M/s Caktus Properties (P) Ltd., New Delhi V. ITO, New Delhi

ITA 4870/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3938 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 08-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 143(3); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL I.T.A. NO. 4870(DEL)/2010 ASSESSMENT YEAR: 2002-03 M/S CAKTUS PROPERTIES (P) INCOME-TAX OFFICER, LTD., 2753/4, ZORAWAR SINGH MARG, VS. WARD 3(2), NEW DELHI. NEW DELHI. PAN-AAACC5473C (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI K. SAMPATH, ADVOCATE RESPONDENT BY: MS. Y. KAKKAR, SR. DR ORDER PER K.G. BANSAL ;AM THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS AP PEAL IS TO THE EFFECT THAT THE LOWER AUTHORITIES ERRED IN HOLDING THE ASSESSEE TO BE GUILTY UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961 (THE ACT), AND LEVYING THE PENALTY. 2. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE HA D FILED ITS RETURN ON 17.10.2002 DECLARING LOSS OF RS. 1,37,370/-. AS SESSMENT U/S 143(3) WAS COMPLETED UNDER SECTION 144 OF THE ACT ON 11.2.2 005, DETERMINING THE TOTAL INCOME AT RS. 26,33,570/-. IN THIS ASSESSM ENT ADDITION OF RS. 6,00,200/- WAS ALSO MADE IN RESPECT OF SHARE CAP ITAL. IT WAS MENTIONED ITA NO. 4870(DEL)/2010 2 THAT THE ASSESSEE WAS REQUIRED TO FILE THE LIST OF SHAREHOLDERS, NUMBER OF SHARES HELD BY THEM AND THEIR ADDRESSES. THE COM PANY FAILED TO FILE THE DETAILS. THEREFORE, THE ADDITION WAS MADE BY IN VOKING THE PROVISION CONTAINED IN SECTION 68 OF THE ACT. THE ADDITIO N WAS UPHELD BY THE LD. CIT(APPEALS) IN QUANTUM APPEAL. ALTHOUGH THE APPEA L WAS FILED BEFORE THE TRIBUNAL IN RESPECT OF TWO OTHER ADDITIONS MADE B Y THE AO, NO APPEAL WAS FILED IN RESPECT OF THIS ADDITION. THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE AO IN ITA NO. 4376(DEL)/2009 DATED 23.04 .2010, A COPY OF WHICH HAS BEEN PLACED BEFORE US. IT WILL BE SEEN FROM THE AFORESAID DISCUSSION THAT THE ADDITION IN RESPECT OF SHARE CAPITAL S TANDS CONFIRMED AS NO APPEAL HAD BEEN FILED ON THIS GROUND BEFORE THE TR IBUNAL. 3. PENALTY PROCEEDINGS WERE ALSO INITIATED U/S 271(1)(C) OF THE ACT, BY THE AO. THESE PROCEEDINGS WERE COMPLETED ON 24 .8.2005 BY LEVYING PENALTY OF RS. 9,89,226/-, BEING THE MINIMUM PEN ALTY LEVIABLE. THE LD. CIT(A) CONSIDERED THE ORDER OF THE TRIBUNAL IN Q UANTUM APPEAL AND MENTIONED THAT PENALTY IN RESPECT OF THE ADDI TION, WHICH HAS BEEN RESTORED TO THE FILE OF THE AO, STANDS CANCELLE D AS THE BASIS OF PENALTY NO LONGER EXISTED. HOWEVER, THE PENALTY IN RESPECT OF ADDITION U/S 68 WAS UPHELD BY MENTIONING THAT NO DETAIL WAS FILED IN T HE COURSE OF THE ITA NO. 4870(DEL)/2010 3 PROCEEDINGS BEFORE THE AO. AGGRIEVED BY THIS OR DER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ASSESSEE DID NOT TAKE UP ANY GROUND BEFORE THE LD. CIT(APPEALS) E RRONEOUSLY IN RESPECT OF ADDITION U/S 68. IN THE WRITTEN SUBMISSIONS DA TED 05.03.2009, FILED BEFORE THE LD. CIT(A), IT WAS MENTIONED IN PARAGRA PH NO. 12 THAT THE ADDITION OF RS. 6,00,200/- ON ACCOUNT OF CAPITAL WAS UNCALLED FOR AND UNJUSTIFIED, AS NO FRESH CAPITAL WAS INTRODUCED IN THIS YEAR. THIS CAN BE SEEN FROM THE BALANCE SHEET SUBMITTED ALONG WITH THE RETURN OF INCOME. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(APPEALS ) DID NOT TAKE UP THIS SUBMISSION IN ABSENCE OF A SPECIFIC GROUND OF APPE AL TAKEN UP BEFORE HER. OUR ATTENTION HAS BEEN DRAWN TOWARDS THE BALANCE-S HEET AS ON 31.03.2002, WHICH SHOWS SUBSCRIBED CAPITAL AT RS. 6,00,200/- , BEING THE SAME AS ON 31.03.2001. A COPY OF THIS BALANCE-SHEET HAS BEEN PLACED BEFORE US. SCHEDULE-1 OF THE BALANCE-SHEET SHOWS SUBSCRIBED C APITAL AT RS. 6,00,200/- ON BOTH THESE DATES. HOWEVER, THE SHARE APPLICAT ION MONEY IS SHOWN AT NIL AGAINST THE AMOUNT OF RS. 40,70,200/- AS ON 31.03.2 001. ON THE BASIS OF THESE ENTRIES OF THE BALANCE-SHEET, IT IS SUBMITTE D THAT THE ADDITION WAS NOT JUSTIFIED AT ALL. IT IS ANOTHER MATTER THAT THE ADDITION WAS MADE IN ITA NO. 4870(DEL)/2010 4 EX-PARTE ASSESSMENT, WHICH HAS GONE UNCHALLENGE D ON THE PART OF THE ASSESSEE. 5. IN REPLY, THE LD. DR REFERRED TO THE FINDING O F THE LD. CIT(APPEALS) THAT NO DETAIL WAS FILED IN ASSESSMENT OR PENALT Y PROCEEDINGS. THEREFORE, IT CANNOT BE SAID WHETHER THE CAPITAL IS IN RESP ECT OF THE SAME PERSONS ON BOTH THE DATES. THIS MATTER REQUIRES VERIFICA TION. 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. FROM THE PERUSAL OF THE BALANCE-SHEET, IT IS SEEN THAT THE SUBSCRIBED SHARE CAPITAL REMAINED THE SAME ON 31 .03.2001 AND 31.03.2002 AT RS. 6,00,200/-. THEREFORE, THERE IS NO INTRO DUCTION OF FRESH CAPITAL. IT COULD BE THAT ONE OR MORE SHAREHOLDERS CHANGED IN THIS PERIOD, BUT THAT DOES NOT BRING IN ANY FRESH CAPITAL IN THE COMPA NY, AS IN SUCH A CASE THE COMPANY HAS ONLY TO CHANGE THE NAME OF THE SHAR EHOLDER IN THE SHAREHOLDER REGISTER. THIS BALANCE-SHEET WAS A VAILABLE WITH THE AO IN ASSESSMENT AND PENALTY PROCEEDINGS AS IT WAS FILE D WITH THE RETURN OF INCOME, BUT FOR WHICH THE AMOUNT OF RS. 6,00,200/ - WOULD NOT HAVE BEEN KNOWN BY THE AO. ON PROPER APPRECIATION OF THESE FACTS, IT IS CLEAR THAT SECTION 68 DID NOT HAVE ANY APPLICABILITY ALTHOUG H THE ADDITION WAS ITA NO. 4870(DEL)/2010 5 MADE AND IT REMAINED UNCHALLENGED BECAUSE OF LA CK OF DUE DILIGENCE ON THE PART OF THE ASSESSEE. BUT THAT DOES NOT MEAN THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CO NCEALED INCOME IN RESPECT OF THE SUBSCRIBED SHARE CAPITAL. THUS, WE ARE O F THE VIEW THAT THE LEVY OF PENALTY WAS UNJUSTIFIED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 MAY, 2011. SD/- SD/- (C.L. SETHI) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 13TH MAY, 2011. SP SATIA COPY OF THE ORDER FORWARD M/S CAKTUS PROPERTIES (P) LTD., NEW DELHI. ITO, WARD 3(2), NEW DELHI. CIT CIT(A) THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR .