ITO, New Delhi V. M/s. Kunsons Metals Ltd., New Delhi

ITA 3352/DEL/2014

• Counselvise Citation: 335220114 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 27-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 30-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Section: 68

Judgement Text

ITA NO. 3352/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3352/DEL/2014 ASSESSMENT YEAR: 20 04-05 INCOME TAX OFFICER, VS. M/S KUNSONS METALS LTD. , WARD-5(3), E-73/74, AMAR COLONY, ROOM NO. 305, LAJPAT NAGAR-IV CR BUILDING, NEW DELHI 110 024 NEW DELHI 110 002 ( PAN: AAACD012B) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. DAM KANUNJNA, SR . DR RESPONDENT BY : NONE DATE OF HEARING : 27-10-2015 DATE OF ORDER : 27 -10-2015 ORDER THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 10/03/2014 OF LD. CIT(A)-VIII, NEW DELHI RELEVANT TO THE ASSESSME NT YEAR 2004-05. 2. THE GROUNDS RAISED IN THE APPEAL OF THE DEPARTME NT READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRE DIN DELETING THE ADDITION OF RS. 1 0,00,000/- MADE BY THE AO U/S. 68 OF THE I.T. ACT, 1961, RELYING ON THE SU BMISSION OF ASSESSEE ONLY AND IGNORING THE LATEST FINDINGS OF HIGH COURT ON THIS ISSUE? 2. THAT THE ORDER OF THE CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. ITA NO. 3352/DEL/2014 2 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR FORGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS O RIGINALLY FILED RETURN ON 1.11.2004 AT A LOSS OF RS. 2,89,694/-, WHICH WAS PR OCESSED U/S. 143(1) ON 28.3.2006. LATER ON AN ASSESSMENT ORDER WAS PASSED U/S. 143(3)/148 OF THE INCOME TAX ACT, 1961, ASSESSING THE TOTAL TAXABLE INCOME AT RS. 7,10,310/- FOR THE ASSESSMENT YEAR 2004-05 THEREBY MAKING AN ADDI TION OF RS. 10,00,000/- U/S. 68 OF THE ACT. BEING AGGRIEVED WITH THE AFORE SAID ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE I MPUGNED ORDER DATED 10.3.2014 HAS DELETED THE ADDITION AND PARTLY ALLO WED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNE D ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING LD. DR RELIED UPON THE OR DER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL AND ALSO RELIED UPON THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT DATED 25.8.2014 IN THE CASE OF CIT VS. NAVODAYA CASTLES ( P) LTD. 6. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS A UTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FI LED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUM STANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND A GAIN TO THE ASSESSEE, THEREFORE, I AM DECIDING THE PRESENT APPEAL EXPART E QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. ITA NO. 3352/DEL/2014 3 7. I HAVE HEARD THE LD. DR AND PERUSED AND CONSIDE RED THE RELEVANT RECORD AVAILABLE WITH ME ESPECIALLY THE IMPUGNED ORDERS PA SSED BY THE REVENUE AUTHORITIES; CASE LAW CITED BY THE LD. DR. I FIND T HAT THE FIRST APPELLATE AUTHORITY HAS DISCUSSED THE ELABORATELY DISCUSSED T HE ISSUE IN DISPUTE BY CONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AND ADJUDICATED THE ISSUE IN DISPUTE AS UNDER:- 10.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. AR AND HAVE ALSO PERUSED THE ASSESSMENT ORDER AND VARIOUS JUDICIAL P RONOUNCEMENTS 011 THE ISSUE. 10.2THE APPELLANT DURING THE YEAR HAS RECEIVED SHAR E APPLICATION MONEY FROM TWO PARTIES SH. DINANANTH LUHARIWALA SPINNING MILLS (P) LTD. AND MIS CHINTPURNI CREDITS & LEASING (P) LTD. OF RS. 5, 00,000/-- EACH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APP ELLANT FILED VARIOUS DOCUMENTARY EVIDENCES LIKE AFFIDAVIT, BANK STATEMEN T, ITS ACKNOWLEDGMENT OF RETURN OF INCOME, PAN, AUDITED BA LANCE SHEET AND COMPANY DETAILS GENERATED FROM THE WEBSITE OF MINIS TRY OF CORPORATE AFFAIRS, BOARD RESOLUTION CONFIRMING THE PAYMENT OF SHARE APPLICATION MONEY WHICH SUPPORTED THE IDENTITY OF THE INVESTOR COMPANY AND ALSO ESTABLISHED GENUINENESS OF THE SHARE CAPITAL MONEY TRANSACTION. 10.3 HOWEVER, THE AO WHILE PASSING THE ORDER HAS ST ATED THAT THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THE ONUS C ASTED ON IT UNDER SECTION 68 OF THE ACT. THE AO HAS FURTHER STATED TH AT THE COPY OF CONFORMATION FROM PARTIES HAVE NOT BEEN FILED AND D IRECTORS OF THE INVESTOR COMPANIES WERE NOT PRODUCED. ITA NO. 3352/DEL/2014 4 10.4FROM THE EVIDENCES PLACED ON RECORD, IT IS OBSE RVED THAT SHARE APPLICATION MONEY WAS RECEIVED FROM 2 ENTITIES BY T HE APPELLANT THROUGH CHEQUES AND SUCH ENTITIES ARE REGISTERED AND ARE AC TIVE AS PER THE COMPANY MASTER DETAILS PRESENT AT THE WEBSITE OF MI NISTRY OF CORPORATE AFFAIRS. IT IS NOTICED THAT THE ASSESSEE HAS FILED AFFIDAVITS OF THE SHARE APPLICANTS CONFIRMING THE TRANSACTION. THE ASSESSEE HAS ALSO FILED OTHER RELEVANT DETAILS CONFIRMING THE IDENTITY, CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION WITH THE SAID SHARE APPLICANTS. 10.6 FROM THE PERUSAL OF THE FINDINGS IT IS ASCERTA INED THAT: A. AO HAS PRIMARILY MADE THE ADDITIONS ON THE GROUN D THAT THE APPELLANT WAS NOT ABLE TO PRODUCE ITS OWN SHAREHOLDERS FOR WH ICH THE ASSESSEE HAS STATED THAT IT HAS PROVIDED THE ADDRESSES OF ALL SH ARE APPLICANTS AND THEY MAY BE CALLED BY THE AO. B. AO HAS STATED THAT THE APPELLANT HAS NOT FILED C ONFIRMATIONS TO WHICH THE ASSESSEE HAS REPLIED THAT THE COPY OF AFFIDAVIT FILED BY THE ASSESSEE IS AS GOOD AS CONFIRMATION FROM THE PARTY AS THERE IS NO SPECIFIC FORMAT FOR FILING CONFIRMATION. C. AO HAS STATED THAT THERE IS IMMEDIATE CASH DEPOS IT IN THE ACCOUNTS OF SHARE APPLICANTS OF THE APPELLANT COMPANY TO WHICH THE AR HAS STATED THAT THERE IS NO MATERIAL/EVIDENCE AVAILABLE WITH T HE AO WHICH SUGGESTS THAT THE MONEY INTRODUCED BY SHARE APPLICANTS WAS A PPELLANTS OWN MONEY, FURTHER ASSESSEE CANNOT BE HELD LIABLE FOR C ASH DEPOSITED IN ACCOUNT OF SOME OTHER PARTIES. THE APPELLANT HAS AL SO CITED VARIOUS CASE LAWS IN ITS SUBMISSIONS WHEREIN IT HAS BEEN HELD TH AT APPELLANT HAVING PRODUCED DETAILS AND DOCUMENTS AS FILED BY THE APPE LLANT, SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME AND CANNOT BE ADDED UNDER SECTION 68 OF THE ACT. ITA NO. 3352/DEL/2014 5 10.9 THE APPELLANT IN ITS SUBMISSION HAS ALSO RELIE D UPON THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT V S. LOVELY EXPOR TS PVT. LTD. 299 ITR 268 (SC) WHICH HAS CONFIRMED THE ORDER OF THE DELHI HIGH COURT. IT HAS BEEN HELD BY THE HON'BLE COURT THAT ONCE THE IDENTI TY OF THE SHAREHOLDERS HAVE BEEN ESTABLISHED, EVEN IF THERE IS A CASE OF B OGUS SHARE CAPITAL, IT CANNOT BE ADDED IN THE HANDS OF THE COMPANY UNLESS ANY ADVERSE EVIDENCE IS NOT ON RECORD. IN THE INSTANT CASE, THE APPELLAN T HAS PROVIDED EVIDENCE IN THE FORM OF PAN, CONFIRMATION, COPY OF IT RETURN FILED, ROC DETAILS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. 10.11 IN VIEW OF THE FACTUAL POSITION AS WELL AS TH E JUDICIAL PRONOUNCEMENT ON THE SUBJECT DISCUSSED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE BONA-FIDES OF THE TRANSACTIONS AND THE AO WAS NOT J USTIFIED IN IGNORING VARIOUS EVIDENCES PROVIDED TO HIM BY THE APPELLANT. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE AMOUNT OF SHARE APPLICATION MONEY OF RS. 10,00,000/- RECEIVED BY TH E APPELLANT FROM THE SAID PARTIES REPRESENTS ITS OWN UNDISCLOSED INCOME. IF THERE WAS DOUBT ABOUT THE SOURCE OF INVESTMENT O F THE SAID COMPANY, THEN ADDITIONS SHOULD HAVE BEEN MADE IN T HE CASE OF INVESTOR COMPANY WHERE CASH WAS INTRODUCED IN THE BANK, AND NOT IN THE HANDS OF THE APPELLANT COMPANY. IN YET ANOTHER DECISION AS T O THE CORRECTNESS TREATING SHARE APPLICATION MONEY ON PAR WITH CASH C REDIT, THE HON'BLE DELHI HIGH COURT IN CIT VS. VALUE CAPITAL SERVICES (P) LTD. (2008) 307 ITR 334 (DELHI) FOUND AFTER REFERRING TO THE TWO TH E DECISIONS OF THE DELHI HIGH COURT ON THE SUBJECT THAT IN RESPECT OF THE SH ARE CAPITAL AMOUNTS, THEY CANNOT BE ASSESSED IN THE HANDS OF THE COMPANY , UNLESS THE DEPARTMENT IS ABLE TO SHOW THAT THE AMOUNT RECEIVED TOWARDS SHARE CAPITAL ACTUALLY EMANATED FROM THE COFFERS OF THE A SSESSEE COMPANY . ITA NO. 3352/DEL/2014 6 10.12 IN THE LIGHT IF THE ABOVE DECISION, I AM INCL INED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELLANT T O SUBSTANTIATE THAT THE TRANSACTIONS REGARDING SHARE APPLICATION MONEY RECEIVED BY IT WERE GENUINE TRANSACTIONS AND THE SAME WERE NOT ACCOMMOD ATION ENTRIES. I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE AO W HICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN TREATING T HE MOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT AS ITS UNDISCLOSED INCOME. IN VIEW OF OUR AFORESAID DISCUSSION, I DELETE THE A DDITION OF RS. 10,00,000/- MADE BY THE AO UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 8. IN VIEW OF THE ABOVE, I AM OF THE VIEW THAT N O INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), B ECAUSE THE LD. CIT(A) HAS DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE ASSESS EE AFTER APPRECIATING THE EVIDENCE FILED BY THE ASSESSEE AS WELL AS VARIOUS D ECISIONS RENDERED BY THE HONBLE SUPREME COURT AS WELL AS HONBLE HIGH COURT AND THE DECISIONS OF THE ITAT BENCHES. I AM ALSO OF THE VIEW THAT THE SHARE APPLICATION MONEY RECEIVED IN THE HANDS OF THE ASSESSEE COMPANY IS PROPERLY EX PLAINED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WEL L AS BEFORE THE LD. CIT(A). THEREFORE, I DO NOT FIND ANY INFIRMITY IN THE IMPU GNED ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND HENCE, I UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVENUE. ITA NO. 3352/DEL/2014 7 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/10/2015. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 27/10/2015 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR