DCIT, Rewari V. M/s. Shree Balaji Grit & Rollings Pvt. Ltd., Rewari

ITA 4021/DEL/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2349 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Keywords: Source of fund; Set aside
• Section: 64; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) (THROUGH VIDEO CONFERENCE ) BEFORE SHRI O.P.KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4021/DEL./2016 ASSESSMENT YEAR : 2012-13 DCIT, VS. M/S. SHRI BALAJ I GRIT & ROLLING P. LTD. CIRCLE-REWARI, PLOT NO. 1020-P, SECTOR-06, AAYAKAR BHAWAN, DHARUHERA, REWARI MODEL TOWN (PAN : AANCS1000N) REWARI (APPELLIANT) (RESPONDENT) REVENUE BY : SHRI PRAKASH DUBEY, SR. DR ASSESSEE BY : SHRI MAHAVIR SINGH, ADV. DATE OF HEARING : 03.06.2021 DATE OF ORDER : 29 .06.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DEPUTY COMMISSIONER OF INCOME TAX, CIRC LE REWARI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORD ER DATED 04.05.2016 PASSED BY THE COMMISSIONER OF INCOME-TA X (APPEALS)- ROHTAK QUA THE ASSESSMENT YEARS 2012-13 ON THE GROU NDS INTER ALIA THAT : ITA NO.4021/DEL./2016 2 1. CIT(A) HAS ERRED IN DELETING THE ADDITION OF R S.. 2,00,00,000/- MADE ON THE GROUND OF SHARE PREMIUM/S HARE CAPITAL WHICH WAS UNEXPLAINED/UNDISCLOSED SOURCE MO NEY U/S 68 OF THE I.T. ACT AS THE ASSESSEE COMPANY FAILED TO E XPLAIN THE IDENTITY, CREDITWORTHINESS OF THE PERSON FROM WHOM SHARE CAPITAL HAS BEEN RECEIVED. MOREOVER, IT IS CLEAR ON THE PER USAL OF BALANCE SHEET FOR THE F.Y. 2011-12 THAT THERE IS INCREASE I N SHARE CAPITAL TO RS. 26,00,000/- AS COMPARED TO F.Y. 2010-11 WHIC H WAS SHOWN AS RS. 18,00,000/- AND RS. 1,92,00,000/- IS ADDED D URING THE F.Y. 2011-12 IN SHARE PREMIUM ACCOUNT SO THE CIT(A) CONT ENTION THAT RS. 2,00,00,000/- HAS BEEN RECEIVED IN F.Y. 2010-11 IS NOT TENABLE, AND NOT SUPPORTED Y EVIDENCE. 2. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 26,33,675/- MADE U/S 57 OF THE I.T. ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT HE HAS EXPANDED ITS BUSINE SS IN THE YEAR 2011-12 AND COMMENCED THE OPERATION OF ITS MS ROLLI NG UNIT IN KHUSKHERA, RAJASTHAN. HOWEVER, THE ASSESSEE COMPANY FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE REGARDING COMMENCE MENT OF BUSINESS OPERATION/PRODUCTION FROM THE NEW UNIT DUR ING THE F.Y. 2011-12. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDI CATION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS INTO THE BUSINESS OF IRON AND STEEL FURNACE UNDER THE NAME & STYLE OF M/S. SH REE BALAJI GRIT & ROLLINGS PVT. LTD. THE ASSESSING OFFICER NOTICED THAT IT HAS RECEIVED SHARE PREMIUM / SHARE CAPITAL TO THE TUNE OF RS. 2,00,00,000/- IN THE F.Y. 2010-11. ON FAILURE OF TH E ASSESSEE TO EXPLAIN THE RECEIPT OF SHARE PREMIUM, AO TREATED TH E AMOUNT OF RS. 2,00,00,000/- AS INCOME FROM UNEXPLAINED SOURCES U /S 68 OF THE ACT. THE ASSESSING OFFICER HAS ALSO DISALLOWED THE DEDUCTION OF EXPENSES CLAIMED BY THE ASSESSEE TO THE TUNE OF RS. 26,33,675/- U/S 57(III) ON THE GROUND THAT THE EXPENSES ARE TO BE CAPITALIZED AND ITA NO.4021/DEL./2016 3 THEREBY ASSESSED THE TOTAL INCOME OF THE ASSESSEE A T RS. 2,30,09,475/-. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A ) BY WAY OF FILING THE APPEAL WHO HAS DELETED THE ADDITION BY A CCEPTING THE APPEAL FILED BY THE ASSESSEE. FEELING AGGRIEVED THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO. 1 5. LD. CIT(A) DELETED THE ADDITION OF RS. 2,00,00,0 00/- MADE BY THE AO BY RETURNING FOLLOWING FINDING :- A PERUSAL OF THE FACTS OF THE CASE REVEALS THAT TH E AMOUNT OF RS. 2,00,000/- WAS RECEIVED DURING THE AY 2011-12. DURI NG THE YEAR UNDER CONSIDERATION, THE SHARE APPLICATION MONEY RE CEIVED IN THE PREVIOUS YEAR WAS TRANSFERRED TO THE SHARE CAPITAL A/C AND SHARE PREMIUM A/C. THEREFORE, THE AMOUNT CANNOT BE ADDED IN THE 2012- 13. MOREOVER, IT IS ALSO SUPPORTED BY THE DOCUMENTS ON RECORD. IN THE CIRCUMSTANCES, THE ADDITION CANNOT BE MADE DURI NG THIS ASSESSMENT YEAR BUT SHOULD HAVE BEEN EXAMINED IN TH E PREVIOUS YEAR. IT IS ALSO PERTINENT TO NOTE THAT ALL DETAILS RELATING TO THE SOURCE OF FUNDS HAVE BEEN SUBMITTED BY THE ASSESSEE . IN VIEW OF THE ABOVE, I DELETE THE SAID ADDITION. THIS GROUND OF A PPEAL IS ALLOWED. 6. WHEN UNDISPUTEDLY ASSESSEE HAS RECEIVED THE AMOU NT IN QUESTION DURING THE F.Y. 2010-11 RELEVANT TO A.Y. 2011-12 AS ITA NO.4021/DEL./2016 4 HAS BEEN DULY DISCUSSED BY AO AT PAGE 8 OF THE ORDE R AND THRASHED BY LD. CIT(A) AT PAGE 2 OF THE IMPUGNED OR DER, THERE IS NO ILLEGALITY AND PERVERSITY IN THE FINDING RETU RNED BY LD. CIT(A), HENCE, GROUND NO. 1 IS DETERMINED AGAINST T HE REVENUE. GROUND NO. 2 7. ASSESSEE HAS CLAIMED DEDUCTION OF RS. 26,33,675/ - ON ACCOUNT OF EXPENSES WHICH HAS BEEN DISALLOWED BY TH E AO ON THE GROUND THAT THESE EXPENSES ARE LIABLE TO BE CAPITAL IZED U/S 57(III) OF THE ACT. NO DOUBT, THERE WAS NO ORDER RECEIVED BY T HE ASSESSEE FROM CUSTOMER CREATING LULL IN THE BUSINESS BUT ASS ESSEE REMAINED INTO MANUFACTURING ACTIVITIES DURING THE YEAR UNDER ASSESSMENT. IN THESE CIRCUMSTANCES NECESSARY EXPENDITURE OF STAFF SALARY, PAYMENT OF RENTAL, PROFESSIONAL EXPENSES ETC. ARE REQUIRED TO BE INCURRED TO KEEP THE BUSINESS ALIVE. THEIR MACHINES REMAINED IN OPERATIVE POSTURE. 8. WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A ) HAS RIGHTLY AND LEGALLY DELETED THE ADDITION BY FOLLOWI NG THE DECISION RENDERED BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. NAHAR EXPORTS LTD. REPORTED AT 213 CTR P AGE3 20 HAS ITA NO.4021/DEL./2016 5 ALLOWED AND HONBLE MADRAS HIGH COURT IN THE CASE O F CIT VS. CHENNAI PETROLEUM CORPORATION REPORTED AT 262 CTR 6 64 WHEREIN IT HAS BEEN HELD THAT MACHINERY COULD NOT BE PUT TO USE DUE TO RAW MATERIAL PAUCITY, ASSESSEES CLAIM FOR D EPRECIATION COULD NOT BE REJECTED. CONSEQUENTLY GROUND NO. 2 IS ALSO DETERMINED AGAINST REVENUE. 9. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDIN G NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY THE LD. CIT(A). THE APPEAL FILED BY THE REVENUE IS HEREBY D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF JUNE, 2021. SD/- SD/- (O.P.KANT) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF JUNE, 2021 BINITA COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.