Income Tax Appellate Tribunal - Ahmedabad
Acit.,Circle-4,, Ahmedabad vs Gopal Iron & Steel Co.(Guj.) Ltd.,, ... on 7 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA Nos. 1303 & 1304/Ahd/2012
(Assessment Years: 1996-97 & 1997-98)
The ACIT, Circle-4, Ahmedabad
Navjivan Trust Bldg., Off. Ashram
Road, Ahmedabad Appellant
Vs.
M/s. Gopal Iron & Steel Co. (Guj) Ltd.,
Plot No. 1401/2, GIDC Kerala Industrial
Estate Ta. Bavla, Ahmedabad - 382220 Respondent
PAN: AAACG7013L
राज व क ओर से/By Revenue : Shri James Kurian, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri Y. K. Batra, A.R.
सन
ु वाई क तार ख/Date of Hearing : 20.12.2016
घोषणा क तार ख/Date of
Pronouncement : 07.03.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
These two Revenue's appeals for assessment years 1996-97 & 1997- 98, arise against the CIT(A)-VIII, Ahmedabad's common order dated 26.03.2012, passed in appeal nos. CIT(A)-VIII/ITO 4(1)/766 & 767/09-10, reversing Assessing Officer's action making Section 68 addition of unexplained share application money of Rs.46,82,981/- & Rs.2,80,17,600/-; ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -2- respectively, in proceedings u/s.143(3) r.w.s. 254 of the Income Tax Act, 1961, in short ' the Act'.
2. Both the learned representatives state at the outset that sole substantive issue in the two instant appeals is about correctness of the abovestated Section 68 addition of unexplained share application money as made by the Assessing Officer and deleted in lower appellate proceedings.
3. It is evident that this is second round of proceedings qua the abovestated sole issue in tribunal. The assessee company manufactures iron & steel items like beams, channels, rounds and angles etc. It received promoter quota contribution of Rs.1,07,35,900/- from 189 applicants in assessment year 1996-97. The Assessing Officer sought to know about details, confirmations, PANs, source of money received in abovestated share applications. The assessee appears to have produced photocopies of the said 189 applicants followed by confirmation letters, PANs as well as income tax assessment particulars pertaining to eighteen parties qua share capital of Rs.60.43lacs. It further placed on record 26 applicants' confirmations involving share capital amount of Rs.16,82,900/- without any proof of identity as well as genuineness / creditworthiness thereof. It however did not file any evidence of the remaining 145 parties involving share capital of Rs.30,10,000/-. These parties' particulars revealed the following details:
i) Cheques drawn on the Gujarat State Co.op. Bank Ltd., Ahmedabad Sr. No. Name Cheque No. date. Amount.
01 Ganapatbhai A Patel 689702 5.5.95 25000 At Kherva, Tal. Patadi, SNR 02 Vinodchand V. Patel 689703 5.5.95 25000 At Kherva, Tal. Patadi, SNR 03 Bhwrabhai S.Patei 689704 5.5.95 25000 At Kherva, Tal. Patadi SNR 04 Jivanbhai L.Patei 689705 5.5.95 25000 At Kherva, Tal. Patadi SNR 05 Hargovindbhai C.Patel 689706 5.5.95 25000 At Kherva, Tal. Patadi SNR 06 B;aldevbhai P.Patel 689707 5.5.95 25000 At Kherva, Tal. Patadi SNR 07 Chamanlal V.Patel 689708 5.5.95 25000 At Kherva, Tal. Patadi SNR 08 Raaanbhai V.Patel 689709 5.5.95 25000 At Nana Ankevaliya, SNR 09 aasasatbhai H.Paftel 689710 5.5.95 25000 At Nana Ankevaliya, SNR 10 Hadhavji J Patel 689711 5.5.95 25000 At Nana Ankevaliya, SNR ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -3-
11 GhanshyaKi K.Patel 689712 5.5.95 25000 At Nana Ankevaliya, SNR
12 Manajfbhai R.Patel 689713 5.5.95 25000 At Dudapur Vaya Gala, SNR
13 Parbhubhai D. Patel 689714 5.5.95 25000 At Dudapur Vaya Gala, SNR
R. Patel 689715 5.5.95 25000 At Dudapur Vaya Gala, SNR
R. Patel 689716 5.5.95 25000 At Dudapur Vaya Gala, SNR
D. Patel 689717 5.5.95 25000 At Dudapur Vaya Gala, SNR
bhai Patel 689718 5.5.95 25000 At Nana Ankevaliya, SNR
ji K. Patel 689719 5.5.95 25000 At Nana Ankevaliya, SNR
aganbhai M. Patel 689720 5.5.95 25000 At Dudheraj, Wadhwan SNR
uvan Patel 689721 5.5.95 25000 At Dudheraj, Wadhwan SNR
Hargovindbhai C.Patel 689748 6.6.95 25000 At Kherva, Tal. Patadi SNR
Chamanbhai Pathak 689749 16.6.95 25000 At Kherva, Tal. Patadi SNR
Rameshbhai C. Patel 689750 16.6.95 25000 At Haripur, Tal. Dhagadhra
Bhavna R. Pathak 689751 16.6.95 25000 At Haripur, Tal. Dhangadhra
Dayaljibhai A Patel 689770 28.6.95 25000 At Kherva, Tal. Patadi SNR
Manshukh A Patel 689771 28.6.95 25000 At Nana Ankevaliya, SNR
Mahadevbhai M. Patel 689772 28.6.95 25000 At Nana Ankevaliya, SNR
Popatbhai M. Patel 689773 28.6.95 25000 At Nana Ankevaliya, SNR
Ghanpatbhai Patel 689774 28.6.95 25000 At Nana Ankevaliya, SNR
Prahladbhai M. Patel 689775 28.6.95 25000 At Nana Ankevaliya, SNR
Baldevbhai G. Patel 689776 28.6.95 25000 At Nana Ankevaliya, SNR
Hargovindbhai C. Patel 689777 28.6.95 25000 At Nana Ankevaliya, SNR
-------------
Total 800000
ii) State Bank of India
Name Cheque No. Date Amt. Rs. Address
Mansingh Jumbhai Solanki 271459 19.1.96 49000 P.O. Hadala T.A.Limbdi Surendranagar.
ubhai Jembhai Solanki 271460 19.1.96 49000 P.O. Hadala Dist.A'bad Dhanduka.
vantsig Khumansing 271461 19.1.96 49000 T.A. Dhanduka, Dist.A'bad P.O. Hadala.
ansingh Jembhai Solanki 271462 19.1.96 28000 ----do-----
ubhai Jembhai Solanki 271463 19.1.96 25000 T.A. Dhanduka, Dist.A'bad.
bhaybhai L. Badaresh 562111 15.11.95 35000 Mohankunj Hatkeshwar Mahadev.
bhubhai L. Patel 562112 15.11.95 15000 Mohankunj Soc. Hatkeshwar Mahadev.
bhaybhai L. Badaresh 562113 15.11.95 20000 Mohankunj Soc. Khokra, A'bad.
-----------------
270000
===========
iii) Bank of Baroda
Name Cheque No. Date Amt. Rs. Address
Lipsinh J Makwan 242754 12.12.95 15000 At. Talodgam TA Pratij Dist. Himatnagar.
aganbhai K. Patel 242755 12.12.95 40000 At. Talodgam TA Pratij Dist. Himatnagar.
garambhai K Patel 242756 12.12.95 40000 At. Talodgam TA Pratij Dist. SK.
jibhai N Patel 242757 12.12.95 45000 At. Vakrapur TA Pratij Dist. SK
shrath N Raval 452984 20.10.95 17000 - rf. Sr. 11-
alsingh Magansinh Rathod 452985 20.10.95 15000 - rf. Sr. 11-
hrath N Raval 452986 20.10.95 8000 - rf. Sr. 11-
ipsingh J. Makwana 452987 20.10.95 15000 At Talodgam TA Pratij Dist. S.K.
nkumar R Patel 452988 20.10.95 17000 - rf. Sr. 11-
ansingh Magansingh Rathod 452990 20.10.95 18000 - rf. Sr. 11-
nbhai Patel 452991 20.10.95 18000 C/o. Shriji Engg. Works At Ahindra T.A. Kalol,
------------- Dist. Panchmahal
248000
=======
iv) Punjab National Bank:
SN. Name Cheque No. Date. Amt.Rs.
1. Ambalal Patel 958839 16.05.95 18000 refer Sr.4
2. A J Vanceha 958840 16.05.95 17000 a/c4 DK Park Bhatan Rd. Surat
3. Labhuben A Patel 958841 16.05.95 15000 refer Sr.4
4. Prabhubhai Patel 958842 16.05.95 18000 refer Sr.4
5. Bhagwatiben Patel 958844 16.05.95 10000 refer Sr.4
ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -4-
6. Madhuben Patle 958845 16.05.95 10000 62, Poonamnagar Bhatan Rd. Surat
7. Manoharbhai Jada 958846 16.05.95 10000 At & PO Amrali TA.
8. Manoharbhai M Patel 958847 16.05.95 15000 64, Rangnagar Soc. Dist. Surat.
9. Naranbhai Patel 958848 16.05.95 10000
-------------
123000
=======
4. The Assessing Officer noticed after perusing the above extracted details that demand drafts corresponding thereto had been prepared on a single date in same very bank and branch followed by continuous numbering thereof. He conducted necessary enquiry with the abovestated co-operative bank as well. This exercise inter alia revealed that the said parties had obtained demand drafts in view of cash payments in assessee's name, relevant twelve application slips' signatures incorporated differed from those in share application forms as well as the fact that one person Shri Rameshbhai had put in his signatures on eight of them. The Assessing Officer took cognizance of the fact that the said 32 applications had also not been submitted. He thus inferred that only one person had handed over total amount to the above stated banker for preparing demand drafts in different names. He further noticed the fact that the assessee's above applicant had been residing in different parts of state whereas they had got prepared their demand drafts at Wadhawan city branch of the Surendranagar District Co- operative bank only on specific day and time well in order to submit share applications in question.
5. The Assessing Officer thereafter prepared three categories of assessee's 189 share applicants. First one pertained to 18 share applicants involving a sum of Rs.60.43lacs hereinabove whose all the relevant details stood duly filed. He accepted assessee's explanation since supported by relevant PAN and income tax assessment details. He however invoked Section 68 of the Act qua the remaining two categories of 171 share applicants i.e. the second category of 26 parties wherein the assessee had ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -5- filed their confirmations only without any evidence or genuineness/creditworthiness. This followed the third category of the remaining 145 share applicants not even involving confirmations. The
Assessing Officer reiterated his earlier observations to treat the corresponding share application amounts of Rs.16,82,900/- & Rs.30,10,000/-; totaling to Rs.46,92,900/- as unexplained u/s.68 of the Act in assessment order dated 23.03.1999.
6. We now advert to latter assessment year 1997-98. The Assessing Officer added similar unexplained share application amount of Rs.2,80,17,600/- by quoting assessee's failure in submitting confirmations even during the course of scrutiny.
7. The assessee preferred separate appeals. The CIT(A) disposed of the same vide common first lower appellate order dated 28.03.2001 to accept its contentions challenging the above additions as follows:
"2.5 I have carefully considered the submissions of the appellant and have gone through the relevant available on record. I have also seen the remand report of the assessing officer. I have also perused the decision relied upon by the appellant and the assessing officer. It is seen from the records available that the identity and existence of the various shareholders, are proved and is also not disputed by the Assessing Officer. The Assessing Officer has not made out any case to support the addition except observing that the appellant has not proved the genuineness of the share holders and their capacity to bring the amount for applying in the shares of the company. It is also not the A.O.'s case that the appellant has earned such huge income during the year in question to enable the company to invest such funds in the share capital in name of benamidars especially considering the fact that no business activity has been carried out by the company during the year. I am of the confirmed view that once the existence and identity of the shareholders is not in doubt, no addition on account of unexplained share capital could be made in the hands of a company. This view of mine is amply fortified by the decision of various courts of law as cited by the appellant in its written submissions filed before me more particularly the decisions of full bench of Delhi High Court in the case of Sofia Finance Ltd. reported in 205 ITR 98 and the decision of the Hon'ble Supreme Court in the case of CIT vs. Stellar Investment Ltd. Reported in 164 CTR
287. Most respectfully following the decision of the Hon'ble Supreme Court in the ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -6- case of CIT vs. Stellar Investment Ltd. (supra). In which it has been held by the hon'ble Supreme Court while affirming the decision of the Delhi High Court in the case of same assessee that, inter-alia, even if the subscribers to the share capital of the company are not found to be genuine, the amount could not be regarded as undisclosed income of the assessee company. Accordingly, the additions of Rs.46,92,900/- and Rs.2,80,17,600/- made u/s. 68 of Income-tax Act, 1961 for assessment years 1996-97 and 1997-98 respectively on account of unexplained share capital is deleted."
8. The Revenue filed its appeals ITA Nos. 1557 & 1559/Ahd/2001 before this tribunal. A co-ordinate bench in its common order dated 15.02.2008 restored the issue back to the Assessing Officer on the ground that the assessee had submitted the relevant details only in course of proceedings before the CIT(A) for the first time so far as its paper book involving pages 1 to 178 was concerned. It accordingly directed the Assessing Officer to finalize afresh consequential assessments.
9. The assessee appears to have filed Tax Appeals nos. 2522 & 2523/2009 before hon'ble jurisdictional high court. The Assessing Officer in the mean time took up consequential proceedings. He again sought necessary details/evidence. The assessee's reply came on 15.09.2009 inter alia reiterating its stand in first round of proceedings right from CIT(A)'s order to tribunal's directions. It stated that the relevant details sought already formed part of record. The assessee again reiterated its earlier submissions on 08.11.2002 that relevant share applications details had been duly placed on record. It thereafter submitted the share holder list in question along with addresses and number of shares. The Assessing Officer asked it to reproduce at least 10 share holders per day along with identity proof and relevant documents. The assessee again expressed its inability to produce the abovestated share holders. It rather requested the Assessing Officer to issue Section 131 process. The assessing authority issued said notices to 13 share applicants on test check basis. Only two of them sought further time. Seven ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -7- share applicants did not turn up. Remaining four share applicants were not found at their given addresses. All this made the Assessing Officer to express strong doubt over identity, genuineness and creditworthiness of assessee's explanation in support of its share application money pertaining to both the assessment years in question. He thus invoked Section 68 of the Act once again to reiterate the impugned additions in consequential round of assessment as well.
10. The assessee filed its separate appeals before the CIT(A) on 29.01.2010. Hon'ble jurisdictional high court in the meant time decided its Tax Appeals (supra) on 08.02.2010 challenging tribunal's remand order in first round so as to direct the CIT(A) to adjudicate assessee's appeals pending in consequential round by observing as under:
"4. The Appellant's grievance is only against the setting aside of the order passed by the CIT(A) and remanding the matter back to the Assessing Officer. The Tribunal while remanding the matter to the Assessing Officer has observed that the assessee has submitted the details for the first time before the CIT(A) regarding the list of shareholders up to allotment appearing at pages 1 to 178 of the paper book. These details were filed for the first time before the CIT(A). On this basis the Tribunal observed that since the verification of these documents are required to adjudicate the issues, in the interest of justice and fair play to both the parties, the assessment orders were set aside and direction was given to the Assessing Officer to make fresh assessments after considering all the submissions as well as the documents which the assessee may submit before him.
5. The very premises or foundation on the basis of which the Tribunal has passed the order, seems to be erroneous, as the list of shareholders up to allotment appearing at pages 1 to 178 of the paper book was filed before the AO and it was not filed before the CIT(A) for the first time. These details were very much before the AO and he has passed the order considering the said details. Hence the Tribunal has erred in making this observation and after making such observations, set aside the assessment. Normally the Court would not have interfered in the order setting aside the assessment. However, looking to the facts of the present case the order passed by the Tribunal is required to be set aside and the Tribunal is required to be directed to decide it afresh. However, looking to the subsequent development that has taken place after the Tribunal has passed ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -8- the impugned order, the Court would not interfere in the order passed by the Tribunal as pursuant to the said order, the AO has already framed the assessment against which the Appellant assessee has filed appeals before the CIT(A) and those appeals are pending.
6. In light of the above facts, without interfering in the order passed by the Tribunal, we direct the CIT(A) to decide the Appeals which are pending before him against fresh assessment orders passed by the AO, in accordance with law and after considering the Apex Court's order passed in the case of Commissioner of Income Tax v. Steller Investment Ltd. 2001 (201) ITR 263 and Commissioner of Income Tax v. M/s Lovely Export (Private) Limited passed by the Apex Court on 11.1.2008 in Special Leave to Appeal (C) No. 11993 of 2007.
7. We are at pains to point out that on a wrong premises the assessment orders were set aside by the Tribunal. The details were before the Tribunal and after considering these details, the Tribunal ought to have passed the order on merits. The shortcut adopted by the Tribunal has given further rise to the litigation. Be that as it may, now the CIT (A) is expected to decide the Appeals filed by the asssessee before him in accordance with law and in accordance with the Hon'ble Apex Court's decisions."
11. We proceed further to notice that the CIT(A) has thereafter accepted assessee's contentions against the impugned addition by observing as under:
"11. I have gone through the assessment orders for both the years under consideration and the orders of the appellate authorities (ITAT, Ahmedabad, and Gujarat High Court,) and a/so the written submissions and paper-book filed on behalf of the appellant company. It appears that the appellant's A.R. has filed a detailed Paper Book as was filed before the Hon'ble ITAT and the same has been perused by me in the context of the written submissions. I have also perused the order passed by the Hon'ble Gujarat High Court's order dated 08-02-201C restoring the matter to the file of the CIT(A) )with a direction to decide the Appeals filed by the assessee, in accordance with law and in accordance with the Hon'ble Apex Court's decisions The High Court has referred to the decisions in the cases of Commissioner of Income-tax Vs. Steller Investment Ltd, (2001) 251 ITR 263 and the Commissioner of Income- tax v. M/S. Lovely Export (Pvt.) Limited passed by the Apex Court on 11-1-2008 in Special Leave to Appeal (C) No. 11993 of 2007.
11.1. It is seen that CIT(A) I, Ahmadabad deciding the original appeal has held in his order dated 3-4-2001 as under- "It is seen from the records available that the identity and existence of the various shareholders are proved and is also not disputed by the Assessing officer. The assessing officer has not made out any case to support the addition except observing that the appellant has not proved the genuineness of the shareholders and their capacity to bring the amount for applying in the shares of the company. It is a/so not the A.O.'s case that the ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 -9- appellant has earned such huge income during the year in question to enable the company to invest such funds in the share capital in name of benamidars especially considering the fact that no business activity has been carried out by the company during the year. I am of the confirmed view that once the existence and identity of the shareholders is not in doubt, no addition on account of unexplained share capital could be made in the hands of a company. This view of mine is amply fortified by the decision of various courts of law as cited by the appellant in its written submission filed before me more particularly the decisions of full bench of Delhi High Court. In the case of Sofia Finance Ltd. Reported in 205 ITR 98 and the decision of the Hon'ble Supreme Court in the case of CIT vs. Stellar Investment Ltd. Reported in 164 CTR 287. Most respectfully following the decision of the Hon'ble Supreme Court in the case of CIT vs. Stellar Investment Ltd. (supra). In which it has been held by the Hon'ble Supreme Court while affirming the decision of the Delhi High Court in the case of same assessee that, inter-alia, even if the subscribers to the share capital of the company are not found to be genuine, the amount could not be regarded as undisclosed income of assessee company. Accordingly, the additions of Rs. 46,92,9007- and Rs. 2,80,17,6007- made u/s. 68 of Income tax Act, 1961 for assessment years 1996-97 and 1997-98 respectively on account of unexplained share capital is deleted."
11.2. The /TAT, Ahmedabad, has directed the AC to verify the creditors. It is seen from the re-assessment order of the AO and a/so submitted by the appellant that the A.O. had issued summons to as many as 13 persons, after the assessee's letter dated 21-12-2009. It is noticed that the A.O. has not mentioned anywhere in the assessment order (i) the date of issue of the Summons to those parties and (ii) the date of service of the summons on them, as could be seen from paragraph 4 of the assessment orders for the assessment years under appeal. Both the Assessment orders have been passed on 31-12-2009. Therefore, it is not evident from the Assessment Order that reasonable time was given to those parties. The appellant has raised the grounds relating to the reasonable opportunity and therefore, legality/validity of the assessment orders under appeal have been questioned. Although the Apex Court of the Country has laid down the law on the subject, which is apparently in favour of the appellant company, the Ld. A.O. had chosen to ignore those decisions and follow the old line of approach in such matters relating to the share application money, irrespective of any consideration to the fact that the company was a new company in those years, which had not even commenced the manufacturing activity. There appears to be an approach of 'erring on the safe side' on the part of the A.O. 11.3. Although the assessments were set aside by the ITAT in the year 2008, it would appear from the assessment order that the hearing in this case was taken up only in the second half of 2009 and the assessments were to be finalized before 31- 12-2009. Against this background, the following remarks of the A.O. about the so- called random verification of the shareholders are not justifiable in the facts and circumstances of the case. It is seen that the AO has not made his case of bogus creditors as he has not enquired the creditors and come to the conclusion without any concrete findings. It can be- said that the AO has. not made the desired effort to enquire the creditors as directed by the higher appellate authorities. The AO has also not discussed and also not applied/discussed the decision of Apex Court ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 - 10 -
in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195, which has held that "Can the amount of share application money be regarded as undisclosed income under section 68 of the IT Act, 1961? We find no merits in the Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department, is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment."
11.4. In view of the above facts and circumstances of the appellant's case, the order of the re-assessment, the relevant case laws on the subject, the directions of the Gujarat High Court and on the basis of the decisions of the Apex court in the cases of Commissioner of Income-tax Vs. Steller Investment Ltd, (2001) 251 ITR 263 and the Commissioner of Income-tax v. M/S. Lovely Export (Pvt) Limited passed by the Apex Court on 11-1-2008 in Special Leave to Appeal (C) No.11993 of 2007, I find substance in the submissions of the Ld. A.R. of the appellant company. I am, therefore, convinced that there is absolutely no justification for the addition of Rs. 46,82,981/- made by the A.O. u/s 68 of the Act for the. A.Y. 1996-
97. I also find that addition of Rs. 2,80,17,600/- made u/s 68 of the Act on similar grounds for A.Y. 1997-98, was also not called for in view of the facts and circumstances of the case and the case law on the subject. In my opinion, therefore, both the above additions were not called for. The A. 0. is, therefore, directed to delete the above two additions and the appellant would accordingly get the relief to that extent in the respective assessment years."
This leaves the Revenue aggrieved.
12. We have heard both parties reiterating their respective stands in support and against the abovestated addition of unexplained share application money made by the Assessing Officer u/s.68 of the Act. The first question raised before us is about the validity of Assessing Officer's latter assessment orders. It is contended that their lordships' directions came heavily upon this tribunal's remand order and therefore, the Assessing Officer's consequential assessment order cannot be deemed to have been passed as per law. We find no merit in this plea. It has come on record that although the Assessing Officer had finalized consequential assessments during pendency of assessee's Tax Appeals, their lordships did not reverse the above assessments. Hon'ble jurisdictional high court rather directed the CIT(A) to decide assessee's appeals preferred against the consequential assessments in ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 - 11 -
question. We thus observe that the consequential assessment in question stand very well validated even in hon'ble jurisdictional high court's order.
13. The next contention raised between the parties is on merits. Learned counsel representing assessee strongly supports CIT(A)'s common order under challenge deleting the addition in question of unexplained share application money. We deem it appropriate to re-assimilate relevant facts. The assessee has declared to have received share application money in question from total 189 applicants in former assessment year. There is no dispute about 18 of them qua share application amount of Rs.60.43 lacs as all the relevant details of these 18 parties in the nature of PAN nos. and assessment records stood very well proved. The dispute in the instant case rather pertains to the remaining 171 share applicants. It has come on record that the assessee has failed to file their relevant details in both rounds of assessments. Learned counsel representing assessee vehemently contends that the assessee had filed all relevant particulars before the assessing authority so as to discharge initial onus in order to prove identity and genuineness of its claim. We however find that this assertion is not supported from the case records. We repeat that 145 share applicants involving share capital of Rs.30.10 lacs never saw any evidence at all. Remaining 26 applicants appears to have filed their confirmations whose veracity could never be proved at assessee's behest. We again wish to repeat at this stage that the Assessing Officer's strong doubt over the said share applicants to the effect that although they reside in different parts of state but their demand draft applications moved before the Surendranagar Co- operative bank disclosed a single day, date and branch followed by their order in defined sequence as extracted in preceding paragraph to be raising enough suspicion; has nowhere been rebutted in either lower appellate ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 - 12 -
proceedings or before this tribunal. We rather find that the learned CIT(A) has observed that the Assessing Officer did not grant the assessee sufficient opportunity to prove its case. He accepts its argument on this technical aspect without even concluding as to how it had proved identity, genuineness and creditworthiness of its share application claim in assessment or lower appellate proceedings.
14. Learned counsel representing assessee thereafter seeks to quote hon'ble apex court's decision in Steller Investment Ltd. & Lovely Exports Ltd. cases (supra). Hon'ble Allahabad high court's decision in CIT vs. Nav Bharat Duplex Ltd. (2013) 35 taxmann.com 289 (All) observes that the above stated two precedents apply only in case where an assessee proves identity of its share applicants in question. Hon'ble Delhi high court in ITA Nos. 1018 & 1019/2011 CIT vs. N. R. Portfolio Pvt. Ltd. decided on 22.11.2013 is of the opinion that mere production of PAN details is not sufficient to establish identity of a person. Hon'ble apex court affirms the same in its reported order 2015 (9) TMI - 54 - SC. We proceed further to notice that hon'ble Delhi high court in ITA No.31/2013 Onassis Axles Pvt. Ltd. vs. CIT decided on 13.02.2014 upholds this tribunal's order restoring Assessing Officer's finding making Section 68 addition of share application money after taking note of the fact that the concerned share applicants belonging to different places had got prepared their pay orders on the same way falling on 29.06.2006. Their lordships further consider the above two apex court's decisions in the said judicial precedents. We take into account all this case law to conclude that the same is very much applicable in facts involved in the instant appeals wherein the assessee has not been able to prove even identity of its share applicants. We also wish to observe that its reliance being placed on demand draft applications is further devoid of merit since the concerned ITA Nos. 1303 & 1304/Ahd/2012 (ACIT vs. M/s. Gopal Iron & Steel Co.
(Guj.) Ltd.) A.Ys. 1996-97 & 1997-98 - 13 -
bank had not complied with " KYC" requirements before issuing demand drafts in question. We accordingly restore Assessing Officer's findings as narrated in preceding paragraphs to reverse CIT(A)'s conclusion forming subject matter of our instant adjudication pertaining to both assessment years raising sole substantive issue of validity of Section 68 addition in question. The Revenue's sole substantive ground as identically pleaded in the instant appeals succeeds.
15. These two Revenue's appeals are allowed.
[Pronounced in the open Court on this the 07th day of March, 2017.] Sd/- Sd/-
(MANISH BORAD) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 07/03/2017
True copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।