ADCON TECHNOLOGIES LTD, MUMBAI V. ITO WD 9(1)(1), MUMBAI

ITA 5861/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8546 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Assessee Lawyers: KALPESH TURALKAR
• Keywords: Unexplained cash credit; Bogus Share capital
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH , JM & SHRI M.BALAGANESH, AM ITA NO. 5861 /MUM/201 8 ( ASSESSMENT YEAR : 2005 - 06 ) M/S. ADCON TECHNOLOGIES LTD 125, NIGOS BUILDING CAMA INDUSTRIAL ESTATE GOREGAON (E) M UMBAI 400 063 VS. ITO 9(1)(1) / 12(1)(1) ROOM NO.226, 2 ND FLOOR AAYAKAR BHAVAN, M.K.ROAD MUMBAI 400 020 PAN/GIR NO. AACCA1228P (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI KALPESH TURALKAR REVENUE BY SHRI MICHAEL JERALD DATE OF HEARING 07 / 01 /2020 DATE OF PRONOUNCEMENT 15 / 01 / 2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5861/MUM/2018 FOR A.Y. 2005 - 06 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI IN APPEAL NO. CIT(A ) - 20/ITO - 9(1)/IT - 10077/13 - 14 DATED 29/06/2018 (LD. CIT(A) IN SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY OF RS.3,65,925/ - U/S.271(1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 5861/MUM/2018 M/S. ADCON TECHNOLOGIES LTD., 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN L IFT PARTS. IT HAD FILED ITS RETURN OF INCOME FOR THE A.Y.2005 - 06 ON 29/10/2005 DECLARING TOTAL INCOME OF RS.4,99,760/ - . THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S.143(3) OF THE ACT ON 05/11/2007 DETERMINING TOTAL INCOME A T RS.5 , 47 , 260 . LATER, BASED ON AN INFORMATION RECEIVED FROM ACIT, CENTRAL CIRCLE - 13 , MUMBAI WHEREIN IT WAS MENTIONED THAT SHRI NARENDRA SHAH, ALONGWITH CERTAIN PERSONS WERE FACILITATING ARTIFICIAL / BOGUS SHARE APPLICATION MONEY AND ASSESSEE COMPANY HAD AL SO RECEIVED CERTAIN SHARE APPLICATION MONEY AMOUNTING TO RS.5 LAKHS FROM M/S. TRIBHUWAN HOUSING LTD. DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ASSESSMENT WAS SOUGHT TO BE REOPENED BY ISSUE OF NOTICE U/S.148 OF THE ACT FOR A.Y.2005 - 06. IN THE RE - ASSESSMENT PROCEEDINGS, THE LD. AO OBSERVED THAT ASSESSEE HAD RECEIVED SHARE CAPITAL OF RS.2,50,000/ - AND SHARE PREMIUM OF RS.7,50,000/ - DURING THE YEAR UNDER CONSIDERATION FROM M/S. TRIBHUWAN HOUSING LTD. AND GUJARAT CHEM I PLASTO LTD. WE FIND THAT THE LD . AO OBSERVED THAT SINCE THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF ALL THESE TRANSACTIONS TOGETHER WITH CREDITWORTHINESS OF THE SHAREHOLDERS BEYOND DOUBT, THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM IN THE SUM OF RS.10 LAKHS REQUIRES TO BE ADD ED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. THIS ADDITION WAS UPHELD BY THE LD. CIT(A). PARALLELLY, THE LD. AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT VIDE ORDER DATED 18/03/2013 ON THE SAID CASH CREDIT ADDITION OF RS.10 LAKHS. THE PENALTY LEVIED WAS RS.3,65,925/ - . THE LEVY OF PENALTY BY THE LD. AO WAS UPHELD BY THE LD. CIT(A). ITA NO. 5861/MUM/2018 M/S. ADCON TECHNOLOGIES LTD., 3 3.1. WE FIND THAT THE LD. AR AT THE TIME OF HEARING PLACED ON RECORD THE COPY OF THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.5403/MUM/2011 FOR A.Y.2005 - 06 DATED 07/12/2018 WHEREIN THE ISSUE OF QUANTUM ADDITION OF RS.10 LAKHS TOWARDS UNEXPLAINED CASH CREDIT WAS REMANDED BACK TO THE FILE OF THE LD. AO FOR FRESH ADJUDICATION AND ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY THE LD. AO DOES NOT SURVIVE. WE FIND TH AT SINCE THE QUANTUM HAS BEEN REMANDED BACK TO THE FILE OF THE LD. AO FOR FRESH ADJUDICATION, IT WILL BE PREMATURE TO DECIDE THE VALIDITY OF LEVY OF PENALTY AT THIS STAGE AND ACCORDINGLY, WE HOLD THAT PENALTY U/S.271(1)(C) OF THE ACT WOULD NOT SURVIVE AT T HIS STAGE. HOWEVER, THE LD. AO IS AT LIBERTY TO RE - INITIATE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AT THE TIME OF COMPLETION OF FRESH ASSESSMENT , IF HE SO DESIRES. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 / 01 /2020 SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 01 / 2020 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//