ITO, New Delhi V. M/s. Valley Iron & Steel Co. Pvt. Ltd, New Delhi

ITA 687/DEL/2010

• Counselvise Citation: 68720114 RSA 2010
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 06-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 687/DEL/2010 ASSTT. YR: 2004-05 INCOME-TAX OFFICER VS. M/S VALLEY IRON & STEEL C O. PVT. LTD. WARD 17(1), NEW DELHI. A-104/10, WAZIRPUR INDL. AREA, NEW DELHI. PAN: AAACV 4632 N ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI SUNIL GAUTAM SR. DR RESPONDENT BY : SHRI RAJ KUMAR CA O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DA TED 18-11-2009, RELATING TO A.Y. 2004-05. SOLE GROUND RAISED IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,98,07,4 00/- MADE U/S 68 OF THE I.T. ACT WITHOUT APPRECIATING THE FACT TH AT THE IDENTITY AND CREDIT WORTHINESS OF THE PARTIES AND GENUINENES S OF TRANSACTION WAS NOT ESTABLISHED SATISFACTORILY. 2. LD. COUNSEL FOR THE ASSESSEE AT THE OUT SET CONT ENDS THAT THE GRIEVANCE OF THE REVENUE DOES NOT EXIST INASMUCH AS THE RIGHT AMOUNT IN QUESTION HAS BEEN OFFERED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION AND VIDE ORDER DATED 31-07-2013 IN SETTLEMENT APPLICATION NO S. DL/DCS/2011- 12/132-IT THE SETTLEMENT AMOUNT HAS BEEN FIXED, TAX ES THEREIN HAVE BEEN PAID BY THE ASSESSEE. 2 2.1. LD. COUNSEL CONTENDS THAT THE ASSESSING OFFICE R MADE ADDITION OF RS. 3,98,07,400/- U/S 68 ALLEGING THAT THE SHARE APPLIC ATION MONEY RECEIVED BY THE ASSESSEE WAS UNEXPLAINED. IN GROUND NO. 2(B) B EFORE CIT(A) HAS TAKEN A GROUND THAT THE ASSESSEE HAD RECEIVED ONLY AMOUNT O F RS. 2,91,16,640/-. THIS GROUND IS AS UNDER: 2(B) THAT THE ADDITION ON ACCOUNT OF SHARE APPLICA TION MONEY/ SHARE CAPITAL MADE OF 40 SHARE APPLICANTS AS STATED IN THE ASSESSMENT ORDER IS WRONG IN VIEW OF THE FACT THAT FROM THESE 40 SHARE HOLDERS/ SHARE APPLICANTS DURING THE YEAR UND ER APPEAL APPELLANT RECEIVED ONLY RS. 2,91,16,640/- THEREFORE , THE REST OF THE ADDITIONS MADE FROM THESE PARTIES DOES NOT PERT AIN TO THE YEAR UNDER APPEAL OR NEVER HAVE BEEN RECEIVED. 2.2. A RECONCILED LIST OF THE SHARE APPLICANTS COMP RISED IN THE ABOVE AMOUNT OF RS. 2,91,16,640/- IS LISTED BY CIT(A) AT PAGE 10 OF HIS ORDER. 2.3. CIT(A) ON MERITS DELETED THE ADDITION BY FOLLO WING OBSERVATIONS: 16. I HAVE NO HESITATION TO CONCLUDE THAT THE ASSE SSEE AHS PROVIDED NECESSARY DETAILS INCLUDING THE WORD/ CIRC LE WHERE THE SHARE APPLICANTS/ INVESTING COMPANIES WERE ASSE SSED TO INCOME TAX AND DISCHARGED THE ONUS CAST ON IT. THE SHARE APPLICANTS/ INVESTING COMPANIES WERE ALSO ALLOTTED SHARES AND THE DETAILS WERE MADE AVAILABLE. THE AO HAS NOT BRO UGHT ANYTHING ON RECORD TO DISPUTE THE FACTS/ DETAILS FU RNISHED BY THE ASSESSEE DESPITE CONDUCTING INDEPENDENT ENQUIRI ES. 17. THE LAW OF EVIDENCE MANDATES THAT IF THE BEST E VIDENCE IS NOT PLACED BEFORE THE COURT, AN ADVERSE INFERENCE C AN BE DRAWN AS AGAINST THE PERSON WHO OUGHT TO HAVE PRODU CED IT. AS STATED ABOVE THAT THE ASSESSEE HAS PRODUCED POSS IBLE/ BEST EVIDENCE TO SUPPORT ITS CLAIM. THE ASSESSEE CANNOT BE FASTENED WITH TAX LIABILITY FOR FAILING TO DO AN IMPOSSIBLE ACT OF PRODUCTION OF DIRECTOR/S OF SHARE APPLICANTS/ INVES TING COMPANIES. 3 18. THE AO HAS SIMPLY ACTED ON THE INFORMATION RECE IVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE COMPANY AND ALSO NOT PLA CING BEFORE THE ASSESSEE THE INFORMATION AND FINDINGS OF THE INVESTIGATION WING VIOLATING THE PRINCIPLES OF NATU RAL JUSTICE. 19. IF THERE IS ANY DISCREPANCY IN THE BOOKS OF ACC OUNTS MAINTAINED BY THE INVESTIGATING COMPANIES, THERE IS A CASE FOR REOPENING OF THE ASSESSMENT OF THE RESPECTIVE SHARE HOLDERS/ INVESTING COMPANIES. 20. THE ASSESSEE CANNOT BE PENALIZED FOR THE MISTAK E/ FAULTS COMMITTED BY THE SHARE HOLDERS. THE AO HAS NOT FOUN D ANY DISCREPANCY IN THE BOOKS OF ACCOUNT AND BANK ACCOUN TS MAINTAINED BY THE ASSESSEE. 21. IT IS SETTLED PRINCIPLE OF LAW THAT NO ADDITION / DISALLOWANCE CAN BE MADE ON SUSPICION, SURMISES AND CONJECTURES AS HELD BY THE HONBLE SUPREME COURT IN THE FOLLOWING CASES: A) DHIRAJLAL GIRDHARILAL V. CIT 26 ITR 736 B) OMAR SALAY MOHAMMED SAIT V. CIT 37 ITR 151 C) DHAKESHWARI COTTON MILLS LTD. V. CIT 26 ITR 775 D) LALCHAND BHAGAT AMBICA RAM V. CIT 37 ITR 288 22. IN THE CASE OF ACCHYALAL SHAW V. ITO (2009) 30 SOT 44 (KOL.) (URO), THE ITAT OBSERVED AS UNDER: SUSPICION CANNOT REPLACE EVIDENTIAL DOCUMENT. SIMP LE ARGUMENT OR ALLEGATION OF MANIPULATION IS NOT SUFFI CIENT WITHOUT PROPER EVIDENCE. 23.1. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND AVAILABLE LEGAL POSITION, THE SHARE CAPITAL TO THE EXTENT OF RS. 3,98,07,400/- (RECONCILED AMOUNT WAS RS. 2,91,16,64 0/-) STANDS EXPLAINED. 4 2.4. THUS, THE ACTUAL AMOUNT UNDER DISPUTE IS RS. 2 ,91,16,640/- AND NOT THE AMOUNT AS AGITATED BY THE REVENUE. THOUGH CIT(A) HE LD IN FAVOUR OF THE ASSESSEE, TO END THE LITIGATION IT APPROACHED THE S ETTLEMENT COMMISSION. 2.5. THE SETTLEMENT COMMISSION VIDE ORDER DATED 31- 07-2013 PASSED U/S 245D(4) HAS SETTLED THE DISPUTE AND AMOUNT AS UNDER BY FOLLOWING COMPUTATION: NAME OF THE APPLICANT ASSTT. YEAR TOTAL INCOME AS PER RETURN (IN RS) INCOME DISCLOSED U/S 245(1)(IN RS.) INCOME SETTLED U/S 245D(4) TOTAL INCOME DETERMINED U/S 245D(4) (IN RS.) M/S VALLEY IRON & STEEL CO. 2004-05 -92,66,470 1,25,20,770 2,93,89,640 2,01,23, 170 2005-06 0 1,18,80,000 1,18,80,000 1,18,80,000 2006-07 0 1,28,13,767 10,48,85,000 10,48,85,000 2007-08 0 1,36,81,575 10,30,00,000 10,30,00,000 2008-09 0 1,58,12,280 16,95,12,280 16,95,12,280 2009-10 12,58,36,390 1,73,93,508 21,03,50,458 33,61,86,848 2010-11 0 1,91,32,859 1,91,32,859 1,91,32,859 TOTAL 11,65,69,920 10,32,34,759 64,81,50,237 76,47,20,157 2.6. THUS, IN A.Y. 2004-05 THE AMOUNT SETTLED IS RS . 2,93,89,640/-WHICH IS MORE THAN THE RECONCILED AMOUNT OF ADDITION OF RS. 2,91,16,640/-. CIT(A)S ORDER REVEALS THAT IMPUGNED ORDER OF CIT(A) DECIDIN G THE ISSUE IN FAVOUR OF THE ASSESSEE ON MERITS OF THE CASE WAS PASSED ON 18 -11-2009 WHEREAS THE SETTLEMENT COMMISSIONS ORDER U/S 245D(4) IS DATED 31-07-2013. HOWEVER, TO AVOID FURTHER LITIGATION, THEREAFTER, ASSESSEE PREFERRED PETITION ON 16-1- 2012 ON WHICH THE SETTLEMENT COMMISSION HA SETTLED THE DISPUTED AMOUNT OF SHARE APPLICATION MONEY AT RS. 2,93,89,640/-. SINCE THE ISSUE STANDS SETTLED BY THE SETTLEMENT COMMISSION, THE REVENUES APPEAL DOES NOT SURVIVE. 5 3. LD. DR IS HEARD. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS IT IS CLEAR TH AT THE CORRECT RECONCILED AMOUNT IS RS. 2,91,16,640/- AND NOT THE ONE AS RAIS ED BY THE REVENUE. THE SETTLEMENT COMMISSION HAS SETTLED THE AMOUNT AT RS. 2,93,89,640/-,MORE THAN THE RECONCILED AMOUNT OF ADDITION. IN VIEW THE REOF, THE AMOUNT HAVING BEEN SETTLED BY THE SETTLEMENT COMMISSION AND THE A SSESSEE HAVING FILED THE TAX THEREON, THE REVENUES APPEAL DOES NOT SURVIVE. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13-09-2013. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH SEPT. 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR