ACIT, New Delhi V. M/s. Webneuron Services Ltd., Noida

ITA 5403/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6551 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-02-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: M L DUJARI
• Keywords: Depreciation; Share purchase agreement; Additional evidence; Onus to prove
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5403/DEL/2011 ASSESSMENT YEAR: 2000-01 ASSISTANT COMMISSIONER OF INCOME TAX VS. M/S WEBNEU RON SERVICES LTD., CIRCLE 18(1), NEW DELHI FC-23, BAG FILMS PREMIS ES, BLOCK-B, FIRST FLOOR, SECTOR-16A, FILM CITY, NOIDA (PAN:AAACW2116J) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. S.K. JAIN, SR. DR ASSESSEE BY : SH. M.L. DUJARI, ADV . DATE OF HEARING : 08-02-2016 DATE OF ORDER : 01-3-2016 ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THIS APPEAL AGAINST THE I MPUGNED ORDER DATED 07.09.2011 OF LD. CIT(A)-XXIV, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2000-01 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 47 ,12,102//- AND RS. 17,99,855/- MADE BY THE AO U/S. 68 ON ACCOUNT OF AS SESSEE NOT HAVING EXPLAINED SATISFACTORILY RECEIPT OF THIS AMO UNT AS SHARE APPLICATION MONEY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 5, 00,000/- MADE BY THE AO ON ACCOUNT OF ADHOC DISALLOWANCE OF EXPENS ES. ITA NO.5403/DEL/2011 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THEN LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF R S. 4,52,158/- MADE BY THE AO OUT OF DEPRECIATION. 4. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGH T TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED RETURN DECLARING NET LOSS OF RS. 1,27,69,072/- WAS FILED ON 30.11.2000, AND WAS PROCESSED. THE CASE WAS REOPENED AND NOTICE U/S. 148 WAS ISSUED ON 30.1.2004. IN COMPLIANCE, THE ASSESSEE FILED A RETURN ON 15.3.2004 DECLARING NET LOSS OF RS. 56,40,738/-. THE AO COMPLETED THE ASSESSMENT VIDE ORDER DATED 31 .3.2005 PASSED U/S. 143(3) /148 OF THE ACT AND MADE THE FOLLOWING ADD ITIONS. (A) ADDITION OF RS. 5 LACS OUT OF TOTAL EXPENDITURE CLAIMED FOR DEVELOPMENT OF BUSINESS PORTALS. (B) ADDITION OF RS. 7,00,798/- OUT OF DEPRECIATION CLAIMED ON ASSETS CLAIMED TO BE UTILIZED FOR DEVELOPMENT OF BUSINES S PORTALS. (C) ADDITION OF RS. 47,12,102/- BEING FOREIGN SHARE APPLICANTS TO WHOM SHARES WERE ALLOTTED DURING THE YEAR. (D) ADDITION OF RS. 17,99,855/- BEING SHARE APPLICA TION MONEY RECEIVED FROM SH. GAGAN HASTEER. (E) ADDITION OF RS. 20,539/- BEING PROFIT EARNED ON REDEMPTION OF MUTUAL FUND UNITS. 3. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSI NG OFFICER DATED 31.3.2005 PASSED U/S. 143(3)/148, ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST ITA NO.5403/DEL/2011 3 APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 07.09.2011 HAD DECIDED THE ISSUES IN DISPUTE IN FAVOUR OF THE ASSESSEE BY PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE AFORESAID FINDING OF THE LD . CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. APROPOS GROUND NO. 1 REGARDING DELETION OF ADDIT ION OF RS. 47,12,102/- & 17,99,855/- MADE U/S. 68 OF THE I.T. ACT. 5.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. IN CONNECTION WITH ADDITION OF RS. 47,12,102/- AND RS. 17,99,855 /- MADE U/S. 68 IS CONCERNED, IT WAS THE MAIN CONTENTION OF THE LD. DR THAT ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE IDENTITY, GENUINEN ESS OF TRANSACTION AND CAPACITY OF THE INVESTORS AND REMAINED UNEXPLAINED, THEREFORE, THE AO HAS RIGHTLY HELD THAT ONUS CAST UPON THE ASSESSEE HAS NOT BEEN SATISFACTORILY DISCHARGED, HENCE, THE ADDITION WAS RIGHTLY MADE BY THE AO AND MAY BE UPHELD ACCORDINGLY. 5.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND PRECEDENTS R ELIED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDER. WE FIND THAT GROUND NO. 1 RE LATING TO ADDITION OF RS.47,12,102/- AND RS.17,99,855/- MADE BY THE AO U/ S. 68 OF THE ACT ON ACCOUNT OF FOREIGN SHARE APPLICATION MONEY RECEIVED BY THE COMPANY DURING THE ITA NO.5403/DEL/2011 4 YEAR, AGAINST WHICH SHARES WERE ALLOTTED AND SHARE APPLICATION MONEY RECEIVED FROM SH. GAGAN HASTEER, RESPECTIVELY. WE NOTE THAT THE ASSESSEE HAD SUBMITTED ADDITIONAL EVIDENCES INCLUDING NECESSARY CONFIRMATI ONS AND OTHER SUPPORTING DOCUMENTS WHICH COULD NOT BE FILED AT THE TIME OF A SSESSMENT AS THE PERSONS WHO HAD GIVEN THE SHARE APPLICATION MONEY OR HAD SU BSCRIBED TO THE SHARES WERE LIVING ABROAD AND IT TOOK TIME TO OBTAIN THE N ECESSARY CONFIRMATIONS. A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFF ICER I.E. DY.CIT, CIRCLE 18(1), NEW DELHI BY CIT(A)-IX, NEW DELHI VIDE LETTE R NO. CIT(A)-IXL06- 07/532 DATED 21.03.2007. A REPLY WAS RECEIVED FROM THE AO VIDE LETTER F. NO. DCIT CIR-18/2006-07/439 DATED 10.09.2007, IN WHICH THE ISSUE OF RECEIPT OF SHARE APPLICATION MONEY FROM FIVE PERSONS LIVING AB ROAD, NAMELY, S/SH. GAGAN HASTEER, RITESH AHUJA, BADRINATHAN, HITESH KUMAR ME HTA AND ALOK KOTHARI, TOTALING RS.47,12,102/- AND THE ISSUE OF SHARE APPL ICATION MONEY RECEIVED FROM SH. GAGAN HASTEER AMOUNTING TO RS.17,99,855/- WAS E XAMINED IN DETAIL. THE AO, IN THE FINAL PARAGRAPH OF HIS REMAND REPORT, HA S SUBMITTED THAT 'TO SUM UP FROM THE FACTS AS SEEN AFTER THE SUBMISSIONS MADE B Y THE ASSESSEE, IT IS GATHERED THAT THE PAPERS FILED SHOW THE MODE, IDENTITY AND C REDITWORTHINESS OF PAYERS. THESE DOCUMENTS WERE NOT PLACED BEFORE THE AO AT TH E TIME OF ASSESSMENT DUE TO CHANGES TAKING PLACE IN THE COMPANY COUPLED WITH DIFFICULTIES IN GETTING CONFIRMATIONS FROM FOREIGN INVESTORS. THESE DOCUMEN TS ARE IMPORTANT POINTERS REGARDING THE GENUINENESS OF THE TRANSACTIONS AND M AY BE CONSIDERED. THE AO HAS FURTHER MENTIONED THAT THE CONFIRMATIONS BY THE APPLICANTS/SHARE HOLDERS, COPY OF FIRC, SHARE CERTIFICATES, REFUND OF EXCESS AMOUNT AFTER ALLOTMENT OF SHARES, EXAMINED THE ISSUE IN DETAIL AND HAS ACCEPT ED THE EVIDENCES PRODUCED BY ITA NO.5403/DEL/2011 5 THE APPELLANT WITH, REGARDS TO SHARE APPLICATION MO NEY AMOUNTING TO RS.47,12,102/- & RS.17,99,855/-. ACCORDINGLY THESE TWO ADDITIONS MADE TO THE INCOME OF THE ASSESSEE U/S. 68 OF THE ACT WERE RIGH TLY DELETED BY THE LD. CIT(A) WHILE PASSING A WELL REASONED ORDER, WHICH IN OUR O PINION, DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDE R OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 1 RAISED BY THE RE VENUE. 7. APROPOS GROUND NO. 2 RELATING TO DELETION OF AD DITION OF RS.5,00,000/- MADE BY THE AO ON ACCOUNT OF ADHOC DISALLOWANCE OF EXPENSES. 7.1 ON THE ISSUE OF ADHOC ADDITION OF RS. 5,00,000/ - RAISED VIDE GROUND NO. 2, LD. DR RELIED UPON THE ORDER OF THE AO AND REIT ERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. 7.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON THE ISSUE I N DISPUTE AND THE SAME MAY BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, WE FIND THAT THE DISALLOWANCE OF EXPENDITURE OF RS. 5 LACS ON ADHOC BASIS OUT OF TOTAL EXPENDITURE INCURRED ON DEVELOPMENT OF BUSINE SS PORTALS JOBAAHEAD.COM AND ZIPAHEAD.COM, IT WAS SEEN THAT THE AO HAS DISAL LOWED A SUM OF RS.5 LACS WITHOUT SUBSTANTIVE REASONS. THE ACCOUNT OF THE ASS ESSEE HAVE BEEN AUDITED BY A CHARTERED ACCOUNTANT. NO DEFECTS HAVE BEEN POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNTS, BILLS OR VOUCHERS OF THE APPELLA NT. WE FIND THAT HE HAS SIMPLY SAID THAT THESE EXPENSES CANNOT BE SAID TO B E EXCLUSIVELY LAID OUT AGAINST THE REVENUE RECOGNIZED DURING THE YEAR. SUCH ADDITI ONS ON ESTIMATE BASIS DO NOT ITA NO.5403/DEL/2011 6 STAND THE TEST OF JUDICIAL SCRUTINY, PARTICULARLY, WHEN NO DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS, BILLS OR VOUC HERS. ACCORDINGLY, LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.5 LAC S WHILE PASSING A WELL REASONED ORDER, WHICH IN OUR OPINION, DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 2 RAISED BY THE REVENUE. 9. APROPOS GROUND NO. 3 RELATING TO DELETION OF AD DITION OF RS.4,52,158/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF OUT OF DEPRECIATION. 9.1 ON THE ISSUE OF ADDITION OF RS. 4,52,158/- RAI SED VIDE GROUND NO. 3, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED T HE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. 9.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON THE ISSUE I N DISPUTE AND THE SAME MAY BE UPHELD. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, WE FIND THAT THE DISALLOWANCE OF DEPRECIATION AMOUNTI NG TO RS.7,00,798/- OUT OF TOTAL DEPRECIATION CLAIMED, WHICH PERTAINS TO THAT PORTION OF ASSETS WHICH WERE NOT UTILIZED FOR REVENUE RECOGNIZED DURING THE YEAR . WE FIND THAT ASSESSEE HAD SUBMITTED A LETTER DATED 07.10.2009, IN WHICH HE HA S SUBMITTED THAT OUT OF TOTAL DEPRECIATION CLAIMED OFRS.10,40,218/-, ONLY RS.5,88 ,060/- WAS CHARGED TO THE PROFIT AND LOSS ACCOUNT AND WAS ACCORDINGLY, ADDED BACK IN THE COMPUTATION OF INCOME. AS NOTICED BY THE AO, RS.4,52,158/- WAS ALLOCATED TO THE PORTAL DEVELOPMENT COST AND THIS AMOUNT WAS ACCORDINGLY N OT ADDED BACK IN THE ITA NO.5403/DEL/2011 7 COMPUTATION OF INCOME. THEREFORE, THE ASSESSEE HAS SUBMITTED THAT IF WE GO BY THE REASONING OF THE AO OR MAKING ADDITION OF RS.7, 00,798/-, THE ENTRY OF RS.4,52,158/-ALLOCATED TO THE COST OF PORTAL BY THE ASSESSEE WILL HAVE TO BE REVERSED BEFORE MAKING A DISALLOWANCE OF RS.7,00,79 8/-. IF THIS IS DONE, THE BALANCE DEPRECIATION DISALLOWANCE WILL BE RESTRICTE D TO RS. 2,48,640/- ONLY. IN VIEW OF THE FINDING MERIT IN THE SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION OF RS. 2,48,640/- , WHICH IN OUR OPINION, DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE GROUND NO. 3 RAISED B Y THE REVENUE. 11. IN THE RESULT, THE REVENUES APPEAL STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/3/2016. SD/- SD/- (L.P. SAHU) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 01/3/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSITANT REGISTRAR ITA NO.5403/DEL/2011 8