ITO, New Delhi V. M/s Jwalaji Propbuild Pvt. ltd., New Delhi

ITA 2653/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61719 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Keywords: Bogus Share capital
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.2653/DEL./2011 (ASSESSMENT YEAR : 2007-08) ITO, WARD 4(2), VS. JWALAJI PROPBUILD PVT. LTD. , NEW DELHI. 373-2 ND FLOOR, SANT NAGAR, EAST OF KAILASH, NEW DELHI. (PAN/GIR NO.AABCJ6879Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI D.K. MISHRA, DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A)- VII, NEW DELHI, DATED 11.03.2011, RELEVANT TO ASSES SMENT YEAR 2007-08, WHEREIN FOLLOWING SINGLE EFFECTIVE GROUND HAS BEEN RAISED: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,96,50,00 0/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT, 1961 BEIN G THE UNEXPLAINED SHARE CAPITAL AND SHARE PREMIUM OF RS.1,01,00,000/- AND R S.8,95,50,000, RESPECTIVELY. 2.1 THE CIT(A) IGNORED THE FINDINGS RECORDED BY THE ASSESSING OFFICER AND THE FACT THAT THE ASSESSEE DID NOT DISCHARGE THE ON US OF PROVING EXISTENCE AND FACT THAT THE ASSESSEE DID NOT DISCHARGE THE ON US OF PROVING EXISTENCE AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENE SS OF THE TRANSACTIONS. I.T.A.NO. 2653/DEL./2011 (A.Y. 2007-08) 2 2. THE ASSESSING OFFICER IN THIS CASE HAS MADE ADDI TION OF RS.9,96,50,000/- ON ACCOUNT OF SHARE CAPITAL OF RS.1,01,00,000/- AND SH ARE PREMIUM OF RS.8,95,50,000/- U/S 68 OF THE I.T. ACT, 1961 AND WHILE MAKING THE ADDIT ION, ASSESSING OFFICER OBSERVED THAT SUBSCRIBING COMPANIES FROM WHOM THE SHARE CAPITAL W AS RECEIVED HAD FILED NOMINAL INCOME AND AS SUCH CAPITAL INVESTMENT CANNOT BE ACC EPTED AND MADE THE IMPUGNED ADDITIONS. IN APPEAL, ASSESSEE SUBMITTED THAT ASSE SSING OFFICER HAS JUST MADE THE ADDITION BY SIMPLY HOLDING THAT CAPITAL INVESTMENT CANNOT BE ACCEPTED IN VIEW OF SUBSCRIBING COMPANIES FROM WHOM THE SHARE CAPITAL HAD BEEN RECE IVED HAD FILED NOMINAL INCOME. ASSESSEE SUPPORTED HIS PLEA BY CITING VARIOUS DECIS IONS IN HIS SUBMISSIONS AS REPRODUCED IN PARA. 4 BY LD.CIT(A), WHO DISCUSSED THE SUBMISSI ONS AND VARIOUS JUDGMENTS IN HIS ORDER FROM PARAS. 4.1 TO 4.3 AND CONCLUDED TO DELE TE THE IMPUGNED ADDITION AS PER PARA. 4.4 OF HIS ORDER, WHICH READS AS UNDER: 4.4 IN THE PRESENT CASE, THE ASSESSEE CAN BE SAID TO HAVE DISCHARGED ITS ONUS UNDER SECTION 68 OF THE ACT IN PROVING THE GENUINEN ESS OF THE SHARE CAPITAL IN RESPECT OF THE IMPUGNED 22 SHAREHOLDERS IN THE LIGH T OF PROPOSITION LAID DOWN BY THE SUPREME COURT AND DELHI HIGH COURT IN THE CASES CITED ABOVE. THE APPELLANT HAS GIVEN ALL THE NECESSARY DETAILS IN ORDER TO EST ABLISH THE IDENTITY OF THE AFOREMENTIONED SHARE APPLICANTS. IT IS ALSO OBSERV ED THAT ALL THE SHARE APPLICANTS ARE CORPORATE ASSESSEES, INCORPORATED UNDER INDIAN COMPANIES ACT. AFTER CONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD, I T IS FAIR TO CONCLUDE THAT THE AFOREMENTIONED 22 SHARE APPLICANTS WERE EXITING PAR TIES. IT IS ALSO SEEN THAT THE ASSESSING OFFICER COULD NOT POINT OUT ANY DISCREPAN CY IN THE EVIDENCES RELIED UPON BY THE ASSESSEE. FURTHER, WHAT IS THE DESIRED DOCUMENTARY EVIDENCE REQUIRED TO SUPPORT THE CLAIM OF THE ASSESSEE AS REQUIRED B Y THE ASSESSING OFFICER IS NOT COMING OUT OF THE ORDER OF THE ASSESSING OFFICER. THOUGH, THE SHARE-APPLICANTS COULD NOT BE EXAMINED BY THE ASSESSING OFFICER, SIN CE THEY WERE EXISTING ON THE FILE OF THE INCOME TAX DEPARTMENT AND THEIR INCOME- TAX DETAILS WERE MADE AVAILABLE TO THE ASSESSING OFFICER, IT WAS EQUALLY THE DUTY OF THE ASSESSING OFFICER TO HAVE TAKEN STEPS TO VERIFY THEIR ASSESSMENT RECO RDS AND IF NECESSARY TO ALSO HAVE THEM EXAMINED BY THE RESPECTIVE ASSESSING OFFICERS HAVING JURISDICTION OVER THEM (SHARE-APPLICANTS), WHICH HAS NOT BEEN DONE BY HIM. IN THESE CIRCUMSTANCES, IT IS HELD THAT THE ADDITION OF RS.9,96,50,000/- ON ACCOU NT OF SHARE CAPITAL AND SHARE PREMIUM U/S 68 OF THE ACT CAN NOT BE SUSTAINED AND ACCORDINGLY, THE SAME IS DIRECTED TO BE DELETED. I.T.A.NO. 2653/DEL./2011 (A.Y. 2007-08) 3 3. AGGRIEVED BY THIS ORDER OF CIT(A), DEPARTMENT HA S COME UP IN APPEAL WHILE RELYING UPON THE BASIS AND REASONING AS GIVEN BY TH E ASSESSING OFFICER, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THA T OF THE ASSESSING OFFICER. 4. LD.DR HAS RELIED UPON THE JUDGMENT OF DELHI HIGH COURT IN CIT VS. NOVA PROMOTOR & FINLEASE P. LTD. (I.T.A. NO.342 OF 2011) , REPORTED IN 18 TAXMAN.COM 217 (DEL.) IN WHICH LOVELY EXPORTS (P) LTD. HAS DULY BE EN DISCUSSED TO DECIDE THE ISSUE IN FAVOUR OF THE REVENUE AND FURTHER RELIANCE WAS PLAC ED ON ITO VS. OMEGA BIOTECH LTD.(2010) 4 I.T.R. (TRIB.) 72 (DEL.). THEREFORE, FOLLOWING THE RATIO OF THE SAID JUDGMENTS, LD.DR HAS PLEADED FOR REVERSAL OF THE OR DER OF THE CIT(A) AND RESTORING OF ASSESSING OFFICER. 5. DESPITE SENDING NOTICE SUFFICIENTLY IN ADVANCE, ASSESSEE DID NOT APPEAR AT THE TIME WHEN CASE WAS CALLED UP FOR HEARING. SO, WE PROCE EDED TO DECIDE THIS APPEAL OF THE DEPARTMENT EX-PARTE QUA-THE-ASSESSEE ON THE BASIS O F MATERIAL AVAILABLE ON RECORD IN THE LIGHT OF THE ARGUMENTS ADVANCED BY THE LD.DR. 6. WE HAVE HEARD LD.DR AND CONSIDERED THE MATERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON BY THE LD.DR AND FIND THAT IN THE CASE OF NOVA PROMOTORS & FINLEASE (P) LTD., HONBLE DELHI HIGH COURT HAS DISCUSSED AND D ISTINGUISHED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORT PVT. LTD., 216 CTR (SC) 195 AND VARIOUS OTHER RELATED DECISIONS TO DECIDE THE APPEA L IN FAVOUR OF THE DEPARTMENT. 7. SINCE ISSUE INVOLVED IN THE APPEAL HAS NOT BEEN CONSIDERED BY THE CIT(A) APPROPRIATELY WHILE GIVING RELIEF TO THE ASSESSEE, THEREFORE, CONSIDERING THE ENTIRETY OF FACTS, CIRCUMSTANCES AND MATERIAL ON RECORD, WE FIN D IT JUST AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THE MATTER B ACK ON HIS FILE WITH THE DIRECTION TO I.T.A.NO. 2653/DEL./2011 (A.Y. 2007-08) 4 CONSIDER THE ISSUE AFRESH AFTER GIVING DUE OPPORTUN ITY TO THE ASSESSEE AS WELL AS TO ASSESSING OFFICER. WE HOLD AND DIRECT ACCORDINGLY. 8. AS A RESULT, THE APPEAL FILED BY THE DEPARTMENT GETS ACCEPTED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 05.06.2012. SD/- SD/- (K.G. BANSAL) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : JUNE 05, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-VII, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT