ITO, New Delhi V. M/s Hare Krishna International Ltd., New Delhi

ITA 579/DEL/2011

• Counselvise Citation: 57920114 RSA 2011
• Duration Of Justice: 3 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-01-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 133(6); 68

Judgement Text

ITA NO. 579/ DEL/ 2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. NO.579/DEL/2011 A.Y. : 2002 - 03 INCOME TAX OFFICER, WARD - 12(3), NEW DELHI VS. M/S HARE KRISHNA INTERNATIONAL LTD., K - 335, 2 ND FLOOR, SARITA VIHAR, NEW DELHI (PAN: AAACH5241D) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. ROBIN RAWAL, SR. D.R. ASSESSEE BY : SH. SALIL AGARWAL, ADV. & SH. SHAILESH GUPTA, CA DATE OF HEARING : 28 - 0 1 - 201 5 DATE OF ORDER : 30 - 01 - 201 5 ORDER PER H.S. SIDHU : J M THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 27 / 10 /20 10 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XXVII , NEW DELHI ON THE FOLLOWING GROUNDS: - 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,07,31,000/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. ITA NO. 579/ DEL/ 2011 2 2. THE APPELLANT CRA VES LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 2. THE FACTS IN BRIEF ARE THAT T HE ASSESSMENT ORDER WAS PASSED BY THE AO ON 30.12.2009 U/S. 147/143(3) OF THE INCOME TAX ACT, 1961, ASSESSING THE TOTAL INC OME AT RS. 1,07,21,150/ - FOR THE ASSESSMENT YEAR 2002 - 03 THEREBY MAKING AN ADDITION OF RS. 1,07, 31 , 000 / - U/S. 68 OF THE ACT. BEING AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER , ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 27.10 .2010 HAS DELETED THE ADDITION AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 3. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4 . AT THE TIME OF HEARING LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL AND FILED THE WRITTEN SUBMISSION DATED 28.1.2015 AS UNDER: - A. ISSUE INVOLVED IN THE CASE IN THIS CASE, AN INFORMATION FROM THE INVESTIGATION WING, DIT(LNV.), NEW DELHI WAS RECEIVED THAT THE ASSESSEE COMPANY HAS TAKEN ACCOMMODATION ENTRIES FROM THE PARTIES DETAILED IN THE TABLE MENTIONED IN THE ASSESSMENT ORDER. AN ADDITION U/S 68 OF THE ACT WAS MADE OF RS. 1,07,31,000/ - ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. B. MATERIAL FACTS MENTIONED IN THE ASSESSMENT ORDER ITA NO. 579/ DEL/ 2011 3 SPECIFIC INFORMATION RECEIVED FROM THE INVESTIGATION WING STATEMENTS RECORDED BY THE INVESTIGATION WING OF SHRI MUKESH GUPTA WHO PROVIDED ACCOMMODATION ENTRIES THROUGH VARIOUS COMPANIES IN WHICH HE IS DIRECTOR. STATEMENTS OF PERSONS RECORDED WHOSE ACCOUNTS WERE USED FOR THE PURPOSE OF ACCOMMODATION ENTRIES AND IN RETURN RECEIVED SOME MONTHLY REMUNERATION. THE PERSONS FROM WHOSE ACCOUNTS THE MONEY WAS TRANSFERRED, ARE NOT HAVING THE SUFFICIENT LIQUIDITY OF THE FUNDS TO INVEST IN SHARE CAPITAL WITHOUT ARRANGING THE CASH FUNDS. THE SOURCE OF THE SAID CASH FUND HAS BEEN EXPLAINED IN THEIR STATEMENTS TO HAVE RECEIVED FROM THE PERSONS TO WHOM CHEQUES/DRAFT WERE ISSUED FOR PURCHASING THE SH ARES OF THE ASSESSEE COMPANY. THE CASH WAS ROUTED THROUGH SEVERAL ACCOUNTS. C. RELEVANT CASE LAWS RELIED UPON 1. COMMISSIONER OF INCOME TAX VS. NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169 (DELHI HE) CRITICAL FACT/EVIDENCE WAS THE STATEMENT OF SHRI MUKESH GUPTA AND SHRI RAJESH JASSAL BEFORE INVESTIGATION WING WHO PROVIDED ACCOMMODATION ENTRIES ITA NO. 579/ DEL/ 2011 4 HON'BLE DELHI HIGH COURT REVERSED ORDER OF THE TRIBUNAL AND CIT(A) DELETING THE ADDITION STATING THAT THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THA T DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF - CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IS TO HELP ASSESSEE'S BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROU GH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. WHILE DECIDING ON THE ISSUE HON'BLE DELHI HIGH COURT DISCUSSED THE FOLLOWING CASE LAWS . CITVS. DURGA PRASAD MORE (1971) 82 ITR 540 MEHTA PARIKH AND COMPANY (1956) 30 ITR 181 CIT VS. LOVELY EXPORTS (P) LTD. 216 CTR (SC) 195 DIVINE LEASING AND FINANCE LTD. (2008) 299 ITR 268 CIT V. OASIS HOSPITALITIES PRIVATE LIMITED, (2011) 333 ITR 119. 2. COMMISSIONER OF INCOME TAX VS. EMPIRE BUILTECH PVT. LTD. 366 ITR 110 SECTION 68 OF INCOME TAX ACT, 1961 - CASH CREDIT - THE ASSESSEE, A NEWLY INCORPORATED COMPANY ISSUED SHARE CAPITAL OF 11 LAKHS AT A PREMIUM OF 1000% AND RECEIVED A SUM OF RS. 1.10 CRORES FROM 39 SHAREHOLDERS. THE CIT (APPEALS) AND TRIBUNAL DELETED THE ADDITION U/S 68 ITA NO. 579/ DEL/ 2011 5 M ADE BY AO ON THE GROUND THAT ASSESSEE HAS PRODUCED THE IDENTITY OF SHAREHOLDERS AND 28 OUT OF 39 S/H HAVE RESPONDED TO THE NOTICES SERVED U/S 133(6) ALSO. THE HC MADE THE ADDITION IN RESPECT OF 11 INVESTORS WHO EITHER DID NOT RECEIVE THE NOTICE OR DID NOT SUBMIT ANY CONFIRMATION - COMMISSIONER OF INCOME TAX VS. EMPIRE BUILDTECH P. LTD. 5 . ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY AND FILED A PAPER BOOK CONTAINING THE PAGES 1 TO 47 HAVING THE C OPIES OF THE FOLLOWING ORDERS OF THE DELHI HIGH COURT AND ITAT, DELHI : - - CIT VS. SUPREME POLYPROPOLENE PVT. LTD. IN ITA NO. 26/2011. (DELHI HIGH COURT) - CIT VS. GANGESHWARI METALS PVT. LTD. REPORTED IN 361 ITR 10 (DELHI HIGH COURT) - CIT VS. GOEL SON S GOLDEN ESTATE PVT. LTD. IN ITA NO. 212/2010 (DELHI HIGH COURT) - ITO VS. ICS HOTELS PVT. LTD. IN ITA NO. 2046/DEL/2010 (ITAT, DELHI BENCH.) - ITO VS. EXCELLENT TOWN PLANNERS PVT. LTD. IN ITA NO. 871/DEL/2010 (ITAT, DELHI) - ITO VS. NC CABLES PVT. LTD. I N ITA NO. 4122/DEL/2009 (ITAT, DELHI) 6 . WE HAVE HEARD THE BOTH PARTIES AND PERUSED AND CONSIDERED THE RELEVANT RECORD AVAILABLE WITH US SPECIALLY THE IMPUGNED ORDER S PASSED BY THE REVENUE AUTHORITIES; WRITTEN SUBMISSIONS FILED BY THE LD. DR AND A PAP ER BOOK FILED BY THE LD. COUNSEL OF THE ASSESSEE ITA NO. 579/ DEL/ 2011 6 MENTIONING THEREIN THE CASES LAWS OF THE HON BLE DELHI HIGH COURT AND THE ITAT, DELHI BENCHES. WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS DISCUSSED THE ELABORATELY DISCUSSED THE ISSUE IN DISPUTE BY C ONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AND ADJUDICATED THE ISSUE IN DISPUTE AS UNDER: - IN THE DETAILED SUBMISSION FILED BY THE LD. CONSUL BEFORE ME IT WAS SUBMITTED THAT THE AMOUNT WAS RECEIVED IN THE FORM' OF SHARE APPLICATION MONEY WHICH WAS DULY CONSIDERED IN THE BOARD MEETING, SHARES WERE ALLOTTED BY THE RESPECTIVE BOARD TO THE SHARE HOLDERS FOR WHICH ALL THE NECESSARY FORMALITIES BEING BOARD MEETING, RETURN OF ALLOTMENT TO THE REGISTRAR OF COMPANIES ISSUE OF SHARE FILING OF ANNUAL RETURN WAS COMPLETED BY THE COMPANY. ALL THE THREE CONDITIONS I . E.' IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION HAVE BEEN PROVED BEYOND DOUBT AS PER DOCUMENTARY EVIDENCE PLACE ON RECORD. FURTHER SHRI MUKESH GUPTA WHOSE STATEMENT H AS BEEN MADE AS BASIS FOR THAT HE HAS INVESTED THE MONEY IN LIEU OF CASH, THE ASSESSING OFFICER HAS DRAWN HIS OWN INFERENCE THAT IN CASE OF ASSESSEE COMPANY INVESTMENT IN THE SHARE APPLICATION MONEY IS FOR CONSIDERATION OF CASH. THERE IS NO EVIDENCE IN THI S REGARD AVAILABLE ON RECORD THUS ADDITION HAS BEEN MADE MERELY ON THE BASIS OF SURMISES AND CONJECTURES AND IS NOT SUSTAINABLE. THE SHARE APPLICATION MONEY RECEIVED IN THE HANDS OF THE APPELLANT COMPANY IS PROPERLY SOURCED. ITA NO. 579/ DEL/ 2011 7 AND IF THE AO HAD ANY DOUBT ON THE GENUINITY OF THE SAID MONEY BROUGHT IN, 'IT WAS OPEN TO HIM TO COMMUNICATE THE SAME FOR APPROPRIATE ENQUIRY IN THE CASE OF SUCH PERSONS IN WHOSE NAMES THE SHARE APPLICATION MONEY WAS BROUGHT IN. IN VIEW OF THE ABOVE I AM OF THE OPINION THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1,07,31,00 0/ - THE SAME IS DELETED. 7. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) , BECAUSE THE LD. CIT(A) HAS DECIDED THE ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AFTER APPRECIATING THE EVIDENCE FILED BY THE ASSESSEE AS WELL AS VARIOUS DECISIONS RENDERED BY THE HON BLE SUPREME COURT AS WELL AS HON BLE HIGH COURT AND THE DECISIONS OF THE ITAT BENCHES. WE ARE OF THE VIEW THAT THE SHARE APPLICATION MONEY RECEIVED IN THE HANDS OF THE ASSESSEE COMPANY IS PROPERLY EXPLAINED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS BEFORE THE LD. CIT(A) AND EVEN BEFORE US. THEREFORE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVENUE. 8 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 30 / 0 1 /20 1 5 . SD/ - SD/ - [ J.S. REDDY] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 30 . / 0 1 /201 5 SRBHATNAGAR \ ITA NO. 579/ DEL/ 2011 8 COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 579/ DEL/ 2011 9