Jajoo Overseas Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(3), Surat

ITA 2850/AHD/2012

• Counselvise Citation: 285020514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 19-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: MEHUL SHAH
• Keywords: Bogus Share capital; Accommodation entries
• Section: 147; 148; 133(6)

Judgement Text

, , , , SMC, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, SMC BENCH . .. . . .. . , ! ! ! ! BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT ITA NO.2850/AHD/2012 [ASSTT.YEAR : 2004-2005] JAJOO OVERSEAS PVT. LTD. 429-432, GOLDEN POINT NR. BSNL OFFICE RING ROAD, SURAT 395 001. PAN : AAACJ 5900 D /VS. ITO, WARD-1(3) SURAT. ( (( (#$ #$ #$ #$ / APPELLANT) ( (( (%&#$ %&#$ %&#$ %&#$ / RESPONDENT) '() * + !/ ASSESSEE BY : SHRI MEHUL SHAH -. * + !/ REVENUE BY : SHRI D.K. MISHRA, SR.DR ./ * )01/ DATE OF HEARING : 17 TH DECEMBER, 2013 234 * )01/ DATE OF PRONOUNCEMENT : 03-02-2014 !5 / O R D E R THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, SURAT D ATED 10.10.2012 2. THE GROUND NO.2 OF THE ASSESSEE IS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN CONF IRMING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.3,15,000/- ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY AND CHARGES. ITA NO.2850/AHD/2012 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE BY A CCOUNT PAYEE CHEQUES AND HAS APPEARED IN THE STATEMENT OF ACCOUN TS OF OTHER PARTY, M/S.SURYADEEP SALT REFINERY &CHEMICAL WORKS LTD. ( SSRCWL FOR SHORT). HE SUBMITTED THAT THE PAN AND TAN NUMBERS OF THE SAID PARTY SSRCWL WAS GIVEN TO THE AO. HE SUBMITTED THAT A SPECIFIC REQUEST WAS MADE TO THE AO VIDE LETTER OF THE ASSESSEE DATE D 5.9.2011 TO USE POWER UNDER SECTION 133(6) AND/OR 131 OF THE ACT TO CALL FOR ANY INFORMATION, DOCUMENTS ETC. FROM SSRCWL SO AS TO VERIFY THE GENUINENESS OF THE TRANSACTION. HE SUBMITTED THAT NO SUCH EXERCISE WAS UNDERTAKEN BY THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VERY BASIS OF ADDITION WAS SOME STATEMENT OF ONE SHRI NARENDRA SHAH OF MUMBAI, AND COPY THEREOF WAS NEVER GIVEN TO THE ASSESSEE NOR ANY OPPORTUNITY TO CROSS-EXAMINE WAS A LLOWED BY THE AO. HE SUBMITTED THAT PARA-2(C), THE AO HAS STATED THAT THE ADIT HAS REPORTED THAT THERE IS NO SUCH COMPANY IN THE NAME OF M/S.SAPAN CHEMICALS LTD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NAME OF SSRCWL WAS CHANGED TO M/S.SAPAN CHEMICALS LTD. AND THE CERTIFICATE THEREOF WAS ISSUED BY THE ASSTT.REGISTR AR OF COMPANIES, GUJARAT, DADRA NAGAR HAVELI, COPY OF WHICH HAS BEEN FILED IN THE COMPILATION BEFORE THE TRIBUNAL. 4. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF TH E LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS NEVER ASKED FOR CROSS-EXAMINATION OF SHRI NARENDRA SHAH OF MUMB AI. HE REFERRED TO THE RELEVANT PORTIONS OF THE ASSESSMENT ORDER AND T HE APPELLATE ORDER PASSED BY THE LEARNED CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTED THAT THE CASE IS BASED ON THE REPORT OF A DIT REGARDING HAWALA OPERATOR, SHRI NARENDRA SHAH WHO ADMITTED HIS ROLE IN PROVIDING ITA NO.2850/AHD/2012 ACCOMMODATION ENTRIES OF SHARES TO VARIOUS BENEFICI ARIES AND HE HAS SUBMITTED A PAPER BOOK CONTAINING NAMES AND ADDRESS ES OF 1314 PERSONS WHO AVAILED OF SUCH ACCOMMODATION ENTRIES. HE RELI ED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME-TAX VS NOVA PROMOTERS AND FINLEASE (P) LTD., 342 ITR 16 9 IN SUPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDERS OF TH E AO AND THE CIT(A). 5. I HAVE CONSIDERED RIVAL SUBMISSIONS. I FIND THA T THE ASSESSEE HAS DISCHARGED ITS ONUS OF ESTABLISHING THE IDENTITY AN D CREDIT-WORTHINESS OF SSRCWL. THE GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED TO BE NON-EXISTENT BY THE REVENUE. THE SHARE APPLICAT ION MONEY WAS SUBSCRIBED BY THE SSRCWL BY ACCOUNT PAYEE CHEQUES AND COPY OF THE BANK STATEMENT HAS BEEN FILED ON RECORD. THE ENTRI ES OF PURCHASE OF SHARES OF THE ASSESSEE-FIRM ARE APPEARING IN THE ST ATEMENT OF ACCOUNTS OF SSRCWL. THE PAN AND TAN OF SSRCWL HAVE BEEN IN TIMATED TO THE AO. THE ASSESSEE VIDE ITS LETTER DATED 5.9.201 1 ADDRESSED TO THE AO HAS SUBMITTED CERTIFICATE OF INCORPORATION, COMMENC EMENT OF BUSINESS, MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION AND ANNUAL REPORT OF SSRCWL. THE ASSESSEE HAS ALSO REQUESTED THE AO T O MAKE USE OF POWER UNDER SECTION 133(6) AND/OR 131 OF THE ACT TO CALL FOR INFORMATION/ DOCUMENTS ETC. FROM SSRCWL SO AS TO VERIFY THE G ENUINENESS OF THE TRANSACTION. THE ASSESSEE HAS DENIED THE KNOWLEDGE OF STATEMENT OF SHRI NARENDRA SHAH OF MUMBAI. THE ASSESSEE HAS CONTENDE D THAT THE SAID SHRI NARENDRA SHAH HAS NO CAPACITY TO MAKE ANY STATEMENT ON BEHALF OF THE ASSESSEE-COMPANY. IN THESE FACTS OF THE CASE, THE AO SHOULD HAVE MADE FURTHER INQUIRIES AND SHOULD HAVE GIVEN THE COPY OF STATEMENT OF SHRI NARENDRA SHAH TO THE ASSESSEE ALONG WITH OPPORTUNIT Y TO THE ASSESSEE TO CROSS-EXAMINE SHRI NARENDRA SHAH. NO SUCH OPPORTUN ITY WAS GIVEN TO THE ASSESSEE. IN THESE FACTS OF THE CASE, I AM OF THE VIEW THAT MERELY ON THE ITA NO.2850/AHD/2012 BASIS OF STATEMENT OF A THIRD PARTY, THE ADDITION C OULD NOT BE MADE IN THE HANDS OF THE ASSESSEE WITHOUT ALLOWING OPPORTUNITY TO CROSS-EXAMINE THE SAID PERSON AND IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO ESTABLISH THE TRUTHFULNESS OF THE STATEMENT OF THE THIRD PART Y. IN THIS VIEW OF THE MATTER, I AM OF THE VIEW THAT THE ADDITION MADE COU LD NOT BE SUSTAINED ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY AND CHARGE S AND ACCORDINGLY, THE GROUND NO.2 OF THE ASSESSEE IS ALLOWED. 6. THE GROUND NOS.1 AND 3 RELATE TO ISSUE OF VALIDI TY OF ASSESSMENT FRAMED UNDER SECTION 147 OF THE ACT BY ISSUING NOTI CE UNDER SECTION 148 OF THE ACT. IN VIEW OF MY DECISION DELETING THE AD DITION ON MERITS THEREOF, I HOLD THAT THERE IS NO NECESSITY TO ADJUD ICATE THE ISSUE OF VALIDITY OF NOTICE ISSUED FOR REOPENING OF THE CASE, AND ACC ORDINGLY, THESE GROUNDS ARE NOT ADJUDICATED UPON. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- ( . .. . . .. . /G.C. GUPTA) /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD