The ACIT,1(1), V. M/s Bajrang Overseas Pvt. Ltd.,

ITA 343/IND/2008

• Counselvise Citation: 34322714 RSA 2008
• Duration Of Justice: 5 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-02-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-07-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRUDULA BAJPAI
• Keywords: Bogus Share capital; Onus to prove
• Section: 133(6)

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 343/IND/2008 A.Y.2004-05 ACIT 1(1), BHOPAL :: APPELLANT VS M/S BAJRANG OVERSEAS PVT. LTD. BHOPAL :: RESPONDENT APPELLANT BY SHRI MRUDULA BAJPAI RESPONDENT BY NONE DATE OF HEARING 9.10.2013 DATE OF PRONOUNCEMENT 24.10.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 4.4.2008 ON THE GROUND THAT THE LEARNED FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 1,65,00,000/- MADE BY THE A.O. ON A CCOUNT OF UNEXPLAINED INCREASE IN SHARE CAPITAL MONEY U/S 68, IGNORING THE 2 FACT THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CREDITORS SPECIALLY IN VIEW OF THE DECISION OF KOLKATA HIGH C OURT IN THE CASE OF CIT VS. RUBY TRADERS AND EXPORTERS (2003) 263 IT R 300. 2. DURING HEARING, WE HAVE HEARD SMT. MRUDULA BAJPA I, LEARNED CIT DR. NOTICE FOR HEARING WAS SENT TO THE ASSESSEE ON THE GIVEN ADDRESS IN FORM NO. 36 BUT THE SAME WAS R ECEIVED BACK WITH THE POSTAL REMARK THAT NO-ONE IS AVAILABLE OF THIS NAME AT THIS ADDRESS . HOWEVER, THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS. WE, THEREFORE, HAD NO OPTION BUT TO PR OCEED EX PARTE QUA THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT SINCE I N SPITE OF FIXING THE CASE FOR HEARING ON VARIOUS DATES, THE ASSESSEE DID NOT APPEAR. LAST OPPORTUNITY WAS PROVIDED TO THE ASSES SEE AND TO THE REVENUE BOTH. FROM THE RECORD, WE FIND THAT DURING THE YEAR, UNDER CONSIDERATION, THE ASSESSEE WAS IN RECEIPT OF SHARE CAPITAL OF RS.16,50,000/- ALONG WITH SHARE PREMIUM OF RS. 1,48,50,000/- FROM FIVE COMPANIES. TO VERIFY THE ID ENTITY OF THESE COMPANIES, THE ASSESSING OFFICER ISSUED NOTICES TO ALL THESE COMPANIES U/S 133(6) OF THE ACT AND INVESTING COMPA NIES WERE 3 REQUESTED TO FURNISH THE INFORMATION WITH REGARD TO THE TRANSACTION ENTERED INTO WITH THE ASSESSEE COMPANY FOR SUBSCRIPTION OF SHARE CAPITAL WITH DOCUMENTARY EVID ENCE. THE ASSESSING OFFICER RECORDED A FINDING THAT NONE OF T HESE COMPANIES HAD FURNISHED THE REQUISITE INFORMATION AND COMPLIE D WITH THE NOTICES ISSUED U/S 133(6) OF THE ACT. THEREAFTER, T HE ASSESSING OFFICER ALSO ISSUED NOTICE TO THE ASSESSEE VIDE NOT E SHEET ENTRY DATED 12.12.2006 TO PRODUCE THE BOOKS OF ACCOUNTS A ND COMPLETE DETAILS REGARDING SHARE CAPITAL AND SHARE PREMIUM R ECEIVED FROM THESE FIVE ALLEGED COMPANIES. THE CASE WAS FIXED F OR 18.12.2006. HOWEVER, NEITHER ANY BOOKS OF ACCOUNTS WERE PRODUCE D FOR EXAMINATION NOR ANYONE FROM THE ASSESSEE HAD APPEAR ED AND SOUGHT FOR ADJOURNMENT. IN THESE CIRCUMSTANCES, TH E ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOTHING TO SAY ON THE ISSUE AND HELD THAT INSPITE OF PROVIDING VARIOUS OPPORTUN ITIES, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE IDENTIT Y OF THE COMPANIES AND THAT BOGUS SHARE CAPITAL HAS BEEN INT RODUCED IN THE NAMES OF FICTITIOUS COMPANIES. BY THE IMPUGNED ORDER, THE LEARNED CIT(A) DELETED THE ADDITION WITHOUT CONTROV ERTING THE FINDINGS RECORDED BY THE ASSESSING OFFICER WITH REG ARD TO IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THESE COMPANIE S. NOTHING 4 WAS REFERRED TO BY THE CIT(A) TO INDICATE THAT IDEN TITY OF THESE COMPANIES WAS ESTABLISHED. WE FIND THAT THE ASSESSE E HAS RECEIVED PREMIUM OF RS. 90/- ON THE SHARE OF RS.10/ - WHEREAS THE ASSESSING OFFICER HAS OBSERVED THAT THE SALE OF THE ASSESSEE FOR THE YEAR, UNDER CONSIDERATION, WAS ONLY RS.31,9 65/- AND FOR EARLIER YEAR IT WAS RS. 1,54,619/-. EVEN BEFORE TH E ASSESSING OFFICER THE ASSESSEE HAS NOT COOPERATED TO FURNISH DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE IDENTITY OF SHARE APPL ICANTS AND JUSTIFICATION FOR ISSUE OF SHARE OF RS.10/- AT A PR EMIUM OF RS. 90/-. THE ASSESSING OFFICER HAS ALSO DISCUSSED VAR IOUS JUDICIAL PRONOUNCEMENTS WITH REFERENCE TO THE FACTS OF THE C ASE AND FINALLY HELD THAT THE ASSESSEE COMPANY HAS INTRODUC ED BOGUS SHARE CAPITAL. WITHOUT CONTROVERTING ALL THESE FIN DINGS, THE CIT(A) DELETED THE ADDITION. WE DO NOT FIND ANY MERIT IN THE ORDER PASSED BY THE LEARNED CIT(A). IN THE INTEREST OF J USTICE AND FAIR PLAY, WE SET ASIDE THE ORDER OF THE CIT(A) AND REST ORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR PROVIDING ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE IDE NTITY OF SHARE APPLICANTS AND GENUINENESS OF TRANSACTION OF SHARE CAPITAL INTRODUCED DURING THE YEAR, UNDER CONSIDERATION. TH E ASSESSE IS ALSO DIRECTED TO FILE COMPLETE DETAILS BEFORE THE A SSESSING OFFICER 5 TO ESTABLISH THE IDENTITY OF THESE SHARE APPLICANTS AND THE BASIS ON WHICH THE SHARE OF RS. 10/- WAS ISSUED AT A PREM IUM OF RS.90/- WHICH IS IN CONTRADICTION TO THE FINANCIAL POSITION OF THE COMPANY, AS DISCUSSED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IS TO DECIDE THE ISSUE AFRESH. WE DIRECT AC CORDINGLY. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS AL LOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. SENIOR DR AT THE CONCLUSION OF THE HEARING ON 24.10.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 24.10.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE 6