M/s Geeri Fashion Pvt. Ltd., Surat V. ITO Wd.1(1)(2), Surat

ITA 62/SRT/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0636 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained expenditure; Principle of natural justice; Tangible material; Borrowed satisfaction
• Section: 69C; 133(6); 143(1); 72; 13; 147; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND DR. ARJUN LAL SAINI (ACCOUNTANT MEMBER) ( VIRTUAL COURT HEARING) ITA NO. 62/SRT/2018FORAY: 2009- 10 M/S GEERI FASHION PVT. LTD., 3067, 3 RD FLOOR, ADARSH MARKET-1, RING ROAD, SURAT. VS. ITO WARD-1(1)(2), AAYAKAR BHAWAN, MAJURA GATE, SURAT. PAN NO. AABCP 3983 F APPELLANT/ ASSESSEE RESPONDENT/ REVENUE ASSESSEE BY : MR. RASESH SHAH, AR REVENUE BY : MS. ANUPAMA SINGLA, SR. DR : DATE OF HEARING : 17/05/2021 DATE OF PRONOUNCEMENT : 15/07/2021 ORDER PER PAWAN SINGH, JUDICIAL MEMEBR; 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX [LD.CIT(A)]-1, SURAT, DATED 12.12.2017 FOR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN RE- OPENING ASSESSMENT U/S 147 BY ISSUING NOTICE U/S 148 OF THE IT. ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS. 1,05,00,000/- U/S 68 OF THE ACT. ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS. 1,05,000/-U/S 69C OF THE ACT. 4. IT IS THEREFORE PRAYED THAT ABOVE ADDITIONS MADE BY THE ASSESSING OFFICER MAY PLEASE BE DELETED. 5. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AS COMPANY, ENGAGED IN THE GARMENT BUSINESS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 01.09.2009 DECLARING TOTAL INCOME AT RS.4,16,830/-. INITIALLY THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) AND WAS ACCEPTED. THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 AND NOTICE UNDER SECTION 148 DATED 31.03.20214, WAS ISSUED AND SERVED ON THE ASSESSEE ON THE SAME DATE. IN RESPONSE TO NOTICE UNDER SECTION 148, THE ASSESSEE SUBMITTED HIS REPLY ON 23.04.2014 STATED THEREIN THAT RETURN FILED ON 01.09.2009 BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148. THE ASSESSEE DEMANDED REASONS RECORDED FOR REOPENING. THE COPY OF REASONS RECORDED FOR REOPENING WAS PROVIDED TO THE ASSESSEE ON 25.04.2014. IN THE REASONS RECORDED THE ASSESSING OFFICER RECORDED THAT HE HAS RECEIVED INFORMATION FROM DIRECTOR OF INCOME TAX (INTELLIGENCE & CRIMINAL INVESTIGATION), AHMEDABAD VIDE LETTER DATED 27.03.2014 THAT ASSESSEE HAS RECEIVED UNREASONABLE PREMIUM AS PER THE DETAILS PROVIDED BY THE REGISTRAR OF COMPANY (ROC). THAT INFORMATION WAS NOT AVAILABLE AT THE TIME OF PROCESSING THE RETURN OF INCOME, THEREFORE, INCOME TO THE TUNE OF RS.94,50,000/- ESCAPED THE ASSESSMENT. THE ASSESSEE FILED ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 3 OBJECTION VIDE HIS OBJECTION DATED 02.07.2014. THE OBJECTION OF THE ASSESSEE WAS DISPOSED OFF VIDE SPEAKING ORDER ON 01.09.2014. THE ASSESSING OFFICER AFTER DISCUSSING OBJECTION OF THE ASSESSEE PROCEEDED FOR REASSESSMENT. THE ASSESSING OFFICER NOTED THAT ON THE VERIFICATION OF MATERIAL AVAILABLE ON RECORD, THE ASSESSEE HAS RECEIVED SHARE CAPITAL OF RS.10,50,000/- AND SHARE PREMIUM OF RS.94,50,000/- AGGREGATING TO RS.1.05,00,000/- FROM 11 FOLLOWING INVESTOR: SR. NO. NAME OF INVESTOR AMOUNT DEPOSITED IN ASSESSEES ACCOUNT (IN RS.) 1. BALAJI INDIFIN LTD. 15,00,000/- 2. FLYHIGH EXPORTS PVT. LTD. 10,00,000/- 3. G.R. INDUSTRIES AND FINANCE LTD. 10,00,000/- 4. MEHNDIPURA TRADELINK 10,00,000/- 5. PRACHI CHEMICALS AND IND. LTD. 5,00,000/- 6. VINGHNHAR MARKETING PVT. LTD. 10,00,000/- 7. YOGRAJ BARTER PVT. LTD. 20,00,000/- 8. NOIATY DEALERS PVT. LTD. 5,00,000/- 9. YULAN MARKETING PVT. LTD. 5,00,000/- 10. THINK FINANCE PVT. LTD. (PREVIOUSLY KNOWN AS GAURAV FASHION PVT. LTD.) 10,00,000/- 11. NIHAT PROMOTERS & FISCAL LTD. 5,00,000/- TOTAL 1,05,00,000/- 3. THE ASSESSING OFFICER IN ORDER TO VERIFY THE TRANSACTION ISSUED NOTICES UNDER SECTION 133(6) TO ALL INVESTORS. IN SOME OF THE CASES, THE NOTICES ISSUED BY THE ASSESSING OFFICER WERE RETURNED BACK UNSERVED, AND ON WHICH NOTICES WERE SERVED, NO RESPONSE WAS RECEIVED. THE ASSESSING OFFICER ALSO GOT CONDUCTED PHYSICAL ENQUIRY THROUGH DEPARTMENTAL OFFICIAL. ON PHYSICAL ENQUIRY, IT WAS REPORTED THAT NO SUCH COMPANIES ARE EXISTING AT THE GIVEN ADDRESS. ON THE BASIS OF AFORESAID OBSERVATION, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AS TO WHY THE CREDIT ENTRY FROM 11 COMPANIES SHOULD NOT BE TREATED AS CASH CREDIT ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 4 UNDER SECTION 68 OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE FILED DETAILED WRITTEN SUBMISSION. IN THE SUBMISSION, THE ASSESSEE HAS STATED THAT ALL THE COMPANIES ARE REGISTERED THOSE NON-BANKING FINANCIAL COMPANIES (NBFC). THE ASSESSEE PROVIDED COPY OF SHARE APPLICATIONS, BANK STATEMENT, COPY OF PAN, CERTIFICATE OF REGISTRATION WITH RESERVE BANK OF INDIA, CERTIFICATE OF INCORPORATION REGISTRATION OF COMPANY AND MEMORANDUM OF ASSOCIATION AND ARTICLE OF ASSOCIATION OF ALL INVESTOR COMPANIES. 4. AFTER RECEIPT OF REPLY, THE ASSESSING OFFICER ISSUED ANOTHER SHOW CAUSE NOTICE ON 13.03.2015 AS RECORDED IN APPEAL AS WELL AT PAGE NO. 7 TO 18 OF THE ASSESSMENT ORDER. IN THE SHOW CAUSE NOTICE THE ASSESSING OFFICER ALSO REFERRED THE SUMMARY OF REPORT OF INVESTIGATION WING KOLKATA. IN THE SHOW CAUSE NOTICE, THE ASSESSING OFFICER STATED THAT INVESTIGATION WING OF KOLKATA RECORDED THE STATEMENT OF ONE OF THE DIRECTOR FLYHIGH EXPORT PVT LTD, NAMELY SHRI RAJKUMARTHARAD, WHO ALLEGEDLY STATED THAT HIS MAIN SOURCE OF INCOME IS COMMISSIONS FROM BUSINESS OF PROVIDING ENTRY THROUGH JAMAKHAARCHI/ PAPER COMPANIES. THE INVESTIGATION WING OF KOLKATA RECORDED THE STATEMENT OF ONE OF THE DIRECTOR OF VIGNHAR MARKETING PVT LIMITED, NAMELY SHRI JIVENDRA MISHRA, WHO HAS ALSO STATED THAT HIS MAIN SOURCE OF INCOME IS COMMISSIONS FROM BUSINESS OF PROVIDING ENTRY THROUGH JAMAKHAARCHI/ PAPER COMPANIES. 5. THE ASSESSEE DEMANDED COPY OF STATEMENT OF BOTH THE PERSON VIDE APPLICATION DATED 20.03.2015 AND AGAIN ON 23.03.2015. THE ASSESSEE ALSO DEMANDED FOR CROSS-EXAMINATION OF THAT PERSON. IN RESPONSE TO SHOW CAUSE NOTICE DATED ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 5 23.03.2015 THE ASSESSEE FILED DETAILS OF CAPITAL RECEIVED FROM THE INVESTOR COMPANY,THEIR PROFIT AND LOSS ACCOUNT, THEIR COPY OF AUDITED BALANCE SHEET AND ALONG WITH THE ACKNOWLEDGEMENT OF RETURN OF INCOME AND CONTENDED THAT THE ASSESSEE DISCHARGED ITS ONUS BY FURNISHING IDENTITY OF INVESTOR, CREDITWORTHINESS OF INVESTOR AND GENUINENESS OF TRANSACTION BY PROVING THAT AMOUNT OF SHARE APPLICATION AND PREMIUM WAS RECEIVED THROUGH BANKING TRANSACTION. THE ASSESSING OFFICER DISREGARDED THE CONTENTION OF THE ASSESSEE AND MADE ADDITION OF RS.1.05 CRORES UNDER SECTION 68. THE ASSESSING OFFICER ON HIS PRESUMPTION ALSO MADE ADDITION ON 1% OF THE TOTAL INVESTMENT OF INVESTOR COMPANY. THE ASSESSING OFFICER HELD THAT THE PAPER COMPANIES MADE COMPLIANCE OF VARIOUS PROVISIONS OF LAWS. THESE COMPANIES HAVE NO LAND, NO EMPLOYEE AND NO FIXED ASSETS. MERELY PROVIDING PAN, ASSESSEE CANNOT SEEK DISCHARGE OF HIS ONUS. FOR CREDITWORTHY, THE ASSESSING OFFICER HELD THAT MOST OF THE COMPANIES ARE SHOWING NOMINAL INCOME. AND FOR GENUINENESS OF TRANSACTION THE ASSESSING OFFICER HELD THAT NO PRUDENT BUSINESSMEN WILL INVEST ITS FUND TO SUCH CONCERN WHICH RUNS MUCH HIGHER RISK AND PROMISES NILL RETURN. NO DIVIDEND WAS GIVEN BY THE ASSESSEE COMPANY IN PREVIOUS YEAR OR THE YEAR UNDER CONSIDERATION. 6. ON APPEAL BEFORE CIT(A), THE ASSESSEE FILED DETAILED WRITTEN SUBMISSION AS RECORDED IN PARA 5 OF IMPUGNED ORDER. BEFORE LD. CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING AS WELL AS THE VALIDITY OF ADDITION ON MERIT. ON VALIDITY OF RE-OPENING THE ASSESSEE CONTENDED THAT CASE WAS RE-OPENED ON THE BASIS OF A GENERAL STATEMENT RECEIVED BY ASSESSING OFFICER FROM THIRD PARTY, ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 6 THEREFORE, THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER RELIED ON THE STATEMENT OF THE THIRD PERSON. WHILE FILING OF RETURN OF INCOME THE ASSESSEE FURNISHED COMPLETE DETAILS ALONG WITH THE AUDITED REPORT. NO TANGIBLE MATERIAL WAS AVAILABLE BEFORE THE ASSESSING OFFICER. THE INFORMATION RECEIVED FROM THE OFFICE OF THE REGISTRAR OF COMPANY (ROC) WAS VAGUE, IRRELEVANT AND NOT DEFINITE. THE ASSESSEE FURTHER EXPLAINED THAT ASSESSMENT CANNOT BE RE-OPENED MERELY ON THE BASIS OF SUSPICIOUS. THE ASSESSING OFFICER DIRECTLY JUMP TO THE CONCLUSION THAT THE ASSESSEE RECEIVED SHARE CAPITAL AND SHARE PREMIUM AND THERE WAS ESCAPE OF INCOME. ON MERIT, THE ASSESSEE CONTENDED THAT SHARE APPLICATION MONEY AND SHARE PREMIUM WAS RECEIVED IN EARLIER FINANCIAL YEAR AND NOT IN THE FINANCIAL YEAR UNDER CONSIDERATION. THE ASSESSEE FURTHER STATED THAT SUFFICIENT DOCUMENTARY EVIDENCE WERE PROVIDED TO THE ASSESSING OFFICER TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION WITH RELATED TO INVESTOR COMPANY. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS. LD. CIT(A) AFTER CONSIDERING THE FACTUAL AND LEGAL SUBMISSION OF THE ASSESSEE UPHELD THE VALIDITY OF RE-OPENING AS WELL AS ADDITION ON MERIT. FURTHER AGGRIEVED, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 7. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. GROUND NO.1 RELATES TO VALIDITY OF RE-OPENING. THE LD. AR OF THE ASSESSEE SUBMITS THAT THERE WAS NO TANGIBLE MATERIAL TO FORM THE ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 7 BELIEF THAT THE INCOME OF THE ASSESSEE AS ESCAPED ADJUSTMENT UNDER SECTION 68 OF THE ACT, UNLESS, THERE SPECIFIC INFORMATION THAT ASSESSEE HAVE RECEIVED ACCOMMODATION IN THE FORM OF SHARE APPLICATION OR SHARE PREMIUM. THE ASSESSING OFFICER HAS NOT RAISED DOUBT REGARDING RECEIPT OF SHARE APPLICATION AND PREMIUM AND OF ACCOMMODATION ENTRY BY THE ASSESSEE IN THE REASON RECORDED. THE ASSESSING OFFICER RECORDED THE REASONS ON 31.03.2014 AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON THE SAME DATE. IN THE REASONS RECORDED, THE ASSESSING OFFICER RECORDED THAT THE INTIMATION IS RECEIVED FROM THE DIRECTOR OF INCOME TAX (INTELLIGENCE & CRIMINAL) AHMEDABAD, VIDE LETTER DATED 27.03.2014. IT IS FURTHER MENTIONED IN THE REASONS RECORDED THAT THE ASSESSEE ISSUED SHARE AT UNREASONABLE PREMIUM AS PER DATES PROVIDED BY THE ROC. IT IS FURTHER STATED IN THE REASONS RECORDED THAT THE INFORMATION WAS NOT AVAILABLE AT THE TIME OF PROCESSING OF RETURN OF INCOME THUS INCOME TO THE EXTENT OF RS.95.00 LAKH AS ESCAPED ASSESSMENT. THE ASSESSEE ON RECEIPT OF NOTICE UNDER SECTION 148 OF THE ACT, FILED DETAILED OBJECTION, RAISING THE OBJECTION THAT INFORMATION RECEIVED BY THE ASSESSING OFFICER IS VAGUE, IRRELEVANT AND NOT DEFINITE. THE ASSESSING OFFICER DIRECTLY JUMP TO THE CONCLUSION THAT ASSESSEE HAD ISSUED SHARE CAPITAL AND THEREFORE, THERE WAS ESCAPEMENT OF INCOME. 8. THE LD. A.R FURTHER SUBMITS THAT THE ASSESSING OFFICER PROCEEDED MERELY ON BORROWED SATISFACTION. HE HAD NOT VERIFIED THE INFORMATION OF HIS OWN. THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER. THE LD. AR SUBMITS THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER FOR ISSUING NOTICE ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 8 UNDER SECTION 148 OF THE ACT. THERE WAS NO EVIDENCE ON RECORD TO SUGGEST THAT ASSESSING OFFICER CONDUCTED INDEPENDENT INQUIRY. THE ALLEGED INFORMATION FROM ROC WERE RECEIVED ON 27.03.2014 AND NOTICE UNDER SECTION 148 OF THE ACT WAS RECEIVED ON 31.03.2014. ON THE BASIS OF AFORESAID SUBMISSION THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE REOPENING WAS NOT VALID. THEREFORE, ALL SUBSEQUENT ACTION TAKEN BY THE ASSESSING OFFICER ARE VOIDAB INITIO TO SUPPORT HIS SUBMISSIONS. THE LD. AR RELIED UPON THE FOLLOWING DECISIONS:- GANGA SARAN AND SONS PVT. LTD., VS. ITO &ORS. (1981) 130 ITR 1 (SC), ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC), BALKRISHNA HIRALAL WANI VS. ITO (2010) 321 ITR 519 (BOM), PCIT VS. RAJESH D. NANDU (HUF) (2019) 261 TAXMAN 110 (BOM), KROWN AGRO FOODS PVT. LTD. VS. ACIT CIRCLE-5(1) (2015) 375 ITR 460 (BOM) 9. ON THE MERIT OF CASE, I.E., ON GROUND NO.2, THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE RECEIVED SHARE APPLICATION MONEY WITH FACE VALUE OF SHARE AND ITS PREMIUM IN THE LAST FINANCIAL YEAR I.E., IN ASSESSMENT YEAR 2007-08 AND NOT THE CURRENT FINANCIAL YEAR I.E., IN FINANCIAL YEAR 2008-09. THE ASSESSEE RECEIVED SHARE APPLICATION AND SHARE PREMIUM FROM ELEVEN COMPANIES. IN REPLY TO THE SHOW CAUSE NOTICE BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS SPECIFICALLY CONTENDED BEFORE THE ASSESSING OFFICER THAT SHARE APPLICATION AND SHARE PREMIUM MONEY WAS RECEIVED IN EARLIER FINANCIAL YEAR. THE SIMILAR SUBMISSION WAS MADE BEFORE THE LD. CIT(A). BOTH THE LOWER AUTHORITIES DISREGARDED THE SUBMISSION OF ASSESSEE. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT ALL THE INVESTOR COMPANIES ARE REGISTERED OF NON-BANKING ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 9 FINANCIAL COMPANY (NBFC) WITH THE RESERVE BANK OF INDIA (RBI) AND ARE REGULARLY FILING THEIR RETURN OF INCOME. THE ASSESSEE SUBSTANTIATED ITS CONTENTION AND TO DISCHARGE ITS ONUS FURNISH COPY OF SHARE APPLICATION, BANK STATEMENT, COPY OF PAN AND REGISTRATION CERTIFICATE OF INVESTOR COMPANY WITH RBI CERTIFICATE OF INFORMATION WITH REGISTRAR OF COMPANY AND MEMORANDUM OF ASSOCIATION AND ARTICLE OF ASSOCIATION. AFTER FURNISHING ALL THOSE EVIDENCES, THE ASSESSING OFFICER AGAIN ISSUED ANOTHER SHOW CAUSE NOTICE DATED 13.03.2015 AS RECORDED IN PARA-6 ( PAGE 7 TO 18 ) OF THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER REFERRED THE STATEMENT OF SHRI RAJKUMARTHARAD AND SHRI JIVENDRA MISHRA. THE ASSESSEE REQUESTED FOR SUPPLY OF COPY OF THOSE STATEMENTS VIDE APPLICATION DATED 20.03.2015 AND 23.03.2015 RESPECTIVELY. THE STATEMENT OF THOSE TWO PERSONS WERE NOT PROVIDED TO ASSESSEE. 10. THE ASSESSEE AGAIN IN RESPONSE TO SHOW CAUSE NOTICE FURTHER ISSUED ON 13.03.2015 FILED DETAILED REPLY ON 23.03.2015 WHICH IS REFERRED IN PARA-8 (IN THE ASSESSMENT ORDER). THE ASSESSEE SATISFACTORY DISCHARGE ITS ONUS, HOWEVER, THE EXPLANATION FURNISHED BY ASSESSEE WAS NOT ACCEPTED. THE ASSESSING OFFICER MADE ADDITION U/S 68 OF THE ACT OF RS.1.05 CRORES. THE LD. AR FURTHER SUBMITS THAT NO ADDITION OF SHARE APPLICATION MONEY OR PREMIUM UNDER SECTION 68 OF THE ACT CAN BE MADE IN THE HAND OF ASSESSEE AS NO SHARE APPLICATION OR SHARE PREMIUM MONEY IS RECEIVED IN THE CURRENT FINANCIAL YEAR. IN SUPPORT OF ITS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF IVAN SINGH VS. ACIT 116 TAXMANN.COM 499 ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 10 (BOM) (GOA BENCH) AND THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF DCIT VS. BRIJWASI DEVELOPERS IN ITA NO.1659-1660/AHD/2012 DATED 17.05.2017. 11. ALTERNATIVE SUBMISSION THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE DEMANDED THE STATEMENT OF TWO PERSONS, WHOSE STATEMENT WAS ALLEGEDLY RECORDED AND THEY ALLEGEDLY STATED THAT THEY WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRY, WERE NOT PROVIDED TO THE ASSESSEE. THE ASSESSEE DEMANDED THEIR CROSS-EXAMINATION BUT THE ASSESSING OFFICER NOT ACCEPTED. THE ASSESSING OFFICER RELIED ON THE STATEMENT OF THE PERSONS, COPY OF WHICH WERE NOT PROVIDED TO THE ASSESSEE. THUS, THE ASSESSING OFFICER VIOLATED THE PRINCIPLE OF NATURAL JUSTICE. TO SUPPORT HIS SUBMISSION THE LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS:- ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (2015) 281 CTR (SC), KISHANCHAND CELLADRAM VS. CIT 125 ITR 713 (SC), PCIT VS. CHARTERED SPEED PVT. LTD. [TAX APPEAL NO. 126 OF 2015 WITH 127 OF 2015] (GUJ)., LAXMANBHAI S. PATEL VS. CIT 237 ITR 290 (GUJ), CCE GUJARAT CYPROMET LTD. 34 TAXMANN.COM 249 (GUJ), CIT VS. INDRAJIT SINGH SURI 33 TAXMANN.COM 281 (GUJ) 12. AGAINST, GROUND NO.3, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER MADE ADDITION BY PRESUMING THAT THE ASSESSEE PAID COMMISSION OF 1% TO THE INVESTOR COMPANY FOR AVAILING ACCOMMODATION ENTRY, THEREFORE, THE ADDITION OF RS.1.05 LAKHS WAS ALSO MADE AS UNEXPLAINED EXPENDITURE. THE LD. ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 11 AR OF THE ASSESSEE SUBMITS THAT THERE IS EVIDENCE ON RECORD THAT ASSESSEE HAD MADE ANY COMMISSION PAYMENT. THE ADDITION IS PURELY ON ASSUMPTION AND PRESUMPTION BASIS. THE LD. AR OF THE ASSESSEE PRAYED THAT THE ASSESSEE IS ENTITLED TO SUCCEED ON LEGAL ISSUE AS WELL AS ON MERIT. 13. ON THE OTHER HAND, LD. SR.DR OF THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. LD. DR FOR THE REVENUE SUBMITS THAT INITIALLY OF THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) AND INTIMATION WAS GIVEN TO THE ASSESSEE. THE INTIMATION UNDER SECTION 143(1) OF THE ACT IS NOT AN ASSESSMENT ORDER. THE CASE WAS RE-OPENED ON THE BASIS OF INFORMATION RECEIVED FROM DIRECTOR OF INCOME TAX (INTELLIGENT & CRIMINAL), WHICH IN TURN RECEIVED INFORMATION FROM ROC. THE ASSESSEE WAS PROVIDED FULL OPPORTUNITY DURING THE REASSESSMENT. THE ASSESSEE FILED OBJECTION AGAINST THE RE-OPENING. THE OBJECTION OF ASSESSEE WAS DULY DISPOSED OF A SPEAKING ORDER. THE ASSESSEE RECEIVED SHARE APPLICATION MONEY AND SHARE PREMIUM FROM THE COMPANIES WHICH ARE PAPER COMPANIES. THE ASSESSING OFFICER GOT THE INQUIRY CONDUCTED THROUGH ADIT KOLKATA AND FIND THAT MOST OF THE COMPANIES ARE NOT EXISTED ON THE ADDRESS GIVEN BY THE ASSESSEE. THE INVESTIGATION WING EXAMINED THE DIRECTORS OF THE INVESTOR COMPANIES AND RECORDED THEIR STATEMENTS. IN THE STATEMENT, THE DIRECTORS OF THOSE COMPANIES DISCLOSED THAT THEY ARE PROVIDED ACCOMMODATION ENTRY. THE LD. DR SUBMITS THAT THE RE-OPENING WAS BASED ON SPECIFIC INFORMATION AND NO FAULT CAN BE FOUND IN THE ACTION OF REVENUE IN RE-OPENING OF THE CASE. ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 12 14. ON MERIT OF THE ADDITION, THE LD.DR FOR THE REVENUE SUBMITS THAT ALL THE INVESTOR COMPANIES ARE NOT HAVING SUFFICIENT CAPITAL. THEY ARE ALL ARE HAVE NO CAPITAL, NO IMMOVABLE ASSET, NO EMPLOYEES COST WERE DEBITED BY THOSE COMPANIES. THE LD. AR OF THE ASSESSEE SUBMITS THE IDENTITY OF ALL THE INVESTOR COMPANIES ARE IN DOUBT, THE GENUINENESS OF TRANSACTION IS ALSO IN DOUBT AND THE INVESTOR COMPANIES ARE NOT HAVING GOOD FINANCIAL CREDENTIAL. ON THE OBJECTION OF THE ASSESSEE THAT NO SHARE CAPITAL WAS RECEIVED IN THE PRESENT CURRENT FINANCIAL YEAR, THE LD. AR SUBMITS THAT THE CASE WAS RE-OPENED ON THE BASIS OF SPECIFIC INFORMATION THAT ASSESSEE RECEIVED SHARE CAPITAL MONEY DURING THE PRESENT FINANCIAL YEAR. TO SUPPORT HER SUBMISSION, THE LD. AR RELIED UPON THE FOLLOWING DECISIONS:- IT O VS PURUSHTTAM KUMAR ( 1997) 224 ITR 362 (SC), LEENA JUGALKISHORE SHAH VS ACIT (2016) 72 TAXMANN.COM 185 (GUJARAT), PUSHPAK BULLIAN P LTD VS DCIT (2017) 85 TAXMANN.COM 84(GUJARAT) AND ASPAS MULTIMEDIA VS DCIT ( 2017) 83 TAXMANN.COM 82 (GUJARAT) 15. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE LD. AR OF THE ASSESSEE BESIDES VEHEMENTLY OBJECT OF THE RE-OPENING, ALSO OBJECTED AGAINST THE ADDITION ON ACCOUNT OF SHARE APPLICATION AND SHARE PREMIUM MONEY U/S UNDER SECTION 68 OF THE ACT. THE LD. AR FOR THE ASSESSEE VEHEMENTLY ARGUED THAT NO MONEY ON ACCOUNT OF SHARE APPLICATION OR SHARE PREMIUM WAS RECEIVED DURING THE CURRENT FINANCIAL YEAR WHICH IS THE ASSESSMENT YEAR UNDER CONSIDERATION. WE INSTEAD OF GOING INTO MERIT AND DE-MERIT OF THE RE-OPENING, FIRST EXAMINE THE ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 13 DATE OF RECEIPT OF VARIOUS SHARE APPLICATION MONEY. ON PERUSAL OF RECORD, WE FIND THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION AND SHARE PREMIUM MONEY FROM ELEVEN INVESTOR COMPANIES IN THE FOLLOWING MANNER:- SR. NO. NAME OF INVESTOR AMOUNT DEPOSITED IN ASSESSEES ACCOUNT (IN RS.) DATE PERTAINING TO FY 2007-08 (FY 2008-09) 1. BALAJI INDIFIN LTD. 5,00,000/- 17.08.2007 5,00,000/- 20.12.2007 5,00,000/- 20.12.2007 2. FLYHIGH EXPORTS PVT. LTD. 5,00,000/- 21.01.2008 5,00,000/- 21.01.2008 3. G.R. INDUSTRIES AND FINANCE LTD. 10,00,000/- 13.12.2007 4. MEHNDIPURATRADELINK 5,00,000/- 03.08.2007 5,00,000/- 27.08.2007 5. PRACHI CHEMICALS AND IND. LTD. 5,00,000/- 06.09.2007 6. VINGHNHAR MARKETING PVT. LTD. 5,00,000/- 03.08.2007 5,00,000/- 27.08.2007 7. YOGRAJ BARTER PVT. LTD. 5,00,000/- 31.12.2007 5,00,000/- 31.12.2007 5,00,000/- 10.01.2008 5,00,000/- 16.01.2008 8. NOIATY DEALERS PVT. LTD. 5,00,000/- 07.09.2007 9. YULAN MARKETING PVT. LTD. 5,00,000/- 29.06.2007 10. THINK FINANCE PVT. LTD. (PREVIOUSLY KNOWN AS GAURAV FASHION PVT. LTD.) 10,00,000/- 22.06.2007 11. NIHAT PROMOTERS & FISCAL LTD. 5,00,000/- 28.06.2007 TOTAL 1,05,00,000/- 16. AS NOTED IN THE TABLE IN PARA (SUPRA), WE FIND THAT ALL MONEY EITHER ON ACCOUNT OF SHARE APPLICATION OR SHARE PREMIUM HAS BEEN RECEIVED DURING THE FINANCIAL YEAR 2007-08, RELEVANT TO AY 2008-09. WE FURTHER FIND THAT DESPITE BRINGING THIS FACT IN THE NOTICE OF LOWER AUTHORITIES, THE LOWER AUTHORITIES TREATED THIS AMOUNT AS UNEXPLAINED CASH CREDIT AND MADE THE ADDITION IN THE FINANCIAL YEAR 2008-09. SINCE NO MONEY EITHER ON ACCOUNT OF SHARE APPLICATION OR SHARE PREMIUM IS RECEIVED IN THE CURRENT FINANCIAL YEAR, THEREFORE THE AMOUNT CANNOT BE TAXED IN THE FINANCIAL YEAR 2008-09 I.E,. RELEVANT TO AY 2009-10. WE FIND THAT ON SIMILAR SET OF FACTS AND ON SIMILAR CONTENTION THE CO-ORDINATE OF THIS ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 14 TRIBUNAL IN DCIT VS. BRIJWASI DEVELOPERS (SUPRA) UPHELD THE ORDER OF LD. CIT(A) HOLDING THAT THE NO AMOUNT CAN BE TAXED WHEN NO SUCH AMOUNT WERE RECEIVED DURING THE CURRENT FINANCIAL YEAR. FURTHER THE HONBLE BOMBAY HIGH COURT IN IVAN SINGH VS ACIT (SUPRA) ALSO HELD THAT WHEN THE CREDIT IN THE ACCOUNT OF THE ASSESSEE WAS FOUND IN THE BOOKS OF ACCOUNT, SO CREDIT CAN BE CHARGED TO THE INCOME OF THE ASSESSEE IN THAT PREVIOUS YEAR AND THE SAID CREDIT CANNOT BE BROUGHT TO TAX IN SUBSEQUENT ASSESSMENT YEAR. CONSIDERING THE AFORESAID FACTUAL AND LEGAL DISCUSSIONS AND RESPECTFULLY FOLLOWING THE ORDER OF HON'BLE HIGH COURT AND COORDINATE BENCH OF TRIBUNAL, NO ADDITION CAN BE MADE DURING THE A.Y. 2009-10. 17. THE CASE LAWS RELIED BY LD. DR FOR THE REVENUE IS NOT HELPFUL TO THE DEPARTMENT AS ALL THE CASE LAWS RELATES THE VALIDITY OF REOPENING ON THE BASIS OF INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT. ON THE CONTRARY, WE HELD THAT THE SHARE APPLICATION MONEY AND PREMIUM WAS NOT RECEIVED IN THE CURRENT FINANCIAL YEAR, WHICH IS THE SUBJECT MATTER UNDER APPEAL. THEREFORE, THE ASSESSEE SUCCEED IN GROUND NO.2. 18. CONSIDERING THE FACT THAT NO ADDITION ON ACCOUNT OF SHARE APPLICATION AND SHARE PREMIUM IS SUSTAINABLE IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE ADDITION ON ACCOUNT OF ALLEGED COMMISSION PAYMENT OF RS.1.05 LAKH IS ALSO NOT SUSTAINABLE. EVEN OTHERWISE THE ADDITION IS NOT BASED ON ANY EVIDENCE ON RECORD. HENCE, GROUND NO. 3 OF THE APPEAL IS ALSO ALLOWED. ITA NO. 62/SRT/2018 (A.Y. 2009-10) GEERI FASHION PRIVATE LIMITED 15 19. FURTHER CONSIDERING THE FACT THAT WE HAVE DELETED THE ADDITION BY HOLDING THAT NO SHARE APPLICATION OR SHARE PREMIUM MONEY IS RECEIVED DURING THE CURRENT FINANCIAL YEAR RELEVANT TO THE AY UNDER CONSIDERATION, THEREFORE, ADJUDICATION ON OTHER CONTENTIONS OF THE LD. AR FOR THE ASSESSEE AND ON THE VALIDITY OF RE- OPENING BECOME ACADEMIC. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 15 TH JULY 2021 BY PLACING THE RESULT ON THE NOTICE BOARD. SD/- SD/- (DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEM BER MUMBAI; DATED: 15/07/2021 RAHUL SHARMA, SR. P.S. (ON TOUR) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, SURAT