Deepak Petrochem Ltd., Baroda V. The ACIT.,Circle-1(1), Baroda

ITA 739/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9055 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-02-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 08-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 739/AHD/2011 (ASSESSMENT YEAR: 2002-03) DEEPAK PETROCHEM LTD. 303, B.N. CHAMBERS, R.C. DUTT ROAD, ALKAPURI, BARODA-390 005 V/S ACIT, CIRCLE-1(1), BARODA (APPELLANT) (RESPONDENT) PAN: AAKACD7462L APPELLANT BY : MS. URVASHI SHODHAN, AR RESPONDENT BY : SHRI ASHISH POPHARE, SR. D.R . ( )/ ORDER DATE OF HEARING : 28 -02-201 7 DATE OF PRONOUNCEMENT : 02 -03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I, BARODA DATED 18.01.2011 PERTAINING TO A.Y. 2002-03. ITA NO. 739/ AHD/2011 . A.Y. 2002-03 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSES SEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,46 ,98,600/- U/S. 68 OF THE ACT. 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF INDUSTRIAL AND SPECIALITY OILS. THE ASSESSEE IS A PUBLIC LIMITED COMPANY. T HE MAIN OBJECT OF WHICH IS TO PRODUCE INDUSTRIAL OILS AND HYDROCARBON OF VARIO US NATURES. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE AUTHORIZED SHARE CAPITAL OF THE ASSESSEE H AS BEEN INCREASED TO 3 CRORES AS AGAINST RS. 1 CRORE SHOWN IN THE IMMEDIAT ELY PRECEDING ASSESSMENT YEAR. THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF SHARE APPLICATION MONEY ALONG WITH PAN, NAME OF SHAREHOLD ER, AMOUNT, DATE, MODE OF PAYMENT WITH CHEQUE NO. AND NAME AND ADDRES S OF THE BRANCH OF THE BANK. 5. VIDE A LETTER DATED 10.11.2004; THE ASSESSEE FILED THE DETAILS OF SHARE APPLICATION MONEY. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, THE A.O. FOUND THAT THE ASSESSEE HAS ACCEPTED THE SHARE APPL ICATION MONEY FROM 273 PARTIES OUT OF WHICH SHARE APPLICATION MONEY HA S BEEN RECEIVED IN CASH FROM 272 PARTIES. THE A.O. FURTHER FOUND THAT IN AL L THESE CASES FULL ADDRESS, PAN AND OTHER DETAILS HAVE NOT BEEN PROVIDED. 6. THE A.O. ISSUED NOTICE U/S. 133(6) OF THE ACT IN FE W CASES WHICH WERE RETURNED UNSERVED. THE A.O. THEREAFTER ASKED THE AS SESSEE TO PROVE THE ITA NO. 739/ AHD/2011 . A.Y. 2002-03 3 CREDIT OF SHARE APPLICATION MONEY IN THE LIGHT OF T HE PROVISIONS OF SECTION 68 OF THE ACT. ON RECEIVING NO PLAUSIBLE REPLY, THE A. O. WAS CONVINCED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST UPON IT BY THE PROVISIONS OF SECTION 68 OF THE ACT. ADDITION OF RS. 1,46,98,600/ - WAS ACCORDINGLY MADE. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A). IT WAS STRONGLY CONTENDED THAT IN 15 CASES AMOUNTS WERE RECEIVED BY CHEQUES. PHOTO COPIES OF SHARE APPLICATION FORMS WERE ALSO SUBMITT ED. THE ASSESSEE STRONGLY CONTENDED THAT IT HAS ESTABLISHED THE IDEN TITIES OF THE PERSONS FROM WHOM SHARE APPLICATION MONEY HAS BEEN TAKEN. 8. THE FIRST APPELLATE AUTHORITY CALLED FOR A REMAND R EPORT FROM THE A.O. AND THE A.O. SUBMITTED THE REMAND REPORT DATED 08.03.20 07 IN WHICH ONCE AGAIN RANDOMLY SELECTED APPLICANTS WERE ISSUED SUMM ONS WHICH RETURNED UNSERVED. MAJORITY OF THE SUMMONS WERE RETURNED UNS ERVED BECAUSE OF INCOMPLETE ADDRESS. 9. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) OBSERVED THAT THE NAMES AND ADDRESSES OF THE SHARE APPLICATI ONS WOULD BE IN THE KNOWLEDGE OF THE ASSESSEE COMPANY AND, THEREFORE, IT IS NOT IMPOSSIBLE TO LOCATE THE SHARE APPLICANTS AND THE ASSESSEE FAILED TO ESTABLISH EVEN THE IDENTITIES OF THE SHARE APPLICANTS. THE LD. CIT(A) FURTHER OBSERVED THAT THE CHEQUES ISSUED WERE IN SERIAL NOS. FROM 00490, 2005 03 OF THE SAME BANK. THE LD. CIT(A) WAS OF THE FIRM BELIEF THAT IT WOULD BE FARFETCHED THAT APPLICANTS LOCATED IN DIFFERENT VILLAGES WOULD ISSU E CHEQUES FROM THE SAME ITA NO. 739/ AHD/2011 . A.Y. 2002-03 4 CHEQUE-BOOK. THE LD. CIT(A) WAS FINALLY CONVINCED T HAT THE A.O. FAILED TO DISCHARGE THE INITIAL BURDEN CAST UPON IT BY THE PR OVISIONS OF SECTION 68 OF THE ACT AND ACCORDINGLY CONFIRMED THE ADDITIONS MAD E BY THE A.O. 10. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 11. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY STATED THAT THE ASSESSEE HAS FURNISHED THE COMPLETE LIST OF THE SHARE APPLICANTS WHEREIN FULL NAMES AND ADDRESSES ARE GIVEN. IT IS THE SAY OF THE LD. COUNS EL THAT ALL THE APPLICANTS ARE AGRICULTURISTS AND, THEREFORE, DO NOT HAVE PAN NUMB ERS. THE LD. COUNSEL CONCLUDED BY SAYING THAT THE ASSESSEE HAS DISCHARGE D THE BURDEN CAST UPON IT AND, THEREFORE, THE ADDITIONS MADE SHOULD BE DEL ETED. 12. PER CONTRA, THE LD. D.R. HEAVILY RELIED UPON THE FI NDINGS OF THE LOWER AUTHORITIES. 13. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAD DURING THE YEAR ACCEPTED SHARE APPLICATION MONEY FROM 273 PARTIES. IT IS ALSO TRUE THAT THE ASSESSEE HAS FURNISHED THE NAMES AND ADDRESSES OF T HE PARTIES IN THE LIST FILED BEFORE THE LOWER AUTHORITIES. IT IS EQUALLY T RUE THAT THE NOTICES ISSUED U/S. 133(6) OF THE ACT AND THE SUMMONS ISSUED BY TH E A.O. WERE RETURNED UNSERVED. A PERUSAL OF THE LIST OF THE SHARE APPLIC ANTS SHOW THAT ONLY THE NAMES AND THE NAME OF THE VILLAGE ARE GIVEN. IT IS ALSO TRUE THAT THE ASSESSEE HAS RECEIVED CHEQUES FROM THE SAME CHEQUE- BOOK BEARING NO. ITA NO. 739/ AHD/2011 . A.Y. 2002-03 5 00490, 200503. IT IS IMPOSSIBLE FOR DIFFERENT SHARE APPLICANTS RESIDING AT DIFFERENT VILLAGES USING THE SAME CHEQUE BOOK FOR T HE APPLICATION OF SHARES. 14. IT APPEARS THAT THE SHARE APPLICATION MONEY INTRODU CED BY THE ASSESSEE COMPANY IN HIS BOOKS OF ACCOUNTS IS NOTHING BUT THE UNACCOUNTED INCOME OF THE ASSESSEE BROUGHT IN THE BOOKS OF ACCOUNTS IN THE FORM OF SHARE APPLICATION MONEY. 15. OUR VIEW IS FORTIFIED BY THE FACT THAT THE ALLEGED SHARE APPLICANTS WHO ARE AGRICULTURISTS HAVE APPLIED FOR THE SHARES OF AN UN LISTED COMPANY FROM WHICH THEY ARE NOT GOING TO DERIVE ANY BENEFIT WHAT SOEVER IN FUTURE BY THE APPRECIATION IN THE MARKET VALUE OF THE SHARES. 16. IN OUR CONSIDERED OPINION, IN THE CONTEXT OF THE PR EPONDERANCE OF PROBABILITIES, THE IMPUGNED SHARE APPLICATION MONEY IS NOT GENUINE AND THE ASSESSEE HAS GROSSLY FAILED IN DISCHARGING THE INIT IAL BURDEN CAST UPON IT BY THE PROVISIONS OF SECTION 68 OF THE ACT. WE, THEREF ORE, DECLINE TO INTERFERE WITH THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 17. BEFORE PARTING, THE LD. COUNSEL FOR THE ASSESSEE PL ACED RELIANCE ON THE DECISION OF THE LD. CIT(A) GIVEN FOR A.Y. 1990-91. IT IS THE SAY OF THE LD. COUNSEL THAT IN EARLIER ASSESSMENT YEAR ALSO, ADDIT IONS WERE MADE U/S. 68 OF THE ACT IN RESPECT OF MONEYS RECEIVED FROM SHAREHOL DERS AND THE SAME HAS BEEN DELETED BY THE LD. CIT(A) IN APPEAL NO. CAB/XV I/3/93-94 VIDE ORDER DATED 10.11.1993. THE LD. COUNSEL STATED THAT THE R EVENUE HAS NOT ITA NO. 739/ AHD/2011 . A.Y. 2002-03 6 PREFERRED ANY APPEAL BEFORE THE TRIBUNAL AND THE OR DER OF THE FIRST APPELLATE AUTHORITY HAS ATTAINED FINALITY, THEREFOR E, THE SAME VIEW SHOULD BE TAKEN. WE DO NOT FIND ANY FORCE IN THIS CONTENTI ON OF THE LD. COUNSEL. FIRSTLY, A PERUSAL OF THE ORDER OF THE FIRST APPELL ATE AUTHORITY RELIED UPON BY THE LD. COUNSEL SHOW THAT IN THAT YEAR, ON INVESTIG ATION IT WAS FOUND THAT THE PERSONS WHO ARE PURPORTED TO HAVE MADE THE INVESTME NT ARE NOT FICTITIOUS BUT ARE EXISTING AND HAVE GIVEN THE STATEMENTS WHIC H THOUGH CAST DOUBT BUT ALSO ESTABLISH THAT THEY HAD KNOWLEDGE ABOUT SO ME TRANSACTIONS WITH THE APPELLANT COMPANY. WHEREAS, THE FACTS OF THE CA SE IN HAND SHOW THAT THE ASSESSEE HAS GROSSLY FAILED TO ESTABLISH THE ID ENTITIES OF THE SHARE APPLICANTS. NONE OF THE SHARE APPLICANTS WERE PRODU CED BEFORE THE A.O. NOR ANY NOTICE COULD BE SERVED UPON THEM AS ALL THE NOT ICES/SUMMONS RETURNED UNSERVED. SECONDLY, IT IS NOT THE CASE OF THE LD. C OUNSEL THAT THE SHARE APPLICANTS FOR THE YEAR UNDER CONSIDERATION ARE THE SAME SHAREHOLDERS WHICH APPLIED IN THE IMMEDIATELY PRECEDING ASSESSME NT YEAR. THE APPEAL STANDS DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 02 - 03- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 02 /03/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT.