The ACIT, Circle-8, Ahmedabad V. SYP Agro Foods Limited, Ahmedabad

ITA 1585/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9346 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-08-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 10-05-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Keywords: Unexplained cash credit; Bogus Share capital
• Section: 195; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH C BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO. 1585/AHD/2004 (ASSESSMENT YEAR 2000-01) ASST. COMMISSIONER OF INCOME TAX CIRCLE-8, AHMEDABAD. VERSUS SYP AGRO FOODS LIMITED TOP FLOOR, MAHASHAKTI COMPLEX, STADIUM CROSS RD., NAVRANGPURA, AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: FOR THE APPELLANT: SHRI SHELLEY JINDAL FOR THE RESPONDENT SHRI NONE ORDER PER H.L.KARWA, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XIV, AH MEDABAD DATED 27-02- 2004 RELATING TO ASSESSMENT YEAR 2000-2001. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION MADE TO THE EXTENT OF RS. 98,75,000/- U/S. 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL. 3. THE ISSUE RELATES TO DELETION OF ADDITION OF RS. 98,75,000/- OUT OF RS. 1,23,48,000/- MADE UNDER SECTION 68 OF THE I.T. ACT , 1961 (IN SHORT THE ACT). THE ASSESSING OFFICER MADE THE ADDITION OF RS. 1,23 ,48,000/- OBSERVING AS UNDER: 2 ITA NO. 1585/AHD/2004 (ASSESSMENT YEAR 2000-01) 4. THE ASSESSEE COMPANY HAS SUBMITTED TWO FORM NO. 2 FILED BEFORE THE DEPARTMENT OF COMPANY AFFAIRS. FROM THE PERUSA L OF THESE FORMS AND THE CONFIRMATIONS ENCLOSED ALONGWITH THE FORMS, IT IS S EEN THAT THE FOLLOWING CONFIRMATIONS HAVE NOT BEEN PRODUCED OR THE CONFIRM ATION PRODUCED DO NOT HAVE ANY P.A. NO. SR. NO. NAME OF THE SHARE HOLDER NO.OF SHARES ALLOTTED STATUS OF CONFIRMATION 1. CANOPY FINSTOCK PVT. LTD. 152500 CONFIRMATI ON WITHOUT PA NO. 2. MIGHTY FINLEASE AND SECURITIES 110000 -DO- 3. RANJANBEN BHRAMBHATT 129000 -DO- 4. YOGINI H. BHRAMBHATT 1800 NO CONFIRMAT ION PRODUCED 5. BHARAT C. PATEL 50000 -DO- 6. CANOPY FINSTOCK PVT. LTD. 110000 C ONFIRMATION WITHOUT PA NO. 7. ROHITKUMAR SHAH 60500 NO CONFIRMATION PROD UCED 8. MIGHTY FINLEASE AND SECURITIES 125000 CONFIRMA TION WITHOUT PA NO. 9. SUNIL D BAROT 50000 -DO- 10. CANOPY FINSTOCK PVT. LTD. 75000 -DO- 11. VIMAL D. RAO 50000 -DO- 12. SHARDABEN BAROT 50000 -DO- 13. CANOPY FINSTOCK PVT. LTD. 75000 -DO- 14. YOGINIBEN BHRAMBHATT 76000 -DO- 15. VIDHI SANCHALAN PVT. LTD. 50000 NO CONFIRM ATION PRODUCED 16. VIPINBHAI R. PATEL 25000 -DO- 17. R.R. PATEL 25000 -DO- 18. J.H. MEHTA 10000 NO CONFIRMATION FOUND 19. H.S. RAVAL 10000 NO CONFIRMATION FOUND TOTAL 1234000 5. THE ASSESSEE HAS GIVEN THE NAMES AND ADDRESSES O F THE SHARE HOLDERS. BUT THOSE WERE PRODUCED ONLY AT THE FAG END OF ASSE SSMENT PROCEEDINGS ON 27/3/2003. THEREFORE IT WAS NOT POSSIBLE TO CONDUC T ANY INDEPENDENT ENQUIRES. 6. IN VIEW OF THE ABOVE, IT IS HELD THAT THE SHARE CAPITAL PERTAINING TO THE ABOVE MENTIONED SHARE HOLDERS AMOUNTING TO RS. 1,23 ,48,000/- IS UNEXPLAINED CASH CREDIT U/S. 68. ADDITION OF RS. 1, 23,48,000/- IS THEREFORE MADE TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 4. ON APPEAL THE CIT(A) DELETED THE ADDITION OF RS. 98,75,000/- OUT OF RS. 1,23,48,000/- OBSERVING AS UNDER: 3.3 AFTER CAREFULLY CONSIDERING THE OBSERVATION OF THE A.O. IN THE ASST. ORDER, THE SUBMISSIONS AS ADVANCED BY THE COUNSEL O F THE APPELLANT AS WELL AS THE REPORT OF THE PRESENT A.O., I AM OF THE VIEW THAT THE 3 ITA NO. 1585/AHD/2004 (ASSESSMENT YEAR 2000-01) APPELLANT DESERVES TO GET A RELIEF TO THE EXTENT OF RS. 98,75,000/- FOR WHICH THE APPELLANT HAS BEEN ABLE TO PROVE THE GENU INENESS OF SHARES BY SUBMITTING NECESSARY CONFIRMATIONS. I, THEREFOR E, DIRECT THE A.O. TO MODIFY THE ADDITION MADE U/S. 68 BY ALLOWING RS. 98 ,75,000/-. THE ADDITION OF THE REMAINING AMOUNT OF RS. 24,73,000/- IS HEREBY CONFIRMED. 5. THE ABOVE TITLED APPEAL WAS FIXED FOR HEARING ON 18-08-2009. HOWEVER, NOBODY APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF NOTICE BY R.P.A.D. THE ASSESSEE HAS ALSO NOT FILED ANY APPLICATION FOR ADJOURNMENT OF HEARING. UNDER THE CIRCUMSTANCES WE ARE CONSTRAINED TO DISPOSE OF THE APPEAL ON MERITS, OF COURSE, AFTER H EARING THE LEARNED DR. WE HAVE HEARD THE LEARNED AR AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CIT HAS TAKEN INTO CONSID ERATION THIS FACT THAT THE DETAILS WERE FURNISHED AT THE FAG END OF THE ASSESS MENT PROCEEDINGS AND HENCE PROPER INQUIRY COULD NOT BE CARRIED OUT BY THE ASSE SSING OFFICER DUE TO PAUCITY OF TIME. THEREFORE, THE CIT ASKED THE ASSE SSING OFFICER TO MAKE A DETAILED INQUIRY OF SHARE HOLDERS, FIND OUT THE GEN UINENESS OF THE SHARES HELD BY THEM AND SEND A REPORT IN THE MATTER AND IN RESP ONSE THERETO, THE ASSESSING OFFICER VIDE HIS LETTER DATED 27-02-2004 HAS SUBMIT TED THAT IN THE CASES OF SHARDABEN D. BAROT, PRIYA FOODS AND FLAVOUR PRIVATE LIMITED, MIGHTY FINANCE LEASE AND SECURITIES LIMITED, CANOPY FIN ST OCK PRIVATE LIMITED AND CANOPY SECURITIES AND FINANCE LIMITED CONFIRMATIONS HAVE BEEN FILED. THESE PARTIES WERE HOLDING 9,87,500/- SHARES AND THE VALU E OF THE SAME AT THE RATE OF RS. 10 PER SHARE CASE TO RS. 98,75,000/-. ON THE B ASIS OF REPORT OF THE ASSESSING OFFICER THE CIT(A) ALLOWED A RELIEF OF RS . 98,75,000/-. IN OUR VIEW THE REVENUE SHOULD NOT HAVE FILED THIS APPEAL BECAUSE THE ASSESSING OFFICER HIMSELF WAS SATISFIED IN HIS REMAND REPORT ABOUT THE IDENTITY OF THE ABOVE SHARE HOLDERS, GENUINENESS OF THE TRANSACTION S AS WELL AS FINANCIAL CAPACITY OF THE SHARE HOLDERS. IN THE CASE OF CIT VS. LOVELY EXPORTS PRIVATE LTD. (2008) 216 CTR (SC) 195 HELD THAT IF THE SHARE APPLICATION MONEY IS 4 ITA NO. 1585/AHD/2004 (ASSESSMENT YEAR 2000-01) RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN DEPA RTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMP ANY. EVEN IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT (SUPRA), NO ADDITION CAN BE MADE IN RESPECT OF THE AMOUNT OF 98,75,000/-. THUS, CON SIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF TH E VIEW THAT THE CIT WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 98,75,000 /- BEING THE VALUE OF 9,87,500 SHARES HELD BY ABOVE 5 PARTIES. ACCORDING LY WE DISMISS THE GROUND RAISED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21-08 -2009. SD/- SD/- ( A.N. PAHUJA) (H.L. KARWA) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED: 21/08/2009 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.