Income Tax Appellate Tribunal - Chandigarh
M/S Galley Financiers & Property ... vs Ito, Patiala on 9 July, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए ", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A' , CHANDIGARH
ीमती दवा संह, याय!क सद"य एवं ीमती अ नपण
ू ा% गु'ता, लेखा सद"य
BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.51/Chd/2016
नधा रण वष / Assessment Year : 2010-11
M/s Galley Financiers & बनाम The Income Tax Officer,
Property Consultants Pvt. Ltd., Ward-1, Patiala.
4154/1, Inside Sirhindi Gate,
Patiala.
थायी लेखा सं./PAN NO: AABCG3381J
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by: Shri Rishabh Kapoor, Adv.
राज व क ओर से/ Revenue by : Smt.Chanderkanta, Sr.DR
सन
ु वाई क तार$ख/Date of Hearing : 02.07.2019
उदघोषणा क तार$ख/Date of Pronouncement: 09.07.2019
आदे श/ORDER
Per Annapurna Gupta, Accountant Member:
Th i s a pp e a l h a s be e n p re fe r re d by th e a s se sse e ag a in st the or de r of the C ommi ss ion e r of I n co me Ta x ( Ap p e a l s) , Pa t ia l a [( i n sh o r t 'C I T( A) '] d a te d 3 .1 1 .2 0 1 5, p a s se d u/s 25 0 ( 6) of th e I n come Ta x Ac t, 1 9 61 (h e re in a fte r re fe rre d to a s ' Act '), re la t in g to a sse ss me nt ye a r 2 0 1 0- 11 . 2 ITA No.51/Chd/2016
A.Y.2010-11
2. Earlier the above appeal of the assessee was dismissed for non prosecution by the Tribunal vide order dated 01.03.2018 and the same was recalled vide order dated 24.04.2019 passed in MA No.213/Chd/2018. Hence, this appeal before us.
3. G r oun d s ra i se d by th e a s se sse e rea d a s u nd e r:
1. That the CIT(A) has in view of the facts and circumstances of the case erred on facts and in law in upholding the impugned assessment u/s 143(3) dated 05.03.2013 assessing the income at Rs 18,89,211/-.
2. That the CIT(A) has grossly erred in law and on facts in adjudicating all the ground of appeal raised before him and has also erred in not considering the case law relied on by the appellant.
3. That the CIT(A) has in view of the facts and circumstances of the case erred on facts and in law in upholding the addition of Rs 16,14,901/-on account of share application money received during the year.
4. That the CIT(A) has grossly erred in ignoring and misinterpreting the important facts of the stand taken by the appellant qua the amount of Rs 16,14,901/-
and the CIT(A) also erred in ignoring the well settled position of law on the issue .
5. That the CIT(A) has grossly erred in upholding the additions notwithstanding the fact that the Appellant has discharged its burden of proof u/s 68 of the Act .
6. That the CIT(A) has grossly erred in ignoring and misinterpreting the facts available on record and has passed the order based on guesswork and surmises and conjectures.
3 ITA No.51/Chd/2016
A.Y.2010-11
7. That the various observations made by the CIT(A) in the appellate order are illegal, contrary to facts on record and based on surmises and conjectures.
8. That the evidence, explanation given by the appellant and the material available on record have not been properly considered and judiciously interpreted.
9. That the additions have been made on basis of mere surmises and conjectures and contrary to facts and evidence on record and cannot be justified by any material on record.
10. That the order of respondent is challenged on facts and law since the addition made by the learned AO is patently invalid, wrong and most unjustified. The said addition is also contrary to the facts, material and evidence existing on records. The impugned addition is contrary to the provisions of law and all canons of natural justice.
11. That the Id CIT (A) has failed to appreciate the fact that the books of account and audited statements of the Appellant company show that the amount of share capital was received by them through regular banking channels from the seven individuals, majority of them are existing income-tax assesses and all of them had confirmed the fact of contributing the amount of share capital.
12. That the CIT(A) has failed to appreciate the fact that all seven share investors were summoned u/s 133(6) of the Act by the respondent and all of them appeared before the respondent and acknowledged their respective investment in the Appellant company along with the complete detail of the qua the source of the said investments, Bank Statements and income tax statement
13. Because the order of the CIT(A) confirming the action of the respondent is contrary of the material facts and particulars of the case since the whole addition is on the mere suspicion of the respondent Assessing Office devoid of any corroborative/ positive evidence on record.
4 ITA No.51/Chd/2016
A.Y.2010-11
14. That the CIT(A) has erred in confirming the action of the respondent despite of the fact that the no adverse finding has been pointed out by the respondent in respect of genuineness of transaction, Investors and their creditworthiness or source of investment.
15. Because the order of the CIT(A) is bad in law since Id first appellant authority over sighted the principle laid down by the Honb'le Supreme Court in the case of CIT vs. Lovely Export (P) Ltd. [2008] 216 CTR 195, wherein the Hon'ble Apex court has held that "if share application money was received by the assessee company from alleged bogus shareholders, whose names were given to the Assessing Officer, then Department was free to proceed to reopen their individual assessments in accordance with the law but this amount of share application money could not be regarded as undisclosed income under section 68, of the asseessee company."
4. Re fe rr i ng to t he a b ove , the Ld. C o u nse l for t he asse ssee poi n te d ou t th at th e s ole is sue r a i se d i n the imp u gne d a pp e a l re l a te d to a d d i tio n ma d e of s ha r e a p p l ic a tion mon e y a moun ti ng to Rs .1 6 ,1 4 ,9 0 1 /- u /s 6 8 of the A ct o n a c cou nt of th e s a me r e ma i ni ng u ne xp la i ne d . Ta ki n g u s th ro ugh t he fa ct s of th e c a se, a s fi n d me n ti on i n th e a s se s sme n t or d e r, the Ld . C ou nse l f or th e a sse ss ee p oi n te d out tha t t he a sse sse e was a NBFC (N on Ba n k in g F i na n ce C omp a n y) e ng a ge d i n the b u si ne ss of pr ovi di n g f in a n ce a nd p r op e r ty con sul ta t ion . Th a t d ur i ng th e i m p ug ne d ye a r , the a ss e ssee ha d r e ce i ve d sh ar e a p p li ca t ion mon e y of Rs. 2 4 l a cs fr om t he fol l ow in g pe r son s:
5 ITA No.51/Chd/2016
A.Y.2010-11
1) Sh . D al j i t S in gh , # 7 81 3 - C, Rs. 2 , 00 , 0 00 /-
Pa s si R o ad, P ati a l a
2) Sh . In de r j it S in gh , # 19 2 1 , Rs. 6 , 00 , 0 00 /-
Urb an E s ta te , Ph a se- II, P a ti a l a
3) Sm t. P ar m ind er K au r, S t. No .1 2 2 , Rs. 5 0 , 00 0 /-
#12 2 2 , Gu ru N an a k N ag ar, P a ti a l a
4) Sh . J. S . D hin d sa, Mo h al l a Rs.6 , 5 0, 0 0 0 /-
Arori an , P a ti a l a
5) Sh . A mar j it S in gh , V il l . Rs.5 , 0 0, 0 0 0 /-
D ha kr a b a, P a ti a l a
6) Sh . R up in d er S in gh , S t. No . Rs. 2 , 00 , 0 00 /-
12 2 # 1 2 2 2, Gu ru Nan a k Nag ar, P a ti a l a
7) Smt. V i te sh a Be d i , 4 1 5 4 /1 Rs.2 , 00 , 0 0 0 /-
Sirh in d G a te, P at i al a
5. D ur i ng a ss e ss me n t p r oce e d in gs, the A. O . i ssue d sum mon s to t he s e pe rs on s a n d r ec or de d sta te me n ts of th ose wh o a pp e a re d i n re sp on se . Th e A. O. n ote d the vit a l p oin ts wh i ch e me r ge d f ro m t he s ta te me nt s re cor de d of the se in ve s tor s a n d a ls o no te d hi s c om me n ts on th e sa me i n a ta b ul a r f or m r e pr od u ce d a t p a ges 3 to 7 of the a sse ssme nt or de r . F r om th e s a me , h e d e r i ve d t ha t w he n the in ve stor s we re s pe ci fi ca l l y a s k e d a s to w h y th e y ha d in ve ste d i n a n un li ste d comp a n y, th e y ha d a com mon a n d cr a m me d re p ly tha t th e c omp a ny w oul d r i se i n fu tur e a nd the y w ou l d ge t be ne fi t. He f urt he r de r i ve d f rom th e sa me t ha t t he sha re hol de r s we re n ot e ve n a w a re o f th e f i na n ce gr ow t h or 6 ITA No.51/Chd/2016 A.Y.2010-11 re su lts o f th e comp a n y a n d a ls o t ha t th e comp a n y ha d not is sue d a ny n otice or le tte r c a lli n g for s ha re a pp l i ca ti on mone y a nd th a t th e sh a re h olde rs w er e j us t cl ose a ssoc i a tes of t he a sse ssee , w h o w e re tr yi ng sa v e the a s se sse e b y gi vi ng suc h st a te me n ts w i th out f ur ni sh i ng any cor r ob or a ti ve e vi de n ti a ry d ocu me n ts r e ga r d ing the s ha re s i ss ue d or ju sti fi ca tio n fo r th e sou r ce of suc h i nv e st me nt . He, the re fo re , he l d th a t th e sha re ap p li ca ti on mon e y w as on ly the ow n un di sc l ose d i n come of the a sse s see a n d add e d ba c k the s a me t o t he inc ome of th e a sse ssee u/s 6 8 o f the A ct.
6. Th e a ss e ss ee ca r r ie d t he ma tte r i n a pp e a l b e f ore the Ld. C I T( A) a n d f il e d de ta i le d su bmis si on s i n w r it i n g a ga in st the a d d it ion s o ma d e , wh i ch i s re pr od u ce d a t p a ra 5. 1 of the C I T( A) 's or d e r . The Ld. C ou ns e l for t he a sse sse e c ont e n de d tha t t he a s se s se e ha d d is ch a r ged i ts on us o f pr ovi ng t he id e n ti ty a n d c a pa ci ty of th e cre di tor s t o a d va nc e th e mon ey a nd a l so the gen ui ne ne ss o f the t r a ns a cti on a nd th e A .O . ma de th e d is a ll ow a n ce on me re susp i ci on . Tha t th e i n ve s tors ha d a c ce p te d the fa c t t ha t the i n ve s tme n t wa s ma d e b y t he m by th e i r ow n sourc e s in the sta teme n ts r e cor de d by th e A .O . a nd , th e re f ore t he re was no re a so n to tre a t th e sa me un e xp la ine d . Th e w ri tte n su b mis si ons fi le d b y the ass e ssee 7 ITA No.51/Chd/2016 A.Y.2010-11 we re fo rw a r de d to the A. O. fo r h is co m me nt s, wh o r e l ie d on the l ine of a r gume nt gi ve n i n th e a s se ssme nt or d e r a n d fu rt he r sta te d tha t a n othe r op por tu ni ty w a s gi ve n t o t he in ve s tor s to su bs ta n ti a te the s our c e of in ve stmen t a nd out of se ve n i n ve s tors, on l y t hr ee h ad r e p l ie d a n d f ur th e r tha t the ge n ui ne ne ss of t he tr a n sa c tion h a d n ot be e n p r ov e d by the a sse s see on the b a si s of w hi ch t he a d di ti on wa s ma d e by the A. O. The Ld . C I T( A) a f te r con si d e r i ng the a bove , de le te d the a dd i ti on ma d e on a c cou nt of s ha r e a p p l ic a tion mon e y re ce i ve d f ro m Shr i I n de r j it Si n gh a nd Sh r i Da l j it Si n gh on fi nd i ng th a t the s our c e of the i r inv e st me nt s ha d be e n d u ly sub s ta nt ia te d . Th e in ve stme nt ma d e by the re st wa s up h e ld by th e C I T(A ) ho ld i ng th a t th e cre d i tw or th ines s of t he in ve s tor s ha d n ot be e n d ul y p r ove d . Th e r e le va n t f in d in gs of the Ld .C I T( A) a t p a r a 5 . 3 of h is or d e r a re a s un de r :
"5.3 I have considered the submission made by the appellant and counter comments made by the Assessing Officer. The final position in respect of each of the impugned investors has emerged as under:
i). Sh. Inderjit Singh is claimed to have received Rs.6,62,000/- on 24.08.2009 from his GPF account on 24.08.2009. He has furnished a copy of the order of the Competent Authority to that effect.
Out of these proceeds, Rs.6,00,000/- have been invested with the appellant company. Thus, the genuineness of this transaction stands 8 ITA No.51/Chd/2016 A.Y.2010-11 established. The addition made on account of this investment, is therefore, deleted.
ii). Smt. Vitesha Bedi is claimed to have invested Rs.2,00,000/- with the appellant. Her bank account No.SB/10247 with Punjab & Sind Bank, Patiala shows a cash credit of Rs.2,00,000/- on 19.02.2010. On that very day it has been invested in the appellant company. Before and after these entries, her bank passbook shows negligible balances only. As per the income computation for Assessment Year 2010-11 submitted before the Assessing Officer on 28.09.2015, she has shown an income of Rs.3,67,000/- including Rs.3,60,000/- from the appellant company as salary as Director. She has claimed a deduction of Rs.1,27,000/ under section 80C. There is hardly any regular flow of funds in her bank account as is evident from the copy of her bank passbook. The specific source of the credit entry of Rs.2,00,000/- in her bank account remains unexplained. Therefore, the Assessing Officer is justified in taking adverse cognizance in respect of investment attributed to her.
iii). Sh. Rupinder Singh is claimed to have invested Rs.2,00,000/- with the appellant. His bank account No. 160634001000484 with Cooperative Bank shows a cash credit of Rs.2.24 lac on 16.02.2010 out of which Rs.2,00,000/- have been invested with the appellant on 19.02,2010. The source of the cash credit entry of Rs.2,24,000/- has not been established/stated. The balance in the bank account before and after this transaction remains negligible. Thus, his credit worthiness is not proved and the Assessing Officer has rightly taken an adverse view on the investment attributed to him.
iv). Smt. Parminder Kaur is claimed to have invested Rs.50,000/- with the appellant. She does not appear to be an income tax assessee. She has a nominal balance of slightly more than Rs.7000/- in her bank account since long. There are cash credit 9 ITA No.51/Chd/2016 A.Y.2010-11 entries of Rs.2000/- and Rs. 44,820- on 10.04.2009 and 10.08.2009. She has invested Rs. 50,000/- on 04.09.2009. After that her balance in the bank account remains nominal only. The source of deposits is also not stated/established. Thus, her creditworthiness is not established and the view taken by the Assessing Officer is upheld.
v). Sh. Amarjit Singh is stated to have invested Rs.5,00,000/- with the appellant company in January 2010. It is stated that he is a retired bank employee and had made investment out of his retirement funds. However, no evidence in support thereof has been filed by the appellant or by the alleged investor either during assessment proceedings or in appellate proceedings. In view thereof his creditworthiness and capacity remains unestablished and the view taken by the Assessing Officer is upheld.
vi). Sh.J.S. Dhindsa is alleged to have made an investment of Rs.6.5 lacs on 03.11.2009 with the appellant company. A perusal of his bank statement reveals a credit entry of Rs.8.5 lacs on 07.10.2009. Soon thereafter the account shows four cash withdrawals of Rs.50,000/- each on 10.10.2009, 14.10.2009, 19.10.2009 and 27.10.2009, before the impugned investment of Rs.6.5 lacs with the appellant company on 03.11.2009. Thereafter the bank balance of this investor remains modest at around Rs.20,000/- before closing on 05.02.2010 at Rs.5,385/-. The source of deposit of Rs.8.5 lacs on 07.10.2009 has not been explained at all. Thus, the creditworthiness of Sh. J.S.Dhindsa is not established and the view taken by the Assessing Officer is upheld.
vii). Sh. Daljit Singh is claimed to have invested Rs.2,00,000/- with the appellant out of the maturity proceeds of his fixed deposits with HDFC Bank Ltd., Patiala and SBOP, Patiala. In support of his contention, the copies of bank passbook evidencing the accumulation are furnished. 10 ITA No.51/Chd/2016
A.Y.2010-11 Therefore, the creditworthiness of this investor is established. The addition made on account of this investment deleted.
It will also be pertinent to mention here a recent decision of the Hon'ble ITAT Kolkata bench 'B' in the case of Subhlakshmi Vanijya (P.) Ltd. Vs. CIT-I, Kolkata [2015] 60 taxmann.com 60, wherein it has been held that the amendment to section 68 by insertion of proviso vide Finance Act, 2012 which casts onus on closely held company to explain source of share capital is clarificatory and hence applicable with retrospective effect. The relevant portion of the judgment is reproduced below :
"13.ae. The above discussed judgments from the Hon'ble Summit Court holding a clarificatory substantive provision as retrospective, despite the same being made applicable from a particular year, fully govern the position under consideration. It is interesting to note that the judgment of the Hon'ble jurisdictional High Court in Maithan International (supra) holding that the burden of proving the credit of share capital etc. is on a closely held company and failure to do so attracts the rigour of section 68, has been delivered on 21.1.2015, much after the amendment carried out by the Finance Act, 2012. This case pertains to pre-amendment era as the order of the tribunal assailed in this case is dated 24.6.2011. It shows that the Hon'ble High Court has also impliedly approved the proposition that the position anterior to the A. Y. 2013-14 was the same inasmuch as the onus to prove the share capital by a closely held company was on it. We, therefore, hold that the amendment to section 68 by insertion of proviso is clarificatory and hence retrospective. The contrary arguments advanced by the Id. AR, being devoid of any merit, are hereby jettisoned."
In the above view of the matter, the Addition made on this count is upheld to extent mentioned in relevant paras. Therefore this ground of appeal is partly allowed."
7. B e f ore u s, th e Ld .C oun se l f or th e a sse s see re i te ra te d the con te nti on ma d e b e fore the l ow e r a u th or it ie s s ta ti ng 11 ITA No.51/Chd/2016 A.Y.2010-11 tha t t he a s se s se e ha d d is ch a r ged i ts on us o f pr ovi ng t he id e n ti ty and cr e d i tw or th ine s s of th e c r e dit or s and ge n ui ne ne ss of th e tr a ns a cti on . Re fe r ri n g to the sta te me n ts re cor de d of all th e in ve stor s , th e Ld. C ou ns el f or t he a sse sse e con te nd e d t ha t a d mitt e d ly a l l the in ve stor s h ad a cce pte d t he f a ct of h a vi n g ma d e the i nv e stme nt s in t he imp ug ne d c omp a ny a nd h a d a l s o sta t e d the so urce of t he sa me . Re fe r r i ng to t he f i nd i ngs of th e Ld . C oun s e l fo r t he a sse ssee a t p a r a 5. 3 th e Ld .C ou ns e l f or the a sse ssee p oi nte d out th a t e ve n th e Ld .C I T(A ) had n ote d th e fa c t tha t Smt. Vi te s ha B e di w a s a Di re c tor in the c omp a ny d r a w i ng sa l a ry of Rs .3 . 6 0 la c s du l y di sc los e d in he r r e tu r n of in come , wh i ch w a s the so ur ce cl ai me d b y th e i nv es tor i n he r sta te me n t re co rd e d a l so . Ld .C oun se l f or the a ss e ssee poi n te d ou t t ha t thi s w a s s uf fi ci en t f or th e i n ve s tme n t ma de of Rs .2 l a cs b y h e r a s sh a re a p pli c a tio n mon e y. As f or Sh r i Ama r j it S in gh , th e Ld . C ou nse l f or t he a s se s se e po in te d out fr om p a r a 5 . 3 (v ) th a t th e i nve st or ha d sta te d tha t he w a s a re ti re d b a n k e mp l oyee a n d ma d e th e i n ve s tme n t o ut of h is re ti re me n t f un d s, w h ic h f a ct ha d re ma in e d un con tr ove r te d . Th e Ld .C ou ns e l f or the a sse ssee st a te d t ha t h a vi ng so de cl a re d the i r s our c e s i n t he s ta te me n ts re c or de d , a n d t he in ve s tor s be i ng a t no po in t a ske d to p r ove the s our ce of 12 ITA No.51/Chd/2016 A.Y.2010-11 the ir s our ce , n or th e i r cre d i tw or th in e s s e ve r be i ng d oub te d by th e A .O , the a ct ion of th e Ld .C I T( A ) i n up h old i ng t he a dd i ti on on th is cou nt w a s not i n a cco rd a n ce w i th la w . The Ld. C ou ns e l fo r th e a s se sse e fu rthe r sta te d a t B a r t ha t i t h a d a ll e vi de nce s to p r ov e the sou r ce of the i nv e st or s f or ma k i ng the i mpu gn e d i n ve s tme n t, if g iv e n an op p or tun i ty. Al te r n a tive l y, the Ld .C ou ns e l for t he a sse ssee c ont e n de d tha t th e re w a s no r e q u ire me nt und e r l a w f or the as se s se e to pr ov e the sou r ce of the sou r ce a nd r e lie d u p on the f oll ow i ng ca se l a w s in s upp or t of h is c onte nt ion :
1) C I T V s. Love ly Exp or ts P vt . Lt d. , 2 9 9 I TR 26 8 (S C ) .
2) C I T Vs . Sh r e e D a d u Au to P vt. Ltd . , I TA N o.7 0 4 of 20 0 9 ( P &H ) .
3) Pr . C I T Vs . Vi d ha ta Tow e r P vt . Ltd ., I TA N o.8 1 9 of 20 1 5 ( B om)
4) Pr . C I T Vs. M /s Acq u a ti c Re me die s P v t. Ltd . , I TA N o. 83 of 2 0 1 5 (B o m)
5) C I T Vs. M /s G a ga n d ee p I n fr a s truc tur e P vt.
Ltd ., I TA N o .1 6 1 3 of 2 0 1 4 ( B om)
8. Vi s-à -vi s t he a d di ti on ma d e o n a c cou nt of i nv e stme nt by S h ri J.S . D h in d sa of R s.6 . 5 la c s, th e Ld . C oun se l f or t he a sse sse e con te n de d th a t a ll ne ce ssa r y e vi de n ce s t o p r ove the sou rc e of th e i r i nv e stme nt s h a d b ee n fi le d t o th e CIT( A) , w ho ha d i gn or e d the sa me comp l e te ly a n d up he ld the a d d it ion . 13 ITA No.51/Chd/2016
A.Y.2010-11 Dr a w i ng our a tte n ti on to th e Pa p e r B ook f il e d b e for e us , t he Ld. C ou ns e l for t he a sse ssee po in te d o ut t o th e d oc ume n ts pl a ce d a t Pa pe r B ook p a g e N o. 3 1 a n d sta t e d th a t it w a s a se tt le me n t e n te re d i nto b y S h ri J.S . D h in d sa a nd a no the r pa r ty , i n w hi ch i t h a d b e e n a gre ed to p a y Rs. 8 ,5 0 ,0 0 0 /- t o Sh r i J.S . Dh i nd sa , wh i ch w a s p a i d t o h i m b y w a y of a d r a ft da t e d 3 . 10 . 20 0 9 . C op y of the sa me w a s pl a ce d a t Pa p e r B o ok Pa g e N o. 25 to wh i ch our a tte nt ion was d ra w n. The Ld. C ou ns e l fo r th e a s se sse e poi n te d o ut tha t it was e xp la ine d t o the Ld. C I T( A) tha t th e i n ve s tme n t ha d b e en ma de o ut of th i s a moun t r e ce ived bu t th e Ld . C I T( A) for his ow n r e a so ns h a s ch ose n to i gn or e the e vi de n ce f i le d a n d up he ld the a d d i tion ma d e .
9. Th e Ld . D R, on th e ot he r h a n d, su p por t e d the or de r of the Ld .C I T(A ) and st a te d th a t th e c on te n ti on of t he Ld. C ou ns e l for t he a sse ssee t ha t the i nve sto rs w e re not a sk e d to su b sta n ti a te the i r sou rc e of in ve stmen ts , w ere in cor r e c t. D r a w ing o ur a tte nti on to p a ge N o.4 8 of the Pa pe r B ook , b e i n g the st a te me nt re c ord e d of Sh ri A ma rj i t S in gh one of the in ve stor s , th e Ld . D R po in te d ou t to q ue s ti on N o.1 0 w h e re i n th e in ve stor wa s a s k e d to fi le d y e a r w i se 14 ITA No.51/Chd/2016 A.Y.2010-11 de ta i ls o f i nv e stme nt a n d the s our c e of ma k i ng i n ve s tme n t. Th e sa me i s r e p rod uce d he re u nder :
" Q .1 0 H ave you m ade th e in ve stm en t in a sin gl e go or in d if f e ren t ye ar s. Pl e a se tel l th e ye ar wi s e d e ta il of in ves tme n ts an d the s ou rce s of mak in g in ve stmen t.
A: - I h ave mad e i nv estmen t in sin g l e go in J an u ar y, 2 0 10 . It i s ou t of f u n d s rec eive d at th e ti me of re tire me n t. S ta te men t of a/c wil l be f u rn ish ed on l a ter d a te. "
10 . Th e Ld . D R r e f er r i ng to th e sa me sta t e d th a t a l l the in ve s tor s we re sp e ci f ic a ll y a ske d to p r ove the sou rc e of t he in ve s tme n ts ma d e a nd , t he re fore , the con te n tion of t he Ld. C ou nse l f or th e a sse ss ee w a s in co rr e ct in thi s r e ga r d tha t the i nve s tor s we re not a s ke d to p r ove the sou r ce . Th e Ld. DR fu rt he r re l ie d on th e de c i si on of the H on 'b le D e l hi H i gh C our t i n th e f ol lo wi n g c a se s w i th r e s pe ct to the on us on t he a sse sse e to pr ove the cre d i tw or thi n e ss of the p a r tie s i n di sc ha r gi n g of its onu s t o p r ove the ge nu i ne nes s o f t he tr a ns a cti on :
1) C I T Vs . N o va P r omote r s & Fi n e ase (P ) Ltd . , I TA N o. 34 2 of 2 0 1 1 (D e l hi ) .
2) C I T N R P or tf ol i o P vt . Ltd . , I TA N o. 1 01 9 of 20 1 1 (D e l h i) .
11 . A s f or the cont e nt ion s ma d e by th e Ld .C ou n s e l f or the a sse sse e re ga r d in g t he sou rce o f i n ve s tme n t ma d e by Sh r i 15 ITA No.51/Chd/2016 A.Y.2010-11 J.S .D hi n d sa , Ld. D R f a ir l y c once de d th a t t he sou rce o f the in ve s tme n t h a d b e e n d u ly e xp la in e d a nd su b sta n ti a te d as con te n de d b y the a sse ssee .
12 . W e ha ve h e a r d th e ri v a l con te nti ons ca re fu ll y, go ne thr ou gh th e o rde r s of a u th or it ie s be low a nd also gone thr ou gh t he d ocume n ts a n d c a se l a w s r e fe r re d to b e f ore us by b oth t he p a r tie s.
13 . Vi s-à -vi s t he i nv e stme nt ma d e by S hr i J. S. Dh i nd sa of Rs. 6, 5 0 ,0 0 0 /-, w e fi n d tha t the as se s se e h a d du l y e x pl a i ne d the s our ce of the sa me a s o ut of mone y re c eive d f ro m se tt le me n t a r r i ve d at by Sh r i J.S . Dh i nd sa w it h a no the r pa r ty . Evi d e n ce s i n th is r e g a r d wer e p la ce d be f ore th e C I T( A) in th e f or m of the or de r of t he Hon 'b le P un ja b a nd H a r ya n a Hi gh C ou r t n oti n g th e f a ct of se t tl e me n t a r r i ve d be twee n t he a sse sse e a n d an oth e r p a r ty i n C r l . Mi s c. N o.M-1 98 7 7 of 20 0 9 d a te d S e p te mb e r 1 0 2 0 0 9 f or a su m of Rs. 8, 5 0 ,0 0 0 /- a nd a l so the c opy of the de ma nd d r a ft for the s a id a mou nt da t e d 3 Oc tobe r 2 0 0 9. The Ld . D R h a s b ee n u na b l e to con tr ove rt the sa me . The Ld . C I T( A) w e f in d ha s h i mse l f note d t he f a ct o f d e p osi t of Rs. 8 ,5 0 ,0 0 0 /- i n t he b a n k a ccou nt of Sh D hi nd s a on 07 -1 0 -2 0 09 and i nv e stme nt the re a fte r in the imp u gne d c o mp a ny of Rs. 6 ,5 0 ,0 0 0 /-. The 16 ITA No.51/Chd/2016 A.Y.2010-11 in ve s tme n t ma de b y Sh . Dh i nd sa , w e the re f ore hold , s ta nd s du ly e xp la i ne d an d s ub sta n ti a te d a l so ,f r om t he a mou nt of mone y r e ce i ve d by h i m on a cc oun t of se t tle me n t . I n vie w of the s a me , w e fi nd n o r e a s on to t r e a t the sh a r e app l i ca ti on mone y re ce ive d f r om Sh r i J. S. Dh i nd sa a s un e xp l a i ne d a nd di r e c t de le ti on of a d d it ion ma d e to th e e x te n t of Rs. 6, 5 0 ,0 0 0 /-.
14 . F or th e ba l a n ce , o n goi ng th ro ugh t he or de r of t he A. O. , w e f i nd t hat th e A .O . h a d tre a te d t he sh a re app l i ca ti on mone y r e ce i ve d a s un e x pl a i ne d a nd i ng e n ui ne tr a n sa ct ion , si nc e he f oun d th a t t he in ve stor s cou l d not of fe r a p la u si b le re a son or e xp l an a tio n f or ma k i n g th e i n ve s tmen t i n the comp a ny co ns id e r i ng the f a ct th a t i n ve s tme n ts ha d b e e n ma de i n p r e c e d ing ye a r s a ls o b ut the a sse ss ee comp a n y h a d not gi v e n a ny d i vi de nd a nd wa s n ot d oi n g th e w or k of he r b a l fa r mi ng for wh i ch p u rp or te d ly the i nve s tors ha d p ut the ir mon e y a n d no sha re ce r ti f ic a te s ha d bee n i ss ue d to the m. Th is is e vi de nt fr om th e comme nts of th e A .O . re cor de d i n ta b ul a r f or m i n t he a s se ss me nt or de r a t pa g e s 3 to 7 a s un d e r :
S. Particular A m ou n t Gist of s t ate m e n t C om m e n ts N o. s re c o r d e d
1. Sh.Inderjit ----00,000/-
• Invested Rs.50,000 • Investing money Singh s/o invested in September 1999 since 1999 and Sr.Amarjit during the 17 ITA No.51/Chd/2016 A.Y.2010-11 Singh, r/o year pumping more and • Invested 1921, Urban more money till Rs.6,00,000/- in Estate, 2010 and also did September, 2009 Phase-11, not get any dividend Patiala • Invested till date. It is Rs.1,00,000 in certainly against the October, 2010 principles of human probability as • Retired in 2009 upheld by Hon'ble • Only one office in apex Court in the the premises case of CIT vs P.K. 4154/1, Sirhind Noorjahan reported Gate, Patiala. in 237 ITR 570. The contention of the • No dividend has shareholder is nor been received till acceptable as a date.
retired government
• Purpose for employee will not
investment is that invest in an unlisted
the company may NBFC who is not
arrange suitable giving him any
land for herbal return since
farming and will get inception is not
higher returns. acceptable to a
rational human
• As informed he was mind as decided in
allotted 75000 Sumati Dayal vs CIT
equity shares but reported in 214 ITR
could not show the 801 (SC).
same either in
physical mode or • The company is not
Demat form and doing the work like
promised to show purchase of land for
later. Promised but herbal farming etc.
never shown till rather it is engaged
date of passing of in money lending
order. business and other
consultations for
• No advertisement purchase of
was given by the movable/immovable
company calling property and
for share earning interest
application money
thereon. The
and he come to memorandum and
know about the Articles of
share issue from the Association do not
Directors as they permit the company
were known to me. to carry out such
• Retired business of herbal
Government farming (as per
employee object clause)
• No share certificates
were shown means
that the assessee is
18 ITA No.51/Chd/2016
A.Y.2010-11
misrepresenting the
facts to the
department by
producing such
persons.
• It is establishes the
fact that the share
holder has never
visited the premises
as there are two
companies running
from the same
premises since long.
2. Sh.Daljit 100,000/-
• Invested Rs.40,000 • Investing since
Singh, 7813-
in 1999 1999 and did not
C, Passi
get any dividend.
Road, Patiala • Invested
Rs.50,000/- in It is certainly
September, 2000 against the
principles of human
• Invested Rs.30,000
probability as
in 2001
upheld by Hon'ble
• Invested apex Court in the
Rs.1,00,000 in case of CIT vs P.K.
1.9.2009 Noorjahan reported
in 237 ITR 570.
• Only one office in
the premises • The company is not
4154/1, Sirhind engaged in the work
Gate, Patiala. like purchase of
land for herbal
• No dividend has
farming etc. rather
been received till
it is engaged in
date.
money lending
• Purpose for business and
investment is that earning interest
the company may thereon.
arrange suitable
• No share certificates
land for herbal
were shown means
farming.
that the assessee is
• Allotted 32000 misrepresenting the
shares but could not facts to the
show the same and department by
promised to show producing such
later. Promised not persons.
fulfilled till date of
• It is establishes the
passing the order.
fact that the share
• No advertisement holder has never
was given by the visited the premises
company calling as there are two
for share companies running
19 ITA No.51/Chd/2016
A.Y.2010-11
application money from the same
and come to know premises since long.
from my brother
• As claimed by the
Amarjit Singh,.
assessee Sh.Daljit
• Retired Singh has invested
Government Rs.200000/- during
employee the year but
Sh.Daljit Singh in
his statement stated
that he has invested
Rs.1,00,000/-. Thus
the claim of the
assessee has no
basis.
3. Sh.Amarjit 5,00,000/-
• Invested • Invested in 2010
Singh, 15-A, invested
Rs.5,00,000 in and did not get any
Hembagh, during the
Janyuary, 2010 dividend. It is
Patiala year
certainly against the
• Two offices in the
principles of human
premises 4154/1,
probability as
Sirhind Gate,
upheld by Hon'ble
Patiala. One M/s
apex Court in the
Galley and other of
case of CIT vs P.K.
Avancer Finlease.
Noorjahan reported
• No dividend has in 237 ITR 570.
been received till
• The company is in
date.
money lending
• Invested in the business etc. and
company with the charging interest
though that it is a thereon and is not
growing company giving any dividend
and will given to shareholders.
benefit in long run.
• No share certificates
• Allotted 50000 were shown means
shares but could not that the assessee is
show the same and misrepresenting the
promised to show facts to the
later. But he did not department by
keep his work. producing such
persons.
• No advertisement
was given by the • The contention of
company calling the shareholder is
for share not acceptable as a
application money retired government
and come to know employee will not
from the Directors invest in an unlisted
as they were known NBFC who is not
to me. giving him any
return since
• Investment made
inception is not
20 ITA No.51/Chd/2016
A.Y.2010-11
out of retirement acceptable to a
funds but no proof rational human
for the same given. mind as decided in
Sumati Dayal vs CIT
• Retired Chief
reported in 214 ITR
Manager from
801 (SC).
Punjab & Sind Bank
4. Smt.Vitesha 2,00,000/-
• Invested Rs.20,000 • Investing since
Bedi,
on 1.4.99 1999 and did not
Director,
get any dividend.
4154/1, • Invested Rs.5,000/-
Sirhindi on 17.12.99 It is certainly
Gate, against the
• Invested Rs.25,000
Patiala. principles of human
on 31.3.2001
probability as
• Invested upheld by Hon'ble
Rs.1,05,000 on apex Court in the
1.10.2001 case of CIT vs P.K.
Noorjahan reported
• Invested
in 237 ITR 570.
Rs.15,000/- on
31.1.2002 Pumping more and
more money not
• Invested
getting any return
Rs.3,00,000/- on
thereon is illogical
15.3.2007
and irrational to a
• Invested rational mind.
Rs.5,75,000/- on
• As claimed by the
31.3.2008
assessee
• Invested Smt.Vitesha Bedi
Rs.2,00,000/- on has invested
1.4.2011 Rs.2,00,000/-
during the year but
Sh.Daljit Singh in
his statement stated
that he has invested
Rs.2,00,000/- on
1/4/2011 (List of
investment on file).
Thus the claim of
the assessee has no
basis.
5. Sh.J.S. 6,50,000/-
• Invested • Invested in 2009
Dhindsa, r/o invested
Rs.6,50,000 in and did not get any
New Officers during the
September, 2009 dividend. It is
Colony, 117, year
certainly against the
Patiala • Two offices in the
principles of human
premises 4154/1,
probability as
21 ITA No.51/Chd/2016
A.Y.2010-11
Sirhind Gate, upheld by Hon'ble
Patiala. One M/s apex Court in the
Galley and other of case of CIT vs P.K.
Avancer Finlease. Noorjahan reported
in 237 ITR 570.
• No dividend has
been received till • The company is in
date. money lending
business etc. and
• Invested in the
charging interest
company to
thereon and is not
support the
giving any dividend
company to rise
to shareholders.
• Allotted shares but
• No share certificates
do not remember
were shown means
the number of
that the assessee is
shares. He could not
misrepresenting the
show the share
facts to the
certificates and
department by
promised to show
producing such
later.
persons.
• No advertisement
• From the statement
was given by the
it is evident that the
company calling
amount was given
for share application
to support the
money and come
company and not as
to know from the
an investment.
Directors as they
were known to me.
• Investment made by
cheque but did not
produce the pass
book.
6. Parminder 50,000
• Father of Ms.Parminder
Kaur d/o
Kaur appeared and
S.Misra
stated that she has
Singh,
settled abroad.
St.No.122,
1222, Guru How a person could
Nanak forego his/her
Nagar, investment and is not
Patiala concerned about the
return on money
invested. Moreover, the
case is same like other
so called investors i.e.
not getting any
money/return in the
form of dividend etc. till
date.
7. Rupinder 2,00,000
• Father of Ms.Parminder
Kaur d/o
22 ITA No.51/Chd/2016
A.Y.2010-11
S.Misra Kaur appeared and
Singh, stated that she has
St.No.122, settled abroad.
1222, Guru
How a person could
Nanak
forego his/her
Nagar,
investment and is not
Patiala
concerned about the
return on money
invested. Moreover, the
case is same like other
so called investors i.e.
not getting any
money/return in the
form of dividend etc. till
date.
15 . Th e AO th e re f ore , we f i nd , tre a te d the in ve stme nt a s un e xp la ine d fi n d in g it hi gh l y imp r ob a b l e fo r any s ane pe r son t o in ve st i n a comp a n y gi vi ng n o r e tu r ns a n d wh i ch wa s i nd u lgi n g i n a cti vi ti e s oth e r th a n thos e f or w h ic h t he in ve s tor s h a d put i n the i r mon e y e x pe cti n g high r e tu r ns the re fr om. He a l so not e d th a t no sh a r e c e r ti fi c a te s e vi de n ci ng the sh a r e s w a s p ro du ce d be f ore hi m a n d a l so tha t th e in ve stor s w e re un a w a re of the f in a n cia ls of t he a sse sse e comp a n y. Th e A .O . , w e fi nd , ha s n ot re c orde d a ny fi nd i ng v i s-a -vi s t he c re d it wo rt hin e ss o f the i nve st or s b e i ng dou b tfu l , i n hi s e n tire no te s on hi s obs e r va t ions fr om t he sta te me n ts re co rd e d of t he i nve s tor s. A t th e sa me ti me ,w e fi nd , th a t th e i n ve s tor s ha d s ta ted t ha t the i nve stme nt s h a d be e n ma d e th r oug h b a nk i ng c ha n n e l s a nd the ir so ur ce s of in ve s tme n t a s be i ng sa l a r y a s di r e c tor fr om the a sse ssee 23 ITA No.51/Chd/2016 A.Y.2010-11 comp a ny i n t he ca se of S mt. Vi de sh a B e d i a n d r e t ire me nt fu nd s of S h. A ma r j it S i ng h w h o cl a ime d to b e a r et ir e d b a nk e mp loy ee . Th e se f a cts we f in d me n ti on e d i n t he CI T( A) 's or de r itse l f a t pa ra 5. 3 r e p r od uce d a bo ve . H a ving cl a ime d so, w e f in d , no fu r the r q ue stion s w e re a ske d fr om t he in ve s tor s.
16 . O n the co ntr a r y, w e fi n d, t he Ld .C I T(A ), h a s up he ld t he a dd i ti on f or a tot a ll y d i ff e re n t rea s on f r om th a t r e co rde d by the A .O , ho ld i ng th a t t he cre di tw or th i ne ss of the in ve stors re ma in e d u np r ove d . Th e Ld .C I T(A ) ha s gi ve n f i nd i ngs a b out ca sh be in g i mm e d ia te l y de p osi te d i n th e b a nk acc oun t of Smt. Vi te s ha B e d i, Sh r i Rup i nd e r Si n gh , Smt. P a r m i n de r Ka u r a nd has u p he ld t he a d d iti on for th is re a s on. But t he Ld. C I T( A) d id so w i th out giv in g th e a s se s se e a n o pp or tu ni ty to r e b u t o r con tr ove r t h i s a d v e r se ob se r va ti on s. Th e f in d in gs dou b ti ng the so ur ce of in ve stme nts was ne ve r ma d e b y t he A. O, bu t w e re ma d e b y the CI T( A ) onl y a n d w e f ind th a t he di d not a ff or d t he a sse ssee a n op p or tun it y to e xp lai n t he sa me a l so. Th e a ss e s see a l l a lon g j us tif ie d the gen ui ne ne ss of t he tr a n sa ct ion , cou nt e r in g t he fi n di n gs of the A O, a n d the C I T(A ) d i d n ot up h ol d th e a dd iti on for th e same r e a s on a s th e A O bu t f or a tota l l y d i ffe ren t r e a s on tha t too w i th out con fr on ti ng hi s a d v e r se ob se r v a ti ons to t he a sse ss ee . Th is 24 ITA No.51/Chd/2016 A.Y.2010-11 a ct of t he Ld . C I T( A) , we ho ld , is ag a in st a ll ca n non s/p r in ci p l e s of n a tur a l justi ce . The Ld . C oun se l fo r the a sse sse e h as st a te d be f ore us a t B a r tha t he h as a l l e vi de n ce s to p r ove the sou r ce of i nv e st me nt ma de . I n the in te re st of j us tice , we , the re f ore , con si d e r i t f it to r e store the is sue ba c k to th e fi l e of the Ld. C I T( A) to a d j u d i ca te t he is sue a f re s h a ft e r g iv in g th e a sse ssee d ue op p or tun i ty of he a r i n g. Th e a s s e sse e i s f ree to f il e a ll e v ide nce s in su p por t of hi s con te nti on.
17 . I n the r e sul t, the a p pe a l of th e as se s se e p a r tl y a l lo we d for sta ti st ic a l p ur p ose s.
O r de r p r o n o u n ce d i n t he O p e n C ou r t .
Sd/- Sd/-
दवा संह अ नपणू ा% ग'ु ता
(DIVA SINGH ) (ANNAPURNA GUPTA)
याय!क सद"य/Judicial Member लेखा सद"य/Accountant Member
दनांक /Dated: 09th July, 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 आयु-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 25 ITA No.51/Chd/2016 A.Y.2010-11