ITO, Ward - 9(3), Kolkata, Kolkata V. M/s. Cygnus Developers (I) Pvt. Ltd., Kolkata

ITA 282/KOL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4956 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 11-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2012
• Court: TRIBUNAL
• Department Lawyers: S M SURANA
• Assessee Lawyers: SITAL PRASAD ROY
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM] ITA NO.282/KOL/2012 ASSESSMENT YEAR : 2005-06 I.T.O., WARD-9(3), .-VERSUS- M/S. CYGNUS DEVELOPERS (I)PVT.LTD. KOLKATA KOLKATA (PAN:AACCC 5113 D) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI SITAL PRASAD ROY, JCIT, SR .DR FOR THE RESPONDENT : SHRI S.M.SURANA, ADVOCATE DATE OF HEARING : 01.02.2016. DATE OF PRONOUNCEMENT : 02.03.2016. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE DIRECT ED AGAINST THE ORDER DATED 27.12.2011 OF CIT- XIX, KOLKATA RELATING TO A.Y.2005-06. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS CORRECT IN HOLDING THAT THE SHARE APPLICANTS COMPAN IES WERE IN EXISTENCE IN SPITE OF THE FACT THAT DEPARTMENTAL ENQUIRIES COULD NOT ABLE TO TRACE OUT THE ALLEGED SHARE APPLICANTS AT THE GIVEN ADDRESSES. 2) WHETHER, ON THE FACTS' AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS CORRECT IN HOLDING THAT THE ONUS OF THE ASSESSEE WAS HELD T O STAND DISCHARGED WHERE THE IDENTITY OF THE ALLEGED SHARE SUBSCRIBERS WERE NOT PROVED EV EN AFTER SUFFICIENT OPPORTUNITIES HAVE BEEN PROVIDED TO THE ASSESSEE TO PRODUCE SHARE SUBS CRIBERS BEFORE THE ASSESSING OFFICER FOR EXAMINATION. 3) THE APPELLANT CRAVES LEAVE TO ADD, ALTER AND MOD IFY THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF PROCEEDINGS. ITA NO.282/KOL/2012 M/S. CYGNUS DEVEL OPERS (I)PVT. LTD. A.YR.2005-06 2 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF DEALING SHARES. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THA T THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY TOTALING RS.54,00,000/- FROM THE FOLLOWING THREE PARTIES :- SL.NO. NAME OF THE INVESTOR COMPANIES ADDRESS AMOUN T INVESTED (RS.) I. SHREE SHYAM TREXIM PVT. LTD. 161/1, M.G.ROAD, 4 TH FLOOR, ROOM NO.94, KOL-7. 31,00,000/- II. NAVALCO COMMODITIES PVT. LTD. 36, SHREE HARIRAM GOENKA STREET, 4 TH FLOOR, KOLKATA-7. 7,00,000/- III. JEWELLOCK TREXIM PVT. LKTD. 19A/B, MUKTARAM BA BU STREET, 3 RD FLOOR, KOLKATA-7. 16,00,000/- THE AO CALLED UPON THE ASSESSEE TO PROVE THE IDENTI TY AND CAPACITY OF THE AFORESAID THREE COMPANIES AND ALSO THE GENUINENESS OF THE TRA NSACTION OF RECEIPT OF SHARE APPLICATION MONEY. 4. IN REPLY TO THE QUERY OF THE AO THE ASSESSEE SU BMITTED CONFIRMATION FROM THE AFORESAID THREE COMPANIES THAT THEY HAD INVESTED IN THE SHARES OF THE ASSESSEE. THE ASSESSEE ALSO GAVE THE INCOME TAX PARTICULARS OF TH E AFORESAID THREE PARTIES. THE ASSESSEE ALSO INFORMED THE AO THAT M/S. NAVALCO COM MODITIES PVT. LTD. AND SHRI SHYAM TREXIM PVT. LTD., WERE ASSESSED BY ITO,WARD-9 (4), KOLKATA. THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF THE AO THAT M/S. JEWELLOCK TREXIM PVT. LTD., WAS BEING ASSESSED BY THE SAME ITO ASSESSING THE ASSESSEE, VI Z., ITO-WARD-9(3), KOLKATA. COPY OF THE ORDER OF ASSESSMENT COMPLETED U/S 143(3) OF THE ACT FOR A.Y.2005-06 IN THE CASE OF M/S. NAVALCO COMMODITIES PVT. LTD., AND FOR A.Y.2004-05 IN THE CASE OF SHREE SHYAM TREXIM PVT. LTD AND FOR A.Y.2005-06 FOR M/S. JEWELLOCK TREXIM PVT. LTD., WERE ALSO FURNISHED. THE FINANCIAL STATEMENTS OF THE THREE PARTIES WERE ALSO FURNISHED WHEREIN THE INVESTMENT MADE IN THE FORM O F SHARE APPLICATION MONEY IN THE SHARES OF THE ASSESSEE COMPANY WAS DULY REFLECTED I N THOSE FINANCIAL STATEMENTS. 5. THE AO, HOWEVER, DEPUTED HIS INSPECTOR TO CONDU CT AN INQUIRY. ACCORDING TO THE AO WHEN THE INSPECTOR VISITED THE PREMISES OF SHREE SHYAM TREXIM PVT. LTD., AND NAVALCO COMMODITIES PVT. LTD., HE FOUND THAT THERE WAS NO SIGN BOARD NOR ANY LETTER ITA NO.282/KOL/2012 M/S. CYGNUS DEVEL OPERS (I)PVT. LTD. A.YR.2005-06 3 BOX IN THE NAME OF THE AFORESAID TWO COMPANIES. HE ALSO REPORTED THAT ON INQUIRY HE WAS INFORMED THAT THERE WAS NO SUCH COMPANY AT THE ADDRESS GIVEN BY THE ASSESSEE. THEREAFTER AO CALLED UPON THE ASSESSEE TO PRODUCE T HE DIRECTORS OF THE INVESTEE COMPANIES. THE ASSESSEE SUBMITTED BEFORE THE AO THA T IT HAD REQUESTED THE DIRECTORS TO APPEAR BEFORE THE AO AND SOME TIME MAY BE ALLOWED F OR THEIR APPEARANCE. THEREAFTER THE DIRECTORS DID NOT APPEAR BEFORE THE AO. IN THE CIRCUMSTANCES AO DREW ADVERSE INFERENCE AND CAME TO THE CONCLUSION THAT THE ASSES SEE FAILED TO SATISFACTORILY EXPLAIN THE IDENTITY, CAPACITY AND GENUINENESS OF THE TRANS ACTIONS OF THE RECEIPT OF SHARE APPLICATION MONEY. ACCORDINGLY RS.54,00,000/- WAS A DDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION MADE BY THE AO OBSERVING AS FOLLOWS :- 6) I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE DETAILS AND DOCUMENTS FILED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT: PROCEEDINGS VIDE LETTER D T.03-10-2007. ON CAREFUL CONSIDERATION OF THE FACTS AND IN LAW 'I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN MAKING, THE ADDITION AGGREGATING TO RS.54,00,000/- U/S.68 OF THE ACT BEING THE AMOUNT OF' SHARE APPLICATION MONEY BY HOLDING THAT THE APP ELLANT COMPANY HAS FAILED TO PROVE THE IDENTITY, AND CREDIT WORTHINESS OF. THE CREDITO RS AS WELL AS THE GENUINENESS OF TRANSACTIONS. IT IS OBSERVED THAT ALL THE THREE SHA RE APPLICANT COMPANIES I.E. M/S. SHREE SHYAM TREXIM PVT. LTD., M/S NAVALCO COMMODITIES PVT . LTD. AND M/S. JEWELLOCK TREXIM PVT. LTD. HAD FILED THEIR CONFIRMATIONS WHER EIN EACH OF THEM CONFIRMED THAT THEY HAD APPLIED FOR SHARES OF THE APPELLANT COMPANY. A LL THE THREE COMPANIES PROVIDED THE CHEQUE NUMBER, COPY OF BANK STATEMENTS AND THEIR P AN. IT IS OBSERVED' THAT THESE COMPANIES ALSO FILED, COPIES OF THEIR RETURN OF INC OME AND FINANCIAL STATEMENTS FOR AS WELL AS COPY OF THEIR ASSESSMENT ORDER U/S.143(3) OF THE I.T.ACT FOR A.Y.2005-06. IN THE CASE OF M/S. JEWELLOCK TREXIM PVT. LTD. THE ASSESSM ENT FOR A.Y.2005-06 WAS COMPLETED BY THE ITO, WARD 9(3), KOLKATA AND THE ASSESSMENTS IN THE CASE OF M/S. NAVALCO COMMODITIES PVT. LTD. AND M/S. SHREE SHYAM TREXIM P VT. LTD. FOR A.Y.2005-06 AND A.Y.2004-05 RESPECTIVELY WERE COMPLETED BY THE ITO, WARD 9(4), KOLKATA. UNDER THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE SHARE APPLICANT COMPANIES WERE NOT IN EXISTENCE. TH E ASSESSMENT ORDERS WERE COMPLETED ON THE ADDRESS AS PROVIDED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS NOT KNOWN AS TO HOW THE AO'S INS PECTOR HAD REPORTED THAT THE AFORESAID COMPANIES WERE NOT IN EXISTENCE AT THE GI VEN ADDRESS. SINCE THE APPELLANT COMPANY HAD PROVIDED SUFFICIENT DOCUMENTARY EVIDENC ES IN SUPPORT OF ITS CLAIM OF RECEIPT OF SHARE APPLICATION MONEY, I AM OF THE OPI NION THAT THE NO ADDITION U/S.68 COULD BE MADE IN THE HANDS OF APPELLANT COMPANY. ON GOIN G THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT, IT IS OBSERVED THAT THE VIEW TAKEN AS ABOVE IS ALSO SUPPORTED BY THEM. IN VIEW OF ABOVE THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.54,00,000/-. THE GROUND NOS.2 AND 3 ARE ALLOWED. ITA NO.282/KOL/2012 M/S. CYGNUS DEVEL OPERS (I)PVT. LTD. A.YR.2005-06 4 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR, WHO RELIED ON THE ORDER OF AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A) AND FURTHER DREW OUR ATTENTION TO THE DECISION OF HONBLE ALLAH ABAD HIGH COURT IN THE CASE OF CIT VS RAJ KUMAR AGARWAL VIDE ITA NO.179/2008 DATED 17.11.2009 WHEREIN THE HONBLE ALLAHABAD HIGH COURT TOOK A VIEW THAT NON P RODUCTION OF THE DIRECTOR OF A PUBLIC LIMITED COMPANY WHICH IS REGULARLY ASSESSED TO INCOME TAX HAVING PAN, ON THE GROUND THAT THE IDENTITY OF THE INVESTOR IS NOT PROVED CANNOT BE SUSTAINED. ATTENTION WAS ALSO TO THE SIMILAR RULING OF THE ITAT KOLKATA BENCH IN THE CASE OF ITO VS DEVINDER SINGH SHANT IN IT A NO.208/KOL/2009 VIDE O RDER DATED 17.04.2009. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS., WE AR E OF THE VIEW THAT ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IT MAY B E SEEN FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE THAT THE REVENUE DISPUTED ONL Y THE PROOF OF IDENTITY OF THE SHARE HOLDER. IN THIS REGARD IT IS SEEN THAT FOR A.Y.2004 -05 SHREE SHYAM TREXIM PVT. LTD., WAS ASSESSED BY ITO, WARD-9(4), KOLKATA AND THE ORD ER OF ASSESSMENT U/S/143(3) DATED 25.01.2006 IS PLACED IN THE PAPER BOOK. SIMIL ARLY NAVALCO COMMODITIES PVT. LTD., WAS ASSESSED TO TAX U/S 143(3) FOR A.Y.2005- 06 BY ITO, WARD-9(4), KOLKATA BY ORDER DATED 20.03.2007. SIMILARLY JEWELLOCK TREXIM PVT. LTD WAS ASSESSED TO TAX FOR A.Y.2005-06 BY THE VERY SAME ITO-WARD-9(3), KOLKATA ASSESSING THE ASSESSEE. IN THE LIGHT OF THE ABOVE FACTUAL POSITION WHICH IS NOT DI SPUTED BY THE REVENUE, IT CANNOT BE SAID THAT THE IDENTITY OF THE SHARE APPLICANTS REMA INED NOT PROVED BY THE ASSESSEE. THE DECISION OF THE HONBLE ALLAHABAD HGIH COURT AS WEL L AS ITAT KOLKATA BENCH ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FO R THE ASSESSEE ALSO SUPPORTS THE VIEW THAT FOR NON PRODUCTION OF DIRECTORS OF THE IN VESTOR COMPANY FOR EXAMINATION BY THE AO IT CANNOT BE HELD THAT THE IDENTITY OF A LIM ITED COMPANY HAS NOT BEEN ESTABLISHED. FOR THE REASONS GIVEN ABOVE WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. ITA NO.282/KOL/2012 M/S. CYGNUS DEVEL OPERS (I)PVT. LTD. A.YR.2005-06 5 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 02.03.2016. SD/- SD/- [WASEEM AHMED] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 02.03.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S. CYGNUS DEVELOPERS (I)PVT. LTD., 51,NALINI S ETH ROAD, KOLKATA- 700007. 2 THE I.T.O., WARD-9(3), KOLKATA. 3. CIT(A)-XIX, KOLKATA 4. CIT-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES