Prabhu Dhan Infrastructure Pvt Ltd., Kolkata V. D.C.I.T Cir - 10,kol, Kolkata

ITA 1908/KOL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3369 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 27-12-2012
• Court: TRIBUNAL
• Department Lawyers: S DUTTA
• Assessee Lawyers: V N PUROHIT
• Keywords: Bogus Share capital; Source of fund
• Section: 68

Judgement Text

1 ITA NO.1908/KOL/2012 PRABHU DHAN INFRASTRUCTURE P VT.LTD., ,A.Y.2005-06 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.1908/KOL/2012 ASSESSMENT YEAR : 2005-06 PRABHU DHAN INFRASTRUCTURE PVT.LTD. -VERSUS- D.C.I .T., CIRCLE-10, KOLKATA KOLKATA (PAN:AACCP 6354 P) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI V.N.PUROHIT, FCA FOR THE RESPONDENT : SHRI S.DUTTA, JCIT, SR.DR DATE OF HEARING : 08.12.2015. DATE OF PRONOUNCEMENT : 20.01.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 31.10.2012 OF CIT(A)- XII, KOLKATA RELATING TO A.Y.2005-06. 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSE E READS AS FOLLOWS :- 1. ON THE FACT & CIRCUMSTANCES OF THE CASE THE LEA RNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF SHARE APPLICATION MONEY OF RS.15.00 LACS U/S 68 OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF FINANCE INVESTMENT AND PROJECT WORK. IN THE COURSE OF ASSESSMENT PROCE EDINGS FOR A.Y.2005-06 THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED SHARE APPLIC ATION MONEY OF RS.20,00,000/- FROM THREE PARTIES NAMELY (I) JAY KALI PROPERTIES (P) LTD., : RS.5,00,000/- (II) KALISARAN PROPERTIES (P) LTD. : RS.10,00,000 /- (III)LUNARAM AGARWAL, HUF : RS.5,00,000/- 2 ITA NO.1908/KOL/2012 PRABHU DHAN INFRASTRUCTURE P VT.LTD., ,A.Y.2005-06 THE AO DID NOT ACCEPT THE EXPLANATION WITH REGARD T O THE RECEIPT OF SHARE APPLICATION MONEY FROM JAI KALI PROPERTIES (P)LTD (JKP) AND KAL ISARAN PROPERTIES PVT. LTD.(KPL) THE ORDER OF THE AO WAS CONFIRMED BY THE CIT(A) WHI CH HAS GIVEN RISE TO THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS W ITH REGARD TO THE RECEIPT OF SHARE APPLICATION MONEY OF 5,00,000/- FROM JAY KALI PROPERTIES (P)LTD AND RS.10,00,000/- KALISARAN PROPERTIES (P) LTD ARE AS FOLLOWS :- TO SATISFACTORILY EXPLAIN THE RECEIPT OF SHARE APPL ICATION MONEY FROM JAI KALI PROPERTIES (P) LTD., THE ASSESSEE FILED A COPY OF T HE BALANCE SHEET OF JAI KALI PROPERTIES (P) LTD TO PROVE THE GENUINENESS AND CREDITWORTHINE SS OF THE TRANSACTIONS OF RECEIPT OF SHARE APPLICATION MONEY. THE AO FOUND THAT SCHEDULE -D OF THE BALANCE SHEET SO FILED, GAVE LIST OF LOANS AND ADVANCES. UNDER THE SUB-HEA D INVESTMENT RS.5,00,000/- APPEARED IN THE BALANCE SHEET AS ON 31.03.2004 AND 31.03.2005. SINCE THERE WAS NO CHANGE IN THE FIGURE OF INVESTMENTS ON BOTH THE AFO RESAID DATES THE AO WAS OF THE VIEW THAT NO INVESTMENTS COULD NOT HAVE BEEN MADE B Y JAI KALI PROPERTIES (P)LTD DURING THE PREVIOUS YEAR. IN REPLY TO THE QUERY OF THE AO IN THIS REGARD THE ASSESSEE FILED A LETTER SIGNED BY SHRI BIJAY KR.DABRIWAL, DI RECTOR OF JAI KALI PROPERTIES (P) LTD IN WHICH IT WAS EXPLAINED THAT INVESTMENT APPEARING IN THE BALANCE SHEET ON 31.03.20O4 WAS AN INVESTMENT BY JAI KALI PROPERTIES (P)LTD IN THE SHARES OF PRABHUDHAN SECURITIES (P) LTD. DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2005-06 THE ASSESSEE SOLD THE AFORESAID INVESTMENT AND OUT OF T HE SALES PROCEEDS RS.5,00,000/- WAS INVESTED IN ASSESSE COMPANY. THE AO WAS OF THE VIEW THAT NO EVIDENCE OF SALE OF INVESTMENTS IN PRABHUDHAN SECURITIES (P)LTD WAS FIL ED BY THE ASSESSEE. THE AO CALLED UPON THE ASSESSEE TO PRODUCE SHRI BIJAY KR.DABRIWAL ON 28.12.2007, BUT THE ASSESSEE DID NOT PRODUCE SHRI BIJAY KR.DABRIWAL. AO THEREFOR E CONCLUDED THAT THE INVESTMENT BY JAI KALI PROPERTIES (P)LTD. IN THE FORM OF SHARE APPLICATION MONEY WAS NOT PROVED. THE ASSESSEE HAD ALSO FILED A COPY OF THE BANK ACCO UNT OF JAI KALI PROPERTIES (P)LTD. THE SAME IS PLACES AT PAGES 10-12 OF THE ASSESSEES PAPER BOOK. A PERUSAL OF THE BANK ACCOUNT SHOWS THAT AS ON 11.02.2005 THE BALANCE IN THE ACCOUNT OF JAI KALI PROPERTIES 3 ITA NO.1908/KOL/2012 PRABHU DHAN INFRASTRUCTURE P VT.LTD., ,A.Y.2005-06 (P)LTD WITH FEDERAL BANK LIMITED WAS A SUM OF RS.1, 55,370/-. ON .14.02.2005 A SUM OF RS.1,50,000/- HAD BEEN INVESTED AS SHARE APPLICA TION MONEY IN THE ASSESSEE COMPANY BY JAI KALI PROPERTIES (P)LTD. THEREAFTER O N 15.02.2005, 17.02.2005 AND 22.02.2005 THE ASSESSEE HAS RECEIVED SALE PROCEEDS OF RS.1,50,000/- EACH ON SALE OF SHARES OF PRABHUDHAN SECURITIES PVT. LTD. THE ASSES SEE HAS ISSUED THREE CHEQUES FOR RS.1,50,000/- EACH ON 16.02.2005, 18.02.2005 AND AN OTHER CHEQUE FOR RS.50,000/- ON 23.02.2005 TOWARDS SHARE APPLICATION MONEY OF THE A SSESSEE COMPANY. THE AO WAS OF THE VIEW THAT THE MONEY WAS DEPOSITED IN THE BANK A CCOUNT JUST BEFORE THE INVESTMENT BY JAI KALI PROPERTIES (P)LTD IN THE ASSESSEE COMPA NY. ACCORDING TO THE AO THE VERY NATURE OF DEPOSITS AND WITHDRAWALS PROVED THAT JAI KALI PROPERTIES (P)LTD. WAS FLOATED TO PROVIDE ADJUSTMENT ENTRY. THE AO THUS CONCLUDED THAT A SUM OF RS.5,00,000/- CREDITED TO THE ACCOUNT OF THE ASSESSEE COMPANY AS SHARE APPLICATION MONEY WAS NOT SATISFACTORILY EXPLAINED. 5. THE CIT(A) CONCURRED WITH THE VIEW OF THE AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ARE OF T HE VIEW THAT ADDITION MADE BY THE AO AND SUSTAINED BY CIT(A) DESERVES TO BE DELET ED. IT IS CLEAR FROM THE EVIDENCE ON RECORD THAT JAI KALI PROPERTIES (P)LTD HELD THAT INVESTMENT WAS RS.5,00,000/- IN PRABHUDAN SECURITIES PVT.LTD AS ON 31.03.2004. DURI NG THE PREVIOUS YEAR THIS INVESTMENTS HAVE BEEN LIQUIDATED AND SALE PROCEEDS ON SUCH SALE HAS GONE INTO THE BANK ACCOUNT AND THE SAME HAS BEEN UTILISED FOR MAK ING INVESTMENTS IN THE FORM OF SHARE APPLICATION MONEY IN THE ASSESSEE COMPANY BY JAI KALI PROPERTIES (P) LTD. THUS IT IS CLEAR THAT THE ASSESSEE HAS ESTABLISHED THE I DENTITY AND CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS OF THE RECEIPT OF S HARE APPLICATION MONEY. WE, THEREFORE, HOLD THAT THE ADDITION MADE BY THE AO AN D SUSTAINED BY CIT(A)SHOULD BE DELETED. 7. AS FAR AS RECEIPT OF SHARE APPLICATION MONEY FRO M KALISARAN PROPERTIES (P)LTD IS CONCERNED THE FACTS ARE ALMOST IDENTICAL. KALISA RAN PROPERTIES (P)LTD HELD 4 ITA NO.1908/KOL/2012 PRABHU DHAN INFRASTRUCTURE P VT.LTD., ,A.Y.2005-06 INVESTMENTS WORTH RS.10,00,000/- IN PRABHUDHAN SECU RITIES (P)LTD AS ON 31.03.2004. THESE INVESTMENTS WERE LIQUIDATED AND UTILISED IN M AKING INVESTMENTS IN SHARE APPLICATION MONEY WITH THE ASSESSEE. THE LETTER OF KALISARAN PROPERTIES (P)LTD IN THIS REGARD IS AT PAGE 1 OF THE PAPER BOOK. PAGES 3 AND 4 IS THE BANK STATEMENT OF KALISARAN PROPERTIES (P)LTD WITH FEDERAL BANK. THE ENTRIES IN THE BANK ACCOUNT CLEARLY DEMONSTRATES THE FACTUM OF REALISATION OF INVESTMEN T IN PRABHUDAN SECURITIES PVT.LTD BY KALI SARAN PROPERTIES (P)LTD AND SUCH PROCEEDS B EING UTILISED TO MAKE INVESTMENTS IN SHARE APPLICATION MONEY OF THE ASSESSEE COMPANY. THE REASONS ASSIGNED BY THE AND CIT(A) FOR MAKING ADDITION U/S 68 OF THE ACT ARE ID ENTICAL AS WERE GIVEN WHILE TREATING THE INVESTMENTS BY JAI KALI PROPERTIES (P) LTD AS UNEXPLAINED. IT IS CLEAR FROM THE EVIDENCE ON RECORD THAT THE ASSESSEE HAS ESTABL ISHED THE IDENTITY AND CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S OF THE RECEIPT OF SHARE APPLICATION MONEY FROM M/S.KALISARAN PROPERTIES (P) LTD. WE, TH EREFORE, HOLD THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY CIT(A)SHOULD BE DEL ETED. 8. A COPY OF THE SOURCE OF FUNDS OF JAI KALI PROPE RTIES (P)LTD AND KALISARAN PROPERTIES (P)LTD FOR MAKING INVESTMENT IN SHARE AP PLICATION OF THE ASSESSEE IS GIVEN AS ANNEXURE TO THIS ORDER. IN THE LIGHT OF THE EVID ENCE ON RECORD WE ARE SATISFIED THAT THE ACTION OF THE REVENUE AUTHORITIES WHILE MAKING THE IMPUGNED ADDITION U/S 68 OF THE ACT CANNOT BE SUSTAINED. ACCORDINGLY THE SAID ADDIT ION IS DIRECTED TO BE DELETED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. O RDER PRONOUNCED IN THE COURT ON 20.01.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20.01.2016. [RG PS] 5 ITA NO.1908/KOL/2012 PRABHU DHAN INFRASTRUCTURE P VT.LTD., ,A.Y.2005-06 COPY OF THE ORDER FORWARDED TO: 1.PRABHU DHAN INFRASTRUCTURE PVT. LTD., C/O V.N.PUR OHIT & CO., CHARTERED ACCOUNTANTS, DIAMOND CHAMBERS, UNIT-III, 4 TH FLOOR, SUIT NO.4G, 4, CHOWRINGHEE LANE, KOLKATA-700016. 2. D.C.I.T., CIRCLE-10, KOLKATA. 3. CIT(A)-XII, KOLKATA 4. CIT-IV, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, DEPUTY /ASST. REGISTRAR, ITAT, KOLKATA BENCHES