Globe Ecologistics Ltd., Ahmedabad V. The ACIT,Circle-4, Ahmedabad

ITA 739/AHD/2013

• Counselvise Citation: 73920514 RSA 2013
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS SHINDE
• Keywords: Unexplained cash credit; Search and seizure
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S. S. GODARA , JUDICIAL MEMBER M/S. GLOBE ECO LOGISTICS LTD, 201, SARAP, OPP. NAVJIVAN PRESS, ASHRAM ROAD, AHMEDABAD - 380014 PAN: AAACG3938J (APPELLANT) VS ACIT, RANGE - 4, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI VILAS SHINDE , SR. D . R. ASSESSEE BY: S H RI VINIT MOONDRA A.R. DATE OF HEARING : 18 - 08 - 2 015 DATE OF PRONOUNCEMENT : 04 - 09 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 20 08 - 09 , AR ISES FROM ORDER OF THE CIT(A) - VIII, AHMEDABAD DATED 22 - 01 - 2013 IN APPEAL NO. CIT(A) - I T A NO . 739 / A HD/20 13 A SSESSMENT YEAR 200 8 - 09 I.T.A NO.739 /AHD/20 13 A.Y. 2008 - 09 PAGE NO M/S. GLOBE ECO LOGISTICS LTD VS. ACIT 2 VIII / ADDL. CIT/R.4/745/0 10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2 . THE ASSESEE S SOLE SUBSTANTIVE GROUND CHALLENGES SECTION 68 ADDITION IN QU ESTION AMOUNTING TO RS. 10 LACS IN RESPECT OF ITS SHARE CAPITAL RECEIVED. THE ASSESSING OFFICER NOTICED IN THE COURSE OF SCRUTINY THAT IT HAD INTRODUCED SHARE CAPITAL OF RS. 1 CRO RE FROM VARIOUS PARTIES. ONE OF THEM HAPPENS TO BE M/S. GENUS COMMUTRADE PVT. LTD QUA THE IMPUGNED SUM OF RS. 10 LACS SHARE APPLICATION MONEY. THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) OF THE ACT. HE MENTIONS IN ASSESSMENT ORDER THAT THE TAPAL FIL E REVEALED A CONFIRMATION BY THIS ENTITY RECEIVED ON 09 - 11 - 2010. HE OBSERVES THAT THE MINISTRY OF CORPORATE AFFAIRS HAD PUT UP THIS ENTITY IN WATCH OUT INVESTORS LIST . THIS MADE HIM TO INVOLVE SECTION 68 OF THE ACT QUA THE IMPUGNED CAPITAL MONEY OF RS. 10 LACS QUOTING ITS POOR ANTECEDENTS AND LACK OF CONFIRMATION. 3. THE CIT(A) AFFIRMS ASSESSING OFFICER S ACTION AS UNDER: - 2.3. THE FACTS OF THE CASE HAVE BEEN CONSIDERED. THE AO HAS DISALLOWED THE SHARE CAPITAL OF RS. 10 LACS ON GROUNDS OF UNEXPLAIN ED CREDITS IN FORM OF SHARE CAPITAL U/S 68 OF THE INCOME TAX ACT, 1961 FROM M/S GENUS COMMU - TRADE PVT. LTD. THE APPELLANT HAS SUBMITTED THAT AO HAS MADE THE ADDITION FOR THE SHARE CAPITAL INTRODUCED ON THE GROUND THAT THE INVESTEE COMPANY HAS A BAD TRACK R ECORD AND THE CONFIRMATION WAS INCOMPLETE. HOWEVER, WE WISH TO BRING TO YOUR KIND NOTICE THAT FOR MAKING A DISALLOWANCE U/S 68, THE AO HAS TO PROVE THAT NEITHER OF THE 3 ELEMENTS HAVE BEEN SATISFIED, I.E. IDENTITY, SOURCE AND CREDIT WORTHINESS OF THE INVES TOR. THE APPELLANT HAS FURTHER SUBMITTED THAT AO HAS MADE THE ADDITION FOR THE CAPITAL INTRODUCED IN THE ASSESSEE'S CASE WITHOUT PROVING IT AS A FAKE ONE AND THE VARIOUS OFFENCES LISTED ON THE WEBSITE AS I.T.A NO.739 /AHD/20 13 A.Y. 2008 - 09 PAGE NO M/S. GLOBE ECO LOGISTICS LTD VS. ACIT 3 REPRODUCED BY THE AO NOWHERE PROVED THAT GENUS COMMU - TRADE PVT. LTD HAS MADE FICTITIOUS ENTRIES AND IN FACT, THE AO HAS ASSUMED THAT GENUS COMMU - TRADE PVT. LTD 'WOULD HAVE' GIVEN A FICTITIOUS ENTRY IN BOOKS OF THE ASSESSEE, BUT NOT PROVED THE SAME. 2.4. AFTER GOING THROUGH THE FACTS OF THE CASE, IT IS SEE N THAT WHILE CONFIRMATIONS WERE RECEIVED FROM MOST OF THE PARTIES BY THE AO, THE LETTER ISSUED TO GENUS COMMU - TRADE PVT LTD WAS RETURNED UNSERVED WITH THE COMMENTS 'LEFT,' ALTHOUGH THE LETTER ISSUED TO GENUS COMMU - TRADE PVT LTD RETURNED UNSERVED, A LETTER WAS RECEIVED ON 9/11/2010 IN TAPAL OF THE AO ABOUT THE INVESTMENT MADE BY THE GENUS COMMU - TRADE IN THE SHARES OF THE ASSESSEE COMPANY. HOWEVER, THE LETTER WAS UNDATED, DID NOT HAVE ANY DETAILS RELATING TO THE INVESTMENT AND IT HAD NO NAME OF DIRECTOR WHO HAD SIGNED THE LETTER. SECONDLY, THE AO HAS ENQUIRED THE ANTECEDENTS OF THIS COMPANY AND FOUND THAT THE COMPANY HAD BEEN INVOLVED IN A SERIES OF SHARE AND INVESTMENT RELATED FRAUDS FOR WHICH IT HAS BEEN INVESTIGATED AND LEVIED PENALTY/PUNISHMENTS BY THE CO MPETENT AUTHORITIES. IN VIEW OF THE ABOVE FACTS, THE CREDIBILITY OF THE COMPANY WAS SERIOUSLY DOUBTED. IT IS TO BE SEEN THAT THE NOTICE ISSUED TO THE GENUS COMMU - TRADE PVT LTD RETURNED UNSERVED WHICH IS A FACT FROM THE RECORDS, THEN HOW ALL OF SUDDEN THE LETTER FROM THIS COMPANY HAD BEEN FILED WITH THE AO ON 9/11/2010 IN TAPAL ABOUT THE INVESTMENT MADE BY THE GENUS COMMU - TRADE IN'..THE SHARES OF THE ASSESSEE COMPANY. THE IMPORTANT ASPECT IN THIS CASE IS THAT THE SO - CALLED INFORMATION WAS NOT PROPER AND GEN UINE AS - I). IT DOES NOT HAVE THE FULL ADDRESS OF THE COMPANY, II). THERE WAS NO NAME OF THE DIRECTOR OR ANY DESIGNATION WHO HAS SIGNED THE LETTER, III). DOES NOT HAVE ANY DETAILS OF THE TRANSACTIONS, IV). DOES NOT HAVE ANY ENCLOSURES LIKE BANK ACCOUNT DET AILS, V). THE LETTER IS UNDATED AND VI). DOES NOT BEAR THE SEAL OF THE COMPANY. THE APPELLANT HAS SUBMITTED THAT THE COMPANY MIGHT HAVE CHANGED THE ADDRESS OF HIS OFFICE, IT IS SEEN THAT THIS LETTER CANNOT BE TAKEN AS CONFIRMATION WHERE THERE IS NO DETAILS WHICH HAS BEEN ASKED BY THE APPELLANT. THIS LOOKS LIKE A PLOY TO MAKE APPEAR THE TRANSACTION GENUINE BEFORE THE AO. 2.5. THE APPELLANT HAS CITED MANY DECISIONS OF HON'BLE COURTS. THE FACTS AND THE CIRCUMSTANCES IN THE APPELLANT CASE ARE VERY UNIQUE AS D ISCUSSED IN ABOVE PARA. THEREFORE, CASE LAWS CITED BY THE APPELLANT ARE NO HELP TO THE APPELLANT CASE. THE APPELLANT HAS ALSO CITED THE CASE OF CIT V/S LOVELY EXPORTS [P] LTD [216 CTR 195(SC) AND SUBMITTED THAT EVEN IF IT IS BOGUS IT CANNOT BE HELD TO BE THE I.T.A NO.739 /AHD/20 13 A.Y. 2008 - 09 PAGE NO M/S. GLOBE ECO LOGISTICS LTD VS. ACIT 4 INCOME OF THE APPELLANT. THE RATIO OF THE ABOVE CASE CANNOT BE APPLIED BLINDLY IN THE APPELLANT CASE AS APPELLANT HAS NOT ALL SUBMITTED ANY RELEVANT DETAIL OF THE ABOVE SAID PARTY BEFORE THE AO. THE DELHI HIGH COURT IN ITS DECISION DATED 15/02/2012 IN CASE OF CIT VS NOVA PROMOTERS AND FINLEASE (P)LTD 18 TAXMANN.COM 217 HAS DISCUSSED THE CASE OF CIT V/S LOVELY EXPORTS [P]LTD [216 CTR 195(SC) AND HAS HELD THAT: - 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS O F THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSE SSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF - CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR U NACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERAND! IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAI LABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIV ITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS P ART OF A PRE - MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF TH3 SHARE APPLICANT AND I.T.A NO.739 /AHD/20 13 A.Y. 2008 - 09 PAGE NO M/S. GLOBE ECO LOGISTICS LTD VS. ACIT 5 THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HA NDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY'. THE FACTS OF THE CASE OF THE APPELLANT ARE LIKE THE ABOVEMENTIONED CASE. IN THE APPELLANT CASE, THE APPELLANT HAS NOT DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN VIEW OF THE ABOVE DISCUSSION, THE SHARE CAPITAL OF RS. 10 LACS IN FORM OF SHARE CAPITAL U/S 68 OF THE INCOME TAX ACT, 1961 FR OM M/S GENUS COMMU - TRADE PVT LTD IS HELD AS UNEXPLAINED CREDIT IN THE HANDS OF THE APPELLANT COMPANY. THE STAND OF THE AO IS CONFIRMED. THE GROUND OF THE APPELLANT IS DISMISSED. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. THE AS SE SSEE ARGUES THAT IT HAS PLACED ON RECORD SHARE APPLICATION FORM, BANK STATEMENT, CONFIRMATION COMPRISING OF DATE AND SEAL, INCOME TAX RETURN AND MEMORANDUM OF THE ENTITY IN QUESTION I.E. M/S GENUS COMMUTRADE (SUPRA) SO AS TO PROVE IDENTITY, GENUINENESS A ND CREDITWORTHINESS OF THE IMPUGNED SHARE CAPITAL AMOUNT ING TO RS. 10 LACS . BALANCE SHEET OF THIS ENTITY IS ALSO FILED FOR THE FIRST TIME IN THE TRIBUNAL. IT SUBMITS THAT THE AUTHORITIES BELOW HAVE WRONGLY MADE THIS ADDITION. THE REVENUE STRONGLY SUPP ORTS THE CIT(A) S ORDER AFFIRMING ASSESSING OFFICER S ACTION. IT IS EVIDENT TO US THAT EVEN THE ASSESSING AUTHORITY IS NOT SURE ABOVE HAVING RECEIVED CONFIRMATION FROM THE ABOVE STATED COMPANY. NOR HAS ANYBODY CLAIMED RESPONSIBILITY OF HAVING FILED THE S AME AT THE BEHEST OF M/S GENUS. COMING TO I.T.A NO.739 /AHD/20 13 A.Y. 2008 - 09 PAGE NO M/S. GLOBE ECO LOGISTICS LTD VS. ACIT 6 BALANCE SHEET OF THE SAID ENTITY, WE HAVE ALREADY OBSERVED THAT THE SAME IS FILED FOR THE FIRST TIME IN TRIBUNAL ONLY. THE LOWER AUTHORITIES DID NOT HAVE ANY OCCASION TO EXAMINE CORRECTNESS THEREOF. WE FEEL IN T HESE CIRCUMSTANCES THAT INTEREST OF JUSTICE WOULD BE MET IN CASE THIS ISSUE IS RESTORED BACK TO THE ASSESSING AUTHORITY FOR FRESH ADJUDICATION AS PER LAW. WE ORDER ACCORDINGLY. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF HEARING. IT SHALL ALS O CO - OPERATE IN CONSEQUENTIAL PROCEEDINGS. 5. THIS ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 04 - 0 9 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( S. S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 04 /0 9 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,