Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 0436 (ITAT-AGRA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 year(s) 4 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
16-05-2019
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
23-07-2013
Assessment Year
2008-2009
Appeal Filed On
13-01-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 23/AG/ 2012 ASSESSMENT YEAR 2008-09 M/S GANPATI OIL & FOODS LTD. VS. ASSISTANT COMMISSI ONER OF INCOME TAX 91A, GALLA MANDI, CIRCLE 2, BHIND (M.P.) GWALIOR (M.P.) (PAN AAACG 9132 C) ITA NO. 39/AG/2012 ASSESSMENT YEAR 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX VS. M/S GA NAPATI OIL & FOODS LTD. CENTRAL CIRCLE-2, 91A, GALLA MANDI, GWALIOR BHIND (M.P.) (PAN AAACG 9132 C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA SHARMA, ADVOCATE REVENUE BY : SHRI S.L. MAURYA, SR.D.R. DATE OF HEARING : 23.07.2013 DATE OF PRONOUNCEMENT : 26.07.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THESE CROSS APPEALS HAVE BEEN FILED BY THE ASSESSE E AND REVENUE AGAINST THE ORDER DATED 28.11.2011 PASSED BY THE LE ARNED CIT(A), GWALIOR FOR A.YS. 2008-09. ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 2 2. THE EFFECTIVE GROUNDS RAISED IN THESE CROSS APP EALS ARE REPRODUCED AS BELOW:- ITA NO. 23/AG/2012 BY THE ASSESSEE:- GROUND NO.1:- ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) WAS NOT JUSTIFIED IN RETAINING AND CONFIRMING AN ADDITIONS OF RS.3,052,700/- ON ACCOUNT OF SHARE APPLICATION MONE Y U/S 68 OF THE INCOME TAX ACT. THE ABOVE ADDITION MAY KI NDLY BE DELETED. GROUND NO.2 ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) WAS NOT JUSTIFIED IN RETAINING A DISALLOWANCE OF 10% OF CER TAIN EXPENSES AMOUNTING TO RS.2,40,880/- ON ADHOC BASIS. GROUND NO.3 THE APPELLANT CRAVES LEAVE TO ADD, ALTE R, AMEND, MODIFY, DELETE OR SUBSTITUTE ANY GROUND OF APPEAL AT THE TI ME OR BEFORE HEARING OF APPEAL. ITA NO. 39/AG/2012 BY THE REVENUE :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON OF *RS.58,29,000/- MADE ON ACCOUNT OF UNEXPLAINED CRED IT IN THE FORM OF SHARE APPLICATION MONEY. (*AMOUNT SHOULD BE RS.58,29,200/-) 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LTD. COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AN D TRADING OF EDIBLE OIL, SOAP, MUSTARD CAKE, VANASPATI ETC. THE ASSESSEE COMPANY FILED RETURN OF INCOME, DECLARING INCOME OF RS.2,24,28,820/-. DURIN G THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS ALLOTTED 88819 SHARES ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 3 HAVING VALUE OF RS.88,81,900/- TO VARIOUS PERSONS. THE A.O. MADE THE ADDITION OF RS.88,81,900/- AS THE ASSESSEE HAS FAIL ED TO DISCHARGE THE BURDEN REGARDING THE CAPACITY AND GENUINENESS OF THE TRANS ACTIONS. 4. THE CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.30,52,700/- AND DELETED THE BALANCE AMOUNT OF RS.58,29,200/- (R S.56,79,200/- +RS.1,50,000/-) AS UNDER :- (CIT(A) PAGE NO.6 TO 9) 5.2 APPELLANTS SUBMISSIONS HAVE BEEN CONSIDERED CA REFULLY ALONGWITH ASSESSMENT ORDER. ASSESSMENT RECORDS HAVE ALSO BEEN PERUSED. APPELLANTS SUBMISSIONS REGARDING RS.1,50, 000/- NOT PERTAINING TO THE ASSTT. YEAR UNDER CONSIDERATION A RE FOUND ACCEPTABLE. AS PER ITS BALANCE SHEET OF LAST YEAR, THE APPELLANT HAS DECLARED THE SAID AMOUNT AS SHARE APPLICATION M ONEY RECEIVED BUT PENDING ALLOTMENT AS ON 31.03.2007. NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE A.O. AND SHARE HAVE BEEN ALLOTTED THIS YEAR FOR THE MONEY RECEIVED LAST YEAR . ADDITION OF RS.1,50,000/- IS, THEREFORE, NOT FOUND SUSTAINABLE AND IS, HEREBY, DELETED. 5.3 REGARDING THE BALANCE AMOUNT OUT OF TOTAL AMOUN T OF SHARE APPLICATION MONEY OF RS.88,81,900/- FOR ALLOTMENT O F 88819 SHARES, THE APPELLANT HAS GIVEN A LIST OF SHAREHOLD ERS GIVING THEIR NAME AND ADDRESS, PAN (WHEREVER ALLOTTED), LEDGER A CCOUNTS FOR SHARE APPLICATION MONEY, SHARE CAPITAL ACCOUNT, BAN K ACCOUNT ETC. THE APPELLANT HAS ALLOTTED 50000 SHARES ON 01. 03.08, 6069 SHARES ON 15.03.08 AND 32750 SHARES ON 31.03.08. TH E APPELLANT HAS NOT GIVEN EVEN PAN OF SH. AJAY BANDI (2000 SHAR ES), SMT. NEELAM JOHRI (1694 SHARES), SHRI RAM BABU JATAV (19 44 SHARES), SHRI VIDYA RAM (1000 SHARES), SHRI VASUDEV SINGH (2 000 SHARES), SHRI VIJENDER SINGH (1000 SHARES) AND SMT. ARTI JAIN (2000 SHARES), THOUGH THE SHARE APPLICATION MONEY I S STATED TO BE RECEIVED THOUGH CHEQUES IN THESE CASES. HOWEVER, IT HAS BEEN HELD BY HONBLE CALCUTTA HIGH COURT THAT EVEN TRANS ACTION CARRIED THROUGH ACCOUNT PAYEE CHEQUE DOES NOT MAKE IT ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 4 SACROSANCT. THE APPELLANT IS REQUIRED TO GIVE SUPPO RTING DOCUMENTARY EVIDENCE TO PROVE IDENTITY AND CREDITWO RTHINESS OF THE PERSON FROM WHOM ALLEGED SHARE APPLICATION MONE Y HAS BEEN RECEIVED ALONGWITH GENUINENESS OF THE TRANSACTION A S REQUIRED U/S 68 OF THE I.T. ACT. THE APPELLANT HAS FAILED MISERA BLY TO GIVE ANY DETAILS WHATSOEVER IN RESPECT OF THESE SEVEN ALLEGE D SHAREHOLDERS TO WHOM TOTAL SHARES OF 12238 SHARES VALUED AT RS.1 2,23,800/- HAVE BEEN ISSUED. IN RESPECT OF SHRI ARVIND AGARWAL (1389 SHARES), SHRI AMAR NARAIN MAHESHWARI (5200 SHARES), SMT. NIRMALA DEVI (2600 SHARES), SHRI RAJESH MAHESHWARI (2600 SHARES), SHRI PANKAJ JOHRI (1000 SHARES), SHRI RAJE EV JAIN (1000 SHARES), SHRI RAJESH JAIN (1000 SHARES),SARIKA JAIN (1500 SHARES) AND ALPANA JAIN (2000 SHARES), THE APPELLAN T HAS SIMPLY GIVEN THEIR PAN WITHOUT ANY SUPPORTING DOCUMENTARY EVIDENCE IN FORM OF BANK STATEMENTS, COPY OF IT RETURNS, EVIDEN CE REGARDING SOURCE OF INCOME ETC. TO PROVE THEIR CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTION. AT THE MOST IT ONLY PROVES THEIR IDENTITY. IT HAS BEEN HELD BY HONBLE CALCUTTA HGH COURT IN CASE OF CIT VS. KORLAY TRADING CO. LTD., (1998) 232 ITR 820 (CAL) THAT THOUGH THE DEPARTMENT OFTEN ACTS ON CONFIRMATO RY LETTERS BUT EVEN THE INCOME TAX PARTICULARS, WHERE THE CREDITOR IS ASSESSED, MAY NOT BE SUFFICIENT. THE SAME HONBLE COURT HAS A LSO HELD THAT IF THE APPELLANT GIVES ONLY THE LIST AND THE INGRED IENTS OF SECTION 68 ARE NOT PROVED BY IT, THE SAID PROVISIONS ARE AT TRACTED EVEN IF THE PAYMENT HAS BEEN RECEIVED THROUGH CHEQUES AS IT IS THE ASSESSEE AND THE ASSESSEE ALSO WHO IS TO OFFER THE EXPLANATION, WHETHER INITIALLY OR SUBSEQUENTLY. IT IS CLEAR FROM THE WORDING OF SECTION 68 THAT THE ONUS IS LAID UPON THE APPELLANT ALONE TO FURNISH ALL RELEVANT INFORMATION IN RESPECT OF ENTR IES MADE IN ITS BOOKS OF ACCOUNTS. MERE FILING OF INCOME TAX FILE N OS. OR PAN IS NOT SUFFICIENT. THEIR SHARE CERTIFICATES AND SHARE APPLICATION FORMS HAVE ALSO NOT BEEN PRODUCED BY THE APPELLANT EVEN DURING THE COURSE OF APPEAL PROCEEDINGS. THUS, ADDITION MA DE IN RESPECT OF 18289 SHARES VALUED AT RS.18,28,900/- ALLOTTED T O THESE SHAREHOLDERS IS, HEREBY, CONFIRMED. IN RESPECT OF OTHER SHAREHOLDERS, THE APPELLANT HA S GIVEN THEIR PAN, PAN CARD, COPY OF INCOME TAX RETURNS, SH ARE APPLICATION FORM AND SHARE CERTIFICATES. A.O. HAS R EJECTED THE APPELLANTS EXPLANATION ON THE GROUND THAT IN THE C ONFIRMATION DATE OF ISSUE OF CHEQUE, NAME OF THE BANK AND SPECI FIC AMOUNT ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 5 HAS NOT BEEN MENTIONED NOR THEIR COPIES OF BANK ACC OUNTS SUBMITTED. IT HAS BEEN HELD BY HONBLE DELHI HIGH C OURT IN CASE OF CIT VS. DIVINE LEADING & FINANCE LTD. (2008) 299 ITR (DEL) THAT A COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AS WELL AS FINANC IAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAIN TAIN AND MAKE AVAILABLE TO THE A.O. FOR ITS PERUSAL ALL THE INFORMATIONS CONTAINED IN THE STATUTORY SHARE APPLICATION DOCUME NTS. IF THE A.O. FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS , HE CANNOT OBDURATELY ADHERE TO HIS SUSPICION AND TREAT THE SU BSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. S IMILAR VIEW HAS ALSO BEEN HELD BY HONBLE COURT INCASE OF HINDU STAN TEA TRADING CO. VS. CIT (2003) 263 ITR 289 THAT WHERE S UBSCRIPTION FOR SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM THE PUBLIC AND THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS INCLUDING THE ADDRESSES OF THE SUBSCRIBERS, THE QUESTION OF TREAT ING THE SAME AS UNEXPLAINED CREDIT DOES NOT ARISE. THE HONBLE JURI SDICTIONAL M.P. HIGH COURT IN CASE OF CIT VS. METACHEM INDUSTR IES (2000) 245 ITR 160 (M.P.) HAS ALSO HELD THAT ONCE IT IS ES TABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON , BE IT A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBILITY O F THE ASSESSEE IS OVER. THE ASSESSEE GIVES A SATISFACTORY EXPLANATION REGARDING CREDIT ENTRY IN ITS BOOKS OF ACCOUNTS OF THE PREVIO US YEAR, THEN THE BURDEN CAST ON IT IS DISCHARGED AND IN THAT CA SE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOME OF THE ASS ESSEE ESPECIALLY WHEN THAT PERSON OWNS THAT ENTRY. ON PER USAL OF RECORDS, IT IS SEEN THAT NO ADVERSE COMMENTS HAVE B EEN MADE BY THE A.O. ON THE DETAILS SUBMITTED NOR ANY FURTHER Q UERY RAISED WHEN CASE HAS BEEN DISCUSSED FROM TIME TO TIME AND BOOKS OF ACCOUNTS PRODUCED AND EXAMINED BY THE A.O. ON 22.12 .10 AND 27.12.2010 BEFORE PASSING THE ORDER ON 30.12.2010. THOUGH SECTION 68 EMPOWERS THE A.O. TO MAKE ENQUIRIES TO F IND OUT THE TRUE NATURE AND SOURCE OF A SUM CREDITED IN THE ACC OUNT BOOKS EVEN IF IT IS CREDITED AS RECEIPT OF SHARE APPLICAT ION MONEY. HOWEVER, IT HAS BEEN HELD BY HONBLE GAUHATI HIGH C OURT IN CASE OF KHANDELWAL CONSTRUCTIONS VS. CIT (1997) 227 ITR 900 (GAU) THAT SECTION 68 OF THE ACT EMPOWERS THE ASSES SING OFFICER TO MAKE ENQUIRY SPECIFICALLY TO SATISFY REGARDING T HE CASH CREDIT. IF HE IS SATISFIED THAT THESE ENTRIES ARE NOT GENUI NE, HE HAS EVERY RIGHT TO ADD THESE INCOME AS INCOME FROM OTHER SOUR CES. THE SATISFACTION OF THE ASSESSING OFFICER IS THE BASIS OF INVOCATION OF ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 6 THE POWERS UNDER SECTION 68 OF THE I.T. ACT AND THE SATISFACTION MUST BE DERIVED FROM RELEVANT FACTORS ON THE BASIS OF PROPER ENQUIRY. THE ENQUIRY ENVISAGED UNDER SECTION 68 IS AN ENQUIRY WHICH IS REASONABLE AND JUST. THE ASSESSING OFFICER SURELY HAS THE JURISDICTION TO LOOK INTO THESE CREDITS AND MAK E NECESSARY ENQUIRY AND COME TO A FINDING ON SUCH AN ENQUIRY IN A PROPER AND FAIR MANNER. THUS, THE A.O. IS ENTITLED, AND IT WOULD INDEED BE HIS DUTY, TO ENQUIRE WHETHER THE ALLEGED SHAREHO LDERS DO IN FCT EXIST OR NOT AND WHETHER MONEY HAS BEEN ADVANCED AN D SHARES ALLOTTED OR NOT AS SHARES CANNOT BE ISSUED IN THE N AME OF NON EXISTING PERSONS AS PER HONBLE DELHI HIGH COURT DE CISION IN CASE OF CIT VS. SOPHIA FINANCE LTD. (1994) 205 ITR 98 (DEL)(FB). IN THE APPELLANTS CASE, A.O. HAS NOT MA DE ANY ENQUIRY TO SHOW THAT AMOUNT CREDITED AS SHARE APPLI CATION MONEY TO THESE BALANCE SHAREHOLDERS DOES NOT REPRESENT SO WHEREAS THE APPELLANT HAS GIVEN REQUISITE DETAILS FOR THE SAME IN RESPECT OF SHARE ALLOTMENT OF RS.56,79,200/-. THUS, A.O. IS NO T FOUND JUSTIFIED IN TREATING THIS AMOUNT OF RS.56,79,200/- AS UNEXPLAINED INCOME OF THE APPELLANT. ACCORDINGLY, ADDITION OF R S.56,79,200/- IS, HEREBY, DELETED. ALSO ADDITION OF RS.1,50,000/- MADE IN RESPECT OF SHARE APPLICATION MONEY RECEIVED LAST YEAR BUT P ENDING ALLOTMENT IS ALSO NOT FOUND SUSTAINABLE, AS MENTION ED ABOVE. HOWEVER, THE APPELLANT HAS FAILED MISERABLY TO PROV E WITH ANY SUPPORTING DOCUMENTARY EVIDENCE, THE BALANCE AMOUNT OF SHARE APPLICATION MONEY RECEIVED EXCEPT THAT AMOUNT HAS B EEN RECEIVED THROUGH CHEQUES. NO EVIDENCE IN ITS SUPPORT HAS BEE N FILED; IN FACT IN SOME CASES EVEN THEIR PAN IS NOT MENTIONED LEAVE ASIDE CONFIRMATIONS, BANK STATEMENTS, COPY OF RETURNS ETC . ACCORDINGLY, ADDITION OF RS.30,52,700/- (RS.12,23,000* + 18,28,9 00) MADE BY THE A.O. IS HEREBY, CONFIRMED ON THE BASIS OF FACTS ABOVE AND AFTER PERUSAL OF RECORDS. (* CORRECT AMOUNT IS RS.12,23,800/-) 5. THE ASSESSEE AND REVENUE BOTH ARE IN APPEAL AS T HE CIT(A) HAS ALLOWED PART RELIEF. 6. THE LD. AUTHORIZED REPRESENTATIVE AT THE OUTSET SUBMITTED THAT THE ASSESSEE HAS NOT PROVIDED RELEVANT DOCUMENTS AND MA TERIAL FOR ARGUING THE ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 7 APPEAL. HE SUBMITTED THAT FOR WANT OF DOCUMENTS, HE HAS TAKEN A NUMBER OF ADJOURNMENTS. LOOKING TO THE NON-AVAILABILITY OF RE LEVANT MATERIAL, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE APPEAL MAY BE DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 7. THE LD. D.R. ON THE OTHER HAND, RELIED UPON THE ORDER OF THE A.O. 8. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. WE NOTICED THAT THE CIT(A) HAS DELETED THE ADDITION OF RS.1,50,000/-OUT OF THE TOTAL ADDITION OF RS.88,81,900/- MADE BY THE A. O. ON ACCOUNT OF SHARE APPLICATION MONEY. THE CIT(A) DELETED THE SAID AMOU NT OF RS.1,50,000/- BY ACCEPTING THE ASSESSEES CONTENTION THAT RS.1,50,00 0/-WAS NOT PERTAINING TO YEAR UNDER CONSIDERATION. THE CIT(A) FOUND THAT THE PERTAINING SHARE APPLICATION MONEY OF RS.1,50,000/- WAS PENDING FOR ALLOTMENT AS ON 31.03.2007, THEREFORE, A.O. IS NOT CORRECT IN DRAWI NG INFERENCE THAT THE SHARES HAVE BEEN ALLOTTED THIS YEAR FOR MONEY RECEI VED. SINCE THE AMOUNT WAS RECEIVED IN EARLIER YEAR, THEREFORE, THE ADDITI ON OF RS.1,50,000/- IS NOT WARRANTED UNDER SECTION 68 OF THE ACT AS ONE OF THE REQUIREMENT OF SECTION 68 IS THAT THE AMOUNT MUST BE CREDITED OR RECEIVED DURING THE YEAR. 9. THE CIT(A) WHILE DELETING THE ADDITION OF RS.56, 79,200/- FOUND THAT THE ASSESSEE HAS FURNISHED PERMANENT ACCOUNT NUMBER , COPY OF RETURN, ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 8 SHARE APPLICATION FORM, SHARE CERTIFICATE. IN VIEW OF THE DOCUMENTS FURNISHED BY THE ASSESSEE, THE CIT(A) RELIED UPON THE JUDGMEN T OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEADING & FINAN CE LTD. (2008) 299 ITR 268 (DEL) WHEREIN IT HAS BEEN HELD THAT COMPANY CON CERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDE NTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE CIT(A) FURTHE R FOUND THAT THE ASSESSEE COMPANY MADE AVAILABLE RELEVANT MATERIAL BEFORE THE A.O. AND THE A.O. HAS FAILED TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS. TH E CIT(A) HELD THAT MERELY ON SUSPICION ADDITION CANNOT BE MADE. THE CIT(A) RE LIED UPON THE ORDER OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF HIND USTAN TEA TRADING CO. VS. CIT (2003) 263 ITR 289. THE CIT(A) HAS ALSO CON SIDERED THE JUDGMENT OF THE HONBLE M.P. HIGH COURT IN THE CASE OF CIT V S. METACHEM INDUSTRIES (2000) 245 ITR 160 (M.P.) WHEREIN IT HAS BEEN HELD THAT ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON, BE IT A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBILITY O F THE ASSESSEE IS OVER. THE CIT(A) NOTED THAT THE A.O. DID NOT POINT OUT ANY AD VERSE COMMENTS ON THE DETAILS SUBMITTED BY THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE BOOKS OF ACCOUNTS FROM TIME TO TIME BEFORE THE A.O. THE CIT( A) AFTER A DETAILED DISCUSSION NOTICED THAT THE A.O. DID NOT MADE ENQUI RY TO SHOW THAT THE AMOUNT CREDITED AS SHARE APPLICATION MONEY TO THESE BALANCE SHAREHOLDERS DOES NOT REPRESENT SO WHEREAS THE ASSESSEE HAS GIVE N REQUISITE DETAILS FOR THE ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 9 SAME IN RESPECT OF SHARE ALLOTMENT OF RS.56,79,200/ -. THE CIT(A) HAS ALSO RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. (1994) 205 ITR 98 (DEL)(FB) . THE CIT(A) HAS MADE ELABORATE DISCUSSION BEFORE DELETING THE ADDIT ION OF RS.56,79,200/- ON ACCOUNT OF SHARE APPLICATION IN HIS ORDER AND REVEN UE HAS FAILED TO POINT OUT ANY CONTRARY MATERIAL TO THE FINDINGS OF THE CIT(A) . WE HAVE ALSO NOTICED THAT THE FINDING OF THE CIT(A) IS FORTIFIED BY JUD GMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. GP INTERNATIONAL LTD. [2010] 325 ITR 25 (P&H) W HEREIN THE HONBLE PUNJAB & HARYANA HIGH COURT HAS FOLLOWED A JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS P. LTD. [2009] 319 ITR 5 (S.C). IN VIEW OF ABOVE DISCUSSIONS, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS.56,79,200/-. THUS, THE DELETION OF TOTAL ADDITION OF RS.58,29,200/- (RS.56,79,200 + RS.1,50, 000/-) IS CONFIRMED. ACCORDINGLY, GROUND OF REVENUES APPEAL IS DISMISSE D. 10. NOW COMING TO GROUND NO.1 OF ASSESSEES APPEAL, WE FIND THAT THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION AND THE VARIOUS JUDGMENTS, THE CIT(A) FOUND THAT SECTION 68 CLEARLY PROVIDES THAT THE ONUS IS LAID UPON THE ASSESSEE TO FURNISH ALL RELEVANT I NFORMATION IN RESPECT OF ENTRIES MADE IN THE BOOKS OF ACCOUNT. MERE FILING O F INCOME TAX FILE NOS. OR ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 10 PAN IS NOT SUFFICIENT. THE RELEVANT SHARE CERTIFIC ATES AND SHARE APPLICATION FORMS WERE NOT PRODUCED BY THE ASSESSEE COMPANY NE ITHER BEFORE THE A.O. NOR BEFORE THE CIT(A). SIMILARLY, THE CIT(A) WHILE CONFIRMING THE ADDITION OF RS.12,23,000/- HELD THAT THE ASSESSEE HAS FAILED MISERABLY TO PROVE WITH ANY SUPPORTING DOCUMENTARY EVIDENCE. THE ASSESSEE H AS FURNISHED ONLY SHARE APPLICATION MONEY THROUGH CHEQUES. IN ABSENCE OF MATERIAL THE CIT(A) SUSTAINED THE ADDITION OF RS.12,23,000/- FOR WANT OF EVIDENCE AND MATERIAL ON ACCOUNT OF ASSESSEE COMPANY TO DISCHARGE THE BUR DEN IN RESPECT OF SECTION 68 OF THE ACT. WE FIND THAT THE CIT(A) HAS EXAMINED EACH AND EVERY ENTRY OF SHARE APPLICATION AND FOUND THAT THE ASSES SEE HAS FAILED TO DISCHARGE THE BURDEN IN RESPECT OF SECTION 68 OF THE ACT PERT AINING TO AMOUNT OF RS.30,52,700/-. WE, THEREFORE, FIND THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION OF RS.30,52,700/- (RS.12,23,800 + RS.18,2 8,900). 11. IN THE LIGHT OF ABOVE DISCUSSIONS, WE CONFIRM T HE ORDER OF THE CIT(A) ON THE ISSUE. THUS THE GROUND NO.1 RAISED BY THE AS SESSEE AND GROUND NO.1 RAISED BY THE REVENUE BOTH ARE DISMISSED. 12. NOW WE ARE TAKING THE SECOND GROUND RAISED BY T HE REVENUE IN ITS APPEAL PERTAINING TO ADDITION OF RS.2,40,880/- OUT OF EXPENSES. THE A.O. HAS MADE ADDITION OF RS.3,00,000/- OUT OF VARIOUS EXPEN SES PERTAINING TO GUEST WELCOME, MISCELLANEOUS, REPAIR AND MAINTENANCE AND TRAVELING AND ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 11 CONVEYANCE FOR WANT OF VERIFICATION. THE CIT(A) CON FIRMED THE ADDITION OF RS.2,40,880/-BEING 10% OF THE EXPENSES CLAIMED BY T HE ASSESSEE AS UNDER :- (CIT(A) PAGE NO.10) 6.2 APPELLANTS SUBMISSIONS HAVE BEEN CONSIDERED CA REFULLY. ITS AUDITED BOOKS OF ACCOUNTS ALONGWITH SUPPORTING BILLS AND VOUCHERS HAVE BEEN ACCEPTED BY THE A.O. AFTER THEIR EXAMINATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NOT EV EN A SINGLE DEFECT HAS BEEN MENTIONED THEREIN BY EITHER THE AUD ITOR OR THE A.O. HIMSELF. IT AHS BEEN HELD BY HONBLE ITAT, INDORE I N CASE OF PROTEIN PRODUCT, INDORE VS. ITO (1993) 21 ITC 256 T HAT THE DISALLOWANCES BASED ON GENERAL OBSERVATIONS ARE NOT SUSTAINABLE IN THAT THERE CANNOT BE VOUCHER FOR EACH AND EVERY EXPENDITURE AND IF VOUCHER ALONE IS INSISTED UPON, IT WOULD BE EASY AND CONVENIENT TO MAKE DISALLOWANCE WITHOUT REFERENCE TO REASONABI LITY AND GENUINENESS OF THE EXPENSE CLAIMED. IT IS AN ESTABL ISHED LAW THAT ANY LUMP-SUM ADDITION TO THE TRADING RESULTS, IF MA DE, MUST BE DONE IN PROPER EXERCISE OF DISCRETION OBJECTIVELY A ND JUDICIALLY ON THEBASIS OF RELEVANT MATERIAL. ARBITRARILY ADDING A ROUND FIGURE OR MAKING ESTIMATED DISALLOWANCE WITHOUT ANY JUSTIFICA TION OR BASIS FOR COMPUTATION OF THE TRUE INCOME OR PROFIT IS NOT JUSTIFIED. IF PROFITS SHOWN BY THE APPELLANT IN ITS RETURN ARE NO T ACCEPTED, IT IS FOR THE A.O. TO PROVE THAT THE APPELLANT HAS MADE M ORE PROFITS NOT DECLARED IN THE BOOKS OF ACCOUNTS [BHAGWANDAS KHAND ELWAL VS. CST, 27 STC 388 (M.P.)]. HOWEVER, CONSIDERING THE F ACTS AND CIRCUMSTANCES, NATURE AND TURNOVER OF THE APPELLANT COUPLED WITH THE NATURE OF EXPENSES AND MAINTAINABILITY OF VOUCH ERS AND AS PER APPELLANTS OWN ADMISSION, DISALLOWANCE @ 10% OF T HESE EXPENSES CLAIMED AT RS.24,08,819/- WHICH WORKS OUT TO RS.2,40,880/- IS FOUND REASONABLE AND JUSTIFIED. TH E SAME IS, HEREBY, CONFIRMED. 13. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AN D RECORDS PERUSED. WE NOTICED THAT THE A.O. MADE ADDITION OUT OF VARIO US EXPENSES AS THE EXPENSES WERE NOT FULLY VOUCHED. HOWEVER, THE CIT(A ) FOUND THAT AS PER ITA NOS.23 /AG./2012, 39/AG/2012 A.YS. 2008-09 12 ASSESSEES OWN ADMISSION REGARDING NON-MAINTENANCE OF PROPER VOUCHERS, THE CIT(A) FOUND THAT 10% OF SUCH EXPENSES WILL BE REASONABLE TO COVER THE DEFICIENCIES. THE ASSESSEE HAS FAILED TO FURNISH AN Y CONTRARY MATERIAL TO THE FINDING OF THE CIT(A). IN THE LIGHT OF THE FACT, TH E ORDER OF THE CIT(A) IS CONFIRMED. 14. IN THE RESULT, APPEAL FILED BY ASSESSEE AND APP EAL FILED BY THE REVENUE BOTH ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY
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