The DCIT Circle-4(1)(1), Ahmedabad V. West side Cars Pvt. Ltd, Ahmedabad

ITA 1398/AHD/2019

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 1207 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-01-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 02-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHOKKUMARSUTHAR
• Assessee Lawyers: SHRITUSHARHEMANI

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं ./ITANo.1398/AHD/2019 धििाधरणवरध / Asstt.Year:2015-2016 TheD.C.I.T, Circle-4(1)(1), Ahmedabad. Vs. WestSideCarsPvt.Ltd., A/1-4,SolitaireCorporatePark, Nr.DivyaBhaskar, Makarba, S.GHighway, Ahmedabad. PAN:AABCW5506D (Applicant)(Respondent) Revenueby:ShriAshokKumarSuthar,Sr.DR Assesseeby:ShriTusharHemani,Sr.Advocate सुिवाईकीतारीख/DateofHearing:25/01/2024 घोरणाकीतारीख/DateofPronouncement:20/03/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheRevenueagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals)-8,Ahmedabad, arisinginthematterofassessmentorderpassedunders.143(3)oftheIncome TaxAct,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessment Year2015-16. ITAno.1398/AHD/2019 A.Y.2015-16 2 2.TheRevenuehasraisedfollowinggroundsofappeal: 1)WhethertheLd.CIT(A)iscorrectinLawandonfactstodeletetheadditionu/s.Rs.68 ofRs.2.99croresmerelyonthegroundthatmonthshasnotbeencreditedinbankdespite itbeingcreditedinbooksduringtheyear. 2)WhethertheLd.CIT(A)correctinlawtodeletetheadditionofRs.1,03,49,000/- creditedbeingcooksofaccountinthenameofShriDevendrasinghBaggabeing contributiontowardssharecapitaldespiteentrynotbeingreversed-neitherinthisA.Y. norinsubsequentA.Y.” 3)WhethertheLd.CIT(A)iscorrectinlawtodeletetheadditionofRs.1,95,51,000/- creditedinthebooksofaccountinthenameofSmt.SukhleenkaurBaggabeing contributiontowardssharecapitaldespiteentrynotbeingreversed-neitherinthisA.Y. norinsubsequentA.Y." 2.1TheinterconnectedissueraisedbytheRevenueisthattheld.CIT-Aerred indeletingtheadditionmadebytheAOforRs.2,99,000.00onaccountof unexplainedcashcreditundersection68oftheAct. 3.Thefactsinbriefarethattheassessee,aprivatecompany,isengagedin thebusinessofcardealership.TheAOduringtheassessmentproceedingsnoticed thattheassesseehasshownreceiptofshareapplicationmoneyofRs. 2,99,00,000/-throughbankingchannelfromitsdirectordetailedasunder: 1.ShriDevendraSinghBaggaRs.1,03,49,000/- 2.Smt.SukhleenKaurBaggaRs.1,95,51,000/- 3.1Theaboveamountwasdulyreflectedintheledgeraccountofthe respectivedirectorsandbankledgersmaintainedinthebooksofaccountsofthe assessee.However,onperusalofthebankstatementofShriDevendraSingh Bagga,onlyanamountofRs.40Lakh(2paymentofRs.20Lakh)matcheswith bankentrywhereasinthecaseofSmt.SukhleenKaurBagganosuchentrywas foundinherbankstatement.TheAO,inviewoftheabove,treatedtheamount ofRs.63,49,000/-(Rs.1,03,49,000minus40,00,000.00)andRs.1,95,51,000/- aggregatingtoRs.2,59,00,000.00notreflectedinthebankaccountofShri DevendraSinghBaggaandSmt.SukhleenKaurBaggaasunexplainedcashcredit ITAno.1398/AHD/2019 A.Y.2015-16 3 undersection68oftheAct.Thus,theAOmadeadditionofRs.2,59,00,000/-to thetotalincomeoftheassesseeundersection68oftheAct. 4.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A).The assesseebeforethelearnedCIT(A)submittedthatthesharewasproposedtobe allottedtotheexistingdirectors/shareholderandaccordinglyvariouscheques aggregatingtoRs.1,03,49,000/-andRs.1,95,51,000/-werereceivedfromShri DevendraSinghBaggaandSmt.SukhleenKaurBaggarespectively.Outof chequesreceivedfromShriDevendraSinghBagga,only2chequesforanamount aggregatingtoRs.40lakhswerepresentedtothebankduringtheyearandthe remainingchequeswerepresentedintheimmediatenextyear.Subsequently,it wasdecidednottoallotthesharetothedirectorsdiscussedabove.Therefore,the amountreceivedfromShriDevendraSinghBaggawasreturnedthroughthe bankingchannelwhereasthechequesreceivedfromSmt.SukhleenKaurBagga werenotpresentedtothebank.AllthesefactsweredulyexplainedtotheAO duringtheassessmentproceedingwhichwerealsoverifiablefromtheirrespective ledgeraccount,bankstatementbuttheAOignoringthefactexplained,treated theamountofshareapplicationmoneycreditedinbooksasunexplainedcredit undersection68oftheActtotheextentofRs.2,59,00,000/-only.Further,the burdencastundersection68oftheActregardingidentityofcreditor,genuineness oftransactionandcreditworthinesswasalsodulydischargedasthepersonin whosenametheamountcreditedweretheexistingshareholders/directorwho wereregularlyfilingtheirrespectiveincometaxreturns. 5.ThelearnedCIT(A)afterconsideringthesubmissionoftheassessee deletedtheadditionmadebytheAObyobservingasunder: 5.1Inthecourseofappellateproceedings,appellantreiteratedthesubmissionsmade beforetheAOandcontendedthattheconfirmation/bankstatementsandcopiesofthe acknowledgmentofReturnsofIncomefiledbyboththedirectorsweresubmittedtothe AO;thefactthatonlychequesworthRs.40lacwereencashedduringtheyearwasalso notcontrovertedbytheAOandwasprovedbythebankstatementofboththecompany aswellasthedirectorShriDevendrasinghBagga;thefactthatnoamountwasdebitedin thebankaccountofSmt.SukhleenkaurBaggaandcreditedinthebankaccountof ITAno.1398/AHD/2019 A.Y.2015-16 4 companyfromherisalsonotcontrovertedbytheAO,andvehementlycontendedthat merelybecauseonthebasisofreceiptofchequestheamountswereshownasshare applicationpendingallocationofsharesadditionu/s68oftheActcannotbemade.Itis observedthatthecopiesofthebankstatement,confirmationfromthedirectorsandcopies ofbankaccountofthecompanywerefurnishedtotheAOfromwhichitisclearthatonlya sumofRs.40lacwasactuallyreceivedbytheappellantfromShriDevendrasinghBagga duringthepreviousyearwhichfactisalsomentionedbytheAOinPara3.1.1.ofthe impugnedAssessmentOrder.Forthisappellanthasfurnishedtheconfirmation,bank accountcopyandtheacknowledgmentofReturnofIncomefromthedirectorShri DevendrasinghBaggaandtheseamountsaredulyreflectedinhisbankaccount.Sourceof thissumsisnotindoubtinthehandsofShriDevendrasinghBagga.Forthebalance amountseitherthechequehavebeendepositedinthesubsequentyear(Rs.63,49,000)or theamounts/chequeswerenotpresentedtothebankbyappellant.AOhasaddedthis entiresumdisregardingalltheevidencesfiledbytheappellant.Appellantreliedupon variousjudgmentsincludingthedecisionofHon'bleITAT,HyderabadinthecaseofDCIT vs.Smt.ShashikalaRamkumarITANo.463/Ahd/2014whereinthechequesreceivedbythe assesseewerecreditedbytheassesseeinitsbooksofaccounts,however,lateronthe chequesbouncedandtheentrieswerereversed.Additionu/s68oftheActwasmadeby theAOwhichweredeletedbytheHon'bleITAT.Inthecaseathand,thefactisthatonlya sumofRs.40lacswasactuallyreceivedbytheappellantduringtheyearforwhichthe identityandcreditworthinessofShriDevendrasinghBaggawasdulyprovedandthe genuinenessofthetransactionsisalsonotindispute.AspertheprovisionsofSection68 anysumfoundcreditedinthebooksofaccountsofanassesseeistobetreatedashis incomeofthepreviousyeariftheassesseeoffersnoexplanationorexplanationofferedis notsatisfactory.Inthiscaseassesseehasdulyexplainedtheentriesasaboveforthesum ofRs.40lacaswellasregardingthechequesofbalanceamountwhichwerereceived, enteredintotherespectiveledgersbutnotpresentedtothebankduringtheyear.Such balancesumoutofthetotalshareapplicationmoneypendingallotment(Rs.2,99,00,000/-) hasnotbeenfoundcreditedinthebankaccountoftheassesseewhichfactisnotdisputed. BalancechequesreceivedformShriDevendraBaggaforasumofRs.63,49,000/-werein factdepositedinthesubsequentyearwhichfactisalsonotindispute,though,this amountwaslaterreturnedtoShriDevendraBagga.ThechequesreceivedfromSmt. ShukleenkaurBaggawerenotpresentedbytheappellanttoitsbank.Appellanthad producedtheconfirmationaswellasbankaccountsandotherrelateddetailstoprovethe identityandcreditworthinessofShriBaggaandthegenuinenessofthetranAsregards, thechequesreceivedfromSmt.SukhleenkoreBaggaallthechequeamountingtoRs. 1,95,51,000/-werenotfoundcreditedinthebankaccountoftheappellantaswellaswere notdebitedinherbankaccount.Boththepersonsaredirectorpromotersoftheappellant companyandtheirentiredetailsalongwithconfirmationsandbankaccountswere submittedtotheAO.Infact,AOhasreproducedtheledgeraccountandtheconfirmations aswellasthebankaccountsintheimpugnedassessmentorderitself.Thecreditsarenot shownfromanyothersourcebutonlyfromthesetwoDirectors.AOhasalso acknowledgedthefactthatthechequeswerenotclearedevenafterconsiderablelapseof timeinpara3.1.3oftheimpugnedorderreproducedhereinabove. 5.2InviewofthesefactstheratioofthejudgmentsofHon'bleITAT,Hyderabadinthe caseofDCITv.ShashikalakumarITANo.463/Hyd/2014judgmentdated06.06.2018is clearlyapplicabletothefactsofthecase.Relevantpartofthesaidjudgmentreliedupon bytheappellantisreproducedasbelow: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX ITAno.1398/AHD/2019 A.Y.2015-16 5 Inviewoftheabovediscussion,theadditionsmadeamountingtoRs. 2,59,00,000/-arenotjustifiableandhence,thesameisdeletedAOisdirectedtodelete thesame.GroundNo.2oftheappealisallowed. 6.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 7.ThelearnedDRbeforeussubmittedthattheassesseehascreditedthe shareapplicationmoneyfromthedirectorbutthesamewasnotreflectinginthe bankstatementsofthedirectorsexceptinonecasefortheamountof₹40lakhs only.Thus,theld.DRwasoftheviewthatsharecapitalrepresentsthe unexplainedcashcreditundersection68oftheact. 8.Ontheotherhand,thelearnedARbeforeusfiledapaperrunningfrom pages1to161andcontendedthatthereweremadebookentryonlyforshare capitalinthenameofSmt.SukhleenKaurBaggawhichcannotbetreatedas unexplainedcashcreditundersection68oftheAct.Suchanentrywasalso reversedinthesubsequentassessmentyear.Theld.ARfurthercontendedthat amountofshareapplicationmoneyreceivedfromShriDevendraSinghBaggawas returnedinthesubsequentyearandthereforethesamecannotbetreatedas unexplainedcashcreditundersection68oftheAct. 9.Boththeld.DRandtheARbeforeusvehementlysupportedtheorderof theauthoritiesbelowasfavourabletothem. 10.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedlytheassesseeinthebooksofaccount preparedfortheyearunderconsiderationcreditedshareapplicationmoneyfrom itsexistingdirector/shareholdersasdiscussedinprecedingparagraphs.The provisionofsection68oftheActsuggeststhatifthereisanysumcreditedin booksofaccountmaintainedfortheanypreviousyearthentheassesseeis requiredtoofferproperandreasonableexplanationregardingnatureandsources ITAno.1398/AHD/2019 A.Y.2015-16 6 ofsuchcredittothesatisfactionoftheAO.Thus,theprimaryonuslieswiththe assesseetoexplainthesourceofcreditinthebooks.Overtheperiod,thecourts havelaiddownthattheassesseetodischargeitsonusisrequiredtofurnish evidencewithrespecttoidentityofthecreditor,genuinenessoftransactionand creditworthinessofthecreditor.Iftheassesseefailstodischargetheprimary onuscastortheexplanationandevidencesubmittedbytheassesseewasnot foundsatisfactorybytheAO,thenthesumcreditedinthebooksshallbedeemed asincomeoftheassessee.TheHon’bleSupremeCourtincaseofCITvs.P. Mohanakalareportedin291ITR278whiledealingwithscopeofprovisionofthe section68oftheActheldthat“theopinionoftheAOthattheexplanation furnishedbytheassesseeasnotsatisfactoryisrequiredtobebasedonproper appreciationofmaterialandotherattendingcircumstancesavailableonrecord. TheopinionoftheAssessingOfficerisrequiredtobeformedobjectivelywith referencetothematerialavailableonrecord.Applicationofmindisthesinequa nonforformingtheopinion.”Inotherwords,oncetheassesseesubmitsprimary evidenceregardingidentityandcreditworthinessofcreditorandthegenuineness ofthetransaction,theonusshiftsontheAOtoconsiderthematerialsprovided andmakeindependentinquirytofindoutgenuinenessoftheevidenceorbring materialcontrarytofactexplainedbytheassessee.TheAOcannotrejectthe primaryevidencefurnishedbytheassesseewithoutappreciatingthefacts availableonrecordorwithoutbringingcontrarymaterialstoformthebeliefthat primarydocumentorexplanationfurnishedbytheassesseeisnotsatisfactory. 10.1Inthepresentcase,theAOtreatedtheshareapplicationmoneycreditedin thebooksofassesseefromitsdirectorsbecausesuchamountswerenotfound debitedinthebankaccountofthedirectors.However,wenotethattheassessee hasexplainedthatthecarsupplierwaspressurizingittoincreasethecapital therefore,it(assessee)proposestoallotfreshshareandchequeaggregatingto Rs.1,03,49,000/-andRs.1,95,51,000/-werereceivedfromShriDevendraSingh BaggaandSmt.SukhleenKaurBaggarespectively.Thechequesreceivedfrom ITAno.1398/AHD/2019 A.Y.2015-16 7 ShriDevendraSinghBaggawerepartlyclearedduringtheyearandpartlyinthe immediatenextassessmentyearwhereasthechequesreceivedfromSmt. SukhleenKaurBaggawerenotpresentedtothebankforclearance.Thisisthe precisereasontheamountcreditedasshareapplicationfromimpugneddirectors wasnotfoundintheirrespectivebankaccountsduringtheyear.Theassessee furtherexplainedthatitsubsequentlydecidednottoallotthefreshshareasthe promotor/directorswerenotwillingtoblockthefundintheformofsharecapital. Accordingly,theamountcreditedfromShriDevendraBaggawasreturnedinthe nextyearwhereasamountcreditedinthenameofSmt.SukhleenKaurBaggawas reversedinthenextyear. 10.2However,theaboveexplanationfurnishedbytheassesseewasnot consideredbytheAOwhichwasdulysupportedbytheledgeraccountofthe directorsandbankstatement.TheAOtreatedthecreditofshareapplication moneyasunexplainedmerelyforthereasonchequeamountshownascredited fromrespectivedirectorwerenotfoundintheirbankstatementsintheyearunder consideration.TheAOwithoutproperlyconsideringtheexplanationandevidence providedbytheassesseeproceededtomaketheadditionundersection68ofthe ActwhichisagainsttheratiolaiddownbytheHon’bleSupremecourtinthecase ofCITvs.P.Mohanakalaasdiscussedinprecedingparagraph.Asfarasthe questionofidentityandcreditworthinessofthedirectorsinwhosenamethecredit ofshareapplicationmoneyshownisnotindoubtandneitherdoubtedbytheAO inhisorder.Likewise,thequestionofcreditworthinessofthedirectors,inthe givenfactsandcircumstances,doesnotariseasalltheentriesrepresentingthe creditentrieswereundoubtedlyreversed.Therefore,consideringthefactsin totality,weholdthattheassesseehasdulydischargedtheonuscastunder section68oftheAct.Hence,wedonotfindanyinfirmityinthefindingofthe learnedCIT(A).Thus,thegroundofappealraisedbytherevenueishereby dismissed. ITAno.1398/AHD/2019 A.Y.2015-16 8 11.Intheresult,theappealfiledbytherevenueisherebydismissed. OrderpronouncedintheCourton20/03/2024atAhmedabad. Sd/-Sd/- (TRSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated20/03/2024 Manish