Nav Shakti Ice & Cold Storage (P) Ltd., Kanpur V. DCIT IV, Kanpur

ITA 653/LKW/2011

• Counselvise Citation: 65323714 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-07-2014
• Assessment Year: misc
• Appeal Filed On: 25-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Bogus Share capital; Business expenditure; Opportunity of being heard; Principle of natural justice
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 653/LKW/2011 ASSESSMENT YEAR: 2004 - 05 NAV SHAKTI ICE & COLD STORAGE (P) LTD. 140, PWD CO - OPERATIVE HOUSING SOCIETY RAWATPUR, KANPUR V. DY. CIT - VI KANPUR PAN: AABCN8016B (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 22 07 2014 DATE OF PRONOUNCEMENT: 23 0 9 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1. THAT THE LEARNED CIT (APPEAL) WAS WRONG IN LAW & ON FACTS IN SUSTAINING THE FOLLOWING ADDITI ONS IN THE ASSTT OF THE APPELLANT: - A) RS. 200000/ - INVESTMENT MADE BY DILIP SINGH SENGAR TOWARDS SHARE CAPITAL IN THE APPELLANT COMPANY B) RS. 34000/ - INVESTMENT MADE BY SMT. RASHMI SENGAR TOWARDS SHARE CAPITAL IN THE APPELLANT COMP ANY. C) RS. 452250/ - INVESTMENT MADE BY TWENTY FOUR PERSONS TOWARDS SHARE APPLICATION D) RS. 370502/ - DISALLOWANCE OUT OF VARIOUS BUSINESS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : EXPENSES. 2. THAT THE LEARNED CIT (APPEAL) WHILE CONFIRMING THE ABOVE ADDITIONS/DISALLOWANCES H AS FAILED TO APPRECIATE THE REAL FACTS, EXPLANATION FURNISHED & VARIOUS DECISIONS RELATING TO INVESTMENT TOWARDS SHARE CAPITAL. 3. THAT THE LEARNED CIT (APPEAL) WAS ALS O UNJUSTIFIED IN OBSERVING THAT 'IF THE AO IS SATISFIED THAT THE SHARE APPLICATION MONEY RECEIVED DURING THE FINANCIAL YEAR 2002 - 2003 (CORRESPONDING TO THE ASSTT YEAR 2003 - 2004) IS NOT EXPLAINED THE AO IS FREE TO TAKE ACTION U/S 147 IN RESPECT OF THOSE CREDITS IN ASSTT YEAR 2003 - 2004' THE PROCEEDING OF WHICH HAD ALREADY BEEN BARRED BY LIMITAT ION. WITHOUT PREJUDICE, NO ADVERSE INFERENCE IN RESPECT OF SHARE APPLICATION MONEY FOR THAT YEAR WAS CALLED FOR. 4. THAT THE DISALLOWANCE OF RS. 370502/ - OUT OF VARIOUS BUSINESS EXPENSES IS UNJUSTIFIED & IN ANY CASE VERY HIGH & EXCESSIVE. 5. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST LAW, FACTS AND PRINCIPLES OF NATURAL JUSTICE. 2 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE INVESTMENT TOWARDS SHARE CAPITAL IN THE ASSESSEE - COMPANY. 3 . ON CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, W E FIND THAT THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.37,36,250/ - ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL. 4 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND FURNISHED COMPLETE DETAILS ABOUT SHARE CAPITAL AND SHARE APPLICATION MONE Y PENDING FOR ALLOTMENT. THE LD. CIT(A) RE - EXAMINED VARIOUS ASPECTS WITH REGARD TO THE INVESTMENT IN SHARE CAPITAL AND BEING PARTLY CONVINCED, HE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : ACCEPTED THE CLAIM OF CONTRIBUTION IN SHARE CAPITAL, BUT WAS NOT CONVINCED WITH RESPECT TO THE INVESTMENT MAD E BY THE FOLLOWING PERSONS: - 1 . RS.2 LAKHS INVESTMENT MADE BY DILIP SINGH SENGAR 2 . RS.34,000/ - INVESTMENT MADE BY SMT. RASHMI SENGAR 3 . RS.4,52,250/ - INVESTMENT MADE BY 24 PERSONS. 5 . BEFORE THE LD. CIT(A) THOUGH ASSESSEE HAS PLACED EVIDENCE, BUT THE LD. CIT(A) HAS N OT APPRECIATED THE SAME AND CONFIRMED THE ADDITIONS ON ACCOUNT OF AFORESAID CONTRIBUTIONS. 6 . NOW THE ASSESSEE IS BEFORE US AND WITH REGARD TO THE INVESTMENT OF RS.4,52,250/ - MADE BY 24 PERSONS TOWARDS SHARE APPLICATION MONEY, IT WAS SUBMITTED THAT THE AMOUNT WAS RECEIVED FROM 24 PERSONS AS PER LIST ATTACHED WITH ALLOTMENT OF SHARES AND THE SAME WAS ACCOUNTED FOR AGAINST THE SHARE APPLICATION MONEY. 7 . WITH REGARD TO SOME OTHER PARTIES, AN AFFIDAVIT WAS FILED BEFORE THE ASSESSING OFFICER. THE SHARES COULD NOT BE ALLOTTED TO THEM, AS THE COMPANY COULD NOT WORK PROPERLY AND THEIR AMOUNTS WERE RETURNED BACK IN FINANCIAL YEAR 2005 - 06. THE ASSESSEE HAS ALSO FILED EVIDENCE, BUT IT WAS NOT LOOKED INTO BY THE LD. CIT(A) AND CONFIRMED THE ADDITION. DURING THE COURSE O F HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(A) HAS TOTALLY IGNORED THE EVIDENCE FILED BY THE ASSESSEE TO JUSTIFY THE CREDITWORTHINESS AND IDENTITY OF THE DEPOSITORS/SHARE APPLICANTS, AND CONFIRMED THE ADDITION . THEREFORE, IN THE INTEREST OF JUSTICE, THE SAME SHOULD BE ALLOWED. 8 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 9 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS, WE FIND THAT THE AMOUNT OF RS.4,52,250/ - WAS CONT RIBUTED BY 24 PARTIES AND IT WAS ALSO A SMALL AMOUNT FOR WHICH ASSESSEE HAS FILED AFFIDAVITS AND PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : CONFIRMATIONS. COPIES OF THE SAME ARE PLACED ON RECORD AND ON A CAREFUL PERUSAL, WE FIND THAT THE LD. CIT(A) HAS OUTRIGHTLY IGNORED THESE EVIDENCE AND HAVING PLACED RELIANCE UPON THE ASSESSMENT ORDER , HE CONFIRMED THE ADDITION. WHEN THE ASSESSEE HAS FILED EVIDENCE BY WAY OF CONFIRMATIONS AND AFFIDAVITS, IT SHOULD HAVE BEEN PROPERLY EXAMINED BY THE LOWER AUTHORITIES, BUT NONE OF THE AUTHORITIES HAS TAKEN ANY PA IN TO EXAMINE THESE EVIDENCES FILED BY THE ASSESSEE. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE REQUIRES A PROPER VERIFICATION BY THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE - ADJUDICATE THE ISSUE IN THE LIGHT OF THE CONFIRMATIONS FILED BY THE RESPECTIVE PARTIES. 10 . WITH REGARD TO THE OTHER ADDITION OF RS.2 LAKHS, IT IS NOTICED THAT SUBODH CHANDEL HAD MADE INVESTMEN T OF RS.2 LAKHS IN THE SHARE CAPITAL OF THE ASSESSEE - COMPANY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A STATEMENT WAS RECORDED, IN WHICH HE HAD ADMITTED CONTRIBUTION OF THE AFORESAID AMOUNT, THOUGH HE HAS NO SOURCE OF INCOME, BUT HE HAS RECEIVED THIS AMOUNT FROM HIS FATHER WHO WAS A FARMER. THE STATEMENT OF THE FATHER OF SHRI. SUBODH CHANDEL WAS ALSO RECORDED, BUT THE SAME WAS NOT PROPERLY APPRECIATED BY THE LOWER AUTHORITIES AND CONFIRMED THE ADDITION. COPIES OF THE STATEMENTS ARE PLACED ON RECORD AND FROM A CAREFUL PERUSAL OF THE SAME, WE ARE OF THE VIEW THAT THE LOWER AUTHORITIES HAVE NOT EXAMINED THESE STATEMENTS AND AFFIDAVITS FILED BY THE SHARE APPLICANT AND HIS FATHER. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE ALSO REQUIRES A FRESH ADJUDI CATION BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE - ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE STATEMENT OF SHRI. SUBODH CHANDEL AND HIS FATHER. 11 . THE OTHER AMOUNT OF RS.34,000/ - IS TOWARDS SHARE CAPITAL AMOUNT BY SMT. RASHMI SENGAR. IN THIS REGARD, WE FIND THAT NO OPPORTUNITY WAS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : AFFORDED TO RASHMI SENGAR TO PLACE THE RELEVANT EVIDENCE IN SUPPORT OF THE INVESTMENT. SINCE WE HAVE RESTO RED THE MATTER RELATING TO OTHER ADDITIONS TO THE ASSESSING OFFICER, THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE - EXAMINE THE ISSUE AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12 . THE OTHER AMOU NT OF RS.3 ,70,502 / - RELATES TO THE ADDITION MADE ON ACCOUNT OF VARIOUS BUSINESS EXPENSES. IN THIS REGARD, IT IS NOTICED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON AD HOC BASIS WHICH IS NOT PERMISSIBLE UNDER THE LAW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITION, AS THIS ADDITION WAS MADE ON AD HOC BASIS. ACCORDINGLY, THIS ISSUE IS DISPOSED OF IN FAVOUR OF THE ASSESSEE. 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS P RONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD SD [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD SEPTEMBER , 2014 JJ: 0809 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTAN T REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )