ITO, New Delhi V. M/s. Rancure Investment Pvt. Ltd., Delhi

ITA 6099/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6453 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Additional evidence
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACOUNTANT MEMBER ITA NO. 6099/DEL/2013 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD 15(2), VS. M/S RANCURE IN VESTMENTS PVT LTD. ROOM NO. 206-B, CR BUILDING, N-42, BUDH VIHAR, PO OTH IP ESTATE, NEW DELHI-02 KALAN, PHASE-I, DELHI-86 (PAN: AAACR226-A] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. F.R. MEENA, SR. DR RESPONDENT BY : SH. RAJ KUMAR, CA ORDER PER H.S. SIDHU, J.M. 01. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-XVIII, NEW DELHI VIDE ORDER DATED 16.8.2013 WHEREIN HE HAS DELETED THE ADDITION OF RS. 5,20,00,000/- MADE BY T HE AO TO THE RETURNED INCOME OF THE ASSESSEE BY APPLYING THE PRO VISIONS OF SECTION 68 OF THE I.T. ACT, 1961 FOR ALLOTMENT OF SHARES V IDE ORDER DATED 30.12.2011. 02. THE REVENUE HAS ONLY RAISED THE FOLLOWING TWO GRO UNDS BOTH ARE WITH RESPECT TO THE ABOVE SUBJECT MATTER WHICH READ AS U NDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE U/S. 68 OF TH E ACT AMOUNTING TO RS. 2 5,20,00,000/- WITHOUT APPRECIATING THE FACT THAT S HARES APPLICANT COMPANIES DID NOT POSSESS FINANCIAL CAPABILITY AND CREDITWORTHINESS. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FINDINGS OF THE AO CO MING OUT OF ENQUIRIES CONDUCTED DURING THE ASSESSMENT PROCEEDINGS REGARD ING CREDITWORTHINESS OF THE ABOVE SHARE APPLICANTS. 03. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING FINANC ES. FOR THE YEAR UNDER CONSIDERATION, IT FILED ITS RETURN OF INCOME ON 29.9.2009 SHOWING INCOME OF RS. 14,58,068/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, IT WAS FOUND THAT ASSESSEE HAS ALLOTT ED SHARES TO 17 SHARE HOLDERS WHO WERE PRIVATE LIMITED COMPANIES AM OUNTING TO RS. 5.20 CRORES DIVIDED BETWEEN SHARE CAPITAL OF RS. 1. 30 CRORES AND SHARE PREMIUM OF RS. 3.90 CRORES. THE TOTAL SHARE ALLOTT ED TO THE COMPANIES WAS EQUITY SHARE OF RS. 10/- EACH WITH A PREMIUM O F RS. 30 PER SHARE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSES SEE SUBMITTED CONFIRMATION OF THE SHARE HOLDERS, THEIR BANK STATE MENTS, THE INCOME TAX RETURN OF THE COMPANIES, AFFIDAVIT OF THE COMPA NIES AND FORM NO. 2 BEING RETURN OF ALLOTMENT FILED WITH THE REGISTRA R OF COMPANIES FOR ALLOTMENT OF SHARES. THEREFORE, ACCORDING TO ASSE SSEE, IT HAS DISCHARGED INITIAL ONUS CAST UPON HIM. HOWEVER, TH E AO ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE COMPANY WH ICH ASSESSEE DID NOT RESPONDED. THEREFORE, THE AO ISSUED NOTICE U/ S. 133(6) TO ALL 17 3 PARTIES, WHICH WERE REPLIED BY THEM TO THE AO BY S UBMITTING CONFIRMATIONS, INCOME TAX RETURNS, BANK STATEMENTS, BALANCE SHEETS AND CERTIFICATE OF INCORPORATION OF THOSE COMPANIE S. HOWEVER, THE AO ON SCRUTINY OF THE BANK ACCOUNTS OF THE SHARE HOLD ERS NOTED THAT BEFORE THE CHEQUES ISSUED FOR SHARE APPLICATION MON EY BY THE COMPANIES, THERE IS A DEPOSIT OF CASH IN THE BANK ACCOUNT OF THE SHARE HOLDERS AND FURTHER THE ANNUAL REPORTS OF THESE COM PANIES WAS SHOWING NOMINAL INCOME OF RS. 8,000/- TO RS. 10,000 /- RANGING UP TO FEW LAKHS OF RUPEES. THEREFORE, HE DOUBTED THE C REDITWORTHINESS OF THE COMPANIES AND GENUINENESS OF THE TRANSACTIONS. THE RETURN OF INCOME WAS ASSESSED U/S. 143(3) OF THE I.T. ACT A T RS. 14,58,068/- TO RS. 5,34,58,068/- VIDE ORDER DATED 30.12.2011. TH E ASSESSEE CHALLENGED THE ORDER BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO DELETED THE ADDITION AND, THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 04. LD. DR SUBMITTED THAT THE AO HAS MADE THE ADDITION AS IMMEDIATELY BEFORE ISSUING OF THE CHEQUES THE MONEY IS DEPOSITE D IN THE BANK ACCOUNT OF THE SHAREHOLDERS AND THEY ARE HAVING VER Y LOW INCOME. HE VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 05. ON THE OTHER HAND, LD. AR OF THE SUBMITTED THAT AS SESSEE RECEIVED SHARE CAPITAL + SHARE PREMIUM OF RS. 5.20 CRORES DU RING THE YEAR FROM 17 PARTIES FOR WHICH ASSESSEE FURNISHED DUR ING ASSESSMENT PROCEEDINGS BANK STATEMENT OF PARTIES, INCOME T AX RETURNS OF PARTIES 4 , CONFIRMATIONS , FORM - 2 BEING RETURN OF ALLOTMEN T BEING FILED TO ROC AND AFFIDAVITS OF PARTIES . HE FURTHER SUBMITTED TH AT AO ISSUED NOTICES U/S 133(6) TO ALL 17 PARTIES AND NOTICES STOOD SE RVED, POSITIVE REPLIES RECEIVED CONSISTING OF CONFIRMATION, ITR, PAN COPY, BANK A/C STATEMENT, BALANCE SHEETS, CERTIFICATE OF INCORPORATION, ETC. HE FURTHER SUBMITTED THAT AS PER THE BALANCE SHEETS, SUFFICIENT FUNDS WE RE AVAILABLE WITH THE DEPOSITORS. THE AO CALLED THE BANK STATEMENTS OF SU CH THIRD PARTIES WHO HAD GIVEN THE FUNDS TO SUCH SHAREHOLDERS WHICH FUNDS WERE RECEIVED BY THE ASSESSEE AS SHARE CAPITAL / PREMIUM . SUCH INFORMATION WAS CALLED FOR ONLY IN RESPECT OF SIX PARTIES OUT O F TOTAL 17 PARTIES AS PER DETAILS ON PG. 4 OF THE AO, AND THAT TOO IN RESPECT OF PART AMOUNT. FROM SUCH BANK STATEMENTS, THE AO HELD THAT CASH WAS DEP OSITED IN ONE BANK ACCOUNT OF SOME ENTITY, THEN CHEQUE WAS ISSUED TO SECOND PARTY, THE SAID SECOND PARTY ISSUED CHEQUE TO THE SHAREHOL DER AND THE SHAREHOLDER ISSUED THE SAID AMOUNT TO ASSESSEE AS S HARE CAPITAL / PREMIUM. ,. HE REFERRED TO THE TABLE ON PG. 4 OF TH E ASSESSMENT ORDER. HE SUBMITTED THAT IN APPEAL BEFORE CIT (A), ADDITIO NAL EVIDENCES WERE GIVEN U/R 46A WHICH INCLUDED CHART-SHOWING AVAILABI LITY OF FUNDS WITH SUCH COMPANIES VIS-A-VIS INVESTMENTS AND ORDERS U/S 143(3) FOR SUCH COMPANIES, THUS SHOWING THE CREDITWORTHINESS, WHICH REMAINED UN- REBUTTED, BY THE AO DURING THE COURSE OF REMAND PRO CEEDINGS. HENCE, WHEN NOTICES U/S 133(6) STOOD SERVED AND WERE RESPO NDED POSITIVELY BY THE SHAREHOLDERS, WHEREIN NO DISCREPANCY WAS POINTE D OUT, THE ONUS OF THE ASSESSEE STANDS FULLY DISCHARGED. HE THEREFORE SUBMITTED THAT, ON 5 THE BASIS OF ENQUIRY DONE AT ASSTT. STAGE AS WELL A S AT APPEAL'S STAGE, ALL THE INGREDIENTS OF SEC. 68 STANDS FULLY SATISFIED. HE FURTHER SUBMITTED THAT WHEN THERE IS NO NEGATIVE INFORMATION ON RECOR D, NO NOTICE U/S. 133 (6) RECEIVED BACK UN-SERVED, ALL NOTICES U/S. 1 33 (6) STOOD POSITIVELY RESPONDED PROVIDING THE REQUISITE INFORMATION(S), N O DISCREPANCY POINTED OUT IN SUCH DOCUMENTS, THE ONUS OF THE ASSE SSEE STANDS DISCHARGED AND THERE REMAINS NO CAUSE FOR ASKING TH E ASSESSEE TO PRODUCE THE PARTIES. UNDER THESE FACTS, NON-PRODUCT ION OF DIRECTOR IS AT THE ASSTT. STAGE CANNOT BE VIEWED ADVERSELY. HE FUR THER SUBMITTED THAT THE AO ALSO NEVER ADVENTURED, TO DIRECTLY CALL SUCH PARTIES. HE FURTHER SUBMITTED THAT IT IS ALSO NOT A CASE, WHERE THERE I S A FINDING OR MATERIAL TO SUGGEST THAT THE MONEY HAS COME BACK TO ASSESSEE . HE FURTHER SUBMITTED THAT THE INFORMATION COLLECTED BY THE AO IN RESPECT OF THE SOURCE OF THE SOURCE IS ONLY FOR 6 PARTIES OUT OF T OTAL 17 PARTIES AND ON THE BASIS OF 6 PARTIES, CLAIM FOR TOTAL 17 PARTIES CANNOT BE REJECTED. FURTHER, THE AMOUNT, AS PER THE AO WHICH WAS DEPOSI TED IN CASH HAS BEEN QUANTIFIED BY THE AO ONLY RS.1,10,50,000/- WHI LE, THE AMOUNT UNDER CONSIDERATION IS RS. 5,20,00,000/- THE AO CAN NOT TAKE A ADVERSE VIEW FOR TOTAL RS. 5,20,00,000/- . HENCE, HE SUBMIT TED THAT THERE COULD NOT BE ANY DISPUTE THAT THE SOURCE OF THE SOURCE OF THE 3RD 14TH EARLIER STAGE CANNOT BE EXAMINED AND NO ADVERSE VIEW FOR TH E SAME CAN BE TAKEN. HE FURTHER RELIED UP ON THE DECISION OF HON DELHI HIGH COURT IN CIT VS. VALUE CAPITAL SERVICES LTD. 307ITR 334 (DEL .) AMONGST OTHER. 6 06. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. IT IS EVIDENT TH AT ASSESSEE HAS SUBMITTED THE CONFIRMATIONS, COPIES OF INCOME TAX RETURNS, BANK STATEMENTS AND AFFIDAVIT OF ALL THE PARTIES, WHICH ARE LISTED IN FORM NO. 2, FILED WITH THE REGISTRAR OF COMPANIES, BEFORE T HE AO, THEREFORE, HE HAS DISCHARGED INITIAL BURDEN CAST UPON THE ASSESSE E, AS PER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT, 1961. AS ASSESSEE HAS EXPRESSED ITS INABILITY TO PRODUCE THE PARTIES, THE AO ISSUED NOTICE U/S. 133(6) TO ALL THE 17 SHAREHOLDERS WHO RESPONDED BY CONFIRMING THE TRANSACTIONS, THEREFORE NOW IT CANNOT BE FOUND FAULT WITH THE ASS ESSEE FOR NON- PRODUCTION OF THE CREDITORS. LD. AO HAD TWO OPTI ONS OF VERIFYING THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE BY EXERCIS ING POWERS U/S 131 OR 133(6) OF THE ACT AND HE HAS CHOSEN PROVISION OF S ECTION 133(6) OF THE ACT, WHICH IS COMPLIED WITH BY THE CREDITORS. THE M AIN REASON FOR MAKING THE ADDITION WAS THAT THE SHAREHOLDERS HAVE DEPOSITED CASH IN SOME OTHER BANK ACCOUNT , WHICH HAVE COME TO THE DE POSITORS WITH BANKING CHANNEL, AND THEN TRANSFERRED TO ASSESSEE. THEREFORE, THE GENUINENESS OF THE TRANSACTIONS WAS DOUBTED. THE AS SESSEE HAS PRODUCED BEFORE THE LD. CIT(A) A CHART SHOWING THE AVAILABILITY OF FUNDS WITH THESE COMPANIES AND ALSO THESE COMPANIES WERE ASSESSED U/S. 143(3) OF THE I.T. ACT. IN VIEW OF THIS, LD. CIT(A) HAS CORRECTLY HELD THAT MERELY BECAUSE THE CASH WAS DEPOSITED IN THE B ANK ACCOUNT OF THE OTHER PARTIES/ SHAREHOLDERS DATE PRIOR TO THE ISSUE OF CHEQUE TO THE ASSESSEE COMPANY, IT CANNOT BE SAID THAT THEY ARE N OT CREDITWORTHY. 7 THE CREDITWORTHINESS NEITHER GETS ENHANCED NOR GETS REDUCED BY THE SIMPLE REASON OF DEPOSITING CASH INTO THE BANK ACCO UNT BEFORE ISSUE OF CHEQUES. IN CASE OF REGULAR ASSESSES WHO ARE ASSESS ED U/S. 143(3) OF THE I.T. ACT, IT IS ALSO NOT THE CASE OF THE AO THAT CASH WAS NOT AVAILABLE WITH THESE COMPANIES AND, THEREFORE, DEPO SIT MADE BY THESE COMPANIES ARE NOT OUT OF THEIR OWN FUNDS. IN THE AB SENCE OF SUCH FINDING BACKED WITH THE EVIDENCE, WE FIND NO INFIRM ITY IN THE ORDER OF THE LD. CIT(A) WITH RESPECT TO HIS DECISION. FURTH ER, MERELY BECAUSE THOSE COMPANIES WHO ARE HAVING INCOME OF RS. 8,000/ - TO RS. 10,000/- AS PER THEIR RETURNS OF INCOME AND WHICH GOES UP TO FEW LACS OF RUPEES, THE AO HAD DOUBTED THE CREDITWORTHINESS OF THESE CO MPANIES. HOWEVER, WHEN THE ASSESSEE HAS SUBMITTED DETAILED C HART OF FUNDS AVAILABLE WITH THESE COMPANIES, IT CANNOT BE SAID N OT CREDITWORTHY MERELY BECAUSE RETURN OF INCOME SHOWS SMALL INCOME. THE CREDITWORTHINESS IS FURTHER GOVERNED BY THE AMOUNT OF INVESTMENTS AND THE SIZE OF THE BALANCE SHEETS OF THOSE COMPANIES. IN THE PRESENT CASE, THE ASSESSEE HAS SHOWN THAT THESE COMPANIES WERE HA VING CAPACITY TO DEPOSIT MONEY WITH THE APPELLANT. IN THE PRESENT CA SE, THE AO HAS NOT POINTED OUT ANY EVIDENCE WHICH SHOWS THAT AMOUNT IN VESTED BY THESE COMPANIES WERE NOT OWNED BY THESE COMPANIES AND THE MONEY BELONG TO THE ASSESSEE. NEEDLESS TO SAY THAT WHEN THE ASSE SSEE HAS FURNISHED THE CONFIRMATIONS, INCOME TAX RETURNS, BANK STATEME NTS OF BORROWERS, IT CANNOT BE SAID, WITHOUT BRINING INTO ADDITIONAL EVIDENCES WHICH EVEN REMOTELY SUGGESTS THAT THE TRANSACTIONS ARE INGENUI NE, LD. AO CANNOT 8 SAY THAT THE AMOUNT INVESTED BY THE DEPOSITORS IS I NCOME OF THE ASSESSEE UNDER SECTION 68 OF THE I.T. ACT. FURTHER, THE LD DR COULD NOT POINT OUT BEFORE US AND INFIRMITY IN THE ORDER OF THE LD CIT (A) IN DELETING THE ADDITION. FURTHER, WE ALSO DO NOT F IND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIONS O F RS. 5.20 CRORES WITH RESPECT TO 17 COMPANIES TO WHOM THE SHARE WERE ISS UED. IN THE RESULT, BOTH THE GROUNDS OF APPEAL OF THE REVENUE A RE DISMISSED. 07. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/12/2016 . SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 30/12/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR