Vedanta Mills Ltd., Ludhiana V. ITO, W-6(3), Ludhiana

ITA 1437/CHANDI/2017

AI Insights

The case involves Vedanta Mills Ltd., which appealed against the order of the ld. CIT(A)-3, Ludhiana, concerning an addition of Rs 2,00,00,000 made under section 68 of the Income Tax Act, 1961, on account of alleged bogus share application money received from M/s Shiv Mangal Shoppers Pvt Ltd. The Assessing Officer (AO) and the CIT(A) had made various observations and findings that the appellant contested as being perverse and contradictory to the facts. The Tribunal noted procedural errors and factual inaccuracies in the handling of additional evidence and the interpretation of documents by the CIT(A), leading to the decision to remand the matter for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127492 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-06-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 27-09-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(3); 133(6)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SHRI A.D.JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 1437/CHD/2017 नधा रण वष / Assessment Year : 2012-13 Vedanta Mills Ltd., 72-D, Sarabha Nagar, South City-2, NRI Block, Cartloon Wood Colony, Ludhiana. VS The ITO, Ward 6(3), Ludhiana. थायी लेखा सं./PAN /TAN No: AADCV3226F अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Vibhore Garg, CA राज व क ओर से/ Revenue by : Shri Dharamvir, JCIT, Sr.DR तार ख/Date of Hearing : 06.06.2023 उदघोषणा क तार ख/Date of Pronouncement : 09.06.2023 आदेश/ORDER PER VIKRAM SINGH YADAV,A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Ludhiana dated 03.07.2017. 2. During the courses of hearing, the ld. AR submitted that this appeal is against the addition of Rs 2,00,00,000/-made u/s 68 on alleged bogus share application money received by the assessee during the year under consideration from one company M/s Shiv Mangal Shoppers Pvt Ltd. (hereinafter referred as investor company). It was submitted that the AO in the assessment order passed u/s 143(3) made a patently false ITA 1437/CHD/2017 A.Y.2012-13 Page 2 of 7 observation that the assessee has not filed bank statements of the investor company apart from other observations in para 5.2 at page 19 of the assessment order. It was further submitted that during the appellate proceedings, assessee filed an application for additional evidence u/r 46A for filing Audited Balance Sheet as on 31.03.2012 of M/s Shiv Mangal Shoppers Pvt Ltd (the investor company) (refer PB Page 79). The Ld. CIT(A) upheld the addition after recording her finding which are perverse, confused & totally against the facts of the case. The specific findings of the CIT(A) are reproduced hereunder: a) Firstly, that the Ld CIT(A) rejected the application for additional evidence u/r 46A observing {in 2 nd last para on page 10 of her order) that the 'In this regard appellant has not been able to justify as to how and why the bank statements could not be obtained by him, to explain his contentions, " during the course of assessment proceedings.' whereas appellant had filed application for additional evidence for filing Audited Balance Sheet of investor company. ,(PB Page -79). The Ld. CIT(A) committed a blunder while considering the application for additional evidence making the entire exercise a mockery. b) Secondly, the Ld CIT(A) further observed (in para 3.4, 7 th line from below, on page 14 of CIT(A) order) that “whereas during the course of appellate proceedings the appellant has filed copy of audited balance sheet and bank statement without explicitly applying for admittance as additional evidence.' This finding is laughable as the Ld. CIT(A) has herself rejected the application of additional evidence u/r 4 6A in above para and gave totally opposite ITA 1437/CHD/2017 A.Y.2012-13 Page 3 of 7 observation that no application for additional evidence is filed by appellant. Further she doesn't even realize what documents are filed before AO and which evidence/ documents are pleaded by appellant in application for additional evidence. c) Thirdly, (in para 3.5, 3 rd line, at page 15 of the CIT(A) order), Ld CIT(A) further observes that, ' ............. .....The assessing officer has also relied upon the fact that during the course of assessment proceedings the appellant company furnish the copy of ITR, balance sheet and bank account of M/s Shiv Mangal Shoppers Pvt Ltd. Which explicitly explain that M/s Shiv Mangal Shopper Pvt Ltd. is only a paper company and no real work is being done. M/s Shiv Mangal Shopper Pvt. Ltd is merely a paper company and has been used to give accommodation entries to the appellant and others.' The Ld CIT(A) has exceeded all limits of perversity to mention that ITR, balance sheet and bank account of M/s Shiv Manga l Shoppers Pvt Ltd were filed before AO itself totally in contradiction to her findings above and further observes that as the appellant has filed all documents before AO, he is right in observing that the company is merely a paper company, d) Fourthly, the Ld CIT(A) finally observed (in para 3.18, at page 28 of CIT(A) order) that 'Since there is admission by the appellant itself during the course of survey that the share transactions were bogus coupled with the fact that there was no justification of share application of Rs 2,00,00,000/- and also the capacity of M/s Shiv Mangal Shopper Pvt Ltd has not been proved' . Neither any survey was ever conducted on the appellant company nor made any admission before any authority. The findings and observations of the Ld. CIT (A) are perverse, contrary to the facts. ITA 1437/CHD/2017 A.Y.2012-13 Page 4 of 7 3. It was further submitted that there is a big goof-up both at assessment stage and appellate stage both by the Assessing officer and by the CIT(A). In order to clarify which documents appellant had filed documents during assessment proceedings and which documents was to be filed before CIT(A), the list of documents was filed during assessment proceedings: a) Bank statement of investor company was filed before Ld AO vide letter dated 23.03.2015 (Letter at Pb Pg-65) (Bank Statement at Pb Pg. 5 8-62) b) Investment was confirmed by the investor u/s 133(6) by investor company (PB Page 51) c) Copy of Pan card of investor company (PB Page 52) d) Copy of ledger account from the books of investor company (PB Page 53) e) Bank statement of M/s Vedanta Mills Ltd (appellant) (PB Page 54) f) ITR & Balance Sheet of M/s Vedanta Mills Ltd (appellant) (PB Page 40-50) g) Memorandum of Articles & Association of M/s Vedanta Mills Ltd (PB Page 1-39) h) Appellant also filed application for additional evidence u/r 46A was filed before Ld CIT(A) for filing Audited Balance Sheet of the investor company M/s Shiv Mangal Shopper Pvt Ltd (PB Page 7 9). 4. The ld. Counsel for the assessee further submitted that the order passed by Ld CIT (A) is a bundle of mistakes and nothing else. By giving such perverse and laughable findings / observation, the CIT(A) has committed a biggest ITA 1437/CHD/2017 A.Y.2012-13 Page 5 of 7 blunder of different proportion and has made a mockery of the entire appellate process. The Ld. CIT (A) did not know a) which documents were filed, b) which document or evidence is sought to be placed on record as additional evidence by appellant, c) CIT(A) rejects application u/r 46A and then comments that application is not filed by appellant for placing documents 'as additional evidence, d) then CIT(A) say documents were filed before AO e) finally CIT(A) observes that survey was conducted and alleged bogus share application was admitted by appellant. The Ld. CIT(A) has crossed all Limits of goof-up. The order of the CIT (A) is liable to be quashed and appeal of the appellant be allowed only on this score itself. 5. It was further submitted that the assessee has discharged its burden of proof beyond doubt and has proved the identity, genuineness and creditworthiness of the investor company. Any investment made by any corporate has its investment and source declared in their audited balance sheet on asset side and liability side respectively. The observations / findings of the AO and CIT(A) are totally vague, perverse, self- contradictory, totally against the facts of the case. The ld. Counsel for the assessee submitted that the additions made are liable to be deleted and that the impugned order be quashed. ITA 1437/CHD/2017 A.Y.2012-13 Page 6 of 7 6. The ld DR is heard who has relied on the order of the lower authorities. 7. We have heard the rival contentions and purused the material available on record. The ld AR has brought to our notice certain factual inaccuracies in terms of findings of the ld CIT(A) wherein she has recorded a finding regarding admission by the assessee during the course of survey whereas there was no survey in case of the assessee as well as inaccuracies in terms of considering the respective documentation which have been considered as filed during the assessment and the appellate stage, besides non-consideration of additional evidence submitted during the appellate stage by the ld CIT(A). The additional evidence in form of audited balance sheet of the investor company is hereby admitted. Considering the entirety of facts and circumstances of the case, we deem it appropriate that the matter is set-aside to the file of ld CIT(A) to examine the same afresh as per law after providing reasonable opportunity to the assessee. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 09.06.2023. Sd/- Sd/- आकाश द प जैन !व#म %संह यादव (AAKASH DEEP JAIN) (VIKRAM SINGH YADAV) उपा(य) / VICE PRESIDENT लेखा सद+य/ ACCOUNTANT MEMBER ITA 1437/CHD/2017 A.Y.2012-13 Page 7 of 7 “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar