Goyal Synthetics Pvt.Ltd., Surat V. The ACIT, Circle-1, Surat

ITA 989/AHD/2006

• Counselvise Citation: 98920514 RSA 2006
• Duration Of Justice: 5 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 24-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Unexplained cash credit; Set aside
• Section: 133(6); 205; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. K. GARO DIA, AM) ITA NO.989/AHD/2006 A. Y.: 2002-03 GOYAL SYNTHETICS PVT. LTD., 701, TRIVIDH CHAMBERS, RING ROAD, SURAT PA NO. AAACG 8634 M VS THE A. C. I. T., CIRCLE-1, AAYAKAR BHAVAN, MAJURA GATE SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAMESH MALPANI, AR RESPONDENT BY SHRI B. L. YADAV, SR. DR DATE OF HEARING: 11-01-2012 DATE OF PRONOUNCEMENT: 25-01-2012 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-I, SURAT DATED 27 TH FEBRUARY, 2006, FOR ASSESSMENT YEAR 2002-03. 2. THE APPEAL OF THE ASSESSEE IN ITA NO.989/AHD/20 06 AND CROSS APPEAL OF THE REVENUE IN ITA NO.1684/AHD/2006 WERE HEARD TOGETHER EARLIER AND WERE DISPOSED OF BY THE TRIBUNAL VIDE O RDER DATED 08-09- 2009. THE ASSESSEE PREFERRED MISC. APPLICATION NO.3 7/AHD/2011 IN ITA NO.989/AHD/2006 STATING THEREIN THAT THE ISSUE OF UNEXPLAINED ITA NO.989/AHD/2006 GOYAL SYNTHETICS PVT. LTD. VS ACIT, CIR-1, SURAT 2 SHARE APPLICATION MONEY OF RS.30 LACS REQUIRES FRES H ADJUDICATION BECAUSE THE CONTENTION OF THE ASSESSEE AND THE CASE LAWS BROUGHT TO THE KNOWLEDGE OF THE TRIBUNAL HAVE NOT BEEN TAKEN I NTO CONSIDERATION. THE TRIBUNAL VIDE ORDER DATED 30-06-2011 ALLOWED TH E MISC. APPLICATION OF THE ASSESSEE AND DIRECTED TO RE-FIX THE APPEAL FOR HEARING IN REGULAR COURSE WITH REGARD TO THE ISSUE OF ADDITION OF RS.30 LACS AS PER GROUND NO.1 OF THE APPEAL OF THE ASSESS EE. ACCORDINGLY, THE PRESENT APPEAL IS RE-FIXED FOR HEARING AFRESH O N GROUND NO.1 WHEREBY THE ASSESSEE CHALLENGED THE ADDITION OF RS. 30 LACS ON ACCOUNT OF SHARE APPLICATION MONEY TREATED AS UNEXP LAINED CASH CREDIT U/S 68 OF THE IT ACT. 3. BRIEFLY, THE FACTS OF THE CASE ON THIS ISSUE ARE THAT ARE THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVED SHARE APPLICATI ON MONEY OF RS.30 LACS FROM M/S. GALAXY MULTITRADE PVT. LTD. TH E AO ISSUED NOTICE U/S 133(6) OF THE IT ACT TO GIVE COPY OF THE ACCOUNTS OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNTS AND BANK ACCOUN TS SHOWING THE TRANSACTION. THE NOTICE RETURNED UN-SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN. THE ASSESSEE GAVE FR ESH ADDRESS WHERE ALSO SIMILAR NOTICE WAS ISSUED BUT THE PARTY HAS NOT SUBMITTED THE DETAILS CALLED FOR. THE ASSESSEE WAS, THEREFORE , DIRECTED TO PRODUCE CONFIRMATION/PARTY BUT THE ASSESSEE CHOSE N OT TO PRODUCE THE SAME. THE AO IN THE ABSENCE OF ANY EVIDENCE ON RECORD TREATED THE SAME AS UNEXPLAINED CASH CREDIT AND MADE THE AD DITION OF RS.30 LACS. THE ADDITION WAS CHALLENGED BEFORE THE LEARNE D CIT(A). HOWEVER, THE LEARNED CIT(A) CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO.989/AHD/2006 GOYAL SYNTHETICS PVT. LTD. VS ACIT, CIR-1, SURAT 3 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN RESPECT OF SHARE CAPITAL ALLOTTED OF RS.30 LACS TO M/S. GAL AXI MULTITRADE PVT. LTD., NO MONEY WAS RECEIVED FROM THIS PARTY BUT THE SHARE CAPITAL IS ALLOTTED AGAINST OUTSTANDING LIABILITY PAYABLE TO T HIS PARTY IN RESPECT OF GOODS PURCHASED. HE HAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE LEDGER ACCOUNTS OF THE PARTY IN SUPPORT OF THE SAME AND FURTHER SUBMITTED THAT THE PURCHASES MADE BY THE ASSESSEE F ROM THIS PARTY HAVE NOT BEEN DISPUTED BY THE AO. COPY OF THE LEDGE R ACCOUNTS OF M/S. GALAXI MULTITRADE PVT. LTD. IS FILED AT PAGE 7 6 OF THE PAPER BOOK TO SHOW THAT AT THE END OF THE YEAR THERE WAS A CRE DIT BALANCE AGAINST THIS PARTY IN A SUM OF RS.36,48,994/- AND AS ON 31 ST MARCH RS.30 LACS HAVE BEEN DEBITED AGAINST THIS PARTY ON ACCOUNT OF ISSUE OF SHARES AS SHARE APPLICATION MONEY. HE HAS SUBMITTED THAT SHAR ES HAVE HOWEVER BEEN ALLOTTED TO THIS PARTY IN THE NEXT YEA R. HE HAS SUBMITTED THAT SINCE NOTHING IS RECEIVED AND ONLY JOURNAL ENT RY IS MADE, THEREFORE, ADDITION U/S 68 OF THE IT ACT CANNOT BE MADE AGAINST THE ASSESSEE. HE HAS RELIED UPON THE DECISION OF THE HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS PANCHAM DASS JAIN 205 CTR 444 IN WHICH IT WAS HELD THAT PROVISIONS OF SECTION 68 ARE NOT ATTRACTED TO AMOUNTS REPRESENTING PURCHASE MADE ON CREDIT. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE CALCUTTA HI GH COURT IN THE CASE OF JATIA INVESTMENT CO. VS CIT, 206 ITR 718 IN WHICH IT WAS HELD THAT ASSESSEE FIRM SHOWN THE AMOUNT OF CONSIDERATION PAYABLE TO THREE COMPANIES AS PAID OUT OF LOAN TAKE N FROM G EFFECT OF THIS ARRANGEMENT IS THAT ASSESSEE-FIRM BE CAME A DEBTOR TO G IN PLACE OF SAID THREE COMPANIES THERE BEING ONLY ITA NO.989/AHD/2006 GOYAL SYNTHETICS PVT. LTD. VS ACIT, CIR-1, SURAT 4 ADJUSTMENT ENTRIES AND NO REAL CASH ENTRY IN CASH B OOK, ADDITION U/S 68 WAS NOT JUSTIFIED. 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT DESPITE THE BEST EFFORTS THE CONCERN PARTY COU LD NOT BE LOCATED AT THE GIVEN ADDRESS. NO CONFIRMATION IS FILED AND EVE N THE PARTY CONCERN IS NOT PRODUCED. THEREFORE, THE AUTHORITIES BELOW WERE JUSTIFIED IN MAKING AND CONFIRMING THE ADDITION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE ASSESSEE IN RESPONSE TO THE NOTICE ISSU ED BY THE AO SUBMITTED THE REPLY WHICH IS INCORPORATED IN THE OR DER OF THE AO AS WELL AS IN THE ORDER OF THE LEARNED CIT(A) IN WHICH THE ASSESSEE EXPLAINED THE CREDIT TO SHARE CAPITAL ALLOTTED OF R S.30 LACS TO M/S. GALAXI MULTITRADE PVT. LTD. AND SUBMITTED THAT NO M ONEY WAS RECEIVED FROM THIS PARTY BUT SHARE CAPITAL IS ALLOTTED AGAIN ST THE OUTSTANDING LIABILITY PAYABLE TO THIS PARTY IN RESPECT OF GOODS PURCHASED. THE ASSESSEE FURNISHED COPY OF THE LEDGER ACCOUNTS AND COPY OF THE LETTER OF CONFIRMATION BY THE PARTY. COPY OF THE LEDGER AC COUNTS IS ALSO FILED AT PAGE 76 OF THE PAPER BOOK WHICH SHOWS THAT THE A SSESSEE MADE SEVERAL PURCHASES FROM M/S. GALAXI MULTITRADE PVT. LTD. AND IN MARCH, 2002 THE OUTSTANDING BALANCE AGAINST THIS PARTY WAS SHOWN AT RS.36,48,994/-. AGAINST THE ABOVE CREDIT BALANCE, T HE ASSESSEE HAS DEBITED RS. 30 LACS ON 31 ST MARCH ON ACCOUNT OF SHARE APPLICATION MONEY. IT WOULD, THEREFORE, SHOW THAT IT WAS MERELY A JOURNAL ENTRY IN THE ACCOUNTS OF M/S. GALAXI MULTITRADE PVT. LTD. AC CORDING TO THE ASSESSEE, THE SHARES HAVE BEEN ALLOTTED IN THE SUBS EQUENT ITA NO.989/AHD/2006 GOYAL SYNTHETICS PVT. LTD. VS ACIT, CIR-1, SURAT 5 ASSESSMENT YEAR. THE LEDGER ACCOUNTS OF THIS PARTY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WOULD SHOW THAT NO SUM WAS FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE A GAINST THIS PARTY. CREDIT BALANCES WERE COMING UP ON ACCOUNT OF PURCHA SES MADE FROM THIS PARTY AND BALANCE AMOUNT WAS ON ACCOUNT OF CRE DIT PURCHASES MINUS PAYMENTS MADE TO THE PARTY IN A SUM OF RS.36, 48,994/-. THE AUTHORITIES BELOW HAVE NOT DISPUTED THE CREDIT OUTS TANDING BALANCE IN THE LEDGER ACCOUNTS OF THIS PARTY OF THE AFORESAID AMOUNT. THE AUTHORITIES BELOW HAVE MERELY DISPUTED THE SHARE AP PLICATION MONEY RECEIVED BY THE ASSESSEE WHICH IN FACT WAS NOT ANY SUM RECEIVED BY THE ASSESSEE BUT A JOURNAL ENTRY MADE IN THE LEDGER ACCOUNTS OF THIS PARTY BY DEBITING RS.30 LACS ON ACCOUNT OF SHARE AP PLICATION MONEY. IT, THEREFORE, APPEARS THAT THE AUTHORITIES BELOW H AVE NOT APPRECIATED THE FACTS OF THE CASE AND MADE THE ADDITION AGAINST THE ASSESSEE WITHOUT ANY JUST CAUSE. THE DECISIONS RELIED UPON B Y THE LEARNED COUNSEL FOR ASSESSEE SQUARELY APPLY TO THE CASE OF THE ASSESSEE. WE ACCORDINGLY, DO NOT JUSTIFY ANY ADDITION U/S 68 OF THE IT ACT IN VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES NOTED ABOVE. W E ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE ADDITION OF RS.30 LACS. IN THE RESULT, GROUND NO.1 OF THE APPEA L OF THE ASSESSEE IS ALLOWED. 7. NO OTHER POINT IS ARGUED OR PRESSED. ITA NO.989/AHD/2006 GOYAL SYNTHETICS PVT. LTD. VS ACIT, CIR-1, SURAT 6 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON GROUND NO.1 ABOVE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD