ITO, New Delhi V. M/s Ultra Modern Exports Pvt. Ltd., New Delhi

ITA 87/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3818 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 14-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H L DIHANA
• Keywords: Unexplained cash credit; Question of law; Onus to prove
• Section: 133(6); 68

Judgement Text

ITA NO. 87/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 87/DEL/2011 A.Y. : 2007-08 ITO, WARD 18(1), ROOM NO. 247, CR BUILDING, IP ESTATE, NEW DELHI VS. M/S ULTRA MODERN EXPORTS PVT. LTD., I-175, 2 ND FLOOR, GARHWALI MOHALLA BLOCK-I, LAXMI NAGAR, DELHI 110 092 (PAN : AAACU8087G) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. ASHWANI KUMAR, CA DEPARTMENT BY : SH. HL DIHANA, C.I.T. (D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 28.10. 2010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN DELETING AN ADDITION OF ` 4,34,0 0,000/- ON ACCOUNT OF UNEXPLAINED CREDITS IN THE FORM OF SHARE APPLICATION MONEY. 3. IN THIS CASE ASSESSING OFFICER HAS FOUND THAT T HE ASSESSEE HAS RECEIVED ` 4,34,00,000/- ON ACCOUNT OF UNEXPLAINED CREDITS IN THE FORM OF SHARE APPLICATION MONEY. ASSESSING OFFICER FURTH ER FOUND THAT THE SAID APPLICATION MONEY WERE LIABLE FOR ADDITION AS U NEXPLAINED ITA NO. 87/DEL/2011 2 RECEIPTS. THE REASONS THEREOF AS STATED BY THE AS SESSING OFFICER WERE AS UNDER:- NOTICES U/S. 133(6) WERE SENT TO INVESTORS OUT OF WHICH NOTICES SENT TO BELOW MENTIONED ENTITIES ARE RECEIV ED BACK AS UNDERSERVED. S.NO. NAME OF THE INVESTOR AMOUNT INVESTED 1. FAIRDEAL INFORMATION & TECHNOLOGY PVT. LTD. 1,00,00,000/- 2. SUNLIGHT TOUR AND TRAVELS PVT. LTD. 1,54,00,000/- 3. JAGDISHWAR PHARMACEUTICALS LTD. 55,00,000/- 4. IMPALA INDUSTRIAL ENTERPRISE LTD. 55,00,000/- 5. SUPREME TELECOM AND NETWORK INDIA PVT. LTD. 70,00,000/- 4,34,00,000/- THEREFORE, THE A.R. WAS SPECIFICALLY ASKED TO PRODU CE THE DIRECTORS OF ABOVE MENTIONED INVESTORS BUT THE SA ME WERE NOT PRODUCED. IT HAS BEEN NOTICED FROM THE DETA ILS FILED BY THE A.R. THAT THE INVESTORS ARE DECLARING VERY SMALL INCOME IN THEIR RETURN OF INCOME AND FURTHER NOTICE D THAT BEFORE ISSUE OF CHEQUE TO M/S ULTRA MODERN EXPORTS PV T. LTD. HUGE AMOUNTS ARE BEING TRANSFERRED IN ITS ACCOUNTS. THEREFORE, IT COULD NOT BE SAID THAT THE CREDITWORT HINESS OF THESE INVESTORS WERE PROVED. KEEPING IN VIEW THE A BOVE FACTS AND DISCUSSIONS, I HAVE NO OPTION BUT TO TR EAT THE SHARE CAPITAL AMOUNT OF ` 4,34,00,000/- AS UNEXPLAIN ED CASH CREDITS AND ADDED BACK TO THE INCOME OF THE ASSESSE E COMPANY. ITA NO. 87/DEL/2011 3 4. UPON ASSESSEES APPEAL IN THIS REGARD, LD. COMMIS SIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSEE HAS FI LED CONFIRMATION CERTIFICATE WITH REGARD TO SHARE APPLICATION MONEY, BANK STATEMENT SHOWING THE NAME OF THE ASSESSEE COMPANY, COPY OF I NCOME TAX RETURN, COPY OF AUDITED BALANCE SHEET AND ADDITIONA L INFORMATION AS REQUIRED UNDER COMPANIES ACT. LD. COMMISSIONER OF I NCOME TAX (APPEALS) FURTHER OBSERVED THAT ASSESSING OFFICER HAS NOT DOUBTED THE IDENTITY OF THE SHARE APPLICANTS WHICH WAS THE MAIN PARAMETER TO BE DISCHARGED BY THE ASSESSEE IN RESPECT OF THE SHARE APPLICATION MONEY. ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX (APPEALS ) REFERRED THE FOLLOWING DECISION OF THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF C.I.T. VS. DWARKADHISH INVESTMENT P LTD. [2010] 19 4 TAXMAN 43 (DELHI), WHEREIN FOLLOWING WAS HELD:- THOUGH IN S. 68 PROCEEDINGS, THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CREDITORS/ SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN OR INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANS ACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE C HEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROO F WOULD SHIFT TO THE REVENUE JUST BECAUSE THE CREDITORS / SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE S. 68 REVENUE HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSONS MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE IN THE INSTANT CASE, THE TRIBUNAL HAS CONFIRMED THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETING THE IMP UGNED ADDITION HOLDING THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPL ICATION MONEY ITA NO. 87/DEL/2011 4 HAS BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES NO QUESTION OF LAW ARISES. 4.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSION, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ADDITION AMOUN TING TO ` 4,34,00,000/- IS MISCONCEIVED, HENCE, LIABLE TO BE DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT IN THIS CASE THE ASSESSEE HAS FURNISHED THE BASIC INFORMATION IN THI S REGARD. THESE WERE CERTIFICATE WITH REGARD TO SHARE APPLICATION, BANK STATEMENT SHOWING THE NAME OF THE ASSESSEE COMPANY, COPY OF IN COME TAX RETURNS, COPY OF THE AUDITED BALANCE SHEET AND COP Y OF ADDITION INFORMATION AS REQUIRED UNDER THE COMPANIES ACT IN A LL THE FIVE CASES. THUS, THE IDENTITY OF THESE SHARE APPLICANTS IS DU LY ESTABLISHED. THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THE IDENTI TY OF SHARE APPLICANTS. IN THESE CIRCUMSTANCES, HONBLE APEX COURT DECISION IN THE CASE OF C.I.T. VS. LOVELY EXPORTS P LTD. (216 CT R 195) IS RELEVANT. IN THIS CASE, IT WAS HELD THAT IF THE SHARE APPLICATIO N MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPART MENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN AC CORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF T HE ASSESSEE. ITA NO. 87/DEL/2011 5 7. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENT, IN OUR CONSIDERED OPINION, THERE IS NO ILLEGALITY OR I NFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), HENCE, WE UPHOLD THE SAME. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/6/2011 UPO N CONCLUSION OF HEARING. SD/- SD/- [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/6/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES