ITO, Jaipur V. M/s LINGRAJ HOTELS PVT. LTD., Jaipur

ITA 92/JPR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62005 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 27-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: B P MUNDRA
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI SANJAY ARORA ITA NO. 92/JP/2012 ASSTT. YEAR : 2003-04 THE ITO , VS M/S LINGRAJ HOTELS PVT LTD., WARD-3 (2), 55, HATHI BABU KA BAGH, KANTI NAGAR, JAIPUR STATION ROAD, JAIPUR PAN NO. AAACL7613H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K.MEENA RESPONDENT BY : SHRI B.P. MUNDRA DATE OF HEARING : 30.04.2012 DATE OF PRONOUNCEMENT : 04.05.2012 ORDER PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER OF CIT(A) RELATING TO ASSESSMENT YEAR 2003-04. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 20,04,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 14.11.2003 THAT WAS DULY PROCESSED U/S 143(1). THE REAFTER, INFORMATION WAS RECEIVED BY 2 ASSESSING OFFICER FROM INVESTIGATION DEPARTMENT, NE W DELHI ON THE BASIS OF WHICH PROCEEDINGS U/S 147 WERE INITIATED BY RECORDING REA SONS ON 16.3.2010. NOTICE U/S 148 WAS ISSUED ON 23.2.2010. IT WAS SUBMITTED THAT RETURN OF INCOME FILED ORIGINALLY MAY BE TREATED FILED IN RESPONSE TO NOTICE U/S 148. THEREA FTER, ASSESSMENT WAS COMPLETED AND THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 17,29, 998/-. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 20,04,000/- ON ACCOUNT OF S HARE APPLICATION MONEY RECEIVED FROM M/S JATIN INDUSTRIES PVT LTD AND M/S INGRAIN SECURI TIES P. LTD. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A). DETAILS OF THE DIRECTORS OF THE COMPANY WERE FILED. IT WAS FURTHER SUBMITTED T HAT ASSESSEE ACCEPTED SHARE APPLICATION MONEY FROM VARIOUS COMPANIES. 12,500 SHARES WERE A LLOTTED TO M/S JATIN INDUSTRIES P. LTD @ RS. 10/- PER SHARE AND 37,500 SHARES WERE ALL OTTED TO M/S INGRAIN SECURITIES P. LTD @ RS. 10/- PER SHARES. ANNUAL RETURNS FILED UNDER THE COMPANYS ACT WERE ALSO FILED. COPIES OF INCOME TAX RETURNS, COPIES OF THEIR BANK STATEMENTS SHOWING THESE TRANSACTIONS, CERTIFIED COPIES OF THE MINUTES OF RESOLUTION OF TH E BOARD FOR APPLICATION OF THESE SHARES BY RESPECTIVE COMPANIES WERE FILED BEFORE THE CIT(A ). IT WAS EXPLAINED THAT ASSESSEE HAD RECEIVED MONEY THROUGH PROPER BANKING CHANNEL, EVIDENCE OF WHICH HAVE BEEN FILED BEFORE ASSESSING OFFICER. IT WAS ALSO SUBMITTED THA T ASSESSEE COMPANY INCORPORATED ON 31.5.2002 AND SHARE APPLICATION MONEY WAS RECEIVED ON 29.6.2002. IT WAS ALSO EXPLAINED THAT SINCE MONEY WAS RECEIVED WITHIN ONE MONTH FROM THE DATE OF INCORPORATION, HOW COULD IT HAVE EARNED UNDISCLOSED INCOME WITHIN 15 D AYS OF ITS COMMENCEMENT. RELIANCE WAS MADE ON VARIOUS CASE LAWS MENTIONED AT PAGE 3 O F THE ORDER OF CIT(A). IT WAS FURTHER EXPLAINED THAT ASSESSEE COMPANY HAS FILED A LL DOCUMENTS REGARDING FINANCIAL 3 CAPACITY, IDENTITY OF THE SHARE APPLICANTS WHICH PR OVE GENUINENESS OF THE TRANSACTIONS. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF RAJ ASTHAN HIGH COURT IN THE CASE OF SHREE BARKHA SYNTHETICS LTD V ACIT (2006) 283 ITR 377 AND IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD (2007) 158 TAXMAN 440 (DELHI) . REGARDING OBSERVATION OF THE ASSESSING OFFICER THAT INVESTIGATION WING CONDUCTED AN ENQUIRY BY WHICH IT WAS FOUND THAT THE SHARE APPLICATION MONEY WAS INDULGING IN G IVING ACCOMMODATION ENTRIES. HOWEVER, IN THAT CASE LAW, THERE IS NO NAME OF THE ASSESSEE COMPANY; THEREFORE, ADVERSE INFERENCE DRAWN AGAINST ASSESSEE WAS NOT JUSTIFIED. 5. AFTER CONSIDERING THE DETAILED SUBMISSIONS AND P ERUSING OTHER MATERIAL ON RECORD, THE CIT(A) FOUND THAT THERE WAS NO BASIS FOR MAKING ANY ADDITION U/S 68 AND ACCORDINGLY SHE DELETED THE ADDITION. NOW THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. DR PLACED RELIANCE ON THE ORDER OF ASSES SING OFFICER. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A), 7. AFTER CONSIDERING THE ORDER OF ASSESSING OFFICER AND CIT(A), WE FOUND NO INFIRMITY IN THE FINDINGS OF LD. CIT(A). FINDINGS OF CIT(A) HAVE BEEN RECORDED IN PARA 4.3 AT PAGES 4 & 5 OF HIS ORDER, WHICH READS AS UND ER:- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE ASSE SSING OFFICER AND SUBMISSIONS OF THE AR. DETAILS OF INFORMATION REGA RDING BENEFICIARIES RECEIVED FROM INV WING DELHI WERE ALSO CALLED FOR F ROM THE CONCERNED AOS AND THE ASSESSMENT ORDERS PASSED IN THE CASE OF M/S INGRAIN SECURITIES P. LTD AND M/S JATIN INVESTMENT P. LTD W ERE CALLED FOR FROM THE CONCERNED AOS IN DELHI AND PLACED ON RECORD. 4 ON PERUSAL OF ALL THE EVIDENCE ON RECORD IT IS SEEN THAT THE ASSESSMENT ORDER IN THE CASE OF M/S JATIN INVESTMENT P. LTD WA S PASSED BY THE ASSESSING OFFICER ON 29.12.2008 U/S 143(3) / 147 BY MAKING AN ADDITION \U/S 68 OF UNEXPLAINED CREDITS OF RS. 93,45,000/- T O THE INCOME OF THE ASSESSEE. LIST OF 21 PARTIES WERE NOTED IN PARA 3 FROM PAGES 1 TO 2L OF THE ORDER FROM WHOM M/S JATIN INVESTMENT P. LTD ALLEGED LY RECEIVED THE AMOUNT TOTALING TO RS. 93,45,000/-. THE NAME OF TH E APPELLANT COMPANY I.E M/S LINGRAJ HOTEL P. LTD DOES NOT FIGURE IN THI S LIST. SIMILARLY, IN THE CASE OF M/S INGRAIN SECURITIES P. LTD, AN ASSESSMENT ORDER WAS PASSED ON 20.11.2010 U/S 143(3) / 147 OF THE ACT WHEREIN RS. 80,52,000/- WERE ADDED AS UNEXPLAINED CREDIT U/S 68 OF THE ACT TO THE INCOME OF THE ASSESSEE. IT WAS OBSERVED ON PAGE 8 OF THE ORDER THAT THE COMPANY HAD RAISED FUNDS TO THE TUNE OF RS. 80,52,0 00/- FROM COMPANIES LISTED IN THE ORDER FROM PAGES 1 TO 5. ON PERUSAL O F THE LIST IT IS VERIFIED THAT THE NAMES OF THE APPELLANT COMPANY M/S LINGRAJ HOTEL P.LTD DOES NOT APPEAR. AS PER EVIDENCE GATHERED ON RECORD IT IS SEEN THAT: 1. THE DEPARTMENT HAD ADDED RS. 93,45,000/- AND RS. 80,52,000/- TO THE INCOME OF THE JATIN INVESTMENT P . LTD AND M/S INGRAIN SECURITIES P. LTD RESPECTIVELY IN T HE ASSESSMENT YEAR 2003-04 BY HOLDING THEM BENEFICIARI ES OF UNEXPLAINED LOANS U/S 68. 2. THE APPELLANT COMPANYS NAME DOES NOT APPEAR IN THE LIST OF NAMES MENTIONED IN THE RESPECTIVE ORDERS WH O HAVE BEEN HELD TO HAVE PROVIDED ACCOMMODATION ENTRIES TO M/S JATIN INVESTMENT P. LTD AND M/S INGR AIN SECURITIES P. LTD. 3. AS PER THESE ORDERS THE TWO COMPANIES HAVE BEEN TREATED AS BENEFICIARIES. IN VIEW OF THE ABOVE EVIDENCE IT IS HELD THAT THE E XISTENCE AND THE FINANCIAL CAPACITY OF M/S JATIN INVESTMENT P. LTD AND M/S ING RAIN SECURITIES P. LTD TO ADVANCE RS. 15,03,000/- AND RS. 5,07,000/- AS SH ARE APPLICATION MONEY TO THE APPELLANT COMPANY IS PROVED. THE MODUS OPER ANDI DISCUSSED BY THE ASSESSING OFFICER IN HIS ORDER WHILE MAKING THE ADD ITION IS NOT BORNE OUT BY THE EVIDENCE PLACED ON RECORD. THERE IS NO EVID ENCE TO PROVE THAT THE APPELLATE COMPANY DIVERTED UNACCOUNTED MONEY TO M/S JATIN INVESTMENT P. LTD WHICH WAS ROTATED BACK TO IT IN THE FORM OF SHARE APPLICATION MONEY. THE CASES OF CIT V DIVINE LEASING & FINANCE LTD (2007) 158 TAXMAN 440 (DELHI), CIT VS SHPHIA FINANCE LTD AND RAJASTHAN HIGH COURT IN THE CASE OF SHREE BARKHA SYNTHETICS LTD VS ACIT (2006) 283 ITR 5 0377. IN VIEW OF THE ABOVE FACTS AND APPLICATION O F LAW TO THESE FACTS THE ADDITION OF RS. 20,04,000/- MADE BY THE ASSESSING O FFICER IS DELETED. 8. THE ABOVE FINDINGS NEITHER COULD BE CONTROVERTED NOR WAS ANY OTHER MATERIAL BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THEREFORE , WE SEE NO REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). THE FINDINGS OF THE CI T(A) ARE IN CONSONANCE WITH THE FINDINGS OF VARIOUS DECISIONS PRONOUNCED BY THE HON 'BLE JURISDICTIONAL HIGH COURT AND BY THE HON'BLE DELHI HIGH COURT. IN VIEW OF THESE F ACTS AND CIRCUMSTANCES, WE CONFIRM THE FINDINGS OF LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04 .05.2012. SD/- SD/- ( SANJAY ARORA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER RKK DATE 04.05.2012 COPY TO/- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR