ACIT, Cuttack V. M/s. Paradeep Cargo CarriersLtd, Cuttack

ITA 260/CTK/2012

• Counselvise Citation: 26022114 RSA 2012
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 25-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2012
• Court: TRIBUNAL
• Department Lawyers: M UDAYAPURIAB AGRAWALARS
• Assessee Lawyers: N K NEBDR
• Keywords: Share purchase agreement

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 260/CTK/2012 / ASSESSMENT YEAR 2007 - 08 ASST.COMMISSIONER OF INCOME - TAX,CIRCLE 2(2), CUTTACK. - - - VERSUS - M/S. PARADEEP CARGO CARRIERS LTD, PROFESSOR PARA, CUTTACK. PAN : AADCP 2661 E ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI M.UDAYAPURIA/B.AGRAWAL,ARS / FOR THE RESPONDENT: / SHRI N.K.NEB,DR / DATE OF HEARING: 25.09.2012 / DATE OF PRONOUNCEMENT: 30 .10.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THE REVENUE IS IN APPEAL RAISING THE FOLLOWING GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.22,00,000/ - MADE BY THE AO U/S.68 ( SHARE APPLICATION) WHEN CREDIT ENTRIES APPEARING IN THE BOOKS OF ACCOUNT HAVE NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE PARTICULARLY WHEN THE ASSESSEE FAILED TO P RODUCE CREDITWORTHINESS OF THE SHARE APPLICANTS. 02. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.13,394/ - U/S.36(1)(VA) READ WITH SECTION 2(24)(X) MADE IN THE ASSESSMENT ORDER FOR BELATED REMI TTANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND & ESI. IT APPEARS THAT THE CIT(A) IS IN ERROR IN CONSIDERING THE DISALLOWANCE U/S.43B OF THE I.T.ACT . 2. AS REGARDS GROUND NO.1, THE UNDISPUTED FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM TRANSPORTA TION OF GOODS. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT AS ON 31.3.2007, THE ASSESSEE SHOWED SHARE APPLICATION MONEY OF 22,00,000 IN THE BALANCE - SHEET. ON 2 BEING ASKED, THE ASSESSEE PRODUCED BEFORE THE AO THE PHOTO COPIES OF THE I.T.RETURN ACKNOWLEDGEMENTS OF INDIVIDUAL SHARE APPLICANTS, STATEMENT OF COMPUTATION OF TOTAL INCOME AND CAPITAL ACCOUNT, BALANCE - SHEET AND BANK AC COUNT COPIES OF THE SHARE APPLICANTS. AFTER VERIFICATION, THE ASSESSING OFFICER OBSERVED THAT ALMOST ALL THE SHARE APPLICANTS ARE SALARY HOLDERS OF THE ASSESSEE - COMPANY OR ITS ASSOCIATED COMPANIES/FIRMS. THE ASSESSING OFFICER ALSO OBSERVED THAT THE SHARE A PPLICANTS WERE HAVING POOR CREDITWORTHINESS. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE AMOUNT OF 22,00,000 U/S.68 TO THE TOTAL INCOME OF THE ASSESSEE. 2.1. IN APPEAL, THE LEARNED CIT(A) DELETED THE SAID ADDITION OF 22,00,000 HOLDING THAT ONCE THE IDENTITY AND SOURCE OF THE SUBSCRIBERS ARE ESTABLISHED FOR MAKING SHARE APPLICATION, NO ADDITION CAN BE MADE U/S.68 OF THE ACT. WHILE HOLDING SO, HE HAS RELIED ON VARIOUS DECISIONS OF HONBLE SUPREME COURT AND HIGH COURTS, SUCH AS, CIT V. LOVELY EXPORTS P. LTD. (2009) 319 ITR (ST.) 5 (SC) FOLLOWED IN CIT V. GP INTERNATIONAL LTD. (2010) 325 ITR 25 (P&H) AND CIT V. ORBITAL COMMUNICATION (P) LTD. (2010) 327 ITR 560 (DEL HI) AND ALSO THE DECISIONS IN CIT V . VECTOR ELECTRODES LTD. (2010) 329 ITR 271 (DELHI) AND CIT V. UJALA DYEING AND PRINTING MILLS P. LTD. (2010) 328 ITR 437 (GUJ), THE SPECIAL LEAVE AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT (2009) 317 ITR (ST.) 1. 2.2. THE LEARNED DR CONTENDED BEFORE US THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION IN QUESTION MADE U/S.68, WHEN CREDIT ENTRIES APPEARING IN THE BOOKS OF ACCOUNT HAVE NOT BE EN SATISFACTORILY EXPLAINED BY THE ASSESSEE PARTICULARLY WHEN THE ASSESSEE FAILED TO PRODUCE CREDITWORTHINESS OF THE SHARE APPLICANTS . HE FULLY SUPPORTED THE IMPUGNED ORDER OF THE ASSESSING OFFICER FOR HIS PART OF SUBMISSIONS. 3 2.3. THE LEARNED AR OF THE A SSESSEE ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A). HE FILED A PAPER BOOK CONTAINING INTER ALIA MEMORANDUM OF ASSOCIATION & ARTICLES OF ASSOCIATION OF THE COMPANY, FINANCIAL STATEMENTS, RESOLUTION OF THE COMPANY REGARDING ADMITTI NG NEW SHARE APPLICANTS AND ALLOTMENT OF SHARES, SHARE APPLICATION COPY BY SHARE APPLICANT, COPY OF SHARE CERTIFICATES ISSUED ,LIST OF SHARE HOLDERS WITH ADDRESS, PAN S , BANK CHEQUE NUMBER & DATE. HE RELIED ON THE DECISIONS AS RELIED ON BY THE LEARNED CIT(A ) IN HIS ORDER. 2.4. HAVING HEARD BOTH THE PARTIES AND GOING THROUGH THE MATERIAL AVAILABLE ON RECORD THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS SUCH AS NAMES AND ADDRESSES, PANS, BANK CHEQUE NUMBER & DATE ETC., IN RESPECT OF EACH SHARE APPLICANTS TO WHOM THE ASSESSEE ISSUED SHARE CERTIFICATES. BUT THE UNDISPUTED FACT REMAINS THAT THE ASSESSEE HAS RECEIVED THE MONEY QUESTION FROM THOSE PERSONS AS SHARE APPLICATION MONEY. THE LEARNED DR DID NOT DISPUTE THE ABOVE FACTS. IN THE CASE LAWS RELIED ON BY THE LEARNED CIT(A) LAW IS WELL SETTLED THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE - COMPANY WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE - COMPANY. WE FIND THAT THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS COVERED BY VARIOUS DECISIONS OF HONBLE SUPREME COURT AND DIFFERENT HIGH COURTS AS REFERRED TO IN HIS ORDER. THEREFORE , WE DO NOT FIND ANY INFIRMITY IN THE SAID ORDER OF LEARNED CIT(A) ON THIS ISSUE. WE CONFIRM THE SAME AND DISMISS GROUND NO.1 RAISED BY THE REVENUE. 3. AS REGARDS GROUND NO.2, AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE ASSESSING OFFICER MADE ADDITION OF 13, 394 DISALLOWING THE CLAIM OF EMPLOYEES CONTRIBUTION OF 13,394 TOWARDS PF & ESI ON THE FINDING THAT THE 4 SAME WAS NOT DEPOSITED WITHIN DUE DATE. THE LEARNED CIT(A) DELETED THE SAID ADDITION BY FOLLOWING THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD (319 ITR 306 (SC), AND THE DECISION OF ITAT, MUMBAI IN THE CASE OF PIK PEN PRIVATE LIMITED V. ITO (ITA NO.6847/MUM/2008 FOR ASSESSMENT YEAR 2005 - 06) DT.28.1.2006. THE REVENUE HAS NOT DISPUTED THE FACT THAT THE SAID AMOUNT HAD BEE N DEPOSITED BEFORE FILING OF THE RETURN. IN THIS VIEW OF THE MATTER, WE ARE IF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE SAID DISALLOWANCE/ADDITION IN VIEW OF THE DECISIONS AS RELIED ON BY THE LEARNED CIT(A). WE, THEREFORE, U PHOLD THE SAME AND DISMISS GROUND NO.2 RAISED BY THE REVENUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 30.10.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE R ESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. 5 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 29.10 .2012 . 2. DATE ON W HICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.10.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 30.10.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..