DCIT 6(3)(1), MUMBAI V. IRON MOUNTAIN INDIA P.LTD, MUMBAI

ITA 5842/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5248 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 30-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ARUNKUMAR SINGH
• Assessee Lawyers: JIGAR SAIYA
• Keywords: Opportunity of being heard; Reason to believe
• Section: 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM I.T.A. NO. 5842/MUM/2016 ( ASSESSMENT YEAR: 2009 - 10) DCIT, CIR. 6(3)(1), R. NO. 506, 5 TH FLOOR, AAYKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 VS. M/S. IRON MOUNTAIN INDIA PVT. LTD., R. J. SHAH, BLDG. NEAR BPT, CONTAINERS YARD, MAHUL ROAD, WADALA (W), MUMBAI - 400 025 PAN/GIR NO. AABCM 3593 N ( REVENUE ) : ( ASSESSEE ) & C.O. NO. 233/MUM/2018 (ARISING OUT OF ITA NO. 5842/MUM/2016 ) (ASSESSMENT YEAR: 2009 - 10) M/S. IRON MOUNTAIN INDIA PVT. LTD. VS. DCITMUMBAI - 400 020 ( ASSESSEE ) : ( REVENUE ) REVENUE BY : SHRI CHOUDHARY ARUNKUMAR SINGH ASSESSEE BY : SHRI JIGAR SAIYA DATE OF HEARING : 09.08.2018 DATE OF PRONOUNCEMENT : 22.10 .2018 O R D E R PER S HAMIM YAHYA, A. M.: THIS A PPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER BY THE LEAR N ED COMMISSIONER OF INCOME TAX (APPEALS) - 2, MUMBAI (LD.CIT(A) FOR SHORT) DATED 08.06.2016 AND PERTAINS TO THE A SSESSMENT YEAR (A.Y.) 2009 - 10. 2. THE GROUNDS OF APPEAL RAISED IN THE REVENUES APPEAL READ AS UNDER: 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,52,14,260/ - U/S 68 ON ACCOUNT OF SHARE PREMIUM .' 2. 'ON THE FACTS & THE CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) WHI LE DELETING THE ADDITION OF RS. 1,52,14,260/ - U/S 68 OF THE ACT VIDE GROUND OF APPEAL 2 ITA NO. 5842/M/2016 & CO NO. 233/M/2018 NO. 3 HAS GROSSLY ERRED IN ALSO ALLOWING GROUND OF APPEAL NO. 4&5 OF THE ASSESSEE BEING A LTERNATE CLAIM OF THE ASSESSEE THAT EVEN IF ANY ADDITION IS WARRANTED U/S 68, THE DISALLOWANCE SHOULD BE RS. 66,25,740/ - & THUS WHILE DEALING WITH THESE GROUNDS OF APPEAL OUGHT TO HAVE UPHEL D ADDITION TO THE EXTENT OF RS. 66,25,740/ - .' 3. THE GROUNDS OF APP EAL RAISED IN THE ASSESSEES CROSS OBJECTION READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DEPUTY COMMISSIONER OF INCOME TAX - 6(3)(1) [HEREINAFTER REFERRED TO AS 'LEARNED AO'] HAS ERRED IN REASSESSING THE INCOME U/S 147 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED AS 'ACT']. 2. WITHOUT PREJUDICE TO GROUND NO 1, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN HOLDING THAT THE PROVISIONS INTRODUCED VIDE SECTION 56(2)(VIIB) OF THE ACT, ARE CLARIF ICATORY IN NATURE AND HENCE CAN BE APPLIED RETROSPECTIVELY. 4. IN THIS CASE, THE ASSESSING OFFICER (A.O.) OBSERVED THAT O N VERIFICATION OF CASE RECORDS, SEEN THAT THE DURING THE F.Y.2008 - 09 RELEVANT TO A.Y.2009 - 10 ASSESSEE HAS RECEIPT OF HUGE SHARE PREMIU M AMOUNTING TO RS. 1,52,14,260 / - , W HEREAS THE ASSESSEE HAS SHOWN NIL INCOME. HE FURTHER NOTED THAT A S THERE WAS NO SCRUTINY ASSESSMENT DONE FOR THIS YEAR, SO CALLED SHARE PREMIUM HAVING BEEN RECEIVED BY THE ASSESSEE WAS NOT EXAMINED. TH AT TH E ASSESSEE IS A N UNLISTED COMPANY AND THE NATURE OF THE SHARE APPLICATION RECEIVED THE INTRINSIC VALUE OF THE SHARES IN COMPARISON TO THE EXCESS PREMIUM RECEIVED IS NOT SUBSTANTIATED. THAT A T THE SAME TIME FILLING OF RETURN OF INCOME, THE ASSESSEE NOT FILED COMP L ETE DETA ILS SHOWING THE NATURE OF THIS SHARE PREMIUM (JUSTIFICATION FOR THE EXCESS PREMIUM RECEIVED IN COMPARISON TO THE INTRINSIC VALUE OF THE SHARE). 5. THAT I N VIEW OF THE ABOVE FACTS, THERE IS REASON TO BELIEVE THAT INCOME, IN THE GRAB OF SHARE APPLICATION M ONEY RECEIVED IN THIS CASE HAS ESCAPED ASSESSMENT IN TERM OF PROVISIONS OF SECTION 147 OF THE I.T. INCOME TAX ACT, 1961. 3 ITA NO. 5842/M/2016 & CO NO. 233/M/2018 THEREFORE THERE IS REASON THAT SHARES APPLICATION AND PREMIUM MONEY REC EIVED AN AMOUNT OF RS. 1,52,14,260/ - CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT. ACCORDINGLY, AFTER DULY RECORDING THE REASONS FOR RE - OPENING THE ASSESSMENT, A N OTICE U/S.148 OF THE I.T.ACT, 1961 DATED 27/03/2014 WAS ISSUED AND SERVED ON 27/03/2014 TO THE ASSESSEE. 6. THE A.O. FURTHER NOTED THA T THE ASSESSEE DID NOT PRO VIDE FOR ANY DETAIL OF THE SHARE APPLICATION MONEY RECEIVED . HIS OBSERVATIONS IN THIS REGARD ARE AS UNDER: DURING THE FINANCIAL YEAR 2008 - 09 (A.Y 2009 - 10), THE COMPANY HAS ISSUED CERTAIN SHARES AT A PRICE WHICH WAS OVE R THE ABOVE THE NOMINAL VALUE. IN THI S REGARD, TH E ASSESSES WAS ASKED TO PROVIDE THE DETAILS OF THE SAID TRANSACTIONS ALONG WITH THE BASIS AND JUSTIFICATION FOR THE PREMIUM SO FIXED I N THE DOCUMENTS AS LISTED UNDER: A. OFFER DETAILS, WITH RELEVANT DOCUMENTS INDICATING THEREIN NUMBER OF SHARES OFFERED FOR SUBSCRIPTIO N, FACE VALUE AND ISSUE PRICE WITH PREMIUM AND NUMBER OF SHARES ALLOTTED, B. RETURNS FILED BEFORE ROC IN FORM 2 & ANNUAL RETURN OF THE RELEVANT PERIOD C. SHARE VALUATION R EPORT. D. DETAILS OF SHARE APPLICATI ONS RECEIVED, ALLOTTED, ISSUED AND PAID UP CAPITAL. SR. NO NAME & ADDRESS OF THE APPLICANT PAN NO OF SHARES APPLIED FOR NUMBER OF SHARES ALLOTTED CONSIDERATION RECEIVED IN CASH OR LAND TOTAL PAYMENT RECEIVED IN RS. AS ASSESSEE DID NOT PRO VIDED DETAILS EXPLANATION CALLED . 7. THEREAFTER THE A.O. ALSO EXAMINED THE ISSUE OF NON JUSTIFICATION OF SHARE PREMIUM. HE FURTHER C ONCLUDED BY ADDING TH AT TH E ENTIRE S HARE APPLICATION INCLUDING PLAN MONEY RECEIVED OF RS.15 , 21 , 426 / - AS TAXABLE INCOME O F THE ASSESSEE. 8. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) NOTED THE ASSESSEES ARGUMENT THAT ALL THE INFORMATION REGARDING THE SHARE APPLICANTS WAS ALREADY FURNISHED. HE REFERRED TO TH E I T AT DECISION IN THE CASE OF GREEN INFRA LTD. VS. ITO [2014] 159 TTJ 728 (MUM), AS UNDER : 4 ITA NO. 5842/M/2016 & CO NO. 233/M/2018 THEREFORE, CONSIDERING THE ENTIRE ISSUE IN THE LIGHT OF THE MATERIAL EVIDENCE BROUGHT ON RECORD, IN OUR CONSIDERATE VIEW, THE REVENUE AUTHORITIES HAVE ERRED IN TREATING THE SHARE PREMIUM AS INCOME OF THE ASSESSEE U/S. 56(1) OF T HE ACT. IN OUR CONSIDERATE VIEW, FOR THE REASONS DISCUSSED HEREINABOVE, WE DO NOT FIND IT NECESSARY TO APPLY THE PROVISIONS OF SEC. 68 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION OF RS. 47,97,10,000/ - . GROUND NO. 2 & 3 ARE ACCORDINGLY A LLOWED. 9. REFERRING TO THE ABOVE, HE HELD THAT IN HIS OPINION ADDITION U/S. 68 IS NOT POSSIBLE. THE ISSUE OF REOPENING WAS NOT ADJUDICATED BY THE LD. CIT(A). FURTHER, THE LD. CIT(A) HELD THAT SECTION 56(2)(VIIB) WAS NOT APPLICABLE TO NONRESIDENT . 1 0. AGAINST TH IS ORDER, THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS OBJECTION. 11. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE, THE ASSESSEE HAS NOT PRODUCED ANY DETAIL OF THE SHARE APPLICANTS A S CALLED BY THE A.O. THIS IS DULY REFLECTED BY THE A.O.S ORDER AS REPRODUCED ABOVE. 12. THE LD. CIT(A) HAS ACCEPTED THE ASSESSEES SUBMISSION THAT ALL THE DETAILS ARE ON RECORD, WITHOUT ANY EXAMINATION O R REMAND FROM THE A.O. IN THE PAPER BOOK SUBMITTED BEFORE US ALSO DOCUMENTS HAVE BEEN CERTIFIED TO HAVE BEEN SUBMITTED BEFORE THE LD. CIT(A) ONLY. THIS CORROBORATE THE A.O.S OBSERVATION IN HIS ORDER THAT NO DETAIL WAS SUBMITTED BEFORE HIM. HENCE, IT IS CLEAR THAT THE LD. CIT(A) DELETED THE ADDITION WITHO UT ANY EXAMINATION OF SHARE APPLICANT DETAIL IN THIS CASE. IT IS SETTLED LAW THAT POWER OF THE LD. CIT(A) ARE CO - TERMINUS WITH THAT OF THE A.O. THE LD. CIT(A) SHOULD HAVE GIVEN HIS FINDING ON THE EXAMINATION OF DOCUMENTS SUBMITTED BY THE ASSESSEE. HENCE, T HE DELETION OF ADDITION U/S. 68 WITHOUT ANY EXAMINATION IS NOT SUSTAINABLE. THIS NON APPLICABILITY OF 5 ITA NO. 5842/M/2016 & CO NO. 233/M/2018 SECTION 56(2)(VIIB) CAN BY NO STRETCH OF IMAGINATION TAKE THE ISSUE OUT OF THE AMBIT OF SECTION 68. FURTHER, WE NOTE THAT THE LD. CIT(A) HAS NOT ADJUDICAT ED THE ISSUE OF REOPENING DESPITE THE ISSUE BEING RAISED BEFORE HIM. 13. HENCE, IN THE INTEREST OF JUSTICE, WE REMIT BOTH THE ISSUE OF REOPENING AS WELL AS MERITS OF THE ADDITION U/S. 68 TO THE FILE OF THE LD. CIT(A). THE LD. CIT(A) SHALL GIVE A SPEAKING ORDER AFTER CONSIDERING AND EXAMINING ALL THE NECESSARY DETAILS. NEEDLESS TO ADD, THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 14. IN THE RESULT, THE REVENUES APPEAL AND THE ASSESSEES CROSS OBJECTION ARE ALLOWED FOR STATISTICAL PUR POSE . ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2018 SD/ - SD/ - ( RAM LAL NEGI ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 22.10.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI