M/s Jas Gold Finlease Ltd., New Delhi v. ITO, New Delhi

ITA 5676/DEL/2010 | 2003-2004
Pronouncement Date: 16-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 567620114 RSA 2010
Assessee PAN AABCJ1335P
Bench Delhi
Appeal Number ITA 5676/DEL/2010
Duration Of Justice 9 month(s) 1 day(s)
Appellant M/s Jas Gold Finlease Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 16-09-2011
Date Of Final Hearing 12-09-2011
Next Hearing Date 12-09-2011
Assessment Year 2003-2004
Appeal Filed On 15-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE G.E. VEERABHADRAPPA HON'BLE VICE-PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO.5676/DEL/2010 ASSESSMENT YEAR: 2003-04 M/S. JAS GOLD FINLEASE LTD. VS. INCOME-TAX OFFICE R NOW KNOWN AS JASGOLD OFFSHORE WARD 4(2) SERVICES LTD. C-181/9 SHIVAJI PARK NEW DELHI. PUNJABI BAGH NEW DELHI. (PAN: AABCJ1335P) (APPELLANT) (RESPONDENT) ITA NO. 432/DEL/2011 ASSESSMENT YEAR: 2003-04 INCOME-TAX OFFICER VS. M/S. JAS GOLD FINLE ASE LTD. WARD 4(2) NOW KNOWN AS JASGOLD OFFSHORE NEW DELHI. SERVICES LTD. C-181/9 SHIVAJI PARK PUNJABI BAGH NEW DELHI. (PAN: AABCJ1335P) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI PEEYUSH KAUSHIK ADV. DEPARTMENT BY: MS. Y. KAKKAR DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE AND REVENUE ARE IN CROSS-APPEALS AGAI NST THE ORDER OF LEARNED CIT(APPEALS) DATED 03.11.2010 PASSED FOR AS SESSMENT YEAR 2003- 04. THOUGH THE REVENUE IN ITS APPEAL HAS TAKEN TWO GROUNDS OF APPEAL BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE WHICH RELA TES TO DELETION OF ADDITION OF RS.8 05 445 ADDED BY THE ASSESSING OFFICER WITH THE AID OF SECTION 68 OF 2 THE INCOME-TAX ACT 1961 AND AN ADDITION OF RS.20 7 00 WHICH WAS ADDED ON THE GROUND THAT ASSESSEE PAID AS COMMISSION FOR OBT AINING THE ACCOMMODATION ENTRY OF RS.8 05 445 IN THE SHAPE OF SHARE CAPITAL. 2. THE ASSESSEE IN ITS APPEAL IS CHALLENGING REOPEN ING OF ASSESSMENT BY ISSUANCE OF A NOTICE UNDER SEC. 148 OF THE ACT AND CONFIRMATION OF ADDITION AT RS.2 30 000. 3. SINCE BOTH THE ISSUES ARE INTER-CONNECTED WITH E ACH OTHER THEREFORE WE TAKE BOTH THE APPEALS TOGETHER. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAS FILED ITS RETURN OF INCOME ON 2 ND DECEMBER 2003 DECLARING AN INCOME OF RS.5 10 912. THE RETURN WAS PROCESSED UNDER SEC. 143(1) OF THE ACT. ACCORDING TO THE ASSESSING OFFIC ER THE DIRECTOR OF INCOME-TAX (INV.) NEW DELHI HAS TRANSMITTED AN INF ORMATION EXHIBITING THE FACT THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION E NTRY. ON THE BASIS OF SUCH INFORMATION HE ISSUED A NOTICE UNDER SEC. 148 ON 18.4.2007 AND REOPENED THE ASSESSMENT. 4. DURING THE COURSE OF REASSESSMENT PROCEEDINGS H E FOUND THAT ASSESSEE HAS TAKEN SHARE CAPITAL OF RS.7 82 000 AND SHARE PR EMIUM OF RS.2 50 000 TOTALLING TO RS.10 35 000. ASSESSING OFFICER MADE A REFERENCE THAT MAINLY 3 AMOUNTS WERE TAKEN FROM FOUR PARTIES NAMELY M/S. NISHANT FINVEST; (2) M/S. SHEKHAWATI FINANCE P. LTD.; (3) M/S. SPARROW M KTG. PVT. LTD. AND (4) M/S. SRS VIJAY SALES PVT. LTD.. ACCORDING TO THE AS SESSING OFFICER ASSESSEE FAILED TO SUBMIT REQUISITE INFORMATION AND THEREFO RE HE MADE AN ADDITION OF RS.10 35 000 UNDER SEC. 68 OF THE INCOME-TAX ACT 1 961. HE WAS OF THE OPINION THAT ASSESSEE MUST HAVE PAID COMMISSION FOR ARRANGING SUCH ACCOMMODATION ENTRIES AND THEREFORE HE ESTIMATED PAYMENT OF SUCH COMMISSION AT 2% AND MADE AN ADDITION OF RS.20 700. 5. ON APPEAL THE ASSESSEE MOVED AN APPLICATION UND ER RULE 46A OF THE INCOME-TAX RULES 1962. IT PLEADED THAT SUFFICIENT O PPORTUNITY WAS NOT GRANTED BY THE ASSESSING OFFICER TO LEAD EVIDENCE A ND THEREFORE IT COULD NOT PRODUCE THE REQUISITE INFORMATION. ALONG WITH THE A PPLICATION ASSESSEE HAS SUBMITTED THE FOLLOWING DETAILS: I) NAMES AND ADDRESSES OF THE SHARE-APPLICANTS; II) PERMANENT ACCOUNT NUMBERS (PAN); III) MODE OF PAYMENT OF SHARE APPLICATION MONEY; & IV) DETAILS OF BANKS OF THE SHARE-APPLICANTS MENTIO NING CHEQUE NUMBER(S) AND THE DATES ON WHICH THE CHEQUES WERE I SSUED. LEARNED CIT(APPEALS) ISSUED NOTICE TO THE ASSESSING OFFICER FOR INVITING HIS COMMENTS AS TO WHY THE ADDITIONAL EVIDENCE SUBMITTE D BY THE ASSESSEE BE NOT ADMITTED. HE ALSO INVITED THE COMMENTS OF THE A SSESSING OFFICER ON THE 4 MERITS OF THE EVIDENCE. IN OTHER WORDS LEARNED FIR ST APPELLATE AUTHORITY HAD GRANTED AN OPPORTUNITY TO THE ASSESSING OFFICER WITHIN THE MEANING OF SUB-RULE(3) OF RULE 46A OF THE INCOME-TAX RULES 19 62. ACCORDING TO THIS RULE LEARNED CIT(APPEALS) CANNOT TAKE THE ADDITION AL EVIDENCE INTO CONSIDERATION UNLESS AN OPPORTUNITY TO THE ASSESSIN G OFFICER IS PROVIDED FOR REBUTTING SUCH EVIDENCE AND LEADING ANY OTHER EVIDE NCE IN REBUTTAL OF THE EVIDENCE. ACCORDING TO THE LEARNED CIT(APPEALS) AS SESSING OFFICER HAS OBJECTED FOR ADMISSION OF EVIDENCE ON THE GROUND TH AT SUFFICIENT OPPORTUNITIES WERE GRANTED TO THE ASSESSEE DURING T HE ASSESSMENT PROCEEDINGS. THERE IS NO CONTRAVENTION OF SUB-RULE( 1) OF RULE 46A. HOWEVER LEARNED FIRST APPELLATE AUTHORITY DID NOT CONCUR WITH THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER. HE HAS R ECORDED THAT CONDITIONS AVAILABLE IN CLAUSE (C) AND (D) OF SUB-RULE 46A(I) DO EXIST IN THE PRESENT CASE AND THEREFORE ADDITIONAL EVIDENCE DESERVES TO BE TAKEN ON RECORD. LEARNED CIT(APPEALS) FURTHER HELD THAT OPPORTUNITIES IN TER MS OF RULE 46A(3) WAS GRANTED TO THE ASSESSING OFFICER BUT HE DID NOT MAK E ANY ADVERSE COMMENTS ON THE MERIT OF THE EVIDENCE. LEARNED CIT(APPEALS) ON AN ANALYSIS OF THE EVIDENCE IN THE LIGHT OF VARIOUS AUTHORITATIVE PRON OUNCEMENT NAMELY (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (S.C ) 195; (II) CIT VS. DIVINE LEASING & FIN. LTD. (2007) 299 ITR 268 (DEL. ); (III) CIT VS. VALUE 5 CAPITAL SERVICES LTD. (2008) 307 ITR 174 (DEL.); )I V) CIT VS. TDI MARKETING PVT. LTD. (2009) 26 DTR (DEL.) 358; AND (V) BHAV SH AKTI STEELS MINES (P) LTD. VS. CIT (2009) 179 TAXMAN 25(DEL.): (2010) 320 ITR 419 ARRIVED AT A CONCLUSION THAT ASSESSEE HAS PROVED THE IDENTITY OF THE SHAREHOLDERS. LEARNED CIT(APPEALS) FURTHER OBSERVED THAT CONDITIONS ENUME RATED IN SEC. 68 HAVE BEEN FULFILLED BY THE ASSESSEE. LEARNED FIRST APPEL LATE AUTHORITY HOWEVER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE WITH REGARD TO NINE SHARE APPLICANTS. OUT OF THESE NINE SHARE APPLICANTS EIG HT ARE INDIVIDUALS FROM WHOM ASSESSEE HAS TAKEN A SUM OF RS.10 000 RS.15 0 00 AND RS.20 000. FROM SHRI UMESH PHALPHER IT TOOK RS.73 000. LEARNE D CIT(APPEALS) HAS OBSERVED THAT ASSESSEE FAILED TO GIVE PAN IN RESPEC T OF THESE NINE SHARE APPLICANTS AND ASSESSING OFFICER CANNOT EXAMINE THE ISSUE IN THEIR ASSESSMENTS THEREFORE HE CONFIRMED THE ADDITION O F RS.2 30 000 OUT OF RS.10 35 000 ADDED BY THE ASSESSING OFFICER. 6. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) SUBMITTED THAT THE ASSESSING OFFICER HAS GIVEN SUFF ICIENT OPPORTUNITY TO THE ASSESSEE THEREFORE LEARNED CIT(APPEALS) OUGHT TO HAVE NOT ENTERTAINED ADDITIONAL EVIDENCE. SHE FURTHER CONTENDED THAT THE REMAND REPORT WAS SUBMITTED BY THE ASSESSING OFFICER WITH REGARD TO H IS OBJECTIONS ON 6 ADMISSION OF ADDITIONAL EVIDENCE. LEARNED CIT(APPEA LS) DID NOT GRANT ANY OPPORTUNITY TO THE ASSESSING OFFICER FOR REBUTTING THE EVIDENCE ON MERIT THEREFORE THE ORDER OF THE LEARNED CIT(APPEALS) DE SERVES TO BE SET ASIDE. SHE RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX VS. MODERN CHARITABLE FOUNDA TION REPORTED IN 2011 TIOL 363. SHE PLACED ON RECORD COPY OF THE HON'BLE HIGH COURTS DECISION. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(APPEALS). HE TOOK US THROUGH THE FI NDING OF THE LEARNED CIT(APPEALS) RECORDED IN PARAGRAPH 7.1 ON PAGE 10 O F THE ORDER. HE FURTHER CONTENDED THAT REVENUE HAS NOT TAKEN ANY GROUND OF APPEAL AGAINST THE ADMISSION OF EVIDENCE OR VIOLATION OF CONDITIONS EN UMERATED IN RULE 46A OF THE ACT. THE REVENUE IS ONLY IMPUGNING THE ADDITION OF RS.8 05 445. ITS APPEAL OTHERWISE ALSO NOT MAINTAINABLE BECAUSE OF L OW TAX EFFECT INVOLVED IN IT. WITH REGARD TO HIS APPEAL HE SUBMITTED THAT TH E ASSESSEE HAS PROVED THE IDENTITY OF THE SHARE-APPLICANT. LEARNED CIT(APPEAL S) HAS MADE AN OBSERVATION TO THIS EFFECT. HE TOOK US THROUGH PARA GRAPH 7.3 OF THE LEARNED CIT(APPEALS)S ORDER. OUT OF THE NINE SHARE-APPLICA NTS EIGHT ARE INDIVIDUALS. FROM SEVEN PERSONS ASSESSEE TOOK SMALL AMOUNT OF R S. 10 000 TO RS.20 000. THESE INDIVIDUALS MIGHT NOT BE INCOME-TAX ASSESSEES . THUS NON-SUBMISSIONS OF PANS IS NOT SUCH A FATAL ERROR IN RESPECT OF SUC H TYPE OF SHARE APPLICANTS 7 THAT ADDITION SHOULD BE CONFIRMED. AMOUNTS HAVE BEE N TAKEN THROUGH ACCOUNT PAYEE CHEQUES. THUS ASSESSEE HAS FULFILLED ALL THE CONDITIONS ENUMERATED IN SEC. 68 OF THE ACT. 7. WITH REGARD TO REOPENING OF ASSESSMENT HE DID N OT PRESS THIS GROUND OF APPEAL. 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THOUGH THE REVENUE HAS NOT RAISED ANY SPECIFIC GROUND WITH REGARD TO THE VIOLATION OF RULE 46A OF THE IT RULES AT THE END OF THE LEARNED FIRST APPELLATE AUTHORITY. LEARNED DR HAS RAISED AR GUMENTS IN THIS CONNECTION. WE DEEM IT APPROPRIATE TO GO INTO THAT ASPECT. ON PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT IT IS AN ASSESSMENT YEAR 2003-04. NOTICE UNDER SEC. 148 WAS ISSUED UPON THE ASSESSEE ON 18.4 .2007. ASSESSING OFFICER DID NOT TAKE UP ANY PROCEEDINGS UP TO 11.7.2008. WH EN THE ASSESSMENT ORDER WAS GOING TO BE TIME BARRED IN DECEMBER 2008. HE TO OK UP THE PROCEEDINGS AND CONCLUDED THE ASSESSMENT WITHIN THREE AND HALF MONTHS. ACCORDING TO THE ASSESSEE SUFFICIENT OPPORTUNITIES WERE NOT GRA NTED TO IT THEREFORE IT PRAYED FOR PERMISSION TO LEAD ADDITIONAL EVIDENCE. ON AN APPRECIATION OF ALL THESE CIRCUMSTANCES LEARNED FIRST APPELLATE AUTHOR ITY HAS OBSERVED THAT 8 CONDITIONS AVAILABLE IN CLAUSE (C) AND (D) OF SUB-R ULE(1) OF RULE 46A DO EXIST IN THIS CASE. THUS LEARNED FIRST APPELLATE AUTHORI TY HAS RECORDED IN WRITING THAT SUFFICIENT REASONS ARE AVAILABLE FOR PERMITTIN G THE ASSESSEE TO LEAD ADDITIONAL EVIDENCE. THIS FINDING HAS BEEN RECORDED IN PARAGRAPH NO.7.1. IN THE NEXT LINE LEARNED CIT(APPEALS) HAS OBSERVED TH AT OPPORTUNITIES IN TERMS OF RULE 46A SUB-RULE (3) WAS GRANTED TO THE ASSESSI NG OFFICER BUT HE DID NOT MAKE ANY COMMENTS ON MERIT. THIS IS A FINDING OF FA CT RECORDED BY THE LEARNED FIRST APPELLATE AUTHORITY. THE REVENUE HAS NOT RAISED ANY GROUND OF APPEAL AGAINST THIS FINDING NOR FILED ANY MATERIAL DEMONSTRATING THE FACT THAT THIS FINDING IS FACTUALLY INCORRECT. LEARNED DR AT THE TIME OF HEARING EMPHASIZED THAT NO OPPORTUNITY WITHIN THE MEANING O F SUB-RULE(3) OF RULE 46A WAS GRANTED TO THE ASSESSING OFFICER. WE HAVE C ONFRONTED HER TO SUBSTANTIATE THIS PLEA FROM THE RECORD BUT SHE WAS UNABLE TO REFER ANY MATERIAL. THEREFORE IN OUR OPINION LEARNED CIT(AP PEALS) HAS RIGHTLY TAKEN THE EVIDENCE ON RECORD AND HAS RIGHTLY OBSERVED THA T OPPORTUNITY TO REBUT THE EVIDENCE ON MERIT WAS GRANTED TO THE ASSESSING OFFI CER. THE REVENUE CANNOT DRAW ANY BENEFIT FROM THE JUDGMENT OF THE HON'BLE D ELHI HIGH COURT IN THE CASE OF THE DIT VS. MODERN CHARITABLE FOUNDATION (S UPRA). 9 9. AS FAR AS THE MERIT OF THE ADDITIONS ARE CONCERN ED WE FIND THAT THE MATERIAL PLACED ON RECORD BY THE ASSESSEE BEFORE TH E LEARNED FIRST APPELLATE AUTHORITY HAS NOT BEEN PLACED BY THE REVENUE BEFORE US. SO WE DO NOT HAVE ANY HESITATION IN CONCURRING WITH THE FINDING RECOR DED BY THE LEARNED CIT(APPEALS). LEARNED CIT(APPEALS) HAS DELETED THE ADDITION OF RS.8 05 000 AFTER GOING THROUGH THE EVIDENCE (DETAI LS EXTRACTED SUPRA) AND RELYING UPON THE JUDGMENT OF HON'BLE DELHI HIGH COU RT. AS FAR AS THE ADDITION CONFIRMED BY THE LEARNED CIT(APPEALS) IS C ONCERNED WE HAVE GONE THROUGH THE DETAILS OF SHARE APPLICANTS NOTIC ED ON PAGE 12 OF THE LEARNED CIT(APPEALS)S ORDER. WE FIND THAT EIGHT IN DIVIDUALS HAVE CONTRIBUTED A SMALL AMOUNT TOWARDS SHARE APPLICANT. THEIR IDENTITY HAS NOT BEEN DOUBTED BY THE LEARNED FIRST APPELLATE AUTHORI TY. THE ADDITION HAS BEEN CONFIRMED SIMPLY ON THE GROUND THAT ASSESSEE F AILED TO GIVE PERMANENT ACCOUNT NUMBER. IN OUR OPINION SUBMISSION OF PAN I S A CORROBORATIVE PIECE OF EVIDENCE FOR DEMONSTRATING THE THREE INGRE DIENTS I.E. IDENTITY OF THE CREDITORS CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION. ONCE THE IDENTITY HAS NOT BEEN DISPUTED AND THE AMOUNTS HAVE BEEN TAKEN THROUGH ACCOUNT PAYEE CHEQUES IN OUR OPINION THE SMALL SH ARE CAPITAL CONTRIBUTED BY SUCH PERSONS DO NOT DESERVE TO BE ADDED AS AN UNEXP LAINED CREDIT. IN VIEW OF 10 THE ABOVE DISCUSSION THE APPEAL OF THE REVENUE IS DISMISSED AND THAT OF ASSESSEE IS PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 16.09.201 1 SD/- SD/- ( G.E. VEERABHADRAPPA) ( RAJPAL YAD AV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 16/09/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR