Delhi High Court
Commissioner Of Income Tax vs Makhni And Tyagi (P) Ltd. on 9 January, 2004
Equivalent citations: (2004)187CTR(DEL)550, [2004]267ITR433(DELHI)
Author: Badar Durrez Ahmed
Bench: Badar Durrez Ahmed
JUDGMENT
1. Against an order made by Tribunal in IT(SS) No. 204/Del/2002 for block assessment period 1st April, 1986 to 19th April, 1996, the Revenue has preferred this appeal. The company was assessed for the block period and addition was made to the tune of Rs. 30,00,000. The Tribunal has examined the facts in detail. It was pointed out that the share capital stood recorded in the account books maintained by the assessed which were seized during the search and stood considered because income-tax case of the assessed had also been completed from asst. yrs. 1987-88 up to 1995-96 before the date of search and for the asst. yr. 1996-97 the assessment which was made under Section 143(3) of the IT Act after the date of search. It was contended before us that the assessed failed to produce the shareholders before the AO and, therefore, there was justification in arriving at the above assessment. The Tribunal considered various documents on record in detail. It is noted by the Tribunal in para 4 of the impugned order that the facts stated by the learned counsel for the assessed have neither been controverter nor disapproved by the learned Departmental Representatives. Admittedly, the entire share capital stood disclosed to the Department as having been entered in the regular account books maintained by the assessed-company prior to the date of search on 19th April, 1996, under Section 132 against Sh. Alok Aggarwal as per details given by AO himself in paras 4.1 to 4.5 of the block assessment order. That apart, it is pointed out by the Tribunal that all the shareholders had confirmed in writing their investment in the share capital of the assessed and all had given their PAN/GIR numbers and other relevant particulars under which they were assessed to tax. It is in view of this, the Tribunal held that no adverse inference should be drawn against the assessed. If, in response to summons under Section 131 of the IT Act, none of the shareholders had appeared before the AO (though each one of them sent their confirmation to the AO) and if the AO felt that their examination was absolutely necessary then he could have enforced their attendance as pointed out by Allahabad High Court in Nathu Ram Premchand v. CIT (1963) 49 ITR 561 (All) and E.M.C. (Works) (P) Ltd. v. ITO (1963) 49 ITR 650 (All).
2. This Court is of the opinion that when documentary evidence was placed on record to prove the identity of all the shareholders including their PAN/GIR numbers and filing of other documentary evidence in the form of ration card, etc. which had neither been controverter nor disapproved by the AO, then no interference is called for. It may be noted that as pointed out by a Full Bench of this Court in CIT v. Sophia Finance Ltd. (1994) 205 ITR 98 (Del)(FB) "if the shareholders exist then, possibly, no further enquiry need be made". If still in the opinion of the AO it was necessary to enquire further, then it was for him to issue coercive process to see that the shareholders are before him and they are questioned about the investment. In the case of CIT v. Precision Finance (P) Ltd. the High Court of Calcutta was required to examine the question from a different angle as in that case the enquiry of the ITO revealed that either the assessed was not traceable or there was no such file and accordingly the first ingredient as to the identity of the creditors had not been established. In the instant case, when necessary material has been produced before the AO to establish the identity of the persons with their PAN/GIR numbers and other details, it was for the AO to enquire further if he felt that it was necessary. Instead of doing so, after issuance of summons when these materials were produced before him, he thought that he is helpless and he passed the burden on the assessed to bring the shareholders before him. The Tribunal, considering the facts of the case, arrived at the following conclusion :
"We find that the identity of the shareholders who had also confirmed their investment in the share capital in response to summons under Section 131 of the IT Act also stood proved. Consequently, the addition of Rs. 30 lakhs is deleted".
In the backdrop of this finding on facts, we find that no substantial question of law arises in this matter and hence the appeal is dismissed.