RAMESHWARRAM TOLLS, Jaipur V. ITO, Sawai Madhopur

ITA 849/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5360 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAL JCIT DR DHK
• Assessee Lawyers: RAHUL KUMAR AJMERA
• Keywords: Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Corroborative evidences
• Section: 68

Judgement Text

ITA NO. 849/JP/2014 M/S. RAMES HWARRAM TOLLS VS. ITO, WARD- 3, SAWAI MADHOPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLA G ;KNO] YS[KK LNL; DS LE{K BEFORE:SHRI R.P.TOLANI, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA NO. 849/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2004-05 M/S. RAMESHWARRAM TOLLS STATION ROAD HINDAUN CITY, KAROLI CUKE VS. THE ITO WARD- 3, SAWAI MADHOPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABFR 8174K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAHUL KUMAR AJMERA , CA JKTLO DH VKSJ LS@ REVENUE BY : SMT. RUNI PAL, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/04/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 28/04/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), KOTA DATED 19-10-2014 FOR THE ASSESSEE 2004-05 CHAL LENGING THE IMPOSITION OF PENALTY OF RS. 27,26,500/- U/S 271(1)( C) OF THE ACT. 2.1 AT THE OUTSET OF THE HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT AN APPEAL OF THE ASSESSEE IN ITA NO. 280/JP/2012 FOR T HE ASSESSMENT YEAR 2004- 05 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 08-04- 2016 BY OBSERVING AT PARA 7 AS UNDER:- ITA NO. 849/JP/2014 M/S. RAMES HWARRAM TOLLS VS. ITO, WARD- 3, SAWAI MADHOPUR 2 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. I T IS UNDISPUTED FACT THAT THE LD ASSESSING OFFICER HAS MADE ADDITIO N IN THE PREMISE OF CASH RECEIPTS FROM THE ASSESSEE DEPOSITED IN M/S ABHAYA INVESTMENT PVT. LTD.. THEREAFTER, HE GOT ACCOMMODATI ON ENTRY. THE LD CIT(A) HAD DISCUSSED SITUATION-1 IN HIS ORDER AND HELD THIS ADDITION IS NOT JUSTIFIED BUT HE HAVING COTERMINOUS POWER AND CONFIRMED THE ADDITION BY TREATING THIS LOAN AS CAS H CREDITOR, WHICH HAS NOT BEEN PROVED BY THE ASSESSEE AS ONUS CAST ON HIM. IT IS ALSO NOT AS PER LAW AS THE LD CIT(A) HAS NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSEE BEFORE USING COTERMINOUS POWER GIVEN UN DER THE LAW TO HIM. THE IDENTICAL CASE HAS ALREADY BEEN CONSIDERED BY THE COORDINATE BENCH IN ITA NOS. 1351 TO 1356/JP/2008 O RDER DATED 31/03/2010 WHERE ADDITIONS WERE MADE WITHOUT PROVIDING CROSS EXAMINATION OF SHRI GAJENDRA PORWAL, WHICH HAS BEEN E ITHER CONFIRMED OR DELETED BY THE LD CIT(A), HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE BY THE ITAT. THE OPERATIVE PORTION OF TH E COORDINATE BENCH IS AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES IN TOTALITY, WE C OME TO THE CONCLUSION THAT THE ADMISSION MADE BY SHRI PORWA L ADMITTING THAT THE TRANSACTION IN QUESTION WAS MANAG ED BY HIM FOR BENEFICIARIES ON CHARGING OF COMMISSION ARE NOT WORTH RELYING IN ABSENCE OF HIS BEING CROSS EXAMINED BY THE ASSESSES AND IN ABSENCE OF ANY SUPPORTING EVIDENCE ESPECIALLY WHEN THOSE ADMISSIONS BY SHRI PORWAL WERE SUITABLE TO HIS OWN INTEREST. IT IS ALSO SURPRISING THAT NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE O F SEARCH AT THE PREMISES OF SHRI GAJENDRA PORWAL TO CORROBORATE HIS STATEMENTS ABOUT INDULGING IN ARRAN GING ACCOMMODATING ENTRIES WHICH ARE BEING DONE AT LARGE SCALE IN A SYSTEMATIC MANNER, AS CLAIMED. WE THUS HOLD THAT IN THE PRESENT CASE THERE WAS NO SUFFICIENT MATERIAL/EVIDEN CE ON RECORD TO COME TO THE CONCLUSION THAT TRANSACTIONS IN QUESTION ARE BOGUS. UNDER THIS BACKGROUND, WE ARE O F THE VIEW THAT THE LD. CIT (A) HAS RIGHTLY DELETED THE AD DITION. FOR A READY REFERENCE THE RELEVANT PARA AT PAGES 6 TO 8 IN THE CASE OF SHRI MEGH RAJ SINGH SHEKHAWAT WHICH IS ALSO ITA NO. 849/JP/2014 M/S. RAMES HWARRAM TOLLS VS. ITO, WARD- 3, SAWAI MADHOPUR 3 COMMON IN THE OTHER APPEALS IS BEING REPRODUCED HER EUNDER :- THE CONTENTION OF THE A/R IS CONSIDERED. IT APPEAR S THAT THE SOLE BASIS FOR THE ADDITION IS STATEMENT OF SH. GAJ ENMDRA PORWAL RECORDED U/S 132(4) DURING THE COURSE OF SEA RCH IN HIS OWN CASE AND HIS AFFIDAVIT DATED 1.11.2006. BAS ED ON THE STATEMENT OF SH. GAJENDRA PORWAL THE AO INFERRED TH AT AS SH. GAJENDRA PORWAL WAS A ENTRY PROVIDER AND THE COMPAN Y M/S. JTFSPL WAS ALSO FLOATED BY HIM HAD NOT WORTH AT ALL , TRANSFER OF SHARE OF M/S. GORBANDH MARBLES PVT. LTD. AND M/S . KAMOD COMMERCIAL SERVICES PVT. LTD., BY THE APPELLANT TO M/S. JTFSPL WAS NOT GENUINE BUT A SHAM TRANSACTION. THAT M/S. JTFSPL WAS USED AS A CONDUIT TO BRING UNACCOUNTED M ONEY IN THE BOOKS OF ACCOUNTS BY THE APPELLANT. THAT STA TEMENT OF SH. GAJENDRA PORWAL WAS SUPPORTED WITH CIRCUMSTANTI AL EVIDENCES. AO ALSO EMPHASIS THAT SH. PORWAL DID NOT RETRACT HIS STATEMENT WHICH IS PROVED BY THE AFFIDAVIT FILE D BY HIM ON 1.11.2006. THE CREDIT WORTHINESS OF PURCHASER COMPA NY I.E. JTFSPL WAS DOUBTED AS BEFORE ISSUING CHEQUES EQUIVA LENT CASH WAS DEPOSITED IN ITS BANK ACCOUNT. THAT CREDIT WORTHINESS OF M/S. JTFSPL AND GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED. THE RECEIPTS OF RS . 41,50,000/- WAS THEREFORE ADDED AS UNEXPLAINED CRED IT U/S 68 OF IT ACT. FROM THE OBSERVATION OF THE AO IT IS CLEAR THAT HE HAD NO OTHER MATERIAL OR EVIDENCE EXCEPT THE STA TEMENT OF SH. GAJENDRA PORWAL. FOR CONSIDERING THE CREDIT ENTRIES AS UNEXPLAINED, THE AO WAS SUPPOSED TO PROVE THAT THE AMOUNT CREDITED IS THE APPELLANTS OWN MONEY. ALSO THAT M /S. JTFSPL WAS NOT CREDIT WORTHY OF PAYING THIS MUCH AM OUNT AND THE TRANSACTION ENTERED INTO BETWEEN THE APPELL ANT AND M/S. JTFSPL WAS NOT GENUINE. THE AO HAS TAKEN SUPPO RT OF THE GENERAL STATEMENT GIVEN BY SH. PORWAL, THAT THE SHARES WERE SUBSEQUENTLY BEEN TRANSFERRED TO CONFIDENT OF THE BENEFICIARIES. HOWEVER, THE AO FAILED TO GIVE ANY S PECIFIC FINDING ABOUT A PARTICULAR TRANSACTION UNDER CONSID ERATION THAT THE SHARES PURCHASED BY M/S. JTFSPL WERE SUBSEQUENTLY TRANSFERRED TO THE APPELLANT OR ITS BE NEFICIARIES. IN FACT THE AO HAS NOT QUOTED ANY SPECIFIC QUESTION AND ITS ANSWER GIVEN BY SH. PORWAL WITH REFERENCE TO THE TR ANSACTION UNDER REFERENCE. SH. PORWAL IN HIS STATEMENT ALSO A DMITTED THAT HE PROVIDED ENTRY FOR A COMMISSION RECEIVED IN CASH BUT IN THE PRESENT CASE THE AO HAS NOT GIVEN ANY FINDIN G, HOW MUCH COMMISSION WAS RECEIVED BY SH. PORWAL FROM THE APPELLANT FOR THIS TRANSACTION. NO SUCH ENTRY FOR R ECEIPT OF COMMISSION WAS FOUND IN THE CASE OF SH. GAJENDRA PO RWAL ITA NO. 849/JP/2014 M/S. RAMES HWARRAM TOLLS VS. ITO, WARD- 3, SAWAI MADHOPUR 4 NOR ANY ADDITION OR AN ACCOUNTED PAYMENT OF COMMISS ION WAS MADE BY THE AO IN THE CASE OF THE APPELLANT. THE APPELLANT COMPANY ASKED FOR CROSS EXAMINATION O F SH. PORWAL WHICH WAS THOUGH ADMITTED BY THE AO BUT AS S H. PORWAL DID NOT REMAIN PRESENT BEFORE HIS OWN AO, TH E OPPORTUNITY OF CROSS EXAMINATION COULD NOT BE AVAIL ED BY THE APPELLANT. ABSENCE OF SH. PORWAL FOR CROSS EXAMINAT ION WAS JUSTIFIED BY THE AO ON SOME ASSUMPTIONS. THE AO HAS GIVEN WEIGHTAGE TO THE FACT THAT SH. PORWAL IN HIS AFFIDA VIT FILED MUCH AFTER THE SEARCH ACTION HAS CONFIRMED HIS EARL IER STATEMENT RECORDED U/S 132(4). THUS THE ENTIRE ADDI TION IS BASED ON THE STATEMENT OF SH. PORWAL RECORDED U/S 1 32(4). NOT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION OF SH. PORWAL IS NOT JUSTIFIED. NO MATERIAL WAS BORNE OUT FROM THE STATEMENT OF SH. GAJENDRA PORWAL WHICH JUSTIFIES TH E ADDITIONS. /EXCEPT STATEMENT THERE IS NO OTHER MATER IAL TO SUPPORT THAT THE TRANSACTION WAS AN ACCOMMODATION E NTRY. THE POSSESSION OF SHARES IN THE HANDS OF THE APPELL ANT HAS NOT BEEN DOUBTED. TO COME OUT OF CLUTCHES OF SECTIO N 68 AN ASSESSEE IS TO PROVE IDENTITY AND CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. IDENTI TY OF THE CREDITOR IS ESTABLISHED WHICH IS M/S. JTFSPL, A COM PANY INCORPORATED. REGARDING HIS CREDIT WORTHINESS THE A O HIMSELF HAS MENTIONED THAT THE CASH WAS DEPOSITED BEFORE IS SUING THE CHEQUES IN FAVOUR OF THE APPELLANT AND THUS THE CREDIT WORTHINESS IS ALSO PROVED. SO FAR AS GENUINENESS OF THE TRANSACTION IS CONCERNED THE AO HAS NOT ESTABLISHED THAT THE MONEY PAID BY JTFSPL TO THE APPELLANT WAS THE APPEL LANTS MONEY. COPIES OF THE SHARE CERTIFICATES WERE ALSO F ILED ALONG WITH THE WRITTEN SUBMISSION WHICH PROVES THAT THE A PPELLANT HAD 415000 SHARES OF M/S. GORBANDH MARBLES PVT. LTD . AND M/S. KAMOD COMMERCIAL SERVICES PVT. LTD. AND ON SAL E THE ASSESSES WERE ALSO TRANSFERRED IN THE NAME OF JTFSP L AND THE AMOUNT WAS RECEIVED BY ACCOUNT PAYEE CHEQUE. TH US THE GENUINENESS OF THE TRANSACTION IS ALSO PROVED. THE A/R MADE DISTINCTION OF THE FACTS OF THE PRESENT CASE W ITH THE FACTS OF THE CASES RELIED UPON BY THE AO. CERTAINL Y CIRCUMSTANTIAL EVIDENCES CAN ALSO BE USED AGAINST T HE APPELLANT BUT IN THE PRESENT CASE EXCEPT THE STATEM ENT OF 3 RD PARTY WHICH WAS PARTIALLY RETRACTED, NO OTHER EVIDE NCE WAS USED BY THE AO. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION MADE BY THE AO BEING NOT BASED ON ANY EVIDENCE IS DIRECTED TO BE DELETED. THE ADDITION OF RS. 41,50,000/- MADE BY THE AO IS THEREFORE DELETED. TH E 2 ND GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELL ANT. ITA NO. 849/JP/2014 M/S. RAMES HWARRAM TOLLS VS. ITO, WARD- 3, SAWAI MADHOPUR 5 WE FULLY CONCUR WITH THE ABOVE FINDING OF THE LD. CI T (A) UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CA SE AS DISCUSSED ABOVE. THE FIRST APPELLATE ORDER IN THIS R EGARD IS THUS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. RECENTLY, THE HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRY VS. COMMISSIONER OF CENTRAL EXCISE I N CIVIL APPEAL NO. 4228/2006 VIDE ORDER DATED 2 ND SEPTEMBER, 2015 HAS HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNES SES BY ADJUDICATING THE AUTHORITY, THOUGH THE STATEMENT OF THOSE WITNESSES WERE MADE THE BASIS OF IMPUGNED ORDER IS A SERIOUS F LAW, WHICH MAKES THE ORDER NULLITY, INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE A SSESSEE WAS ADVERSELY AFFECTED. THIS TO BE BORNE IN MIND THAT TH E ORDER OF THE CCE WAS BASED UPON THE STATEMENT GIVEN BY TWO WITNESSE S. BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE B ENCH AND PROPOSITION OF HON'BLE SUPREME COURT, WE ALLOW THE AS SESSEES APPEAL. 2.2 THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A ). 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS SEEN THAT WHEN THE QUANT UM ADDITION AMOUNTING TO RS. 76,00,000/- HAS BEEN DELETED BY COORDINATE BENC H VIDE ITS ORDER DATED 08-04-2016 (SUPRA) THEN THERE IS NO QUESTION OF IMP OSING PENALTY OF RS. 27,26,500/- U/S 271(1) OF THE ACT IN THE CASE OF T HE ASSESSEE. IN VIEW THEREOF, THE APPEAL OF THE ASSESSEE IS ALLOWED DELE TING THE PENALTY OF RS. 27,26,500/- IMPOSED BY THE LD. CIT(A). ITA NO. 849/JP/2014 M/S. RAMES HWARRAM TOLLS VS. ITO, WARD- 3, SAWAI MADHOPUR 6 3.0. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/04/2016. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/04/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. RAMESHWARRAM TOLLS, KAROLI 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- , SAWAI MADHOPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.849/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR