Bhandari Hospital & Research Centre P. Ltd., Indore V. The Addl. CIT, Range-2, Indore

ITA 420/IND/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2308 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-06-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 28-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V J BORICHA
• Assessee Lawyers: N D PATVA ADVS
• Section: 143(3); 133A; 234B; 147; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.420/IND/2012 ASSESSMENT YEAR: 2004-05 BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 181, CLERK COLONY, INDORE (M.P.) INDORE / VS. ACIT, RANGE - 2 AYAKAR BHAWAN INDORE ( REVENUE ) ( RESPONDENT ) P.A. NO. AAACB7024Q APPELLANT BY SHRI ASHISH GOYAL & SHRI N.D. PATVA , ADVS. RESPONDENT BY SHRI V.J. BORICHA SR. DR DATE OF HEARING: 06.02.2018 DATE OF PRONOUNCEMENT: 28 .02.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II, INDORE, (IN SHORT CIT(A)), DATED 06.04.2010 PERTAINING TO A.Y. 2004-05. THE AS SESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS & CIRCUMSTANCES OF THE CASE- BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 2 1. THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT HOLDING THA T THE ASSESSMENT ORDER IS BAD IN LAW AS IT IS CONTRARY TO THE FACTS ON RECORD AND IT IS AGAINST THE PROVISION OF LAW, B EING UNREASONABLE, UNJUSTIFIED & WITHOUT JURISDICTION. 2. IN UPHOLDING THE ADDITION TO INCOME OF RS.2,00,000/ - RECEIVED AS CONTRIBUTION TOWARDS SHARE CAPITAL. 3. IN UPHOLDING ADDITION TO INCOME OF RS.16,50,000/- R ECEIVED AS SHARE PREMIUM AMOUNT. 4. IN SUSTAINING TOTAL ADDITION OF RS.18,50,000/- INSP ITE OF THE FACT THAT THE APPELLANT DISCHARGED ITS ONWU IN FULL AS PROVIDED U/S 68. 5. IN HOLDING THAT THE TRANSACTIONS WITH SLFL DEFIED L OGIC AND ARE AGAINST ALL HUMAN PROBABILITIES AND IT IS MEREL Y AN ACCOMMODATION ENTRY BY ARRANGING THE AFFAIRS AND BY COLLUSIVE AGREEMENT. 6. IN NOT QUESTING THE CHARGING THE INTEREST U/S 234A, 234B & 234C. 7. IN NOT QUASHING THE INITIATION OF PENALTY U/S 271(1 )(C). 2. BRIEFLY STATED FACTS ARE THAT CASE OF THE ASSESS EE PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) O F THE ACT (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 27.03.2016. WHILE FRAMING THE ASSESSMENT, THE AO OB SERVED THAT THE ASSESSEE COMPANY HAD INTRODUCED SHARE CAPITAL O F RS.2,00,000/- AND SHARE PREMIUM OF RS.16,50,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS A SKED TO EXPLAIN INTRODUCTION OF SHARE CAPITAL AND SHARE PRE MIUM. IN RESPONSE THERETO, THE ASSESSEE COMPANY STATED THAT THE COMPANY HAS ALLOTTED 2000 EQUITY SHARE AS RS.100/- PER SHAR E ON PREMIUM OF RS.825/- PER SHARE TO SHRESHTHA LEASING AND FINA NCE LTD. (HEREIN REFERRED IN SHORT AS SLFL).THE AO DID NOT A CCEPT THE EXPLANATION AS OFFERED BY THE ASSESSEE AND PROCEEDE D TO MAKE BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 3 ADDITION OF THIS AMOUNT BY INVOKING PROVISION OF SE CTION 68 OF THE ACT. AGGRIEVED BY THE THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHO ALSO SUSTAINED THIS ADDITION. 3. GROUND NO. 1 OF THE ASSESSEES APPEAL READS AS U NDER: THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT HOLDING THA T THE ASSESSMENT ORDER IS BAD IN LAW AS IT IS CONTRARY TO THE FACTS ON RECORD AND IT IS AGAINST THE PROVISION OF LAW, BEIN G UNREASONABLE, UNJUSTIFIED & WITHOUT JURISDICTION. AT THE TIME OF HEARING GROUND NO.1 WAS NOT PRESSED, THEREFORE, THIS GROUND IS DISMISSED AS NOT PRESSED. 4. GROUND NOS. 2 TO 5 ARE INTERCONNECTED AND AGAINS T CONFIRMATIONS OF ADDITION OF RS.18,50,000/-. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS AS MADE IN THE GIST OF ARGUMENTS. THE SUBMISSIONS OF T HE ASSESSEE ARE REPRODUCED AS UNDER FOR THE SAKE OF CLARITY. NATURE AND SOURCE OF CREDIT 1. IDENTITY OF INVESTOR COMPANY (A) I-T RETURN - PB 143/ III. PAN OF SLFL - AADCS38 50Q. PB 144/III. (B) ASSESSMENT ORDER FOR A.Y. 2004-05 U/S. 147 DATE D 24.12.2007. PB 61-62/ II (C) ASSESSMENT ORDER FOR A.Y. 2004-05 U/S. 153C/ 14 3(3) DATED 30.12.2011. PB 63-65/ II. [BASED ON SEARCH IN CASE OF BHATIA GROUP] (D) LD AO PG. 6, TOP 3 RD LINE -IDENTITY OF SLFL STANDS PROVED. 2. GENUINENESS (A) CONFIRMATION. PB 145-146/ III BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 4 (B) DETAILS OF INVESTMENT BY CHEQUE. PB 145/ I. (C) BANK ACCOUNT REFLECTING PAYMENT OF BY INVESTOR COMPANY. PB 147-156/ III (D) SHARE APPLICATION FORM . PB 157-167/111 (E) FINAL ACCOUNTS FOR A.Y. 2004-05 3. CREDIT-WORTHINESS (A) INVESTOR HAD SUFFICIENT BANK BALANCE BEFORE INV ESTMENT IN ASSESSEE-COMPANY. PB 147-156/ III (B) FINAL ACCOUNTS OF SLFL. (ANNEXURE B 1-2 TO CIT( A) ORDER). SHARE CAPITAL AND RESERVES ON 31.03.2004 RS. 15,22, L1,96 SHARE CAPITAL AND RESERVES ON 31.3.2003 RS.15,22,67 ,042 (C) INVESTMENTS BY SLFL 31.03.2004 RS. 22,75,56,530 31.03.2003 RS.10,50,76,OOO INVESTMENT IN ASSESSEE-COMPANY WAS NOT EVEN 1% OF T HE INVESTMENTS DONE BY THEM. (D) SURVEY U/S. 133A WAS CONDUCTED ON THEM ON 02.02.2007. FINDINGS IN SURVEY AT ANNEXURE A TO CIT(A) IS IMPORTANT ESPECIALLY PAGE 4 THEREOF. SLFL GAVE SOURCE OF THEIR FUNDS. THEIR SOURCE WAS D OUBTED; AND 'APPROPRIATE ACTION' WAS DIRECTED IN INVESTOR COMPA NY. THEREAFTER, THEIR ASSESSMENT U/S. 147 WAS COMPLETED ON 24.12.2007. [PB 61-62/ II]. NO ADDITION WAS MADE. A LSO, BASED ON SEARCH IN THE CASE OF BHATIA GROUP, ACTION U/S. 153C/ 143(3) WAS TAKEN IN THEIR CASE. HOWEVER, NO ADDITION WAS M ADE. [PB 63-65/11] 4. REASON FOR HUGE SHARE PREMIUM (A) INTRINSIC VALUE PER SHARE OF ASSESSEE WAS RS. 1,110.96/-. [PB 37/ I]. THEY INVESTED AT RS. 925/- PER SHARE [I.E. RS. 100 FACE VALUE AND RS. 825 PREMIUM]. (B) CASH PROFIT OF ASSESSEE-COMPANY WAS 50.89% OF CAPITAL. [PB 38/ I). THIS SHOWED A GOOD POTENTIAL OF FURTHER FUTURE INVESTMENTS AND INCOME. (C) ALTHOUGH THERE WAS GOOD HOSTELS IN INDORE, BUT FOR NURSES OF INDORE INSTITUTE OF MEDICAL SCIENCES. IT IS A REPUT ED INSTITUTION. BASIS OF LD AO/CIT(A) (A) SUSPICION - NO ONE WILL INVEST AT SUCH HUGE PRE MIUM. SUSPICION CANNOT TAKE FORM OF EVIDENCE. ASSESSEE HAS GIVEN EV IDENCES TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS AN D FURTHER REASON FOR SUCH PREMIUM. (B) GENERAL FINDING - SHARE CAPITAL USED FOR MONEY LAUNDERING. ITS BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 5 A GENERAL FINDING; MAY RAISE A SUSPICION, BUT NO EV IDENCE TO PROVE THE SAME. (C) INQUIRIES IN CASE OF INVESTOR-COMPANY AND ADDITION IN OTHER IN VESTEE-COMPANIES. ON BASIS OF INQUIRY IN INVESTOR-C OMPANY, NO FINDING OF ACCOMMODATION; OR THEIR SOURCE OF CAPITA L NOT DISREGARDED IN THEIR ASSESSMENT. ADDITION IN OTHER INVESTEE-COMPANIES DELETED. ORDER OF ANANT STEEL [PB 66-142/ II ON RECORD]. SPECIFIC PB 73-74, 102 (LAST BUT S' LINE). DIRECTLY COVERED CASES FOR SAME INVESTOR (A) RANK SHIPPING AGENCY [ITAT MUMBAI, ITA 5805/ MUM/ 2008 ORDER DATED 21.11.2012]. CASE LAW COMPILATION CL PB # 1-12. (B) ANANT STEEL [ITAT INDORE, ORDER DATED 18.11.2015]. PB 66- 142/ II. CASE RELATES TO COMMON INVESTIGATION BY DEPARTM ENT IN CASE OF ASSESSEE AND THEIR CASE. ON THE CONTRARY LD. DR OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE HEARD THE CONTENTIONS AND PERUSED MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE AO MADE ADDITION ON THE BASIS THAT THE CONTENTION T HAT THE PREMIUM WAS PAID ON THE BASIS OF PROFITABILITY IS N OT CORRECT AS IN FACT, NO WORTHWHILE PROFIT HAS BEEN SHOWN IN PART W HICH MAY ATTRACT ANY INVESTORS ATTENTION. IT IS RECORDED BY THE AO THAT FROM THE PERUSAL OF COPY OF RETURN FILED WITH THE ADDITIONAL COMMISSIONER OF INCOME-TAX, RANGE-4, SURAT IT IS SEEN THAT THE ALLE GED INVESTOR COMPANY HAS FILED RETURN OF INCOME FOR A.Y. 2004-05 DECLARING TOTAL INCOME OF RS.2,25,450/- ONLY. THE AO SUSPECTED THE GENUINITY OF INVESTMENT COMPANY ON THE GROUND THAT M/S. SHRESHTH A LEASING AND FINANCE LTD. HAS SHOWN SHARE PREMIUM OF RS.10 C RORES UNDER THE HEAD RESERVES AND SURPLUS. THE RECEIPT OF SHARE PREMIUM OF RS.10 CRORE BY M/S. SHRESHTHA LEASING AND FINANCE L TD. CLEARLY INDICATES THAT THIS COMPANY IS NOTHING BUT A CONDUI T COMPANY FOR BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 6 FACILITATING ACCOMMODATION ENTRY TO RECEIVE AND PAY SHARE PREMIUM AND GIVE TRANSACTIONS SOMEHOW THE COLOR OF GENUINE TRANSACTION. FURTHER, THE AO OBSERVED THAT NO BANK STATEMENT WAS FURNISHED BELONGING TO M/S. SHRESHTHA LEASING AND FINANCE LTD . THE SUBMISSION OF THE ASSESSEE IS THAT INVESTMENT IN AS SESSEE COMPANY WAS NOT EVEN 1% OF THE INVESTMENT MADE. WE ARE OF T HE VIEW THAT THE QUESTION HERE IS THAT WHETHER THE TRANSACTION S O EXECUTED IS GENUINE OR OTHERWISE A COLORABLE DEVICE. IT IS NOT THE QUANTUM OF INVESTMENT BUT THE GENUINITY OF INVESTMENT IS MATER IAL. IN THE CASE IN HAND, THE AO HAS SUFFICIENT MATERIAL TO SUSPECT THE TRANSACTION. IT IS UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH TRANSACTION. NO MATERIAL IS PLACED TO PROVE THAT TH E PURCHASE MADE IS IN CONFORMITY WITH PREVALENT MARKET AS NO COMPAR ABLE TRANSACTION BY OTHER THIRD PARTY IS PRODUCED. HENCE , WE DO NOT SEE ANY REASON TO INTERFERE INTO THE FINDING OF THE AUT HORITIES BELOW. THE GROUND NOS. 2 TO 5 IN THIS APPEAL ARE DISMISSED. 6. GROUND NO.6 RELATES TO CHARGING OF INTEREST U/S 234A, 234B & 234C OF THE ACT. THE CHARGING OF INTEREST BEING CONSEQUENTIAL IN NAT URE, WE HOLD ACCORDINGLY. 7. GROUND NO.7 IS AGAINST INITIATION OF PENALTY PRO CEEDINGS. THIS GROUND IS PREMATURE HENCE DISMISSED. BHANDARI HOSPITAL & RESEARCH CENTRE P. LTD. 7 8. AS A RESULT, APPEAL OF THE ASSESSEE IN ITANO.420 /IND/2012 IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28.02 .2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 28 /02/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE