M/s. Prachan Fashion House Pvt. Ltd., Delhi V. ITO, Noida

ITA 42/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2947 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 03-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LD CITAI NEW DE LHI
• Assessee Lawyers: PRADEEP KUMAR SAHGAL; UTSAV SAHGAL CA RESPON
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 142(1); 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 42/DEL/2017 ASSESSMENT YEAR: 2012-13 M/S PRACHAN FASHION HOUSE PVT. LTD., D-4, NARESH PARK EXTENSION, NAZAFGARH ROAD, NAGLOI, DELHI VS. ITO WARD-2(4) PLOT NO. A-2D, SECTOR-24, AAYAKAR BHAWAN, NOIDA PAN : AADCP9453C (APPELLANT) (RESPONDENT) O R D E R THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDER DATED 31.1.2016 PASSED BY THE LD. CIT(A)-I, NEW DE LHI AND ORIGINALLY FILED THE 06 GROUNDS OF APPEAL WHICH AR E ARGUMENTATIVE IN NATURE. HOWEVER, AS PER THE DIRECTION DATED 23.8.20 17 OF THE BENCH, THE AASSESSEES REPRESENTATIVE VIDE LETTER DATED 16 .1.2017 HAS FILED THE 04 CONCISE GROUNDS OF APPEAL WHICH READ AS UNDE R:- L. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF LD. AO IN MAKING AGGREGATE ADDITION OF RS.24,OO,OOO/- ON ACCOUNT OF SHARE APPELLANT BY SH. PRADEEP KUMAR SAHGAL, CA & SH. UTSAV SAHGAL, CA RESPONDENT BY SH. V.K. JIWANI, SR. DR 2 APPLICATION MONEY RECEIVED FROM SH. MAHABIR PRASAD, MRS NEETU AND MR DINESH KUMAR BY TREATING IT AS ALLEGED UNEXPLAINED CASH CREDIT U/S 68 AND THAT TOO BY RECO RDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD . AO IN MAKING AGGREGATE ADDITION OF RS.24,OO,OOO/- ON ACCO UNT OF SHARE APPLICATION MONEY BY TREATING IT AS ALLEGED UNEXPLAINED CASH CREDIT U/S 68, IS BAD IN L AW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTE REST U/S 234A, 234B AND 234C OF INCOME TAX ACT, 1961. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODI FY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE ASSESSEES REPRESENTATIVE DURING THE COURSE OF HEARING, HAS FILED AN APPLICATION REQUESTING FOR GRANT OF P ERMISSION TO RAISE GROUND OF APPEAL NOT SET FORTH IN THE CONCISE GROU NDS OF APPEAL. THE ADDITIONAL GROUND READS AS UNDER:- 3 THAT THERE IS NO EVIDENCE WITH THE AUTHORITIES BEL OW DIRECTLY OR INDIRECTLY THAT APPELLANTS UNACCOUNTED MONEY TO THE EXTENT OF RS. 24 LACS HAD BEEN ROUTED IN TH E SHARE CAPITAL AND IN THE ABSENCE OF SUCH EVIDENCE, NO ADD ITION COULD BE SUSTAINED IN THE INCOME OF THE APPELLANT MERELY ON SUSPICION. SINCE THE IDENTITY OF THE SHAREHOLDE RS AND GENUINENESS OF TRANSACTIONS HAD BEEN ESTABLISHED BY THE APPELLANT, THUS UTMOST IN CASE OF DOUBT ABOUT THE CAPACITY, THE ADDITION COULD HAVE BEEN MADE IN THE HANDS OF SHAREHOLDER(S). 3. I HAVE PERUSED THE AFORESAID ADDITIONAL GROUND A ND I AM OF THE VIEW THAT THIS ADDITIONAL GROUND DO NOT REQUIRE FRE SH FACTS WHICH IS TO BE INVESTIGATED AND THE SAME GOES TO THE ROOT OF TH E MATTER. THEREFORE, IN THE INTEREST OF JUSTICE, I ADMIT THE AFORESAID ADDITIONAL GROUND RAISED BY THE ASSESSEE AND PROCEED TO DECID E THE ADDITIONAL GROUNDS FIRST. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED HIS RETURN OF INCOME SHOWING INCOME OF NIL ON 29.11.2012. LATER O N, THE CASE WAS PICKED UP FOR SCRUTINY UNDER CASS FOR WHICH NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED AS THE ACT) WAS ISSUED WHICH WAS RETURNED BACK. ANOTHER NOTICE U/S. 143(2) OF THE ACT, BUT NO COMPLIANCE WAS MADE, HENCE, ANOTHER NOTICES U/S. 142(1) OF THE ACT WERE ISSUED ON VARIOUS DATES AND DETAILED QUESTIONNAIRE WITH NOTICES U/S. 142(1) OF THE ACT WERE SERVED AND COMPLIED AND ASSESSEE FILED THE WRITTEN SUBMISSIONS . THEREAFTER, THE 4 AO OBSERVED THAT ASSESSEE COMPANY HAS FAILED TO PR OVE THE SHARE CAPITAL OF RS. 24 LACS (RS. 13 LACS SHOWN AS RECEI VED FROM SH. MAHABIR PRASAD, RS. 9,50,000/- SHOWN AS RECEIVED FR OM SMT. NEETU AND RS. 1,50,000/- SHOWN AS RECEIVED FROM SH. DINE SH KUMAR) SHOWN IN ITS BOOKS OF ACCOUNT FOR THE FINANCIAL YEA R 2011-12, RELEVANT TO AY 2012-13. HENCE, THE ADDITION OF RS. 24 LACS WAS MADE IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT AN D ASSESSMENT WAS ASSESSED AT RS. 22,86,540/- U/S. 143(3) OF THE ACT VIDE ORDER DATED 19.3.2015. 5. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL TO LEARNED CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 31.10.2016 HAS DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ACTION OF THE AO. 6. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE ME. 7. DURING THE HEARING, THE LEARNED AR BEFORE US FIL ED A PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 79 IN WHICH HE HAS ATTACHED THE COPY OF REPLY DATED 16.3.2015 FILED BY THE ASSESSEE ALONGWITH ANNEXURES BEFORE AO (PAGE 1-23 OF PB); COPY OF INCO ME STATEMENT OF SH. MAHABIR PRASAD (PAGE 24-PB); COPY OF INCOME STA TEMENT OF SH. DINESH KUMAR (PAGE 25-PB); COPY OF ACKNOWLEDGEMENT OF RETURN F SMT. RAJBALA FOR AYT 2013-14 (PAGE 26-PB); COPY OF INCOME STATEMENT OF SMT. RAJBALA (PG. 27-28-PB); COPY OF C ONFIRMATION OF ACCOUNTS AS ON 1.4.2011 TO 2.3.2012 FROM RAJ BALA T O M/S LAXMI AGENCIES(PG. 29-PB); COPY OF INCOME TAX RETURN VERI FICATION FORM OF 5 SMT. NEETU FOR AY 2013-14 (PG. 30-PB); COPY OF INCO ME STATEMENT OF SMT. NEETU (PG. 31-32-PB); COPY OF CASH BOOK AS ON 1.4.2011 TO 31.3.2012 OF SMT. NEETU (PG. 33-58-PB); COPY OF CO NFIRMATION OF ACCOUNTS AS ON 1.4.2011 TO 31.3.2012 FROM SMT. NEET U TO SH. AJAY KUMAR SHARMA (PG. 59-PB); CERTIFIED COPY OF STATEME NT OF SH. MAHABIR PRASAD RECORDED ON OATH DURING THE COURSE O F ASSESSMENT PROCEEDING (PG. 60-63-PB); CERTIFIED COPY OF AFFID AVIT OF SH. DINESH KUMAR (PG. 64-PB); CERTIFIED COPY OF STATEMENT OF SH. DINESH KUMAR RECORDED ON OATH DURING THE COURSE OF ASSESSMENT P ROCEEDING (PG. 65-68-PB); CERTIFIED COPY OF AFFIDAVIT OF SMT. NEET U (PG. 69-PB); CERTIFIED COPY OF PASS BOOK OF UNITED BANK OF INDIA OF SH. MAHABIR PRASAD DALMIA ALONGWITH DETAILS OF SHARE APPLICANT S (PG. 70-72 PB); CERTIFIED COPY OF ACKNOWLEDGEMENT OF RETURN SMT. NE ETU FOR AY 2012- 13 (PG. 73-PB); CERTIFIED COPY OF INCOME STATEMENT OF SMT. NEETU AS ON 31.3.2012 (PG. 74-75-PB); CERTIFIED COPY OF ACKN OWLEDGMENT OF RETURN SH. DINESH KUMAR FOR AY 2012-13 (PG. 76-PB); CERTIFIED COPY OF INCOME STATEMENT OF SH. DINESH KUMAR AS ON 31.3. 2012 (PG. 778- PB); CERTIFIED COPY OF BANK STATEMENT OF SH. DINES H KUMAR FROM THE PERIOD 1.4.2011 TO 31.3.2012 (PG. 78-PB) AND CERTIF IED COPY OF BANK STATEMENT OF PRACHAN FASHION HOUSE PVT. LTD. FROM T HE PERIOD 29.4.2011 TO 31.3.2012 (PG. 79-PB). HE FURTHER STAT ED THAT IN THIS CASE THAT THERE IS NO EVIDENCE WITH THE AUTHORITIE S BELOW DIRECTLY OR INDIRECTLY THAT APPELLANTS UNACCOUNTED MONEY TO TH E EXTENT OF RS. 24 LACS HAD BEEN ROUTED IN THE SHARE CAPITAL AN D IN THE ABSENCE OF SUCH EVIDENCE, NO ADDITION COULD BE SUSTAINED IN TH E INCOME OF THE 6 APPELLANT MERELY ON SUSPICION. SINCE THE IDENTITY O F THE SHAREHOLDERS AND GENUINENESS OF TRANSACTIONS HAD BEEN ESTABLISHE D BY THE ASSESSEE, THUS UTMOST IN CASE OF DOUBT ABOUT THE CA PACITY, THE ADDITION COULD HAVE BEEN MADE IN THE HANDS OF SHAR EHOLDER(S). TO SUPPORT HIS CONTENTION, HE RELIED UPON THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD . (2008) 216 CTR 195 (SC) AND ALSO RELIED UPON THE RECENT DECISION DATED 09.3.2018 OF THE ITAT, D BENCH, NEW DELHI IN THE CASE OF M/S K ESHA APPLIANCES PVT. LIMITED VS. ITO PASSED IN ITA NO. 2715/DEL/201 6 (AY 2012-13). 8. ON THE OTHER HAND, THE LEARNED DR SUBMITTED TH AT THE IDENTITY OF THE COMPANIES TO WHOM THE SHARES WERE SOLD BY THE A SSESSEE WAS NOT ACCEPTED. THEREFORE, THE SAME REPRESENTS THE UN EXPLAINED CASH CREDIT OF THE ASSESSEE. THE LEARNED DR VEHEMENTLY S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIALS AVAILABLE ON RECORD. I FIND THAT THE ONLY DISPUTE I NVOLVED IS TAXABILITY OF THE CASH CREDIT OF RS. 24 LACS. THE ASSESSEE CLA IMED THAT THE AMOUNT OF RS. 24 LACS WAS SHARE CONTRIBUTION BY THR EE PERSONS NAMELY SH. MAHABIR PRASAD CONTRIBUTING RS. 13,00,00 0/-, SMT. NITU CONTRIBUTING RS. 9,50,000/- AND SH. DINESH KUMAR CO NTRIBUTING RS. 1,50,000/-. I FURTHER FIND THAT ASSESSEE HAS F ILED A PAPER BOOK CONTAINING PAGES 1 TO 79 IN WHICH HE HAS ATTACHED T HE COPY OF REPLY DATED 16.3.2015 FILED BY THE ASSESSEE ALONGWITH ANN EXURES BEFORE AO (PAGE 1-23 OF PB); COPY OF INCOME STATEMENT OF SH. MAHABIR PRASAD (PAGE 24-PB); COPY OF INCOME STATEMENT OF SH. DINES H KUMAR (PAGE 7 25-PB); COPY OF ACKNOWLEDGEMENT OF RETURN F SMT. R AJBALA FOR AYT 2013-14 (PAGE 26-PB); COPY OF INCOME STATEMENT OF S MT. RAJBALA (PG. 27-28-PB); COPY OF CONFIRMATION OF ACCOUNTS AS ON 1.4.2011 TO 2.3.2012 FROM RAJ BALA TO M/S LAXMI AGENCIES(PG. 29 -PB); COPY OF INCOME TAX RETURN VERIFICATION FORM OF SMT. NEETU FOR AY 2013-14 (PG. 30-PB); COPY OF INCOME STATEMENT OF SMT. NEETU (PG. 31-32- PB); COPY OF CASH BOOK AS ON 1.4.2011 TO 31.3.2012 OF SMT. NEETU (PG. 33-58-PB); COPY OF CONFIRMATION OF ACCOUNTS A S ON 1.4.2011 TO 31.3.2012 FROM SMT. NEETU TO SH. AJAY KUMAR SHARMA (PG. 59-PB); CERTIFIED COPY OF STATEMENT OF SH. MAHABIR PRASAD R ECORDED ON OATH DURING THE COURSE OF ASSESSMENT PROCEEDING (PG. 60- 63-PB); CERTIFIED COPY OF AFFIDAVIT OF SH. DINESH KUMAR (PG. 64-PB); CERTIFIED COPY OF STATEMENT OF SH. DINESH KUMAR RECORDED ON OATH DUR ING THE COURSE OF ASSESSMENT PROCEEDING (PG. 65-68-PB); CERTIFIED COPY OF AFFIDAVIT OF SMT. NEETU (PG. 69-PB); CERTIFIED COPY OF PASS B OOK OF UNITED BANK OF INDIA OF SH. MAHABIR PRASAD DALMIA ALONGWITH DE TAILS OF SHARE APPLICANTS (PG. 70-72 PB); CERTIFIED COPY OF ACKNO WLEDGEMENT OF RETURN SMT. NEETU FOR AY 2012-13 (PG. 73-PB); CERTI FIED COPY OF INCOME STATEMENT OF SMT. NEETU AS ON 31.3.2012 (PG. 74-75-PB); CERTIFIED COPY OF ACKNOWLEDGMENT OF RETURN SH. DINE SH KUMAR FOR AY 2012-13 (PG. 76-PB); CERTIFIED COPY OF INCOME STAT EMENT OF SH. DINESH KUMAR AS ON 31.3.2012 (PG. 778-PB); CERTIFI ED COPY OF BANK STATEMENT OF SH. DINESH KUMAR FROM THE PERIOD 1.4.2 011 TO 31.3.2012 (PG. 78-PB) AND CERTIFIED COPY OF BANK ST ATEMENT OF PRACHAN FASHION HOUSE PVT. LTD. FROM THE PERIOD 29. 4.2011 TO 8 31.3.2012 (PG. 79-PB). THESE DOCUMENTS WERE BEFORE THE LOWER AUTHORITIES BELOW, BUT THEY IGNORED THE SAME AND NO T POINTED OUT ANY DEFECT IN THE SAME. I NOTE THAT LD. CIT(A) HAS O BSERVED THAT THE IDENTITY OF THE CREDITOR IS PROVED AND THE TRANSACT ION IS ROUTED THROUGH THE BANK BUT THE CAPACITY OF THE ALLEGED CR EDITORS IS RATHER FOUND TO BE NON-EXISTENT. BUT IN THIS CASE THERE I S NO EVIDENCE WITH THE AUTHORITIES BELOW DIRECTLY OR INDIRECTLY THAT A SSESSEES UNACCOUNTED MONEY TO THE EXTENT OF RS. 24 LACS HAD BEEN ROUTED IN THE SHARE CAPITAL, HENCE, IN THE ABSENCE OF SUCH EV IDENCE, ADDITION IS NOT SUSTAINABLE IN THE EYES OF LAW. AS PER THE SETT LED LAW, IF THE IDENTITY OF THE SHAREHOLDERS AND GENUINENESS OF TR ANSACTIONS HAD BEEN ESTABLISHED BY THE ASSESSEE, THE ADDITION COUL D HAVE BEEN MADE IN THE HANDS OF SHAREHOLDER(S). I AM OF THE CONSI DERED VIEW THAT ASSESSEE HAS DULY EXPLAINED THE SOURCE OF MONEY REC EIVED AND THE ASSESSEE IS NOT ANSWERABLE FOR THE SOURCE OF MONEY IN THE HANDS OF INVESTORS. IN THIS REGARD I DRAW SUPPORT FROM THE J UDGMENT OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) WHEREIN IT WAS HELD AS UNDER :- 2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF IT ACT, 1961?. WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS 9 FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 9.1 I FURTHER NOTE THAT RECENTLY THE ITAT, D BE NCH, NEW DELHI IN THE CASE OF M/S KESHA APPLIANCES PVT. LIMITED VS. I TO PASSED IN ITA NO. 2715/DEL/2016 (AY 2012-13) VIDE ITS DECISION DA TED 09.3.2018 HAS DEALT THE SIMILAR ISSUE AND DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY FOLLOWING THE HONBLE SUP REME COURT JUDGEMENT IN THE CASE OF LOVELY EXPORTS (SUPRA). 9.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPLAINED ABOVE AND RESPECTFULLY FOLLOWING THE AF ORESAID PRECEDENTS, I DELETE THE ADDITION IN DISPUTE AND ALLOW THE ADDI TIONAL GROUND RAISED BY THE ASSESSEE. SINCE THE ADDITION IN DISPUTE HAS BEEN DELETED, AS AFORESAID, THERE IS NO NEED TO ADJUDICATE THE OTH ER GROUNDS RAISED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON 14-03-2018. SD/- (H.S. SIDHU ) JUDICIAL MEMBER DATE: 14.03.2018 SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI