DCIT, New Delhi v. M/s. Om Shankar Cold Storage Pvt. Ltd., New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH F DELHI ] BEFORE SHRI I. P. BANSAL JM & SHRI K. D. RANJAN AM I. T. APPEAL NO. 3126 (DEL) OF 2010. ASSESSMENT YEAR : 200001. DY. COMMISSIONER OF INCOME-TAX M/S. OM SHA NKAR COLD STORAGE PVT. LTD. C I R C L E : 13 (1) VS. R 52 VI KASH MARGH 3 RD FLOOR N E W D E L H I. S H A K A R P U R D E L H I 92. P A N / G I R NO. AAA CO 4679 C. ( APPELLANT ) ( RES PONDENT ) ASSESSEE BY : SHRI PRATAP GUPTA C. A.; DEPARTMENT BY : SHRI H. K. LAL SR. D. R.; O R D E R. PER K. D. RANJAN AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 0-01 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-XVIII NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS.30 0 0 000/- MADE ON ACCOUNT OF SHARE APPLICATION OF MONEY UNDER SECTION 68 OF THE INCOME-TAX ACT 1961; 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS.60 0 00/- MADE ON ACCOUNT OF COMMISSION; 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) ERRED IN IGNORING THE FACT THAT THE ASSES SEE BEING A CLOSELY HELD COMPANY IS NOT AUTHORIZED TO RECEIVE SHARE CAPITAL FROM PERSONS OTHER THAT THE DIRECTORS AND CLOSE RELATIVES OF THE DIRECTORS OF T HE COMPANY. THE ASSESSEE HAS TAKEN SHARE APPLICATION ENTRIES IN THE NAMES OF FIV E COMPANIES (MENTIONED IN THE ASSESSMENT ORDER) UNSE BY THE HAWALA OPERATOR SHRI PRATAP KUMAR JINDAL. THE STATEMENT OF SHRI PRATAP KUMAR JINDAL WAS PROVIDED TO THE ASSESSEE CONFIRMING THAT HE HAS MANAGED THE HAWALA OPERATION AND THE AS SESSEE WAS ASKED TO PRODUCE 2 I. T. APPEAL NO. 3126 (DEL) OF 2010. SHRI PRATAP KUMAR JINDAL. THE ASSESSEE DID NOT PRO DUCE SHRI PRATAP KUMAR JINDAL. IT ALSO DID NOT REQUEST THE AO TO ALLOW CR OSS EXAMINATION OF SHRI PRATAK KUMAR JINDAL. ASSESSEE HAD MERELY SUBMITTED THAT T HE STATEMENT OF THE SH. PRATAP KUMAR JINDAL COULD NOT BE USED AGAINST IT. SINCE THE GENUINENESS AND CREDITWORTHINESS OF THE PERSONS WHO HAVE INTRODUCED THE SO CALLED SHARE CAPITAL WAS NOT PROVED THE ASSESSEE WAS ASKED TO PRESENT T HE PERSON WHO HAD INTRODUCED THE SO CALLED SHARE CAPITAL BUT THE ASSESSEE NEITHE R PRODUCE THE PERSON NOR SHOWED ITS INABILITY TO PRODUCE. IN VIEW OF THE FA CTS THAT THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS TO PRODUCE THE PARTIES AS HELD BY THE ITAT IN ITS JUDGEMENTS (I) M/S. OMEGA BIOTECH LTD. IN ITA. NO. 2860 (DEL) OF 2 009 DATED 31/12/2009; (II) M/S. OPTIBELT PRIVATE LTD. IN ITA. NO. 1964 (DEL) O F 2009 ASSESSMENT YEAR 2005- 06 DATED 29/01/2010; (III) M/S. ARYAN MANAGEMENT SE RVICES PVT. LTD. IN ITA. NO. 2986 (DEL) OF 2009 8/01.2010; (IV) M/S. BEAUTEX I N ITA. NO. 217 (DEL) OF 2008 DATED 25/09/2009 THE IDENTITY OF THE SHARE APPLICA NTS ARE NOT PROVED. FILING OF CERTAIN DOCUMENTS INDICATING THE MERE PAPER IDENTIT Y OF THE SHARE APPLICANT IS MEANINGLESS WHEN THE PHYSICAL IDENTITY AND PHYSICAL EXISTENCE OF THE SHARE APPLICANTS ARE NOT PROVED; 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEALS) HAS FAILED TO APPRECIATE THAT THE JUDGEME NT OF THE SUPREME COURT IN THE CASE OF M/S. LOVELY EXPORTS (P) LTD. IS NOT APPLICA BLE WHERE SHARE APPLICATION MONEY IS NOT RECEIVED IN A PUBLIC ISSUE. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION MADE UNDER SECTION 68 OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO A S THE ACT] AMOUNTING TO RS.30 00 000/- ON ACCOUNT OF SHARE APPLICATION MONEY AND ADDITION OF RS.60 000/- ON ACCOUNT OF COMMISSION. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE RETURN OF INCOME ORIGINALLY FILED ON 18/09/2001 WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 10 /12/2002. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 31 ST MARCH 2003 AT RETURNED LOSS OF RS.12 21 730/-. SUBSEQUENTLY AN INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT ACCORDING TO WHICH THE ASSESSEE COMPANY HAD RECEIVE D THE ACCOMMODATION ENTRIES FROM M/S. PRECISION AGENCIES PVT. LTD. AND M/S. GOOD LUCK COM MM. P. LTD. THE AMOUNT INVOLVED WAS AT RS.15 01 000/- (12 00 400+3 00 600) IN BOTH THE CAS ES. THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING IN ITIATED REASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE UNDER SECTION 148 ON 30/03/2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS RAISED OBJECTIONS THAT NOTICE UNDER SE4CTION 148 ISSUED TO REOPEN THE ASSESSMENT WAS BARRED BY LIMITATION. HOWEVER THE AO REJECTED THE CONTENTIO N OF THE ASSESSEE AND ADDED THE AMOUNT OF 3 I. T. APPEAL NO. 3126 (DEL) OF 2010. RS.30 00 000/- UNDER SECTION 68 OF THE ACT TREATING THE SHARE APPLICATION MONEY RECEIVED FROM FIVE COMPANIES. 4. ON APPEAL IT WAS SUBMITTED THAT THE ORIGINAL RET URN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ON THE SPECIFIC ISSUE OF ADDITION TO THE S HARE CAPITAL. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS NECESSARY DETAILS INCLUDING CONFIRMATIONS OF THE SUBSCRIBERS ALONG WITH THEIR ASSESSMENT PARTICULARS FOR THE INVESTMENTS MA DE IN THE ASSESSEE COMPANY WERE FILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE SUBS CRIBERS AS ALSO THE GENUINENESS OF TRANSACTIONS. THE AO AFTER EXAMINATION OF THE SAID DETAILS COMPLE TED ASSESSMENT UNDER SECTION 143(3) OF THE ACT ACCEPTING THE LOSS AS RETURNED BY THE ASSESSEE. THEREFORE IT WAS ARGUED THAT SINCE FULL AND TRUE DISCLOSURE HAD BEEN MADE BY THE ASSESSEE IN TH E RETURN OF INCOME AS WELL AS DURING THE ORIGINAL ASSESSMENT PROCEEDINGS ON THE ABOVE ISSUE THE REOPENING OF ASSESSMENT UNDER SECTION 147 AFTER EXPIRY OF FOUR YEARS WAS BAD IN LAW AS TH ERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. HOWEVER THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE LD. CIT (APPEALS). FURTHER ON MERITS THE LD. CIT (A) DELETED THE ADDITION ON THE GROUND THAT THE AO HAD NOT BROUGHT ANY MATERIAL TO DISPROVE THE CLAIM OF THE ASSESSEE. THE LD. CIT (A) ALSO NOTED THAT SHARES H AVE BEEN ALLOTTED TO THE APPLICANT COMPANIES HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS P. LTD. 216 CTR 195 (SC) WHEREIN IT HAS BEE N HELD THAT EVEN IF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WAS FROM ALLEGED BOG US SHARE HOLDERS WHOSE IDENTITY WAS PROVED BY THE ASSESSEE COMPANY THE REVENUE COULD HAVE PRO CEEDED AGAINST SUCH SHARE HOLDERS IF NECESSARY AND RE-OPEN THEIR INDIVIDUAL ASSESSMENTS. THE LD. CIT (APPEALS) IN VIEW OF THE HONBLE SUPREME COURT AND OTHER DECISIONS ON THE SU BJECT DELETED THE ADDITION. 5. BEFORE US THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER RELYING ON CERTAIN DECISIONS OF THE ITAT. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HARYANA ACR YLIC MANUFACTURING COMPANY VS. CIT 308 ITR 38 (DEL.) FOR THE PROPOSITION THAT THE SHARE AP PLICATION MONEY RECEIVED BY THE ASSESSEE WAS EXAMINED IN THE COURSE OF ORIGINAL ASSESSMENT PROCE EDINGS AND THE ASSESSEE HAD FILED THE DETAILS 4 I. T. APPEAL NO. 3126 (DEL) OF 2010. AND ASSESSMENT WAS COMPLETED BY THE AO KEEPING IN V IEW THE MATERIAL AVAILABLE ON RECORD. THEREFORE THE AO WAS NOT JUSTIFIED TO REOPEN THE A SSESSMENT. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE ABOVE FACTS IT IS CLEAR THAT THE ASSESSING OFFI CER COMPLETED ASSESSMENT UNDER SECTION 143(3) ORIGINALLY ON 31 ST MARCH 2003 AFTER EXAMINING THE ISSUE OF SHARE APP LICATION MONEY RECEIVED FROM VARIOUS PARTIES. THE ASSESSEE HAD CHALLENGED THE ISSUE OF REOPENING OF ASSESSMENT WHICH HAS BEEN REJECTED BY THE LD. CIT (APPEALS). IN THE PRESENT APPEAL THE REVENUE IS IN APPEAL AND THE ASSESSEE HAS NOT FILED ANY CROSS OBJECTION WITH REFERENCE TO ASSUMPTION OF JURISDICTION. THEREFORE THE ASSESSEE CANNOT TAKE THE ISSUE OF AS SUMPTION OF JURISDICTION IN THE APPEAL FILED BY THE REVENUE. THEREFORE WE ARE UNABLE TO AGREE WIT H THE ARGUMENTS OF THE ASSESSEE THAT THE AO WAS NOT JUSTIFIED IN REOPENING OF ASSESSMENT IN THE ABSENCE OF ANY APPEAL OR CROSS APPEAL FILED BY THE ASSESSEE. HOWEVER AS REGARDS THE ADDITION DEL ETED BY THE LD. CIT (A) ON ACCOUNT OF SHARE APPLICATION MONEY WE FIND THAT THIS ISSUE IS SQUAR ELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS P. LTD. (SUPRA). THEREFORE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY MATERIAL HAVING BROUGHT ON RECORD TO SUGGEST THAT THE SHARE APPLICATION MONEY HAS FLOWN FROM THE COFFERS OF THE ASSESSEE. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. CIT (A) DELETING THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AND COMMISSION OF RS.60 000/- ALLEGED TO HAVE BEEN PAID IN RESPECT OF SHARE APPLI CATION MONEY. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON : 25 TH FEBRUARY 2011. SD/- SD/-. [ I. P. BANSAL ] [ K. D. R ANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH FEBRUARY 2011. *MEHTA * 5 I. T. APPEAL NO. 3126 (DEL) OF 2010. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.