Income Tax Appellate Tribunal - Mumbai
Modern Sales Agency (I) P.Ltd, Mumbai vs Department Of Income Tax on 9 October, 1012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'B' MUMBAI
BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER &
SHRI B.R. JAIN, ACCOUNTANT MEMBER
I.T.A.NO. 5271/Mum/2011
Assessment Year : 2007-08
The Income Tax Officer 6(3)(4), Vs. M/s Modern Sales Agency (I) Pvt.
Mumbai. Ltd.,
9, Nagdevi Cross Lane,
Mumbai 400 003.
PAN: AAECM3668D
(Appellant) (Respondent)
Appellant by : Shri V. Krishnamoorthy.
Respondent by : Shri Malay H. Shah.
Date of Hearing: 09-10-1012.
Date of Pronouncement: 12-10-2012.
ORDER
Per B.R.JAIN, AM:
This appeal by the revenue against the order dated 15-02-2011 of the Ld. CIT(A) - 12, Mumbai, challenges the following grounds:
1. "On the facts and in the circumstances of the case and in Law, the C I T (A) q erred in deleting the addition of Rs 55,00,000/- made by A 0 u/s 68 of the I T Act on account of unexplained increases in share capital without appreciating the efforts made by A.0. to verify the genuineness and credit worthiness of investor. A.O had issue show cause duly informing the assessee about unavailability of parties and un-verifiable state of facts and therefore onus lay on the assessee, which the assessee failed to discharge.
2. "The appellant prays that the order of Ld. CIT (A) on the above grounds be set V aside and that of the assessing Officer be restored."Page 1 of 6
ITA NO. 5271 OF 2011 M/s Modern Sales Agency (I)P Ltd.
2. Briefly stated facts are that the Assessing Officer noticed that the assessee has received Rs.55 lacs as share capital money from the following parties"
1. Rajesh Chawda Rs. 2,00,000/-
2. Meena Rawal Rs. 2,00,000/-
3. Khimji G Mahida (HUF) Rs. 2,00,000/-
4. Harish N Thakkar Rs. 2,00,000/-
5. Kishor Modi (HUF) Rs. 2,00,000/-
6. Chhotalal D Panchal (HUF) Rs. 2,00,000/-
7. Omkar Singh Matharu (HUF) Rs. 4,00,000/-
8. Savita Pawar Rs. 4,00,000/-
9. Macrosoft Technology Pvt Ltd Rs. 15,00,000/-
10. Olympus Vision Pvt Ltd Rs Rs. 10,00,000/-
Rs. 55,00,000/-
The AO thereafter made enquiries u/s.133(6) of the Act and informed the assessee about the result of the enquiry that (1) i.e Shri Rajesh Chawda has failed to respond to letter dated 14.12.2009, u/s 133(6) of the I. T. Act. In respect of parties at Sr.No (2) to (8), the parties have failed to prove their credit worthiness and in respect of parties at Sr.No (9) & (10), they have failed to show the transaction in their books.
Since the genuineness & creditworthiness of the transaction in respect of the aforesaid parties has not been proved and the onus of proving the same lies with you, which has not been discharged. He, therefore, issued a show cause notice to the assessee as to why the aforesaid amount of Rs.55 lacs should not be added as assessee's income u/s.68 of the Act. In response thereto, the assessee made a part compliance, but did not prove the nature and source of the cash credit in respect of the share capital money to the satisfaction of the assessing authority, inasmuch as, the assessee has failed to discharge the onus of proving Page 2 of 6 ITA NO. 5271 OF 2011 M/s Modern Sales Agency (I)P Ltd.
the genuineness of the transaction of receipt of Rs.15 lacs from M/s Microsoft Technology Pvt. Ltd. and Rs.10 lacs from Olympus Vision Pvt. Ltd. The rest of the individuals at serial Nos. 1 to 8 hereinabove, were not able to substantiate their creditworthiness, nor did assessee discharge its onus in that regard. He, therefore, proceeded to treat the entire amount of Rs.55 lacs as unexplained cash credits u/s.68 of the I.T.Act.
3. The Ld. CIT(A) taking the view that the appellant company had responded to the show cause notice on 31-12-2009 and considering the material on record, recorded that the appellant has given the names, addresses, P.A.Nos, return of income acknowledgments filed to the AO and the AO having not doubted the identity of the persons who has invested in this company, held that the onus laid upon the assessee stands discharged as the bank account also shows that the amounts were received in cheques and shareholders' certificates have also been placed on record. He, therefore, deleted the entire addition so made by the AO.
4. The Ld. DR. supporting the ground raised in appeal, contends that the parties were not available, nor the information and facts that assessee claims to have placed on record have either been verified by the assessing authority or by the Ld. CIT(A). Without carrying the factual verification it was neither permissible nor possible for the Ld. CIT(A) to have reached a conclusion that the assessee has discharged the onus that lay upon him. In this view of the matter, the order of the Page 3 of 6 ITA NO. 5271 OF 2011 M/s Modern Sales Agency (I)P Ltd.
Ld. CIT(A) needs to be set aside and that of the assessing authority has to be restored.
5. On the other hand, assessee's counsel Shri M. H. Shah, supporting the impugned order contends that all the material details which were filed on the receipt counter on 04-12-2009 as the assessing authority did not allow hearing to him on the relevant date. In response to show cause notice dated 30-12-2009 informing the assessing authority that all such details as sought by him have been filed at the dak counter. The AO considering the assessee's letter dated 31-12-2009 did not still being satisfied proceeded to make addition despite the fact that the details were placed before him before completion of the assessment. He, in fact, did not comment adversely on the information supplied by the assessee with respect to each of such creditor. The ld. CIT(A) in turn called for the assessment records and found that the assessee has laid the relevant information on assessment record. On the basis of such documents alone he expressed the satisfaction that the onus that lay upon the assessee stands established and thus proceeded to delete the uncalled addition made by the assessing authority. The order passed by the ld. CIT(A) conforms to the judgment by the apex court in the case of CIT vs. Lovely Exports P. Ltd. (2008) 216 CTR (S.C) 195 and thus needs no interference.
6. We have heard parties with parties to the material on record and precedent brought to our notice. The assessee admits that the Page 4 of 6 ITA NO. 5271 OF 2011 M/s Modern Sales Agency (I)P Ltd.
documents with respect to each of the creditors showing their identities, creditworthiness and genuineness were filed at the dak counter on 4-12-2009. The assessing authority appears to have not applied his mind on such information till 30-12-2009 as he is shown to have issued a fresh show cause notice for compliance by the assessee thereto. The factual verification of the correctness claimed in these documents is not found to have been made by the assessing authority as the time available to him was too short when he passed the assessment order on the same date i.e. on 31-12-2009 when the assessee responded to the fresh show cause notice. Essentially burden was on the assessee to show that transactions with the two companies from whom share capital aggregating to Rs.25 lacs received are genuine. Even balance sheets of the individual creditors from whom share capital is stated to have been raised are not signed by either of them, nor capital account of these persons has been laid on record to substantiate that such persons had ostensible sources of income, more so, when apparently all the balance-sheets reflect largely the investment with the assessee company or advances to some other persons. The Ld. CIT(A) himself also did not make any verification as to the correctness of the documents and the facts, before recording a finding that the onus which lay upon the assessee stands discharged. The grounded in appeal by revenue also projects that the creditors are not available and facts claimed by the assessee are also not verifiable. In this view of the matter and under the circumstances, as stated Page 5 of 6 ITA NO. 5271 OF 2011 M/s Modern Sales Agency (I)P Ltd.
hereinabove, we consider it appropriate to set aside the impugned order and remit the issue back to the file of the assessing authority for making factual verification of facts brought on record by the assessee and reach satisfaction in accordance with law as envisaged by sec.68 of the Act after affording reasonable and effective opportunity of being heard to the assessee.
7. In the result, appeal by the Revenue is allowed for statistical purposes only.
Order pronounced in the open Court on this day of 12.10.2012.
Sd/- Sd/-
(B.R.MITTAL) (B.R.JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai: 12/10/2012.
P/-*
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