ITO 9(1)(1), MUMBAI V. ANG TRADING P.LTD, MUMBAI

ITA 5557/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8787 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-03-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 08-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.5557/MUM/2010 ASSESSMENT YEAR: 2001 -02 I.T.O. 9(1)(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. M/S. ANG TRADING PVT LTD., 211, ANANT BHAVAN, WATER FIELD ROAD, BANDRA (W), MUMBAI-400 050 PA NO.AACCA 9284 B (APPELLANT) VS. (RESPONDENT) ITA NO.5680/MUM/2010 ASSESSMENT YEAR: 2001 -02 M/S. ANG TRADING PVT LTD., 211, ANANT BHAVAN, WATER FIELD ROAD, BANDRA (W), MUMBAI-400 050 PA NO.AACCA 9284 B. I.T.O. 9(1)(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. (APPELLANT) VS. (RESPONDENT) REVENUE BY : MS NEERAJA PRADHAN ASSESSEE BY: SHRI RAJIV KHANDELWAL DATE OF HEARING: 29.8.2012 DATE OF PRONOUNCEMENT: 26 .9.2012 ORDER PER B.R.MITTAL, JM: THESE CROSS APPEALS ARE FILED BY THE DEPARTMENT AN D ASSESSEE AGAINST ORDER DATED 23.4.2010 OF LD CIT(A)-19, MUMBAI FOR ASSESSM ENT YEAR 2001-02. 2. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.15,00,0 00/- MADE BY THE ASSESSING OFFICER U/S.68 OF THE L.T.ACT WITH RESPEC T TO THE CASH CREDITS PERTAINING TO M/S. KRISHNA PLASTOCHEM LTD., AND M/S . SULABH INFOLINE COM LTD., IGNORING THE FACT THAT THE CREDITWORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE TRANSACTIONS WERE NOT ESTABLISHE D BY THE ASSESSEE. ITA NO.5557/MUM/2010 ITA NO.5680/MUM/2010 ASSESSMENT YEAR: 2001 -02 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.15,00,000 MADE BY THE AO WITH RESPECT TO SHARE APPLICATION MONEY RECEIVED FROM MINIMAX IN VESTMENT PVT LTD., AND ORIENT MARKETING LTD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW, LD CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.2,66, 000 MADE BY THE AO IN RESPECT OF ENTIRE COMMISSION PAYMENT. 4. FIRST, WE TAKE UP APPEAL FILED BY DEPARTMENT BEI NG I.T.A. NO.5557/MUM/2010. 5. IN RESPECT OF GROUND OF APPEAL TAKEN BY DEPARTME NT, RELEVANT FACTS ARE THAT ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(3) O F THE ACT ON 27.3.2004. LD CIT(A) ALSO CONFIRMED THE ADDITION MADE BY THE AO VIDE HIS ORDER DATED 29.9.2004. HOWEVER, IN FURTHER APPEAL, THE TRIBUNAL BY ITS ORDER DATED 25.10.2007 SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORED THE MATTER BACK TO T HE FILE OF AO FOR HIS FRESH ADJUDICATION. PURSUANT THERETO, AO HAS PASSED THE ASSESSMENT ORDER U/S.143(3) R.W.S. 254 OF THE ACT DATED 24.12.2008 WHILE CONSIDERING T HAT THE SHARE APPLICATION MONEY OF RS.10 LAKHS FROM KRISHNA PLASTO CHEM LTD., AND RS.5 ,00,000 FROM SRI SUBHLABH INFOLINE COM LTD., IS NOT JUSTIFIED AS THE SUMMONS ISSUED U/ S.131 OF THE ACT WERE RETURNED BACK UNSERVED. IN THE FIRST APPEAL, LD CIT (A) CONSIDER ED THE SUBMISSIONS OF THE ASSESSEE THAT ASSESSEE FILED IN RESPECT OF BOTH PARTIES, COP IES OF SHARE APPLICATION, COPIES OF RESOLUTION PASSED BY BOARD OF DIRECTORS, COPY OF CE RTIFICATION OF INCORPORATION, MEMORANDUM AND ARTICLES OF ASSOCIATION AND LETTER O F CONFIRMATION ALONGWITH PAN NO. FURTHER, LD CIT(A) ALSO CALLED FOR REMAND REPORT FR OM THE AO. IN RESPONSE TO SUMMONS ISSUED THE SHARE APPLICANTS CONFIRMED TO APPLY FOR SHARE APPLICATION MONEY AND ALLOTMENT OF SHARES TO THEM. LD CIT(A) CONSIDERING ABOVE DETAILS HELD THAT ASSESSEE HAS PROVED NOT ONLY THE IDENTITY AND CREDITWORTHINESS O F APPLICANTS BUT ALSO THE GENUINENESS OF THE TRANSACTIONS AND, ACCORDINGLY, ACCEPTED THE SHARE APPLICATION MONEY AS GENUINE AND DELETED THE SAME. HENCE, DEPARTMENT IS IN APPE AL BEFORE THE TRIBUNAL. 6. DURING THE COURSE OF HEARING LD D.R. RELIED ON O RDER OF AO ON THE GROUND THAT ASSESSEE COULD NOT PROVE BEFORE THE AO THE GENUINEN ESS OF THE TRANSACTIONS. HOWEVER, LD A.R. RELIED ON ORDER OF LD CIT(A) AND SUBMITTED THAT ASSESSEE FILED REQUISITE DETAILS NOT ITA NO.5557/MUM/2010 ITA NO.5680/MUM/2010 ASSESSMENT YEAR: 2001 -02 3 ONLY OF THE APPLICANTS BUT ALSO ADDITIONAL EVIDENCE S WHICH WERE CONSIDERED BY LD CIT(A) AFTER SEEKING REMAND REPORT FROM THE AO. HE SUBMIT TED THAT ASSESSEE HAS PROVED THE IDENTITY AND CREDITWORTHINESS OF SHARE APPLICANTS A S WELL AS GENUINENESS OF THE TRANSACTIONS. 7. ON CONSIDERATION OF THE SUBMISSIONS OF LEARNED R EPRESENTATIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW AND ALSO AFTER CONSIDER ING RELEVANT PAGES OF PAPER BOOK, WE ARE SATISFIED THAT ASSESSEE HAS NOT ONLY PROVED THE GENUINENESS OF TRANSACTIONS BUT ALSO THE IDENTITY OF THE SHARE APPLICANTS AS WELL AS THE IR CAPACITY TO APPLY FOR SHARES OF RS.10,00,000 BY KRISHNA PLASTO CHEM LTD., AND RS.5, 00,000 BY SRI SUBHLABH INFOLINE CO. LTD. WE HOLD THAT LD CIT(A) HAS RIGHTLY DELETED TH E SAID ADDITION MADE BY THE AO. THEREFORE, WE UPHOLD HIS ORDER AND REJECT GROUND OF APPEAL TAKEN BY DEPARTMENT. 8. NOW WE TAKE UP APPEAL FILED BY ASSESSEE BEING I. T.A. NO.5680/M/2010. 9. IN RESPECT OF GROUND NO.1 OF APPEAL, RELEVANT FA CTS ARE THAT ASSESSEE STATED TO HAVE BEEN RECEIVED RS.5 LAKHS FROM MINIMAX INVESTME NT PVT LTD., AND RS.10,00,000 FROM M/S. ORIENT MARKETING LTD. AO HAS STATED THAT SUMMONS UNDER SECTION 131 WERE ISSUED BUT THE SAME WERE RETURN UNSERVED. THEREFOR E, ASSESSEE COULD NOT PROVE THE IDENTITY, CAPACITY OF THE PARTIES AND GENUINENESS O F THE TRANSACTIONS. HE TREATED THE SAID SHARE APPLICATION MONEY AGGREGATING TO RS.15 L AKHS AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD CIT(A). 10. LD CIT(A) HAS CONFIRMED THE ACTION OF AO VIDE P ARA 5.5 OF THE IMPUGNED ORDER WHICH IS AS UNDER: WITH REGARD TO THE REMAINING PARTIES I.E. M/S. MIN IMAX INVESTMENT (P)LTD., RS.5,00,000 AND M/S. ORIENT MARKETING LTD., RS.10,0 0,000, THERE HAS BEEN NO RESPONSE TO THE SUMMONS ISSUED BY THE AO. SINCE TH ERE HAS BEEN NO RESPONSE FROM THE SAID PARTY, THE ACTION OF THE AO IN TREATI NG THE SAID CREDITS AS UNEXPLAINED IS JUSTIFIED. THEREFORE, ADDITION U/S. 68 TO THE EXTENT OF RS.15,00,000 IS CONFIRMED. 11. HENCE, THIS APPEAL BY THE ASSESSEE. 12. DURING THE COURSE OF HEARING, LD A.R. SUBMITTED THAT ASSESSEE FILED THE REQUISITE DETAILS/EVIDENCE BEFORE THE AO. HE FURTHER SUBMITT ED THAT SHARES WERE ALLOTTED TO THEM. ITA NO.5557/MUM/2010 ITA NO.5680/MUM/2010 ASSESSMENT YEAR: 2001 -02 4 LD A.R. FURTHER SUBMITTED THAT NO SUMMON U/S 131 WA S ISSUED TO M/S. MINIMAX INVESTMENT (P)LTD AND M/S. ORIENT MARKETING LTD AND HENCE, SAID PARTIES DID NOT APPEAR. TO SUBSTANTIATE HIS SUBMISSION, LD A.R. REFERRED PA GES 848 TO 849 OF PAPER BOOK, WHICH IS A COPY OF REMAND REPORT DATED 9.11.2009 AND ALSO REFERRED PAGES 850 TO 852 OF PB WHICH IS A REMAND REPORT DT.12.3.2010 AND STATED TH AT NO SUMMONS WERE ISSUED TO THE SAID PARTIES AND, THEREFORE, REQUISITE DETAILS COUL D NOT BE FILED BEFORE THE AO DURING REMAND PROCEEDINGS. HE SUBMITTED THAT SAID PARTIES ARE GENUINE AND THE APPLICATIONS WERE ALSO RECEIVED BY A/C PAYEE CHEQUE. HOWEVER, I N REPLY TO A QUERY, LD A.R. COULD NOT POINT OUT FROM THE PAPER BOOK PLACED ON RECORD, DET AILS OF DOCUMENTS WHICH WERE PLACED BEFORE THE AUTHORITIES BELOW TO EVIDENCE THA T ASSESSEE COULD PROVE IDENTITY AS WELL AS GENUINENESS OF THE TRANSACTIONS IN RESPECT OF ABOVE TWO PARTIES, NAMELY, M/S. MINIMAX INVESTMENT PVT LT.D, AND ORIENT MARKETING L TD., THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A) TO HOLD THAT AS SESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF RECEI PT OF RS.10 LAKHS FROM M/S. ORIENT MARKETING LTD., AND RS.5,00,000 FROM M/S. MINIMAX I NVESTMENT PVT LTD., AS SHARE APPLICATION MONEY AND ALLOTTED SHARES TO THEM. IT IS RELEVANT TO STATE THAT DURING THE COURSE OF HEARING, LD A.R. PLACED RELIANCE OF HONB LE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. CREATIVE WORLD TELEFI LMS LTD. , 333 ITR 100(BOM) AND SUBMITTED THAT IF THE AO FAILS TO MAKE PROPER INVESTIGATION, ADDITION CANNOT BE MADE IN ASSESSEES HANDS. WE ARE OF THE CONSIDERED VIEW THAT SAID CASE DO NOT APPLY TO THE FACTS OF THE ASSESSEE AS ASSESSEE IN THIS CASE HAS FAILED TO PRODUCE REQUISITE DETAILS/DOCUMENTS AND GENUINENESS OF SHAR E APPLICANTS AS WELL AS GENUINENESS OF THE TRANSACTIONS. HENCE, WE UPHOLD THE ORDER OF LD CIT(A) AND REJECT GROUND NO.1 OF APPEAL TAKEN BY ASSESSEE. 13. IN REGARD TO GROUND NO.2 OF APPEAL, AO HAS STAT ED THAT VIDE NOTICES DATED 10.7.2008, 3.12.2008 AND 17.12.2008, ASSESSEE WAS A SKED TO FILE THE DETAILS OF COMMISSION PAID OF RS.2,66,000 BUT ASSESSEE DID NOT SUBMIT ANY REPLY. THEREFORE, AO DISALLOWED THE CLAIM OF COMMISSION PAYMENT OF RS.2, 66,000 AND ADDED TO THE INCOME OF THE ASSESSEE. LD CIT(A) HAS ALSO CONFIRMED THE ACT ION OF AO ON THE GROUND THAT IN ABSENCE OF DETAILS TO SUBSTANTIATE THE CLAIM THE E XPENDITURE CANNOT BE ALLOWED. HENCE, THIS APPEAL BY THE ASSESSEE. ITA NO.5557/MUM/2010 ITA NO.5680/MUM/2010 ASSESSMENT YEAR: 2001 -02 5 14. DURING THE COURSE OF HEARING, LD A.R. COULD NOT FURNISH BEFORE US ALSO ANY DETAILS FOR THE ALLEGED CLAIM OF COMMISSION PAYMENT. HENCE , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD CIT(A). ACCORDINGLY , GROUND NO.2 OF APPEAL TAKEN BY ASSESSEE IS DISMISSED. 15. IN THE RESULT, APPEALS FIELD BY DEPARTMENT AS W ELL AS ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2012 SD/- (B.RAMAKOTAIAH ) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 26 TH SEPTEMBER, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),19, MUMBAI 4. COMMISSIONER OF INCOME TAX, 9 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI