M/s. Expo Globe India (P) Ltd., New Delhi v. ITO, New Delhi

CO 53/DEL/2010 | 2000-2001
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 5320123 RSA 2010
Assessee PAN AAACE6054B
Bench Delhi
Appeal Number CO 53/DEL/2010
Duration Of Justice 1 year(s) 4 month(s) 7 day(s)
Appellant M/s. Expo Globe India (P) Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Cross Objection
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 22-07-2011
Date Of Final Hearing 22-07-2011
Next Hearing Date 22-07-2011
Assessment Year 2000-2001
Appeal Filed On 15-03-2010
Judgment Text
ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 185/DEL/2010 A.Y. : 2000-01 INCOME TAX OFFICER WARD 11(2) NEW DELHI ROOM NO. 321 CENTRAL REVENUE BUILDING I.P. ESTATE NEW DELHI 110 002 VS. M/S EXPO GLOBE INDIA (P) LTD. C/O RN SARAF & CO. 2659/2 GURUDWARA ROAD KAROL BAGH NEW DELHI (PAN/GIR NO. : AAACE 6054B) AND C.O. NO. 53/DEL/2010 (IN ITA NO. 185/ DEL/2010) A.Y. 2000-01 M/S EXPO GLOBE INDIA (P) LTD. VS. INCOME TAX OFFIC ER C/O RRA TAXINDIA WARD 11(2) D-28 SOUTH EXTENSION PART-I ROOM NO. 321 CR BU ILDING NEW DELHI 110 049 NEW DELHI (PAN/GIR NO. : AAACE 6054B) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSEESSEE BY : DR. RAKESH GUPTA/ MS. RANI ADVOCATE DEPARTMENT BY : SH. ROHIT GARG SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) DATED 03.11.2009 AND PERTAIN TO ASSESSMENT YEAR 20 00-01. ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 2 REVENUES APPEAL 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE BY TH E ASSESSING OFFICER TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF UNEX PLAINED CASH CREDIT U/S 68 OF THE IT ACT. 3. IN THIS CASE ASSESSING OFFICER NOTED THAT ASSES SEE DURING THE YEAR UNDER CONSIDERATION HAS RECEIVED SHARE APPLICA TION MONEY OF ` 69 75 000/-. OUT OF THIS AMOUNT THE ASSESSEE HAS R ECEIVED ` 6 88 215/- FROM M/S ONYX EXIM AND SALES PVT. LTD. AND M/S SHORABH FINANCIALS PVT. LTD. THESE CONCERNS WERE ALLEGED TO BE ENTRY PROVI DER AS PER THE INVESTIGATION DONE BY THE INVESTIGATION WING. ASS ESSING OFFICER FURTHER NOTED THAT ASSESSEE HAS NOT COME FORWARD TO PROVE THE CREDITWORTHINESS OF THESE CONCERNS. ALSO THE ASSE SSING OFFICER NOTED THAT ASSESSEE HAS NOT PROVIDED ANY DETAIL FOR THE R EST OF THE SHARE APPLICATION MONEY. HENCE ASSESSING OFFICER ADDED A SUM OF ` 69 75 000/- AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. ASSESSING OFFICER FURTHER NOTED THAT ENTRY OPERATO RS WERE CHARGING COMMISSION @ 2% FOR GIVING THESE ACCOMMODATION ENTRIE S. ON THIS ACCOUNT ASSESSING OFFICER FURTHER ADDED A SUM O F ` 1 39 500/- TO THE INCOME OF THE ASSESSEE. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSEE SUBMITTED A LOT OF MAT ERIAL INCLUDING FRESH EVIDENCE. THESE WERE SENT TWICE TO THE ASSES SING OFFICER FOR HIS EXAMINATION AND REMAND REPORT BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). CONSIDERING THE ENTIRE MATERIAL LD . COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 3 REGARDING DECISION ON MERITS IT IS SEEN THAT THE APPELLANT HAS SUBMITTED SUFFICIENT EVIDENCES TO SHOW THAT ALL THE PERSONS ARE PROPERLY IDENTIFIED AND ALL ARE ASSESSE D TO TAX. THE DETAILS OF THESE EVIDENCES HAVE ALREADY BEEN MENTIONED IN EARLIER PART OF THE ORDER. A.O. HAS MADE ALLEGATION ABOUT INGENUITY OF THE AMOUNT RECEIVED FR OM TWO PERSONS ONLY NAMELY M/S ONXY EXIM & SALES LTD. AND M /S SHOURABH FINANCIALS PVT. LTD. THERE IS NO MENTION OF ANY ADVERSE MATERIAL WITH RESPECT TO OTHER PERSONS. EVEN WITH RESPECT TO THESE TWO PERSONS A.O. HAS MENTIONED ABO UT 'CERTAIN INVESTIGATION' BY DIT (INV.) EVEN IN THE RE MAND REPORT HE HAS NOT DISCUSSED AND SENT ANY MATERIAL O N THE BASIS OF WHICH ALLEGATIONS OF BOGUS ENTRY WAS MADE. NOTHING HAS BEEN BROUGHT ON RECORD AND AFTER ALL WHAT IS TH E MATERIAL AGAINST THE ASSESSEE. ON THE OTHER HAND IT IS SEEN THAT APPELLANT HAS DISCHARGED PRIMARY ONUS DESPITE T HE FACT THAT PRIMARY ONUS WAS UPON THE AO SINCE THESE PROCEEDINGS HAVE BEEN INITIATED U/S 147 AND IN VIEW OF THE JUDGEMENT OF HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRADEEP GUPTA 303 ITR 95. IT IS FURTHER NOTICED THA T IN ALL THERE ARE 19 SHARE APPLICANTS OUT OF WHOM 17 ARE THE COMPANIES WHO EXIST ON THE RECORD OF REGISTRAR OF COMPANIES. ALL THE PERSONS ARE ASSESSED TO TAX. APPE LLANT HAS ALSO SUBMITTED THAT THE AMOUNT HAS BEEN REFUNDED TO ALL THESE PERSONS IN SUBSEQUENT YEARS AND APPELLANT WAS NOT EVEN REAL BENEFICIARY OF SHARE APPLICATION MONEY. TH E ASSESSING OFFICER HAD ALL THE POWERS UNDER THE LAW TO CALL FOR THE DESIRED INFORMATION DIRECTLY FROM THESE PERS ONS AS ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 4 ALSO HELD BY HON'BLE SUPREME COURT WAY BACK IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD.159 ITR 78. MOREOVER THE POSITION OF THE LAW IS CLEAR WITH RESPECT TO SH ARE APPLICATION MONEY. IT HAS BEEN HELD BY HON'BLE SUPRE ME COURT AND VARIOUS HIGH COURTS THAT NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION MONEY ONCE THE NAMES OF THE SHARE APPLICANTS ARE GIVEN. IN THE INSTANT CASE IDENTITY OF THESE PERSONS ARE NOT IN DOUBT AND ASSESSMENT PARTICULARS OF ALL THE PERSONS ARE ON RECORD AND TH ERE IS NO MATERIAL TO HOLD THAT CREDIT WORTHINESS OF THESE PER SONS ARE NOT ESTABLISHED. THE JUDGEMENT OF HON'BLE SUPREME CO URT IN THE CASE OF LOVELY EXPORT 216 CTR 195 AND ALSO THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF C IT VS. VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334 ARE REL EVANT ON THIS ISSUE. IT WAS HELD BY HON'BLE MADRAS HIGH COUR T IN THE CASE OF CIT VS ELECTRO POLYCHEM LTD. 294 ITR 661 AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF JAYA SE CURITIES LTD. 166 TAXMAN 7 THAT NO ADDITION CAN BE MADE ON A CCOUNT OF SHARE APPLICATION MONEY EVEN IF SUBSCRIBER TO CAP ITAL ARE NOT GENUINE. THE ABOVE SAID JUDGEMENTS WERE CHALLENGE D BY THE DEPARTMENT BY WAY SLP BEFORE SUPREME COURT OF INDIA AND SLP HAS BEEN DISMISSED BY SUPREME COURT IN BOTH THE CASES. IN VIEW THE ABOVE SAID FACTS OF CASE AND POSITION OF LAW I HEREBY DIRECT THE A.O. TO DELETE THE ADDIT ION OF ` 69 75 000/-. REGARDING OTHER ADDITION OF RS. 13 590/- BEING THE AMOUNT OF ALLEGED COMMISSION CALCULATED @ 2% I FIND THAT TH ERE IS ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 5 NO MATERIAL AND BASIS TO MAKE THIS ADDITION AND THE S AME CANNOT BE UPHELD AND SAME IS HEREBY DELETED. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT A SSESSEE HAS PROVIDED CONFIRMATION AND PAN DETAILS AND MASTER DETAI L OF ROC IN THE CASE OF THE SHARE APPLICANTS. THUS IT IS CLEAR T HAT ASSESSEE HAS ESTABLISHED THE IDENTITY OF THESE PERSONS. ASSESSI NG OFFICER HAS NOT BROUGHT OUT ANYTHING IN THE REMAND REPORT TO REBUT T HE CONTENTION OF THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS GIVEN A FINDING THAT ALL THE SHARE APPLICANTS WERE ASSESSED TO INCOME TAX. ASSESSEE HAS FURTHER SUBMITTED THAT AMOUNT HAS BEEN REFUNDED TO THESE PERSONS IN SUBSEQUENT YEARS AND ASSESSEE WAS NOT EVEN REAL BENEFICIARY OF SHARE APPLICATION MONEY. HENCE WE FIND OURSELVES IN AGREEMENT WITH THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) THAT IDENTITY OF THESE PERSONS ARE NOT IN DOUBT AND ASSE SSMENT PARTICULARS OF ALL THE PERSONS ARE ON RECORD AND THERE IS NO MA TERIAL TO HOLD THAT THESE SUMS ARE TO BE ADDED AS UNEXPLAINED CASH CRED IT TO THE ASSESSEE. IN OUR CONSIDERED OPINION THE LD. COMMISS IONER OF INCOME TAX (APPEALS) HAS MADE A REASONABLE ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. 7. ON COMING TO THE ABOVE CONCLUSION WE PLACE REL IANCE OF THE HONBLE APEX COURT DECISION DELIVERED IN THE CASE OF CIT VS. LOVELY EXPORTS 216 CTR 195. IN THIS CASE IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPAN Y FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AS SESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEI R INDIVIDUAL ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 6 ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 8. WE FURTHER PLACE RELIANCE UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. V G OURDIN HERBALS INDIA LTD. IN ITA NO. 665/2009 VIDE ORDER DATED 17.4.2009 WHEREIN IT HAS BEEN HELD AS UNDER:- THREE COMPANIES VIZ. M/S KUBERCO SALES PVT. LTD. M/ S GARG FINVEST PVT. AND M/S MAFICO LEASING AND CONSULTANTS PV T. LTD. HAD SUBSCRIBED TO THE SHARE CAPITAL ISSUED BY THE ASSE SSEE. THE ASSESSING OFFICER HAD SOME DOUBTS ABOUT THE SOURCE OF THE INVESTMENT MADE BY THOSE THREE COMPANIES AND THEREFO RE MADE CERTAIN INQUIRIES. IN RESPONSE THE ASSESSEE PRODUC ED THE COPY OF THE BANK ACCOUNTS OF ALL THE THREE COMPANIES THEI R CERTIFICATES OF INCORPORATION AND ALSO THE INCOME TAX RETURNS FI LED BY THEM. FROM THE ABOVE DOCUMENTS THE IDENTITY AND GENUINENESS OF THESE COMPANIES IS CLEARLY ESTABLISHED. THE ONLY GROUND FOR MAKING ADDITION BY THE ASSESSING OFFICER WAS THAT T HE BANK ACCOUNTS OF THE THREE COMPANIES REVEALED THAT THE AMOUNTS IN CASH WERE DEPOSITED IN THOSE ACCOUNTS AND THUS CHEQ UES WERE ISSUED IN FAVOUR OF THE ASSESSEE COMPANY ALONGWITH SHARE APPLICATION MONEY. ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 7 IN THESE CIRCUMSTANCES WE ARE OF THE OPINION THAT FOLLOWING THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. LOVELY EXPORTS PVT. LTD. 216 CTR 195 THE ITAT HAS RIGHTLY HELD THAT THE ASSESSEE HAD DISCHARGED I TS BURDEN. IN CASE THOSE THREE COMPANIES HAD RECEIVED CERTAIN CAS H WHICH WERE DEPOSITED IN THE BANK ACCOUNTS IT WAS FOR TH E INCOME TAX DEPARTMENT TO TAKE ACTION AGAINST THE SAID COMPANIES. 9. WE FURTHER PLACE RELIANCE UPON THE DECISION OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. DWARKADISH INVESTMENT P LTD. THE RELEVANT PARAS OF THIS JUDGEMENT OF HON BLE DELHI HIGH COURT I.E. PARA NO. 6 7 & 8 ARE REPRODUCED HEREIN BELOW:- 6. IN OUR OPINION AS SECTION 68 OF THE ACT 1961 HAS BEEN INTERPRETED AS RECENTLY AS 2008 BY A DIVISION BENCH OF THIS COURT IN DIVINE LEASING AND FINANCE LTD. (SUPRA) AFTE R CONSIDERING ALL THE RELEVANT JUDGEMENTS WE DO NOT HAVE TO RECONSIDER ALL THE JUDGEMENTS REFERRED TO BY MR. SAH NI WHICH ARE PRIOR IN DATE AND TIME TO THE AFORESAID JUDGEMENT. IN FACT A SPECIAL LEAVE PETITION FILED A GAINST THE SAID DIVISION BENCH JUDGEMENT WAS DISMISSED BY THE SUPREME COURT BY WAY OF SPEAKING ORDER IN C.I.T. VS . LOVELY ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 8 EXPORTS (P) LTD. 216 CTR 195 (SC). THE SUPREME COUR T IN LOVELY EXPORTS PVT. LTD. (SUPRA) HAS HELD AS UNDER:- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT 1961. WE FIND NO MERIT IN THIS SPECIAL LE AVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGEMENT. 7. CONSEQUENTLY THE DOCTRINE OF MERGER WOULD APPLY AND THE JUDGEMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) WOULD COVER THE FIELD WITH REGARD TO INTERP RETATION OF SECTION 68 OF THE ACT. 8. IN ANY MANNER THE ONUS OF PROOF IS NOT A STATIC ONE. THOUGH IN SECTION 68 PROCEEDINGS THE INITIAL BURDE N OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTIT Y OF THE ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 9 CREDITORS/ SHARE APPLICANTS BY EITHER FURNISHING T HEIR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY / HIS B OOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY A NY OTHER MODE THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVE NUE. JUST BECAUSE THE CREDITORS /SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE THE R EVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE P OWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE. 10. FROM THE ABOVE PARAGRAPHS OF THE HONBLE JURISDI CTIONAL HIGH COURT DECISION IT IS SEEN THAT IT HAS BEEN HELD BY THE HONBLE HIGH COURT THAT WHEN ASSESSEE HAS PROVED THE IDENTITY O F THE SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWN THE GENUINENESS OF TRAN SACTION BY SHOWING MONEY EITHER BY ACCOUNT PAYEE CHEQUE OR BY D RAFT OR BY ANY OTHER MODE THEN THE ONUS OF PROOF WOULD SHIFT TO TH E REVENUE. IN THE PRESENT CASE ASSESSEE HAS DISCHARGED ITS ONUS TO P ROVE THE IDENTITY OF THE SHARE APPLICANTS. 11. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS RELIED UPON WE DO NOT FIND ANY INFIRMITY OR ILLE GALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ACCOR DINGLY WE UPHOLD THE SAME. ITA NO. 185/DEL/2010 & CO NO. 53/DEL/2010 10 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ASSESSEES CROSS OBJECTION 13. IN THE CROSS OBJECTION ASSESSEE HAS AGITATED AGA INST THE VALIDITY OF THE REOPENING IN THIS CASE. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL BE WITHDRAWING THE SAME. ACCORDINGLY THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS WITH DRAWN. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/7/2011 UP ON CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 22/7/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES