M/s. R.J. Roller Flour Mill (P) Ltd., v. ITO,

MA 13/LKW/2010 | 1997-1998
Pronouncement Date: 11-01-2011 | Result: Allowed

Appeal Details

RSA Number 1323724 RSA 2010
Assessee PAN AACCR5466N
Bench Lucknow
Appeal Number MA 13/LKW/2010
Duration Of Justice 9 month(s) 13 day(s)
Appellant M/s. R.J. Roller Flour Mill (P) Ltd.,
Respondent ITO,
Appeal Type Miscellaneous Application
Pronouncement Date 11-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 11-01-2011
Date Of Final Hearing 07-01-2011
Next Hearing Date 07-01-2011
Assessment Year 1997-1998
Appeal Filed On 29-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER M.A.NO.13(LKW.)/2010 ( IN I.T.A.NO.613(LKW.)/2010) A.Y. : 1997-98 M/S. R.J.ROLLER FLOUR MILL PVT. VS. THE ITO LTD. SHAHJAHANPUR. SHAHJAHANPUR. PAN AACCR5466N (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI ABHINAV MEHROTRA C.A. RESPONDENT BY : SHRI P.K.BAJAJ D.R. O R D E R PER H.L.KARWA VICE PRESIDENT THIS MISCELLANEOUS APPLICATION BY THE ASSESSEE UN DER SECTION 254(2) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) AR ISES OUT OF THE ORDER OF THE TRIBUNAL DATED 31.10.2007 PASSED IN I.T.A.NO.61 3(LUC.)/2001 RELATING TO ASSESSMENT YEAR 1997-98. 2. THE ASSESSEE VIDE ITS APPLICATION DATED 24.3.201 0 RECEIVED BY THE TRIBUNAL ON 29.3.2010 HAS STATED AS UNDER: PARTICULARS OF MISTAKE APPARENT FROM RECORD. NON CONSIDERATION OF HON'BLE SUPREME COURT AND THE JURISDICTIONAL HIGH COURT'S VERDICT IN THE SAME FAC TS AND CIRCUMSTANCES OF A CASE AS THE ONE DECIDED BY THE H ON'BLE BENCH. 2 THAT THE ASSESSEE IS A COMPANY LTD. BY SHARES AND I S REGULARLY ASSESSED TO TAX. THAT DURING THE YEAR UNDER CONSIDERATION THE COMPA NY RECEIVED CERTAIN AMOUNTS FROM DIFFERENT PERSONS (D ULY IDENTIFIED BY A.O.) SUBSCRIBING TO THE SHARE CAPIT AL OF THE COMPANY. THAT BY DRAWING AN ADVERSE INFERENCE WITH RESPECT TO THE CREDITWORTHINESS OF THE SHAREHOLDERS THE A.O. CHOO SE TO MAKE ADDITIONS OF THE AMOUNT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT IN THE HANDS OF T HE COMPANY. THAT THE LD. CIT(A) DELETED THE SAID ADDITIONS BY HOLDING THAT IN SUCH FACTS AND CIRCUMSTANCES ADDITION ON ACCOUN T OF UNEXPLAINED CASH CREDITS IF ANY WERE TO BE MADE T HE SAME COULD NOT HAVE BEEN MADE IN THE HANDS OF THE COMPAN Y PARTICULARLY IN VIEW OF THE FACT THAT THE PERSONS WHO HAVE PAID THE MONEY ARE IDENTIFIABLE AND THE SAME SHOULD HA VE BEEN ADDED IN THE HANDS OF THE RESPECTIVE SHAREHOLDERS. THAT THE HON'BLE ITAT PROCEEDED TO LAY THE FOUNDAT ION OF ITS DECISION PARTICULARLY ON THE PREMISE THAT: THE DECISIONS OF HON'BLE DELHI HIGH COURT IN THE C ASE OF STELLER INVESTMENT AND SOFIA FINANCE LTD. WERE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE THE SAME WERE RENDERED IN RESPECT TO A PUBLIC LIMITED COMPA NY. THE CREDITWORTHINESS OF THE SHAREHOLDERS COULD NOT BE PROVED. PLEADINGS A) IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE IT NEEDS TO BE FIRST ESTABLISHED THAT IT IS A FIT CASE BEFORE THE HON'BLE TRIBUNAL FOR INVOKING THE PROVISIONS OF SECTION 25 4(2). 3 IN THIS REGARD RELIANCE IS PLACED ON THE FOLLOWING DECISIONS OF THE VARIOUS HON'BLE COURTS WHEREIN IT IS HELD THAT NON- CONSIDERATION OF HON'BLE SUPREME COURT AND THE JURI SDICTIONAL HIGH COURT'S VERDICT IN THE SAME FACTS AND CIRCUMST ANCES CONSTITUTES COMMITTING OF MISTAKE APPARENT FROM REC ORD THAT IS RECTIFIABLE BY RECALLING THE IMPUGNED ORDER. A) SAURASHTRA KUTCH STOCK EXCHANGE ASST. V. COMMISSIONER OF INCOME TAX REPORTED AT 305 ITR 227. B) HONDA SIEL POWER PRODUCTS LTD V. COMMISSIONER OF INCOME TAX REPORTED AT 295 ITR 466. B) THE NEXT CONTENTIOUS ISSUE IS WHETHER THE HON'B LE JURISDICTIONAL HIGH COURT OR THE SUPREME COURT HAS TAKEN ANY VIEW IN RESPECT TO SAME FACTS THAT IS INCONSISTENT WITH THE VIEW OF THE HON'BLE TRIBUNAL. THE ISSUE GETS ANSWERED BY A REFERENCE TO A THE DE CISIONS OF HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER O F INCOME TAX V. LOVELY EXPORTS (P) LTD REPORTED AT 216 CTR 195 AND 6 DTR 208 COPY WHEREOF IS ENCLOSED HEREWITH. THIS DECISION HAD PUT TO REST ALL CONTROVERSIES IN RELATION TO THE TREATMENT OF SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE COMPANY. IT IS HELD IN THE SAID DE CISION THAT ONCE THE NAMES OF THE SHAREHOLDERS HAVE BEEN FURNISHED BY T HE COMPANY THE DEPARTMENT IS FREE TO PROCEED AGAINST THE SAME. FU RTHER IT MAY BE POINTED OUT THAT THIS DECISION HAS BEEN RENDERED IN RELATION TO A PRIVATE LIMITED COMPANY AND THEIR LORDSHIPS AT THE HON'BLE SUPREME COURT DID NOT CHOOSE TO DRAW ANY DISTINCTION WHIL E APPLYING THE ABOVE PRINCIPLE IN RELATION TO A PRIVATE LIMITED C OMPANY AND A PUBLIC LIMITED COMPANY. THE HON'BLE ALLAHABAD HIGH COURT HAD ALSO EXPRESSE D SIMILAR VIEWS IN THE CASE OF JAYA SECURITIES LTD. V. COMMISSIONER OF INCOME TAX-II KANPUR REPORTED AT 166 TAXMAN 7. 4 IT MAY FURTHER BE POINTED OUT THAT SINCE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT ARE NOT APPLICABLE IN THE AFORE SAID FACTS OF THE CASE HENCE THERE IS NO SCOPE FOR ANY FURTHER INVESTIGATI ON BY THE DEPARTMENT. PRAYER IN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CAS E IT IS HUMBLY REQUESTED THAT YOUR HONOUR BE PLEASED TO RECTIFY TH E MISTAKE IN THE ABOVE ORDER AND OBLIGE. MOST RESPECTFULLY SUBMITTED YOURS FAITHFULLY FOR R.J. ROLLER FLOUR MILL (P) LTD. SD. DIRECTOR DATED 24.3.2010. ADD: GANDHIGANJ SHAHJ AHANPUR. 3. BEFORE US SHRI ABHINAV MEHROTRA C.A. LD. COUNS EL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT WHILE DECIDING THE APPEAL O F THE ASSESSEE THE TRIBUNAL HAS NOT CONSIDERED THE DECISIONS OF THE HO N'BLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. LOVELY EXPORTS (P. ) LTD. (2008) 216 CTR 195(S.C.) AND THAT OF THE JURISDICTIONAL HIGH COU RT IN THE CASE OF JAYA SECURITIES LTD. VS. CIT II KANPUR (2008) 166 TAXM AN 7 (S.C.) WHICH ARE DIRECTLY ON THE ISSUE AND ARE APPLICABLE TO THE FAC TS OF THE PRESENT CASE. SHRI ABHINAV MEHROTRA LD. COUNSEL FOR THE ASSESSEE FUR THER SUBMITTED THAT NON- CONSIDERATION OF THE VERDICTS OF THE HON'BLE SUPRE ME COURT AND THE HON'BLE JURISDICTIONAL HIGH COURT IN THE SAME FACTS AND CI RCUMSTANCES CONSTITUTES COMMITTING OF MISTAKE APPARENT FROM RECORD THAT IS RECTIFIABLE BY RECALLING THE IMPUGNED ORDER. RELIANCE WAS PLACED ON THE DECI SIONS OF THE HON'BLE SUPREME COURT IN HONDA SIEL POWER PRODUCTS LTD. VS . CIT (2007) 295 ITR 5 466(SC) AND ACIT VS. SAURASHTRA KUTCH STOCK EXCHA NGE LTD. (2008) 305 ITR 227 (SC). WHILE DECIDING GROUND NO.1 OF THE AP PEAL THE TRIBUNAL CONSIDERING THE PECULIAR FACTS OF THE CASE HELD AS UNDER : 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS THE FACTS R EPORTED BY THE ASSESSING OFFICCER IN HIS ORDER AND SUMMARIZED BY U S ABOVE. THERE IS NO DISPUTE THAT THE CREDITWORTHINESS OF THE DEPOSIT S IS NOT ESTABLISHED. THERE IS ALSO NO LINK AS TO WHETHER THOSE PERSONS H AD ACTUALLY PURCHASED THE DRAFTS OUT OF THEIR OWN MONEY. FACTS INDICATE THAT DRAFTS WERE NOT PURCHASED BY THEM. PARTICULARS OF THE DRAF TS SUGGEST THAT THEY WERE PURCHASED AT THE SAME TIME FROM THE SAME BANK. THE FINANCIAL CONDITION OR THE ALLEGED SHAREHOLDERS IS NOT SUCH T HAT THEY WOULD HAVE SAVINGS OF RS.50 000/-. WE AGREE WITH THE LEARNED D .R. THAT IT IS SO STRANGE AND NOT COINCIDENTAL THAT EVERYBODY WOULD T HINK TO PURCHASE SHARES OF RS.50 000/- THAT TOO BY PAYING CASH WHEN THEIR OWN FINANCIAL CONDITION IS NOT SO GOOD WHICH WOULD NOT INSPIRE CO NFIDENCE THAT THEY WOULD HAVE SO MUCH OF MONEY ENABLING THEM TO PURCHA SE SHARE IN THE ASSESSEE COMPANY. THEY HAD NOT ENQUIRED INTO AND AL SO THEY DO NOT KNOW AS TO WHAT HAPPENED TO THEIR MONEY AND WHAT AR E THE DOCUMENTARY EVIDENCE OF ALLEGED SHARES. 11. SO FAR AS THE DECISION OF HON'BLE SUPREME COUR T IN BHARAT ENGINEERING &CONSTRUCTION COS CASE IS CONCERNED W E AGREE WITH THE LEARNED D R. THAT IT PERTAINED TO THE PERIOD WHEN S ECTION 68 WAS NOT IN THE STATUTE BOOK. THEREFORE THE RATIO OF HON' BLE SUPREME COURT IN THIS CASE WOULD NOT BE APPLICABLE. IN FACT SECTION 68 DOES NOT MAKE ANY DISTINCTION IN A CASE WHERE BUSINESS IS COMME NCED OR IN A CASE WHERE BUSINESS IS NOT COMMENCED. SECTION 68 FALLS I N CHAPTER VI WHOSE HEADING IS 'AGGREGATION OR INCOME AND SET UP OF OR CARRY FORWARD OR LOSSES'. PRIOR TO THIS ALL OTHER FIVE HE ADS ARE DESCRIBED WHICH MEANS THAT EVEN IF THE ASSESSEE DOES NOT CARR Y OUT ANY BUSINESS BUT HAS INCOME ASSESSABLE UNDER A DIFFERENT HEAD ST ILL IN THAT CASE SECTION 68 WOULD BE APPLICABLE. THEREFORE WE REJEC T THE CONTENTION OF THE ASSESSEE THAT SECTION 68 WOULD NOT BE APPLICABL E IN THE CASE OF THE ASSESSEC BECAUSE HIS BUSINESS IS NOT COMMENCED. 12. REGARDING APPLICATION OF DECISION OF HON'BLE DE LHI HIGH COURT IN STELLER INVESTMENT LTD.S CASE AND SOFIA FINANCE LTD.S CASE ARE 6 CONCERNED WE ARE OF THE VIEW THAT THEY ARE APPLIC ABLE IN THE CASE OF' PUBLIC LIMITED COMPANY WHERE LARGE NUMBER OF SHAREH OLDERS APPLY FOR SHARES. IT IS NOT APPLICABLE TO A PRIVATE LIMIT ED CO. WHERE ONLY LIMITED NUMBER OF' SHAREHOLDERS APPLY. THEREFORE I N THE CASE OF' PRIVATE LIMITED COMPANY THE ONUS IS ON THE ASSESSE E TO NOT ONLY ESTABLISH THE IDENTITY OF' SHAREHOLDERS BUT ALSO T HEIR CREDITWORTHINESS. IN THE PRESENT CASE WE ARE CONVINCED THAT CREDITWO RTHINESS AND IDENTITY OF ALLEGED SHAREHOLDERS IN SOME CASES ARE NOT ESTABLISHED AND THEREFORE ONUS LYING ON THE ASSESSEE IS NOT DISCHA RGED. ON THE OTHER HAND THERE IS ENOUGH MATERIAL WITH THE ASSESSING O FFICER TO SHOW THAT THE ALLEGED SHAREHOLDERS DID NOT HAVE ENOUGH MONEY TO ENABLE THEM TO INVEST IN THE COMPANY. ACCORDINGLY WE REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF' ASSESSING OFFICER IN RE SPECT OF ADDITION OF RS.5 LACS. THIS GROUND OF' REVENUE IS THEREFORE A LLOWED. 4. IT IS TRUE THAT NON-CONSIDERATION OF THE VERDIC TS OF THE HON'BLE SUPREME COURT AND THE HON'BLE JURISDICTIONAL HIGH C OURT IN THE SAME FACTS AND CIRCUMSTANCES OF A CASE CAN BE CONSIDERED A M ISTAKE APPARENT FROM RECORD WHICH ATTRACTS THE PROVISIONS OF SECTION 2 54(2) OF THE ACT. IT IS APPARENT FROM THE RECORD THAT WHILE DECIDING THE IS SUE THE TRIBUNAL HAS NOT CONSIDERED THE DECISION OF THE HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF JAYA SECURITIES LTD. (SUPRA) WHICH DECISION WAS RENDERED BY THE HON'BLE JURISDICTIONAL HIGH COURT ON MAY 15 2007. ADMITTEDL Y THE ORDER OF THE TRIBUNAL IS DATED 31.10.2007. THUS IT IS CLEAR THA T THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JA YA SECURITIES LTD. (SUPRA) WAS AVAILABLE WHEN THE APPEAL OF THE ASSESSEE WAS DECIDED. AS PER THE VERDICT OF THE HON'BLE SUPREME COURT IN THE CASE O F SAURASHTRA KUTCH STOCK EXCHANGE LTD. (SUPRA) WHETHER A DECISION OF THE JU RISDICTIONAL HIGH COURT WAS BROUGHT OR NOT BROUGHT TO THE NOTICE OF THE TR IBUNAL IS IMMATERIAL HOWEVER NON-CONSIDERATION OF THE SAME BY THE TRIBU NAL AMOUNTS TO A MISTAKE APPARENT FROM THE RECORD WHICH REQUIRES RE CTIFICATION. WE 7 THEREFORE RECALL OUR ORDER DATED 31.10.2007 FOR A LIMITED PURPOSE TO DECIDE THE ISSUE OF SHARE APPLICATION MONEY AMOUNT ING TO RS.5 LACS ALLEGEDLY DEPOSITED BY TEN SHAREHOLDERS. IN THE ABOVE TERMS THE APPLICATION IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.1.11 . SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JANUARY 11TH 2011. COPY TO THE : 1. APPLICANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA.