Oswal Pumps Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 1480/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87172 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 24-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA SENIOR
• Assessee Lawyers: V M CHAURASIYA
• Keywords: Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1480/DEL./2013 (ASSESSMENT YEAR : 2004-05) M/S. OSWAL PUMPS PVT. LTD., VS. ITO, WARD 13 (4), C 5/2A, RANA PRATAP BAGH, NEW DELHI. OPP. CC COLONY, DELHI 110 005. (PAN : AAACO6417C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, CA AND SHRI V.M. CHAURASIYA, ADVOCATE REVENUE BY : SHRI P. DAM KANUNJHA, SENIOR DR DATE OF HEARING : 24.02.2015 DATE OF PRONOUNCEMENT : 31.03.2015 ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-XVI, DELHI DATED 22.01.2013. 2. IN THIS CASE, THE ORIGINAL RETURN OF INCOME WAS FILED ON 29.10.2004 DECLARING INCOME OF RS.58,120/-. A NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 WAS ISSUED ON 25.03.2011. THE ASSESSMENT U/S 147/1 43(3) WAS FINALIZED ON 26.12.2011 AT AN INCOME OF RS.62,71,870/-. THE ACT ION OF THE ASSESSING OFFICER ITA NO.1480/DEL./2013 2 HAS BEEN AFFIRMED BY THE CIT (A). NOW THE ASSESSEE IS IN APPEAL BY TAKING THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD, BOTH IN THE EYE OF LAW AND ON THE FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE INITIATION OF T HE REASSESSMENT PROCEEDINGS AND THE REASSESSMENT ORDER ARE BAD BOTH ON FACTS AND IN LAW AND LIABLE TO BE QUASHED AS THE STATUTORY CONDI TIONS AND PROCEDURE PRESCRIBED UNDER THE STATUTE HAVE NOT BEE N COMPLIED WITH. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE REASSESSMENT OR DER PASSED BY THE A.O. IS BAD AND LIABLE TO BE QUASHED AS THE SAME HA S BEEN REOPENED ON THE BASIS OF THE REASONS WHICH ARE VAGUE AND HAS BEEN RECORDED WITHOUT APPLICATION OF MIND ON THE PART OF THE A.O. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE ORDER PASSED BY THE LEARNED A.O. IS BAD AND LIABLE TO BE QUASHED BEING BARRED BY LIM ITATION SINCE THE REASONS RECORDED WERE PROVIDED TO THE ASSESSEE AFTE R A PERIOD OF SIX YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. 5 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS & IN LAW IN CONFIRMING THE ADDITION OF RS.62, 13,750/- ON ACCOUNT OF SHARE CAPITAL AND SHA RE APPLICATION MONEY RECEIVED BY THE ASSESSEE. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ABOVE ADDITION DESPITE THE ASSESSEE BRINGING ALL MATERIAL AND EVIDENCES ON RECORD TO PROVE THE IDENTITY, GENUINENESS OF THE SH ARE APPLICANTS. 6. THAT THE ABOVE-SAID ADDITIONS ARE OTHERWISE UNTE NABLE IN THE EYE OF LAW, HAVING BEEN MADE ON THE BASIS OF TH E MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE AND WITHOUT P ROVIDING COPY OF THE SAME & PROVIDING OPPORTUNITY TO REBUT THE SAME. ITA NO.1480/DEL./2013 3 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 3. GROUND NOS.1, 6 & 7 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 4. IN THE GROUND NOS.2, 3 & 4, THE ASSESSEE IS CHAL LENGING THE UPHOLDING OF THE ACTION OF THE ASSESSING OFFICER FOR REOPENING O F THE ASSESSMENT. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE NOTICE U/S 148 ISSUED ON 25.03.2011 WAS DULY SERVED ON THE ASSESSEE WELL WIT HIN THE LIMITATION PRESCRIBED BY THE ACT. THE ASSESSEE HAS RESPONDED TO THE NOTI CE AND SUBMITTED THAT RETURN FILED EARLIER SHOULD BE TREATED AS THE RETURN FILED U/S 147 AND THE COPY OF THE SAID RETURN WAS ALSO ENCLOSED. THE ASSESSEE HAS SOUGHT COPY OF REASONS RECORDED U/S 147. THE ASSESSEE COMPANY WAS PROVIDED REASONS FOR REOPENING VIDE LETTER DATED 28.09.2011 AND THESE OBJECTIONS WERE DISPOSED OFF BY AN ORDER DATED 02.09.2011. THEREFORE, IN OUR CONSIDERED VIEW, THE RE ARE NO LEGAL AND PROCEDURAL LACUNAE IN THE RE-ASSESSMENT PROCEEDINGS. THIS REO PENING WAS BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME-TAX DEPARTMENT WITH REGARD TO THE BENEFICIARY OF ACCOMMODATION ENT RIES. CONSIDERING ALL THESE ASPECTS, WE FIND NO MERITS IN THE GROUND NOS.2 TO 4 OF THE APPEAL WHICH ARE DISMISSED ACCORDINGLY. 6. IN THE GROUND NOS.5(I) & (II), THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.62,13,750/- ON ACCOUNT OF SHARE CAPITAL AND SHAR E APPLICATION MONEY RECEIVED BY THE ASSESSEE. 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ASSESSEE HAS SHOWN RECEIPT OF SHARE APPLICATION MONEY FROM FOUR ENTITI ES AS UNDER :- ITA NO.1480/DEL./2013 4 S.NO. NAME AMOUNT (RS.) 1. FAIR N SQUARE EXPORTS PVT. LTD. 20,04,000/- 2. TASHI CONTRACTORS (P) LTD. 15,03,000/- 3. SATWANT SINGH SODHI CONST. (P) LTD. 2,03,000 /- 4. RABIK EXPORTS LTD. 25,03,750/- TOTAL : 62,13,750/- THE ASSESSEE HAS SUBMITTED FOLLOWING DOCUMENTS WITH REGARD TO THE ENTITIES:- - M/S. SATWANT SINGH SODHI CONSTRUCTORS (P) LTD. (I) COPY OF SHARE APPLICATION FORM (II) COPY OF AFFIDAVIT (III) COPY OF CERTIFICATE ISSUED AT THE END OF YEAR BY TH E PARTY (IV) COPY OF BOARD RESOLUTION (V) COPY OF CONFIRMATION FROM PARTY (VI) COPY OF BANK STATEMENT (VII) COPY OF ACKNOWLEDGEMENT OF ITR (VIII) COPY OF BALANCE SHEET AND P&L ACCOUNT (IX) COPY OF APPOINTMENT OF AND CHANGES AMONG DIRECTORS (X) COPY OF CERTIFICATE OF INCORPORATION (XI) COPY OF MEMORANDUM OF ASSOCIATION & ARTICLES OF ASS OCIATION - M/S. TASHI CONTRACTORS (P) LTD. (I) COPY OF SHARE APPLICATION FORM (II) COPY OF AFFIDAVIT (III) COPY OF CERTIFICATE ISSUED AT THE END OF YEAR BY TH E PARTY (IV) COPY OF CONFIRMATION FROM PARTY (V) COPY OF BOARD RESOLUTION (VI) COPY OF BANK STATEMENT (VII) COPY OF ACKNOWLEDGEMENT OF ITR (VIII) COPY OF BALANCE SHEET AND P&L ACCOUNT (IX) DETAILS OF PAN (X) COPY OF APPOINTMENT OF AND CHANGES AMONG DIRECTOR (XI) COPY OF CERTIFICATE OF INCORPORATION (XII) COPY OF MEMORANDUM OF ASSOCIATION & ARTICLES OF ASS OCIATION - M/S. RABIK EXPORTS LTD. (I) COPY OF SHARE APPLICATION FORM (II) COPY OF AFFIDAVIT (III) COPY OF CERTIFICATE ISSUED AT THE END OF YEAR BY TH E PARTY (IV) COPY OF CONFIRMATION FROM PARTY ITA NO.1480/DEL./2013 5 (V) COPY OF BOARD RESOLUTION (VI) COPY OF BANK STATEMENT (VII) COPY OF ACKNOWLEDGEMENT OF ITR (VIII) COPY OF BALANCE SHEET AND P&L ACCOUNT (IX) DETAILS OF PAN (X) COPY OF APPOINTMENT OF AND CHANGES AMONG DIRECTOR (XI) COPY OF CERTIFICATE OF INCORPORATION (XII) COPY OF MEMORANDUM OF ASSOCIATION & ARTICLES OF ASS OCIATION - M/S. FAIR N SQUARE EXPORTS (P) LTD. (I) COPY OF SHARE APPLICATION FORM (II) COPY OF AFFIDAVIT (III) COPY OF CERTIFICATE ISSUED AT THE END OF YEAR BY TH E PARTY (IV) COPY OF CONFIRMATION FROM PARTY (V) COPY OF BOARD RESOLUTION (VI) COPY OF BANK STATEMENT (VII) COPY OF ACKNOWLEDGEMENT OF ITR (VIII) COPY OF BALANCE SHEET AND P&L ACCOUNT (IX) DETAILS OF PAN (X) COPY OF APPOINTMENT OF AND CHANGES AMONG DIRECTOR (XI) COPY OF CERTIFICATE OF INCORPORATION (XII) COPY OF MEMORANDUM OF ASSOCIATION & ARTICLES OF ASS OCIATION WE WOULD ALSO LIKE TO MENTION THAT THIS WAS THE FIR ST YEAR OF THE ESTABLISHMENT OF THE COMPANY AND THERE APPEARS TO BE NO BUSINESS ACT IVITY DURING THE YEAR. THEREFORE, THE REVENUES ALLEGATION THAT ASSESSEE H AS INTRODUCED HIS OWN UNACCOUNTED MONEY IN THE SHARE APPLICATION MONEY IS CONTRARY TO THE FACTS OF THE CASE. SINCE THE ASSESSEE HAS NOT DONE ANY BUSINESS DURING THE YEAR THERE CANNOT BE ANY OCCASION TO GENERATE UNACCOUNTED FUNDS WHICH CAN BE ROUTED BACK TO THE ASSESSEE COMPANY IN THE FORM OF SHARE APPLICATION M ONEY. THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT PAPERS BEFORE THE ASSESS ING OFFICER WHICH INCLUDE SHARE APPLICATION FORMS, CONFIRMATIONS, AFFIDAVITS, BALANCE SHEETS, CERTIFICATE ISSUED TO THE BOARD RESOLUTION, CONFIRMATIONS FROM THE PARTY, BANK STATEMENTS OF THE PARTIES, COPY OF ITRS, BALANCE SHEETS AND PROFI T & LOSS ACCOUNT, COPY OF ITA NO.1480/DEL./2013 6 CERTIFICATE OF INCORPORATION AND MEMORANDUM AND ART ICLES OF ASSOCIATION, COPY OF PAN CARD. THEREFORE, PRIMARILY, THE ASSESSEE WA S ABLE TO DISCHARGE THE ONUS CASTED UPON IT. IT WAS ON ASSESSING OFFICER TO VER IFY THE VERACITY OF THESE DOCUMENTS AND IF FOUND NOT SATISFACTORY, THEN ONLY THE BURDEN SHIFTS ON THE ASSESSEE. THE ASSESSEE HAS SUBMITTED THE CORRECT A DDRESS OF THE PARTIES. LATEST ASSESSMENT PARTICULARS OF THESE PARTIES WERE ALSO F ILED WHICH INCLUDES THE PAN NUMBER, ASSESSMENT DETAILS, THE ASSESSING OFFICERS DETAILS AND BANK ACCOUNT DETAILS. THE MONEY HAS BEEN RECEIVED THROUGH THE R EGULAR BANK ACCOUNTS OF THESE COMPANIES. ALL THESE COMPANIES HAVE SHOWN NAME OF THE ASSESSEE COMPANY IN THEIR SCHEDULE OF INVESTMENT. IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER:- IN ANY CASE, WHAT IS CLINCHING IS THE ADDITIONAL B URDEN ON THE REVENUE. IT MUST SHOW THAT EVEN IF THE APPLICANT D OES NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE B Y THE APPLICANT ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME O F THE ASSESSEE. THIS HAS NOT BEEN SHOWN INSOFAR AS THE PRESENT CASE IS CONCERNED AND THAT HAS BEEN NOTED BY THE TRIBUNAL ALSO. SIMILARLY IN THE CASE OF CIT VS. DIWAN LEASING LEAS ING AND FINANCE LTD. 299 ITR 268, THE HONBLE HIGH COURT HAS HELD AS UNDER : - THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING A DVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAIL S OR NEGLECTS TO RESPOND TO ITS NOTICES. THE HONBLE SUPREME COURT IN THE CASE OF CTI VS. KA MDHENU STEEL & ALLOYS LTD. IN SLP (CC) NO.15640 OF 2012 DATED 17.09.2010 HAS DISMISSED THE SPECIAL LEAVE PETITION AGAINST THE ORDER OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF ITA NO.1480/DEL./2013 7 CIT VS. KAMDHENU STEEL L& ALLOYS LTD. IN WHICH IT H AS BEEN HELD THAT ONCE ADEQUATE EVIDENCE AND MATERIAL GIVEN BY THE ASSESSE E, WHICH WOULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER, IN CASE SUCH EVIDENCE IS TO BE DISCARDE D OR IT IS PROVED THAT THE ASSESSEE HAS CREATED EVIDENCE, THE REVENUE IS SUPPO SED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AND FASTEN THE AS SESSEE WITH SUCH A LIABILITY U/S 68/69 OF THE ACT. CONSIDERING ALL THESE ASPECTS, W E SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND ALLOW THE ASSESSEES APPEAL O N THIS GROUND. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF MARCH, 2015. SD/- SD/- (GEORGE GEORGE K) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 31 ST DAY OF MARCH, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.