ITO, New Delhi V. M/s. Jabbal Woodcrafts India Ltd, New Delhi

ITA 802/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9691 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-09-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 05-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHEKER
• Keywords: Set aside
• Section: 195; 68

Judgement Text

I.T.A. NO.802/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH D BEFORE SHRI K.G. BANSAL, ACCOUTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 802 /DEL/2009 (ASSESSMENT YEAR 1996-97) ITO, CO. WARD 4(1), VS. M/S. JABBAL WOODCRAFTS INDIA LTD., NEW DELHI F-7, 1 ST FLOOR, LSC, MANSAROVER GARDEN, NEW DELHI. (APPELLANTS) (RESPONDENTS) APPELLANT BY: SHRI SANJEEV SHEKER, SR. DR RESPONDENT BY: SHRI ANIL JAIN, CA ORDER PER GEORGE MATHAN, JM: 1. THIS APPEAL BY THE REVENUE HAS BEEN PREFERRED AG AINST THE ORDER OF LD. CIT(A) VII, NEW DELHI IN APPEAL NO.186/2007-08 FOR THE ASSESSMENT YEAR 1996-97. SHRI SANJEV SHEKHER SR. DR REPRESENTED FOR THE REVE NUE AND SHRI ANIL JAIN, CA APPEARED ON BEHALF OF THE ASSESSEE. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1) THE ORDER OF THE LD. CIT(A) IS ERRONEOUS & CONTRARY TO FACTS & LAW. I.T.A. NO.802/DEL/2009 2 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION MADE U/S 68 OF RS.26,86,500/- IGNORING:- A) THAT THE ASSESSEE FAILED TO FURNISH EVEN BANK STATEMENTS & OTHER DOCUMENTS OF THE ALLEGED SHARE APPLICANTS. B) THE DICTUM GIVEN BY THE HON'BLE SUPREME COURT IN CIT VS DURGA PRASAD MORE 82 ITR 540 & SUMATI DAYAL VS CIT 214 ITR 801 IN WHICH APEX COURT HAS LAID DOWN THE PROPOSITION THAT THE COURTS & TRIBUNALS SHOULD SEE THE PREPONDERANCE OF PROBABILITIES WHILE CONSIDERING THE EVIDENCE FURNISHED BY THE ASSESSEE. C) THAT IN RESPECT OF THIS CASE, THE RATIO OF CASE LAWS RELIED UPON BY FIRST APPELLATE AUTHORITY ARE NOT APPLICABLE AT ALL. THE CIT(A) BASED HIS DECISION ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN DIVINE LEASING & FINANCE LTD. & LOVELY EXPORTS IGNORING THAT THE FACTS ARE ESSENTIALLY DIFFERENT INASMUCH AS IN THIS CASE THE ASSESSEE IS A PVT. COMPANY AND NO MEMBER OF THE PUBLIC PARTICIPATED. ON THE OTHER HAND IN THE CASE OF DIVINE LEASING & FINANCE LTD. & LOVELY EXPORTS, THE SHARE APPLICATIONS WERE MADE BY WAY OF PUBLIC ISSUES. D) THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN ITA NO.1509 OF 2006 CIT IV, NEW DELHI VS HIMALAYA INTERNATIONAL LTD. WHEREIN, THE COURT AFTER DISCUSSING IN DETAILS ITS OWN ORDER IN THE CASE OF M/S. DIVINE LEASING & FINANCE LTD. HAS UNEQUIVOCALLY UPHELD THE REVENUES STAND I.T.A. NO.802/DEL/2009 3 THAT THE ONUS OF PROVING ALL THE THREE ELEMENTS I.E. THE IDENTITY, GENUINENESS & CREDITWORTHINESS OF THE PARTY/PARTIES LIES ON THE ASSESSEE. E) THAT THE A.O. IS DUTY BOUND U/S 68 TO ENQUIRE INTO THE CREDITWORTHINESS, IDENTITY OF THE CREDITORS & GENUINENESS OF THE TRANSACTIONS. THE CIT(A) HAS ERRED IN IGNORING SUCH FINDINGS RECORDED BY THE A.O. IN THE ASSESSMENT ORDER. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.3,25,630/- IN RESPECT OF AN ALLEGED SUNDRY CREDITOR WITHOUT APPRECIATING THAT THE ASSESSEE HAS FILED ONLY A PHOTOCOPY OF CONFIRMATION WHICH IS DEVOID OF ANY PAN & ALSO UNDATED ONE. 4) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. IT WAS THE SUBMISSION BY THE LD. D.R. THAT THE A SSESSEE HAD RECEIVED SHARE APPLICATION MONEY DURING THE RELEVANT ASSESSMENT YEAR TO THE TUNE OF RS.26,86,50 0/- AND THE A.O. HAD TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS FURTHER SUBMITTED T HAT THE DETAILS OF SHARE APPLICANT HAD NOT BEEN FURNISH ED AND ONLY THE IDENTITY OF THE SHARE APPLICANT HAD BEEN P LACED BEFORE THE A.O. HOWEVER, IT WAS SUBMITTED THAT BEF ORE THE LD. CIT(A) THAT THE ASSESSEE HAD PRODUCED DETAI LED INFORMATION AND COMPLETE NAMES & ADDRESSES OF THE I.T.A. NO.802/DEL/2009 4 PERSON FROM WHOM THE SHARE APPLICATION MONEY HAS BEEN RECEIVED CONFIRMATION RECEIVED FROM THE PERSON S WHO HAD PROVIDED SHARE APPLICATION MONEY, NAMES & ADDRESS OF SHARE APPLICANTS, PAN AND INCOME TAX DET AILS OF SHARE APPLICANTS, COPY OF RATION CARD / ELECTION COMMISSION CARD AS ALSO THE INCOME TAX RETURNS ACKNOWLEDGEMENTS OF THE SHARE APPLICANTS. IT WAS T HE SUBMISSION THAT THE LD. CIT(A) HAD FOLLOWED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DIVINE LEASING REPORTED IN 216 CTR 195 AND HAD DELETED THE ADDITION. IT WAS HIS FURTHER SUBMISSIO N THAT THE A.O. HAD ALSO MADE ADDITION ON ACCOUNT OF SUNDR Y CREDITORS TO THE EXTENT OF RS.3,25,630/- AS THE ASS ESSEE HAD NOT PRODUCED THE DETAILS OF SUNDRY CREDITORS. IT WAS THE SUBMISSION THAT BEFORE THE CIT(A) THE ASSESSEE HAD PLACED DETAILS IN THE FORM OF CONFIRMATION FROM THE TRADE CREDITORS VIDE THEIR LETTER DATED 24.12.2007, WHICH WAS ALSO PLACED BEFORE HE A.O. WHEN THE ASSESSMENT WAS GETTING BARRED BY LIMITATION ON 31.12.2007. IT WAS THE SUBMISSION THAT THE ORDER OF LD. CIT(A) IS LIABLE T O BE REVERSED. IN REPLY, THE LD. A.R. SUBMITTED THAT AL L THE DETAILS HAD BEEN PRODUCED BEFORE THE A.O. AND THE S AME WAS ALSO RECORDED BY THE LD. CIT(A) AS HAVING BEEN AVAILABLE BEFORE THE A.O. IT WAS THE SUBMISSION TH AT THE I.T.A. NO.802/DEL/2009 5 A.O. HAD NOT DISCUSSED ANYTHING ABOUT THE DETAILS PRODUCED AND IT CANNOT BE HELD TO BE THE FAULT OF T HE ASSESSEE. HE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF DIVINE LEASING REFERRED TO SUPRA CLEARLY SHOWS THAT IF THE ASSESSEE HAS PRODUCED THE IDENTITY OF THE SHARE APPLICANTS THEN UNLESS THE A.O. IS ABLE TO SHOW THA T THE FUNDS OF THE ASSESSEE HAS BEEN ROUTED THROUGH THE S HARE APPLICANTS, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IT IS FURTHER NOTICED FROM THE DECISION OF HON'BLE SUPREME COURT THAT IN THE CASE OF DIVINE LEASING, LIBERTY HAS BEEN GIVEN TO THE A.O. TO TAKE THE NECESSARY ACTION IN THE HANDS OF THE SHARE APPLICAN TS. HERE IT IS NOTICED THAT THOUGH THE LD. CIT(A) DOES SAY THAT THE DETAILS IN THE FORM OF COMPLETE NAMES & ADDRESSES OF THE PERSONS AND THE AFFIDAVIT, PAN, IN COME TAX PARTICULARS, INCOME TAX RETURN ACKNOWLEDGEMENT, COPY OF PASSPORT RATION CARD / ELECTION COMMISSION CARD WERE PRODUCED BEFORE THE A.O., THE ORDER OF THE A.O . DOES NOT MAKE A MENTION OF ANY OF THESE DETAILS. I N FACT, THE A.O. HAS CATEGORICALLY GIVEN A FINDING TH AT IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF TRANSACTI ON AND I.T.A. NO.802/DEL/2009 6 THE CREDIBILITY OF THE SHARE APPLICANTS. HERE, WE FIND THAT THERE IS CONTRADICTION BETWEEN THE FINDING AS GIVEN BY THE A.O. AND AS GIVEN BY THE LD. CIT(A) IN REGAR D TO THE FURNISHING OF DETAILS IN REGARD TO THE SHARE APPLICATION MONEY AS ALSO IN REGARD TO THE SUNDRY CREDITOR M/S. SHREE PAWANSUT TRADERS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS ISSUE S HOULD BE RESTORED TO THE FILE OF THE A.O. FOR RE-ADJUDICA TION AFTER CONSIDERING ALL THE EVIDENCES AS PRODUCED BY THE ASSESSEE AND WE DO SO. IT IS FURTHER DIRECTED THAT THE A.O. WHILE COMPLETING THE ASSESSMENT SHALL DECIDE T HE ISSUE AFTER TAKING INTO CONSIDERATION OF THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF DIVINE LEASING REFERRED TO SUPRA. THE A.O. IS ALSO DIRECTED TO VE RIFY WITH THE REGISTRAR OF COMPANIES AND OTHER STATUTORY AUTHORITIES IN REGARD TO THE STATUTORY RETURN AND T HE MINUTES, WHICH ARE STATUTORILY REQUIRED TO BE FILED BEFORE THE STATUTORY AUTHORITY IN RESPECT OF THE SHARE APP LICATION MONEY RECEIVED. LIBERTY IS ALSO GIVEN TO THE A.O. TO INVOKE HIS POWER U/S131 AND SUCH OTHER POWERS INHER ENT IN HIM TO CALL FOR DETAILS FROM THE CONCERNED SHARE APPLICANT FOR VERIFICATION AS TO WHETHER THE FUNDS OF THE ASSESSEE HAVE BEEN ROUTED THROUGH THE SHARE APPLICA NTS. IN THESE CIRCUMSTANCES, THE FINDING OF LD. CIT(A) O N I.T.A. NO.802/DEL/2009 7 BOTH THE ISSUES ARE SET ASIDE AND BOTH THE ISSUES B EING THAT OF SHARE APPLICATION MONEY AND THE SUNDRY CRED ITOR IS RESTORED TO THE FILE OF THE A.O. FOR RE-ADJUDICA TION IN LINE WITH THE DIRECTIONS GIVEN ABOVE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. 5. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N .. SEP. 2009. (K.G.BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: SEP., 2009 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI