M/s. NDR Realtors (P) Ltd., Delhi V. ITO, New Delhi

ITA 935/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4054 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 31-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KAUSHIK
• Assessee Lawyers: RAHUL KOCHAR
• Keywords: Reassessment proceedings
• Section: 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER ITA NO. 935/DEL/2016 : ASSTT. YEAR : 2007 - 08 M/S NDR REALTORS (P) LTD., A - 7/1, MIA NWALI NAGAR, DELHI VS INCOME TAX OFFICER, WARD - 17 (3), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A CCN4729N ASSESSEE BY : SH. RAHUL KOCHAR, ADV. REVENUE BY : SH. S. R. KAUSHIK , SR. DR DATE OF HEARING : 08 .01 .201 8 DATE OF PRONOUNCEMENT : 15 .01 .201 8 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 21.12.2015 OF LD. CIT(A) - 42 , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE ORDER PASSED BY THE CIT (A) - 42 IS BAD IN LAW AND IS VOID - AB - INITIO. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER WHO HAD INCORRECTLY INVOKED THE PROVISIONS OF SECTION 147 R/W S. 148 OF THE INCOME TAX ACT. 1961. CONTRARY TO THE PROVISIONS OF THE LAW AND THE INCOME TAX ACT, 1961. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 COMPLE TELY IGNORING THE FACT THAT THE APPELLANT/ ASSESSEE HAD FILED THE AFFIDAVITS, ITR'S, ITA NO . 935 /DEL /20 1 6 NDR REALTORS (P) LTD. 2 PAN DETAILS AND THE BANK STATEMENTS OF THE INVESTOR COMPANIES AND THEREFORE THE CIT (A) HAD INCORRECTLY CONCURRED WITH THE VIEW OF THE ASSESSING OFFICER HOLDING THAT THE A PPELLANT/ASSESSEE WAS UNABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY ANY OF THE ABOVE GROUNDS DURING THE PENDENCY OF THIS APPEAL. 3 . DURING THE COURSE OF H EARING, THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL FOR THE SUBSEQUENT ASSESSMENT YEAR 2008 - 09 IN ITA NO. 3448/DEL/2011 WHEREIN VIDE ORDER DATED 03. 03.2017, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT (COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD). 4 . IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT EXPLAIN CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTION. THEREFORE, THE ADDITION U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY MADE BY THE AO, WAS RI GHTLY SUSTAINED BY THE LD. CIT(A). 5 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT ITA NO . 935 /DEL /20 1 6 NDR REALTORS (P) LTD. 3 IS NOTICED THAT IN THE SUBSEQUENT YEAR, SIMILAR ADDITION WAS DELETED BY T HE LD. CIT(A) AND THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE ITAT DELHI BENCH E , NEW DELHI IN ITA NO. 3448/DEL/2011 WHEREIN VIDE ORDER DATED 03.03.2017, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA S 4 & 4.1 WHICH READ AS UNDER: 4. IN VIEW OF ABOVE CITATIONS, WHEN WE GO THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEES IN SUPPORT OF GENUINENESS OF THEIR CLAIMS REGARDING RECEIPT OF SHARE APPLICATION MON EYS FROM DIFFERENT PARTIES HAD FURNISHED THEIR CONFIRMATORY LETTERS, PAN DETAILS, COPIES OF INCOME TAX RETURNS AS WELL AS SHARE APPLICATION FORMS AND COMPLETE NAME AND ADDRESS OF SHARE APPLICANTS. THESE DOCUMENTS WERE SUFFICIENT TO ESTABLISH THE IDENTITY OF SHARE APPLICANTS. IT IS ALSO NOT IN DISPUTE THAT ALL THE TRANSACTIONS HAVE BEEN ROUTED THROUGH BANKING CHANNELS AND SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES, DETAILS OF WHICH WERE FURNISHED. THE ASSESSEES HAD ALSO FURNIS HED RETURNS OF INCOME OF THE CREDITORS ACCEPTED BY THE DEPARTMENT AND THUS, WE ARE OF THE VIEW THAT IN ABSENCE OF REBUTTAL OF THESE FACTS THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE TRANSACTIONS. THE CREDITWORTHINESS OF THE SHARE APPLICANTS WAS AL SO ESTABLISHED BY THE ASSESSEE BY FILING THE AUDITED BALANCE SHEET OF EACH OF THE SHARE - HOLDER COMPANY. ON THE CONTRARY, NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE THAT SHARE APPLICATION MONEY EMANATED FROM THE COFFERS OF THE ASSESSEES. IT IS ALSO PERTINENT TO NOTE HERE THAT IN ITA NO . 935 /DEL /20 1 6 NDR REALTORS (P) LTD. 4 RESPONSE TO THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT BY THE ASSESSING OFFICER WERE RESPONDED BY THE SHARE APPLICANTS. MERELY BECAUSE THE ASSESSEE, AS DIRECTED BY THE ASSESSING OFFICER, COULD NOT PRODUCE ANY OF THE SHARE APPLICANTS, CANNOT BE A REASON FOR DOUBTING THE GENUINENESS OF THE TRANSACTIONS. THIS VIEW IS WELL SUPPORTED BY THE DECISIONS OF THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASES OF CIT VS. RAKAM MONEY MATTERS PVT. LTD. (SUPRA) AND CIT VS. VICTOR ELECTRODES (SUPRA), RELEVANT EXTRACT THEREOF, ARE RE SPECTIVELY REPRODUCED HEREUNDER : - CIT VS. RAKAM MONEY MATTERS PVT. LTD. : 12. A PERUSAL OF THE ORDER OF THE AO SHOWS THAT ITS FOUNDATION IS THE REPORT OF THE DIT (INVEST IGATION). ADMITTEDLY, THE ASSESSEE WAS NOT CONFRONTED WITH THAT MATERIAL IN THE COURSE OF THE REASSESSMENT PROCEEDINGS. THE ASSESSEE WAS ALSO NOT CONFRONTED WITH THE STATEMENTS RECORDED IN THE COURSE OF THE INVESTIGATION. ONCE THAT MATERIAL IS KEPT ASIDE T HEN THE SCOPE OF ENQUIRY CAN ONLY BE WHETHER THE ASSESSEE HAS PRODUCED DOCUMENTS TO DISCHARGE THE INITIAL ONUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE COMPANIES WHO WERE STATED TO HAVE SUBSCRIBED TO THE ASSESSEE S SHARES. 13. IT IS NOT IN DISPUTE THAT EXTENSIVE MATERIAL WAS PRODUCED BY THE ASSESSEE IN THE PRESENT CASE TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE COMPANIES WHO HAD SUBSCRIBED TO ITS SHARES. AMONG THE MATERIALS PRODUCED WERE THE INCOME TAX RETURNS AND THE ITA NO . 935 /DEL /20 1 6 NDR REALTORS (P) LTD. 5 PA N CARD DETAILS OF THE EIGHT COMPANIES. EVEN IF THE DIRECTORS OF THESE COMPANIES DID NOT RESPOND TO THE SUMMONS ISSUED BY THE AO, IT WAS NOT IMPOSSIBLE FOR THE AO TO MAKE PROPER ENQUIRIES TO ASCERTAIN THE GENUINENESS OF THESE ENTITIES AND SATISFY HIMSELF OF THEIR CREDITWORTHINESS. AS POINTED OUT BY THE CIT(A), THE AO FAILED TO MAKE ANY EFFORT IN THAT DIRECTION. HE DID NOT TAKE TO THE LOGICAL END THE HALF HEARTED ATTEMPT AT GETTING THE DIRECTORS TO APPEAR BEFORE HIM. HE DID NOT EVEN SEEK THE ASSISTANCE OF THE AOS OF THE CONCERNED COMPANIES WHOSE ITRS AND PAN CARD COPIES HAD BEEN PRODUCED. 14. THE VIEW TAKEN BY THE CIT(A) THAT THE AO FAILED TO COME UP WITH THE MATERIAL TO DISPROVE WHAT HAD BEEN PRODUCED BY THE ASSESSEE IS CERTAINLY A PLAUSIBLE VIEW IN THE FAC TS AND CIRCUMSTANCES OF THE CASE. LIKEWISE, THE VIEW TAKEN BY THE ITAT CONCURRING WITH THE CIT(A) ON FACTS CANNOT BE SAID TO BE PERVERSE. CIT VS. VICTOR ELECTRODES : THERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SAME DIRECTOR OR OTHER REPRES ENTATIVE OF THE APPLICANT COMPANIES BEFORE THE ASSESSING OFFICER. THEREFORE, FAILURE OF ASSESSEE TO PRODUCE THEN COULD NOT BY ITSELF, HAVE JUS TIFIED THE ADDITIONS MADE BY A. O . 4.1 AS DISCUSSED ABOVE, WE FIND THAT THE ASSESSEES HAVE BEEN ABLE TO DISCHAR GE ITS INITIAL ONUS TO ESTABLISH THE GENUINENESS OF THE CLAIMED TRANSACTIONS ITA NO . 935 /DEL /20 1 6 NDR REALTORS (P) LTD. 6 OF SHARE APPLICATION MONEYS BY FURNISHING ALL THE NECESSARY POSSIBLE EVIDENCES AND THUS, THE ONUS TO DISPROVE THOSE EVIDENCES WERE SHIFTED UPON THE ASSESSING OFFICER, TO WHICH THE ASSESSING OFFICER HAS FAILED TO DISCHARGE BY NOT DISPROVING THOSE EVIDENCES. THE ASSESSEES WERE THUS, ABLE TO ESTABLISH THE IDENTIFICATION AS WELL AS CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE CLAIMED RECEIPT OF SHARE APPLICATION MONEYS FROM THOSE PARTIES. THE LD. CIT (APPEALS) WAS THUS JUSTIFIED IN DELETING THE ADDITIONS MADE UNDER SECTION 68 OF THE ACT ON ACCOUNT OF THE ALLEGED UNEXPLAINED SHARE APPLICATION MONEY. THE SAME IS UPHELD. THE GROUNDS QUESTIONING THE ACTION OF THE LD. CIT (APPEALS) IN THIS REGARD ARE THUS REJECTED. 6 . IN THE PRESENT CASE, THE ASSESSEE RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS.20,00,000/ - FROM M/S ACQUARIUS SECURITIES PVT. LTD., RS.15,00,000/ - FROM M/S TAURUS IRON & STEEL CO. PVT. LTD. AND RS.10,00,000/ - FROM M/S TEJASVI INVESTMENT PVT. LTD. IN THE SUBSEQUENT YEAR ALSO, THE ASSESSEE RECEIVED SHARE APPLICATION MONEY FROM M/S TAURUS IRON & STEEL CO. PVT. LTD. AND M/S TEJASVI INVESTMENT PVT. LTD. AMOUNTING TO RS.42,50,000/ - AND RS.20,00,000/ - RESPECTIVELY. APART FROM THAT THE ASSESSEE ALSO RECEIVED SHARE APPLICATION MONEY FROM OTHER PERSONS. THEREFORE, THE FACTS ARE SIMILAR FOR THE YEAR UNDER CONSIDERATION VIS - - VIS THE SUCCEEDING ASSESSMENT YEAR 2008 - 09. SO, RESPECTFULLY FOLLOWING THE AFORESAI D REFERRED TO ORDER DATED 03.03.2017 IN ITA NO. 3448/DEL/2011 FOR THE ASSESSMENT YEAR 2008 - 09 IN ASSESSEE S OWN CASE, ITA NO . 935 /DEL /20 1 6 NDR REALTORS (P) LTD. 7 THE IMPUGNED ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D . (O RD E R P RON OUNCED IN THE COURT ON 15 /01 /201 8 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 15 /01/2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR