Appeal Details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 2195 (ITAT-JODHPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-03-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2011-2012
Appeal Filed On
01-05-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 155/JODH/2018 (ASSESSMENT YEAR-2008-09) M/S LODHA OFFSET LTD. E-390, M.I.A., 2 ND PHASE, BASNI, JODHPUR. VS PR. COMMISSIONER OF INCOME TAX-1, JODHPUR. (APPELLANT) (RESPONDENT) PAN: AAACL2759G ASSESSEE BY SHRI AMIT KOTHARI (CA) & SHRI ABHINAV KOTHARI (CA) R EVENUE BY SHRI K.C. BADHOK CIT - DR DATE OF HEARING 17 /03/2020 DATE OF PRONOUNCEMENT 19/03/2020 O R D E R PER SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. PR. CIT-I, JODHPUR DATED 27.03.2018 PASSED U /S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) FOR THE ASSESSMEN T YEAR 2008-09. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: '1. THE ORDER PASSED BY THE LD. CIT, JODHPUR U/S 26 3 IS BAD IN LAW AND BAD ON FACTS. 2. THE LD. CIT HAD ERRED IN OBSERVING THAT ORIGINA L ASSESSMENT MADE U/S 143(3)/148 ON 31 ST MARCH, 2016 WAS ERRONEOUS SO FAR AS PREJUDICIAL T O THE INTEREST OF REVENUE. 2 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT 3. THE LD. PR. CIT HAS ERRED IN OBSERVING THAT THE SHARE CAPITAL MONEY RECEIVED DURING THE YEAR UNDER CONSIDERATION WAS NOT FULLY E XPLAINED AND NEEDS TO BE RE-EXAMINED. THE SAME IS BAD IN LAW AND BAD ON F ACTS. 4. THE LD. PR. CIT HAS ERRED IN OBSERVING THAT THE LD. AO HAD ERRED IN OBSERVING THAT THE AMENDMENT IN SECTION 68 AND SECTION 56(2)( VIIB) WERE APPLICABLE ONLY FROM A.Y. 2013-14. SUCH A VIEW CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. 5. THE IMPUGNED ORDER U/S 263 IS ILLEGAL AND MOST UNJUSTIFIED, AS THE SAME IS NOT BASED ON ANY VALID MATERIAL OR LEGAL EVIDENCE W HATSOEVER ON RECORDS, BUT THE SAME IS MERELY BASED ON WRONG SUSPICIONS AN D BASELESS PRESUMPTIONS. THE IMPUGNED ORDER DESERVES TO BE QUA SHED. 6. THE LD. PR. CIT HAS ERRED IN SETTING ASIDE THE ORDER, PARTICULARLY WHEN THE VIEW OF THE LD. AO WAS BASED ON JUDICIAL DECISION O F HON'BLE SUPREME COURT AND HON'BLE RAJASTHAN HIGH COURT. THE CONTRARY VIEW TAKEN BY THE LD. PR. CIT WAS BAD IN LAW AND BAD ON FACTS AND SETTING ASI DE THE ORDER WAS NOT JUSTIFIED. 7. THE APPELLANT PRAY FOR SUITABLE COSTS. 8. THE APPELLANT PRAY FOR STAY OF IMPUGNED ORDER. 9. THE APPELLANT CRAVES LIBERTY TO ADD, AMEND, ALT ER, AND MODIFY ANY OF THE GROUND OF APPEAL ON OR BEFORE ITS HEARING BEFORE YO UR HONOUR.' 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE SUB MITTED RETURN OF INCOME FOR A.Y. 2008-09 AT NIL INCOME WHICH WAS ASS ESSED AS SUCH. THE AO INITIATED PROCEEDINGS U/S 148 OF THE ACT VIDE NO TICE DATED 30.03.2O15 AND ASSESSMENT WAS COMPLETED. THE ASSESSMENT U/S 14 3(3)/148 OF THE ACT WAS COMPLETED VIDE ORDER DATED 31.03.2016 IN WHICH THE INCOME AS ORIGINALLY ASSESSED WAS ACCEPTED. 3. INITIALLY THE ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10 WAS INITIATED BY THE AO BY TAKING ACTION U/S 148 OF THE ACT AS ACCOR DING TO HIM THERE WAS 3 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT INCREASE IN SHARE CAPITAL OF THE COMPANY, WHICH WAS NOT GENUINE AND HE PASSED ORDER U/S 143(3)/148 OF THE ACT MAKING ADDIT ION OF THE SAID AMOUNT. THE ADDITION WAS DELETED IN APPEAL BEFORE T HE LD. CIT(A) AND THE SAID ORDER WAS ALSO CONFIRMED BY JODHPUR BENCH OF T HE ITAT IN THEIR ORDER DATED 06.12.2017 IN ITA NO. 271/JODH/2017. ONE OF THE REASONS FOR DELETING THE SAID ADDITION IN THE SAID YEAR WAS THA T THE AMOUNT OF SHARE CAPITAL WAS RECEIVED IN AY 200-09 AND ONLY ALLOTMEN T OF SHARES WAS MADE IN AY 2009-10, AND THEREFORE ON THESE GROUNDS THE ADDI TION CANNOT BE SUSTAINED. 4. FROM THE RECORDS, IT APPEARS THAT FROM THE SAID FINDING FOR AY 2009- 10 GIVEN IN THE APPELLATE PROCEEDINGS ACTION U/S 14 8 WAS TAKEN FOR THE YEAR UNDER CONSIDERATION. EVEN FROM THE REASONS RECORDED IT IS SEEN THAT THE ACTION WAS TAKEN ON THE BASIS OF PROCEEDINGS FOR AY 2009-10. 5. THE CONTENTION OF THE ASSESSEE IS THAT THE PROC EEDINGS FOR THE YEAR UNDER CONSIDERATION WERE INITIATED FOR VERIFICATION OF THE SHARE CAPITAL WHICH ARE THE SAME GROUNDS AS TAKEN FOR THE A.Y. 2009-10, AND COMPLETE DETAILS WHICH WERE SUBMITTED IN A.Y. 2009-10 WERE ALSO SUBM ITTED IN THE YEAR UNDER CONSIDERATION ALSO. THE AO WHILE COMPLETING T HE SAID ASSESSMENT HAD EXAMINED THESE DETAILS AND AFTER COMPLETE VERIFICAT ION OF THE SAME AND ALSO CONSIDERING THE FACT THAT THE AMOUNT OF SHARE CAPIT AL CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSID ERATION AS THE 4 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT AMENDMENT IN SECTION 2(24), SECTION 56(2)(VIIB) AND SECTION 68 WERE MADE APPLICABLE FROM A.Y. 2013-14 IN RELATION TO SHARE C APITAL AND PREMIUM AND THEREFORE, NO ADDITION WAS MADE. THIS DECISION OF T HE AO WAS EXAMINING THE COMPLETE DETAILS AND THIS WAS PRECISELY THE REA SON FOR WHICH THE ACTION U/S 148 WAS TAKEN. SUCH A VIEW ACCORDING TO THE APP ELLANT CANNOT BE SAID TO BE ERRONEOUS VIEW AND THERE WAS NO JUSTIFICATION FOR INITIATION OF ACTION U/S 263 BY THE CIT. 6. IT WAS ALSO CONTENDED THAT IN THE VARIOUS JUDIC IAL DECISIONS IT IS HELD THAT WHEN THE IDENTITY OF THE SHARE HOLDER IS ESTAB LISHED, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THE AMENDMENTS M ADE IN THE LAW IN SECTION 68 OF THE ACT AS WELL AS IN SECTION 56 OF T HE ACT WERE APPLICABLE ONLY FROM ASSESSMENT YEAR 2013-14 AND WERE NOT APPL ICABLE IN THE YEAR UNDER CONSIDERATION. EVEN ON MERITS OF THE CASE IT WAS SUBMITTED THAT THE ASSESSEE HAD SUBMITTED THAT VOLUMINOUS DETAILS WITH REGARD TO THE ISSUE OF SHARE CAPITAL. THE ASSESSEE COMPANY RECEIVED A TOTA L SUM OF RS. 1,50,00,000/- (ONE CRORE AND FIFTY LACS) FROM 5 LIM ITED COMPANIES AS SHARE APPLICATION MONEY ALONGWITH SHARE PREMIUM IN A.Y. 2 008-09. THE SHARES WERE ALLOTTED TO ALL THOSE COMPANIES IN A.Y. 2009-1 0. IT WAS CONTENDED THAT THE ASSESSEE SUBMITTED INTERALIA THE COPIES OF ACCO UNTS OF ALL THE COMPANIES PERTAINING TO A.Y. 2008-09 AND A.Y. 2009-10 INDICAT ING THE AMOUNT WAS RECEIVED TOWARDS SHARE APPLICATION, COPY OF BANK ST ATEMENT, CONFIRMATIONS, COPY OF PAN CARD, AND ANNUAL REPORTS. 5 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT 7. THE ASSESSEE ALSO CONTENDED THAT THAT NO ADDITI ON U/S 68 OF THE ACT CAN BE MADE IN RESPECT OF SHARE CAPITAL AND SHARE P REMIUM IN THE HANDS OF THE ASSESSEE COMPANY, WHERE THE ASSESSEE COMPANY HA D FURNISHED EVIDENCE TO PROVE THE IDENTITY, OF THE SHAREHOLDERS AND THE ISSUE IS COVERED IN FAVOUR OF THE APPELLANT BY THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF CIT V/S LOVELY EXPORTS (P.) LTD. (2008) 6 D TR (SC) 308 IN WHICH IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS REC EIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPE N THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. SIMILAR VIE W WAS GIVEN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287: 251 ITR 263 (SC) IN WHICH IT WAS HELD THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASE SHARE CAPITAL WERE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTANCES CAN T HE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE AS SESSEE. REFERENCE WAS ALSO MADE TO THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. SHREE BARKHA SYNTHETIC LTD. 182 CTR (RAJ) L7 5, IN WHICH HIGH COURT HAS FOLLOWED THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT V/S STELLER INVESTMENTS LTD. 8. IN ORDER U/S 263 OF THE ACT THE CIT, JODHPUR H AD REFERRED TO THE ALLOTMENT OF SHARE TO THE COMPANIES AND OBSERVED TH AT ENQUIRY LETTER WERE 6 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT ISSUED TO THEM IN AY 2009-10 U/S 133(6) WHICH WERE RETURNED BACK. DURING A.Y. 2009-10 THE APPELLANT COULD NOT PROVE THE SOUR CE AND CREDITWORTHINESS OF THE SHARE CAPITAL RECEIVED. THE SHARES OF THE CO MPANY IN THE SUBSEQUENT YEARS HAD BEEN TRANSFERRED TO CERTAIN RELATED PERSO NS WHICH ALSO INDICATES THAT THE SHARE CAPITAL RECEIVED WAS NOT GENUINE. TH E CRUX OF THE ORDER IS THAT THE AO WAS NOT JUSTIFIED IN ACCEPTING THE CONT ENTION OF THE ASSESSEE AND THE ORDER SO PASSED IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE AND THEREFORE, THE ORDER WAS SET ASIDE TO M AKE FRESH EXAMINATION OF THE GENUINENESS OF THE SHARE APPLICATION MONEY U /S 68 OF THE ACT. 9. ON THE OTHER HAND, THE LD CIT-DR HAS RELIED ON T HE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE LD. COUNSELS FOR BOTH THE PAR TIES AND HAVE ALSO CONSIDERED THE MATERIAL PLACED ON RECORD, ORDER PAS SED BY THE REVENUE AUTHORITIES AS WELL AS JUDGEMENTS RELIED UPON BY TH E PARTIES. FROM THE RECORD, WE NOTICE THAT MAIN ISSUE IN THE PRESENT CO NTROVERSY IS AS TO WHETHER THE ORDER PASSED BY THE A.O. CAN BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. IN CASE THE ORDER PASSED U/S 143(3)/148 OF THE ACT, THE A.O. IS NOT ERRONEOUS TH EN EVENTUALITY THE POWER U/S 263 OF THE ACT CANNOT BE EXERCISED. FROM THE FA CTS, WE NOTICE THAT IN THE REASSESSMENT ORDER PASSED, THE ISSUE HAD BEEN D ULY EXAMINED AND ON THE BASIS OF THE EXAMINATION OF THE RELEVANT RECORD S AND THE APPLICATION OF 7 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT LAW, ONE OF THE POSSIBLE OPINION HAD BEEN DRAWN BY THE A.O., WHICH CANNOT BE SAID TO BE ERRONEOUS SO FAR AS PREJUDICIAL TO TH E INTEREST OF REVENUE. IN THIS REGARD, WE DRAWN INTEREST FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LD. VS CIT (2000) 243 ITR 83 (SC) WHEREIN THE HONBLE SUPREME COURT HAD OBSERVED THAT SECTION 263 OF THE INCOME TAX ACT, 1961, MAKES IT CLEAR THAT THE P REREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSION SUO MOTO UNDER IT, IS THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. EVEN IF ONE OF THEM R ECOURSE CANNOT BE HELD TO SECTION 263(1) OF THE ACT. THE A.O. AFTER GOING THROUGH THE MATERIAL ON RECORD AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, HAD APPLIED HIS MIND. HIS VIEW WAS THAT THE AMENDMENT ARE NOT A PPLICABLE IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WH ICH IS A POSSIBLE VIEW. THE CIT DID NOT AGREE WITH THE CONCLUSION REACHED B Y THE ITO. HOWEVER, SECTION 263 OF THE ACT DOES NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED B Y THE ITO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SIN CE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERED BY T HE ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW C AN BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION U/S 263 OF THE AC AND IT CANNOT BE HELD TO BE JUSTIFIED. 8 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT 11. THE BASIS FOR AN ACTION U/S 263 OF THE ACT AND IT CANNOT BE HELD TO BE JUSTIFIED. THE ORDER CAN BE SAID TO BE ERRONEOUS AS SESSMENT ONLY IF IT DEVIATES FROM THE LAW AND IF THE AO ACTING IN ACCOR DANCE WITH LAW MAKES A ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER. THE AP HAS EXERCISED THE QUASI-JUDICI AL POWER VESTED IN HIM ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IN THE PRES ENT CASE IT CANNOT BE SAID THAT THERE IS AN INCORRECT APPLICATION OF LAW SO TH AT THE ORDER BEING ERRONEOUS. THE AMENDMENTS WERE FROM A.Y. 2013-14 AN D THE JUDICIAL DECISIONS WERE ALSO TO THE EFFECT THAT IT CANNOT BE MADE IN RELATION TO SHARE CAPITAL WHERE IDENTITY IS PROVED. THE PHRASE 'PREJU DICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THE VIEW OF THE AO THAT T HE AMENDMENTS WERE NOT RETROSPECTIVE IS ALSO ONE OF THE POSSIBLE VIEW AND SUCH A VIEW CANNOT BE SAID TO BE ERRONEOUS. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. VATIKA TOWNSHIP PRIVATE LIMITED REPORTED (2014) 367 ITR 466 (SC) HELD THAT WHEN THE AMENDMENT WAS MADE FROM A PARTICULAR DATE THE INTENTION OF THE LEGISLATURE WAS TO TREAT IT PROSPECTIVE AND IT COULD NOT BE TREATED AS DECLARATORY/STATUTORY OR CURATIVE IN NATURE. SIMILA RLY IN THE CASE OF ZILE SINGH VS STATE OF HARYANA & ORS. 2004(8) SCC 1 , IT WAS OBSERVED AS FOLLOWS THE CARDINAL PRINCIPLE OF CONSTRUCTION THAT EVERY S TATUTE IS PRIMA FACIE 9 ITA 155/JOHD/2018 M/S LODHA OFFSET LTD. VS PCIT PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECESSARY IMPLICATION MADE TO HAVE A RETROSPECTIVE. UNLESS THERE ARE WORDS IN THE STAT UTE SUFFICIENT TO SHOW THE INTENTION OF THE LEGISLATURE TO AFFECT EXISTING RIG HTS, IT IS DEEMED TO BE PROSPECTIVE ONLY.' IN VIEW OF ABOVE WE FIND THAT TH ERE IS NO ERROR IN THE CONCLUSION DRAWN BY THE AO WHILE PASSING THE ORDER AND THEREFORE, THE IMPUGNED ORDER U/S 263 OF THE ACT IS NOT JUSTIFIED AND THE SAME IS HEREBY QUASHED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED ORDER PRONOUNCED IN THE OPEN COURT ON 19/03/2020. SD/- SD/- (R.C.SHARMA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :. 19/03/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. DR, ITAT, JODHPUR 6. GUARD FILE (ITA NO. 155/JODH/2018) ASSISTANT REGISTRAR JODHPUR BENCH
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