Appeal details
Counselvise Citation
[2011] 100 COUNSELVISE.COM (IT) 2214 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 9 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-03-2011
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
G
Next Hearing Date
17-02-2011
Assessment Year
2001-2002
Appeal Filed On
19-06-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH G DELHI ] BEFORE SHRI A. D. JAIN, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NO. 2944 (DEL) OF 2009 ASSESSMENT YEAR : 2001-02. M/S. SONAVI AGENCIES PVT. LTD., THE INCOME-T AX OFFICER, 1101, NAVRANG HOUSE, VS. W A R D : 9 (1), 21 KASTURBA GANDHI MARG, N E W D E L H I. N E W D E L H I 110 001. PAN / GIR NO. AAE CS 0232 M. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ASHWANI KUMAR, C. A.; DEPARTMENT BY : SHRI KISHORE B., SR. D . R. O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 01-02 ARISES OUT OF THE ORDER OF THE LD. CIT, DELHI-XII, NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER :- 1. THAT SHARE CAPITAL OF RS.12,50,000/- REC EIVED SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE; 2. THAT CHEQUES RECEIVED FROM ESTABLISHED ENTITIES LIKE A LIMITED COMPANY FROM THEIR OWN BANK ACCOUNT CANNOT BE DEEME D TO BE AN INCOME OF THE ASSESSEE; 2 I. T. APPEAL NO. 2944 (DEL) OF 2009. 3. THAT PRESUMED ENTRY OBTAINING CHARGE OF RS.12,50,000/- SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. 3. THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO CONFIRMING THE ADDITION OF RS.12,50,000/- ON ACCOUNT OF SHARE CAPITAL RECEIVED BY THE ASSESSE E. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE AD MITTED TO HAVE RECEIVED SHARE CAPITAL AND SHARE PREMIUM MONEY FROM MKM FINSEC PVT. LTD. THROU GH CHEQUE NO. 303583 DATED 18/11/2000. THE CONCERNED MKM FINSEC PVT. LTD. WAS OWNED BY SHRI MAHESH BATRA FOR HIS ENTRY BUSINESS. AS A RESULT OF INVESTIGATION CARRI ED OUT BY INVESTIGATION WING, DELHI, IT WAS FOUND THAT SHRI MAHESH BATRA THROUGH HIS ASSOCIATES AND VARIOUS CONCERNS WAS GIVING ACCOMMODATION ENTRIES AND WAS NOT DOING ANY GENUINE BUSINESS OF INVESTMENT. THE ASSESSING OFFICER PROVIDED THE COPIES OF SWORN STATEMENT OF S HRTI MAHESH BATRA, THE ENTRY OPERATOR. IT WAS ALSO BROUGHT TO THE NOTICE OF THE AUTHORIZED REPRES ENTATIVE THAT THE ABOVE PERSONS HAD AFFIRMED THAT THEY WERE NOT DOING ANY GENUINE BUSINESS / INV ESTMENT, BUT ONLY GIVING ENTRIES AFTER TAKING CASH FROM THE PARTIES, WHICH WAS ROUTED THROUGH THE ACCOUNTS MAINTAINED BY THEM FOR GIVING CHEQUES IN THE SHAPE OF SHARE APPLICATION, SHARE CA PITAL, LOANS, GIFTS ETC. THE ASSESSING OFFICER ASKED THE AUTHORIZED REPRESENTATIVE TO PRODUCE DIRE CTOR / PRINCIPAL OFFICER OF THE INVESTOR COMPANY FOR CROSS EXAMINATION AND TO PROVE THEIR CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. HOWEVER, NO SUCH PERSON WAS PRODUCED BY THE ASSESSEE. THE ASSESSEE WAS ASKED TO SUBSTANTIATE ITS CLAIM OF HAVING RECEIVED SHARE APP LICATION MONEY AND SHARE CAPITAL TO THE TUNE OF RS.12,50,000/- FAILING WHICH THE AMOUNT SHALL BE TR EATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRE D TO AS THE ACT]. THE ASSESSEE DID NOT PRODUCE THE DIRECTOR / PRINCIPAL OFFICER AND RATHER SHOWED HIS RELUCTANT IN PRODUCING THE SAID PERSONS. THE ASSESSING OFFICER, THEREFORE, CAME TO THE CONCL USION THAT THE ASSESSEE COMPANY FAILED TO DISCHARGE ITS ONUS IN RESPECT OF AMOUNT CREDITED IN THE BOOKS OF ACCOUNTS IN THE GUISE OF SHARE CAPITAL. THE ASSESSING OFFICER PLACED ON RELIANCE ON SEVERAL DECISIONS TO ARRIVE AT THE CONCLUSION THAT THE ASSESSEE HAD NOT PROVED THE CREDITWORTHINE SS, THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS AND, THEREFORE, THE AMOUNT WAS TO BE A DDED UNDER SECTION 68 OF THE ACT. 3 I. T. APPEAL NO. 2944 (DEL) OF 2009. 4. ON APPEAL BEFORE CIT(A) THE LD. AR OF THE ASSES SEE SUBMITTED THAT SHRI MAHESH BATRA, WHOSE AFFIDAVIT HAS BEEN RELIED UPON BY THE AO JOIN ED THE COMPANY AFTER THE TRANSACTION WITH THE ASSESSEE HAD TAKEN PLACE. THEREFORE, COGNIZANCE OF THE STATEMENT COULD NOT BE TAKEN. THE LD. CIT (APPEALS) REJECTED THIS CONTENTION THAT THE ASS ESSEE IS A LEGAL ENTITY. THE DIRECTOR CAN GIVE STATEMENT ON BEHALF OF THE COMPANY AND ITS MODUS OP ERANDI. THE STATEMENT IS NOT GIVEN IN HIS PERSONAL CAPACITY. THE COMPANY IS AN ENTITY IN PER PETUITY. THEREFORE, THE AFFIDAVIT GIVEN BY SHRI MAHESH BATRA IS NOT IN HIS PERSONAL CAPACITY, BUT A S ONE OF THE DIRECTORS OF THE SAID COMPANY. SHE ALSO NOTED THAT THE STATEMENT OF SHRI MAHESH BA TRA COULD NOT BE ATTRIBUTED TO BE PERTAINING ONLY TO SPECIAL PERIOD, BUT PERTAINED TO ENTIRE WOR KING OF THE COMPANY OVER THE YEARS. SHE, THEREFORE, REJECTED THE CONTENTION OF THE LD. AR OF THE ASSESSEE. THE LD. CIT (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT SPECIFIC ENTRY PERTAINING TO THE PAYMENT HAS BEEN DENIED BY THE COMPANY AND THEIR CREDITWORTHINE SS IS NOT ESTABLISHED. 5. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY ON 18/11/2000 FROM MKM FINSEC PVT . LTD. THE STATEMENT OF SHRI MAHESH BATRA WAS RECORDED ON 23/01/2004 WHEREAS HE WAS APP OINTED DIRECTOR ON 15/03/2005, AFTER RECEIPT OF STATEMENT AT THE BACK OF THE ASSESSEE BY THE INVESTIGATION WING. HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F LOVELY EXPORTS LTD 216 CTR 195 (SC) WHEREIN IT HAS BEEN HELD THAT EVEN IF THE SHARE APP LICATION MONEY RECEIVED BY THE ASSESSEE WAS FROM ALLEGED BOGUS SHARE HOLDERS WHOSE IDENTITY WAS PROVED BY THE ASSESSEE COMPANY, THE REVENUE COULD HAVE PROCEEDED AGAINST SUCH SHARE HOL DERS IF NECESSARY AND RE-OPEN THEIR INDIVIDUAL ASSESSMENTS. IT WAS ALSO SUBMITTED THA T THERE IS NO EVIDENCE TO SAY THAT THE MONEY HAS PASSED TO THE COMPANY FROM THE COFFERS OF THE COMPA NY. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (A) BY SAYING TH AT SHRI MAHESH BATRA IN HIS SWORN STATEMENT HAD CONFIRMED THAT HE WAS NOT ENGAGED IN REAL INVES TMENT BUSINESS, BUT WAS PROVIDING ENTRIES TO THE BENEFICIARIES, AFTER TAKING THE MONEY IN CASH. HENCE THE GENUINE OF TRANSACTION HAS NOT BEEN PROVED. 4 I. T. APPEAL NO. 2944 (DEL) OF 2009. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSING OFFICER HAS OBSERVED THA T THE ASSESSEE HAS NOT DISCHARGED THE INITIAL ONUS I.E. THE IDENTITY OF THE PERSON, THE CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION. MERELY BECAUSE THE MONEY HAS COME THROUGH BANKING C HANNELS WOULD NOT MAKE THE TRANSACTION GENUINE. SHRI MAHESH BATRA HAS GIVEN STATEMENT ON BEHALF OF THE COMPANY ADMITTING THAT THE ASSESSEE WAS ENGAGED AS ENTRY PROVIDER. HONBLE DE LHI HIGH COURT IN THEIR RECENT DATED 31.01.2011 IN THE CASE OF OASIS HOSPITALITIES PVT. LTD.(ITA NO 2093 OF 2010 ETC.) AFTER CONSIDERING THE VARIOUS DECISIONS ON THE ISSUE INCL UDING THE CASE OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS(SUPRA) HAS HELD THAT IN ITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SHARE APPLICATION MONEY RECEIV ED BY THE ASSESSEE. IN ORDER TO DISCHARGE THIS BURDEN, THE ASSESSEE IS REQUIRED TO PROVE THE IDENT ITY OF SHARE-HOLDER, THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHARE HOLDE R. IN THE CASE OF VIJAY POWER IN ITA. NO. 514 OF 2007 FORMING PART OF THE SAME ORDER HONBLE DELH I HIGH COURT HAS CONFIRMED THE ADDITION ON THE GROUND THAT IN THAT CASE THE ASSESSEE COULD NOT DISCHARGE THE INITIAL ONUS AND THE ASSESSING OFFICER WAS FOUND TO BE JUSTIFIED IN MAKING THE ADD ITION. IN THE CASE BEFORE US, THE ASSESSEE HAD NEITHER DISCHARGED THE INITIAL ONUS CAST ON IT NOR PRODUCED THE DIRECTORS OF INVESTOR COMPANY FOR EXAMINATION. IN VIEW OF DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) CONFIRMING THE ADDITION. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 31 ST MARCH, 2011. SD/- S D/- [ A. D. JAIN ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : _31 ST MARCH, 2011 . *MEHTA * 5 I. T. APPEAL NO. 2944 (DEL) OF 2009. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.
