Dhanman Investment & Properties Pvt.Ltd., U T OF D & NH V. The Income tax Officer,Vapi Ward, Vapi

ITA 1531/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5881 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1995-1996
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Assessee Lawyers: M K PATEL
• Section: 143(3); 147; 68

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DHANMAN INVESTMENT & PROPERTY (P) LTD., AT NAROLI, U.T. OF DADRA & NAGAR HAVELI. VS. THE INCOME-TAX OFFICER, VAPI WARD, VAPI. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI M. K. PATEL, AR REVENUE BY:- SHRI P. R. GHOSH, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING F OLLOWING GROUNDS :- (1) THE ORDER OF ASSESSMENT IS CONTRARY TO THE FACTS OF THE CASE AND PREJUDICIAL TO THE ASSESSEE. (2) ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AND LAW, THE ADDITIONS MADE ARE CONTRARY TO LAW AND BAS ED ON ERRONEOUS UNDERSTANDING OF THE FACTS OF THE CASE. (3) ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE OBSERVATION A ND TREATMENT OF SHARE APPLICATION MONEY RECEIVED FROM VARIOUS SH ARE APPLICANTS TO THE TUNE OF RS.3,60,000/- AS UNEXPLAI NED U/S 68 OF THE ACT BY THE LD. AO. THE ACTION OF THE LD. CIT(A) IS NOT IN ACCORDANCE WITH THE FACTS OF THE CASE AND DESERVES TO BE DELETED. 2. OUT OF THE ABOVE, LD. AR FOR THE ASSESSEE DID NO T PRESS GROUND NOS.1 & 2 AND HENCE THEY ARE TREATED AS REJECTED. T HUS THE ONLY ISSUE ITA NO.1531/AHD/10 ASST. YEAR :1995-96 2 SURVIVES FOR ADJUDICATION IS ABOUT SHARE APPLICATIO N MONEY OF RS.3,60,000/- ADDED BY THE AO UNDER SECTION 68 OF T HE ACT. 3. THE FACTS OF THE CASE ARE THAT ORIGINAL ASSESSME NT UNDER SECTION 143(3) READ WITH SECTION 147 WAS COMPLETED ON 30.3. 2000 ON AN INCOME OF RS.34,06,871/- WHEREIN AN ADDITION OF RS.34,09,9 00/- WAS MADE BY THE AO U/S 68, AGAINST SHARE APPLICATION MONEY. THE LD. CIT(A), SURAT VIDE HIS ORDER DATED 24.3.2003 CONFIRMED AN ADDITION OF RS.14,09,900/- UNDER SECTION 68 AND DELETED THE SUM OF RS.20 LACS BEING THE ADVANCE RECEIVED BY THE ASSESSEE FROM MILTON PLASTIC (P) LTD. WHEN T HE MATTER WENT BEFORE THE TRIBUNAL AT THE INSTANCE OF THE DEPARTMENT, IT WAS RESTORED TO THE FILE OF AO FOR FRESH HEARING. 4. SIMILARLY IN RESPECT OF ADDITION CONFIRMED BY TH E LD. CIT(A) THE MATTER WAS ALSO RESTORED TO THE FILE OF AO FOR FRES H ADJUDICATION. IN FRESH ASSESSMENT PROCEEDINGS THE AO ACCEPTED THE ADVANCE RECEIVED FROM M/S MILTON PLASTIC (P) LTD. FOR RS.20 LACS. OUT OF OTHE R SUM OF RS.14,09,900/- THE AO TREATED A SUM OF RS.3,60,000/- AS UNEXPLAINE D AND ADDED BACK U/S 68. HOWEVER, BEFORE THE LD. CIT(A) NO ONE APPEARED AND NO WRITTEN SUBMISSIONS WERE FILED. THE LD. CIT(A), THEREFORE, PROCEEDED TO DECIDE THE ISSUE ON MERITS. THE LD. CIT(A) CONFIRMED THE A DDITION AS UNDER :- 5. ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY F ROM 13 PERSONS OUT OF WHICH 10 PERSONS WERE PRODUCED BEFORE THE AO. THE STATEME NTS WERE RECORDED AND WERE FOUND TO BE GENUINE WHEREAS THE REMAINING 3 PERSONS COULD NOT BE PRODUCED. THE AO VERIFIED AND SAW THAT ALL THE SHARE APPLICANTS WERE FROM THE RELATIVES OF THE DIRECTORS. AFTER CONSIDERING ALL THE CIRCUMSTANTIAL EVIDENCES AND PROBABILITIES THE AO TREATED THE SUM OF RS.3,60,000/- AS UNGENUINE AND UNEXPLAIN ED. THEREFORE, ADDED IT TO THE TOTAL INCOME OF THE APPELLANT U/S 68 OF THE I.T. AC T, 1961. SINCE THERE IS NO OTHER EXPLANATION TO CONTROVERT THE FINDING OF THE AO, I AGREE WITH THE ACTION OF THE AO AND DISMISS THE APPEAL OF THE APPELLANT. 3 5. I HAVE HEARD THE PARTIES AND CAREFULLY PERUSED T HE MATERIAL ON RECORD. THE FOUR PERSONS IN RESPECT OF WHOM SHARE A PPLICATION MONEY WAS NOT TREATED AS GENUINE ARE AS UNDER :- SL.NO. NAME OF THE PERSON AMOUNT RS. WHETHER SHARES ALLOTTED OR NOT 1. SHRI YOGESH N. MANGROLIA 90,000 NO. 2. SHRI BHARATSINH B. MANGROLIA 90,000 NO 3 SHRI BAHADURSINH B. MANGROLIA 90,000 NO 4. SHRI HEMANTSINH N. MANGROLIA 90,000 NO. THE MAIN REASON FOR NOT TREATING THE SHARE APPLICAT ION MONEY AS GENUINE WAS THAT THERE WAS NO ALLOTMENT OF SHARES. THE LD. CIT(A) ALSO CONFIRMED THE ADDITION ON THE SAME GROUND. HE FURTHER ADDED T HAT THREE PERSONS WERE NOT PRODUCED BEFORE THE AO AND 4 TH ONE HAD DIED. THEREFORE, IT COULD NOT BE VERIFIED WHETHER MONEY WAS DEPOSITED BY THESE PE RSONS. 6. IN MY CONSIDERED VIEW NO ADDITION CAN BE MADE BE CAUSE THE VERY REASON FOR MAKING ADDITION IS NOT SOUND. WHETHER SH ARES ARE ALLOTTED OR NOT, IT IS A SUBSEQUENT FACT AFTER RECEIVING THE MO NEY. THE SHARES MAY OR MAY NOT BE ALLOTTED EVEN IN THE CASE OF GENUINE SHA RE APPLICATION MONEY. THEREFORE, THE ALLOTMENT OR NON-ALLOTMENT OF SHARES CANNOT BE A CRITERIA FOR DECIDING WHETHER SHARE APPLICATION IS GENUINE O R NOT. THE DECIDING CRITERIA IS THAT THERE SHOULD BE DOUBT ABOUT THE ID ENTITY OF THE PERSON WHO HAS DEPOSITED THE MONEY AS SHARE APPLICATION MONEY AND THAT HE HONESTLY ACCEPTS THAT HE HAS PAID MONEY TO THE COMPANY. IT H AS BEEN HELD IN SEVERAL CASES THAT IF IDENTITY OF THE SHARE APPLICA NT IS ESTABLISHED THEN NO ADDITION CAN BE MADE UNDER SECTION 68. IT HAS BEEN HELD IN CIT VS. VALUE CAPITAL SERVICES (P) LTD. (2009) 221 CTR (DEL) 511 OR CIT VS. DIVINE LEASING AND FINANCE LTD. (2008) 299 ITR 268 OR IN A ONE HOUSING 4 COMPLEX LTD. VS. ITO (2008) 299 ITR 327 ITAT (DEL) THAT WHERE IDENTITY OF THE SHARE APPLICANT IS ESTABLISHED AND THE APPLICANT ACCEPTS THAT HE HAS PAID MONEY THEN ONUS IS DEEMED TO BE DISCHAR GED BY THE ASSESSEE. IN THE PRESENT CASE THE AO HAS NOT RAISED ANY DOUBT ABOUT THE IDENTITY OF THE SHARE APPLICANTS, THEN NO FURTHER CRITERIA TO D ECIDE THE ADDITION UNDER SECTION 68 CAN BE CONSIDERED OR TREATED AS RELEVANT . ACCORDINGLY, I DELETE THE ADDITION. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 8/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD, DATED : 8/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD