M/s. Vardhman Fincon Pvt. Ltd., UDAIPUR V. ACIT, UDAIPUR

ITA 417/JODH/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4913 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 29-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Unexplained cash credit
• Section: 68; 69; 6

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 417/JODH/2009 (A.Y. 2000-01) M/S. VARDHMAN FINCON PVT. LTD. VS ACIT, CIRCLE-2, FIRST FLOOR, 60-D PANCHWATI, UDAIPUR. UDAIPUR. PAN NO. AAACV5726F (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT KOTHARI. DEPARTMENT BY : SH. G.R. KOKANI- DR. DATE OF HEARING : 02/07/2013. DATE OF PRONOUNCEMENT : 29/08/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2000-01 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR, DATED 03/04/2009 . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- COMPANY FILED ITS RETURN OF INCOME (ROI) FOR A.Y. 2 000-01 ON 09/10/2000 DECLARING TOTAL INCOME OF RS. 46,160/-. SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147/148 IN THE WAKE OF A SEAR CH CONDUCTED IN 2 THE CASE OF A THIRD PARTY NAMELY GAJENDRA PORWAL GR OUP OF UDAIPUR U/S 132(1) ON 11/03/2005, BY THE INVESTIGATION WING. IN THAT SEARCH IT WAS EVIDENCED THAT THIS GROUP HAD BEEN PROVIDING ACCOMM ODATION ENTRIES THROUGH VARIOUS CONCERNS OF THE GROUP TO CONVERT BL ACK MONEY INTO WHITE. IN ONE OF THE RELATED CONCERNS NAMELY M/S. J ALKANTA TECHNICAL & FINANCE SERVICES PVT. LTD. THIS ASSESSEE WAS TREA TED AS ONE OF ITS BENEFICIARIES WHO HAS RECEIVED ACCOMMODATION ENTRIE S FROM SHRI GAJENDRA PORWAL. IN HIS STATEMENT RECORDED ON 25/05 /2005 U/S 132(4) OF THE ACT HE STATED THAT TO THIS ASSESSEE HE HAD G IVEN A SUM OF RS. 13 LAKHS DURING F.Y. 1999-2000 AS SHARE APPLICATION MO NEY, IN THE SAME MANNER. THE POSITION OF ACCOUNT OF M/S. VARDHMAN FI NCON PVT. LTD. IT STOOD IN THE BOOKS OF M/S. JALKANTA TECHNICAL & FIN ANCIAL SERVICES PVT. LTD. FOR F.Y. 1999-2000 IS AS UNDER :- DATE NARRATION DR. CR. JULY 25 SHARE PURCHASE A/C BEING SHARES PURCHASES [NO.9] 5,00,000 SEPT 9 SHARE PURCHASE A/C BEING SHARES PURCHASES [NO.17] 8,00,000 SEPT 17 BANK OF RAJASTHAN LTD UDR. BEING CH. NO. 66683 GIVEN FOR PURCHASING OF SHARE NO. 290 4,00,000 SEPT 29 BANK OF RAJASTHAN LTD UDR. BEING CH. NO. 66683 GIVEN FOR PURCHASING OF SHARE NO. 303 4,00,000 3 JAN 18 BANK OF RAJASTHAN LTD UDR. BEING CH. NO. 145488 GIVEN FOR PURCHASING OF SHARE NO. 499 5,00,000 13,00,000 13,00,000 3. THE ASSESSEE HAS SHOWN THIS AMOUNT AS SHARE APP LICATION MONEY AND THE A.O. HAS ADD THIS AMOUNT U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDITOR. THE LD. CIT(A) HAS ALSO CONFIRMED THIS AD DITION. HE HAS ALSO UPHOLD THE REOPENING. THE ASSESSEE IS FURTHER AGGRI EVED. IN THIS APPEAL LEGAL ISSUE TAKEN FOR CHALLENGING REOPENING WAS NOT PRESSED. THEREFORE, GROUND NO. (1) OF THIS APPEAL IS DISMISSED AS NOT P RESSED. 4. ON MERITS, GROUND NOS. 2 AND 3 PERTAIN TO THE MA IN ISSUE. AFTER REOPENING A SUM OF RS. 13 LACS HAS BEEN ADDED U/S 6 8 AND THE RELATED COMMISSION ALLEGED TO HAVE BEEN PAID OF RS. 13,000/ - HAS BEEN ADDED U/S 69 OF THE ACT. AFTER HEARING BOTH SIDES WE HAVE FOUND FROM THE RECORDS THAT APART FROM THE STATEMENT OF A THIRD PA RTY, THERE IS NO OTHER EVIDENCE TO SUPPORT THESE ADDITIONS. RATHER, THE ASSESSEE HAS PROVED TO THE HILT, AS FAR AS IT LIES ON HIM TO DO, THAT THIS SUM OF RS. 13 LACS IS ONLY APPLICATION MONEY. THE SHARE APPLICANT NOT ONLY HAS BEEN IDENTIFIED BUT IN A WAY THIS DEPOSIT HAS BEEN CONFI RMED BY HIM. THE ASSESSEE HAS RECEIVED THREE CHEQUES TWO CHEQUES FOR RS. 4 LACS EACH AND ONE CHEQUE OF RS. 5 LACS, TOTALING TO CHEQUES O F RS. 13 LACS, DURING 4 THE F.Y. 1999-2000, RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, FROM M/S. JALKANTA TECHNICAL & FINAN CIAL SERVICES P. LTD. (JTFSPL). THE A.O. HAS HIMSELF OBSERVED THAT S HRI GAJENDRA PORWAL, IN HIS STATEMENT RECORDED ON 15/05/2005 BY DDIT (INV.)-I, UDAIPUR, HAS STATED THAT HE GAVE THIS MONEY FOR PUR CHASE OF SHARES (PAGE 7 PARA 14, 4 TH AND 5 TH LINES AND TO THE END) IN SUCH CASE WHERE SHARE APPLICATION MONEY IS FOUND RECORDED IN THE BO OKS OF AN ASSESSEE WHICH MAY REPRESENT CREDIT IN THE BOOKS, AND THE SH ARE APPLICANT IS IDENTIFIED, THAT AMOUNT CANNOT BE ADDED IN THAT ASS ESSEES HANDS U/S 68 OF THE ACT. THE HONBLE RAJASTHAN HIGH COURT HAS REPEATEDLY REITERATED THE ABOVE LEGAL POSITION. THESE CASES AR E :- (I) CIT VS. M/S. SHREE BARKHA SYNTHETICS LTD. 182 CTR (RAJ.) 175. (II) BARKHA SYNTHETICS LTD. VS. ACIT (2005) 197 CT R (RAJ). 432. IN COMING TO THE ABOVE CONCLUSION THE HONBLE JURIS DICTIONAL HIGH COURT HAS CONSIDERED AT LENGTH THE RELEVANT DECISIONS ON THE ISSUE LIKE CIT VS. STELLAR INVESTMENT LTD. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) WHICH HAS CONFIRMED THE DECISION OF HONBLE DELHI H IGH COURT REPORTED IN (1992) 192 ITR 287. THE HONBLE COURT HAS GONE T O THE EXTENT OF STATING THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRI BER TO THE SHARE CAPITAL ARE NOT GENUINE, NEVERTHELESS, UNDER NO CIR CUMSTANCES CAN THE 5 AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CASE THE SHARE SUBSCRIBER IS IDEN TIFIED. THERE CAN BE NO DISPUTE REGARDING THE ABOVE STATED LEGAL POSITIO N. THE FOLLOWING DECISIONS ALSO LAY DOWN THE SAME RATIO :- (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 6 DTR (SC) 3 08. (II) CIT VS. DOLPHIN CONPACK LTD. (2006) 283 ITR 190 (DE LHI). (III) CIT VS. GUJRAT HEAVY CHEMCIALS LTD. (2002) 256 ITR 795 (SC). (IV) CIT VS. KWICK TRAVELS (1992) 199 ITR (ST) 85 (SC). THIS ISSUE HAS BEEN DEALT AT LENGTH BY THE THIRD ME MBER ORDER IN THE CASE OF UMA POLYMERS PVT. LTD. VS. DCIT (2006) 101 TTJ (JD.) T.M. 126 = (2006) 284 ITR (AT) 1 JD. ACCORDINGLY, WE REVERSE THE FINDING OF LD. CIT(A) A ND DELETE THE ADDITION OF RS. 13 LACS AND ALSO THE CONSEQUENTIAL ADDITION OF RS. 13,000/-. THEREFORE, WE ALLOW GROUND NOS. 2 AND 3 O F THIS APPEAL. 5. GROUND NO. 4 & 5 RELATES TO THE CLAIMING OF INTE REST WHICH HAVE TOBE DECIDED AS PER LAW SINCE CHARGING OF INTEREST IS MANDATORY BUT ADMIT CONSEQUENTIAL RELIEF. 6 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR