MPG International (P) Ltd., Delhi V. ITO, New Delhi

ITA 6347/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6873 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 16-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 20-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL SENIOR
• Section: 143(3); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-I : NEW DELHI) BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NOS. 6248 & 6347/DEL./2014 (ASSESSMENT YEARS : 2003-04 & 2004-05) M/S. MPG INTERNATIONAL (P) LTD., VS. ITO, WARD 6 (1), (EARLIER KNOWN AS MPG INVESTMENT (P) LTD.), NEW DE LHI. AN 2, SHALIMAR BAGH, DELHI 110 088. (PAN : AAACM5544Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH JAIN, ADVOCATE REVENUE BY : SHRI ROBIN RAWAL, SENIOR DR DATE OF HEARING : 17.02.2016 DATE OF PRONOUNCEMENT : 18.02.2016 O R D E R BOTH THESE APPEALS FILED AGAINST THE RESPECTIVE OR DER OF THE CIT (A) DATED 23.09.2014. SINCE THE COMMON ISSUE INVOLVED, THEREFORE, BOTH THE APPEALS ARE DECIDED TOGETHER ON THE BASIS OF FACTS INVOLVED IN THE ASSESSMENT YEAR 2003-04 AS HAS BEEN AGREED BY BOTH THE PARTIES. 2. GROUND NO.1 IN BOTH THE APPEALS IS NOT PRESSED, THEREFORE, THE SAME STANDS DISMISSED AS NOT PRESSED. 3. GROUND NO.4 IN ASSESSMENT YEAR 2003-04 RELATE TO THE DISALLOWANCE OF RS.2,05,779/- WHICH CONSIST OF RS1,38,500/- INCU RRED BY THE ASSESSEE FOR FILING FEES FOR INCREASE OF THE AUTHORIZED CAPITAL FROM RS.20 LAKHS TO ITA NO.6248 & 6347/DEL./2014 2 RS.1.50 CRORES IN THE OFFICE OF THE REGISTRAR OF CO MPANIES AND RS.57,000/- AS BANK INTEREST. 4. I HEARD THE RIVAL CONTENTIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. I AGREE WITH THE LD. DR THAT SO FAR THE ISSUE IN RESPECT OF FILING FEES PAID TO ROC AMO UNTING TO RS.1,38,500/- IS CONCERNED, THE SAME HAS BEEN PAID FOR INCREASE I N THE AUTHORIZED CAPITAL AND THIS ISSUE IS NO MORE RES INTEGRA IN VIEW OF TH E DECISION OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. VS. CIT REP ORTED IN 225 ITR 792. I ACCORDINGLY CONFIRM THE ORDER OF THE CIT (A) SUST AINING THE DISALLOWANCE OF RS.1,38,5000/- OUT OF THE SUM OF RS.2,05,779/-. 5. SO FAR AS THE SUM OF RS.57,000/- IS CONCERNED, I NOTED THAT THIS HAS BEEN SHOWN BY THE ASSESSEE AS BANK INTEREST PAID BU T THE SAME HAS BEEN DISALLOWED AS NO STOCK-IN-TRADE OR BUSINESS ASSET W AS APPEARING IN THE BALANCE SHEET. BEFORE ME, LD. AR APPEARED BUT DID NOT ADVANCE ANY ARGUMENT IN THIS REGARD AS WELL AS THE BALANCE EXPE NSES. I ACCORDINGLY CONFIRM THE DISALLOWANCE. THUS, GROUND NO.4 TAKEN BY THE ASSESSEE STANDS DISALLOWED. 6. GROUND NO.2 IN BOTH THE ASSESSMENT YEARS 2003-04 AND 2004-05 RELATE TO THE ADDITION OF RS.8 LACS IN AY 2003-04 A ND RS.10 LACS IN AY 2004-05 U/S 68 OF THE INCOME-TAX ACT, 1961 (HEREINA FTER THE ACT) ON ACCOUNT OF THE SHARE CAPITAL. ITA NO.6248 & 6347/DEL./2014 3 7. THE FACTS RELATING TO THIS GROUND ARE THAT THE A SSESSEE RECEIVED SHARE CAPITAL FOR RS.8 LAKHS FROM M/S. FINWIZ CAPITAL SER VICES PRIVATE LTD. THROUGH BANKING CHANNEL ON 04.12.2002 AND RS.10 LAK HS I.E. RS.5 LAKHS FORM FAIR N SECURE EXPORTS PVT. LTD. AND RS.5 LAK HS FROM RABIK EXPORTS LTD. THROUGH BANKING CHANNEL IN THE ASSESSMENT YEAR 2003-04 AND 2004-05 RESPECTIVELY. THE AO AFTER RECEIVING THE INFORMATI ON FROM THE DIRECTORATE OF INCOME-TAX (INV.), NEW DELHI AND AFTER RECORDING REASONS, REOPENED THE ASSESSMENT IN EACH OF THE ASSESSMENT YEAR BY ISSUIN G THE NOTICE U/S 148(2) AFTER RECORDING THE REASONS TO BELIEVE. THE LD. AR EVEN THOUGH BEFORE ME CHALLENGED THE VALIDITY OF THE INITIATION OF THE PR OCEEDINGS U/S 147 IN EACH OF THE ASSESSMENT YEAR BY WAY OF GROUND NO.1 BUT DI D NOT PRESS THE SAME WHEN HIS ATTENTION WAS DRAWN TOWARDS THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF ITO VS. PURUSHOTTAM DAS BANGUR 224 ITR 362 IN WHICH THE HONBLE SUPREME COURT HAS CLEARLY TAKEN T HE VIEW THAT THE LETTER OF DEPUTY DIRECTOR OF INVESTIGATION GIVING INFORMAT ION THAT COMPANY PROSPERING AT THE RELEVANT TIME AND NO STOCK EXCHAN GE QUOTATION WAS ONLY FOR MANIPULATION IS THE INFORMATION FROM WHICH ITO COULD HAVE RECEIVED TO BELIEVE ABOUT THE INCOME ESCAPED THE ASSESSMENT. THE AO COMPLETED THE ASSESSMENT AFTER MAKING THE ADDITION OF THE SHARE C APITAL IN EACH OF THE ASSESSMENT YEAR AMOUNTING TO RS.8,00,000/- AND RS.1 0,00,000/- RESPECTIVELY. THE ASSESSEE WENT IN APPEAL BEFORE T HE CIT (A) AND THE CIT (A) CONFIRMED THE ADDITION. ITA NO.6248 & 6347/DEL./2014 4 8. I HEARD THE RIVAL CONTENTIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NO TED THAT IN THIS CASE UNDER PARA 6.4, THE CIT (A) HAS TAKEN A FINDING THAT THE IDENTITY OF THE SHARE APPLICANT COMPANY, M/S. FINWIZ CAPITAL SERVICES PVT . LTD. IS NOT DOUBTED IN ANY MANNER. THE AMOUNT IS ROUTED THROUGH BANKIN G CHANNEL IS ALSO NOT DOUBTED. THE DOUBT HAS BEEN RAISED ABOUT THE GENUI NENESS OF THE TRANSACTION. WHETHER THE MONEY HAS BEEN GIVEN BY T HE SHARE APPLICANT COMPANY AND, THEREFORE, HE CONFIRMED THE ADDITION R ELYING ON THE DECISION OF CIT VS. NEELKANTH ISPAT UDYOG (P) LTD. - 81 DTR 214 (DELHI), CIT VS. NIPUN BUILDERS AND DEVELOPERS PVT. LTD. - 350 ITR 4 07 AND .CIT VS. N.R. PORTFOLIO PVT. LTD. 214 TAXMAN 408 (DEL.). IN TH IS CASE, I NOTED THAT THE ASSESSEE HAS SUBMITTED THE FOLLOWING DOCUMENTS:- (I) APPLICATION FOR ALLOTMENT OF EQUITY SHARES WHIC H SHOWS THE PO DATED 4.12.2002 DRAWN ON THE RATNAKAR BANK FOR A N AMOUNT OF RS.8,00,000/- BEING THE AMOUNT OF SHARE APPLICATION MONEY. (II) COPY OF BOARD RESOLUTION (DATED 2.12.2002) PAS SED BY THE DIRECTORS OF M/S. FINWIZ CAPITAL SERVICES PVT. LTD. , WHEREIN SHRI RAJESH JHA DIRECTOR OF THE COMPANY IS AUTHORIZ ED TO APPLY FOR 80000 SHARES OF RS. 101- PER SHARE, ON BE HALF OF THE SAID COMPANY, IN THE APPELLANT COMPANY. (III) COPY OF CONFIRMATION FILED (WITHOUT DATE) CON FIRMING THE AMOUNT OF RS.8,00,000/-, PAY ORDER NUMBER, PAN AND ASSESSMENT PARTICULARS. (IV) COPY OF AFFIDAVIT NOT ATTESTED BY ANY AUTHORIT Y. ITA NO.6248 & 6347/DEL./2014 5 (V) SIGNATURE VERIFICATION DATED 5.12.2002 FROM BAN K OF MR. RAJESH JHA, THE THEN DIRECTOR OF MIS. FINWIZ CAPITA L SERVICES PVT. LIMITED. (VI) LIST OF DIRECTORS OF THE COMPANY AS ON 4.12.20 02. (VII) FORM NO. 32 DATED 24.5.2002 (VIII) COPY OF ITR FOR AY 2002-03, AND COPY OF BALA NCE SHEET AS ON 31.3.2002. (IX) COPY OF ORDER U/S 143(3) FOR AY 1996-97. (X) COPY OF THE ONE PAGE BANK STATEMENT OF THE RATN AKAR BANK LIMITED, SHOWING THE TRANSACTION FOR ISSUED OF PAY ORDER FOR RS.8,00,000/- AGAINST DEBIT OF RS.8,00,800/-. (XI) COPY OF BALANCE SHEET AS ON 31.3.2013 OF M/S. FINWIZ CAPITAL SERVICES (P) LIMITED. ON THE BASIS OF THESE DOCUMENTS, THE LD. AR BEFORE ME CONTENDED THAT THE GENUINENESS OF THE TRANSACTION IS APPARENT FROM THE FACT THAT BOARD RESOLUTION WAS PASSED BY THE DIRECTOR OF M M/S. FIN WIZ CAPITAL SERVICES PVT. LTD. FOR MAKING THE APPLICATION FOR 80,000 SHA RES AT RS.10 PER SHARE. THIS FACT HAS BEEN CONFIRMED BY THE SAID COMPANY TH AT THEY PAID RS.8 LAKHS AS SHARE APPLICATION MONEY. THE AMOUNT HAS D ULY BEEN SHOWN IN THE BALANCE SHEET BY M/S. FINWIZ CAPITAL SERVICES PVT. LTD. IT IS NOT A CASE OF ISSUANCE OF SHARES AT A PREMIUM OR DISCOUNT; SHARES HAVE BEEN ISSUED AT THE FACE VALUE. THE REVENUE HAS NOT BROUGHT ANY CONTRA RY EVIDENCE EXCEPT HOLDING THAT THE GENUINENESS OF THE TRANSACTION IS DOUBTFUL EVEN THOUGH THE IDENTITY OF THE SHARE APPLICANT AS WELL AS THE PAYM ENT THROUGH BANKING CHANNEL WAS NOT DOUBTED. I NOTED THAT SIMILAR ISSU E HAS ARISEN BEFORE THE ITA NO.6248 & 6347/DEL./2014 6 HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. FIVE VISION PROMOTERS PVT. LTD. - 380 ITR 289 (DEL.) IN WHICH THE ASSESSEE HAS SUBMITTED SIMILAR TYPE OF DOCUMENTS TO PROVE THE GE NUINITY OF THE TRANSACTION. THE HONBLE HIGH COURT ULTIMATELY CON FIRMED THE ORDER OF THE TRIBUNAL DELETING THE ADDITION. IN MY OPINION, ONC E THE ASSESSEE HAS SUBMITTED THE DOCUMENTS, THE ONUS GETS SHIFTED ON T HE REVENUE TO PROVE THAT THE TRANSACTION IS NOT GENUINE. THE SHARE APPLICAN T HAS CONFIRMED THE TRANSACTION. COPY OF THE RESOLUTION DATED 02.02.20 12 FOR INVESTMENT IN 80,000 SHARES OF RS.10/- EACH IN THE ASSESSEE COMPA NY WAS PASSED, CONFIRMATION GIVING THE PAY ORDER NUMBER, PAN NUMBE R AND ASSESSMENT PARTICULARS OF THE APPLICANT COMPANY WAS FILED. TH E REVENUE HAS NOT TAKEN ANY ACTION AGAINST THE SHARE APPLICANT COMPANY BUT THE CIT (A) SIMPLY TOOK THE VIEW THAT THE SAID SHARE APPLICANT COMPANY HAS GIVEN THE MONEY AS SHARE APPLICATION IS NOT ESTABLISHED. THE FINDI NG GIVEN BY THE CIT (A) UNDER PARA 6.4 IN THIS REGARD MIGHT NOT BE SUPPORTE D BY THE EVIDENCE BROUGHT ON RECORD IN THIS REGARD. HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. FIVE VISION PROMOTERS PVT. LTD. - 380 ITR 289 (DEL.) TOOK THE VIEW THAT THE SHARES OF THE ASSESSEE WERE SUBSEQUEN TLY SOLD AT A REDUCED PRICE WHICH INDEED WAS NOT GERMANE TO THE QUESTION OF THE GENUINENESS OF THE INVESTMENT IN THE SHARE CAPITAL OF THE ASSESSEE . I AM BOUND TO FOLLOW THE AFORESAID DECISION OF HONBLE DELHI HIGH COURT REPORTED IN 380 ITR 289. I ACCORDINGLY DELETE THE SAID ADDITION. ITA NO.6248 & 6347/DEL./2014 7 9. AS REGARDS GROUND NO.3, BOTH THE PARTIES ARE AGR EED THAT IT IS CONSEQUENTIAL. THE AO MADE THE ADDITION WHICH WAS REDUCED BY THE CIT (A) TO 2% OF SHARE APPLICATION AMOUNTING TO RS.16,0 00/- AS COMMISSION PAID BY THE ASSESSEE. SINCE I HAVE ALLOWED GROUND NO.2 BY DELETING THE ADDITION IN RESPECT OF SHARE CAPITAL RECEIVED, I AC CORDINGLY DELETE THE SAID ADDITION. GROUND NO.3 IS ALSO ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF FEBRUARY, 2016. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED THE 18 TH DAY OF FEBRUARY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-IX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.