ITO, New Delhi v. M/s. Ganpati Finlease Pvt. Ltd, New Delhi

ITA 3739/DEL/2009 | 2006-2007
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 373920114 RSA 2009
Assessee PAN AAACF2099M
Bench Delhi
Appeal Number ITA 3739/DEL/2009
Duration Of Justice 8 month(s) 17 day(s)
Appellant ITO, New Delhi
Respondent M/s. Ganpati Finlease Pvt. Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 21-05-2010
Date Of Final Hearing 17-05-2010
Next Hearing Date 17-05-2010
Assessment Year 2006-2007
Appeal Filed On 03-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER ITA NO. 3739/DEL/2009 ASSESSMENT YEAR: 2006-07 ITO WARD 12(1) C.R. BUILDING NEW DELHI. VS. GANPATI FINLEASE PVT. LTD. S-1 34/1 VIKAS APARTMENT PUNJABI BAGH EAST NEW DELHI. AAAC2929B (APPELLANT) (RESPONDENT) APPELLANT BY : SH. KISHORE B. SR. DR RESPONDENT BY: VED JAIN RANO JAIN CA O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF CIT(A) DATED 16.06.09 FOR A.Y. 2006-07. G ROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER OF THE CIT(A) IS WRONG PERVERSE ILLEGAL AND AGAIN ST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 10 00 000 /- ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME TAX A CT 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2 ITA NO. 3739/DEL/2009 2. THE ASSESSEE COMPANY IS A FINANCE COMPANY. IT R ECEIVED SHARE APPLICATION MONEY FROM TWO CONCERNS OF RS. 5 LAKH E ACH THE DETAILS OF WHICH ARE AS UNDER: - 1. M/S ETHNIC CREATIONS PVT. LTD. RS. 5 LAKH. 2. M/S FIRST HI FIN LTD. RS. 5 LAKH. ACCORDING TO AO M/S ETHNIC CREATIONS PVT. LTD. IS E NTRY OPERATOR AND IN THE CASE OF M/S FIRST HI FIN LTD. THE AMOUNT OF RS. 5 LAKH PAID TO ASSESSEE AS SHARE APPLICATION MONEY WAS DEPOSITED I N CASH IN THEIR BANK ACCOUNT ON 14.01.06 FROM WHERE THE CHEQUE WAS ISSUED TO THE ASSESSEE. THE AO HAS DISCUSSED REGARDING INVESTIGA TION WING OF THE DEPARTMENT WHO HAD UNEARTHED A HUGE MONEY LAUNDERIN G OPERATION AND SENDING THE REQUISITE INFORMATION TO THE FIELD FORM ATIONS. THE AO OBSERVED THAT IT WAS ALLEGED THAT THE ASSESSEE HAD RECEIVED CHEQUES IN LIEU OF CASH PAYMENTS FROM ENTRY OPERATORS PROVIDIN G ACCOMMODATION ENTRIES AND IT WAS A SYSTEMATIC PLAN THROUGH WHICH THE MONEY WAS RECEIVED IN THE BANK ACCOUNT AND CHEQUES WERE ISSUE D TO THE INTERESTED PARTIES. THE ASSESSEE WAS REQUIRED TO PRODUCE THES E PARTIES VIDE ORDER SHEET ENTRY DATED 11.11.06 BUT THEY WERE NOT PRODUC ED. ACCORDING TO AO AS ASSESSEE HAD FAILED TO FURNISH SUBSTANTIVE EV IDENCE REGARDING THE CREDITWORTHINESS OF THE ALLEGED INVESTORS THEREFOR E THE CASE LAW RELIED UPON BY ASSESSEE COULD NOT BE APPLIED AS ACCORDING TO LD. AO THE JUDGMENT WAS TO BE READ IN THE CONTEXT OF QUESTION THAT AROSE FOR CONSIDERATION AND IN THE CIRCUMSTANCES LD. AO HAS A DDED SAID SUM OF RS. 10 LAKH BEING UNEXPLAINED CREDITS U/S 68 OF I.T . ACT 1961 (ACT). 3 ITA NO. 3739/DEL/2009 3. BEFORE CIT(A) IT WAS SUBMITTED THAT VIDE QUESTI ONNAIRE DATED 22.02.08 AT POINT NO. 13 THE AO REQUIRED THE ASSESS EE TO FURNISH DETAILS OF SHARE CAPITAL RECEIVE DURING THE YEAR ALONGWITH CONFIRMATION WITH PAN AND COPIES OF ITR AND BANK ACCOUNT OF THE PARTIES C ONCERNED AND THE ASSESSEE HAD DISCHARGED ITS ONUS OF PROVING THE IDE NTITY GENUINENESS AND CREDITWORTHINESS OF THE SHAREHOLDERS AS UNDER: - A) COMPLETE PARTICULARS OF PERSONS TO WHOM SHARES WERE ALLOTTED ALONG WITH COPIES OF ACCOUNT DULY CONFIRMED WERE FURNISHED VIDE LETTER DATED 14.10.08 . B) TO SUBSTANTIATE THE GENUINENESS OF SHARE SUBSCRIPTIONS THE APPELLANT FILED AFFIDAVIT OF THE PRINCIPAL OFFICERS OF THE COMPANY COPY OF APPLICAT ION FOR SHARES COPY OF RETURN OF ALLOTMENT FILED WITH REGISTRAR OF COMPANIES DEPARTMENT OF COMPANY AFFAIRS ON 29.06.06 VIDE RECEIPT NO. A01685650. PHOTOCOPY OF RETURN ALONG WITH ACKNOWLEDGEMENT FOR FILING OF RETURN WAS FILED. C) CONFIRMATION FROM THE SHAREHOLDERS MENTIONING PA N WAS ALSO FURNISHED. D) COPY OF PAN DETAILS OF SHAREHOLDERS AS DOWNLOADE D FROM THE WEB SITE OF THE INCOME TAX DEPARTMENT WAS ALSO FURNISHED. E) COPY OF MASTER DATA DETAILS OF SHAREHOLDERS AS DOWNLOADED FROM WEB SITE OF MINISTRY OF COMPANY AFFAIRS REGISTRAR OF COMPANIES WAS ALSO FURNISHED . F) COPY OF BANK STATEMENT OF SHAREHOLDERS WERE ALSO FURNISHED BEFORE THE LD. AO. 4. IT WAS FURTHER SUBMITTED THAT VIDE LETTER-DATED 18.11.08 THE ASSESSEE HAD SUBMITTED BEFORE AO THAT THE ASSESSEE HAD REQUESTED 4 ITA NO. 3739/DEL/2009 SHARE APPLICANTS TO PRESENT BEFORE AO BUT DUE TO PE RSONAL REASONS THEY DID NOT ATTEND. HOWEVER THEY HAVE PROVIDED AFFIDA VITS FOR ONWARDS SUBMISSION TO THE AO. IT WAS SUBMITTED THAT PARTIE S WERE NOT BEING AT DISPOSAL OF ASSESSEE THE AO SHOULD SUMMON THEM IF A NY ADVERSE INFERENCE IS TAKEN AND AFTER MAKING ENQUIRIES FROM THEM THE OPPORTUNITIES OF CROSS-EXAMINATION SHOULD BE PROVID ED TO THE ASSESSEE. IT WAS SUBMITTED THAT IN RESPONSE TO SUMMONS M/S FI RST HI FIN LTD. SUBMITTED THEIR REPLY DATED 07.11.08 IN WHICH INVES TMENT MADE BY THEM IN ASSESSEE COMPANY WAS CONFIRMED. COPY OF ITR B ANK STATEMENT WAS SUBMITTED TO EXPLAIN THE INVESTMENT AND IT WAS EXPLAINED THAT CASH DEPOSITED IN STATE BANK OF INDORE WAS WITHDRAWN FRO M THEIR BANK ACCOUNT WITH BANK OF RAJASTHAN LTD. 5. IT WAS FURTHER SUBMITTED THAT M/S ETHNIC CREATIO NS P. LTD. ALSO CONFIRMED THEIR INVESTMENT WITH DETAILS FURNISHED V IDE LETTER DATED 22.10.08 AND THUS ALL THE REQUIRED EVIDENCE WAS SU BMITTED TO DISCHARGE THE BURDEN LAID UPON ASSESSEE AND THEN REFERENCE WA S MADE TO VARIOUS JUDICIAL PRONOUNCEMENTS TO CONTEND THAT ADDITION HA S WRONGLY BEEN MADE. LD. CIT(A) HAS OBSERVED THAT VIDE LETTER DAT ED 14.10.08 THE ASSESSEE HAD PROVIDED ALL THE DETAILS WHICH INCLUDE D CONFIRMATIONS FROM SHAREHOLDERS COPY OF BANK STATEMENTS COPY OF SHAR E APPLICATION FORMS COPY OF BANK ACCOUNTS AND COPY OF INCOME TAX RETURN S FIELD BY THE SHARE APPLICANTS. LD. CIT(A) OBSERVED THAT M/S FIRST HI FIN LTD. HAD APPLIED FOR SHARES ON 14.01.06 WHICH INDICATED THE ADDRESS AT 1 01 IIIRD FLOOR COMMERCIAL CHAMBER OLD RAJINDER NAGAR MARKET NEW DELHI-60. THE 5 ITA NO. 3739/DEL/2009 APPLICATION WAS FOR 10 000 SHARES FOR WHICH A SUM O F RS. 5 LAKH WAS REMITTED VIDE CHEQUE NO. 214556 DATED 14.01.06 AND THE PAN NO. WAS STATED AS AAACF2099M. THE BANK ACCOUNT IN STATE BA NK OF INDORE ROHINI SECTOR 14 NEW DELHI AND ACCOUNT NO. IS 630 01530494. FIRST HI FIN LTD. CONFIRMED ITS INVESTMENT WITH ASSESSEE VID E LETTER DATED 3 RD OCTOBER 2008. 6. IN RESPECT OF ANOTHER SHAREHOLDER NAMELY M/S ETH NIC CREATION P. LTD. LD. CIT(A) OBSERVED THAT COPY OF APPLICATION FORMS SUBMITTED TO THE AO INDICATED THE ADDRESSES OF THE SHARE APPLICANTS AS AT WZ-134 PLOT NO. 170 VISHNU GARDEN-18 WHO HAS APPLIED FOR 10 00 0 SHARES BY REMITTING AN AMOUNT OF RS. 5 LAKH VIDE CHEQUE NO. 7 60356 DATED 07.02.06 WITH PAN NO. AAACE2095B. THE MONEY ORIGIN ATED FROM ACCOUNT NO. 0262000029306 HDFC BANK NEW DELHI AND AN INDEPENDENT CONFIRMATION WAS SUBMITTED VIDE LETTER DATED 3 RD OCTOBER 2008. 7. IT WAS FURTHER OBSERVED THAT AFFIDAVITS OF BOTH THE SHAREHOLDERS SUPPORTING THEIR INVESTMENT WITH THE ASSESSEE WERE PART OF THE ASSESSMENT RECORD. IN VIEW OF THESE FACTS LD. CIT( A) OBSERVED THAT THE CASH DEPOSITED BY FIRST HI FIN LTD. IN ITS BANK ACC OUNT WAS SUPPORTED BY CASH WITHDRAWAL FROM ITS ANOTHER BANK ACCOUNT IN BA NK OF RAJASTHAN VIKASH PURI NEW DELHI FROM WHERE THE SAID CONCERN HAD WITHDRAWN RS. 6 LAKH ON 09.01.06 WHICH WAS DEPOSITED IN STATE BAN K OF INDORE FROM WHERE THE CHEQUE OF RS. 5 LAKH WAS ISSUED TO THE AS SESSEE. THUS IT HAS 6 ITA NO. 3739/DEL/2009 BEEN OBSERVED BY LD. CIT(A) THAT THE CASH DEPOSITED IN SHAREHOLDER ACCOUNT WAS SUPPORTED BY THE ANOTHER WITHDRAWAL MAD E BY IT. THEN LD. CIT(A) HAS REFERRED TO THE OTHER EVIDENCES FILED BY THE ASSESSEE IN RESPECT OF SHAREHOLDERS IN THE SHAPE OF CONFIRMATIO N COPIES OF BANK STATEMENTS INCOME TAX PARTICULARS COPIES OF SHARE APPLICATION FORMS AND REFERRING TO VARIOUS JUDICIAL PRONOUNCEMENTS I T IS OBSERVED THAT ADDITION MADE BY THE AO WAS NOT CALLED FOR AND HE H AS DELETED THE ADDITION AGAINST WHICH DEPARTMENT IS AGGRIEVED HEN CE IN APPEAL. 8. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY L D. DR THAT ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM ENTRY OPE RATORS. THE AO WAS HAVING INFORMATION FROM INVESTIGATION WING AND ACCORDING TO MODUS OPERANDI ADOPTED BY THE ENTRY OPERATORS AND BENEFIC IARIES OF THOSE ENTRIES THE CASH WAS PAID IN LIEU OF CHEQUE RECEIV ED. HE SUBMITTED THAT THE ASSESSEE REMAINED UNABLE TO PRODUCE THE SO-CALL ED SHAREHOLDERS AND THUS EVIDENCE SUBMITTED BY THE ASSESSEE WAS HA VING LITTLE FORCE. HE SUBMITTED THAT UNLESS ASSESSEE PRODUCE THE SHARE HOLDERS THE VERACITY OF THE EVIDENCE COULD NOT BE VERIFIED. REL YING ON THE ASSESSMENT ORDER IT WAS VEHEMENTLY PLEADED BY LD. DR THAT ADD ITION HAS WRONGLY BEEN DELETED BY LD. CIT(A). 9. ON THE OTHER HAND LD. AR SUBMITTED THAT ALL THE REQUISITE EVIDENCE WAS SUBMITTED TO THE AO WHICH WAS SUFFICIENT TO ES TABLISH IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . IT WAS SUBMITTED THAT ALL THE REQUIRED EVIDENCE WAS SUBMITTED WHICH WAS IN THE SHAPE OF 7 ITA NO. 3739/DEL/2009 COPIES OF SHARE APPLICATION COPIES OF INCOME TAX R ETURNS COPIES OF BANK STATEMENTS COPIES OF MASTER DATA DETAILS OF SHAREH OLDERS AS DOWNLOADED FROM WEBSITE. IT WAS SUBMITTED THAT SHA RES WERE ALLOTTED TO THE SHAREHOLDERS IN THE VERY SAME YEAR AND THEY ARE STANDING IN THEIR NAME TILL DATE. IT WAS SUBMITTED THAT ACCORDING TO LETTER DATED 27.11.08 IT WAS SUBMITTED TO THE AO THAT SHAREHOLDERS MAY BE SU MMONS U/S 131 TO VERIFY THE GENUINENESS OF THE TRANSACTIONS AND IF A NYTHING IS FOUND ADVERSE THEN ASSESSEE MAY BE AFFORDED AN OPPORTUNIT Y OF CROSS EXAMINING THE WITNESS AND IT WAS FURTHER SUBMITTED THAT WHATEVER INFORMATION OR MATERIAL OR EVIDENCE IS AVAILABLE WI TH THE AO WHICH IS GATHERED AND WHICH IS PROPOSED TO BE USED AGAINST T HE ASSESSEE THE SAME MAY BE CONFRONTED TO THE ASSESSEE. IT WAS ALS O SUBMITTED THAT ASSESSEE IS A NON-BANKING FINANCIAL COMPANY REGISTE RED WITH RBI AND IS ENGAGED IN THE BUSINESS OF FINANCING I.E. MAKING OF LOANS AND ADVANCES. HE SUBMITTED THAT COPY OF THE SAID LETTER FILED WIT H AO IS APPEARING AT PAGE 48 TO 52 OF THE PAPER BOOK. THEN LD. AR REFER RED TO THE REPLY FILED BY FIRST HI FIN LTD. DATED 7.11.08 IN RESPONSE TO S UMMONS U/S 131 WHEREIN THEY HAVE CONFIRMED THAT THE COMPANY WAS EN GAGED IN THE BUSINESS OF INVESTMENT AND A SUM OF RS. 5 00 000/- HAS BEEN INVESTED THROUGH ACCOUNT PAYEE CHEQUES AND THE INVESTMENT WA S DRAWN FROM STATE BANK OF INDORE PHOTOCOPY OF BANK STATEMENT WA S SUBMITTED AND IT WAS SUBMITTED THAT THE AMOUNT DEPOSITED IN BANK WAS AVAILABLE IN THEIR BOOKS OF ACCOUNT AS THE SAME WAS WITHDRAWN FROM THE IR BANK ACCOUNT WITH BANK OF RAJASTHAN LTD. IT WAS FURTHER MENTION ED BY THEM THAT THEY WERE READY TO APPEAR BEFORE AO IF IT IS FELT NECESS ARY. THE COPY OF SUCH 8 ITA NO. 3739/DEL/2009 REPLY IS FILED AT PAGE 53 OF THE PAPER BOOK. SIMIL ARLY REFERENCE WAS MADE TO THE REPLY SUBMITTED BY ETHNIC CREATIONS P. LTD. VIDE THEIR LETTER DATED 22.10.08 IN RESPONSE TO SUMMONS ISSUED TO THE M BY THE AO U/S 131 OF THE ACT IN WHICH THEY HAVE CONFIRMED THAT TH EIR COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT. COPY OF INC OME TAX RETURN ALONG WITH COMPUTATION OF INCOME WAS SUBMITTED. IT WAS S TATED THAT THE AMOUNT OF RS. 5 LAKH INVESTED BY THEM WAS DRAWN BY AN ACCOUNT PAYEE CHEQUES FROM THEIR BANK ACCOUNT IN HDFC BANK. COPY OF BANK ACCOUNT WAS ENCLOSED. IT WAS STATED THAT RETURN OF INCOME WAS SUBMITTED TO THE ITO WARD 11(2) NEW DELHI. IT WAS FURTHER MENTION ED THAT IF THE AO IS NOT SATISFIED WITH THE ABOVE REPLY THEY CAN BE PRES ENTED FOR PERSONAL DISPOSITION. 10. THUS IT WAS SUBMITTED BY LD. AR THAT NOT ONLY THE SHAREHOLDERS HAD SUBMITTED THEIR REPLY BUT THEY ALSO STATED IN T HOSE LETTERS THAT IF THE AO IS NOT SATISFIED WITH THE REPLY SUBMITTED IN RES PONSE TO SUMMONS THEN THEY CAN ALSO APPEAR IN PERSON. 11. THUS IT WAS SUBMITTED BY LD. AR THAT LD. CIT(A ) TAKING INTO CONSIDERATION ALL THE EVIDENCES SUBMITTED BY THE AS SESSEE HAS RIGHTLY DELETED THE ADDITION BY RELYING UPON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS 216 CTR 195 (SC). 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THOUGH THERE IS MENTION IN THE ASSESSMENT 9 ITA NO. 3739/DEL/2009 ORDER THAT M/S ETHNIC CREATIONS P. LTD. IS ENTRY OP ERATOR BUT THERE IS NO WHISPER ABOUT THE EVIDENCE UPON THE BASIS OF WHICH THE SAID COMPANY IS TERMED AS ENTRY OPERATOR. IT IS SEEN THAT FOR THE SECOND CONCERN NAMELY FIRST HI FIN LTD. THERE IS NO SUCH ALLEGATION. THE ENTRY RELATING TO FIRST HI FIN LTD. IS ADDED TO THE INCOME OF THE ASSESSEE ON THE GROUND THAT CASH HAS BEEN DEPOSITED IN THEIR BANK ACCOUNT BEFORE THE ISSUE OF CHEQUE TO THE ASSESSEE. BUT THERE IS EVIDENCE PLACED ON RECO RD ACCORDING TO WHICH THE SAID CONCERN WAS HAVING AVAILABILITY OF C ASH WHICH COULD BE DEPOSITED IN THE BANK ACCOUNT OUT OF WHICH THE CHEQ UE WAS ISSUED. THEREFORE THE DEPOSIT OF CASH IN THE BANK ACCOUNT FROM WHERE THE CHEQUE WAS ISSUED TO THE ASSESSEE IS SUPPORTED BY T HE WITHDRAWAL MADE BY THAT CONCERN FROM ITS ANOTHER BANK ACCOUNT. AMP LE EVIDENCE HAS BEEN PLACED BY THE ASSESSEE ON RECORD WITH RESPECT TO BOTH THE SHARE APPLICANTS TO SHOW THAT MONEY WAS ADVANCED BY THEM TO THE ASSESSEE AND SHARES WERE ALLOTTED TO THEM. ACCORDING TO THE SUBMISSION OF LD. AR THE SHARE ALLOTTED TO THEM ARE STILL BEING HELD BY THEM. THUS IT IS A CASE WHERE ASSESSEE HAS RECEIVED THE AMOUNT AND ALLOTTED THE SHARES TO THOSE CONCERNS WHICH HAVE NOT BEEN BOUGHT BACK BY THE INTERESTED PERSONS OF THE ASSESSEE COMPANY. THERE IS NO EVIDEN CE ON RECORD TO SUGGEST THAT THE ALLEGATION OF THE AO THAT M/S ETHN IC CREATIONS P. LTD. WAS AN ENTRY OPERATOR. BOTH OF THE SHAREHOLDERS HA VE RESPONDED TO THE SUMMONS ISSUED TO THEM AND THE REQUISITE EVIDENCE W AS SUBMITTED TO SUPPORT THE CLAIM THAT THEY HAD INVESTED THE SAID A MOUNT TO BUY THE SHARE OF THE ASSESSEE COMPANY. 10 ITA NO. 3739/DEL/2009 13. KEEPING IN VIEW THE ENTIRETY OF FACTS AND EVIDE NCE PLACED ON RECORD WE ARE OF THE OPINION THAT LD. CIT(A) WAS R IGHT IN DELETING THE ADDITION BY APPLYING THE RATIO OF DECISION OF HONB LE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS P. LTD. (SUPRA). WE THEREFORE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. 14. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.05.10 (K.D. RANJAN) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR