ITO, New Delhi V. M/s. Guru Nistha Agencies Pvt. Ltd., New Delhi

ITA 575/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87129 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Opportunity of being heard
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI I.C. SUDHIR, JM ITA NO.575/DEL/2010 ASSESSMENT YEAR : 2006-07 ITO, WARD-12(3), NEW DELHI. VS. GURU NISTHA AGENCIES PVT. LTD., H. NO.4, KARNAL FARM, TIGRI COLONY, NEW DELHI. PAN: AABCG8584B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH GUPTA, CA DEPARTMENT BY : SHRI T. VASANTHAN, SR. DR DATE OF HEARING : 23.03.2015 DATE OF PRONOUNCEMENT : 24.03.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 18.11.2009 IN RELATION TO THE ASSESSM ENT YEAR 2006-07. ITA NO.575/DEL/2010 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS.26,60,000/- DURING THE YEAR, WHICH WAS SHOWN AS CURRENT LIABILITY IN ITS BALAN CE SHEET. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON TO FILE NECESSARY DETAILS TO PROVE THE EXISTENCE/IDENTITY A ND CREDIT WORTHINESS OF THE PERSONS WHO HAD ADVANCED SUCH MONEY TO THE ASSE SSEE IN THE SHAPE OF SHARE APPLICATION MONEY AND ALSO TO PROVE THE GE NUINENESS OF TRANSACTIONS. ON PERUSAL OF THE DETAILS, IT WAS NO TICED THAT THE ASSESSEE CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONEY IN CASH AMOUNTING TO RS.15,35,000/-, DETAILED AS UNDER:- S.NO. NAME AMOUNT 1. SMT. ASHA DEVI RS.195000/- 2. SH. BANWARI LAL RS.245000/- 3. SMT. RADHA DEVI RS.195000/- 4. SH. ARUN SINGHAL RS.225000/- 5. SH. BANBARI LAL SINGHAL RS.225000/- 6. SH. GHANSHYAM DAS SINGHA RS.225000/- 7. SH. TARUN SINGHAL RS.225000/- TOTAL RS.15,35,000/- ITA NO.575/DEL/2010 3 3. THE ASSESSEE WAS REQUIRED TO PROVE THE SOURCE OF CASH DEPOSITED BY THE ABOVE PERSONS, WHICH WAS CLAIMED AS SHARE APPLI CATION MONEY RECEIVED. NO REPLY WAS FILED BY THE ASSESSEE. SHO W CAUSE NOTICES DATED 19.12.2008 AND 23.12.2008 WERE ISSUED, WHICH WERE S ERVED PERSONALLY ON THE ASSESSEE BY THE NOTICE-SERVER OF THE WARD, O NCE AGAIN REQUIRING THE ASSESSEE TO PROVE, INTER ALIA , THE SOURCE OF CASH DEPOSITED BY THESE PERSONS. THE ASSESSEE WAS REQUIRED TO FILE THESE D ETAILS ON OR BEFORE 23 RD DECEMBER, 2008 AND 26 TH DECEMBER, 2008 RESPECTIVELY. NEITHER ANY REPLY WAS FILED NOR ANY PERSON ATTENDED ON BEHALF O F THE ASSESSEE. ONE LETTER DATED 26.12.2008 WAS FILED BY THE ASSESSEE T HROUGH A MESSENGER WITHOUT ANY EVIDENCE ESTABLISHING THE SOURCE OF CAS H DEPOSIT BY THESE PERSONS. THIS LEFT THE AO WITHOUT ANY OPTION BUT T O MAKE AN ADDITION OF RS.15.35 LAC U/S 68 OF THE ACT. THE LD. CIT(A) GOT CONVINCED WITH THE ASSESSEES SUBMISSIONS AND DELETED THE ADDITION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. NOVA PROMOTERS AND FIN LEASE (P) LTD. (2012) 342 I TR169 (DEL), HAS ITA NO.575/DEL/2010 4 HELD THAT IF THE ASSESSEE FAILS TO PROVE THE RECEIP T OF SHARE APPLICATION MONEY TO THE SATISFACTION OF THE AO, THEN, ADDITION HAS TO BE RIGHTLY SUSTAINED U/S 68. SIMILARLY, IN THE CASE OF CIT VS. EMPIRE BUILD TECH PVT. LTD., (2014) 366 ITR 110 (DEL), THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD DISCLOSED THE IDENTITY OF THE INVESTORS, IT CANNOT BE SAID THAT T HE BURDEN IMPOSED UPON THE ASSESSEE U/S 68 STOOD DISCHARGED. 5. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE AO REPEATEDLY REQUIRED THE ASSESSEE TO PROVE THE SOURC E OF MONEY IN THE HANDS OF THE PERSONS WHO ALLEGEDLY INVESTED IT AS S HARE CAPITAL IN THE ASSESSEE-COMPANY. EXCEPT FOR FILING CERTAIN ROUTIN E DOCUMENTARY DETAILS, THE ASSESSEE DID NOT BOTHER TO PROVE THE C REDIT WORTHINESS OF THE PERSONS TO THE SATISFACTION OF THE AO. NONE OF THE PERSONS WERE PRODUCED FOR EXAMINATION BEFORE THE AO. THE DOCUMEN TS SO FILED BY THE ASSESSEE, WITHOUT BEING PROPERLY SUBSTANTIATED, DO NOT CONCLUSIVELY PROVE THE GENUINENESS OF CREDITS. HERE IS A CASE I N WHICH ALL THE SEVEN PERSONS IN RESPECT OF WHOM SHARE APPLICATION MONEY HAS BEEN RECORDED, ITA NO.575/DEL/2010 5 ARE RELATIVES OF THE DIRECTORS OF THE ASSESSEE COMP ANY WITH MEAGER INCOME. THE FACT THAT THE AMOUNTS WERE ALLEGEDLY P AID IN CASH ALSO CASTS MORE BURDEN ON THE ASSESSEE TO PROVE THEIR GENUINEN ESS ALONG WITH THE CREDITWORTHINESS OF SUCH PERSONS. WITHOUT GOING INT O THE MERITS OF THE CAPACITY OF EACH OF SUCH PERSONS, WE ARE OF THE CON SIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IM PUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF AO. WE ORDER ACCORDINGLY AND DIRECT THE AO TO DECIDE THE GENUINE NESS OF THE ABOVE SEVEN SHARE APPLICANTS AFRESH, AS PER LAW, AFTER AL LOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. NO OBSERVATION MADE IN THIS ORDER SHOULD BE CONSTRUED AS TOUCHING THE MERITS OF THE CREDITWORTHINESS OR OTHERWISE OF THESE CREDITORS. IN OTHER WORDS, THE AO SHOULD DECIDE ALL THE RELEVANT ASPECTS IN RESPECT OF THESE CREDITORS AFRESH UNINFLUENCED BY ANY OBSERVAT IONS MADE IN THIS ORDER. ITA NO.575/DEL/2010 6 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 24.03.201 5. SD/- SD/- [I.C. SUDHIR] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 24 TH MARCH, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.