M/s Motlay Finance Pvt. Ltd., v. The ACIT, Circle 1(1),

ITA 96/IND/2008 | 2004-2005
Pronouncement Date: 28-01-2010 | Result: Allowed

Appeal Details

RSA Number 9622714 RSA 2008
Assessee PAN AABCM2050J
Bench Indore
Appeal Number ITA 96/IND/2008
Duration Of Justice 1 year(s) 10 month(s) 19 day(s)
Appellant M/s Motlay Finance Pvt. Ltd.,
Respondent The ACIT, Circle 1(1),
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 28-01-2010
Date Of Final Hearing 02-03-2010
Next Hearing Date 02-03-2010
Assessment Year 2004-2005
Appeal Filed On 10-03-2008
Judgment Text
1 IN THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA AM ITA NO 96/IND/08 A.Y. 2004-05 MOTLAY FINANCE PRIVATE LIMITED INDORE APPELLANT PAN AABCM 2050J VS ASSTT. COMMR. OF INCOME TAX CIRCLE 1(1) INDORE RESPONDENT APPELLANT BY SHRI H.P. VERMA AND SHRI A. GOYAL RESPONDENT BY SHRI R.K. CHAUDHARY CIT DR O R D E R PER JOGINDER SINGH JM THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED FIRST APPELLATE AUTHORITY DATED 31.12.2007. THE LEARNED C OUNSEL FOR THE ASSESSEE DID NOT PRESS GROUNDS NO. 1 2 AND 5 OF THE APPEAL THE REFORE THE SAME ARE DISMISSED AS NOT PRESSED. THE ONLY GROUNDS PRESSED BEFORE US ARE GROUND NOS. 3 AND TO THE EFFECT THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS. 55 LACS MADE BY THE AO U/S 68 OF THE ACT ON ACCOUNT OF SHAR E CAPITAL RECEIVED BY THE ASSESSEE COMPANY FROM M/S EMPHIRE FINCAP PVT. LTD. NEW DELHI AND FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.25 LACS ON A CCOUNT OF SHARE CAPITAL 2 RECEIVED FROM M/S VIKAS KHARMARKAR (RS. 5 LACS) MR . BHAGIRATH SHARMA (RS. 15 LACS) AND MR. RAJIV JAIN (RS. 5 LACS). 2. THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE IS THAT THE INITIAL ONUS WAS DISCHARGED BY THE ASSESSEE FOR WHICH OUR ATTENTION WAS INVITED TO PAGES 26 28 TO 30 OF THE PAPER BOOK AND PAGE 31 BY FURTHER SUBM ITTING THAT FOR THE ASSESSMENT YEAR 2003-04 THE IDENTICAL ISSUE WAS DEC IDED IN FAVOUR OF THE ASSESSEE. IT WAS ALSO PLEADED THAT NO APPEAL WAS P REFERRED BY THE DEPARTMENT FOR THE A.Y. 2003-04. A STRONG PLEA WAS RAISED THAT EV EN NOW THE ASSESSEE IS IN A POSITION TO PRODUCE THESE PERSONS BEFORE THE AO FOR EXAMINATION. IT WAS PLEADED THAT THE DECISION OF THE HONBLE COURTS IN THE CASES OF DIVINE LEASING & FINANCE LIMITED GENERAL EXPORTS & CREDIT LIMITED AND LOVELY EXPORTS PVT. LTD. (2008) 299 ITR 268 (DEL) ARE SQUARELY APPLICAB LE TO THE FACTS OF THE CASE. THEREFORE NO ADDITION CAN BE MADE U/S 68 OF THE AC T. IT WAS ALSO POINTED OUT THAT THE IDENTITY OF THE SHARE HOLDERS IS ESTABLISH ED TRANSACTION IS THROUGH BANKING CHANNEL/GENUINE ON THE OTHER HAND THE CIT DR FAIRLY AGREED THAT O N THE ISSUE OF SHARE CAPITAL NO SECOND APPEAL WAS FILED BY THE DEPARTMEN T. HOWEVER IT WAS PLEADED THAT THE ORDER OF THE LOWER AUTHORITY IS NOT BINDIN G ON THE TRIBUNAL. MR. CHAUDHARY POINTED OUT THAT THE ASSESSEE IS GETTING SHARE APPLICATION MONEY FROM THE PERSONS ALL OVER INDIA AND SINCE THE ASSESSEE I S A LOSS MAKING COMPANY THEREFORE NO WISE PERSON SHALL INVEST HIS MONEY IN SUCH A COMPANY. A PLEA WAS 3 ALSO RAISED THAT SUMMONS COULD NOT BE SERVED ON THE PERSONS THEREFORE THE IMPUGNED ORDER WAS ARGUED TO BE JUSTIFIED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESS EE IS AN INVESTMENT AND FINANCE COMPANY REGISTERED AS NON-BANKING FINANCE COMPANY A ND IS SUBSIDIARY OF APOLLO TYRES LIMITED. DURING THE ASSESSMENT PROCEE DINGS IT WAS NOTICED THAT THERE WAS INCREASE OF RS. 80 LACS IN THE SHARE CAPI TAL OF THE ASSESSEE COMPANY. ADMITTEDLY THE NAMES OF SHARE APPLICANTS WERE FURN ISHED BY THE ASSESSEE. IT WAS GATHERED BY THE AO THAT A DIRECTOR I.E. THE KEY PERSON OF ONE SHARE APPLICANT I.E. M/S EMPIRE FINCAP PRIVATE LIMITED WHO CONTRIB UTED SHARE CAPITAL OF RS.55 LACS LEFT FOR AUSTRALIA AND THE OTHER PERSONS APPE ARING ON HIS BEHALF COULD NOT ADDUCE EVIDENCE IN SUPPORT OF SHARE CONTRIBUTION. A S PER THE REVENUE THERE WAS EVIDENCE THAT THE CREDIT WORTHINESS OF THE CONTRIBU TOR WAS IN DOUBT. IT IS SEEN THAT ALL THE PAYMENTS ARE THROUGH BANKING CHANNELS. THE AO REJECTED THE CLAIM OF THE ASSESSEE AND ASSESSED THE AMOUNT OF RS. 55 L ACS RECEIVED FROM EMPIRE FINCAP PVT. LTD. AND ADDED U/S 68 OF THE ACT. LIKEW ISE THE ASSESSEE ALSO RECEIVED SHARE APPLICATION MONEY I.E RS. 15 LACS FR OM MR. BHAGIRATH SHARMA AND FROM M/S VIKAS KHARMARKAR AND SHRI RAJIV JAIN R S. 5 LACS EACH. THE AO WAS OF THE VIEW THAT THESE PERSONS WERE ALSO OF DUB IOUS BACKGROUND AND WERE NOT WORTHY OF CONTRIBUTING SHARE CAPITAL. THERE IS A FINDING IN THE IMPUGNED ORDER THAT EVEN AT THE FIRST APPELLATE STAGE THE AS SESSEE DID NOT MAKE ANY EFFORT TO 4 PRODUCE EVIDENCE IN SUPPORT OF IDENTITY AND CREDIT WORTHINESS OF THESE INVESTORS. THE ASSESSMENT ORDER WAS AFFIRMED. 4. THERE IS NO DISPUTE TO THE FACT THAT THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED (2008) 216 CTR (SC) 195 CON CLUDED AS UNDER :- CONCLUSION :- IF THE SHARE APPLICATION MONEY IS RE CEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME S ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPE N THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. HOWEVER DURING HEARING OF THIS APPEAL THE LEARNED COUNSEL REITERATED THAT THE ASSESSEE IS IN A POSITION TO PRODUCE THE EVIDENCE/S HARE HOLDERS EVEN NOW THEREFORE WITHOUT COMMENTING FURTHER AND TO SAVE T HE INTEREST OF REVENUE AS WELL AS OF THE ASSESSEE WE DIRECT THE AO TO EXAMIN E AND INVESTIGATE THE CASE DE NOVO IN THE LIGHT OF THE DECISION IN THE CASE OF LO VELY EXPORTS PVT. LTD.(SUPRA) IN ACCORDANCE WITH LAW AFTER ANALYZING THE TRUE FAC TS. THE ASSESSEE IS AT LIBERTY TO FURNISH EVIDENCE IF ANY TO SUBSTANTIATE ITS CL AIM FOR WHICH DUE OPPORTUNITY OF BEING SHALL BE PROVIDED BY THE AO TO THE ASSESSEE. THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 28.1.10 SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 28.1.10 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR *DBN/ 5