ACIT,CC38, MUMBAI V. RISK DESIGN & ADVERTISING LTD., MUMBAI

ITA 5984/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3081 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: DR P DANIEL; S M MAKHIJA
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA , ACCOUNTANT MEMBER . ITA. NO. 5984 / M UM /20 1 3 (ASSESSMENT YEAR: 2 00 9 - 1 0 ) AC IT , CC - 38, MUMBAI APPELLANT VS. M/S. RISK DESIGN & ADVERTISING LTD., PLOT NO.8, SHAH INDUSTRIAL ESTATE, OFF. VEERA DESAI ROAD, ANDHERI (W), MUMBAI 400 610 RESPONDENT PAN: AA CC D0946R / BY APPELLANT : SHRI JEETENDRA KUMAR , D.R. / BY RESPONDENT : DR. P. DANIEL & SHRI S. M. MAKHIJA , A .R. / DATE OF HEARING : 2 4 . 0 9 .2015 / DATE OF PRONOUNCEMENT : 23 . 1 0 .201 5 I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 2 O RDER PER SHAILENDRA KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 4 1 , MUMBAI , DATED 31 . 07 . 20 1 3 FOR A.Y. 200 9 - 1 0 ON FOLLOWING GROUND: ( 1 ) . WHETHER O N THE FACTS AND CIRCUMSTANCES OF CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7,20,20,026/ - AS UNEXPLAINED CASH CREDIT WHICH WAS ACCOUNTED AS SHARE APPLICATION MONEY BY THE ASSESSEE WHILE THE ASSESSEE HAS FAILED TO PROVE THAT HOW HE RECEIVED SUCH SHARE APPLICATION MONEY AND HAS BOOKED THE SAME ONLY BY WAY BOOK ENTRY. 2. ASSESSEE COMPANY IS ENGAGED IN BUSINESS OF PRINTING AND DESIGNING PROMOTIONAL MATERIAL FOR FILM INDUSTRY, PRODUCTION AND DISTRIBUTION OF FILMS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME F OR ASSESSMENT YEAR UNDER CONSIDERATION ON 30.09.2009 DECLARING LOSS OF RS.2,13,71,520/ - . ASSESSMENT WAS PROCESSED U/S.143(1) OF THE ACT. THE CASE OF ASSESSEE WAS SELECTED UNDER SCRUTINY AND AFTER CONSIDERING THE SUBMISSIONS ON BEHALF OF ASSESSEE, ASSESSM ENT WAS COMPLETED BY ASSESSING OFFICER U/S.143(3) VIDE ORDER PASSED ON 30.12.2011 DETERMINING TOTAL INCOME OF ASSESSEE COMPANY AT RS.21,84,85,920/ - AFTER MAKING VARIOUS ADDITIONS AND DISALLOWANCES. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 3 AND HAVING CONSIDERED THE SAME, CI T(A) GRANTED RELIEF TO ASSESSEE, SAME HAS BEEN APPEARED ON BEHALF OF REVENUE AS STATED IN HIS GRAND APPEAL ON THE OTHER HAND LD. AUTHORISED REPRESENTATIVE SUPPLIED THE ORDER OF CIT (A) 2.3. WE FIND THAT ASSESSING OFFICER HAS MADE ADDITION OF RS.7,20,20,026/ - AS UNEXPLAINED CASH CREDIT BY TREATING SHARE APPLICATION MONEY AS NOT GENUINE. IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO SUBMIT THE PROOF OF SHARE APPLICATION MONEY RECEIVED AND TO SUBMIT EVIDENCES TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PERSONS GIVING SHARE APPLICATION MONEY. ASSESSEE WAS ALSO ASKED TO SUBMIT COMPLETE DOCUMENTS STARTING FROM SHARE ADVERTISE MENT INVITING SHARE APPLICATION TILL THE INTIMATION TO ROC FOR THIS PURPOSE. ASSESSEE FURNISHED ONLY NAME AND ADDRESS ALONG WITH PAN OF PERSONS FROM WHOM SHARE APPLICATION MONEY OF RS.7,20,20,026/ - HAD BEEN RECEIVED. ASSESSING OFFICER OBSERVED THAT ASSES SEE HAD NEITHER SUBMITTED CONFIRMATIONS NOR TRIED TO ESTABLISH THE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CONCERNED PARTIES. ACCORDINGLY, HE HELD THAT ASSESSEE HAS NOT DISCHARGED ITS ONUS TO ESTABLISH THAT IT WAS A GENUINE TRANSACTION. ASS ESSING OFFICER, THUS, TREATED THE SUM OF RS.7,20,20,026/ - AS UNEXPLAINED CASH CREDIT APPEARING IN BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE COMPANY AND ADDED THE SAME U/S.68 OF THE ACT . I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 4 IN APPEAL CIT(A) OBSERVED THAT SHARE APPLICATION MONEY OF RS.3,64,00,00 0/ - WAS RECEIVED FROM M/S. SONATA REALTY PVT. LTD. (A RELATED ENTITY) DURING A.Y. UNDER CONSIDERATION. ASSESSEE FURNISHED ADDRESS AND PAN OF THIS PARTY. IN HIS REMAND REPORT, ASSESSING OFFICER HAS NOT DRAWN ANY ADVERSE INFERENCE WITH REGARDS TO GENUINENE SS OF THIS TRANSACTION. IN THIS REGARD, ASSESSEE VIDE LETTER DATED 15.07.2013 SUBMITTED THAT ASSESSING OFFICER HAS CROSS VERIFIED THE TRANSACTION FROM THE RECORDS OF M/S. SONATA REALTY PVT. LTD., WHICH IS ALSO ASSESSED TO TAX WITH HIM. THUS, ADDITION OF RS.3,64,00,000/ - MADE BY ASSESSING OFFICER U/S.68 ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/S. SONATA REALTY PVT. LTD. WAS RIGHTLY DELETED BY CIT(A). THIS FACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. WITH REGARD TO THE SHARE APPLICATION MONEY RECEIVED FROM MR. CHIRAG DROLIA (RS.L, 0 L, 00 , 000 / - ), MR. RAJESH D ROLIA (RS.50, 00 , 000 / - ), MRS. ANITA RAJESH DROLIA (RS.50, 00,000 / - ) AND MS. AKRUTI D ROLIA (RS.25, 00 , 000 / - ), IT WA S OBSERVED BY CIT(A) THAT THESE AMOUN TS WERE ORIGINALLY PAID BY THESE PERSONS TO ASSESSEE IN A.Y. 2006 - 07. IN THIS CONNECTION, SAID PARTIES SUBMITTED THEIR CONFIRMATIONS TO ASSESSING OFFICER IN RESPONSE TO THE NOTICES U/S.133(6) ISSUED BY HIM IN COURSE OF REMAND PROCEEDINGS. IT WA S STATED BY ASSESSEE IN COURSE OF REMAND PROCEEDINGS THAT ASSESSEE TRANSFERRED THESE AMOUNTS AGGREGATING TO RS.2,26, 00 , 000 / - TO ITS SISTER CONCERN, NAMELY, I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 5 M/S SONATA REALTY PVT. LTD. BY WAY OF CHEQUE IN A.Y.2007 - 0 8 . HOWEVER, IN A.Y. UNDER APPEAL, IT WA S EXPLAINED B Y ASSESSEE THAT M /S . SONATA REALTY PVT. LTD. AGAIN TRANSFERRED THESE AMOUNTS BACK TO ASSESSEE UNDER INSTRUCTIONS FROM CONCERNED PARTIES. ACCORDING TO ASSESSING OFFICER, TRANSFER OF SHARE APPLICATION MONEY IN THE NAMES OF ABOVE PERSONS IN A.Y. UNDER CONSID ERATION WAS MADE BY WAY OF BOOK ENTRY ONLY. 3.1 HAVING CONSIDERED THE R EMAND R EPORT AND REPLY THERETO SUBMITTED BY ASSESSEE , CIT(A) OBSERVED THAT NECESSARY CONFIRMATIONS IN REGARD TO PAYMENT OF SHARE APPLICATION MONEY AGGREGATING TO RS.2,26, 00 , 000 / - HAV E ALREADY BEEN RECEIVED BY ASSESSING OFFICER THEREBY ESTABLISHING THE IDENTITY OF SAID SHARE APPLICANTS, THEIR FINANCIAL CAPACITY AND THE GENUINENESS OF TRANSACTIONS. THE ONUS CAST UP ON THE ASSESSEE IN THIS REGARD , ST OO D DISCHARGED. THE MERE FACT THAT TRAN SFER OF SHARE APPLICATION MONEY TO ASSESSEE HAS NOT TAKEN PLACE BY WAY OF CHEQUE/ CASH BUT BY WAY OF BOOK ADJUSTMENT BETWEEN ASSESSEE AND ITS SISTER CONCERN; M/ S . SONATA REALTY PVT. LTD. MAY NOT BE A VALID GROUND TO SUSTAIN THE ADDITION MADE BY ASSESSING OF FICER IN THIS REGARD ESPECIALLY WHEN THE ABOVE AMOUNTS NOW STAND CREDITED IN BOOKS OF ACCOUNT OF ASSESSEE IN NAMES OF ABOVE PARTIES AND THEIR CONFIRMATIONS ARE ALREADY ON RECORD. UNDER THESE CI R CUMSTANCES, THE ADDITION OF SUMS AGGREGATING TO RS.2,26, 00,000 / - REPRESENTING SHARE APPLICATION MONEY I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 6 RECEIVED FROM THE ABOVE FOUR PARTIES WERE NO LONGER JUSTIFIED AND SAME WAS RIGHTLY DELETED BY CIT(A). 3.2 THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4. AS RE GARDS THE REMAINING SHARE APPLICANTS, ASSESSING OFFICER VIDE HIS R EMAND R EPORT POINTED OUT THAT IN REMAND PROCEEDINGS, ASSESSEE COULD NOT GIVE PAN AND ADDRESS OF M R. H ETAL PAREKH (RS. 7, 00 , 000 / - ) AND MS. KANCHAN SHARMA (RS. 5,00 , 000 / - ), WHILE N O REPLY WAS R ECEIVED FROM M/S. R GV FILMS PVT. LTD. (RS.1,18,20,026/ - ). IN THIS REGARD, IT WAS INFORMED BY HIM THAT ASSESSEE VIDE LETTER DATED 14.06.2013 EXPRESSED ITS INABILITY TO GET CONFIRMATIONS OR DETAILS OF TRANSACTIONS FROM THE ABOVE THREE PARTIES. IT IS ACCORD INGLY URGED THAT ACTION OF ASSESSING OFFICER TO TREAT THE SUMS RECEIVED FROM THESE THREE PARTIES AGGREGATING TO RS.1,30,20,026/ - AS UNDISCLOSED INCOME U/S. 68 DESERVES TO BE UPHELD. 4.2 IN ITS REBUTTAL TO R EMAND R EPORT, ASSESSEE HA D CONTENDED THAT SUCH A DDITION CANNOT BE MADE OR CONFIRMED IN A.Y. UNDER APPEAL, BECAUSE SHA RE APPLICATION MONEY FROM M/ S. RGV FILMS PVT. LTD. WAS RECEIVED IN A.Y. 2006 - 07 WHEREAS MR. HETAL PAREKH AND MS. KANCHAN SHARMA CONTRIBUTED SHARE APPLICATION MONEY IN A.Y. 2008 - 09. I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 7 4.3 IN VIEW OF ABOVE POSITION, CIT(A) AGREED WITH THE PLEA OF ASSESSEE THAT SINCE SAID SUMS WERE CREDITED IN THE BOOKS OF ACCOUNT OF ASSESSEE IN A.YS. 2006 - 07. IN 2008 - 09, THESE CANNOT BE TREATED AS UNEXPLAINED CASH CREDITS U/S. 68 IN A.Y. UNDER CONSIDERATION. ASSESSEE IS AT LIBERTY TO TAKE LEGAL ARGUMENT AT ANY STAGE IN SUPPORT OF HIS CASE EVEN IF HE HAS ADMITTED THE SAME BEFORE ASSESSING OFFICER AS DISCUSSED ABOVE. IN VIEW OF ABOVE, THE ADDITION OF SAID AMOUNTS AGGREGATING TO RS.1,30,20,026/ - COULD NOT BE H ELD AS UNEXPLAINED UNDER THE PROVISIONS OF SECTION 68 OF THE ACT AND SAME WERE RIGHTLY DELETED BY CIT(A) WITH A DIRECTION TO ASSESSING OFFICER TO INITIATE NECESSARY STEPS TO BRING THE RELEVANT AMOUNTS TO TAX U/S. 68 IN RESPECTIVE ASSESSMENT YEARS. SUBJECT TO THIS, GROUND NO. 3 WA S ALLOWED. THIS REASONED FACTUAL AND LEGAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5 . AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 23RD DAY OF OCT O BER , 201 5 . SD/ - SD/ - ( ASHWANI TANEJA ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED 23 / 1 0 /2015 S.K.SINHA I T A NO . 5984 / M UM / 1 3 A.Y. 0 9 - 1 0 [ AC IT VS. RISK DESIGN & ADVERTISING LTD. ] PAGE 8 / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4 . - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , / , ,