Ved Sassomeccanica (India) Pvt. Ltd., Kanpur V. Income Tax Officer-6(2), Kanpur

ITA 715/LKW/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4828 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-01-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 10-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH GIDWANI
• Keywords: Unexplained cash credit
• Section: 234B; 133(6); 147; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.715/LKW/2014 ASSESSMENT YEAR 2001-02 ITO - 6(2), KANPUR VS VED SASSOMECCANICA (INDIA) (P)LTD. D-18/1, SITE NO.1, PANKI INDUSTRIAL AREA, KANPUR PAN AAACV 4747 Q (RESPONDENT) (APPELLANT) SHRI ABHINAV MEHROTRA, ADVOCATE APPELLANT BY SHRI HARISH GIDWANI, DR RESPONDENT BY 06/01/2016 DATE OF HEARING 21/01/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A)-I, KANPUR DATED 21.05.2014 FOR THE AY 2001-02. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ASSESSMENT PR OCEEDINGS, IN THE CASE OF THE ASSESSEE ARE BARRED BY LIMITATION AND H ENCE ORDER PASSED IS BAD IN LAW. 2 2. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ASSESSMENT PR OCEEDINGS, IN THE CASE OF THE ASSESSEE ARE BAD IN LAW SINCE THE PURPO RTED REASONS TO BELIEVE, DO NOT HAVE LIVE LINK NEXUS TO THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 3. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.5 LACS TO THE APPELLANT'S INCOME AS UNEXPLAINED CASH CREDITS, WHEN THE APPELLANT HAD ALREADY PLACED ON RECORD CREDIBLE EVI DENCE TO SUBSTANTIATE ITS CLAIM AND HAS DISCHARGED ITS ONUS. 4. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT (A) ERRED IN LAW AND ALSO ON FACTS IN NOT APPRE CIATING THAT THE INVESTMENT HAS BEEN MADE IN THIS COMPANY BY OTHER C ORPORATE ENTITIES, DULY INCORPORATED AND RECOGNIZED IN THE E YES OF LAW. 5. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN HOLDING THAT T HE AMOUNT OF RS. 5 LAC REPRESENTED UNDISCLOSED INCOME OF THE APPELLANT COMPANY. 6. BECAUSE THE LD. CIT (A) FAILED TO APPRECIATE TH AT EXCESS INTEREST U/S 234B HAS BEEN CHARGED IN THE APPELLANT'S CASE WHILE DRAWING OUT THE NOTICE OF DEMAND. 7. BECAUSE THE ORDER PASSED IS BAD IN LAW AND DESE RVES TO BE QUASHED. 8. THE APPELLANT CRAVES FOR LEAVE TO ADD/AMEND THE GROUNDS OF APPEAL, WITH THE PERMISSION, OF THE HONBLE BENCH. 3. IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE GROUNDS NO. 1 AND 2 ARE NOT PRESSED AND ACCORDINGLY THESE TWO GROUNDS A RE REJECTED AS NOT PRESSED. 4. REGARDING GROUND NO.3, LD. AR OF THE ASSESSEE HA S PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- 3 A.) DCIT VS. M/S RANA GIRDERS LTD. REPORTED IN ITA NO. 138 OF 2013 DATED 05.03.2013, COPY FILED. B) CIT VS. DWARKADHISH INVESTMENT (P.) LTD. REPORTE D IN [2010) 194 TAXMAN 43 (DELHI). C) ACIT VS. M/S MAA SHARDA BUILDTECH PVT. LTD. IN I TA NO. 578/LKW/2014 DATED 23.09.2015, COPY FILED. D) ACCHYLAL SHAW VS. ITO REPORTED IN [2009] 30 SOT 44 (KOL.) (URO) E) DCIT VS. M/S TULSYAN VASTRALAYA (P) LTD. , ITA N O. 473/LKW/2011 DATED 12.11.2013, COPY FILED. 5. AS AGAINST THIS, LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. REGARDING RELIANCE PLACED BY LD. AR OF THE ASSESSEE ON VARIOUS JUDICIAL PRONOUNCEMENTS, HE SUBMITTED THAT THESE JUDGMENTS A RE NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE PROCEEDINGS U/S 147 OF ACT WERE INITIATED IN THIS CASE ON THE BASIS OF THE INF ORMATION THAT THE ASSESSEE COMPANY HAS TAKEN ENTRIES IN THE FORM OF SHARE APPL ICATION MONEY VIDE TWO DEMAND DRAFTS OF RS.2.50 LAKH EACH IN ITS FAVOUR FR OM M/S PERFORMANCE TRADING & INVESTMENT PVT. LTD. AND M/S PARTICULAR MANAGE FIN LEASE (INDIA) (P) LTD. WE HAVE ALSO NOTED THAT NOTICES WERE ISSUED TO THESE COMPAN IES U/S 133(6) OF THE ACT. BUT THESE NOTICES WERE RETURNED BY THE POSTAL AUTHORITY WITH THE REMARKS THAT THERE IS NO SUCH FIRM. IN THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE PRESENT POSTAL AD DRESS OF THESE TWO COMPANIES BUT EVEN AFTER TAKING SEVERAL ADJOURNMENTS, LD. AR OF THE ASSESSEE DID NOT PROVIDE THE PRESENT ADDRESSES OF THESE TWO COMPANIES TO THE ASSESSING OFFICER. THEREAFTER, THE ASSESSING OFFICER ISSUED THE SHOW C AUSE NOTICE TO THE ASSESSEE 4 ASKING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE REC EIPT OF RS.5.00 LAKH FROM THESE TWO COMPANIES SHOULD NOT BE ADDED AS INCOME O F THE ASSESSEE AS UNEXPLAINED CASH CREDIT BECAUSE THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THESE TWO COMPANIES ALONG WITH GENUINENESS OF THE TRANSACTION. IN REPLY TO THIS SHOW CAUSE NOTICE DAT ED 23.12.2008, THE ASSESSEE COMPANY SUBMITTED REPLY DATED 30.12.2008, IN WHICH IT WAS STATED THAT AMOUNT IN QUESTION WAS RECEIVED FROM THESE TWO COMPANIES BY W AY OF TWO DEMAND DRAFTS OF RS.2.50 LAKH EACH AND ALSO PROVIDED DISTINCTIVE NUM BER OF THE SHARE ALLOTTED BY THE ASSESSEE TO THESE TWO COMPANIES. THE ASSESSEE ALSO FURNISHED COPY OF THE APPLICATION FORM RECEIVED FROM THESE TWO COMPANIES ALONG WITH THEIR CONFIRMATION AND INCOME TAX RETURN COPY AND IT WAS ALSO SUBMITTE D THAT PRESENT ADDRESS IS NOT KNOWN. UNDER THESE FACTS, THE ASSESSING OFFICER HAS MADE ADDITION OF RS.5.00 LAKH U/S 68 OF THE ACT. IT HAS CONFIRMED BY THE LD. CIT( A). NOW IN THE LIGHT OF THESE FACTS, WE EXAMINE THE APPLICABILITY OF VARIOUS JUDI CIAL PRONOUNCEMENTS CITED BY LD. AR OF THE ASSESSEE. 7. FIRST JUDGMENT CITED BY HIM IS THE JUDGMENT OF H ONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF DCIT VS. M/S RANA GIRDERS L TD. (SUPRA). IN THIS CASE, IT IS HELD BY HONBLE ALLAHABAD HIGH COURT THAT TRIBUNAL HAS FOLLOWED THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF LOVE LY EXPORTS PVT. LTD. & OTHERS 216 CTR 195 (SC) AND BECAUSE OF THIS, HONBLE HIGH COURT HAS CONFIRMED THE TRIBUNAL ORDER IN THAT CASE. IN THE PRESENT CASE, I T HAS TO BE SEEN AS TO WHETHER FACTS ARE IDENTICAL WITH THE FACTS IN THE CASE OF L OVELY EXPORTS PVT. LTD (SUPRA) OR NOT BECAUSE THE FACTS IN THE CASE OF DCIT VS. RANA GIRDERS LTD.(SUPRA) ARE NOT AVAILABLE IN THE COPY OF JUDGMENT BROUGHT ON RECORD BY LD. AR OF THE ASSESSEE. AS PER THE FACTS IN THE CASE OF LOVELY EXPORTS PVT. LT D. & OTHERS (SUPRA), IT WAS HELD BY THE HONBLE APEX COURT THAT THE DEPARTMENT IS FR EE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF THE INVESTORS BUT ADDITIO N CANNOT BE MADE IN THE CASE OF 5 THE COMPANY WHO RECEIVED THE SHARE APPLICATION MONE Y. IN THIS REGARD, WE ARE OF THE CONSIDERED OPINION THAT WHEN THE PRESENT ADDRES S OF THE ALLEGED SHAREHOLDERS IS NOT BROUGHT ON RECORD BY THE ASSESSEE, IT IS NOT POSSIBLE FOR THE DEPARTMENT TO TAKE ACTION IN THE CASE OF THESE ALLEGED SHAREHOLDE RS AND THEREFORE, IN THE FACTS OF THE PRESENT CASE, THIS JUDGMENT OF THE HONBLE APEX COURT IS NOT APPLICABLE AND AS A CONSEQUENCE, JUDGMENT OF HONBLE ALLAHABAD HIGH C OURT ON WHICH RELIANCE HAS BEEN PLACED BY THE LD. AR OF THE ASSESSEE BEFORE US IS ALSO NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 8. THE SECOND JUDGMENT, ON WHICH RELIANCE HAS BEEN PLACED BY LD. AR OF THE ASSESSEE IS A TRIBUNAL ORDER RENDERED IN THE CASE O F ACIT VS. M/S MAA SHARDA BUILDTECH PVT. LTD. (SUPRA). IN THIS CASE, THE TRIB UNAL FOUND THAT ASSESSEE HAS FURNISHED VARIOUS DOCUMENTS SUCH AS CONFIRMATION, S HARE APPLICATION FORM AND INCOME TAX RETURN BUT NO ENQUIRY WAS MADE BY THE A. O. FROM THE A.O. OF THE SHARE APPLICANTS AND NO OTHER ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD EXCEPT STATING THAT BANK STATEMENT OF ALL SEVEN SHA RE APPLICANTS AND INCOME TAX RETURN OF TWO APPLICANTS WERE NOT FURNISHED. UNDER THESE FACTS, IT WAS HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 O F THE ACT IS NOT JUSTIFIED. IN THE PRESENT CASE ALSO, THE COPY OF SHARE APPLICATION FO RM FROM BOTH THESE SHARE APPLICANTS ALONG WITH THEIR CONFIRMATION AND COPY O F INCOME TAX RETURN FOR AY 1999-2000 ETC. ARE AVAILABLE ON RECORD. IN THE COPY OF INCOME TAX RETURN OF BOTH THESE SHARE APPLICANTS AVAILABLE ON PAGES 43 TO 44 AND 78 TO 79 OF THE PAPER BOOK, GIR NO. ALONG WITH PARTICULARS OF THE ASSESSI NG OFFICER OF THESE TWO SHARE APPLICANT ARE ALSO AVAILABLE. COPY OF THE ASSESSMEN T ORDER U/S 143 (3) FOR AY 1997-98 IN THE CASE OF M/S PERFORMANCE TRADING & IN VESTMENT PVT. LTD. IS ALSO AVAILABLE ON PAGE 45 OF THE PAPER BOOK AND SIMILARL Y, ON PAGE 88 OF THE PAPER BOOK, COPY OF INTIMATION FOR AY 1999-2000 FOR THE S ECOND SHARE APPLICANT IS AVAILABLE. THEREFORE, IT HAS TO BE ACCEPTED THAT GI R NUMBER ALONG WITH PARTICULARS 6 OF THE ASSESSING OFFICER OF BOTH THESE TWO SHARE AP PLICANTS WERE MADE AVAILABLE BY THE ASSESSEE TO THE ASSESSING OFFICER AND THIS IS A LSO A FACT THAT NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER OF THE ASSESSEE IN TH E PRESENT CASE FROM THE ASSESSING OFFICER OF THESE TWO SHARE APPLICANTS AND THEREFORE, THE FACTS IN THE PRESENT CASE ARE SIMILAR WITH THE FACTS IN THE CASE OF CIT VS. M/S MAA SHARDA BUILDTECH PVT. LTD. (SUPRA) AND THEREFORE, RESPECTF ULLY FOLLOWING THIS TRIBUNAL ORDER, WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFF ICER U/S 68 OF THE ACT IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WITHOUT BRINING ANY ADVERSE MATERIAL ON RECORD AND WITHOUT MAKING ANY E NQUIRY FROM THE ASSESSING OFFICER OF THESE TWO SHARE APPLICANTS IS NOT JUSTIF IED. WE, THEREFORE, DELETE THE SAME. OTHER JUDGMENTS ARE NOT REQUIRED TO BE DISCUS SED BECAUSE THE ISSUE GETS DECIDED BY FOLLOWING THIS TRIBUNAL ORDER. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21/01/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REG ISTRAR