DCIT, CHENNAI V. Cosmo Foundations Ltd., CHENNAI

ITA 1469/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96666 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS JCIT
• Keywords: Onus to prove
• Section: 133A; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1469/MDS/2014 ' $ %$ / ASSESSMENT YEAR :2006-2007 ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3) CHENNAI 600 034. VS M/S. COSMO FOUNDATIONS LTD, NO.11, COSMO TOWERS, DR. THOMAS ROAD, T. NAGAR, CHENNAI 600 017. [PAN AAACN 1489K] ( / APPELLANT) ( /RESPONDENT) ./ I.T.A.NO.1995/MDS/2014 ' $ %$ / ASSESSMENT YEAR :2006-2007 M/S. COSMO FOUNDATIONS LTD, NO.11, COSMO TOWERS, DR. THOMAS ROAD, T. NAGAR, CHENNAI 600 017 VS ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3) CHENNAI 600 034. [PAN AAACN 1489K] ( / APPELLANT) ( /RESPONDENT) ASSESSEE BY : SHRI. Y. SRIDHAR, C.A. DEPARTMENT BY : SHRI. A.V.SREEKANTH, IRS, JCIT. & ' / DATE OF HEARING : 07.12.2015 ()% & ' / DATE OF PRONOUNCEMENT : 31.12.2015 ITA NOS.1469 & 1995/MDS/2014. :- 2 -: / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-I, CHENNAI, DA TED 28.02.2014 FOR THE ASSESSMENT YEAR 2006-2007. 2. THE GRIEVANCE OF THE DEPARTMENT IS WITH REGARD TO DELETION OF ADDITION OF :2,50,00,000/- SET TO BE RECEIVED F ROM SMT. VIMALAMMA. 3. THE FACTS OF THE CASE ARE THAT THERE WAS SURVEY U /S.133A ON 03.06.2008. DURING THE COURSE OF SURVEY IT WAS FOU ND THAT THE ASSESSEE HAD PURCHASED LAND FROM SMT. VIMALAMMA AND PAID :3,71,70,255 ON 17.06.2006. THE VALUE OF THE PROPE RTY WAS FIXED AT :5,60,00,000/- AND THE BALANCE UNPAID AMOUNT WAS B ROUGHT INTO THE BOOKS OF ASSESSEE AS SHARE APPLICATION MONEY PENDIN G ALLOTMENT. IT WAS STATED BY THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY THAT SMT. VIMALAMMA HAD APPLIED FOR SHARES FOR A VALUE OF :1,88,00,000/-. ON EXAMINATION OF SMT. VIMALAMMA, SHE STATED THAT S HE HAD RECEIVED A TOTAL CONSIDERATION OF :3,75,00,000/- AND THERE W AS NO INVESTMENT IN THE FORM OF SHARE APPLICATION MONEY OF ASSESSEE COM PANY. HENCE, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S.148 OF THE ACT AND ITA NOS.1469 & 1995/MDS/2014. :- 3 -: ASSESSMENT WAS FRAMED BY ADDING THE UNEXPLAINED SH ARE CAPITAL AMOUNT OF :3,14,14,460/- ON THE REASON THAT SMT. VI MALAMMA DENIED RECEIVED THE AMOUNT. AGGRIEVED, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. ON APPEAL THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT INCREASE IN SHAREHOLDERS FUND IN T HE BALANCE-SHEET OF THE ASSESSEE OF :3,14,14,460/- NEEDS TO BE EXPLAINE D BY THE ASSESSEE. THE ASSESSEE HAS SHOWN THIS AMOUNT AS :2, 85,00,000/- RECEIVED FROM SMT.VIMALAMMA AND :29,14,460/- FROM O THER PROMOTERS. WITH REGARD TO SMT.VIMALAMMA, :1,00,00,0 00/- CREDITED TO SHAREHOLDERS FUND WAS WELL SUPPORTED BY THE CHEQ UE PAYMENT THROUGH UNITED BANK OF INDIA. THERE WAS NO DOUBT AB OUT ITS CREDIBILITY WHICH WAS ALSO ACKNOWLEDGED BY THE ASSESSEE. WITH R EGARD TO :1,85,00,000/-, IT WAS SHOWN IN THE BALANCE SHEET O F THE ASSESSEE AS SHARES ALLOTTED TOWARDS PART CONSIDERATION OF SALE OF LAND (SALE CONSIDERATION OF HER PROPERTY :5,60,00,000/-, AS PE R GUIDELINE VALUE, REDUCED BY :3,75,00,000/- ACTUALLY RECEIVED AND ACK NOWLEDGED BY HER). SMT. VIMALAMMA HAS ACCEPTED HAVING GIVEN :1,8 5,00,000/- TOWARDS SHAREHOLDERS FUND IN HER CONFIRMATION LETTE RS DATED 17.3.2006 ADDRESSED TO THE BOARD OF DIRECTORS (2 LETTERS BOTH DATED 17.3.2006). HOWEVER, IN THE SWORN STATEMENT DATED 04.06.2008, S UBSEQUENT TO SURVEY U/S 133A OF THE ACT CONDUCTED ON 03.06.2008, SHE EXPRESSED ITA NOS.1469 & 1995/MDS/2014. :- 4 -: HER IGNORANCE OF HAVING INVESTED ANY AMOUNT IN ANY COMPANY TOWARDS SHARES. IN HER LETTER DATED 30.6.2011 IN RE SPONSE TO SUMMONS U/S. 131 OF THE ACT ISSUED BY THE AO, SHE HAS ADMITTED T HE SALE CONSIDERATION OF :.5,60,00,000/- IN HER RETURN OF INCOME AND STATED THAT THE BALANCE AMOUNT (:1,85,00,000) HAS N OT BEEN PAID BY THE PURCHASER OF THE PROPERTY I.E., THE ASSESSEE. S HE HAS ALSO STATED THAT SHE HAS NOT GIVEN ANY CONSENT OR AGREED TO DEE M THE DIFFERENCE AS SHARE APPLICATION MONEY BY COSMO FOUNDATIONS LTD . BASED ON THESE DETAILS, THE AO HAS SUBMITTED HIS REMAND REPO RT DT.06.01.2012 THROUGH PROPER CHANNEL RECEIVED IN THIS OFFICE ON 1 0.01.2012 STATING THAT SMT. VIMALAMMA HAS NOT GIVEN ANY CONSENT TO T REAT THE DIFFERENCE AS SHARE APPLICATION MONEY BY THE ASSESS EE. IT APPEARS FROM THE FACTS THAT SMT.VIMALAMMA HAS GOT CONFUSED AND WORRIED WITH THE HIGHER TAX LIABILITY IN THE FORM OF LONG-T ERM CAPITAL GAINS WHEN THE SALE CONSIDERATION OF THE PROPERTY WAS TAK EN AT A HIGHER RATE I.E., :5.60 CRORES AS PER GUIDELINE VALUE WHEN THE MARKET RATE IS ABOUT :3.50 CRORES FOR WHICH THE AGREEMENT WAS ENTE RED WITH THE ASSESSEE. THIS FACT WAS EVIDENT IN HER LETTER DATED 30.6.2011. THEREFORE, SHE WAS NOT CLEAR OF THE BALANCE AMOUNT OF :1,85,00,000/. AT ONE POINT OF TIME SHE STATED THAT SHE HAS ASKED THE BOARD OF DIRECTORS TO ALLOT THE SHARES TO THE EXTENT OF BALA NCE AMOUNT AND AT ANOTHER POINT OF TIME SHE STATED THAT SHE HAS NOT G IVEN ANY CONSENT ITA NOS.1469 & 1995/MDS/2014. :- 5 -: FOR SUCH ALLOCATION OF SHARES. BUT THE FACT REMAINS THAT SHE HAS NOT RECEIVED THE DIFFERENCE AMOUNT FROM THE BUYER (ASSE SSEE COMPANY) WHICH HAS ARISEN MOSTLY DUE TO DIFFERENCE OF GUIDEL INE VALUE AND THE ACTUAL MARKET VALUE. SINCE SHE HAS FILED HER RETURN OF INCOME AND OFFERED THE HIGHER VALUE AS PER GUIDELINE VALUE FOR CAPITAL GAINS IN HER RETURN OF INCOME THERE IS NO DEFAULT FROM HER SIDE ON THAT POINT. FROM THE ASSESSEE'S POINT OF VIEW IE., THE BUYER OF THE PROPERTY, THE AMOUNT HAS NOT BEEN PAID TO HER AND CAME FORWARD TO ALLOCA TE THE SHARES OF ITS COMPANY AND RECOGNISE THE SAME IN ITS BALANCE-S HEET. FROM THIS POINT OF VIEW, THE COMMISSIONER OF INCOME TAX (APPE ALS) OPINED THAT THE AMOUNT PAYABLE OF :.1,80,00,000/- SHOULD BE TAK EN AS LIABILITY OUTSTANDING AND BE ALLOWED AS SHARE APPLICATION MON EY IN THE NAME OF SMT. VIMALAMMA AND ACCORDINGLY DELETED THE ADDIT ION MADE BY THE ASSESSING OFFICER. AGAINST THIS, THE REVENUE IS I N APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. AS PER THE SALE DEED OF PROPERTY DATED 17 TH MARCH, 2006 THE SALE CONSIDERATION WAS :5.6 CRORES. AS PER SALE DEE D SMT. VIMALAMMA RECEIVED FULL SALE CONSIDERATION OF :5.6 CRORES AND THERE WAS NO MENTION ABOUT THE ALLOTMENT OF SHARE IN LIEU OF SHA RE CONSIDERATION. FURTHER, ON FEW OCCASIONS, SHE NARRATED IN EARLIER PARA THAT SHE HAD DENIED MAKING ANY INVESTMENT IN ASSESSEE COMPANY. HOWEVER, THE ITA NOS.1469 & 1995/MDS/2014. :- 6 -: COMMISSIONER OF INCOME TAX (APPEALS) GAVE A FINDIN G THAT :2.85 CRORES WAS MADE AS INVESTMENT BY SMT. VIMALAMMA. I N OUR OPINION, THE ASSESSEE SHALL FURNISH ALL DETAILS TO PROVE THE TRANSACTION. THE ONUS TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUIN ENESS OF TRANSACTION IS ON ASSESSEE AS THE ENTIRE FACTS ARE IN HER KNOWLEDGE. MERE PRODUCTION OF CONFIRMATION LETTER FROM SMT.VIM ALAMMA IS NOT SUFFICIENT IN THIS CASE. SHE HAS GIVEN DIFFERENT S TATEMENTS AT DIFFERENT STAGES. WE DO NOT KNOW WHETHER SHE IS TRUTHFUL AND HONEST TO DISCLOSE THE CORRECT FACT. BEING SO, HER STATEMENTS ARE NOT RELIABLE WHEN SURROUNDING AND ATTENDING FACTS BROUGHT ON RECORD B Y THE A.O INDICATE AND REFLECT PAPER WORK AND DOCUMENTATION. BUT GENU INENESS, CREDITWORTHINESS AND IDENTITY ARE DEEPER, IT SHALL REQUIRE TO BE ESTABLISHED BY DOCUMENTS. BEING SO, THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS TAKEN JUST CURSORY LOOK AT THE ENTIRE THINGS AND DELETED THE ADDITION WHICH IS IMPROPER. HENCE, THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONDUCTING DE TAILED INQUIRY AND DECIDE THE ISSUE AFRESH. THE ASSESSEE HAS TO FILE BANK ACCOUNT DETAILS OF SMT. VIMILAMMA TO PROVE THE TRANSACTION. THIS APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPO SES. 6. THE ASSESSEE APPEAL IN ITA NO.1995/MDS/2014 IS NOT PRESSED BEFORE US BY THE LD. AUTHORISED REPRESENTAT IVE. THEREFORE, THE ITA NOS.1469 & 1995/MDS/2014. :- 7 -: APPEAL OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 31ST DAY OF DECEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI * / DATED:31.12.2015 KV + & -''./ 0/%' / COPY TO: 1 . 12 / APPELLANT 3. 3' () / CIT(A) 5. /67 -''' / DR 2. -812 / RESPONDENT 4. 3' / CIT 6. 79$ : / GF