ITO, New Delhi v. Sh. Ram Syal Hydro Power Pvt. Ltd, New Delhi

ITA 3497/DEL/2009 | 2006-2007
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 349720114 RSA 2009
Assessee PAN AAICS6524Q
Bench Delhi
Appeal Number ITA 3497/DEL/2009
Duration Of Justice 5 month(s) 15 day(s)
Appellant ITO, New Delhi
Respondent Sh. Ram Syal Hydro Power Pvt. Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 22-01-2010
Date Of Final Hearing 14-01-2010
Next Hearing Date 14-01-2010
Assessment Year 2006-2007
Appeal Filed On 07-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 3497/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD 8(4) ROOM NO. 196A C.R. BUILDING NEW DELHI VS. RAM SYAL HYDRO POWER PVT. LTD. 267 UDAY PART NDSE II SOUTH EXTN. NEW DELHI. (APPELLANT) (RESPONDENT) PAN : AAICS 6524 Q APPELLANT BY : SHRI ISTIYAQUE AHMAD SR. DR RESPONDENT BY : SHRI R.S. SINGHAVI C.A. O R D E R PER: C.L. SETHI J.M. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 1 9.05.2009 PASSED BY THE LD. CIT(A) FOR THE A.Y. 2006-07. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDE R:- THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION S OF RS. 50 00 000/- MADE BY THE AO U/S. 68 OF THE I.T. ACT 1961. 3. DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E COMPANY HAS SHOWN SHARE APPLICATION MONEY OF RS. 50 LACS RECEIV ED FROM SHRI SUJIT ITA NO. 3497/DEL/2009 PAGE 2 OF 7 ACHARYA. CONFIRMATION FROM THE SAID PERSON WAS FIL ED BEFORE THE AO. AS PER THIS CONFIRMATION LETTER THE SAID SHAREHOLDE R WHO IS A DIRECTOR OF THE ASSESSEE COMPANY HAS CONFIRMED THE TRANSACTION BY STATING THAT SUM OF RS. 36 LACS AND 14 LACS WERE PAID BY HIM TO THE COMPANY THROUGH DEMAND DRAFT ON 16.07.2005 AND 23.07.2005. THE AO THEN ISSUED SUMMONS TO THE DIRECTOR BUT SAME COULD NO BE SERVED AS THE DIRECTOR WAS NOT AVAILABLE. THE ASSESSEE SUBMITTED BEFORE THE A O THAT THE DIRECTOR HAD GONE ON FOREIGN TRIP TO CHINA ALONGWITH HIS FAMILY AND HE WAS EXPECTED TO BE BACK IN DELHI IN JANUARY 2009. THE ASSESSEE HAD TRIED TO ESTABLISH HIS IDENTITY AND EXISTENCE BY SUBMITTING HIS PERMAN ENT ACCOUNT NUMBER AND DELHI ADDRESS ALONGWITH BANK STATEMENT MAINTAIN ING WITH AXIS BANK AT GREATER KAILASH II NEW DELHI. HOWEVER THE A O HAS STATED THAT IT WAS THE ASSESSEES ONUS TO PROVE THE SOURCE OF SUM OF MONEY RECEIVED BY THE ASSESSEE AND IN THE PRESENT CASE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE NATURE AND SOURCE OF THE MONEY RECEIV ED. HE THEREFORE TREATED THE AMOUNT AS UNDISCLOSED INCOME OF THE ASS ESSEE AND ADDED THE SAME TO THE ASSESSEES TOTAL INCOME. 4. ON AN APPEAL THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- ITA NO. 3497/DEL/2009 PAGE 3 OF 7 2.5 I HAVE CAREFULLY CONSIDRED THE SUBMISSIONS MADE ON BEHALF OF APPELLANT. IT IS TRU E THAT IN APPEAL PROCEEDINGS THE APPELLANTS AR HIMS ELF ATTENDED AND VOLUNTEERED FOR PRODUCING SH. SUJIT ACHARYA BEFORE THE AO FOR EXAMINATION WHICH SHOWS GENUINE INTENTION OF THE APPELLANT. ON THIS SPECIF IC REQUEST THE REMAND ORDER WAS PASSED. HOWEVER THE WITNESS COULD BE PRODUCED IN THE REMAND PROCEEDINGS . THE AR HAS EXPLAINED THE REASONS FOR APPELLANTS INABILITY TO PRODUCE HIM. HOWEVER FROM THE DOCUMENTS PLACED BEFORE THE AO AND IN APPEAL IT IS FOUND THAT THE IDENTITY OF THE SHARE APPLICANT IS N OT IN DOUBT. COPY OF HIS PAN CARD FOR NO. 32 HIS CONSEN T LETTER TO BE A DIRECTOR OF THE COMPANY AND BAND ACCOUNT (ALTHOUGH OF SUBSEQUENT PERIOD) DO PROVE TH E EXISTENCE AND IDENTITY OF THE PARTY. HE IS A DIRE CTOR OF THE COMPANY. THE PAN NUMBER HAS ALSO BEEN CHECKED ON THE COMPUTER SYSTEM OF DEPARTMENT AND IT SHOWS THE JURISDICTION OF SH. SUJIT ACHARYA WITH IT O WARD 23(4) NEW DELHI. IT IS ALSO SEEN THAT THE SIGNATURE OF SH. SUJIT ACHARYA ON VARIOUS DOCUMENTS DO TALLY WITH EACH OTHER. SAME SIGNATURES APPEAR O N THE CONFIRMATION LETTER IN WHICH HE HAS CONFIRMED HAVING PAID RS. 50 LACS TO THE APPELLANT COMPANY. IT IS NOT IN DISPUTE THAT THE PAYMENT HAS BEEN MADE AS SHARE APPLICATION MONEY IN LIEU OF WHICH TWO SHARE CERTIFICATES ALLOTTING TOTAL 50 000 SHARE OF RS. 10 0 EACH WERE ISSUED TO HIM ON 1/2/07. THE RATIO OF SUPREME COURT DECISION IN THE CASE OF LOVELY EXPORT S IS VERY CLEAR AND HAS NOT BEEN RECONSIDERED OR REVIEWED. IN THE FACT THE RATIO HAS BEEN FOLLOWED IN MANY CASES BY OTHER JUDICIAL AUTHORITIES. SINCE IN THIS CASE THE IDENTITY OF THE PERSON AND GENUINENESS OF TRANSACTION IS PROVED IN MY OPINION THE ADDITION O F SHARE APPLICATION MONEY IN THE CASE OF APPELLANT COMPANY IS NOT JUSTIFIED. IF THE AO HAS ANY DOUBT ABOUT THE SOURCE OF PAYMENT HE MAY SEND THE INFORMATION TO THE AO HAVING JURISDICTION OVER SH SUJIT ACHARAYA FOR FURTHER NECESSARY ACTION. IN VI EW OF THIS ADDITION OF RS. 50 LACS IS DELETED. ITA NO. 3497/DEL/2009 PAGE 4 OF 7 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 6. IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT T HE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM ITS DIRECTOR SHRI SUJI T ACHARYA WHO HAS FILED CONFIRMATION LETTER BEFORE THE AO. THE EXIST ENCE OF SHRI SUJIT ACHARYA WAS NOT IN DISPUTE IN AS MUCH AS HIS IDENTI TY AND EXISTENCE IS ESTABLISHED BY FACT THAT HE WAS HAVING PERMANENT AC COUNT NUMBER AS WELL AS HE IS MAINTAINING BANK ACCOUNT WITH AXIS BA NK A COPY OF WHICH WAS FILED BEFORE THE AO. HIS EXISTENCE IS ALSO EST ABLISHED FROM THE FACT THAT IN FORM NO. 22 FILED WITH THE REGISTRAR OF CO MPANIES SHRI SUJIT ACHARYA HAS BEEN SHOWN AS A DIRECTOR AND HE HAS GIV EN HIS CONSENT TO ACT AS A DIRECTOR OF THE COMPANY. IT IS THUS A CASE WHERE IDENTITY OF THE SHARE HOLDER HAS BEEN ESTABLISHED AND IT IS THE CA SE WHERE THE SHARE HOLDER HAS CONFIRMED THAT HE HAS MADE INVESTMENT OF RS. 50 LACS TOWARDS SHARE CAPITAL IN THE ASSESSEE COMPANY. THE CIT(A) HAS ALSO MADE HIS OWN ENQUIRY AND FOUND THAT PAN HAS BEEN ALLOTTED TO SHRI SUJIT ACHARYA HAVING JURISDICTION WITH INCOME TAX OFFICER WARD 23(4) NEW DELHI. THE CIT(A) HAS ALSO COMPARED THE SIGNATURE OF SHRI SUJIT ACHARYA ON VARIOUS DOCUMENTS AND FOUND THAT THE SIGNATURE WERE TALLIED WITH EACH OTHER. IT IS ALSO NOT IN DISPUTE THAT THE SHARES W ERE ALLOTTED TO HIM ON ITA NO. 3497/DEL/2009 PAGE 5 OF 7 01.02.2007. IN THE LIGHT OF THESE FACTS THE CIT(A ) HAS DELETED THE ADDITION BY APPLYING THE RATIO OF DECISION OF HONB LE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS 216 CTR 195. IT IS ALSO PERTINENT TO NOTE THAT IT IS NOT THE CASE WHERE CERTAIN INVESTIG ATION HAVE BEEN MADE BY THE DEPARTMENT WHERE FROM IT HAS BEEN REVEALED THAT THIS TRANSACTION OF PAYMENT OF SHARE APPLICATION MONEY IS BOGUS AND IT IS MERELY AN ACCOMMODATION ENTRY. THE DEPARTMENT HAS ALSO NOT B EEN ABLE TO POINT OUT ANY MATERIAL OR EVIDENCE ON THE BASIS OF WHICH IT C OULD BE SAID THAT MONEY HAS BEEN EMANATED FROM COFFERS OF THE ASSESSEE COMP ANY SO AS TO TREAT THE SHARE APPLICATION MONEY AS UNDISCLOSED INCOME OF TH E ASSESSEE COMPANY. IN CASE THE DEPARTMENT HAS ANY DOUBT ABOUT THE SOUR CE OF PAYMENT MADE BY SHRI SURJIT ACHARYA THE DEPARTMENT IS FREE TO P ROCEED AGAINST SHRI SURJIT ACHARYA FOR FURTHER ACTION AS SO OBSERVED BY THE LD. CIT(A). 7. IN THIS VIEW OF THE MATTER WE DONT FIND ANY MA TERIAL OR BASIS TO TAKE A VIEW OTHER THEN THE VIEW TAKEN BY THE CIT(A) IN DELETING THE ADDITION OF RS. 50 LACS BEING SHARE APPLICATION MON EY RECEIVED BY THE ASSESSEE FROM SHRI SUJIT ACHARYA. WE THEREFORE N OT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS ACCORDINGLY UPHELD. 8. BEFORE PARTING WITH THE ISSUE WE MAY OBSERVE ID ENTICAL VIEW HAS BEEN TAKEN BY THE INCOME TAX APPELLATE TRIBUNAL DE LHI BENCH C NEW ITA NO. 3497/DEL/2009 PAGE 6 OF 7 DELHI IN THE CASE OF ITO VS. M/S. HARYANA INVESTME NT PVT. LTD. VIDE ORDER DATED 15 TH SEPTEMBER 2009 IN ITA NO. 2781/DEL/2008 A COPY OF WHICH HAS BEEN PLACED BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE. IN THIS DECISION THE HONBLE TRIBUNAL HAS HELD AND OBS ERVED AS UNDER:- WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THE TRIBUNAL HAD ALREADY ACCEPTED THE VERACITY OF SUBMISSION MADE BY THE ASSESSEE. THE MATTER WAS REMITTED BEFORE THE ASSESSING OFFICER TO ENABLE HIM TO EXAMINE THE DOCUMENTS SUBMITTED BEFORE THE CIT(A). INSTEAD THE ASSESSING OFFICER KEPT ON INSISTING THE PRODUCTION OF THESE SHARE APPLICANTS BY THE ASSESSEE AND WENT ON TO MAKE THE ADDITION. THIS ACTION OF THE ASSESSING OFFICER IS NOT JUSTIFIED ON THE ANVIL OF HONBLE AP EX COURT DECISION IN THE CASE OF CIT VS. ORRISA CORPORATION PVT. LTD. 159 ITR 78 WHEREIN IT WAS HEL D THAT IN CASE THE CREDITOR DOES NOT APPEAR IN RESPON SE TO SUMMON ISSUED UNDER SECTION 131 NO ADVERSE INFERENCE CAN BE DRAWN. FURTHER WE FIND THAT THE ASSESSEE HAD ALREADY SUBMITTED THE NAMES AND ADDRESSES AND IT DETAILS OF THE SHARE APPLICANTS AN D UNDER THESE CIRCUMSTANCES THE DECISION IF THE HONB LE APEX COURT DELIVERED IN THE CASE OF CIT VS. LOVELY EXPORTS 216 CTR 195 IS DIRECTLY APPLICABLE. IN THI S CASE IT WAS HELD THAT IF THE SHARE APPLICATION MONE Y IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER 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 THE ASSESSEE. 10. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT WE DO NOT FIND ANY ILLEGALITY OR INFIRMI TY IN THE ORDER OF THE LD. CIT(A). HENCE WE UPHOLD THE SAME. ITA NO. 3497/DEL/2009 PAGE 7 OF 7 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 10. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 22 ND JANUARY 2010. SD/- (SHAMIM YAHYA ) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 22 ND JANUARY 2010 *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR