Appeal details
Counselvise Citation
[2018] 122 COUNSELVISE.COM (IT) 3733 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
16 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
19-04-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2008-2009
Appeal Filed On
03-04-2018
Judgement Text
1 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER IT (SS) A NO. 3 8 /CTK/201 8 S.P. NO.2 1 /CTK/2018 ASSESSMENT YEAR : 20 08 - 2009 SADHNA DALMIA , B - 40, SAHEED NAGAR, BHUBANESWAR. VS. DCIT, CORPORATE CIRCLE 1(1), BHUBANESWAR PAN/GIR NO. AAOPD 1335 K (APPELLANT ) .. ( RESPONDENT ) IT (SS) A NO.39 /CTK/201 8 S.P. NO.22/CTK/2018 ASSESSMENT YEAR : 20 08 - 2009 GANGOL VINCOM (P) LTD., B - 40, SAHEED NAGAR, BHUBANESWAR. VS. DCIT, CORPORATE CIRCLE 1(1), BHUBANESWAR PAN/GIR NO. AAACG 9912 C (APPELLANT ) .. ( RESPONDENT ) IT (SS) A NO.40 /CTK/201 8 S.P. NO.23/CTK/2018 ASSESSMENT YEAR : 20 08 - 2009 AHINSA VINIMAY PVT LTD., B - 40, SAHEED NAGAR, BHUBANESWAR. VS. DCIT, CORPORATE CIRCLE 1(1), BHUBANESWAR PAN/GIR NO. AACCA 5431 G (APPELLANT ) .. ( RESPONDENT ) IT (SS) A NO.41 /CTK/201 8 S.P. NO.24/CTK/2018 ASSESSMENT YEAR : 20 08 - 2009 SURENDRA KUMAR DALMIA B - 40, SAHEED NAGAR, BHUBANESWAR. VS. DCIT, CORPORATE CIRCLE 1(1), BHUBANESWAR PAN/GIR NO. AAOPD 1336 L (APPELLANT ) .. ( RESPONDENT ) 2 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 IT (SS) A NO.42 /CTK/201 8 S.P. NO.25/CTK/2018 ASSESSMENT YEAR : 20 08 - 2009 DEWDROP MERCHANTS PVT LTD.,, B - 40, SAHEED NAGAR, BHUBANESWAR. VS. DCIT, CORPORATE CIRCLE 1(1), BHUBANESWAR PAN/GIR NO. AABCD 0873 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.S.PANDA, AR REVENUE BY : SHRI SAAD KIDWAI, DR DATE OF HEARING : 1 7 / 0 4 / 201 8 DATE OF PRONOUNCEMENT : 19 / 0 4 / 201 8 O R D E R PER N.S.SAINI, AM THESE ARE THE APPEALS FILED BY THE ASSESSEE IN THE CASE OF FOLLOWING ASSESSEES AGAINST THE ORDERS OF THE CIT(A) - 1, BHUBANESWAR FOR THE ASSESSMENT YEAR 2008 - 2009 AS DETAILED BELOW: NAME OF ASSESSEE DATE OF ORDER OF CIT(A) 1. SADHNA DALMIA 23.3.2018 2. GANGOL VINCOM (P) LTD 26.3.2018 3. AHINSA VINIMAY PVT LTD 26.3.2018 4. SURENDRA KUMAR DALMIA 23.3.2018 5. DEWDROP MERCHANTS PVT LTD. 26.3.2018 2. IN ALL THESE APPEALS, THE FACTS AND ISSUE INVOLVED ARE COMMON AND, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE BEING DISPOSED OFF TOGETHER AS UNDER: 3 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 3. IN ALL THESE APPEALS, COMMON GROUNDS OF APPEAL ARE TAKEN BY THE ASSESSEES EXCEPT FOR CHANGE IN FIGU RES. WE, THEREFORE, QUOTE THE GROUNDS OF APPEAL IN THE CASE OF SADHANA DALMIA IN IT)SS) A NO.38/CTK/2018, WHICH READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE CIT(A) IS ARBITRARY, EXCESSIVE AND BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO IN CONSIDERING THE ADVANCE RECEIVED AGAINST SALE OF SHARES AMOUNTING TO RS.62,000/ - AS UNEXPLAINED CASH CREDIT AND MADE ADDITION U/S.68 OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN CONSIDERING THE IMPUGNED TRANSACTION OF ADVANCE RECEIVED AGAINST SALE OF UNEXPLAINED IGNORING THE FACT THAT THE SAME HAS BEEN CONSIDERED AS INCOME AND NECESSARY TAX ON THE SAME INCOME HAS BEEN PAID UNDER THE HEAD LONG TERM CAPITAL GAIN IN SUBSEQUENT ASSESSMENT YEAR. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEES CLAIMED TO HAVE RECEIVED RS.62,000/ - IN THE CASE OF SADHANA DA LMIA, RS.4,85,15,000/ - IN THE CASE OF GANGOL VINCOM PVT LTD., RS.7,60,30,000/ - IN THE CASE OF AHINSA VINIMAY PVT LTD., RS.31,58,900/ - IN THE CASE OF SURENDRA KUMAR DALMIA AND RS.4,85,15,000/ - IN THE CASE OF DEWDROP MERCHANTS PVT LTD., AS ADVANCE FOR SALE O F SHARES OF M/S. SURYA SPONGE IRON LTD. THE SUBMISSIONS OF THE ASSESSEES BEFORE THE ASSESSING OFFICER WERE AS UNDER: 10. THE DISPUTE AROSE ON THE GROUNDS OF OPPRESSION & MISMANAGEMENT OF THE COMPANY AFFAIRS. 11. SRI S.K. DALMIA & GROUP IN 2007 FILED APPEAL BEFORE CLB VIDE C.P. NO. 186 OF 2007 U/S. 397/398 OF THE COMPANIES ACT, 1956. 4 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 12. DURING THE PENDENCY OF THE SAID PETITION, A SETTLEMENT WAS MADE AMONGST BOTH THE PARTIES & A MOU WAS SIGNED ON 28.11.2007 THE DETAILS OF WHICH HAS ALREADY BEEN FILED BEFORE YOUR HONOR DURING THE COURSE OF HEARING. A COPY OF THE SAME IS ENCLOSED AS ANNEXURE - 2. 13. FEW OF THE AGREEMENTS OF THE MOU ARE REPRODUCED BELOW : A) AS PER THE FAIR MARKET VALUE AND MUTUALLY AGREED CONSIDERATION FOR THE TRANSFER, READ WITH PARA 1 &2 ABOVE WILL BE RS. 15.50 CRORES (RUPEES FIFTEEN CRORES FIFTY LACS ONLY). EFFECTIVE PRICE FOR EACH SHARE WILL BE RS. 31 ( RUPEES THIRTY ONE ONLY). B) R S. 15.50 CRORES (RUPEES FIFTEEN CRORES FIFTY LACS ONLY) WILL BE PAID BY WAY OF PDCS OF DIFFERENT DATES BY DDA TO SKD DRAWN IN FAVOUR OF THE RESPECTIVE SHAREHOLDERS AS PER THE ENCLOSED SCHEDULE - A. THE LAST DATE OF THE CHEQUES WILL NOT BE LATER THEN 15 TH J ANUARY, 2008. C) PERSONAL / CORPORATE GUARANTEE OF SKD FOR THE LOAN AVAILED BY THE COMPANY FROM BANK OR FROM ANY OTHER INSTITUTIONS WILL BE RELEASED BEFORE TRANSFER OF THE SHARES. BOTH PARTIES TO THIS MOU HAVE TO EXPLORE ALL POSSIBILITIES IN CONSULTATION WITH THE CONSULTANTS / ADVOCATES, AS THE CASE IT MAY BE, TO REPLACE THE PERSONAL GUARANTEE OF SKD ON OR BEFORE 15.01.2008. D) THE PRESENT MOU WILL BE FILED BEFORE THE L EA R NED COMPANY LAW BOARD ON THE NEXT DATE OF HEARING AND KEPT ON RECORD. AN APPLICATION WILL BE FILED BEFORE THE LEARNED COMPANY LAW BOARD TO LIST THE CASE AFTER 15.01.2008 FOR DISPOSAL OF THE TERMS OF THE PRESENT MOU DULY SIGNED BY BOTH THE PARTIES. 14. IN THE ABOVE MOU IT WAS AGREED THAT SRI S. K. DALMIA GROUP WILL EXIT FROM THE COMPANY BY SELLING OFF THEIR 50% SHAREHOLDING TO THE OTHER GROUP @RS. 31/ - PER SHARE AGGREGATING TO A VALUE OF RS. 15.50 CR. 15. DUE TO SOME TECHNICAL ISSUE ON THE PART SRI DINDAYAL AGARWAL GROUP, REPLACED THE CHEQUE ISSUED TO M/S. AHINSA VINIMAY PVT. LTD. FROM M/S. FLEXIR IMPEX PVT. LTD. AMOUNTING TO RS.335,15,000. THE SAME FACT IS MENTIONED IN THE MINUTES OF MEETING HELD BETWEEN BOTH THE GROUPS ON 15.04.2008, A COPY OF WHICH IS ENCLOSED AS ANNEXURE - 3. 16. ON 14.02.2008 SRI DINDAYAL AGARWAL GROUP GAVE A DEMAN D DRAFT BEARING NO. 021341 DATED 23.01.2008 DRAWN ON UTI BANK LTD. FOR RS. 275,15,000 IN FAVOUR OF AHINSA VINIMAY PVT. LTD. TOWARDS SECURITY DEPOSIT AGAINST THE COLLATERAL SECURITY OFFERED BY SRI S.K. 5 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 DALMIA GROUP. IN SUPPORT OF THE ABOVE, A LETTER ISSUED BY SRI DINDAYAL AGARWAL IS ENCLOSED AS ANNEXURE - 4. 17. BECAUSE OF NON FULFILLMENT OF THE TERMS AND CONDITIONS OF THE MOU DT. 28.11.2007 ANOTHER MOU WAS MADE ON 14.02.2008 EXTENDING THE DATE OF REPLACING THE SECURITY TO 15.05.2008 AND THEREAFTER COMPLET ING THE SHARE TRANSFER. A COPY OF THE MOU DATED 14.02.2008 IS ENCLOSED AS ANNEXURE - 5. 18. ON THE BASIS OF THE ABOVE MOUS, A TERMS OF S ETTLE MENT WAS SIGNED BETWEEN BOTH THE GROUPS DATED \ 15.02.2008 AND FILED WITH THE COMPANY LAW BOARD. A COPY OF THE TERM S OF SETTLEMENT IS ENCLOSED AS ANNEXURE - 6. 19. THE CLB PASSED AN ORDER ON 15.02.2008 ACCEPTING THE TERMS OF SETTLEMENT, A COPY OF WHICH IS ENCLOSED AS ANNEXURE - 7. 20. THE COPIES OF CLB ORDER AND TERMS OF SETTLEMENT WERE ALSO FILED WITH ROC VIDE FORM NO. 21, A COPY OF WHICH IS ENCLOSED AS ANNEXURE - 8. 21. IT MAY BE MENTIONED HERE THAT THE ABOVE DOCUMENTS ENCLOSED AS ANNEXURES FORMS PART OF THE SEIZED RECORD AND ALSO FILED BEFORE THE CLB. 22. SINCE THE TERMS AND CONDITIONS INCLUDING THE RELEASE OF THE COLLATERAL SECURITY OFFERED BY THE S.K. DALMIA GROUP TO THE BANK COULD NOT BE COMPLIED BEFORE 31.03.2008, THE TRANSFER OF SHARES WERE KEPT PENDING AND THE PAYMENT RECEIVED AGAINST SALE OF SHARES WERE SHOWN AS LIABILITY AS ON 31.03.2008 IN TH E BALANCE SHEET. 23. SUBSEQUENTLY RS. 275,15,000 WAS REFUNDED BY 07.05.2008 AFTER RELEASE OF SECURITY OFFERED BY SRI S.K. DALMIA GROUP TO BANK FOR AVAILING LOAN AND ON 10.05.2008 AFTER REPLACEMENT OF THE SECURITY, THE SHARES WERE TRANSFERRED TO THE DIND AYAL AGARWAL GROUP. IN SUPPORT OF ABOVE, THE ANNUAL RETURN FILED FOR THE AGM HELD ON 29.09.2008 WITH ROC IS ENCLOSED AS ANNEXURE - 9 . 24. ON COMPLETION OF THE TRANSFER OF SHARES, NECESSARY CAPITAL GAIN TAX DUE WERE DULY PAID BY THE ABOVE APPELLANTS. FR OM THE ABOVE IT MAY KINDLY BE CONCLUDED THAT THE CREDIT ENTRY IN THE BOOKS OF THE APPELLANTS WERE AGAINST A SALE TRANSACTION OF 50% SHARES IN SURYA SPONGE IRON LTD. BY SRI S.K. DALMIA GROUP TO SRI DINDAYAL AGARWAL GROUP AND REMAINED O/S IN THE BOOKS FOR NO N COMPLETION OF THE TRANSFER PROCESS BY 31.03.2008 WHICH WAS 6 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 BECAUSE OF PENDING RELEASE OF THE SECURITY OFFERED BY SRI S.K. DALMIA GROUP FOR AVAILING LOAN FOR SURYAA SPONGE IRON LTD. THE FUNDS RECEIVED WERE FROM ENTITIES TO WHOM SRI DINDAYAL AGARWAL WANTE D THE SHARES TO BE TRANSFERRED AND SRI S.K. DALMIA GROUP HAD NO KNOW/EDGE OF THE SAID ENTITIES TO WHOM THE SHARES WERE TRANSFERRED. IN VIEW OF THE ABOVE, THE ISSUE OF GENUINENESS, IDENTITY AND CREDITWORTHINESS ARE NOT GROUNDS ON WHICH THE ADDITIONS COULD HAVE BEEN MADE. WITHOUT PREJUDICE TO ABOVE, THE APPELLANT WOULD LIKE TO MENTION BEFORE YOUR HONOUR , THAT THE PROV. O F SEC. 68 OF THE ACT IS NOT APPLICABLE TO THE GROUP SINCE IT IS NOT ADVANCE IN NATURE, RATHER IT IS PAYMENT AGAINST SALE OF SHARES IN TO TO IN STEAD OF IN PART. THE JUSTIFICATION ALONGWITH COURT CITATIONS FOR NON APPLICABILITY OF THE PROV. OF SE E . 68 TO THE GROUP IS ENCLOSED AS ANNEXURE - 10.' 5. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITION FOR THE ABOVE AMOUNTS IN THE HANDS OF THE RECIPIENT ASSESSEES BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT ON THE GROUND THAT ASSESSEE FAILED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS. 6. BEING AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND FILED THE FOLLOWING COMMON WRITTEN SUBMISSIONS AS UNDER: 1. GANGOL VINCOM PVT. LTD. DURING THE COURSE OF SURVEY PROCEEDINGS, NO BOOK S OF ACCOUNTS OF M/S. AIM CREDIT CAPITAL PVT. LTD WERE FOUND. EVEN NO EMPLOYEE OF THE COMPANY WAS AVAILABLE THERE. 2. AHINSA VINIMAY PVT. LTD. SMT. ANJU AGARWAL, ONE OF THE DIRECTOR OF M/S. FLEXIR IMPEX PVT. LTD. ( THE BUYER FROM WHOM THE AMOUNT WERE RE CEIVED AND LAYING AS ADVANCE RECEIVED AS ON THE BALANCE SHEET DATE) IN RESPONSE TO 7 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 SUMMON ISSUED U/S 131 OF THE INCOME TAX ACT,1961. COULD NOT SUBMIT ANYTHING TO PROVE TIE IDENTITY AND GENUINENESS OF THE COMPANY. DURING THE SURVEY PROCEEDINGS U/S 133A IN THE OFFICE PREMISES OF THE M/S. FLEXIR IMPEX PVT. LTD. NO BOOKS OF ACCOUNT/ DOCUMENTS/ EVIDENCE WERE FOUND WITH REGARD TO THE SALE TRANSACTION 3. SMT. SADHNA DALMIA . 1. SRI DEEPAK AGARWAL, ONE OF THE DIRECTOR OF M/S. N.R. I NTERNATIONAL LTD. ( THE BUYER FROM WHOM THE AMOUNT WERE RECEIVED AND LA YING AS ADVANCE RECEIVED AS ON THE BALANCE SHEET DATE) IN RESPONSE TO SUMMON ISSUED U/S 131 COULD NOT PRODUCE THE ORIGINAL DOCU MENTS ASKED FOR WHICH HE STATED THAT THE SAME ARE MAINTAINED AT KOLKATA OFFICE. 2. DURING THE SURVEY PROCEEDINGS U/S 133A IN THE PREMISES OF THE N.R. INTERNATIONAL LTD. NO BOOKS OF ACCOUNT/ DOCUMENTS/ EVIDENCE WERE FOUND WITH REGARD TO THE SAID SHARE TRA NSACTIONS. 4. SRI SURENDRA KUMAR DALMIA 1. SRI DEEPAK AGARWAL, ONE OF THE DIRECTOR OF M/S. N.R. INTERNATIONAL LTD. ( THE BUYER FROM WHOM THE AMOUNT WERE RECEIVED AND LAYING AS ADVANCE RECEIVED AS ON THE BALANCE SHEET DATE) IN RESPONSE TO SUMMON ISSUED U/S 131 COULD NOT PRODUCE THE ORIGINAL DOCUMENTS ASKED FOR WHICH HE STATED THAT THE SAME ARE MAINTAINED AT KOLKATA OFFICE. 2. DURING THE SURVEY PROCEEDINGS U/S 133A IN THE PREMISES OF THE N.R. INTERNATIONAL LTD. NO BOOKS OF ACCOUNT/ DOCUMENTS/ EVIDENCE W ERE FOUND WITH REGARD TO THE SAID SHARE TRANSACTIONS. 5. DEWDROP MERCHANTS PVT. LTD. 1. . SRI DEEPAK AGARWAL, ONE OF THE DIRECTOR OF M/S. N.R. INTERNATIONAL LTD. ( THE BUYER FROM WHOM THE AMOUNT WERE RECEIVED AND LAYING AS ADVANCE RECEIVED AS ON THE BALANCE SHEET DATE) IN RESPONSE TO SUMMON ISSUED U/S 131 COULD NOT CLARIFY AS TO HOW THE PRICE OF S UCH SHARES WAS FIXED AT RS.31/ - . 2. SRI AGARWAL COULD NOT PRODUCE THE ORIGINAL DOCUMENTS ASKED FOR WHICH HE STATED THAT THE SAME ARE MAINTAINED AT KOLKATA OFFICE. 8 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 3. DURING THE SURVEY PROCEEDINGS U/S.133A IN THE PREMISES OF THE N.R.INTERNATIONAL LTD., NO BOOKS OF ACCOUNT/DOCUMENTS/EVIDENCES WERE FOUND WITH REGARD TO THE SAID SHARE TRANSACTION. WITH THE ABOVE BACKGROUND, THE ID. A.O. CONCLUDED THAT ALL THE ABOVE 5 APPELLANTS HAVE NOT PROVED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS AND CONSIDERED THE PAYMENT RECEIVED AGAINST SALE OF SHARES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. IN THIS REGARD, THE APPELLANT HAS ALREADY FILED BEFORE YOUR HONOUR ITS SUBMISSIONS ON VARIOUS DATES. HOWEVER, THE FOLLOWING IS A SUMM ARY OF ALL THE SUBMISSIONS JUSTIFYING THE STAND OF THE APPELLANT THAT THE ID. A.O. IS NOT CORRECT IN HIS CONTENTION. 1. SURYAA SPONGE IRON LTD. IS A COMPANY OWNING ODISHA'S FIRST SMALL SCALE INDUSTRIAL UNIT OF SPONGE IRON PLANT LOCATED AT BUDHAKENDUA, JAJPUR, ODISHA. 2. THE COMPANY WAS INCORPORATED ON 30.05.1996 AND ITS PLANT STARTED COMMERCIAL OPERATION ON 01.03.1999. A COPY OF MEMORANDUM & ARTICLES OF ASSOCIATION IS ENCLOSED AS ANNEXURE - 1. 3. THE REGISTERED OFFICE OF THE COMPANY WAS SITUATED AT THE BUSINESS PREMISES OF SRI DALMIA LOCATED AT B - 40, SAHEED NAGAR, BHUBANESWAR. 4. THE SHAREHOLDING PATTERN OF THE COMPANY WAS AS FOLLOWS: SI. NO. NAME OF THE GROUP NO. OF SHARES SHARE HOLDINGS % A) S.K. DALMIA GROUP (I) AHINSHA VINIMAY PVT. LTD. 15,65,000 15.65 (II) GANGOL VINCOM PVT. LTD. 15,65,000 15.65 ( III ) SADHNA DALMIA 2,000 0.02 (IV) S.K. DALMIA 1,01,900 1.02 (V) DEWDROP MERCHANTS PVT. LTD. 15,65,000 15.65 (VI) VIKAASH DALMIA 2,01,100 2.01 50,00,000 50.00 B) SRI D.D. AGARAWAL GROUP 50,00,000 50.00 9 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 THE ABOVE IS EVIDENT FROM THE ANNUAL RETURN FOR THE AGM HELD ON DT. 29.09.2008. THE CONSTITUTION OF THE BOARD OF DIRECTORS OF THE COMPANY WAS AS FOLLOWS: SRI S.K. DALMIA GROUP SRI D.D. AQARWAL GROUP SRI S.K. DALMIA SRI DINDAYAL AGARAWAL SRI VIKAASH DALMIA SRI DINESH AGARAWAL IN SUPPORT OF THE ABOVE THE COPY OF THE ANNUAL RETURN FILED FOR THE AGM HELD ON 29.09.2008 IS ENCLOSED AS ANNEXURE - 9. 6. THE COMPANY IS ASSESSED SINCE INCEPTION AT BHUBANESWAR & ITS PAN IS AADCS7760D. 7. 7. SRI S.K. DALMIA RESIDES AT BHUBANESWAR AND IS ALSO ASSESSED IN BHUBANESWAR AND SRI D.D. AGARWAL RESIDES AT CUTTACK AND ALSO ASSESSED AT CUTTACK. 8. ALL OF THEM ARE \ ESTABLISHED BUSINESS MEN OF THEIR LOCALITY AND ASSESSED TO INCOME TAX SINCE MORE THAN THREE DECADES UNDER ODISHA CIRCLE. 9. IN 2007 DISPUTE AROSE BETWEEN SRI S.K. DALMIA GROUP AND SRI D.D. AGARAWAL GROUP. 7 . THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ORDER OF THE ASSESSING OFFICER . THE OBSERVATION S OF THE CIT(A) IN THE CASE OF SADHANA DALMIA ARE AS UNDER: I HAVE CONSIDERED THE MATTER WITH REFERENCE TO THE MATERIALS ON RECORD. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE ASSESSEE. IT IS A FACT THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE IDENTITY OF THE COMPANY M/S. N. R. INTERNATIONAL LTD. FROM WHOM THE ADVANCE WAS ALLEGEDLY RECEIVED FOR SALE OF SHARES OF SURYA SPONGE IRON LTD. THERE WAS A SURVEY OPERATION CONDUCTED U / S .133A IN THE PREMISES OF M/S. N. R. INTERNATIONAL LTD. AT KOLKATA AND IT WAS FOUND THAT NO ACCOUNTS AN D DOCUMENTS RELATING TO THE ALLEGED PURCHASE OF SHARES WERE MAINTAINED THERE. THE ONLY PERSON AVAILABLE IN THE REGISTERED OFFICE OF M/S. N. R. INTERNATIONAL LTD. WAS ONE SRI A. K. CHAKRABORTY WHO CATEGORICALLY STATED ON OATH THAT NO DOCUMENTS/EVIDENCES REL ATING TO PURCHASE OF SHARES FROM THE ASSESSEE WERE KEPT IN THE OFFICE. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY EVIDENCE AS REGARDS THE CAPACITY OF M/S. N. R. INTERNATIONAL LTD. TO ADVANCE AN AMOUNT 10 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 OF RS.62,000/ - . THE ASSESSEE PLEADS THAT SINCE THE TRANSACTIONS OF RECEIPT OF ADVANCE AND SALE OF SHARES TOOK PLACE AS PER AN MOU SIGNED BY THE TWO PROMOTER GROUPS, NAMELY, DDA GROUP AND SKD GROUP, COPY OF WHICH WAS FILED BEFORE THE CLB AND ROC, THE TRANSACTIONS CANNOT BE QUESTIONED FROM THE POINT OF V IEW OF IDENTITY AND CREDITWORTHINESS OF THE PARTY M/S. N. R. INTERNATIONAL LTD. THE ASSESSEE PERHAPS INTENDS TO ARGUE THAT SINCE M/S. N. R. INTERNATIONAL LTD. BELONGS TO DDA GROUP AND AS PER MOU, THE DDA GROUP HAS PURCHASED SHARES OF M/S. SURYA SPONGE IRON LTD. FROM SKD GROUP, IT IS THE RESPONSIBILITY OF THE DDA GROUP TO EXPLAIN THE SOURCE OF THE ADVANCE GIVEN FOR PURCHASE OF SHARES AND THE SKD GROUP CANNOT BE ASKED TO PROVE THE GENUINENESS OF THE AMOUNT RECEIVED FOR SALE OF SHARES. I DO NOT AGREE WITH THIS VIEW OF THE ASSESSEE. THE ONUS SQUARELY LIES ON THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PARTY AND ALSO THE GENUINENESS OF THE TRANSACTIONS. THE LAW IN THIS REGARD IS WELL SETTLED. THE ASSESSEE HAS FAILED TO DISCHARGE THIS ONUS. IN THE WRITTEN SUBMISSION, THE ASSESSEE HAS REFERRED TO CERTAIN CASE LAWS WHICH ARE FOUND NOT TO BE APPLICABLE TO THE CASE OF THE ASSESSEE SINCE THE FACTS IN THOSE CASES ARE TOTALLY DIFFERENT. IN THE CASE OF CIT V. DEVI PRASAD BISWANATH PRASAD 72 ITR 194 REL IED UPON BY THE ASSESSEE, THE HON'BLE APEX COURT HAS HELD THAT IT IS FOR THE ASSESSEE TO PROVE THAT EVEN IF THE CASH CREDIT REPRESENTS INCOME, IT IS INCOME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED. IN THIS CASE, THE ASSESSEE HAS NOT PROVED THAT THE ADDIT ION MADE U/S.68 HAS ALREADY BEEN TAXED IN THE HANDS OF THE ASSESSEE FROM SOME OTHER SOURCE. HENCE, THIS DECISION OF THE HON'BLE APEX COURT HAS NO APPLICATION TO THE CASE OF THE ASSESSEE. DISCLOSURE OF CAPITAL GAINS ON SALE OF SHARES AND PAYMENT OF TAX ON T HE SAME IN THE SUBSEQUENT YEAR CANNOT BE A GROUND FOR NOT TAXING THE UNEXPLAINED CASH CREDITS U/S.68. THE ABOVE DECISION OF THE HON'BLE SUPREME COURT CANNOT BE INTERPRETED IN THE MANNER IN WHICH THE ASSESSEE INTERPRETS THE SAME. SIMILARLY!, THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT V. DURGA PRASAD MORE CANNOT HELP THE ASSESSEE IN ANY MANNER SO FAR AS ADDITION U/S.68 IS CONCERNED. THIS DECISION RATHER SUPPORTS THE ACTION OF THE AO. IN THE CASE OF SMT. HARSHILA CHORDIA 298 ITR 349, THE HON'BLE RAJASTHAN HIGH COURT OPINED THAT ADDITION U/S.68 CANNOT BE MADE IN RESPECT OF THE AMOUNT WHICH WAS FOUND TO BE CASH RECEIPT FROM THE CUSTOMERS AGAINST WHICH DELIVERY OF GOODS WAS MADE TO THEM. 1 WONDER HOW THIS DECISION CAN HELP THE ASSESSEE. M/S. N. R. I NTERNATIONAL LTD. IS NOT A REGULAR CUSTOMER OF THE ASSESSEE AND THE ASSESSEE IS NOT INVOLVED IN ANY TRADING ACTIVITIES WITH THAT COMPANY ON A REGULAR BASIS. THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT WAS DELIVERED ON A COMPLETELY DIFFERENT SET OF FACTS AND CLEARLY NOT APPLICABLE TO THE CASE OF TH E ASSESSEE. THE FACTS IN THE CASE GHAI LIME STONE COMPANY DECIDED 11 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 BY THE HON'BLE M. P. HIGH COURT 144 ITR 140 ARE ALSO FOUND TO BE DIFFERENT. IN THAT CASE, THE HON'BLE COURT WAS REQUIRED TO DECIDE WHETHER TRADE ADVANCES RECEIVED AGAINST SUBSEQUENT SUPPLY O F GOODS COULD BE CONSIDERED AS CASH CREDIT AS CONTEMPLATED U/S.68. THE COURT HAS HELD THAT THE TRADE ADVANCES RECEIVED AGAINST SUPPLY OF GOODS SUBSEQUENTLY IS NOT A CASH CREDIT U/S.68. 5.1 IN THE CASE OF THE ASSESSEE, ADVANCE OF RS.62,000/ - WAS CREDITED I N HER ACCOUNTS IN THE NAME OF M/S. N. R. INTERNATIONAL LTD. AND THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THIS COMPANY. ONLY BECAUSE THE AMOUNT WAS RECEIVED BY CHEQUE, IT CANNOT BE CONSIDERED TO BE GENUINE. ON THE FACTS OF THE C ASE, THE ADDITION MADE BY THE AO U/S.68 OF RS.62,000/ - IS FOUND TO BE IN ORDER AND HENCE, CONFIRMED . 8 . SIMILAR FINDINGS ARE GIVEN BY THE CIT(A) IN CASE OF OTHER ASSESSEES . 9 . THE SUBMISSIONS OF THE LD A.R. OF THE ASSESSEE BEFORE US ARE THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) U/S.68 OF THE ACT IS MIS - PLACED AND NOT CORRECT. IT IS HIS ARGUMENT THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEES TOWARDS SALE CONSIDERATION OF THE SHARES HELD BY THE ASSESSEE IN M/S. SURYA SPON G E IRON LTD., AND NOT AS SHARE APPLICATION OR LOANS. IT WAS HIS SUBMISSION THAT IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR I.E. 2009 - 2010, THE SHARES AGAINST WHICH SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE DURING THE YEAR WERE TRANSFERRED TO THE PAYERS OF THE AMOUNT AND THE CAPITAL GAIN EARNED BY THE ASSESSEE WAS OFFERED TO TAX IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2009 - 2010 AS UNDER: NAME OF THE ASSESSEE CAPITAL GAINS (AMOUNT SADHANA DALMIA RS.23,846/ - GANGOL VINCOM (P) LTD., RS.33,334,224 AHINSA VINIMAY PVT LTD. RS.40 066,964 SURENDRA KUMAR DALMIA RS.28,12,242 12 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 DEWDROPS MERCHANTS P.LTD. RS.29,373,239 10 . IT WAS HIS ARGUMENT THAT THE CAPITAL GAINS OFFERED IN THE RETURN OF INCOME FILED BY THE ASSESSEE WAS ASSESSED TO TAX BY THE DEPARTMENT IN THE ASSESSMENT YEAR 2009 - 2010. IT WAS HIS SUBMISSION THAT THE SEARCH IN THE CASE OF THE ASSESSEE GROUP WAS CONDUCTED ON 12.2.2013 AND FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS RECEIVED THE A BOVE STATED ADVANCE AGAINST SALE FROM SHARES IN M/S. SURYA SPONGE IRON LTD., ON THESE FACTS, IT WAS HIS SUBMISSION THAT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 2010 WAS FILED BY THE ASSESSEE AS UNDER: NAME OF THE ASSESSEE DATE OF RETURN SADHANA DALMIA 20.7.2009 GANGOL VINCOM (P) LTD., 22.8.2009 AHINSA VINIMAY PVT LTD. 22.8.2009 SURENDRA KUMAR DALMIA 20.7.2009 DEWDROPS MERCHANTS P.LTD. 22.8.2009 1 1 . THESE RETURNS WERE PROCESSED AND ACCEPTED BY THE DEPARTMENT AND NO NOTICE U/S.143(2) OF THE AC T WAS ISSUED ON OR BEFORE 30.9.010. THUS, THE RETURNS OF INCOME ATTAINED FINALITY AND WERE ABATED ON THE DATE OF SEARCH CONDUCTED ON THE ASSESSEE ON 12.2.2013. AS T HE ASSESSMENT U/S.153A OF THE ACT VIDE ORDER DATED 12.2.2013 HAS BEEN MADE ON THE BASIS OF BOOKS OF ACCOUNT OF THE ASSESSEES WITHOUT REFERENCE TO ANY SEARCH MATERIAL FOUND DURING THE COURSE OF SEARCH, THE ADDITIONS MADE 13 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 CANNOT BE SUSTAINED IN LAW IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF THE DECISION DATED 28.8.2015 IN THE CASE OF CIT(CENTRAL) - III VS. KABUL CHAWLA IN ITA NO. 707/DEL/2014 WHEREIN THE HON BLE DELHI HIGH COURT HAS REITERATED THE SETTLED LEGAL PROPOSITION THAT SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 1 2 . ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 1 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE APPEALS UNDER CONSIDERATION ARE IN PURSUANCE TO ASSESSMENTS MADE U/S.153A OF THE ACT IN PURSUANCE TO A SEARCH CONDUCTED U/S.132 OF THE ACT ON 12.2.2013. THE ASSESSMENT YEAR IN VOL V ED IN ALL THESE APPEALS IS 2008 - 09. FOR THE ASSESSMENT YEAR 2008 - 09, THE ORIGINAL RETURNS OF INCOME FILED BY THE ASSESSEE ARE TABULATED AS UNDER: NAME OF THE ASSESSEE DATE OF FILING RETURN DATE ON WHICH TIME LIMIT OF INCOME U/S.139(1 ) FOR ISSUANCE OF NOTICE U/S. 143(2) EXPIRES SADHANA DALMIA 2 2.9.2008 30.9.2009 GANGOL VINCOM (P) LTD., 2 0.9.2008 30.9.2009 AHINSA VINIMAY PVT LTD. 2 0.9.2008 30.9.2009 SURENDRA KUMAR DALMIA 2 2.9.2008 30.9.2009 14 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 DEWDROPS MERCHANTS P.LTD. 2 0 . 9 .200 8 30.9.2009 1 4 . THUS, IT IS OBSERVED THAT IN NONE OF THE ABOVE ASSESSEES CASE, ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2008 - 09 WAS ABATED IN PURSUANCE TO THE SEARCH. IN OTHER WORDS, ALL THE CASES ARE OF UN - ABATED ASSESSMENT. IT IS SETTLED POSITION OF LAW THAT IN CASE OF UN - ABATED ASSESSMENT, ADDITION CAN BE MADE IN AN ASSESSMENT MADE U/S.153A OF THE ACT ONLY ON THE BASIS OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. THE ABOVE PROPOSITION OF LAW IS WELL SETTLED IN THE FOLLOWING DECISIONS: 1 ) PR. .CIT VS. MEETA GUTGUTIA PROP. M/S.FEMS 'N' PETALS [2017) 39 5 ITR 526 (DEL) . 2) ALL CARGO GLOBAL LOGISTICS LTD. (2015) 374 1TR 645 (BOM) 3) PR. CIT - 2, KOLKATA VS M/S. SALASAR STOCK BROKING LTD., G.A.NO.1929 OF 2016(KOL) 4) PR. CIT VS. SOMAYA CONSTRUCTION PVT LTD., 387 ITR 529 (GUJ) 5) CIT VS. IBC KNOWLEDGE PARK PVT LTD., 385 ITR 346 (KAR) 6) CIT VS. GURINDER SINGH BAWA, 386 ITR 143 (BOM) 7) PR. CIT VS. DHARMAPAL PREMCHAND LTD., IN ITA NO. 512, 513 & 514/2016 ORDER DATED 21.08.2017 (DELHI) 1 5 . COMING TO THE FACTS OF THE CASE UNDER APPEAL, IT IS OBSERVED THAT ALL THE ASSESSEES HAD DULY DISCLOSED THE RECEIPT OF ADVANCE WHICH IS UNDER APPEAL IN THEIR REGULAR BOOKS OF ACCOUNT. THE ASSESSEES CLAIMED TO HAVE SOLD SHARES AGAINST THESE ADVANCES IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR I.E. 2009 - 2010 AND HAVE ALSO PAID C APITAL GAINS TAX ON THE GAINS DERIVED ON SALE OF SUCH SHARES. IT IS NOT IN DISPUTE THAT THE 15 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 RELATED LONG - TERM CAPITAL GAINS HA VE BEEN ALSO ACCEPTED AS GENUINE BY THE DEPARTMENT IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009 - 2010. LD D.R. COULD NOT POINT OUT ANY MATERIAL WHICH WAS UNEARTHED BECAUSE OF THE SEARCH AND WHICH SHOWS THAT THE ADVANCES IN QUESTION WERE NOT GENUINE IN RESPECT OF WHICH ADDITION WAS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). THUS, IT IS OBSERVED THAT THE ADDITIONS I N QUESTION WERE NOT BASED ON ANY SEARCH MATERIAL. RESPECTFULLY FOLLOWING THE ABOVE CITED DECISIONS, IN OUR CONSIDERED VIEW, ADDITIONS SO MADE DE HORS SEARCH MATERIAL IS UNSUSTAINABLE. WE, THEREFORE, DELETE THE ADDITIONS MADE IN THE CASE OF ALL THE ASSESS EES AS UNDER: 1. SADHNA DALMIA RS. 62,000/ - 2. GANGOL VINCOM (P) LTD RS.4,85,15,000/ - 3. AHINSA VINIMAY PVT LTD RS.7,60,30,000/ - 4. SURENDRA KUMAR DALMIA RS. 31,58,900/ - 5. DEWDROP MERCHANTS PVT LTD. RS.4,85,15,000/ - THUS, THE GROUNDS OF APPEAL IN ALL THESE APPEAL S OF THE ASSESSEES ARE ALLOWED. 1 6 . THE ASSESSEE S HA VE FILED STAY PETITION S FOR STAY OF DEMAND. AS WE HAVE HEARD AND DECIDED THE APPEAL OF THE ASSESSEE S , THE STAY PETITION S OF THE ASSESSEE HA VE BECOME INFRUCTUOUS AND, ACCORDINGLY, THEY ARE DISMISSED. 16 IT(SS) A NO. 3 8 TO 42 /CTK/2018 S.P. NO.2 1 TO 25 /CTK/2018 ASSESSMENT YEAR : 2008 - 2009 1 7 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED AND STAY PETITIONS ARE DISMISSED. ORDER PRONOUNCED ON 19 / 0 4 /201 8 . S D/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 19 / 0 4 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANTS: SADHNA DALMIA/ GANGOL VINCOM (P) LTD/ AHINSA VINIMAY PVT LTD/ SURENDRA KUMAR DALMIA/ DEWDROP MERCHANTS PVT LTD., B - 40, SAHEED NAGAR, BHUBANESWAR. 2. THE RESPONDENT. DCIT, CORPORATE CIRCLE 1(1), BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//
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