ITO, New Delhi V. M/s. Raghvi Finance Ltd, New Delhi

ITA 973/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9910 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 03-09-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 17-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI D.R.SINGH, JM AND SHRI R.C.SHARMA, AM ITA NO.973/DEL/2009 ASSESSMENT YEAR : 2000-01 INCOME TAX OFFICER, WARD-15(1), NEW DELHI. VS. M/S RAGHVI FINANCE LIMITED, 10, COMMUNITY CENTRE-II, ASHOK VIHAR, PHASE-II, DELHI. PAN NO.AAACR5879F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K.LAL, DR. RESPONDENT BY : NONE. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF CIT(A) DATED 12.12.2008 FOR THE ASSESSMENT YEAR 2004-05 WHEREIN THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE:- (I) THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N DELETED THE ADDITIONS AS BELOW: 1. THE ADDITION OF RS.25,05,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT. 2. THE ADDITION OF RS.62,625/- U/S 68 OF THE I.T. ACT ON ACCOUNT ALLEGED COMMISSION PAID. 3. THE ADDITION OF RS.1,10,000/- IN THE INCOME OF THE ASSESSEE COMPANY U/S 68 OF THE I.T. ACT AS INCOME FROM UNDISCLOSED SOURCES ON ACCOUNT OF AMOUNT PAYABLE TO M/S SUMA FINANCE & INVESTMENT LTD. BY ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES, 1962 WITHOUT CONFRONTING THE ADDITIONAL EVID ENCE TO THE DEPARTMENT. 2. NOBODY APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. THIS APPEAL OF THE REVENUE IS THEREFORE BEING DISPOSED O F EX-PARTE QUA THE RESPONDENT- ITA-973/D/2009 2 ASSESSEE AFTER HEARING THE ARGUMENTS OF LEARNED DR AND PERUSING THE RELEVANT MATERIAL ON RECORD. AFTER REOPENING THE ASSESSMENT U/S 147, THE AO OBSERVED THAT THERE WAS AN INCREASE IN SHARE CAPITAL BY ISSUE OF EQUITY SHARES OF RS.10/- EACH AT A PREMIUM OF RS.30/- PER SHARE. AS PER THE LIST FURN ISHED BY THE ASSESSEE, M/S SUMA INVESTMENT & FINANCE LTD. HAS BEEN ALLOTTED 25,000 SHARES, THE TOTAL CONSIDERATION OF THE SAME WORKS OUT TO RS.10,00,000/- (25,000 SHA RES @ RS.40/- PER SHARE). THE RELEVANT DETAILS AS TO THE DATES OF RECEIPT OF THE AMOUNTS FROM M/S SUMA INVESTMENT & FINANCE LTD. FOR THIS TRANSACTION ARE AS UNDER:- CHEQUE/INSTRUMENT NO. DATE AMOUNT IN RS. 417605 24 JULY 1999 500000 769606 11 JANUARY 2000 500000 TOTAL R S.10,00,000 3. IN RESPECT OF OTHER APPLICANTS ALSO, THE ASSESSE E FURNISHED THE DETAILS. BEING NOT SATISFIED, THE AO HELD THAT ENTIRE INCREASE IN THE SHARE CAPITAL AMOUNTING TO RS.25.05 LAKHS AND PREMIUM THEREON WAS UNEXPLAINED INCOME OF THE ASSESSEE. ACCORDINGLY, SAME WAS ADDED ALONGWITH THE COMMISSIO N ALLEGED TO BE PAID THEREON. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION ON MERITS. AFTER RELYING ON THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS 260 CTR 185, HE HELD THAT THERE IS NO MERIT IN THE TREATMENT OF SUM OF RS.25.05 LAKHS AS UNDISCLOSED I NCOME OF THE ASSESSEE. HE ALSO DELETED THE ADDITION MADE ON ACCOUNT OF COMMISSION ALLEGED TO BE PAID FOR SHARE APPLICATION MONEY. 4. WE HAVE CONSIDERED THE CONTENTIONS OF LEARNED DR AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND THAT CIT(A) HAD DELETED THE ADDITION BY RECORDING A FIND ING THAT THE APPELLANT COMPANY HAS PROVED THE IDENTITY OF THE SHARE APPLICANTS AND PAYMENT HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND SHARE APPLICANTS ARE ASSESSED TO INCOME TAX. THIS FINDING HAS NOT BEEN CONTROVERTED BY LEARNED D R. THE ISSUE WITH REGARD TO ITA-973/D/2009 3 ADDITION ON ACCOUNT OF SHARE CAPITAL IS NO MORE RES -INTEGRA IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORTS WHEREIN SLP WAS DISMISSED VIDE ORDER DATED 11.1.2008 HOLDING THAT WHEN THE SH ARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. SIM ILAR WAS THE FINDING OF THE HON'BLE SUPREME COURT IN THE CASE OF SHIPRA RETAILE RS (P) LTD. IN SLP NO.451/08 DATED 21.1.2008 AS ALSO IN THE CASE OF DIVINE LEASI NG & FINANCE LTD. IN SLP NO.375/08 DATED 21.1.2008. IN THE INSTANT CASE, SH ARES HAVE BEEN ALLOTTED TO ALL THE SHARE APPLICANTS ON 4.1.2004. RETURN OF ALLOTMENT OF SHARES IN FORM NO.2 AS PER THE COMPANIES ACT, 1956 WAS FILED WITH REGISTRAR OF COM PANIES DELHI AND HARYANA. COPY OF SAME WAS ALSO FILED WITH THE AO. CONFIRMAT IONS OF THE SHARE APPLICANTS AS DESIRED BY THE AO WERE FILED DURING THE COURSE O F ASSESSMENT PROCEEDINGS. ALL THE SHARE APPLICANTS ARE THE CORPORATE ASSESSEE AND ASSESSED TO TAX WITH THE INCOME TAX DEPARTMENT. APPLYING THE PROPOSITION OF LAW AS LAID DOWN BY HON'BLE SUPREME COURT, DISCUSSED HEREINABOVE, TO THE FACTS OF THE INSTANT CASE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) DELETING THE ADDITION MADE ON ACCOUNT OF SHARE CAPITAL. 5. NEXT GRIEVANCE OF THE REVENUE RELATES TO DELETIO N OF ADDITION OF RS.1,10,000/- MADE BY THE AO FOR AMOUNT PAYABLE TO M/S SUMA FINANCE AND INVESTMENT LIMITED AS SUNDRY CREDITORS AS ON 31.3.2 000. IT WAS SUBMITTED BY THE ASSESSEE COMPANY THAT AO HAS SIMPLY MADE THE ADDITI ON BECAUSE NO CONFIRMATION OF SUMA FINANCE AND INVESTMENT LIMITED HAS BEEN FIL ED AND NAME OF SUMA FINANCE AND INVESTMENT LIMITED IS REFLECTED IN THE REPORT OF DIT(INV.). IT WAS CONTENDED BY THE ASSESSEE COMPANY THAT IT IS A FINA NCE COMPANY AND IS REGISTERED NBFC WITH RBI AND IS ENGAGED IN THE BUSINESS OF FIN ANCING AND PURCHASE AND SALE OF SHARES. CONFIRMATION OF SUMA FINANCE AND INVEST MENT LIMITED WAS FILED BEFORE HIM. DURING THE YEAR UNDER CONSIDERATION, T HE ASSESSEE COMPANY HAS PURCHASED THE SHARES FROM M/S SUMA FINANCE AND INVE STMENT LIMITED. AGAINST ITA-973/D/2009 4 THE STATEMENT OF THE ASSESSEE, NOTHING HAS BEEN BRO UGHT ON RECORD BY THE AO. THE ADDITION WAS DELETED BY THE CIT(A) BY OBSERVING THA T AO HAS NOT DISPUTED THE PURCHASE MADE BY THE COMPANY. RESULTS PERTAINING T O BUSINESS ACTIVITIES DECLARED BY THE ASSESSEE COMPANY HAVE BEEN ACCEPTED. NO ADV ERSE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO. THE CIT(A) ALSO VERIF IED THE CONFIRMATION FILED BY SUMA FINANCE AND INVESTMENT LIMITED. THE LEARNED D R COULD NOT CONTROVERT THE FINDINGS OF THE CIT(A), ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 3 RD SEPTEMBER, 2009. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 03.09.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR