Sikka Overseas (P) Ltd, V. ITO Ward-8 (4),

ITA 1480/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9960 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: K R MANJANI
• Keywords: Additional evidence; Set aside
• Section: 195; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G: NEW DELHI BEFORE SHRI R.P.TOLANI,JM AND SHRI R.C. SHARMA, A M I.T.A. NOS.1479 & 1480/DEL OF 2008 I.T.A. NOS.779 & 780/DEL OF 2009 ASSESSMENT YEARS: 2003-04 & 2005-06 M/S SIKKA OVERSEAS P. LTD., INCOME-TAX OFFICER, C-60, SIKKA HOUSE, PREET VIHAR, VS WARD 8(4), NEW D ELHI, VIKAS MARG, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.R. MANJANI RESPONDENT BY : S HRI B. K. GUPTA ORDER PER R.P. TOLANI: JM THESE ARE APPEALS BY ASSESSEE TWO AGAINST THE ASS ESSMENT FOR ASSTT. YEARS 2003-04 AND 2005-06 AND TWO AGAINST THE IMPOS ITION OF PENALTY U/S 271(1)( C) OF THE INCOME-TAX ACT, 1961 IN THE RESPE CTIVE YEARS. ASSESSMENT YEAR 2003-04: 2. GROUNDS RAISED BY ASSESSEE ARE AS UNDER: 1. THE AO AND THE LD. CIT(A) HAVE ERRED ON THE FA CT AND IN LAW IN SUSTAINING RS.2,50,000/- IN RESPECT OF SH ARE MONEY FROM EIGHT PERSONS, ONE OF WHOM IS OF RS.1,50,000/- BY LIMITED COMPANY, WHICH IS A REGULA R ASSESSEE. 2. LEARNED CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW IN REJECTING THE CASE ON ACCOUNT OF NEW EVIDENCE, EVEN THOUGHT HIS EVIDENCE IN SUPPORT OF THE CLAIM BEFORE AO, 2 WHO IS REPORTED TO HAVE SENT LETTERS TO SHAREHOLDER S AND WITHOUT INDICATING THE APPELLANT THE RESULT, MADE T HE ADDITION. IF THE LD. CIT(A) FELT THAT IT WAS NEW EV IDENCE, EH INSTEAD OF REJECTING THE CLAIM, SHOULD HAD GIVEN OPPORTUNITY OR HAD CALLED FOR THE REPORT 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE ISSUE IN QUESTION IS IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY T HE ASSESSEE COMPANY AND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS, 216 CTR 195 AN D ON HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF DIVINE LEASING, 299 ITR 268 FOR THE PROPOSITION THAT IN CASE OF RECEIPT OF SHARE APPLIC ATION MONEY BY ASSESSEE, THE SAME CANNOT BE ADDED IN THE HANDS OF THE ASSESS EE EVEN IF THE SHARE APPLICANTS ARE FOUND TO BE BOGUS. LEARNED COUNSEL C ONTENDS THAT IN THIS CASE DETAILS WERE FILED FROM TIME TO TIME BY THE ASSESSE ES CHARTERED ACCOUNTANT BEFORE AO AS MENTIONED IN PARA 1 OF THE ASSESSMENT ORDER. CONSEQUENT TO SURVEY, OUT OF RS.89,50,100/- AMOUNT OF SHARE APPLI CATION MONEY, RS.87 LACS WERE ACCEPTED BY THE DIRECTOR TO BE HIS INCOME, THE REFORE, NOW THE QUESTION IS IN RESPECT OF RS.2,50,100/-. SINCE THE ASSESSEE HAD FILED THE RELEVANT DETAILS IN RESPECT OF THE IDENTITY OF THE SHARE APP LICANTS, THE ADDITION MAY BE DELETED IN VIEW OF THE ABOVE JUDGMENTS. 4. LEARNED DR, ON THE OTHER HAND, REFERRED TO ORDER OF CIT(A) WHEREIN A CLEAR FINDING HAS BEEN GIVEN THAT ASSESSEE DID NOT FILE ANY CONFIRMATION IN 3 RESPECT OF SHARE APPLICATION MONEY AND THEY WERE FI LED BY WAY OF ADDITIONAL EVIDENCE, WHICH WAS NOT ADMITTED BY CIT(A), THEREFO RE, IT IS NOT CLEAR WHETHER ASSESSEE FILED EVIDENCE IN RESPECT OF SHARE APPLICANTS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LEARNED COUNSEL CONTENDS THAT THE EVIDENCE IN THIS BEHALF WAS FILED BEFORE AO WHEREAS CIT(A) SAYS THAT ADDITIONAL EVIDENCE WAS FILED WHICH WAS NOT ADMITTED. THE RECEIPT OF S HARE APPLICATION MONEY IN THE HANDS OF A COMPANY CANNOT BE ADDED U/S 68 AS HE LD BY HONBLE SUPREME COURT AND HONBLE DELHI HIGH IN ABOVE MENTIONED CAS ES. HOWEVER, LOOKING AT THE DOUBTS EXPRESSED BY LEARNED DR, WE SET ASIDE THE ISSUE BACK TO THE FILE OF AO TO ASK THE ASSESSEE TO FILE THE CONFIRMATIONS AND TO DECIDE THE SAME KEEPING IN VIEW THESE JUDGMENTS AND PASS AN ORDER I N ACCORDANCE WITH LAW. 6. THIS APPEAL BY ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSES. 7 CORRESPONDING PENALTY APPEAL FOR THIS YEAR I.E. I .T.A. NO.798/DEL/09 IS ALSO SET ASIDE, RESTORE BACK TO THE FILE OF AO A S IT WILL DEPEND ON THE REFRAMING OF THE ISSUE. 8. THIS APPEAL IS ALSO ALLOWED FOR STATISTICAL PURP OSES. ASSESSMENT YEAR 2005-06: 9. FOLLOWING GROUND IS RAISED FOR ASSTT. YEAR 2005- 06: THE LD. AO AS WELL AS CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW IN SUSTAINING ADDITION OF RS.11,47,200/- WHI CH IS 4 AMOUNT PAID BY THE ONE OF THE DIRECTOR EXISTING ASS ESSEE ON BEHALF OF THE COMPANY EVEN THOUGH HE DULY INDICATED SOURCES THEREFORE. 2. THE LD. CIT(A) IS WRONG IN REJECTING THE CLAIM O N GROUND OF NEW EVIDENCE, WHICH WAS FILED IN SUPPORT OF THE CLAIM MADE BEFORE AO AND IS ALSO NECESSARY FOR PROP ER DECISION IN THE CASE. IF THE LD. CIT(A) FELT THAT IT WAS NEW EVIDENCE HE, INSTEAD OF REJECTING THE CLAIM SHOULD HAD GIVEN OPPORTUNITY OR HAD CALLED FOR THE REPORT. 10. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THIS AMOUNT WAS DEPOSITED BY ONE OF THE DIRECTOR SHRI HARBHAJAN ON THE DATES AS MENTIONED IN PARA 2 OF CIT(A)S ORDER WITH RAILWAYS ON BEHALF OF THE COMPANY. THE DIRECTOR IS SEPARATELY ASSESSED TO TAX. SUBSEQUENT LY THIS AMOUNT OF SHRI HARBHAJAN SINGH CHAWLA WAS CONVERTED INTO SHARE APP LICATION MONEY. IT WAS EXPLAINED TO LOWER AUTHORITIES THAT HE WAS ASSE SSED TO TAX, COPIES OF ACKNOWLEDGEMENT OF INCOME-TAX RETURNS WERE FILED BE FORE AO, THE AMOUNT WAS DEPOSITED BY HIM. HE DID NOT CONSIDER THE SAME . THOUGH THIS PLEA WAS RAISED SPECIFICALLY BEFORE CIT(A), WHICH IS EVIDENT FROM PAPER BOOK PAGE 25, HE ERRONEOUSLY HELD THIS TO BE AN ADDITIONAL EV IDENCE. ASSESSEE HAS TAKEN A CATEGORICAL PLEA BEFORE CIT(A) THAT ALL THE RELEVANT DOCUMENTS WERE FILED BEFORE AO. SINCE ALL THE DOCUMENTS WERE FILED , THE CREDITOR I.E. SHRI HARBHAJAN SINGH, BEING A REGULAR ASSESSEE, THE INCO ME-TAX HAVING ACCEPTED THE ABOVE PAYMENT ON BEHALF OF THE COMPANY, NO ADDI TION IS CALLED FOR. 5 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSESSEE HAS CHALLENGED THE C IT(A)S ACTION IN TREATING THE PAPERS FILED BEFORE HIM AS NEW EVIDENCE FROM TH E WRITTEN SUBMISSIONS FILED BY ASSESSEE BEFORE CIT(A), WHICH ARE PLACED O N PAPER BOOK NO.25 ONWARDS, WHICH ARE NOT DISPUTED BY LEARNED DR. T HE SAME SPEAKS OF FILLING OF RELEVANT PAPERS ABOUT COPIES OF CONFIRMATIONS AN D RETURNS BEFORE AO. SINCE THE ASSESSEES DIRECTOR IDENTITY IS ESTABLISH ED, TRANSACTIONS ARE NOT DENIED AND HE IS ASSESSED TO TAX, THE INITIAL BURDE N PASSED ON ASSESSEE IN THIS BEHALF STANDS DISCHARGED. IN VIEW THEREOF, WE DELE TE THE ADDITIONS MADE ON THE ASSESSEE. THIS APPEAL OF THE ASSESSEE IS ALLOWE D. 12. SINCE WE HAVE DELETED THE QUANTUM ADDITIONS, TH E PENALTY IMPOSED U/S 271(1)(C ) ON THIS QUANTUM, WHICH IS AGITATED BY AS SESSEE IN APPEAL NO.799/DEL/09 IS ALSO DELETED. 13. THIS APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH AUGUST, 2009. (R.C. SHARMA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6 TH AUGUST, 2009 VIJAY 6 COPY TO:- 1. APPELLANT. 2. RESPONDENT 3. CIT 4. CIT(A)-I, NEW DELHI 5. THE DR ASSISTANT REGISTRAR.