M/S Tanishq Management and Services Pvt. Ltd., Bhopal V. THE ACIT 1(1), Bhopal

ITSSA 214/IND/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3872 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: M K SHARMA
• Keywords: Unexplained cash credit; Bogus Share capital; Search and seizure; Loose papers; Documents seized
• Section: 143(3); 142(1); 153A; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.214/IND/2016 ASSESSMENT YEAR:2006-07 TANISHQ MANAGEMENT AND SERVICES PVT. LTD. 93, AMBEDKAR NAGAR, NEAR GEETANJALI COMPLEX, BHOPAL / VS. ACIT - (1) BHOPAL (APPELLANT) (REVENUE ) P.A. NO. AACCT3857D APPELLANT BY SHRI M. K. SHARMA, CA REVENUE BY SHRI LAL CHAND, CIT - DR DATE OF HEARING: 31.07.2018 DATE OF PRONOUNCEMENT: 21.08.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO A.Y. 2006-07 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- UJJAIN CAMP AT BHOPAL, (IN SHORT CIT(A)), DATED 1 7.05.2016 WHICH IS ARISING OUT OF THE ORDER U/S 153 R.W.S 143(3) OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 23.12.2011 BY TANISHQ MANAGEMENT 2 ITO-1(1), BHOPAL. THE GROUNDS RAISED BY THE ASSESSE E READ AS UNDER: 1.THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.22,73,000/- 2. THAT, THE LEARNED CIT(A) HAS ERRED IN LAW IN CON FIRMING THE ADDITIONS U/S 153A IN THE ABSENCE OF ANY INCRIMINAT ING MATERIAL FOUND AGAINST THE APPELLANT DURING THE COURSE OF SE ARCH. 3. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF SHARE CAPITAL TO THE INCOME OF APPELLANT TO THE TUNE OF RS.22,73,000/-, DESPITE THE FACT THAT THERE IS NO M ATERIAL OR EVIDENCE ON RECORD TO TAX SUCH AMOUNT. 4. THAT NO ADDITION CAN BE MADE U/S 68 UNLESS THERE IS A POSSIBILITY OF EARNING AN INCOME BY THE APPELLANT, WHICH IS BEING CLAIME AS CASH CREDIT, PARTICULARLY IN A CASE WHERE THE APPELLANT HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING TH E RELEVANT ASSESSMENT YEAR. THAT SHARE CAPITAL/SHARE APPLICATION MONEY CANNOT B E ADDED TO THE INCOME OF THE COMPANY IN ACCORDANCE WITH THE JU DGMENT OF HONOURABLE SUPREME COURT IN THE CASE OF CIT VS. LOV ELY EXPORTS PVT. LTD. (2008) 2016- CTR -195 (SC). 6. THAT NO ADDITION CAN BE MADE TO THE INCOME OF AP PELLANT SIMPLY ON THE BASIS OF STATEMENT OR SURRENDER, UNLE SS IT IS INDEPENDENTLY SHOWN BY THE DEPARTMENT THAT THE AMOU NT ADDED CONSTITUTES AN INCOME. 7. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, AL TER OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS DECIDED, WITH THE PERMISSION OF HONOURABLE BENCH. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. SEARCH AND S EIZURE OPERATIONS WERE CARRIED OUT U/S 132 OF THE ACT ON 2 3.07.2009 AT GROUP OF CONCERN AND INDIVIDUALS WHICH ALSO INCLUDE D THE ASSESSEE. DURING THE COURSE OF SEARCH VARIOUS INCRIMINATING M ATERIAL INCLUDING LOOSE PAPERS WERE FOUND AND SEIZED. IN TH E CASE OF ASSESSEE, DOCUMENTS SEIZED WERE PLACED AT ANNEXURE LPS(1 TO 50) TANISHQ MANAGEMENT 3 WHICH ALSO INCLUDED LOOSE PAPER OF SOME OTHER CONCE RNS. CONSEQUENTLY, NOTICE U/S 153A OF THE ACT WERE ISSUE D AND SERVED UPON THE ASSESSEE AND IN RESPONSE THERETO THE ASSES SEE SUBMITTED THAT AS THERE IS NO CHANGE IN INCOME, THEREFORE, TH E REGULAR RETURNS FILED EARLIER MAY BE TREATED AS IF FILED IN RESPONS E TO NOTICE U/S 153A FOR A.Y. 2006-07. INCOME OF RS. NIL WAS DISCLOSED I N THE ORIGINAL RETURNS DATED 30.11.2006. NOTICE FOR SCRUTINY WERE ISSUED U/S 143(2) R.W.S. 153A AND NOTICE U/S 142(1) OF THE AC T, DETAILS CALLED WERE SUBMITTED. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE LD. AO NOTICED THAT DURING THE SEARCH AND SEIZURE A CTION. THE ASSESSEE COMPANY THROUGH ITS MANAGING DIRECTOR SHR I VIVEKANAND DWIVEDI HAS OFFERED ITS ENTIRE SHARE CAPITAL AMOUN TING TO RS.38,83,700/- TAX AND THE SAME WAS DISCLOSED IN TH E RETURN OF INCOME FILED FOR A.Y. 2009-10 AS INCOME FROM OTHER SOURCES. 3. ON FURTHER VERIFICATION IT WAS REVEALED THAT THE ALLEGED SHARE CAPITAL OF RS.38,83,700/- WAS RECEIVED DURING THE A .Y. 2006-07 & 2007-08 AT RS.22,73,000/- AND RS.16,10,700/- RESPEC TIVELY. 4. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY T HE SHARE CAPITAL NOT TO BE TAXED IN THE YEAR IN WHICH IT IS RECEIVED BY THE COMPANY. IN RESPONSE, THE LD. AR CONTENDED THAT AS THE ALLE GED SHARE CAPITAL HAS BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2009-10 THEREFORE THE SAME MAY KINDLY BE ACCEPTED. NO REASON FOR OFFERING THE SHARE CAPITAL AS INCOME FOR THE ASSESSMENT YEAR 2009-10 W AS GIVEN BY THE ASSESSEE. THE ASSESSEE FURTHER CONTENDED THAT THE S HARE CAPITAL IS TANISHQ MANAGEMENT 4 GENUINE, HOWEVER, IT HAS BEEN DISCLOSED U/S 132(4) OF THE ACT TO BUY PEACE WITH THE DEPARTMENT. 5. THE ASSESSING OFFICER HOWEVER WAS NOT CONVINCED WITH THE SUBMISSIONS AS IN HIS VIEW IT WAS EVIDENT THAT ASSE SSEE HAS OFFERED ITS SHARE CAPITAL FOR TAX AFTER BEING UNABLE TO EST ABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICATION MONEY AND THEREFORE IS REQUIRED TO BE TAXED U/S 68 OF THE INCOME TAX AC T, 1961 AS INCOME OF THE ASSESSEE COMPANY IN THE RESPECTIVE YE ARS OF THE RECEIPT. THEREFORE, AN AMOUNT OF RS.22,73,000/- AND RS.16,10,700/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY FOR THE A.Y. 2006-07 AND A.Y. 2007-08 RESPE CTIVELY. LD. AO HOWEVER GAVE BENEFIT TO THE ASSESSEE BY NOT TAXI NG ALLEGED INCOME RELATING TO UNEXPLAINED SHARE CAPITAL FOR A. Y. 2009-10. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) FOR THE ALLEGED ADDITION FOR A.Y. 2006-07 BUT FAILED TO SUCCEED AS THE VIEW TAKEN BY THE LD. AO WAS CONFIRMED BY THE LD. C IT(A). 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L ASSAILING THE FINDING OF LD. CIT(A). RAISING VARIOUS GROUNDS WHIC H ARE LIMITED TO THE ISSUE OF ADDITION U/S 68 OF THE ACT FOR RS. 22, 73,000/- FOR ALLEGED UNEXPLAINED SHARE CAPITAL. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. LD. COUNSEL FURTHER S UBMITTED THAT THE ASSESSEE HAS ALREADY OFFERED THE ALLEGED UNEXPLAINE D SHARE CAPITAL IN THE RETURN OF INCOME FILED FOR A.Y. 2009-10. HE FURTHER PLEADED THAT THE ASSESSEE HAS NEVER ACCEPTED THAT THE SHARE CAPITAL IS NOT GENUINE AND THE ONLY PURPOSE OF SURRENDER WAS TO AV OID LITIGATION TANISHQ MANAGEMENT 5 AND ALSO THE DEPARTMENT HAS NO OTHER INCRIMINATING MATERIAL WHICH COULD SUPPORT THE ADDITION. 9. ON THE OTHER HAND LD. DR VEHEMENTLY ARGUED REFER RING TO THE SUBMISSIONS MADE IN THE PAPER BOOK FROM PAGE 1 TO 4 1 AND FURTHER SUBMITTED THAT ASSESSEE HAS HIMSELF OFFERED AND SUR RENDERED THE INCOME OF RS.38,83,700/- FOR THE ALLEGED SHARE CAPI TAL RECEIVED DURING THE A.YS. 2006-07 & 2007-08 AND LD. CIT(A) H AS RIGHTLY CONFIRMED THE VIEW TAKEN BY THE AO AS THE IMPUGNED SHARE CAPITAL IS TO BE TAXED IN THE YEAR IN WHICH IT WAS ACTUALLY RECEIVED. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD BEFORE US. THE ISSUE IN BRIEF R ELATES TO THE ADDITION OF RS.22,73,000/- WHICH ACTUALLY IS THE A MOUNT OF SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY DURING A.Y . 2006-07. IT IS ALLEGED THAT THE ASSESSEE HAS OFFERED THE INCOME OF RS.38,83,700/- AS INCOME FROM OTHER SOURCES IN A.Y. 2009-10 AND TH E NEXUS OF THIS DISCLOSURE RELATES TO THE SHARE CAPITAL INTRODUCED AT RS.22,73,000/- DURING THE A.Y. 2006-07. THE ALLEGED SURRENDER WAS MADE BY THE ASSESSEE TO BY PEACE AND AVOIDS LITIGATION. THE LD. CIT(A) CONFIRMED THE ADDITION FOR TAXING ALLEGED SHARE CAPITAL OF RS .22,73,000/- IN THE A.Y. 2006-07, RELEVANT TO F.Y. 2005-06 OBSERVIN G AS FOLLOWS: THROUGH THESE GROUNDS OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.22,73,000/- ON ACCOUN T OF SHARE APPLICATION MONEY. A SEARCH ACTION U/S. 132 OF THE LT. ACT HAS BEEN CARRIED OUT AT THE BUSINESS PREMISES ON 23.07.2009. DURING THE COURSE OF POST S UCH ENQUIRY STATEMENT OF SHRI VIVEKANAND DWIVEDI, DIREC TOR HAS BEEN RECORDED. WHILE REPLYING THE QUESTION NO.8 SHRI VIVEKANAND DWIVEDI, DIRECTOR DISCLOSED THE INC OME TANISHQ MANAGEMENT 6 OF RS.38.83 LACS ON ACCOUNT OF SHARE APPLICATION MO NEY. THE APPELLANT OFFERED THIS INCOME IN THE A.Y. 2009- 10 WHILE FILING THE RETURN OF INCOME. THEREFORE, THE APPELLANT HAS ACCEPTED AND OFFERED THE SHARE APPLICATION MONEY FOR TAXATION. DURING THE COURSE O F ASSESSMENT PROCEEDING IT WAS FOUND THAT SAID APPLICATION MONEY AMOUNTING TO RS.22,73,000/- IS PERTAINING TO A.Y. 2006-07 AND RS.16,10,700/- IS PERTAINING TO THE A.Y. 2007-08. ACCORDINGLY, THE AO MADE THE ADDITION IN THE RESPECTIVE ASSESSMENT YEAR S INSTEAD OF ASSESSMENT YEAR 2009-10. WHILE FILING T HE RETURN OF INCOME FOR ASSESSMENT YEAR THE APPELLANT ADMITTED AND OFFERED THE SAID APPLICATION MONEY IN THE A.Y. 2009-10. THEREFORE, THERE IS NO DISPUTE THAT O FFERED INCOME IS TAXABLE. NOW THE QUESTION ARISES REGARDIN G THE YEAR OF TAXABILITY OF THE SURRENDERED INCOME IS THE SETTLED PRINCIPAL THAT THE INCOME IS TO BE TAXED IN THE YEAR OF IT ARISES. IN THE PRESENT CASE THE APPELLAN T IS IN RECEIPT OF THE SAID APPLICATION MONEY AMOUNTING TO RS.22,73,000/- IN THE A.Y. 2006- 07. THEREFORE, OUT OF THE DISCLOSED INCOME OF RS.38.83 LACS, RS.22,73,000 /- IS TAXABLE IN THE A.Y. 2006-07. THE APPELLANT IS MAINTAINING BOOKS OF ACCOUNTS AND THE ENTRY OF SHAR E APPLICATION MONEY AMOUNTING TO RS.22,73,000/- IS FOUND PERTAINING TO THE A.Y. 2006-07. THE APPELLANT HAS BEEN FILED THE REGULAR RETURN OF INCOME FOR THE A.Y . 2006- 07. THE APPELLANT HAS NOT RECEIVED ANY SHARE CAPITA L AFTER ASSESSMENT YEAR 2006-07. THEREFORE, NO QUESTI ON ARISES FOR MAKING THE ADDITION IN RESPECT OF THE SA ID CAPITAL IN THE A. Y. 2009-10. WHILE REPLYING TO THE Q.NO.8 DURING THE RECORDING OF THE STATEMENT ON 23.11.2009 U/S. 131(IA) SHRI VIVEKANAND DWIVEDI, DIRECTOR OFFERED THE ADDITIONAL INCOME ON ACCOUNT O F SAID INCOME AMOUNTING TO RS.38,83 LACS. WHILE DISCLOSING THE TANISHQ MANAGEMENT 7 ADDITIONAL INCOME THE APPELLANT HAS NOT MENTIONED T HE ASSESSMENT YEAR FOR WHICH THE ADDITIONAL INCOME HAS BEEN DECLARED. THEREFORE, AS PER THE SETTLED THE PRINCIPAL OF ACCOUNTANCY THE INCOME IS TAXABLE IN T HE YEAR TO WHICH IT PERTAINS. SINCE THE CASH CREDITS U /S. 68 IS PERTAINING TO THE A. Y. 2006-07, THE SAME IS TAXABLE IN THE A. Y. 2006-07. IT IS ALSO TO BE MENTIONED TH AT THE AO HAS EXCLUDED RS.38.83 LACS FROM THE INCOME OF A.Y. 2009-10. THE AO IS JUSTIFIED IN MAKING THE ADDITION IN THE ASSESSMENT YEAR FOR WHICH THE INCOME IS PERTAIN ING. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.22,73,000/- IS CONFIRMED. THE APPEAL ON THESE GROUNDS IS DISMISSED. 11. WE HAVE CAREFULLY PERUSED THE FINDING OF LD. CI T(A) AND FIND THAT THE ALLEGED SURRENDER WAS SPECIFICALLY FOR THE SHAR E CAPITAL INTRODUCED IN F.Y. 2005-06. IT IS TRUE THAT ASSESSE E HAS OFFERED IT FOR TAX IN A.Y. 2009-10. IT HAS BEEN CONSISTENTLY HELD BY VARIOUS HON'BLE COURTS THAT UNEXPLAINED CASH CREDIT NEEDS T O BE TAXED IN THE YEAR IN WHICH IT IS ACTUALLY RECEIVED. IT HAS B EEN DULY ACCEPTED BY THE ASSESSEE DURING THE SEARCH AND SEIZURE OPERA TION THAT ALLEGED AMOUNT OF RS.22,73,000/- IS UNEXPLAINED SHA RE CAPITAL AND THE SAME HAS BEEN DULY OFFERED TO TAX IN A.Y. 2009- 10. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCE S OF THE CASE, FIND NO INCONSISTENCY IN THE FINDING OF LD. CIT(A) CONFIRMING THE ACTION OF THE LD. AO OF TAXING THE SURRENDERED AMOU NT OF RS.22,73,000/- IN A.Y. 2006-07. IT IS ALREADY BEEN BROUGHT TO OUR NOTICE THAT THE AO HAS NOT TAXED THIS ALLEGED AMOUN T FOR A.Y. 2009- TANISHQ MANAGEMENT 8 10. WE THEREFORE, FIND NO MERIT IN THE ASSESSEES AP PEAL AND THE SAME DESERVES TO BE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21 .08 .2018. SD- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 21 / 08/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE