ISS CATERING SERVICES (W) P. LTD, MUMBAI V. DCIT 9(2), MUMBAI

ITA 3206/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83548 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Share purchase agreement; Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; ,OA ,OA ,OA ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.3206/MUM/2013 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2009-10 ISS CATERING SERVICES (WEST) PVT. LTD. GODREJ INDUSTRIES LIMITED COMPLEX, GATE NO. 4 EASTERN EXPRESS HIGHWAY, PIROJSH NAGAR, VIKHROLI (IEAST) MUMBAI 400 079. VS. DY. COMMISSIONER OF INCOME TAX 9(2) 1 ST FLOOR, AAYAKAR BHAWAN, MAHARISHI KARVE MARG, CHURCHGATE MUMBAI 400 020. PAN:- AABCI7565A APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.07.2013 OF CIT(A) FOR THE A.Y. 2009-10. THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS IN THIS APPEAL:- GROUND NO.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN CONFIRMING THE ADDITION OF RS. 2,12,10,9001- BEING INCREASE IN THE ISSUED SUBSCRIBED AND PAID UP SHARE CAPITAL OF THE COMPANY BY RS. 1,24,77 01- AT A PREMIUM OF RS 2,10,86,130/-. IN SPITE OF THE FACT THAT, THAT ALL THE DETAILS WERE SUBMITTED BEFORE LEARNED CIT (A), HE HAS STILL CONFIRMED THE ABOVE ADDITION UNDER THE PRETEXT THAT 'NO PROPER EXPLANATION' WAS SUBMITTED. ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI MUKESH B. ADVANI REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI VIKASH KUMAR AGARWAL DATE OF HEARING 31.07.2014 DATE OF PRONOUNCEMENT 20.08.2014 ISS CATERING SERVICES (WEST) PVT. LTD. 2 | P A G E WE THEREFORE PRAY, THAT THE ADDITION OF RS. 2,12,10 ,900/-WHICH IS SUSTAINED BY THE LEARNED CIT (A) OUGHT TO BE DELETE D. GROUND NO. 2 THE LEARNED CIT(A) HAS ALSO ERRED IN MAKING IN CONF IRMING THE AD HOC ADDITION MADE BY THE LEARNED ASSESSING OFFICER OF RS 2,00,00 ,000/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS WHICH ARE OUTSTANDING AS ON 31ST MARCH, 2009 AMOUNTING TO RS. 2,37,46,9311-. IN SPITE OF THE FAC T THAT DETAILS OF ALL THE SUNDRY CREDITORS WHICH WERE OUTSTANDING AT THE YEAR END WERE PLACED ON RECORDS, EVEN THEN, THE ENTIRE ADDITION WAS CONFIRM ED BY THE LEARNED CIT(A). TAKING INTO CONSIDERATION THE FACT THAT THE CREDITO RS WHICH WERE OUTSTANDING AS ON 31.03.2009 WERE ALSO OUTSTANDING AS ON 31.03.201 0 AS APPELLANT MAINTAINS RUNNING ACCOUNTS WITH THEM, AND ALSO, THE FACT THAT ASSESSING OFFICER HAS ACCEPTED THESE CREDITORS AS GENUINE WHILE PASSING T HE ASSESSMENT ORDER FOR A.Y. 2010-11 U/S 143(3), HENCE THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER OUGHT TO BE DELETED. 2. THE ASSESSEE IN THIS CASE IS A COMPANY ENGAGED I N THE BUSINESS OF CATERING & OTHER CUSTOMER RELATED HOSPITALITY SERVICES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED ITS E-RETURN ON 26.09.2009 DECLARING TOTAL INCOME OF RS. 46,89,000/-. THE ASSESSING OFFICER ISSUED NOTICES U/S 142(1) BUT THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. THE ASSESSING OFFICER FRAMED THE ASSESSMENT ORDER ON 23.12.2011 U/S 143(3) WHEREBY THE ASSESSING OFFICER MADE ADDITION OF RS. 4,52,10,900/- TOWARDS INCREASE OF SHARE CAPITAL SUB SCRIBED WITH SHARE PREMIUM. THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS. 2,0 0,00,000/- ON ACCOUNT OF OUTSTANDING SUNDRY CREDITORS. ACCORDINGLY THE ASSES SING OFFICER COMPUTED THE TOTAL INCOME AT RS. 6,98,99,195/-. 3. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFFICER BEFORE CIT(A). THE CIT(A) FOUND THAT THE ASSESSEE HAS NOT PROPERLY EXP LAINED THE INCREASE OF SHARE CAPITAL, THOUGH THE ADDITION ON ACCOUNT OF INCREASE OF AUTHORIZED CAPITAL WAS DELETED ISS CATERING SERVICES (WEST) PVT. LTD. 3 | P A G E BY THE CIT(A) AS NO CAPITAL WAS ACTUALLY RECEIVED T O THE EXTENT OF RS. 2,50,00,000/-. ACCORDINGLY THE CIT(A) HAS DELETED THE ADDITION TO THE EXTENT OF RS, 2,50,00,000/-AND CONFIRMED THE BALANCE ADDITION. AS REGARDS THE ADDI TION ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS, THE CIT(A) SUSTAINED THE ADDITION MADE BY ASSESSING OFFICER OF RS. 2,00,00,000/-.. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE COULD NOT REPRESENT ITS CASE DUE TO THE DIFFICULTY OF SHORTAGE OF EMPLO YEES. SINCE THE ASSESSEE WAS FACING HARDSHIP AND DUE TO ADVERSE CIRCUMSTANCES, T HE ASSESSEE COULD NOT PRESENT ITS CASE PROPERLY BEFORE THE AUTHORITIES BELOW. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE HAS FILED THE ENTIR E RELEVANT EVIDENCE IN SUPPORT OF ITS CLAIM OF SHARE CAPITAL AS WELL AS SUNDRY CREDIT ORS WHICH MAY BE ADMITTED AS AN ADDITIONAL EVIDENCE. HE HAS REFERRED THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE AND SUBMITTED THAT THE SHARE CAPITAL HAS B EEN FULLY SUBSCRIBED BY THE HOLDING COMPANY OF THE ASSESSEE NAMELY ISS FACILITY SERVICES INDIA PRIVATE LTD. IN SUPPORT OF ITS CLAIM, THE ASSESSEE NOW WANTS TO PRO DUCE THE AUDITED ANNUAL ACCOUNTS OF THE HOLDING COMPANY ISS FACILITY SERVIC ES INDIA PRIVATE LTD., ACKNOWLEDGEMENT OF RETURN OF INCOME SHOWING THE INV ESTMENT IN THE SHAPE OF SHARE CAPITAL SUBSCRIBED IN THE ASSESSEES COMPANY, ANNUA L RETURN FILED BEFORE THE REGISTRAR OF COMPANY BY THE ASSESSEE WHEREIN THE HO LDING COMPANY HAS BEEN DECLARED AS SHARE HOLDER, THE ASSESSMENT ORDER PASS ED U/S 143(3) IN CASE OF HOLDING COMPANY DATED 8 TH DECEMBER 2011 FOR THE A.Y. 2009-10 WHEREBY THE ASSESSING OFFICER HAS ACCEPTED THE SUBSCRIPTION OF SHARE CAPITAL BY HOLDING COMPANY IN THE ASSESSEES COMPANY. THUS THE LD. AUT HORIZED REPRESENTATIVE HAS SUBMITTED THAT THE ADDITIONAL EVIDENCE THOUGH COULD NOT BE FILED BEFORE THE ASSESSING OFFICER BUT THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE CASE OF HOLDING COMPANY AS WELL AS BY THE OTHER AUTHORITIES OF THE GOVERNMENT, THEREFORE, THE SAME MAY BE ADMITTED IN THE INTEREST OF JUSTICE . AS REGARDS THE ADDITION ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS, THE LD. AU THORIZED REPRESENTATIVE HAS ISS CATERING SERVICES (WEST) PVT. LTD. 4 | P A G E SUBMITTED THAT THE ASSESSEE IS SEEKING TO PRODUCE T HE ADDITIONAL EVIDENCE TO SHOW THAT THE PAYMENT HAS BEEN MADE IN RESPECT OF 13 PA RTIES IN THE SUBSEQUENT YEARS THROUGH THE ACCOUNT PAYEE CHEQUES. HE HAS FURTHER S UBMITTED THAT THE OUTSTANDING CREDITORS AS ON 31 ST MARCH 2010 HAS BEEN ACCEPTED BY THE ASSESSING OFFI CER IN THE SUBSEQUENT YEAR. THE ASSESSEE HAS ALSO RELIED UPON THE BANK STATEMENTS IN SUPPORT OF ITS CLAIM REGARDING PAYMENT OF THE CREDITORS IN SUBSEQUENT YEARS. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE AD DITION ON ACCOUNT OF SHARE CAPITAL AS WELL AS SUNDRY CREDITORS HAS BEEN MADE B Y THE ASSESSING OFFICER FOR WANT OF RELEVANT EVIDENCE AND DETAILS WHICH COULD NOT BE FURNISHED BY THE ASSESSEE DUE TO UNAVOIDABLE CIRCUMSTANCES. IF THE EVIDENCE FILED BY THE ASSESSEE IS CONSIDERED, THE CLAIM OF THE ASSESSEE CANNOT BE DISALLOWED. THU S THE LD. AUTHORIZED REPRESENTATIVE HAS PLEADED THAT THE ADDITIONAL EVI DENCE FILED BY THE ASSESSEE MAY BE ADMITTED AND THE ISSUE MAY BE REMITTED TO THE AS SESSING OFFICER FOR EXAMINATION OF THE SAID EVIDENCE. 5. ON THE OTHER HAND, THE LD. DR HAS VEHEMENTLY OBJ ECTGED TO THE ADMISSION OF ADDITIONAL EVIDENCE ON THIS STAGE AND SUBMITTED THA T DESPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE BY AUTHORITIES BELOW, THE ASS ESSEE FAILED TO FURNISH THE RELEVANT DETAILS AND EVIDENCE IN SUPPORT OF ITS CLA IM. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ADDITION ON ACCOUNT OF INC REASE IN SHARE CAPITAL AS WELL AS SUNDRY CREDITORS HAS BEEN MADE BY THE ASSESSING OFF ICER FOR WANT OF NECESSARY DETAILS AND EVIDENCE IN SUPPORT OF ITS CLAIM. THOUG H THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS DURING THE COURSE ASSESSMENT PRO CEEDINGS TO PROVE THE CLAIM BY FURNISHING THE SUPPORTING EVIDENCE, HOWEVER, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE CLAIM OF THE ASSESSEE WAS FOUND TO BE BOGUS. THE ASSESSING OFFICER DISALLOWED THE CLAIM AND MADE THE ADDITION ON ACCOU NT OF INCREASE IN SHARE CAPITAL AND OUTSTANDING SUNDRY CREDITORS ONLY ON THE BASIS THAT THE ASSESSEE FAILED TO ISS CATERING SERVICES (WEST) PVT. LTD. 5 | P A G E EXPLAIN TO THE SATISFACTION OF THE ASSESSING OFFICE R AS THE ASSESSEE HAS NOT FURNISHED THE NECESSARY DETAILS AND EVIDENCE. WE HA VE GONE THROUGH THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WHICH INCLUDES THE A UDITED ACCOUNTS OF THE HOLDING COMPANY OF THE ASSESSEE NAMELY ISS FACILITY SERVICE S INDIA PRIVATE LTD WHICH HAD SUBSCRIBED THE ENTIRE SHARE CAPITAL OF THE ASSESSEE . THE RETURN OF INCOME FILED BY THE HOLDING COMPANY AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER FOR THE A.Y. 2009-10, IN THE CASE OF HOLDING COMPANY HAS SH OWN THE INVESTMENT BY INFUSING THE CAPITAL IN THE ASSESSEES COMPANY. IN THE ASSES SMENT ORDER PASSED IN THE CASE OF HOLDING COMPANY, THE ASSESSING OFFICER HAS ACCEP TED THE SUBSCRIPTION OF THE SHARE CAPITAL BY THE HOLDING COMPANY IN THE ASSESSE ES COMPANY. FURTHER THE ASSESSEE HAS ALSO FILED THE ANNUAL RETURN FILED BEF ORE THE REGISTRAR OF COMPANY, WHEREIN THE HOLDING COMPANY HAS BEEN DECLARED AS SH ARE HOLDER. APART FROM THIS, THE ASSESSEE HAS ALSO FILED THE DETAILS OF THE AMOU NT RECEIVED FROM THE HOLDING COMPANY AS WELL AS SHARE PURCHASE AGREEMENT EXECUTE D BETWEEN THE ASSESSEE AND THE HOLDING COMPANY. IT IS PERTINENT TO NOTE THAT A LL THESE DOCUMENTS AND EVIDENCE WERE ALREADY PLACED BEFORE THE RELEVANT AUTHORITIES INCLUDING THE INCOME TAX AUTHORITIES IN CASE OF HOLDING COMPANY, THEREFORE, PRIMA FACIE THE SCOPE OF MANIPULATION OF THESE DOCUMENTS IS RULED OUT. SIMIL ARLY THE ASSESSEE FILED THE RELEVANT DETAILS SHOWING THE RE-PAYMENT OF THE SUND RY CREDITORS IN QUESTION THROUGH CHEQUES DURING THE SUBSEQUENT YEAR. THE ASSESSEE HA S FILED BANK STATEMENT SHOWING THE REPAYMENT OF THE SUNDRY CREDITORS. THES E REPAYMENTS WERE BEFORE THE FINALIZATION OF ASSESSMENT ORDER IN QUESTION. THOUG H THE RELEVANT MATERIAL/DOCUMENTS COULD NOT BE FURNISHED BEFORE TH E ASSESSING OFFICER RESULTING THE ADDITION IN QUESTION, HOWEVER, FROM THE DOCUMENTS F ILED BY THE ASSESSEE, IT APPEARS THAT IF THESE DOCUMENTS ON EXAMINATION ARE FOUND T O BE CORRECT THEN THE ADDITION MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) I S NOT SUSTAINABLE. BUT IT DEPENDS ON THE EXAMINATION AND VERIFICATION OF THE RECORD FILED BY THE ASSESSEE. IT IS TRYST LAW THAT THE CORRECT INCOME OF THE ASSESSEE H AS TO BE ASSESSED TO TAX WHICH HAS TO BE DETERMINED BY CONSIDERING ALL THE RELEVAN T FACTS AND EVIDENCE, THEREFORE, THE ADDITION MADE FOR WANT OF NECESSARY DETAILS IF SUBSEQUENTLY FOUND TO BE NOT SUSTAINABLE ON PRODUCTION OF THE RELEVANT EVIDENCE THEN THE ADDITIONAL EVIDENCE ISS CATERING SERVICES (WEST) PVT. LTD. 6 | P A G E SOUGHT TO BE PRODUCED BY THE ASSESSEE CANNOT BE DEN IED, OTHERWISE IT WILL LEAD TO TAX THE UNREAL INCOME OF THE ASSESSEE. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ADMIT T HE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND REMIT THE MATTER TO THE RECORD OF ASSE SSING OFFICER FOR FRESH ADJUDICATION OF THESE TWO ISSUES AFTER VERIFICATION AND EXAMINATION OF THE RELEVANT EVIDENCE AND DETAILS FILED BY THE ASSESSEE. NEEDLES S TO SAY THE ASSESSEE BE GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE PASSING AFRESH ORDER. 7.. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 20 -8 -2014 SD/- SD/- ( RAJENDRA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 20-8 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI