ADITYA INFRAREALTORS LTD, Jaipur V. ITO, Alwar

ITA 8/JPR/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2746 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 03-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MONISHA CHOUDHARY JCIT A AA A
• Keywords: Gift; Fair market value
• Section: 133(6); 13; 68; 56; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 08/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2012-13 M/S ADITYA INFRAREALTORS LTD. 11/129, MEHTAB SINGH KA NOHRA, NEAR K.K. TENT HOUSE, ALWAR. CUKE VS. THE ITO, WARD-2(3), ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCA 4985 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE JKTLO DH VKSJ LS @ REVENUE BY : SMT. MONISHA CHOUDHARY (JCIT) A AA A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/03/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 22/06/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 17.10.2016 RELEVANT FOR THE ASS ESSMENT YEAR 2012- 13 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GR OUND OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING AN ADDITION OF RS. 1,60,88,000/- BY OBSERVING THAT SHA RE ALONG WITH PREMIUM WAS ISSUED TO M/S EMMTHREE FINANCIAL SERVIC ES PVT. LTD. WITHOUT REALIZING THE MONEY IN A FAIR AND TRANSPARE NT MANNER AND THEREFORE AO WAS JUSTIFIED IN TREATING THE SHARE CA PITAL ALONG WITH SHARE PREMIUM MONEY RECEIVED BY THE ASSESSEE AS UNE XPLAINED ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 2 U/S 68 OF THE ACT. HE HAS FURTHER ERRED IN MAKING V ARIOUS OBSERVATIONS WHICH ARE IRRELEVANT AND CONTRADICTORY TO EACH OTHER WHILE SUSTAINING THE ADDITION. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. IT IS NOTED THAT THE APPEAL WAS FILED WAY BACK IN THE YEAR 2017 AND THE MATTER HAS BEEN SCHEDULED FOR HEARING ON MULTIPLE O CCASIONS. IT IS FURTHER NOTED THAT THE LD. COUNSEL WHO WAS APPOI NTED BY THE ASSESSEE HAD SINCE WITHDRAWN FROM THE CASE ON 18.03 .19 AND THEREAFTER, THE REGISTRY HAS TRIED TO SERVE NOTICE ON THE ASSESSEE ON MULTIPLE OCCASIONS HOWEVER, THE NOTICES HAVE BEE N RETURNED UNSERVED BY THE POSTAL DEPARTMENT. LATELY, THE DR WAS DIRECTED TO SERVE THE NOTICE ON THE ASSESSEE AND A REPORT DA TED 8.01.2021 HAS BEEN PLACED ON RECORD THAT THE NOTICE HAS BEEN SERVED ON THE ASSESSEE THROUGH EMAIL AS PROVIDED BY THE ASSESSEE. INSPITE OF SERVICE OF NOTICE THROUGH EMAIL WHICH IS NOW AN ACC EPTED MODE OF COMMUNICATION, THERE IS NO COMPLIANCE ON PART OF TH E ASSESSEE, THE MATTER HAS BEEN ADJOURNED ON NUMBER OF OCCASION S. EVEN WHEN THE MATTER WAS CALLED FOR HEARING ON 30.03.202 1, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNM ENT APPLICATION WAS FILED. IT THUS APPEARS THAT THE ASS ESSEE IS NOT INTERESTED IN PURSUING THE PRESENT APPEAL AND IT WA S ACCORDINGLY DECIDED THAT NO USEFUL PURPOSE WOULD BE SERVED IN A DJOURNING THE MATTER ANY FURTHER AND TO HEAR THE MATTER EX-PARTE QUA THE ASSESSEE TAKING INTO CONSIDERATION THE MATERIAL AVA ILABLE ON RECORD. ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 3 3. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THERE HAS BEEN INFUSION OF FRESH FUNDS IN THE FORM OF SHARE APPLICATION MONEY AMOUNTING TO RS. 2,01,100/- AND S HARE PREMIUM AMOUNT OF RS. 1,58,86,900/-IN THE BOOKS OF ASSESSEE COMPANY. THE MATTER WAS THEREAFTER EXAMINED BY THE ASSESSING OFFICER CALLING FOR INFORMATION U/S 133(6) AS WELL AS RECORDING STATEMENT OF THE DIRECTOR OF THE ASSESSEE-COMPANY W HO ALSO HAPPENS TO BE DIRECTOR OF THE INVESTOR COMPANY, THE REAFTER ADDITION OF RS. 1,60,88,000/- WAS MADE U/S 68 OF TH E ACT. THE RELEVANT FINDINGS OF THE AO ARE CONTAINED AT PARA 4 OF THE ASSESSMENT ORDER WHICH READ AS UNDER:- 4.0 IN VIEW OF THE ABOVE IT SEEMS THAT ALL THESE T HINGS ARE MAKE BELIEVE ARRANGEMENTS ASSESSEE CO. AND M/S EMMTHREE FINANCIAL SERVICES PVT. LTD AND IT APPEARS THAT ASS ESSEE COMPANY HAS BEEN FORMED FOR SPECIAL PURPOSE VEHICLE ON PAPER TO INTRODUCE A HUGE SUM OF MONEY AS ITS CAPIT AL FROM AGAINST FALSE DEBTS AND INVESTMENT. THE COMPANY WAS FORMED IN THE YEAR APRIL, 2008 SINCE THEN NO BUSINE SS ACTIVITY HAS BEEN CARRIED OUT. DURING THE YEAR CONS IDERATION THE ASSESSEE COMPANY HAS RECEIVED SHARE APPLICATION MONEY FOR A SHARE OF NOMINAL VALUE OF RS. 10 EACH PER SHA RE AT A PREMIUM OF RS. 790 EACH. APPARENTLY THERE WAS NO RE ASON TO WHY THE SHARE OF THIS COMPANY WOULD COMMAND SO M UCH SHARE PREMIUM. THE SUBMISSION OF THE ASSESSEE IN THIS REGARD IS NO T ACCEPTABLE ON THE BASIS OF FOLLOWING REASONS: (I) NO WORTH OF THE ASSESSEE COMPANY FINANCIALLY. ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 4 (II) THE COMPANY WAS FORMED ON 08 TH APRIL 2008 FOR THE PURPOSE OF CARRYING ON BUSINESS OF REAL ESTATE SINCE THEN NO B USINESS ACTIVITY IS MADE. (III) THE COMPANY IS FILING ITS INCOME TAX RETURN N IL SINCE ITS INCEPTION AND IS SHOWING LOSS. (IV) SHARES NOT LISTED IN RECOGNIZED STOCK EXCHANGE . (V) CHEQUE OF RS 1,60,88,000/- ISSUED AGAINST SHARE NOT ENCASHED. (VI) THERE IS NO HEAD OFFICE OF THE COMPANY AT REGI STERED OFFICE ADDRESS 11/219, MEHTAB SINGH KA NOHRA NEAR K.K. TEN T HOUSE, ALWAR. IT IS THE RESIDENTIAL HOUSE IN WHICH THE FAM ILY OF SH. KAMALKANT SHARMA LIVES FOR A LONG TIME. (VII) SHRI S.K. BHARGAVA WHO IS THE DIRECTOR IN BOT H THE COMPANIES M/S M/S ADITYA INFRAREALATORS LTD., ALWAR AND M/S E MMTHREE FINANCIAL SERVICES PVT LTD, NEW DELHI IS THE KEY PE RSON WHO MAKES FINANCIAL ARRANGEMENTS CONVENIENTLY TO TRANSFER THE UNACCOUNTED MONEY AND TO AVOID THE TAXABILITY. IN THIS CASE SHARES OF RS. 10 WERE APPLIED AT A PRE MIUM OF RS. 790. THERE IS NO APPARENT REASON AS TO WHY SUCH HUGE AMO UNT OF SHARE PREMIUM WOULD BE PAID FOR OBTAINING SHARE OF FACE V ALUE OF RS. 10. ANY PRUDENT PERSON WHO MAKES INVESTMENT IN SHARES W OULD MAKE THE INVESTMENT IN ACCORDANCE WITH THE FAIR MARKET V ALUE OF THE SHARES AND ALSO CONSIDER THE BOOK VALUE OF THE SHAR E, EARNING PER SHARE AND BOOK PROFIT OF THE COMPANY. AS THE COMPAN Y IS NOT MAKING ANY PROFIT AND IS REGULARLY MAKING LOSSES TH EREFORE THERE IS NO BOOK PROFIT ETC. AND THE FAIR MARKET VALUE OF ITS SHARES WOULD BE DEFINITELY BELOW THE FACE VALUE OF THE SHARE. IT IS ALSO NOTICED THAT THE SHARE HOLDER CO. M/S EMMTHREEE FINANCIAL S ERVICES PVT. LTD., NEW DELHI IS ALSO IN LOSS ON PERUSAL OF THE R ETURN FILED FOR A.Y. 2012-13. BY NO STRETCH OF IMAGINATION IT CAN BE SAID THAT EX AMINATION UNDER SECTION 68 OF DISPROPORTIONATE SHARE PREMIUM MONEY HINGES ON THE PROVISION OF SECTION 56 (VIIB). ADMITTEDLY THIS SUB SECTION WAS INSERTED BY THE FINANCE ACT, 2012. SIMPLY BECAUSE T HIS SECTION WAS INSERTED WITH EFFECT FROM 01-04-2013 IT CANNOT BE INFERRED ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 5 THAT ANY HUGE SHARE PREMIUM RECEIPT MUCH BEYOND THE FAIR MARKET VALUE PRIOR TO THIS INSERTION DOES NOT REQUI RE ANY EXAMINATION BY THE REVENUE AUTHORITIES UNDER SECTIO N 68. AS A MATTER OF FACT SECTION 56(V) WAS INSERTED W.E.F. 01 .04.2005. THIS WAS IN CONNECTION WITH THE AMOUNTS RECEIVED WITHOUT CONSIDERATION AND THE TREATMENT THEREOF. IN OTHER W ORDS THIS RELATED TO TAXATION OF GIFTS RECEIVED. BY NO STRETC H OF IMAGINATION IT CAN BE CLAIMED THAT PRIOR TO THIS IN SERTION THE RECEIPT OF MONEY WITHOUT CONSIDERATION AS GIFT WAS NOT REQU IRED TO BE EXAMINED. THIS WAS DESIGNED TO FACILITATE THE TRANSFER OF THE SE COMPANIES TO OTHER PERSONS ON TRANSFER OF DEBTS, INVESTMENT O R DISCOUNTED VALUE OF SHARES OR ON PAYMENT OF NOMINAL VALUE. IN OTHER WORDS THE VALUE EMBEDDED IN THE SHARE PREMIUM WAS M EANT TO BE TRANSFERRED UNDER HAND AND UNACCOUNTED MONEY, AN D PRIMA FACIE IT APPEARS AS THE BOOK PROFIT OF THE COMPANY IS NIL AND THE COMPANY IS IN LOSS WHO WILL WANT TO MAKE INVESTMENT IN AS SUCH COMPANY BUT A HUGE AMOUNT OF RS. 1,60,88,000/- HAS BEEN INVESTED ON A HIGH SHARE PREMIUM OF RS. 790/-. ON THE OTHER HAND THE COMPANY M/S EMMTHREE FINANCIAL SERVI CES PVT. LTD WHO HAVE SUBSCRIBED IS ALSO IN LOSS. HENCE JUST BECAUSE THE SHARE APPLICATION WITH HUGE AND UNJUSTIFIED SHARE PREMIUM WAS RECEIVED FROM M/S EMM THREE FINANCIAL SERVICES PVT. LTD AGAINST ITS SO CALLED D EBTS AND INVESTMENT MADE IN PROPERTIES IS NOT TENABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE CONTENTS OF THE ABOVE PARA CLEARLY THROWS LIGHT ON THE MODUS OPERANDI ADOPTED BY THE ASSESSEE COMPANY AND CERTAINLY CREATES SUSPICION AND DOUBTS AS REGARDS T HE GENUINENESS AND REASONABLENESS OF THE ALLEGED TRANS ACTIONS. IN THE LIGHT OF THE ANALYSIS OF THE DOCUMENTS FURNI SHED BY THE ASSESSEE IN THIS REGARD AND ALSO IN VIEW OF THE DIS CUSSIONS MADE IN THE ABOVE FORGOING PARAS IT IS HELD THAT TH E ASSESSEE HAD FAILED TO DISCHARGE THE CREDITWORTHINESS AND GE NUINENESS OF THE TRANSACTIONS. ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 6 / FOR THE REASONS AS DISCUSSED ABOVE THE SHARE CAPITA L ALONG WITH PREMIUM IS HELD TO BE UNPROVED AND UNEXPLAINED. THE REFORE , AN ADDITION OF RS. 2,01,100/- TOWARDS SHARE APPLICATIO N MONEY AND RS 1,58,89,900/- TOWARDS SHARE PREMIUM ARE HEREBY MADE INVOKING PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND AFTER CONSIDERING THE SUB MISSIONS SO FILED BY THE ASSESSEE, THE LD. CIT(A) HAS RECORDED HIS FINDINGS WHICH ARE CONTAINED AT PARA 5.3 & 5.3.2 OF HIS ORDE R WHICH READ AS UNDER:- 5.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WE LL AS SUBMISSIONS MADE BY THE APPELLANT. FOLLOWING FACTS HAVE EMERGED; 1. THAT THE APPELLANT COMPANY IS SUPPOSEDLY DEALING IN THE REAL ESTATE BUSINESS. HOWEVER, EFFECTIVELY THIS IS THE FIRST YEAR OF THE BUSINESS WHERE THE COMPANY HAS SHOWN SA LE OF SERVICES AMOUNTING TO RS. 1,33,743/- AND LOSS OF RS . 7,666/. 2. THAT THE COMPANY HAS SHOWN RESERVES AND SURPLUSE S AT RS. 2.29 CR. (APPROX.) AND SHARE CAPITAL OF RS. 57 LAKH S. 3. THAT DURING THE YEAR UNDER CONSIDERATION, THE AP PELLANT COMPANY HAD ISSUED TO M/S. EMMTHREE FINANCIAL SERVI CES PVT. LTD, A TOTAL OF 20,110 SHARES OF FACE VALUE OF RS. 10/- PER SHARE AT A PREMIUM OF RS. 790/- PER SHARE TOTALING TO RS. 1, 60,88,000/- . 4. THAT WHILE LOOKING AT THE SHARE TRANSACTION, IT IS FOUND THAT SHARE PREMIUM WAS DETERMINED WITHOUT ANY BASIS. IT IS A LIMITED COMPANY BUT THERE ARE PARAMETERS TO VALUE A SHARE. SHARE VALUE CANNOT BE DETERMINED WITHOUT ANY BASIS. IN THIS CAS E LOOKING AT THE BALANCE SHEETS, THE VALUE OF SHARE PREMIUM DOES NOT MATCH WITH THE WORTH OF THE COMPANY. 5. THAT IT HAS FURTHER BEEN FOUND THAT THE ENTIRE T RANSACTION OF SHARE ISSUANCE BY THE APPELLANT COMPANY TO M/S EMMT HREE ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 7 SERVICES PVT. LTD. ALSO INVOLVES PROPERTIES TRANSFE R TO THE APPELLANT COMPANY. 6. THAT THERE ARE 3 KEY PLAYERS INVOLVED IN THE TRA NSACTION OF CERTAIN PROPERTY ASSETS DURING THE YEAR UNDER CONSI DERATION I.E M/S EMMTHREE SERVICES PVT. LTD., M/S ADITYA INFRARE ALTORS LIMITED AND M/S A P CONSTRUCTIONS. 7. THAT THERE IS AN ASSIGNMENT DEED SIGNED ON 30/03 /2012, BETWEEN M/S EMMTHREE SERVICES PVT. LTD. AS ASSIGNOR AND M/S ADITYA INFRAREALTORS . LTD. AS ASSIGNEE, WHEN THE ASSIGNOR HAS PASSED ON PROPERTY WORTH RS. 1,60,88,493/- TO THE A SSIGNEE. 8. THAT THERE IS ANOTHER ASSIGNMENT DEED SIGNED ON 31/03/2012 BETWEEN M/S ADITYA INFRAREALTORS LTD. AS ASSIGNOR A ND M/S A P CONSTRUCTIONS WHERE THE SAME PROPERTY ASSETS WERE A SSIGNED TO M/S A P CONSTRUCTIONS BY M/S ADITYA INFRAREALTORS L TD. 9. THAT AS PER ASSIGNMENT DEED A CHEQUE WAS ISSUED BY M/S ADITYA INFRASTRUCTURES LTD. TO M/S EMMTHREE SERVICE S PVT. LTD. FOR AN AMOUNT OF RS. 1,60,88,493/- VIDE CHEQUE NO. 2690 30 DATED 30/03/2012 DRAWN ON STANDARD CHARTERED BANK. 10. THAT M/S EMMTHREE SERVICES PVT. LTD. HAS ISSUED A CHEQUE FOR THE IDENTICAL AMOUNT OF RS. 1,60,88,000/- ON 29 /03/2012 ON ACCOUNT OF SHARES ISSUED BY M/S ADITYA INFRAREALTOR S LTD. BUT CURIOUSLY, THE CHEQUE WAS NEVER ENCASHED BY M/S ADI TYA INFRAREALTORS LTD. 5.3.2. I HAVE TAKEN INTO CONSIDERATION THE ENTIRE G AMUT OF THE ISSUES INVOLVED. IT IS MY CONSIDERED VIEW THAT ALL THE 3 ABOVE MENTIONED PLAYERS IN THE PROPERTY DEAL CAME TOGETHE R TO TRANSACT THE BUSINESS WITHOUT PAYING DUE TAXES. THE APPELLAN T COMPANY ENJOYED THE BENEFIT OF THE PROPERTIES AND IN LIEU O F IT ISSUED SHARE AT A PREMIUM NOT COMMENSURATING WITH THE BALANCE SH EET OF THE COMPANY. THE CHEQUE ISSUED TO THE BENEFICIARY OF TH E SHARES I.E. M/S EMMTHREE SERVICES PVT. LTD. WAS ALSO NOT ENCASH ED. THAT AMPLY POINTS TOWARDS A FACT THAT SHARES WERE ISSUED WITHOUT REALIZING THE MONEY IN A FAIR AND TRANSPARENT MANNE R. THEREFORE, A.O IS QUITE JUSTIFIED IN TREATING SHARES CAPITAL A LONG WITH THE ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 8 SHARE PREMIUM MONEY SHOWN RECEIVED BY THE APPELLANT COMPANY AS UNEXPLAINED UNDER SECTION 68 OF THE ACT. THE ENT IRE CHAIN OF TRANSACTIONS, TO MY MIND IS AIMED AT EVADING DUE IN COME TAX. ACCORDINGLY, THE ADDITION OF RS. 1,60,88,000/- IS S USTAINED AND THE APPELLANT'S GROUND OF APPEAL ON THIS ISSUE IS D ISMISSED. 5. AFTER HEARING THE LD DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND NO JUSTIFIABLE BASIS TO INTERFERE W ITH THE FINDINGS OF THE LOWER AUTHORITY AS THE ASSESSEE HAS FAILED TO PROVI DE NECESSARY EXPLANATION TO THE SATISFACTION OF THE AO ABOUT THE GENUINENESS OF THE TRANSACTION INCLUDING THE RELATED MATTERS OF VALUAT ION AND CREDITWORTHINESS OF THE INVESTOR COMPANY. THEREFOR E, THE GROUND OF APPEAL SO TAKEN BY THE ASSESSEE IS DISMISSED AND TH E ORDER OF THE LD CIT(A) IS HEREBY SUSTAINED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/06/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/06/2021. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S ADITYA INFRAREALTORS LTD., ALWAR . 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-2(3), ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 08/JP/2017 M/S ADITYA INFRAREALTORS LTD. VS. ITO 9 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 08/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR