Komal Taxfab Pvt.Ltd., Ahmedabad V. The ACIT.,Cent.Cirle-2(4), Ahmedabad

ITSSA 98/AHD/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3614 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AP ARNA AGRAWAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Commercial expediency
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) IT(SS)A. NOS: 98 & 99/AHD/2013 (ASSESSMENT YEARS: 2007-08 & 2008-09) KOMAL TAXFAB PVT. LTD. SURVEY NO. 167/168, NR. BALAJI TEXTILE, NAROL SARKHEJ ROAD, AHMEDABAD-382405 V/S ACIT CENT. CIRCLE-2(4), AHMEDABAD (APPELLANT) (RESPONDENT) ITA NO: 590/AHD/2013 (ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(4), AHMEDABAD V/S KOMAL TAXFAB PVT. LTD. SURVEY NO. 167/168, NR. BALAJI TEXTILE, NAROL SARKHEJ ROAD, AHMEDABAD- 382405 (APPELLANT) (RESPONDENT) PAN: AAACK6150C APPELLANT BY : SHRI S. N. SOPARKAR & PARIN SHAH, A.R. RESPONDENT BY : SMT. APARNA AGRAWAL, CIT/DR. ( )/ ORDER IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 2 DATE OF HEARING : 08 -02-201 8 DATE OF PRONOUNCEMENT : 16 -02-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. IT(SS)A NOS. 98 & 99/AHD/2013 ARE APPEALS BY THE AS SESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-III, AHMEDABAD DATED 21 .12.2012 PERTAINING TO A.Y. 2007-08 & 2008-09. ITA NO. 590/AHD/2013 IS THE CROSS APPEAL BY THE REVENUE FOR A.Y. 2008-09. SINCE THE FIRST APPELLATE AUTHORITY HAS DISPOSED THE APPEALS BY A CONSOLIDATED ORDER, BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE AND BREVITY. 2. REPRESENTATIVES OF BOTH SIDES WERE HEARD AT LENGTH. CARE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CAREFULLY CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECOR D IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE ITAT RULES. 3. GRIEVANCE RAISED VIDE GROUND NO. 1 HAS NOT BEEN PRE SSED AND THE SAME IS DISMISSED AS NOT PRESSED. 4. WITH GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ADDITION ON AD HOC BASIS @ 5% OF PAYMENTS TO LABOUR CONTRACTORS, QUANTUM MAY D IFFER IN THE IMPUGNED APPEALS. 5. A SEARCH WAS CONDUCTED AT THE FACTORY PREMISES OF T HE ASSESSEE. AS PER THE HARD DISK DATA SEIZED DURING THE COURSE OF SEARCH, IT WAS FOUND THAT PAYMENT TO CONTRACTORS DIFFERED FROM THE AMOUNT OF EXPENDITURE SHOWN IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE EXPENDITURE SHOWN IN IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 3 THE PROFIT AND LOSS ACCOUNT IS HIGHER THAN THE AMOU NT FOUND IN THE HARD DISK OF THE COMPUTER. THE ASSESSEE WAS FURTHER ASKED TO EXPLAIN THE AVERAGE PERCENTAGE OF DIFFERENCE IN THE ACTUAL AMOUNT OF EX PENSE AND THE AMOUNT REFLECTED IN THE PROFIT AND LOSS ACCOUNT WHICH WAS AROUND 40%. 6. IN ITS REPLY, THE ASSESSEE STRONGLY CONTENDED THAT PAYMENT MADE TO CONTRACTORS ARE DEBITED IN BOOKS OF ACCOUNTS AND SUPPORTED BY B ILLS RAISED BY THE CONTRACTORS. IT WAS EXPLAINED THAT THE EXCEL SHEET FOUND IN THE HARD DISK, THE ASSESSEE SOLELY PREPARED FOR ESI INSPECTION WHICH W AS GOING ON THE DATE OF SEARCH. IT WAS POINTED OUT THAT BILLS RAISED BY THE CONTRACTORS CONTAIN CERTAIN ITEMS EXEMPTED FROM ESI. AS THE BILLS RAISED BY CON TRACTORS DO NOT GIVE BIFURCATION OF SUCH EXPENSE, ASSESSEE HAD PREPARED THE EXCEL SHEET FOUND IN THE HARD DISK ON WHICH ESI CONTRIBUTION IS PAYABLE HAS BEEN SHOWN. IT WAS BROUGHT TO THE NOTICE OF THE A.O. THAT THE ESI AUTHORITY HA S NOT ACCEPTED THE COMPUTATION MADE BY THE ASSESSEE AND IT WAS DECIDED THAT 60% OF TOTAL BILL AMOUNT WILL BE TREATED AS WAGES ON WHICH EMPLOYER I S LIABLE TO PAY CONTRIBUTION TO ESI. WE FIND THAT THE TOTAL BILL AMOUNT OF CONTR ACTORS IS RS. 1,94,63,843/-. THE ESI AUTHORITY HAS FINALLY COMPUTED 60% OF TOTAL BILL AMOUNT AT RS. 1,16,78,366/- AGAINST THIS THE ASSESSEE HAS MADE CO NTRIBUTION ON WAGES RS. 87,29,474/-. 7. THE TOTAL BILL AMOUNT RAISED BY THE CONTRACTORS AT RS. 19463843/- IS ALSO REFLECTED IN THE EXCEL SHEET FOUND IN THE HARD DISK AND THE SAME AMOUNT HAS BEEN CLAIMED AS LABOUR EXPENDITURE IN P & L ACCOUNT OF A.Y. 2007-08. THIS IS SUPPORTED BY THE ORDER PASSED BY THE ESIC. IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 4 8. WE FIND THAT THE A.O. DID NOT ACCEPT THIS CONTENTIO N MERELY ON THE STRENGTH OF THE STATEMENT OF SHRI ROHIDS POWAR AND SHRI VIJAYSI NGH RATHOD. WE FIND THAT BOTH THESE PERSONS HAVE FILED AFFIDAVIT EXPLAINING THEIR STATEMENTS RECORDED DURING POST SEARCH ENQUIRIES. IN OUR CONSIDERED OPI NION, THERE IS NO OVER- STATEMENT OF LABOUR EXPENDITURE AS ALLEGED BY THE A .O. ALTHOUGH, CERTAIN PAYMENTS ARE MADE IN CASH. HOWEVER, TAX HAS BEEN DU LY DEDUCTED ON SUCH PAYMENT. WE ALSO FIND THAT AT PARA 3.4 OF HIS ASSES SMENT ORDER, THE A.O. HAS ACCEPTED THE EXPLANATION SUBMITTED BY THE ASSESSEE. WE FAIL TO UNDERSTAND ONCE THE EXPLANATION OF THE ASSESSEE HAS BEEN FOUND TO B E ACCEPTABLE WHY AD HOC DISALLOWANCE OF 5% WAS MADE BY THE A.O. AND CONFIRM ED BY THE LD. CIT(A). ONCE IT IS ACCEPTED THAT THE DATA AVAILABLE ON THE HARD DISK WAS FOR THE PURPOSE OF ESI WORKING AND THE SAME HAS BEEN DULY EXPLAINED AND RECONCILED WITH THE TOTAL CLAIM OF LABOUR EXPENDITURE DULY SUPPORTED BY CONTRACTORS SUBJECT TO TDS, NO DISALLOWANCE ON AD HOC BASIS IS CALLED FOR. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO D ELETE THE ADDITION ON AD HOC BASIS @ 5% OF PAYMENTS TO LABOUR CONTRACTORS IN THE YEARS UNDER APPEAL. GROUND NO. 2 IS ALLOWED. 9. GROUND NO. 3 RELATES TO THE DISALLOWANCE OF FOREIGN TRAVEL EXPENDITURE. 10. ON VERIFICATION OF THE DETAILS RELATING TO THE EXPE NDITURE INCURRED ON FOREIGN TRAVEL, THE A.O. NOTICED THAT CERTAIN EXPENDITURE W AS INCURRED FOR THE WIFE OF ONE OF THE DIRECTORS FOR TRIP TO SWITZERLAND. THE A SSESSEE WAS ASKED TO JUSTIFY THE BUSINESS NECESSITY OF SUCH EXPENDITURE. 11. IN ITS REPLY, THE ASSESSEE EXPLAINED THAT THE WIFE OF THE DIRECTOR ACCOMPANIED HIM ON A BUSINESS TO SWITZERLAND TO ATTEND VARIOUS EXHIBITION AND FASHION IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 5 SHOWS SINCE THE ASSESSEE IS IN THE BUSINESS OF MANU FACTURING/PROCESSING OF GARMENT, KNITTING, FABRIC BUSINESS. IT WAS CONTENDE D THAT THE LADIES UNDERTOOK FOREIGN TOUR TO GAIN INNOVATIVE FASHIONS IDEA PREVA ILING IN THE GLOBAL GARMENT MARKET. 12. THIS CONTENTION OF THE ASSESSEE WAS DISMISSED BY T HE A.O. WHO WAS OF THE FIRM BELIEF THAT THE EXPENDITURE INCURRED ON THE WI FE OF THE DIRECTOR HAS NO CO- RELATION WITH THE BUSINESS EXPEDIENCY AND ACCORDIN GLY DISALLOWED THE FOREIGN TOUR EXPENDITURE IN THE YEARS UNDER APPEAL, THOUGH QUANTUM MAY DIFFER. 13. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 14. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. WE FIND THAT NO EVIDENCE OF THE TECHNICAL/PROFESSIONAL QUALIFICATION OF THE WIV ES OF THE DIRECTORS HAVE BEEN BROUGHT ON RECORD. THE CLAIM OF THE ASSESSEE THAT I NPUTS OF THE LADIES WOULD BE BENEFICIAL FOR THE BUSINESS OF THE COMPANY IS NOT A CCEPTABLE AS THERE IS NOTHING ON RECORD TO SUGGEST THAT THE SAME HAVE BEEN USED I N THE DAY TO DAY BUSINESS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE SERVICES OF THE LADIES ARE UTILIZED ONLY IN FOREIGN TRIPS. ON THE GIVEN FACTS OF THE CASE, W E DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. COUNSEL. THEREFORE, WE DECLIN E TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 3 IS DISMISS ED. 15. GROUND NO. 4 - THE APPELLANT IS AGREED BY THE ADDIT IONS MADE BY THE A.O. U/S. 68 AS UNEXPLAINED CASH CREDIT TREATING THE SHARE PR EMIUM RECEIVED BY THE COMPANY FROM THE SUBSCRIBERS. IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 6 16. FROM THE SCRUTINY OF THE DATA AND THE INFORMATION G ATHERED DURING THE COURSE OF THE SEARCH OPERATIONS AND POST SEARCH OPERATION, IT WAS FOUND THAT IN F.Y. 2006-07 80,240 SHARES WERE SUBSCRIBED AND PAID UP A ND IN F.Y. 2007-08 20,000 SHARES WERE SUBSCRIBED AND PAID UP. THE AMOUNT OF S HARES CAPITAL RAISED IN THESE YEARS WAS RS. 8,02,400 AND RS. 2 LACS RESPECT IVELY. IT WAS FOUND THAT FOR EACH SHARE OF THE FACE VALUE OF RS. 10 EACH, A PREM IUM OF RS. 240 PER SHARE WAS CHARGED BY THE COMPANY AND THE CORRESPONDING AMOUNT OF SHARE PREMIUM WAS AT RS. 1,92,57,600/- AND RS. 48 LACS IN F.Y. 2007-0 8 RESPECTIVELY. 17. THE PARTICULARS OF THE CONCERNS/ENTITIES WHICH SUBS CRIBED TO THE SHARES OF THE APPELLANT COMPANY ARE AS PER THE TABLE GIVEN BELOW: - SR. NO. NAME F.Y . NO. OF SHARES SHARE CAPITAL (RS,) SHARE PREMIUM (RS.) 1. VAX HOUSING FINANCE 2006 - 07 8,000 80,000 19,20,000 CORPORATION LIMITED 2007 - 08 6,000 60,000 14,40,000 2. SONAL SILCHEM PVT. 2006 - 07 11,200 1,12,000 26,88,000 LTD. 2007 - 08 3. SONAL COSMETICS 2006 - 07 48,000 4,80,000 1,15,20,000 EXPORT LIMITED 2007 - 08 6,000 60,000 14,40,000 4 SONAL INTERNATIONAL 2006 - 07 12,800 1,28,000 30,72,000 LIMITED 2007 - 08 4,000 40,000 9,60,000 5. SHEETAL SECURITIES 2006 - 07 PVT. LTD. 2007 - 08 4,000 40,000 9,60,000 6 RUPESH BHANDARI 2006 - 07 80 800 19,200 7. MEGHA B. JAIN 2006 - 07 80 800 19,200 IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 7 8. SAYARBE N 2006 - 07 80 800 19,200 TOTAL 1,00,240 10,02,400 2,40,57,600 18. ON 23.02.2009 I.E. WITHIN A PERIOD OF HARDLY TWO YE ARS ALL THE SHARES OF THE COMPANY WHICH WAS SUBSCRIBED BY THE CONCERNS MENTIO NED AT SERIAL NO. 1 TO 5 IN THE TABLE HEREINABOVE WERE SOLD BACK AT THE FACE VALUE OF RS. 10 TO THE DIRECTORS AND PROMOTERS OF THE APPELLANT COMPANY. 19. IT IS TRUE THAT THE COMMERCIAL EXPEDIENCY OF THE SH ARE PREMIUM OF RS. 240 PER SHARE CANNOT BE QUESTIONED IN THE YEARS UNDER CONSI DERATION BUT AT THE SAME TIME THE SAME HAS TO BE EXAMINED IN THE LIGHT OF TH E PROVISIONS OF SECTION 68 OF THE ACT AS HELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF GREEN INFRA LTD. 392 ITR 7. IT IS EQUALLY TRUE THAT THE P ROVISO TO SECTION 68 HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 WITH EFFECT FRO M 01.04.2013. THUS, IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEARS 2 013-14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEARS AS HELD BY THE HON BLE HIGH COURT OF BOMBAY IN THE CASE OF GAGANDEEP INFRASTRUCTURE PVT. LTD. 3 94 ITR 680. 20. HAVING SAID ALL THAT STILL THE ISSUES HAVE TO BE EX AMINED WITHIN THE FOUR WALLS OF THE PROVISIONS OF SECTION 68 OF THE ACT. INSOFAR AS THE GENUINENESS OF THE TRANSACTION IS CONCERNED, THE HONBLE SUPREME COURT IN THE CASE OF GOSALIA SHIPPING PVT. LTD. 113 ITR 307 HAS LAID DOWN THE FO LLOWING RATIO:- IT WAS TRUE THAT ONE COULD NOT PLACE OVER-RELIANCE ON THE FORM WHICH THE PARTIES GAVE TO THEIR AGREEMENT OR ON THE LABEL WHICH THEY ATTACHED TO THE PAYMENT DUE FROM ONE TO THE OTHER. ONE MUST HAVE REGARD TO THE SUBSTANCE OF THE MATTER AND, IF NECESSARY, TEAR THE VEIL IN ORDER TO SEE WHETHER THE TRUE CHARACTER OF A PAYMENT IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 8 WAS SOMETHING OTHER THAN WHAT, BY A CLEVER DEVICE O F DRAFTING, IT WAS MADE TO APPEAR. 21. NO PRUDENT PERSON WITH SOME COMMERCIAL SENSE WOULD BUY A SHARE OF RS. 10 AT A PREMIUM OF RS. 240 IN A PVT. LTD. COMPANY AND SEL L THEM BACK TO THE PROMOTERS ETC. FOR RS. 10 THEREBY BOOKING LOSS OF R S. 240 PER SHARES. THIS TRANSACTION DEFINITELY RAISES THE EYEBROWS INASMUCH AS THE PERSONS PURCHASING SHARES IN A PVT. LTD. COMPANY ARE FULLY AWARE OF TH E FACT THAT SHARES OF A PVT. LTD. COMPANY ARE NEITHER TRADED IN THE STOCK EXCHAN GE NOR ARE TRANSFERABLE IN THE OPEN MARKET. 22. ON SUCH CALENDSTINE TRANSACTION, WE HAVE TO CONSIDE R THE SURROUNDING CIRCUMSTANCES AND APPLY THE TEST AS LAID DOWN BY TH E HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL 214 ITR 801. THE RELEVANT FINDING OF THE HONBLE SUPREME COURT IN THIS CASE READ AS UNDER:- IN THE INSTANT CASE, THE AMOUNT IS CREDITED IN THE CAPITAL ACCOUNT IN THE BOOKS OF THE APPELLANT. THE APPELLANT HAS OFFERED HER EXPLAN ATION ABOUT THE SAID RECEIPTS BEING HER WINNINGS FROM RACES. THE SAID EXPLANATION HAS BEEN CONSIDERED IN THE LIGHT OF THE SWORN STATEMENT OF THE APPELLANT DATED JANUARY 6, 1973, AND OTHER MATERIAL ON RECORD. THE INCOME-TAX OFFICER AND THE APPELLATE ASSISTANT COMMISSIONER HAVE NOT ACCEPTED THE EXPLANATION OFFE RED BY THE APPELLANT. THE TWO MEMBERS CONSTITUTING THE MAJORITY IN THE SETTLE MENT COMMISSION HAVE ALSO TAKEN THE SAME VIEW. THERE IS NO DISPUTE THAT THE AMOUNTS WERE RECEIVED BY THE APPELLANT FROM VARIOUS RACE CLUBS ON THE BASIS OF WINNING TICKETS PRESENTE D BY HER. WHAT IS DISPUTED IS THAT WERE THEY REALLY THE WINNINGS OF THE APPELLANT FROM THE RACES. THIS RAISES THE QUESTION WHETHER THE APPARENT CAN BE CONSIDERED AS THE REAL. AS LAID DOWN BY THIS COURT THE APPARENT MUST BE CONSIDERED THE REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPL YING THE TEST OF HUMAN PROBABILITIES (SEE : CIT V. DURGA PRASAD MORE [1971 ] 82 ITR 540 (SC). IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 9 23. WE FURTHER FIND THAT IN THE STATEMENT OF SHRI YOGES HBHAI J. SHAH ( WHO IS A COMMON DIRECTOR) IN THE SHARE APPLICANT COMPANIES M ENTIONED AT SERIAL NO. 2 TO 4 IN THE TABLE EXHIBITED ELSEWHERE HAS CATEGORIC ALLY STATED THAT THESE THREE COMPANIES WERE USED TO PROVIDE THE ENTRIES RELATED TO THE INTRODUCTION OF SHARE CAPITAL IN THE APPELLANT COMPANY KOMAL TEXFAB PVT. LTD. HE HAD ALSO STATED THAT THE MONEY FOR SUCH TRANSACTIONS WAS ALSO PROVI DED BY THE DIRECTORS/PROMOTERS OF THE APPELLANT COMPANY KOMAL TEXFAB PVT. LTD. ONLY. A COPY OF THE STATEMENT OF SHRI YOGESHBHAI J. SHAH W AS FORWARDED TO THE ASSESSEE WHO CHOSE NOT TO COMMENT/REPLY/CROSS-EXAMI NE. SHRI YOGESHBHAI J. SHAH. THUS, THE APPELLANT COMPANY HAS FORGONE ITS R IGHT. THEREFORE, AT THIS STAGE, (I.E. BEFORE US) THE LD. COUNSEL CANNOT TAKE THE PLEA THAT RIGHT OF CROSS- EXAMINATION HAS BEEN DENIED. THEREFORE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CHARTERED SPEED PVT. LTD. IN TAX APPEAL NO. 126 & 127 OF 2015 AS RELIED UPON BY THE ASSESSEE WOULD NO T BE APPLICABLE. 24. IN OUR UNDERSTANDING OF THE FACTS, THE APPELLANT CO MPANY INTRODUCED ITS OWN UNACCOUNTED MONEY THROUGH THE SHARE APPLICANT COMPA NIES IN THE FORM OF SHARE PREMIUM AND THE FAMILY MEMBERS OF THE PROMOTE RS/DIRECTORS BOUGHT BACK SHARES FROM THESE COMPANIES AT THE FACE VALUE OF RS. 10 EACH THEREBY KEEPING THE RIGHTS OF THE MANAGEMENT INTACT WITHIN THE FAMILY. 25. IT IS TRUE THAT THE BUY BACK OF THE SHARES WILL NOT DECIDE THE QUESTION OF THE GENUINENESS AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF FIVE VISION PROMOTERS PVT. LTD. 380 ITR 289 (THE JUDGMEN T RELIED UPON BY THE LD. COUNSEL) BUT IT IS EQUALLY TRUE THAT THE SHARES HAV E BEEN SOLD TO UNRELATED PARTIES AT A HUGE PREMIUM AND THEREUPON WITHIN SHORT SPAN O F TIME THOSE SHARES WERE PURCHASED BACK, THE GENUINENESS OF THE TRANSACTION CAN BE QUESTIONED AS HELD IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 10 BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF M AF ACADEMY PVT. LTD. 361 ITR 258. HONBLE SUPREME COURT IN MACDOWELL AND COM PANY LTD. 154 ITR 148 HAS LAID DOWN THE RATIO THAT ANY COLOURABLE DEV ICE CANNOT BE PART OF TAX PLANNING AND IT IS WRONG TO ENCOURAGE OR ENTERTAIN THE BELIEF THAT IT IS HONOURABLE TO AVOID THE PAYMENT OF TAX BY RESORTING TO DUBIOUS METHOD. THE HONBLE SUPREME COURT FURTHER OBSERVED THAT EVEN IF THE TRANSACTION IS GENUINE AND EVEN IF IT IS ACTUALLY ACTED UPON, IF THE TRANS ACTION IS ENTERED INTO WITH THE INTENTION OF TAX AVOIDANCE, THEN THE TRANSACTION WO ULD CONSTITUTE A COLOURABLE DEVICE. . 26. CONSIDERING THE CREDIT OF SHARE PREMIUM FROM THE IM PUGNED TRANSACTION FROM ALL POSSIBLE ANGLES, WE FAILED TO PERSUADE OURSELVE S TO ACCEPT THE TRANSACTION AS GENUINE. ONCE THE GENUINENESS OF THE TRANSACTION IS HELD TO BE DOUBTFUL AND BOGUS, THE CORRESPONDING CREDITS HAVE TO BE TREATED AS UNEXPLAINED CASH CREDIT. WE, THEREFORE, UPHOLD THE ADDITION OF THE SHARE PRE MIUM OF RS. 19257600/- IN A.Y. 2007-08 AND RS. 48 LACS IN A.Y. 2008-09. GROUN D NO. 4 OF BOTH THE APPEALS ARE DISMISSED. 27. BEFORE PARTING, THE LD. COUNSEL HAS RELIED UPON CER TAIN OTHER JUDICIAL DECISIONS WHICH ARE PLACED IN THE CASE LAW PAPER BOOK BUT THO SE JUDGMENTS ARE NOT RELEVANT ON THE PECULIAR FACTS OF THE CASE DISCUSSE D HEREINABOVE. 28. GROUND NO. 5 RELATES TO THE LEVY OF INTEREST U/S.23 4A, 234B, 234C & 234D. THE LEVY OF INTEREST IS MANDATORY, THOUGH CONSEQUENTIAL . THE A.O. IS DIRECTED TO LEVY INTEREST AS PER THE PROVISIONS OF THE LAW. IT(SS)A NOS. 98 & 9 8/AHD/2013 AND OTHERS . A.YS. 2007-08 & 2 008-09 11 29. GROUND NO. 6 RELATES TO THE INITIATION OF PENALTY U /S. 271(1)(C) OF THE ACT. THIS GRIEVANCE IS PREMATURE AND NEEDS NO SEPARATE ADJUDI CATION. COMING TO ITA NO.590/AHD/2013 REVENUES APPEAL FOR A.Y. 2008-09 30. THE ONLY GRIEVANCE RELATES TO THE DELETION OF THE A DDITION OF RS. 9,81,241/- ON ACCOUNT OF DISALLOWANCE OF CASH PAYMENTS TO CONTRAC TORS. 31. THIS ISSUE HAS BEEN DISCUSSED AT LENGTH IN ASSESSEE S APPEAL VIDE GROUND NO. 2 (SUPRA). FOR OUR DETAILED DISCUSSION THEREIN, THE A PPEAL FILED BY THE REVENUE IS DISMISSED. 32. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PART LY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 02- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 16 /02/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD