DCIT, Circle - 3, Siliguri, Siliguri V. M/s. Nowera Valley Plantation (P) Ltd., Siliguri

ITA 1575/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54577 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 09-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S DUTTA
• Assessee Lawyers: V N PUROHIT
• Keywords: Unexplained cash credit; Bogus Share capital; Reasonable cause; Corroborative evidences
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . , !' ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] # # # # / I.T.A NO.1575/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. NOWER A VALLEY PLANTATION (P) LTD. CIRCLE-3, SILIGURI (PAN AABCN 7839 G) ()* /APPELLANT ) (+,)*/ RESPONDENT ) FOR THE APPELLANT: SHRI P. S. DUTTA FOR THE RESPONDENT: SHRI V. N. PUROHIT DATE OF HEARING: 12.10.2011 DATE OF PRONOUNCEMENT: 12.10.2011 !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), SILIGURI IN APPEAL NO 283/ CIT(A)/SLG/06-07 DATED 18.02.2010. ASSESSMENT WAS F RAMED BY ACIT, CIRCLE-3, SILIGURI U/S.143(3)(II) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 20.12.2006. 2. AT THE OUTSET, IT IS NOTICED THAT THE APPEAL OF REVENUE IS DELAYED BY 52 DAYS AND CONDONATION PETITION HAS BEEN FILED. WE FIND THAT THE CONCERNED ASSESSING OFFICER I.E. ACIT, CIRCLE-3, SILIGURI WAS ON LEAVE DURING THE PERIOD A ND DCIT, CIRCLE-3, SILIGURI WAS HOLDING ADDITIONAL CHARGE OF CIRCLE-3,SILIGURI AND DUE TO O VERSIGHT HE COULD NOT FILE THE APPEAL ON TIME AND THEREBY CAUSED DELAY OF 52 DAYS. ON CONFRONTED , LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS BEING REASONABLE CAUSE, DELAY CA N BE CONDONED. AS BOTH THE PARTIES HAVE NO OBJECTION, WE CONDONE THE DELAY BEING SMALL OF 52 D AYS. ACCORDINGLY, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF SHARE APPLICATION MONEY OF RS.35.55 LAK HS MADE BY ASSESSING OFFICER BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT. FOR THIS, REV ENUE HAS RAISED FOLLOWING TWO GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A), SILIGURI WAS JUSTIFIED IN LAW IN DELETING THE ADDITION OF RS.35, 55,000/- MADE BY THE ASSESSING OFFICER 2 ITA 1575/K/2010 NOWERA VALLEY PLANTATION (P) LTD. . A.Y.04-05 U/S. 68 OF THE INCOME-TAX ACT, 1961 ON ACCOUNT OF B OGUS SHARE APPLICATION FUND SHOWN BY THE ASSESSEE COMPANY WITHOUT CONSIDERING THE FACT T HAT THE CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION W AS NOT PROVED BY THE ASSESSEE COMPANY NEITHER DURING THE COURSE OF SCRUTINY PROCE EDINGS NOR DURING THE COURSE OF HEARING OF APPEAL BEFORE THE LD. CIT(A), SILIGURI. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A), SILIGURI HAS ERRED IN IGNORING THE DECISION IN THE CASE OF CIT VS. BIJ U PATNAIK 160 ITR 674 (SC) WHEN IN THE INSTANT CASE THE ASSESSEE HAD NOT DISCHARGED THE ON US OF PROVING THE SOURCE OF THE SOURCE HELD NECESSARY AS DECIDED IN THE CASE CITED. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT THE ASSESSEE COMPANY DURING FY 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05 COLLECTED SHARE APPLICATION MONEY FROM 12 P ERSONS IN TOTALING TO RS.35.55 LAKHS. IT WAS THE CONTENTION OF THE ASSESSEE THAT COMPANY DID NOT COMMENCE ANY BUSINESS TILL THE END OF THE RELEVANT ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AND MOREOVER, SHARE APPLICATION MONEY OF RS.35.55 LAKHS WAS UTILI SED FOR PURCHASE OF LAND. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDING , REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF SHARE APPLICATION MONEY INCLUDING NAMES, ADDRESS ES, PAN OF SHARE APPLICANTS, THE MODE OF RECEIPT OF SHARE APPLICATION MONEY ALONG WITH DOCUM ENTARY EVIDENCE. THE ASSESSEE FILED COMPLETE NAMES AND ADDRESSES ALONG WITH PAN AND ASS ESSMENT PARTICULARS OF THESE SHARE APPLICANTS. THE ASSESSING OFFICER OBSERVED THAT THE SE PARTIES I.E. TEN PARTIES ARE RESIDING ON THE SAME ADDRESS AND REMAINING TWO PARTIES ARE AT A DIF FERENT ADDRESS AND IN RESPONSE TO REQUISITION U/S. 133(6), THE ASSESSEE FURNISHED COPIES OF I. T. RETURNS FOR ASSESSMENT YEAR 2003-04 AND 2004-05 ALONG WITH P&L ACCOUNT, BALANCE SHEET AND B ANK STATEMENTS ETC. THE ASSESSING OFFICER, ON EXAMINATION OF I. T. RETURNS OF THESE S HARE APPLICANTS, FOUND THAT MOST OF THE LADIES HAVE SHOWN INCOME FROM SEASONAL CROP BUSINESS AND R ETURNED INCOME WAS MARGINALLY ABOVE THE TAXABLE LIMIT AND MOST OF THEM DID NOT HAVE ANY BANK ACCOUNT. IN VIEW OF THESE FINDINGS, HE FURTHER NOTED THAT ALL TWELVE SHARE APPLICANTS HAD PAID SHARE APPLICATION MONEY BY CHEQUE, WHICH WAS NOT POSSIBLE WITHOUT HAVING BANK ACCOUNT AND EVEN SEQUENCE OF SOME OF CHEQUE NUMBERS INDICATE THAT THESE HAVE BEEN ISSUED FROM S AME BANK ACCOUNT. IN VIEW OF THESE FACTS, ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS OF THESE SHARE APPLICAN TS BUT THE ASSESSEE FAILED TO DO SO DESPITE SEVERAL OPPORTUNITIES PROVIDED TO THEM. ACCORDINGL Y, ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD INTRODUCED ITS UNACCOUNTED MONEY IN TH E GARB OF SHARE APPLICATION MONEY AND BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT, T REATED THE ENTIRE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT. AGGRIEVED, ASSESSEE PREFER RED APPEAL BEFORE CIT(A). 3 ITA 1575/K/2010 NOWERA VALLEY PLANTATION (P) LTD. . A.Y.04-05 5. BEFORE CIT(A), IT WAS CONTENDED THAT THE SUBSCRI PTIONS WERE RECEIVED THROUGH BANKING CHANNELS AND ALL THESE ARE REFLECTED IN PERSONAL IN COME TAX RETURNS OF SHARE APPLICANTS. ACCORDING TO ASSESSEE, ALL OF THEM WERE INCOME TAX ASSESSEES HAVING PAN, THE ASSESSEE SUBMITTED COMPLETE DETAILS OF SHARE APPLICATION MON EY, PARTICULARS OF CHEQUE RECEIPT FROM SHARE APPLICANTS ETC. THE ASSESSEE ALSO FILED DETAILS O F BANK TRANSACTIONS, CHEQUES, PAY ORDERS, DEMAND DRAFTS ISSUED FOR THE SHARE APPLICATION MONE Y AND ALSO FILED COPIES OF THE SAME. THE SAME WERE REFERRED BY CIT TO ASSESSING OFFICER FOR HIS REMAND REPORT AND ASSESSING OFFICER IN HIS REMAND REPORT ADMITTED THE DOCUMENTS OF THESE T RANSACTIONS OF SHARE APPLICANTS AS GENUINE. THE RELEVANT TEXT OF THE REPORT AS REPRODUCED IN TH E ORDER OF CIT(A) IS AS UNDER: WITH RESPECT TO THE VERIFICATION OF THE BANK CHEQU ES ISSUED BY THE SHARE APPLICANTS, NECESSARY INVESTIGATION AND ENQUIRY WAS CONDUCTED, THE RESULTS OF WHICH ARE HEREBY SUMMARIZED AS FOLLOWS: 1) THAT THE SHARE APPLICANTS HAVE PAID FOR THEIR SH ARE APPLICATION MONEY THROUGH CHEQUES BUT NOT BY THEMSELVES BUT THROUGH T HE BANK ACCOUNT OF SOME OTHER ENTITIES VIZ. BENGAL DISTRIBUTORS AND NORTH B ENGAL CEREALS P. LTD. AND THROUGH TWO INDIVIDUALS UTTAM KUMAR GOYAL AND VISHA NT KUMAR GOYAL. 2) THAT THE ASSESSEE IN THEIR SUBMISSION BEFORE THE UNDERSIGNED ON 12.02,2010 HAS MENTIONED THE BANK NAME AND THE RES PECTIVE BANK ACCOUNTS FROM WHERE THE SHARE APPLICATION HAS BEEN RECEIVED. 3) THE FACT OF THE SHARE APPLICATION MONEY HAVING C OME FROM AXIS BANK ACCOUNT OF BENGAL DISTRIBUTORS WAS ALSO CORROBORATE D BY THE CONFIRMATION RECEIVED FROM AXIS BANK IN THE FORM OF PHOTOCOPY OF CHEQUE, WHEREIN THE SIGNATORY IS ONE MR. RAMNIWAS AGARWAL, WHO IS THE P ROPRIETOR OF BENGAL DISTRIBUTORS. THE NECESSARY REPORT IS HEREBY SUBMITTED ALONGWITH SUPPORTING EVIDENCE FOR KIND PERUSAL AND NECESSARY ACTION ON YOUR PART. 6. THE CIT(A) AFTER CONSIDERING REMAND REPORT OF TH E ASSESSING OFFICER AND THE EVIDENCE PRODUCED BY ASSESSEE DELETED THE ADDITION BY GIVING FOLLOWING FINDING: IN VIEW OF THE ABOVE FACT, IT IS APPARENT THAT TH E SHARE APPLICANTS MADE THE INVESTMENT WITHDRAWING THEIR LOAN FUNDS INVESTED EA RLIER WITH VARIOUS CONCERNS. THE SAME FACT IS ALSO SUPPORTED AND CORROBORATED BY THE EVIDENCES PRODUCED BY THE LD. ARS. AFTER VERIFICATION OF THE FACT, THE A.O. HAS ALSO A CCEPTED THE SUBMISSION OF THE LD. ARS. HE HAS ALSO EXAMINED THE RELEVANT BANK ACCOUNTS. T HEREFORE, IT CANNOT BE SAID THAT THE SOURCE OF THE SHARE APPLICATION MONEY WAS UNEXPLAIN ED. FROM THE PAN/GIR NOS. OF THE SHARE HOLDERS, THEIR IDENTITY IS ESTABLISHED. THE ASSESSEE HAS EXPLAINED SOURCE OF THE FUND AND TRANSACTIONS WERE MADE THROUGH BANKING CHANNEL. AS SUCH, THE SHARE APPLICATION FUND CANNOT BE STATED TO BE UNEXPLAINED. CERTAIN O THER ISSUES RAISED BY THE LD. A.O IN HIS ORDER ARE NOT VERY RELEVANT SO FAR AS THE AMOUNT OF CASH CREDIT IS CONCERNED. ON THE BASIS OF SUCH CONTRADICTORY INFORMATION, HE DID NOT CONDUCT FURTHER ENQUIRY TO PROVE THAT THE FAADE OF SHARE APPLICATION MONEY WAS AN AFTER THOUGHT. 7. WE FIND THAT THE ASSESSEE HAS PRODUCED COMPLETE DETAILS OF SHARE APPLICATION MONEY AND SHARE APPLICATION MONEY WAS RECEIVED THROUGH BANKIN G CHANNELS OF THESE SHARE APPLICANTS 4 ITA 1575/K/2010 NOWERA VALLEY PLANTATION (P) LTD. . A.Y.04-05 THROUGH BANK ACCOUNT OF BENGAL DISTRIBUTORS AND NOR TH BENGAL CEREALS P. LTD. AND ALSO THROUGH UTTAM KUMAR GOYAL AND VISHANT KUMAR GOYAL. THIS FA CT HAS BEEN CONFIRMED BY AXIS BANK BY CONFIRMING THE FACT THAT THE CHEQUES WERE OF SHA RE APPLICATION MONEY AND WERE GIVEN THROUGH AXIS BANK. ONCE THE ASSESSEE IS ABLE TO ES TABLISH THE IDENTITY OF SHARE APPLICANTS AND GENUINENESS OF TRANSACTION, IT IS FOR THE REVENUE T O LOOK INTO THE POSITION OF CREDITWORTHINESS OF SHARE APPLICANTS IN THE HANDS OF SHARE APPLICANTS O NLY AND NOT IN THE HANDS OF ASSESSEE COMPANY. SIMILARLY, HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR 195 (SC) HAS HELD AS UNDER: IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GI VEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN TH EIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. IN VIEW OF THE ABOVE AND FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS (P) LTD. (SUPRA), WE UPHOLD THE ORDER OF CI T(A) AND DISMISS THE REVENUES APPEAL. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . , !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 12 TH OCTOBER, 2011 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DCIT, CIRCLE-3, SILIGURI. 2 +,)* / RESPONDENT, M/S. NOWERA VALLEY PLANTATION (P) LTD ., MANGAL JYOTI BHAWAN, GANESH RAM COMPOUND, HILL CART ROAD, SILIGU RI. 3 . -$ ( )/ THE CIT(A), KOLKATA 4. -$ / CIT, KOLKATA 5 . => +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$?/ BY ORDER, 1 /ASSTT. REGISTRAR .