ACIT, New Delhi V. M/s. Laser Sight India Pvt. Ltd., Delhi

ITA 3448/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4264 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 14-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: PRAKASH NARAIN
• Keywords: Bogus Share capital; Assessment record
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.K. HALDAR ITA NO. 3448/DEL/2010 ASSTT. YR: 2002-03 ACIT, CIR. 4(1), VS. M/S LASER SIGHT INDIA PVT. LTD., NEW DELHI. S-547, IIND FLOOR, MAIN ROAD, SHAKARPUR, DELHI-92. PAN/GIR NO. AAACL2024Q (APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI A.K. MONGA SR. DR RESPONDENT BY : SHRI PRAKASH NARAIN ADV. O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DATED 10-05-2010 RELATING TO A.Y. 2002-03. FOLLOWING GROUNDS ARE RAI SED: 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONE OUS & CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 40,00,000/- MADE BY THE AO U/S 68 OF THE I.T. A CT BEING THE BOGUS SHARE APPLICATION MONEY. 2.1. THE LD. CIT(A) IGNORED THE FACT THAT THE DIREC TOR OF THE ASSESSEE CO. ADMITTED IN HIS STATEMENT RECORDED BY THE AO ON OATH THAT ACCOUNT OPENED FOR FUNDING THE SHARE APPL ICATION MONEY WAS BOGUS/ FICTITIOUS. 3. THE APPELLANT CASES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF H EARING. 2 2. BRIEF FACTS ARE: THE ASSESSEE FILED ITS RETURN O F INCOME DECLARING TOTAL INCOME OF RS. 34,11,773/-. IT WAS PROCESSED U/S 143 (1) OF THE I.T. ACT. SUBSEQUENTLY, THE ASSESSING OFFICER (AO IN SHORT) RECEIVED SPECIFIC INFORMATION FROM ADDL. DIRECTOR OF INCOME-TAX (INV. ), AGRA THROUGH THE CIT, DELHI-II, VIDE LETTER DATED 30-4-2008 THAT ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 40 LACS AS SHARE APPLICATION MONEY FROM A PAPER COMPANY M/S KAPI LEASING FINANCE CO. LTD. INQUIRY REPORT WAS ALSO FO RWARDED BACK TO AO. ON THAT BASIS THE ASSESSEES ASSESSMENT WAS REOPENED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE JAI PUR BASED COMPANY WAS IN FACT A PAPER COMPANY AND ITS BANK ACCOUNT NO. 54 9 WITH SYNDICATE BANK, JHALANA DUNGRI, JAIPUR WAS A BOGUS ACCOUNT BECAUSE OF FOLLOWING FACTS: A. AS PER STATEMENT GIVEN BY SH. NEERAJ AGARWAL, DIREC TOR OF KAPI LEASING COMPANY LIMITED ON 4.12.2007 U/S 131 O F THE ACT I. THE COMPANY KAPI LEASING CO. LTD. WAS INCORPORATED ON 29.9.1994 BUT AS THE COMPANY COULD NOT TAKE CERTIFI CATE OF COMMENCEMENT OF BUSINESS IT NEVER STARTED ANY BUSINESS. II. THE COMPANY HAS NO BANK ACCOUNT. III. THE COMPANY HAS THREE DIRECTORS NAMELY NEERAJ KUMAR AGARWAL, SMT. INDU AGARWAL AND DEEPAK KUMAR AGARWAL. IV. THE COMPANY NEVER MADE ANY INVESTMENT SINCE ITS INCEPTION. B. THE PHOTOGRAPH AND SIGNATURES OF NEERAJ AGARWAL IN THE ACCOUNT OPENING FORM OF ACCOUNT NO. 549, SYNDICATE BANK, JHALANA DUNGRI, JAIPUR BELONGS TO AN EMPLOYEE OF SH . PANKAJ BARLA, WHO IS THE AUDITOR OF KAPI LEASING COMPANY L IMITED. IN A STATEMENT GIVEN ON OATH U/S 131 OF THE ACT ON 10.12.2009, SH. PANKAJ BARLA HAS ADMITTED THAT HIS EMPLOYEE 3 SH. JAI PRAKASH HAD SIGNED ON ACCOUNT OPENING FORM AS NEERAJ AGARWAL AND EVEN THE PHOTOGRAPH BELONGED TO HIM. THE SIGNATURES OF SH. NEERAJ AGARWAL DIRECTOR OF KA PI LEASING COMPANY LTD. AND SH. JAI PRAKASH WHO SIGNED AS NEERAJ AGARWAL IN ACCOUNT OPENING FORM ARE DIFFEREN T. 2.1. STATEMENT OF SAID SHRI NEERAJ AGARWAL, DIRECTO R OF KAPI LEASING CO. LTD. WAS CONFRONTED TO DR. ASHOK PACHAURI, DIRECTOR OF THE ASSESSEE COMPANY, WHOSE STATEMENT WAS ALSO RECORDED. ACCORDI NG TOP AO, HE COULD NOT SATISFACTORILY EXPLAINED ABOUT THE TRANSACTION AND COULD NOT DEMONSTRATE THAT KAPI LEASING CO. HAD ANY CREDITWORTHINESS. AO ON THE BASIS OF THESE FACTS AND VARIOUS DISCREPANCIES AND THE ACCOUNT OPE NING FORM, MADE THE ABOVE ADDITION. 2.2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE THE CIT(A) DELETED THE ADDITION ON MERITS. HOWEVER, IN RESPECT OF ACTI ON U/S 147/148, THE GROUND WAS NOT ADJUDICATED AS THE APPEAL WAS DECIDED ON ME RITS IN FAVOUR OF THE ASSESSEE. 3. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. IT MA Y BE PERTINENT TO NOTE THAT ASSESSEE HAS NOT COME IN APPEAL AGAINST NON-AD JUDICATION OF GROUND ABOUT VALIDITY OF PROCEEDINGS U/S 147/148. 4. LEARNED DR CONTENDS THAT AO WAS IN POSSESSION OF SPECIFIC INFORMATION ABOUT THE SHARE APPLICANT OF THE ASSESS EE M/S KAPI LEASING CO. BEING A BOGUS ENTITY, WHO HAD NO CREDITWORTHINESS A ND IT WAS CREATED AS PART OF ENTRY PROVIDING SYNDICATE. NEERAJ AGGARWAL DIREC TOR OF KAPI LEASING CO. DENIED HAVING CREDITWORTHINESS AND DR. ASHOK PACHAU RI DIRECTOR OF ASSESSEE COMPANY ALSO COULD NOT ESTABLISH THE CREDITWORTHINE SS OF THE SHARE APPLICANT. CIT(A) HAS GLOSSED OVER THESE FACTS AND MERELY ON T HE BASIS OF RETURN OF 4 SHARE APPLICANT FILED BEFORE ROC HAS STRAIGHT WAY G IVEN THE RELIEF RELYING ON THE CASE LAWS, BY FOLLOWING OBSERVATIONS: 4.4. IN THE PRESENT CASE THE ASSESSEE CAN BE SAID TO HAVE DISCHARGED ITS ONUS UNDER SECTION 68 OF THE ACT. TH E APPELLANT AHS GIVEN ALL THE NECESSARY DETAILS IN ORDER TO EST ABLISH THE IDENTITY OF THE SHARE APPLICANT. AFTER CONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD, IT IS FAIR TO CONCLUDE T HAT HE SHARE APPLICANT WAS AN EXISTING PARTY AND THE PAYMENTS WE RE MADE THROUGH BANKING CHANNELS. IT IS ALSO SEEN THAT THE ASSESSING OFFICER COULD NOT POINT OUT ANY DISCREPANCY IN THE EVIDENCES RELIED UPON BY THE ASSESSEE. FURTHER, WHAT IS THE D ESIRED DOCUMENTARY EVIDENCE REQUIRED TO SUPPORT THE CLAIM OF THE ASSESSEE AS REQUIRED BY THE AO IS NOT COMING OUT OF THE ORDER OF THE AO. THOUGH, THE SHARE-APPLICANT COULD NOT BE EX AMINED BY THE AO, SINCE IT WAS EXISTING ON THE FILE OF THE IN COME TAX DEPARTMENT AND ITS INCOME-TAX DETAILS WERE MADE AVA ILABLE TO THE AOA, IT WAS EQUALLY THE DUTY OF THE AO TO HAVE TAKEN STEPS TO VERIFY ITS ASSESSMENT RECORDS AND IF NECESSARY T O ALSO HAVE IT EXAMINED BY THE RESPECTIVE AO HAVING JURISDICTION O VER IT (SHARE-APPLICANT), WHICH HAS NOT BEEN DONE BY HIM. 4.1. LEARNED DR FURTHER ARGUES THAT CIT(A) HAS NO W HERE DISPUTED THE FACT THAT T HE SHARE APPLICANT IN FACT, WAS ENTITY CRE ATED TO FACILITATE THE TRAIL OF MONEY AND MERELY ITS PERMANENT A/C NO., COPY OF RET URN AND AUDITED BALANCE-SHEET WILL NOT DISCHARGE THE ASSESSEE OF TH E ONUS PRESCRIBED BY SEC. 68. CIT(A) HAS NOT LOOKED INTO ANY OF THE FACTS I. E. ADIT REPORT, STATEMENT OF MR. NEERAJ AGARWAL AND DR. ASHOK PACHAURI. IT IS STRANGE THAT IN THIS CASE WHERE THE SHARE APPLICANTS DIRECTOR AND ASSESSEES DIRECTOR ARE NOT IN A POSITION TO GIVE A REPLY, STILL CIT(A) HAS DELETED THE ADDITION IN DISREGARD OF FACTS AND MERELY RELYING ON CASE LAWS. 5. ON THE QUERIES OF THE BENCH ABOUT THE AUTHORIZED AND ISSUE CAPITAL OF THE ASSESSEE COMPANY AND OTHER FACTS REGARDING THE REGULARIZATION OF EITHER 5 THE SHARE APPLICATIONS OR ALLOTMENT THEREOF, LEARNE D COUNSEL FOR THE ASSESSEE COULD NOT REPLY THE SAME. AT THE END OF THE ARGUMEN TS, BOTH THE PARTIES AGREED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW. IN VIEW OF THIS PROPOSITION, WE SET ASIDE THE ISSUE BACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH AFTER INQUIRING INTO THE DETAILS ABOUT THE AUTHORIZED ISSUE/ SHARE CAPIT AL OF THE COMPANY, DIVIDEND, IF ANY, DECLARED, ROC COMPLIANCE, NUMBER OF EXISTING AND PROPOSED SHARE HOLDERS ETC. WE ORDER ACCORDINGLY. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 04-05-2011. SD/- SD/- ( B.K. HALDAR ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04-05-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR