ITO, Muzaffarnagar V. M/s G.S> Pharmaceuticals Pvt. Ltd., Muzaffarnagar

ITA 6146/DEL/2015

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9297 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 18-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SAMPATH SH V RAJ KUMAR
• Keywords: Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.- 6146 /DEL/ 2015 (ASSESSMENT YEAR: 2011-12) ITO, WARD 1, MUZAFFARNAGAR VS. GS PHARMACEUTICALS PRIVATE LIMITED, A-11, MEERUT ROAD, MUZAFFARNAGAR. PAN NO. AACCG5549B APPELLANT RESPONDENT ASSESSEE BY SH. K SAMPATH, ADVOCATE SH. V RAJKUMAR, ADVOCATE REVENUE BY SH. KANV BALI, SR. DR DATE OF HEARING: 4/1/2021. PRONOUNCEMENT ON 4/1/2021. ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDER DATED 14/08/2015 IN APPEAL N O. 73/14- 15/MZR PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- MUZAFFARNAGAR (LD. CIT(A)) IN THE CASE OF M/S GS PHARMACEUTICALS PRIVATE LIMITED (THE ASSESSEE), FOR THE ASSESSMEN T YEAR 2011-12, REVENUE PREFERRED THIS APPEAL CHALLENGING THE DELET ION OF RS. 2 CRORES ADDED BY THE LEARNED ASSESSING OFFICER UNDER SECTIO N 68 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AND RS. 5 LACS UNDER SECTION 35AC OF THE ACT. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY DERIVING INCOME FROM MANUFACTURE AND SALE O F PHARMACEUTICAL PRODUCTS. FOR THE ASSESSMENT YEAR 2011-12 THEY HAVE FILED THE RETURN OF INCOME ON 30/9/2011 DECLARING AN INCOME OF RS. 93, 92, 700/-. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETE BY ORDER DATED 31/3/2014 AT AN INCOME OF RS. 2, 19, 74, 866/ -BY MAKING ADDITION OF RS. 2 CRORES UNDER SECTION 68 OF THE ACT, RS. 1, 36, 163/- BY DISALLOWING THE BENEFIT OF SECTION 80 IC OF THE ACT AND RS. 5, 11, 401/- UNDER SECTION 35 AC OF THE ACT. 3. IN THE APPEAL PREFERRED BY THE ASSESSEE, BY WAY OF IMPUGNED ORDER, LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE BY DELETING THE ADDITION OF RS. 2 CRORES MADE UNDER SECTION 68 OF THE ACT AN D ALSO RS. 5 LACS UNDER SECTION 35AC OF THE ACT. HENCE THE REVENUE IS AGGRIEVED BY SUCH AN ACTION OF THE LD. CIT(A) AND PREFERRED THIS APPE AL. 4. INSOFAR AS THE ADDITION OF RS. 2 CRORES UNDER S ECTION 68 OF THE ACT IS CONCERNED, ACCORDING TO THE LEARNED ASSESSING OF FICER, THOUGH THE ASSESSEE WAS REQUIRED TO SUBMIT DOCUMENTARY EVIDENC E IN RESPECT OF PROOF OF SHARE APPLICATION MONEY IN RELATION TO FOU R ENTITIES, NAMELY, POPULAR MERCANTILE, AXIOM COMMODE, PLAZMATRADECAND M/S SALASARTRACOMAND THOUGH THE ASSESSEE SUBMITTED CONF ORMATIONS, COPY OF BANK ACCOUNT AND COPY OF ITRS IN RESPECT OF IND IVIDUALS AND HUFS, BUT NO CONFIRMATION AND COPY OF BALANCE SHEET WAS S UBMITTED IN RESPECT OF SUCH COMPANIES. DURING THE COURSE OF THE FIRST APPELLATE PROCEEDINGS, ASSESSEE SUBMITTED CERTAIN DOCUMENTS B Y WAY OF ADDITIONAL EVIDENCE AND SUCH DOCUMENTS WERE SENT TO THE LEARNED 3 ASSESSING OFFICER FOR HIS COMMENTS. SINCE THE LEARN ED ASSESSING OFFICER EXPRESSED HIS DIFFICULTY TO OPPOSE THE RECEIPT OF A DDITIONAL EVIDENCE, LD. CIT(A) RECEIVED THE SAME. 5. IT COULD BE SEEN FROM THE IMPUGNED ORDER THAT DU RING THE REMANDED PROCEEDINGS, AT THE INSTANCE OF THE ASSESS EE, THE ASSESSING OFFICER VERIFIED AND FOUND THAT THE COPIES OF CONFO RMATIONS WHICH THE ASSESSEE SUBMITTED AS ADDITIONAL EVIDENCE DURING TH E FIRST APPELLATE PROCEEDINGS, WERE FOUND TO HAVE BEEN SUBMITTED BY T HE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. LEARNED ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE SPECIFICALLY INDICATED TOWARDS TH E DESIRE OF THE IMPUGNED SHAREHOLDERS RANGING FROM MORE THAN RS. 12 CRORES TO RS. 17 CRORES IN ORDER TO PROVE THEIR CAPACITY AND ON A PE R USUAL OF THE BALANCE SHEETS, LEARNED ASSESSING OFFICER FOUND THAT THE RE ASONS TO THE STATED EXTENT WERE BEING DEPICTED IN THE BALANCE SHEET OF THE SAID ENTITIES FORWARDED BY WAY OF ADDITIONAL EVIDENCE TO HIM AND IT WAS A VERIFIABLE FACT FROM THE RECORD DURING THE ASSESSMENT PROCEEDI NGS AND THE BANK STATEMENTS OF A FEW DAYS WERE PROVIDED. 6. INSOFAR AS THE IDENTITY, CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS IS CONCERNE D, LEARNED ASSESSING OFFICER FOUND THAT THE SHARE SUBSCRIBERS ONE IDENTI FIABLE ENTITIES AS THEY ARE ASSESSEE TO TAX AND THE TRANSACTIONS WERE GENUI NE AS THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH UNDISPUTED B ANKING CHANNELS, WHICH SHOWS REGULAR INFLOW AND OUTFLOW OF SUBSTANTI AL MONEY IN THE INVESTOR COMPANIES BANK ACCOUNT; THAT NOT IN A SIN GLE CASE, CASH HAS BEEN DEPOSITED PRIOR TO THE ISSUE OF CHEQUES TO THE ASSESSEE FOR 4 INVESTMENT IN SHARES APPLICATION MONEY; AND THAT TH E ASSESSEE HAD FURNISHED COPIES OF ITRS, PAN CARD, BALANCE SHEETS , COPIES OF CONFIRMATION AND A PIECE OF RANK ACCOUNTS. 7. IT COULD BE SEEN FROM THE IMPUGNED ORDER THAT TH E LEARNED ASSESSING OFFICER, IN THE REMAND REPORT, AS A MATTE R OF FACT, FOUND THAT THE RESERVES OF THE IMPUGNED SHARE APPLICANTS RANGE FROM MORE THAN RS. 12 CRORES TO RS. 17 CRORES. LD. CIT(A), ON A PE RUSAL OF THE BALANCE SHEETS OF THE INVESTOR COMPANIES FOUND THAT THE COM PANIES HAVING SUBSTANTIAL FINANCES AT THEIR COMMAND AND AS SUCH T HESE COMPANIES OR ENTITIES OF MEANS AND THE LEARNED ASSESSING OFFICER COULD NOT CONTROVERT THE DOCUMENTARY EVIDENCES PERMITTED BY THE ASSESSEE . WHILE PLACING RELIANCE ON THE DECISION OF THE HONBLE ALLAHABAD H IGH COURT IN THE CASE OF CIT, MEERUT VS. NAV BHARAT DUPLEX LTD IN ITA NO. 279/2010 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. M/S CREATIVE WORLD TELEFILMS LTD, LD. CIT(A) RETURNED A FACT-FINDING THAT THE ADDITION UNDER SECTION 68 OF THE ACT IS NOT JUSTIFI ED AND DELETED THE SAME. 8. NONE OF THESE OBSERVATIONS AND FINDINGS OF THE L D. CIT(A) COULD BE CONTROVERTED BEFORE US AND AS A MATTER OF FACT T HE REMAND REPORT SUBMITTED BY THE LEARNED ASSESSING OFFICER CLINCHES THE ISSUE THAT THERE IS NO DISPUTE IN RESPECT OF THE IDENTITY AND CREDIT WORTHINESS OF THE SHARE APPLICANTS NOT ABOUT THE GENUINENESS OF THE TRANSAC TIONS. THE FINDING OF FACTS AND THE APPLICATION OF LAW BY THE LD. CIT(A) DO NOT WARRANT ANY INTERFERENCE AT THE END OF THIS TRIBUNAL. WE THEREF ORE, UPHOLD THE SAME AND DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. 5 9. NOW COMING TO THE ADDITION OF RS. 5, 11, 401/-B EING THE DISALLOWANCE OF EXPENSES SHOWN UNDER THE HEAD DONA TION, IT COMPRISES OF 2 AMOUNTS, NAMELY, RS. 5 LACS PAID TO SHIRDI SAIBABASANSTHAN AND A RS. 11, 401/-PAID TO OTHER LO CAL ORGANISATIONS. ON A PERUSAL OF THE REMAND REPORT OF THE LEARNED AS SESSING OFFICER AND THE REJOINDER OF THE ASSESSEE IN THE LIGHT OF THE S UBMISSIONS MADE BY THE ASSESSEE, LD. CIT(A) OBSERVED THAT THE COPY OF DONA TION ACCOUNT AND THE PHOTOSTAT COPY OF THE CHEQUE DATED 13/10/2010 TO A SUM OF RS. 5 LACS ISSUED TO SAI BABA SANSTHAN TRUST, SHIRDI AND INFOR MATION REGARDING DONATION BEING 100% EXEMPT UNDER SECTION 35AC OF TH E ACT, THE SAME IS ALLOWABLE AS PER LAW AND ACCORDINGLY DELETED THE SA ME. LD. CIT(A), HOWEVER, CONFIRMED THE DISALLOWANCE OF RS. 11, 401/ -. INSOFAR AS THE DELETION OF RS. 5 LACS DISALLOWANCE IS CONCERNED, N OTHING CONTRARY IS BROUGHT TO OUR NOTICE TO TAKE A DIFFERENT VIEW FROM THE VIEW TAKEN BY THE LD. CIT(A). WE THEREFORE DECLINE TO INTERFERE W ITH SUCH A FINDING OF THE LD. CIT(A) AND DISMISS GROUND NO. 2. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTE R THE CONCLUSION OF THE HEARING IN THE VIRTUAL COURT ON 4 /1/2021. SD/- SD/- (G.S. PANNU) (K. NARSIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 4/1/2021. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY 6 ASSISTANT REGISTRAR ITAT NEW DELHI