Vasudeva Cotton Products Limited, Hyderabad V. Income Tax Officer, Ward-17(3), Hyderabad

ITA 1541/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5605 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 15-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Bogus Share capital; Additional evidence
• Section: 143(3); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 1541 /HYD/201 9 (ASSESSMENT YEAR : 201 4 - 15 ) M/S. VASUDEVA COTTON PRODUCTS LIMITED, 1 - 98/6/79, PLOT NO.5, JUBILEE ENCLAVE, MADHAPUR, HYDERABAD - 500 081 PAN AADCV4904G VS. INCOME TAX OFFICER, WARD 17(3), HYDERABAD. APPELLANT RESPONDENT APPELLANT BY : SHRI P. MURALI MOHAN RAO. RESPONDENT BY : SHRI SUNIL KUMAR PANDEY (D.R) DATE OF HEARING : 25.03.2021 . DATE OF PRONOUNCEMENT : 23 .04. 2021. O R D E R PER SHRI S.S. GODARA, J.M. : THIS ASSESSEES APPEAL FOR ASST. YEAR 2014 - 15 ARISES FROM THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, HYDERABAD ORDER DT. 25.03.2017 PASSED IN CASE NO. 0536/2016 - 17/ITO - 17(3)/CIT(A) - 1/HYD/2019 - 20 IN PROCEEDINGS UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (THE ACT). HEARD BOTH THE PARTIES . C ASE FILE PERUSED. 2 ITA NO. 1541/HYD/2019 2. THE ASSESSEE'S SOLE SUBSTANTIVE GRIEVANCE CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION ADDING OF UNEXPLAINED SHARE CAPITAL OF RS.1,15,66,200 U/S. 68 OF THE ACT. IT TRANSPIRES DURING THE COURSE OF HE A RING THAT THE ASSESSEE HAD CLAIMED TO HAVE RAISED THE SAME FROM VARIOUS INVESTORS/COTTON GROWERS IN ITS REGULAR BUSINESS OF PROCESSING AND SALE OF AGRO PRODUCTS INCLUDING COTTON. THE ASSESSING OFFICERS ASSESSMENT ORDER DT.31.122.2015 ATT RIBUTED THE ASSESSEE'S FAILURE IN RESPECT OF 42 OF SUCH INVESTORS IN THE LIGHT OF THEIR MEAGRE LAND HOLDINGS VIS - - VIS THE INVESTMENT MADE. ALL TH IS MADE HIM TO ADD THE IMPUGNED SUM ( S ) AS UNEXPLAINED SHARE CAPITAL U/S. 68 OF THE ACT. 3. THE ASSESSEE PRE FERRED APPEAL BEFORE THE CIT(A) . IT FURTHER FILED ADDITIONAL EVIDENCE (S) AS WELL. THE CIT(A) ISSUED CORRESPONDING DIRECTION S TO THE FIELD AUTHORITIES . THE ASSESSING OFFICER FILED HIS REMAND REPORT DT.22.6.2018 ON THE GROUND REITERATING THE EARLIER FINDING S THAT THE SHARE CAPITAL OF IMPUGNED 42 PARTIES WAS DISPROPORTIONATE TO THEIR LAND HOLDINGS. THE CIT(A) HAS THEREAFTER CONFIRMED THE IMPUGNED ADDITION AS UNDER : 10.3 DURING THE APPEAL PROCEEDINGS, THE APPELLANT SUBMITTED ADDITIONAL E VIDENCE. HENCE, A REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER ON 15 - 3 ITA NO. 1541/HYD/2019 4 ITA NO. 1541/HYD/2019 5 ITA NO. 1541/HYD/2019 6 ITA NO. 1541/HYD/2019 7 ITA NO. 1541/HYD/2019 8 ITA NO. 1541/HYD/2019 9 ITA NO. 1541/HYD/2019 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL PLEADINGS. SUFFICE TO SAY , IT IS NOT IN DISPUTE THAT BOTH THE LOWER AUTHORITIES DECLINE TO ACCEP T THE ASSESSEE'S SHARE CAPITAL OF RS.1,15,66,200 OUT OF THE TOTAL SUM OF RS.3,40,72,000 IN INVOLVING 42 INVESTORS. IT IS AN ADMITTED FACT THAT OF THESE 42 PARTIES HAVE DULY FILED CONFIRMATIONS BOTH IN THE COURSE OF ASSESSMENT AS WELL AS REMAND PROCEEDING S. THE ASSESSEE HAS ALSO SUBMITTED A DETAILED PAPER BOOK BEFORE US RUNNING INTO MORE THAN 200 PAGES COMPRISING OF ALL THE DETAILS OF THE SAID 42 INVESTOR PARTIES. WE MAKE IT CLEAR THAT THIS IS NOT THE R EVENUES CASE THAT THE ASSESSEE HAD FAILED TO PROVE IDENTITY OF INVESTORS IN THE COURSE OF FACTUAL VERIFICATION. THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE OBSERVED THAT THE SAID INVESTORS LAND HOLDINGS ARE VERY MUCH DISPROPORTIONATE TO THE CORRESPONDING SHARE CAPITAL MONEY. L EARNED DEPARTMENT REPRESENT ATIVE FAILED TO INDICATE THE SO CALLED DISPROPORTIONATE 10 ITA NO. 1541/HYD/2019 INVESTMENT QUA THE SHARE CAPITAL INVESTORS LAND HOLDINGS. IN OTHER WORDS, APART FRO M MERELY MAKING SWEEPING REMARKS, NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HA VE EXAMINED THE ASSESSEE'S DETAILED EVIDENCES AS WELL AS THE CONFIRMATIONS FROM ALL THE REMAINING PARTIES ON MERITS . WE THUS CONCLUDE IN THIS FACTUAL MATRIX THAT THE IMPUGNED UNEXPLAINED SHARE C A P ITAL ADDITION OF RS .1,15,66,200 MADE IN RESPECT OF THE ASSESSEE'S 42 INVEST OR PARTIES DOES NOT DESERVE TO BE UPHELD. THE SAME IS DIRECTED TO BE DELETED FOR THIS PRECISE REASON ONLY. 5. ALL OTHER PLEADINGS OF ASSESSEE ARE RENDERED INFRUCTUOUS . 6. THIS ASSESSEE'S APPEA L IS ALLOWED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 23RD APRIL , 2021. SD/ - SD/ - (LAXMI PRASAD SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 23 .0 4 .2021. * REDDY GP COPY TO : 1. M/S. VASUDEVA COTTON PRODUCTS LIMITED, 1 - 98/6/79, PLOT NO.5, JUBILEE ENCLAVE, MADHAPUR, HYDERABAD - 500 081 2. ITO, WARD 17(3), HYDERABAD. 3. PR. C I T - 5 , HYDERABAD. 4. CIT(APPEALS) - 1, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.