M/s Davanam Construction P. Ltd., V. D.C.I.T. Central Circle -1(2),

ITA 148/BANG/2014

• Counselvise Citation: 14821114 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ZAIN KHAN
• Keywords: Unexplained cash credit
• Section: 153A; 133(6); 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO. 148/BANG/2014 ASSESSMENT YEAR : 2005-06 M/S. DAVANAM CONSTRUCTIONS (P) LTD., # 148, SURVEYORS STREET, BASAVANGUDI, BANGALORE 560 04. PAN: AABCD 3880H VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI ZAIN KHAN, C.A. RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II(DR) DATE OF HEARING : 16.03.2015 DATE OF PRONOUNCEMENT : 20.03.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 13.11.2013 OF THE CIT(APPEALS)-VI, BANGALORE RELATING TO ASSES SMENT YEAR 2005-06. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF PROPERTY DEVELOPMENT. CONSEQUENT TO SEARCH U/S. 132 OF THE ACT CARRIED OUT IN THE CASE OF ASSESSEE ON 2.9.2010, ASSESSMENTS WERE FRAM ED U/S. 153A OF THE ACT FOR THE PERIOD SPECIFIED IN SECTION 153A OF THE ACT. A.Y. 2005-06 WAS ALSO AN ASSESSMENT YEAR FALLING WITHIN THE PERIOD S PECIFIED U/S. 153A. ITA NO.148/BANG/2014 PAGE 2 OF 6 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 153 A FOR THE A.Y. 2005-06, THE ASSESSING OFFICER NOTICED THAT THE ASS ESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM THE FOLLOWING PERSONS: - KEMPANNA RS. 10 LAKH SURESH CHANDRA RS.10 LAKHS VIJAY KUMAR GOWDA RS. 5 LAKHS TOTAL RS.25 LAKHS 4. SHRI D.V. HARISH, DIRECTOR OF ASSESSEE COMPANY W AS EXAMINED U/S. 131 OF THE ACT BY THE AO ON 19.11.10. HE WAS CALLE D UPON TO FURNISH DETAILS OF AFORESAID 3 PARTIES FROM WHOM SHARE APPL ICATION MONEY WAS RECEIVED BY THE ASSESSEE. MR. HARISH IN HIS STATEM ENT TOOK A PLEA THAT ONE D.K. KEMPEGOWDA GAVE THE MONEY ON THE THREE NAMES R EFERRED TO ABOVE AND THAT HE DID NOT NO FURTHER DETAILS. THE AO THE REUPON ISSUED A SHOW CAUSE NOTICE DATED 28.2.2013 CALLING UPON THE ASSES SEE TO FURNISH THE FOLLOWING DETAILS:- (A) ADDRESS OF THE ABOVE PARTIES (B) PAN NO. OF THE ABOVE PARTIES (C) MODE OF RECEIPT AND DATE OF RECEIPT (D) WHETHER SHARES HAVE BEEN ALLOTTED SUBSEQUENTLY , IF SO, FURNISH DETAILS OF DATE OF ALLOTMENT AND NO. OF SH ARES. (E) IF REFUNDED SUBSEQUENTLY, FURNISH DETAILS OF D ATE OF REPAYMENT AND MODE OF REPAYMENT. 5. THE ASSESSEE FURNISHED REPLY BEFORE THE AO AS FO LLOWS:- AS PER STATEMENT U/S. 131 DATED 19.11.2010 WITH RE GARD TO SHARE APPLICATION MONEY RECEIVED, MR. HARISH, MANAGING DI RECTOR HAS STATED THAT SHARE APPLICATION MONEY RECEIVED IN TH E NAMES OF ITA NO.148/BANG/2014 PAGE 3 OF 6 KAMALESH KUMAR, KEMPANNA AND VIJAYKUMAR WAS ARRANGE D BY SHRI D.K. KEMPEGOWDA AND THEREFORE THE DETAILS OF S OURCE OF MONEY RECEIVED FROM THEM ARE NOT KNOWN TO HIM. CO NSEQUENTLY THE LIABILITIES LYING IN THE BOOKS OF THE COMPANY W ERE TRANSFERRED TO SRI D.K. KEMPEGOWDA AS THE SAME WERE TAKEN OVER BY HIM. FOR YOUR REFERENCE WE ARE HEREWITH ENCLOSING THE CO PY OF LEDGER ACCOUNT OF SRI D.K. KEMPEGOWDA FOR HAVING TRANSFERR ED THIS AMOUNT TO HIS LEDGER ACCOUNT. IN THIS CONTEXT CONSI DERING IT TO BE UNEXPLAINED CREDIT DOES NOT ARISE. 6. THE AO, HOWEVER, WAS OF THE VIEW THAT ASSESSEE F AILED TO EXPLAIN THE CREDIT IN THE BOOKS OF ACCOUNT IN THE FORM OF S HARE APPLICATION MONEY. A NOTICE U/S. 133(6) DATED 4.3.2013 WAS ALSO ISSUED A ND SERVED ON D.K. KEMPEGOWDA CALLING FOR DETAILS OF SHARE APPLICATION MONEY. THERE WAS NO RESPONSE FROM KEMPEGOWDA TO THE AFORESAID NOTICE. IN THE FACTS AND CIRCUMSTANCES, THE AO CAME TO THE CONCLUSION THAT A SSESSEES EXPLANATION THAT FUNDS WERE GIVEN BY KEMPEGOWDA WILL NOT ABSOLV E THE OBLIGATION OF ASSESSEE TO PROVE THE THREE INGREDIENTS U/S. 68 OF THE ACT VIZ., IDENTITY OF THE SHARE APPLICANTS, THEIR CREDIT WORTHINESS AND G ENUINENESS OF THE TRANSACTION. 7. BEFORE THE CIT(APPEALS), THE ASSESSEE FILED A CO NFIRMATION LETTER FROM D.K. KEMPEGOWDA, WHICH READS AS FOLLOWS:- THIS IS TO CONFIRM THAT SHARE APPLICATION MONEY RE CEIVED BY SRI D.V. HARISH, MANAGING DIRECTOR OF DAVANAM CONSTRUCT IONS PRIVATE LIMITED IN THE NAMES OF KAMALESH KUMAR, KEM PANNA AND VIJAY KUMAR GOWDA WAS ARRANGED BY ME AND THIS L IABILITY WHICH WAS LYING IN THE BOOKS OF COMPANY WAS TRANSFE RRED TO ME AS THE SAME WERE TAKEN OVER BY ME. FOR ANY REFEREN CE I ENCLOSE HEREWITH COPY OF MY LEDGER ACCOUNT FOR HAVING TRANS FERRED THIS ITA NO.148/BANG/2014 PAGE 4 OF 6 AMOUNT. I AM ASSESSED TO TAX BY DCIT CC(1)(2) BANG ALORE VIDE PAN NO: AAEHP7332N. 8. THE ASSESSEE ALSO PRODUCED THE LEDGER ACCOUNT OF D.K. KEMPEGOWDA IN THE BOOKS OF ASSESSEE, WHEREIN THE AS SESSEE HAS RECOGNIZED THE CREDIT OF RS.25 LAKHS IN THE NAMES O F THREE SHARE APPLICANTS AS MONEY OF KEMPEGOWDA. BASED ON THE ABOVE DOCUMEN TS, THE ASSESSEE PLEADED BEFORE THE CIT(A) THAT ADDITION MADE BY THE AO SHOULD BE DELETED. 9. THE CIT(APPEALS), HOWEVER, DID NOT AGREE WITH TH E SUBMISSIONS MADE BY THE ASSESSEE AND SHE HELD AS FOLLOWS:- UNDER THE FACTS OF THE CASE, I FIND THAT THE SHAR E APPLICATION MONEY AS CLAIMED HAS BEEN RAISED BY THE APPELLANT C OMPANY IN NAMES OF SRI KEMPANNA RS.10,00,000, SRI SURESH CHA NDRA RS.10,00,000 AND SRI VIJAYKUMAR GOWDA RS.5,00,000. THE AMOUNT HAS BEEN RECEIVED IN CASH. THE APPELLANT CO MPANY IS REQUIRED TO EXPLAIN THE GENUINENESS OF THE TRANSACT ION CLAIMED. NO CONFIRMATION FROM THE SAID PARTY OR ANY EVIDENCE OF THE SOURCES OF THE AMOUNT HAS BEEN FURNISHED EITHER BEF ORE THE ASSESSING OFFICER OR BEFORE ME DURING THE COURSE OF APPEAL. MERELY STATING THAT THESE WERE ARRANGED BY ONE SRI D K KEMPEGOWDA AND THAT THE LIABILITY HAS BEEN TRANSFER RED TO SRI D K KEMPEGOWDA DOES NOT IN ANY WAY EXPLAIN THE SOURCE OF CREDIT IN THE HANDS OF THE APPELLANT COMPANY. THE ADDITIO N MADE BY THE ASSESSING OFFICER UNDER SUCH FACTS AND CIRCUMSTANCE S IS IN ORDER AND IS UPHELD. 10. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASS ESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO.148/BANG/2014 PAGE 5 OF 6 11. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSE L FOR THE ASSESSEE, WHO SUBMITTED THAT AS FAR AS ASSESSEE IS CONCERNED, IT HAD DISCHARGED ITS ONUS BY FILING CONFIRMATION OF KEMPEGOWDA AND SINCE KEMPEGOWDA HAS OWNED THE TRANSACTION, THE ADDITION MADE BY THE AO SHOULD BE DELETED. 12. WE HAVE CONSIDERED THE SUBMISSIONS ON BEHALF OF THE ASSESSEE AND ARE OF THE VIEW THAT THE SAME IS NOT ACCEPTABLE. A DMITTEDLY, THE ORIGINAL ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE SHO WED THAT SHARE APPLICATION MONEY HAD BEEN RECEIVED FROM THREE PERS ONS, WHOSE NAMES HAVE BEEN SET OUT IN THE EARLIER PART OF THIS ORDER . APPLICATION FOR ALLOTMENT OF SHARES IS REQUIRED TO BE MADE BEFORE ACCEPTING S HARE APPLICATION MONEY. SUCH AN APPLICATION WOULD CONTAIN ALL THE DETAILS O F THE PERSON APPLYING FOR THE SHARES. SINCE THE ASSESSEE HAD MADE ENTRIES IN THE BOOKS OF ACCOUNT RECOGNIZING THE THREE PERSONS AS HAVING APPLIED FOR ALLOTMENT OF SHARES IN THE ASSESSEE COMPANY, THE ASSESSEE OUGHT TO HAVE RE CEIVED APPLICATIONS FOR ALLOTMENT OF SHARES FROM THE AFORESAID THREE PE RSONS. THE ASSESSEE, INSTEAD OF FURNISHING DETAILS OF THREE PERSONS, HAS RELIED UPON A DECLARATION BY ONE SHRI D.K. KEMPEGOWDA, WHO CLAIMS TO HAVE ARR ANGED THE THREE NAMES AND THAT HE IS TAKING OVER LIABILITY OF THE A SSESSEE FOR THE AFORESAID THREE PERSONS. THERE IS NO BASIS ON WHICH THIS CLA IM IS MADE BY KEMPEGOWDA. THE CONTENTS OF DECLARATION GIVEN BY K EMPEGOWDA IS ONLY A SELF-SERVING STATEMENT. WITHOUT THE IDENTITY OF TH REE PERSONS WHOSE NAME APPEARS IN BOOKS OF ACCOUNT OF THE ASSESSEE AS SHAR E APPLICANTS AND WITHOUT THEIR CONFIRMATION, IT IS NOT POSSIBLE TO A CCEPT THE CLAIM OF ITA NO.148/BANG/2014 PAGE 6 OF 6 KEMPEGOWDA IN HIS CONFIRMATION LETTER. AS RIGHTLY HELD BY THE LD. CIT(APPEALS), CLAIM OF KEMPEGOWDA THAT THE LIABILIT Y HAS BEEN TRANSFERRED TO HIM WILL NOT EXPLAIN THE IDENTITY OF SHARE APPLI CANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IN OUR VIEW, THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS U/S. 68 OF THE ACT. THE ADD ITION WAS RIGHTLY MADE BY THE AO AND CONFIRMED BY THE CIT(APPEALS). 13. WE FIND NO MERIT IN THIS APPEAL BY THE ASSESSEE AND ACCORDINGLY THE SAME IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH , 2015 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 20 TH MARCH , 2015 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3 . CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/ SENIOR PRIVATE SECRETARY ITAT, BANGALORE.