Rosvar Iron and Power Private Limited, Coimbatore v. JCIT, CHENNAI

ITA 414/CHNY/2013 | 2009-2010
Pronouncement Date: 28-04-2014

Appeal Details

RSA Number 41421714 RSA 2013
Assessee PAN AADCR1053Q
Bench Chennai
Appeal Number ITA 414/CHNY/2013
Duration Of Justice 1 year(s) 1 month(s) 23 day(s)
Appellant Rosvar Iron and Power Private Limited, Coimbatore
Respondent JCIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-04-2014
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 28-04-2014
Date Of Final Hearing 09-04-2014
Next Hearing Date 09-04-2014
Assessment Year 2009-2010
Appeal Filed On 07-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHE NNAI . . . !' # $! % BEFORE DR. O.K. NARAYANAN VICE PRESIDENT & SHRI VIKAS AWASTHY JUDICIAL MEMBER . / I.T.A. NO. 414/MDS/2013 / ASSESSMENT YEAR : 2009-10 M/S.ROSVAR IRON AND POWER PRIVATE LIMITED 350-A SUBRAMANIAMPALAYAM ROAD G.N.MILLS POST COIMBATORE641 029 [PAN: AADCR 1053 Q] VS THE JOINT COMMISSIONER OF INCOME TAX RANGE IV COIMBATORE-641 018 . / I.T.A. NO. 37/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE ASST. COMMISSIONER OF INCOME TAX COMPANY CIRCLE-IV(2) NO.63 RACE COURSE ROAD COIMBATORE-641 018 ( '& /APPELLANT) VS M/S.ROSVAR IRON AND POWER PRIVATE LIMITED 350-A SUBRAMANIAPALAYAM ROAD G.N.MILLS POST COIMBATORE641 029 [PAN: AADCR 1053 Q] ( '('& /RESPONDENT) REVENUE BY : SHRI T.N.BETGERI JCIT ASSESSEE BY : SHRI S.SRIDHAR ADVOCATE / DATE OF HEARING : 09-04-2014 / DATE OF PRONOUNCEMENT : 28-04-2014 $) / O R D E R PER VIKAS AWASTHY J.M: I.T.A. NO. 414/MDS/2013: THE APPEALS HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I COIMBATORE ITA. NOS. 414/13 & 37/MDS/2014 2 DATED 01-11-2012 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2009-10. THE ONLY ISSUE IN APPEAL IS THE ADDITION MADE U/S. 68 OF THE INCOME TAX ACT 1961 (HEREIN AFTER REFERRED TO AS THE ACT ) ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE: THE ASSESSEE IS A PRIVATE LIMITED COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY.2009-10 ON 30-09-2009 DECLARING ITS TOTAL INCOME AS ` 69 35 103/- AND BOOK PROFITS OF ` 1 91 81 155/- UNDER THE PROVISIONS OF SECTION 115JB. THE CASE OF THE ASSES SEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) WAS ISS UED TO THE ASSESSEE ON 03-09-2010. DURING THE COURSE OF ASSES SMENT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE-COMPAN Y HAS SHOWN A SUM OF ` 2 85 00 000/- AS SHARE APPLICATION MONEY RECEIVED DURING THE YEAR. THE ASSESSING OFFICER IS SUED LETTERS TO THE SHARE APPLICANTS TO CONFIRM THEIR INVESTMENT IN THE COMPANY IN THE FORM OF SHARE APPLICATION MONEY. FROM THE TOTA L APPLICANTS WHO HAD ADVANCED SHARE APPLICATION MONEY ONLY EIGH T WHO HAD INVESTED ` 1 33 00 000/- RESPONDED TO THE LETTERS AND CONFIRME D THEIR INVESTMENTS. THE ASSESSING OFFICER TREATED T HE REMAINING ITA. NOS. 414/13 & 37/MDS/2014 3 AMOUNT OF ` 1 52 00 000/- AS CREDITS NOT PROVED AND MADE ADDITI ON U/S.68 OF THE ACT. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 28-12 -2011 ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) UPHELD THE FINDINGS OF THE ASSESSING O FFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TR IBUNAL IMPUGNING THE FINDINGS OF CIT(APPEALS). 3. SHRI S.SRIDHAR APPEARING ON BEHALF OF THE ASSES SEE SUBMITTED THAT THE ADDITION HAS BEEN MADE ON ACCOUN T OF SHARE APPLICATION MONEY RECEIVED IN CASH FROM VARIOUS INV ESTORS. THE ASSESSEE HAD FURNISHED THE DETAILS OF ALL THE APPLI CANTS TO THE ASSESSING OFFICER TO VERIFY THE VERACITY OF THE CLA IM OF THE ASSESSEE. HOWEVER VERY SHORT TIME WAS GIVEN TO TH E INVESTORS TO RESPOND THEREFORE ONLY EIGHT PERSONS COULD CONFIR M THEIR INVESTMENT IN THE COMPANY. ALL THE APPLICANTS HAV E SUPPORTED THE CASE OF THE ASSESSEE. SHARES HAVE BEEN ALLOTTED TO THEM AND RETURN OF ALLOTMENT IN THE PRESCRIBED FORM NO.2 HAS BEEN FILED WITH THE CONCERNED REGISTRY OF COMPANIES. THE LD.COUNSE L FOR THE ASSESSEE REFERRED TO THE RETURN OF ALLOTMENT FILED WITH THE MINISTRY OF CORPORATE AFFAIRS ON 31-12-2012 ALONG WITH THE D ETAILS OF THE ITA. NOS. 414/13 & 37/MDS/2014 4 ALLOTTEES AT PAGE NO.228 TO 235 OF THE PAPER BOOK. THE LD.COUNSEL FOR THE ASSESSEE IN ORDER TO FURTHER STR ENGTHEN HIS SUBMISSIONS RELIED ON THE JUDGMENT OF THE HONBLE S UPREME COURT OF INDIA IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. REPORTED AS 216 CTR 195 (SC) AND CIT VS. FAIR FINVEST LTD. REPORTED AS 357 ITR 146 (DEL). 4. ON THE OTHER HAND SHRI T.N.BETGERI APPEARING O N BEHALF OF THE DEPARTMENT VEHEMENTLY SUPPORTED THE IMPUGNED OR DER AND PRAYED FOR THE DISMISSAL OF THE APPEAL OF THE ASSES SEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDG MENTS CITED BY THE LD.COUNSEL FOR THE ASSESSEE AND THE RETURNS OF ALLOTMENT AT PAGE NOS.228 TO 235 OF THE PAPER BOOK. WE FIND THA T THE ONLY REASON FOR MAKING ADDITION IN THE RETURN IS THAT TH E ASSESSEE HAS NOT BEEN ABLE TO PROVE THE INVESTORS. THE ASSESSEE HAD GIVEN DETAILS OF THE PERSONS WHO HAD ADVANCED SHARE APPLI CATION MONEY. THE ASSESSEE HAS ALSO PLACED ON RECORD RETURN OF AL LOTMENT OF SHARES WHICH IS AT PAGE NOS.228 TO 235 OF THE PAPER BOOK. A PERUSAL OF DETAILS OF SHAREHOLDERS AT PAGE NO.235 S HOWS THAT THE ITA. NOS. 414/13 & 37/MDS/2014 5 SHARES HAVE BEEN ALLOTTED TO ALL THE PERSONS WHO HA VE ADVANCED SHARE APPLICATION MONEY. 6. THE HONBLE SUPREME COURT OF INDIA IN THE CASE O F CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA) HAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPA NY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PR OCEED TO RE-OPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. BUT THE SHARE APPLICATION MONEY CANNOT BE REGARDED AS U N-DISCLOSED INCOME OF THE ASSESSEE-COMPANY. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. FAIR FINVEST LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATION MONEYS IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJECT IT O N TENABLE GROUNDS IN CASE HE WISHES TO RELY ON THE REPORT OF THE INVESTIGATION AUTHORITIES SOME MEANINGFUL ENQUIRY OUGHT TO BE CO NDUCTED BY HIM TO ESTABLISH LINK BETWEEN THE ASSESSEE AND THE ALLEGED HAWALA OPERATOR WHERE THE ASSESSING OFFICER DOES NOT ENQUI RE INTO THE MATTER OR SUMMING SHARE APPLICANTS OR DIRECTORS. T HE FINDINGS OF THE ASSESSING OFFICER THAT THE MATERIAL DISCLOSED I S UN-TRUSTWORTHY OR LACKS CREDIBILITY IS UN-TENABLE. ITA. NOS. 414/13 & 37/MDS/2014 6 IN THE INSTANT CASE THE ASSESSEE HAS BEEN ABLE TO SHOW THAT THE SHARES HAVE BEEN ALLOTTED TO THE PERSONS WHO HA VE PAID SHARE APPLICATION MONEY AND MAJORITY OF THE INVESTORS HAV E CONFIRMED THEIR INVESTMENT IN THE COMPANY. THEREFORE WE DO NOT FIND ANY MERIT IN SUSTAINING THE ADDITION U/S.68 OF THE ACT. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE I S ALLOWED. I.T.A. NO. 37/MDS/2013: 7. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER OF CIT(APPEALS)-I COIMBATORE DATED 23-10-2013 FOR THE AY. 2010-11. IN THIS APPEAL THE REVENUE HAS ASSAILED T HE FINDINGS OF CIT(APPEALS) DELETING THE ADDITIONS OF ` 32 00 000/- MADE ON ACCOUNT OF UN-EXPLAINED CASH CREDITS U/S.68 OF THE ACT. THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER VIDE A SSESSMENT ORDER DATED 11-02-2013 PASSED U/S.143(3) ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED. THE ASSESSEE AGGRIEVED AGAINST THE ASSESSMENT ORDER PREFERRED APPEAL BEFORE THE CIT(A PPEALS). THE CIT(APPEALS) FOLLOWING THE DECISION OF HONBLE SUPR EME COURT OF INDIA IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE. 8. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. THE FACTS IN TH E PRESENT APPEAL ITA. NOS. 414/13 & 37/MDS/2014 7 ARE IDENTICAL TO THE FACTS IN THE APPEAL OF THE ASS ESSEE FOR THE AY.2009-10. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. FOR THE REASONS GIVEN IN APPEAL ITA NO.414 /MDS/2013 OF THE ASSESSEE FOR THE AY.2009-10 THE APPEAL OF T HE REVENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO.414/MDS/2013 IS ALLOWED AND THE APPEAL OF THE RE VENUE IN ITA NO.37/MDS/2013 IS DISMISSED. ORDER PRONOUNCED ON MONDAY THE 28 TH APRIL 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIKAS AWAS THY) ( . . . ) ( !' ) / VICE PRESIDENT ! / JUDICIAL MEMBER '# /CHENNAI $ /DATED: 28 TH APRIL 2014 TNMM #% & '( )#( /COPY TO: 1. *+ APPELLANT 2. & *+ /RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. (01 & 2 /DR 6. 13 4 /GF