Income Tax Appellate Tribunal - Chandigarh
Acit, Patiala vs M/S Vishal Paper Industries Pvt. Ltd., ... on 29 March, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा ग'ु ता, लेखा सद य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.829/Chd/2014
नधा रण वष / Assessment Year : 2010-11
The A.C.I.T., बनाम M/s Vishal Paper Industries
Circle Patiala. Pvt. Ltd., Village Khusropur,
District Patiala.
थायी लेखा सं./PAN NO: AACCV2149L
नधा रती क ओर से/Assessee by : Shri Manjit Singh, Sr.DR
राज व क ओर से/ Revenue by : Shri Mayank Jain
सन
ु वाई क तार!ख/Date of Hearing : 15.02.2019
उदघोषणा क तार!ख/Date of Pronouncement: 29.03.2019
आदे श/ORDER
Per Anna pur na Gupta, Account ant Member The present ap peal has been fi l ed by the |Revenue agai nst the order of the Commi ssi oner of I ncome Ta x ( Appeal s) , Pati al a ( i n short 'CI T( A) ' dated 31.7.2014 passed u/s 250( 6) of the I ncome Ta x Act, 1961 ( herei nafte r referred to as 'Act') .
2. The sole issue relates to addition made of share premium received by the assessee during the year amounting to Rs.93,80,000/- from different parties treating the same as unexplained by the A.O. and which addition was deleted by the CIT(A).
3. Brief facts relating to the case are that during assessment proceedings the A.O. noted that the 2 ITA No.829/Chd/2014 A.Y.2010-11 assessee had received share premium of Rs.93,80,000/- from nine parties as under:
Sr. No Name Address Amount paid
1 M/s Shalini Holdings Ltd. C-4/151, First Floor, Sector 560000/-
6, Rohini.
2 M/s Nandal Finanace and C -33, 2nd Floor, Prashant 1120000/-
Leasing Pvt. Ltd, Vihar, New Delhi.
3 M/s Aasheesh Royal Palace, G-55, Laxmi 1400000/-
CapitaTj Services Pvt. Ltd, Nagar, Vikas Marg, New Delhi.
4 M/s Attractive Fin-lease 203, 18/12, WEA, Pusa 560000/-
ltd. Lane, Karol Bagh, Delhi- 5.
5 M/s Finage leasing 106, Patel Nagar, New 1400000/-
and Finance (India)Ltd Delhi
6 M/s Sunny Cast & Forge 14A/33, WEA, Jetking 840000/-
Ltd. Building, Guru Nanak
Market, Karol Bagh, New 1120000/-
7 M/s Apporva Leasing Fin. 104, Single Storey, Ramesh
and Investment Co. Ltd, Nagar, New Delhi.
8 M/s Avail Financial 555, Double Storey Market, 980000/-
Services Pvt. Ltd, New Rajinder nagar, New Delhi.
9 M/s Solomon Holdings Room No. 401, 3198/15, 560000/-
Pvt. Ltd, 4m Floor, Gali No.1,
Sangatrashan, Paharganj,
New Delhi.
Total 93,80,000/-
4. The A.O. cal l ed for certai n i nf ormati on from these
parti es u/s 133( 6) of the Act ,i .e PAN Number, proof of fi l i ng return of i ncome for the i mpugned year, computati on of i ncome, copy of bank statement from where cheques were i ssued and the source and mode of recei pt of funds for i nvesti ng i n the i mpugned share premi um al ong wi th copy of the rel evant l edger account. I n the case of four parti es at S.Nos.1, 2, 3 and 4, i n the tabl e above, the noti ces were returned back u ndel i vered si nce the parti es co ul d not be traced/found at the sai d addresses. I n case of three parti es at Sr.Nos.5, 6 and 7 of the tabl e above, no repl y was recei ved, whi l e i n the case of remai ni ng t wo parti es at 3 ITA No.829/Chd/2014 A.Y.2010-11 Sr.Nos.8 and 9 of the tabl e above, the A.O. noted that i ncompl ete i nformati on was provi ded whi ch di d not provi de suffi ci ent evi dences to prove the genui neness and credi t worthi ness of the transacti on and of the appli cant. The assessee was, therefore, asked to sho w cause as to why the amounts of share premi um be not di sal l o wed i nterest he absence of any c orroborati ve evi dence. The assess ee sought ti me for produci ng/confi rmi ng the transacti on from the parti es. Ho wever the A.O. thereafter passed assessment order maki ng a ddi ti on of the i mpugned share premi um treati ng the same as une xpl ai ned and i ngenui ne u/s 68 of the Act.
5. The matter was carri ed i n appeal before the Ld.CI T( A) where the assessee contended that i t had di scharged i ts onus of provi ng t he genui neness o f the i mpugned t ransacti on by fi l i ng necessar y documents provi ng the i denti t y, the genui neness and the credi t worthi ness of the i nvestors. Th e Ld. counsel for assessee contended that i t had fi l ed copy of the ackno wl edgement of return of i ncome, copy of their resol uti on to p urchase shares, copy of thei r audi ted statement of accounts and bank account statements. The Ld. counsel for asse ssee further con tended that the A.O. had onl y di sputed the share premium havi ng accepted the amount i nvested as share capi tal by the ver y same investors and, therefore, it coul d not be sai d that the i mpugned premi um remai ned une xpl ai ned. The Ld. c ounsel for assessee further col l ected the requi red i nformati on from the 4 ITA No.829/Chd/2014 A.Y.2010-11 i nvestors and submi tted the same of the Ld.CI T( A) stati ng that i t had tri ed conducti ng the i nvestors for sub mi tti ng thi s i nformati on duri ng assessment proceedi ngs but i t took ti me and cannot be furni shed by the ti me the assessment was compl eted. I t was further contended that some of the l etters coul d not be ser ved to the parti e s because there was change i n the correspondence address of the compani es whi ch the sai d parti es had e xpl ai ned and wri tten thei r ne w addresses i n thei r i nformati on l etters. The s ubmi ssi ons of the assessee were for warded to the A.O. for hi s counter comments who rei terated hi s contenti on made i n the assessment order. The Ld.CI T( A) after consi deri ng the contenti ons of both the assessee and the A.O. hel d that the documents for warded to the A.O. had no t been controverted by hi m and the sai d documents sho wed that the i nvestors company had suf fi ci ent capi tal s and reserves that i nvestment had been made through bank ac counts and copy of thei r i ncome t a x returns had al so been submi tted. I n vi e w of the same, the Ld.CI T( A) hel d that the i d enti t y, credi t worthi ness and gen ui neness of the transacti on was not i n doubt. The Ld.CI T( A) further stated that the A.O. had di sal l owed the i nvestment merel y because the parti es coul d not be produce. Thereafter referri ng to vari ous deci si ons of t he Hon'bl e Hi gh Court the Ld.CI T( A) hel d t hat the assesse e had ful l y di sc harged i ts onus to prove the genui ne of the trans acti on and accordi ngl y, del eted the addi ti on made. The rel eva nt fi ndi ng of the Ld.CI T( A) at para 6.3 of hi s order i s as under: 5 ITA No.829/Chd/2014
A.Y.2010-11
"6.3 I have considered the submissions made and also perused the assessment records. It is noted from the submissions & assessment record that the appellant during the course of assessment proceeding has duly submitted the copies of resolution of the Board of Company regarding allotment of shares, application from the respective subscriber companies for allotment of shares. The PAN No., copy of lTR with acknowledgement, list of Directors with addresses and Bank Statement of the subscriber companies were also filed. Further, the audited copies of the Balance sheet and P&L A/c and the acknowledgement regarding receipt of share certification were also filed. In case of Shalini Holdings Put. Ltd., the copy of assessment order passed u/s 143(3) for A.Y. 1993-94 was also filed.
The appellant during the course of appellate proceedings has also submitted that the A.O. has accepted principle amount of investment in shares by these companies. The share premium has been paid by these companies against the principle investment in the shares. The share-holders are existing assessees and copies of the ITR have also been submitted. The payments have been made through account payee check and copy of bank statement were also submitted in support. The copy of the audited statement of accounts and bank account statements, the copies of resolution to purchase shares has been submitted. During the course of appellate proceedings, therefore, it is submitted that the identity of the persons is proved furnishing the acknowledgement of return of income, PAN No. of the persons. These companies are registered with the registrar of the companies. The genuineness of the transactions is proved by the providing the Bank Account statement of all these persons and the money has been received by Account Payee Cheques. The creditworthiness is also proved by the audited accounts of statement. It is further submitted that such details are not controverted by the A.O. The appellant further submitted that the appellant's company volunteered to do the needful to place the information sought u/s 133(6) on record and in case the information is not sent by the parties, it will try to produce the investor company. However, through the assessee company tried to contact the investor companies and the information was collected from that them it took time and the same could not be furnished on or before 25.03.2013 on which date the assessment was completed and the information collected thereafter, remained with the appellant. The appellant further relied on various case laws and submitted that no addition can be made u/s 68 in the case of the assessee company. It was also seen from the assessment record that the assessee vide letter dated 18.03.2013 submitted that the assessee can not be penalized for conduct of third parties over which it has no control. Further, vide order sheet entry dated 25.03.2013, it was submitted by the counsel of the appellant that it is not possible to produce these parties on 25.03.2013, as the concerned persons are out of station on account of long week and an occasion of Holi and Good Friday holidays. However, the A.O. completed the 6 ITA No.829/Chd/2014 A.Y.2010-11 assessment on the same date. The appellant also submitted that there was a change of address in some cases and the new addresses were duly filed in the information letters now. All such documents were forward to A.O. which is not controverted. Further, as per details submitted, the shares capital of the investor companies and reserves and surplus are as under:-
M/s Vishal Paper Industries Pvt. LTd., Patiala Assessment Year 2010-11 Details of Additions in Share Capital Account & Enclousers Thereof S.No. Name of the Share Share Capital Reserve & Holder of The Company Surplus
1. Aasheesh Capital I23.355.000.00 1,107,945.000.00 Services Pvt. Ltd.
2. Apoorva Leasing 199,749,000.00 998,865,500.00 Finance & Investment Company Ltd.
3. Solomon Holdings Pvt. 19,304,000.00 172,852,010.00 Ltd.
4. Avail Financial Services 16,330,000.00 82,630,000.00 Pvt. Ltd.
5. Nandal Finance And 122,583,000.00 1,068,778,734.62 Leasing Pvt. Ltd.
6. Attractive Finlease Ltd. 105,505,000.00 945,045,000.00
7. Shalini Holdings. Ltd. 127,480,000.00 1,121,250,000.00
8. Sunny Cast & Forge Ltd. 87,281,400.00 1,167,775,256.78
9. Finage Leasing & Finance 15,009,000.00 130,619,866.67 (India) Ltd.
Therefore, looking into the entirety of the facts, it is evident that the investor companies had sufficient capital and reserve. The investments have been made through the Bank Accounts; the copy of IT returns filed has also been submitted, therefore, in all these cases, the identity, creditworthiness and genuineness of the transactions are not in doubt. It is submitted that the companies are registered with ROC. The A.O. has not controverted any of the documents filed by the appellant. The A.O. has simply disallowed the investment as the parties could not be produced before the A.O. In the case of CIT vs. Winstra Paper Chemiicals Pvt. Ltd. 330 ITR 603 (Del) the assessee has received share application money through the banking channels. The assessee company furnished written confirmation from the applicant companies, copies of certificates of corporations, PAN cards, PAN details and company's details of the applicant. The Hon'ble High Court held that under such circumstances, the finding of the tribunal that identity of the subscribers stood duly established from the documents produced by the assessee cannot be said to be perverse and there is no 7 ITA No.829/Chd/2014 A.Y.2010-11 legal bar to more than one company being registered at the same address. Merely because the applicants did not respond to the notices sent to them, the A.O. was not justified in adding the amount of share application money to the income of the assessee.
In the case of CIT vs. Dwarkadhish Investment (P)Ltd. 330 ITR 298 (Del) the assessee company received share application money. The Hon'ble High Court held that the initial burden of proof lies on the assessee yet once he proves the identity of the creditor/share applicant by either furnishing their PAN or Income tax assessment number and shows the genuineness of transactions by showing money in his books either by account payee cheques or by draft or by in other mode, these onus of proof would shift to the revenue. Just because the creditors/share applicants could not be found at the address given, it could not give the revenue the right the invoke section 68. Moreover it is a settled law that the assessee need not prove the "source of source." In this case the tribunal has confirmed the order of CIT (A) deleting impugned addition and held that the assessee has been able to prove the identity of share applicants and the share application money has been received by way of account payee cheqeus.
In the case of Commissioner of Income Tax vs. Lovely Export (P.) Ltd. decided on nth January, 2008 by the Supreme Court of India reported in 216 CTR 195: It has been held as under:-
"If share application money is received by assessee-company from alleged bogus shareholders, whose names are given to Assessing officer, then Department is free to proceed to reopen their individual assessments in accordance with law but these amount of share money can not be regarded as undisclosed income under section 68 of assessee company. (Special leave petition of the revenue is dismissed) "
Thus, in this case, the appellant has duly discharged his onus. He has filed the copies of lTR of the companies, PAN etc establishing the identity of the subscriber. The transaction is through Bank and as per audited copies of Balance Sheet there is sufficient capital and Reserve with the subscriber. Moreover, as contended by the appellant, the share capital subscribed is duly accepted by the A.O. while share premium is disallowed. During the appellate proceeding the appellant again filed the confirmation which was also forwarded to the A.O. and are not rebutted. Relying on the ratio on decision in the case laws as above, in my opinion, the appellant cannot be punished for non-appearance of the subscriber once the appellant has submitted complete details establishing the identity and creditworthiness of the subscribers and genuineness of the transactions as held in the case of CIT vs, Lovely Export Pvt. Ltd. (SC) 216 CTR 195 and under such circumstances no addition can be made in the hands of the assessee company. 8 ITA No.829/Chd/2014
A.Y.2010-11 Thus relying on the cases as above and submission made, the addition made by the A.O. is hereby deleted."
6. Aggri eved by the same, the Revenue has come up in appeal before us, rai si ng the fol l o wi ng grounds:
"1. In the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of. Rs.93,80,000/- made by the AO on account of share premium, ignoring the fact that the assessee had failed to discharge the onus of proving the identity and creditworthiness of the alleged shareholders & genuineness of the transactions to the satisfaction of the AO at the time of the assessment proceedings, since four companies could not be traced at their given addresses, three companies did not comply with the notice issued to them, the balance two companies submitted incomplete information and the assessee also could not produce the companies before the AO.
2. In the facts and circumstances of the case, the Ld. CIT(A) has erred in accepting assessee's version about genuineness of investors without giving an opportunity to the AO to call the companies so as to complete the inquiry he had initiated in respect of companies, especially since four companies were not found at their given addresses, three companies did not respond to the inquiry notice and the balance two companies furnished incomplete information.
3. In the facts and circumstances of the case, the Ld. CIT(A) has erred in relying on fresh information letters and changed addresses admittedly not supplied by assessee to the AO during the assessment proceedings, without admitting the fresh addresses and information letters as fresh evidence by following the procedure laid down under Rule 46A and without giving any opportunity to the AO to examine such evidence, only on the ground that the information forwarded to the AO remained uncontroverted, without appreciating the fact that without admission of fresh evidence by the Ld. CIT(A), the AO could not examine the same.
4. In the facts and circumstances of the case, Ld. CIT(A) has erred in relying on the decision of the Hon'ble Apex Court in the case of CIT Vs. Lovely Exports Pvt. Ltd., without appreciating that, as pointed out by the Hon'ble Delhi High Court in the case of CIT Vs. Nova Promoters and Finlease (P) Ltd., 342 ITR 169 (Del.), in that case the AO did not carry out any enquiry about the share applicants, whereas in the present case, the A.O. had tried to conduct enquiries in respect of all the nine companies but either the companies were not found or did not respond or they furnished incomplete 9 ITA No.829/Chd/2014 A.Y.2010-11 information to him.
5. It is prayed that the order of the Ld. CIT(A) be set aside and that of the AO restored.
6. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard and finally disposed of."
7. Duri ng the course of heari ng before us he Ld. DR rel i ed upon the order of the A.O. whi l e the Ld. counsel for assessee rel i ed upon the order of the Ld.CI T( A) .
8. We have consi dered the ri val contenti ons and al so careful l y gone through the order of the Ld.CI T( A) . We fi nd no reason to i nterfere in the same. The Ld.DR has not controverted the factual fi ndi ngs of the Ld.CI T( A) that the assessee had submi tted necessar y documents evidenci ng the i denti t y, the ge nui neness and t he credi t worthi ness of the i nvestor compani es duri ng as sessment proceedi ngs, as stated at para 6.3 of hi s order as under:
6.3 I have considered the submissions made and also perused the assessment records. It is noted from the submissions & assessment record that the appellant during the course of assessment proceeding has duly submitted the copies of resolution of the Board of Company regarding allotment of shares, application from the respective subscriber companies for allotment of shares. The PAN No., copy of lTR with acknowledgement, list of Directors with addresses and Bank Statement of the subscriber companies were also filed. Further, the audited copies of the Balance sheet and P&L A/c and the acknowledgement regarding receipt of share certification were also filed. In case of Shalini Holdings Put. Ltd., the copy of assessment order passed u/s 143(3) for A.Y. 1993-94 was also filed.10 ITA No.829/Chd/2014
A.Y.2010-11
9. Therefore, the as sessee had di sch arged the i ni tial onus cast upon hi m. Further , we fi nd that the CI T( A) has noted that the i nformati on sought for by the A.O. by making hi s o wn enqui r y u/s 133( 6) of the A ct from the sai d i nvestors was al so col l ected by the assessee from the said i nvestors and provi ded duri ng appel l ate proceedi ngs whi ch was confronted to the A.O. who di d not fi nd any i nfi rmi t y i n the same. Thi s fac t has al so remai ned uncontroverted before us. Thus i t stands that the concerned parti es had al so i ndependentl y c onfi rmed the tra nsacti ons. The CI T( A) , we fi nd al so took note of the fi nanci al posi ti on of the i nvestor compani es and found that the y had suffi ci ent capi tal and reserve to make the i nvestment. Ld.DR has been unabl e to controvert thi s fact al so. The credi t worthi ness of the i nvestor compani es thus stands suffi ci entl y establ ished. Moreover the addi ti on i n the i mpugned case i s onl y of the share premi um recei ved, and we agree wi th the Ld.CI T( A) that havi ng accepted the share capi tal recei ved from the same i nvestors, there was no reason to doubt the premi um thereon .
10. I n vi e w of the above, we have no hesi tati on i n agreei ng wi th the Ld.CI T( A) that the genui neness of the transacti on stood establ i shed and we do not see any reason t o doubt the same. Even the Ld. DR has been unabl e to poi nt out from the order of the A.O. as to why the i mpugned transac ti ons were to be l ooked at wi th suspi ci on. Th e assessee had establ i shed the genui neness of the transacti ons by fi l i ng rel evant 11 ITA No.829/Chd/2014 A.Y.2010-11 documents and the same was confi rmed by the i nvestor compani es al so, no i nfi rmi t y i n the documents fi l ed ei ther by the assessee or by the i nvestor compani es has been poi nted out by the Revenue. We fai l to understand, therefore, why the i mpugned transacti on shoul d be treated as une xpl ai ned/i ngenui ne. Al so havi ng establ i shed the genui neness of t he transacti on wi th necessar y documents, as above, the onus shi fted to the Department, and havi ng not poi nted out any i nfi rmi t y i n the documents submi tted by the assessee, the assessee was no t any more requi red to fi l e further evi dences or even prod uce the di recto rs of the compani es. We agree therefore wi th the Ld.CI T( A) that the share premi ums coul d not be sai d to be i ngenui ne merel y because the di rectors of the compani es were not produced for e xami nati on.
11. The Revenue, w e fi nd, has chal l enged the del et ion of the addi ti on bef ore us on the gr ound that the as sessee di d not di scharge i t s onus duri ng a ssessment proce edi ngs and adequate opport uni t y was not gi ven to the AO t o compl ete hi s i nqui r y vi s a vi s the i nvestor compani es and further that the CI T( A) admi tted the addi ti onal evi dences wi thout fol l o wi ng the procedure l ai d do wn i n Rul e 46A of the I ncome Ta x Rul es,1962 f or the same.
12. We do not fi nd any meri t i n the above contenti ons of the Revenue si nce as hel d above by us the assessee had dul y di scharged i ts onus of provi ng the genui nene ss of the transacti on and the A.O. ha d been gi ven suffi ci ent 12 ITA No.829/Chd/2014 A.Y.2010-11 opportuni t y to conduct al l i nqui ri es vi s a vi s the sai d i nvestors i n rem and proceedi ngs. Further we fi n d that the CI T( A) had noted the fact that though the assessee had sought ti me to produce the i nvestors, the AO wi thout gi vi ng any further opportuni t y fi nal i zed the assessment. I n thi s backdrop the CI T( A) admi tted t he evi dences fi l ed by the assessee col l ected from the i nves tors and for ward ed them to the AO for hi s co mments. The CI T( A) therefore, we hol d, had dul y admi tted the addi ti onal evi dences i n the ci rcumstances enumerated i n Rul e 46A of the Rul es, whi ch al l o ws the CI T( A) to admi t such evi dences where the assessee was not gi ven suffi ci ent opportuni t y to adduce the same earl i er.
I n vi e w of the above, al l the ground rai sed by the Revenue are di smi ssed.
13. I n the resul t, the appeal of the Revenue i s di smi ssed.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
संजय गग अ नपण
ू ा ग'ु ता
(SANJAY GARG) (ANNAPURNA GUPTA)
याय क सद य/Judicial Member लेखा सद य/Accountant Member
+दनांक /Dated: 29th March, 2019
*रती*
आदे श क ' त(ल)प अ*े)षत/ Copy of the order forwarded to :
1. अपीलाथ+/ The Appellant
2. ',यथ+/ The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आय-
ु त (अपील)/ The CIT(A)
5. )वभागीय ' त न0ध, आयकर अपील!य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar 13 ITA No.829/Chd/2014 A.Y.2010-11