M/s Suryakanta Poultri P.Limited, Ganjam V. DCIT, Berhampur

ITA 427/CTK/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90817 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 26-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHOVAN KRISHNA SAHU
• Assessee Lawyers: P R MOHANTY
• Keywords: Income from undisclosed sources
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK B ENCH, CUTTACK , . . , BEFORE SHRI SUNIL KUMAR YADAV, JM & SHRI B.P.JAIN, AM ./ ITA NO.427/CTK/2012 ( ! ! ! ! / ASSESSMENT YEAR :2004-05) M/S. SURYAKANTA POULTRIES PVT LTD., GOVINDPUR, CHATRAPUR, GANJAM VS. DCIT, BERHAMPUR CIRCLE, BERHAMPUR ' ./ # ./ PAN/GIR NO. AADCS 1597 G ( '$ / APPELLANT ) .. ( %&'$ / RESPONDENT ) ( * * * * /ASSESSEE BY : SHRI P.R.MOHANTY * * * * /REVENUE BY : SHRI SHOVAN KRISHNA SAHU + ( / DATE OF HEARING : 18 TH MAY, 2015 -.! ( / DATE OF PRONOUNCEMENT 21 ST MAY,2015 / / / / / O R D E R PER B.P.JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD CIT(A), BERHAMPUR DATED 21.3.2012 FOR THE ASSESSMENT YEAR 2 004-05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. FOR THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS), BERHAMPUR, ODISHA HEREINAFTER REFERRED T O AS CIT (APPEAL) DATED 21.03.2012 PASSED IN APPEAL NO. 0247 /2006-07 CONFIRMING THE APPEAL ORDER DATED 29.03.2007 PASSED BY THE C.I.T (APPEALS), BERHAMPUR FOR THE ASSESSMENT YEAR 2004-0 5 DISMISSING THE APPEAL IS NOT JUST AND LEGAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. FOR THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION TO THE EXTENT OF RS.48,30,000/-( BEING SHA RE CAPITAL RECEIVED BY THE COMPANY) MADE BY C.I.T (APPEALS), B ERHAMPUR ITA NO.427/CTK/2012 ASSESSMENT YEAR 2004-05 2 VIDE ITS ORDER DATED 29.03.2007 TO THE RETURNED INC OME OF THE APPELLANT ON ACCOUNT OF UNACCOUNTED INCOME U/S. 68 OF THE INCOME FAX ACT 1961 ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE. 3.FOR THAT THE LEARNED CIT(A) HAS FAILED TO APPRECI ATE THE CONTENTS OF THE ENQUIRY REPORT DATED 02.12.2011 COLLECTED FR OM ASST. DIRECTOR OF INCOME TAX (INV), RAJAHRNUNDRY (ENGAGED TO INQUI RE THE IDENTITY AND CREDIT WORTHINESS OF THE ALLEGED SHARE APPLICAN TS) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY DERIVED INCOME FROM POULTRY BUSINESS. ON PERUSAL OF THE BA LANCE SHEET FILED ALONGWITH THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD RECEIVED AN A MOUNT OF RS.1,05,00,000/- AS SHARE APPLICATION MONEY. SIMULTANEOUSLY, THE CO MPANY HAD ALSO INVESTED AN AMOUNT OF RS.58,50,000/- IN ITS SISTER CONCERN, HIM AKAILASH HYDROPOWER PVT LTD., TOWARDS SHARE CAPITAL. IN RESPONSE TO QUERIE S RAISED BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED TWO LIST OF SHARE A PPLICANTS-ONE CONTAINING A LIST OF THOSE APPLICANTS WHO WERE ASSESSED TO INCOME TAX AND THE OTHER OF THOSE NOT ASSESSED TO INCOME TAX. THE ASSESSING OFFICER ACCE PTED THE EXPLANATION OF THE ASSESSEE RELATING TO THE FIRST LIST OF 11 NUMBER OF SHARE APPLICANTS WHO WERE ASSESSED TO INCOME TAX AND WHO CONTRIBUTED AN AMOUN T OF RS.45,30,000/-. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION OF T HE ASSESSEE RELATING TO THE BALANCE AMOUNT OF RS.59,70,000/- FROM 24 SHARE APPL ICANTS WHO WERE NOT ASSESSED AND, ACCORDINGLY, ADDED RS.59,70,000/- TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE ACT. 4. THE LD CIT(A) VIDE HIS ORDER DATED 29.3.2007 ACC EPTED THE GENUINENESS AND CREDITWORTHINESS IN RESPECT OF FOUR SHARE HOLDERS OUT OF 24 ITA NO.427/CTK/2012 ASSESSMENT YEAR 2004-05 3 SHARE HOLDERS IN RESPECT OF WHO THE ADDITIONS WERE MADE. ACCORDINGLY, THE LD CIT(A) DELETED AN AMOUNT OF RS.11,40,000/- REPRESEN TING THE CONTRIBUTION OF THESE FOUR SHARE HOLDERS AND SUSTAINED THE ADDITION AT RS.48,30,000/-. 5. THE MATTER TRAVELLED TO THE ITAT, WHO REMANDED T HE MATTER BACK TO THE FILE OF THE LD CIT(A) AND THE LD CIT(A) REFERRE D THE MATTER TO THE INVESTIGATION WING OF VISAKHAPATNAM FOR VERIFICATION OF THE SAID DEPOSITS. THE ADIT (INVESTIGATION) SUBMITTED THE REPORT VIDE LETTER DA TED 2.12.2011 AND THE SAID REPORT OF THE ADIT (INV) WAS GIVEN TO THE ASSESSEE, WHO SUBMITTED HIS REPLY VIDE LETTER DATED 12.3.2012. THE LD CIT(A) AFTER CONSID ERING THE REPORT OF THE ADIT(INV) AND REPLY OF THE ASSESSEE AND RELYING ON THE VARIOUS COURTS OF LAW, CONFIRMED THE ACTION OF THE ASSESSING OFFICER, MAIN LY ON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL, 214 ITR 801 & CIT VS DURGA PRASAD MORE, 82 ITR 540(SC). 6. AT THE TIME OF HEARING, THE LD COUNSEL FOR THE A SSESSEE INVITED OUR ATTENTION TO THE REPORT OF THE ADIT(INV), WHERE OUT OF 20 SHARE APPLICANTS, 15 SHARE APPLICANTS HAVE CONFIRMED OF HAVING INVESTED THE MONIES WITH THE ASSESSEE AND THE ADIT(INV) HAS GIVEN THE REPORT THA T THEY ARE IDENTIFIABLE, LEADING A DECENT STANDARD OF LIVING AND APPEARS TO HAVE SUFFICIENT CREDITWORTHINESS. AS REGARDS OTHER 5 APPLICANTS, T HEY HAVE ALREADY CONFIRMED OF HAVING INVESTED THE MONIES WITH THE ASSESSEE AND MO ST OF THEM ARE RELATIVES AND FRIENDS AND, ACCORDINGLY, LD COUNSEL FOR THE A SSESSEE PRAYED THAT THE ORDER OF THE LD CIT(A) BE REVERSED. 7. LD D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF BOTH THE AUTHORITIES ITA NO.427/CTK/2012 ASSESSMENT YEAR 2004-05 4 BELOW AND INVITED OUR ATTENTION TO THE REPORT OF AD IT(INV) THAT REGARDING GENUINENESS, NONE OF THE PERSONS OUT OF 20 SHARE AP PLICANTS, WAS ABLE TO FURNISH ANY EVIDENCE TO SHOW THAT THE TRANSACTION W AS GENUINE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE WITH REGARD TO INVESTMENTS MADE BY 20 SHARE APPLICANTS TOTALING TO RS.48,30,00 0/-, WHICH HAVE MAINLY BEEN CONFIRMED AS INCOME U/S.68 OF THE ACT ON THE BASIS OF PROBABILITIES IN VIEW OF THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASES OF SUMATI DAYAL, & DURGA PRASAD MORE (SUPRA). IT IS ALSO UNDISPUTED THAT TH E ADIT(INV) AFTER INVESTIGATING THE MATTER SUBMITTED THE REPORT VIDE LETTER DATED 2 .12.2011 WITH REGARD TO SAID 20 SHARE APPLICANTS, OUT OF WHICH, THE INCOME TAX I NSPECTOR WAS ABLE TO CONTACT 15 PERSONS WITH RESPECT TO WHICH HE SUBMITTED THE R EPORT THAT THEY ARE IDENTIFIABLE, LEADING A DECENT STANDARD OF LIVING A ND ALSO APPEARS TO HAVE SUFFICIENT CREDITWORTHINESS. MOST OF THEM ARE FOUN D TO BE NEAR RELATIVES AND FRIENDS OF THE MANAGING DIRECTOR OF THE ASSESSEE AN D ALL OF THEM HAVE CONFIRMED THAT THEY HAVE ACTUALLY INVESTED THEIR RESPECTIVE S HARE APPLICATION MONIES IN THE ASSESSEE COMPANY AND THE SOURCE OF THE SAME HAVE BE EN EXPLAINED TO BE ACCUMULATED OUT OF AGRICULTURAL SAVINGS AND THEY AR E NOT INCOME TAX ASSESSES BUT THEY ARE DERIVING INCOME FROM AGRICULTURAL OPER ATIONS ONLY. IT WAS ALSO STATED BY THEM THAT THE AMOUNTS HAD BEEN INVESTED B Y TAKING DEMAND DRAFTS SINCE THEY WERE NOT FAMILIAR WITH THE BANKING OPERA TIONS. ALL THE 15 PERSONS HAVE ALSO FURNISHED CONFIRMATION LETTERS. IN THE C IRCUMSTANCES AND FACTS OF THE CASE, EVEN IF NO EVIDENCE WITH REGARD TO THE SAID S TATEMENT HAVE BEEN PRODUCED, IT CANNOT BE A MATTER OF UNEXPLAINED INCO ME OF THE ASSESSEE. THE LD ITA NO.427/CTK/2012 ASSESSMENT YEAR 2004-05 5 CIT(A) HAS NOT BROUGHT ON RECORD THAT THE SAID MONI ES ACTUALLY BELONGS TO THE ASSESSEE. THEREFORE, THE ARGUMENTS OF THE LD D.R. WITH REGARD TO THE GENUINENESS OF THE TRANSACTION CANNOT HELP THE REVE NUE. 9. AS REGARDS OTHER FIVE SHARE APPLICANTS, WHO ARE NOT RESIDING AT THEIR NATIVE PLACES AND HAVE MIGRATED TO FAR PLACES LIKE HYDERABAD AND VISAKHAPATNAM, ETC AND THEIR PRESENT ADDRESS COULD NOT BE FOUND, IS A MATTER OF RECORD BY THE INVESTIGATION WING. IN SUCH CIRCUMST ANCES AND FACTS OF THE CASE, IF THE DEPARTMENT IS NOT ABLE TO FIND OUT THE SAID SHARE APPLICANTS, THE SAID SHARE APPLICATION MONIES CANNOT BE SAID TO BE THE INCOME OF THE ASSESSEE. IN VIEW OF ABOVE, WE ARE OF THE OPINION THAT THE A DDITION CANNOT BE MADE MERELY ON THE BASIS OF CONJECTURES AND SURMISES. THEORY OF HUMAN PROBABILITIES AND SURROUNDING CIRCUMSTANCES CANNOT BE APPLIED ABOUT T HE CREDITWORTHINESS & VERACITY OF TRANSACTION BEFORE MAKING ADDITION U /S 68 OF THE ACT. ACCORDINGLY, THE LD CIT(A) IS NOT JUSTIFIED IN TREATING THE SAID SHARE APPLICATION MONIES OF RS.48,30,000/- ON THE BASIS OF PROBABILITIES AS INC OME OF THE ASSESSEE AND CONFIRMING THE ADDITION OF RS.48,30,000/- AND, THER EFORE, THE ORDER OF THE LD CIT(A) IS DIRECTED TO BE REVERSED. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS /05 /2015. SD/- SD/- ( ) (SUNIL KUMAR YADAV) ( . . ) (B.P.JAIN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 21 /05/2015 B.K.PARIDA, SPS ITA NO.427/CTK/2012 ASSESSMENT YEAR 2004-05 6 / / / / %( %( %( %( 2!( 2!( 2!( 2!( / COPY OF THE ORDER FORWARDED TO : \ / / / / / BY ORDER, 3 33 3 / 4 4 4 4 (ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. '$ / THE APPELLANT : M/S. SURYAKANTA POULTRIES PVT LTD., GOVINDPUR, CHATRAPUR, GANJAM 2. %&'$ / THE RESPONDENT.: DCIT, BERHAMPUR CIRCLE, BERHAMPUR 3. 5 ( ) / THE CIT(A), BERHAMPUR 4. 5 / CIT , BHUBANESWAR. 5. 6 %( , / DR, ITAT, CUTTACK 6. 8 9+ / GUARD FILE. &( %( //TRUE COPY//