DCIT, Alwar V. M/S SINGHAL CREDIT MANAGEMENT P LTD., Alwar

ITA 566/JPR/2011

• Counselvise Citation: 56623114 RSA 2011
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1994-1995
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Unexplained investment; Additional evidence; Reassessment proceedings
• Section: 143(3); 68

Judgement Text

1 ITA 566-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 566/JP/2011 ASSTT. YEAR : 1994-95. THE DCIT, CENTRAL CIRCLE, VS. M/S. SINGHAL CREDIT MANAGEMENT P. LTD., ALWAR. F-143, INDUSTRIAL AREA, BHIWADI, ALWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI PC PARWAL AND SH RI RAKESH AGARWAL DATE OF HEARING : 18.01.2012. DATE OF PRONOUNCEMENT : 02.02.2012 ORDER DATED : 02/02/2012. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 1994-95. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 18,00,000/- MADE BY AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARE CA PITAL UNDER SECTION 68. THE DEPARTMENT HAS ALSO OBJECTED IN ADMITTING ADDITIONA L EVIDENCES FILED UNDER RULE 46A. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE CO MPANY INCORPORATED ON 29.03.1994 HAS AN AUTHORIZED SHARE CAPITAL OF RS. 30 LACS DIVI DED INTO 50,000 EQUITY SHARES OF RS. 10 EACH & 25,000 1% NON REDEEMABLE PREFERENCE SHARES O F RS. 100 EACH. THE PAID UP SHARE CAPITAL IS RS. 25,00,200/-. DURING THE COURSE OF OR IGINAL ASSESSMENT PROCEEDINGS, ASSESSEE 2 COMPANY WAS ASKED TO FILE THE DETAILS OF ITS SHAREH OLDERS. ASSESSEE SUBMITTED THE CONFIRMATION/APPLICATION FOR ALLOTMENT OF SHARES BY THE SHAREHOLDERS. AO AFTER EXAMINING THE SAME FOUND THEM CORRECT & COMPLETED THE ASSESSM ENT U/S 143(3) 28.03.1995 BY ACCEPTING THE RETURNED INCOME AS DECLARED BY THE AS SESSEE. THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED ON 06.03.1998 ON THE BASIS OF REPORT OF ADIT (INV.), NEW DELHI & ACCORDINGLY ENQUIRIES WERE CONDUCTED BY ADIT (INV.) , KOLKATTA IN RESPECT OF THE CASH INFLOW OF SHARE APPLICATION MONEY IN THE ASSESSEE C OMPANY FROM THE FOLLOWING KOLKATTA BASED COMPANIES:- - MONICA COMPUTERS (P) LTD RS. 2,00,000/- - JMS EXPORTS INDIA (P) LTD RS. 2,50,000/- - NOVEL AGENCIES PVT. LTD. RS. 2,50,000/- - MONIKA PROMOTERS PVT. LTD RS. 2,50,000/- - J.P MANAGEMENT SYSTEM PVT. LTD. RS. 2,50,000/- - AVON DISTRIBUTION (INDIA) PVT. LTD RS. 2,00,000/ - - JYOTI PROGRESSIVE & DEVELOPERS PVT. LTD RS. 2,00, 000/- - JOYOUS AGENCIES PVT. LTD. RS. 2,00,000/- TOTAL RS. 18,00,000/- 4. AS PER THE REPORT OF ADIT (INV.), KOLKATTA DT. 2 4.02.1998 NONE OF THE ABOVE CONCERNS WERE TRACED AT THE GIVEN ADDRESS & ALL THE CONCERNS WERE INTERCONNECTED EITHER THROUGH DIRECTORS/BANK ACCOUNTS. IN RESPONSE TO SAM E, ASSESSEE FILED REPLY BUT THE SAME WAS NOT FOUND TENABLE ON THE GROUND THAT ASSESSEE F AILED TO FILE THE PRESENT ADDRESSES/PROVE THE EXISTENCE OF THE COMPANIES & TH E EVIDENCES FURNISHED RELATES TO THE ASSESSMENT YEAR UNDER CONSIDERATION OR EARLIER YEAR S & NOT FOR SUBSEQUENT PERIOD. ACCORDINGLY, AO VIDE ORDER DT. 30.03.2000 MADE ADDI TION OF RS. 18 LACS U/S 68 BY HOLDING THAT ASSESSEE FAILED TO PROVE THAT THE TRAN SACTIONS ARE REAL. 3 5. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). BEFORE CIT(A), ASSESSEE VIDE LETTER DATED 09.11.2001 REQUESTED TO ADMIT ADDITIONAL EVID ENCES IN THE FORM OF DOCUMENTS RELATED TO THE ABOVE CONCERNS FOR SUBSEQUENT PERIOD S AS THE SAME WERE UNDER COLLECTION DURING THE COURSE OF REASSESSMENT PROCEEDINGS. CIT( A) VIDE LETTER DT. 08.02.2002 CALLED A REMAND REPORT FROM AO. AFTER CONSIDERING THE SAME, CIT(A) DELETED THE ADDITION OF RS. 18 LACS BY GIVING THE FOLLOWING FINDINGS (PAGE 19-2 0 OF THE ORDER):- HAVING HEARD THE COUNCIL AND AFTER PERUSING THE AS SESSMENT ORDER, IT IS SEEN THAT THE ASSESSEE HAS SUBMITTED CONFIRMATION OF THE SAID SHA RE CAPITAL FROM THE SHAREHOLDERS AND DOCUMENTARY EVIDENCE ARE PLACED ON RECORD AND A LSO REFERRED TO BY THE ASSESSING OFFICER IN THE COURSE OF ORIGINAL ASSESSMENT PROCEE DING. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL WHICH CAN PROVE THAT THIS MONEY WAS THE APPLICANTS OWN MONEY. THE ONUS FOR PROVING THAT SHARE CAPITAL RECEIVED WA S ASSESSEE OWN MONEY LIES ON THE ASSESSING OFFICER. IN THE CASE OF MONEY RECEIVED WH ICH WERE CAPITAL ONLY, IDENTITY NEEDS TO BE PROVED. IF THE IDENTITY IS PROVED IT IS NOT FOR THE ASSESSEE TO PROVE AS TO HOW THE SHAREHOLDERS CAN BE IN POSSESSION OF THE MO NEY. THE IDENTITY IN CASE STANDS PROVED BEYOND ANY DOUBT, WHICH FACT HAS ALSO BEEN A CCEPTED BY AO IN HIS REMAND REPORT. DOCUMENTARY EVIDENCE CONTAINED THE DETAILS NOT ONLY THE IDENTITY OF THE SHAREHOLDERS BUT ALSO THEIR ADDRESSEE, PAN CARD, CO PY OF INCOME TAX RETURN, CERTIFICATE OF INCORPORATION AS ISSUED BY THE RESPE CTIVE OF REGISTRAR OF COMPANIES. THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVE OF TRANSA CTION AND THE AO WAS NOT JUSTIFIED IN IGNORING THE VARIOUS EVIDENCES PROVIDED TO HIM. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY AO THAT THE SHARE CAPITAL MONEY REPRES ENTS IT OWN UNDISCLOSED INCOME. IN A RECENT DECISION OF HONBLE SUPREME COURT IN LO VELY EXPORTS (P) LTD. 319 ITR (ST) 5 HAS HELD THAT IF SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIV EN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENT IN ACCORDANCE WITH LAW. 4 6. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 7. THE LD. D/R FIRSTLY PLACED RELIANCE ON THE ORDER OF AO. IT WAS FURTHER SUBMITTED THAT NO DETAILS WHATSOEVER WAS FILED BEFORE THE AO AND ON THE BASIS OF ENQUIRY AND INFORMATION RECEIVED, THE AO CONCLUDED THAT THE SHA RE CAPITAL INTRODUCED BY ASSESSEE IS NOTHING BUT IT IS OWN MONEY INVESTED UNDER THE GARB OF SHARE APPLICATION MONEY. THE AO HAS DISCUSSED THE ISSUE IN DETAIL AND HAS ARRIVED A T A CONCLUSION THAT ALL THE SHAREHOLDERS IN WHOSE NAME SHARE APPLICATION MONEY IS RECEIVED A RE BOGUS AS THEY WERE NOT FOUND AT THE ADDRESS GIVEN. 8. THE LD. COUNSEL OF THE ASSESSEE, ON THE OTHER HA ND, FIRSTLY PLACED RELIANCE ON THE ORDER OF LD. CIT (A). FURTHER RELIANCE WAS PLACED ON THE WRITTEN SUBMISSIONS FILED. 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). THE OBJEC TIONS RAISED BY THE AO FOR MAKING ADDITIONS HAVE ALREADY BEEN CONSIDERED BY LD. CIT ( A). THE OBJECTION RAISED HAS ALSO BEEN EXPLAINED IN THE WRITTEN SUBMISSIONS FILED BY ASSESSEE WHICH ARE AS UNDER :- IT MAY BE NOTED THAT IN COURSE OF ORIGINAL ASSESSME NT PROCEEDINGS, ASSESSEE FILED CONFIRMATION/APPLICATIONS FOR ALLOTM ENT OF SHARES IN RESPECT OF ALL THE ABOVE 8 COMPANIES. AO AFTER EXAMINING TH E SAME FOUND THEM CORRECT & COMPLETED THE ASSESSMENT U/S 143(3) 28.03 .1995 BY ACCEPTING THE RETURNED INCOME AS DECLARED BY THE ASSESSEE. TH EREAFTER, MOST OF THESE COMPANIES GOT AMALGAMATED WITH OTHER COMPANIES AS P ER THE DETAILS GIVEN AT PB 34 . THEREFORE, ASSESSEE COULD NOT FURNISH THE ADDRESS OF THESE COMPANIES SUBSEQUENT TO THE ENQUIRY MADE BY ADIT (I NV.), KOLKATTA VIDE LETTER DT. 24.02.1998. 5 IN APPELLATE PROCEEDINGS, ASSESSEE COLLECTED ALL TH ESE INFORMATION & SUBMITTED TO CIT(A). THE REMAND REPORT WAS CALLED FROM AO. AO MADE THE ENQUIRIES FROM DDIT (INV.), KOLKATTA ABOUT EXIS TENCE OF THESE COMPANIES. ON THESE ENQUIRIES, THE INSPECTOR VIDE H IS REPORT DT. 08.09.2004 [PB 146] GAVE ADVERSE REPORT IN CASE OF M/S JB MARKETING PV T. LTD (IN WHICH JYOTI PROGRESSIVE & DEVELOPERS PVT. LTD. WAS AMALGAMATED), M.V CREDIT (P) LTD. (IN WHICH NOVEL AGENCIES PVT. LTD. WAS AMALGAMATED) & M/S COLUMBIA TRADING CO. LTD. (IN WHICH MONIKA PROM OTERS PVT. LTD WAS AMALGAMATED). THEREAFTER, ON FURTHER ENQUIRY DDIT ( INV.), KOLKATTA ACCEPTED THE EXISTENCE OF M/S JB MARKETING PVT. LTD & M.V CREDIT (P) LTD. M/S COLUMBIA TRADING CO. LTD. WAS REPORTED TO BE NOT FOUND AT THE GIVEN ADDRESS [PB 147] . FROM THE ABOVE REPORT, IT IS CLEAR THAT ALL THE COM PANIES STATED ABOVE WERE FOUND TO BE IN EXISTENCE EXCEPT M/S COLU MBIA TRADING CO. LTD. IN WHICH MONIKA PROMOTERS PVT. LTD WAS AMALGAM ATED. IN RESPECT OF THIS COMPANY COMPLETE DETAILS WERE FILED WHICH ARE AT PB 64-94 . THIS INCLUDES PETITION WITH HONBLE HIGH COURT OF CALCUT TA FOR AMALGAMATION (PB 66-69), ACKNOWLEDGEMENT OF INCOME TAX RETURN OF M/S COLUMB IA TRADING CO. LTD. FOR A.Y. 2000-01, 03-04 & 04-05 (P B 90-92) & ITS BANK STATEMENT (PB 93-94) . THESE DOCUMENTS CLEARLY PROVE THE EXISTENCE OF M/ S COLUMBIA TRADING CO. LTD. IN RESPECT OF ALL OTHER C OMPANIES, COMPLETE DETAILS ARE AVAILABLE AT PB 35-145 WHICH PROVES THE EXISTENCE OF THE COMPANIES. THEREFORE, THE ASSESSEE HAS DISCHARGED I TS PRIMARY BURDEN OF ESTABLISHING THE IDENTITY OF THESE COMPANIES. CONSI DERING THE SAME, CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 18 L ACS MADE U/S 68. IT IS TO BE NOTED THAT AO VIDE HIS REPORT DT. 05.12.2006 HAS ALSO ACCEPTED THE EXISTENCE OF THE COMPANIES (COPY ENCLOSED) . AFTER GOING THROUGH THE WRITTEN SUBMISSIONS AND ORD ERS OF THE AUTHORITIES BELOW, WE NOTED THAT ADDITIONAL EVIDENCES WERE ADMITTED BY LD. CIT (A) AFTER AFFORDING REASONABLE 6 OPPORTUNITY TO THE AO WHO HAS MADE ENQUIRY FROM THE SHAREHOLDERS AND IT WAS FOUND THAT THE SHAREHOLDING COMPANY WAS AMALGAMATED WITH ANOTH ER COMPANY. THE AO HAS ACCEPTED THAT VARIOUS COMPANIES WHO APPLIED FOR SHA RES OF ASSESSEE COMPANY WERE AMALGAMATED. COPY OF REMAND REPORT IS PLACED ON RE CORD. THEREFORE, THIS IS NOT A CASE THAT LD. CIT (A) HAS ACCEPTED THE ADDITIONAL EVIDEN CES WITHOUT AFFORDING OPPORTUNITY TO THE AO. ACCORDINGLY, THE GROUND OF THE DEPARTMENT IS LIABLE TO BE REJECTED AND, THEREFORE, THE SAME IS REJECTED. ON MERIT, SINCE ALL THE NECE SSARY VERIFICATIONS WERE DONE WHICH HAVE BEEN CONSIDERED BY LD. CIT (A), ALL OLD COMPAN IES WERE ASSESSED TO TAX, THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH PROPER BANKI NG CHANNEL, THEREAFTER SHARES TO THESE COMPANIES WERE ALLOTTED, THEREFORE, THIS IS N OT A CASE THAT ASSESSEE COMPANY HAS NOT DISCHARGED ITS ONUS LAW UPON IT. VARIOUS HIGH COURT S HAVE HELD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY OF WHOSE SHARES WE RE ALLOTTED TO VARIOUS OTHER ENTITIES WHO HAS APPLIED FOR THE SHARES. IF ANY ADDITION CA N BE MADE, THAT CAN BE MADE IN THE HANDS OF ENTITIES WHO APPLIED FOR SHARES OF A PARTI CULAR COMPANY. THE ASSESSEE HAS GIVEN COMPLETE DETAILS ALONG WITH ADDRESSES AND PANS ETC. ALL THE COMPANIES WERE EXISTING COMPANIES, LATER ON ALL THOSE COMPANIES WERE AMALGA MATED IN ANOTHER COMPANY AND THIS FACT HAS BEEN VERIFIED THROUGH INVESTIGATION WING O F THE DEPARTMENT SITUATED AT CALCUTTA WHERE ALL THESE COMPANIES WERE SITUATED WHO APPLIED FOR SHARES OF THE ASSESSEE COMPANY. THE DECISION OF HONBLE SUPREME COURT IN CASE OF LO VELY EXPORTS PVT. LTD. WHICH HAS BEEN TAKEN INTO CONSIDERATION BY LD. CIT (A) IS SQU ARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE AND HOW IT IS NOT APPLICABLE THAT IS N OT BROUGHT ON RECORD. HOWEVER, FACTS ARE DISTINGUISHABLE THAT IS ALSO NOT BROUGHT ON REC ORD. VARIOUS OTHER CASES WHICH ARE MENTIONED IN THE WRITTEN SUBMISSIONS FILED BY ASSES SEE WHICH ARE REPRODUCED SOMEWHERE 7 ABOVE IN THIS ORDER ARE ALSO IN SUPPORT OF THE CASE OF THE ASSESSEE. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND IN VIEW OF REASON ING GIVEN BY LD. CIT (A) WHICH ARE REPRODUCED SOMEWHERE ABOVE IN THIS ORDER, WE HOLD T HAT LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION. ACCORDINGLY, WE CONFIRM THE ORDER OF LD. CIT (A). 10. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02 .02.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- THE DCIT, CENTRAL CIRCLE, ALWAR. M/S. SINGHAL CREDIT MANAGEMENT PVT. LTD., ALWAR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 566/JP/2011) BY ORDER, AR ITAT JAIPUR.