Deputy Commissioner of Income Tax, Circle - 3, , Guwahati V. M/s. New Tech Steel and Alloys Pvt. Ltd. , Karbi Anglong

ITA 92/GTY/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7513 (ITAT-GUWAHATI)
• Duration Of Justice: 2 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M HAOKIP J
• Assessee Lawyers: RAMESH GOENKA; AMIT G
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Assessment record
• Section: 68; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 92 / GAU / 2017 ASSESSMENT YEAR :2012-13 DCIT, CIRCLE-3 AAYAKAR BHAWAN, 7 TH FLOOR, G.S. ROAD, GUWAHATI-781005 V/S . M/S NEW TECH STEEL & ALLOYS PVT. LTD., BORJAN, KHATHKATI, KARBI ANGLONG, ASSAM-782480 [ PAN NO.AACCN 8196 K ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI M. HAOKIP, JCIT-DR /BY RESPONDENT SHRI RAMESH GOENKA, SR ADVOCATE & SHRI AMIT GOENKA, ADVOCATE /DATE OF HEARING 05-07-2019 /DATE OF PRONOUNCEMENT 26-07-2019 / O R D E R PER BENCH:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-2, GUWAHATIS ORDER DATED 23.02.2017 PASSED IN CASE NO.GUWA-225/2015-16, INVOLVING PROCE EDINGS U/S 144 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES FORMER TWO IDENTICAL GROUNDS CHALL ENGE CORRECTNESS OF THE CIT(A)S ORDER REVERSING ASSESSING OFFICERS AC TION TREATING ASSESSEES SHARE CAPITAL AND SHARE PREMIUM OF RS.20,00,000/- A ND RS.1,80,00,000/- AS ITA NO.92/GAU/2017 A.Y. 2012-13 DCIT, CIR-3, GUWA VS. M/S NEW TECH STEEL & A LLOYS P LTD. PAGE 2 UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. CASE FI LE SUGGESTS THAT THE ASSESSEE HAD PROVED BEFORE THE CIT(A) ABOUT THE IMP UGNED SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM ONE OF ITS DIRECTOR SHRI SURESH SHARMA. THE CIT(A)S FINDINGS ARE DELETING THE IMPUGNED ADDITIO N(S) READS AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BEFORE M E. I HAVE ALSO PERUSED THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT S ENT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IN THE REMAND REPORT SENT BY HIM HAS SUBMITTED THAT HEARING OPPORTUNITIES WERE PROVIDED TO THE APP ELLANT ON VARIOUS DATES AND THE ASSESSMENT ORDER WAS PASSED AFTER HEARING THE A PPELLANT. HOWEVER, HE HAD NO OBJECTION FOR ADMISSION OF ANY FRESH OR ADDI TIONAL EVIDENCE WHICH THE ASSESSEE MAY PRODUCE IF IT IS CONSIDERED TO BE RELE VANT FOR DECIDING THE ISSUE. 4.4 THE APPELLANT HAS MADE A PRAYER UNDER RULE 46A OF THE INCOME TAX RULES, 1962 FOR ADMISSION OF ADDITIONAL EVIDENCES. IT IS SUBMITTED THAT THE APPELLANTS ASSESSMENT WAS COMPLETED WITHOUT THE AP PELLANT BEING GIVEN PROPER AND MEANINGFUL OPPORTUNITY OF BEING HEARD AN D HENCE IT COULD NOT PRODUCE THE DOCUMENTS IN SUPPORT OF THE SHARE CAPIT AL AND SHARE PREMIUM. AS MENTIONED ABOVE, THE ASSESSING OFFICER IN HIS REMAN D REPORT HAS STATED THAT HE HAD NO OBJECTION FOR ADMISSION OF ANY FRESH OR A DDITIONAL EVIDENCE IF IT IS CONSIDERED TO BE RELEVANT FOR DECIDING THIS ISSUE. ON A CONSIDERATION OF FACTS AS NARRATED BY THE APPELLANT IN ITS WRITTEN SUBMISS ION, I THINK IT WOULD BE FAIR AND REASONABLE IF THE ADDITIONAL EVIDENCES NOW PROD UCED BY THE APPELLANT ARE ADMITTED FOR DECIDING THE ISSUE OF SHARE CAPITAL AN D SHARE PREMIUM. I, THEREFORE, ADMIT THE ADDITIONAL EVIDENCE PRODUCED B Y THE APPELLANT UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 4.5 THE APPELLANT HAS SUBMITTED THE ENTIRE SHARE CA PITAL AND SHARE PREMIUM WAS RECEIVED FROM SHRI SURESH SHARMA, ONE OF THE DI RECTORS OF THE APPELLANT- COMPANY. IN SUPPORTED OF THE RECEIPT OF SHARE CAPIT AL AND SHARE PREMIUM, THE APPELLANT HAS FIELD BEFORE ME COPIES OF SHARE-APPLI CATIONS, COY O ACCOUNTS CONFIRMATION WITH SHRI SURESH SHARMA, COPY OF BANK STATEMENT OF SHRI SURESH SHARMA FROM WHERE THE SHARE APPLICATION MONEY WAS P AID, COPY OF BALANCE SHEET OF SHRI SURESH SHARMA AS ON 31.03.2012, COPY OF APPELLANTS BANK STATEMENT FOR THE RELEVANT PERIOD AND ALSO COPY OF THE RETURN OF ALLOTMENT I.E. FORM NO.2 FILED WITH THE ROC, SHILLONG BY THE APPEL LANT. A PERUSAL OF THE ABOVE DOCUMENTS SHOWS THAT HE ENTIRE SHARE CAPITAL AND SHARE PREMIUM AGGREGATING RS.2 CRORES WAS RECEIVED BY CHEQUE. SHR I SURESH SHARMA, DIRECTOR OF THE APPELLANT-COMPANY AS WELL AS THE AP PELLANT-COMPANY ITSELF ARE BOTH ASSESSED BY THE SAME ASSESSING OFFICER. THE IN VESTMENT MADE BY SHRI SURESH SHARMA IN THE APPELLANT-COMPANY HAS BEEN ACC EPTED BY THE SAME ASSESSING OFFICER IN HIS ASSESSMENT FOR THE ASSESSM ENT YEAR 2012-13. HENCE, THERE CANNOT BE ANY DOUBTED ABOUT THE IDENTI TY AND CREDITWORTHINESS OF SHRI SURESH SHARMA AND ALSO ABOUT THE GENUINENES S OF THE TRANSACTIONS. IN VIEW OF THE ABOVE DISCUSSIONS I FIND NO REASON T O SUSTAIN THE ADDITION OF RS.12 CRORES MADE BUY THE ASSESSING OFFICER. THE SA ME IS HEREBY DELETED . ITA NO.92/GAU/2017 A.Y. 2012-13 DCIT, CIR-3, GUWA VS. M/S NEW TECH STEEL & A LLOYS P LTD. PAGE 3 3. MR. HAOKIP VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT ASSESSEE COULD NOT PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTOR PARTIES I.E., SHRI SURESH SHARMA ONE OF TH E DIRECTOR BEFORE THE ASSESSING OFFICER DESPITE AVAILING ADEQUATE OPPOR TUNITIES DURING THE COURSE OF ASSESSMENT IN THE ISSUE. WE FIND NO SUBSTANCE WI TH REVENUES INSTANT ARGUMENTS. WE MAKE IT CLEAR THAT AS ASSESSEE WELL A S INVESTOR / DIRECTOR, SHRI SURESH SHARMA ARE ASSESSED IN THE SAME JURISDICTION . THE ASSESSEE HAS ALREADY FILED ON RECORD ALL THE NECESSARY EVIDENCE BEFORE THE LOWER AUTHORITIES; MORE PARTICULARLY, THE CIT(A) BY WAY OF ADDITIONAL EVIDENCE. WE FURTHER REITERATE THAT REVENUES GROUND PLEADED IN THE INST ANT APPEAL NOWHERE ALLEGES VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 . HONBLE GUJARAT HIGH COURTS JUDGMENT IN THE CASE OF PCIT VS. GYSCOAL AL LOYS TAX APPEAL NO.1180 OF 2018 HOLDS THAT SUCH AN ADDITION OF SHARE APPLIC ATION / PREMIUM COMING FROM ONE OF THE ASSESSEE-COMPANYS DIRECTOR SUPPORT ED BY ALL DOCUMENTARY EVIDENCE CANNOT BE TREATED AS UNEXPLAINED CASH CRED ITS. THEIR LORDSHIPS DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER:- WHETHER APPELLATE TRIBUNAL HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F RS.9,99,99,900/- AS PENALTY THE PROVISION OF SECTION 68 OF THE INCOME-T AX ACT, WITHOUT PROPERLY APPRECIATING THE FACTS OF CASE AND THE MATERIAL BRO UGHT ON RECORD? C/TAXAP/1180/2018 ORDER THE ISSUE PERTAINS TO THE S HARE APPLICATION MONEY RECEIVED BY THE RESPONDENT-ASSESSEE-COMPANY. THE ASSESSING OFFICER ADDED A SUM OF RS.9,99 CRORES [ROUNDED OFF] IN THE HANDS OF THE ASSESSEE WITH THE AID OF SECTION 68 OF THE INCOME-T AX ACT, 1961 [THE ACT FOR SHORT]. CIT[A] DELETED SUCH ADDITION PRIMARILY ON THE GROUND THAT THE ASSESSEE HAD ESTABLISHED THE SOURCE, GENUINENESS OF THE TRAN SACTIONS AND THE CREDITWORTHINESS OF THE INVESTORS. IN FURTHER DETAI LED CONSIDERATION, THE TRIBUNAL CONFIRMED THE VIEW OF CIT[A], MAKING THE F OLLOWING OBSERVATIONS:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AP E HAS RECEIVED AN AMOUNT OF RS.9,99,99,900/- ON ACCOUNT OF SHARE CAP ITAL AND SHARE PREMIUM FROM M/S GENERAL CAPITAL AND HOLDING CO. PV T. LTD, AHMEDABAD DURING THE YEAR. THE AO HELD THAT THE CRE DITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION WERE NOT PROVED BY THE APPELLANT AND ACCORDINGLY MADE THE ADDITION UNDER SECTION 68 OF THE ACT FOR THE ABOVE AMOUNT. THE APPELLANT HAS SUBMITTED THAT ALL THREE INGREDIENTS SUCH AS, CREDITWORTHINESS, GENUINENESS AND THE IDEN TITY OF THE SHARE APPLICANT HAVE BEEN PROVED AND THEREFORE, THE ADDIT ION SHOULD NOT HAVE BEEN MADE BY THE AO. ITA NO.92/GAU/2017 A.Y. 2012-13 DCIT, CIR-3, GUWA VS. M/S NEW TECH STEEL & A LLOYS P LTD. PAGE 4 C/TAXAP/1180/ORDRE DURING THE COURSE OF APPELLATE P ROCEEDINGS, THE ASSESSMENT RECORDS WERE ALSO OBTAINED FROM AO A ND THE SAME HAVE ALSO BEEN EXAMINED BY ME TO ASCERTAIN THE FACT S CORRECTLY. THE SHARE APPLICANT COMPANY M/S GENERAL CAPITAL HAS BEE N DULY CONFIRMED THE FACT OF MAKING INVESTMENT IN THE APPELLATE COMP ANY. THE AMOUNTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL. THE SAM E ARE DULY REFLECTED IN THE ANNUAL ACCOUNTS OF THAT COMPANY. T HE EXTRACTS OF THE BANK STATEMENT WHICH HAVE BEEN FILED BEFORE ME DURI NG THE COURSE OF APPELLATE PROCEEDINGS AS WELL AS BEFORE THE AO CLEA RLY SHOW THAT THERE ARE NO CASH DEPOSITS AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. THE OBSERVATION OF THE AO THAT THE CASH HAS BEEN DE POSITED AND SUBSEQUENTLY CHEQUES WERE ISSUED IS FACTUALLY INCOR RECT. THE DIRECTOR OF THE COMPANY ALSO ATTENDED BEFORE AO AND CONFIRM ED THE FACT. IT IS ALSO NOTE THAT BOTH THE COMPANIES, THAT IS THE APPE LLANT COMPANY AS WELL AS THE SHARE APPLICANT ARE MANAGED BY THE SAME GROUP OF PERSONS. HON'BLE HIGH COURT OF GUJARAT HAS CONSISTENTLY HELD THAT IF THE ASSESSEE HAS GIVEN SUFFICIENT PROOF IN RESPECT OF THE SHARE APPLICATION, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IF THE AO HAS ANY DOUBT ABOUT THE SOURCE OF THE SHARE APPLICANT FURTH ER INVESTIGATION CAN BE MADE IN THE HANDS OF THE SHARE APPLICANT, BUT NO T IN THE CASE OF THE APPELLANT. C/TAXAP/1180/2018 ORDER IT CAN THUS BE SEEN THAT TH E E ENTIRE ISSUE IS BASED ON APPRECIATION OF MATERIAL ON RECORD. CIT[A] AND THE TRIBUNAL CONCURRENTLY CAME TO THE CONCLUSION THAT THE ASSESS EE HAD DISCHARGES ITS BASIC ONUS. THE INVESTORS HAVE CONFIRMED THE TRANSA CTIONS. SUCH TRANSACTIONS WERE CARRIED OUT THROUGH THE BANKING CHANNEL. THE D IRECTOR OF THE INVESTING COMPANY HAD ALSO APPEARED BEFORE THE ASSESSING OFFI CER AND ALSO CONFIRMED THE TRANSACTIONS. THE CIT[A] AND THE TRIBUNAL ALSO DID NOT CONFIRM THE ASSESSING OFFICERS FINDING THAT THE ASSESSEE FAILE D TO ESTABLISH THE CREDITWORTHINESS OR GENUINENESS OF THE TRANSACTIONS . 4. WE THEREFORE DECLINE THE REVENUES INSTANT FORME R SUBSTANTIVE GRIEVANCE SEEKING TO REVERSE THE ASSESSING OFFICER S ACTION MAKING US/ 68 ADDITION ON ACCOUNT OF ASSESSEES SHARE CAPITAL / P REMIUM RECEIVED FROM ITS DIRECTOR WHO IS ALSO ASSESSED IN THE SAME JURISDICT ION. 5. NEXT COMES THE LATTER TWO ADDITION(S) OF CASH FO UND DURING SURVEY AND UNDISCLOSED STOCK INVOLVING FIGURES OF RS.1,10,320/ - AND RS.19,60,738/-; RESPECTIVELY. IT TRANSPIRES DURING THE COURSE OF HE ARING THAT THE DEPARTMENT HAD CONDUCTED THE SURVEY IN QUESTION AT ASSESSEES BUSI NESS PREMISES ON 06.12.2012 I.E. IN PREVIOUS YEAR RELEVANT TO SUCCEE DING ASSESSMENT YEAR ITA NO.92/GAU/2017 A.Y. 2012-13 DCIT, CIR-3, GUWA VS. M/S NEW TECH STEEL & A LLOYS P LTD. PAGE 5 2013-14 THAN 2012-13. THE CIT(A) HAS DELETED BOTH T HESE ADDITION(S) FOR THIS PRECISE REASON. WE THEREFORE DECLINE THE REVENUES INSTANT TWIN FOLDED PLEA GOING BY THE SAME ANALOGY. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 2 6/07/2019 SD/- SD/- ( #) (%& #) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) GUWAHATI, *DKP '- 26 / 07 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIR-3, AAYAKAR BHAWAN, G.S.ROAD, 7 TH FL, GUWAHATI-781005 2. /RESPONDENT-M/S NEW TECH STEEL & ALLOYS PV. LTD., B ORJAN, KHATHKATI, KARBI ANGLONG, ASSAM- 782480 3. 2 3 8 / CONCERNED CIT GUWAHATI 4. 3- / CIT (A) GUWAHATI 5. ; &&2, 2, 8 / DR, ITAT, GUWAHATI 6. A / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY (ON TOUR) 2,