M/s. Sunflower Nirman (P) Ltd., Siliguri V. Addl. CIT, Circle - 2, Siliguri, Siliguri

ITA 1506/KOL/2010

• Counselvise Citation: 150623514 RSA 2010
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 21-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2010
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: S K TULSIYAN
• Section: 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , . .. .!' !'!' !'. .. . , , , , #$ ] ]] ] [BEFORE HONBLE SRI B.R.MITTAL, JM & HONBLE SRI C. D. RAO, AM] & & & & /ITA NO.1506/KOL/2010 '( )*/ ASSESSMENT YEAR : 2006-07 (,- / APPELLANT ) - ' - ( /0,- /RESPONDENT) M/S.SUNFLOWER NIRMAL (P) LTD. -VERSUS- ADD L.CIT, RANGE-2, SILIGURI SILIGURI (PAN AALCS 6239 H) ,- 1 2 #/ FOR THE APPELLANT: SHRI S.K.TULSIYAN /0,- 1 2 #/ FOR THE RESPONDENT: SHRI S.K.ROY #3 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 14.05.2010 OF THE CIT(A)-SILIGURI PERTAINING TO A.YR. 2006-07. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS REL ATING TO THE CONFIRMATION OF ADDITION OF RS.68,00,000/- MADE BY THE AO ON ACCOUNT OF SHARE A PPLICATION MONEY. 3 .THE BRIEF FACTS OF THE ISSUE ARE THAT WHILE DOIN G THE SCRUTINY ASSESSMENT THE AO HAS OBSERVED THAT THE ASSESSEE COMPANY HAS RAISED S HARE CAPITAL OF RS.70,20,000/- FROM 31 PERSONS. ON ENQUIRY, HE OBSERVED THAT THE C OMPANY ALLOTTED SHARE APPLICATION MONEY OF FAIR VALUE OF RS.10/- EACH AS PER THE BOAR D RESOLUTION DATED 25.04.2008. THE AO CONDUCTED THE LOCAL ENQUIRY. THE AO, BASED O N THE BALANCE SHEET AND THE BANK PASS BOOKS, SUBMITTED THAT THE ASSESSEE IN RES PECT OF THE SHARE APPLICANTS EXAMINED AND AFTER ANALYZING THE SAME HE MAINLY OBS ERVED THAT IN ALL THESE SHARE APPLICANTS INCOME ALL THE SHARE APPLICATIONS ARE VE RY NOMINAL AND THE CAPITAL IS ALSO NOT SUFFICIENT ENOUGH TO MAKE THE INVESTMENT IN THI S COMPANY. HE ANALYSED THE DETAILS 2 OF ALL THE SHARE APPLICANTS AT PAGE NOS. 7 TO 13 AN D FINALLY CONCLUDED THAT THE MONEY RECEIVED BY THE ASSESSEE COMPANY IS NOTHING BUT THE UNACCOUNTED MONEY OF THE ASSESSEE COMPANY WHICH HAS BEEN INTRODUCED IN ITS B OOKS IN THE GUISE OF SHARE APPLICATION MONEY. THE ASSESSEE COMPANY FAILED TO E XPLAIN SATISFACTORILY THE NATURE AND SOURCE OF RECEIPTS AND IDENTITY AND CREDITWORTH INESS OF THE SHARE APPLICANTS. THEREFORE HE ADDED AN AMOUNT OF RS.70,20,000/- AS U NEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 3.1. ON APPEAL THE LD. CIT(A) HAS CONFIRMED THE ADD ITION OF 30 SHARE APPLICANTS BY REPEATING THE OBSERVATIONS MADE BY THE AO AT PAGE N OS. 13 TO 16 AND FINALLY CONCLUDED THAT EXCEPT ONE SHARE APPLICATION RECEIVE D FROM SHRI RAJIV KR.AGARWAL I.E. AMOUNT OF RS.2,20,000/- HE IS OF THE OPINION THAT T HE AO HAS RIGHTLY STATED THAT INCOMES OF THE SHARE APPLICANTS AS WELL AS THEIR DR AWINGS ARE VERY NOMINAL. THERE WAS NO POSSIBILITY OF GENERATING SUCH HUGE SHARE APPLIC ATION MONEY. THUS HE CONFIRMED AN AMOUNT OF RS.68,00,000/-. 3.2. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL B EFORE US. 4. THE LD COUNSEL APPEARING ON BEHALF OF THE ASSES SEE BY REFERRING TO THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AO WHE REIN HE SUBMITTED THAT OUT OF 31 SHARE APPLICANTS THE ASSESSEE HAS PRODUCED THE DETA ILS OF NAMES AND ADDRESSES ALONG WITH PAN NOS. IN RESPECT OF 30 AND IN RESPECT OF OT HER PERSON SHRI RAJIV KR.AGARWAL A COPY OF THE PASSPORT HAS BEEN GIVEN. HE FURTHER POI NTED OUT THAT AO HAS OBSERVED THAT OUT OF 31 PERSONS ONLY FOUR PERSONS HAVE BEEN PAID THE SHARE APPLICATION MONEY IN CASH AND THE BALANCE HAS BEEN GIVEN BY A/C PAYEE CH EQUES THROUGH BANKING CHANNELS. IN SUPPORT OF HIS SUBMISSIONS HE FILED THE IDENTITY PROOF OF ALL THE APPLICANTS WHICH WERE PLACED AT PAGES 17 TO 53 OF THE PAPER BOOK AND THE COPIES OF THE BANK STATEMENTS OF THE SHARE APPLICANTS AT PAGES 54 TO 84 AND FINAL LY BY REFERRING TO THE ORDER SHEET NOTINGS MADE ON 2.12.2008 AND 05.12.2008 SUBMITTED THAT THE AO HAS MADE NECESSARY ENQUIRIES FROM SOME OF THE SHARE APPLICAN TS AND GOT THE CONFIRMATIONS. THE ASSESSEE HAS PRODUCED PAN NOS. OF ALL THE SHARE APP LICANTS. THE ASSESSEE COMPANY HAS 3 ALSO CONFIRMED THE SHARE APPLICATION ALLOTMENT OF R OC IN FORM NO.2 WHICH WAS PLACED AT PAGES 11 TO 13 OF THE PAPER BOOK. BASED O N THE ABOVE DOCUMENTS, HE CONTENDED THAT THE ASSESSEE HAS DISCHARGED HIS ONUS IN RESPECT OF THE IDENTITY, CREDITWORTHINESS AS WELL AS GENUINENESS OF THE TRAN SACTIONS AND THE REVENUE IS NOT JUSTIFIED IN DISBELIEVING THE TRANSACTIONS BASED ON THE INCOME OF THE SHARE APPLICANTS AS WELL AS THEIR DRAWINGS. THEREFORE, HE REQUESTED TO SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DELETE THE ADDITION WHICH IS CONFIR MED BY THE LD. CIT(A) IN RESPECT OF 30 SHARE APPLICANTS. 5. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE, RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, IT IS OBSERVED THAT THE ASSESS EE HAS GIVEN THE PAN NUMBERS IN RESPECT OF 30 SHARE APPLICANTS ALONG WITH COPIES OF THE SAME AND THE BANK STATEMENTS THROUGH WHICH THE SHARE APPLICANTS MONEY HAS BEEN R ECEIVED AND IN RESPECT OF CASH RECEIPTS ONE OF THE SHARE APPLICANTS HAS BEEN PRODU CED BEFORE THE AO. UNDER THIS CIRCUMSTANCES IT IS NOT FAIR ON THE PART OF THE REV ENUE TO DISBELIEVE THE SUBMISSIONS OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE ID ENTITY OF THE SHARE APPLICANTS HAS NOT BEEN ESTABLISHED WHICH WAS OBSERVED BY THE LD. CIT(A). THEREFORE, IN OUR CONSIDERED OPINION, IN THE PRESENT FACTS AND CIRCUM STANCES THE HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD. 216 C TR 195 (SC)IS FAIRLY APPLICABLE. THE HONBLE SC HAS HELD AS UNDER :- IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS U NDISCLOSED INCOME OF ASSESSEE COMPANY. 6.1. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DIRECT TH E AO TO DELETE THE ADDITION OF RS.68,00,000/- U/S 68 OF THE ACT. 4 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 19.08.2011. SD/- SD/- [ .. , ] [ .!'., #$ ] [ B.R.MITTAL ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( ('$ '$ '$ '$) )) ) DATE: 19.08.2011. R.G.(.P.S.) #3 1 /4 5#4)6- COPY OF THE ORDER FORWARDED TO: 1. M/S. SUNFLOWER NIRMAN (P) LTD., BURDWAN ROAD, SILIG URI. 2 THE ADDL.CIT, RANGE-2, SILIGURI. 3. THE CIT, 4. THE CIT(A)-SILIGURI. 5. DR, KOLKATA BENCHES, KOLKATA 04 // TRUE COPY, #3';/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES