M/s. Schon Pharmacuticals Ltd., Indore v. The A C I T 5 (1), Indore

PAGE 1 OF 4 - I.T.A.NO. 390/IND/2008 SCHON PHARMACEUTICALS LIMITED IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AAFCS6596K I.T.A.NO. 390/IND/2008 A.Y. : 2004-05 SCHON PHARMACEUTICALS LIMITED ACIT INDORE. VS 5(1) INDORE. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SMT.APARNA KARAN SR.DR DATE OF HEARING : 06.04.2010 O R D E R PER BENCH THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE LD. CIT(A) INDORE DATED 23.05.2008 FOR THE ASSESSMEN T YEAR 2004-05. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE HENCE WE PROCEED TO DECIDE THIS APPEAL ON MERITS AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 3. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE D ECISION OF THE LD. CIT(A) IN CONFIRMING THE PENALTY OF RS. 70 000/ - LEVIED BY THE ASSESSING OFFICER U/S 271(1(C) OF THE INCOME-TAX AC T 1961. PAGE 2 OF 4 - I.T.A.NO. 390/IND/2008 SCHON PHARMACEUTICALS LIMITED 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A LIM ITED COMPANY ENGAGED IN MANUFACTURING OF PHARMACEUTICALS PRODUCT S. THE ASSESSEE COMPANY DECLARED INCOME OF RS. 15 06 896/- U/S 115- JB OF THE ACT. THE A.O. NOTED THAT THE ASSESSEE HAD RECEIVED SHARE CAP ITAL FROM SIX PERSONS AGGREGATING TO RS. 1 90 000/-. THE A.O. REQUIRED TH E ASSESSEE TO PROVE THE GENUINENESS OF SUCH TRANSACTION. THE ASSESSEE SUBMI TTED THAT THESE PAYMENTS HAD BEEN RECEIVED THROUGH ACCOUNT PAYEE CH EQUES AND IN THE CASE OF PUBLIC LIMITED COMPANY ONCE THE IDENTITY W AS PROVED THE AMOUNT CANNOT BE ADDED U/S 68. THE A.O. HOWEVER R EJECTED THESE CONTENTIONS OF THE ASSESSEE AS PAN ACCOUNT AND OTHE R DETAILS WERE NOT AVAILABLE AND AN INDEPENDENT INQUIRY WAS ALSO NOT P OSSIBLE FOR WANT OF COMPLETE ADDRESS. THE ASSESSEE DID NOT PREFER AN AP PEAL IN VIEW OF THE LOSS. THE A.O. THEREAFTER INITIATED PENALTY PROCE EDINGS WHEREIN THE ASSESSEE MADE DETAILED SUBMISSIONS AS REGARD TO THE NATURE OF TRANSACTION AND GENUINENESS THEREOF. THE ASSESSEE ALSO SUBMITTE D THAT TO AVOID FURTHER LITIGATION THE ASSESSEE DID NOT PREFER AN APPEAL. HOWEVER THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS . THE A.O. HOWEVER IMPOSED PENALTY OF RS. 70 000/- U/S 271(1)(C) OF TH E ACT. 5. AGGRIEVED BY THIS THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A) WHEREIN THE DETAILED SUBMISS IONS WERE MADE TO PROVE THE GENUINENESS OF THE TRANSACTION AND IT WAS CONTENDED THAT THE PAGE 3 OF 4 - I.T.A.NO. 390/IND/2008 SCHON PHARMACEUTICALS LIMITED RANGE OF THE AMOUNT WAS RS. 25 000/- AND RS. 50 000 /- HENCE PAN WAS NOT A MANDATORY CONDITION. IT WAS ALSO CONTENDED TH AT CONFIRMATORY LETTERS WERE ALSO FILED DIRECTLY. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PRIVATE LIMITED AS REPORTED IN 216 CTR 196. THE LD . CIT(A) HOWEVER DID NOT TAKE THE COGNIZANCE OF THIS DECISION AS TH E CITATION WAS WRONG. THEREAFTER THE LD. CIT(A) RELYING ON EARLIER JUDIC IAL DECISIONS CONFIRMED THE ACTION OF THE A.O. 6. THE LD. SR. DR NARRATED THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). ADMITTEDLY IT IS A CA SE OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE A PUBLIC LIMITED CO MPANY. HENCE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS PRIVATE LIMITED (SUPRA) THE SAME CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE COMPANY THOUGH THE ASSESSEE COMPANY H AS NOT PREFERRED APPEAL AGAINST SUCH ADDITION. WE FURTHER FIND THAT THE CONFIRMATION HAS BEEN GIVEN BY THE SHAREHOLDERS DIRECTLY. THUS HAVI NG REGARD TO THESE FACTS WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. HENCE WE CANCEL THE SAME. PAGE 4 OF 4 - I.T.A.NO. 390/IND/2008 SCHON PHARMACEUTICALS LIMITED 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :8 TH APRIL 2010. CPU* 674