ITO 6(3)(4), MUMBAI V. MODERN SALES AGENCY (I) P.LTD, MUMBAI

ITA 5271/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8715 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Assessee Lawyers: MALAY H SHAH
• Keywords: Opportunity of being heard; Assessment record
• Section: 133(6); 68

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SHRI B.R. JAIN, ACCOUNTANT MEMBER I.T.A.NO. 5271/MUM/2011 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER 6(3)(4), MUMBAI. VS. M/S MODERN SALES AGENCY (I) PVT. LTD., 9, NAGDEVI CROSS LANE, MUMBAI 400 003. PAN: AAECM3668D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V. KRISHNAMOORTHY. RESPONDENT BY : SHRI MALAY H. SHAH. DATE OF HEARING: 09-10-1012. DATE OF PRONOUNCEMENT: 12-10-2012. O R D E R PER B.R.JAIN, AM: THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 15-02-2011 OF THE LD. CIT(A) 12, MUMBAI, CHALLENGES THE FOLL OWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE C I T (A) Q ERRED IN DELETING THE ADDITION OF RS 55,00,000/- MADE BY A 0 U/S 68 OF THE I T ACT ON AC COUNT OF UNEXPLAINED INCREASES IN SHARE CAPITAL WITHOUT APPR ECIATING THE EFFORTS MADE BY A.0. TO VERIFY THE GENUINENESS AND CREDIT WORTHINESS OF INVESTOR. A.O HAD ISSUE SHOW CAUSE DU LY INFORMING THE ASSESSEE ABOUT UNAVAILABILITY OF PARTIES AND UN -VERIFIABLE STATE OF FACTS AND THEREFORE ONUS LAY ON THE ASSESS EE, WHICH THE ASSESSEE FAILED TO DISCHARGE. 2. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT ( A) ON THE ABOVE GROUNDS BE SET V ASIDE AND THAT OF THE ASSESS ING OFFICER BE RESTORED. ITA NO. 5271 OF 2011 M/S MODERN SALES AGENCY (I)P LTD. PAGE 2 OF 6 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSING OFFI CER NOTICED THAT THE ASSESSEE HAS RECEIVED RS.55 LACS AS SHARE CAPIT AL MONEY FROM THE FOLLOWING PARTIES 1. RAJESH CHAWDA RS. 2,00,000/- 2. MEENA RAWAL RS. 2,00,000/- 3. KHIMJI G MAHIDA (HUF) RS. 2,00,000/- 4. HARISH N THAKKAR RS. 2,00,000/- 5. KISHOR MODI (HUF) RS. 2,00,000/- 6. CHHOTALAL D PANCHAL (HUF) RS. 2,00,000/- 7. OMKAR SINGH MATHARU (HUF) RS. 4,00,000/- 8. SAVITA PAWAR RS. 4,00,000/- 9. MACROSOFT TECHNOLOGY PVT LTD RS. 15,00,000/- 10. OLYMPUS VISION PVT LTD RS RS. 10,00,000/- RS. 55,00,000/- THE AO THEREAFTER MADE ENQUIRIES U/S.133(6) OF THE ACT AND INFORMED THE ASSESSEE ABOUT THE RESULT OF THE ENQUIRY THAT ( 1) I.E SHRI RAJESH CHAWDA HAS FAILED TO RESPOND TO LETTER DATED 14.12. 2009, U/S 133(6) OF THE I. T. ACT. IN RESPECT OF PARTIES AT SR.NO (2) T O (8), THE PARTIES HAVE FAILED TO PROVE THEIR CREDIT WORTHINESS AND IN RESP ECT OF PARTIES AT SR.NO (9) & (10), THEY HAVE FAILED TO SHOW THE TRANSACTIO N IN THEIR BOOKS. SINCE THE GENUINENESS & CREDITWORTHINESS OF THE TRA NSACTION IN RESPECT OF THE AFORESAID PARTIES HAS NOT BEEN PROVED AND TH E ONUS OF PROVING THE SAME LIES WITH YOU, WHICH HAS NOT BEEN DISCHARG ED. HE, THEREFORE, ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WH Y THE AFORESAID AMOUNT OF RS.55 LACS SHOULD NOT BE ADDED AS ASSESSE ES INCOME U/S.68 OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE MADE A PART COMPLIANCE, BUT DID NOT PROVE THE NATURE AND SOURCE OF THE CASH CREDIT IN RESPECT OF THE SHARE CAPITAL MONEY TO THE SATISFACTION OF THE ASSESSING AUTHORITY, INASMUCH AS, THE ASSESSEE HAS FAILED TO DISCHARGE T HE ONUS OF PROVING ITA NO. 5271 OF 2011 M/S MODERN SALES AGENCY (I)P LTD. PAGE 3 OF 6 THE GENUINENESS OF THE TRANSACTION OF RECEIPT OF RS .15 LACS FROM M/S MICROSOFT TECHNOLOGY PVT. LTD. AND RS.10 LACS FROM OLYMPUS VISION PVT. LTD. THE REST OF THE INDIVIDUALS AT SERIAL NOS. 1 T O 8 HEREINABOVE, WERE NOT ABLE TO SUBSTANTIATE THEIR CREDITWORTHINESS, NO R DID ASSESSEE DISCHARGE ITS ONUS IN THAT REGARD. HE, THEREFORE, P ROCEEDED TO TREAT THE ENTIRE AMOUNT OF RS.55 LACS AS UNEXPLAINED CASH CRE DITS U/S.68 OF THE I.T.ACT. 3. THE LD. CIT(A) TAKING THE VIEW THAT THE APPELLAN T COMPANY HAD RESPONDED TO THE SHOW CAUSE NOTICE ON 31-12-2009 AN D CONSIDERING THE MATERIAL ON RECORD, RECORDED THAT THE APPELLANT HAS GIVEN THE NAMES, ADDRESSES, P.A.NOS, RETURN OF INCOME ACKNOWL EDGMENTS FILED TO THE AO AND THE AO HAVING NOT DOUBTED THE IDENTITY O F THE PERSONS WHO HAS INVESTED IN THIS COMPANY, HELD THAT THE ONUS LA ID UPON THE ASSESSEE STANDS DISCHARGED AS THE BANK ACCOUNT ALSO SHOWS THAT THE AMOUNTS WERE RECEIVED IN CHEQUES AND SHAREHOLDERS CERTIFICATES HAVE ALSO BEEN PLACED ON RECORD. HE, THEREFORE, DELETED THE ENTIRE ADDITION SO MADE BY THE AO. 4. THE LD. DR. SUPPORTING THE GROUND RAISED IN APPE AL, CONTENDS THAT THE PARTIES WERE NOT AVAILABLE, NOR THE INFORM ATION AND FACTS THAT ASSESSEE CLAIMS TO HAVE PLACED ON RECORD HAVE EITHE R BEEN VERIFIED BY THE ASSESSING AUTHORITY OR BY THE LD. CIT(A). WITHO UT CARRYING THE FACTUAL VERIFICATION IT WAS NEITHER PERMISSIBLE NOR POSSIBLE FOR THE LD. CIT(A) TO HAVE REACHED A CONCLUSION THAT THE ASSESS EE HAS DISCHARGED THE ONUS THAT LAY UPON HIM. IN THIS VIEW OF THE MAT TER, THE ORDER OF THE ITA NO. 5271 OF 2011 M/S MODERN SALES AGENCY (I)P LTD. PAGE 4 OF 6 LD. CIT(A) NEEDS TO BE SET ASIDE AND THAT OF THE AS SESSING AUTHORITY HAS TO BE RESTORED. 5. ON THE OTHER HAND, ASSESSEES COUNSEL SHRI M. H. SHAH, SUPPORTING THE IMPUGNED ORDER CONTENDS THAT ALL THE MATERIAL DETAILS WHICH WERE FILED ON THE RECEIPT COUNTER ON 04-12-20 09 AS THE ASSESSING AUTHORITY DID NOT ALLOW HEARING TO HIM ON THE RELEV ANT DATE. IN RESPONSE TO SHOW CAUSE NOTICE DATED 30-12-2009 INFO RMING THE ASSESSING AUTHORITY THAT ALL SUCH DETAILS AS SOUGHT BY HIM HAVE BEEN FILED AT THE DAK COUNTER. THE AO CONSIDERING THE AS SESSEES LETTER DATED 31-12-2009 DID NOT STILL BEING SATISFIED PROCEEDED TO MAKE ADDITION DESPITE THE FACT THAT THE DETAILS WERE PLACED BEFOR E HIM BEFORE COMPLETION OF THE ASSESSMENT. HE, IN FACT, DID NOT COMMENT ADVERSELY ON THE INFORMATION SUPPLIED BY THE ASSESSEE WITH RE SPECT TO EACH OF SUCH CREDITOR. THE LD. CIT(A) IN TURN CALLED FOR TH E ASSESSMENT RECORDS AND FOUND THAT THE ASSESSEE HAS LAID THE RELEVANT I NFORMATION ON ASSESSMENT RECORD. ON THE BASIS OF SUCH DOCUMENTS A LONE HE EXPRESSED THE SATISFACTION THAT THE ONUS THAT LAY U PON THE ASSESSEE STANDS ESTABLISHED AND THUS PROCEEDED TO DELETE THE UNCALLED ADDITION MADE BY THE ASSESSING AUTHORITY. THE ORDER PASSED B Y THE LD. CIT(A) CONFORMS TO THE JUDGMENT BY THE APEX COURT IN THE C ASE OF CIT VS. LOVELY EXPORTS P. LTD. (2008) 216 CTR (S.C) 195 AND THUS NEEDS NO INTERFERENCE. 6. WE HAVE HEARD PARTIES WITH PARTIES TO THE MATERI AL ON RECORD AND PRECEDENT BROUGHT TO OUR NOTICE. THE ASSESSEE A DMITS THAT THE ITA NO. 5271 OF 2011 M/S MODERN SALES AGENCY (I)P LTD. PAGE 5 OF 6 DOCUMENTS WITH RESPECT TO EACH OF THE CREDITORS SHO WING THEIR IDENTITIES, CREDITWORTHINESS AND GENUINENESS WERE F ILED AT THE DAK COUNTER ON 4-12-2009. THE ASSESSING AUTHORITY APPEA RS TO HAVE NOT APPLIED HIS MIND ON SUCH INFORMATION TILL 30-12-200 9 AS HE IS SHOWN TO HAVE ISSUED A FRESH SHOW CAUSE NOTICE FOR COMPLIANC E BY THE ASSESSEE THERETO. THE FACTUAL VERIFICATION OF THE CORRECTNES S CLAIMED IN THESE DOCUMENTS IS NOT FOUND TO HAVE BEEN MADE BY THE ASS ESSING AUTHORITY AS THE TIME AVAILABLE TO HIM WAS TOO SHORT WHEN HE PASSED THE ASSESSMENT ORDER ON THE SAME DATE I.E. ON 31-12-200 9 WHEN THE ASSESSEE RESPONDED TO THE FRESH SHOW CAUSE NOTICE. ESSENTIALLY BURDEN WAS ON THE ASSESSEE TO SHOW THAT TRANSACTIONS WITH THE TWO COMPANIES FROM WHOM SHARE CAPITAL AGGREGATING TO RS.25 LACS R ECEIVED ARE GENUINE. EVEN BALANCE SHEETS OF THE INDIVIDUAL CRED ITORS FROM WHOM SHARE CAPITAL IS STATED TO HAVE BEEN RAISED ARE NOT SIGNED BY EITHER OF THEM, NOR CAPITAL ACCOUNT OF THESE PERSONS HAS BEEN LAID ON RECORD TO SUBSTANTIATE THAT SUCH PERSONS HAD OSTENSIBLE SOURC ES OF INCOME, MORE SO, WHEN APPARENTLY ALL THE BALANCE-SHEETS REFLECT LARGELY THE INVESTMENT WITH THE ASSESSEE COMPANY OR ADVANCES TO SOME OTHER PERSONS. THE LD. CIT(A) HIMSELF ALSO DID NOT MAKE A NY VERIFICATION AS TO THE CORRECTNESS OF THE DOCUMENTS AND THE FACTS, BEFORE RECORDING A FINDING THAT THE ONUS WHICH LAY UPON THE ASSESSEE S TANDS DISCHARGED. THE GROUNDED IN APPEAL BY REVENUE ALSO PROJECTS THA T THE CREDITORS ARE NOT AVAILABLE AND FACTS CLAIMED BY THE ASSESSEE ARE ALSO NOT VERIFIABLE. IN THIS VIEW OF THE MATTER AND UNDER THE CIRCUMSTAN CES, AS STATED ITA NO. 5271 OF 2011 M/S MODERN SALES AGENCY (I)P LTD. PAGE 6 OF 6 HEREINABOVE, WE CONSIDER IT APPROPRIATE TO SET ASID E THE IMPUGNED ORDER AND REMIT THE ISSUE BACK TO THE FILE OF THE A SSESSING AUTHORITY FOR MAKING FACTUAL VERIFICATION OF FACTS BROUGHT ON REC ORD BY THE ASSESSEE AND REACH SATISFACTION IN ACCORDANCE WITH LAW AS EN VISAGED BY SEC.68 OF THE ACT AFTER AFFORDING REASONABLE AND EFFECTIV E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, APPEAL BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 2.10.2012. SD/- SD/- (B.R.MITTAL) (B.R.JAIN) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI: 12/10/2012. P/-*