DCIT, New Delhi V. M/s. Green Valley Plywood Ltd., New Delhi

ITA 3688/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97531 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T VASANTHAN
• Keywords: Unexplained cash credit; Onus to prove
• Section: 143(3); 68; 148

Judgement Text

1 ITA NO. 3688/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 3688/DEL/2013 (ASSESSMENT YEA R-2004-05) DCIT CIRCLE 12(1) NEW DELHI (APPELLANT) VS GREEN VALLEY PLYWOOD LTD. 2941/3, CHUNA MANDI PAHARGANJ NEW DELHI AAACG0323P (RESPONDENT) APPELLANT BY SH. VED JAIN, CA RESPONDENT BY SH.T. VASANTHAN, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 26/03/2013 PASSED BY CIT(A) XV, NEW DELHI FOR ASSES SMENT YEAR 2004-2005. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE IS AS FOLLOWS: 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW IN HOLDING THAT AOS ACTION IN REOPENING THE PROCEEDINGS U/S 148 WAS INCORRECT? DATE OF HEARING 18.09.2015 DATE OF PRONOUNCEMENT 30.09.2015 2 ITA NO. 3688/DEL/2013 2. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS.45,900,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT UNDER SECTION 68 OF THE IT ACT, 1961. 3. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 8 TH SEPTEMBER, 2004 DECLARING BUSINESS LOSS OF RS. 11,03,2002/- AS WELL S INCOME OF RS. 70,70,033/- U/S. 115 JB OF THE INCOME TAX ACT, 1961. THE SAID RETURN WAS SELECTED FOR SCRUTINY. THE AO HAS ISSUED A DETAILED QUESTIONNAIRE. IN RESPONSE THERE TO, THE ASSESSEE HAS FILED DETAILED REPLY VIDE LETTER DATED 6 TH DECEMBER, 2006 THEREBY ASSESSEE SUBMITTED ALL THE D ETAILS INCLUDING THE DETAILS OF THE SHARE APPLICATION MONE Y RECEIVED DURING THE YEAR ALONG WITH CONFIRMATION AND DOCUMEN TARY EVIDENCES THEREOF (PAPER BOOK PG. 25-26, RELEVANT PARA 8 ON PAGE 26.) THE AO THEREAFTER COMPLETED THE ASSESSMENT U/S 143(3) VIDE ORDER DATED 29 TH DECEMBER, 2006 ( PAPER BOOK PG. 30-33). THEREAFTER THE ASSESSEE RECEIVED A NOTICE U/S 148 DATED 30 TH MARCH, 2011. THE ASSESSEE FILED THE RETURN IN RESPONSE THERETO. AS PER THE REASONS SUPPLIED BY T HE AO THE ASSESSMENT WAS REOPENED ON THE BASIS OF ALLEGATION THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRY OF RS.45, 00,000/- DURING THE YEAR UNDER CONSIDERATION. 4. IN RESPONSE THERETO, THE ASSESSEE FILED COMPLETE DETAILS OF THE SHARE CAPITAL RECEIVED DURING THE YEAR (PAPER BOOK PG. 39-40) ALONG WITH EVIDENCES WHICH INCLUDED SHARE APPLICATI ON FORM, 3 ITA NO. 3688/DEL/2013 BOARD RESOLUTION, CONFIRMATION, MEMORANDUM OF ARTIC LES, BANK STATEMENT, CHEQUE COPY, INCOME TAX RETURN, BAL ANCE SHEET, FORM NO. 18 AND 32, ETC. 5. THE AO PASSED AN ORDER WHEREBY MAKING AN ADDITIO N OF RS.45,00,000/-. THE AO HELD THAT AN AMOUNT OF RS.45,00,000/- HAS BEEN CREDITED IN THE BOOKS OF TH E ASSESSEE FOR WHICH NO EXPLANATION HAS BEEN PLACED ON RECORD. 6. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE CIT(A) WHEREBY IT CHALLENGED:- (I) THE REOPENING OF THE ASSESSMENT (II) IT CHALLENGED THAT THE AMOUNT ADDED RS.45,00,000/- IS NOT CORR ECT AMOUNT. (III) IT ALSO CHALLENGED THAT ADDITION ON ACCOUNT OF SHARE CAPITAL CANNOT BE MADE IN VIEW OF THE EVIDENCES SUBMITTED BY THE ASSESSEE. 7. THE CIT(A) ALLOWED THE APPEAL ON ALL THE THREE G ROUNDS. THE CIT(A) QUASHED THE REOPENING AND ACCORDINGLY UPHELD THE CONTENTION OF THE ASSESSEE THAT REOPENING IS BAD . 4 ITA NO. 3688/DEL/2013 8. THE DR SUBMITTED THAT THE ASSESSEE HAS RECEIVED CHEQUES AMOUNTING TO RS. 45,00,000/- THROUGH TRANSACTIONS, WHERE IN FACT NO REAL TRANSACTIONS TOOK PLACE. THE GENUINENE SS AND CREDITWORTHINESS OF THE PERSONS GIVING CAPITAL TO T HE ASSESSEE WAS NOT PROVED AND THE ASSESSEE FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE PERSON WHO CLAIMED TO BE THE SHAREHOLDER OF THE ASSESSEE C OMPANY. THE DR TOTALLY RELIED UPON THE ORDER OF THE ASSESSI NG OFFICER. THE DR SUBMITTED THAT THE RE-OPENING WAS PROPER. TH E DR FURTHER SUBMITTED THAT THE ASSESSEES CASE IS GOVER NED BY HONBLE SUPREME COURT CASE NAVODAYA CASTLE (P.) LTD . VS. CIT [2015] 56 TAXMAN.COM 18 (SC). FOR THIS SUBMISSION THE DETAILED ORDER OF THE HONBLE DELHI HIGH COURT ([2 014] 367 ITR 306 (DEL) WAS SUBMITTED DURING THE COURSE OF HEARIN G. THE HONBLE HIGH COURT HELD THAT IT WAS ACCEPTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE DIRECTORS AND TH E PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THAT AS PER THE INFORMATION AND DETAILS COLLECTED B Y THE ASSESSING OFFICER FROM THE CONCERNED BANK, THE ASSE SSING OFFICER HAD OBSERVED THAT THERE WERE GENUINE CONCER NS ABOUT IDENTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACTIONS. THUS, THE MATTER W AS REMITTED TO THE TRIBUNAL FOR FRESH ADJUDICATION. T HE DR FURTHER SUBMITTED THAT THE CONFIRMATION AND THE EVI DENCE HAS TO BE TAKEN INTO ACCOUNT AND THE ONUS LIES ON THE A SSESSEE AND NOT ON THE DEPARTMENT. THEREFORE, THE AO HAS CORRE CTLY TAKEN 5 ITA NO. 3688/DEL/2013 INTO ACCOUNT ALL THE FACTORS. THE DR FURTHER SUBMIT TED THAT THE CIT(A) HAS WRONGLY STATED THAT THE APPELLANT HAS D ISCHARGED THE INITIAL ONUS OF ESTABLISHING THE BONAFIDE ALL T HE TRANSACTIONS AND THE AO WAS NOT JUSTIFIED IN IGNORI NG VARIOUS EVIDENCES PROVIDED TO HIM BY THE ASSESSEE. THE FI NDING GIVEN BY THE CIT(A) THAT NOTHING ADVERSE HAS BEEN RECORDE D BY THE AO TO ESTABLISH THAT THE AMOUNT OF SHARE APPLICATI ON MONEY OF RS.45 LACS RECEIVED BY THE ASSESSEE FROM THE SAID P ARTIES, ARE NOT PROPER AS PER THE DR. THE DR ALSO RELIED UPON T HE JUDGMENT OF CIT VS. EMPIRE BUILTECH P. LTD. [2014] 366 ITR 110 (DEL) WHEREIN AGAIN THE HONBLE DELHI HIGH COUR T HELD THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO SHOW THE GENUINENESS OF THE IDENTITY OF THE INDIVIDUALS OR E NTITIES WHICH SEEK TO SUBSCRIBE TO ITS SHARE CAPITAL. 9. THE AR SUBMITTED THAT THE ASSESSEE HAS GIVEN DET AILS OF SHARE APPLICATION MONEY RAISED DURING THE YEAR ALONG WITH CONFIRMATION AND DOCUMENTARY EVIDENCE THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REOPENING TH E MATTER UNDER SECTION 148. (PG. 26 POINT 8 OF THE PAPER BOO K). THE AR FURTHER SUBMITTED THAT THE CASE OF NAVODAYA CASTLES PVT. LTD. (SUPRA) WILL NOT BE APPLICABLE AS IN THE PRESENT CA SE THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF BY SUBM ITTING THE DOCUMENTARY EVIDENCE AT THE TIME OF ORIGINAL ASSESS MENT. 6 ITA NO. 3688/DEL/2013 SIMILARLY, THE AR SUBMITTED THAT THE CASE OF EMPIRE BUILTECH (SUPRA) WILL ALSO BE NOT APPLICABLE IN PRESENT CASE . 10. WE HAVE PERUSED ALL THE PROCEEDINGS AND HEARD B OTH THE PARTIES AFTER GOING THROUGH THE JUDGMENTS SUBMITTED BY THE ASSESSEE AS WELL AS BY THE DEPARTMENT. AS REGARDIN G THE ISSUE OF REOPENING OF THE ASSESSMENT, IT IS TO BE NOTED T HAT AO IN THE REASONS HAS MENTIONED A SUM OF RS.45,00,000/- FROM 9 PARTIES. WHEREIN THE AMOUNT IN THE CASE OF KUBERCO SALES PVT. LTD AND M/S SHRINIWAS LEASING & FINANCE HAS BEEN MENTIONED TWICE. FURTHER, THE ASSESSEE HAS NOT REC EIVED ANY SHARE CAPITAL FROM M/S VR TRADERS AND M/S SHRINIWA S LEASING & FINANCE. THEREFORE THE CORRECT AMOUNT IS RS.25,00,000/- FROM FIVE PARTIES. THIS FACTUAL ASP ECT HAS BEEN CONFIRMED BY THE CIT(A) AND THE SAME WAS NOT DENIED BY THE DR. THIS SHOWS NON-APPLICATION OF MIND BY AO AT THE TIME OF REOPENING OF THE ASSESSMENT AND HENCE REOPENING IS BAD IN LAW. THUS, THE NAVODAYA CASE WILL NOT BE APPLICABLE IN THE PRESENT CASE AS THE ASSESSEE HAS GIVEN THE SUBSTANT IAL EVIDENCE DURING THE COURSE OF ORIGINAL ASSESSMENT A LONG WITH CONFIRMATION TO THE AO. THE SAME WAS IGNORED BY THE AO. HENCE, ON THIS ISSUE THE GROUND NO. 1 OF THE REVENU E IS DISMISSED. 7 ITA NO. 3688/DEL/2013 11. ON THE ISSUE OF THE DISPUTED AMOUNT BEING RS.25 ,00,000 AS AGAINST RS. 45,00,000/- RECORDED IN THE REASONS AND FOR WHICH ADDITION WAS MADE, THE CIT(A) UPHELD THE CONTENTION OF THE ASSESSEE THAT ASSESSEE HAS NOT RECEIVED ANY SHARE C APITAL FROM M/S VR TRADERS AND M/S SHRINIWAS LEASING & FINANCE. IT ALSO HELD THAT THE AMOUNT IN THE CASE OF KUBERCO SA LES PVT. LTD. AND M/S SHRINIWAS LEASING & FINANCE HAS BEEN MENTIONED TWICE. ACCORDINGLY THE CIT(A) HELD THAT THE DISPUTED AMOUNT OF THE SHARE CAPITAL ON THE BASIS O F WHICH ADDITION HAS BEEN MADE BY THE AO COMES TO RS.25,00, 000/-. THE CIT(A) AFTER EXAMINATION OF THE EVIDENCES AND T HE VARIOUS JUDGMENTS FURTHER HELD THAT ASSESSEE HAS DISCHARGED ITS ONUS AND AO HAS NOT BROUGHT ANY MATERIAL TO DISCREDIT TH E EVIDENCES SUBMITTED BY THE ASSESSEE. HENCE CIT(A) R IGHTLY DELETED THE ADDITION MADE ON MERIT. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH OF SEPTEMBER 2015. SD/- SD/- ( N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/09/2015 *R. NAHEED* 8 ITA NO. 3688/DEL/2013 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 18.09.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 21.09.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 30 .09.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 30/09/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30.09.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 30.09.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 9 ITA NO. 3688/DEL/2013