ACIT, Agra V. M/s T.S.Ice & Cold Storage Pvt. Ltd, Agra

ITA 273/AGR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6965 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH AGARWAL
• Keywords: Unexplained cash credit; Gift; Source of fund; Assessment record; Onus to prove
• Section: 143(3); 142(1); 133(6); 131; 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.273/AGR/2009 ASST. YEAR: 2004-05 ACIT 4(1), VS. M/S T.S. ICE & COLD STORAGE PVT. LTD. AGRA. T.S. MARKET, VILLAGE & POST KHANDOLI, AGRA. (PAN : AACCT 1158 P) (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI MAHESH AGARWAL, CA ORDER PER H.S. SIDHU, J.M. : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E IMPUGNED ORDER DATED 23.03.2009 PASSED BY THE LD. CIT(A)-I, AGRA ON THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ENTIRE ADDITION MADE BY ASSESSING OFFI CER U/S 68 AMOUNTING TO ` 82,12,000/- (47,67,000 + 34,45,000) BEING UNEXPLAINED SHARE MONEY AND LOANS WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND RELYING ON THE SUBMISSION MADE BY THE ASSESSEE AND ALSO WITHOUT ADJUDICATING THE ISSUES RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 2. THAT THE DECISION OF LD. COMMISSIONER OF INCOME TAX (A)-II, AGRA BEING ERRONEOUS IN LAW AND ON FACTS DESERVES T O BE QUASHED AND THAT OF THE ASSESSING OFFICER DESERVES TO BE RESTOR ED. 2 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR ALTER ANY OR MORE GROUND OR GROUNDS OF APPEAL AS MAY BE DEEMED FIT AT THE TIME OF HEARING OF APPEAL. 2. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND FILED ITS RETURN OF INC OME ON 01.11.2004 DECLARING LOSS OF ` 28,83,314/-. THE ASSESSING OFFICER SELECTED THE CA SE OF THE ASSESSEE FOR SCRUTINY AND ISSUED NOTICES UNDER SECTION 143(2) AN D 142(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). IN RESPONSE TO THE SAME, THE LD. LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED W RITTEN REPLY. THE ASSESSEE DERIVES ITS INCOME FROM COLD STORAGE. THE ASSESSEE COMPANY WAS INCORPORATED W.E.F. 16.04.2003 AND THE COLD STORAGE WAS CONSTRUC TED AND INSTALLED DURING THE YEAR ITSELF. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSEE WAS REQUIRED TO FURNISH DETAILS OF INVESTMENT IN THE CO LD STORAGE, SOURCE OF SHARE CAPITAL, GENUINENESS OF LOANS AND TO JUSTIFY SUCH I NVESTMENT AND SUCH CAPITAL/LOANS AND OTHER EXPENSE WITH REFERENCE TO BOOKS OF ACCOUN TS, BILLS, VOUCHER, ETC. THE ASSESSEE HAS THOUGH FILED SOME OF THE DETAILS, BUT HAS NOT FILED THE COMPLETE DOCUMENTARY EVIDENCE AS REQUIRED BY THE ASSESSING O FFICER. AFTER EXAMINING THE RETURN FILED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOWN RECEIPT OF SHARE MONEY AMOUNTING TO ` 75,00,000/- FROM 15 PERSONS WHICH INCLUDES ` 64,00,000/- FROM 4 DIRECTORS OF THE ASSESSEE COMPAN Y AND BALANCE AMOUNT OF ` 11,00,000/- WAS RECEIVED FROM 11 PERSONS ( ` 1,00,000/- EACH). APART 3 FROM THE SAID AMOUNT, THE ASSESSEE HAS ALSO SHOWN R ECEIPT OF ` 34,45,000/- BY WAY OF UNSECURED LOANS FROM 19 AGRICULTURISTS. AFTER E XAMINING THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER REQUESTED THE ASSES SEE TO FURNISH NAMES AND ADDRESSES OF THE PERSONS WHO HAD GIVEN SHARE APPLIC ATION MONEY DURING THE YEAR 2003-04, COPY OF APPLICATION FILED BY THEM FOR ALLO TMENT OF SHARES, DATE AND MODE OF PAYMENT OF SHARE APPLICATION MONEY AND COPY OF B ANK ACCOUNT IN WHICH SHARE APPLICATION MONEY WAS DEPOSITED BY THE ASSESSEE. S ECONDLY, THE ASSESSING OFFICER ALSO REQUESTED THE ASSESSEE FOR SUPPLY OF NAME AND ADDRESSES OF ALL SHARE HOLDERS, NUMBER OF SHARES APPLIED/ALLOTTED TO THEM, DATE AND MODE OF PAYMENT FOR PURCHASING THE SHARES, COPY OF APPLICATION FILED BY THEM FOR ALLOTMENT OF SHARES AND TO FILE COMPLETE NAMES AND ADDRESSES OF SHAREHOLDER S TO WHOM ALLOTMENT OF SHARES WAS PENDING AS ON 31.03.2004 AND THE DATE OF ALLOTM ENT OF SHARES TO SUCH SHAREHOLDERS IN SUBSEQUENT YEAR WITH SUPPORTING EVI DENCE. THIRDLY, THE ASSESSING OFFICER ALSO REQUESTED THE ASSESSEE TO FURNISH COMP LETE ADDRESSES OF THE PERSONS FROM WHOM THE LOANS WERE TAKEN, PROVE THEIR IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WITH SUPPORTING DOCU MENTARY EVIDENCES, TERMS AND CONDITIONS OF LOANS, PURPOSE OF TAKING SUCH LOANS A ND FILE THEIR COPY OF ACCOUNT AS ON 31.03.2004 ALONG WITH CONFIRMATION FROM ALL SUCH PERSONS IN RESPECT OF LOANS TAKEN, RATE OF INTEREST CHARGED. 4 3. IN COMPLIANCE OF THE AFORESAID REQUEST OF THE AS SESSING OFFICER, THE ASSESSEE HAS ONLY FURNISHED A LIST OF SHARE APPLICANTS, GIVI NG THEIR NAMES AND ADDRESSES AND AMOUNT RECEIVED FROM THEM TOWARDS PURCHASE OF SHARE S. IN SUPPORT OF SHARE APPLICATION MONEY RECEIVED FROM THE DIRECTORS, THE ASSESSEE HAS FURNISHED BANK STATEMENT OF SHRI BHURI SINGH, SHRI RAKESH KUMAR, S HRI PRATAP SINGH, SHRI DALLVIR SINGH AND THEIR HUFS, DETAILS OF LOADING AND NIKASI OF POTATOES FROM PARABHAT COLD STORAGE, HATHRAS ROAD, AGRA, A COPY OF KHASRA EVIDE NCING THEIR LAND HOLDING AND SALE BILLS OF POTATOES. THE ASSESSEE STATED THAT D IRECTORS HAD SOLD THEIR AGRICULTURAL LAND IN THE YEAR 2003 AND OUT OF SUCH SALE PROCEEDS , SHARE APPLICATION MONEY WAS PAID. IN SUPPORT, 11 SALE DEEDS AMOUNTING TO ` 19,55,000/- HAVE BEEN FURNISHED. THE DETAILS OF THE SAME, THE ASSESSING OFFICER HAS REPRODUCED IN PARAGRAPH NO.2 AT PAGE NO.2 IN THE ASSESSMENT ORDER. THE ASSESSEE HA S ALSO FILED COPY OF CONFIRMATIONS, RATION CARD AND KISAN BAHI OF LOAN C REDITORS EVIDENCING LAND HOLDING BY THE CREDITORS. 4. AFTER RECEIVING THE AFORESAID EVIDENCES, THE ASS ESSING OFFICER, FEELING DISSATISFIED, AGAIN REQUESTED THE ASSESSEE TO FURNI SH (1) SHARE APPLICATION FORMS FILED BY THE SHARE APPLICANTS AND FILE A COPY OF TH EIR RATION CARDS TO PROVE THEIR IDENTITY AND BANK PASS BOOKS FOR THE PERIOD 11.04.2 011 TO 31.03.2005, (2) FURNISH A COPY OF KHATAUNI FOR THE RELEVANT YEAR ALONG WITH C ERTIFICATE FROM THE REVENUE AUTHORITIES PROVING CULTIVATION OF POTATOES BY THE DIRECTORS AND THEIR FAMILY 5 MEMBERS DURING THE RELEVANT YEAR, (3) BANK PASS BOO K OF THE PERSONS FROM WHOM LOANS WERE TAKEN, (4) TO PRODUCE ALL BOOKS OF ACCOU NTS, BILLS AND EVIDENCES IN SUPPORT OF IDENTITY, CAPACITY AND GENUINENESS OF LO ANS AND SHARE APPLICATION MONEY RECEIVED DURING THE YEAR. 5. IN RESPONSE TO THE AFORESAID REQUEST OF THE ASSE SSING OFFICER, THE ASSESSEE FILED ITS REPLY ON 22.12.2006 IN WHICH RELIANCE WAS AGAIN PLACED ON THE SAME MATERIAL WHICH HAD BEEN FILED BY THE ASSESSEE EARLI ER. BUT THE ASSESSEE HAS NOT FILED THE EVIDENCE REQUIRED BY THE ASSESSING OFFICE R FOR THE VERIFICATION OF THE CORRECTNESS OF CULTIVATION OF POTATOES BY THE SHARE APPLICANTS AND LOAN CREDITORS. THE ASSESSEE HAS ALSO NOT PRODUCED CERTIFICATE OF L AND REVENUE AUTHORITIES REGARDING SUCH CULTIVATION BY THE ABOVE PERSONS BY NOT FURNIS HING SUCH DETAILS, THE ASSESSEE HAS NOT CO-OPERATED WITH THE DEPARTMENT IN VERIFYIN G THE GENUINENESS OF ITS CLAIM REGARDING SOURCE OF FUND IN THE HANDS OF SHARE APPL ICANTS AND LOAN CREDITORS. 6. AFTER EXAMINING THE SAID EVIDENCE, THE ASSESSING OFFICER WAS OF THE OPINION THAT ALL THE SHARE APPLICANTS AND LOAN CREDITORS AR E MAINLY AGRICULTURISTS AND THEIR MAIN SOURCE OF INCOME IS AGRICULTURE AND THEIR ANNU AL INCOME IS IN THE RANGE OF ` 40,000/- PR ANNUM. ALMOST ALL HAVE FAMILY CONSISTI NG OF 4 TO 6 PERSONS AND IT IS NOT POSSIBLE TO SAVE ANYTHING AFTER MEETING THE HOU SEHOLD EXPENSES AND OTHER EXPENSES ON ACCOUNT OF SOCIAL AND FAMILY OBLIGATIO NS. 6 7. THE ASSESSING OFFICER ALSO FOUND THAT KEEPING IN VIEW OF BANK ACCOUNTS OF THE DIRECTORS AND OTHERS, THERE ARE CASH DEPOSITS O R TRANSFER OF MONEY JUST BEFORE GIVING OF CHEQUES OF SHARE APPLICATION MONEY OF THE LOANS AND BUT FOR SUCH DEPOSIT/CREDIT, THEY WERE NOT HAVING CAPACITY TO IN VEST MONEY WITH THE ASSESSEE. HE HAS WRITTEN ALL THE DETAILS IN THE BOTTOM OF PAG E NO.3 AND IN THE STARTING OF PAGE NO.4 IN THE ASSESSMENT ORDER IN DISPUTE. LASTLY, T HE ASSESSING OFFICER HAS ACCEPTED THE SALE CONSIDERATION OF ` 19,55,000/-, AS DISCUSSED IN THE ASSESSMENT ORDER AT PARA NO.2, PAGE NO.2, IN THE HANDS OF 4 DI RECTORS AND ADDED THE BALANCE AMOUNT, I.E. ` 64,00,000.00 ` 19,55,000.00, AS UNEXPLAINED ON ACCOUNT OF SHARE APPLICATION MONEY INVESTED BY THE 4 DIRECTORS. TH E ASSESSING OFFICER ALSO ACCEPTED THE AMOUNT OF ` 7,78,000/- REPRESENTING CAPITALIZATION OF LAND FOR THE COLD STORAGE AND AT THE END THE ASSESSING OFFICER ADDED ` 47,67,000/- ( ` 75,00,000 ` 19,55,000 ` 7,78,000) AND AMOUNT OF UNEXPLAINED LOAN OF ` 34,45,000/- TOTALING TO ` 82,12,000/- AND ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT VIDE HIS ORDER DATED 27.12.2006 PASSED UNDER SE CTION 143(3) OF THE ACT. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BE FORE THE LD. FIRST APPELLATE AUTHORITY WHO, VIDE THE IMPUGNED ORDER DATED 23.03. 2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION IN DISPUTE. NOW, THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 23.03.2009. 7 8. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REP RESENTATIVE DID NOT APPEAR BEFORE THE BENCH DUE TO SOME REASON BEST KNOWN TO H IM, BUT HE FILED WRITTEN SUBMISSION. FOR THE SAKE OF CONVENIENCE, THE WRITT EN SUBMISSION FILED BY THE LD. DEPARTMENTAL REPRESENTATIVE IS REPRODUCED AS UNDER :- F.NO.CIT(DR)/ITAT/AGRA/2011-12/ OFFICE OF THE COMMISSIONER OF INCOME-TAX (DR) INCOME TAX APPELLATE TRIBUNAL, AGRA DATED: 20.06.2011 TO, THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, CGO COMPLEX, SANJAY PLACE, AGRA SIR, SUB:- ITA NO.273/AG/2009 IN THE CASE OF M/S T.S. I CE AND COLD STORAGE PVT. LIMITED FOR THE A.Y. 2004-05 - REGARD ING. THE ASSESSEES ARGUMENTS ARE A) IN RESPECT OF CASH-CREDITS. SOURCE OF SOURCE DOE S NOT REQUIRE TO BE ESTABLISHED AND THAT ONCE THE IDENTITY OF CREDIT IS AFFIRMED AND THE FACTS THE PAYMENT IS BY CHEQUE - ADDITIONS CANNOT BE MADE IN THE HANDS OF THE COMPANY. B) IN RESPECT OF SHARE CAPITAL ADDED U/S 68 - ONCE SHAREHOLDER/ CREDITORS ARE IDENTIFIED - NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY. EVEN OTHERWISE, THIS BEING THE FIRS T YEAR OF OPERATION OF THE COMPANY, THE COMPANY COULD NOT HAV E EARNED THE SAID INCOME. AND THAT THEREFORE, THE ADDITIONS, IF ANY, COULD NOT BE MADE IN THE HANDS OF THE COMPANY. 8 IN RESPECT OF AS ASSESSEE HAS RELIED ON 264 ITR 254 (GAUHATI) HC NEMI CHAND KOTHARI AND THE .. ALLAHABAD HC - 147 TAXMAN 448 (ALL.) - JA..GOEL. THIS IS BASED ON THE REASONING ADOPTED BY THE GAUHATI HIGH COURT - PAGE 16 OF ASSESSEE'S PAPER BO OK ONCE THE ASSESSEE HAD ESTABLISHED THAT HE HAD RECOVERED THE SAID AMOUNTS FROM THE CREDITORS APPEAR ENTERED BY WAY OF CHEQUES, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITORS HAD CREDITW ORTHINESS TO ADVANCE THE LOANS ........... THIS POSITION OF LAW IS CONTROVERTED BY THE SUPREME COURT AND HAS BEEN FOLLOWED BY THE CONTRARY BY VARIOUS HIGH COURT S AND THE JURISDICTIONAL HIGH COURT IN 280 ITR 547 RAM LAL AGARWAL VS. CIT HAS ITSELF THIS LOGIC OF SOURCE OF SOURCE N OT BEING REQUIRED TO BE PROVED. THE DEPARTMENT RELIES UPON A) CIT VS P. MOHAN KALA 291 ITR 278 (SC) FOR THE PAGE 280 THAT THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION WAS NOT BY ITSEL F OF ANY CONSEQUENCE. THE SAID PROPOSITION HAS BEEN FOLLOWED IN 294 ITR 2 19 (AT) - ACIT VS. RAJEEV TANDON 267 ITR 308 - CIT VS. JAWAHAR LAL (OSWAL) (P&H) HC AND 264 ITR 435 (DEL.) HC IN SANJAY DAS & SONS ONUS LIES ON HIM NOT ONLY TO ESTABLISH THE IDENTITY OF THE DONOR BUT H IS CAPACITY TO MAKE SUCH A GIFT. THE JURISDICTIONAL HIGH COURT IN 280 ITR 547 (ALL) IN RAM LAL AGGARWALA VS. CIT - EXPLICITLY REQUIRES THE CREDITW ORTHINESS OF THE SOURCE TO BE PROVED. IN OTHER WORDS SOURCE OF SOUR CE IS REQUIRED TO BE ESTABLISHED. CASH CREDIT : - BURDEN OF PROOF - ASSESSEE MUST EST ABLISH THE IDENTITY OF THE CREDITORS AND PROVE THEIR CREDITWORTHINESS - FINDING BY I.T. AUTHORITIES THAT CREDITWORTHINESS OF DEPOSITORS WAS NOT PROVED - 9 ASSESSMENT OF THE AMOUNT SHOWN AS CASH CREDITS - VA LID ALL THE . FOUND THAT THE PERSONS WHO WERE ALLEGED TO HAVE MAD E THE PAYMENTS HAD NO SOURCE AND CAPACITY TO MAKE SUCH A PAYMENT. IN OTHER WORDS THE ALLAHABAD HIGH COURT EXAMINES TH E SOURCE AND CAPACITY OF THE SOURCE TO ARRIVE AT ITS FINDINGS. FURTHER, RELIANCE IS PLACED ON CIT VS. LOVELY EXPOR TS P. LIMITED (DEL. HC) AFFIRMED BY SUPREME COURT WHICH ON PAGE 282, LA YS DOWN 7 OF LAW AFTER AN ANALYSIS OF ALL EARLIER PRECED ENTS SPECIFYING THE ASSESSEE HAS TO PRIMA FACIE PROVE 3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF T HE CREDITORS/ SUBSCRIBER AND 7) THE OFFICER IS DUTY BOUND TO INVESTIGATE THE CRE DITWORTHINESS OF THE CREDITORS/SUBSCRIBER THE GENUINENESS OF THE TRA NSACTION AND VERACITY OF THE TRANSACTION. THIS OBVIOUSLY OUGHT TO BE DONE IN THE LIGHT OF THE THAT THE MERE RECEIPT THROUGH BANKING CHANNELS IS NOT SU FFICIENT EVIDENCE AND VIDE 160 ITR 674 (SC) BIJU PATNAIK - IN APPROPR IATE CASES THE SOURCE OF SOURCE OUGHT TO BE EXAMINED BY THE DEPART MENT AS HAS BEEN DONE IN THE CASE OF RAM LAL AGGARWAL (ALLAHABAD HC) . ACCORDINGLY THE LEGAL PRECEDENTS CITED BY THE ASSES SEE STAND DISTINGUISHED. FURTHER RELIANCE ON THE SAID PROPOSITION IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN 159 ITR 78 (ORISSA CORPORA TION (P) LTD., VS. CIT VIDE PAGE 84). IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESS OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE R EVENUE THAT THE SAID CREDITORS WERE INCOME TAX ASSESSEES. THEIR INDEX NU MBERS WERE IN THE FILE OF REVENUE. THE REVENUE APART FROM ISSUING NOT ICES U/S 131 AT THE INSTANCE OF THE ASSESSEE DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO BE FOUND OUT WHETHER THEY WERE CREDITW ORTHY OR WERE SUCH WHO COULD ADVANCE THE SAID LOAN. 10 THE HON'BLE SC CLEARLY REPRESENT IN EXPLICIT TERM - THAT SOURCE OF SOURCE CANNOT BE EXAMINED. ON THE CONTRARY BOTH LOV ELY EXPORTS AND ORRISA CORPORATION REQUIRED THE ASSESSING OFFICER T O EXAMINE THE SOURCE OF INCOME OF THE SAID CREDITORS AND HIS CAPA CITY TO ADVANCE THE SAID LOAN. ACCORDINGLY SOURCE OF SOURCE CAN NOT BE EXAMINED AN D THE CIT HAS NOT GIVEN ANY FINDING OF HER OWN TO ESTABLISH THAT THE CREDITOR'S EXTENT OF LAND HOLDINGS HIS INCOME AND SAVINGS AND THE RES ULTANT CAPACITY TO MAKE SUCH A LOAN IN THE LIGHT OF HUMAN PROBABILITIE S. AS REGARDS THE SECOND PROPOSITION OF THE ASSESSEE ( I) SHARE CAPITAL CANNOT BE ADDED IN THE HANDS OF THE COMPANY (II) TH AT THIS IS THE FIRST YEAR OF BUSINESS - HENCE NO ADDITION IN THE CASE OF THE COMPANY. - IN THIS CONTEXT PLEASE REFER TO PAGE 82 - OF 159 ITR (SC) IN ORISSA CORPORATION - SECTION 68. THE SECTION ONLY GIVES A STATUTORY RECOGNITION TO THE PRINCIPLE THAT CASH CREDITS WHICH ARE NOT SATISFACTORILY EXPLAINED CAN BE ADDED AS INCOME. THE SECTION ENACTS THAT IF A SUM IS FOUND C REDITS IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR THE CASH CREDITS MIGHT BE IN CASES WHERE IT IS TREATED AS UNDISCLOSE D INCOME, BE TREATED AS THE INCOME OF THE PREVIOUS YEAR EVEN IF THE UNDISCLOSED INCOME WAS NOT FOUND TO BE FROM THE ASSESSEE'S REGU LAR BUSINESS FOR WHICH THE BOOKS WERE MAINTAINED. FURTHER, IT STATES UNDER THE 1922 ACT WHERE A LARG E AMOUNT OF CASH WAS FOUND CREDITED ON THE VERY FIRST DAY OF THE ACC OUNTING YEAR AND CONSIDERING THE EXTENT OF THE BUSINESS IT WAS NOT P OSSIBLE THAT THE ASSESSEE EARNED A PROFIT OF THAT AMOUNT IN THE DAY, THE AMOUNT COULD NOT BE ASSESSED AS THE INCOME OF THE YEAR ON THE FI RST DAY ON WHICH IT WAS CREDITED IN THE BOOKS. UNDER THIS SECTION (68) EVEN IN SUCH A CASE THE UNEXPLAINED CASH CREDIT MIGHT BE ASSESSED AS TH E INCOME OF THE ACCOUNTING YEAR FOR WHICH THE BOOKS ARE MAINTAINED. THUS, ORISSA CORPORATION LAYS DOWN 159 ITR 78 SUPRE ME COURT - 11 A) IRRESPECTIVE OF DATE/YEAR THE CASH CREDIT CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE COMPANY - EVEN IN CASES WHERE IT WAS CLEAR THAT THE ASSESSEE COULD NOT POSSIBLY HAVE EARNED THAT IN COME. IN THE LIGHT OF THE SUPREME COURT RULING THE ASSESS EES RELIANCE ON THE ALLAHABAD HIGH COURT JUDGMENT IN JAWAHAR MOTOR FINA NCE 141 ITR 706 IS MISLEAD, THE JUDGMENT OF 83 ITR 187 (SC) BHA RAT ENGG HAS BEEN DECIDED ON FACTS AS BASICALLY FINDING OF FACT NOT ON LEGAL PROSPECT AND AS SUCH CANNOT BE CITED AS A PRECEDENT. THE CAS E OF INDIA RICE MILLS 218 ITR 508 WAS IN THE CONTEXT OF CASH CREDIT S PAID TO COMMENCEMENT OF FIRM WHICH IS NOT THE CASE HERE. THE BENCH HAS BEEN KIND ENOUGH TO ASK FOR A COPY OF P&L ACCOUNT. PERHAPS THE MEMORANDUM OF UNDERTAKING WOULD HAVE MA DE THE SCOPE AND EXTENT OF ASSESSEE'S BUSINESS ................ BUT AS THE BENCH ITSELF HAS NOTED SALES OF 8000 MT TURNOVER 66.77 LACS DURING T HE YEAR AND SELLING EXPENSES DEBITED TO THE PROFIT AND LOSS ACC OUNT. THIS IS BECAUSE WHILE STORAGE OF POTATOES IS A BUSINESS OF THE COLD STORAGE ARE NOT PRECLUDED FROM SPECULATION AND TRADING IN POTATOES. IN FACT THE ASSESSEE'S METHOD OF ACCOUNTING DOES NO T PERMIT THE RECOGNITION OF INTEREST INCOME ON ADVANCES TO FARME RS AND THE PART OF STORAGE OF POTATOES FOR THE MONTHS OF FEBRUARY AND MARCH UNTIL THE POTATOES ARE SOLD IN THE ENSUING YEAR. THUS THE ASSESSEE IS NOT PRECLUDED FROM EARNING INC OME SINCE THE INCEPTION OF THE COMPANY AND RENTAL INCOME FROM POT ATOES IS NOT THE ONLY SOURCE OF INCOME. TRADING/SALE OF POTATOES IN ITS OWN RIGHT TOO IS A SOURCE OF INCOME. NOW AS REGARDS SHARE CAPITAL CANNOT BE ASSESSED IN HANDS OF COMPANY .. THE DEPARTMENT CONTEXT THAT (A) THE LAW LAID DOWN I N 263 ITR 289 HINDUSTAN TEA TRADING COMPANY DOLPHIN COMPACT LIMIT ED 283 ITR 190 AND CIT VS. RUBY TRADERS AND EXPORTERS - EXPLIC ITLY SPECIFY THE DISTINGUISH BETWEEN A PUBLIC LIMITED COMPANY AND A PRIVATE LIMITED COMPANY WITH ITS INTIMATE KNOWLEDGE OF CREDITORS/SU BSCRIBERS. 12 IN CASE OF PUBLIC ISSUE NO ADDITIONS IN HANDS OF CO MPANY EXCEPT IN CASES WHERE THERE IS LINK BETWEEN THE AMOUNT SUBSCR IBED AND THE COMPANY ..... (263 ITR 289) AND IN 263 ITR 300 (CA L. HC) CIT VS. RUBY TRADERS AND EXPORTERS. THE COURT DISCREDITED T HE ARGUMENTS THAT THERE COULD BE NO RESPONSIBILITY FOR THE COMPANY IN RESPECT OF ITS SHARE CAPITAL. YOUR'S HONOUR WILL NOTE THAT LOVELY EXPORTS - DEL.( HC) MAKES IT CLEAR ON PAGE 275 THAT THE STELLER INVESTMENTS IS NO LONG ER HAS ..... AFTER CONSIDERING THE ABOVE DECISIONS THE ITAT IN 98 ITD PART 6 NAPER DRUGS VS. DCIT (DEL.) PARA 64 : THAT THESE DECISIONS DO NOT LAY DOWN ANY PREPOSITI ON OF LAW MUCH LESS THE PREPOSITIONS THAT IN CASE OF A COMPANY UND ER NO CIRCUMSTANCES ANY ADDITIONS CAN BE MADE IN THE HAND S OF THE A COMPANY. FURTHER IN CASE OF ACIT VS. MODEREN CEMENT INDUSTRI ES LIMITED 94 ITD 170 (AHMEDABAD) SHARE CAPITAL HAS BEEN ADDED IN THE HANDS OF THE COMPANY. BESIDES SECTION 68 ORRISA CORPORATION PAGE 82 CAN B E RELIED UPON TO ADD SHARE CAPITAL IN THE HANDS OF THE COMPANY. THIS IS IN THE FACTUAL BACKGROUND, THAT EVEN IF ALL KHATAUNIES HAVE BEEN PROVIDED, THERE IS STILL NO RECONCILIATION/REC ORD OF LAND OWNED BY THE PERSONS IN WHOSE NAMES SALE OF POTATOES HAVE BE EN CREDITED. THERE IS ALSO NO PROOF OF CULTIVATION OF POTATOES, OR STORAGE OF SUCH POTATOES IN THE COLD STORAGE. ACCORDINGLY, SUBMITTED, YOURS FAITHFULLY, SD/- (WASEEM ARSHAD) ADDL. COMMISSIONER OF INCOME TAX (SR. DR) DATED 20 TH JUNE, 2011 I.T.A.T., AGRA 13 9. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED HIS WRITTEN SUBMISSION ALONG WITH PHOTOCOPY OF VARIOUS DECISIONS SUPPORTING HIS ARGUM ENTS. LD. COUNSEL FOR THE ASSESSEE HAS ALSO FILED 3 PAPER BOOKS CONTAINING PA GE NOS.1 TO 48 IN WHICH HE HAS ATTACHED COPY OF SUBMISSION BEFORE THE ASSESSING OF FICER, COPY OF SUBMISSIONS DATED 26.12.2006 BEFORE THE ASSESSING OFFICER, COPY OF SUBMISSIONS DATED 06.09.2007 BEFORE THE CIT(A), COPY OF REMAND REPORT FROM THE ACIT, COPY OF AUDITED ACCOUNTS FOR THE FINANCIAL YEAR 2003-04 REL EVANT TO ASSESSMENT YEAR 2004-05, COPY OF COMPUTATION OF INCOME FILED, COPY OF DIRECTORS REPORT FOR THE FINANCIAL YEAR 2003-04, COPY OF AAMAD REGISTER (FO R STORAGE OF POTATOES) OF THE FINANCIAL YEAR 2003-04, COPY OF AUDITED ACCOUNTS FO R THE FINANCIAL YEAR 2004-05 AND DETAILS OF EXPENDITURE CAPITALIZED DURING THE F INANCIAL YEAR 2003-04. 10. AS WE STATED ABOVE, THE LD. COUNSEL FOR THE ASS ESSEE HAS FILED HIS WRITTEN SUBMISSION ON THE DATE OF HEARING. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE THE SAME AS UNDER :- BEFORE THE HONBLE INCOME TAX APPELLAE TRIBUNAL, AGRA BENCH, AGRA IN THE MATTER OF ITA NO.273/AG/2009 ACIT, CIR.4(1), AGRA VS. M/S T.S. ICE & COLD STORAG E PVT. LTD. MAY YOUR HONOUR PLEASE, THE RESPONDENT ASSESSEE SUB MITS AS FOLLOWS 14 1. THE ASSESSEE IS A PRIVATE LIMITED COMPANY FORMED ON 16.04.2003. 2. THE ASSESSEE COMPANY WAS FORMED TO CARRY ON THE BUSINESS OF COLD STORAGE FOR WHICH STORAGE SEASON COMMENCES FRO M FEBRUARY AND NIKASI FROM JUNE ONWARD. 3. THIS BEING THE FIRST YEAR, ACTIVITIES OF THE ASS ESSEE LIMITED TO THE CONSTRUCTION OF THE COLD STORAGE AND STORAGE OF POT ATO ONLY. THERE WAS NO INFLOW OF ANY INCOME DURING THE YEAR. 4. THE ASSESSEE COMPANY RAISED A SHARE CAPITAL OF ` 75,00,000/- FROM 15 SHAREHOLDERS ` 64,00,000/- FROM 4 DIRECTORS AND ` 11,00,000/- FROM OTHER 11 SHAREHOLDERS. ALL THE SHA REHOLDERS WERE FROM THE SAME FAMILY HAVING AGRICULTURAL BACKG ROUND WITH SUBSTANTIAL LAND HOLDINGS. 5. TO MEET THE FINANCIAL NEEDS FOR CONSTRUCTION ACT IVITIES, THE ASSESSEE ALSO RAISED LOANS OF ` 34,45,000/- FROM 19 PERSONS WHO TOO WERE HAVING THE AGRICULTURAL BACKGROUND. 6. DURING THE COURSE OF ASSESSMENT THE ASSESSEE WAS ASKED TO PROVIDE NAMES, ADDRESSES AND SOURCE OF INVESTMENT O F THE SHAREHOLDERS AND ALSO TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF LOANS. THE ASSESSEE COMPLIED WITH THE SAME AND FURNISHED T HE REQUISITE INFORMATION ALONG WITH EVIDENCES. 7. HOWEVER, THE LD. AO CONSIDERED ` 27,33,000/-, OUT OF SHARE CAPITAL, AS EXPLAINED AND ADDED ` 82,12,000/- (47,67,000/- OUT OF SHARE CAPITAL AND 34,45,000/- OF UNSECURED LOANS ) AS INCOME FROM UNEXPLAINED SOURCES, MAINLY FOR THE FOLLOWING REASONS - A) NECESSARY DOCUMENTS PARTICULARLY THE KHATAUNI HA S NOT BEEN FURNISHED SO THE CORRECTNESS OF CULTIVATION OF POTATOES BY THE SHARE APPLICANTS AND THE LOAN CREDI TORS CANNOT BE CONCLUSIVELY VERIFIED. (PG 3 OF AO) B) LOOKING TO THE LARGE NUMBER OF SHAREHOLDERS, THA T TOO AGRICULTURIST, RESIDING IN VILLAGES, IT IS NOT POSS IBLE TO 15 EXAMINE AND VERIFY THE MONEY RECEIVED FROM ALL SUCH SHARE APPLICANT. (PG 3 OF AO) C) FROM THE RATION CARDS IT IS NOTED THAT SHARE APP LICANTS AND LOAN CREDITORS ARE MAINLY AGRICULTURISTS AND TH EIR ANNUAL INCOME IS IN THE RANGE OF 40,000/- PER ANNUM . IT IS NOT AT ALL POSSIBLE TO SAVE ANY THING AFTER MEETING HOUSE HOLD EXPENSES AND OTHER EXPENSES OF SOCIAL AND FAMI LY OBLIGATION. (PG 3 OF AO) D) THE BANK ACCOUNTS OF THE SHAREHOLDERS AND DEPOS ITORS REVEALED THAT THERE WERE CASH DEPOSIT/TRANSFERS JUS T BEFORE GIVING CHEQUE FOR SHARE APPLICATION OR LOAN. (PG 3 OF AO) 8. ALL THE ABOVE REASONS ARE CONTRARY TO THE ACTS A ND EVIDENCES ON RECORD - A) COMPLETE NAMES AND ADDRESSES OF ALL THE SHAREHOL DERS AND DEPOSITORS WITH IDENTITY PROOF, CAPACITY, COPY OF THEIR ACCOUNTS AND THEIR CONFIRMATION WERE FILED. (PB/1- 5) B) SOURCE OF CAPITAL CONTRIBUTION BY VARIOUS SHAREH OLDERS ALONG WITH DETAILED EVIDENCES, INCLUDING THE KHATAU NI AND CERTIFICATES FROM GRAM PRADHAN AS WELL FROM BLO CK PRAMUKH, WERE ALSO FILED. (PB/6-9) C) ALL THE SHAREHOLDERS LIVED IN ONE VILLAGE ONLY. D) PER ANNUM INCOME SHOWN IN THE RATION CARDS IS NO T SACROSANCT WHILE HUGE LAND HOLDINGS AND THEIR EARNI NG CAPACITY FROM THE AGRICULTURE ACTIVITIES I.E. GROWI NG AND SELLING OF POTATOES, IS WELL PROVED. E) CREDIT OF CASH OR TRANSFER OF FUNDS IN THE BANK ACCOUNTS OF THE SHAREHOLDERS OR DEPOSITORS WAS THEIR OWN MON EY GENERATED FROM THE AGRICULTURAL ACTIVITIES AND CAN NOT HAVE ANY ADVERSE IMPACT ON THE CASE OF ASSESSEE COMPANY WHO HAD NOT EVEN COMMENCED THE BUSINESS ACTIVITY. 16 9. DURING THE APPELLATE STAGE THE ASSESSEE AGAIN SU BMITTED ALL THE DETAILS AND EVIDENCES AND EVEN FILED AFFIDAVITS FRO M THE DEPOSITORS. THESE SUBMISSIONS WERE SENT, U/S 250(4) , TO THE AO FOR HIS COMMENTS BUT, IN HIS REMAND REPORT, THE LD. AO DID NOT CHALLENGE OR REBUT ANY OF THE CONTENTION OR EVIDENC E OF THE ASSESSEE. (PB/10-17 AND 18-19) (CIT-A PG 4) 10. LD. CIT(A) ALSO SOUGHT DIRECT INFORMATION FROM THE BANK OF THE SHAREHOLDERS AND DEPOSITORS. (CIT-A PG 12) 11. WHILE ALLOWING THE APPEAL, LD. CIT(A) NOTED THE FOLLOWING - REG: SHARE CAPITAL - ADDITION ` 47,67,000/- A) ` 133250/- WERE INCURRED ON THE FORMATION OF COMPANY AND ` 10,15,000/- ON THE IMPROVEMENT OF LAND. THESE EXPEN SES WERE INCURRED PRIOR TO THE FORMATION OF THE COMPANY AND CANNOT BE CONSIDERED IN THE ASSESSMENT YEAR. (PG 6 - 7) B) THE SHAREHOLDERS WERE AGRICULTURISTS AND HAVING SUBSTANTIAL LAND HOLDINGS FOR WHICH EVIDENCES IN THE FORM OF KHASRA & KHATAUNI AND CERTIFICATES FROM THE GRAM PRADHAN AS WELL BLOCK PR AMUKH WERE FILED. CERTIFICATE FROM THE COLD STORAGE WHERE POTA TO GROWN BY THE SHAREHOLDERS WAS KEPT AND COPIES OF BILLS FOR ITS S UBSEQUENT SALE WERE ALSO FILED WHICH PROVED THAT POTATO TO THE TUNE OF ` 26,24,371/- WAS SOLD. THUS TO THIS EXTENT THE CONTRIBUTION TOWARD T HE SHARE CAPITAL STANDS PROVED. (PG 7 - 9) C) REGARDING BALANCE CAPITAL OF AROUND 11.00 LACS, IDENTITY OF THE SHAREHOLDERS AND THE INVESTMENT IN SHARE CAPITAL TH ROUGH THEIR SAVINGS BANK ACCOUNTS IS NOT IN DOUBT. THUS SOURCE OF SAID DEPOSIT IS LIABLE TO BE EXAMINED IN THEIR RESPECTIVE PERSONAL CASES. (PG 9 - 10) REG: UNSECURED LOANS ` 34,45,000/- A) APPELLANT FURNISHED CONFIRMATION LETTERS, RATION CARDS AND KHATAUNIS SHOWING AGRICULTURE LAND HOLDING BY VARIO US LENDERS. AT THE APPELLATE STAGE AFFIDAVITS FROM ALL THE LEND ERS WERE ALSO FILED. (PG 11) 17 B) ALL LOANS, EXCEPT ONE OF ` 2,00,000/-, HAVE BEEN RETURNED IN DEC. 2008 BY CHEQUE WITH INTEREST. (PG 12 ) C) INFORMATION CALLED FROM THE BANK IN SOME CASES R EVEALED THAT THEIR BANK ACCOUNTS WERE OLD ACCOUNTS AND THE OCCUP ATION WAS SHOWN AS AGRICULTURE. (PG 13 ) D) NONE OF THE CONTENTION OR THE EVIDENCES, INCLUDI NG AFFIDAVITS, FILED BY THE ASSESSEE HAS BEEN CONTORVERTED, CHALLE NGED OR REBUTTED BY THE AO EVEN IN REMAND REPORT. THUS, AO FAILED TO ESTABLISH (1) ANY FALSITY IN THE CLAIM OF LAND HOLD INGS OF THE DEPOSITORS; (2) THE AMOUNT CLAIMED TO HAVE BEEN ADV ANCED FROM THEIR SAVINGS WERE EXCESSIVE OR UNREASONABLE AND (3 ) THE DEPOSITORS ROUTED THE UNACCOUNTED FUNDS OF THE COMP ANY THROUGH THEIR BANK ACCOUNTS PARTICULARLY WHEN THE A PPELLANT COMPANY HAD NOT EVEN COMMENCED OPERATIONS AT RELEVA NT POINT OF TIME. (PG 14) E) SINCE IMPUGNED AMOUNTS HAVE BEEN DEPOSITED IN CA SH IN THE BANK ACCOUNTS OF THE RESPECTIVE LENDERS PRIOR TO TH EIR ADVANCE TO THE APPELLANT COMPANY, THE SOURCE OF DEPOSIT IS LIABLE TO BE EXAMINED IN THEIR RESPECTIVE CASES. ( PG 14 ) THUS, THE ORDER OF CIT(A), AFTER CONSIDERING ALL TH E EVIDENCES AND OBTAINING REMAND REPORT, IS WELL REASONED, FULLY JU STIFIED AND LEGALLY CORRECT. 12. IT IS HUMBLY SUBMITTED THAT - A) THE ASSESSEE COMPANY WAS FORMED ON 16.04.2003 AN D IT WAS ITS FIRST ASSESSMENT YEAR. DURING THE YEAR, UPTO JANUAR Y 2004, IT CARRIED ON ONLY CONSTRUCTION ACTIVITIES AND IN THE MONTH OF FEB. - MARCH 2004 IT ONLY STORED POTATOES. THERE WAS NO INFLOW OF INCOME AT ALL DURING THE YEAR UNDER APPEAL - AS A M ATTER OF FACT, DURING THE YEAR, IT HAD NO EARNING CAPACITY AT ALL. UNDER THESE CIRCUMSTANCES HOW IT CAN BE ASSUMED THAT THE ALLEGE D CREDITS WERE UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. B) SO FAR CREDIT TOWARDS SHARE CAPITAL IS CONCERNED ALL THE CAPITAL STANDS ALLOTTED. THUS SHARE HOLDERS ARE THE REAL OW NER TO THE 18 EXTENT OF VALUE OF SHARES HELD BY THEM. IT IS NOT A CASE OF SHARE MONEY PENDING FOR ALLOTMENT. C) UNSECURED LOANS TOO HAVE BEEN RETURNED WITH INTE REST BY CROSSED ACCOUNT PAYEE CHEQUES. D) ASSESSEE HAD ADDUCED ALL THE RELEVANT INFORMATIO N AND EVIDENCE. THUS ITS ONUS U/S 68 STANDS FULLY DISCH ARGED. E) EVEN IF THE AO WAS NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE IT WAS NOT MANDATORY FOR HIM TO TREAT THE ALLEGED AMOUNTS AS UNEXPLAINED INCOME OF THE ASSESSEE COMPA NY. UNDER THE CIRCUMSTANCES, THE AO WAS FACTUALLY AND L EGALLY WRONG IN MAKING THE ALLEGED ADDITION U/S 68 OF THE ACT. F) IN THIS RESPECT THE ASSESSEE RELIES ON THE FOLLO WING JUDICIAL PRONOUNCEMENTS - 1) 216 CTR 195 (SC) LOVELY EXPORTS (P) LTD. 2) 307 ITR 334 (DELHI) VALUE CAPITAL SERVICES P. L TD. 3) 192 ITR 287 (DELHI) STELLER INVESTMENTS LTD. 4) 218 ITR 508 (ALL) INDIA RICE MILS 5) 264 ITR 254 (GUJ) NEM CHAND KOTHARI 6) 141 ITR 706 (ALL) JAISWAL MOTOR FINANCE 7) 83 ITR 187 (SC) BHARAT ENGG. & CONS. CO. 8) 237 ITR 570 (SC) P.K. NOORJAHAN SUBMITTED THROUGH SD/- AR 11. WE HAVE HEARD BOTH THE PARTIES AND ALSO THOROUG HLY GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY BOTH THE PARTIES ALONG WITH TH E ORDERS PASSED BY THE REVENUE AUTHORITIES. THE REVENUE HAS CHALLENGED THE DELETI ON OF ADDITION TO THE EXTENT OF ` 82,12,000/- MADE BY THE LD. FIRST APPELLATE AUTHORI TY WHICH HAS BEEN MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT O N ACCOUNT OF UNEXPLAINED SHARE 19 MONEY AND LOANS. THE LD. FIRST APPELLATE AUTHORITY HAS DISCUSSED THE SAID ADDITION IN TWO PARTS I.E. ` 47,67,000/- ON ACCOUNT OF UNEXPLAINED SHARE MONEY A ND ` 34,45,000/- ON ACCOUNT OF UNEXPLAINED LOANS. AS RE GARDS TO THE UNEXPLAINED SHARE APPLICATION MONEY AMOUNTING TO ` 47,67,000/-, THE ASSESSEE COMPANY WAS INCORPORATED W.E.F. 16.04.2003 AND DERIVES INCOME F ROM COLD STORAGE WHICH WAS CONSTRUCTED AND COMMENCED DURING THE RELEVANT FINAN CIAL YEAR. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH THE DETAI LS OF INVESTMENTS IN THE COLD STORAGE AND SOURCE OF SHARE CAPITAL. IN RESPONSE T O THE SAME, THE ASSESSEE FURNISHED BANK STATEMENTS OF 4 DIRECTORS AND THEIR HUFS., DETAILS OF LOADING AND NIKASI OF POTATOES FROM PRABHAT COLD STORAGE, HATHR AS ROAD, AGRA, COPY OF KHASRA EVIDENCING THEIR LAND HOLDING AND SALE BILLS OF POT ATOES. THE ASSESSEE HAS ALSO FURNISHED 11 SALE DEEDS. THE TOTAL SALE CONSIDERAT ION RECEIVED BY THE 4 DIRECTORS AGGREGATES TO ` 19,55,000/-. AFTER CONSIDERING THE AFORESAID EVIDE NCES, THE ASSESSING OFFICER ACCEPTED THE CLAIM OF THE ASSESSE E TO THE EXTENT OF ` 27,33,000/- COMPRISING OF ` 19,55,000/- BEING SALE PROCEEDS OF AGRICULTURAL LAN D AND ` 7,78,000/- REPRESENTING CAPITALIZATION OF LAND FOR THE COLD STORAGE AND FINALLY HE ADDED THE BALANCE OF ` 47,67,000/- AS UNEXPLAINED SHARE MONEY. BUT THE LD . FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER DELETED T HE SAME BY HOLDING THAT THE ASSESSING OFFICER HIMSELF IN PARAGRAPH NO.3 OF THE ASSESSMENT ORDER STATED THAT THE ASSESSEE HAS SHOWN RECEIPT OF SHARE MONEY AMOUN TING TO ` 75,00,000/- FROM 15 PERSONS - ` 64,00,000/- FROM 4 DIRECTORS, WHO ARE ALL BROTHERS AND BALANCE AMOUNT 20 OF ` 11,00,000/- WAS RECEIVED FROM 11 PERSONS ( ` 1,00,000/- EACH) AND ALL THE SHARE APPLICANTS INCLUDING THE DIRECTORS ARE AGRICULTURIS TS. THE LD. FIRST APPELLATE AUTHORITY HAS HELD THAT THE ASSESSING OFFICER HAS N OT DOUBTED THE ASSESSEES CLAIM THAT THE INVESTMENT IN THE ASSESSEE COMPANY HAS BEE N MADE BY THE PERSONS WHO ARE AGRICULTURISTS AND HE HIMSELF HAS ACCEPTED ` 19,55,000/- AS EXPLAINED ON ACCOUNT OF SALE OF AGRICULTURAL LAND BY THE DIRECTORS BY ACCEP TING THE SHARE CAPITAL AS EXPLAINED TO THE EXTENT OF FUND DERIVED FROM SALE O F AGRICULTURAL LAND. THE ASSESSING OFFICER ACCEPTED THAT THE DIRECTORS WERE HOLDING THESE LANDS IN THE EARLIER YEARS PRIOR TO THEIR SALE AND WAS DERIVING AGRICULTURAL INCOME THEREFROM. SECONDLY, THE ASSESSING OFFICER HAS ALSO ACCEPTED A ND ALLOWED THE SHARE CAPITAL TO THE EXTENT OF ` 7,78,000/- BEING AGRICULTURAL LAND CAPITALIZED FOR CONSTRUCTION OF COLD STORAGE. THE LD. FIRST APPELLATE AUTHORITY HA S ALSO HELD THAT THE ASSESSEE HAS FILED ALL THE NECESSARY DETAILS OF LAND HOLDING OF THE DIRECTORS AND THEIR FAMILY MEMBERS WHO ARE ALSO THE SHARE HOLDERS WHICH HAS NO T BEEN REBUTTED BY THE ASSESSING OFFICER WITH ANY EVIDENCE TO THE CONTRARY . WHEN THE ASSESSING OFFICER HIMSELF ACCEPTED THAT THE DIRECTORS AND THEIR FAMIL Y MEMBERS ARE AGRICULTURISTS AND NO BOOKS OF ACCOUNTS WERE REQUIRED TO BE MAINTAINED BY THEM IN RESPECT OF AGRICULTURAL OPERATION, THEREFORE, NO CONTEMPORANEO US RECORDS SHOWING ACCUMULATION OF FUNDS/SAVINGS OUT OF AGRICULTURAL I NCOME COULD BE PRODUCED. WE HAVE THOROUGHLY GONE THROUGH THE IMPUGNED ORDER AND FOUND THAT THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DIS PUTE AFTER APPRECIATING THE 21 EVIDENCES PRODUCED BY THE ASSESSEE FOR ESTABLISHING THE SOURCE OF INCOME, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS OF THE AMOUNT IN DISPUTE, BECAUSE THE ASSESSEE HAS PRODUCED COPIES OF ALL KHASARAS AN D KHATONIS IN RESPECT OF AGRICULTURAL LAND HOLDING, CERTIFICATES FROM GRAM P RADHAN ABOUT THE RESPECTIVE LAND HOLDING OF EACH PROMOTER, CERTIFICATE FROM THE BLOC K PRAMUKH ABOUT THE LAND HOLDING OF THE RESPECTIVE PROMOTER OF THE FAMILY, C OPY OF 15 SALE DEEDS OF AGRICULTURAL LAND SOLD DURING THE YEAR 2003, COPY O F ALL SAVINGS BANK ACCOUNT OF ALL PROMOTERS AND COPY OF BANK ACCOUNT OF THE COMPANY W HERE THE CONTRIBUTION BY EACH MEMBER OF THE FAMILY WAS DEPOSITED. ALL THE A BOVE MONEY RAISED THROUGH ISSUE OF SHARE CAPITAL WAS ROUTED THROUGH BANKING C HANNEL. THESE EVIDENCES PRODUCED BY THE ASSESSEE HAVE NOT BEEN REBUTTED BY THE LD. FIRST APPELLATE AUTHORITY WITH ANY EVIDENCE TO THE CONTRARY. THE L D. FIRST APPELLATE AUTHORITY HAS ALSO EXAMINED THE AGRICULTURAL INCOME OF THE DIRECT ORS RELATING TO THE SUBSEQUENT YEARS WHICH IS REPRODUCED AT PAGE NO.9 IN THE IMPUG NED ORDER. NO DOUBT, THE LD. DEPARTMENTAL REPRESENTATIVE AS WELL AS THE LD. COUN SEL FOR THE ASSESSEE RELIED UPON VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME C OURT AS WELL AS HONBLE HIGH COURTS ON THE ADDITION IN DISPUTE, BUT THE SAME ARE APPLICABLE WHEN THE FACTS AND CIRCUMSTANCES OF THE CASES ARE IDENTICAL. WE FIND THAT THE ASSESSING OFFICE AS WELL AS THE LD. FIRST APPELLATE AUTHORITY HAS ADJUDICATE D THE ISSUE IN DISPUTE ON THE BASIS OF DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. THEREFORE, THE CASE LAW RELIED UPON BY BOTH THE PARTIES ARE OF NO HELP TO THEM ON THE ISSUE IN DISPUTE. KEEPING IN 22 VIEW OF THE FACTS AND CIRCUMSTANCES EXPLAINED ABOVE , WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE ADDITION OF ` 47,67,000/- ON ACCOUNT OF UNEXPLAINED SHARE APPLICA TION MONEY AFTER PROPERLY APPRECIATING THE EVIDENCES PRODUCED BY THE ASSESSEE . IT IS ALSO APPRECIABLE THAT THE LD. FIRST APPELLATE AUTHORITY HAS GIVEN FULL OPPORT UNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCES PRODUCED BY THE ASSESSEE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE ASSESSING OFFICER HAS NOT CONTR OVERTED THE SAME WITH THE SUPPORT OF ANY CONTRARY EVIDENCE. THEREFORE, WE FU LLY AGREE WITH THE REASONING MENTIONED BY THE LD. FIRST APPELLATE AUTHORITY ON T HE DELETION OF ` 47,67,000/- AND WE UPHOLD THE IMPUGNED ORDER ON THE SAME. 12. AS REGARDS TO THE DELETION OF ` 34,45,000/-, THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THIS ADDITION BY OBSERVING THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MADE THE ADDITION OF ` 34,45,000/- BY WAY OF UNSECURED LOANS FROM 19 AGRICULTURISTS. TO SUPPORT THE CLAIM ON THE ISSUE IN DISPUTE THE ASSESSEE HAS FILED COPY OF THEIR CONFIRMATION, RATION CARDS AND KISAN BAHI EVIDENCING LAND HOLDING BY LOAN CREDITORS. THE LD. FIRST APPELLATE AUTHORITY HAS HELD THAT THE ASSESSING OFFICER HIMSELF HAS WRITTEN IN THE ASSESSMENT ORDER THAT LOOKING TO THE LARGE NUMBER OF SHARE HOLDERS THAT TOO AGRICULTURISTS RES IDING IN VILLAGES, IT IS NOT POSSIBLE TO EXAMINE AND VERIFY THE MONEY RECEIVED FROM ALL S UCH SHARE APPLICANTS. AFTER EXAMINING ALL SUCH DOCUMENTS AND EVIDENCES AND ALSO CONSIDERING THE NON- 23 FURNISHING OF REQUIRED DETAILS, THE ASSESSING OFFIC ER HAS MADE THE ADDITION OF ` 34,45,000/- BEING UNSECURED LOANS OUTSTANDING IN TH E BALANCE SHEET. THE LD. FIRST APPELLATE AUTHORITY HAS THOROUGHLY GONE THROU GH THE ASSESSMENT RECORDS, CONFIRMATION LETTERS FURNISHED BY THE ASSESSEE, PHO TOCOPY OF RATION CARDS AND KHATAUNIS SHOWING AGRICULTURAL LAND HOLDING BY THE VARIOUS LENDERS AS ALSO ACKNOWLEDGED BY THE ASSESSING OFFICER IN THE ASSESS ING OFFICER. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO ATTACHED ANNEXURE-I TO THE IMPUGNED ORDER SHOWING SUMMARIZED CHART BY THE ASSESSES ON THE AMOUNT WHIC H IS IN DISPUTE AND OBSERVED THAT ALL THE LOANS HAVE BEEN REPAID IN DECEMBER 200 8 BY CHEQUE ALONG WITH INTEREST EXCEPT ONE LOAN OF ` 2,00,000/- RECEIVED ON 23.02.2004 FROM ONE SHRI RA VINDRA KUMAR. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO CONFRONTED ALL DOCUMENTARY EVIDENCES TO THE ASSESSING OFFICER AND TAKEN THE RE MAND REPORT FROM HIM IN WHICH THE ASSESSING OFFICER HIMSELF ADMITTED THAT HE HAS NOT BEEN ABLE TO EXAMINE THE EVIDENCES FURNISHED BY THE ASSESSEE DUE TO THEIR VO LUME. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO ISSUED A REQUISITION ON 09.01.2 009 UNDER SECTION 133(6) OF THE ACT TO THE MANAGER, ORIENTAL BANK OF COMMERCE, CALL ING FOR INFORMATION WITH REGARD TO 4 LOAN CREDITORS ON SAMPLE BASIS (S. NOS. 3, 4, 5 & 19 OF ANNEXURE-I MENTIONED AND ATTACHED BY THE LD. FIRST APPELLATE A UTHORITY IN THE IMPUGNED ORDER) AND FOUND THAT ALL THE LENDERS OWN THE AGRIC ULTURAL LAND AND HAVING THEIR RATION CARDS AND CONFIRMATION LETTERS FOR THE IMPUG NED LOANS, ESTABLISHED THE IDENTITY OF CREDITORS AND GENUINENESS OF TRANSACTIO N WHICH HAS NOT BEEN DOUBTED OR 24 DISPUTED BY THE ASSESSING OFFICER. THE LD. FIRST A PPELLATE AUTHORITY HAS ALSO DELETED THE ADDITION AFTER CALLING THE REMAND REPOR T FROM THE ASSESSING OFFICER AND AFTER APPRECIATING THE EVIDENCES PRODUCED BY THE AS SESSEE TO SUPPORT THE CLAIM IN DISPUTE. WE HAVE THOROUGHLY GONE THROUGH THE IMPUG NED ORDER ON THE ISSUE IN DISPUTE AND WE ARE OF THE CONSIDERED OPINION THAT T HE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE ADDITION OF ` 34,45,000/- ON ACCOUNT OF UNSECURED LOANS. WE FULLY AGREE WITH THE REASONING MENTIONED BY THE LD. FIRST APPELLATE AUTHORITY BY DISMISSING THE ISSUE INVOLVED IN GROUND NO.1 I.E . ADDITION OF ` 82,12,000/- ( ` 47,67,000/- + ` 34,45,000/-) BEING UNEXPLAINED SHARE MONEY AND LOA NS. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.20 11). SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 30 TH JUNE, 2011 PBN/* 25 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY