Sri Maa Buildwell Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 3550/DEL/2010 | 2006-2007
Pronouncement Date: 20-01-2011 | Result: Allowed

Appeal Details

RSA Number 355020114 RSA 2010
Bench Delhi
Appeal Number ITA 3550/DEL/2010
Duration Of Justice 5 month(s) 28 day(s)
Appellant Sri Maa Buildwell Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 20-01-2011
Date Of Final Hearing 20-01-2011
Next Hearing Date 20-01-2011
Assessment Year 2006-2007
Appeal Filed On 23-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.D. RANJAN ITA NO. 3550(DEL)2010 ASSESSMENT YEAR: 2006-07 SRI MAA BUILDWELL PVT. LTD. INCOME TAX OFFICER WARD 9(2) A-1/26 SECTOR 7 ROHINI. V. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VED JAIN & SMT. RANO JAIN CAS RESPONDENT BY: SHRI RAVI RAMACHAN DRAN SR. DR ORDER PER A.D. JAIN J.M . THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 006-07. THE ONLY EFFECTIVE GROUND IS GROUND NO.2 WHICH READS AS UND ER:- 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING AN ADDITION OF ` 20 00 000/- ON ACCOUNT OF SHARE APPLICATION MONEY R ECEIVED. (II) THAT THE ABOVE SAID ADDITION HAS BEEN MADE D ESPITE THE FACT THAT THE AO HIMSELF HAD MADE ENQUIRY FROM THE BANKS AND ON RECEIVING REPLY THEREFROM THE IDENTITY OF THE SHAREHOLDERS DO ES NOT REMAIN IN QUESTION. (III) THAT CIT(A) HAS ERRED BOTH ON FACTS AND IN L AW IN CONFIRMING THE ADDITION ON ACCOUNT OF SHARE CAPITAL DESPITE THE FA CT THAT ASSESSEE HAS DISCHARGED ITS ONUS BY ESTABLISHING THE IDENTITY OF THE SHAREHOLDERS. ITA 3550(DEL)2010 2 2. THE AO OBSERVED THAT AS PER THE ASSESSEES BALAN CE SHEET THE ASSESSEE PRIVATE LIMITED COMPANY HAD RECEIVED SHARE APPLICA TION MONEY OF ` 20 00 000/- WHICH WAS STANDING IN THE BOOKS OF ACC OUNT AS ON 31.3.2006 AND NO SHARES HAD BEEN ALLOTTED WHERE-AGAINST. THE BR EAK UP OF THIS AMOUNT IS AS FOLLOWS:- SL.NO. NAME OF THE SHARE APPLICANT ADDRESS AMOUNT RECEIVED ` 1. CORE INTERNATIONAL LTD. 1655/35 NAIWALA KAROL BAGH DELHI. 5 00 000/- 2. VDM CONSULTANCY &MARKETING PVT. LTD. 74 GYAN PARK GALI NO.5 CHANDER NAGAR DELHI-51 5 00 000/- 3. KESRI INDUSTRIAL LAB PVT.LTD. 2C/JC BLOCK HARI ENCLAVE HARI NAGAR NEW DELHI-64. 5 00 000/- 4. DREAM LAND SOLUTIONS PVT. LTD. 104 BD CHAMBERS DB GUPTA ROAD KAROL BAGH DELHI. 5 00 000/-. 3. ON QUERY BEFORE THE AO THE ASSESSEE FILED COPI ES OF CONFIRMATIONS FROM THE PARTIES COPIES OF THEIR INCOME TAX RETURN S AND COPIES OF THEIR BANK STATEMENTS. THE AO ISSUED NOTICES UNDER SEC. 133( 6) OF THE ACT TO ALL THE PARTIES AS WELL AS TO THE BANKERS OF THESE PARTIES. THE BANK WAS REQUIRED TO FURNISH INFORMATION REGARDING THE CREDIT ENTRIES IM MEDIATELY PRECEDING THE ISSUANCE OF CHEQUES TO THE ASSESSEE COMPANY. ITA 3550(DEL)2010 3 4. APROPOS THE PARTY KESRI INDUSTRIAL LAB PVT.LTD. THE AO OBSERVED THAT THE ASSESSEE HAD FURNISHED A COPY OF BANK STATEMENT OF THIS PARTY FOR THE PERIOD FROM 1.10.2005 TO 7.10.2005 IN RESPECT OF IT S ACCOUNT WITH ORIENTAL BANK OF COMMERCE PAHARGANJ DELHI; THAT THE BANK W AS ASKED TO INTIMATE THE DETAILS OF THE PERSON FROM WHOSE ACCOUNT THE AM OUNT OF ` 5 00 000/- HAD BEEN RECEIVED AS A CREDIT ENTRY DATED 6.10.2005 WI TH THE NARRATION BY CLG.; THAT HOWEVER THE BANK FURNISHED A CERTIFIED COPY O F THE BANK STATEMENT OF THE PARTY FOR THE PERIOD FROM 5.10.2005 TO 7.10.200 5; THAT IT WAS EFFECTIVE FROM THE COMPARISON OF BOTH THE STATEMENTS; THAT TH ERE WAS NO CREDIT IN THE ACCOUNT THROUGH CLEARING RATHER THERE WAS A CASH D EPOSIT OF ` 5 00 000/- ON 7.10.2005 AND A CHEQUE OF SAME AMOUNT HAD BEEN ISS UED TO THE ASSESSEE COMPANY ON THAT VERY DAY; THAT IN THE CONFIRMATION FILED BY THE ASSESSEE CONCERNING THE SHARE APPLICATION RECEIVED FROM KESR I INDUSTRIAL LAB PVT.LTD. AND THE SHARE APPLICATION FORM CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM THE SAID PARTY FOR THE ISSUANCE OF 50 000 SHAR ES THE MODE OF PAYMENT WAS MENTIONED AS DRAFT NO. 5079924 DATED 4.10.2005 DRAWN ON ORIENTAL BANK OF COMMERCE PAHARGANJ DELHI WHEREAS AS PER THE BANK STATEMENT THE PAYMENT HAD BEEN MADE BY CHEQUE NO. 507929 AND NOT BY DRAFT NO. ITA 3550(DEL)2010 4 507924; AND THAT THEREFORE THE GENUINENESS OF THE SHARE APPLICATION FORM AND THE CONFIRMATION FURNISHED BY THE ASSESSEE WAS HIGHLY DOUBTFUL. 5. SO FAR AS REGARDS DREAM LAND SOLUTIONS PVT. LTD. THE AO OBSERVED THAT THE ASSESSEE HAS FURNISHED A COPY OF THE BANK STATEMENT FOR THE PERIOD FROM 1.10.2005 TO 10.10.2005 IN RESPECT OF THE ACCO UNT HELD BY DREAM LAND SOLUTIONS PVT. LTD. WITH ORIENTAL BANK OF COMMERCE PAHARGANJ DELHI; THAT THE BANK HAD BEEN ASKED TO INTIMATE THE DETAILS OF THE PERSON FROM WHOSE ACCOUNT THE SUM OF ` 4 86 735/- HAD BEEN RECEIVED BY THE ASSESSEE AS A C REDIT ENTRY DATED 6.10.2005 WITH THE NARRATION BY CLG.; THAT HOWEVER THE BANK HAD FURNISHED A CERTIFIED COPY OF THE BANK STATEMEN T OF DREAM LAND SOLUTIONS PVT. LTD. FOR THE PERIOD FROM 5.10.2005 TO 8.10.2005; THAT IT WAS EVIDENT FROM THE COMPARISON OF BOTH THE STATEMENTS THAT ACTUALLY THERE HAD BEEN NO CREDIT ENTRY OF ` 4 86 735/- IN THE SAID ACCOUNT; THAT IN FACT THE B ANK HAD SPECIFICALLY MENTIONED THIS FACT IN RESPONSE TO THE QUERY RAISED U/S 133(6) OF THE ACT; THAT HOWEVER THEREAFTER THE AS SESSEE HAD NOT TURNED UP AND NO REPLY OR EXPLANATION HAD BEEN FILED PROVING THAT THE ASSESSEE HAD NOTHING TO EXPLAIN REGARDING THE GENUINENESS OF THE DOCUMENTS FURNISHED; THAT IN THE CONFIRMATION FILED AND SHARE APPLICATIO N FORM CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM DREAM LAND SOLUT IONS PVT. LTD. FOR ITA 3550(DEL)2010 5 ISSUANCE OF 50 000 SHARES THE MODE OF PAYMENT HAD BEEN MENTIONED AS DRAFT NO. 504533 DATED 4.10.2005 DRAWN ON ORIENTAL BANK OF COMMERCE PAHARGANJ DELHI WHEREAS AS PER THE BANK STATEMENT THE PAYMENT HAD BEEN MADE BY A CHEQUE AND NOT BY A DRAFT; THAT THEREFORE THE GENUINENESS OF THE SHARE APPLICATION FORM AND THE CONFIRMATION FILED B Y THE ASSESSEE WAS HIGHLY DOUBTFUL. 6. THE AO FURTHER OBSERVED THAT REPLIES HAD BEEN RE CEIVED FROM THE TWO PARTIES IN RESPONSE TO NOTICES ISSUED U/S 133(6) O F THE ACT; THAT THOUGH IN THE REPLIES IT HAD BEEN STATED THAT COPIES OF BANK ACC OUNT WERE BEING ENCLOSED NO SUCH COPIES WERE FOUND ENCLOSED; THAT AS SUCH L ETTERS WERE WRITTEN TO BOTH THE COMPANIES INTIMATING THAT NO BANK STATEME NT HAD BEEN RECEIVED ALONG WITH REPLIES; THAT HOWEVER THE SAID LETTERS WERE RETURNED UNSERVED WITH THE POSTAL REMARK REFUSED IN THE CASE OF DREAM L AND SOLUTIONS PVT. LTD. AND LEFT IN THE CASE OF KESRI INDUSTRIAL LAB PVT .LTD.; THAT THEREFORE IT WAS EVIDENT THAT THE ASSESSEE COULD NOT SATISFACTORILY PROVE THE NATURE OF THE RECEIPTS OF ` 10 00 000/- CLAIMED TO HAVE BEEN RECEIVED AS SHARE APPLICATION MONEY FROM KESRI INDUSTRIAL LAB PVT.LTD. AND DREAM LAND SOLUTIONS PVT. LTD. 7. BY VIRTUE OF THE IMPUGNED ORDER THE LEARNED CIT (A) CONFIRMED THE ADDITION. ITA 3550(DEL)2010 6 8. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 9. CHALLENGING THE ORDER UNDER APPEAL THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF ` 20 00 000/- ON ACCOUNT OF SHARE APPLICATION MONEY R ECEIVED; THAT WHILE DOING SO THE LD. CIT(A) REMAINED OBLIVI OUS OF THE FACT THAT THE AO HAD HIMSELF MADE ENQUIRY FROM THE BANKS AND ON R ECEIVING REPLY THEREFROM THE IDENTITY OF THE SHAREHOLDERS NO LONG ER REMAINED IN QUESTION; THAT THE ASSESSEE HAD AMPLY DISCHARGED ITS ONUS BY ESTABLISHING THE IDENTITY OF THE SHAREHOLDERS; THAT THE ANNEXURES 1 TO 4 TO T HE ASSESSMENT ORDER ARE CLEAR EVIDENCE OF THE FACT OF THE ASSESSEE HAVING RECEIVED THE MONEY FROM THE PARTIES ESTABLISHING THE IDENTITIES OF SUCH PA RTIES; THAT REFUSAL TO ACCEPT A NOTICE IS GOOD SERVICE WHICH HAS NOT BEEN CONSIDER ED BY THE LD. CIT(A); AND THAT THE NOTICEE HAVING LEFT THE PREMISES DOES NOT SHOW THAT THE PARTY IS NON- EXISTENT. 10. THE LEARNED DR ON THE OTHER HAND HAS STRONGLY RELIED ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) HAS CORRECTLY UPHELD THE ADDITIONS MADE; THAT THE DOCUMENTARY EVI DENCE FILED BY THE ASSESSEE HAS BEEN CONCURRENTLY HELD BY BOTH THE AUT HORITIES BELOW AS HAVING GENUINE OR RELIABLE OR AUTHENTIC; THAT THE ASSESSEE REMAINED UTTERLY UNABLE TO ITA 3550(DEL)2010 7 DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF TR ANSACTION; THAT BESIDES THE CREDIT WORTHINESS OF THE PARTIES WAS ALSO NOT E STABLISHED; THAT OVER AND ABOVE THIS EVEN THE IDENTITY OF THE PARTIES REMAIN ED UNPROVED; AND THAT THEREFORE THERE BEING NO MERIT THEREIN THE APPEAL FILED BY THE ASSESSEE BE DISMISSED. 11. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THOUGH THE AO HAS DOUBTED THE AUTHENTICITY OF THE R ECEIPT OF SHARE APPLICATION MONEY BY THE ASSESSEE FOR THE REASON TH AT AS PER THE TWO BANK STATEMENTS IN THE CASE OF EACH OF THE PARTIES THE AMOUNT HAD BEEN RECEIVED THROUGH CHEQUE AND NOT THROUGH DRAFT AS ALLEGED AN D IT WAS A CASH DEPOSIT AND NOT THROUGH CLEARING THE FACTUM OF RECEIPT O F MONEY BY THE ASSESSEE FROM EITHER KESRI INDUSTRIAL LAB PVT.LTD. OR DREAM LAND SOLUTIONS PVT. LTD. HAS NOT BEEN DOUBTED. 12. IN THE PRESENT CASE THE AO HIMSELF MADE ENQUI RY FROM THE BANK. THE BANK SUPPLIED INFORMATION TO THE EFFECT THAT TH E PARTIES WERE IN EXISTENCE AND THAT THE MONEY WAS PAID BY THEM TO THE ASSESSEE . THE AO ENCLOSED THE BANK STATEMENTS AS ANNEXURES TO HIS ORDER. THIS I TSELF SHOWS THAT THE IDENTITIES OF THE PARTIES WERE ESTABLISHED. THIS B RINGS US TO THE QUESTION THAT WHERE THE IDENTITY OF THE PAYER DOES STAND ESTABLIS HED BY ACCEPTANCE OF THE FACTUM OF THE ASSESSEE HAVING RECEIVED THE MONEY FR OM THEM WHETHER ANY ITA 3550(DEL)2010 8 ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THE ANSWER TO THIS QUESTION IS CONTAINED THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF LOVELY EXPORT PVT. LTD. 216 CTR 195(SC). THE REIN IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT WHERE THE IDENTIT Y OF THE PAYER HAS BEEN PROVED AND ESTABLISHED EVEN IF SUCH PARTIES ARE BO GUS ADDITION IF ANY CAN BE MADE ONLY IN THEIR HANDS AND NOT IN THE HANDS OF THE ASSESSEE. IT WAS HELD AS FOLLOWS:- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER SEC. 68 OF THE I.T. ACT 1961? WE FIND NO IN SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE AP PLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMEN T IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW. HENCE NO INFIRMITY IS FOUND WITH THE IMPUGNE D JUDGMENT. 13. THEREFORE RESPECTFULLY FOLLOWING LOVELY EXPOR TS(SUPRA) RENDERED BY THE HONBLE SUPREME COURT THE GRIEVANCE OF THE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. 14. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.1.2011. SD/- SD/- (K.D. RANJAN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA 3550(DEL)2010 9 DATED: 20.1.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR