ITO, New Delhi V. M/s. Rajgarhia Holdings. Ltd, New Delhi

ITA 3123/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3946 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 10-05-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 07-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: O P SAPRA
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NOS. 3123 TO 3127(DEL)2009 ASSESSMENT YEARS: 1997-98 TO 2001-02 INCOME TAX OFFICER, M/S. RAJGA RHIA HOLDINGS LTD., WARD 15(2), NEW DELHI. V. 702, AKASHDEEP BLDG. BARAKHAMBA ROAD, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. ANUSHA KHURANA, SR. DR RESPONDENT BY: S/SHRI O .P.SAPRA & SANDEEP SAPRA, ADV. ORDER PER A.D. JAIN, J.M . ITA NO. 3123(DEL)2009 : THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 199 7-98, TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ER RED IN DELETING THE ADDITION OF ` 1,22,117/- BEING INTEREST ACCRUED ON LOAN GIVEN BY THE ASSESSEE WITHOUT PROPER APPRECIATION OF THE FAC TS OF THE CASE, IN PARTICULAR COPY OF ACCOUNT OF THE PARTY SUBMITTED B Y THE ASSESSEE BEFORE THE COURT, CLAUSE 6 OF LOAN AGREEMENT DATED 30.07.1996 AND PARA 8 OF SUIT OF RECOVERY FILED BY THE ASSESSEE IN THE COURT OF LAW. ITA NOS 3123 TO 3127(DEL)09 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ` 11,37,000/- MADE U/S 68 OF THE I.T. ACT IGNORING THE FACT THAT BOOKS OF ACCOUNT COULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE AO IN SPITE OF A NUMBER OF OPPORTUNITIES PROVIDED DURING THE COURSE OF CURRENT ASSESSMENT PROCEEDINGS UNDER SECTIONS 254/143(3) AS WELL AS EA RLIER ASSESSMENT PROCEEDINGS UNDER SECTIONS 148/143(3). 2. APROPOS GROUND NO.1, THE DEPARTMENT CONTENDS THA T THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 1,22,117/- BEING INTEREST ACCRUED ON LOAN GIVEN BY THE ASSESSEE TO M/S.MAGNI RAM BAIJ NA TH (HUF), AMOUNTING TO ` 50,00,000/-. 3. FROM THE COPY OF ACCOUNT OF M/S.MAGNI RAM BAIJ N ATH (HUF), AS SUBMITTED BY THE ASSESSEE COMPANY BEFORE THE AO, TH E AO OBSERVED THAT INTEREST INCOME OF ` 1,22,117/- HAD ESCAPED ASSESSMENT FOR ASSESSMENT YE AR 1997-98, AS SCHEDULE A OF LOANS AND ADVANCES FORMIN G PART OF THE BALANCE SHEET FOR THE PERIOD ENDING 31.3.97, IT HAD SHOWN L OANS OF ` 50,10,604/- DUE AGAINST M/S.MAGNI RAM BAIJ NATH (HUF), AS AGAINST A DEBIT BALANCE OF ` 51,32,722/-, AS PER THE ACCOUNT OF THE PARTY SUBMIT TED BEFORE THE COURT ; AND THAT THE BALANCE OF ` 51,32,722/- HAD BEEN WORKED OUT AFTER GIVING CREDIT TO THE PARTY ON ACCOUNT OF INTEREST RECEIVED DURING TH E FINANCIAL YEAR. IT WAS THUS, THAT THE AO CONCLUDED THAT THE INCOME TO THE TUNE OF ` 1,22,117/- HAD ITA NOS 3123 TO 3127(DEL)09 3 ESCAPED ASSESSMENT. THIS AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE, BEING INTEREST ACCRUED ON LOANS GIVEN. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THIS ADDITION. 5. AGGRIEVED, THE DEPARTMENT IS IN APPEAL. 6. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS C ONTENDED THAT WHILE DELETING THE ADDITION CORRECTLY MADE, THE LD. CIT(A ) FAILED TO APPRECIATE THE COPY OF ACCOUNT OF THE PARTY SUBMITTED BY THE ASSES SEE, CLAUSE SIX OF THE LOAN AGREEMENT DATED 30.7.96 AND PARA 8 OF THE SUIT OF RECOVERY FILED BY THE ASSESSEE; AND THAT WHEREAS IN THE BALANCE SHEET OF THE ASSESSEE FOR THE PERIOD ENDING 31.3.97, IT HAD SHOWN LOAN OF ` 50,10,604/- DUE AGAINST M/S.MAGNI RAM BAIJ NATH (HUF), ACCORDING TO THE ACCOUNT OF TH E PARTY, THERE WAS A DEBIT BALANCE OF ` 51,32,722/-. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 8. HAVING HEARD THE PARTIES AND PERUSED THE MATERIA L ON RECORD WITH REGARD TO THIS ISSUE, WE FIND THAT THE ADDITION HAD BEEN MADE SINCE AS PER THE AO, THE ASSESSEE HAD FILED WORKING BEFORE THE COURT , IN WHICH, ` 51,32,722/- HAD BEEN SHOWN AS DUE FROM M/S.MAGNI RAM BAIJ NATH (HUF), AS ON 31.3.97. AS AGAINST THIS, AS PER THE BALANCE SHEE T OF THE ASSESSEE, A SUM OF ONLY ` 50,10,604/- WAS DUE AS ON 31.3.97. THE DIFFERENCE IN THE AMOUNT DUE ITA NOS 3123 TO 3127(DEL)09 4 AS ON 31.3.97 CAME TO ` 1,32,722/- AND NOT ` 1,22,117/-. THIS IS SO, SINCE AS PER THE BALANCE SHEET AND SCHEDULE 9 THERETO, ONLY ` 50,00,000/- WAS DUE FROM M/S.MAGNI RAM BAIJ NATH (HUF) AS ON 31.3.97. FURTHER, THE AMOUNT OF ` 1,32,722/- REPRESENTED INTEREST INCOME, OUT OF WHI CH, THE ASSESSEE HAD FURTHER RECONCILED AN AMOUNT OF ` 1,25,000/-, AS PERTAINING TO INTEREST INCOME FOR THE MONTH OF MARCH, 97. THIS HAD BEEN SHOWN B Y THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, WHICH WAS AVAILABLE F ROM THE COPY OF INTEREST RECEIVED ACCOUNT. AS PER THE WORKING FILED IN THE COURT, ON THE OTHER HAND, INTEREST OF ` 1,25,000/- FROM MARCH, 97 HAD BEEN SHOWN AS RECOVE RABLE UPTO 31.3.97. IT WAS SHOWN AS RECEIVED IN APRIL, 97, AC CORDING TO THE WORKING FILED IN THE COURT. FROM THESE FACTS, THE LD. CIT (A) RIGHTLY OBSERVED THAT THERE WAS NO DISCREPANCY OF ` 1,25,000/-. THE BALANCE DIFFERENCE OF ` 7722/- ON ACCOUNT OF INTEREST, IT IS SEEN, WAS CLAIMED BY THE ASSESSEE BEFORE THE HONBLE DELHI HIGH COURT. HOWEVER, SINCE THE MATT ER WAS SUB JUDICE THE LEARNED COUNSEL FOR THE ASSESSEE STATES AT THE BAR THAT IT IS SUB JUDICE EVEN AS ON BEFORE US, THE AMOUNT OF ` 7722/- COULD NOT BE TAXED ON A NOTIONAL BASIS. UNDISPUTEDLY, M/S.MAGNI RAM BAIJ NATH (HUF) ISSUED CHEQUES AGGREGATING TO ` 11,25,000/- ON ACCOUNT OF INTEREST PAYABLE TO THE A SSESSEE AGAINST LOAN OF ITA NOS 3123 TO 3127(DEL)09 5 ` 50,00,000/-. THE ASSESSEE HAD SHOWN THIS AS INTER EST INCOME IN ITS BOOKS OF ACCOUNT FOR THE PERIOD UNDER CONSIDERATION. 9. IN VIEW OF THE ABOVE, FINDING NO ERROR WITH THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF ` 1,22,117/-, WE HEREBY CONFIRM THE SAME. 10. GROUND NO.1 IS, ACCORDINGLY, REJECTED. 11. ACCORDING TO GROUND NO.2, THE LD. CIT(A) HAS ER RED IN DELETING THE ADDITION OF ` 11,37,000/- MADE U/S 68 OF THE I.T. ACT. 12. THIS AMOUNT OF ` 11,37,000/- REPRESENTED SHARE APPLICATION MONEY. THE AO MADE THE ADDITION, OBSERVING THAT APROPOS TH IS AMOUNT, THE ASSESSEE HAD FILED CONFIRMATION FROM M/S. RAJGARHIA SONS, CO PY OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FROM M/S. RAJGARHIA SONS AN D OTHER MATERIAL TO PROVE SHARE APPLICATION MONEY; THAT HOWEVER, THE ASSESSE E COULD NOT PRODUCE THE BOOKS OF ACCOUNT; AND THAT IN THE ABSENCE OF BOOKS OF ACCOUNT, GENUINENESS OF SHARE APPLICATION MONEY COULD NOT BE VERIFIED. 13. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THIS ADDITION ALSO, GIVING RISE TO GROUND NO.2 BEFORE US. 14. IN THIS REGARD, THE LD. DR HAS CONTENDED THAT W HILE DELETING THE ADDITION CORRECTLY MADE, THE LD. CIT(A) HAS IGNORED THE FACT THAT DESPITE HAVING BEEN GRANTED NUMEROUS OPPORTUNITIES TO DO SO , THE ASSESSEE HAD ITA NOS 3123 TO 3127(DEL)09 6 REMAINED UNABLE TO PRODUCE ITS BOOKS OF ACCOUNT; AN D THAT AS CORRECTLY HELD BY THE AO, IN THE ABSENCE OF BOOKS OF ACCOUNT, THE GENUINENESS OF SHARE APPLICATION MONEY COULD NOT BE VERIFIED. 15. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, HAS IN THIS REGARD ALSO, RELIED ON THE IMPUGNED ORDER. IT HAS FURTHER BEEN CONTENDED THAT VIDE LETTER DATED 3.12.08, THE ASSESSEE HAD REQUEST ED THE AO TO GRANT AN ADJOURNMENT, SINCE ONE OF THE DIRECTORS OF THE ASSE SSEE COMPANY HAD MET WITH AN ACCIDENT; THAT THE MATTER WAS REMANDED BY T HE CIT(A) TO THE FILE OF THE AO; THAT HOWEVER, IN THE REMAND PROCEEDINGS, TH E BOOKS OF THE ASSESSEE WERE NOT VERIFIED; THAT IT WAS THE CIT(A) WHO VERIF IED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND CORRECTLY DELETED THE ADDITION; THAT MOREOVER, THE AO HAD ADDED NOT THE GROSS AMOUNT BUT THE NET AMOUNT, THER EBY ACCEPTING THE GENUINENESS OF THE SHARE APPLICATION MONEY. 16. IN THIS REGARD, IT IS SEEN THAT THE ADDITION HA D BEEN MADE BY THE AO FOR THE REASON THAT BOOKS OF ACCOUNT HAD NOT BEEN PRODU CED BEFORE HIM IN THE ASSESSMENT PROCEEDINGS. UNDISPUTEDLY, HOWEVER, TH E ASSESSEE HAD FILED BEFORE THE AO, DOCUMENTARY EVIDENCE IN THE SHAPE OF CONFIRMATIONS, BANK STATEMENTS, BALANCE SHEET, PA NUMBER ETC. OF M/S. R AJGARHIA SONS, WHO HAD GIVEN THE SHARE APPLICATION MONEY TO THE ASSESSEE. THE RELEVANT BANK STATEMENT AND INCOME TAX RETURN OF VINOD KUMAR RAJG ARHIA AND THE RELEVANT ITA NOS 3123 TO 3127(DEL)09 7 BANK STATEMENT OF M/S. DELHI FIBRE SYNTEX LTD. HAD ALSO BEEN FILED. THESE HAD NOT BEEN CONTROVERTED BY THE AO. FROM THIS, TH E LD. CIT(A) RIGHTLY CONCLUDED THAT THE IDENTITY AND CREDIT-WORTHINESS OF THE ASSESSEE AND THE GENUINENESS OF THE TRANSACTION STOOD FULLY PROVED. APROPOS THE ALLEGED NON- PRODUCTION OF BOOKS OF ACCOUNT, BEFORE THE AO, THE LD. CIT(A) HAS MADE A CATEGORICAL FACTUAL OBSERVATION TO THE EFFECT THAT HE WAS OF THE VIEW THAT THE AO HAD NOT ALLOWED PROPER OPPORTUNITY TO THE ASSESS EE TO DO THE NEEDFUL AND IT WAS DUE TO THIS, THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE BOOKS OF ACCOUNT BEFORE THE AO. FUR THER, THE LD. CIT(A) HAD REMANDED THE MATTER TO THE AO TO EXAMINE THE BOOKS OF ACCOUNT OF THE ASSESSEE. HOWEVER, FOR THE REASONS BEST KNOWN TO H IM, EVEN IN THE REMAND PROCEEDINGS, THE AO DID NOT EXAMINE THE ASSESSEES BOOKS OF ACCOUNT, IN SPITE OF SPECIFIC DIRECTIONS HAVING BEEN GIVEN TO H IM BY THE CIT(A) IN THIS REGARD. IT WAS IN THESE BACKGROUND THAT THE CIT(A ) HIMSELF EXAMINED THE ASSESSEES BOOKS OF ACCOUNT WHICH WERE PRODUCED BEF ORE HIM. THE CIT(A) FOUND THAT THE COPIES OF ACCOUNT, ETC., FILED BY TH E ASSESSEE, DULY TALLIED WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE MAINTAINED. 17. FURTHER, STILL, FROM THE CONFIRMED COPY OF ACCO UNT OF SHARE APPLICATION MONEY, AS FILED BY THE ASSESSEE, THE CIT(A) OBSERVE D THAT THE ASSESSEE TO HAVE RECEIVED FRESH SHARE APPLICATION MONEY AMOUNTI NG TO ` 11,61,000/- ITA NOS 3123 TO 3127(DEL)09 8 FROM M/S. RAJGARHIA SONS. OUT OF THIS AMOUNT, A SUM OF ` 24,000/- HAD BEEN RETURNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. AS SUCH, IT WAS A NET INCREASE IN THE SHARE APPLICATION MONE Y OF ` 11,37,000/-. THE AO WAS FOUND TO HAVE ADDED BACK THE NET INCREASE AT ` 11,37,000/- RATHER THAN THE GROSS INCREASE OF ` 11,61,000/-. OBVIOUSLY, BY HIS THIS ACTION, THE AO HAD HIMSELF ACCEPTED A PART OF THE TRANSACTION T O BE GENUINE. SO FAR AS REGARDS THE ASSESSEE, IT WAS FOUND TO HAVE PROVED N OT ONLY THE SOURCE TO THE SOURCE OF SOURCE OF THE INVESTMENT BY WAY OF SHARE APPLICATION MONEY. 18. IT WAS IN THESE FACTS, THAT THE CIT(A) DELETED AND, IN OUR CONSIDERED OPINION, CORRECTLY SO, THE ADDITION OF ` 11,37,000/-. 19. EVEN OTHERWISE, IN THE REASONS RECORDED FOR ISS UANCE OF NOTICE U/S 148 OF THE ACT, THERE WAS NO MENTION OF THE SHARE CAPIT AL , THOUGH ADDITION IN THIS REGARD WAS MADE VIDE THE ASSESSMENT ORDER. THIS P OSITION STANDS UNCONTROVERTED. THEREFORE ALSO, THE ADDITION MADE WAS UNSUSTAINABLE IN THE EYE OF LAW. 20. IN VIEW OF THE ABOVE, THE LD. CIT(A)S ORDER IN THIS REGARD IS ALSO FOUND TO BE CORRECT AND IS CONFIRMED AS SUCH. 21. GROUND NO.2 IS ALSO REJECTED. ITA NOS. 3124 TO 3127(DEL)2009: ITA NOS 3123 TO 3127(DEL)09 9 22. THESE ARE ALL DEPARTMENTS APPEALS FOR ASSESSME NT YEARS 1998-99 TO 2001-02. THE ISSUES INVOLVED HEREIN ARE EXACTLY T HE SAME AS THOSE PERTAINING TO ITA NO. 3123(DEL)2009 FOR ASSESSMENT YEAR 1997-98(SUPRA). IN THESE YEARS, SINCE NO INTEREST WAS RECEIVED, NO NE WAS ACCOUNTED FOR. 23. THE FACTS INVOLVED IN ALL THESE APPEALS BEING I N PARI MATERIA WITH THOSE PRESENT IN ITA NO. 3123(DEL)09, OUR OBSERVATIONS MA DE THEREIN ARE, MUTATIS MUTANDIS, APPLICABLE HERETO ALSO. 24. THUS, FOR THE REASONS RECORDED AS ABOVE, WHILE DEALING WITH ITA NO. 3123(DEL)09, THE GROUNDS TAKEN BY THE DEPARTMENT IN THESE APPEALS ARE ALSO REJECTED. 25. IN THE RESULT, ALL THE APPEALS FILED BY THE DEP ARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.05.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 13.05.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) ITA NOS 3123 TO 3127(DEL)09 10 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR