Hotel Vamsi Krishana Pvt., Rayagada V. ITO, Rayagada

ITA 68/CTK/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2400 (ITAT-CUTTACK)
• Duration Of Justice: 6 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Unexplained investment
• Section: 201

Judgement Text

P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO . 68 /CTK/201 3 ASSESSMENT YEAR : 20 09 - 2010 HOTEL MAMSI KRISHNA PVT LTD., NEW COLONY, RAYAGADA VS. ITO, RAYAGADA WARD, RAYAGADA PAN/GIR NO. AABCF 7604 R (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE (ADJ PETITION REJECTED) REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 28 / 11 / 201 9 DATE OF PRONOUNCEMENT : 28 / 1 1 / 201 9 O R D E R PER C.M.GARG,JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) , BERHAMPUR DATED31.10.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS OF APPEAL BUT EXCEPT GROUND NOS.3 & 4, OTHER GROUNDS AND ARGUMENTATIVE AND SUPPORTING TO THE EFFECTIVE GROUND NOS . 3 & 4, WHICH READ AS FOLLOWS: 3. THAT THE ADDITION MADE BY THE LD COMMISSIONER OF INCOME TAX IN SCORE OF SHARE CAPITAL AN AMOUNT OF RS.1,50,000/ - IS UNJUST. 4. THAT THE LD AO HAS ALLOWED RS.2,53,000/ - AND DISALLOWED RS.1,50,000/ - AFTER TAKING THE STATEMENT AND RELEVANT EVIDENCE OF SHARE HOLDERS. HENCE, THE ESTIMATED AD DITION IS UNJUST AND UNWARRANTED. ITA NO.68/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 2 | 5 2. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE MATTER WAS CALLED FOR HEARING. HOWEVER, AN ADJOURNMENT PETITION HAS BEEN FILED BY THE ASSESSEE STATING THEREIN THAT THE LD A.R. OF THE APPELLANT WILL NOT BE AVAILABLE I N HEADQUARTER OWING TO PRE - OCCUPIED PROFESSIONAL ENGAGEMENT AND REQUESTED TO ADJOURN THE CASE FOR A PERIOD OF ONE MONTH. 3. ON PERUSAL OF APPEAL RECORD, WE FIND THAT ON LAST OCCASION I.E. ON 4.11.2019, THE ASSESSEE WAS ALLOWED ADJOURNMENT DIRECTING TO FILE FORM NO.35 FILED BEFORE THE CIT(A) AND ALSO TO FILE THE LIST OF SHARE CAPITAL APPLICANTS AS PER NOTE SHEET DATED 9.4.2018 AND THE CASE WAS ADJOURNED TO 28.11.2019. DESPITE SPECIFIC DIRECTION, THERE IS NO COMPLIANCE BY THE ASSESSEE AND TODAY, LD A.R. IS S EEKING ADJOURNMENT ON THE GROUND OF PROFESSIONAL ENGAGEMENT. THIS IS AN OLD APPEAL FILED IN THE YEAR 2013 AND AS PER THE DIRECTION OF HONBLE DELHI HIGH COURT, IT IS INCUMBENT UPON THE TRIBUNAL TO DISPOSE OF ALL THE APPEALS WHICH ARE PENDING FOR MORE THAN 5 YEARS. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE GROUND TAKEN IN THE TIME PETITION IS NOT PLAUSIBLE ONE AND, THEREFORE, WE REJECT THE ADJOURNMENT PETITION AND PROCEED TO DECIDE THE APPEAL ON MERITS ON T HE BASIS OF MATERIALS ALREADY AVAILABLE ON RECORD AND AFTER HEARING LD D.R. 4. WE HAVE HEARD LD D.R. AND ORDERS OF LOWER AUTHORITIES, INTER ALIA PAPER BOOK FILED BY THE ASSESSEE SPREAD OVER 14 PAGES AND ADDITIONAL PAPER BOOK SPREAD OVER 16 PAGES. ITA NO.68/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 3 | 5 5. BEFORE THE LOWER AUTHORITIES, IT WAS THE MAIN CONTENTION OF THE ASSESSEE THAT NO ADDITION ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL CAN BE MADE AS THE SHARE APPLICANTS HAVE CONFIRMED THE TRANSACTIONS BEFORE THE ASSESSING OFFICER. THE ASSESSEE RELIED ON THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT LTD., (2018) 216 ITR 185 (SC) IN SUPPORT OF HIS ARGUMENTS. 6. REPLYING TO ABOVE, LD DR DREW OUR ATTENTION TOWARDS RELEVANT PARA 4 OF THE ASSESSMENT ORDER AND RELEVANT PARAS 6 TO 6.3.3 OF THE FIR ST APPELLATE ORDER AND SUBMITTED THAT SINCE IN THE INSTANT CASE, THE ASSESSEE FAILED TO DISCHARGE THE CREDITWORTHINESS OF THE SUBSCRIBERS AND MORE IMPORTANTLY THE GENUINENESS OF THE TRANSACTION, THEREFORE, THE AUTHORITIES BELOW WERE RIGHT IN MAKING THE AD DITION BY TREATING THE SAME AS UNEXPLAINED INVESTMENTS. PLACING RELIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. PRAGATI FINANCIAL MANAGEMENT PVT LTD. VS CIT, ORDER DATED 7.3.2017 IN ITAT 178 OF 2016 ALONGIWTH OTHER APPEALS, LD DR SUBMITTED THAT THE AUTHORITIES BELOW WERE RIGHT IN MAKING ADDITION ON ACCOUNT OF SHARE CAPITAL AND SAME MAY KINDLY BE UPHELD. 7. ON CAREFUL CONSIDERATION OF THE CONTENTION OF THE ASSESSEE ON RECORD AND ALSO CONTENTION OF LD D.R. PLACED BEFORE THE BENCH AND THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT IN PARA 6.3 THE CIT(A) NOTED THAT THE LD A.R. FAIRLY CONCEDED THAT THE ENTIRE TRAN SACTION IS IN CASH. ALL THE SHARE APPLICATION HOLDERS ARE SMALL CULTIVATORS/AGRICULTURIST AND SMALL RETAIL TRADERS ITA NO.68/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 4 | 5 I.E. PERSONS WHO ARE LEAST EXPECTED TO INVEST IN PRIVATE COMPANIES. NONE OF THEM HAVE PRODUCED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THEIR INCOME AND ALL ARE SHARE CROPPERS. THEIR AGRICULTURE LAND HOLDING IS MEAGER. THE RETAIL TRADERS ARE NEITHER ASSESSED TO INCOME TAX NOR BY THE COMMERCIAL TAX DEPARTMENT. THEREFORE, THE CIT(A) HELD THAT THE AO WAS RIGHT IN TREATING THE SHARE CAPITAL AS BOGUS. LD CIT(A) ALSO ISSUED ENHANCEMENT NOTICE TO THE ASSESSEE WHICH WAS DULY REPLIED BY THE ASSESSEE AS IS EVIDENT FROM PARA 6.3.1 OF THE CIT(A) ORDER. 8. FURTHER FROM THE RELEVANT PARA OF THE CIT(A) ORDER, WE CLEARLY OBSERVE THAT THE CIT(A) HAS CATEGOR ICALLY HELD THAT SHAREHOLDERS HAVE NOT BEEN PRODUCED BEFORE HIM AND ALL THE SHAREHOLDERS HAVE PAID MONEY IN CASH AND ARE MEN OF MEAGRE MEANS. NONE OF THEM ARE ASSESSED TO TAX AND IN FACT DO NOT HAVE SUFFICIENT AGRICULTURAL LAND TO SUPPORT THEM FOR A FULL YEAR FOR WHICH THEY HAVE TO TAKE LAND ON SHARE CROPPING BASIS FROM OTHER LAND HOLDERS. LD CIT(A) FURTHER NOTED THAT EXCEPT FILING IDENTICAL CONFIRMATIONS WRITTEN IN ALMOST SAME HANDWRITING, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE REGARDING SURPLUS INCO ME OF THESE PERSONS WHICH WILL LEAD THEM TO INVEST IN PRIVATE COMPANIES. LOOKING INTO THE PLACE OF RESIDENCE, PROFESSION AND OTHER SURROUNDING CIRCUMSTANCES, LD CIT(A) HELD THAT IT IS HIGHLY IMPROBABLE THAT THESE POOR FARMERS WILL INVEST EVEN WHATEVER MEA GER SAVINGS THEY HAVE IN INSTRUMENTS LIKE SHARES. THEREAFTER, THE CIT(A) DRAWN THE CONCLUSION THAT THE ASSESSEE HAS TRIED TO INTRODUCE HIS OWN CASH IN THE ITA NO.68/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 5 | 5 NAME OF THESE POOR SUBSISTENT FARMERS HELD THAT ENTIRE SHARE CAPITAL OF THESE FIVE PERSONS AMOUNTING TO RS.3,85,000/ - IS LIABLE TO ADDED U/S.68 OF THE ACT. WE ARE NOT ABLE TO SEE ANY VALID REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A) IN ENHANCING AND CONFIRMING THE ADDITION. WE ALSO FIND THAT THE VIEW TAKEN BY THE LD CIT(A) IS FORFEITED BY THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF PRINCIPAL CIT VS. NRA IRON & STEEL PVT. LTD. IN PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO.29855/2018 ORDER DATED 05/03/2019. WE, ACCORDINGLY, UPHOLD THE SAME. 9. IN THE RESULT, APPEAL FILED BY THE ASSESS EE IS DISMISSED. ORDER PRONOUNCED ON 28 / 1 1 /201 9 . S D/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 28 / 1 1 /20 1 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : HOTEL MAMSI KRISHNA PVT LTD., NEW COLONY, RAYAGADA 2. THE RESPONDENT. ITO, RAYAGADA WARD, RAYAGADA 3. THE CIT(A) - , BERHAMPUR 4. PR.CIT - , B ERHAMPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//