect
• Section: 143(3); 131; 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.:- 1260/DEL/2015 ASSESSMENT YEAR: 2011-12 ITA NO. :- 1446/DEL/2015 ASSESSMENT YEAR 2011-12 M/S. PRAYAG POLYTECH PVT. LTD. 1106 VIKRAM TOWER, 16 RAJENDRA PLACE, NEW DELHI-110 008 PAN AAACP1009R VS. ACIT, CIRCLE -20(1) C.R. BUILDING, I.P. ESTATE, NEW DELHI. (APPELLANT) (RESPONDENT) ACIT CIRCLE-20(1) NEW DELHI. VS . PRAYAG POLYTECH PVT. LTD. 1106, VIKRAM TOWER, 16, RAJENDRA PLACE, NEW DELHI 110 008; PAN AAACP1009R (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI M.P. GUPTA, SHRI M.K. GUPTA, ADV. DEPARTMENT BY : SHRI S.L. ANRAGI, SR. DR DATE OF HEARING 17/04/2018 DATE OF PRONOUNCEMENT 02/07/2018 2 O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST THE IMPUGNED ORDER DAT ED 29.12.2014 PASSED BY LD. CIT (A) 7, DELHI FOR THE QUANTUM OF A SSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2011-12. 2. AT THE OUTSET IT IS NOTED THAT IN THE REVENUES APPE AL FOLLOWING AMOUNT OF ADDITION HAS BEEN DISPUTED:- 1. RS. 6,13,630/- ON ACCOUNT OF VEHICLE REPAIR AND MAINTENANCE AND DEPRECIATION; 2. ADDITION OF RS. 14,50,000/- U/S 68 3. SINCE TAX EFFECT ON THE DISPUTED ISSUE IS LESS TH AN RS. 10 LACS, THEREFORE, THE REVENUES APPEAL IS NOT MAINTAINABLE AS PER CBDT CIRCULAR NO. 21/2015 DATED 10 TH DECEMBER , 2015, F. NO. 279/ MISC./ 142/2007-ITJ(PT.) AND HENCE SAME IS DISMISSED AS NOT MAINTAINABLE. 4. IN SO FAR AS THE ASSESSEES APPEAL IS CONCE RNED IN THE GROUNDS OF APPEAL ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 15 LACS MADE BY THE AO U/S 68 ON ACCOUNT OF INVESTMENT MADE BY M/S. KAN GAROO FINANCIAL SERVICES PVT. LTD. AS SHARE APPLICATION MONE Y RECEIVED BY THE ASSESSEE FOR WHICH SHARES HAVE BEEN ISSUED, THE FAC TS IN BRIEF ARE THAT, DURING THE YEAR ASSESSEE HAS RECEIVED SHARE APPLICA TION MONEY FOR 3 ISSUE AND ALLOTMENT OF 6000 SHARES AT THE FACE VALUE OF RS. 10 AND SHARE PREMIUM OF RS. 240/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE ASSESSEE IN SUPPORT OF SUCH SHARE APP LICATION MONEY HAD FILED; I) SHARE APPLICATION FORM; II) ITR; III) BANK STATEMENT OF THE CREDITOR; IV) PROOF OF ALLOTMENT OF SHARES; V) CONFIR MATION LETTER; VI) COPY OF REGISTER OF MEMBERS SHOWING THE INVESTORS N AME; VII) BALANCE SHEET ETC. THE AO HAD ISSUED A SUMMONS U/S 131 TO THE DIRECTOR OF M/S. KANGAROO FINANCIAL SERVICES AND ALSO SENT INCOM E TAX INSPECTOR FROM WHERE IT WAS GATHERED THAT THE DIRECTOR, SHRI M K A RORA DOES NOT LIVE IN THE SAID ADDRESS AND PEOPLE OF THE NEARBY PL ACE WERE NOT AWARE OF SUCH COMPANY. ACCORDINGLY, AO CONCLUDED THAT ASSE SSEE WAS UNABLE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS AND ACCORDINGLY AFTER RELYING UPON VARIOUS DECISIONS HE HAS MADE THE ADDITION OF RS. 15 LACS U/S 68 AFTER DETAIL DISCUSSION . 5. BEFORE THE LD. CIT(A) ASSESSEE REITERATED THE SAME EVIDENCE AND ALSO POINTED OUT THAT ENTIRE TRANSACTION HAS BEEN THROUGH ACCOUNT PAYEE CHEQUE AND IN THIS REGARD FOLLOWING SUBMISSION S WERE MADE BEFORE THE CIT(A) :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS YOUR A PPELLANT FILED I) COPY OF ACCOUNT, II) BANK STATEMENT AND III) COP Y OF ITR AND IV) LEDGER COPY OF THE ACCOUNT OF THE LOAN CREDITOR BEF ORE THE LD. ASSESSING OFFICER WHICH WERE QUITE SUFFICIENT AND E NOUGH TO PROVE HIS IDENTITY, CAPACITY, CREDIT WORTHINESS, SOURCE O F THE MONEY ADVANCED AND GENUINENESS OF THE TRANSACTION. THE LD . AO, 4 HOWEVER, PREFERRED TO ISSUE SUMMON U/S 131 FOR THE PERSONAL DEPOSITION OF AND BY THE LOAN CREDITOR ON 03-01-201 4 EVEN AFTER PASSING AND SIGNING THE ASSESSMENT ORDER ON 31-12-2 013. THE SAID SUMMON COULD NOT BE SERVED DUE TO CHANGE OF AD DRESS SO AT THE REQUEST OF THE APPELLANT THE SAID LOAN CREDITOR SENT THE DOCUMENTS SUCH AS I) CONFIRMATION OF ACCOUNT, II) C OPY OF BANK STATEMENT AND III) COPY OF ITR DIRECTLY TO THE OFFI CE OF THE LD. AO BY SPEED POST WELL IN TIME ON 21-11-2013 BUT THE LD . AO DID NOT CONSIDER THE SAID DOCUMENTS HAVING BEEN RECEIVED BY HIM THROUGH SPEED POST AT ALL AND HE ACCORDINGLY CLOSED THE ASS ESSMENT PROCEEDINGS AND PASSED THE ASSESSMENT ORDER ON 31-1 2-2013 BY MAKING ADDITION ON ACCOUNT OF CASH CREDIT OF RS.14, 50,OOOI-. IT IS NOT LESSER INTERESTING TO NOTE THAT HE CONDUCTED EN QUIRIES INTO THIS MATTER ON 03-01-2014 BY ISSUE OF SUMMONS U/S 131 TH ROUGH HIS INSPECTOR AND STAFF WHICH IS INCORPORATED IN THE OR DER ALREADY PASSED BY HIM ON 31-12-2013 I.E. THREE DAYS PRIOR T O THE INVESTIGATION ON 03-01-2014. THE CASH CREDIT OF RS. 14,50,000/- IN THIS CASE AS SUCH WAS GENUINE AND UNDISPUTED TILL T HE DATE OF PASSING OF THE ORDER ON 31-12-2013 AS THE SO CALLED ADVERSE MATERIAL IF ANY WAS BROUGHT ON THE FILE ONLY ON 03- 01-2014 I.E. THREE DAYS AFTER PASSING OF THE ORDER. MOST OF THE CASE LAWS CITED AND RELIED UPON IN RESPECT OF ADDITION ON ACCOUNT O F THE SHARE APPLICATION MONEY AS CITED HEREIN ABOVE ARE APPLICA BLE TO THE LOANS I CASH CREDITS ALSO. THE AMOUNTS RECEIVED ARE NOT OUT OF THE CASH DEPOSI TS IF ANY INTO THE BANK ACCOUNT OF THE SHARE APPLICANT OR THE LOAN CREDITOR AS THE CASE MAY BE. COPIES OF DOCUMENTS SUCH AS I) ITR, II) FORWARDING LETTER OF THE DOCUMENTS HAVING BEEN SENT BY THE PARTY THROUGH SPE ED POST, III) CONFIRMATION OF A/C OF THE ASSESSEE IV) COPY OF A/C IN THE BOOKS OF 5 THE LOAN CREDITOR AND V) BANK A/C ARE ENCLOSED AS A NNEXURE C-1 TO C-6. IN CONTINUATION TO THE WRITTEN SUBMISSIONS FILED BE FORE YOUR HONOUR BY ME ON 14-07-2014 READ WITH THE ABOVESAID REMAND REPORT DATED11-09-2014 SUBMITTED BY THE LD. DCIT CIRCLE - 14(1) NEW DELHI PARTICULARLY AND ESPECIALLY IN RESPECT OF HIS COMMENTS AT PARA 3 OF PAGE 4 OF THE SAID REPORT REGARDING DATE OF SUMMONS U/S 131 DATED 03-01-2014 ISSUED IN THE NAME OF T-T/S SU PERIOR FACILITY MANAGEMENT PVT. LTD. AND THE INSPECTOR'S R EPORT IN RESPECT THEREOF IT MAY BE VERY HUMBLY AND RESPECTFULLY STAT ED AND AND SUBMITTED AS HEREUNDER ;- 1) YOUR KIND ATTENTION IS INVITED TO THE ASSESSEE'S APPLICATION DATED 12-5-2014 FILED BEFORE THE LD. DCIT CIRCLE 14 (1) NEW DELHI (COPY ENCLOSED) REQUESTING FOR ISSUANCE OF CE RTIFIED COPIES OF SOME DOCUMENTS PARTICULARLY AND SPECIALLY INCLUDING THAT OF I) COPY OF THE ORDER SHEET AT SI. NO.1, II) COPY OF THE DOCUMENTS DIRECTLY SENT BY THE LOAN CRE DITOR M/S SUPERIOR FACILITY MANAGEMENT PVT. LTD. UNDER SPEED POST ON 21-11-2013 AT SI. NO.4 WHICH REMAINED UNCONSIDERED THROUGHOUT THE ASSESSMENT PROCEEDINGS AND II)COPY O F SUMMONS U/S 131DATED 03-01-2014 ISSUED IN THE NAME OF M/S SUPERIOR FACILITY MANAGEMENT PVT. LTD. AND INSP ECTOR'S REPORT THEREON AS MENTIONED AT SI. NO.6 OF THE SAID APPLICATION. THE LD. DCIT INSTEAD OF SUPPLYING THE REQUIRED CERTIFIED COPIES AS REQUESTED IN THE APPLICATION AS KED THE ASSESSEE TO FILE THE APPLICATION IN HIS OFFICE FOR PASSING OF APPROPRIATE ORDER THEREON BUT NO ORDER WAS PASSED N OR THE CERTIFIED COPIES SUPPLIED TILL DATE WHICH MAKES IT SUSPICIOUS, CONTRADICTORY AND UNBELIEVABLE THAT THE MISTAKE IN MENTIONING THE DATE AS 03-01-2014 (INSTEAD OF WHICH 6 DATE?) COULD HAVE HAPPENED DUE TO TYPOGRAPHICAL ERR OR MORE SO BECAUSE ALL THE DIGITS IN RESPECT OF DATE, MONTH AS WELL AS THE YEAR RELATE TO A FUTURE PERIOD WHICH WA S COMING VERY SOON AND ALSO BECAUSE AS PER LAST LINE OF THE REMAND REPORT AT PAGE 4 THE LAST ENTRY ON THE ORDER SHEET NOTED BY THE AR OF THE ASSESSEE WAS ON 27-12-2013 AND THEREA FTER 28-12-2013 WAS SATURDAY AND 29-12-2013 WAS SUNDAY AND ON TUESDAY THE 31ST DAY OF DECEMBER 2013 THE OR DER IS WRONGLY SAID TO APPEAR AS HAVING BEEN PASSED ON THA T DATE. 6. LD. CIT (A) HAS CONFIRMED THE SAID ADDITION O N THE GROUND THAT ASSESSEE HAS NOT PRODUCED ANY PERSON FROM M/S. KANGA ROO FINANCIAL SERVICES PVT. LTD. AND THEREFORE, IDENTITY OF THE PERSO N GIVING THE CREDIT HAS NOT BEEN PROVED AND ALSO CREDITWORTHINESS H AS ALSO NOT BEEN ESTABLISHED. HE ALSO RELIED UPON VARIOUS CASE L AWS. 7. BEFORE US LD. COUNSEL SUBMITTED THAT, DESPITE FU RNISHING ALL THE DOCUMENTS INCLUDING THE INCOME TAX RETURN COPY OF AUDI TED BALANCE SHEET AND ALL THE SUPPORTING DOCUMENTS OF THE SAID COM PANY, AO WITHOUT VERIFYING THE SAME FORM THE DEPARTMENT CHOOSE TO ISSUE SUMMON TO THE COMPANY WHICH COULD NOT BE SERVED AND E VEN THE ITI INQUIRY HAPPENED ON THE BACK OF THE ASSESSEE AND SA ME WAS NOT CONFRONTED TO THE ASSESSEE. BEFORE THE LD. CIT (A) DESP ITE RAISING VARIOUS OBJECTIONS AND FURNISHING ALL THE DOCUMENTS, H E HAS GIVEN A VERY ERRONEOUS FINDING OF FACT THAT NOTHING HAS BEEN P RODUCED TO PROVE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR. 7 8. ON THE OTHER HAND, LD. DR AFTER REFERRING TO THE VARIOUS OBSERVATIONS MADE BY THE AO AND THE LD. CIT(A) SUBMITTE D THAT THE INQUIRY MADE BY THE AO ON THE ADDRESS AS GIVEN BY THE ASSESSEE WAS NOT FOUND TO BE CORRECT AND THEREFORE, THE INFERENCE DR AWN BY THE AO CANNOT BE DISTURBED. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS THE MATERIAL PLACED ON RECORD, WE FIND THAT EVIDENCES WHICH HAVE B EEN FURNISHED BY THE ASSESSEE HAVE NOT BEEN DISCUSSED; AND IF THE DIRE CTOR HAS NOT BEEN FOUND THEN IT CANNOT BE SAID THAT IDENTITY OF THE COMP ANY IS NOT ESTABLISHED ESPECIALLY IN WAKE OF INCOME TAX RECORDS AND SHARE ALLOTMENT FORM AND OTHER HOST OF DOCUMENTS. IF IN THE IN QUIRY, BY THE ITI IT WAS FOUND THAT ON THE SAID ADDRESSEE THE COMPANY OF THE DIRECTOR WAS NOT TRACEABLE, THEN AO SHOULD HAVE CONFRON TED TO THE ASSESSEE AND ASSESSEE SHOULD HAVE BEEN GIVEN THE OPP ORTUNITY TO PRODUCE THE CONCERNED PERSON FROM THE SAID COMPANY. E VEN THE LD. CIT (A) IN HIS ORDER THOUGH SOUGHT FOR THE REMAND REPO RT BUT HAS NOT GIVEN THE MANDATE TO THE AO TO CONFRONT THE SAME TO THE ASS ESSEE. ACCORDINGLY, THE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT MATTER SHOULD BE RESTORED BACK TO TH E FILE OF THE AO AND ASSESSEE WILL ENSURE FULL CORPORATION AND PRODUC E THE CONCERNED PERSON FROM THE SAID COMPANY AND OR PROVIDE CORRECT DETAILS OF THE 8 SAID COMPANY FOR ISSUING OF SUMMON. THEREAFTER THE AO SHALL EXAMINE THE ENTIRE SOURCE OF CREDIT AFTER CONSIDERING T HE ENTIRE MATERIAL PLACED ON RECORD AND DECIDE THE ISSUE AFRES H AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THIS CASE. AC CORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTI CAL PURPOSES. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DI SMISSED AND APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JULY, 2018. SD/- SD/- (B.R.R. KUMAR) (AM IT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02/07/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI