ACIT, CHENNAI v. M/s. Jasmine Agro Forestry Pvt. Ltd., CHENNAI

ITA 1564/CHNY/2009 | 2003-2004
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 156421714 RSA 2009
Assessee PAN AABCJ1767D
Bench Chennai
Appeal Number ITA 1564/CHNY/2009
Duration Of Justice 1 year(s) 3 month(s) 22 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. Jasmine Agro Forestry Pvt. Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-01-2011
Date Of Final Hearing 24-01-2011
Next Hearing Date 24-01-2011
Assessment Year 2003-2004
Appeal Filed On 06-10-2009
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL: D- BENCH:CHENN AI (BEFORE SHRI ABRAHAM P. GEORGE. ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEM BER) ITA NO. 1564/ MDS/09 ASST. YEAR 2003-04 THE ACIT CENTRAL CIR.IV(3) CHENNAI VS. M/S JASMINE AGRO FORESTRY PVT. LTD. 30 JOSIER ST. NUNGAMBAKKAM CHENNAI 600034 PAN AABCJ1767D (APPELLANT) (RESPONDENT) APPELLANT BY : RESPONDENT BY: SHRI.K.E.B. RENGARAJAN JR. STANDING COUNSEL NONE ORDER PER SHRI ABRAHAM P.GEORGE A.M: IN THIS APPEAL OF THE REVENUE ITS GRIEVANCE IS TH AT THE CIT(A) DELETED THE ADDITION OF ` 7 16 00/- MADE BY THE AO. ACCORDING TO THE REVENUE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ELECTRO POLYCHEM LTD. (294 ITR 661) HAD NOT BECOME FINAL. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE WAS SERVED WITH NOTICE UNDER SEC.153C OF THE INCOME-TAX ACT 11961 (THE ACT FO R SHORT) ON 14-03-2008 ITA NO. 1564/MDS /09 2 FOR FILING A RETURN UNDER THAT SECTION. THE SAID NO TICE WAS ISSUED PURSUANT TO A SEARCH OPERATION CARRIED ON ONE SHRI S. PALANI SWAMY RAJA ON 18-12- 2006 WHERE A CASH OF ` 12 LAKHS WAS SEIZED. IN RESPONSE TO THE SAID NOTICE ASSESSEE FILED A RETURN OF INCOME IN WHICH INCOME DECLARED WAS ` 84 551/-. THE AO DURING THE COURSE OF ASSESSMENT NO TICED FROM THE BALANCE SHEET OF THE ASSESSEE THAT A SUM OF ` 7.16 LAKHS WAS SHOWN AS SHARE ADVANCES. ASSESSEE COMPANY WAS REQUIRED TO SU BMIT DETAILS OF THESE SHARE ADVANCES WHEREUPON IT PRODUCED CONFIRMA TION IN RESPECT OF FIVE PERSONS AS UNDER: 1. V.KAERTHIROLI COIMBATORE 2. J.KUMAR RAMAPURAM 3. T.S.VAIDYANATHAN IYYAPPANTHANGAL 4. R.SENTHIL KUMAR COIMBATORE 5. V.RAMARAJU DINDIGUL AO WAS OF THE OPINION THAT ASSESSEE WAS UNABLE TO F URNISH EVIDENCE REGARDING IDENTITY AND CREDITWORTHINESS OF THE PART IES FROM WHOM THE ABOVE AMOUNTS WERE RECEIVED AND THE GENUINENESS OF THE TR ANSACTION WAS ALSO NOT PROVED. HE THEREFORE MADE AN ADDITION OF ` 7.16 LAKHS AS CASH CREDIT. 3. IN THE APPEAL FILED BY THE ASSESSEE BEFORE THE C IT(A) IT WAS ARGUED THAT THE AMOUNT REPRESENTED SHARE APPLICATION MONE Y FOR ALLOTMENT OF SHARES AND THE CONFIRMATION LETTERS CLEARLY PROVED THE IDENTITY OF THE ITA NO. 1564/MDS /09 3 PERSONS. LD. CIT(A) RELYING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ELECTRO POLYCHEM LTD. (SU PRA) HELD THAT SUCH AMOUNT COULD NEVER BE CONSIDERED AS UNDISCLOSED INC OME OF THE ASSESSEE. 4. NOW BEFORE US LD. DR STRONGLY ASSAILING THE ORD ER OF LD. CIT(A) SUBMITTED THAT THE ABOVE SUMS WERE NOT ACTUALLY SHA RE APPLICATION MONEY BUT ONLY DEPOSIT SINCE THE SHARE APPLICATION MONEY WAS NEVER CONVERTED INTO SHARES DESPITE LONG LAPSE OF TIME. ACCORDING T O HIM IF IT WAS CONSIDERED AS A DEPOSIT THEN RULES REGARDING CASH CREDIT WOULD APPLY AND ASSESSEE WAS LIABLE TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS AND THEIR CAPACIT Y ALSO. ACCORDING TO HIM THESE WERE NOT SUFFICIENTLY PROVED BEFORE THE AO AN D THEREFORE ADDITION WAS RIGHTLY MADE BY THE AO. 5. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE PERUSED THE ORDERS AND CAREFULLY CONSIDE RED THE SUBMISSIONS OF THE LD.DR. THERE IS NO DISPUTE THAT THE SUM OF ` 7 16 000/- WAS SHOWN BY THE ASSESSEE IN ITS BOOKS AS ADVANCE F OR SHARE CAPITAL. THE NOMENCLATURE WOULD CLEARLY IMPLY THAT THIS WAS NOTH ING BUT SHARE APPLICATION MONEY. ASSESSEE HAD FILED CONFIRMATION. THERE IS NO CASE FOR ITA NO. 1564/MDS /09 4 THE REVENUE THAT THE SAID CONFIRMATION MENTIONED TH EREIN THAT THE AMOUNTS GIVEN BY THE SAID PERSON WERE SOMETHING OTHER THAN SHARE APPLICATION MONEY OR ADVANCE FOR SHARE CAPITAL. CASE OF THE REV ENUE IS THAT THE RULES REGARDING DEPOSIT OR LOAN SHOULD HAVE BEEN APPLIED TO SUCH SHARE APPLICATION MONEY SINCE SHARES WERE NOT ALLOTTED B Y ASSESSEE COMPANY DESPITE LONG LAPSE OF TIME. IN THE FIRST PLACE THE RE IS NO LAW THAT SHARE APPLICATION MONEY SHOULD BE CONVERTED TO SHARES WIT HIN ANY PRESCRIBED PERIOD OF TIME. IN THE SECOND PLACE THE PERSON WHO HAD ADVANCED MONEY HAD NEVER CLAIMED IT TO BE ANY DEPOSIT OR LOAN AT A LL. AS LONG AS THE AMOUNTS RECEIVED WERE SHOWN AS ADVANCE FOR SHARE CA PITAL AND AS LONG AS THE CONFIRMATION FILED BY THE CONCERNED PERSON DID NOT SHOW ANYTHING CONTRARY WE HAVE TO CONSIDER THAT THE MOUNTS WERE ONLY FOR THE PURPOSE OF SUBSCRIBING TO SHARES OF THE ASSESSEE COMPANY. IF T HAT IS SO WE DO NOT FIND ANYTHING WRONG IN THE ORDER OF LD. CIT(A) APPL YING THE LAW IN THIS REGARD AS LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN LTHE CASE OF ELECTRO POLYCHEM LTD. (SUPRA). THIS VIEW HAS ALSO B EEN TAKEN BY THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS P . LTD. V. CIT. THEREFORE WE CANNOT FIND ANY REASON TO INTERFERE W ITH IN THE ORDER OF LD. CIT(A). 7. APPEAL OF THE REVENUE THEREFORE STANDS DISMISSE D. ITA NO. 1564/MDS /09 5 ORDER PRONOUNCED IN OPEN COURT ON 28 -01-2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 28 TH JANUARY 2011. NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE.