ASST CIT 11(1)(2), MUMBAI V. SAHASTRA EXPORTS P. LTD, MUMBAI

ITA 5335/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1523 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 14-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Unexplained cash credit; Share purchase agreement; Opportunity of being heard; Source of fund; Additional evidence; Reassessment proceedings; TDS
• Section: 143(1); 22; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , G BENCH MUMBAI BEFORE SHRI JUSTICE P P BHATT, PRESIDENT & SHRI M. BALAGANESH, A CCOUNTANT MEMBER ITA NO. 5335 /MUM/ 20 1 7 ( ASSESSMENT YEAR : 20 09 - 10 ) ACIT - 11(1)(2) ROOM NO.1, G ROUND FLOOR AAYKAR BHAWAN, M.K.MARG MUMBAI - 400 020 VS. M/S. SAHASTRA EXPORTS PVT.LTD. NAVKAR PLAZA, 6 TH FLOOR BAJAJ ROAD VILE PARLE(WEST) MUMBAI - 400 056 PAN/GIR NO. AA FCS2340R (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI NIKHIL TIWARI, AR REVENUE BY SHRI V. VINOD KUMAR, DR DATE OF HEARING 15/09 /2020 DATE OF PRONOUNCEMENT 11 / 12/ 2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5335 /MUM/201 7 FOR A.Y. 20 09 - 10 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) - 18 , MUMBAI IN APPEAL NO. CIT(A) - 18 /IT - 299/AC - 11(1)(2)/14 - 15 DATED 18/04/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 24/02/2015 BY THE LD. ASSISTANT COMMISSIONER OF INCOME TAX - 11(1)(2) , MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 2 2. TH E ONLY EFFECTIVE ISSUE RAISED IN THE APPEAL OF THE REVENUE IS THAT WHETHER THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.3 , 37 , 92 , 5 46/ - MADE TOWARDS SHARE CAPITAL AND SHARE PREMIUM IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF CHEMICALS AND SOLVENT GOODS AND FILED ITS RETURN OF INCOME FOR THE AY 2009 - 10 ON 27/09/2009, DECLARING TOTAL INCOME OF RS.21 , 6 4 , 954/ - , WHICH WAS DULY PROCESSED U/S 143(1) OF THE ACT. LATER , THE ASSESSMENT WAS SOUGHT TO BE REOPENED BY ISSUE OF NOTICE U/S 148 OF TH E ACT ON 25/03/2014. THE ASSESSEE VIDE ITS LETTER , DATED 11/04/2014 SUBMITTED THAT THE RETURN ALREADY FILED MAY BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND ALSO REQUESTED FOR PROVIDING THE REASONS RECORDED FOR REOPENING THE ASSESSME NT. THE LD. AO VIDE HIS LETTER DATED 02/07/2015 PROVIDED THE REASONS RECORDED BY HIM TO REOPEN THE ASSESSMENT. 3.1. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE LD. AO SOUGHT TO EXAMINE THE VERACITY OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY TH E ASSESSEE TO THE TUNE OF RS. 3 , 37 , 92 , 646/ - . THE ASSESSEE SUBMITTED THAT THE SHARE CAPITAL AND SHARE PREMIUM WERE RECEIVED FROM THE FOLLOWING PARTIES AND ALSO SUBMITTED CORRESPONDING DETAILS OF THE SHAREHOLDERS AS UNDER: - ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 3 SR. NAME OF PARTY NO. OF S HARES NOMINAL ISSUE PRICE DETAILS SUBMITTED TO N. VALUE AO 1 BHARATI THAKKAR 6,000 60,000 3,90,000 BALANCE SHEET & CAPITAL A/C 2 SAUJANYA PLASTICS PVT 70461 7,04,610 45,79,965 NO DETAILS FILED DUE TO LTD PAUCITY OF TIME 3 SWADHA AGARWAL 18,997 1,89,970 12,34,805 NO DETAILS FILED DUE TO PAUCITY OF TIME 4 SUHHAIL AGARWAL 8,62,118 86,21,180 2,75,87,776 ITR COI BALANCE SHEET & CAPITAL A/C SHARE CERTIFICATE ACCOUNTS CONFIRMATION TOTAL 9,57,576 95,75,760 3,37,92,646 4 . WHEN, THE ASSESSEE WAS IN THE PROCESS OF COLLATING THE DETAILS IN RESPECT OF S AU JANYA PLASTICS PVT.LTD AND SWADHA AG ARWAL, THE LD. AO WITHOUT PROVIDING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND WITHOUT VERIF ICATION OF DETAILS SUBMITTED BY THE ASSESSE COMPLETED THE REASSESSMENT VIDE ORDER DATED 24/ 02 /2015 BY MAKING AN ADDITION TOWARDS SHARE CAPITAL AND SHARE PREMIUM OF RS.3 , 37 , 92 , 546/ - TREATING THEM AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 5 . WE FIND THAT BEFORE THE LD.CIT(A), THE ASSESSEE FILED FOLLOWING ADDITIONAL EVIDENCES TO PROVE THE GENUINENESS OF THE TRANSACTIONS ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 4 AND CREDITWORTHINESS OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED AS UNDER: - SR. N NAME OF PARTY DETAILS FILED 1 BHARATI THAKKAR ACCOUNTS CONFIRMATION INCOME TAX RETURN SHARE CERTIFICATE BANK STATEMENT 2 SAUJANYA PLASTI CS PVT LTD ACCOUNTS CONFIRMATION INCOME TAX RETURN SHARE CERTIFICATE BANK STATEMENT 3 SWADHA AGARWAL ACCOUNTS CONFIRMATION INCOME TAX RETURN SHARE CERTIFICATE BANK STATEMEN T 4 SUHHAIL AGARWAL BANK STATEMENT ACCOUNTS CONFIRMATION (ADDITIONAL TO DETAILS ALREADY FILED BEFORE AO) 5 OTHER DETAILS OF ASSESSEE BANK STATEMENT FROM 1 APRIL 2007 TO 31 MARCH 2009 COPY OF FORM 2 FILED WITH ROC ON ALLOTMENT OF SHARES 6 . THESE DOCUMENTS WERE DULY SENT FOR REMAND TO THE LD. AO BY THE LD.CIT(A). DURING THE REMAND PROCEEDINGS , THE LD. AO ASKED FOR DETAILS PERTAINING TO SOURCE OF FUNDS INTRODUCED BY THE SHAREHOLDERS. ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 5 THE ASSESSEE SUBMITTED THE SOURCE OF SOURCE DETAILS OF THE SHAREHOLDERS VIDE ITS LETTER DATED 20/02/2016 AS UNDER: - SR.N. PARTY DETAILS FILED 1 BHARTI THAKKAR STATEMENT OF PAYMENTS RECEIVED (SOURCE OF FUNDS) WITH PAN AND ADDRESS OF PARTY B ANK STATEMENT SHARE APPLICATION MONEY LEDGER 2 SAUJANYA PLASTICS PVT LTD STATEMENT OF PAYMENTS RECEIVED (SOURCE OF FUNDS) WITH PAN AND ADDRESS OF PARTY BANK STATEMENT 3 SUHHAIL AGARWAL STATEMENT OF PAYMENTS RECEIVED (SOURCE OF FUN DS) WITH PAN AND ADDRESS OF PARTY BANK STATEMENT SHARE APPLICATION MONEY LEDGER T DS CERTIFICATE ON F D R INTEREST 4 SWADHA AGARWAL STATEMENT OF PAYMENTS RECEIVED (SOURCE OF FUNDS) WITH PAN AND ADDRESS OF PARTY BANK STATEMENT 7 . THE LD. AO ON EXAMINATION OF ALL THESE DETAILS WITH SUPPORTING DOCUMENTS SUBMITTED THE REMAND REPORT , DATED 02/03/2017 AND ACCEPTED TO THE CONTENTIONS OF THE ASSESEE BY STATING THAT THE DETAILS FILED BY THE ASSESSEE WERE DULY EXAMINED AND WERE FOUND TO BE CORRECT. PURSUANT TO THIS , THE LD.CIT(A) PROCEEDED TO CONCLUDE THAT THE ASSESEE IN THE INSTANT CASE HAD SATISFACTORILY EXPLAINED THE IDENTITY , GENUINENESS AND CREDITWORTHINESS OF THE SHARE CAPITAL/SHARE PREMIUM AMOUNTING TO RS.3 , 37 , 92 , 546/ - AND ACCO RDINGLY DELETED THE ADDITIONS. AGGRIEVED BY THIS ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 8 . WE FIND THAT IN THE INSTANT CASE, ASSESEE HAS FURNISHED THE FOLLOWING DOCUMENTS IN RESPECT OF ALL THE FOUR PARTIES FROM WHOM SHARE CAPITAL AND SH ARE PREMIUM WAS RECEIVED BY THE ASSESSEE ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 6 COMPANY. THE LD. AR BEFORE US FILED A TABULATION IN RESPECT OF EACH OF THE PARTIES STATING THAT THE FOLLOWING DOCUMENT WERE FILE D PROVING THE IDENTITY AND CREDITWORTHINESS OF THE SHARE SUBSCRIBERS TOGETHER WITH GE NUINENESS OF THE TRANSACTIONS AS UNDER: - PARTY IDENTITY GENUINENESS CREDITWORTHIN ESS BHARTI INCOME TAX RETURN INCOME TAX RETURN * INCOME TAX RETURN THAKKAR BANK STATEMENT ACCOUNTS CONFIRMATION BANK STATEMENT STATEMENT OF PAYMENTS SHARE CERTIFICATE STATEMENT OF PAYMENTS RECEIVED WITH PAN AND BANK STATEMENT RECEIVED WITH PAN AND ADDRESS OF PARTY STATEMENT OF PAYMENTS ADDRESS OF PARTY RECEIVED WITH PAN A ND ADDRESS OF PARTY SHARE APPLICATION MONEY LEDGER SAUJANYA INCOME TAX RETURN INCOME TAX RETURN INCOME TAX RETURN PLASTICS PVT BANK STATEMENT ACCOUNTS CONFIRMATION BANK STATEMENT LTD STATEMENT OF PAYMENTS SHARE CERTIFICATE RECEIVED WITH PAN AND BANK STATEMENT ADDRESS OF PARTY STATEMENT OF PAYMENTS RECEIVED WITH PAN AND ADDRESS OF PARTY SUHHAIL INCOME TA X RETURN INCOME TAXRETURN INCOME TAX RETURN AGARWAL STATEMENT OF PAYMENTS * BALANCE SHEET & CAPITAL COI RECEIVED WITH PAN AND A/C BALANCE SHEETS CAPITAL ADDRESS OF PARTY SHARE CERTIFICATE A/C . ACCOUNTS CONFIRMATION STATEMENT OF PAYMENTS ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 7 SHARE APPLICATION MONEY RECEIVED WITH PAN AND LEDGER ADDRESS OF PARTY TDS CERTIFICATE ON FOR INTEREST SWADHA AGARWAL INCOME TAX RETURN STATEMENT OF PAYMENTS RECEIVED WITH PAN AND INCOME TAX RETURN ACCOUNTS CONFIRMATION SHARE CERTIFICATE INCOME TAX RETURN BANK STATEMENT STATEMENT OF PAYMENTS ADDRESS OF PARTY BANK STATEMENT RECEIVED WITH PAN AND ADDRESS OF PARTY 9 . WE FIND LOT OF FORCE IN ONE OF THE CRUCIAL ARGUMENT ADVANCED BY THE LD. AR THAT THE AFORESAID SHAREHOLDERS W ERE HOLDING SHARES IN THE ASSESSEE COMPANY , EVEN PRIOR TO THE YEAR UNDER CONSIDERATION. IN OTHER WORDS , HE VEHEMENTLY ARGU ED THAT THE SHARE CAPITAL AND SHARE PREMIUM WAS RECEIVED FROM THE AFORESAID FOUR SUBSCRIBERS WHO ARE ALREADY EXISTING SHAREHOLDERS IN THE ASSESSEE COMPANY . 10. O NE MORE EXCRUCIATING FACT WHICH GOES IN FAVOUR OF THE ASSESSEE IN THE INSTANT CASE IS THAT TH E ENTIRE SHARE APPLICATION MONEY OF RS.3 , 37 , 92 , 546/ - WAS RECEIVED BY THE ASSESSE COMPANY IN AY 2008 - 09 AND NOT IN THE YEAR UNDER CONSIDERATION. THE LD. AR DREW OUR ATTENTION TO PAGE 22 OF VOLUME NO. 1 OF PAPER BOOK TO PROVE THE SAME . WE FIND THAT ADMITTEDL Y THAT THE ADDITION IN THE INSTANT CASE HAS BEEN MADE U/S 68 OF THE ACT , WHICH TALKS ABOUT ANY SUM OF MONEY RECEIVED DURING THE YEAR. AS STATED EARLIER , NO SUMS WERE RECEIVED DURING THE YEAR AND THAT THE SHARE APPLICATION MONEY ACTUALLY WAS RECEIVED IN T HE EARLIER ASSESSMENT YEAR I.E AY 2008 - 09 AND THAT THE SHARES WERE ALLOTTED DURING THE YEAR AT A PREMIUM TO THE ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 8 VERY SAME SHAREHOLDERS. HENCE, NO ADDITION COULD BE MADE U/S 68 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. 11. IN ANY CASE, WE FIND THAT THE LD. AO HAD ACCEPTED ALL THE EVIDENCES IN THE REMAND REPORT AND HAD ACTUALLY GIVEN A FAVORABLE REMAND REPORT BEFORE THE LD.CIT(A). HENCE, THE LD. AO HAVING GIVEN A FAVORABLE REMAND REPORT ACCEPTING THE CONTENTIONS OF THE ASSESSEE OUGHT NOT TO HAVE PREFER RED FURTHER APPEAL TO THIS TRIBUNAL. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF B.JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 AMONG OTHER DECISIONS RELIED UPON BY THE LD. AR. HENCE, WE HOLD THAT THE ADDITI ON MADE U/S 68 OF THE ACT IN THE INSTANT CASE D ESERVE TO BE DELETED ON ALL COUNTS. ACCORDINGLY, THE GROUND S RAISED BY THE REVENUE ARE DISMISSED. 10 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 11 /1 2 / 2020 BY WAY OF PRO PER MENTIONING IN THE NOTICE BOARD. SD/ - ( JUSTICE P P BHATT ) SD/ - (M.BALAGANESH) PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 11 /1 2 / 2020 THIRUMALESH , SR.PS ITA NO . 5335 /MUM/201 7 M/S. SAHASTRA EXPORTS PVT.LTD. 9 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1 . THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//