DCIT 4(1), MUMBAI V. AMAN INFRATEX LTD. (FORMERLY KNOWN AS M/S.AMAN AGENCIES TEXTILES 9I) PVT. LTD.), MUMBAI

ITA 7487/MUM/2010

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0568 (ITAT-MUMBAI)
• Duration Of Justice: 11 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 131; 68; 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.7487/Mum./2010 (Assessment Year : 2005–06) Dy. Commissioner of Income Tax Circle–4(1), Mumbai ................ Appellant v/s Aman Infratex Ltd. (Formerly known as M/s. Aman Agencies Textiles (I) Pvt. Ltd.) 10 OVA, Wadi, Kalbadevi Road Mumbai 400 0002 PAN – AACCA9711H ................Respondent Assessee by : None Revenue by : Shri Mehul Jain Date of Hearing – 15/06/2022 Date of Order – 04/08/2022 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the Revenue challenging the impugned order dated 23/08/2010, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by learned Commissioner of Income Tax (Appeals)–8, Mumbai, [“learned CIT(A)”], for the assessment year 2005–06. 2. When this appeal was called for hearing neither any one appeared on behalf of the assessee nor was any application seeking adjournment filed. Considering the issues involved, we proceed to hear these appeals ex parte Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 2 qua the assessee, after hearing the learned Departmental Representative („learned DR’) and on the basis of material available on record. 3. In its appeal, the Revenue has raised following grounds: REVISED GROUNDS OF APPEAL “1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in admitting fresh evidence without taking into consideration that the assessee had failed to furnish any details before the A.O. in respect of addition in share capital account without any reasonable cause before the A.O. and also failed to prove the identity, genuineness and creditworthiness of the transaction before the Ld. CIT(A), Mumbai. Still the additions were deleted by the Ld. CIT(A) in absence of any evidence before the A.O. & Ld. CIT(A). 2. On the facts and in the circumstances of the case and in law, the impugned order of the learned CIT(A) is contrary to law and consequently merits to be set aside and that of the Assessing Officer be restored.” 4. The brief facts of the case pertaining to the appeal, as emanating from the record, are: The assessee is engaged in the business of manufacturing of textured yarn. For the year under consideration, assessee filed its return of income on 29/10/2005 declaring total loss at Rs. 55,29,153 under the normal provisions. The assessee paid tax under section 115 JB of the Act at an income of Rs. 23,97,510. During the course of assessment proceedings, it was observed from balance sheet filed by the assessee that there is an increase in share capital by Rs. 42,41,250 and also increase in share premium by Rs. 2,96,88,750 (i.e. total addition in share capital amounting to Rs. 3,39,30,000). On perusal of balance sheet, it was also observed that during the year, assessee has issued 424125 equity shares of Rs. 10 each fully paid-up for a premium of Rs. 70. The assessee was asked to furnish Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 3 name, address, number of shares held and PAN of all the shareholders and also submit confirmation of the shareholders. In reply, the assessee submitted details of shareholders as on 31/03/2005. However, no confirmation or any other documentary evidence from parties to whom shares have been issued was submitted. The Assessing Officer issued notice to the assessee seeking information about the shareholders. The Assessing Officer also issued summons under section 131 of the Act to 29 shareholders to produce details of share capital subscribed in the assessee company. However, only two shareholders, to whom shares have been issued to the extent of Rs. 10 lakhs each, appeared before the Assessing Officer. Since the assessee failed to discharge its onus as to identity of the remaining shareholders, the Assessing Officer vide order dated before 24/12/2007 passed under section 143(3) of the Act, inter-alia, treated share capital and share premium received by the assessee of Rs. 3,90,30,000 (i.e. Rs. 3,39,30,000 minus Rs. 20,00,000) as unexplained cash credit in the hands of the assessee under section 68 of the Act. 5. In appeal before the learned CIT(A), the assessee furnished additional evidences which were forwarded to the Assessing Officer by the learned CIT(A) vide letter dated 15/09/2008 requesting comments with respect to – a) admissibility of the additional evidence; and b) in case the additional evidences to be admitted, the merit of the same. The Assessing Officer furnished his report/comments as per letter dated 07/05/2010. The learned CIT(A) also sought comments of the assessee on Assessing Officer‟s remand report. Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 4 6. The learned CIT(A) vide impugned order, inter-alia, after admitting the additional evidence filed by the assessee, partly allowed the appeal, by observing as under: “3.3 Upon consideration of relevant facts and the appellant's submission and also remand port of the AO. I find that the addition us 68 had been made by the A.O merely because the persons to whom summons us 131 had been issued had either failed to respond to such summons of the summons could not be served, from which the A.Q. concluded that the ass had failed to discharge is onus However, I observe that there is no mention in the assessment order that the out-come of the events subsequent upon the issue of summons to 28 share holders by the AO. had been brought to the notice of the assessee to accord it an opportunity of rebuttal. Subsequently, in his remand report, I find that the A.O. has not se finding with respect to admissibility of the additional evidence or merit of the additional evidence as was required as per this office letter dated 15.09.2008, except in the case of two share holders namely Mrs. Pushpadevi Agarwal (Rs.1,50,000/-) and Mrs. Kirti Agarwal (Rs.6,50,000). 3.4. As regards admissibility of additional evidence. I hold that additional evidence being new address of the erstwhile share holders furnished during the appellate proceedings is required to be admitted as the A.O. has not raised any specific objection to the same and further, the assessee, during the assessment proceedings was not given any opportunity to furnish these new addresses and also the A.O., during the remand proceedings got an opportunity to conduct enquiry, as it was not intimated to the assessee that the share holders were not present at the addresses given by it during the assessment proceedings or such share holders had not responded in case of service of summons issued by the A.O. Under these circumstances, find that the information submitted by the appellant during the appellate proceedings regarding which the A.O. was accorded an opportunity to make enquiry is required to be admitted and taken into consideration for deciding the instant appeal. Further, I find that the information submitted by the appellant during the appellate proceedings being new address of the share holders, cannot be treated as fresh or new evidence as the names of the share holders had already been furnished before the A.O. which is evident from the fact that the A.O. in his report has not mentioned that the names of share holders furnished during the appellate proceedings were not the same as those furnished during the assessment proceedings and it was merely information about the addresses of the same share holders which were produced during the appellate proceedings. From the remand report I find that the A.O. has not mentioned that the names of the share holders furnished by the appellant during the appellate proceedings regarding whom the A.O. was required to conduct enquiries as per this office letter dated 15.09.2008 were not the same as those furnished during the assessment proceedings. Thus, finding that the appellant had merely furnished certain information regarding the share holders which cannot be treated as new evidence, hold that this Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 5 information is required to be taken into consideration for disposal of the instant appeal. 3.5 As regards the merit of the evidence produced by the assessee in respect of the genuineness of the transactions, find that the enquiries conducted by the A.O. during the appellate proceedings as reported in letter dated 07.05.2010 did not reveal any fact which could lead to inference that the amount credited as receipt of share application money including premium thereon was not from sources which were satisfactorily explained as required u/s 68, except in the case of Mrs. Pushpadevi Agarwal and Mrs. Kirti Agarwal who had invested a sum of Rs.1,50,000/- and Rs.6,50,000/- respectively. I, therefore, do not find any justification for addition of Rs.3,19,30,000/- except of the sum of Rs.8,00,000/- (Rs. 1,50,000/- + Rs.6,50,000/-) being the investment made by Mrs. Pushpadevi Agarwal and Mrs. Kirti Agarwal. As regards the transactions with Mrs. Pushpadevi Agarwal and Mrs. Kirti Agarwal, the A.O. has mentioned that the investments stated to be made by them could not be verified as they were stated to be out of country. In the written submission dated 09.08.2010, no submission in this regard has been made by the appellant. Thus, in the fresh remand proceedings which were undertaken on the basis of fresh information submitted by the appellant, the source of the sum of Rs.1,50,000/- Rs.6,50,000/- claimed to be from Mrs. Pushpadevi Agarwal and Mrs. Kirti Agarwal could not be verified. The disallowance of a sum of Rs.8,00,000/- (Rs.1,50,000/- + Rs.6,50,000/-) being the amounts stated to have been received from Mrs. Pushpadevi Agarwal and Mrs. Kirti Agarwal is to be upheld. Regarding the balance amount of Rs.3,11,30,000/-, find that the A.O. in the remand report has not arrived at any adverse finding regarding genuineness of the source of the credit. 3.6 In view of the above discussion, the addition of Rs.8,00,000/- as above is confirmed and addition of balance amount of Rs.3,11,30,000/- is deleted. The appeal on this ground (Ground No. 3) is partly allowed.” Being aggrieved, the Revenue is in appeal before us. 7. During the course of hearing, learned DR submitted that no evidence was furnished by the assessee before the Assessing Officer despite sufficient opportunity and thus learned CIT(A) should not have admitted the additional evidence so filed by the assessee. 8. We have heard the submissions and perused the material available on record. The only grievance against the impugned order raised by the Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 6 Revenue, during the course of hearing, is that the learned CIT(A) admitted the fresh evidence submitted by the assessee without considering the fact that assessee failed to furnish the said evidence before the Assessing Officer even despite sufficient opportunity been granted. In the present case, as noted above, during the year under consideration there was an increase in share capital (i.e. share capital and share premium) of the assessee. In order to verify the above, the Assessing Officer sought information regarding the shareholders who have bought the shares of the company. As evident from the record, during the assessment proceedings, assessee could only provide the details of the shareholders as on 31/03/2005. Further, as recorded in the assessment order despite issue of summons under section 131 of the Act to 29 shareholders, only two shareholders appeared before the Assessing Officer. Therefore, the Assessing Officer granted relief only in respect of the share transactions with aforesaid two shareholders and made addition under section 68 in respect of the balance amount. 9. In appeal before the learned CIT(A), assessee filed details of the share applicants by way of application seeking admission of additional evidence. From the perusal of the impugned order, it is evident that the learned CIT(A) forwarded the additional evidence filed by the assessee to the Assessing Officer and sought comments with respect to admissibility of additional evidence and the merit of the same. In reply, Assessing Officer vide letter dated 07/05/2010 furnished the report/comments to the additional evidence filed by the assessee. From the perusal of the aforesaid report of the Assessing Officer, it is evident that summons under section 131 Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 7 as well as notices under section 133 (6) of the Act were issued to various parties calling for following information: “2. In this respect, summons u/s. 131 of the Act have been issued to various parties calling for the following information: 1. Ledger ac showing share capital invested with M/s. Aman Agencies & Textiles (I) Pvt. Ltd. for the AY.2005-06. 2. Evidence in support of the source of investment. 3. Copy of capital a/c balance sheet and statement of income for AY 2008-06. 4. Copy of return of income for AY 2005-06. 3. Further notices u/s 133(^) have also been sued to various parties calling for following information: 1. PAN along with the designation of the AO. 2. Copy of assessee’s accounts in their books regarding the investments made in the above no. For the period 1.4.2004 to 31.3.2005. 3. Copy of capital a/c balance sheet, P&L A/c along with burn of income for AY 2005-06. 4. Details of share capital introduced in the above co along with evidence source investment thereof. 5. Copy of bank statement covering the investment entries in the bank accounts.” 10. After examination of the details filed in the remand proceedings, the Assessing Officer vide aforesaid letter dated 07/05/2010, observed as under: “The above details filed by various parties in response to notices u/s.133(6) and 131 have been verified and placed on record. These documents, bank accounts of the assessee, copies of the bank statements and copies of returns of income of the creditors / share application money applicants were examined. The assessee vide this office letter dated 19.01.2009 and subsequent order sheet notings was asked to produce bank accounts and other documents in support of unsecured loans and share application money received during the year in question. In response to the same, the assessee, during the course of remand report proceedings, has submitted the details of increase in share Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 8 application money, copy of returns and balance sheets of share applicants, ledger accounts copies of these parties. These details have been verified and cross checked with the details submitted by various creditors/share application money applicants. Sir, as directed details of share money application and of loan credits have been verified b issue of notices u/s.131 and u/s.133(6) of the I.T. Act. These notices were served on addresses given or revised addresses given by the assessee. In response to the notices issued, Directors/ Authorised representatives attended in person in cases where summons u/s.131 were issued and information was received by pos: in respect of cases where notices u/s.133(6) were issued. In other words, some parties attended in person while others submitted their replies in writing alongwith copies of return, ledger account and balance sheet. However, investments stated to be made by the following parties could not be verified as they are stated to be out of country. Sl. no. Name of the party Amount Remarks 1. Pushpadevi Agarwal (Promoter & Relative) 150000 Resides outside India hence notice could not be served. 2. Kirti Agarwal (Promoter & Relative) 650000 Resides outside India hence notice could not be served. Copy of DD / Cheque and copy of share application received.” In view of the above factual report, Hon’ble CIT(A) may decide the issue on merits. 11. Thus, it is evident from the aforesaid remand report that Assessing Officer did not object to the admissibility of additional evidence filed by the assessee before the learned CIT(A). Further, except for the two parties, who could not be verified during the remand proceedings, the Assessing Officer in the remand report did not record any adverse findings regarding genuineness of the source of credit from other share applicants. Accordingly, learned CIT(A) admitted the additional evidence filed by the assessee and restricted the disallowance under section 68 of the Act only in respect of the transaction with aforesaid two parties. Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 9 12. Now, in the appeal before us, Revenue is objecting to the admission of additional evidence on the basis that such evidence was not produce before the Assessing Officer despite sufficient opportunity. From the perusal of the record, we are of the considered view that when reasonable opportunity was granted by the learned CIT(A) to the Assessing Officer to examine the additional evidence filed by the assessee, and complete verification of all the details was done, in the remand proceedings, by the Assessing Officer, admission of additional evidence filed by the assessee cannot be faulted by taking a pedantic approach. 13. Insofar as the merit is concerned, as noted above, the Assessing Officer in the remand proceedings did not record any adverse findings regarding the share applicants except the two parties, who could not be verified. Accordingly, vide impugned order, learned CIT(A) restricted the disallowance under section 68 only in respect of the transaction with the aforesaid two parties. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) in the present case. As a result, grounds raised by the Revenue are dismissed. 14. In the result, appeal by the Revenue is dismissed. Order pronounced in the open court on 04/08/2022 Sd/- S. RIFAUR RAHMAN ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 04/08/2022 Aman Infratex Ltd. ITA No.7487/Mum./2010 Page | 10 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai