Astt. Commissioner of Income Tax, Lucknow V. Late Shri Sanjiv Mishra (through legal heir Smt. Malti Mishra), Lucknow

ITA 355/LKW/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4055 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Share purchase agreement
• Section: 92C; 133(6); 147; 68; 148

Judgement Text

I.T.A. NO.355/LKW/15 ASSESSMENT YEAR:2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI ABY T. VARKEY, JUDICIAL MEMBER ITA NO.355/LKW/2015 ASSESSMENT YEAR:2004-05 A.C.I.T., CENTRAL CIRCLE-II, LUCKNOW. VS. LATE SHRI SANJIV MISHRA, (THROUGH L/H SMT. MALTI MISHRA) 255/62, KUNDRI RAKABGANJ, LUCKNOW. PAN:ADFPM6670E (APPELLANT) (RESPONDENT) O R D E R PER P. K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-III, LUCKNOW DATED 31/01/2015 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS: 1. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.4,89,20,000/- ON ACCOUNT OF UNACCOUNTED INCOME INTRODUCED IN THE FORM OF SHARE HOLDERS FUND IN M/S SHYAM VANASPATI OILS LTD. IN TH E HAND OF ASSESSEE WHICH HAS PROPERLY BEEN MADE BY AO ON SUBSTANTIVE BASIS. 2. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,89,20,000/- ON ACCOUNT OF UNACCOUNTED/ UNEXPLAINED CASH U/S 68 OF THE I.T. AC T, 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESSE E FAILED TO ESTABLISH AS TO HOW SUCH A HUGE SUM CAME TO BE THERE IN ONE PLACE. APPELLANT BY SHRI O. P. MEENA, CIT, D.R. RESPONDENT BY SHRI RAKESH GARG, ADVOCATE DATE OF HEARING 07/06/2016 DATE OF PRONOUNCEMENT 10 / 08 /2016 I.T.A. NO.355/LKW/15 ASSESSMENT YEAR:2004-05 2 3. THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,89,20,000/- ON ACCOUNT OF UNEXPLAINED CASH IN TOTAL DISREGARD OF THE DOCUMENT AS PER ANNEXURE-SV-13 SV-14 DURING THE COURSE OF SEARC H WHICH CONSTRUCTED AN EVIDENCE IN TERMS OF SECTION 2 92C OF THE I.T. ACT. 2. THE ONLY INVOLVED IN ALL THE GROUNDS RELATES TO THE DELETION OF ADDITION OF RS.4,89,20,000/- ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INCOME INTRODUCED IN THE ASSESSEE IN TH E FORM OF SHAREHOLDERS FUND. THE BRIEF FACTS OF THE CASE ARE THAT THERE HAS BEEN A SURVEY CONDUCTED ON 24/01/2006. CENTRAL EXCISE AUT HORITIES CARRIED OUT THE SURVEY IN THE FACTORY CUM RESIDENTIAL PREMISES OF THE ASSESSEE. IN CONSEQUENT THEREOF, ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BUT THE PROCEEDINGS WERE DROPPED BY THE THEN ASSESSING OFFI CER. SUBSEQUENTLY, SEARCH & SEIZURE OPERATION WAS CONDUCTED ON 25/11/2 010 ON ASSESSEES DIFFERENT PREMISES SITUATED AT LUCKNOW AND KOLKATA. THE CASE WAS REOPENED WITH THE PRIOR APPROVAL OF CIT-I, LUCKNOW. AFTER RECORDING THE REASONS U/S 148 OF THE ACT, WHICH ARE REPRODUCED IN THE ASSESSMENT ORDER AT PAGE NO. 2 & 3 PARA 3.1, IN RESPONSE TO THE NOTI CE, THE ASSESSEE FILED THE RETURN OF INCOME AND RAISED OBJECTION ABOUT THE REOPENING OF THE ASSESSMENT AND THE OBJECTIONS OF THE ASSESSEE WERE DISPOSED OF VIDE LETTER DATED 20/01/2004. SUBSEQUENTLY, AFTER ISSUING NOTI CE U/S 143(2) AND 142(1), THE PROCEEDINGS WERE INITIATED. THE ASSES SEE AGAIN OBJECTED THE REOPENING OF THE ASSESSMENT TO WHICH THE ASSESSING OFFICER DID NOT AGREE. ON MERIT, THE ASSESSEE ALSO SUBMITTED THE VARIOUS E VIDENCES TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS IN RESPECT OF THE SUM OF RS.4,89,20,111/-. THE ASSESSING OFFICER DID NOT AGREE WITH THE ASSESSEE AND RELYING ON THE BASIS OF ANNEXURE AV-13 AND SV-14 WAS OF THE VIEW THAT THE ASSESSEE HAS INTRODUCED RS.4,89,20,00 0/- IN CASH AS SHARE CAPITAL IN M/S SHYAM VANASPATI OILS LTD. WHICH INCL UDES RS.4,05,00,000/- IN I.T.A. NO.355/LKW/15 ASSESSMENT YEAR:2004-05 3 CASH FROM THREE COMPANIES OF DELHI ON 13 TH , 14 TH & 15 TH OCTOBER, 2003 AS UNDER: (I) M/S SUN SHINE CAPITAL LTD., 3-D.B. GUPTA ROAD, NEW DELHI FOR RS.1,30,80,000/- (II) M/S STELLAR INVESTMENT LTD., 460 NEHRU PLACE, NEW D ELHI FOR RS.1,49,35,000/- (III) M/S BETSY GROWTH FINANCIAL LTD., 3-D.B. GUPTA ROAD, NEW DELHI FOR RS.1,24,85,000/-. 2.1 THE ORIGINAL SHARE CERTIFICATES PURPORTED TO HA VE BEEN ISSUED IN THE NAME OF THESE THREE COMPANIES WERE AMONG THE 500 SH ARE CERTIFICATES FOUND AT THE COMPANYS REGISTERED OFFICE AT KOLKATA DURING THE SEARCH ON 25/11/2010. THE ASSESSING OFFICER CALLED FOR THE I NFORMATION U/S 133(6) OF THE ACT. OUT OF THESE COMPANIES, TWO COMPANIES M/S SUNSHINE CAPITAL LIMITED AND M/S BESTY GROWTH FINANCE LIMITED HAVE D ENIED THAT THEY HAVE EVER APPLIED/INVESTED IN THE SHARE CAPITAL OF M/S S HYAM VANASPATI OILS LTD. WHILE THE LETTER SENT TO M/S STELLER INVESTMENT LIM ITED WAS RECEIVED BACK UNSERVED. THE SUMMON U/S 131(1A) WERE ISSUED TO M/ S STELLER INVESTMENT LIMITED, M/S WORLD LINK TELECOM LTD. AND M/S HILLRIDGE INVESTMENT LTD. ASKING FOR THE CERTAIN INFORMATION BUT ALL THE THREE SUMMONS WERE RETURNED BY POSTAL DEPARTMENT. INSPEC TOR WAS DEPUTED TO SERVE THE SUMMONS AND CARRY OUT THE INQUIRY. THE A SSESSING OFFICER THEREFORE, ULTIMATELY TOOK THE VIEW THAT THESE COMP ANIES HAVE NEVER APPLIED FOR THE SHARE CAPITAL AND ULTIMATELY THE AS SESSING OFFICER DID NOT ACCEPT THE SOURCE OF THE CASH FOUND AT THE TIME OF SEARCH TO BE THE SHARE CAPITAL OF M/S SHYAM VANASPATI OILS LTD. HE THEREF ORE, MADE THE ADDITION OF THE CASH FOUND ON 20/10/2003 OF RS.4,89,20,000/- IN THE INCOME OF THE ASSESSEE AS UNACCOUNTED INCOME GENERATED FROM THE P RODUCTION OF GUTKHA. WHEN THE MATTER WENT BEFORE THE CIT(A), TH E CIT(A) REJECTED THE GROUND OF THE ASSESSEE AS FAR IT RELATES TO THE VAL IDITY OF INITIATION OF PROCEEDINGS U/S 148 OF THE ACT BUT DELETED THE ADDI TION MADE BY THE I.T.A. NO.355/LKW/15 ASSESSMENT YEAR:2004-05 4 ASSESSING OFFICER BY OBSERVING ON THE BASIS OF THE ASSESSMENT ORDER MADE IN THE CASE OF M/S SHYAM VANASPATI OILS LTD. FOR AS SESSMENT YEAR 2004-05 ON 22/12/2011 AS UNDER: IN THE ABOVE ORDER DATED 22/12/2011, THE ASSESSING OFFICER HAS DETERMINED AN UNDISCLOSED INCOME OF RS.4,89,20, 000/- AND THE SAME WAS ADDED AS ASSESSEE'S OWN INCOME FROM UNDISCLOSED SOURCES ON SUBSTANTIAL BASIS. FROM THE PERUSAL OF THE ABOVE ORDER IT IS ALSO SEEN THAT THERE IS NO ME NTION THAT THIS ADDITION IS BEING MADE ON PROTECTIVE BASIS IN THE C ASE OF SHYAM VANASPATI OILS LTD. FROM THE ABOVE FACTS IT IS SEEN THAT THE DEPARTMENT IN THIS CASE HAS ALREADY TAKEN A VIEW AL TER EXAMINING IN DETAIL UNDER SCRUTINY, THAT THIS ENTIR E AMOUNT OF SHARE CAPITAL OF RS.4,89,20,000/- IS FROM UNDISCLOS ED SOURCES AND THE DEPARTMENT HAS ADDED THE SAME IN THE CASE O F M/S SHYAM VANASPATI OILS LTD. FOR A.Y. 2004-05 VIDE ORD ER U/S 147/143(3) DATED 22/12/2011.(SUPRA). THIS ADDITION IS SUBSTANTIAL. EVEN IN THE BOOKS OF ACCOUNTS OF SHYAM VANASPATI OILS LTD., THE SHARE APPLICATION MONEY IS SHOWN IN THE BALANCE SHEET OF COMPANY AND FOR THE YEAR UNDER CONSIDERATI ON THE AMOUNT IN SHARE CAPITAL IS AS UNDER:- (C) ISSUED, SUBSCRIBED AND PAID UP CAPITAL RS.4,5 8,20,000/- (D)SHARE APPLICATION MOONY PENDING ALLOTMENT RS. 36,00,000/- (AS GIVEN IN THE AUDITED BALANCE SHEET RS.4,94,20,000/- (LESS): SHARE ISSUED AT THE TIME OF INCORPORATION OF THE COMPANY RS. 5,00,000/- OUT OF THIS ENTIRE AMOUNT, THE ASSESSING OFFICER AD DED RS.4,89,20,000/- AS INCOME FROM UNDISCLOSED SOURCES OF THE COMPANY AS PER ORDER DATED 22.12.2011 U/S 147/143(3 ) (SUPRA). THIS SHARE CAPITAL IS ALSO SHOWN IN THE AN NUAL RETURN OF COMPANY I.E. SHYAM VANASPATI OILS LTD. FILED BEFORE HOC. THEREFORE, THE SAME ADDITION CANNOT BE TAXED TWICE. HENCE, ALTER CONSIDERING THE ABOVE STATED FACTS THE ADDITION OF RS.4,89,20,000/-IS HEREBY DELETED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ENTIRE AMOUNT OF SHARE CAPITAL OF RS.4,89,20,000/- WAS ADDED BY THE I.T.A. NO.355/LKW/15 ASSESSMENT YEAR:2004-05 5 ASSESSING OFFICER IN THE CASE OF M/S SHYAM VANASPAT I OILS LTD. IN RESPECT OF WHICH CASH WAS FOUND DURING THE COURSE OF SEARCH . ONCE THE ADDITION HAS BEEN MADE IN THE HANDS OF M/S SHYAM VANASPATI O ILS LTD., WE DO AGREE WITH CIT(A) THAT IN RESPECT OF THE SAME SOURC E THE ADDITION OF THE INCOME CANNOT BE MADE AGAIN IN THE HANDS OF THE ASS ESSEE. LEARNED A. R. OF THE ASSESSEE WAS FAIR ENOUGH TO CONSEDE THAT IN THE CASE OF THE COMPANY THIS ADDITION HAS NOT BEEN DELETED. ONCE T HE SAME AMOUNT HAS BEEN TREATED AS THE INCOME FROM UNDISCLOSED SOURCES IN THE CASE OF M/S SHYAM VANASPATI OILS LTD. AGAIN THE ADDITION CANNOT BE MADE IN THE CASE OF THE ASSESSEE AS IT WILL TANTAMOUNT TO BE THE DOU BLE ADDITION IN RESPECT OF THE SAME CASH FOUND DURING THE COURSE OF SEARCH. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER O F CIT(A) IN DELETING THE ADDITION IN THE CASE OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 10/08/2016) SD/. SD/. ( ABY T. VARKEY ) ( P. K . BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:10/08/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR