Asian Petroproduct & Exports Limited, Baroda V. The ACIT., Circle-1(1), Baroda

ITA 512/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85824 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 11-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: M K PATEL
• Keywords: Additional evidence
• Section: 68

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.512/AHD/2010 / ASSTT. YEAR: 2004-05 ASIAN PETROPRODUCTS & EXPORTS LTD. 204-5, STERLING CENTER, 2 ND FLOOR R.C.DUTT ROAD, ALKAPURI. VS ACIT, CIR.1(1) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE(S) BY : SHRI M.K. PATEL REVENUE BY : SHRI B.L. YADAV, SR.DR / DATE OF HEARING : 11/03/2015 / DATE OF PRONOUNCEMENT: 13/03/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-I, BARODA DATED 17/11/2009 FOR ASSTT.YEAR 2004-05. 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION MADE U/S.41(1) OF THE ACT B Y THE AO TO THE EXTENT OF RS.40,000/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO FOUND TH AT AS ON 31.3.2004 RS.40,000/- WAS OUTSTANDING AS PAYABLE TO AHMEDABAD STOCK EXCHANGE. IN REPLY TO THE SHOW CAUSE NOTICE, THE A SSESSEE SUBMITTED THAT THE ASSESSEE-COMPANY WAS FACING A HUGE FINANCI AL CRISIS, AS IT HAD INCURRED HUGE LOSS FOR PAST SEVERAL YEARS, AND THER EFORE, THE ASSESSEE WAS UNABLE TO PAY THE AMOUNT. IT WAS ALSO SUBMITTE D THAT THERE WAS NO CESSATION OF LIABILITY AND THERE WAS NO REMISSION G RANTED TO THE ASSESSEE AND THE COMPANY INTENDED TO HONOUR THE LIABILITY. HOWEVER, THE AO HELD THAT THERE WAS CESSATION OF LIABILITY AND MADE ADDITION OF RS.40,000/- UNDER SECTION 41(1) OF THE ACT. ITA NO.512/AHD/2010 2 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE AMOUNT W AS OUTSTANDING TO AHMEDABAD STOCK EXCHANGE FROM FINANCIAL YEAR 31- 3-2001 TILL 31-3- 2009. THIS SHOWS THAT THE ASSESSEE HAD NO INTENTION OF MAKING THE PAYMENT. THE EXPENDITURE WAS CLAIMED IN THE EARLIE R YEARS. NO DISPUTE WITH REGARD TO THE LIABILITY TO MAKE THE PAYMENT WA S OUTSTANDING. THE ASSESSEE WAS WILLFULLY WITHHOLDING THE PAYMENT FOR MANY YEARS. THIS CLEARLY SHOWS THAT IT HAD NO INTENTION OF MAKING PA YMENT IN FUTURE ALSO AND CONFIRMED THE ADDITION MADE BY THE AO. 5. THE AR OF THE ASSESSEE SUBMITTED THAT THERE WAS NO CESSION OF LIABILITY AND THE AMOUNT MUST HAVE BEEN PAID BY THI S TIME BY THE ASSESSEE, BUT THE EVIDENCE OF THE SAME ARE NOT READ ILY AVAILABLE WITH HIM, AND THEREFORE, REQUESTED THAT THE MATTER SHOUL D BE RESTORED BACK TO THE FILE OF AO FOR VERIFICATION OF THE SAME. 6. ON THE OTHER HAND, DR SUPPORTED THE ORDERS OF TH E LOWER AUTHORITIES. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO NOTICED FROM THE BALAN CE SHEET OF THE ASSESSEE THAT A SUM OF RS.40,000/- HAS BEEN SHOWN A S OUTSTANDING PAYABLE TO AHMEDABAD STOCK EXCHANGE. HE ALSO OBSER VED THAT THE AMOUNT WAS OUTSTANDING SINCE 2001 TILL 2009. THERE FORE, THE AO WAS OF THE VIEW THAT THERE WAS CESSION OF LIABILITY AND BY INVOKING THE PROVISION OF SECTION 41(1) OF THE ACT MADE ADDITION OF THE SA ME TO THE INCOME OF THE ASSESSEE. 8. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO ON THE GROUND THAT THE ASSESSEE DID NOT HAVE THE INTENTION TO PAY LIABILITY. 9. WE FIND THAT THE REVENUE HAS NOT BROUGHT ANY MAT ERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS ALLOWED DEDUCTION IN RESPECT OF LIABILITY IN QUESTION, AND IF IT WAS ALLOWED THEN IN WHICH YEAR. FURTHER, IT IS OBSERVED THAT THE REVENUE HAS ADMITTED THAT THE AMO UNT IN QUESTION ITA NO.512/AHD/2010 3 WAS SHOWN AS LIABILITY BY THE ASSESSEE IN ITS BALAN CE SHEET OF THE YEAR UNDER CONSIDERATION. WE FIND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE LIABILITY IN QUESTION CEASE D TO EXIST DURING THE YEAR UNDER CONSIDERATION OR ANY BENEFIT WAS DERIVED BY THE ASSESSEE IN RESPECT OF THE LIABILITY IN QUESTION DURING THE YEA R UNDER CONSIDERATION. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. RAVJIBHAI BECHARBHAI DHAMELIYA, (2013) 354 ITR 533 (GUJ) HAS HELD THAT IN THE ABSENCE OF MATERIAL TO SHOW THAT THERE WAS A REMISS ION OR CESSATION OF LIABILITY AS CONTEMPLATED UNDER SECTION 41(1) OF TH E ACT AS WELL AS IN THE ABSENCE OF MATERIAL TO INDICATE DERIVING OF ANY BEN EFIT IN CASH OR OTHERWISE BY THE ASSESSEE SECTION 41 IS NOT APPLICA BLE. IN THE ABOVE FACTS OF THE CASE, IN OUR CONSIDERED VIEW, THE ADDI TION MADE BY INVOKING THE PROVISION OF SECTION 41(1) OF THE ACT IS NOT SU STAINABLE. WE, THEREFORE, DELETE THE ADDITION OF RS.40,000/- AND A LLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 11. THE SECOND ISSUE IS INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION MADE U/S.68 OF THE ACT O F RS.10,20,000/-. 12. THE FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONE Y AMOUNTING TO RS.15,40,000/- IN CASH. FROM THE DETAILS FURNISHED BY THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE COULD NOT SUBMIT PAN ETC. IN RESPECT OF SHARE APPLICANTS FOR RS.10,20,000/-. THEREFORE, TH E AO HELD THAT THE IDENTITY, CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTION HAS NOT BEEN ESTABLISHED AND MADE ADDITION FOR RS.10,20,000 /- UNDER SECTION 68 OF THE ACT. 13. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE PAN WAS AVAILABLE IN RESPECT OF SHARE APPLICANTS FOR RS.6,7 5,000/-, AND THEREFORE, ATLEAST THIS MUCH SHOULD BE ALLOWED. 14. THE CIT(A) AFTER CONSIDERING SUBMISSIONS OBSERV ED THAT ALL THE SHAREHOLDERS WHO HAD MADE APPLICATION FOR SHARES IN CASH FOR THE ITA NO.512/AHD/2010 4 AGGREGATE AMOUNT OF RS.10,20,000/- WERE RELATIVES O F THE MANAGING DIRECTOR. IN EVERY CASE, THE PAYMENT HAS BEEN MADE IN CASH. IN THE CASE OF THE SHARE APPLICANTS, NOT A SINGLE ONE WAS WITHOUT A BANK ACCOUNT. IT WAS, THEREFORE, SURPRISING THAT DESPI TE MAINTAINING BANK ACCOUNT, EACH ONE OF THE SHARE APPLICANTS CHOSE TO PAY THE APPLICATION MONEY BY WAY OF CASH. FURTHER, COPIES OF BANK ACCO UNT COULD NOT BE FURNISHED IN SPITE OF SPECIFIC REQUESTS FOR DOING S O, AND THEREFORE, HE WAS OF THE OPINION THAT THE IDENTITY AND FINANCIAL CAPACITY OF THE APPLICANTS MAY NOT BE IN DOUBT, BUT THE ONUS CAST U PON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSACTION HAS NO T BEEN DISCHARGED. HE, THEREFORE, CONFIRMED THE ADDITION OF RS.10,20,0 00/-. 15. BEFORE US, THE AR OF THE ASSESSEE SUBMITTED THA T SHARE APPLICATION MONEY OF RS.10,20,000/- WAS RECEIVED FROM TEN PERSO NS. NAME, ADDRESS AND CONFIRMATION OF ALL TEN PERSONS WERE FI LED BEFORE THE AO AS WELL AS BEFORE THE CIT(A). THE LOWER AUTHORITIES, MERELY ON THE BASIS OF SURMISES AND CONJECTURES AND DOUBT, REJECTED THE EX PLANATION OF THE ASSESSEE, AND HAVE BROUGHT NO MATERIAL TO SHOW THAT THE RECEIPT OF SHARE APPLICATION WAS NOT GENUINE. HE ALSO FILED A FFIDAVITS OF ALL TEN PERSONS BEFORE US, AND PRAYED THAT, AS THE SAME GOE S TO THE ROOT OF THE MATTER, ADDITIONAL EVIDENCE BE ADMITTED. 16. ON THE OTHER HAND, DR SUPPORTED THE ORDERS OF T HE LOWER AUTHORITIES. 17. WE FIND THAT IT IS NOT IN DISPUTE THAT THE NAME , ADDRESS AND CONFIRMATION OF ALL TEN PERSONS IN QUESTION WERE FI LED BEFORE THE LOWER AUTHORITIES. THE LOWER AUTHORITIES HAVE NOT ACCEPT ED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE PAN OF THE TAX-PAYE RS IN QUESTION WERE NOT FURNISHED, THE AMOUNT WAS RECEIVED IN CASH IN S PITE OF BANK ACCOUNT BEING MAINTAINED BY THESE TEN PERSONS. FURTHER, IT WAS ALSO OBSERVED BY THE CIT(A) THAT TEN PERSONS IN QUESTION WERE REL ATIVES OF THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY. THUS, W E FIND THAT THE ITA NO.512/AHD/2010 5 IDENTITIES OF THE SHARE APPLICANTS ARE NOT IN DOUBT . THE REVENUE HAS BROUGHT NO MATERIAL, AFTER PROPER VERIFICATION, TO SHOW THAT THE SHARE APPLICANTS IN QUESTION WERE NOT GENUINE. BEFORE U S, THE AR OF THE ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF A FFIDAVITS OF TEN PERSONS. BEFORE THESE ADDITIONAL EVIDENCES ARE ACC EPTED, IN OUR CONSIDERED VIEW, IT IS IN THE INTEREST OF JUSTICE T HAT THE AO EXAMINE THE SAME. THE AR OF THE ASSESSEE SUBMITTED THAT THE IS SUE, THEREFORE, BE RESTORED TO THE FILE OF AO FOR EXAMINATION OF ADDIT IONAL EVIDENCES NOW FILED BY THE ASSESSEE. IN THE CIRCUMSTANCES, IT SH ALL BE IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE BACK TO THE FILE OF TH E AO FOR ADJUDICATION AFRESH AFTER PROPER VERIFICATION. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE WITH THE AO AND FILE ALL THE MATERIALS, W HICH IT WISHES TO RELY UPON BEFORE THE AO, AS AND WHEN CALLED UPON BY THE AO. WE ORDER ACCORDINGLY. THUS, THIS GROUND OF APPEAL OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 13 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER