Pride Housing & Construction Private Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 288/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4504 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-10-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MEENA
• Keywords: Unexplained cash credit; Unexplained expenditure
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI VIKAS AWASTHY, JM / ITA NO.288/PUN/2016 / ASSESSMENT YEAR : 2009-10 PRIDE HOUSING AND CONSTRUCTION PRIVATE LIMITED. 504, CORPORATE PLAZA, SENAPATI BAPAT ROAD, PUNE-411 016 PAN : AACCP4911G .... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), PUNE. / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI S.S. MEENA / DATE OF HEARING : 25.10.2018 / DATE OF PRONOUNCEMENT : 26.10.2018 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-13, PUNE DATED 15.12.2015 FOR THE ASSESSMENT YEAR 2009-10. 2 ITA NO.288 /PUN/2016 A.Y.2009-10 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: A SEARCH U/S.132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CONDUCTED IN THE CASE OF PRIDE GROUP ON 07.09.2011. THE ASSESSEE IS ONE OF THE GROUP COMPANIES. DURING THE COURSE OF SEARCH PROC EEDINGS, CERTAIN DOCUMENTS WERE FOUND AND SEIZED INDICATING RECEIPT OF SHAR E APPLICATION MONEY BY PRIDE GROUP OF COMPANIES FROM VARIOUS ALLEGED FICT ITIOUS AND NON GENUINE COMPANIES. THE ASSESSING OFFICER ON THE BASIS OF S TATEMENT OF ONE SHRI JAGADISH PUROHIT AND SHRI PRADEEP GUPTA HELD THAT T HE ASSESSEE HAS ALSO RECEIVED SHARE APPLICATION MONEY FROM SUCH SHELL COMPA NIES ENGAGED IN PROVIDING PAPER TRANSACTIONS. THE ASSESSING OFFICER HELD THA T THE ASSESSEE HAS FAILED TO DISCHARGE THE LIABILITY OF PROVING CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTIONS AND THE INVESTING COMPAN IES. CONSEQUENTLY, THE ASSESSING OFFICER MADE ADDITION OF RS.75,00,000/- BY TREA TING THE SAME AS UNEXPLAINED CASH CREDIT. THE ASSESSING OFFICER FURTHER MA DE ADDITION OF RS.56,250/- U/S.69C OF THE ACT IN RESPECT OF COMMISSION PAID SHRI JAGDISH PUROHIT, ENTRY PROVIDER FOR ARRANGING SHARE APPLICATION MONEY TRANS ACTIONS. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30.03.2014 PASSED U/S.153A R.W.S. 143(3) OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE TH E COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER AND DISMISSED THE AP PEAL OF ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF CIT(A) IN CONFIRMING ADDITIONS OF RS.75,00,000/- U/S.68 OF THE ACT AND ADDITION OF RS.56,250/- U/S.69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 4. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE PRIMARILY ON THE BASIS OF ST ATEMENTS OF SHRI 3 ITA NO.288 /PUN/2016 A.Y.2009-10 PRADEEP GUPTA, CHARTERED ACCOUNTANT AND SHRI JAGADISH PUROHIT, ENTRY PROVIDER. THE LD. AR POINTED THAT STATEMENT OF SHRI JAGAD ISH PUROHIT WAS RECORDED U/S.131 OF THE ACT ON 19.10.2011 AND THE SAM E IS AT PAGE 19 TO 27 OF THE PAPER BOOK. IN REPLY TO QUESTION NO. 7 OF THE ST ATEMENT, SHRI JAGADISH PUROHIT HAS GIVEN LIST OF 34 COMPANIES WHICH WERE CONTROLLED AND MANAGED BY HIM. HOWEVER, ASSESSEE HAS NOT RECEIVED SHARE APPLICATION MONEY FROM ANY OF THE COMPANIES MENTIONED IN THE STATEMENT OF SHRI JAGADISH PUROHIT. THE STATEMENT OF SHRI PRADEEP GUPTA WAS RECORDED ON 19.10.2 011. IN RESPONSE TO QUESTION NO. 6, SHRI PRADEEP GUPTA HAS GIVEN THE NAME OF 38 COMPANIES WHEREIN HE WAS INSTRUMENTAL IN INCORPORATING THE SAID COMP ANIES ON THE INSTRUCTION OF SHRI JAGADISH PUROHIT. THE LD. AR SUBMITTED TH AT NONE OF THE COMPANIES LISTED BY THE SHRI PRADEEP GUPTA, HAVE APPLIED FO R SHARES IN THE ASSESSEE COMPANY. THE ASSESSEE HAS RECEIVED SHARE APP LICATION MONEY FROM THREE COMPANIES NAMELY: I) KHERA MOTER FINANCE PVT. LTD. (PAN NO.AAAFK8628A) II) ROSEBERRY MERCANTILE PVT. LTD. (PAN NO.AABCR3485J) III) SITARAM INVESTMENT LIMITED. (PAN NO.AACCS4036P) THUS, THE ASSESSEE HAS NOT RECEIVED SHARE APPLICATION MONEY FROM ANY OF THE COMPANIES MENTIONED BY EITHER SHRI JAGADISH PUROHIT OR SHRI PRADEEP GUPTA. 4.1 THE LD. AR POINTED THAT NONE OF THE THREE COMPANIES WHO HAVE APPLIED FOR SHARES OF THE ASSESSEE ARE SHELL COMPANIES. ALL THE THR EE COMPANIES ARE CONDUCTING THEIR BUSINESS REGULARLY. THE INFORMATION FROM O FFICIAL WEBSITE OF MINISTRY OF CORPORATE AFFAIRS WOULD SHOW THAT THESE COMP ANIES HAVE REGULARLY FILED RETURN UNDER THE PROVISIONS OF THE COMPANIE S ACT AND ARE ACTIVE. THE AUTHORITIES BELOW HAVE FAILED TO TAKE INTO CONSID ERATION THE FACT 4 ITA NO.288 /PUN/2016 A.Y.2009-10 THAT ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM THE AFORE-MENTIONED THREE COMPANIES ONLY AND THESE COMPANIES DO NOT FIGURE IN THE LIST OF COMPANIES MENTIONED BY SHRI JAGADISH PUROHIT AND SHRI PRA DEEP GUPTA. THE ASSESSING OFFICER MADE ADDITION MERELY ON THE BASIS OF STAT EMENT OF SHRI PRADEEP GUPTA AND SHRI JAGADISH PUROHIT. THE FIRST APPEL LATE AUTHORITY IN MECHANICAL MANNER HAS UPHELD THE FINDINGS OF ASSESSING OFFIC ER. THE LD. AR FAIRLY ADMITTED THAT DURING FIRST APPELLATE PROCEEDINGS, IT W AS NOT BROUGHT TO THE NOTICE OF COMMISSIONER OF INCOME TAX (APPEALS) THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE FROM AFORE-MENTIONED THREE COMPANIES AND THE ASSESSING OFFICER HAS FAILED TO TAKE NOTE OF THIS FA CT THOUGH IN SUBMISSIONS BEFORE ASSESSING OFFICER, THIS FACT WAS HIGHLIGHTED. 5. SHRI S.S. MEENA REPRESENTING THE DEPARTMENT SUBMITTED THAT THE ASSESSEE FOR THE FIRST TIME HAS POINTED BEFORE THE TRIBUNA L THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM THE THREE COMPANIES W HICH ARE NOT PART OF THE LIST OF COMPANIES MENTIONED BY SHRI JAGADISH PU ROHIT OR SHRI PRADEEP GUPTA IN THEIR RESPECTIVE STATEMENTS. THE LD. DR SUBMITTED THAT THE GENUINENESS AND CREDITWORTHINESS OF THESE COMPANIES IS RE QUIRED TO BE VERIFIED. THEREFORE, THE MATTER MAY BE REMITTED TO THE FILE O F ASSESSING OFFICER FOR CONDUCTING FURTHER ENQUIRIES. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS RAISED AS MANY AS 15 GROUNDS IN APPEAL. THE LD. AR OF THE ASSESSEE HAS STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO.1. ACCORDINGLY, TH E SAME IS DISMISSED AS NOT PRESSED. 5 ITA NO.288 /PUN/2016 A.Y.2009-10 7. GROUND NO.2 TO 13 OF THE APPEAL ARE IN RESPECT OF ADD ITION OF RS.75,00,000/- U/S.68 OF THE ACT MADE BY ASSESSING OFFICER IN RESPECT OF SHARE APPLICATION MONEY ALLEGEDLY RECEIVED FROM SHELL COMPAN IES. THE ASSESSEE PURPORTEDLY RECEIVED SHARE APPLICATION MONEY FR OM THREE COMPANIES I.E. : I) KHERA MOTER FINANCE PVT. LTD. (PAN NO.AAAFK8628A) II) ROSEBERRY MERCANTILE PVT. LTD. (PAN NO.AABCR3485J); AND III) SITARAM INVESTMENT LIMITED. (PAN NO.AACCS4036P). A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSE SSING OFFICER HAS MADE ADDITION OF RS.75,00,000/- BY RAISING DOUBT OVER THE GENUINENESS OF THE INVESTING COMPANIES. THE ASSESSING OFFICER HAS BASED HIS FIND INGS ON THE STATEMENTS OF SHRI JAGADISH PUROHIT AND SHRI PRADEEP GUP TA. SHRI JAGADISH PUROHIT IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT WH ILE REPLYING TO QUESTION NO.7 HAS GIVEN LIST OF 34 COMPANIES WHICH WERE CON TROLLED AND MANAGED BY HIM. SHRI PRADEEP GUPTA IN HIS STATEMENT HAS ADMITTED THAT HE HAS INCORPORATED THE COMPANIES ON THE INSTRUCTION OF SH RI JAGADISH PUROHIT AND HAS GIVEN THE LIST OF 38 COMPANIES. HOWEVER, WE FIND THAT IN THE GIVEN LIST, THE NAME OF THE THREE COMPANIES FROM WHICH THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY IS NOT MENTIONED. THOUGH IN THE WRITTEN SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER, NAME OF THE THREE COMPANIES FR OM WHOM THE ASSESSEE IS STATED TO HAVE RECEIVED SHARE APPLICATION MO NEY WERE MENTIONED BUT THE ASSESSING OFFICER HAS NOT TAKEN COGNIZANCE OF THE SAME. DURING FIRST APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT BROUGHT THIS FACT TO THE NOTICE OF COMMISSIONER OF INCOME TAX (APPEALS). THUS, WE ARE OF CONSIDE RED VIEW, THIS ISSUE NEEDS RE-VISIT TO THE FILE OF ASSESSING OFFICER TO ASCER TAIN THE CORRECT FACTS AND TO VERIFY GENUINENESS AND CREDITWORTHINESS OF T HE INVESTING COMPANIES AND THE VERACITY OF THE TRANSACTIONS BETWEEN THE SAID COMPANIES 6 ITA NO.288 /PUN/2016 A.Y.2009-10 AND THE ASSESSEE. THE ASSESSING OFFICER WHILE DECIDING THE ISSUE DE- NOVO SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANCE WITH LAW. THUS, IN VIEW OF THE ABOVE, FINDINGS OF COMMISSIONER OF INC OME TAX (APPEALS) ON THIS ISSUE ARE SET ASIDE AND GROUNDS NOS. 2 T O 13 OF THE APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN GROUND NO.14, THE ASSESSEE HAS ASSAILED ADDITION O F RS.56,250/- U/S.69C OF THE ACT. THE ASSESSING OFFICER MADE ADDITION IN R ESPECT OF COMMISSION PAID TO SHRI JAGADISH PUROHIT FOR ALLEGEDLY PROVI DING BOOK ENTRIES FOR SHARE APPLICATION MONEY. WE FIND THAT THE ADDITION IS CON SEQUENTIAL TO THE GROUND NOS.2 TO 13 OF THE APPEAL. THEREFORE, WE DEEM IT AP PROPRIATE TO REMIT THE ISSUE RAISED IN GROUND NO.14 OF THE APPEAL TO THE FILE OF ASSESSING OFFICER FOR RE-ADJUDICATION ALONG WITH THE MAIN ISSUE (SUPRA). ACCOR DINGLY, GROUND NO.14 RAISED IN APPEAL BY ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPO SE. 9. THE GROUND NO.15 OF THE APPEAL BY ASSESSEE IS GENER AL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 26TH DAY OF OCTOBER, 2018. SD/- SD/- R. S. SYAL VIKAS AWAS THY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 26 TH OCTOBER, 2018 SB 7 ITA NO.288 /PUN/2016 A.Y.2009-10 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-13, PUNE. 4. THE CIT (CENTRAL), PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE.