RAMA TECHNO PAPERS & ALLIED INDUSTRIES LTD, MUMBAI V. ITO 1(3)(1), MUMBAI

ITA 3077/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88250 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-01-2015
• Assessment Year: 1993-1994
• Appeal Filed On: 20-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N R AGRAWAL; PAAWAN VEDAR
• Keywords: Source of fund; Additional evidence; Assessment record; Onus to prove
• Section: 143(3); 69; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D B ENCH, MUMBAI , , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ./ I.T.A. NO.3077/MUM/2010 ( / ASSESSMENT YEAR : 1993-94) M/S. RAMA TECHNO PAPERS & ALLIED INDUSTRIES LTD. 1, CHATEAU WINDSOR, 86,VEER NARIMAN ROAD MUMBAI-400 020. / VS. ITO - CIRCLE 1(3)(1) AAYAKAR BHAVAN 5 TH FLOOR MUMBAI-400 020. ./ ./PAN/GIR NO. : /1(3)/54-R ( /APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI N.R. AGRAWAL AND SHRI PAAWAN VED-AR / RESPONDENT BY : SHRI JEETENDRA KUMAR - DR !' # $ / DATE OF HEARING : 22 /01/2015 %&' $ / DATE OF PRONOUNCEMENT : 06 /0 2 /2015 ( / O R D E R PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25/3/2010 OF CIT(A) FOR THE ASSESSMENT YEAR 1993-94. THE ASSESSE E HAS RAISED A SOLITARY GROUND WHICH READS AS UNDER :- THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.51,20,000/- ON ACCOUNT OF SHARE APPLICATION MONEY AS PAID FROM UNEXPLAINED SOURCES OF INCOME U/S. 68C. 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31/12 /1993 DECLARING TOTAL LOSS OF 2 ITA NO.3077/M/10 RS.27,456/-. THE RETURN WAS ACCEPTED U/S.143(1)(A) OF THE ACT ON 28/02/1994 WITHOUT MAKING ANY ADJUSTMENT. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1997-98 THE AO NOTED THAT THE SHARE APPLICATION MONEY SHOWN AS RECEIPT FROM THREE PARTIES WAS OUTSTANDING AS ON 31 /3/1997. THE DETAILS OF THE AMOUNT OF SHARE APPLICATION MONEY ARE AS UNDER :- 1. M/S. BLUE LAGOON INVESTMENT PVT. LTD. RS.17,00,00 0/- 2. M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. RS.17,00, 000/- 3. M/S. MEDITERIAN INVESTMENT PVT. LTD. RS.17,20,000/ - 2.1 THUS, THE ASSESSEE HAS SHOWN RS.51,20,000/- AS OUTSTANDING AS ON 31/3/1997. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1997-98 CONDUCTED THE ENQUIRY TO VERIFY THIS FACT AND EXAMI NED THE ASSESSMENT RECORDS OF THESE THREE COMPANIES. THE AO FOUND THAT THESE COMPANIES DO NOT SHOW ANY AMOUNT RECEIVABLE FROM THE ASSESSEE. ON FURTHER ENQUIRY TH E AO FOUND THAT THESE AMOUNTS HAVE BEEN RECEIVED BY THESE THREE COMPANIES DURING THE FY 1992-93. ACCORDINGLY, THE ASSESSMENT FOR ASSESSMENT YEAR 1993-94 WAS RE-OPENE D BY ISSUING NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 31/3/2000. IN THE COUR SE OF RE-ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE BUSINESS OF THE ASS ESSEE WAS TAKEN OVER BY NATH GROUP OF COMPANIES IN THE MONTH OF DECEMBER92 AND ACCORDINGLY THE AMOUNT DUE TO THE SAID THREE COMPANIES WERE REPAID BY NATH GROUP OF COMPANIES. THE ASSESSEE FURNISHED THE DETAILS OF CHEQUE NO., AMOUNT, DATE A ND BANK ON WHICH THE CHEQUES WERE DRAWN FOR RE-PAYMENT OF SAID AMOUNT OF RS.51,21,000 /-, BEING REFUND OF SHARE APPLICATION MONEY. THUS THE ASSESSEE SUBMITTED BEFO RE THE AO THAT NO BALANCE OUTSTANDING WAS SHOWN BY THOSE COMPANIES AS THE PAY MENT WAS MADE BY NATH GROUP OF COMPANIES. IT WAS FURTHER SUBMITTED THAT BY MIST AKE THE ASSESSEE HAS NOT MADE JOURNAL ENTRIES IN THE BOOKS WHICH RESULTED IN CONT INUATION OF OUTSTANDING BALANCE. THIS EXPLANATION WAS NOT ACCEPTED BY THE AO AS ACCORDING TO HIM IT COULD NOT BE BELIEVED THAT THE ASSESSEE WAS NOT AWARE OF THESE FACTS. ACC ORDINGLY THE AO HELD THAT THE CREDITORS OF THE ASSESSEE DO NOT EXIST AND THESE AM OUNTS WERE REQUIRED TO BE TREATED AS INCOME OF THE ASSESSEE. THE AO ALSO HELD THAT THESE LIABILITIES COULD ALSO HAD BEEN 3 ITA NO.3077/M/10 SQUARED UP FROM UNEXPLAINED SOURCES OF INCOME. HENC E, HE MADE AN ADDITION OF RS.51,20,000/-. THE ASSESSEE CHALLENGED THE ACTION OF AO BEFORE CIT(A) AND FILED COPIES OF RELEVANT DOCUMENTS VIZ. BANK STATEMENT DE TAILS OF CHEQUE, COPIES OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF ASSESSEE CONCERN WH ICH MAY HELP TO PROVE THAT THE MONEY WAS ACTUALLY PAID THROUGH BANK TO THE CREDITO RS. THE ASSESSEE EXPLAINED BEFORE CIT(A) THAT THERE WAS HARDLY ANY BUSINESS AND LIABI LITIES WERE DISCHARGED BY NATH GROUP. THE LD. CIT(A) ACCEPTED THE EXPLANATION OF T HE ASSESSEE AND DELETED THE ADDITION MADE BY AO. THE MATTER WAS CARRIED TO THIS TRIBUNAL THROUGH THE APPEAL FILED BY THE REVENUE. THE TRIBUNAL NOTED THE FACT THAT NA TH GROUP OF COMPANIES HAVE SHOWN A LARGER AMOUNT PAID TO THESE THREE COMPANIES THAN THE AMOUNT OF RS.51,22,000/- DUE FROM THE ASSESSEE AND THEREFORE, IT WAS NOT CLEAR W HETHER THOSE COMPANIES HAVE RECEIVED THE SHARE APPLICATION MONEY AGAINST THESE CHEQUES OR BY DIFFERENT MODE OF PAYMENT. THE TRIBUNAL FURTHER NOTED THAT SINCE NO E VIDENCE WAS OBTAINED BY OR PRODUCED BEFORE AO, THEREFORE, THIS ASPECT REQUIRED VERIFICATION. ACCORDINGLY THE TRIBUNAL VIDE ITS ORDER DATED 27/2/2004 SET ASIDE T HE ORDER OF LD. CIT(A) AND RESTORED THE MATTER TO THE FILE OF AO FOR LIMITED PURPOSE OF VERIFYING THE AFORESAID ASPECT. IN THE SET ASIDE PROCEEDINGS THE AO ISSUED SUMMONS TO ALL THREE PARTIES IN ORDER TO VERIFY THE POSITION AS DIRECTED BY THE TRIBUNAL. THE SUMMONS C OULD NOT BE SERVED UPON TWO PARTIES NAMELY M/S. MEDITERIAN INVESTMENT PVT. LTD . AND M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. HOWEVER, THE SUMMONS WERE SERVED UP ON THE 3 RD PARTY M/S. BLUE LAGOON INVESTMENT PVT. LTD. 2.2 THE REPRESENTATIVE OF THE SAID COMPANY APPEARED BEFORE AO BUT COULD NOT EXPLAIN EITHER THE NATURE OF THE ADVANCE GIVEN TO T HE ASSESSEE NOR AS TO HOW THE ACCOUNT HAS BEEN SQUARED UP. THE AO ASKED THE ASSES SEE TO PRODUCE THE REMAINING TWO PARTIES BUT THE ASSESSEE FAILED TO PRODUCE THES E PARTIES. DESPITE THE VARIOUS EFFORTS OF THE AO IT WAS RECORDED THAT HE COULD NOT LOCATE THESE TWO PARTIES. EVEN THE ASSESSEE ITSELF WAS NOT ABLE TO LOCATE THESE TWO PARTIES OR TO PRODUCE THESE PARTIES BEFORE THE AO. ACCORDINGLY THE AO REPEATED THE ADDITION OF RS. 51,20,000/- AS MADE IN THE ORIGINAL ASSESSMENT. BEFORE THE CIT(A) THE ASSESSEE FILED FR ESH EVIDENCE IN THE FORM OF FRESH 4 ITA NO.3077/M/10 CONFIRMATION FROM THESE THREE PARTIES. THE CIT(A) A DMITTED THE ADDITIONAL EVIDENCE AND REFERRED THE SAME TO THE AO FOR VERIFICATION AND CO MMENTS. THE AO SUBMITTED ITS REMAND REPORT DATED 24/2/2010. THE AO IN THE REMAND PROCEEDINGS DOUBTED THE VERACITY OF THE CONFIRMATIONS PRODUCED BY THE ASSES SEE IN VIEW OF THE FACT THAT DESPITE THE BEST EFFORTS OF THE AO THE SUMMONS COULD NOT BE SERVED ON THESE TWO PARTIES AND THE 3 RD ONE DID NOT APPEAR DURING THE SET ASIDE ASSESSMENT PROCEEDING DESPITE SERVICE OF SUMMONS FOR APPEARANCE BEFORE THE AO. THUS THE A O IN HIS REMAND REPORT WAS OF THE VIEW THAT THE CONFIRMATIONS ARE NOT GENUINE. TH US THE AO CONCLUDED IN THE REMAND REPORT THAT THE ASSESSEE FAILED TO ESTABLISH THAT T HE AMOUNT RECEIVED FROM THESE THREE COMPANIES WERE SQUARED UP BY MAKING THE PAYMENT FRO M NATH GROUP OF COMPANIES. AFTER CONSIDERING THE REMAND REPORT THE CIT(A) FURT HER OBSERVED THAT THE ISSUE REQUIRES TO BE ANALYZED IN THE LIGHT OF THE DOCUMENTS OF AGR EEMENT FOR TAKING OVER THE ASSESSEE COMPANY BY NATH GROUP. ADMITTEDLY, THERE WAS A WRIT TEN AGREEMENT INDEED AS TO WHICH ASSESSEE COMPANY WAS TAKEN OVER BY NATH GROU P AND CIT(A) ASKED THE ASSESSEE TO PRODUCE A COPY OF THE AGREEMENT WHICH W AS NOT PRODUCED BY THE ASSESSEE. ACCORDINGLY, THE CIT(A) HAS CONFIRMED THE ADDITION MADE BY AO. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE ASSESSEE PRODUCED THE CONFIRMATION FROM NATH INDUSTRIAL ELECTRICAL LTD . FOR THE PAYMENT OF RS.17,20,000/-, TO M/S. MEDITERIAN INVESTMENT PVT. LTD.THE ASSESSEE ALSO PRODUCED A LEDGER COPY IN THE BOOKS OF NATH GROUP AS WELL AS CONFIRMATION FROM M /S. MEDITERIAN INVESTMENT PVT. LTD. FOR RECEIPT OF RS.17,20,000/- APART FROM THIS THE B ANK STATEMENT OF M/S. MEDITERIAN INVESTMENT PVT. LTD. AS WELL AS LEDGER ACCOUNT OF T HE ASSESSEE IN THE BOOKS AT M/S. MEDITERIAN INVESTMENT PVT. LTD. WAS ALSO PRODUCED. SIMILARLY, THE PAYMENT OF RS. 17.00 LACS TO M/S. BLUE LAGOON INVESTMENT LTD. WAS CONFIR MED BY NATH PULP & PAPER LTD. AND THE ASSESSEE FILED CONFIRMATION FROM NATH PULP & PA PER REGARDING PAYMENT OF RS.1.21 CRORES INCLUDING PAYMENT OF RS.17.00 LACS TO M/S. B LUE LAGOON INVESTMENT LTD. THE ASSESSEE PRODUCED LEDGER ACCOUNT OF M/S. BLUE LAGOO N INVESTMENT LTD. IN THE BOOKS OF NATH PAPER & PULP LTD., BANK STATEMENT OF NATH PULP & PAPER LTD. OF THE ACCOUNT IN SBI, CONFIRMATION DATED 18/2/2010 AND 14/01/2010 AN D BANK STATEMENT OF M/S. BLUE 5 ITA NO.3077/M/10 LAGOON WITH BANK OF BARODA. AS REGARDS THE PAYMENT OF RS.17.00 LACS TO TRUE BELL HOLDING AND IMPEX PVT. LTD. THE LD. AR HAS SUBMITTE D THAT THE ASSESSEE SUBMITTED THE CONFIRMATION FROM NATH PAPER & PULP LTD. REGARDING PAYMENT OF RS.1.29 CRORES INCLUSIVE OF RS.17.00 LACS TO M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. FURTHER LEDGER COPY OF M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. IN THE BOO KS OF NATH PAPER & PULP LTD., BANK STATEMENT OF NATH PAPER & PULP LTD. IN SBI AND ACKN OWLEDGEMENT OF FILING OF RETURN WERE FURNISHED BEFORE THE AUTHORITIES BELOW. THE LD . AR HAS FURTHER SUBMITTED THAT THE SUMMONS ISSUED BY THE AO TO M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. WAS AT WRONG ADDRESS AS IT IS CLEAR FROM THE RETURN OF INCOME OF M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. FOR THE ASSESSMENT YEAR 2003-04. THEREFORE, TH E SAME COULD NOT BE SERVED BECAUSE IT WAS ISSUED AT INCORRECT ADDRESS. THE LD. AR SUBMITTED THAT AS PER DIRECTIONS OF THIS TRIBUNAL THE AO WAS TO VERIFY ONLY ONE ASPE CT, I.E., WHETHER THE PAYMENT OF LARGER AMOUNT BY NATH PULP & PAPER LTD. TO BLUE LAG OON LTD. AND M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. INCLUDES THE PAYMENT OF RS.17.00 LACS EACH W.R.T. REPAYMENT OF APPLICATION MONEY ON BEHALF OF THE ASSESSEE. THE A SSESSEE PRODUCED SUFFICIENT EVIDENCE TO SHOW THAT THE SAID PAYMENTS BY NATH PUL P & PAPER INCLUDES THE PAYMENT OF RS.17.00 LACS EACH TO M/S. BLUE LAGOON INVESTMENT PVT. LTD. AND M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. HOWEVER, THE AO HAS FAILE D TO PROVE OTHERWISE. HE REFERRED TO THE VARIOUS DOCUMENTS PRODUCED DURING THE REMAND PROCEEDINGS AND SUBMITTED THAT THE CONFIRMATION FROM NATH GROUP AS WELL AS FROM AL L THE THREE APPLICANTS WERE PRODUCED BY THE ASSESSEE TO PROVE THAT THE AMOUNT W AS RECEIVED BACK BY THESE THREE APPLICANT COMPANIES FROM NATH GROUP OF COMPANIES. T HE BANK STATEMENT OF NATH INDUSTRIAL AND NATH PULP & PAPER LTD. PROVED THE PA YMENT TO THESE THREE COMPANIES THROUGH THE RESPECTIVE CHEQUES. BOTH THE PARTIES TH E PAYER AND PAYEE CONFIRMED THE FACT THAT THE AMOUNT PAYABLE BY THE ASSESSEE, BEING REFUND OF SHARE APPLICATION MONEY, WAS PAID BY NATH INDUSTRIAL & NATH PAPER & PULP LTD . THE LD. AR HAS ALSO FORCEFULLY CONTENDED THAT THE AO HAS NOT PROVED THE FACT THAT THE PAYMENT IN QUESTION WAS MADE BY THE ASSESSEE AND THEREFORE WHEN THE ASSESSEE DID NOT PAY THE AMOUNT IN QUESTION THEN THE PROVISIONS OF SECTION 69 CANNOT BE INVOKED . IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE JUDGMENT OF HONBLE ALLAHABD HIGH COURT IN THE CASE OF CIT VS. SALEK 6 ITA NO.3077/M/10 CHAND AGARWAL [2008](300 ITR 426)(ALL.) AND SUBMITTED THAT THE HON'BLE HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY MATERIAL WHICH COULD LINK THE ADVANCE/DEPOSIT BY THE ASSESSEE AND WHEN THE ASSESSEE DENIED MAKING AN Y SUCH ADVANCE/DEPOSIT WITH THE OTHER PARTIES THE PROVISIONS OF SECTION 69 OF THE I NCOME TAX ACT WERE NOT ATTRACTED. 4. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT DESPITE THE MATTER WAS SET ASIDE BY THIS TRIBUNAL FOR FURTHER VERIFICATION, TH E ASSESSEE FAILED TO PRODUCE ANY MATERIAL OR EVIDENCE BEFORE THE AO TO SHOW THAT THE PAYMENT OF RS.51,20,000/- WAS PART OF THE LARGER PAYMENT MADE BY NATH GROUP OF CO MPANIES TO THESE THREE APPLICANTS. HE FURTHER CONTENDED THAT THE ONUS WAS ON THE ASSES SEE TO ESTABLISH THAT THE PAYMENTS WERE MADE BY NATH GROUP OF COMPANIES ON BEHALF OF T HE ASSESSEE, BUT THE ASSESSEE FAILED TO PROVE THE SAME. HE FURTHER CONTENDED THAT THE ASSESSEE HAS NOT SHOWN IN ITS BOOKS OF ACCOUNT ANY LOAN OR LIABILITY IN THE NAME OF NATH INDUSTRIAL CHEMICAL LTD. AND NATH PULP & PAPER LTD. ON ACCOUNT OF PAYMENT TOWARD S REFUND OF APPLICATION MONEY ON BEHALF OF THE ASSESSEE . FURTHER, THE CIT(A) SPECIF ICALLY ASKED THE ASSESSEE TO PRODUCE THE AGREEMENT FOR TAKING OVER THE ASSESSEE COMPANY BY NATH GROUP AND UNDERTAKING THE LIABILITY OF PAYMENT TO THESE THREE SHARE APPLI CANT COMPANIES. THE ASSESSEE HAS FAILED TO SHOW HOW THE ALLEGED PAYMENT BY NATH GROU P IS TAKEN INTO ACCOUNT OF THE ASSESSEE COMPANY. FURTHER, THE ASSESSEE COMPANY SHO WED OUTSTANDING OF THE SAID PAYMENT WHICH GOES TO PROVE THAT THE PAYMENT WAS MA DE FROM UNEXPLAINED SOURCES. HE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 4.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE CONTROVERSY OF REPAYMENT OF APPLICATION MONEY OF RS.51,20,000/- TO THREE SHARE APPLICANTS AROSE FROM THE FACT THAT THESE THR EE SHARE APPLICANTS HAVE SHOWN THE REFUND OF THE APPLICATION MONEY RECEIVED IN THE FIN ANCIAL YEAR 1992-93 WHEREAS THE ASSESSEE HAS BEEN SHOWING THE SAID AMOUNT OF RS.51, 20,000/- OUTSTANDING PAYABLE TO THESE THREE COMPANIES AS UNDER :- 1. M/S. BLUE LAGOON INVESTMENT PVT. LTD. RS.17,00,000 /- 2. M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. RS.17,00, 000/- 7 ITA NO.3077/M/10 3. M/S. MEDITERIAN INVESTMENT PVT. LTD. RS.17,20,000/ - 4.2 THIS FACT WAS NOTED BY THE AO DURING THE ASSESS MENT PROCEEDINGS OF THE ASSESSMENT YEAR 1997-98. THUS IT IS CLEAR THAT IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE THE AMOUNT REMAINED AS UNPAID AND OUTSTANDING BUT A T THE SAME TIME THE COUNTER PARTIES SHOWN THE RECEIPT OF REFUND OF SAID APPLICA TION MONEY IN THE FY 1992-93 ITSELF. THERE IS NO DISPUTE THAT THESE THREE PARTIES RECEIV ED THEIR MONEY AND SQUARED ALL THEIR ACCOUNTS RECEIVABLE FROM THE ASSESSEE . THE ASSESSE E HAS ALSO NOT DISPUTED THAT THE APPLICATION MONEY WAS REFUNDED TO THESE TWO PARTIES IN THE FINANCIAL YEAR 1992-93 ITSELF. HOWEVER, THE ASSESSEE CLAIMED THAT THE ASSE SSEE COMPANY WAS TAKEN OVER BY NATH GROUP IN THE YEAR 1992-93 AND THE LIABILITIES REGARDING RE-PAYMENT OF APPLICATION MONEY TO THESE THREE COMPANIES WERE DISCHARGED THRO UGH NATH GROUP OF COMPANIES. THE MATTER EARLIER TRAVELLED TO THIS TRIBUNAL AND V IDE ORDER DATED 2/7/06 THE TRIBUNAL RESTORED THE ISSUE TO THE RECORD OF THE AO IN PARA -3 AS UNDER :- 3. BOTH THE PARTIES HAVE BEEN HEARD AT LENGTH. THE RE IS NO DISPUTE THAT SUM OF RS.51.20 LACS WERE RECEIVED BY THE ASSESSEE AS S HARE APPLICATION MONEY FROM THE AFORESAID THREE COMPANIES. IT IS ALSO NOT IN DI SPUTE THAT THE BUSINESS OF THE ASSESSEE WAS TAKEN OVER BY NATH GROUP OF COMPANIES. FURTHER, THE BANK STATEMENT AND THE BOOKS OF ACCOUNTS MAINTAINED BY T HE NATH GROUP OF COMPANIES SHOWED THAT CERTAIN PAYMENTS HAVE BEEN MA DE BY CHEQUES TO THE SAID THREE COMPANIES. THE ENQUIRIES MADE BY THE AO ALSO REVEALS THAT THE AMOUNTS PAID BY THOSE COMPANIES TO THE ASSESSEE WER E SQUARED UP ON ACCOUNT OF PAYMENTS MADE BY NATH GROUP OF COMPANIES. HOWEVE R, THE LD. DR HAS DRAWN OUR ATTENTION TO THE FACT THAT NATH GROUP OF COMPAN IES HAD SHOWN MUCH LARGER AMOUNT TO THOSE COMPANIES THAN THE DUE FROM THE ASS ESSEE AND, THEREFORE, IT IS NOT CLEAR WHETHER THOSE COMPANIES HAD RECEIVED BACK THE SHARE APPLICATION MONEY AGAINST THESE CHEQUES OR BY DIFFERENT MODE OF PAYMENT. IN OUR OPINION, THIS ASPECT REQUIRES VERIFICATION SINCE NO EVIDENCE WAS OBTAINED BY/OR PRODUCED BEFORE THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO FOR LIMITED PURPOSE OF VERIFYING THE AFORESAID ASPECT. IT IS FOUND THAT THOSE COMPANIES HAD SQUARED UP THE ACCOUNTS OF THE ASSESSEE AGAINST THE PAYMENTS MADE BY CHEQUES BY NATH GROUP OF COMPANIES, THEN THE AO WOULD NOT MAKE ANY ADDITION ON THIS ACCOUNT. ON THE OTHER HAND, IF IT IS FOUND THAT THOSE COMPANIES HAD SQUARED UP THE ASSES SEES ACCOUNT EITHER ON ACCOUNT OF CASH RECEIPT OR AGAINST SOME OTHER PAYME NTS, THEN WE WOULD PASS APPROPRIATE ORDER IN THIS REGARD. 8 ITA NO.3077/M/10 4.3 THE TRIBUNAL HAS ALSO OBSERVED IN THE EARLIER R OUND OF LITIGATION THAT THERE IS NO DISPUTE THAT SUM OF RS.51.01 LACS WERE RECEIVED BY THE ASSESSEE AS SHARE APPLICATION MONEY FROM THE AFORESAID THREE COMPANIES AND THE AM OUNTS WERE SQUARED UP BY THESE THREE COMPANIES ON ACCOUNT OF PAYMENT MADE BY NATH GROUP OF COMPANIES. SO FAR AS THE PAYMENT MADE BY NATH INDUSTRIAL CHEMICAL LTD. O F RS.17,20,000/-; AND BY NATH PAPERS & PULP LTD. OF RS.1.20 CRORES AS WELL AS RS .1.29 CRORES RESPECTIVELY TO THESE THREE COMPANIES, THE SAME IS NOT DISPUTED AS THE AS SESSEE HAS PRODUCED THE RELEVANT RECORD CONSISTING OF THE BANK STATEMENT OF NATH GRO UP OF COMPANIES AND THE RESPECTIVE COMPANIES HAVE ALSO ACCEPTED THE SAID PAYMENT AND I T WAS ALSO RECORDED IN THEIR BOOKS OF ACCOUNT AND IN THEIR BANK ACCOUNT. THE TRIBUNAL SET ASIDE THIS ISSUE FOR A LIMITED PURPOSE TO VERIFY WHETHER THE LARGER PAYMENT OF RS. 1.21CRORES AND RS.1.29 CRORES BY NATH PAPERS & PULP LTD. TO M/S. BLUE LAGOON INVEST MENT PVT. LTD. AND TRUE BELL HOLDING & IMPEX PVT. LTD. RESPECTIVELY INCLUDES PAY MENT OF RS.17.00 LAKHS EACH IN RESPECT OF SHARE APPLICATION MONEY. THUS THE LIMITE D ENQUIRY WAS DIRECTED TO BE CONDUCTED BY THE AO TO FIND OUT WHETHER THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THESE THREE COMPANIES THROUGH THESE CHE QUES OF LARGER PAYMENT OR BY DIFFERENT MODE OF PAYMENT. DURING THE SET ASIDE PR OCEEDING BEFORE THE AO NONE OF THE PARTIES GAVE ANY SATISFACTORY REPLY OR CONFIRMATION IN THIS RESPECT THAT THE RESPECTIVE AMOUNT FOR SHARE APPLICATION MONEY WAS RECEIVED FRO M NATH GROUP THROUGH THESE CHEQUES AS ALLEGED BY THE ASSESSEE. WE NOTE THAT TH E AO ISSUED SUMMON TO THESE THREE COMPANIES AND IN RESPONSE ONLY M/S. BLUE LAG OON INVESTMENT PVT. LTD. APPEARED BEFORE AO THROUGH ITS CA. THE SUMMONS ISSUED TO M/S . MEDITERIAN INVESTMENT PVT. LTD. AND M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. COULD NOT BE SERVED. WE FIND THAT THE SUMMON ISSUED TO M/S. TRUE BELL HOLDING & IMPEX PVT . LTD. WAS AT A DIFFERENT ADDRESS THAN THE ADDRESS GIVEN IN THE ACKNOWLEDGEMENT OF RE TURN OF INCOME FILED FOR ASSESSMENT YEAR 2004-05. 4.4 WE FURTHER NOTE THAT IN THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) R.W. 147 THE AO HAS STATED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1997-98 THE SUMMONS WERE ISSUED TO ALL THESE T HREE COMPANIES AND THEY HAVE 9 ITA NO.3077/M/10 SUBMITTED THE FINAL ACCOUNTS FROM THE ASSESSMENT YE AR 1992-93 TO 1997-98, FROM WHERE THE AO FOUND THAT THESE THREE COMPANIES HAVE SHOWN REFUND OF SHARE APPLICATION MONEY DURING FY 1992-93 ITSELF. THEREFORE, IT WAS N OT THE CASE OF THE AO THAT THESE PARTIES WERE NOT IN EXISTENCE. FURTHER, THE AO HAS PROCEEDED TO VERIFY THE FACT AS DIRECTED BY THE TRIBUNAL ONLY FROM THE RECIPIENT TH REE COMPANIES AND HAS NOT TAKEN ANY STEP TO VERIFY THIS FACT FROM THE NATH GROUP OF COM PANIES WHICH HAVE MADE THIS PAYMENT. THOUGH THE ENQUIRY CONDUCTED BY THE AO COU LD NOT REACH A LOGICAL CONCLUSION, HOWEVER, THE ASSESSEE PRODUCED ALL THE RELEVANT REC ORDS AS WELL AS CONFIRMATION FROM ALL THE RELEVANT PARTIES IN RESPECT OF THE REPAYMENT OF THE SHARE APPLICATION MONEY TO THESE THREE PARTIES, THE DETAILS OF WHICH IS GIVEN BY AO IN PARA-3 OF THE ASSESSMENT ORDER PASSED PURSUANT TO DIRECTION OF THE TRIBUNAL ARE A S UNDER :- SR.NO. NAME OF THE COMPANY PAYING NAME OF THE COMPANY RECEIVING AMOUNT CHEQUE NO./DT. BANK/BRANCH 1. NATH INDUSTRIAL CHEMICAL LTD. MEDITARIAN INV. PVT. LTD. 17,00,000 20,000 2993/17.10.92 2994 -DO- BANK OF INDIA, BACKBAY RECLAMATION BRANCH 2. NATH PAPERS AND PULP LTD. BLUE LAGOO N INV. LTD. 1,29,00,000 418085/2.7.92 BANK OF INDIA, BACKBAY RECLAMATION BRANCH 3. NATH PAPERS AND PULP LTD. TRUE BELL HOLDINGS & IMPEX PVT. LTD. 1,21,00,000 418086/2.7.92 BANK OF INDIA, BACKBAY RECLAMATION BRANCH 4.5 EVEN THE TRIBUNAL IN THE EARLIER ROUND OF LITIGA TION HAS NOTED THE DETAILS OF THE ALLEGED PAYMENT AT PAGE-2 OF THE ORDER AS UNDER :- I. M/S. NATH INDUSTRIAL CHEMICAL LTD. HAS PAID BY CHEQUE NO.2993 FOR RS.17,00,000/- AND CHEQUE NO.2994 FOR RS.20,000/- B OTH DATED 17.10.1992 ON BANK OF BARODA, NARIMAN POINT BRANCH TO M/S. MEDIT ERIAN INVESTMENT PVT. LTD. II. SIMILARLY M/S. NATH PAPER AND PULP MILLS LTD., HAD ISSUED CHEQUE NO.418085 DATED 2.7.1992 FOR RS.1,29,00,000/- DRAWN ON STATE BANK OF INDIA, BACKBAY RECLAMATION BRANCH, IN FAVOUR OF BLUE LAGOO N INVESTMENT LTD., WHICH INCLUDED A SUM OF RS.17,00,000/- PAID ON BEHALF OF RAMA TECHNO PAPER INDUSTRIES LTD. 10 ITA NO.3077/M/10 III. M/S. NATH PAPER AND PULP MILLS LTD., HAD ALSO ISSUED ANOTHER CHEQUE BEARING NO.418086 DATED 2.7.1992 FOR RS.1,21,00,000 /- DRAWN ON STATE BANK OF INDIA, BACKBAY RECLAMATION BRANCH, IN FAVOUR OF M/S . TRUE BELL HOLDING & IMPEX PVT. LTD., WHICH INCLUDED A SUM OF RS.17,00,000/- P AID ON BEHALF OF RAMA TECHNO PAPERS & ALLIED INDUSTRIES LTD. 4.6 AS WE HAVE DISCUSSED ABOVE THAT THE PAYMENT OF THE ABOVE SAID LARGER AMOUNTS IS NOT IN DISPUTE AND THE ONLY ASPECT WHICH WAS TO BE EXAMINED BY THE AO WAS WHETHER THE AMOUNTS OF RS.17,20,000/- AND RS.17.00 LACS AND RS.17.00 LACS RESPECTIVELY REFUNDED TO THESE THREE COMPANIES WERE PART OF THES E LARGER PAYMENTS. THE ASSESSEE HAS FURNISHED THE LEDGER ACCOUNT IN THE BOOKS OF NA TH INDUSTRIAL CHEMICAL LTD. TO SHOW THAT THE AMOUNT OF RS.17.20,000/- PAID THROUGH CHEQ UES TO M/S. MEDITERIAN INVESTMENT PVT. LTD. WAS DEBITED IN THE ACCOUNTS OF THE ASSESS EE . APART FROM THIS A CONFIRMATION FROM NATH INDL. CHEMICAL LTD. WAS ALSO PRODUCED BY THE ASSESSEE TO SHOW PAYMENT OF RS.17,20,000/- TO M/S. MEDITERIAN INVESTMENT PVT. L TD. ON BEHALF OF THE ASSESSEE . WE FIND THAT THIS AMOUNT OF RS.17,20,000/- WAS CREDITE D IN THE BANK ACCOUNT OF M/S. MEDITERIAN INVESTMENT PVT. LTD. THROUGH CHEQUE. THE ONLY DIFFERENCE IS THAT THE ENTIRE AMOUNT OF RS.17,20,000/- WAS SHOWN AS RECEIVED THRO UGH ONE CHEQUE WHEREAS IN THE DETAILS OF PAYMENT IT WAS CLAIMED TO HAVE BEEN MADE THROUGH TWO SEPARATE CHEQUES OF RS.17.00 LACS AND RS.20,000/- RESPECTIVELY. SINCE B OTH CHEQUES WERE FROM ONE PARTY AND DRAWN ON SAME BANK THEREFORE IT IS POSSIBLE THA T INSTEAD OF SHOWING TWO ENTRIES THE TOTAL AMOUNT OF RS.17,20,000/- WAS SHOWN UNDER SING LE ENTRY. SIMILARLY, IN THE CASE OF M/S. BLUE LAGOON INVESTMENT PVT. LTD. AND M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. THE PAYMENT OF RS.17.00 LACS EACH WAS CONFIRMED BY NATH PAPERS & PULP LTD. THROUGH CHEQUE PAYMENT OF LARGER AMOUNT OF RS.1.21 CRORES A ND RS.1.29 CRORES. THE ASSESSEE HAS ALSO PRODUCED THE CONFIRMATION FROM NATH PAPER & PULP LTD. AS WELL AS THE CONFIRMATION FROM M/S. BLUE LAGOON INVESTMENT PVT. LTD., WHEREIN IT HAS BEEN CONFIRMED THAT THE AMOUNT OF RS.17.00 LACS WAS RECE IVED AS PART OF THE LARGER AMOUNT OF RS. 1.21 CRORES. FROM THE LEDGER ACCOUNT OF M/S. BLUE LAGOON INVESTMENT PVT. LTD. IN THE BOOKS OF NATH PULP & PAPER LTD. A SEPARATE E NTRY OF RS.17.00 LACS HAS BEEN MADE IN THE NAME OF THE ASSESSEE. THEREFORE, IT IS CLEA R THAT THE PAYMENT OF RS.1.21 CRORES 11 ITA NO.3077/M/10 TO M/S. BLUE LAGOON INVESTMENT PVT. LTD. INCLUDES P AYMENT OF RS.17.00 LACS ON BEHALF OF THE ASSESSEE. SIMILARLY, IN THE LEDGER ACCOUNT O F M/S. TRUE BELL HOLDING & IMPEX PVT. LTD. IN THE BOOKS OF NATH PAPERS & PULP LTD. A SEP ARATE ENTRY OF RS.17.00 LACS HAS BEEN SHOWN AS TRANSFER TO ASSESSEE. 4.7 THEREFORE, BY CONSIDERING THE RELEVANT RECORD P RODUCED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO PROVE THAT THE PAYMENT IN QUESTION ON ACCOUNT OF REFUND OF SHARE APPLICATION MONEY TO THE SE THREE PARTIES HAVE BEEN MADE BY NATH INDUSTRIAL CHEMICAL LTD. AND NATH PAPER & PULP . THOUGH THE CIT(A) HAS RAISED A QUESTION ABOUT THE TAKEOVER AGREEMENT TO VERIFY WHE THER LIABILITY OF REPAYMENT WAS PART OF THE TAKEOVER AGREEMENT OR NOT HOWEVER, IT I S PERTINENT TO NOTE THAT WHEN THE ASSESSEE HAS PRODUCED THE RELEVANT RECORD TO ESTABL ISH THAT THE PAYMENT WAS MADE BY NATH GROUP OF COMPANIES THEN THE TAKEOVER AGREEMENT WILL NOT CHANGE THE FACT OF PAYMENT MADE BY THESE COMPANIES. ACCORDINGLY, IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ASSESSEE HAS PROVED THE FACT THAT THE REPAYMENT OF APPLICATION MONEY OF RS.51,20,000/- WAS MADE TO THESE THREE COM PANIES THROUGH NATH GROUP OF COMPANIES AND THEREFORE, ADDITION MADE BY THE AO OF THIS ACCOUNT IS NOT SUSTAINABLE AND ACCORDINGLY DELETED. 4.8 BEFORE PARTING WITH THE ISSUE WE WOULD LIKE TO CONSIDER THE JUDGMENT RELIED UPON BY THE LD. AR IN THE CASE OF SALEK CHAND AGARWAL (3 00 ITR 426)(ALL.) (SUPRA). IN THE SAID CASE DURING THE SEARCH OF THIRD PARTY A DOCUME NT WAS SEIZED WHICH SHOWS THREE CREDIT ENTRIES IN THE NAME OF THE ASSESSEE. THE ASS ESSEE DENIED SUCH ADVANCE OR DEPOSIT WITH THE SAID PARTY. THE HON'BLE HIGH COURT AFTER TAKING NOTE OF THE FACT THAT NO MATERIAL WAS FOUND WHICH COULD LINK THE ADVANCE/DEP OSIT OF RS.2.20 LACS TO THE ASSESSEE AND THE ASSESSEE HAD DENIED TO MAKE ANY SUCH ADVANC E OR DEPOSIT WITH THE SAID FIRM AND ACCORDINGLY HELD THAT PROVISIONS OF SECTION 69 ARE NOT ATTRACTED. IN THE CASE AT HAND THE RECEIPT OF APPLICATION MONEY BY THE ASSESSEE AN D REPAYMENT OF THE APPLICATION MONEY TO THE SHARE APPLICANTS IS NOT IN DISPUTE. TH EREFORE, THE DECISION RELIED UPON BY THE LD. AR IS NOT APPLICABLE IN THE FACTS OF THE PR ESENT CASE. ONCE THE REPAYMENT IS NOT 12 ITA NO.3077/M/10 IN DISPUTE THEN THE PROVISIONS OF SECTION 69 IS ATT RACTED IF THE SOURCE OF REPAYMENT IS NOT EXPLAINED BY THE ASSESSEE. WE HAVE ALREADY GIVE N THE FINDING THAT THE ASSESSEE HAS PROVED THE REPAYMENT OF APPLICATION MONEY THROUGH N ATH GROUP OF COMPANIES. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6/2/2015 ( %&' ! ) *' + 6/2/2015 ,# SD/- SD/- ( SANJAY ARORA ) ( VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER !-# MUMBAI; *' DATED 6/2/2015 . ' . ./ JV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , !' / DR, ITAT, MUMBAI 6. #$ %' / GUARD FILE. & & & & / BY ORDER, & //TRUE COPY// ' ' ' ' / &( &( &( &( ) ) ) ) (DY./ASSTT. REGISTRAR) , !' / ITAT, MUMBAI.