ITO, New Delhi V. M/s GPM Developers Pvt. Ltd., New Delhi

ITA 2207/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7552 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAI
• Keywords: Unexplained cash credit; Bogus Share capital; Corroborative evidences
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT & SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2207/DEL/2011 ASSESSMENT YEAR: 2006-07 ITO, VS. GPM DEVELOPERS PVT. LTD. WARD 12(2), F-20, BANKEY LALA MARKET, C.R. BUILDING, BADARPUR, NEW DELHI. NEW DELHI. AACCG3872F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VIKRAM SAHAI, SR. DR RESPONDENT BY : SH. VED JAIN, ADV. & SMT. RANO JAI N, ADV. ORDER PER H.S. SIDHU, J.M. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 26.03.2011 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-XV, NEW DELHI FOR A.Y. 2006-07 ON THE FOL LOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 15,00,000/- ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL U/S 68 OF THE I.T. ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT( A) ERRED IN DELETING THE ADDITION OF RS. 15,00,000/- MADE U/S 6 8 OF THE I.T. ACT IGNORING THE FULFILLMENT OF THE CONDITION LAID DOWN BY THE LAW. 3. THE APPELLANT CRAVES TO ADD, ALTER, AMEND, DELETE O R WITHDRAW ANY GROUND OF APPEAL DURING THE COURSE OF APPELLATE PRO CEEDINGS. 2. THE ONLY ISSUE INVOLVED IN THE PRESENT APPEAL IS DELETION MADE BY THE CIT(A) OF THE ADDITION OF RS. 15 LAKHS MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY. DURING THE ASSESSMENT YEA R IN DISPUTE THE ASSESSEE HAD RECEIVED SHARE CAPITAL FROM THREE COMP ANIES TOTAL AMOUNT OF RS. 15 LAKHS I.E. ACHIT FINCAP LTD. RS. 5,00,00 0/-, ARGENT FINVEST PVT. LTD. RS. 4,00,000/- & M.V. MARKETING PVT. LTD. RS. 6,00,000/-. ACCORDING ITA NO. 2207/D/2011 GPM DEVELOPERS P. LTD. 2 TO THE ASSESSEE ALL THESE THREE COMPANIES ARE REGIS TERED WITH THE REGISTRAR OF THE COMPANY AND MAINTAINING PROPER BOO KS OF ACCOUNT AND ARE REGULAR INCOME-TAX ASSESSEE. THE TRANSACTIONS HAVE BEEN UNDERTAKEN THROUGH BANKING CHANNELS TO SUPPORT THES E CONTENTIONS ASSESSEE HAS FILED ALL THE SUPPORTING EVIDENCES BEF ORE THE AO AS WELL AS BEFORE THE LD. FIRST APPELLATE AUTHORITY. THE AO M ADE THE ADDITION OF RS. 15 LAKHS AS UNEXPLAINED CREDITS U/S 68 OF THE I NCOME TAX ACT IN RESPECT OF SHARE CAPITAL RECEIVED FROM THE SAID THR EE PARTIES. LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DIS PUTE WHILE PASSING THE IMPUGNED ORDER. NOW THE REVENUE HAS FILED THE PRES ENT APPEAL. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORD AVAILABLE WITH US SPECIALLY THE ORDERS PASSED BY TH E REVENUE AUTHORITY ALONG WITH THE DOCUMENTARY EVIDENCE FILED BY THE AS SESSEE IN THE SHAPE OF PAPER BOOK CONTAINING PAGE 1 TO 96 IN WHICH THE ASSESSEE HAS ATTACHED ALL THE DOCUMENTARY EVIDENCE WHICH THE ASS ESSEE HAS FILED BEFORE THE AO AS WELL AS BEFORE THE LD. FIRST APPEL LATE AUTHORITY. 4. WE ARE OF THE VIEW THAT LD. FIRST APPELLATE AUTH ORITY HAS PASSED A WELL REASONED ORDER ON THE ISSUE IN DISPUTE AT PAGE S 7-9, 14 & 16. FOR THE SAKE OF CONVENIENCE THESE RELEVANT FINDINGS GIV EN BY THE LD. FIRST APPELLATE AUTHORITY ARE REPRODUCED AS UNDER: (I) PAGE 7: I HAVE CONSIDERED THE FACTS OF THE C ASE, SUBMISSIONS OF THE APPELLANT AND THE FINDINGS OF TH E AO. REGARDING THE SHARE APPLICATION MONEY IT IS SEEN TH AT THE APPELLANT HAD FURNISHED VARIOUS DOCUMENTS IN SUPPOR T OF SHARE CAPITAL BEFORE THE AO AND ALSO DURING THE APPELLATE PROCEEDINGS AS UNDER: (I) COMPLETE NAME AND ADDRESS OF SHARE APPLICANT (II) CONFIRMATION OF SHARE APPLICANT (III) PAN DETAILS (IV) COPY OF SHARE APPLICATION FORM (V) COPY OF ITR ALONG WITH COPY OF AUDITED ACCOUNT ITA NO. 2207/D/2011 GPM DEVELOPERS P. LTD. 3 (VI) COPY OF BANK STATEMENT THE ONUS OF PROVING CASH CREDIT IN THE BOOKS IS REB UTTABLE. THE ASSESSEE HAS TO DISCHARGE THE INITIAL ONUS BY PROVI NG THE IDENTITY OF THE CREDITOR BY FILING THE CONFIRMATORY LETTER A ND OTHER RELEVANT DETAILS. THE PRESUMPTION IS REBUTTABLE AN D THE DEPARTMENT IS ALSO REQUIRED TO BRING EVIDENCE ON RE CORD IF WANTS TO REJECT THE EXPLANATION OF THE ASSESSEE. I T IS NOW SETTLED LAW THAT THERE ARE THREE BASIC REQUIREMENTS IN CASE OF A CASH CREDIT: 1. THE IDENTITY OF THE CREDITOR 2. THE CREDITWORTHINESS OF THE CREDITOR, AND 3. THE GENUINENESS OF THE TRANSACTION THE FIRST ISSUE IS IDENTITY OF THE CREDITORS. THE APPELLANT FILED THE FOLLOWING DETAILS IN REGARD TO THE CREDITORS: (I) CONFIRMATORY LETTER (II) PAN DETAILS (III) COPY OF ITR (IV) COPY OF SHARE APPLICATION FORM (V) COMPLETE NAME & ADDRESS OF SHARE APPLICANTS THESE FACTS WERE SUBMITTED BY THE APPELLANT BEFORE THE AO VIDE LETTER DATED 24.12.2008. THIS SHOWS THAT THE IDENT ITY OF THE SHARE APPLICANT HAS BETWEEN ESTABLISHED BEYOND DOUB T BY THE APPELLANT. (II) PAGE 8-9 THE GENUINENESS OF THE TRANSACTION IS ESTABLISHED AS THE TRANSACTION IS ROUTED THOUGHT BANKING CHANNE LS. IT IS SEEN THAT THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH A/C PAYEE CHEQUE, DETAIL OF WHICH HAD BEEN FILED BY THE APPELLANT. THUS, WHERE THE RETURN OF INCOME IS FILED BY THE CR EDITORS OF THE ASSESSEE AND IS ACCEPTED BY THE DEPARTMENT AND THE PAYMENTS IS THROUGH A/C PAYEE CHEQUE THE GENUINENESS OF THE TRA NSACTION CANNOT BE DOUBTED. (III) PAGE 14 IN THE INSTANT CASE NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO PROVE THAT THE SHARE APPLICA TION MONEY EMANATED FROM THE COFFERS OF THE APPLICANT. PERUSA L OF THE BALANCE SHEETS OF THE SHARE APPLICANTS SHOWS THAT T HE SHARE APPLICANTS HAD SHARE CAPITAL AND RESERVES MUCH ABOV E THE MOUNT INVESTED IN SHARE APPLICATION MONEY WHICH PRO VES THEIR CREDITWORTHINESS. GENUINENESS OF THE TRANSACTION I S ESTABLISHED SINCE THE SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH THE BANKING CHANNELS AND COPY OF BANK A/C HAS BEEN SUBMITTED ITA NO. 2207/D/2011 GPM DEVELOPERS P. LTD. 4 BY THE APPELLANT. MOREOVER, IT IS ALSO SEEN THAT T HE AO HAD MADE INQUIRIES FROM THE SHARE APPLICANTS THROUGH LE TTERS U/S 133(6) WHICH WERE REPLIED TO BY THE SHARE APPLICANT S. COPIES OF THE REPLIES HAVE BEEN PLACED ON RECORD BY THE APPEL LANT DURING THE APPELLATE PROCEEDINGS. IT IS ALSO SEEN THAT TH E APPELLANT HAS NOT BEEN OFFERED THE OPPORTUNITY OF CROSS EXAMINATI ON DESPITE MAKING A SPECIFIC REQUEST TO THE AO. RELYING ON THE VARIOUS DOCUMENTS PLACED ON RECORD A ND THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF M/S LOVELY EXPORT PVT. LTD. WHICH IS DIRECTLY ON THE ISSUE OF SHARE CAPITAL AND IN VIEW OF THE DECISIONS CITED AB OVE THE ADDITION ON ACCOUNT OF SHARE CAPITAL CANNOT BE SUST AINED. THE AO HAS NO WHERE PROVED THAT DOCUMENTS IN SUPPORT OF THE IDENTITY OF THE PARTY HAVE NOT BEEN PLACED ON RECOR D OR THEY ARE FORGED DOCUMENTS. THE AO ALSO HAS NOT BROUGHT ANY EVIDENCE ON RECORD REGARDING THE FACTS THAT THE SHARE APPLIC ATIONS WERE NOT CREDITWORTHY OR GENUINE, DESPITE THE FACT THAT THEIR NAMES AND ADDRESSES AND SOURCE OF MONEY WERE SUBMITTED BY THE APPELLANT. (IV) PAGE 16 IN VIEW OF THE FINDINGS ABOVE AND TH E JUDICIAL PRECEDENTS ON THE SUBJECT THAT THE IDENTITY OF THE SHARE APPLICANTS WERE PROVED BY THE APPELLANT WHICH IN TH E INSTANT CASE HAS NOT BEEN CONTROVERTED BY THE AO, THE ADDIT ION OF RS. 15.00 LAKHS MADE BY THE AO ON ACCOUNT OF UNEXPLAINE D SHARE APPLICATION MONEY IS DELETED. HOWEVER, THE AO IS F REE TO TAKE APPROPRIATE ACTION AS MAY BE PERMISSIBLE UNDER THE LAW IN THE CASE OF VARIOUS SHARE HOLDERS ALLEGED TO BE ENTRY P ROVIDERS. 5. AFTER GOING THROUGH THE ORDERS OF THE REVENUE AU THORITIES, WE ARE OF THE VIEW THAT THE AO HAS RELIED UPON THE STATEME NTS OF MR. PRADEEP JINDAL TAKEN ON OATH ON 15/04/2004, MR. MUKESH GUPT A REOCORDED ON 16/01/2004 AND MR. RAJAN JASSAL RECORDED ON 04/02/2 004. THESE STATEMENTS HAVE NO RELEVANCE AS TO THE FINANCIAL YE AR UNDER CONSIDERATION I.E. 2005-06 MUCH AFTER THE STATEMENT . AS PER RECORD THESE STATEMENTS HAVE NOT BEEN CONFRONTED TO THE AS SESSEE FOR CROSS EXAMINATION BUT THE ADVERSE INFERENCES HAVE BEEN TA KEN AGAINST THE ASSESSEE WHICH IS CONTRARY TO THE PRINCIPLE OF NATU RAL JUSTICE. WE ARE ALSO OF THE VIEW THAT THE AO HAS MADE THE ADDITION IN DISPUTE ON THE BASIS THAT THE DIRECTORS OF SHAREHOLDER OF THE COMP ANY HAS NOT BEEN ITA NO. 2207/D/2011 GPM DEVELOPERS P. LTD. 5 PRODUCED BEFORE HIM. THIS CANNOT BE A GROUND FOR M AKING ADDITION IN RESPECT OF SHARE CAPITAL AS HAS BEEN HELD BY THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VICTOR ELECTROCED ES LIMITED, 329 ITR 271 (DEL.). THE LD. COUNSEL FOR THE ASSESSEE HAS A LSO RELIED UPON VARIOUS DECISIONS TO SUPPORT THE IMPUGNED ORDER PAS SED BY THE LD. FIRST APPELLATE AUTHORITY. SOME OF THE DECISIONS ARE CIT VS. SOPHIA FINANCE LTD., 205 ITR 98 (DEL), CIT VS. ACHAL INVESTMENT LT D., 268 ITR 211 (DEL.), CIT VS. STELLAR INVESTMENTS LTD., 192 ITR 298 (DEL) , CIT VS. STELLAR INVESTMENTS LTD., 251 ITR 263 (SC), CIT VS. DIVINE LEASING & FINANCE LTD., 299 ITR 268 (DEL), CIT VS. VALUE CAPITAL SERV ICES P. LTD., 307 ITR 334 (DEL), CIT VS. LOVELY EXPORTS P. LTD., 319 ITR 5 (SC) & CIT VS. OASIS HOSPITALITIES P. LTD., 333 ITR 119 (DEL). 6. WE HAVE GONE THROUGH THE AFORESAID DECISIONS REN DERED BY THE HONBLE SUPREME COURT OF INDIA AS WELL AS THE HONB LE JURISDICTIONAL HIGH COURT AND WE ARE OF THE CONSIDERED VIEW THAT T HE LD. FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER AND HAS RIGHTLY DELETED THE ADDITION IN DISPUTE WITH THE SUPPORT OF VARIOUS DEC ISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, NO INTERFEREN CE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLA TE AUTHORITY AND WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY T HE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/12/2014 SD/- SD/- (G.D. AGARWAL) (H.S. SIDHU ) VICE PRESIDENT JUD ICIAL MEMBER DATED: 12/12/2014 *KAVITA, P.S. ITA NO. 2207/D/2011 GPM DEVELOPERS P. LTD. 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR ITA NO. 2207/D/2011 GPM DEVELOPERS P. LTD. 7