M/s Corporate Advisory Services Ltd, Bhubaneswar v. ACIT, Bhubaneswar

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. /AND . . . S HRI K.S.S.PRASAD RAO JUDICIAL MEMBER / I.T.A.NO. 263/CTK/2010 / ASSESSMENT YEAR 2004 - 05 M/S.CORPORATE ADVISORY SERVICES LTD. A/16 ASHOK NAGAR BHUBANESWAR 751 009 PAN: AACCC 0813 E - - - VERSUS - ASST.COMMISSIONER OF IN COME - TAX CIRCLE 1(2) BHUBANESWAR 751 007. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI G.NAIK/RAJAT KAR ARS / FOR THE RESPONDENT: / SHRI J.KHANRA DR / ORDER . . SHRI K.K.GUPTA ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE ADDITION BROUGHT TO TAX UNDER THE PROVISIONS OF SECTION .68 OF THE I.T.ACT 1961 BY THE ASSESSING OFFICER IN HIS ORDER U/S.143(3)/153A R.W.S. 153C OF THE ACT. ANOTHER ISSUE HAS BEEN AGITATED BY THE ASSESSE E BEING DISALLOWANCE OF SET OFF OF BROUGHT FORWARD LOSSES AGAINST THE INCOME OF THE IMPUGNED YEAR ON THE FACTS AND CIRCUMSTANCES OF TH E CASE. 2. THE LEARNED COUNSEL FOR THE ASSESSEE PREFERRED NOT TO PRESS THE GROUND RELATING TO GROUND OF SET OFF OF BROUGHT FORWARD LOSSES IN VIEW OF HIS SUBMISSION THAT TH E ADDITION THAT HAS BEEN MADE U /S.68 AMOUNTING TO 4 07 600 STANDS COVERED BY THE VARIOUS DECISIONS OF THE TRIBUNAL HIGH COURTS AND SUPREME COURT TO THE EXTENT THAT THE ADDITION IN THE FORM OF SHARE CAPITAL MONEY BEING THE AMOUNT OF INVESTMENT BY THE INDIVIDUAL SHAREHOLDERS CANNOT BE T AXED IN THE HANDS OF THE ASSESSEE - COMPANY WHEN THE RECEIPTS THEREOF HAS BEEN ACKNOWLEDGED ON THE BASIS OF IDENTIFICATION AND I.T.A.NO. 263/CTK/2010 2 CREDITWORTHINESS OF SHAREHOLDERS AND GENUINESS OF TRANSACTIONS HAD BEEN ESTABLISHED BEFORE THE ASSESSING OFFICER. THE LEARNED COU NSEL FOR THE ASSESSEE FOR THIS PROPOSITION SUBMITTED A COPY OF THE DECISION OF THE ITAT CTTACK BENCH IN THE CASE OF SIDHARTH MINES AND MINERALS PVT. LTD. IN ITA NO.336/CTK/2010 DATED 15 TH NOVEMBER 2010. 3. THE LEARNED DR SUPPORTED THE O RDERS OF THE AUTHO RITIES BELOW AS THE AMOUNTS THAT HAD BEEN RECEIVED WERE IN CASH AND THE COMPLETE DETAILS REMAINED UNVERIFIED TO THE EXTENT THAT CERTAIN SHAREHOLDERS HAD NOT OBTAINED THE PAN AS A MANDATORY REQUIREMENT. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE RECORDS AND FIND THAT THE ASSESSEE HAS GIVEN DETAILS OF SHARE APPLICANTS WHO HAD INVESTED IN ASSESSEE - COMPANY SHARE CAPITAL BY GIVING PAN ADDRESSES AND SOME OF WHOM HAD ALSO PAID IN CASH WHICH HAS BEEN SUBJECTED TO TAX BY THE ASSESSING OFFICER UN DER THE PROVISIONS OF SECTION 68 WHICH FACTUAL INTERPRETATION HAS BEEN SUBJECTED TO BY VARIOUS JUDICIAL PRONOUNCEMENT INSOFAR AS THE LATEST DECISION B Y THE HONBLE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS P. LTD [(2008) 216 CTR 195] STATES THAT O NCE THE ASSESSEE HAS BEEN ABLE TO DISCHARGE THE BURDEN OF GIVING THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE SHAREHOLDER THE ONUS LIES ON TO THE ASSESSING OFFICER TO BRING THE BOGUS SHAREHOLDERS TO TAX BUT NO ADDITION COULD BE MADE IN THE HANDS O F THE ASSESSEE. THE LEARNED CIT(A) HAD BY ADJUDICATING ON THIS RATIO AND PROPOSITION IN THE CASE OF RESPECTIVE SHAREHOLDERS THOUGHT IT FIT TO CONFIRM THE ADDITION U/S.68 WHICH IN OUR VIEW HAD NOT ESTABLISHED THE REQUIREMENT OF CREDITWORTHINESS ADVERSELY AS IT DOES NOT JUSTIFY THE PALTRY AMOUNT OF SHARE APPLICATION MONEY INVESTED. IN ANY CASE THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE WHEN THE AVENUE AVAILABLE TO THE AUTHORITIES BELOW WAS TO VERIFY THE SHAREHOLDERS AND TAX THEM. IN THE L IGHT I.T.A.NO. 263/CTK/2010 3 OF THE ABOVE THE APPEAL FILED BY THE ASSESSEE IS ALLOWED THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF 4 07 600 MADE U/S.68 OF THE ACT. 5. THE OTHER GROUND IS NOT PRESSED AND IS DISMISSED AS NOT PRESSED. 6. IN THE RESULT THE APPEAL O F THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 15 TH FEBRUARY 2011 S D/ - S D/ - ( . . . ) ( K.S.S.PRASAD RAO) JUDICIAL MEMBER ( . . ) (K.K.GUPT A) ACCOUNTANT MEMBER. ( ) DATE: 15.02.2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.CORPORATE A DVISORY SERVICES LTD. A/16 ASHOK NAGAR BHUBANESWAR 751 009 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX CIRCLE 1(2) BHUBANESWAR 751 007 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BE NCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY ( ) ( H.K.PADHEE ) SENIOR.PRIVATE SECRETARY.