Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 74793 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-01-2014
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2009-2010
Appeal Filed On
11-06-2013
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAI NI) ITA NO. 619/JP/2013 ASSESSMENT YEAR : 2009-10 PAN: AAFCA 9416 Q M/S. ARL INFRATECH LTD. VS. THE ACIT A-27, 13-A, KANTI CHANDRA ROAD CIRCLE- 3 JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SVS. N.M. RANKA, AASHISH SHARM A & N.K. JAIN DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 22-01-2014 DATE OF PRONOUNCEMENT: 24 -01-2014 ORDER PER HARI OM MARATHA, JM:- THIS APPEAL OF THE ASSESSEE PERTAINING TO ASSESS MENT YEAR 2009-10 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I, JA IPUR DATED 07-05-2013. 2.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME (ROI) FOR THE ASSESSMENT YEAR 2009-10 DEC LARING TOTAL INCOME OF RS. 7,54,65,640/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 (THE ACT FOR SHORT) ON 29-12-2011 AT A TOTAL INCOME OF RS. 10,04,65,640/-. IN THIS APPEAL, THE ASSESSEE HAS RA ISED FOLLOWING GROUNDS. 2 1. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERR ED IN HOLDING REMITTANCE OF RS. 1 CRORE BY M/S. MAA SARVESHWARI ( INDIA) LTD., DELHI FOR SHARE APPLICATION, AS UNEXPLAINED AND INC OME U/S. 68 OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPAN Y WAS INCORPORATED ON 14.5.1981, IS IN EXISTENCE TILL DAT E; HAD PAN; WAS REGULARLY FILING RETURNS OF INCOME AND ASSESSED ; HAD BANK ACCOUNT AND REMITTED THROUGH BANKING CHANNEL; HAD C ONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OF FICER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISSUED SH ARE CERTIFICATES WHEREBY IDENTITY, GENUINENESS AND CREDIT WORTHINESS WAS FULLY ESTABLISHED. 1.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRAWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND I.P. ADDRESS. 1.2. THAT SUMMONS HAVING BEEN ALSO SERVED BY THE ASSISTA NT COMMISSIONER OF INCOME-TAX, NEW DELHI, NON-APPEARAN CE COULD NOT BE USED ADVERSELY AGAINST THE APPELLANT. 2. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN HOLDING REMITTANCE OF RS. 10 LACS BY M/S. SKY WEB (INDIA) L TD., DELHI FOR SHARE APPLICATION AS UNEXPLAINED AND INCOME U/S . 68 OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPANY WAS INCORPORATED ON 6.8.1997, IS IN EXISTENCE TILL DATE ; HAD PAN; WAS REGULARLY FILING RETURNS OF INCOME AND ASSESSED; HAD BANK ACCOUNT AND REMITTED THROUGH BANKING CHANNEL; HAD C ONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OF FICER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISSUED SH ARE CERTIFICATES WHEREBY IDENTITY, GENUINENESS AND CREDIT WORTHINESS WAS FULLY ESTABLISHED. 2.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRAWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND I.P. ADDRESS AND CREDIT BALANCE IN THE BANK ACCOUNT OF THE APPLICANT BEING LOW. 2.2. THAT SUMMONS HAVING BEEN ALSO SERVED BY THE ASSISTA NT COMMISSIONER OF INCOME-TAX, NEW DELHI, NON-APPEARAN CE COULD NOT BE USED ADVERSELY AGAINST THE APPELLANT. 3. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN HOLDING REMITTANCE OF RS. 25 LACS BY M/S. RISHI LEASING LIM ITED, DELHI, FOR SHARE APPLICATION, AS UNEXPLAINED AND INCOME U/ S. 68 OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPANY WAS INCORPORATED ON 23.10.1986, IS IN EXISTENCE TILL DATE; HAD PAN; WAS 3 REGULARLY FILING RETURNS OF INCOME AND ASSESSEED; HAD BANK ACCOUNT AND REMITTED THROUGH BANKING CHANNEL; HAD CONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OFFICER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISSUED SHARE CERTIFICATES WHE REBY IDENTITY, GENUINENESS AND CREDIT WORTHINESS WAS FULLY ESTABLI SHED. 3.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRAWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND I.P. ADDRESS, NON-FILING OF AUDIT R EPORT AND OPENING BALANCE IN BANK ACCOUNT BEING ZERO. 3.2. THAT RETURN OF SUMMONS BY THE ASSI STANT COMMISSIONER OF INCOME-TAX, NEW DELHI WITH THE REMA RK 'LEFT' COULD NOT BE USED ADVERSELY AGAINST THE APPELLANT. 4. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN HOLDING REMITTANCE OF RS. 40 LACS BY M/S. GHACHAN ALLOYS PV T.LTD., DELHI FOR SHARE APPLICATION, AS UNEXPLAINED AND INC OMEU/S.68 OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPANY W AS INCORPORATED ON 11.9.1996, IS IN EXISTENCE TILL D ATE; HAD PAN; WAS REGULARLY FILING RETURNS OF INCOME AND ASSESSED; HA D BANK ACCOUNT AND REMITTED THROUGH BANKING CHANNEL; HAD CONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OFFI CER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISSUED SHAR E CERTIFICATES WHEREBY IDENTITY, GENUINENESS AND CREDITWORTHINESS WAS FULLY ESTABLISHED. 4.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRAWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND DIFFERENT ADDRESSES AND I.P. ADDRES S ETC.. 4.2. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED WH EN SUMMONS WAS SERVED BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, NEW DELHI, INSPECTOR FOUND THE PLACE AS WELL AS THE OWNER ADMITTING RENTED TO SHRI RAJNEESH JAIN. 5. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN HOLDING REMITTANCE OF RS. 25 LACS BY M/S. NATRAJ AGROTECH P VT.LTD., DELHI FOR SHARE APPLICATION, AS UNEXPLAINED AND INCOMEU/S .68OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPANY WAS INCORPORATED ON 24.9.2008, IS IN EXISTENCE TILL D ATE; HAD PAN; WAS REGULARLY FILING RETURNS OF INCOME AND ASSESSED; HA D BANK ACCOUNT AND REMITTED THROUGH BANKING CHANNEL; HAD CONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OFFI CER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISSUED SHAR E CERTIFICATES 4 WHEREBY IDENTITY, GENUINENESS AND CREDITWORTHINESS WAS FULLY ESTABLISHED. 5.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DR AWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND I.P. ADDRESS, AUDIT REPORT NOT FILE D DESPITE SERVICE ON THE SHAREHOLDER, ETC. 5.2 THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRA WING ADVERSE INFERENCE ON ACCOUNT OF SUMMONS SENT BY THE ASSISTANT COMMI SSIONER OF INCOME-TAX, NEW DELHI REMAINING UNSERVED WITH THE REMARKS 'LEFT '. IT CLEARLY SHOWS THE SHAREHOLDER EXISTED. 6. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN HOLDING REMITTANCE OF RS. 25 LACS BY M/S. RADHA MOHAN AGROT ECH PVT. LTD., DELHI FOR SHARE APPLICATION, AS UNEXPLAINED A ND INCOME U/S. 68 OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPANY WAS INCORPORATED ON 24.9.2008, IS IN EXIS TENCE TILL DATE; HAD PAN; WAS REGULARLY FILING RETURNS OF INCO ME AND ASSESSED; HAD BANK ACCOUNT AND REMITTED THROUGH BAN KING CHANNEL; HAD CONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OFFICER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISS UED SHARE CERTIFICATES WHEREBY IDENTITY, GENUINENESS AND CRED IT WORTHINESS WAS FULLY SATISFIED. 6.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN D RAWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND I.P. ADDRESS, AUDIT REPORT NOT FILED DESPITE SERVICE ON THE SHAREHOLDER, ETC. 6.2. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DR AWING ADVERSE INFERENCE ON ACCOUNT OF SUMMONS SENT BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, NEW DELHI REMAINING UNS ERVED WITH THE REMARKS 'LEFT'. IT CLEARLY SHOWS THE SHAREHOLDER EXISTED. 7. THAT THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN HOLDING REMITTANCE OF RS. 25 LACS BY M/S. INTERIOR SOFT SOL UTIONS PVT. LTD., DELHI FOR SHARE APPLICATION, AS UNEXPLAINED A ND INCOME U/S. 68 OF THE APPELLANT COMPANY, WHEN THE APPLICANT COMPANY WAS INCORPORATED ON 20.1.2009, IS IN EXIS TENCE TILL DATE; HAD PAN; WAS REGULARLY FILING RETURNS OF INCO ME AND ASSESSED; HAD BANK ACCOUNT AND REMITTED THROUGH BAN KING CHANNEL; HAD CONFIRMED INDEPENDENTLY TO THE LEARNED ASSESSING OFFICER AND HAD PROVIDED RELEVANT MATERIAL; WAS ISS UED SHARE 5 CERTIFICATES WHEREBY IDENTITY, GENUINENESS AND CRED IT WORTHINESS WAS FULLY SATISFIED. 7.1. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRAWING ADVERSE INFERENCE ON ACCOUNT OF FILING OF NIL INCOM E RETURN BY THE SHAREHOLDER AND I.P. ADDRESS, AUDIT REPORT NOT FILED DESPITE SERVICE ON THE SHAREHOLDER, ETC. 7.2. THAT THE LEARNED LOWER AUTHORITIES ERRED IN DRAWING ADVERSE INFERENCE ON ACCOUNT OF SUMMONS SENT BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, NEW DELHI REMAINING UNS ERVED WITH THE REMARKS 'LEFT'. IT CLEARLY SHOWS THE SHAREHOLDER EXISTED. 8. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPE ALS) ERRED IN CONSIDERING THE APPELLANT COMPANY AS A PRI VATE LIMITED COMPANY WHEN THE APPELLANT COMPANY IS UNLI STED PUBLIC COMPANY, WHERE BOARD RESOLVED TO INCREASE THE CAPIT AL, INVITED APPLICATIONS, CONSIDERED RESOLUTION, HELD G ENERAL MEETING PASSED SPECIAL RESOLUTION, TOOK DECISION TO ALLOT, ALLOTTE D, ISSUED CERTIFICATES AND FILED REQUISITE FORMS TO THE REGISTRAR OF COMPANIES IN-ACCORDANCE WITH LAW. NO DEFAULT WAS NOTICED. 8.1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) ERRED IN HOLDING AGAINST, FOR NON-PURSUANCE PRODUCT ION OF THE PRINCIPAL OFFICERS OF THE 7 COMPANIES, WHEN THEIR I DENTITY WAS ESTABLISHED AND WHEN THE SAID COMPANIES INDEPENDENTLY RESPONDED AND CONFIRMED THE SHARE APPLICATION MONE Y AND THE ALLOTMENT. 8.2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) ERRED IN DRAWING INFERENCE ON THE BASIS OF PART OF THE CROSS- EXAMINATION OF SHRI PRAMOD JAIN, DECLARING HIS AFFI DAVIT AS UNBELIEVABLE SELF SERVING STATEMENT AND IGNORING TH E MATERIAL DOCUMENT. 8.3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) GROSSLY ERRED IN HOLDING THE IMPUGNED SHARE APPLICA TION MONEY OF RS. 2.5 CRORES AS UNEXPLAINED INCOME OF THE APP ELLANT COMPANY WHEN ADMITTEDLY BY NO INDISCRIMINATING DOCU MENT OR RECORD OR MATERIAL WAS FOUND IN SURVEY; THE REVEN UE FAILED TO FIND ANY UNDISCLOSED INCOME OR SOURCE OF ADDITIONAL INCOME OF THE APPELLANT COMPANY AND UTTERLY FAILED TO PROVE 'ASSESSEE'S OWN MONEY' AS REQUIRED BY THE RAJASTHAN HIGH COUR T IN THE 6 CASE OF BARKHA SYNTHETICS LTD., A BINDING PRECEDENT NOTED ON PAGE 17 OF THE IMPUGNED ORDER. 8.4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) GROSSLY ERRED IN SUPPORTING THE IMPUGNED ADDITION M ADE ON THE BASIS OF RETRACTED STATEMENT RECORDED IN THE SURVEY UNDER THE CIRCUMSTANCES EXPLAINED AND PROVED BY SHRI PRAMOD J AIN. 8.5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) GROSSLY ERRED IN HOLDING THE 7 COMPANIES AS ENTITIE S CREATED FOR PROVIDING ENTRIES BY WAY OF SHARE APPLICATION MONEY , WHEN SUCH A FINDING IN WITHOUT MATERIAL AND CONTRARY TO THE M ATERIAL ON RECORD. 8.6. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) GROSSLY ERRED IN SUSTAINING THE ADDITION ON DOUBTS, SUSPICIOUS, SURMISES, CAPRICIOUSLY, ARBITRARILY, AFTER IGNORING THE BINDING PRECEDENTS OF THE JURISDICTIONAL HIGH COURT AND SUP REME COURT CITED AND HEAVILY RELIED UPON. 8.7. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) GROSSLY ERRED IN MECHANICALLY PLACING RELIANCE ON T HE JUDGMENTS OF HON'BLE DELHI HIGH COURT, WHEN FACTS SITUATION OF THE SAID CASES ARE COMPLETELY DISTINGUISHABLE TO THE FACTS A ND EVIDENCE ON RECORDS OF THE APPELLANT COMPANY. 8.8. THAT THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) ERRED IN DISMISSING THE APPEAL WHEN IT IS SETTLED T HAT SOURCE OF THE SOURCE IS NOT TO BE ESTABLISHED BY THE APPELLAN T AND SOURCE WAS PROVED BY THE APPELLANT COMPANY. 8.9. THAT THE LEARNED LOWER AUTHORITIES FAILED TO EXERCI SE THE DISCRETION U/S 68 JUDICIOUSLY AND JUDICIALLY 8.10. THAT THE LEARNED LOWER AUTHORITIES ERRED IN N OT PROVIDING CERTIFIED COPY OF THE DOCUMENTS NOTED AT ITEM NO. 1 & 3 APPL ICATION DATED 18.1.2012 AND PROVIDING ONLY IN PART FOR ITEM NO. 2 AND 4 OF THE SAID APPLICATION AND NON-PROVIDING INSPECTION OF THE ASS ESSMENT RECORDS, THOUGH INSPECTION FEE WAS DEPOSITED AND THE LOWER A UTHORITIES GROSSLY ERRED IN HEAVILY PLACING RELIANCE ON SUCH MATERIAL, COLLECTED ON THE BACK OF THE APPELLANT AND NOT PROVIDED THOUGH DEMANDED. 9. THAT THE LEARNED LOWER AUTHORITIES ERRED IN CHAR GING INTEREST U/S. 234B OF THE ACT, WHEN THERE IS NO SUCH LIABILITY AN D THE ADDITION WAS NON-ANTICIPATED/UNSUSTAINABLE. 7 2.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD AVAILABLE BEFORE US. WE HAVE ALSO GON E THROUGH THE RELEVANT PROVISIONS OF LAW AND RELATED PRECEDENTS THERETO. I N FACT, ONLY ONE ISSUE RELATED TO ADDITION ON ACCOUNT OF DISALLOWANCE OF SHARE APPLICATION MONEY IS INVOLVED IN THIS CASE AND ALL THE GROUNDS IN RESPEC T OF THE SAME AND SOLE ISSUE . THE FACTS APROPOS TO THE IMPUGNED ISSUE ARE THAT SURVEY U/S 133A OF THE ACT WAS CARRIED OUT IN THE BUSINESS PREMISES OF M/S. ARL INFRATECH LTD., JAIPUR ON 18-07-2011. THE ASSESSEE COMPANY IS ENGAG ED IN THE BUSINESS OF MANUFACTURING OF AC PRESSURES PIPES AND AC SHEETS S HRI GRP PIPES. DURING THE COURSE OF SURVEY, THE STATEMENT OF SHRI PRAMOD JAIN, DIRECTOR OF THE COMPANY, WAS RECORDED. IN ANSWER TO QUESTION NO . 15 AND 16,, HE STATED THAT THE ASSESSEE RECEIVED BOGUS SHARE APPLICATION MONEY OF RS. 2.50 CRORES FROM SEVEN COMPANIES DURING THE FINANCIAL YEAR 2008 -09. ALL THESE DETAILS OF THE MONEY RECEIVED AS SHARE APPLICATION MONEY ARE A S UNDER:- S.N. NAME AND ADDRESS OF APPLICANT COMPANY COMPANY REGISTRATION IT PAN AMOUNT RS. DATE 1. M/S. INTERIOR SOFT SOLUTION (P) LTD. 2087/7B-3, GALI NO. 11, PREM NAGAR, NEW DELHI-11008 U72200DL2009 PTC 186854 AAC10197H 25 LACS 20-03- 2009 2. M/S. RADHA MADAV AGROTECH (P) LTD. B- 65/156, GALI NO. 5, GURU NANAK PURA, DELHI-110092 U01407DL2008 PTC183659 AECR 1442 E 25 LACS 27-03- 2009 3. M/S. NATRAJ AGROTECH (P) LTD. B-65/156, U01111DL2008 PTC 183658 AACCN8787E 25 LACS 27-03- 2009 8 GALI NO. 5, GURU NANAK PURA, DELH- 110092 4. M/S. CHACHAN ALLOYS (P) LTD., 110 EMCO COMPLEX, 59, VIJAY BLOCK, DELHI 110092 U70101DL 1996 PTC 081869 AAACCS5178J 25 LACS 15 LACS 20-03- 2009 27-03- 2009 5. M/S. RASHI LEASING LTD. LIG-173, SARITA VIHAR, NEW DELHI- 110076 U65999DL 1986 PLC 025839 AAACR0591A 25 LACS 26-03- 2009 6. M/S. SKY WEB (INDIA) LTD. 110, EMCO COMPLEX, 59, VIJAY BLOCK, LAXMI NAGAR, DELHI-10092 U74900DL1997 PLCC 088941 AALCS 9718 H 10 LACS 26-03- 2009 7. M/S. MAA SARVESHWARI (INDIA) LTD. , 110, EMCO COMPLEX, 59, VIJAY BLOCK, LAXMI NAGAR, DELHI-110092 U33110DL1998 PLC 093805 AACCM5392C 20 LACS 30 LACS 50 LACS 24-03- 2009 24-03- 2009 30-03- 2009 8. M/S. SKY WEB (INDIA) LTD. , 110, EMCO COMPLEX, 59, VIJAY BLOCK, LAXMI NAGAR, DELHI-110092 U74900DL1997 PLC 088941 AALCS 9718H 50 LACS 50 LACS 04-04- 2009 04-04- 2009 'IN RESPONSE TO YOUR FINAL SHOW CAUSE BEARING NO.AC IT/C- 3/JPR/2011-12/1581 DATED 23/12/2011 RECEIVED ON 26/ 12/2011 FOR 28/12/2011, WE WISH TO SUBMIT AS UNDER:- 1.THAT THE ASSESSEE COMPANY IN ITS REPLY JULY, 18 , 2011 IN RESPONSE TO YOUR HONOUR'S NOTICE U/S 142(1) AND 143(2) DATED 12/07/2011 ALONGWITH QUESTIONNAIRE, FURNISHED THE DETAILS OF S HARE APPLICATION MONEYVIDEANNEXURE-5 ON PAGE NO. 146 TO 154. THE AP PLICANTS HAVE FURNISHED DETAILED ADDRESS AND THE CHEQUE NUMB ER FOR THE APPLICATION MONEY. 2.THAT SUBSEQUENTLY THE ASSESSEE COMPANY REC EIVED A LETTER DATED19/08/2011 ON 26/08/2011 FOR 29/08/2011, REGAR DING SHARE 9 APPLICATION MONEY RECEIVED FROM THE COMPANIES. A DE TAILS REPLY DATED 29/08/2011WASSUBMITTED WHEREIN IT STANDS ESTABLISHE D THAT THE STATEMENTS OFSHRI PRAMOD JAIN WERE NOT VOLUNTARY AS EXPLAINED BY HIM VIDE HIS LETTERDATED27/07/2011 AND 04/08/2011 ALONGWITH HIS AFFIDAVIT DULY NOTARIZED. WE HAVE ALSO DRAWN YOUR KIND ATTENTION T OWARDS THE BOARD'SCIRCULARDATED10/03/2003 AND THE INSTRUCTIONS DATED 11/03/2003 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES. HENCE, AS REQUESTED THE SO CALLED STATEMENTS OF SHRI PRAMOD JAIN IS NO MATERIA L AND DESERVES TO BE EXCLUDED FROM ASSESSMENT RECORD OF THE ASSSESSEE COMPANY. 2.1 THAT IF STILL YOUR HONOUR WANT TO RELY UPON THE SO CALLED STATEMENT OF SHRI PRAMOD JAIN, YOU ARE VERY KINDLY REQUESTED TO PRODUCE SHRI PRAMOD JAIN FOR OUR CROSS EXAMINATI ON. WE SUBMIT ANY STATEMENT RECORDED ON THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE. SUCH USER SHALL BE IN VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE. 3. THAT IN THE SAID REPLY DATED 29/08/2011 VIDE PA RA-6, IT HAS BEEN STATED:(I)THE ASSESSEE COMPANY RECEIVED SHARE APPLICATION MONEY FROM THE STATED COMPANIES BY ACCOUNT PAYEE CHEQUE; (II) EACH ONE OF THE SAID COMPANY IS DULY REGISTERED UNDER THE COMPANIES ACT AND MAINTAIN REGULAR AND PROPER BOOKS OF ACCOUNT DULY AUDITED BY STATUTORY AUDITORS; (III)EACH ONE OF THE APPLICANT HAS REMITTED SHARE A PPLICATION MONEY VOLUNTARILY BY CHEQUE DULY COLLECTED BY THE ASSESSE E COMPANY THROUGH ITS BANK ACCOUNT;(IV)EACH ONE OF THE APPLICANT IS AN EX ISTING INCOME TAX ASSESSEE AND HOLDS PERMANENT ACCOUNT NUMBER ; AND ( V) THE ASSESSEE COMPANY HAS BEEN GIVEN TO UNDERSTAND THAT EACH ONE OF THE APPLICANT COMPANY IS REGULARLY FILING ITS RETURN OF INCOME AN D HAS BEEN ASSESSED TO INCOME TAX FOR THE ASSESSMENT YEAR 2009-10 AND 2010 -11. THE ASSESSEE COMPANY ALSO FURNISHED A STATEMENT DETAILING THEREI N; NAME AND ADDRESS OF APPLICANT COMPANY REGISTRATION NUMBER, P AN, NUMBER OF SHARES, AMOUNT OF SHARE APPLICATION MONEY, MODE OF RECEIPT WITH CHEQUE NUMBER, DATE AND BANK AND SHARE SCRIPT NUMBER ISSUE D ON 10/04/2009. WE HAVE ALSO GIVEN IN THE SAID STATEMENT DATE OF CR EDIT IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY. IT HAS BEEN CLEARL Y STATED THAT VERIFICATION , IF DESIRED MAY BE MADE FROM THE APPL ICANT COMPANY, ITS BANKERS AND OUR BANK. 4. THAT WE HAVE BEEN GIVEN TO UNDERSTAND THAT AFT ER RECEIPT OF THE AFORESAID DETAILED INFORMATION VIDE ORDER LETTER DATED 29/08/2011,YOUR HONOUR SENT LETTER / SUMMON U/S 131 DATED 02/09/2011TO THE SHARE APPLICANT COMPANIES REQUIR ING THEM TO FURNISH THE INFORMATION RELATING TO THEIR CERTIFICA TE OF INCORPORATION; AUDIT REPORT, BALANCE -SHEET ETC. WE HAVE BEEN FURTHER GIVEN TO UNDERSTAND THAT THE SHARE APPLICANT COMPAN IES HAVE ACKNOWLEDGMENT THE SAID LETTER AND HAVE FURNISHED T HE DESIRED INFORMATION BY POST IN SEP, 2011. 10 5. THAT THE ASSESSEE COMPANY HAS ALSO FURNIS HED WITH LETTER DATED 11/10/2011 PHOTO-STAT COPY OF FORM NO. 2 FILED WITH R.O.C. AND ALLOTMENT OF SHARES AS ON 10/04/2009 ALO NGWITH LIST OF SHARE HOLDERS TO WHOM SHARES WERE, ALLOTTED AND REC EIPT OF DEPOSITING FORM NO.2 WITH R.O.C. THE ASSESSEE COMP ANY HAS ALSO FURNISHED PHOTOSTAT COPY OF COUNTERFOIL OF SHA RE CERTIFICATES ISSUED TO THE SHARE APPLICANT COMPANIES ON 10/04/20 09. 6. THAT THE ASSESSEE COMPANY HAS FULLY DISCHARGED ITS ONUS U/S 68 OF THE INCOME-TAX ACT, 1961. IT HAS ESTABLIS HED IDENTIFY OF THE SHARE APPLICANT, THE SHARE APPLICANT HAS BEEN I SSUED THE SHARES DULY NOTIFIED WITH THE REGISTER OF COMPANIES ; EACH ONE OF THE COMPANY HAS FURNISHED ITS PAN NUMBER AS WELL AS BAL ANCE SHEET, AUDITED ACCOUNTS AND THE ASSESSMENT DETAILS. THE HO N'BLE SUPREME COURT IN CIT V/S ORISSA CORPORATION LIMITED (1986) 159 ITR 78 AFFIRMED JUDGMENT OF THE ORISSA HIGH COURT AND DISM ISSED APPEAL OF THE REVENUE WHEN THE ASSESSEE HAD GIVEN NAMES AND ADDRESSES AND IT WAS IN THE KNOWLEDGE OF THE REVENU E THAT THE SAID CREDITORS WERE INCOME TAX ASSESSES, THEIR INDEX NUM BERS WERE IN THE FILE OF THE REVENUE. IT HELD THAT THE RESPONDENT CO ULD NOT DOE ANYTHING FURTHER AND THAT THE RESPONDENT HAD DISCHA RGED THE BURDEN THAT LAY ON IT. 6.1 THAT IN SIMILAR CIRCUMSTANCE , THE HON'BLE RAJ ASTHAN HIGH COURT, THE JURISDICTIONAL HIGH COURT, IN THE FOLLOW ING CASE DISMISSED APPEAL OF THE REVENUE. (I) CIT V. SHREE BARKHA SYNTHETICS LTD. (2004) 270 ITR 477(RAJ.)- IN THE SAID CASE 6 OUT OF 7 COMPANIES HAD FURNISHED GIR/PAN AND CONFIRMATIONS ABOUT THEIR INVESTMENTS. REGARDING INDIVIDUAL INVESTORS, 9 OUT OF 10 HAD CONFIRMED THE FACT OF MAKING INVESTMENTS IN THE SHARES OF THE ASSESSEE AND THEY WERE INCOME TAX ASSESSES AND THE MODE OF RECEIPT HAD BEEN THROUGH BANKING CHANNELS. IT APPLIED THE CASE OF ORISSA CORPORATION (P) LIMITED (SUPRA). (II) SHREE BARKHA SYNTHETICS LTD. V/S ASSTT. CIT (2006) 283 ITR 377 (RAJASTHAN)- IF THE TRANSACTIONS ARE MADE THROUGH BANKING CHANNELS AND ONCE THE EXISTENCE OF PERSONS BY NAME IN THE SHARE APPLICATIONS IN WHOSE NAME THE SHARES HAVE BEEN ISSUED IS SHOWN, THE ASSESSEE COMPANY CANNOT BE HELD RESPONSIBLE TO PROVE WHETHER THAT PERSON HIMSELF HAS INVESTED THE SAID MONEY OR SOME OTHER PERSON HAD MADE INVESTMENT IN THE 11 NATURE OF THAT PERSON. THE BURDEN THEN SHIFTS ON THE REVENUE TO ESTABLISH THAT SUCH INVESTMENT HAS COME FROM THE ASSESSEE COMPANY ITSELF. IT FOLLOWED CIT V. STELLER INVESTMENT LTD. (2001)251 ITR 263 (SC). (III) CIT V. FIRST POINT FINANCE LTD. (2006) 286 I TR 477 (RAJ.)- IN CASE OF AMOUNTS SHOWN AS SHARE CAPITAL THE BURDEN OF PROOF ON THE ASSESSEE COMPANY LIES TO THE EXTENT OF MAKING OUT A CASE THA T THE INVESTORS EXIST AND THEREAFTER IT IS NOT FOR TH E ASSESSEE TO FURTHER PROVE WHERE THEY HAVE BROUGHT MONEY FROM TO INVEST WITH IT. (IV) CIT V. AKJ GRANITE PVT. LTD. (2008)301 ITR 298 (RAJ.) 6.2 THAT THE DECISION OF THE SUPREME COURT UPHELD THE CONSISTENT VIEW OF THE HIGH COURTS IN CIT V. LOVELY EXPORTS P. LTD. (2009) 319 ITR (ST.) 5 (SC), WHICH WAS FOLLOWED IN CIT V. GP INTERNATIONAL LTD. (2010) 325 ITR 25 (P&H) AND CIT V. ORIBITAL COMMUNICATION (P) LTD. (2010) 327 ITR 560 (DELHI). SAME VIEW WAS TAKEN IN CIT V. VICTOR ELETRODES LTD. (2010) 329 IT R 271 (DELHI) AND CIT V. UJALA DYEING AND PRINTING MILLS P. LTD. (201 0) 328 ITR 437 (GUJ), THE SPECIAL LEAVE AGAINST WHICH WAS DISMISSE D BY THE SUPREME COURT (2009) 317 ITR (ST.) 1. 7. THAT AS SUBMITTED EARLIER AND HEREIN ABOVE, THE ASSESSEE COMPANY HAS FULLY DISCHARGED ITS ONUS U/S 68 OF THE ACT AND THAT THE SO CALLED STATEMENT OF SHRI PRAMOD JAIN IS OF NO EVIDE NTIAL VALUE. WE SUBMIT NO ADVERSE INFERENCE CAN BE DRAWN ON THE SO CALLED STATEMENT WHICH IS ALSO UNSUPPORTED BY ANY MATERIAL EVIDENCE OR PROOF. WE HAVE ALREADY SUBMITTED THAT NO INDISCRIMI NATING DOCUMENT, PAPER OR RECORD WAS FOUND DURING THE SURVEY AND THA T CASE OF THE ASSESSEE IS OF ACCEPTED HISTORY. 8. THAT WE ARE READY, WILLING AND PREPARED TO FURNI SH FURTHER INFORMATION, CLARIFICATION OR EXPLANATION, IF DEEME D NECESSARY. YOU ARE, THEREFORE, VERY KINDLY REQUESTED TO VACAT E THE NOTICE. THE PROPOSED ADDITION OF RS. 2,50,00,000/- IS OBJECTED TO. WE HU MBLY REQUEST NOT TO MAKE THE ILLEGAL ADDITION IN THE LIGHT OF THE BINDING PRECEDENTS OF SUPREME COURT, JURISDICTIONAL AND OTHER HIGH COURTS. HOWEVER, THE REPLY OF THE ASSESSEE DID NOT SATISFY THE AO. AFTER MENTIONING THE REASONS GIVEN IN THE ASSESSEE'S CASE , THE AO 12 CONDUCTED FURTHER ENQUIRIES BY ISSUING SUMMON U/S 1 31 OF THE ACT AND THE AO FOUND THAT THE PARTIES ARE NOT GENUINE. THEREFORE, THE COUPLE OF ADMISSIONS MADE DURING SURVEY THAT THE EN QUIRES MADE BY HIM, THE AO HAS ADDED THIS AMOUNT OF RS. 2.50 CRORE S TO THE RETURNED INCOME BY HOLDING THAT IDENTITY AND CREDIT WORTHINESS OF THESE PARTIES DOES NOT STAND PROVED ON RECORD. 2.3 AGGRIEVED, THE ASSESSEE WENT IN APPEAL IN FIRST APPEAL AND THE LD. CIT(A) ALSO FOLLOWED THE SUIT AND CONFIRMED THI S ADDITION. 2.4 BEFORE US, BOTH THE PARTIES HAVE REITERATED THE IR EARLIER STANDS. 2.5 BEFORE, WE PROCEED TO DECIDE THE ISSUE ON MERIT S, WE WOULD LIKE TO DISCUSS THE SCHEME OF THE ACT AND PRECEDENT S ON THE ISSUE INVOLVED IN THIS APPEAL AS UNDER:- IN CASES WHERE SHARE APPLICATION MONEY IS FOUND RECORDED IN THE BOOKS OF AN ASSESSEE WHICH MA Y REPRESENT CREDIT IN THE BOOKS AND THE SHARE APPLICA NT IS IDENTIFIED, THAT AMOUNT CANNOT BE ADDED IN THE ASSESSEE'S HANDS U/S 68 OF THE ACT. THE HON'BLE RAJASTHAN HIGH COURT HAS REPEATEDLY REITERATED THE ABOVE LEGAL POSITION. THESE CASES ARE: (I) CIT VS. SHREE BARKHA SYNTHETICS LTD. 182 CTR 175 (RAJ.) (II) BARKHA SYNTHETICS LTD. VS. ACIT (2005), 197 CTR 432 (RAJ. 13 IN COMING TO THE ABOVE CONCLUSION, THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED AT LENGTH THE RELEVANT DECISIONS ON THE ISSUE LIKE CIT VS. STELLE R INVESTMENT LTD. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) WHICH HAS CONFIRMED THE DECISION OF HON'BL E DELHI HIGH COURT REPORTED IN (1992) 192 ITR 287. TH E HON'BLE COURT HAS GONE TO THE EXTENT OF STATING TH AT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBER TO THE SH ARE CAPITAL ARE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CASE, THE SHARE SUBSCRIBER IS IDENTIFIED. THERE CAN BE NO DISPUTE REGARDING THE ABOVE STATED LEGAL POSITION. THE FOLLOWING DECISIONS ALSO LAY DOWN THE SAME RATIO:- (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 6 DTR 30 8 (SC) (II) CIT VS. DOLPHIN CONPACK LTD. (2006) 283 ITR 19 0 (DEL.) (III) CIT VS. GUJARAT HEAVY CHEMICALS LTD. (202) 25 6 ITR 795 (SC) (IV) CIT VS. KWICK TRAVELS (1992) 199 ITR (ST.) 85 (SC) THIS ISSUE HAS BEEN DEALT AT LENGTH BY THE THIRD MEMBER IN THE CASE OF UMA POLYMERS (P) LTD. VS. DCIT, (2006) 101 TTJ (JD.) T.M. 126 = (2006) 284 ITR (AT) 1 JODHPUR. 2.6 ADVERTING, THE FACTS OF THE GIVEN CASE, WE ARE OF THE CONSIDERED OPINION THAT ALL THE SHARE APPLICANTS ST AND IDENTIFIED. THE ASSESSEE HAS PROVIDED PANS OF THE SHARE APPLICA NTS. THE MODE OF PAYMENT HAS ALSO BEEN MADE EXPLAINED. THERE IS N O DIRECT OR INDIRECT RELATION BETWEEN THE ASSESSEE COMPANY AND THE SHARE APPLICANTS. THE STATEMENTS RECORDED DURING SURVEY H AS GOT NO EVIDENTIARY VALUE AND THE LAW IS VERY MUCH SETTLED ON THIS ISSUE. IN ANY CASE, EVEN UNDER THE PROVISIONS OF SECTION 68 O F THE ACT, THE 14 ASSESSEE CANNOT BE FORCED TO PROVE THE SOURCE OF TH E SOURCE. THE LAW ON THIS SUBJECT IS ALSO SETTLED BY NUMEROUS DEC ISIONS. THE ALLEGED REPORT OF THE INSPECTOR OF THE DEPARTMENT W HO IS STATED TO HAVE VISITED AT THE GIVEN ADDRESSES OF THE SHARE AP PLICANTS WAS NEVER PUT OR CONFRONTED TO THE ASSESSEE. THE CUMULA TIVE EFFECTS OF THESE REASONS IS THAT THE IMPUGNED ADDITION CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE COMPANY. ACCORDINGLY, WE ORDE R TO DELETE THE ENTIRE ADDITIONS AND ALLOW THE APPEAL OF THE ASSESS EE. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 -01-201 4. SD/- SD/- (.N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMEBR JAIPUR DATED: 24 TH JAN 2014 *MISHRA COPY FORWARDED TO:- BY ORDER 1. M/S. ARL INFRATECH LTD. , JAIPUR 2. THE ACIT, CIRCLE- 3 JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT 5. THE DR 6. THE GUARD FILE (IT NO.619/JP/13) A.R., ITAT, J AIPUR 15 16 17
Other Referred Cases
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Laws Referred To
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1:1 Consultation on Startup Fundraising
₹5000
1:1 Consultation on Business Valuations
₹1
1:1 Consultation on Tax Litigation
₹1
Assignment of Registered Trademark
Mehul₹500
Early Retirement Letter
₹0
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