The DCIT, Circle-1, Surat V. M/s. Himalaya Cotton Yarn Pvt.Ltd., Surat

ITA 274/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80432 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained cash credit
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD , , , , BEFORE SHRI G. C. GUPTA , VICE PRESIDENT AND .., !'# $% $% $% $% SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER &'(, )* + ) # , ) # , ) # , ) # , ITA NO. 274/AHD/2011 ASSESSMENT YEAR :2007-08 THE DY. COMMISSIONER OF INCOME-TAX CIRCLE-1, ROOM NO. 108, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S . M/S. HIMALAYA COTTON YARN PVT. LTD. B-18/14,15,16,SACHIN, UDHYOGNAGAR, HOJIWALA ESTATE, SACHIN, SURAT. PAN NO. A A BC H3967M (APPELLANT) .. (RESPONDENT) -. / 0 ) /BY APPELLANT SHRI NIMESH YADAV, SR. D.R. 12-. / 0 ) /BY RESPONDENT SHRI R. N. VEPARI, A.R. 3 / ' * /DATE OF HEARING 19.09.2014 456 / '* /DATE OF PRONOUNCEMENT 17.10.2014 O R D E R PER : SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT(A)-I, SURAT, DATED 26.10.2010 FOR THE ASSESSMENT YEAR 200 7-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIALS ON RE CORD ARE AS UNDER: 3. THE ASSESSEE IS A COMPANY STATED TO BE ENGAGED I N THE BUSINESS OF MANUFACTURING AND SELLING OF YARN. THE ASSESSEE FI LED ITS RETURN OF INCOME FOR A.Y. 07-08 DECLARING TOTAL INCOME OF RS.13,84,375/- . THE CASE WAS SELECTED I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 2 FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED U/S.143(3) VIDE ORDER DATED 30.12.2009 AND THE TOTAL INCOME WAS DETERMINE D AT RS.1,34,98,390/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE THE CIT(A) WHO VIDE ORDER DATED 26.10.2010 GRANTED PARTIAL REL IEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE REV ENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.85, 89,500/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68. 4. DURING THE COURSE OF ASSESSMENT PROCEEDING, A.O. NOTICED THAT ASSESSEE HAD INTRODUCED CAPITAL BY WAY OF SHARE APP LICATION MONEY AND SHARE CAPITAL. ASSESSEE WAS ASKED TO FURNISH COMPLETE DE TAILS OF INCREASE IN SHARE CAPITAL DURING THE YEAR AND SOURCES OF THE SAME. O N THE BASIS OF INFORMATION FURNISHED BY THE ASSESSEE, A.O. NOTICED THAT ASSESS EE HAD CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONEY OF RS. 50,58,500/- FROM 299 INDIVIDUALS IN CASH AND COMPANY HAD ALSO ALLOTTED SHARES OF RS.35, 31,000/- TO 207 INDIVIDUALS. ASSESSEE WAS ASKED TO PROVE THE IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WITH SUPPORTING PROO F AND EVIDENCES. OUT OF THE LIST OF PERSONS FROM WHOM ASSESSEE HAD STATED T O HAVE RECEIVED SHARE APPLICATION MONEY, A.O. ISSUED SUMMONS TO 10 INDIVI DUALS SELECTED ON RANDOM BASIS OUT OF WHICH ONLY 4 PERSONS COMPLIED W ITH SUMMONS AND ATTENDED THE OFFICE. THE STATEMENTS OF 4 PERSONS W ERE RECORDED U/S. 131 OF THE ACT, WHEREIN THEY SUBMITTED THAT THEY HAVE NEIT HER APPLIED FOR SHARES NOR I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 3 THEY HAVE BEEN ALLOTTED ANY SHARE BY THE ASSESSEE T ILL DATE. A.O. ALSO NOTICED THAT THE PERSONS FROM WHOM THE SHARE APPLICATION MO NEY WAS STATED TO HAVE BEEN RECEIVED WERE LABOURERS AND HAVING SMALL MEANS AND DID NOT HAVE THE CAPACITY TO APPLY FOR SHARES OF THE COMPANY. THE A SSESSEE IN ITS RESPONSE SUBMITTED THAT IT HAD ALLOTTED THE SHARES TO THE PE RSONS FROM WHOM THE AMOUNT WAS RECEIVED. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE A.O. FOR THE REASONS THAT THE AMOUNT RECEIVED F ROM THE SHARE APPLICANTS WERE LESS THAN RS. 20,000/- EACH, THE AMOUNT WAS RE CEIVED IN CASH AND NO PAN NUMBER OF SHARE APPLICANTS WERE SUBMITTED BY AS SESSEE. HE WAS FURTHER OF THE VIEW THAT MERE FURNISHING OF THE LIST OF NAM ES AND INCOMPLETE ADDRESS DOES NOT PROVE THE IDENTITY, CREDITWORTHINESS AND G ENUINENESS OF THE TRANSACTION. HE, THEREFORE, RELYING UPON VARIOUS C ASE LAWS CITED IN THE ORDER, CONCLUDED THAT ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE CAPITAL BROUGHT INTO THE BOO KS OF ACCOUNT. HE, THEREFORE, CONSIDERED THE AGGREGATE AMOUNT OF RS. 8 5,89,500/- (COMPRISING OF RS.50,58,500/- TOWARDS SHARE APPLICATION MONEY AND RS.35,31,000/- BEING THE SHARE CAPITAL) AS UNEXPLAINED CASH CREDIT WITHIN TH E MEANING OF SECTION 68 AND ADDED TO THE INCOME. 5. AGGRIEVED BY THE ORDER OF A.O., THE ASSESSEE CAR RIED THE MATTER BEFORE THE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, REMAND REPORT AND THE REPLY OF THE ASSESSEE TO THE REMAND REPORT, DELETED THE ADDITION BY HOLDING AS UNDER: I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 4 9. DECISION: I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSIO NS OF THE APPELLANT, REMAND REPORT AND ALSO COMMENTS OF THE APPELLANT ON THE REMAND REPORT OF THE A.O. THE ADDITION MADE ON THIS COUNT IS HEREBY DELETED DUE TO THE FOLLOWING REASONS: A) THE VERY BASIS OF ADDITION I.E. DURING THE ASSESSMENT P ROCEEDINGS THE FOUR PERSONS WHO ATTENDED BEFORE THE A.O. DENIE D HAVING MADE INVESTMENT IN THE SHARES OF THE APPELLANT COMPANY, IS NO MORE VALID NOW BECAUSE DURING THE REMAND PROCEEDINGS THEY HAVE CON FIRMED HAVING MADE INVESTMENT IN SHARES OF THE APPELLANT COMPANY REPOR TED BY THE A.O. IN THE REMAND REPORT. B) THE APPELLANT HAS PROVIDED THE NAMES, THE ADDRE SSES, THE SOURCES OF SHAREHOLDERS FUND, THE AFFIDAVITS FROM M OST OF THE SHAREHOLDERS, ETC. THE A.O. HAS NOT BROUGHT OUT ANY EVIDENCE TO SHOW T HAT THESE WORKERS HAVE BEEN PLANTED BY THE APPELLANT COMPANY AND ENTIRE TR ANSACTIONS HAVE BEEN COLOURED AS SUBMITTED BY HIM IN THE REMAND REPORT. C) DURING THE REMAND PROCEEDINGS, 20 INDIVIDUALS O UT OF 25 WERE SUMMONED, APPEARED BEFORE THE A.O. AND THEY CONFIRM ED HAVING APPLIED FOR SHARES IN THE APPELLANT COMPANY. THE A.O. HAS NOT C OMMENTED ADVERSELY. D) NO ADVERSE INFERENCE SHOULD BE DRAWN FROM THIS F ACT THAT SHRI NAISHADH DESAI, BEING A PROMINENT LABOUR LEADER, IS ALSO INVOLVED IN THE AFFAIRS OF THE COMPANY TO PROTECT THE INTEREST OF THE WORKE RS. NOTHING HAS BEEN BROUGHT ON THE RECORD BY THE A.O. TO SUGGEST THAT SHRI D ESAI IS CONTROLLING THE APPELLANT COMPANY. E) HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORTS P. LTD., (216-CTR-195) (6-DTR-308) HAS HELD THAT EVEN IF THE SHAREHOLDERS ARE BOGUS, NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY. BUT IN THIS CASE, NAMES, ADDRESSES, AFFIDAVITS AND SOURCES HAVE ALREADY BEEN SUBMITTED TO THE REVENUE. F) HON'BLE DELHI BENCH OF TRIBUNAL IN CASE OF ARUN INDUSTRIES LIMITED [19-DTR 465] HELD THAT EVEN IF THE SHARE APPLICATIO N MONEY IS RECEIVED BY THE ASSESSES COMPANY FROM BOGUS SHARE HOLDERS, WHEN THE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PR OCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT NO ADDITION CAN BE MADE IN I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 5 THE HANDS OF THE ASSESSEE WITHOUT ESTABLISHING THAT THE INVESTMENT EMANATED FROM THE CORPUS OF THE ASSESSEE. IN THIS CASE NOTHING HAS BEEN BROUGHT ON THE RECORD THAT THE INVESTMENT EMANATED FROM THE CORPUS OF THE APPELLANT COMPANY. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. D.R. TOOK US THROUGH THE FINDINGS AND OBSERVATIONS MADE BY A.O. IN THE ASSESSMENT ORDER AND FURTHER SUBMITT ED THAT ENTIRE SHARE APPLICATION MONEY AND CAPITAL RECEIVED FROM VARIOUS INDIVIDUALS WERE BELOW RS.20,000/- AND THE ENTIRE AMOUNT WAS RECEIVED IN C ASH. HE FURTHER SUBMITTED THAT BEFORE A.O., 4 PERSONS WHOSE NAMES WERE LISTED AT PAGE NO.6 OF THE ASSESSMENT ORDER HAD ADMITTED THAT THEY HAD NEITHER APPLIED FOR THE SHARES OF THE COMPANY NOR HAVE THEY BEEN ALLOTTED THE SHARES. HE FURTHER SUBMITTED THAT THE ASSESSEES EXPLANATION THAT THE MONEY WAS WITHDRAWN FROM SOCIETY AND DEPOSITED WITH THE COMPANY CANNOT BE ACCEPTED A S NO PROOF OF SOURCE LIKE THE WITHDRAWAL MADE FROM THE SOCIETY WAS PRODU CED BEFORE THE A.O. AND CIT(A). HE FURTHER SUBMITTED THAT CIT(A) HAS JUST RELIED ON THE SUBMISSIONS OF THE ASSESSEE. LD. D.R. FURTHER POINTED TO PAGE 1 O F THE PAPER BOOK OF THE ASSESSEE AND POINTED OUT THAT THE ASSESSEE HAS NOT FILED AFFIDAVITS IN CASE OF 150 PERSONS AND THE AGGREGATE AMOUNT OF WHICH IS RS . 18,97,000/- AND IN THESE CASES, THE ASSESSEE HAS NOT AT ALL DISCHARGED THE INITIAL ONUS. HE, THUS, SUBMITTED THAT A.O. WAS FULLY JUSTIFIED IN MAKING T HE ADDITION AND THUS SUPPORTED THE ORDER OF A.O. I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 6 8. LD. A.R. ON THE OTHER HAND GAVE THE BRIEF BACKG ROUND ABOUT THE ASSESSEE AND STATED THAT NAVSARI COTTON & SILK MILL S LTD. (NCSM) WAS A COMPOSITE TEXTILE MILL WHICH WAS INCORPORATED IN 19 36. IT BECAME SICK COMPANY IN 1986 AND REFERENCE WAS MADE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR) IN 1990. BIFR SANC TIONED A REHABILITATION SCHEME IN 1991 WHICH WAS NOT COMPLETED EVEN AFTER F OUR YEARS. THE COMPANY STOPPED ITS OPERATION IN 1994. MEANWHILE, WORKERS OF NCSM FORMED A WORKERS CO-OPERATIVE SOCIETY NAMELY MORARJEE DESA I TEXTILE LABOUR CO-OP INDUSTRY LTD. (MDTLI) AND SUBMITTED REHABILITATION PROPOSAL FOR REVIVAL OF THE COMPANY IN 1994. THE SCHEME WAS APPROVED IN 1996 A ND THE STATE GOVERNMENT WAS DIRECTED TO GRANT EXEMPTION FROM POW ER CUT AND OTHER BENEFITS. HOWEVER, THE REHABILITATION SCHEME THROU GH MDTLI FAILED AND THEREAFTER, A FRESH ATTEMPT WAS MADE BY MAJUR MAHAJ AN MANDAL LABOUR UNION AND IT INCORPORATED YARN INDUSTRIAL CO-OP. SOCIETY LTD. (YICS) WHERE THE WORKERS OF NCSM DEPOSITED THE AMOUNTS RECEIVED BY T HEM ON RETRENCHMENT AS SHARE APPLICATION MONEY AND WHICH WAS ALSO REFLE CTED IN THE BALANCE SHEET OF YICS. TO START THE SICK UNIT, YICS APPLIE D TO NATIONAL CO-OP. DEVELOPMENT COUNCIL (NCDC) WHICH DID NOT MATERIALIZ E. THEREFORE, YICS APPROACHED THE BANKS FOR FINANCE BUT THE BANKS WERE RELUCTANT TO GRANT FINANCE TO A CO-OP. SOCIETY. THEREFORE, HIMALAYA C OTTON YARN PVT. LTD. WAS INCORPORATED IN 2004. SINCE, THE OPERATIONS WERE T O BE CARRIED OUT IN HIMALAYA COTTON YARN PVT. LTD., YICS AT ITS GENERAL MEETING RESOLVED TO I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 7 TRANSFER THE SHARE APPLICATION MONEY RECEIVED BY IT FROM WORKERS TO HIMALAYA COTTON YARN PVT. LTD. THE ASSESSEE, FOR WHICH NECES SARY RESOLUTION WAS PASSED. PURSUANT TO THE RESOLUTION, YICS TRANSFERR ED SHARE APPLICATION MONEY RECEIVED FROM 337 WORKERS RECEIVED BY IT AGGREGATIN G TO RS.56,15,000/- TO THE ASSESSEE. THUS, IT WAS SUBMITTED THAT THE MAIN SOU RCE OF SHARE CAPITAL INTRODUCED IN ASSESSEE COMPANY WAS BY THE WORKERS W HO WERE EARLIER WORKING IN NCSM. IT WAS FURTHER SUBMITTED THAT MAJ UR MAHAJAN MANDAL, THE LABOUR UNION ALSO ENCOURAGED WORKERS FROM OTHER ENT ITIES AS ALSO OTHERS TO CONTRIBUTE TOWARDS THE SHARE APPLICATION MONEY IN ASSESSEE COMPANY AND THEREFORE, FURTHER 169 WORKERS OF VARIOUS UNITS AND OTHERS INVESTED RS.29,74,500/- IN SHARES OF ASSESSEE. HE, THEREFOR E, SUBMITTED THAT BY INNOVATIVE EXPERIMENT MADE BY THE MAJUR MAHAJAN MAN DAL, THE SICK COMPANY, WHICH WAS ORDERED TO BE LIQUIDATED BY THE BIFR, WAS REVIVED TO PROTECT THE INTEREST OF THE WORKERS AND TO ENSURE THEIR EMPLOYM ENT AND THE WORKERS HAD CONTRIBUTED AND HAD BECOME THE SHARE HOLDERS OF THE ASSESSEE. IT WAS SUBMITTED THAT THE SHARE CAPITAL OF THE ASSESSEE IS MAINLY HELD BY WORKERS OF ERSTWHILE NCSM AND OTHERS AND BY THIS UNIQUE EXPERI MENT THE WORKERS HAVE STARTED THE CLOSED MILL. IT WAS FURTHER SUBMITTED THAT THE AMOUNT WAS CONTRIBUTED BY THE WORKERS AND IN EACH CASE THE SHA RE CAPITAL WAS BELOW RS.20,000/- AS THE WORKERS WERE MOSTLY UNEDUCATED A ND WERE ALSO NOT HAVING BANK ACCOUNT OR PAN NOS. LD. A.R. FURTHER SUBMITTE D THAT ASSESSEE HAD OBTAINED AFFIDAVITS OF AS MANY WORKERS AS WERE POSS IBLY WHO HAVE AFFIRMED I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 8 THE INVESTMENT OF FUNDS BY THEM IN THE COMPANY. TH E AFFIDAVITS WERE ALSO OBTAINED FROM THE WORKERS WHOSE MONEY WAS ROUTED TH ROUGH YICS AND AFFIDAVITS FROM 122 WORKERS WERE FILED BEFORE THE A .O. DURING THE REMAND PROCEEDINGS. LD. A.R. FURTHER SUBMITTED THAT IN TH E ORIGINAL PROCEEDING THE 4 WORKERS WHO WERE SUMMONED TO THE A.O. HAD DENIED TO HAVE CONTRIBUTED TO SHARE CAPITAL BECAUSE THE WORKERS WERE UNEDUCATED A ND WERE IN FEAR BUT, HOWEVER, IN THE REMAND PROCEEDING, THEY WERE CROSS EXAMINED AND HAD AGREED TO HAVE CONTRIBUTED THE CAPITAL. LD. A.R. F URTHER SUBMITTED THAT DURING THE COURSE OF REMAND PROCEEDING, A.O. HAD SUMMONED FURTHER 25 WORKERS OUT OF WHICH 20 APPEARED AND WHO IN THEIR STATEMENT HAD CONFIRMED TO HAVE APPLIED FOR SHARES IN THE COMPANY. WITH REGARD TO 5 PERSONS WHO DID NOT APPEAR THE REASON FOR NON APPEARANCE WAS STATED THA T THEY HAD GONE TO THE NATIVE PLACE AT THE RELEVANT TIME. LD. A.R. FURTHE R POINTED TO THE BALANCE SHEET OF YICS FOR PERIOD AS ON 31 ST MARCH, 2001 TO 2005, WHICH WAS PLACED AT PAGE NO.83 TO 90 OF PAPER BOOK AND POINTED WHEREIN SHARE APPLICATION MONEY RECEIVED FROM THE WORKERS WAS REFLECTED. LD. A.R. ALSO PLACED ON RECORD THE DETAILS OF AMOUNT RECEIVED AND POINTED TO THE TABLE WHICH SHOWED THE AMOUNT AND DATE OF RECEIPT OF MONEY IN YICS AND THE DATE A ND AMOUNT OF THE TRANSFER OF MONEY FROM YICS TO THE ASSESSEE, THE NUMBER OF S HARES ALLOTTED AND THE AMOUNT OF SHARE CAPITAL. HE ALSO POINTED TO PAGE 1 OF THE PAPER BOOK WHICH CONTAINED A TABLE WHEREIN IT WAS SHOWN THAT OUT OF TOTAL AMOUNT OF RS. 85,89,500/- WHICH WAS RECEIVED BY ASSESSEE FROM 506 WORKERS, ASSESSEE HAD I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 9 FILED AFFIDAVITS IN CASE OF 391 WORKERS AND THE AMO UNT AGGREGATED TO RS.66,92,500/-. ONLY IN CASE OF 115 WORKERS WHERE THE AMOUNT AGGREGATED RS.18,97,000/-. ASSESSEE COULD NOT FILE THE AFFID AVITS BUT IT INCLUDED THE SUM OF RS.11,17,500/- WHICH WAS RECEIVED THROUGH YICS. LD. A.R., THEREFORE, SUBMITTED THAT SINCE THE CASE OF THE ASSESSEE HAS A LSO TO BE SEEN IN THE LIGHT OF THE FACT THAT THE PRESENT CASE WAS A VERY RARE I NSTANCE WHERE INSTEAD OF LIQUIDATING THE COMPANY, BUT BY A BOLD & INNOVATIVE EFFORT THE UNIT WAS STARTED BY THE WORKERS. HE THEREFORE SUBMITTED THAT ASSESS EE HAS FULLY DISCHARGED THE ONUS AND HE, THUS SUPPORTED THE ORDER OF CIT(A) . 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DISPUTE IN THE PRESENT GROUND, IS WITH RESPECT TO ADDITION U/S. 68. BEFORE US, LD. A.R. HAS SUBMITTED THE BACKGROUND AN D THE CONTEXT IN WHICH THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSE E AND FURTHER THE AMOUNT WAS CONTRIBUTED MAINLY BY THE WORKERS OF NAV SARI COTTON & SILK MILLS LTD. (NCSM). THE ASSESSEE HAS ALSO PLACED AT PAGE 1 THE FOLLOWING TABLE: _________________________________________________ _____________________________ __ TOTAL NUMBER OF AFFIDAVITS AFFIDAVITS SHAREHOLDERS/WORKERS RS. FILED RS. NOT FILED RS. THROUGH YARN CO-OP SOCIETY LTD 337 5,615,000 269 4, 497,500 68 1,117,500 OTHER WORKERS AND OFFICERS 169 2,974,500 122 2,195,000 47 779,500 _________________________________________________ __________________________ 506 8,589,500 391 6,692,500 115 1,897,000 THE ASSESSEE HAS ALSO SUBMITTED THAT THE AMOUNT WAS RECEIVED FROM THE WORKERS WAS INITIALLY PLACED WITH YICS AND LATER ON THE MONEY OF THE WORKERS THAT WAS RECEIVED BY YICS WAS TRANSFERRED TO THE AS SESSEE AND THE WORKERS I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 10 WERE ALLOTTED THE SHARES AND IN SUPPORT OF WHICH, T HE ASSESSEE HAS ALSO PLACED THE AFFIDAVITS AND STATEMENTS OF THE WORKERS . THE AFORESAID SUBMISSION OF THE LD. A.R. HAS NOT BEEN CONTROVERTE D BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. IT IS SEE N THAT ONE OF THE REASON FOR MAKING THE ADDITION WAS THAT OUT OF 506 WORKERS 4 W ORKERS IN THEIR STATEMENT MADE BEFORE A.O. HAD DENIED ABOUT INVESTING IN THE COMPANY. IT IS FURTHER SEEN THAT CIT(A) HAS NOTED THAT DURING THE REMAND P ROCEEDINGS, 20 OTHER INDIVIDUALS OUT OF 25 WHICH WERE SUMMONED HAVE CONF IRMED OF APPLYING FOR THE SHARES OF THE ASSESSEE AND A.O. HAD NOT COMMENTED A DVERSELY. FROM THE TABLE PLACED BY THE ASSESSEE AT PAGE 1 OF THE PAPER BOOK, IT IS SEEN THAT ASSESSEE HAS FILED THE AFFIDAVITS OF THE WORKERS WH O HAVE CONFIRMED THE DEPOSIT OF MONEY AND THE AGGREGATE AMOUNT OF SUCH D EPOSITS IS RS.66,92,500/-. BEFORE US, NO MATERIAL HAS BEEN PL ACED BY THE REVENUE ON RECORD TO CONTROVERT THE AVERMENTS MADE BY SUCH DEP OSITORS OF MONEY. AS FAR AS AGGREGATED AMOUNT OF RS.18,97,000/- RECEIVED FRO M 115 WORKERS IN CONCERNED, IT IS SEEN THAT RS.11,27,500/- HAS BEEN STATED TO HAVE BEEN RECEIVED THROUGH YICS AND IT IS STATED TO BE THE AM OUNT, WHICH WAS DEPOSITED BY THE WORKERS IN YICS. BEFORE US, NO MATERIAL HAS BEEN PLACED BY REVENUE TO CONTROVERT THE AFORESAID SUBMISSION OF ASSESSEE. AS FAR AS RS.7,79,500/- RECEIVED FROM 47 WORKERS IS CONCERNED, NO AFFIDAVIT S HAVE BEEN FILED BY ASSESSEE AND FURTHER NO OTHER MATERIAL HAS BEEN PLA CED BY ASSESSEE TO SUPPORT ITS CONTENTIONS. THUS, IN THE CASE OF 47 W ORKERS WHERE THE AGGREGATE I.T.A. NO. 274/AHD/2011 A.Y. 07-08 (DCIT VS. M/S. HIMALAYA COTTON YARN P. LTD.) PAGE 11 AMOUNT RECEIVED IS RS.7,79,500/-, WE ARE OF THE VIE W, THE ASSESSEE HAS NOT BEEN IN A POSITION TO DISCHARGE THE ONUS AS REQUIRE D U/S. 68. CONSIDERING THE TOTALITY AND PECULIAR FACTS OF THE CASE, WE ARE OF THE VIEW THAT IN THE PRESENT CASE THEREFORE ADDITION CAN ONLY BE SUSTAINED WITH RESPECT TO RS.7,79,500/-. WE, THUS, DIRECT ACCORDINGLY. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 17/10/2014 SD/- SD/- (G.C.GUPTA) (ANIL CHATURV EDI) VICE PRESIDENT ACCOUNTANT MEMB ER TRUE COPY S.K.SINHA )7 )7 )7 )7 / // / 1'8 1'8 1'8 1'8 9)86' 9)86' 9)86' 9)86' / COPY OF ORDER FORWARDED TO:- 1. -. / APPELLANT 2. 12-. / RESPONDENT 3. %% ' = / CONCERNED CIT 4. =- / CIT (A) 5. 8A 1' , , / DR, ITAT, AHMEDABAD 6. CD / GUARD FILE. BY ORDER/ )7 ), !/ % , ,