DCIT, New Delhi V. M/s. Emmanuele Agencies Pvt. Ltd, New Delhi

ITA 3896/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58963 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SM MATHUR
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3896/DEL/2010 ASSESSMENT YEAR : 2007-08 DY. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), NEW DELHI. VS. M/S EMMANUELE AGENCIES PVT. LTD., C-11, ANAND NIKETAN, NEW DELHI 110 021. PAN : AABCE0357R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.M. MATHUR, CA REVENUE BY : SHRI ALOK SINGH, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 3 RD JUNE, 2010 IN RESPECT OF ASSESSMENT YEAR 2007-08. THE GROUND OF APPEAL READS AS U NDER:- 1. THE ORDER OF LD. CIT (A) IS WRONG, PERVERSE, ILL EGAL AND AGAINST THE PROVISIONS OF LAW, LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, LEARNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.86,34,791/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. IN THE PRESENT CASE THE ASSESSEE FILED ITS RETURN OF IN COME AT ` 2,58,21,803/-. THE ASSESSING OFFICER HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE WAS NOT CARRYING OUT ANY BUSINESS A CTIVITY IN ITA NO.3896/DEL/2010 2 THE YEAR UNDER CONSIDERATION EXCEPT PROFIT SHOWN ON T WO TRANSACTIONS OF IMMOVABLE PROPERTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS ALSO NOTICED THAT TH ERE WAS UNEXPLAINED CREDIT IN THE BOOKS OF ACCOUNT IN RESPECT OF MONEY RECEIVED BY IT FROM SHRI RANJIT S. AMRIT OF ` 86,36 ,791/-. THE SAID CREDIT WAS FOUND TO HAVE COME IN THE BANK ACCOUNT OF THE ASSE SSEE ON 3 RD APRIL, 2006. FROM THE DOCUMENTS SUBMITTED BEFORE THE ASSESSING OFFICER IT WAS NOTICED THAT THE AMOUNT WHICH WAS STATE D TO BE RECEIVED FROM ONE SHRI RANJIT S. AMRIT WAS SHOWN IN HIS BANK AC COUNT TO BE REALIZED ON 2 ND FEBRUARY, 2005. AS AGAINST THAT THE ASSESSEE HAD RECEIVED THAT AMOUNT ONLY ON 3 RD APRIL, 2006. THEREFORE, THE ASSESSING OFFICER DOUBTED THE TRANSACTION. HE ASKED THE ASSESSEE T O EXPLAIN THE SAME AND FINALLY VIDE LETTER DATED 17 TH DECEMBER, 2009 A LETTER SIGNED BY SHRI RANJIT S. AMRIT OF KENYA WAS FILED STATING TH AT THE SAID AMOUNT OF ` 86.34 LAC WAS SENT ON ACCOUNT OF ACQUISITION OF SH ARES OF THE ASSESSEE COMPANY ON 2 ND FEBRUARY, 2005. IT WAS FURTHER MENTIONED THAT THE SAID MONEY BY MISTAKE WAS REMITTED TO THE ACC OUNT OF SHRI HARISH VOHRA (DIRECTOR OF THE ASSESSEE COMPANY), WHICH W AS LATER ON CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE COMPANY IN APRIL, 2006 (I.E., AFTER ABOUT 14 MONTHS). RELYING ON THESE FACT S, THE ASSESSING OFFICER EXPRESSED DOUBT ON THE SAID TRANSACTION FOR THE FOLLOWING REASONS:- 1. IF THE INTENTION OF THE LENDER WAS FOR SUBSCRIPTIO N OF SHARES OF THE ASSESSEE COMPANY, WHY THE MONEY WAS REMITTED WITH OUT REACHING THE FINAL CONCLUSION OR DECISION REGARDING T HE AMOUNT OF PREMIUM ON EACH SHARE OF THE COMPANY. 2. WHY THE MONEY WAS TRANSFERRED TO THE ACCOUNT OF TH E DIRECTOR WHICH WAS NOT ONLY CREDITED IN THE ACCOUNT OF CREDIT OR BUT ALSO UTILIZED THE ENTIRE MONEY AS IS EVIDENT FROM THE BANK STATEMENT ITA NO.3896/DEL/2010 3 FILED IN THE CASE OF SH. HARSH VOHRA. THE CONTENTION OF THE ASSESSEE THAT IT WAS A MISTAKE IS RULED OUT SINCE THIS MONEY GOT TRANSFERRED TO THE ASSESSEE COMPANY ONLY AFTER A LAPSE OF 14 MONTHS. 3. IF THIS MONEY WAS REMITTED AS SHARE APPLICATION MONE Y THEN WHY THE COMPANY HAS DISCLOSED THIS AMOUNT AS SUNDRY CREDI TOR AND HENCE IT ONLY GOES TO PROVE THAT THE COMPANY DOE S NOT ACCEPT THIS MONEY AS SHARE APPLICATION IN HIS BOOKS OF A CCOUNT. 4. EVEN AFTER THE EXPIRY OF 14 MONTHS THE COMPANY DI D NOT ALLOT SHARES TO THE APPLICANT AND THE APPLICANT HAS NOT MADE ANY OBJECTION TO THE SAME. 3. AFTER MENTIONING OF THE AFOREMENTIONED FACTS, THE ASSESSING OFFICER OBSERVED THAT THERE IS A CONTRADICTION AND U NRELIABILITY IN THE CONTENTION OF THE ASSESSEE VIS-A-VIS THE DOCUMENTS FILED T O SUPPORT THE TRANSACTION AND THE ASSESSING OFFICER OBSERVED THAT THE R EAL COLOUR OF THE TRANSACTION HAS REMAINED UNEXPLAINED. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE ASSESSEE HAS MISERABLY FAILED TO DISC HARGE HIS OBLIGATION CAST ON THE ASSESSEE UNDER THE PROVISIONS OF SE CTION 68 AND, IN THIS MANNER, THE ASSESSING OFFICER ADDED THE SAID AMOU NT OF ` 86,34,791/- TO THE INCOME OF THE ASSESSEE. 4. IN THE APPEAL FILED BEFORE THE CIT (A) THE ADDIT ION MADE BY THE ASSESSING OFFICER WAS CONTESTED AND THE FOLLOWING DOCUMEN TS WERE SUBMITTED TO SUPPORT THE TRANSACTION:- I) CONFIRMATION REGARD REMITTANCE OF MONEY BY SH. R ANJIT S. AMRIT. II) COPY OF BANK CERTIFICATE REGARDING REMITTANCE O F MONEY. ITA NO.3896/DEL/2010 4 III) COPY OF PASSPORT OF SH. RANJIT S. AMRIT. IV) COPY OF BANK STATEMENT OF SH. HARISH VOHRA, DIREC TOR OF M/S EMMANNUELLE AGENCIES PVT. LTD. REGARDING REMITTANCE OF MONEY FROM SH. RANJIT S. AMRIT. V) COPY OF BANK ACCOUNT OF M/S EMMANUELLE AGENCIES PV T. LTD. IN CONFIRMATION OF TRANSFER AND RECEIPT OF MONEY FRO M THE ACCOUNT OF SH. HARISH VOHRA. VI) COPY OF FORM NO.2 REGARDING ALLOTMENT OF SHARES B Y M/S EMMANNUELLE AGENCIES PVT. LTD. TO SH. RANJIT S. AMRI T. 5. REFERENCE WAS ALSO MADE TO THE VARIOUS DECISIONS. LE ARNED CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND TA KING INTO CONSIDERATION THE AFOREMENTIONED DOCUMENTS HAS DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- 4. I HAVE CONSIDERED THE FACTS OF THE CASE, OBSERVATIO N OF THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT. I T IS FOUND THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE SOURCE OF MONEY REMITTED BY SHRI RANJIT S. AMRIT AS THE SOURCE OF THE SAM E IS SUPPORTED FROM CERTIFICATE OF THE BANK. THE ASSESSING OFFICER HAS ONLY MADE GENERAL OBSERVATION AND DID NOT RECORD ANY SPECIFIC FINDING AS TO HOW AND ON WHAT BASIS THE ADDITI ON HAS BEEN MADE. IT IS IMPORTANT TO TAKE NOTE OF THE FOLLOWING FACTS AS PER DOCUMENTS PLACED ON RECORD. I) CONFIRMATION REGARD REMITTANCE OF MONEY BY SH. RANJ IT S. AMRIT. II) COPY OF BANK CERTIFICATE REGARDING REMITTANCE OF MO NEY. III) COPY OF PASSPORT OF SH. RANJIT S. AMRIT. IV) COPY OF BANK STATEMENT OF SH. HARISH VOHRA, DIRECTO R OF M/S EMMANNUELLE AGENCIES PVT. LTD. REGARDING REMITTANCE OF MONEY FROM SH. RANJIT S. AMRIT. V) COPY OF BANK ACCOUNT OF M/S EMMANUELLE AGENCIES P VT. LTD. IN CONFIRMATION OF TRANSFER AND RECEIPT OF MONEY FROM THE ACCOUNT OF SH. HARISH VOHRA. VI) COPY OF FORM NO.2 REGARDING ALLOTMENT OF SHARES B Y M/S EMMANNUELLE AGENCIES PVT. LTD. TO SH. RANJIT S. AMRIT. ITA NO.3896/DEL/2010 5 THE ASSESSING OFFICER HAS NOT COMMENTED ON THESE DOCUM ENTS WHICH ARE RELEVANT TO ISSUE OF ADDITION IN THE CONTEXT OF PROVISIONS OF SEC.68. I AM OF THE CONSIDERED OPINIO N THAT APPELLANT HAS SATISFIED ALL THE REQUISITE CONDITIONS IN THE CONTEXT OF PROVISIONS OF SEC.68. 1. THERE IS NO DISPUTE ABOUT THE SOURCE OF REMITTANCE. 2. THE IDENTITY OF THE REMITTER IS ALSO NOT IN DISPUTE AS SAME IS CORROBORATED FROM PASSPORT AND COPY OF BANK ACCOUNT. 3. THE GENUINENESS OF TRANSACTION IS ALSO SUPPORTED FRO M BANK CERTIFICATE AND ISSUE OF SHARES. FURTHER, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ABOVE SAID MONEY REPRESENT UNDISCLOSED INCOME OF THE APPELLANT AND THERE IS NEXUS BETWEEN SUCH UNDISCLOSED INCOME AND REMITTANCE OF MONEY BY SH. RANJIT S. AMRIT THROUGH B ANKING CHANNELS. THE LEGAL POSITION TO THIS EFFECT IS SUPPORTED FROM DEC ISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AN TARTICA INVESTMENT PVT. LTD. AND M/S VENTURES CAPITAL SERVICES PV T. LTD., REFERRED TO ABOVE. FURTHER, THE ASSESSING OFFICER HAS RAISED PROBABILITIES ABOUT HOW AND WHY THE MONEY WAS TRANSFERR ED ORIGINALLY TO THE ACCOUNT OF SH. HARISH VOHRA AND SUBS EQUENTLY TO THE APPELLANT COMPANY AFTER EXPIRY OF SOME TIME. AS CL ARIFIED, THE MONEY WAS INTENDED FOR ALLOTMENT OF SHARES IN THE NA ME OF SH. RANJIT S. AMRIT AND AS PER CONVENIENCE, MONEY WAS ORIGINALLY TRANSFERRED TO THE ACCOUNT OF SH. HARISH VOHRA AND SUBS EQUENTLY TO THE APPELLANT COMPANY. HOWEVER, MERELY BECAUSE MON EY WAS ROUTED FROM ONE ACCOUNT TO ANOTHER, THERE CANNOT BE A NY ADVERSE INFERENCE PARTICULARLY WHEN IDENTITY FOTHE PARTY AND SOURCE OF MONEY IS NOT IN DISPUTE. I AM OF THE VIEW THAT APPELLANT HAS CLEARLY DISCHARGED THE ONUS AS REQUIRED U/S 68 AND WHOLE BASIS OF ADDITION IS ON PRESUMPTION AND SURMISES AND ON THE BASIS OF GENERAL OBSERVATION. IT IS ALSO RELEVANT TO OBSERVE THAT THE MONEY WAS ORIGINA LLY REMITTED BY SH. RANJIT S. AMRIT ON 2.2.05 TO THE ACCOUNT O F SH. HARISH VOHRA AND SAME WAS SUBSEQUENTLY TRANSFERRED ON 3.4.06 TO ACCOUNT OF THE COMPANY. THE REMITTANCE WAS ORIGINATED ON 2.2.05 AND AS SUCH THE ISSUE OF ANY UNEXPLAINED CASH CREDIT IS EVEN OTHERWISE NOT RELEVANT FOR CONSIDERATION IN THE YEA R UNDER REFERENCE. IN THE LIGHT OF ABOVE DISCUSSION, THERE IS NO FACTUAL O R LEGAL BASIS TO TREAT THE ABOVE SAID REMITTANCE AS UNEXPLAINED C ASH ITA NO.3896/DEL/2010 6 CREDIT AND ADDITION MADE BY THE ASSESSING OFFICER IS N OT SUSTAINABLE AND SAME IS HEREBY DELETED. 6. AFTER NARRATING THE FACTS, IT WAS VEHEMENTLY PLEAD ED BY THE LEARNED DR THAT WHILE DELETING THE ADDITION LEARNED CIT (A) HAS RELIED UPON CERTAIN ADDITIONAL EVIDENCES WITHOUT REFERRING IT TO THE ASSESSING OFFICER. HE SUBMITTED THAT IT IS THE CASE OF THE ASSESSING OFFICER THAT THERE WAS A CONTRADICTION IN THE CONTENTIONS AND DOCU MENTS FILED BY THE ASSESSEE TO PROVE THE AFOREMENTIONED CREDIT. HE SUB MITTED THAT THE CONTRADICTION HAS STILL NOT BEEN REMOVED, THEREFO RE, HE PLEADED THAT LEARNED CIT (A) HAS WRONGLY DELETED THE ADDITIO N. 7. ON THE OTHER HAND, RELYING UPON THE ORDER OF CIT (A), IT WAS PLEADED BY THE LEARNED AR THAT THE ADDITION HAS RIGH TLY BEEN DELETED AND THE ORDER OF LD. CIT (A) SHOULD BE UPHELD. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. SO FAR AS IT RELATES TO FACTS OF THE PRESENT CASE IT IS THE CASE OF THE ASSESSEE THAT SHRI RANJI T S. AMRIT HAD REMITTED THE AFOREMENTIONED AMOUNT ON ACCOUNT OF SHA RE APPLICATION MONEY OF THE ASSESSEE COMPANY. THE SAID AMOUNT WAS REMIT TED THROUGH SHRI HARISH VOHRA, WHO IS THE DIRECTOR OF THE ASSESSEE COMPANY. ACCORDING TO THE CONFIRMATION THE SAID AMO UNT WAS GIVEN BY SHRI RANJIT S. AMRIT TO THE DIRECTOR OF THE ASSESSEE CO MPANY ON 2 ND FEBRUARY, 2005. TO SUPPORT SUCH CONTENTION, THE ASSESSEE HAS FILED BANK ACCOUNT OF SHRI HARISH VOHRA IN WHICH THE SAID A MOUNT HAS BEEN CREDITED AND THE COPY IS PLACED AT PAGE 23-24 OF TH E PAPER BOOK. IT IS OBSERVED FROM THE SAID COPY OF ACCOUNT THAT THE SAID C OPY IS NOT COMPLETE AS THE COPY PLACED AT PAGE 23 STARTS FROM 7 TH JANUARY, 2005 AND END WITH 6 TH MAY, 2005. THE COPY PLACED AT PAGE 24 STARTS FROM 1.4.2006 AND IT ENDS WITH 3 RD JULY, 2006. IT IS ALSO OBSERVED THAT AFTER CREDITING THE SAID AMOUNT ON 2 ND FEBRUARY, 2005, THE AMOUNT HAS BEEN ITA NO.3896/DEL/2010 7 UTILIZED BY SHRI HARISH VOHRA ON VARIOUS DATES AND THE BALANCE HAS BEEN REDUCED TO ` 28,49,128/- AS ON 6 TH JULY, 2005. THERE IS A CREDIT BALANCE OF ` 1,30,66,068/- AS ON 1.1.2006. THE PERU SAL OF THE AFOREMENTIONED COPY OF BANK ACCOUNT OF SHRI HARISH V OHRA WILL REVEAL THAT THE SAID AMOUNT WAS UTILIZED BY SHRI HARISH VOHRA AND THERE IS NOTHING ON RECORD TO SUGGEST THAT HOW THE AMOUNT RECE IVED BY SHRI HARISH VOHRA FROM SAID SHRI RANJIT S. AMRIT FOR SHARE APPLICATION WAS UTILIZED BY HIM. THE CONFIRMATION FURNISHED BY SHRI RANJIT S. AMRIT IS ALSO UNDATED AND IT CANNOT BE ASCERTAINED THAT ON WHI CH DATE SHRI RANJIT S. AMRIT HAS SUBMITTED THAT CONFIRMATION TO TH E ASSESSEE. MOREOVER, THE ALLOTMENT OF SHARES WHICH ARE STATED TO BE ALLOTTED TO SHRI RANJIT S. AMRIT ARE IN TWO LOTS OF 43,170 SHARES EACH IS MADE ON 5 TH APRIL, 2010. IF IT IS SO, THEN, BEFORE THE DATE OF ASSESSMENT THESE SHARES WERE NOT ALLOTTED EVEN TO SHRI RANJIT S. AMRIT AND RELIANCE UPON THE FACT OF ALLOTMENT OF SHARES, WITHOUT CONFRONTING THE SAME TO THE ASSESSING OFFICER, COULD NOT BE PLACED AS IT WILL BE IN VIOLATION OF RULE 46A. IT IS ALSO OBSERVED THAT CERTAIN ADDITIONAL DOCU MENTS HAVE ALSO BEEN FILED BY THE ASSESSEE IN THE PAPER BOOK WHICH IS IN THE SHAPE OF CERTIFICATE FROM ICICI BANK WHICH IS DATED 14 TH JUNE, 2011, THE COPY OF WHICH IS PLACED AT PAGE 14 OF THE PAPER BOOK IN WHIC H THE PURPOSE OF REMITTANCE OF SHRI RANJIT S. AMRIT IS STATED TO BE ON ACCOUNT OF SHARE CAPITAL. THEREFORE, IN OUR OPINION, LEARNED CIT (A ) HAS WRONGLY DELETED THE ADDITION AS THE ASSESSEE COULD NOT PLACE ON RECORD T HE ENTIRE EVIDENCE BEFORE THE ASSESSING OFFICER TO PROVE THE IDEN TITY AND CREDIT WORTHINESS OF THE CREDITOR AND ALSO GENUINENESS OF THE T RANSACTION. IN OUR OPINION, THE ASSESSING OFFICER SHOULD HAVE EXAMINED SHRI HARISH VOHRA AS WELL AS THE CREDITOR TO ASCERTAIN THE FACTUAL ASPECT OF THE TRANSACTION. KEEPING IN VIEW THE ENTIRETY OF FACTS A ND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ADDITION HAS WRONGLY BEEN DELETED BY LEARNED CIT (A) BY HOLDING THAT THE ASSESSEE HAS PROVED ALL THE THREE INGREDIENTS OF THE TRANSACTIONS, NAMELY, IDENTITY OF T HE CREDITOR, CREDIT ITA NO.3896/DEL/2010 8 WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE T RANSACTION. IN OUR OPINION IT WILL MEET THE INTEREST OF JUSTICE IF T HE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO RE-ADJUDICATE THE MATTER BY PROVIDING THE ASSESSEE A REASONABLE OPPORT UNITY OF HEARING. REMITTING THE MATTER BACK TO THE FILE OF ASSESSING OFFICER IS ALSO NECESSARY FOR THE REASON THAT WHILE DELETING THE A DDITION LEARNED CIT (A) HAS RELIED UPON CERTAIN DOCUMENTS WHICH WERE NOT EVEN PLACED BEFORE THE ASSESSING OFFICER OR WHICH HAVE NOT BEEN CON FRONTED TO THE ASSESSING OFFICER. WE DIRECT ACCORDINGLY. 9. IN THE RESULT, FOR STATISTICAL PURPOSES THE APPEAL FI LED BY THE DEPARTMENT IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.03.20 12. SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 23.03.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR, ITAT, DELHI BENCHES