THE ACIT, 3(1), V. SHRI KELA PRAKASHAN P.LTD.,

ITA 264/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1534 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-05-2010
• Assessment Year: misc
• Appeal Filed On: 16-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: H P VERMA
• Keywords: Unexplained cash credit
• Section: 205; 195; 192; 147; 131; 68; 148

Judgement Text

PAGE 1 OF 9 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NOS.264 & 265/IND/2008 AYS: 2002-03 & 2003-04 ACIT-3(1), BHOPAL ..APPELLANT V/S. M/S. SHREE KELA PRAKASHAN PVT. LTD., PROFESSOR COLONY, CIVIL LINES, BHOPAL (PAN AAFCS 5120 B) ..RESPONDENT DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ASSESSEE BY : S/SHRI H.P. VERMA & ASHISH GOYAL ORDER PER JOGINDER SINGH, JM THESE APPEALS ARE BY THE REVENUE FOR DIFFERENT AYS AGAINST THE ORDER OF THE LD. CIT(A) DATED 24.3.2008 ON THE GROUND THAT THE LD. F IRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.30,00,000/- AN D RS.10,00,000/- RESPECTIVELY MADE ON ACCOUNT OF UNEXPLAINED SHARE A PPLICATION MONEY U/S 68 WITHOUT APPRECIATING THE FACT THAT THE PROCEEDINGS WERE INITIATED ON THE BASIS OF SPECIFIC INFORMATION UNEARTHED BY THE INVESTIGAT ION WING DELHI AND THE GENUINENESS OF ENTIRE TRANSACTION WAS NOT ESTABLISH ED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. PAGE 2 OF 9 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S MT. APARNA KARAN, LD. SR. DR, AND SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYAL, LD. COUNSEL FOR ASSESSEE. MRS. KARAN STRONGLY DEFENDED THE ASSESSME NT ORDER BY CONTENDING THAT THE GENUINENESS OF TRANSACTION/SHARE APPLICATI ON MONEY WAS NOT ESTABLISHED BY THE ASSESSEE DURING ASSESSMENT PROCE EDINGS, THEREFORE, THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELET ING THE IMPUGNED ADDITIONS. THE LD. SR. DR ALSO RELIED UPON THE CASES AND THE CONTE NTION MENTIONED IN THE ASSESSMENT ORDER. THE ADDITION U/S 68 OF THE ACT WA S ARGUED TO BE JUSTIFIED. HOWEVER, THE LD. COUNSEL FOR ASSESSEE RELIED UPON T HE DECISION FROM THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORT BY DEFENDING THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THAT FOR AY 2002-03, AN INCOME OF RS.12,854/- WAS DECLARED IN ITS RETURN FILED ON 31. 10.2002 WHEREAS FOR AY 2003-04, A LOSS OF RS.1,48,693/- WAS DECLARED IN TH E RETURN FILED ON 29.11.2003. NOTICE U/S 148 WAS ISSUED ON 28.3.2006 AND WAS DULY SERVED UPON THE ASSESSEE ON 31.3.2006. THE REASONS WERE DU LY RECORDED U/S 147 WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER, THEREFORE, WE ARE REFRAINING OURSELVES IN REPRODUCING THE SAME. IT WA S FOUND BY THE INVESTIGATION WING OF THE DEPARTMENT AT NEW DELHI T HAT LARGE NUMBER OF ENTRIES HAS BEEN PROVIDED TO THE BENEFICIARIES WHO HAVE ACCOUNTED/INTRODUCED THE SAME IN THEIR BOOKS OF ACCOUNT. AS PER INFORMAT ION GATHERED FROM THE PAGE 3 OF 9 INVESTIGATION WING, THE ASSESSEE RECEIVED ACCOMMODA TION ENTRIES FROM PRAGATI FINANCE LTD., SUMA FINANCE & INVESTMENT LTD ., GANESH GOYAL AND DEEPAK GOYAL. THE DETAILS OF WHICH ARE AS UNDER: AY: 2002-03 (AMOUNTS IN RS.) NAME OF THE ENTRY OPERATOR FROM WHOSE A/C. ENTRY WAS GIVEN MODE OF PAYMENT DATE AMOUNT (RS.) SUMA FINANCE & INVESTMENT LTD. D.D. CORPORATION BANK 17.8.01 501000 SUMA FINANCE & INVESTMENT LTD. D.D. CORPORATION BANK 29.6.01 1202400 SUMA FINANCE & INVESTMENT LTD. D.D. CORPORATION BANK 22.8.01 200300 DEEPAK GUPTA DIR. AMBA ALLOYS D.D. S.B. INDORE 2.7.02 300750 GANESH GOYAL DIR. ENPOL PVT. LTD. D.D. VIJAYA BANK 2.7.02 401000 GANESH GOYAL DIR. ZIGMA TELECOM LTD. JAI LAXMI CORPN. BANK 2.7.02 300000 TOTAL: 2905450 FOR AY: 2003-04, THE ASSESSEE SUBMITTED THE FOLLOWI NG DETAILS BY CLAIMING THAT THE AMOUNTS WERE RECEIVED ON ACCOUNT OF ISSUE OF SHARES AS PREMIUM (AMOUNTS IN RS.) NAME OF SHARE APPLICANT FACE VALUE OF SHARE (RS.) PREMIUM AMOUNT NUMBER OF SHARES TOTAL AMOUNT (RS.) BANK DRAFT DATE OF DRAFT BANK ZIGMA TELECOM PVT. LTD. (GANESH GOEL) 10/ - 50/ - 6000 300000 498901 2.7.02 JAILAXMI CO-OP. BANK ENPOL PVT. LTD. (GANESH 10/ - 50/ - 8000 400000 202456 2.7.02 JAILAXMI CO-OP. BANK PAGE 4 OF 9 GOYAL) AMBA ALLOYS PVT. LTD. (DEEPAK GUPTA) 10/ - 50/ - 6000 300000 498900 2.7.02 JAILAXMI CO-OP. BANK 4. THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT T HE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST UPON THE ASSESSEE TO PROVE THE GENUINENESS, PAYING CAPACITY AND IDENTITY OF THE SHARE APPLICANTS, CONS EQUENTLY, HE TREATED THE IMPUGNED AMOUNTS AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHEREIN THE LD. FIRST APPELLATE A UTHORITY DELETED THE IMPUGNED ADDITIONS WHICH ARE UNDER CHALLENGE BY THE REVENUE BEFORE THE TRIBUNAL. UNDER THE AFOREMENTIONED FACTS, ONE CLEAR FACT IS OOZING OUT THAT THE IMPUGNED AMOUNTS HAS BEEN PAID THROUGH BANKING CHAN NEL/DEMAND DRAFTS, CONSEQUENTLY, IT CAN BE SAID THAT THE IDENTITY OF T HE SHARE APPLICANTS WAS PROVED BY THE ASSESSEE, THEREFORE, THE DECISION OF THE TRIBUNAL IN THE CASE OF DHANRAJ GEMS (ITA NO.342/IND/2008) DATED 5.10.2009 SUPPORTS THE CASE OF THE ASSESSEE. THE RELEVANT PORTION OF THE SAME IS R EPRODUCED HEREWITH: THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF LD. CIT-(A)-I, BHOPAL, DATED 4.4.2008 ON THE GROUND THA T THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.40 LAKHS MADE ON ACCOUNT OF UNEXPLAINED INCREASE IN SHARE CAPITAL MONEY U/S 68 IGNORING THE FACT THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONUS IN PROVING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF CREDITOR SPECIALLY IN VIEW OF THE DECISION OF HONBLE KOLKATA HIGH COURT IN CIT V S. PAGE 5 OF 9 RUBY TRADERS & EXPORTERS (2003) 263 ITR 300. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SMT. APARNA KARAN, LD. ADDL. CIT, DR AND NONE WAS PRESENT FOR THE ASSESSEE. MRS. KARAN ADVANCED HER ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED B Y SUPPORTING THE ASSESSMENT ORDER. 2. WE HAVE CONSIDERED THE SUBMISSIONS PUTFORTH BY THE LD. SR. DR AND PERUSED THE MATERIAL AVAILABL E ON THE FILE. BRIEF FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, DECLARED INCOME OF RS.1039 IN ITS RETURN FILED ON 24 TH OCTOBER, 2005. THE ASSESSEE RECEIVED SHARE CAPITAL OF RS.20 LAKHS EACH FROM TWO COMPANIES I.E. M/S. ANUDEEP TOWERS P. LTD. AND M/S. JYOTI VYAPAR P. LTD., KOLKATA. THE ASSESSEE WAS ASK ED TO PROVE THE GENUINENESS OF THE IMPUGNED CREDITS. THE ASSESSEE THROUGH ITS REPLY DATED 5.12.2007 FILE D THE COPY OF ACKNOWLEDGEMENT OF INCOME-TAX RETURN OF THE SUBSCRIBER COMPANY, HOWEVER, THE LD. AO ISSUED SUMMONS U/S 131 TO THE DIRECTOR OF THESE COMPANIES. THE STAND OF THE REVENUE IS THAT THESE SUMMONS WERE NOT COMPLIED WITH, CONSEQUENTLY, THE LD. AO WAS OF THE VIEW THAT IDENTITY OF THE CREDITORS/SHARE MONEY SUBSCRIBERS WAS NOT SUFFICIENTLY PROVED. HE FOLLOWED THE DECISION FROM THE HONBLE APEX COURT IN STELLER INVESTMENT LTD. (251 ITR 263) (SC), CIT VS. RUBY EXPORTERS (263 ITR 300) AND MADE THE IMPUGNED ADDITION OF RS.40 LAKHS U/S 68 OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE. THE STAND OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS THA T THE WHOLE ADDITION IS BASED ON SURMISES/MISCONCEIVED. THE LD. FIRST APPELLATE AUTHORITY DELETED THE IMPUGNED ADDITION WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL BY THE REVENUE . ADMITTEDLY, THE ASSESSEE FILED INCOME-TAX RETURNS O F THESE COMPANIES/SUBSCRIBERS, THEREFORE, THE IDENTIT Y IS PROVED. WE ARE OF THE VIEW THAT NON-APPEARANCE B Y THE SUBSCRIBERS CANNOT BE THE SOLE GROUND FOR MAKIN G THE ADDITION U/S 68. THIS VIEW IS SUPPORTED BY THE DECISION FROM THE HONBLE APEX COURT IN ANIS AHMED & SONS VS. CIT (2008) 297 ITR 441 (SC). AS FAR AS T HE ADDITION U/S 68 OF THE ACT IS CONCERNED, WE ARE OF THE VIEW THAT NO ADVERSE INFERENCE IS JUSTIFIED IF THE SHAREHOLDERS FAIL TO RESPOND THE NOTICE OF THE AO. PAGE 6 OF 9 SINCE THE ASSESSEE COMPANY DULY FILED THE COPY OF T HE INCOME-TAX RETURNS OF THE SUBSCRIBING COMPANIES, THEREFORE, THE IDENTITY OF SHAREHOLDERS IS PROVED, CONSEQUENTLY, THE ADDITION AS PART OF SHARE CAPITAL U/S 68 IS NOT JUSTIFIED BECAUSE THE ASSESSEE HAS DISCHARGED HIS ONUS BY PROVING THE IDENTITY OF THE SHARE SUBSCRIBER. HAD ANY SUSPICION STILL REMAINS I N THE MIND OF THE AO, HE COULD HAVE INITIATED COERCI VE PROCESS BUT THIS ACTION WAS NOT ADOPTED BY HIM, CONSEQUENTLY, THE DELETION OF ADDITION BY THE LD. CIT(A) IS QUITE JUSTIFIED. THE HON'BLE APEX COURT I N THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 CLEARLY COMES TO THE RESCUE OF THE ASSESSEE WHEREIN IT WAS HELD AS UNDER:- IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS, 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. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD (2008) 299 ITR 268 (DEL) ON THE EFFECT OF SECTION 68 IN THE CASE OF CA SH CREDIT SHOWN AS SHARE CAPITAL HELD THAT THE ASSESSE E MUST PROVE THE IDENTITY OF SHARE HOLDERS AND GENUINENESS OF TRANSACTION. THE HONBLE APEX COURT IN LOVELY EXPORT PVT. LTD. (SUPRA) EVEN HAS GONE ON E STEP FURTHER THAT EVEN THE ALLEGED SHAREHOLDERS ARE BOGUS STILL IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THE PRESENT APPEAL, THE ASSESSEE DULY PROVED THAT THE AMOUNTS WERE RECEIVED FROM SPECIFIC SHARE HOLDERS, THEIR INCOME-TAX RETUR NS WERE FILED, WHEREIN NO DEFECT WAS POINTED OUT BY TH E REVENUE, THEREFORE, THE IDENTITY WAS PROVED. IN VIE W OF THESE FACTS, THE DECISION FROM THE HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) CLEARLY SUPPORTS THE CASE OF THE ASSESSEE. WE ARE MAKING IT CLEAR THAT IF THE LEARNED ASSESSING OFFICER WAS NOT SATISFIED, NOTHING PREVENTED HIM TO REOPEN THE CASE S OF SUCH SHARE HOLDERS AS PER THE PROVISIONS OF THE ACT. PAGE 7 OF 9 THE HONBLE DELHI HIGH COURT IN THE CASE OF DIVINE LEASING & FINANCE LTD., GENERAL EXPORT AND CREDITS LIMITED, LOVELY EXPORT P. LTD. (2008) 299 ITR 268 (DEL) CONSIDERED HOST OF DECISIONS INCLUDING THE CA SE OF CIT VS. RUBY TRADERS & EXPORTERS (SUPRA), RELIED UPON BY THE AO/LD. DR AND HELD THAT THE ADDITION IS NOT JUSTIFIED. THE DECISION OF HONBLE DELHI HIGH C OURT WAS AFFIRMED BY THE HONBLE APEX COURT IN CIT VS. LOVELY EXPORTS PVT. LTD (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308. OUR VIEW IS FURTHER FORTIFIE D BY THE DECISION OF DELHI HIGH COURT IN CIT VS. DOLP HIN CANPACK LTD. (283 ITR 190) (DEL) WHEREIN THE EXPLANATION REGARDING CREDITS WAS FOUND SATISFACTOR Y BY THE TRIBUNAL, CONSEQUENTLY, THE AMOUNT REPRESENTING CASH CREDITS WAS HELD TO BE JUSTIFIED IN NOT INCLUDIBLE IN TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT. WHILE COMING TO THIS CONCLUSION, THE HONBLE HIGH COURT DULY CONSIDERED THE DECISION IN CIT VS. SOPHIA FINANCE LTD., 205 ITR 98 (DEL)(FB) A ND CIT VS. STELLER INVESTMENT LTD., 192 ITR 287 (DEL). THE RATIO LAID DOWN IN FOLLOWING DECISIONS FURTHER FORTIFIES THE CASE OF ASSESSEE: 1. CIT VS. KUNDAN INVESTMENT LTD. (263 ITR 626) (KOLKATA) (PARA 17); 2. CIT VS. MAKHNI & TYAGI P. LTD. (267 ITR 433) (DEL) (PARAS 14 & 25); 3. CIT VS. NIVEDAN VANIJYA NIYOJAN LTD. (263 ITR 623)(KOLKATA) (PARA 17); 4. CIT VS. PRECISION FINANCE P. LTD. (208 ITR 465) (KOLKATA) (PARA 14); 5. CIT VS. SIBAL (RS) (269 ITR 429 (DEL) (PARA 14); 6. CIT VS. STELLER INVESTMENT LTD. (251 ITR 263) (SC) (PARAS 4, 23); 7. HINDUSTAN TEA TRADING CO. LTD. (263 ITR 289)(CAL)(PARA 17); 8. MUNICIPAL CORPORATION DELHI VS. GURNAM KAUR (1989) AIR 1989 SC 38 (PARA 5); 3. IN THE LIGHT OF SPECIFIC DECISION FROM HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) AN D VARIOUS OTHER DECISIONS CITED ABOVE, WE HAVE NOT FOUND ANY INFIRMITY IN THE IMPUGNED ORDER, THEREFOR E, PAGE 8 OF 9 THIS APPEAL OF THE REVENUE IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN ON 5.10.2009. 5. IN THE AFORESAID CASE, THE TRIBUNAL HAS ALREADY RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS, THEREFORE, THE SAME ARE NO T BEING REPEATED FOR THE SAKE OF BREVITY. THE WHOLE CASE OF THE ASSESSEE IS BASED UPON THE INFORMATION/INVESTIGATION MADE BY INVESTIGATING WIN G OF THE DEPARTMENT AT DELHI. NOTHING HAS BEEN BROUGHT ON RECORD BY THE AS SESSING OFFICER EVIDENCING THAT THE SHAREHOLDERS ARE EITHER BENAMID ARS OR FICTITIOUS PERSONS OR ANY PART OF THE SHARE CAPITAL IS REPRESENTED BY THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. HOWEVER, WE ARE MAKING IT CLEAR THAT IF THE SHARE APPLICATION MONEY, RECEIVED BY THE ASSESSEE, FROM A LLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER IS FOUND BOGUS THEN DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE TREATED AS UND ISCLOSED INCOME OF THE PRESENT ASSESSEE. THIS VIEW IS FORTIFIED BY THE DEC ISION FROM THE HONBLE APEX COURT IN CIT VS. LOVELY EXPORT PVT. LTD. (2008) (21 6 CTR 195) (SC). OUR VIEW IS FURTHER FORTIFIED BY THE DECISION OF THE CHANDIG ARH BENCH OF THE TRIBUNAL IN THE CASE OF JAI MATA FOODS (ITA NO.719/CHD/2008). H OWEVER, IN THE PRESENT APPEAL, THE ASSESSEE HAS PROVED THE IDENTITY OF SHA RE SUBSCRIBERS, THEREFORE, PAGE 9 OF 9 WE HAVE NOT FOUND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), CONSEQUENTLY, THE SAME IS UPHELD. 6. IN THE RESULT, THESE APPEALS OF THE REVENUE ARE HAVING NO MERITS, THEREFORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 8.10.2009. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8.10.2009 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/ CIT(A)/DR