M/s Fidelity Commodity Traders Ltd., Ludhiana V. ITO, W-7(1), Ludhiana

ITA 527/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1217 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH . . , ! ' , # $% BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.527/CHD/2018 / ASSESSMENT YEAR : 2013-14 M/S FIDELITY COMMODITY TRADERS LTD., 543, KAPORR STREET, BLINDRABAN ROAD, LUDHIANA. THE INCOME TAX OFFICER, WARD-7(1), LUDHIANA. ./ PAN NO.AAACF2501Q / APPELLANT / RESPONDENT /ASSESSEE BY : SHRI ASHWANI KUMAR, CA ! / REVENUE BY : SMT.MEENAKSHI VOHRA, SR.DR ' # $ /DATE OF HEARING : 07.03.2019 %&'( $ /DATE OF PRONOUNCEMENT: 04.06.2019 /ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)], DATED 23.2.2018 RELATING TO ASSESSMENT YEAR 2013-14 , ITA NO.527/CHD/2018 A.Y.2013-14 2 PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS: THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT , 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-S, LUDHIAN A IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN M AKING AN ADDITION OF RS. 50,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINE D CREDIT IN THE NAME OF M/S SUMUKH COMMERCIAL PVT. LTD. BY RESORT T O PROVISIONS OF SECTION 68 OF INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF DEALING IN INVESTMENT IN SECURITIES. RETURN OF INCOME OF THE ASSESSEE HAD BE EN FILED AT AN INCOME OF RS.28,730/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM THE PERUSAL OF BALANCE SHEET FILED BY THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION, IT WAS FOUND BY THE A.O. THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN AN AMOU NT OF RS.50,00,000/- PAYABLE TO M/S SUMUKH COMMERCIALS PV T. LTD. UNDER THE HEAD CURRENT LIABILITIES. THE ASSE SSEE WAS ASKED TO FURNISH THE EVIDENCE FOR GENUINENESS OF TR ANSACTION AND FOR CREDIT WORTHINESS AND IDENTITY OF THE COMPANY/PERSON FROM WHOM AN AMOUNT OF RS.50,00,000/ - WAS RECEIVED. THE ASSESSEE COMPANY WAS ASKED TO FIL E THE ITA NO.527/CHD/2018 A.Y.2013-14 3 ITRS, BANK STATEMENT, AND AUDITED BALANCE SHEET OF THE CREDITORS, NAMELY M/S SUMUKH COMMERCIALS PVT. LTD. THE COUNSEL OF THE ASSESSEE PRODUCED SH. PARVEEN KUMAR JAIN, THE DIRECTOR OF THE M/S SUMUKH COMMERCIALS PVT. LTD ., WHOSE STATEMENT WAS RECORDED. IN HIS STATEMENT HE A DMITTED THAT HIS COMPANY HAD GIVEN AN ADVANCE OF RS. 50,00, 000/- TO THE ASSESSEE, FOR PURCHASE OF SHARES OF M/S GALA FINANCE & INVESTMENT LIMITED, WHICH WERE AVAILABLE WITH THE ASSESSEE CONCERN AT RS.50 PER SHARE. FURTHER HE ALS O STATED THAT DUE TO SHORTAGE OF FUNDS, HIS CONCERN DID NOT PURCHASE THE SHARES OF GALA FINANCE LIMITED AND RECEIVED BAC K THE WHOLE AMOUNT OF RS.50,00,000/- LATER ON. THE A.O., HOWEVER, OBSERVED THAT THE DIRECTOR OF THE COMPANY HAD FAILE D TO EXPLAIN THE SOURCE OF ABOVE SAID CREDITS MADE IN TH E BANK ACCOUNT OF M/S SUMUKH COMMERCIALS PVT. LTD. LATER O N THE ASSESSEE EXPLAINED THE IMMEDIATE DEPOSITS BEFORE TRANSFERRING THE AMOUNT OF RS.50,00,000/-RECEIVED I N THE BANK ACCOUNT OF M/S SUMUKH COMMERCIALS PVT. LTD FRO M FOLLOWING CONCERNS:- S.NO. NAME OF THE PERSON FROM RECEIVED AMOUNT RECEIVED NATURE OF RECEIPT 1. SPACE CORP. LTD. 5,00,00/- RETURN OF INTER COP DEPOSIT 2. BIPIN V. SHAH 10,00,000/- RETURN 3. OLIVE OVERSEAS PVT. LTD. 31,05,000 SUNDRY RECEIVABLE ITA NO.527/CHD/2018 A.Y.2013-14 4 4. NAKSHATRE BUSINESS PVT. LTD. 1,00,000/- SUNDRY RECEIVABLE THE A.O. OBSERVED IN THE ASSESSMENT ORDER THAT NO BOOKS OF ACCOUNT WERE PRODUCED BY THE CREDITOR, EVE N AFTER AVAILING SO MANY OPPORTUNITIES. IN THE MEAN TIME TH E A.O. RECEIVED AN INFORMATION FROM THE DDIT(LNV.), UNIT-I LL, MUMBAI, VIDE WHICH IT HAD BEEN REVEALED THAT OLIVE OVERSEAS PVT. LTD. & NAKSHATRE BUSINESS(P) LTD. WERE ALSO PA PER COMPANIES. HE HELD THAT THE AMOUNTS RECEIVED FROM T HESE CONCERNS COULD NOT BE TREATED AS GENUINE. IN VIEW O F THE ABOVE FACTS, SOURCES OF CREDITS IN THE BANK ACCOUNT OF THE CREDITOR MADE IMMEDIATELY BEFORE TRANSFERRING THE A MOUNT TO THE ASSESSEE, REMAINED UNEXPLAINED. IN THE FACTS OF THE CASE, THE A.O. TREATED THE CLAIM OF THE ASSESSEE COMPANY AS NON GENUINE. HENCE, THE A.O. MADE AN ADDITION OF RS.50,00,000/- U/S 68 OF THE ACT TO THE TOTAL INCOM E OF THE ASSESSEE COMPANY IN VIEW OF THE UNEXPLAINED CREDITS INTO THE ACCOUNT OF THE ASSESSEE. 4. THE LD.CIT(A) CONFIRMED THE ADDITION SO MADE BY THE A.O. 5. HENCE, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US. ITA NO.527/CHD/2018 A.Y.2013-14 5 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE ORDERS OF LO WER AUTHORITIES. ADMITTEDLY, THE AMOUNT OF RS.50,00,000 /- RECEIVED BY THE ASSESSEE COMPANY FOR SALE OF SHARES OF M/S GALA FINANCE & INVESTMENT LIMITED TO M/S SUMUKH COMMERCIALS PVT. LTD. HAD BEEN RETURNED/PAID BACK T O M/S SUMUKH COMMERCIALS PVT. LTD. AS THE TRANSACTION DID NOT MATURE. TO PROVE THE CREDITWORTHINESS OF THE BUYER AND TO PROVE THE GENUINENESS OF THE TRANSACTION, THE ASSES SEE PRODUCED BEFORE THE A.O. SHRI PARVEEN KUMAR JAIN, D IRECTOR OF M/S SUMUKH COMMERCIALS PVT. LTD., WHOSE STATEMEN T WAS ALSO RECORDED, WHEREBY HE HAD ADMITTED THAT HE HAD PAID RS.50,00,000/- TO THE ASSESSEE COMPANY FOR PUR CHASE OF SHARES OF M/S GALA FINANCE & INVESTMENT LIMITED AND FURTHER THAT THE SAID MONEY HAD BEEN RECEIVED BACK AS DUE TO SHORTAGE OF FUNDS HIS CONCERN DID NOT PURCHASE T HE SHARES. THE TRANSACTION WAS DONE THROUGH BANKING CH ANNEL AND ALL THE REQUISITE DOCUMENTS TO PROVE THE GENUIN ENESS OF TRANSACTION, SUCH AS COPY OF BANK ACCOUNT STATEMENT , BALANCE SHEET, CONFIRMATION FROM M/S SUMUKH COMMERCIALS PVT. LTD. WERE SUBMITTED. THE LD.COUNSE L FOR THE ASSSESSEE HAS ALSO PRODUCED BEFORE US THE COPY OF THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S GALA FI NANCE & ITA NO.527/CHD/2018 A.Y.2013-14 6 INVESTMENT LIMITED BEARING ITA NO.1170/CHD/2017 DEC IDED VIDE ORDER DATED 18.1.2019 OF THIS TRIBUNAL. IN THE SAID CASE OF M/S GALA FINANCE & INVESTMENT LIMITED, THE ADDITION WAS MADE BY THE A.O. DOUBTING THE PAYMENT OF RS.57,29,425/- MADE BY THE ASSESSEE COMPANY FOR PUR CHASE OF SHARES OF M/S GALA FINANCE & INVESTMENT LIMITED. THE SAID ADDITION STOOD DELETED VIDE ORDER DATED 18.1.2 019 OF THIS TRIBUNAL. THE FACTS SPEAKS THAT THE ASSESSEE H AD MADE A PAYMENT OF RS.57,29,425/- FOR PURCHASE OF SHARES OF M/S GALA FINANCE & INVESTMENT LIMITED. THE ASSESSEE THR OUGH THE TRANSACTION IN QUESTION HAD INTENDED TO SELL TH OSE SHARES AND IN LIEU RECEIVED THE AMOUNT OF RS.50,00, 000/- FROM M/S SUMUKH COMMERCIALS PVT. LTD. THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION AS NOTED A BOVE, HAS SUBMITTED ALL THE REQUISITE DOCUMENTS AS NOTED ABOVE. THE TRANSACTION WAS CONFIRMED BY THE DIRECTOR OF TH E COMPANY IN HIS STATEMENT RECORDED BY THE A.O. EVEN THE DIRECTOR OF THE COMPANY HAS ALSO FURNISHED THE SOUR CE OF THE MONEY, WHICH WAS FURTHER ADVANCED TO THE ASSESS EE. THUS THE ASSESSEE HAS NOT ONLY PROVED THE SOURCE OF THE MONEY BUT HAS ALSO FURNISHED THE DETAILS OF SOURCE OF THE SOURCE. THE A.O. FURTHER DOUBTED THE SOURCE OF THE SOURCE I.E. THE COMPANY FROM WHICH FROM M/S SUMUKH ITA NO.527/CHD/2018 A.Y.2013-14 7 COMMERCIALS PVT. LTD. RECEIVED THE AMOUNT, WHICH WA S UTILIZED TO ADVANCE THE MONEY TO THE ASSESSEE, FOR THAT, IN OUR VIEW, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE AS THERE IS NO EVIDENCE ON THE RECORD THAT IT WAS THE OWN MONEY OF THE ASSESSEE, WHICH WAS ROUTED THR OUGH THE AFORESAID COMPANIES. UNDER THESE CIRCUMSTANCES, THE ADDITION IN THIS CASE HAS BEEN MADE ON THE BASIS OF SUSPICION, WHEREAS THE PRIMARY/INITIAL BURDEN, WHIC H WAS UPON THE ASSESSEE, HAS BEEN DULY DISCHARGED BY THE ASSESSEE. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTI FICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING/CONFIRM ING THE IMPUGNED ADDITION IN THE HANDS OF THE ASSESSEE, THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.06.2019. SD/- SD/- . . !' (N.K. SAINI (SANJAY GARG ) / VICE PRESIDENT #$% / JUDICIAL MEMBER '$ /DATED: 4 TH JUNE, 2019 * * ITA NO.527/CHD/2018 A.Y.2013-14 8 &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR