ACIT, New Delhi V. M/s. KMG Rolling Pvt. Ltd., Delhi

ITA 3876/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8579 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 01-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Unexplained cash credit; Additional evidence
• Section: 69C; 131; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEM BER ITA NO. 3876/DEL/2016 [ASSESSMENT YEAR: 2012-13] THE A.C.I.T VS. M/S KMG ROLLING PVT LTD CIRCLE 14(2) 375, MAIN ROAD, GHAZIPUR NEW DELHI NEW DELHI PAN: AADCK 8087 D [APPELLANT] [RESPONDENT] DATE OF HEARING : 15.07.2020 DATE OF PRONOUNCEMENT : 16.07.20 20 ASSESSEE BY : SHRI SURESH GUPTA, CA REVENUE BY : SHRI SARAS KUMAR, DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 5, DELHI DATED 05.04.2016 PERTAINING TO A. Y 2012-13. 2 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE DREW OUR ATTENTION TO THE APPLICATION MADE U/R 27 OF THE ITA T RULES AND POINTED OUT THAT THE ASSESSEE IS CHALLENGING A PURE LEGAL G ROUND AND ITS ADJUDICATION DOES NOT REQUIRE INTENSE INVESTIGATION AND RELEVANT FACTS ARE EXPLICITLY AVAILABLE ON RECORD. 3. WITH THIS APPLICATION, THE ASSESSEE HAS CHALLENG ED THE IMPUGNED ADDITION OF RS. 2,01,50,000/- BEING SHARE APPLICATI ON MONEY, WHICH, ACCORDING TO THE ASSESSING OFFICER, ACCEPTED DURING THE YEAR UNDER CONSIDERATION AND SUBJECTED TO TAX U/S 69C OF THE I NCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT']. THE A SSESSEE CONTENDS THAT SUCH UNEXPLAINED CREDITS ARE OUTSIDE THE AMBIT OF S ECTION 69C OF THE ACT. RELIANCE HAS BEEN PLACED ON SEVERAL JUDICIAL DECISIONS. 4. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER. RIGHT FROM HIS QUERY TILL THE FRAMING OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS PROCEEDED TO EXAMINE THE CREDITS OF SHARE APPLI CATION MONEY IN LIGHT OF SECTION 68 OF THE ACT. THE ASSESSEE ITSEL F, IN ALL ITS REPLIES, HAS MADE SUBMISSION IN LIGHT OF SECTION 68 OF THE ACT. IT APPEARS THAT INADVERTENTLY, WHILE MAKING ADDITION, THE ASSESSING OFFICER HAS MENTIONED SECTION 69C OF THE ACT. 3 5. IN OUR CONSIDERED OPINION, WRONG MENTION OF SECT ION WOULD NOT VITIATE THE ENTIRE ASSESSMENT. MOREOVER, THE FIRST APPELLATE AUTHORITY, AT PARA 4.3 OF HIS ORDER, HAS ALSO ACKNOWLEDGED THI S INADVERTENT ERROR. THEREFORE, WE DO NOT FIND ANY MERIT IN THIS APPLICA TION MOVED BY THE ASSESSEE. ACCORDINGLY, THE SAME STANDS REJECTED. 6. COMING TO THE MERITS OF THE REVENUES APPEAL, TH E SOLITARY GRIEVANCE IS IN RELATION TO DELETION OF ADDITION OF RS. 2,01,50,000/-. 7. REPRESENTATIVES OF BOTH THE SIDES HAVE BEEN HEAR D AT LENGTH. CASE RECORDS CAREFULLY PERUSED AND RELEVANT DOCUMEN TARY EVIDENCES HAVE BEEN CONSIDERED IN LIGHT OF RULE 18(6) OF THE ITAT RULES. 8. FACTS ON RECORD SHOW THAT WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE HAS SHOWN SHARE APPLICATION MONEY RECEIVED FROM FIVE PARTIES AMOUNTING TO RS. 2,01,50,000/-. THE ASSESSEE WAS ASKED TO FURNISH T HE DETAILS WITH NAMES AND ADDRESSES OF THE PARTIES FROM WHOM SHARE APPLICATION MONEY HAS BEEN RECEIVED, AMOUNT AND ASSESSMENT PART ICULARS. THE 4 ASSESSEE FILED CONFIRMATIONS FROM ALL THE PARTIES, ALONGWITH BANK STATEMENTS AND COPIES OF I.T. RETURNS. 9. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FILED BANK STATEMENTS ONLY OF THE MONTH IN WHICH TRANSACTION T OOK PLACE. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE I.T. RE TURNS FILED BY THE PARTIES FOR ASSESSMENT YEAR 2012-13 SHOW INCOME BET WEEN 2 TO 3 LAKHS. TO EXAMINE THE CREDIT WORTHINESS OF THE SHA RE APPLICANTS, THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 OF THE ACT BUT NO ONE ATTENDED THE PROCEEDINGS AND AGAIN CONFIRMATIONS WE RE FILED. TAKING AN ADVERSE VIEW, THE ASSESSING OFFICER FORMED A BEL IEF THAT THE CREDITS ARE UNEXPLAINED AND, ACCORDINGLY, MADE ADDITION OF RS. 2,01,50,000/-. 10. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND STRONGLY CONTENDED THAT THE ASSESSING OFFICER NEVER ASKED THE ASSESSEE TO FURNISH COMPLETE BANK DETAILS AND, THEREFORE, TH E ASSESSEE FILED BANK DETAILS OF THE SHARE APPLICANTS ONLY FOR THE M ONTH IN WHICH TRANSACTION TOOK PLACE. IN SUPPORT, THE ASSESSEE F ILED COMPLETE BANK STATEMENTS ALONGWITH THE SOURCE OF AVAILABILITY OF FUNDS WITH THE SHARE APPLICANTS. 5 11. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, TH E LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCES. THE LD. CIT(A) FOUND THAT IN SO FAR AS THE AMOUNT OF RS. 6,50,000/- IS CONCERNED, IT IS BROUGHT FORWARD BALANCE FROM PRECEDING ASSESSMENT YEARS FROM PAWAN GOYAL AND SONS, HUF. BEING AN OPENING BALANCE, NO ADDITION COULD B E MADE U/S 68 OF THE ACT AND ACCORDINGLY, THE SAME WAS DELETED. 12. IN RESPECT OF OTHER SHARE APPLICANTS, THE LD. C IT(A), AFTER ADMITTING ADDITIONAL EVIDENCES, CALLED FOR REMAND R EPORT FROM THE ASSESSING OFFICER WHO SUBMITTED HIS REMAND REPORT D ATED 08.02.2015. 13. AFTER CONSIDERING THE OBSERVATIONS OF THE ASSES SING OFFICER IN HIS REMAND REPORT, THE LD. CIT(A) OBSERVED AS UNDER: 4.5. PERUSAL OF THE ADDITIONAL EVIDENCES SHOWS THA T IN ADDITION TO THE CONFIRMATIONS, BANK STATEMENT OF TH E RELEVANT TRANSACTION AND ITRS, WHICH THE APPELLANT PRODUCED BEFORE THE AO, BANK STATEMENT FOR THE COMPLETE FINANCIAL Y EAR, CONFIRMATION OF THE SOURCE OF SOURCE (AMIT INDUSTRI ES PVT. LTD., SHRI. SUMIT AGGARWAL AND SH. AMIT AGGARWAL) A ND THE BANK STATEMENTS OF THE ABOVE MENTIONED PARTIES HAVE BEEN FILED. IT IS UNDERSTOOD THAT SMT. MEGHA AGGARWAL IS THE 6 DAUGHTER-IN-LAW OF THE DIRECTOR OF THE COMPANY SH. PAWAN GOEL AND NEERU AGGARWAL, AMIT AGGARWAL AND SUMIT AG GARWAL ARE HER SIBLINGS. THESE PERSONS ARE DIRECTORS IN M/ S AMIT INDUSTRIES PVT. LTD., WHICH HAS FILED RETURN FOR AS SESSMENT YEAR 2012-13 SHOWING AN INCOME OF RS.11,04,117/-. T HE SOURCES OF SHARE APPLICATION MONEY BY THE SHARE APPLICANTS HAS BEEN EXPLAINED BY WAY OF FUND TRANSFER FROM AMIT INDUSTI RES PVT. LTD., AMIT AGGARWAL, SUMIT AGGARWAL AND SHASHI GUPT A. SMT. SHASHI GUPTA IS ALSO ASSESSED TO TAX WITH THE ITO, WARD 25(1) AND HAS RETURNED INCOME OF RS.3,03,072/- FOR A.Y. 2012-13. KEEPING IN VIEW THE EVIDENCES FILED IN THE FORM OF COMPLETE BANK STATEMENTS, ITRS, CONFIRMATIONS OF SO URCES FROM WHICH FUNDS HAVE BEEN TRANSFERRED AND THEIR IN COME TAX RETURNS, IT IS HELD THAT THE GENUINENESS, CREDITWOR THINESS AND IDENTITY OF THE SHARE APPLICANTS HAS BEEN PROVED BE YOND DOUBT AND HENCE NO ADDITION CAN BE MADE U/S 68. IN THIS VIEW OF THE MATTER GROUND NO. 2 & 3 ARE ALLOWED. 14. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 15. IT IS TRUE THAT THE ASSESSING OFFICER DID NOT P ROCEED FURTHER AFTER SERVING THE SUMMONS U/S 131 OF THE ACT. IN OUR CON SIDERED OPINION, IF THE SUMMONS WERE SERVED AND SHARE APPLICANTS BEING FAMILY MEMBERS, THE ASSESSING OFFICER HAD ALL POWERS TO ENFORCE THE IR ATTENDANCE. 7 16. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSES SEE FURNISHED COMPLETE BANK STATEMENTS ALONGWITH SOURCE OF AVAILA BILITY OF FUNDS WITH SHARE APPLICANTS, BUT THE SAME HAS BEEN DISCUS SED SUMMARILY BY THE LD. CIT(A) AND ALSO BY THE ASSESSING OFFICER IN HIS REMAND REPORT. IN OUR CONSIDERED OPINION, WHEN THE INCOME OF THE S HARE APPLICANTS DOES NOT JUSTIFY THE SHARE APPLICATION MONEY, THEN THE BURDEN IS HEAVIER ON THE ASSESSEE TO PROVE THE CREDIT WORTHIN ESS OF THE SHARE APPLICANTS. 17. THOUGH THE ASSESSEE DID FILE DOCUMENTARY EVIDEN CES, IT APPEARS THAT THE SAME HAVE NOT BEEN THOROUGHLY EXAMINED BY THE AUTHORITIES BELOW. THEREFORE, IN THE INTEREST OF JUSTICE AND F AIR PLAY, WE DEEM IT FIT TO RESTORE THE ENTIRE ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO FURNISH DOCUMENTARY EVI DENCES TO SHOW THE AVAILABILITY OF FUNDS WITH SHARE APPLICANTS AND THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THOROUGHLY AND DECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. 18. IN SO FAR AS THE ADDITION ON ACCOUNT OF SHARE A PPLICATION MONEY FROM PAWAN GOYAL & SONS, HUF IS CONCERNED, THERE IS NO DISPUTE THAT THIS WAS OPENING BALANCE BROUGHT FORWARD FROM THE P RECEDING 8 ASSESSMENT YEARS AND, THEREFORE, IT IS OUTSIDE THE AMBIT OF SECTION 68 OF THE ACT. TO THIS EXTENT, WE DO NOT FIND ANY ERR OR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). ADDITION OF RS. 6,50,0 00/- STANDS DELETED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 3876/DEL/2016 IS ALLOWED IN PART FOR STATISTICAL PU RPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.07 .2020. SD/- SD/- (KULDIP SINGH) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 TH JULY, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 9 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER