DCIT RG 8(2), MUMBAI V. OVERASEAS INFRASTRUCTURE ALLIANCE (I) P.LTD, MUMBAI

ITA 1470/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3373 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 05-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Assessee Lawyers: VINOD RAWAL
• Keywords: Unexplained cash credit; Additional evidence; Onus to prove
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI AMARJIT SINGH , J M ./ ITA NO . 1470 /MUM /20 1 1 ( / ASSESSMENT YEAR : 20 0 7 - 20 08 ) DCI T, 8(2), MUMBAI - 400020 VS. M/S OVERSEAS INFRASTRUCTURE ALLIANCE (I) PVT. LTD., 402, SHUBHAM CENTRE - 1, CARDINAL GRACIOUS ROAD, CHAKALA, ANDHERI(EAST),MUMBAI - 99 ./ ./ PAN/GIR NO. : A A AC I 3042 F ( / APPELLANT ) .. ( / R ESPONDENT ) /REVENUE BY : SHRI M. DAYASAGAR /ASSESSEE BY : SHRI P.C.YADAV & VINOD RAWAL / DATE OF HEARING : 08 / 02 / 201 6 / DATE OF PRONOUNCEMENT 30/03 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), MUMBAI, FOR THE ASSESSMENT YEAR 200 7 - 0 8 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT . 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED FOR DELETING THE ADDIT ION MADE ON ACCOUNT OF REDEEMABLE PREFERENCE SHARE CAPITAL OF RS.14 CRORES. THE REVENUE IS ALSO AGGRIEVED FOR DELETING OF ADDITION OF RS. 1,01,39,592/ - MADE ON ACCOUNT OF LOAN TAKEN FROM M/S AKHIL MARKETING PVT. LTD. . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AN D RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXECUTION OF PROJECTS IN THE INFRASTRUCTURE SECTOR. DURING THE COURSE OF ASSESSMENT, THE ITA NO. 1470 /1 1 2 AO OBSERVED THAT DURING THE YEAR THERE WAS INCREASE IN SHARE CAPITAL BY RS.14 CROR ES AND THE AMOUNT HAD BEEN RECEIVED FROM FOLLOWING THREE PARTIES : - I) ALL - IN - ONE FINANCE & INVESTMENTS PVT. LTD. - RS.2,00,00,000/ - II) YAMUNA ESTATE PVT. LTD. RS.6,00,00,000/ - III) AKASH ORGANICS PVT. LTD. RS.6,00,00,000/ - THE AO FOUND THAT IN THE CASE OF ALL - IN - ONE FINANCE & INVESTMENTS PVT. LTD. IN I.T. RETURN, THE RETURNED INCOME WAS OF RS.1886/ - . P&L A/C. GROSS RECEIPTS WERE RS.36.750 / - AND EXPENDITURE SHOWN WAS R S .34.S64/ - . AT NO POINT OF TIME DURING THE YEAR BANK BALANCE WAS EXCEEDING RS.50.00 01 - . IN THE CASE OF YAMUNA ESTATE PVT LTD. IN I.T. RETURN. RETURNED INCOME WAS R S .1 8 ,431/ - . P&L A/C. GROSS RECEIPTS WERE RS.3.60.000 / - AND EXPENDITURE WAS RS.3,41.569/ - BALANCE IN THE BANK A/C. HAD NOT REMAINED EVEN RS.1.00.000 / - FOR FIVE CONSECUTIVE DAYS. OUT OF TOTAL TRANSACTION OF RS .6 CRORES TRANSACTION OF RS .30 LAKHS ONLY HAS BEEN CARRIED OUT THROUGH CHEQUE AND BALA NCE AMOUNT OF RS .570 / - LACS HAS BEEN RECEIVED THROUGH JOURNAL ENTRIES ONLY. IN THE CASE OF AKASH ORGANICS PVT. LTD. AS PER I.T. RETURN. RET URNED INCOME WAS OF RS.2.052 / - FOR THE A.Y.2007 - 0 8 . P&L A /C. RECEIPTS WERE RS.22.000 / - AND EXPENDITURE SHOWN WAS R S .1 9.940 / - . IN THE BANK A/ C BALA N CE REMAINED NOT MORE THAN RS.50.000 / - FOR THREE CONSECUTIVE DAYS. OUT OF R S .6 CRORES , ONLY R S .30 LACS HAD BE EN RECEIVED THROUGH CHEQUE AND BALANCE R S .570 LACS W AS TRANSACTED THROUGH J.V. IN VIEW OF THESE FACTS , IT W AS CONCLUDED THAT (I) ALL THE THREE PARTIES FROM WHOM SUCH SHARE CAPITAL HAS BEEN RECEIVED WERE MERELY NAME LENDERS THE TRANSACTION WERE NOT GENUINE AND THESE PARTIES HAVE NO CREDIT ITA NO. 1470 /1 1 3 WORTHINESS. (II) ALL THREE PARTIES HAD SUBMITTED CONFIRMATION ON COMPUTER GENERATED LETTER HEAD HAVING SIMILAR WORDINGS AND SAME FONT. (III) THOUGH IN THE BALANCE SHEET. ALL THE PARTIES HAD SHOWN WORTH HOWEVER. IN EFFECT NO THING WAS THERE AS DULY EVIDENCED FROM THE BANK STATEMENTS WHERE BALANCE WAS NOT EVEN RS.1.00, 000/ - (IV) ALL THE ABOVE THREE COMPANIES APPEARED SIMPLY OR, PAPER. THESE COMPANIES DO NOT HAVE ANY BUSINESS WHATSOEVER. (V) ALL THE THREE PARTIES HAVE SHOWN HUGE INCREASE IN SHARE CAPITAL AND SHARE PREMIUM. HOWEVER, NO PARTY HAD PAID ROC FEES AND MAJORITY AMOUNT WAS RECEIVED AS SHARE PREMIUM. (VI) OUT OF TOTAL SHARE CAPITAL & SHARE PREMIUM TAKEN OF R S .14 CRORES. R S .60 LACS ONLY HAS BEEN RECEIVED BY CHEQUE AND BALA NCE AMOUNT WAS RECEIVED THOUGH BOOK ENTRIES. THEREFORE, BALANCE AMOUNT OF RS .1340 L ACS WAS CREDITED MERELY BY BOOK ENTRIES WITHOUT ANY CORRESPONDING FUND TRANSFER. THEREFORE ENTIRE SHARE CAPITAL AND SHARE PREMIUM RECEIVED OF R S .14 CRORES WAS TREATED AS UNE XPLAINED CASH CRED IT. 4. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS : - 8 THE SUBMISSION HAS BEEN CONSIDERED. IT IS STATED THAT THESE THREE COMPANIES SUBSCRIBED TO .REDEEMABLE PREFERENCE SHARES OF THE AP PELLANT COMPANY AND SIMULTANEOUSLY APPELLANT HAS ALSO SUBSCRIBED TO PREFERENCE SHARE CAPITAL OF THESE COMPANIES. CONSEQUENTLY, THE AMOUNT PAYABLE AND RECEIVABLE WAS SQUARED OFF. IT IS STATED THAT THIS PROCEDURE WAS IN ACCORDANCE WITH THE PROVISIONS OF COMP ANIES ACT. THE DOCUMENTS FILED ALONG WITH AUDITED ACCOUNTS, BANK STATEMENTS, I.T. RETURNS AND ASSESSMENT ORDERS SHOWS THAT THESE COMPANIES HAVE BEEN ASSESSED FOR SEVERAL YEARS. THE IDENTITY AND GENUINENESS OF THE TRANSACTION IS TO BE ACCEPTED. THE ADDITION OF 14 CRORES IS HENCE, DELETED. 5. LD. DR RELIED ON THE ORDER OF AO. ON THE OTHER HAND, LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL ON SIMILAR FACTS IN CASE OF SINHAL PRODUCTS ITA NO. 1470 /1 1 4 (P) LTD., ITA NO.3852 TO 3854/DEL/2009, ORDER DATED 7 - 3 - 2012 , WHEREIN SIMI LAR ADDITION WAS DELETED BY THE TRIBUNAL AFTER HAVING THE FOLLOWING OBSERVATION : - 14. IT MAY BE MENTIONED HERE THAT IT IS NOT A CASE WHERE DEPARTMENT HAS RECEIVED ANY INFORMATION THAT THE SHARE APPLICANT WAS A BOGUS ENTITY OR IT IS IN THE SHAPE OF ACCOMM ODATION ENTRY. THE SHARE APPLICANT IS ASSOCIATE CONCERN OF THE ASSESSEE AND IS ALSO BEING ASSESSED TO INCOME - TAX. COPIES OF INCOME - TAX RETURNS HAVE ALSO BEEN FILED. THE EVIDENCE WHICH HAS BEEN RELIED BY THE LEARNED CIT (A) FOR DELETING THE ADDITION IS COPY OF CONFIRMATION LETTER, COPY OF BANK ITA NOS.3852, 3853 & 3854/D/2009 STATEMENT, RETURN ACKNOWLEDGEMENT OF SOPL, THE BALANCE SHEET OF SOPL AND THE ALLOTMENT OF SHARE TO SOPL IN SUBSEQUENT YEARS. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE SAID EVIDENCE AND HAS JUST APPLIED SECTION 68 . LEARNED CIT (A) HAS RIGHTLY HELD THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANS ACTION AND HIS SUCH FINDINGS ARE BASED ON THE MATERIAL MADE AVAILABLE BY THE ASSESSEE TO THE ASSESSING OFFICER. THE RELEVANT EVIDENCE WAS ALSO REFERRED BEFORE US AND WE FIND THAT THERE WAS NO DISCREPANCY AND THE LEARNED DR ALSO COULD NOT POINT OUT ANY DISC REPANCY IN THOSE EVIDENCES. IN THIS VIEW OF THE SITUATION, WE ARE OF THE OPINION THAT THE SAID AMOUNT COULD NOT BE TREATED TO BE AN UNEXPLAINED CASH CREDIT UNDER THE PROVISIONS OF SECTION 68 AS THE ASSESS EE HAD ADDUCED EVIDENCE TO SHOW THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE CREDITOR (SHARE APPLICANT). THEREFORE, FINDING NO INFIRMITY IN THE ORDER OF THE CIT (A) , WE HOLD THAT THE ADDITION HAS RIGHTLY BEEN DELETED AND FOR DELETION OF THE ADDI TION LEARNED CIT (A) HAS NOT CONSIDERED ANY ADDITIONAL EVIDENCE. THE DEPARTMENTAL APPEALS BEING DEVOID OF MERITS ARE DISMISSED. 6. WITH REGARD TO THE ADDITION OF RS. 1,01,39,592/ - , THE A.O. OBSERVED THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF R S.1,01,39,592 / - PAYABLE TO M/S . AKHIL MARKETING PVT. LTD., GROUPED UNDER THE HEAD 'OTHER LIABILITIES'. IT WAS SEEN FROM THE P&L ACCOUNT OF AKHILL MARKETING PVT. LTD. THAT THE TOTAL RECEIPTS IN P&L A/C. WAS RS 4, 19 , 800/ - AND PROFIT BEFORE TAX WAS RS.7,908/- THE COMPANY H AD FILED ITS RETURN DECLARING A LOSS OF RS.83,078/ - AND PAID TAX OF RS .887/ - ON BOOK PROFIT. ALL THE ENTRIES IN THE BOOKS OF M/S. AKHILL MARKETING PVT. LTD HAS BEEN CARRIED OUT BY CHQUES AND HENCE THE ITA NO. 1470 /1 1 5 TRANSACTION IN QUESTION WAS HELD TO BE UNSECURED LOAN. ON PERUSAL OF BANK STATEMENT OF M/S. AKHILL MARKETING PVT. LTD. FOR THE PERIOD 01.04.2006 TO 31.03.2007, IT WAS OBSERVED THAT EFFECTIVELY BALANCE OF NOT MORE THAN RS .1 LAKH HAD BEEN MAINTAINED FOR FIVE CONSECUTIVE DAYS. NUMBER OF CASH DEPOSITS AND CASH WIT HDRAWALS WERE REFLECTED AND LOOKING TO THE NUMBER OF CHEQUES ISSUED AND DEPOSITED IN THE BANK ACCOUNT IT WAS CONCLUDED THAT COMPANY EXISTS ONLY ON PAPER AND EFFECTIVELY NO BUSINESS WHATSOEVER HAS BEEN CARRIED OUT. THE ENTIRE AMOUNT DUE TO M/S. AKHIL MARKET ING PVT. LTD. OF RS.1,01 ,39,592 / - WAS TREATED AS UNEXPLAINED CASH CREDIT AN D ACCORDINGLY TAXED U/S.68. 7. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS : - 4.4 THE SUBMISSION HAS BEEN CONSIDERED. THE A.O. HAD HELD THAT - AS THE ENTRIES ARE BY CHEUQES THE TRANSACTION RELATES TO UNS ECURED LOANS. FURTHER AS BANK BALANCE BEING MINIMAL AND BUSINESS NOT BEING CARRIED ON IT WAS CONCLUDED THAT CREDITWORTHINESS AND GENUINENESS WAS NOT PROVED. THE DOCUMENTS FILED BY THE A PPELLANT SHOW THAT THE TRANSACTIONS ARE REFLECTED IN THE AUDITED ACCOUNTS OF M/S. AKHIL MARKETING (P ) LTD. WHO IS ASSESSED TO TAX. AS ON 31.03.2007, THE PARTY HAS SHOWN ADVANCES OF R S .6.29 CRORE S INCLUDIN G TO THE APPELLANT. IT IS STATED THAT RS. 12,55.592/ - WAS PAYABLE AS LEASE. IN THE CIRCUMSTANCES, IT CANNOT BE HE L D THAT IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PARTY WERE NOT PROVED. THE ADDITION IS HENCE DELETED. 8. LD. AR ALSO RELIED ON THE PROPOSITION OF LAW LAID DOWN BY THE HON BLE DELHI H IGH COURT IN THE CASE OF KINETIC CAPITAL FINANCE LTD., 202 TAXMAN 548, DECISION OF HONBLE M.P.HIGH COURT IN THE CASE OF PEOPLES GENERAL HOSPITAL LTD., 35 TAXMANN.COM 444. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF AUTHORI TIES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED AT BAR BY LD. AR AND LD. DR AND ALSO DISCUSSED BY ITA NO. 1470 /1 1 6 THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS. FROM THE RECORD WE FOUND THAT THE CIT(A) DEALT WITH ISSUE ALL THE OBJECTION S RAISED BY THE AO AND AFTER CONSIDERING THE DOCUMENTS PLACED ON RECORD, RECORDED A CATEGORICAL FINDING TO THE EFFECT THAT AMOUNT PAYABLE AND RECEIVABLE BY THE ASSESSEE WAS SQUARED OFF WHICH WAS IN ACCORDANCE WITH THE PROVISIONS OF COMPANIES ACT. FURTHER FINDING WAS R ECORDED TO THE EFFECT THAT THESE COMPANIES WERE ASSESSED WITH I.T. DEPARTMENT FOR SEVERAL YEARS. THE IDENTITY AND GENUINENESS OF THE TRANSACTION WAS DULY ACCEPTED. THE DETAILED FINDING RECORDED BY CIT(A) ARE AS PER MATERIAL ON RECORD. MOREOVER THE ISSUE IS ALSO COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF SINHAL PRODUCTS (P) LTD., ITA NO.3852/DEL/2009, DATED 7 - 3 - 2012, WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE TRIBUNAL HAS HELD THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS TO P ROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. WE ALSO FOUND THAT IT IS NOT A CASE WHERE DEPARTMENT H AS RECEIVED ANY INFORMATION WITH REGARD TO THE FACT THAT THE SHARE APPLICATION WERE BOGUS ENTRY OR IT IS IN THE SHAPE OF ACCOMMODA TION ENTRY. THE SHARE APPLICATION IS BY THE ASSOCIATE CONCERN OF THE ASSESSEE WHICH IS ALSO ASSESSED WITH IT DEPARTMENT. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH VIS - - VIS FINDING RECORDED BY CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) RESULTING INTO DELETION OF ADDITION OF RS.14 CRORES. 10. WITH REGARD TO ADDITION OF RS. 1,01,39,592/ - MADE ON ACCOUNT OF LOAN TAKEN FROM M/S AKHIL MARKETING PVT. LTD., WE FOUND THAT TRANSACTIONS ARE DULY RECORDED IN THE AUDITED ACCOUNT OF M/S AKHIL MARKETING PVT. LTD., ITA NO. 1470 /1 1 7 WHICH IS ALSO ASSESSED TO TAX. WE FOUND THAT AS ON 31 - 3 - 2007 THE PARTY HAS SHOWN ADVANCE OF RS.6.29 CRORES INCLUDING TO THE ASSESSEE ALSO. RS.12.55 LAKHS WAS PAYABLE AS LEASE. THE CIT(A) HAS RECORDED A CATEGORICAL FINDING ON THE BASIS OF MATERIAL PLACED ON RECORD TO THE EFFECT THAT ALL THE THREE CONDITIONS REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDITORS WERE DULY ESTABLISHED. SINCE THE FINDINGS ARE AS PER MATERIAL ON RECORD, WE DO NOT FIND ANY RE ASON TO INTERFERE IN THE FINDINGS SO RECORDED BY CIT(A). 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 30/03 / 201 6 . SD/ - SD/ - ( AMARJIT SINGH ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 30/03 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY OR DER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//