ITO, New Delhi v. M/s Shiv Kraft Paper (P) Ltd., New Delhi

ITA NO. 4283/DEL/2007 A.Y. 2006-07 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 4283/DEL/2009 A.Y. : 2006-07 INCOME TAX OFFICER VS. M/S SHIV KRAFT PAPE R (P) LTD. WARD 8(2) ROOM NO. 197-A 29-A KEWAL PARK EXT ENSION CR BUILDING IP ESTATE NEW DELHI-92 OPP. OUT G ATE SUBZI MANDI AZAD PUR DELHI-33 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PAWAN KUMAR MAHESWARI CA DEPARTMENT BY : SHRI S.K. BHARATI SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDERS OF THE LD. CIT(A) DATED 04.8.2009 PERTAINING TO ASSESS MENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 35 LACS MADE BY THE AO UNDER SECTIO N 68 OF THE IT ACT. 3. IN THIS CASE DURING THE COURSE OF ASSESSMENT THE AO NOTED THAT ASSESSEE COMPANY HAS RECEIVED A SUM OF RS. 35 LACS FROM FOLLOWING PARTIES AS SHARE APPLICATION MONEY INCLUD ING SHARE PREMIUM. ITA NO. 4283/DEL/2007 A.Y. 2006-07 2 I) LAZEEG EQUIPMENT (P) LTD. RS. 15 00 000/- II) PASSIM INVESTMENT (P) LTD. RS. 20 00 000/- RS. 35 00 000/- 3.1 THE ASSESSEE FIELD CONFIRMATIONS FROM THESE PA RTIES ALONGWITH THE BANK ACCOUNT. THE AO ISSUED NOTICE UNDER SECTI ON 133(6) TO THE SAID PARTIES BUT THE SAME WAS RECEIVED BACK UND ELIVERED. ASSESSEE WAS ASKED TO PRODUCE THE DIRECTOR OF THE C OMPANIES FROM WHOM THE MONEY WAS RECEIVED BUT NONE WAS PRODUCED. UNDER SUCH CIRCUMSTANCES AO OPINED THAT ADDITION UNDER S ECTION 68 WAS TO BE MADE FOR A SUM OF RS. 35 LACS IN THIS REGARD. 4. UPON ASSESSEES APPEAL THE LD. CIT(A) GAVE DIREC TIONS TO THE ASSESSEE TO PRODUCE THE RELEVANT DOCUMENTS BEFORE T HE AO AND IT WAS ALSO ASKED TO PRODUCE THE DIRECTORS OF THE SAID TWO COMPANIES AND FILED REPORT THEREAFTER. ON RECEIPT OF THE RE MAND REPORT LD. CIT(A) HAS HELD AS UNDER:- IN THE INSTANT CASE ADDITIONS WERE MADE U/S. 68 OF THE INCOME TAX ACT 1961 TO THE EXTENT OF RS. 15 00 000 /- AND RS. 20 00 000/- IN THE NAME OF M/S LEPL AND PICPL. THE ADDITIONS WERE MADE AS DETAILS WERE NOT FILED DURI NG THE COURSE OF HEARING. IN THE REMAND STAGE SUCH THE A PPELLANT COOPERATED WITH THE DEPARTMENT AND FILED NECESSARY EVIDENCE AND ALSO PRODUCED THE DIRECTORS OF THE COMPANY WHO HAVE INVESTED FUND WITH THE APPELLANT BY WAY OF SHARE AP PLICATION MONEY. THE AO HAS EXAMINED BOTH THE TWO DIRECTORS AND STATED THAT SUCH DIRECTORS HAD ADMITTED TO INVEST THE FUND TO THE EXTENT OF RS. 15 00 000/- AND RS. 20 00 000/- T OTALING RS. 35 00 000/- TO THE APPELLANT COMPANY. THE NECES SARY CONFIRMATION CERTIFICATES WERE ALSO PRODUCED ALONGW ITH THE BANK STATEMENT TO JUSTIFY THE CLAIM. AS IN THE REM AND REPORT NO SPECIFIC INFIRMITY REGARDING SUCH LOAN WAS RAISE D HENCE IT ITA NO. 4283/DEL/2007 A.Y. 2006-07 3 IS CONSTRUED THAT THE AO HAS ACCEPTED THE LOAN WHIC H WAS INVESTED AS SHARE APPLICATION MONEY TO THE APPELLAN T BY THESE TWO CONCERNS. THE ADDITION U/S. 68 IS NOT SUSTAINA BLE AND HENCE DELETED. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT IN THE REMAND PROCEEDINGS THE DIRECTO RS OF BOTH THE COMPANIES WHO HAVE GIVEN SHARE APPLICATION MONEY W ERE PRODUCED BEFORE THE AO. THE DIRECTORS ADMITTED BEFORE TH E AO THAT THE COMPANIES HAD GIVEN SHARE APPLICATION MONEY. NO F URTHER EXAMINATION OR ADVERSE INFERENCE WAS CALLED FOR BY THE AO. UNDER THE CIRCUMSTANCES MAIN POINT ON WHICH THE ADDITION WAS MADE HAS BEEN DULY MET IN THE REMAND PROCEEDINGS AND THERE I S NO JUSTIFICATION TO SUSTAIN THE ADDITION. 7. IN THIS REGARD IT WOULD BE APT TO REFER THE DE CISION OF THE HON'BLE APEX COURT DELIVERED IN THE CASE OF CIT VS . LOVELY EXPORTS 216 CTR 195. IN THIS CASE IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR I NDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 8. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR ECEDENT WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDE R OF THE LD. CIT(A). HENCE WE UPHOLD THE SAME. ITA NO. 4283/DEL/2007 A.Y. 2006-07 4 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/01/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:08/01/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES