THE DCIT 8(2)), MUMBAI v. M/S. HALDIRAM VITTA VINIYOG PVT. LTD, MUMBAI

ITA 5862/MUM/2007 | 2001-2002
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 586219914 RSA 2007
Assessee PAN AAACH3363G
Bench Mumbai
Appeal Number ITA 5862/MUM/2007
Duration Of Justice 3 year(s) 10 month(s) 16 day(s)
Appellant THE DCIT 8(2)), MUMBAI
Respondent M/S. HALDIRAM VITTA VINIYOG PVT. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 29-07-2011
Date Of Final Hearing 12-07-2011
Next Hearing Date 12-07-2011
Assessment Year 2001-2002
Appeal Filed On 12-09-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER & SHRI R.S. PADVEKAR JUDICIAL MEMBER. I.T.A. NO. 5862/MUM/2007. ASSESS MENT YEAR : 2001-02. DY. COMMISSIONER OF INCOME-TAX M/S HAL DIRAM VITTA & VINIYOG PVT.LTD. 8(2) MUMBAI. VS. 204 SHYAM KAMAL TEJPAL SCHEME VILE PARLE MUMBAI 4000057. PAN AAACH 3363G APPELLANT. RESPONDENT. APPELLANT BY : SHRI GOLI SRINIWAS RAO. RESPONDENT BY : SHRI HITESH P. SHAH. O R D E R. PER P.M. JAGTAP A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-I NAGPUR DATED 24-05-2007. 2. IN GROUND NO.1 THE REVENUE HAS CHALLENGED THE A CTION OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDITION OF RS.11 30 0 00/- MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY TREATING THE SAM E AS UNEXPLAINED CASH CREDIT U/S 68. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ADDITIO N OF RS.11 30 000/- MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED F ROM SIX PERSONS TREATING THE SAME AS UNEXPLAINED CASH CREDIT WAS DELETED BY THE LEARNED CIT(APPEALS) BY HIS 2 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 IMPUGNED ORDER RELYING INTER ALIA ON THE ORDER PA SSED BY HIM IN THE CASE OF M/S KASNA FOODS PVT. LTD. FOR ASSESSMENT YEARS 2000-01 2001-02 AND 2005-06 WHEREIN SIMILAR ADDITION MADE BY THE AO IN THE SAME SET OF FACTS WAS DELETED BY HIM. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE AS SESSEE THE TRIBUNAL HAS ALREADY UPHELD THE ORDERS OF THE LEARNED CIT(APPEALS) PASSE D IN THE CASE OF M/S KASNA FOODS PVT. LTD. FOR ASSESSMENT YEARS 2000-01 2001- 02 AND 2005-06 UPHOLDING THE DECISION OF THE LEARNED CIT(APPEALS) IN DELETING TH E SIMILAR ADDITIONS MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY TREATING T HE SAME AS UNEXPLAINED CASH CREDIT U/S 68. THE COPIES OF RELEVANT ORDERS OF THE TRIBUNAL ARE ALSO PLACED ON RECORD AND A PERUSAL OF THE SAME SHOWS THAT THE ORD ER OF THE LEARNED CIT(APPEALS) DELETING THE SIMILAR ADDITIONS MADE U/S 68 IN THE C ASE OF M/S KASNA FOODS PVT. LTD. FOR ASSESSMENT YEAR 2000-01 HAS BEEN UPHELD BY THE TRIBUNAL VIDE ITS ORDER DATED 3 RD MARCH 2009 PASSED IN IT(SS)A. NO. 60/NAG/2006 FOR THE FOLLOWING REASONS GIVEN PARAGRAPH NO. 6 AND 6.1 : 6. WE HAVE HEARD THE LD. C.I.T. (DR) AND PERUSED T HE MATERIAL PLACED BEFORE US. FROM THE ORDER OF THE C.I.T.(A) IT IS FO UND THAT IN RESPONSE TO QUERY DURING ASSESSMENT PROCEEDINGS THE ASSESSEE F URNISHED THE FOLLOWING INFORMATION/EVIDENCE :- (A) COPY OF SHARE APPLICATION. (B) COPY OF CONFIRMATION WITH PAN DETAILS OF M/S REGENC Y FINTRADE P. LTD. (C) COPY OF BANK STATEMENT OF M/S REGENCY FINTRADE P. L TD. DULY DEPICTING THE PAYMENT AGAINST SHARE APPLICATION MON EY. (D) COPY OF AUDITED BALANCE SHEET AS AT 31-3-2000 & 31- 3-2001 IN RESPECT OF M/S REGENCY FINTRADE P. LTD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD RECEIVED THE SHARE APPLICATION MONEY DURING THE YEAR UNDER CONSIDERATION FROM M/S. REGEN CY FINTRADE P. LTD. THE 3 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 SAID COMPANY IS ASSESSED TO INCOME-TAX AND AMOUNTS ARE RECEIVED BY THE ASSESSEE BY DEMAND DRAFTS. THE ASSESSEE HAS FURNISH ED ALL PARTICULARS OF THE SHARE APPLICANT INCLUDING ITS COMPLETE ADDRESS BAN K STATEMENT AUDITED ACCOUNTS BALANCE SHEETS AND INCOME-TAX DETAILS. TH E A.O. HAS NOT DENIED THAT THE SAID COMPANY IS ASSESSED TO INCOME-TAX AND THE SHARE APPLICATION MONEY CLAIMED TO HAVE BEEN GIVEN TO THE ASSESSEE HA S BEEN REFLECTED IN THE BALANCE SHEETS FURNISHED WITH THE A.O. THE A.O. DOU BTED THE GENUINENESS OF THE TRANSACTION MAINLY ON THE GROUND THAT THE NOTIC E U/S 133(6) TO THE SHARE APPLICANT RETURNED UNSERVED BY THE POSTAL AUTHORITI ES. WE FIND THAT ON THE ABOVE FACTS THE DECISION OF HONBLE APEX COURT IN T HE CASE OF ORISSA CORPORATION PVT. LTD. [159 ITR 78 (SC)] WOULD BE SQ UARELY APPLICABLE. THE FACTS IN THE CASE OF ORISSA CORPORATION PVT. LTD. ( SUPRA) WERE THAT THE ASSESSEE WAS A PRIVATE LIMITED COMPANY WHICH HAS CL AIMED TO HAVE RECEIVED THE LOAN OF RS.1 50 000/- FROM THREE CREDITORS. THE ASSESSEE HAS PRODUCED BEFORE THE A.O. THE CONFIRMATION OF THE CREDITORS A ND THEIR GIR NOS. THE ASSESSEE COULD NOT PRODUCE THE CREDITORS AND THE SU MMONS ISSUED U/S 131 BY THE A.O. WERE RETURNED WITH THE REMARK OF THE POSTA L AUTHORITIES LEFT. THEREFORE THE A.O. TREATED THE SUM OF RS.1 50 000/- AS UNEXPLAINED CASH CREDIT. THE I.T.A.T. DELETED THE ADDITION. THE ORDE R OF THE I.T.A.O. WAS UPHELD BY THE HIGH COURT. ON APPEAL TO THE SUPREME COURT BY THE REVENUE THEIR LORDSHIPS HELD AS UNDER :- THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAM ES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE R EVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEE. THEIR INDEX NUM BERS WERE IN THE FILE OF THE REVENUE. THE REVENUE APART FROM ISSUING NOTICE S UNDER SECTION 131 AT THE INSTANCE OF THE RESPONDENT DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE W AS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CI RCUMSTANCES THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE RESPONDENT HAD DISCHARGED THE B URDEN THAT LAY ON IT THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNR EASONABLE NOR PERVERSE OR BASED ON NO EVIDENCE. 4 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 THE FACTS IN THE CASE OF THE ASSESSEE IS IDENTICAL- TO THE FACTS IN THE CASE OF ORISSA CORPORATION P. LTD. (SUPRA). IN THIS CASE TH E ASSESSEE HAS FURNISHED ALL THE PARTICULARS OF SHARE APPLICANT INCLUDING ITS P AN. THE A.O. APART FROM ISSUING NOTICE U/S 133(6) DID NOT PURSUE THE MATTER FURTHER. THEREFORE THE NOTICE ISSUED TO THE SHARE APPLICANT RETURNED UNSER VED CANNOT BE THE CRITERIA TO TREAT THE SHARE APPLICATION AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. 6.1 FURTHERMORE WE FIND THAT THE ISSUE IS NOW ALSO COVERED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C.I.T. VS. LOVELY EXPORTS (P) LTD. [216 C.T.R. 195 (SC)]. IN THIS CASE THEIR LORDSHIPS OF HONBLE APEX COURT HELD AS UNDER :- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER S. 68 OF I.T. ACT 1961? WE FIND NO MERIT IN THIS 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 A.O. THEN THE DEPARTM ENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW. HENCE WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. IN THE CASE UNDER APPEAL BEFORE US THE ASSESSEE HA S FURNISHED THE NAME COMPLETE ADDRESS AND PAN NO. OF SHARE APPLICANT. TH EREFORE IF THE A.O. IS NOT SATISFIED ABOUT THE EXPLANATION GIVEN BY THE SH ARE APPLICANT FOR MAKING THE INVESTMENT IN THE ASSESSEE-COMPANY HE COULD HAV E TAKEN THE APPROPRIATE ACTION IN ACCORDANCE WITH LAW IN THE CASE OF THE SH ARE APPLICANT. BUT SO FAR AS THE ASSESSEE-COMPANY IS CONCERNED IT HAS DULY DISC HARGED THE ONUS LAY UPON IT TO PROVE THE SHARE CAPITAL. IN VIEW OF THE ABOVE WE RESPECTFULLY FOLLOWING DECISION OF HONBLE APEX COURT IN THE CASE OF ORISS A CORPORATION PVT. LTD. (SUPRA) AND LOVELY EXPORTS P. LTD. (SUPRA) UPHOLD T HE ORDER OF THE C.I.T.(A) IN THE CASE OF BOTH THE ASSESSEE AND DISMISS THE GR OUNDS RAISED BY THE REVENUE. 4. THE AFORESAID DECISION RENDERED IN ASSESSMENT YE AR 2000-01 HAS BEEN SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL WHILE UPHOLDI NG THE ORDERS OF THE LEARNED CIT(APPEALS) FOR ASSESSMENT YEARS 2001-02 AND 2005- 05 DELETING THE SIMILAR 5 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 ADDITIONS VIDE ITS COMMON ORDER DATED 24-07-2009 PA SSED IN IT(SS)A.NOS. 61 & 62/NAG/2007. AS THE ISSUE INVOLVED IN THE PRESENT C ASE AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE ADMITTEDLY SIMILAR TO TH AT OF THE CASE OF M/S KASNA FOODS PVT. LTD. (SUPRA) WE RESPECTFULLY FOLLOW THE ORDER S PASSED BY THE TRIBUNAL IN THE CASE OF KASNA FOODS PVT. LTD. (SUPRA) AND UPHOLD TH E IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) DELETING THE SIMILAR ADDITION OF RS.11 30 000/- MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY U/S 68. 5. GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDIN GLY DISMISSED. 6. IN GROUND NO.2 THE REVENUE HAS CHALLENGED THE A CTION OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDITION OF RS.43 55 9 75/- MADE BY THE AO ON ACCOUNT OF SALE PROCEEDS OF SHARES. 7. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN ON SALE OF SHAR E OF M/S MINOLTA FINANCE LTD. SIMILAR LONG TERM CAPITAL GAIN WAS ALSO DECLARED BY OTHER ASSESSEES BELONGING TO THE SAME GROUP. ON THE BASIS OF ENQUIRIES CONDUCTED AND INFORMATION RECEIVED THE AO DID NOT ACCEPT THE SALE OF SHARES OF MINOLTA FIN ANCE LTD. SHOWN BY THE ASSESSEE AS GENUINE AND THE ENTIRE AMOUNT OF PROCEEDS OF THE SALE WERE ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE U/S 68. ON APPEAL THE LEARNED CIT(APPEALS) DELETED THE SAID ADDITION RELYING INTER ALIA ON HIS ORDER PASSED IN THE CASE OF SHRI KAMAL KUMAR AGRAWAL THE ASSESSEE BELONGING TO THE SAME G ROUP FOR ASSESSMENT YEARS 1999-2000 TO 2002-03 WHEREIN SIMILAR ADDITIONS MADE BY THE A.O. ON ACCOUNT OF SALE PROCEEDS OF SHARES WERE DELETED BY HIM HOLDING THAT THE TRANSACTIONS INVOLVING SALE OF SHARES WERE GENUINE. AS SUBMITTED BY THE LE ARNED COUNSEL FOR THE ASSESSEE BEFORE US THE ORDER PASSED BY THE LEARNED CIT(APPE ALS) IN THE CASE OF KAMAL KUMAR AGRAWAL FOR ASSESSMENT YEARS 1999-2000 TO 200 2-03 DECIDING A SIMILAR 6 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 ISSUE IN FAVOUR OF THE ASSESSEE HAS BEEN UPHELD BY THE TRIBUNAL VIDE ITS COMMON ORDER DATED 24-07-2009 IN ITA NO. 18/NAG/2007 TO 12 2/NAG/2007. AS FURTHER SUBMITTED BY HIM THE SAID DECISION OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT VIDE ITS JUDGMENT DATED 23 RD SEPT. 2010 PASSED IN INCOME TAX APPEAL NO. 50 OF 2010 AND OTHERS. A COPY OF THE SAI D JUDGMENT IS PLACED ON RECORD BEFORE US AND A PERUSAL OF THE SAME SHOWS THAT THE DECISION OF THE TRIBUNAL GIVING RELIEF TO THE ASSESSEE ON SIMILAR ISSUE IN THE EARL IER YEARS HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 12 TO 14 OF ITS ORDER : 12. FROM THE DOCUMENTS PRODUCED BEFORE US WHICH W ERE ALSO IN POSSESSION OF THE ASSESSING OFFICER IT IS SEEN THA T THE SHARES IN QUESTION WERE IN FACT PURCHASED BY THE ASSESSEE ON THE RESPE CTIVE DATES AND THE COMPANY HAS CONFIRMED TO HAVE HANDED L OVER THE SH ARES PURCHASED BY THE ASSESSEE. SIMILARLY THE SALE OF THE SHARES TO THE RESPECTIVE BUYERS IS ALSO ESTABLISHED BY PRODUCING DOCUMENTARY EVIDENCE. IT I S TRUE THAT SOME OF THE TRANSACTIONS WERE OFF-MARKET TRANSACTIONS. HOWEVER THE PURCHASE AND SALE PRICE OF THE SHARES DECLARED BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET RATES PREVAILING ON THE RESPECTIVE DATES AS IT IS SEEN FROM THE DOCUMENTS FURNISHED BY THE ASSESSEE. THEREFORE THE FACT THAT SOME OF THE TRANSACTIONS WERE OFF MARKET TRANSACTIONS CANNOT BE A GROUND TO TREAT THE TRANSACTIONS AS SHAM TRANSACTIONS. 13. THE STATEMENT OF PRADEEP KUMAR DAGA THAT THE TR ANSACTIONS WITH THE HALDIRAM GROUP WERE BOGUS HAS BEEN DEMONSTRATED TO BE WRONG BY PRODUCING DOCUMENTARY EVIDENCE TO THE EFFECT THAT T HE SHARES SOLD BY THE ASSESSEE WERE IN CONSONANCE WITH THE MARKET PRICE. ON PERUSAL OF THOSE DOCUMENTARY EVIDENCE THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT THE TRANSACTIONS WERE GENUINE. NOTHING IS BROUGHT TO OU R NOTICE THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE CONTRARY TO THE DOCUME NTARY EVIDENCE ON RECORD. 7 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 14. THE TRIBUNAL HAS FURTHER RECORDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BANK ACCOUNTS OF SOME OF THE BUYERS OF SHARES CANNOT B LINKED TO THE ASSESSEES. MOREOVER IN THE LIGHT OF THE DOC UMENTARY EVIDENCE ADDUCED TO SHOW THAT THE SHARES PURCHASED AND SOLD BY THE ASSESSEES WERE IN CONFORMITY WITH THE MARKET PRICE THE TRIBUNAL RECO RDED A FINDING OF FACT THAT THE CASH CREDITS IN THE BUYERS BANK ACCOUNTS CANNO T BE ATTRIBUTED TO THE ASSESSEES. NO FAULT CAN BE FOUND WITH THE ABOVE FIN DING RECORDED BY THE TRIBUNAL. 8. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WEL L AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE ADMITTEDLY SIMILAR TO THAT OF THE CASE OF SHRI KAMAL KUMAR AGRAWAL WE RESPECTFULLY FOLLOW THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KAMAL KUMAR AGRAWAL (SUPRA) AND UPHO LD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF SALE PROCEEDS OF SHARES. 9. GROUND NO.2 OF THE REVENUES APPEAL IS ACCORDIN GLY DISMISSED. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. . ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY 2011. SD/- SD/- (R.S. PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI DATED: 29 TH JULY 2011. WAKODE 8 ITA NO.5862/MUM/2007 ASSESSMENT YEAR :2001-02 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR H-BENCH. (TRUE COPY ) BY ORD ER ASSTT. R EGISTRAR ITAT MUMBAI BEN CHES MUM BAI.