ITO, New Delhi V. M/s T.S Pulses Pvt. Ltd., New Delhi

ITA 3473/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5787 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 29-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 06-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANAPATI BHAT
• Assessee Lawyers: S K GUPTA
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI A.D.JAIN AND SHRI K.G. BANSAL I.T.A.NO. 3473(DEL)/2009 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, M/S T.S. PULSES PVT. LTD., WARD 16(1), NEW DELHI. VS. 2647 GALI RAGHUNANDAN, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GANAPATI BHAT, SR. DR RESPONDENT BY: SHRI S.K. GUPTA, C.A. ORDER PER K.G. BANSAL ; AM THIS APPEAL OF THE REVENUE EMANATES FROM THE OR DER OF THE CIT(APPEALS)-XIX, NEW DELHI, PERTAINING TO ASS ESSMENT YEAR 2006-07. THE CORRESPONDING ORDER OF ASSESSMENT WAS FRAM ED BY THE INCOME-TAX OFFICER, WARD 16(1), NEW DELHI, ON 26.12.2008, UNDER THE PROVISION OF SECTION 143(3) OF THE INCOME-TAX ACT, 1961. THE O NLY GROUND TAKEN BY THE REVENUE IS THAT ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS. 10.00 LAKH MADE BY THE AO U/S 68 OF THE ACT. ITA NO. 3473(DEL)/2009 2 2. THE FACTS AS MENTIONED IN THE ASSESSMENT ORD ER ARE THAT THE RETURN OF INCOME WAS FILED ON 22.11.2006 DECLARING TO TAL INCOME OF RS. 75,740/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT W AS FOUND THAT THE ASSESSEE RECEIVED SHARE APPLICATION MONEY INTER-ALIA FROM REENA OIL INDUSTRIES (P) LTD. AND REENA PLASTIC PIPES (P) LTD., AMOU NTING TO RS. 5.00 LAKH EACH. IN SUPPORT OF THE GENUINENESS OF THE RECE IPT OF THE AFORESAID AMOUNT, BOTH THE SUBSCRIBERS FILED PROFIT AND LOSS ACC OUNT AND BALANCE-SHEET FOR FINANCIAL YEAR 2005-06. ON PERUSAL THEREOF, THE AO FOUND THAT THE NAME OF THE ASSESSEE DID NOT APPEAR IN THEIR SCHEDUL ES OF INVESTMENTS. THEREFORE, HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS O F THE RECEIPT OF THE SUBSCRIPTIONS, AS REQUIRED UNDER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. STELLER INVESTMENTS LTD . (2001) 251 ITR 263. 2.1 AGGRIEVED BY THIS ORDER, THE ASSESSEE MO VED AN APPEAL BEFORE THE CIT(APPEALS)-XIX, NEW DELHI. IT WAS AGITA TED THAT THE ASSESSEE HAD SATISFIED ALL THE CONDITIONS REGARDING GE NUINENESS OF THE SUBSCRIPTION. HOWEVER, THE AO FAILED TO TAKE INTO ACCOUNT TH E POSSIBILITY OF SALE OF SHARES BEFORE THE END OF THE YEAR WHILE FORMING HIS OPINION IN THE MATTER. THIS POSSIBILITY WAS INDICATED TO HIM IN THE COURSE OF ASSESSMENT ITA NO. 3473(DEL)/2009 3 PROCEEDINGS ITSELF. THE EVIDENCE PRODUCED BEFOR E THE LOWER AUTHORITIES HAS BEEN DESCRIBED BY THE LD. CIT(APPEALS) O N PAGE 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW:- S.NO. NAME ADDRESS AMOUNT REMARKS 1. M/S REENA OIL INDUSTRY PVT. LTD. 206-B, MUKUND HOUSE, COMMERCIAL COMPLEX, AZADPUR, DELHI-33 5,00,000/- COP IES OF APPLICATION FOR SHARES, IT RETURN ACK., BANK STATEMENT, CONFIRMED A/C COPY, BALANCE- SHEET, P&L A/C AND CONFIRMATION LETTER WERE FILED. PAN:AACCR1410Q, WARD 4(3), AGRA. 2. M/S REENA PLASTIC PIPES PVT. LTD. 206-B, MUKUND HOUSE, COMMERCIAL COMPLEX, AZADPUR, DELHI-33 5,00,000/- COPIES OF APPLICATION FOR SHARES, IT RETURN ACK., BANK STATEMENT, CONFIRMED A/C COPY, BALANCE- SHEET, P&L A/C AND CONFIRMATION LETTER WERE FILED. PAN:AACCR1409F, WARD 4(3), AGRA. 2.2 ON THE BASIS OF THE EVIDENCE, HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAD SATISFIED ALL THE THREE INGREDIE NTS ON A PRIMA FACIE BASIS, THE ONUS OF WHICH WAS CAST ON IT U/S 68 OF THE AC T. HE REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD., 216 CTR 195 AND CONCLUDING OBSERVATIO NS FROM THAT CASE WERE REPORTED ON PAGE 7 OF THE ORDER, WHICH ARE REPRO DUCED OVERLEAF:- ITA NO. 3473(DEL)/2009 4 CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SEC. 68 OF IT ACT, 196 1? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE S IMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVE D BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 2.3 IN VIEW OF THE EVIDENCE PLACED ON RECORD AN D TAKING INTO ACCOUNT THE AFORESAID DECISION OF THE APEX COURT, HE CAME TO THE CONCLUSION THAT THERE WAS NO CASE FOR ADDITION OF RS. 10.00 LAKH TO THE TOTAL INCOME OF THE ASSESSEE. 3. BEFORE US, THE LD. DR REFERRED TO THE F ACTS OF THE CASE MENTIONED IN THE ASSESSMENT ORDER AND THE FINDING OF THE AO THAT THE NAME OF THE ASSESSEE DID NOT APPEAR IN THE SCHEDULE OF INVEST MENTS FILED BY THE SUBSCRIBERS. HE RELIED HEAVILY ON THE ORDER OF THE AO AND ARGUED THAT THE DECISION OF THE LD. CIT(APPEALS) MAY BE REVERSE D AND THAT OF THE AO MAY BE RESTORED. 3.1 IN REPLY, THE LD. AR RELIED HEAVILY ON THE ORDER OF THE LD. CIT(APPEALS) AND SUBMITTED THAT THE NAMES OF THE ASSESSEES DID NOT APPEAR IN THE SCHEDULE OF THE INVESTMENTS FOR TH E REASON THAT THEY HAD ITA NO. 3473(DEL)/2009 5 SOLD THE SHARES BEFORE THE CLOSE OF THE PREVIOUS YEAR. OTHERWISE, REQUISITE EVIDENCE TO PROVE GENUINENESS OF THE TRANSACTION HAD BEEN FILED BEFORE THE AO. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE US. FROM THE IMPUGNED ORDER, IT IS SEEN THAT COPIES OF APPLICATION FORM, ACKNOWLEDGMENT OF THE I.T. RETURN, BANK ST ATEMENT, CONFIRMED COPY OF ACCOUNT, BALANCE-SHEET AND PROFIT AND LOSS A CCOUNT WERE FILED BEFORE THE AO BY THE SUBSCRIBERS. THESE DOCUMENTS REAS ONABLY ESTABLISH THE IDENTITY OF THE SUBSCRIBERS. THE SUBSCRIPTION WAS MADE THROUGH BANK ACCOUNT AND THE SUBSCRIBERS ARE REGULARLY ASSES SED TO TAX. IT WAS ALSO EXPLAINED THAT THEY HAD SOLD THE SHARES BEFORE T HE CLOSE OF THE PREVIOUS YEAR AND THAT IS WHY THE NAME OF THE ASSESS EE DID NOT APPEAR IN THE SCHEDULE OF INVESTMENTS. IN VIEW OF THE EVIDENC E FILED IN THE ASSESSMENT PROCEEDINGS, THE CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTIONS ALSO STAND PROVED ON A PRIMA F ACIE BASIS. THEREAFTER, IF THE AO HAD ANY FURTHER SUSPICION IN THE MATTER, HE OUGHT TO HAVE MADE FURTHER ENQUIRY TO BRING EVIDENCE ON RECORD THAT THESE DOCUMENTS DID NOT REPRESENT THE REAL STATE OF AFFAIRS SO AS TO SHIFT THE BURDEN AGAIN ON THE ASSESSEE. HOWEVER, WITHOUT MAKING ANY FURT HER ENQUIRY, HE REJECTED ITA NO. 3473(DEL)/2009 6 THE EVIDENCE AND EXPLANATION FILED BY THE ASSES SEE ON THE GROUND THAT THE SCHEDULE OF INVESTMENTS DID NOT CONTAIN THE SHA RES OF THE ASSESSEE COMPANY. THIS MATTER WAS ALSO EXPLAINED TO HIM BY STATING THAT THERE IS A POSSIBILITY OF SELLING THE SHARES BEFORE THE CLOSE OF THE YEAR. NO ENQUIRY WAS MADE IN THIS RESPECT ALSO. THUS, IT IS CLEAR THAT THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS CAST ON IT U/S 68 OF THE ACT. IN VIEW THEREOF, THE LD. CIT(APPEALS) WAS RIGHT IN DELETING THE ADDITION BY RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF L OVELY EXPORTS PVT. LTD. 5. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 MARCH, 2010. SD/- SD/- (A.D.JAIN) (K.G.BAN SAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 31.03.2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. M/S T.S.PULSES PVT. LTD., NEW DELHI. 2. ITO, WARD 16(1), NEW DELHI. 3. CIT(A) 4. CIT, NEW DELHI. 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRA R.