Aparajita Hotels (P) Ltd., Lucknow v. ITO, Lucknow

ITA 310/LKW/2007 | 1999-2000
Pronouncement Date: 12-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 31023714 RSA 2007
Assessee PAN AADCA1756D
Bench Lucknow
Appeal Number ITA 310/LKW/2007
Duration Of Justice 4 year(s) 2 month(s) 26 day(s)
Appellant Aparajita Hotels (P) Ltd., Lucknow
Respondent ITO, Lucknow
Appeal Type Income Tax Appeal
Pronouncement Date 12-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 12-07-2011
Date Of Final Hearing 09-05-2011
Next Hearing Date 09-05-2011
Assessment Year 1999-2000
Appeal Filed On 16-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B - BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER I.T.A.NOS.310 & 311(LKW.)/2007 A.YS.: 1999-2000 & 2000-01 M/S. APARAJITA HOTELS (P) LTD. VS. THE ITO RANGE I(3) B-39 SECTOR C LUCKNOW. MAHANAGAR LUCKNOW. PAN AADCA1756D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.J.MEHROTRA C.A. RESPONDENT BY : SHRI P.K.BAJAJ SR.D.R. O R D E R PER H.L.KARWA VICE PRESIDENT THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE LD.CIT(A)-I LUCKNOW DATED 4.1.2007 RELATING TO ASSESSMENT YEARS 1999-2000 & 2000-01. THESE APPEALS WERE HEAD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY WE WILL DEAL WITH I.T.A.NO.310(LKW)/2007 RELATING TO ASSESSMENT YEAR 1999-2000. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE NOTICE ISSUED U/S 148 TO BE A VALID NOTICE AND THAT THE FORMATION OF BELIEF U/S 147 IS ADMINISTRATIVE ACTION AND NOT SUBJECT TO JUDICIAL SCRUTINY. 2 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ENTIRE ASSESSMENT FRAMED U/S 143(3)/147 IS VOID ABINITIO AND BAD IN LAW IN AS MUCH AS THERE WAS NO NEW MATERIAL WHICH COULD BE SAID TO BE FORMING A REASON TO BELIEF THAT THE INCOME ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT AND THE REASONS RECORDED WERE ONLY A CHANGE OF OPINION THERE BEING NO NEW FACTS ON RECORDS AND THEREFORE THE ENTIRE PROCEEDINGS WERE BAD IN LAW. 3. THAT WITHOUT PREJUDICE THE LD. CIT(A) NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.7 35 000/- AS CASH CREDIT IN THE HANDS OF THE APPELLANT WHICH REPRESENTED SHARE APPLICATION MONEY RECEIVED FROM SMT. KSHAMAWATI MISHRA. 4. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE IDENTITY AND THE SOURCE OF MONEY RECEIVED ON ACCOUNT OF SHARE APPLICATION FROM SMT.KSHAMAWATI MISHRA WAS DULY SUBSTANTIATED AND PROVED AND THEREFORE THERE WAS NO JUSTIFICATION IN TREATING THE SAME AS UNEXPLAINED AND ADDING THE SAME TO THE INCOME OF THE APPELLANT. 5. THAT IN ANY VIEW OF THE MATTER THE LD. CIT(A) NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.7 35 000/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT COMPANY ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW. 6. THAT THE ORDER PASSED BY THE LD. CIT (A) IS WITHOUT PROPER OPPORTUNITY AND BAD IN LAW. 7. THAT THE ORDER PASSED BY THE LD. CIT (A) IS AGAINST THE MERITS CIRCUMSTANCES AND LEGAL ASPECTS OF THE EASE. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR WITHDRAW ANY OR ALL THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3 3. AS REGARDS GROUNDS NO.3 TO 5 OF THE APPEAL THE RELEVANT FACTS ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE UNDER SECTION 139 OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT). THEREAFTER NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED BY THE AO. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE APPEARED AND ASKED THE AO TO TREAT THE ORIGINAL RETURN FILED IN RESPONSE TO SAID NOTICE AND REQUESTED FOR COPY OF THE REASONS. ON PERUSAL OF THE REASONS IT TRANSPIRED THAT THE NOTICE UNDER SECTION 148 HAS BEEN ISSUED ONLY BECAUSE DURING THE RELEVANT PREVIOUS YEAR A SUM OF RS.11 45 000 WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF SHARE APPLICATION MONEY FROM SMT. KSHAMAWATI MISHRA. HOWEVER IN RESPONSE TO THE QUERIES RAISED BY THE AO IT WAS POINTED OUT THAT THE LADY SMT. KSHAMAWATI MISHRA WHO HAD DEPOSITED A SUM OF RS.11 45 000 BY WAY OF SHARE APPLICATION MONEY HAS SINCE EXPIRED. HOWEVER WITH A VIEW TO ESTABLISH THE IDENTITY OF THE LADY CERTIFICATES FROM FEDERAL BANK 29 VIDHAN SABHA MARG LUCKNOW WERE OBTAINED BY THE ASSESSEE WHERE THE LADY WAS MAINTAINING A SAVINGS BANK ACCOUNT THROUGH WHICH OUT OF THE TOTAL SHARE APPLICATION MONEY OF RS.11 45 000 RS.4 10 000 WERE DEPOSITED WITH THE ASSESSEE THROUGH CHEQUES. HOWEVER ANOTHER CERTIFICATE WAS OBTAINED FROM ONE SHRI YOGENDER SINGH S/O SHRI GOPI SINGH OF NISHAT GANJ LUCKNOW WHO HAD CONFIRMED THAT HE HAD MADE PAYMENT OF RS.12 00 000 TO THE LADY ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE I.E. EUCALYPTUS TREES BETWEEN APRIL 1998 TO MARCH 1999. HOWEVER THE AO HAS ACCEPTED THE DEPOSIT OF SHARE APPLICATION MONEY TO THE EXTENT OF RS.4 10 000 AND HAS TREATED THE BALANCE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE-COMPANY AS ACCORDING TO HIM THE SOURCE OF INCOME OF SMT. KSHAMAWATI MISHRA IS NOT CLEAR. 4 4. ON APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US SHRI J.J.MEHROTRA C.A. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE-COMPANY IS A PRIVATE LIMITED COMPANY AND IT HAS PROVED THE IDENTITY OF THE PERSON WHO HAS GIVEN SHARE APPLICATION MONEY AND ALSO TRIED TO PROVE SOURCE OF THE SHARE APPLICATION MONEY AND THEREFORE ONUS ON THE ASSESSEE STANDS DULY DISCHARGED AND THERE WAS NO JUSTIFICATION OF TREATING A PART OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM THE LADY AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE-COMPANY. HE FURTHER SUBMITTED THAT BOTH THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT DURING THE PREVIOUS YEAR THE ASSESSEE-COMPANY HAD JUST STARTED ITS BUSINESS ACTIVITIES AND THEREFORE THERE CANNOT BE ANY SOURCE OF DEPOSIT OF ANY UNEXPLAINED MONEY AND TREATING THE SAME TO BE AS A CASH CREDIT IN THE HANDS OF THE ASSESSEE-COMPANY. SHRI J.J.MEHROTRA C.A. LEARNED COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P.) LTD. (2008) 216 CTR (SC) 195 WHEREIN IT HAS BEEN HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. SHRI J.J.MEHROTRA LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE INSTANT CASE THE AO HAS ACCEPTED THE IDENTITY OF THE PERSON WHO HAD GIVEN THE SHARE APPLICATION MONEY. THE AO HAS ALSO PARTLY ACCEPTED THE CAPACITY OF THE SHAREHOLDER AND ALSO GENUINENESS OF THE TRANSACTION AND THEREFORE THERE WAS NO JUSTIFICATION IN TREATING A PART OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY FROM THE LADY AS 5 AN UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. HE THEREFORE SUBMITTED THAT THE ADDITION MAY BE DELETED. 6. ON THE OTHER HAND SHRI P.K.BAJAJ LD.SR.D.R. HEAVILY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. SHRI P.K.BAJAJ LD.SR.D.R. SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 68 OF THE ACT THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF THE SHAREHOLDER CAPACITY OF THE SHAREHOLDER TO DEPOSIT THE SHARE APPLICATION MONEY AND THE GENUINENESS OF THE TRANSACTION. ACCORDING TO THE LD. D.R. THE AMOUNT OF RS.4 10 000 WAS DEPOSITED WITH THE ASSESSEE THROUGH CHEQUES AND THEREFORE TO THIS EXTENT THE ASSESSEE HAS PROVED THE CAPACITY OF THE SHAREHOLDER AND ALSO GENUINENESS OF THE TRANSACTION. HOWEVER THE ASSESSEE COULD NOT DISCHARGE THE BURDEN OF PROVING THE BALANCE AMOUNT OF RS.7 35 000. HE THEREFORE SUBMITTED THAT BOTH THE AUTHORITIES BELOW WERE JUSTIFIED IN THEIR ACTION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE PERSON I.E. SMT. KSHAMAWATI MISHRA WHO HAD GIVEN SHARE APPLICATION MONEY AND ALSO TRIED TO PROVE THE SOURCE OF THE SHARE APPLICATION MONEY AND THEREFORE ONUS OF THE ASSESSEE COMPANY HAS BEEN DULY DISCHARGED AND THERE WAS NO JUSTIFICATION OF TREATING A PART OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY FROM THE LADY AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. HOWEVER THE ASSESSEE HAS PROVED THE SOURCE OR SOURCE. IN THIS REGARD THE ASSESSEE FURNISHED A CERTIFICATE FROM ONE SHRI YOGINDER SINGH OF NISHAT GANJ LUCKNOW WHO HAD CONFIRMED THAT HE HAD MADE PAYMENT OF RS.12 LACS TO THE LADY ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE I.E. EUCALYPTUS TREES BETWEEN APRIL 6 1998 TO MARCH 1999. IT IS AN ADMITTED FACT THAT THE AO HAS ACCEPTED THE DEPOSIT OF SHARE APPLICATION MONEY TO THE EXTENT OF RS.4 10 000 AND THERE WAS NO JUSTIFICATION IN TREATING THE BALANCE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. IN THE CASE OF LOVELY EXPORTS (P.) LTD. (SUPRA) THE HON'BLE SUPREME COURT HELD AS UNDER: CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S.68 OF I.T.ACT 1961 ? WE FIND NO MERIT IN THIS SPECIAL LEAVE 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 AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 7.1 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND ALSO KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) WE DO NOT FIND ANY JUSTIFICATION IN TREATING PART OF SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE COMPANY. ACCORDINGLY WE DELETE THE IMPUGNED ADDITION AND ALLOW GROUNDS NO.3 TO 5 OF THE APPEAL. 8. AS REGARDS GROUNDS NO.1 AND 2 OF THE APPEAL WE HOLD THAT SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS AND THEREFORE WE DO NOT THINK IT NECESSARY TO DECIDE GROUNDS NO.1 & 2 OF THE APPEAL. 9. GROUNDS NO.6 TO 8 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE NO COMMENTS ARE BEING GIVEN. 7 I.T.A.NO.311(LKW)/2007 10. GROUNDS NO.3 TO 5 RAISED BY THE ASSESSEE IN THIS APPEAL ARE SIMILAR TO THOSE RAISED IN I.T.A.NO.310(LKW)/2007 THE ONLY DIFFERENCE IS REGARDING THE AMOUNT OF ADDITION. IN THIS CASE THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD.CIT(A) IS OF RS.3 97 500. IN THIS YEAR THE ASSESSEE RECEIVED SHARE APPLICATION MONEY OF RS.4 47 500. IN ORDER TO ESTABLISH THE IDENTITY OF THE LADY CERTIFICATES FROM THE FEDERAL BANK 29 VIDHAN SABHA MARG LUCKNOW WAS OBTAINED BY THE ASSESSEE WHERE THE LADY SMT. KSHAMAWATI MISHRA WAS MAINTAINING A SAVINGS BANK ACCOUNT THROUGH WHICH OUT OF THE TOTAL SHARE APPLICATION MONEY OF RS.4 47 500 RS.50 000 WERE DEPOSITED WITH THE ASSESSEE THROUGH CHEQUES. HOWEVER ANOTHER CERTIFICATE WAS OBTAINED FROM ONE SHRI YOGENDER SINGH SON OF SHRI GOPI SINGH OF NISHAT GANJ LUCKNOW WHO HAD CONFIRMED THAT HE HAD MADE PAYMENT OF RS.5 LACS TO THE LADY ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE I.E. EUCALYPTUS TREES BETWEEN APRIL 1999 TO MARCH 2000. THE AO HAS ACCEPTED THE DEPOSIT OF SHARE APPLICATION MONEY TO THE EXTENT OF RS.50 000 AND HAS TREATED THE BALANCE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE COMPANY AS ACCORDING TO HIM THE SOURCE OF INCOME OF SMT. KSHAMAWATI MISHRA IS NOT CLEAR. ON APPEAL THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THOSE OF ASSESSMENT YEAR 1999-2000. IN THIS YEAR ALSO THE AO HAS ACCEPTED THE DEPOSIT OF SHARE APPLICATION MONEY TO THE EXTENT OF RS.50 000 AND TREATED THE BALANCE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT. THE FINDINGS GIVEN BY US IN I.T.A.NO.310(LKW)/2007 SHALL APPLY TO THIS APPEAL ALSO WITH EQUAL FORCE. FOR THE DETAILED REASONS GIVEN IN I.T.A.NO.310(LKW.)/2007 WE DELETE THE ADDITION OF RS.3 97 500 MADE ON ACCOUNT OF SHARE APPLICATION MONEY. CONSEQUENTLY GROUNDS NO.3 TO 5 OF THE APPEAL STAND ALLOWED. 8 11. VIDE GROUNDS NO.1 AND 2 OF THE APPEAL THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS AND THEREFORE WE DO NOT THINK IT NECESSARY TO DECIDE THE AFORESAID LEGAL GROUNDS AND HENCE NO FINDINGS ARE BEING GIVEN. 12. GROUNDS NO.6 7 AND 8 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE NO FINDINGS ARE BEING GIVEN. 13. IN THE RESULT BOTH THE APPEALS ARE ALLOWED PARTLY AS INDICATED ABOVE. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.7.2011. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JULY 12TH 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA.