ITO, New Delhi V. M/s. Gaurav Leasing Pvt. Ltd., New Delhi

ITA 4616/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58537 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-01-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 19-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Unexplained cash credit; Share purchase agreement

Judgement Text

ITA NO. 4616/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4616/DEL/2010 A.Y. : 2001-02 ITO, WARD 12(1), NEW DELHI ROOM NO. 337, CR BUILDING, NEW DELHI 110002 VS. M/S GAURAV LEASING PVT. LTD., 3-B, VANDANA, 11, TOLSTOY MARG, NEW DELHI (PAN/GIR NO. : AAACG0591R) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. SATY EN SETHI, ADVOCATE DEPARTMENT BY : SH. SALIL MISHRA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.8.2 010 PERTAINING TO ASSESSMENT YEAR 2001-02. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 15,15 ,000/- U/S. 68. 3. IN THIS CASE WHILE MAKING THE DISALLOWANCE, ASSE SSING OFFICER OBSERVED THAT STATEMENT OF SH. MAHESH GARG WAS RECO RDED BY THE INVESTIGATION WING WHEREIN HE HAS STATED THAT HIS MAIN WORK WAS TO PROVIDE ENTRIES AND HIS ONLY ICOME WAS BY WAY OF COMMI SSION @ 0.5%. SH. GARG HAD FURTHER STATED IN HIS STATEMENT THAT T HE COMPANY M/S SEKHAWATI FINANCE PVT. LTD. TO WHOM THE ASSESSEE HAD MADE SALES WAS ALSO ENGAGED IN PROVIDING ENTRY. IN VIEW OF THE ABOVE THE ASSESSING ITA NO. 4616/DEL/2010 2 OFFICER HAS HELD THAT THE TRANSACTIONS ENTERED INT O BY THE ASSESSEE WERE NOT GENUINE AND THE CREDITWORTHINESS OF THE PE RSONS WHO HAD GIVEN CREDITS IN ANY FORM WAS IN A SERIOUS DOUBT. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT THE ASSESSEE COU LD NOT PRODUCE THE PERSONS CONTROLLING M/S SEKHAWATI FINANCE PVT. LTD. ASSESSING OFFICER PLACED RELIANCE UPON THE HONBLE APEX COURT DECISI ON IN THE CASE OF MCDOWELL AND CO. LTD. 154 ITR 148. HE HELD THAT SI NCE THE ASSESSEE HAS FAILED TO BRING VARIOUS DOCUMENTS WHICH CAN PRO VE THE GENUINENESS OF THE TRANSACTION THIS COUPLED WITH T HE CATEGORICAL ADMISSION OF THE DIRECTORS OF M/S SEKHAWATI FINANCE PVT . LTD. CLEARLY ESTABLISHED THE FACT THAT THE TRANSACTION ENTERED B Y THE ASSESSEE WITH M/S SEKHAWATI FINANCE PVT. LTD. WERE NOT GENUINE AND T HE CREDITS APPEARING THE BOOKS OF ASSESSEE FROM M/S SEKHAWATI FIN ANCE PVT. LTD. REMAIN UNEXPLAINED. THEREFORE, THE ADDITION OF ` 15 LACS AS UNEXPLAINED CREDITS APPEARING FROM M/S SEKHAWATI FINA NCE PVT. LTD. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSEE HAS FILED THE FOLLOW ING DOCUMENTS WITH REGARD TO TRANSACTION WITH M/S SEKHAWATI FINANCE PVT. LTD.:- I) PAN OF M/S SEKHAWATI FINANCE PVT. LTD. II) COPY OF ITR III) CERTIFICATE OF INCORPORATION OF M/S SEKHAWATI FINANCE PVT. LTD. IV) COPY OF BALANCE SHEET. V) COPY OF BOARD RESOLUTION OF BUYER CONFIRMING PU RCHASE OF SHARES. ITA NO. 4616/DEL/2010 3 VI) COPY OF LETTER OF M/S NAVYUG INVESTMENT LTD. RE GARDING THE TRANSFER OF SHARES IN THE NAME OF M/S SEKHAWATI FI NANCE PVT. LTD. VII) COPY OF TRANSFER DEED SHARES WITH DISTINCTIVE NUMBERS. VIII) COPY OF SHARE TRANSFER FORM. IX) COPIES OF BANK STATEMENT OF THE APPELLANT. 4.1 LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT IN VIEW OF THE DETAILS SUBMITTED BY THE ASSESSEE ON RECORD AND IN VIEW OF THE CERTAIN CASE LAWS THE IDENTITY OF THE CREDI TORS ARE CONSIDERED PROVED. HE HAS ALSO HELD THAT THE GENUINENESS O F THE TRANSACTION IS ESTABLISHED AS THE TRANSACTION IS ROUTED THROUGH B ANKING CHANNELS. HE FURTHER OBSERVED THAT IT IS SEEN THAT THE SALE PROCEEDS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. LD. COMMI SSIONER OF INCOME TAX (APPEALS) OPINED THAT THUS WHERE THE RET URN OF INCOME IS FILED BY THE CREDITORS OF THE ASSESSEE AND IS ACCEP TED BY THE DEPARTMENT, AND THE PAYMENTS IS THROUGH A/C PAYEE CHEQUE THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. REGARDING THE CREDITWORTHINESS OF THE PURCHASER IT IS SEEN AS PER THE AUDITED ACCOUNTS THAT THE NET WORTH WAS ` 2518055/- SO IT WAS IN A POSITION TO PURCHASE SHARES OF ` 5 LAKH. LD. COMMISSIONER OF IN COME TAX (APPEALS) FURTHER OBSERVED THAT PERUSAL OF THE FACT S ON RECORD SHOW THAT THERE CAN BE NO DISPUTE TO THE FACTS THAT THE INVESTMENT HAD BEEN MADE BY THE ASSESSEE IN THE EQUITY SHARES WHICH HAVE BEEN SOLD, IN VIEW OF THE FACTS THAT THE ASSESSEE HAD SUBMITTED COPY OF BALANCE SHEET OF EARLIER YEARS WHEREIN THE SHARES SOLD ARE REFLECTED IN THE INVESTMENTS. THE DISTINCTIVE NUMBER OF THE SHARE C ERTIFICATES AND ALSO THE RATE AT WHICH PURCHASES HAVE BEEN MADE ARE CLEA RLY SPECIFIED. THE ASSESSEE FILED CONFIRMATION REGARDING THE SAL ES MADE FROM THE ITA NO. 4616/DEL/2010 4 PURCHASER. THE ASSESSING OFFICER HAS NOT BROUGHT ANY INFORMATION OR EVIDENCE ON RECORD TO DISPROVE CLAIMS OF THE ASSESSE E SUBSTANTIATED BY IRREBUTTABLE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE. THE ASSESSING OFFICER HAS SIMPLY TREATED THE SALE OF SH ARES OF M/S SEKHAWATI FINANCE PVT. LTD. AS AN ACCOMMODATION ENTRY AND MADE THE ADDITION WITHOUT BRINGING ANY EVIDENCES ON RECORD LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER PLACED RELIANCE UPO N HONBLE APEX COURT DECISION IN THE CASE OF KISHAN CHAND CHELLA R AM VS. C.I.T. 125 ITR 713; MUKESH R. MARROLIA VS. ACIT 6 SOT 247 (MUM) AND ITAT C BENCH IN THE CASE OF ITO VS. NAVEEN GUPTA 5 SOT 94 (DEL.) LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED THA T ASSESSEE HAS BROUGHT EVIDENCE ON RECORD REGARDING THE IDENTITY O F THE PURCHASER GENUINENESS OF THE TRANSACTION AND ALSO THAT PAYMEN T WAS RECEIVED THROUGH CHEQUES; COPY OF BANK ACCOUNT HAS ALSO BEEN SUBMITTED. LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE DE CISION OF THE HONBLE APEX COURT IN THE CASE OF UMA CHARAN SHAW AN D BROS. VS. C.I.T. 37 ITR 271 AND OMAR SALAY MOHAMMAD SAIT VS. C.I .T. 37 ITR 151 AND OBSERVED THAT NO ADDITION CAN BE MADE MERELY ON SUSPICION, SURMISES AND CONJECTURES. IN VIEW OF THE ABOVE DISC USSIONS AND JUDICIAL PRECEDENTS ON THE ISSUES DISCUSSED ABOVE, T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE AND ADDITION OF ` 15 LACS MADE BY THE ASSESSING OFFICER WAS DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT THE FOLLOWING ITA NO. 4616/DEL/2010 5 DOCUMENTS HAVE BEEN FILED IN SUPPORT OF THE SALES MAD E WITH M/S SEKHAWATI FINANCE PVT. LTD.:- I) PAN OF M/S SEKHAWATI FINANCE PVT. LTD. II) COPY OF ITR III) CERTIFICATE OF INCORPORATION OF M/S SEKHAWATI FINANCE PVT. LTD. IV) COPY OF BALANCE SHEET. V) COPY OF BOARD RESOLUTION OF BUYER CONFIRMING PU RCHASE OF SHARES. VI) COPY OF LETTER OF M/S NAVYUG INVESTMENT LTD. RE GARDING THE TRANSFER OF SHARES IN THE NAME OF M/S SEKHAWATI FI NANCE PVT. LTD. VII) COPY OF TRANSFER DEED SHARES WITH DISTINCTIVE NUMBERS. VIII) COPY OF SHARE TRANSFER FORM. IX) COPIES OF BANK STATEMENT OF THE APPELLANT. 6.1 FURTHER, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT THE GENUINENESS OF TRANSACTION IS ESTA BLISHED AS THE TRANSACTION IS ROUTED THROUGH BANKING CHANNELS. REGARDING THE CREDITWORTHINESS OF THE PURCHASER IT WAS FOUND THAT AS PER THE AUDITED ACCOUNTS THE NET WORTH WAS ` 2518055/-. IT IS A LSO UNDISPUTED THAT ASSESSEE HAS MADE INVESTMENT IN EARLIER YEARS IN EQ UITY SHARES AND HAVE SHOWED THE SAME IN THE BALANCE SHEET OF EARLIE R YEARS WHEREIN THE SHARES SOLD WERE REFLECTED IN THE INVESTMENTS. THE DISTINCTIVE NUMBER OF THE SHARE CERTIFICATES AND ALSO THE RATE AT WHICH PURCHASES HAVE BEEN MADE ARE CLEARLY SPECIFIED. THE ASSESSEE FILED CONFIRMATION REGARDING THE SALES MADE FROM THE PURCHASER. THUS WE AGREE WITH THE ITA NO. 4616/DEL/2010 6 CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) THAT THE ASSESSEE HAS BROUGHT EVIDENCE ON RECORD REGARDING T HE IDENTITY OF THE PURCHASERS; GENUINENESS OF THE TRANSACTION AND ALSO THE FACT THAT THE PAYMENT WAS MADE THROUGH CHEQUE. ALL THE NECESSARY DOCUMENTS IN THIS REGARD VIZ. SALE BILL, COPY OF BANK STATEMENT, SHARE TRANSFER FORM ETC. HAVE ALL BEEN SUBMITTED BY THE ASSESSEE. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) AND ACCORDINGLY, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/1/2012. SD/- SD/- [ [[ [I.P. BANSAL I.P. BANSAL I.P. BANSAL I.P. BANSAL] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 25/1/2012 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES