ITO, New Delhi V. M/s Comshare Investments Pvt. Ltd., New Delhi

ITA 1519/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65467 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: K SAMPATH ADV APPEAL HEARD ON
• Section: 68

Judgement Text

I.T.A .NO.- 1519/DEL/2011 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULBHARAT, JUDICIAL MEMBER I.T.A .NO.- 1519/DEL/2011 (ASSESSMENT YEAR-2006-07) ITO, VS COMSHARE INVESTMENTS PVT. LTD. WARD- 3(4), H-57, SARITA VIHAR, NEW DELHI NEW DELHI-110076. PAN-AACCC0599F (A PPELLANT) (RESPONDENT) APPELLANT BY: SH. S.K.JAIN, SR. DR RESPONDENT BY: SH. K. SAMPATH, ADV. APPEAL HEARD ON-10.09.2012 ORDER PRONOUNCED ON-14.09.2012 ORDER PER KULBHARAT, JM THE PRESENT APPEAL OF THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-IV, DELHI DATED 27.01.2011. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF THE APPEAL:- 1). THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS. 31,60,000/- MADE BY THE ASSESSING O FFICER U/S 68 OF THE INCOME TAX ACT, 1961, IGNORING THE FACT THAT EVEN IF PAPER IDENTITY OF THE SHARE APPLICANTS HAVE BEEN ES TABLISHED, YET FOR THE PURPOSE OF ACCEPTING THE GENUINENESS OF FUN DS U/S 68 OF THE I.T.ACT, THE PHYSICAL IDENTITY OF THE SHARE APP LICANTS HAS TO BE ESTABLISHED AND IN THE PRESENT CASE THE SAME HAS NOT HAPPENED. RELIANCE IS PLACED ON THE RECENT DECISIO NS OF HONBLE TRIBUNAL IN SEVERAL CASES NAMELY OMEGA BIOT ECH LTD. I.T.A .NO.- 1519/DEL/2011 2 IN ITA NO. 2860/DEL/2009; OPTIBELT PVT. LTD. IN ITA NO. 1964/DEL/2009; ARYAN MANAGEMENT SERVICES PVT. LTD. IN ITA NO. 2986/DEL/2009; BEAUTEX IN ITA NO. 217/DEL/2008. 2). THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEA L. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSES SEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS FRAMED W HEREBY THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WAS TREA TED AS HIS INCOME FROM OTHER SOURCES. THE ASSESSEE FEELING AGGRIEVED BY T HE ORDER OF AO, FILED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS AND RELYING UPON THE JUDGEMENT OF THE HONBLE SUPREME C OURT RENDERED IN THE CASE OF M/S LOVELY EXPORTS (P) LTD.(2008)299 ITR 26 8 (DELHI) ALLOWED THE APPEAL. NOW REVENUE IS IN APPEAL BEFORE US. 4. THE ONLY EFFECTIVE GROUND IS AGAINST THE DELETIO N OF ADDITION OF RS. 31,60,000/- MADE BY THE AO U/S 68 OF THE ACT. LD. S ENIOR DR SUBMITTED THAT THE CONFIRMATION HAS GIVEN BY THE ASSESSEE WAS NOT CREDIBLE AND THE AO HAS RIGHTLY DISCARDED THE SAME. HE SUBMITTED THAT THE AO HAS OBSERVED THAT THE ASSESSEE COMPANY HAS FAILED TO FURNISH ANY DOCUMENT S IN SUPPORT OF GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF PERSONS. HE SUBMITTED THAT THE AO HAS REPEATEDLY ASKED THE ASSESSEE TO FU RNISH COPY OF BALANCE SHEET, COPIES OF ITR SO THAT THE GENUINENESS OF THE TRANSACTIONS AND CREDIT- WORTHINESS OF THE CREDITORS CAN BE ASCERTAINED. HE PLACED RELIANCE ON THE I.T.A .NO.- 1519/DEL/2011 3 JUDGEMENT OF THE HONBLE HIGH COURT OF DELHI RENDER ED IN THE CASE OF CIT VS NOVA PROMOTERS & FINLEASE (P) LTD. (2012) 342 IT R 169 (DELHI). ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE STRONGLY SUP PORTED THE ORDER OF LD. CIT(A). HE SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A). HE SUBMITTED THAT THE FACTS OF CIT VS NOVA PROMOTER S & FINLEASE (P) LTD. (SUPRA) ARE DIFFERENT. IN THAT CASE, THERE WAS A T HOROUGH INQUIRY BY THE REVENUE. IN THIS CASE, THE ASSESSEE HAS SUPPLIED C ONFIRMATION TO THE AO AND THOSE CONFIRMATIONS MENTIONED PAN NO, IDENTITY PROO F ETC. HE SUBMITTED MERELY BECAUSE THERE WAS NO MENTION OF DATE ON CONF IRMATION LETTER, SAME OUGHT NOT TO HAVE BEEN DISCARDED. HE SUBMITTED THA T THE AO CHOSE NOT TO MAKE FURTHER INQUIRIES AS PAN NO. OF THE CONCERNED COMPANIES, WAS AVAILABLE AND ALSO INCOME-TAX RETURNS, BALANCE SHE ET ETC. WERE AVAILABLE WITH THE DEPARTMENT. HE SUBMITTED THAT THE BASIS OF DIS CARDING AND DISBELIEVING THE CONFIRMATION BY THE AO IS THAT THE CONFIRMATION LETTER OF M/S MACL SECURITIES & FINANCE LTD, IS UNDATED AND IN RESPECT OF OTHER COMPANIES ON BASIS THAT THE CONFIRMATION LETTER WAS SIGNED BY ON E PERSON NAMELY SH. V.SRIVASTAVA. THE AO HAS NOT MADE ANY INDEPENDENT INQUIRY CONFIRMING THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED MATE RIAL AVAILABLE ON RECORD. UNDISPUTED FACTS REMAINS THAT THE CONFIRMA TIONS WERE DISCARDED BY THE AO, BEING NOT CREDIBLE EVIDENCE. HOWEVER, ON S UCH CONFIRMATION LETTER I.T.A .NO.- 1519/DEL/2011 4 PAN NO. OF THE COMPANIES WAS MENTIONED. THE AO DID NOT DEEM IT FIT TO MAKE ANY FURTHER INQUIRY BY ISSUING SUMMONS ETC. TO THE CONCERNED COMPANIES. THE REVENUE HAS RELIED ON THE JUDGEMENT OF HON'BLE HIGH COURT OF DELHI RENDERED IN THE CASE OF CIT VS NOVA PROMOT ERS & FINLEASE (P) LTD (SUPRA). 6. IT IS PERTINENT TO NOTE THAT THE HON'BLE HIGH CO URT, IN THE CASE OF CIT VS NOVA PROMOTERS & FINLEASE (P) LTD. WHICH REFERRI NG THE JUDGEMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF M/S L OVELY EXPORTS (P) LTD., OBSERVED THAT THE RATIO OF A DECISION IS TO BE UNDE RSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THE CASE, SO UNDERST OOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICA TIONS SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDI T-WORTHINESS, SHARE APPLICATION FORMS AND SHARES TRANSFER REGISTER ETC . ARE FURNISHED TO THE AO AND THE AO HAS NOT CONDUCTED ANY INQUIRY INTO THE S AME AS HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS AR E FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE U/S 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE S HARE APPLICANTS IN ACCORDANCE WITH LAW. HONBLE HIGH COURT FURTHER OB SERVED THAT THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT CANNOT B E APPLIED TO A CASE WHERE THE AO IS IN POSSESSION OF MATERIAL THAT DISC REDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTA BLISHES THE LINK BETWEEN I.T.A .NO.- 1519/DEL/2011 5 SELF-CONFESSED ACCOMMODATION ENTRY PROVIDERS, WHO SE BUSINESS IS TO HELP ASSESSEE BRING INTO THEIR BOOKS OF ACCOUNTS THEIR U NACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION AND THE AS SESSEE. THE RATIO IS INAPPLICABLE TO A CASE WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MAD E AVAILABLE TO THE AO AS A RESULT OF INVESTIGATION CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH ENTRY PROVIDERS. THE EXISTENC E WITH THE AO OF MATERIAL SHOWING THAT THE SHARES SUBSCRIPTIONS WERE COLLECTE D AS PART OF A PRE- MEDITATED PLAN-A SMOKE SCREEN-CONCEIVED AND EXECUTE D WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICA BILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WH ERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLAC ED UPON HIM TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTIONS. IN SUCH A CASE, T HE AO CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVI DENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT T HE SAME WITHOUT CARRYING OUT ANY VERIFICATION OR INQUIRY INTO THE M ATERIAL PLACED BEFORE HIM. 7. WE FIND THAT THE JUDGEMENT OF THE HONBLE HIGH C OURT RENDERED IN THE CASE OF CIT VS M/S NOVA PROMOTERS & FINLEASE (P) LT D.(SUPRA) WAS NOT AVAILABLE WITH THE LD. CIT(A). IN THIS VIEW OF THE MATTER, THIS ISSUE IS REMITTED BACK TO THE FILE OF LD. CIT(A) TO DECIDE T HE CASE IN THE LIGHT OF THE I.T.A .NO.- 1519/DEL/2011 6 JUDGEMENT OF HONBLE HIGH COURT RENDERED IN THE CAS E OF CIT VS NOVA PROMOTERS & FINLEASE (P) LTD.(SUPRA). THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTI CAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2012. SD/- SD/- (S.V.MEHROTRA) (KULBHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/09/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI