Jarul Glasswork Private Limited, Haryana V. ITO Ward 1(3), Faridabad

ITA 83/DEL/2021

AI Insights

The case involves M/s. Jarul Glasswork Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), Faridabad, concerning the assessment year 2016-17. The primary issues in the appeal were the additions made under Section 68 of the Income Tax Act, 1961, regarding unexplained share premium and share capital, and the enhancements made to the income under Section 251(1) of the Act. The Tribunal examined the legality of the additions and enhancements, considering the documentary evidence and the procedural compliance in issuing notices and conducting assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121591 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 04-02-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 10; 201; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No.83/DEL/2021 Assessment Year 2016-17 M/s. Jarul Glasswork Pvt. Ltd. House No.-103/B, Near Shyam Ji Mandir, Malenra Road, Adarsh Nagar, Ballabgarh, Haryana -121004 Vs. ITO, Ward-1(3), FBD CR Building, Faridabad, Haryana. TAN/PAN: AADCJ1891J (Appellant) (Respondent) Appellant by: Shri Ms. Sumangla Saxena, Adv. Shri Dishant Sethi, Adv. Respondent by: Shri D.K. Srivastava, Sr.DR Date of hearing: 12 09 2023 Date of pronouncement: 27 09 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he c a p ti o n e d a p pe a l h as b e e n fi le d b y t he a ss es se e ag ai n s t t h e or d e r o f t h e C o mm i ssi on e r o f In co me T a x ( A p pe a l s), F ar i da ba d [‘ C IT (A ) ’ in s h o rt ] d a t e d 1 8. 0 3 . 20 2 0 ar is i n g f ro m th e a ss e s s me n t or d e r d a t e d 0 6 . 1 2. 2 0 1 8 pa sse d b y t he A sse s si ng O ff ic e r ( A O ) un de r S ec t i on 1 4 3( 3 ) o f t he I nc o m e T a x A c t, 1 96 1 ( t he A c t) c on c e r n i n g A Y 201 6- 1 7. 2. T he g r o un ds o f a pp e a l c on c is e d b y a s s es s ee r e a d a s un d e r : “ 1 . T h a t t h e Ld . C I T ( A ) ha s e r r e d i n l a w as w e l l as o n f ac t s in c on f i r m i n g a d d i ti o n o f R s . 96 , 00 , 0 00 / - u / s 6 8 o f t h e I T A c t . 19 6 1 o n ac c o un t o f a l l e ge d un e x pl a i ne d s h ar e p r e m iu m a n d s ha r e c ap i t al de s p i t e f u r n i s hi n g a l l t h e d o c u m e n t a r y e v i d e nc e f or e s t a bl i s h i n g id e n t it y , c r e di t w o r t h i ne s s o f th e i n v e s t o r s an d t he g e n u i n e n e s s of I.T.A. No.83/Del/2021 2 th e t r a ns ac t i o n. 2. T ha t th e Ld . C I T (A ) h a s e r r e d i n l a w a s w e l l a s o n f a c ts i n e nh an c i n g t he i nc o m e of a p p e l la n t u / s 25 1 ( 1 ) of t h e A c t by R s . 64 , 0 0 , 0 00 / - u nd e r t h e he a d i n c om e f r o m ot h e r s o u r c es b y a p p l y i ng s e c t io n 5 6 (2 )( v i i b ) o f th e A c t o n p r ot e c t i v e b a s i s an d r e j e c t i n g t he v al u at i o n r e p o r t f u r n i s h e d u n de r R u l e 1 1 U A ( 2 ) ( b ) o f I n c o m e T ax R ul e s , 1 9 62 i . e . , D i s c o un t e d C a s h F lo w Me t h od . 3. T h a t t h e L d . C I T ( A ) h as e r r e d i n l a w a s w e l l as o n f a c t s in e nh an c i n g t he i nc o m e of a pp e l l a n t b y n o t is s u in g v al i d s h ow c au s e no t i c e as m an d a t e d u / s 2 5 0 ( 2 ) o f th e A c t . 4. T ha t t h e L d . C I T ( A )h a s g r os s l y e r r e d i n e nh a nc i ng t h e i n c o m e of ap pe l l a nt o n pr o t e c t i v e b a s i s u s 5 6 ( 2 )( v i ib ) r . w . r 1 1 U A o f I T r u l e s w i t h ou t ap pr e c i a t i n g t he f ac t t h at t he c a s e w a s s e le c t e d f o r l i m i t e d s c r u t in y t o v e r i f y " w h e t h e r t he f u n d s r e c e i v e d i n the f or m o f s ha r e pr e m i u m a r e f r o m d i s c l os e d s o u r c e s a n d h a v e b e e n c or r e c t l y of f e r e d t o t a x " w h i c h r e s t r i c t t h e s c op e o f as s e s s in g au t ho r i t i e s t o s c r u t in i z e o nl y t h e s o ur c e o f s h a r e p r e m i u m . 5. T h a t t h e L d . C I T ( A ) h as e r r e d i n l a w a s w e l l as o n f a c t s i n in i t i at i n g t h e p e n a l ty p r o c e e di n gs u / s . 2 7 1 (1 ) (c ) of t h e A c t . ” 3. W h e n th e ma t t er w a s c al l e d f or he a r i ng, t h e l d. c ou nse l ma de mu l ti fo l d a rg u me n t s; ( i) t h e ad di t i o n o f Rs. 1 6 la k h w a s m a de u n d e r S e cti on 6 8 o f t he A c t by t h e A sse s si ng O ffi c e r on a c c o u nt o f a l le ge d u ne xp l a i n e d sha re p re mi u m an d s ha re c a p i t al w h i ch c o m pr i se s o f fi ve su bs c r i b e r s (a ) M / s . G ha r o n d a N i r m a n Pv t . Lt d . (b ) M / s. Ri sh i k e s h Bu i ld co n P v t . L t d. (c ) M / s. T e x ci t y Co n s tr u c t io ns K o va i P v t. L t d . (d ) M /s. Ra ys o ni c I n fra c on P vt . Lt d. ( e ) M / s. H er c u l e se Bu i l d e r s ( C o i m ba t or e ) P v t. L t d . T he ld . c o u n se l fo r t h e as se sse e su b mi t t e d t ha t t he as se sse e h a s re c e i ve d s ub sc ri pt i on on ly f ro m M / s. R a y s on i c I n fr ac on P vt . Lt d. d u r i n g t h e F i n a nc i a l Y ea r 2 0 15 -1 6 re le va n t t o A ss e s s me n t Y ea r 2 0 1 6- 17 u n de r c o ns i d er at i on . T h e m on e y to w ar ds su bsc r i p t i o n i n re sp e c t o f ot he r f ou r pa rt i e s h a v e b e e n r e c e i v e d in t h e e a r l i er ye a rs w h i c h i s se l f ev i d e n t fr o m t he b an k I.T.A. No.83/Del/2021 3 sta t e me nt o f t h e su bsc ri be r as w el l a s t h e a s se s se e. T he pro vi si on o f S e c t i o n 6 8 t h us c a nn o t b e a pp li e d i n re s pe c t o f ot h e r f ou r pa r t i es i n so fa r a s A Y 201 6- 1 7 i s c on c er n e d . (i i ) t he a ss e s se e f il e d v ar io us de t a i l s o n IT BA P ort a l i n r e spe ct M / s. R a y so n i c I n fr a co n P v t. L t d. f ro m w h o m t h e su b sc r i p t i o n mo ne y w a s re ce i v e d d ur i n g t h e y e a r . T h e d et a il s u ploa d e d w er e i n c o m e ta x r et u r ns, a u d i t re po rt , ba l an ce s he et , b an k sta t e me nt , c o n f i r m at i on o f ac c o un t fr o m i n ve st or - c omp an y in c l u di ng M / s. Ra y s o ni c I n fr a co n P vt . L t d. a n d t h e ir I T R s e t c. Th e b a n k st a t e m e n t o f th e a l l o t e es w e re a l so f il e d b e f o r e t he CI T (A ) a s no t e d b y t he CI T( A ) i n p a g e no. 7 o f t h e app el l a t e ord er . T he C I T ( A ) h ow e ve r a t pa g e 29 o f i ts o rd er ha s ob se r v e d t ha t t he a sse ss e e ha s n o t fu r ni s h e d a ny con fi r m a t i o n in r e s pe ct o f t h e sub sc ri pt i o n m o ne y w h i c h i s fa c t ua l l y in c o r r e c t an d c o n t r ad i c t or y. (i i i) t h e e n h an ce m e n t p ro ce e di ng s w e r e i n i t i a t e d by t he C I T( A ) un d er S e c t i o n 2 51 ( 1) ( a ) o f t h e A c t w i t h o u t i s su i n g sh ow ca u se not i c e i n t h i s re g ar d a s c on te m p l a te d un d er S e ct i o n 25 1( 2 ) o f th e A c t. T he C I T ( A ) ha s n ot m a d e a n y r e fe r e nc e t o an y n ot i c e iss u e d i n t hi s re g a r d i n t he fi r st a p p e ll a t e o r de r as w e l l . T h e w hol e e n ha n c e m en t pr o c ee di ng i s t h u s n u l l a n d v o i d at t he th r e s ho ld . (i v ) t h e pr ov is i o n s o f S e c t i o n 5 6 (2 )( vi ib ) h a s b e e n i n vo k ed i n th e fi r st a p pe l l a t e p ro c e e d i n gs a l o ng w i t h S ec t i o n 6 8 o f t he A ct . A s a g a i n st S e c ti on 68 i n v o ke d b y t he A s se ss i n g O ff ic e r, th e i n v o c at i o n o f p ro vi si on s o f S e c t i o n 5 6( 2) ( v i i ) al o n gsi de , for c h a r gi n g pr e m i u m o f Rs. 2 0 p e r s h ar e o n s h a r e iss u e d ha s how e ve r be e n ma d e on p ro t e c ti v e ba si s w h ic h i s no t pe r m i s s ib le i n l a w i n so fa r a s A pp e l l a te A ut ho r i ty i s I.T.A. No.83/Del/2021 4 co n c e r n e d. Th e A ppe l l at e A ut h or i t y is re qu ir e d t o gi ve a de fi n i t e fi n d in g, m or e so, i n a n e n ha n c e me n t p ro ce ed i n g s a n d ca n n o t s up p o se dl y en h a n c e t he i n c o m e o f t he a s s es see o n pro t e c t iv e gr ou n d s . T he t e n t a ti ve a c t io n i n e n h a n c eme nt pro ce e d i n g s b y a pp el l a t e a ut ho ri t y i s n ot su st a i na bl e i n la w . 4. W e h a v e pe ru se d t he a sse ss m e nt or de r a n d t h e fi rst a p p el l a t e or d e r an d a ls o c o n s i de re d t he m a t e r ia l re fe rr ed t o a nd r e l i e d up on i n t he c o u rs e o f he a ri ng. 5. T he as se ss e e o b t a i n ed s h ar e s u b sc ri p t i o n fr o m 5 p ar t ie s a n d t he sh ar es w e r e a l l ot t ed a t a pr e m i u m o f R s. 20 pe r s h a r e a ga i n st t h e fa c e v a l u e o f R s. 1 0 p e r s h a r e t o t he s e 5 di ff e r e n t e n ti t i es . T h e a m ou nt r e c e i ve d a ga i ns t t h e i ss u e o f sh a r e a t pr e m iu m st a n ds a t Rs. 9 6 l a kh i n a g gr eg a te . T h e A sse ss i ng O ff ic e r h a s c a st sh a d ow o n t he g e n ui ne ne ss, i de n t i ty a n d c re di t w o rt h i n e s s o f th e e nt i t i e s t o w ho m sh a r e s w e r e al l ot t e d a t a p re m i u m. S ec t i o n 6 8 o f t he A ct w a s t hu s i nv o k e d by t h e A sse ss i n g O ffi c e r an d it w as hel d th at t h e o n us w hi c h l a y up on t he a s se ss e e un de r S ec t i o n 68 w a s not di s c ha rg e d i n re s pe c t o f c re di t s a g a i n s t s u c h a l l o t m e n t s. 6. I n t he fi r st a pp e a l, t he a ss e s se e c h a l l e ng ed t h e a c ti on o f t h e A sse s si n g O f fi c e r bu t h ow e v e r w h i l e th e C IT (A ) h a s c o n fi r m e d t h e a dd i t i o ns, t he C IT ( A ) a l so i n v ok ed t h e e n h a n c e me nt p o w e rs v e st e d un d e r S e c t i o n 2 51 ( 1) ( a ) o f t h e A c t a nd i n vo ke d p ro vi s io ns o f S ec t i on 5 6( 2 ) ( vi i b ) o f t h e A c t t o qu e st i o n t h e ju sti f i c a t io n o f pr e m i u m o f R s. 20 p e r s ha re re ce i v e d a ga in st t he fa ce v a l ue o f R s . 1 0 pe r sh a r e . T h e a c t i on w as ho w e v e r t a ke n o n pr ot e c t iv e b a si s an d w it h o ut gi vi ng a ny e nh a n ce m e n t no t i c e i n t h i s r eg a rd a n d c on se qu en t l y t he a sse ss ee w a s d e n i e d t he o p po rt un i ty t o re s p o nd t o t he p ro po se d e nh an c e m e n t . T he a c t i o n o f t h e C I T ( A ) i s th us c o n t r ar y t o t h e e xp li c i t m a n da t e o f la w in t e r m s o f S e c ti o n 2 51 (2 ) o f t h e A ct . I.T.A. No.83/Del/2021 5 Co n s e q ue n t l y, t he e nh an c e m e n t a c ti o n o f t h e C I T (A ) c a n no t be c ou n t e n a n c e d i n l a w a nd t h us se t a si de . T he e n ha nc eme n t a c t io n i s a ls o no t s u s t a i n a b l e o n t h e g ro un d t h a t t h e e nh an c em e n t ca nn ot be do n e b y t he fi rs t a ppe l l at e a u th or i t y o n a p r ot e c tive ba si s w i th ou t a ny c og en t a n d d e f in i te fi n d i n g ex pe c te d o f a n a p p el l a t e o ff ic e r a s pl e ad ed on b e h a l f o f t h e a ss e s se e. T h e e n ha nc e me n t a c ti o n i s t h u s se t a si de on t w i n g r ou nd s. 7. W e n ow ad ve rt t o t he se c o n d pl a n k o f t h e a rg u me nt s a d va nc e d on be ha l f o f t h e as se s se e . T h e a s se sse e c la i ms t ha t s e c ti o n 6 8 co ul d no t h a v e be e n i n v o ke d by th e A ss e s si n g O f fi c e r i n re l at i on t o t h e c re di t s re c e i v e d i n th e e a r l i e r y e a r s. I n t h e i n st an t c a s e, fou r o ut o f t he fi v e e n t i t i e s h a v e co nt r i b u t ed t ow a rd s sh a r e s su b sc r i pt i on i n t he e ar li e r ye a r s a n d t hu s S e c t i o n 6 8 h a s n o ap pl i ca t i on i n re s pe c t o f e nt it i e s ot he r t ha n M / s. Ra ys o ni c In f ra c o n P v t. L t d. We f in d pa l pa bl e me r i t i n suc h p l ea on fi r st pr i n c ip le s. The p r ov i si on s o f S ec t i on 6 8 a r e a pp l i c a b l e onl y i n r e l a t i on t o a n y su m fo u nd c r e d i t e d i n t h e b oo k s o f t he as s e sse e qu a t h e p r e vi ou s y e ar r e l e v a n t t o a ss es s m e n t y ea r a nd t h us un l e ss t h e cr e di t h a s b e e n m a d e i n t h e fi n a n c i a l ye a r 20 1 5- 1 6, t he ri go rs o f S e c t i o n 6 8 w ou l d n o t a p p l y. Th i s a sp ec t i s t h us re m it t e d ba c k t o t h e fi l e o f t he A ss es s i n g O ff i c e r. Th e A ss e s si ng O ff ic e r w il l b e e nt i t l e d to v e r i f y t he c l a i m o f t he a ss es se e t h a t th e sha re su b s cr i pt i o n m on ey ha s be e n r ec e i v e d i n re s pe c t o f f o ur p ar t i e s i n t he p re v i o u s ye a r ot he r th a n F . Y . 2 01 5- 1 6 re l ev an t t o A s se ss m e n t Y e a r 2 0 1 6- 17 i n q u e st i o n . I t s h a l l b e o p e n t o t he a s se sse e t o d e m o n s tr a t e th e f a c t ua l po si t i on o n t h e c on to ur o f S ec t i on 6 8 o f t h e A c t . Th u s, t he A ss e ss i n g O f fi c e r sh a l l re v i s i t i t s a ct i o n h a v i ng r e g a r d t o t h e pr o vi si on s o f S e c t i o n 68 o f t he A c t. 8. W e n ow a d ve rt t o t he t h i r d l i mb o f a r g u m e n t i . e ., t he do c u me n t a ry e vi d e nc e s w e r e d ul y pl a c e d i n r e s pe ct of s ha re I.T.A. No.83/Del/2021 6 su b sc r i p t io n m on e y f or al l fi ve e nt i t ie s i nc l u di ng M / s . R a y so n ic In fra c o n P vt . L t d. I t is ob s e r v e d f r o m t h e s ub m i ss io ns ma de b y t he a ss es se e b e f o r e t h e CI T( A ) t ha t su c h d o c u m e n t s w er e c la i m e d t o ha v e b ee n up lo ad e d i n IT BA P ort a l . T he CI T (A ) ha s ho w e ve r gi ve n a c o n tr ad i c t or y fi n d in g t h at no s uc h d o cu me nt s ha ve b e e n p l a c e d o n re c or d . In t h e i n t e r est o f j u st i c e, w e c on s i d e r i t e x pe di e n t to r e m it t he m a t te r b ac k t o t he fi l e o f t h e A s se s si ng O f fi c er . T h e a ss e s see sha l l b e a t l i b e r t y t o a d du ce a ll t he e v i d en ce s i n s u p p or t o f b on a f id es o f su b s cr i p t i o n u nd er q u e s ti on . T he A ss e s si ng O ff ic e r s h a ll a ft er o bj ec t i ve c o n s id er a t i o n o f e v i d e n ce s a n d su b mis s i o ns m a d e o n be h a l f o f t h e a ss es se e p a s s a ss e s s m en t o rd e r a fr e s h in a c c o rd an ce w it h la w . 9. I n t he l i gh t o f t h e a bo v e d e l i ne a t i o n s, t he m a t te r i s s e t asi de a nd r e st or e d t o t h e fi l e o f t he A sse ssi ng O ff ic e r for f ra mi n g t h e a ss es s m e n t a fr e s h i n a c c o r d a n ce w i t h l aw . 10 . I n t he re su lt , t h e a pp e a l o f t h e a sse ss e e i s a llo w e d fo r st a t i st ic a l pu r p os e s . Order pronounced in the open Court on 27/09/2023 Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /09/2023 Prabhat