The ACIT, 1(2), V. M/s AVN winfortech Ltd.,

ITA 132/IND/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2711 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2010
• Assessment Year: misc
• Appeal Filed On: 05-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AADCA7079F I.T.A.NO. 132 /IND/20 07 A.Y. : 2003 - 04 ACIT, 1(2), M/S.AVN WINFORTECH LIMITED, BHOPAL VS B - 122/2, DDA FLA TS, EAST OF KAILASH, NEW DELHI APPELLANT RESPONDENT APPELLANT BY : SHRI ARUN DEWAN, SR. DR RESPONDENT BY : SHRI RAKESH NANDA, C. A. DATE OF HEARING : 03 .0 5 .2012 DATE OF PRONOUNCEMENT : 12 . 0 6 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 16.11.2006 FOR THE 200 3-04, WHEREIN THE FOLLOWING GROUND HAS BEEN TAKEN BY THE REVENUE :- -: 2: - 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 12,22,177/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF UNEXPLAINED CREDIT U/S 68 OF THE INCOME-TAX ACT, 19 61. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. N THE ORDER FRAMED U/S 143(3) ASSESSING OFFICER FOUND THAT ASSESSEE COMPANY WAS INCORPORATED IN APR IL, 2000. TWO OF ITS DIRECTORS ARE FROM INDIA VARIOUS E LECTRICAL AND ELECTRONIC EQUIPMENTS LIKE COLOUR DISPLAY TUBES OF MONITORS OF COMPUTERS ETC. HOWEVER, TILL DATE APPEL LANT COMPANY COULD NOT START ITS ACTIVITIES HENCE, NO BU SINESS ACTIVITIES WERE UNDERTAKEN DURING THIS YEAR. IT WAS FOUND BY HIM FURTHER THAT THERE WAS INCREASE IN THE SHARE APPLICATION MONEY THIS YEAR BY AN AMOUNT OF RS. 12,22,177/-. ASSESSING OFFICER REQUIRED THE APPELLA NT TO GIVE DETAILS REGARDING SHARE APPLICANTS. APPELLANT HAD FURNISHED DETAILS WHICH WERE DISCUSSED BY HIM IN TH E ASSESSMENT ORDER. ASSESSING OFFICER NOTED THAT IN T HE ACCOUNTS OF APPELLANT, SHARE APPLICATION MONEY STAN DS -: 3: - 3 CREDITED IN THE NAME OF MR. JUNG YI CHANG BUT THE M ONEY HAS BEEN REMITTED BY SOME OTHER SOURCE. APPELLANT C OULD NOT FURNISH EVIDENCE THAT LETTERS WERE ACTUALLY SENT BY WINNY ELECTRON ENTERPRISE COMPANY LTD., TAIWAN AND MRS. CHEN FONG YING CHANG OF TAIWAN. ASSESSING OFFI CER HELD THAT IT IS NOT UNDERSTOOD WHY SOME COMPANY OR PERSON WOULD SEND MONEY ON BEHALF OF SOME OTHER PERSON. THUS, ASSESSING OFFICER HELD THAT THE GENUINENESS AND CREDIT WORTHINESS OF AMOUNTS OF RS.12,22,177/- SHOWN IN THE GARB OF SHARE APPLICATI ON MONEY STANDS UNSATISFACTORILY EXPLAINED AND HENCE, HE HAD MADE THE ADDITION U/S 68 OF THE INCOME-TAX ACT, 1961. 3. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS :- I HAVE CONSIDERED VERY CAREFULLY THE DETAILED SUBMISSION OF THE LD. COUNSEL IN THIS REGARD. I HAVE ALSO PERUSED THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING ADDITION U/S 68 IN -: 4: - 4 RESPECT OF AMOUNTS RECEIVED FROM TAIWAN. AFTER DUE CONSIDERATION OF THE MATTER, I HOLD THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THIS ADDITION AS APPELLANT HAD SATISFACTORILY EXPLAINED THE RECEIPT OF AMOUNTS FROM TAIWAN. APPELLANT HAD PLACED SUFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER TO THE EFFECT THAT AMOUNTS HAVE BEEN RECEIVED FROM TAIWAN IN THE ACCOUNT OF APPELLANT. THEREFORE, ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION U/S 68 OF THE INCOME-TAX ACT, 1961. THE ADDITION THUS, MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.12,22,177/- IS HEREBY DELETED. THUS, BOTH THE GROUNDS TAKEN BY THE APPELLANT ARE HEREBY DECIDED IN FAVOUR OF THE APPELLANT. 4. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US . 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT A MEMORANDUM OF UNDERSTANDING WAS REACHED BETWEEN M.P. STATE -: 5: - 5 INDUSTRIAL DEVELOPMENT CORPORATION LIMITED AND M/S WINNY ELECTRON ENTERPRISE CO. LTD., TAIWAN ON 02/11/1999 TO INCORPORATE THE COMPANY AND JOINTLY CARRY OUT THE PROJECT. MEMORANDUM OF UNDERSTANDING AND MINUTES AND SUBSEQUENT MEETING WITH M.P. STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED WERE SUBMITTED BEFORE THE LOWER AUTHORITIES. OUT OF SEVE N SUBSCRIBERS TO THE MEMORANDUM AND ARTICLE OF ASSOCIATION OF THE COMPANY, FIVE WERE FROM M.P. STA TE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED AND TWO FROM WINNY ELECTRON ENTERPRISE COMPANY LTD., NAMELY MR. JUNG YI CHANG AND MS. CHANG CHIEN YU. IN THE MEETING ON 08/03/2002 BETWEEN M.P. STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED AND WINNY ELECTRON ENTERPRISE COMPANY LTD., IT WAS DECIDED THAT WINNY ELECTRON ENTERPRISE COMPANY LTD., WILL MAKE DEPOSIT S TO COVER INITIAL AND OTHER EXPENSES AFTER INCORPORA TION OF THE COMPANY. 6. WE ALSO FOUND THAT THE ASSESSEE COMPANY RECEIVE D USD 24924.38 (RS.11,99,148.97) FROM WINNY ELECTRON -: 6: - 6 ENTERPRISE COMPANY LTD., TAIWAN AND USD 485 (RS.23,027.80) FROM MRS. CHEN FONG YING CHANG DURIN G THE PREVIOUS YEAR ENDED ON 31/03/2003. THESE AMOUNTS WERE REMITTED IN FOREIGN CURRENCY FROM TAIW AN THROUGH BANK TRANSFER FOR WHICH THREE CERTIFICATES OF FOREIGN INWARD REMITTANCE WERE ISSUED BY CHINA TRUS T COMMERCIAL BANK, JANPATH, NEW DELHI, WHICH ARE PLACED ON RECORD. THE SAID CERTIFICATES CLEARLY STA TE THE NAME OF THE REMITTER, NAME AND PLACE OF REMITTING B ANK, AMOUNT OF FOREIGN CURRENCY AND RUPEE EQUIVALENT, NA ME OF THE BENEFICIARY AND THE PURPOSE OF REMITTANCE. 7. WE ALSO FOUND THAT SHARE APPLICATION ACCOUNT APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE CLEARLY STATES THAT SHARE APPLICATION MONEY WAS RECEIVED FR OM WINNY ELECTRON ENTERPRISE COMPANY LTD., AND MS. CHE N FONG YING CHANG. THE DETAILS OF SHARE APPLICATION M ONEY SUBMITTED TO THE ASSESSING OFFICER ALSO CLEARLY STA TES THAT SHARE APPLICATION MONEY UNDER DISPUTE WAS RECEIVED FROM WINNY ELECTRON ENTERPRISE COMPANY LTD., AND MS. CHE N FONG YING CHANG. THE .OBSERVATION OF THE ASSESSING OFFICER -: 7: - 7 IN THE ORDER THAT IN THE ACCOUNTS OF THE ASSESSEE, THE SHARE APPLICATION MONEY STANDS CREDITED IN THE NAME MR. J UNG YI CHANG, BUT THE MONEY HAS BEEN REMITTED FROM SOME OT HER SOURCES IS FACTUALLY INCORRECT. A DETAILED FINDING TO SUBSTANTIATE THE SAME HAS BEEN RECORDED BY CIT(A) A S REPRODUCED HEREINABOVE, WHICH HAS NOT BEEN CONTROVE RTED BY DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. 8. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING T HE ADDITION MADE U/S 68 OF THE INCOME-TAX ACT, 1961. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH JUNE, 2012. CPU* 8.11.6