M/s AD-Manum Packaging Ltd., Indore V. The ACIT, 5(1), Indore

ITA 163/IND/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66659 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 21-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S N AGARWAL; PANKAJ MONGRA CAS
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABCA4240L I.T.A.NO. 163 /IND/201 2 . A.Y. : 2005 - 06 M/S.AD - MANUM PACKAGING LIMITED, ACIT, 5(1), 1 ST FLOOR, AGRAWAL HO USE, VS INDORE. 5, YESHWANT COLONY, INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. N. AGARWAL AND SHRI PANKAJ MONGRA, CAS RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 19 .0 7 .2012 DATE OF PRONOUNCEMENT : 06 . 0 9 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 30 TH DECEMBER, 2011, FOR THE ASSESSMENT YEAR 2005-06. -: 2: - 2 2. THE ASSESSEE IS AGGRIEVED BY ADDITION OF RS. 10- LA KHS ON ACCOUNT OF UNSECURED LOAN U/S 68 OF THE INCOME-T AX ACT, 1961, AND FOR DISALLOWANCE OF INTEREST PAID AMOUNTI NG TO RS. 20,712/-. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THERE IS AN AMOUNT OF RS.20,OO,000/- RECEIVED FROM HINDUSTAN CONTINENTAL LTD DURING THIS ASSESSMENT YEAR AS UNSECURED LOAN. THE INVESTIGATION IN OTHER CASES RELATED TO LONG TERM C APITAL GAIN RECEIVED ON THE SALE OF SHARES OF HINDUSTAN CONTINE NTAL LTD CAME OUT TO BE BOGUS. SO PRIMA FACIE THIS TRANSACTI ON APPEARED NON GENUINE AND A DETAILED INVESTIGATION W AS CARRIED OUT. THE ASSESSEE WAS ASKED TO PRODUCE THE SAID PARTY TO ESTABLISH IDENTITY, CREDITWORTHINESS AND GENUINE NESS OF TRANSACTION. BUT THE ASSESSEE WAS NOT ABLE TO PRODU CE THE SAID PARTY. THE ASSESSEE PRODUCED THE INCOME TAX RE TURN ALONG WITH ITS BANK STATEMENT FOR THE RELEVANT ASSE SSMENT YEAR AND ARGUED THAT ONCE IT PRODUCED INCOME TAX RE TURN, BANK STATEMENT AND LOAN CONFIRMATIONS THEN THE ONUS OF THE -: 3: - 3 PARTY IS FULFILLED. SUBSEQUENTLY, SUMMON U/S 131 OF IT ACT, 1961, WAS ISSUED TO THE M/S. HINDUSTAN CONTINENTAL LTD ON THE ADDRESS MENTIONED IN THE INCOME TAX RETURN AS W ELL AS IN THE SHARE APPLICATION. THE SUMMONS RETURNED UNSERVE D AND INSPECTOR'S REPORT STATES THAT NO SUCH PARTY AVAILA BLE PRESENTLY IN THE GIVEN ADDRESS AND NOBODY AROUND AW ARE OF SUCH COMPANY. ON PERUSAL OF THE INCOME TAX RETURN I T INDICATES THAT THE SAID COMPANY IS HAVING AN ADDRES S AT MANDSAUR. IN REPLY TO A COMMISSION ISSUED BY ACIT 1 (1), INDORE THE INCOME TAX OFFICER, MANDSAUR STATED THAT NO SUCH PARTY AVAILABLE IN THE GIVEN ADDRESS. LATER THIS OF FICE CAME TO KNOW THAT THE PARTY IN THE AY. 2004-05 SUBMITTED IT S INCOME TAX RETURN AT ACIT 4(1), INDORE AND LATER THE SAID RETURN IS TRANSFERRED TO WARD 1(2), INDORE CURRENTLY, THE ASS ESSEE FILING RETURN AT JABALPUR. THE ACIT-1, JABALPUR TO ENQUIRE INTO THE MATTERS OF HINDUSTAN CONTINENTAL LTD. THE REPLY SEN T BY THE ACIT -1, JABALPUR, CLEARLY STATES THAT NO SUCH COMP ANY EXISTS THERE. IN THE PROCEEDINGS OF AN ANOTHER CASE THE AS SESSEE CAME OUT WITH A NEW ADDRESS OF M/S. HINDUSTAN CONTINENTAL LTD AT MUMBAI. THIS OFFICE HAS ISSUED A COMMISSION TO ASST -: 4: - 4 DIRECTOR INVESTIGATION IX (3), MUMBAI FOR THE VERIF ICATION OF THE ADDRESS. THE REPLY OF THE SAID OFFICER CLEARLY SAYS THAT THERE IS NO SUCH COMPANY EXISTS THERE. 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE COMPANY WAS HAVING SHARE CAPITAL OF RS. 8. 9 CRORES AGAINST WHICH FIXED ASSETS WAS ONLY 1.88 LAKHS AND CAPITAL WORK IN PROGRESS AMOUNTS TO RS. 3.2 CRORES. HE, THU S, FOUND THAT THE ASSESSEE COMPANY WAS MAINTAINING SAME AMOU NT OF FIXED ASSETS AND WORK IN PROGRESS YEAR AFTER YEAR. THE ASSESSING OFFICER FURTHER OBSERVED THAT COMPANY IS ENGAGED IN BUSINESS OF SOLVENT EXTRACTION HAVING VERY GOOD LIC ENSED CAPACITY, BUT DID NOT PRODUCE ANYTHING AND YEAR AFT ER YEAR IT IS JUST SHOWING THAT IT IS IN THE PROCESS OF IMPLEMENT ING THE PROJECT. THE ASSESSING OFFICER FURTHER ANALYZED THE BANK STATEMENT OF M/S. HINDUSTAN CONTINENTAL LIMITED AVA ILABLE WHICH INDICATED THAT HUGE AMOUNT OF MONEY GOING OUT SIDE THE ACCOUNT TO VARIOUS PARTIES IN THE NAME OF UNSECURED LOAN OR SHARE APPLICATION MONEY. 5. THE ASSESSING OFFICER FURTHER STATED THAT THE SUMMO NS DATED 05.04.2007 OF SEBIS INVESTIGATION DEPARTMENT CLEARLY -: 5: - 5 STATES THAT A CARTEL OF FEW BROKERS AND CLIENTS ART IFICIALLY MANIPULATED THE SHARE PRICES OF HINDUSTAN CONTINENT AL LIMITED TO GIVE FAKE CAPITAL GAIN ENTRIES TO BENEFI CIARIES. THE SAID REPORT MENTIONS THAT M/S. SUNIL SHARES AND STO CKS PRIVATE LIMITED IS ONE OF THE ENTRIES WHICH INDULGE D IN THIS PRICE MANIPULATION. FURTHER IT IS NOTEWORTHY TO MEN TION THAT THE OFFICIAL ADDRESS AVAILABLE IN THE BANK ACCOUNT OPENING FORM OF M/S. SAHAYATA MARKETING (WHERE CASH DEPOSITED) I S THE SAME AS OF OFFICE ADDRESS OF M/S. HINDUSTAN CONTINE NTAL LIMITED. IN VIEW OF THE ABOVE, IT IS CERTAIN THAT T HERE IS A CLEAR CUT NEXUS BETWEEN SAHAYATA MARKETING, SUNIL SHARES AND HINDUSTAN CONTINENTAL LIMITED. THESE THREE ENTRIES OPERATED IN TANDEM TO AID MONEY LAUNDERING FOR ULTIMATE BENE FICIARIES. 6. THE ASSESSING OFFICER FURTHER STATED THAT WHEN THE COMPANY, M/S. HINDUSTAN CONTINENTAL LIMITED IS NOT DOING ANY BUSINESS AND IT IS JUST IN THE PROCESS OF IMPLE MENTING THE PROJECT THEN THERE IS NO ACCEPTABLE EXPLANATION FOR SUCH HUGE INWARD AND OUTWARD FLOW OF MONEY IN ITS BANK ACCOUN T. MOREOVER, IT IS NOT CLEAR WHERE THE COMPANY IS BUIL DING ITS PLANT. ALL THE FOUR AVAILABLE ADDRESS LET INDORE, M ANDSAUR, -: 6: - 6 MUMBAI AND JABALPUR BEING EXAMINED AND IT CAME OUT THAT THOSE ADDRESSES ARE NOT GENUINE AND NO SUCH PARTY E XISTS IN THE GIVEN ADDRESS. 7. IN VIEW OF THE ABOVE, IT WAS INFERRED THAT THE LEND ER COMPANY M/S. HINDUSTAN CONTINENTAL LIMITED IS NOT A N EXISTING COMPANY IN THE REAL SENSE. ITS ACTIVITY IN RESPECT OF FILING OF RETURN FOR THREE DIFFERENT ASSESSMENT YEA RS AT THREE DIFFERENT PLACES. I.E. INDORE, MANDSAUR AND JABALPU R CONCEALS MORE THAN IT REVEALS. THE CREDITWORTHINESS OF THE C OMPANY HAS ALSO NOT BEEN ESTABLISHED IN VIEW OF THE FACT THAT THERE IS HUGE INFLOW AND OUTFLOW OF FUND WITHOUT ANY LOGIC. LEADI NG TO THE CONCLUSION THAT THIS IS A CONDUIT COMPANY FOR ROUTI NG OF FUNDS. IT ONLY EXISTS IN BOOKS AND RECORDS TO GIVE ACCOMMO DATION ENTRIES TO VARIOUS PARTIES WHO WANT TO LAUNDER THEI R UNACCOUNTED MONEY IN THE GUISE OF SHARE APPLICATION OR UNSECURED LOAN OR LONG TERM CAPITAL GAIN. THIS BEIN G SO GENUINENESS OF TRANSACTION ALSO DOUBTFUL. ACCORDING LY, IN THIS CASE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION HAS NOT BEEN ESTABLISHED. -: 7: - 7 8. THUS, THE ADDITION OF RS. 20 LAKHS WAS MADE BY THE ASSESSING OFFICER U/S 68. 9. DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS FOUND THAT LOAN WAS TO THE TUNE OF RS. 10 LAKHS AND NOT RS. 20 LAKHS, THEREFORE, A RECTIFICATION PROCEEDINGS WAS U NDERTAKEN U/S 154. AFTER GIVING DETAILED FINDING AT PARA 4, T HE LD. CIT(A) FURTHER FORTIFIED THE FINDINGS RECORDED BY THE ASSE SSING OFFICER AND REACHED TO THE CONCLUSION THAT THE IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF THE LENDER IS NOT ESTABLISH ED. 10. IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATI VE THAT CONFIRMATIONS OF UNSECURED LOAN CREDITORS AND DETAILS OF INCOME TAX RETURNS WERE FILED BEFORE THE ASSESSING OFFICER ALONGWITH BANK STATEMENT. THE ASSESSEE HAS TAKEN LO AN THROUGH ACCOUNT PAYEE CHEQUE AND HAD ALSO PAID INTE REST ON THE LOAN, WHICH WAS ALSO PAID THROUGH ACCOUNT PAYEE CHEQUES AND DUE TAX WAS DEDUCTED AT SOURCE ON SUCH INTERES T PAYMENT. HE FURTHER CONTENDED THAT SINCE LOAN CREDI TOR WAS DULY ASSESSED TO TAX, THE CREDITWORTHINESS OF LOAN CREDITOR WAS DULY ESTABLISHED. OUR ATTENTION WAS ALSO INVITED TO THE DETAILED -: 8: - 8 SUBMISSION FILED BEFORE THE LOWER AUTHORITIES IN S UPPORT OF ABOVE CONTENTION. 11. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND ALSO THE ORDER OF TH E TRIBUNAL IN THE CASE OF AGARWAL COAL CORPORATION DATED 31 ST OCTOBER, 2011, REPORTED AT 18 ITJ 717, AND SUBMITTED THAT EVEN IDE NTITY OF THE LOAN CREDITOR WAS NOT ESTABLISHED. HE FURTHER RELIE D ON THE FINDINGS RECORDED BY THE LOWER AUTHORITIES TO THE E FFECT THAT ALL THE THREE INGREDIENTS OF CASH CREDIT U/S 68 WAS NOT SATISFIED. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO THE ORDER OF THE TRIBUNAL IN THE CASE OF AGARWAL COAL C ORPORATION, WHEREIN AFTER HAVING DETAILED OBSERVATION, THE TRIB UNAL REACHED TO THE CONCLUSION THAT IDENTITY OF THE CASH CREDITOR M/S. HINDUSTAN COAL IS NOT ESTABLISHED. FURTHERMORE , THE FINDINGS RECORDED BY LOWER AUTHORITIES TO THE EFFEC T THAT NOT ONLY IDENTITY BUT ALSO GENUINENESS OF THE LOAN TRAN SACTION AND ITS CREDITWORTHINESS WAS NOT ESTABLISHED COULD NOT BE DISLODGED. EVEN DURING THE COURSE OF HEARING BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE COULD NOT PRODUCE ANY EV IDENCE TO -: 9: - 9 PERSUADE US TO DEVIATE FROM THE FINDINGS RECORDED B Y THE LOWER AUTHORITIES. ACCORDINGLY, RESPECTFULLY FOLLOWING TH E DECISION OF TRIBUNAL IN CASE OF AGARWAL CORPORATION (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE LOWER AUTHORITIES AND CONFIRM THEIR ACTION. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 6 TH SEPTEMBER, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :6 TH SEPTEMBER, 2012. CPU* 569