The ITO, Ward-8(1), Ahmedabad V. Satyandra Traders Pvt.Ltd., Ahmedabad

ITA 1702/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8933 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-09-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH SENIOR
• Assessee Lawyers: G C PIPARA
• Keywords: Bogus Share capital; Share purchase agreement
• Section: 133(6); 195

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.1702/AHD/2009 (ASSESSMENT YEAR:- 2006-07) THE INCOME-TAX OFFICER, WARD-8(1), AHMEDABAD V/S SATYENDRA TRADERS PVT. LTD.,1/2, KABOOTAR KHANA, KALUPUR, AHMEDABAD PAN: AAICS 5703 P [APPELLANT] [RESPONDENT] APPELLANT BY :- SMT. NEETA SHAH, SENIOR DR RESPONDENT BY:- SHRI G C PIPARA, CA O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THE ONLY ISSUE INVOLVED IN THIS APPEAL FILED BY THE REVENUE AGAINS T THE ORDER OF THE CIT(A) DATED 09-03-2009 RELATES TO DELETION OF AN ADDITION OF RS.12,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDI TS BEING SHARE CAPITAL. THE AO NOTED THAT THE ASSESSEE ISSUE D THE SHARE CAPITAL DURING THE YEAR. THE ASSESSEE FURNISHED THE DETAILS OF SIX PERSONS, THEIR INVESTMENTS AND SHARES ALLOTTED TO T HEM. THE AO MADE INQUIRIES U/S 133(6) AND ULTIMATELY THE SUMMON S COULD NOT BE SERVED ON ONE MR. RANJIT SHARMA, WHO HAS INVESTE D A SUM OF RS.12,00,000/-, ALTHOUGH THE ASSESSEE HAS PRODUCED HIS IDENTITY CARD, BANK STATEMENT, COPY OF INCOME-TAX RETURN, OR IGINAL SHARE CERTIFICATE ISSUED BY THE ASSESSEE. THE AO, THEREFO RE, MADE THE ADDITION OF RS.12,00,000/-. WHEN THE ASSESSEE WENT IN APPEAL 2 BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 2.3 I HAVE CAREFU1Y CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS ALONG WITH THE JUDICIAL PRONOUNCEMENTS, AS RELIED UPON. IT IS SEEN THAT THE APPELLANT, BY FURNISHING THE EVIDE NCES, IN RESPONSE TO LETTERS ISSUED U/S. 133(6), LIKE CONFIRMATION ADDRE SSED TO THE A.O. BY THE SHAREHOLDERS IN RESPONSE TO NOTICE U/S.133(6) O F THE ACT COPY OF LI. RETURN HAVING PAN NO., COPY OF SHARE CERTIFICATE ET C. DETAILS OF PAYMENTS MADE IN RESPECT OF ALL SIX PERSONS TO WHOM THE SHARES WERE ALLOTTED, HAS BEEN ABLE TO ESTABLISH THE IDENTITY, GENUINENESS OF TRANSACTION, CREDITWORTHINESS OF THE SHARE HOLDERS ETC. THE COMPLETE DETAILS AS REQUIRED BY THE A.O. VIDE LETTER DATED 2 3-05-2008 HAVE BEEN COMPLIED BY THE SHAREHOLDERS, EXCEPT COPY OF THE BA NK STATEMENT WHICH WAS FLIED ONLY IN TWO CASES IN THE CASE OF TW O PERSONS , WHERE BANK STATEMENTS HAVE BEEN FILED NOTHING ADVERSE HAS BEEN OBSERVED BY THE A..O. THUS THE OBSERVATION OF THE AO THAT THE D ETAILS OF BANK ACCOUNTS HAVE NOT BEEN FURNISHED, BECOMES INCORRECT IN 2 CASES AND FOR OTHER 4 CASES IN VIEW OF PAN THE SAME BECOMES IRREL EVANT. IN THE CASE OF THE APPELLANT, IT IS ALSO SEEN THAT ALL THE TRAN SACTIONS WERE MADE THROUGH A/C. PAYEE CHEQUES AND ALL THE SHAREHOLDERS ARE ASSESSED TO INCOME TAX THE A.R. HAS CITED SEVERAL CASE LAWS INC LUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ST ELLAR INVESTMENT LTD., 164 CTR 287, AGAINST WHICH THE SLP BY THE DEP ARTMENT WAS DISMISSED BY THE HONBLE SUPREME COURT FURTHER I FI ND THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF CIT V. LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC) THAT IF THE SHARE APPLICATION MONE Y IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S , WHOSE NAMES ARE GIVEN TO THE A.O. THEN THE DEPARTMENT IS FREE T O PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CAN NOT HE REGARDED AS UNDISCLOSED INCOME OF THE COMPANY. I AL SO FIND THAT IN THE CASE OF CIT VS. ORISSA CORPORATION (P LTD. 159 ITR 78(SC) IT WAS HELD THAT WHEN CREDITORS ARE ASSESSED TO INCOME TAX AND HAVE CONFIRMED THE TRANSACTIONS , ADDITION IS NOT JUSTIF IED ULS.68 OF THE IT. ACT IN VIEW OF THE ABOVE CASE LAWS, I AM OF THE VIE W THAT THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL CANNOT BE HELD TO BE PROPER. THE ADDITION OF RS.12,00,000/- MADE ON THIS COUNT IS HEREBY DELETED. 3 2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT NOW THIS ISSUE I S NO MORE RES INTEGRA IN VIEW OF THE DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF CIT V. LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC). NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE B Y THE LEARNED DR. WE ARE THEREFORE OF THE OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) AND THE CI T(A) HAS RIGHTLY DELETED THE ADDITION. 3 IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 25-09-2 009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 25-09-2009 COPY OF THE ORDER FORWARDED TO : 1. SATYENDRA TRADERS PVT. LTD.,1/2, KABOOTAR KHANA, KALUPUR, AHMEDABAD 2. THE ITO, WARD-8(1), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XIV, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA