DCIT 13(3)(1), MUMBAI V. RANE PRKAHSHAN P. LTD, MUMBAI

ITA 3745/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1512 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: DR P DANIEL
• Keywords: Unexplained cash credit; Bogus Share capital; Share purchase agreement; Accommodation entries; Onus to prove; Retraction; Set aside
• Section: 143(3); 133(6); 147; 68; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.3745/M/2017 ASSESSMENT YEAR: 2009-10 DCIT 13(3)(1), ROOM NO.229, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20 VS. M/S. RANE PRAKASHAN PVT. LTD., 102, SAI POOJA, 1 ST FLOOR, PLOT NO.390, 16 TH ROAD, NEAR RAJNI MATERNITY HOME, BANDRA (W), MUMBAI 52 PAN: AADCR8804M (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : DR. P. DANIEL, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 20.02.2019 DATE OF PRONOUNCEMENT : 14.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 15.03.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ID. C1T (A) WAS CORRECT IN DELETING THE ADDITION OF RS. 75.00.000/- ON ACCOUNT OF SHARE PREMIUM/SHARE APPLICATION MONEY/UNEXPLAINED CASH CR EDIT U/S68 WITHOUT APPRECIATING THE FACT THAT SHRI PRAVEEN KUMAR JAIN WAS PROVED TO BE ONE OF LEADING ENTRY PROVIDERS OPERATING IN -MUMBAI WHO COULD NOT BE PRODUCED BY THE ASSESSEE AS HIS WITNESS DURING THE ASSESSMENT PROCEEDINGS BE FORE THE AO. ITA NO.3745/M/2017 M/S. RANE PRAKASHAN PVT. LTD. 2 2. THE APPELLANT PRAYS THAT THE ORDER OF THE C1T( A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR AL TER ALL OR ANY OF THE GROUNDS OF APPEAL WHICH MAY BE NECESSARY. 3. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS. 75,00,000/- BY CIT(A) AS ADDED BY THE AO ON ACCOUNT OF SHARE APPLICATION/SHARE PREMIUM/UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT. 4. THE FACTS IN BRIEF ARE THAT ASSESSEE FILED THE R ETURN OF INCOME ON 30.9.2009 DECLARING LOSS OF RS.5,08,32,96 4/- AND SAME WAS CARRIED FORWARD WHICH WAS PROCESSED U/S 14 3(1) OF THE ACT ON 16.3.2011. THE ASSESSMENT U/S 143(3) WAS ALS O COMPLETED ON 23.12.2011 ASSESSING THE SAME LOSS. UP ON RECEIVING INFORMATION FROM THE DGIT(INV) MUMBAI THA T THE ASSESSEE IS BENEFICIARIES OF ACCOMMODATION ENTRIES OF BOGUS SHARE APPLICATION MONEY FROM CONCERNS OPERATED AND CONTROLLED BY PRAVEEN KUMAR JAIN AND THE AO FOUND THAT ASSESSE E HAS RECEIVED SHARE APPLICATION MONEY FROM FIVE PARTIES AS UNDER: 1.DUKE BUSINESS (P) LTD 15,00,000 2JAVDA INDIA IMPEX PVT LTD 15,00,000 3.KUSH HINDUSTAN ENT LTD 15,00,000 4.TRIANGULAR INFOCOM LTD 15,00,000 5.VANGUARD JEWELS LTD 15,00,000 THE SAID INFORMATION WAS NOT AVAILABLE WITH THE AO AND THEREFORE COULD NOT BE CONSIDERED WHILE FRAMING THE ASSESSMENT U/S 143(3). THE AO NOTED THAT THE SHRI PRAVEEN KUMA R JAIN AND OTHER DIRECTORS ADMITTED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT THAT THEY NOT ENGAGED IN ANY REAL BUSINESS BUT ONLY PROVIDING ACCOMMODATION ENTRIES. ON THE SAID BASIS, AO RE- ITA NO.3745/M/2017 M/S. RANE PRAKASHAN PVT. LTD. 3 OPENED THE ASSESSMENT U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 26.3.2015.DURING THE ASSESSMENT PROCEEDINGS THE AO ALSO ISSUED NOTICE U/S 133(6) TO THE FIVE PARTIES BUT DI D NOT RECEIVE ANY REPLY TILL THE FRAMING OF THE ASSESSMENT U/S 14 3(3) R.W.S.147 OF THE ACT. THE ASSESSEE ALSO FILED BEFORE THE AO S HARE HOLDING PATTERN, DIVIDEND PAID TO INVESTORS, DETAILS OF SHA REHOLDERS REGISTERS AND DETAILS OF OTHER INVESTMENTS ETC. THE AO EVEN ASKED THE ASSESSEE TO PRODUCE THE INVESTORS BUT COU LD NOT PRODUCE AND FINALLY THE ENTIRE AMOUNT OF RS. 75,00, 000 WAS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 AND ADDED TO THE INCOME OF THE ASSESSEE. 5. IN THE APPELLATE PROCEEDINGS THE LD CIT(A) ALLOW ED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT THE AO HAS RELIED ON THE REPORT OF INVESTIGATION WING AND HAS FAILED TO BRING ANY EVIDENCES ON RECORDS TO SHOW THE MONEY TRAIL IN RES PECT OF THE AMOUNT RECEIVED BY THE ASSESSEE. THE AO HAS ONLY C ONSIDERED THE STATEMENT OF PRAVEEN KUMAR JAIN AND OTHER DIREC TORS BUT HAS NOT CONSIDERED THE RETRACTION IN WHICH IT WAS S TATED THAT THE STATEMENT HAS BEEN RECORDED UNDER PRESSURE AND DURE SS. THE LD CIT(A) ALSO NOTED THAT AO HAS NOT COMMENTED AND CO NSIDERED THE ASSESSEE SUBMISSIONS THAT SHRI PRAVEEN KUMAR IS NOT INVOLVED IN ANY CAPACITY IN THE INVESTING COMPANIES . THE LD CIT(A) ALSO NOTED THAT NOTICES U/S 133(6) WERE ISSU ED AT THE FAG END OF THE PROCEEDINGS I.E. NOTICES WERE ISSUED ON 15.12.2015 AND ASSESSMENT ORDER WAS PASSED ON 31.3.2015 AND IT IS NOT THE CASE THAT THE NOTICES WERE NOT SERVED. THE LD CIT(A ) ALSO OBSERVED THAT THE ASSESSEE HAS FILED DOCUMENTARY EV IDENCES SUCH AS MOA, PANS, BALANCE SHEET AND PROFIT AND LOS S ACCOUNT, SHARE APPLICATION FORM AND CONFIRMATION LETTERS OF THE INVESTORS ITA NO.3745/M/2017 M/S. RANE PRAKASHAN PVT. LTD. 4 BEFORE THE AO AS WELL AS DURING APPELLATE PROCEEDIN GS. THE LD CIT(A) ALSO OBSERVED THAT NO CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE OF SHRI PRAVEEN KUMAR WHOSE STATEMENT WAS USED AGAINST THE ASSESSEE AND ALSO THAT THE STATEMENT GI VEN BY SHRI PRAVEEN KUMAR DID NOT NAME THE ASSESSEE. THE LD CIT (A) HAS GIVEN A FINDING THAT THE ASSESSEE HAS FILED ALL THE INFORMATION/DOCUMENTARY EVIDENCES WITH THE AO AND T HUS DISCHARGED THE INITIAL BURDEN WHEREAS THE AO HAS NO T CARRIED OUT ANY FURTHER VERIFICATION EXCEPT RELYING ON THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN. FINALLY RELYING ON THE DE CISIONS OF CIT VS LOVELY EXPORT 6, DTR 309 (SC), CREATIVE WORLD TEL EFIMS LTD 333 ITR 100 (BOM), CIT VS ORISSA CORPORATION 159 ITR 78 (SC) AND VARIOUS OTHER DECISIONS AND HOLDING THAT SECTIO N 69 PLACES BURDEN OF PROOF ON THE TAX PAYER TO EXPLAIN THE NAT URE AND SOURCE OF THE CREDIT APPEARING IN THE BOOKS OF ACCO UNTS. BUT WHEN THE ASSESSEE SUBMITS THE BASIC INFORMATION LIK E IDENTIFICATION, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS ONUS IS DISCHARG ED BY THE ASSESSEE AO DISBELIEVE THE GENUINENESS, HE HAS TO P ROVE OTHERWISE, MERELY DOUBTING AND POINTING OUT SOME DI SCREPANCY IS NOT FOUNDATION FOR DISCARDING THE GENUINENESS OF THE DEPOSIT OR SHARE MONEY OF SUBSTANCE OF THE MATTER AS HAS B EEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS GUJA RAT HEAVY CHEMICALS LTD (2002)265 ITR 795(SC.) AND THUS DELET ED HE ADDITION. 6. THE LD DR RELIED HEAVILY ON THE ORDER OF AO AND SUBMITTED THAT THE ASSESSEE IS BENEFICIARY OF ACCOMMODATION E NTRIES RACKET OPERATED BY SHRI PRAVEEN KUMAR JAIN AND ASSOCIATES WHICH WAS CANDIDLY ADMITTED IN THE STATEMENTS RECORDED U/S 13 2(4) OF THE ITA NO.3745/M/2017 M/S. RANE PRAKASHAN PVT. LTD. 5 ACT THAT THEY ARE NOT DOING ANY BUSINESS EXCEPT PRO VIDING ACCOMMODATION ENTRIES. THUS THE ASSESSEE IS CLEAR B ENEFICIARY OF THE SHARE CAPITAL ENTRIES FROM THE SAID ENTITIES. T HE SUBSEQUENT RETRACTION IS AN AFTERTHOUGHT AND AO HAS RIGHTLY MA DE THE ADDITION U/S 68. THE LD DR SUBMITTED THAT MERELY DO CUMENTARY EVIDENCES WOULD NOT SATISFY THE CONDITIONS OF SECTI ON 68 OF THE ACT. EVEN THE LETTER ISSUED BY THE AO U/S 133(6) WE RE NOT RESPONDED THOUGH SERVED UPON THEM DESPITE ALLOWING 15 DAYS TIME. THE DR PRAYED THAT IN VIEW OF THESE FACTS TH E ORDER OF AO MAY BE RESTORED. 7. THE LD AR VEHEMENTLY SUBMITTED BEFORE THE BENCH THE ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES SUCH AS (I) SHARE APPLICATION FORMS WITH ACCEPTANCE LETTER (II)CONFIR MATION LETTERS (III) PANS (COPIES OF ITR) (IV) AUDITED ANNUAL ACCO UNTS (V) BANK STATEMENTS TO EVIDENCE THAT TRANSACTIONS WERE THROU GH BANKING CHANNELS AND SHARE CERTIFICATES TO PROVE ALL IDENTI FICATION, GENUINENESS OF THE TRANSACTIONS OF SHARE CAPITAL AN D CREDITWORTHINESS OF THE CREDITORS AND THUS DISCHAR GED THE ONUS CAST UPON THE ASSESSEE. EVEN ALL THESE COMPANIES WE RE ACTIVE ON ROC WEBSITE AND HAVE BEEN REGULARLY FILING THEIR R ETURNS. THE LD AR ARGUED THAT THE AO HAS TOTALLY FAILED TO FURT HER INVESTIGATE THE MATTER AND DISPROVE THE EVIDENCES FILED BY THE ASSESSEE AND HAS ONLY RELIED ON THE STATEMENT OF SHRI PRAVEEN KU MAR JAIN AND OTHER GROUP DIRECTORS WITHOUT CONSIDERING THE F ACT THAT THE STATEMENTS WERE RETRACTED BY THEM. EVEN THE SHRI P RAVEEN KUMAR JAIN DID NOT NAME THE ASSESSEE AS BENEFICIARY OF ACCOMMODATION ENTRIES IN HIS STATEMENT. EVEN THE ST ATEMENT OF PRAVEEN KUMAR JAIN WAS RELIED BY THE AO BUT NO CROS S EXAMINATION WAS PROVIDED TO THE ASSESSEE DESPITE SP ECIFIC ITA NO.3745/M/2017 M/S. RANE PRAKASHAN PVT. LTD. 6 REQUEST FROM THE ASSESSEE. THE LD AR SUBMITTED THAT OUT OF FIVE PARTIES, TWO PARTIES NAMELY JAVDA INDIA IMPEX LTD AND KUSH HINDUSTAN ENTERTAINMENT LTD WERE ALREADY CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL HYDERABAD IN THE C ASE OF M/S KOMAL AGROTECH PVT LTD VS ITO WHEREIN THE TRIBUNAL H ELD THAT ADDITION MADE U/S 68 IS BAD IN LAW. THESE COMPANIES ARE SHAREHOLDERS IN THE ASSESSEE COMPANY. THE LD AR FUR THER SUBMITTED THAT PROVISO TO SECTION 68 WOULD NOT BE A PPLICABLE TO SHARE CAPITAL AND SHARE PREMIUM PRIOR TO 01.04.2013 AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF M/S GAGANDEEP INFRASTRUCTURE LTD 394 ITR 680 (BOM) AND THUS ADDIT ION WAS RIGHTLY DELETED. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORDS, WE OBSERVE THAT THE ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES TO PROVE IDENTIFICATION , GENUI NENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS IN THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS. THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON IT WHERE AS THE AO HAS NOT DONE ANY FURTHER VERIFICATION AND INVESTIGA TION TO DISAPPROVE THE EVIDENCES FILED BY THE ASSESSEE. THE AO ONLY HARPED ON THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN WHICH HAS BEEN RETRACTED LATER ON. MOREOVER OUT OF FIVE INVES TOR, TWO NAMELY JAVDA INDIA IMPEX LTD AND KUSH HINDUSTAN ENTERTAINMENT LTD WERE ALREADY CONSIDERED BY THE C OORDINATE BENCH OF THE TRIBUNAL HYDERABAD IN THE CASE OF M/S KOMAL AGROTECH PVT LTD VS ITO WHEREIN THE TRIBUNAL HELD TH AT ADDITION MADE U/S 68 IS BAD IN LAW. WE ALSO FIND MERITS IN T HE ARGUMENTS OF THE LD AR THAT THE SHARE CAPITAL AND SHARE PREMI UM CAN NOT BE ADDED U/S 68 IN VIEW OF THE PROVISO TO SECTION 6 8 AS THAT IS ITA NO.3745/M/2017 M/S. RANE PRAKASHAN PVT. LTD. 7 EFFECTIVE AND APPLICABLE FROM 1.4.2013.WE HAVE PERU SED THE DECISIONS RELIED UPON BY THE ASSESSEE AND ARE OF TH E OPINION THAT THE CASE IS SQUARELY COVERED BY THEM. ACCORDINGLY W E DO NOT FIND ANY INFIRMITIES IN THE ORDER OF CIT(A) WHO HAS PASS ED A VERY REASONED ORDER AND ACCORDINGLY APPEAL OF THE REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.03.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.