Patel Pan Products Ltd., Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 474/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2031 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: P K KAPOOR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.474 & 475/LKW/2014 ASSESSMENT YEAR:2005-06 & 2006-07 PATEL PAN PRODUCTS LTD. LUCKNOW V. ACIT CENTRAL CIRCLE 1 LUCKNOW TAN/PAN:AAECP0472C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. P. K. KAPOOR, C.A. RESPONDENT BY: SHRI. S. K. SINGH, CIT (DR) DATE OF HEARING: 28 08 2015 DATE OF PRONOUNCEMENT: 31 08 2015 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A). I.T.A. NO. 474/LKW/2014: 2. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITION OF RS.6,000/- UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') HAVING NOT ACCEPTED THE CONTENTION BY THE ASSESSEE THAT THE CONTRIBUTION WAS MADE BY THE SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTED THAT :- 2 -: THE SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION HAVE CONTRIBUTED RS.1,000/- EACH FOR ACQUIRING 100 SHARES EACH OF THE COMPANY. SINCE HE WAS NOT CONVINCED WITH THE CREDITWORTHINESS OF THE CONTRIBUTORS, HE MADE ADDITION OF THE SAME UNDER SECTION 68 OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT THE LD. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE AND HE ACCORDINGLY CONFIRMED THE ADDITION. 5. NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSION THAT SIX PERSONS ARE SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION AND THEY HAVE CONTRIBUTED RS.1,000/- EACH TO ACQUIRE 100 SHARES EACH. SINCE THE AMOUNT IS VERY NOMINAL, THEREFORE, THE CREDITWORTHINESS AND IDENTITY SHOULD NOT BE DOUBTED. MOREOVER, THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF THE CONTRIBUTORS BEFORE THE ASSESSING OFFICER. COPIES OF THE DETAILS ARE ALSO FILED BEFORE US. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT ALL THESE SIX PERSONS ARE SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION AND THEY HAVE ACQUIRED 100 SHARES EACH BY MAKING CONTRIBUTION OF RS.1,000/- EACH. SINCE THE PERSONS ARE SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION, THEIR DETAILS ARE AVAILABLE ON RECORD, BUT THE ASSESSING OFFICER DID NOT MAKE ANY EFFORT TO VERIFY THE CREDITWORTHINESS AND IDENTITY OF THE CONTRIBUTORS AND WITHOUT MAKING ANY VERIFICATION, HE DISALLOWED THE SAME AND MADE ADDITION UNDER SECTION 68 OF THE ACT. WHEN THE ASSESSEE HAS FURNISHED THE DETAILS OF THE SHAREHOLDERS, DISALLOWANCE SHOULD NOT HAVE BEEN MADE. WE ACCORDINGLY FIND NO MERIT IN THE DISALLOWANCE AND WE DELETE THE SAME. I.T.A. NO. 475/LKW/2014: :- 3 -: 7. IN THIS APPEAL, THE ASSESSING OFFICER HAS NOTED THAT RS.3.50 LAKHS WAS RECEIVED BY THE ASSESSEE AS SHARE APPLICATION MONEY. THOUGH THE ASSESSEE HAS FURNISHED THE DETAILS OF THE SHARE APPLICANTS, BUT THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SAME AND HE MADE ADDITION OF RS.3.50 LAKHS. 8. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM. 9. NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSION THAT RS.3.50 LAKHS WAS ALSO DEPOSITED BY THE EARLIER SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION AND THEIR COMPLETE DETAILS ARE ON RECORD. IF THE ASSESSING OFFICER HAS ANY DOUBT ON THEIR IDENTITY AND CREDITWORTHINESS, IT CAN BE VERIFIED. BUT THE ASSESSING OFFICER AND THE LD. CIT(A) WITHOUT MAKING ANY EFFORT TO VERIFY THE CREDITWORTHINESS AND IDENTITY OF THE SHAREHOLDERS, HAS MADE THE ADDITION. 10. THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 11. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT RS.3.50 LAKHS WAS ALSO CONTRIBUTED BY THE EARLIER SIGNATORIES OF THE MEMORANDUM OF ASSOCIATION FOR ACQUIRING MORE SHARES IN THEIR NAMES. SINCE THE DETAILS OF ALL SHAREHOLDERS ARE AVAILABLE WITH THE ASSESSING OFFICER, HE SHOULD NOT HAVE MADE ADDITION BEFORE MAKING ANY VERIFICATION. THOUGH THE ASSESSEE HAS FILED THE DETAILS BEFORE THE LD. CIT(A), BUT THE LD. CIT(A) ALSO DID NOT MAKE ANY EFFORT TO VERIFY THE DETAILS OF THE CONTRIBUTORS OR THE SHAREHOLDERS. SINCE THE ADDITION WAS MADE WITHOUT MAKING ANY VERIFICATION, WE FIND NO MERIT IN THE ORDER OF THE LD. CIT(A), AS THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE AUTHORITIES BELOW. WE :- 4 -: ACCORDINGLY DELETE THE ADDITION OF RS.3.50 LAKHS CONFIRM BY THE LD. CIT(A). 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST AUGUST, 2015 JJ:3108 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR