Income Tax Appellate Tribunal - Delhi
Buzz Estates Pvt. Ltd., New Delhi vs Department Of Income Tax on 22 August, 2014
ITA NOS. 1186 & 1213/Del/2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A", NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A. No. 1186/Del/2013
A.Y. : 2006-07
Shivganesh VS. Income Tax Officer,
Buildtech Pvt. Ltd., Ward 3(1),
(Formerly known as New Delhi
Buzz Estates Pvt.
Ltd.,),
621A, Devika
Towers,
6, Nehru Place,
New Delhi - 110019
(PAN: AAKCS2413G)
(APPELLANT) (RESPONDENT)
AND
I.T.A. No. 1213/Del/2013
A.Y. : 2006-07
Income Tax Officer, VS. Buzz Estates Pvt.
Ward 3(1), Ltd.,),
New Delhi 621A, Devika
Towers,
6, Nehru Place,
New Delhi -
110019
(PAN:
AAKCS2413G)
Assessee by : Sh. CS Agarwal, Sr.
Advocate, Sh. BP Jain, CA
and Sh. RP Mall, Adv.
Department by : Ms. Y.S. Kakkar, Sr. D.R.
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ITA NOS. 1186 & 1213/Del/2013
ORDER
PER H.S. SIDHU : JM These are the cross appeals filed by the assessee and revenue emanate out of the order passed by the Ld. CIT(A)-VIII, New Delhi dated 4.12.2012 pertaining to assessment year 2006-07.
2. The grounds raised in the Assessee's appeal read as under:-
1. That the learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in confirming an addition of RS.50,OOO/-, a sum received as share capital in respect of shares issued by the assessee to Shri Deepak Gupta, out of an addition made of RS.1,00,000/received by way of share capital.
1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the source of the aforesaid sum was duly established, being the amount provided by Shri Anupam Nagalia and thus there could have been no justification to hold, that the said sum 2 ITA NOS. 1186 & 1213/Del/2013 of Rs. 50,000/- received from Shri Anupam Nagalia, in respect of which shares issued to Shri Deepak Gupta could be held to be unexplained credit in the hands of the assessee company.
2. That the learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law, in upholding the disallowance of Rs.
9,88,377/- debited by the assessee under the head "purchase account on account of mutation expenses".
2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there could have been no valid justification to hold, that the assessee had failed to establish the source of expenses incurred and debited as mutation expenses.
2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the expenses on mutation had been incurred by the 3 ITA NOS. 1186 & 1213/Del/2013 company M/s Vatika limited and the assessee had paid a cost of registration of land purchased including mutation expenses through M/s Vatika limited who had duly recorded such payments in its accounts, and was duly confirmed by M/s Vatika limited.
It is therefore prayed, the addition and disallowance sustained by the Commissioner of Income Tax (Appeals) aggregating to RS.10,37,377/-, which ought to have been deleted by the Commissioner of Income Tax (Appeals) be directed to be deleted and altogether and the appeal be allowed.
3. The grounds raised in the Revenue's appeal read as under:-
1. Whether the Ld. CIT(A) has erred on facts in law in deleting the addition made on account of unexplained source of share capital of Rs.
50,000/- introduced of Sh. Anupam Nagelia ignoring the fact that-
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ITA NOS. 1186 & 1213/Del/2013
(a) The assessee failed to give any details regarding names, address or income-tax assessment particulars of share subscribers despite having been specifically asked to do so.
(b) The assessee failed to furnish confirmation from the purported share applicants.
2. Whether the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs.
10.41 lakhs made on account of
unexplained cash deposited in bank
account ignoring the fact that the assessee has not furnished any supporting vouchers and the complete books of account.
3. The appellant craves leave for reserving the right to amend, modify, alter, add, or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 5
ITA NOS. 1186 & 1213/Del/2013
4. Ld. Counsel of the assessee has filed the synopsis in brief in support of his arguments, which read as under:-
"The captioned two appeals arise out of the order of the learned CIT (A) dated 04.12.2012 and pertain to assessment year 2006-2007.
1.1 It may at the outset be submitted that the appeal had been filed by the assessee after the assessee M/s Buzz Estates Private Limited was merged with the appellant i.e. M/s Shiv Ganesh Buildtech Private Limited; whereas the revenue has filed the appeal in the name of the company before its merger i.e. M/s Buzz Estates Private Limited and thus such an appeal filed is not maintainable, since it had ceased to exist factually and legally when the appeal was filed.
1.2 Since however both the appeals arises from the same order of CIT (A) dated 04.12.2012, consolidated submissions are being made in respect of both the appeals which are reproduced hereunder:-
In respect of ITA No. 1186/Del/2013 1.3 In the above appeal filed by the assessee, the assessee company has disputed the addition made by the 6 ITA NOS. 1186 & 1213/Del/2013 learned A.O., in respect of an addition made of an amount of Rs. 50,000/- received by it as share capital contribution from Shri Deepak Gupta.
In ground NO.2, the appellant has challenged the addition sustained of Rs. 9,88,377/-, debited by it under the head purchase account on account of mutation expenses".
In respect of ITA No. 1213/Del/2013 It is an appeal filed by the revenue wherein the revenue has challenged the deletion of the two sums namely:
(i) Rs. 50,000/- being the sum received by way of share capital from Shri Anupam Nagalia;
(ii) Rs. 10,41,000/- on account of alleged unexplained cash deposit in the bank account of the assessee.
4. Firstly, taking up the assessee's appeal, i.e. ITA No. 1186/Del/2013, it is submitted that, in the appeal filed by the assessee the first ground pertains to an addition of Rs. 50,000/- which represents sum received as share capital. In this case, the assessee had issued 5000 shares in the name of Shri Deepak Gupta and the aforesaid sum was credited in the books against the issue of such share capital but was paid on his 7 ITA NOS. 1186 & 1213/Del/2013 behalf by Shri Anupan Nagalia and was duly confirmed (see page 68 of the paper book). It is submitted that, assessee had led evidence to establish that, shares were issued and the aforesaid amount was received against the issue of the share capital. The assessee company was incorporated on 15.04.2005, with a share capital of Rs. 1,00,000/- only. The aforesaid share capital was contributed by those shareholders, who were promoter shareholders.
5. The learned A.O. had made the addition of the said sum when he held that the source of the cash of Rs. 1,00,000/- has not been explained by the assessee company. In fact, in making such an observation the learned A.O. failed to comprehend that, no such inference could have been drawn by him without calling upon the assessee to produce evidence in support of the share capital. In view thereof, learned A.O. having made the addition, and assessee disputed the said addition before the CIT (A) and submitted that, said sum represents share capital contributed by the shareholders. It was explained that the aforesaid contribution was received from Shri Anupam Nagalia through banking channel and was not a cash deposit in the books of the assessee.
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ITA NOS. 1186 & 1213/Del/2013
6. Further, since the assessee had not been provided any opportunity by the learned A.O., before the learned CIT (A), it made an application under Rule 46A of the Income Tax Act for the admission of additional evidence namely:
(a) Detail of share capital;
(b) Confirmation of share capital;
(c) Sources thereof;
(d) Copy of the cash books; to support that the payment of share capital from the shareholders namely Shri Anupam Nagalia and Shri Deepak Gupta was contributed by Shri Anupam Nagalia and payment was made by Shri Anupam Nagalia through cheque.
(see page 99).
The assessee further submitted that, Shri Anupam Nagalia had paid a sum of Rs. 10,10,000/- by a cheque No. 320983 dated 02.05.2005, drawn in favour of assessee, which was duly reflected in the bank account of the assessee (see page 99) and it was out of Rs. 10,10,000/- a sum of Rs. 1,00,000/was credited to the share capital account and that out of Rs. 1,00,000/- so credited, shares were issued for Rs. 50,000/- each 9 ITA NOS. 1186 & 1213/Del/2013 in the name of Shri Anupam Nagalia and Shri Deepak Gupta. It was the balance sum of Rs. 9,10,000/- was credited to the loan account of the assessee.
8. From the aforesaid it would be seen that, in fact there was no cash deposit in the books of the assessee, (as was assumed by the learned A.O. instead there was a credit by way of cheque which sum was received from Shri Anupam Nagalia. This sum of Rs. 10,10,000/- has not been included in the total income of the assessee as unexplained credit. an the contrary, instead of the aforesaid sum, all what has been brought to tax by the learned A.O. was the amount of Rs. 1,00,000/- despite the fact, the credit was of Rs. 10,10,000/- and was through a cheque. Since the aforesaid sum of Rs. 10,10,000/- had been received by the assessee from Shri Anupam Nagalia who had advanced Rs. 9,10,000/- as loan to the assessee company, the said sum was credited to the loan account of Shri Anupam Nagalia (see page 70) and was debited to bank account; whereas Rs. 1,00,000/- was appropriated towards the share capital, being the contribution made by Shri Anupam Nagalia on his own behalf and on behalf of above shareholder namely Shri Deepak Gupta. To support the source of credit of Rs. 10
ITA NOS. 1186 & 1213/Del/2013 10,10,000/- assessee had filed before the learned A.O. a copy of the confirmation as well as copy of the bank account of Shri Anupam Nagalia. (see page 70 &. page 95)
9. It is thus evident there could have been no valid basis whatsoever to have held that Rs. 1,00,000/- being the credit to the share capital is an unexplained cash deposit on which finding, the learned A.O. has made an addition of Rs. 1,00,000/- It is thus submitted, that the learned A.O. had erred in making the addition of Rs. 1,00,000/- and the CIT(A) has erred while deleting addition of Rs. 50,000/- as explained still sustained an addition of Rs. 50,000/- which sum represents contribution towards share capital against the issue of shares in the name of Shri Deepak Gupta. It is submitted that, the assessee has not received nor there is any other credit of Rs. 50,000/- and that too, in cash as a sum allegedly received from Shri Deepak Gupta. Despite the aforesaid fact, the learned CIT (A) has sustained the addition of Rs. 50,000/- representing share capital in respect of shares allotted to Shri Deepak Gupta. It is submitted with respect that, there is contradiction in terms. The source of Rs. 10,10,000/- is Shri Anupam Nagalia, the learned A.O. does not dispute the credit of Rs. 10,10,000/- in the books 11 ITA NOS. 1186 & 1213/Del/2013 of the assessee as the sum emanating from Shri Anupam Nagalia but he makes an addition of Rs. 1,00,000/- on an assumption that, there is a share capital which is the sum received "in cash", which is a factually incorrect finding of the A.O. The learned CIT (A) however has held that since no confirmation has been filed in the account of Shri Deepak Gupta, the identity of Shri Deepak Gupta has not been proved by the assessee. It is submitted, the same is non-issue, since the factual matrix as stated above shows that it is out of an amount of Rs. 10,10,000/- the sum credited Rs. 1,00,000/- was credited to share capital account and Rs. 9,10,000/- to loan account, and hence it cannot be held that the credits remain unexplained. In fact, the A.O. had proceeded to make an addition on the basis of his unsubstantiated finding that a sum of Rs. 1,00,000/- is a credit in cash which is factually incorrect.
10. It is submitted with respect that, the learned A.O. and learned CIT (A) failed to appreciate and comprehend that, the appellant is a company having only two shareholders namely Shri Anupam Nagalia and Shri Deepak Gupta and there could be no company with only one shareholder. It is thus submitted the findings that, assessee has failed to establish the identity of 12 ITA NOS. 1186 & 1213/Del/2013 Shri Deepak Gupta is highly arbitrary. In any case, it is submitted the same is not either relevant since the issue involved is about the credit in the books whether the said credit is explained or is otherwise.
11. Without prejudice to the aforesaid, the appellant submits that, if the identity of Shri Deepak Gupta is held as not proved, then there was no company and no assessment could be made on the company. The assessee submits that, it being an undisputed position that, assessee is a company and there being no adverse finding by the learned A.O. in his order that the assessee has failed to establish the identity of the shareholder, learned CIT(A) could not have without giving an opportunity concluded that assessee has failed to establish the identity of Shri Deepak Gupta.
12. The assessee however without prejudice to the aforesaid submissions that, Shri Anupam Nagalia has identified Shri Deepak Gupta and otherwise too, his identity established from the following documents on record.
(i) Memorandum of Articles of Association (Page 71 - 94) 13 ITA NOS. 1186 & 1213/Del/2013
(ii) Certificate of incorporation showing that on the basis of the aforesaid memorandum company has been incorporated.
13. Now, in respect of the addition made by the learned A.O. and sustained by CIT (A) of Rs. 9,87,377/- the assessee submits that, the aforesaid addition has been made without any basis. The said addition is totally illogical and is fanciful. Perusal of the annual accounts i.e. profit and loss account (see page 5) reflects that, in the instant year assessee had incurred an expenditure of Rs. 14,12,97,149/- towards the cost of trading assets and the same was reflected as closing stock (see page
6). The learned A.O. has not disputed either the cost incurred or the value of closing stock, despite the same, he has made addition by observing in his order in para 3 as under:
"Mutation expenses:
From the purchase account of land, it is seen that this account also includes the mutation expenses of Rs. 9,87,377/-.The assessee company was asked to explain the sources of the mutation expenses whether the expenses were paid in cash or through cheque. But, the assessee company has failed to explain the sources of mutation expenses. Hence, under the 14 ITA NOS. 1186 & 1213/Del/2013 circumstances, the mutation expenses of Rs. 9,87,377/- is disallowed and added in taxable income as income of the assessee from undisclosed sources." Reading the aforesaid observation, it would be seen that, the finding of the learned A.O. is that, when the assessee was called upon, whether the expenditure were paid in cash or through cheque, it had failed to explain the source of mutation expenses. It is respectfully submitted, such finding is wholly arbitrary as the entire sum was funded by M/s Vatika Limited who has confirmed the same. A copy of the accounts of M/s Vatika Limited in the books of the assessee (see page 113 - 116) shows that, the said sum was incurred by M/s Vatika Limited and was debited to the account of assessee and as such the assessee could not have incurred the said sum again either in cash or by cheque, it is further evident that, the aforesaid sum of Rs. 9,87,377/- was incurred on mutation of the land acquired for the assessee by MIs Vatika Limited (See page 117 of paper book). This is also well demonstrated from the following table which shows details of Mutation Expenses debited in land purchase account in the books of Vatika Limited to the debit of the account of assessee in their books:
15 ITA NOS. 1186 & 1213/Del/2013 Date Total Amount Mutation Page of Paper Debited Expenses Book included in Total Amount 14.09.2005 61,69,625.00 1,38,125.00 118 16.09.2005 1,49,74,375.00 3,34,375.00 119 19.09.2005 34,00,700.00 75,000.00 120 28.09.2005 2,49,79,900.00 91,900.00 121 28.09.2005 9,74,400.00 5,400.00 122 28.09.2005 7,04,900.00 3,900.00 123 28.09.2005 1,09,60,937.00 40,000.00 124 03.10.2005 2,18,72,000.00 80,000.00 125 03.10.2005 81,92,750.00 30,000.00 126 05.10.2005 17,92,650.00 9,800.00 127 07.10.2005 1,35,41,237.00 49,852.00 128 10.10.2005 53,01,100.00 19,550.00 129 16 ITA NOS. 1186 & 1213/Del/2013 24.10.2005 90,67,750.00 33,000.00 130 25.10.2005 67,94,600.00 25,100.00 131 28.10.2005 5,01,625.00 2,775.00 132 28.10.2005 19,93,500.00 36,000.00 133 18.11.2005 23,23,850.00 12,600.00 134 Total 9,87,377.00
15. It would further be seen that, as per the ledger account of M/s Vatika Limited in the books of assessee, a sum of Rs.
17,63,03,759/- has been credited and the said credit represents Rs. 14,12,97,149/- towards cost of land which includes Rs. 9,87,377/- as mutation expenses. Further to the aforesaid sum of Rs. 14,12,97,149/- a further sum of Rs. 3,50,00,000/- had been paid as a loan besides incurring the preliminary expenses of Rs. 6,610/- as is tabulated below:
Detail of Vatika limited
1. Land Purchased Rs. 14,12,97,149/
2. Cheque paid to assessee Rs. 3,50,00,000/-
3. Preliminary expenses incurred 17 ITA NOS. 1186 & 1213/Del/2013 Rs. 4,810/-
Rs. 200/-
Rs. 1,600/- Rs. 6,610/
Due on 31.03.2006 Rs. 17,63,03,759/-
Apart there from the breakup of Rs. 14,12,97,149/- includes the said sum of Rs. 9,87,377/- and is also demonstrated as below:
Inventory
1. Land Purchased Rs. 12,90,52,625/-
2. Land (Misc. Fixed Assets) Rs. 35,14,207/-
3. Land Registration, Stamp paper etc.Rs. 77,42,940/-
4. Mutation Expenses Rs. 9,87,377/-
Rs. 14,12,97,149/-
16. The learned CIT (A) in his order has noted that, the assessee in support of the fact that, expenses have been incurred by M/s Vatika Limited on behalf of the assessee had placed on record a copy of land account of M/s Vatika Limited (pages 113 -116) in the books of the assessee company. He has 18 ITA NOS. 1186 & 1213/Del/2013 further noted that, assessee had furnished before him, a copy of the collaboration agreement with M/s Vatika Limited as well as copy of account of M/s Vatika Limited in the books of the assessee and also debit notes (pages 118 - 134) issued by M/s Vatika Limited to establish the mutation expenses had been incurred by M/s Vatika Limited on behalf of the assessee, which sum has duly been incorporated by the assessee in the books of accounts.
17. It is thus submitted that, despite the aforesaid facts the learned CIT (A) has erred in sustaining the addition without disputing either the genuineness of the evidence on the ground that since the assessee was asked to produce bills or other supporting evidence like vouchers indicating the nature of these expenses. In fact his finding that, the debit notes of associated concern does not hold good, is wholly arbitrary. Even otherwise, it is submitted, since no claim of deduction has been claimed, no addition could be held to be tenable in law as the same is against the principles of accountancy and computation of income under law. It is submitted that, assuming and for the sake of an argument, though disputed that, no expenditure was incurred as has been assumed then it 19 ITA NOS. 1186 & 1213/Del/2013 is not known under which of the provision of Income Tax Act, such amount could be added to the income, when no such expenses have been claimed, as a deduction. Without prejudice to the aforesaid and in the alternative it is submitted, the fact that the expenditure has been incurred cannot be disputed, which expenditure had been incurred by M/s Vatika Limited on behalf of the assessee which is duly debited in the books of M/s Vatika Limited in the account of the assessee, who is collaborator of the assessee. Thus the addition made and sustained by the CIT (A) is highly illegal, arbitrary, without application of mind, in disregard of the basic principles of the account as well as the statutory provision of the Income Tax Act.
18. In respect of the departmental appeal i.e. ITA No.:
1213/Del/2013 18.1 That the respondent assessee submits that for the reasons stated by the learned CIT(A) in his order in respect of the two sums, he has correctly deleted the aforesaid sums. The respondent further submits that while deleting the addition made of Rs. 10,41,000/-, the learned CIT (A) has noted that source of the credits in the books of the account of the 20 ITA NOS. 1186 & 1213/Del/2013 assessee is out of cash withdrawn from the bank on 04.05.2005 and 07.05.2005 and was thereafter in the books of the assessee was shown as cash in hand. It is an admitted fact that there are no adverse observation made in respect of the correctness and completeness of the books of account maintained by the assessee. In view thereof it is submitted that when assessee re-deposited the same out of the cash balance, then he clearly erred in holding that credits are unexplained. In fact in so doing, he has merely stated that the amount was deposited after two and half months after the date of the withdrawal but he ignored the fact that the same sum of withdrawal remain to be cash in hand and was duly reflected in the books of the assessee. It is submitted that the mere fact that it was kept in cash in hand and for business needs of the assessee company cannot be held to be any valid basis for making the addition. The assessee seeks to support its submission from the judgment in the case of S. R. Venkataratnam vs Commissioner of Income-Tax reported in 127 ITR 807 and in fact there are several judgments upholding the aforesaid submission of the assessee. 21
ITA NOS. 1186 & 1213/Del/2013 18.2 Further in respect of the addition of Rs. 50,000/- being the sum received by way of share capital from Shri Anupam Nagalia, assessee has already made its submission in para 4-12 hereinabove. It is retreated that all what is required is satisfy the A.O. was to explain the source of credit of Rs. 10,10,000/-. The A.O. had duly accepted that out of the said sum of Rs. 10,10,000/- was an amount received as a loan and despite thereof he made an addition out of the said sum of Rs. 1,00,000/- out of which share were issued in the name of Shri. Anupam Nagalia and Shri. Deepak Gupta. It is submitted there has not been any dispute the credit in the books is from Shri. Anupam Nagalia. In such circumstances, it is prayed that it be held that the Learned A.O. had erroneously made the addition which it is submitted is highly unwarranted and is evidently arbitrary both on fact and in law."
4.1 Ld. Counsel of the assessee has also filed the Paper Book from pages No. 1 to 157 containing the various documents and details filed during the proceedings before the lower authorities.
5. On the other hand, learned DR has argued at length. She also filed a paper book from page 1 to 68 containing the 22 ITA NOS. 1186 & 1213/Del/2013 assessment record of the Assessing Officer and relevant documents. She submitted that during the course of assessment proceedings, the Assessing Officer asked the assessee to submit the details of equity share capital for the new share capital introduced during the year alongwith confirmations and income tax particulars of subscribers. In response to which, the assessee only stated that the company was incorporated with the share capital of `1 lakh. No further explanation/evidence with regard to the share capital of `1 lakh was furnished before the Assessing Officer. Even before the CIT(A), the assessee has not furnished the confirmation of two shareholders in whose account `50,000/- each was credited but, on the other hand, the assessee's explanation is that the assessee had received a cheque of `10,10,000/- on 2.5.2005 from Shri Anupam Nagalia and out of this `10,10,000/-, a sum of `1,00,000/- was credited to the share capital account in the name of two persons Shri Anupam Nagalia and Shri Deepak Gupta. Balance `9,10,000/- was credited to the loan account of the assessee. That when cheque of `10,10,000/- was received from Anupam Nagalia, why and on what basis it was credited at three different places? She also stated that the books of 23 ITA NOS. 1186 & 1213/Del/2013 account were never produced before the Assessing Officer either during original assessment proceedings or the remand proceedings so that the contention of assessee can be verified. The assessee also did not produce confirmation from shareholders.
5.1 With regard to cash deposit of `10,41,000/- in the bank account, she submitted that the only explanation given by the assessee is that the amount is deposited out of earlier cash withdrawn from the bank. Here again, there is a gap of more than two and half months between the withdrawal and the deposit. That the assessee is a company which is in the business of real estate. That it was for the assessee to establish that no expenditure was incurred during the period of two and half months i.e. between the withdrawal of the cash from the bank and deposit of cash in the bank. She reiterated that the assessee did not produce the cash book even in remand proceedings. In the absence of cash book, the assessee cannot verify the availability of cash on the date on which money is deposited in the bank account. With regard to mutation expenses of `9,87,377/-, again, the assessee did not produce any evidence except that the expenses were met by 24 ITA NOS. 1186 & 1213/Del/2013 the sister concern. That the assessee termed it as a mutation expenses but when the Assessing Officer asked the assessee to produce the vouchers for the expenses, the assessee submitted that the expenses were incurred on identification of land, inspection thereof, searching of registrar's records, expenses incurred on report from advocates, brokerage etc. How and why these expenses were paid by the sister concern Vatika Limited is not explained and moreover, if the sister concern is debiting some amount in the account of the assessee, they have to produce the supporting evidence to whom they have made the payment and for what purpose. No such details were produced either during the original assessment proceedings or during the remand proceedings. She referred to the letter of the CIT(A) which is at page 6 of the department's paper book wherein the CIT(A) has mentioned that the AR has submitted before the CIT(A) that the assessee is ready to offer cooperation in examination of additional evidence. On that basis, the CIT(A) asked the Assessing Officer to call for the relevant vouchers and the books of account for verification and then submit another remand report. She referred to the order sheet entry dated 1.11.2010 and pointed out that the books of 25 ITA NOS. 1186 & 1213/Del/2013 account and vouchers not produced. She, therefore, submitted that either the order of the Assessing Officer may be restored i.e. all the additions made by the Assessing Officer should be sustained or alternatively, the matter may be sent back to the file of the Assessing Officer for re-examination.
6. We have carefully considered the submissions of both the sides and perused relevant material placed before us. With regard to share capital of `1 lakh, the query raised by the Assessing Officer reads as under:-
"Furnish the details of the equity share capital for the new shares capitals introduced during this year along with confirmations, IT particulars of subscribers."
6.1 In response to this, the reply furnished by the assessee reads as under:-
"The assessee company was incorporated 15-04- 2005 under the Companies Act, 1956 with a share capital of Rs.1,00,000/- other than initial share capital of Rs.1,00,000/- no further Equity Share Capital was raised during the year under consideration."
6.2 From the above, it is evident that the assessee has not given any details with regard to the share capital of `1 lakh, not even the name of the shareholder and the confirmation of the shareholder. Before the CIT(A), the 26 ITA NOS. 1186 & 1213/Del/2013 assessee explained that it had received the sum of `10,10,000/- by cheque from Shri Anupam Nagalia, out of which, `50,000/- is credited to the share capital account of Shri Anupam Nagalia, `50,000/- to the share capital account of Shri Deepak Gupta and balance `9,10,000/- in the loan account. Except this explanation, no confirmation from anybody was produced and moreover, why the cheque received from Shri Anupam Nagalia was credited by share capital by Shri Deepak Gupta is explained. In our opinion, the matter needs proper examination at the end of the Assessing Officer. With regard to the other two items, we find that so far as cash deposit in the bank is concerned, the only explanation of the assessee is cash withdrawal from the banks two and half months before. However, here again, the assessee has not produced the cash book from which the Assessing Officer may verify whether the cash withdrawn two and half months back is available. The assessee is a company which is in the business of real estate. There, learned DR rightly pointed out that it needs to be verified whether no expenditure is incurred by the assessee company during the two and half 27 ITA NOS. 1186 & 1213/Del/2013 month period. Similarly, with regard to mutation expenses, no vouchers for the expenses are submitted. The only explanation of the assessee is that the payment has been made by M/s Vatika Limited and the expenses were incurred for identification of land, inspection thereof, searching of registrar's record, expenses incurred on reports from advocates, brokerages etc. Now, if a third party is debiting some account in the name of the assessee, the third party would certainly give the details to the assessee to whom they have made the payment and for which purpose. No such vouchers/details or evidence are produced before the Assessing Officer either in original assessment proceedings or in remand proceedings despite assurance given to CIT(A). The CIT(A) wrote a letter to the Assessing Officer dated 15.8.2010, copy of which is at page 6 of the department's paper book. It reads as under:-
"The Income-tax Officer, Ward 3(1), New Delhi.
28
ITA NOS. 1186 & 1213/Del/2013
Sub :Application under rule 46A(1) for
production of
additional evidence befreo CIT(Appeals) in the case of M/s Buzz Estates Pvt.Ltd. A.Y. 2006-07 - reg.
Please refer to the subject cited above. In your remand report, you have raised the issue that in the absence of supporting vouchers and books of accounts, comments cannot be offered on the additional evidence. In his rejoinder, the AR has submitted that he is ready to offer cooperation in examination of additional evidence. For ascertaining the factual position, you are requested to examine the documents filed by the appellant. In this regard, you may call for the relevant vouchers and books of accounts for verification. Your report must reach this office within one month of receipt of this letter.
Sd/-
(Geetmala Mohananey) Commissioner of Income Tax (Appeals)-VI, New Delhi"
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ITA NOS. 1186 & 1213/Del/2013 6.3 From the above, it is seen that before the CIT(A), the assessee agreed that he will produce the books of account and supporting evidence for verification before the Assessing Officer and therefore, the CIT(A) directed the Assessing Officer to call for the relevant vouchers and books of account for verification. The DR has produced the photocopy of the order sheet dated 1.11.2010 in which Assessing Officer has recorded that the books of account and vouchers not produced. Considering the totality of these facts, we agree with the submission of the learned DR that the entire matter needs complete relook and re-examination by the Assessing Officer. We, therefore, set aside the orders of the authorities below on all the points raised either in Revenue's appeal or in assessee's appeal and restore the matter to the file of the Assessing Officer to be readjudicated afresh in accordance with law. We also direct the assessee to produce the books of account and all the supporting evidence before the Assessing Officer for verification. If the assessee again fails to produce the same, the Assessing Officer will be at liberty to draw the adverse inference. With this remark, we set aside the orders of authorities below and restore the matter to the Assessing 30 ITA NOS. 1186 & 1213/Del/2013 Officer. We direct the Assessing Officer to allow adequate opportunity to the assessee, for production of books of accounts and evidences/explanation etc.
7. In the result, both the appeals are deemed to be allowed for statistical purposes.
Order pronounced in the Open Court 22-8-2014.
Sd/- Sd/-
[G.D. AGRAWAL]
AGRAWAL] [H.S. SIDHU]
SIDHU]
VICE PRESIDENT JUDICIAL MEMBER
Date 22/8/2014
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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ITA NOS. 1186 & 1213/Del/2013
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