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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per:Anikesh Banerjee, JM: The instant appeal of the revenue was filed against the order of the ld. Commissioner of Income Tax (Appeal)-3, Ludhiana {in brevity the CIT(A)}, date of order 31.07.2019,order passed u/section 250(6) of the Income Tax Act,1961(in brevity the Act)for Assessment year 2014-15. The impugned order was originated from the order of the ld. Income Tax Officer, ward- 2, Moga (in brevity the AO), order past under section 143(3) of the Act, date of order 20/12/2016.
The revenue has taken the following grounds: -
i) Whether on the facts and circumstances of the case and as per law the learned Commissioner of Income Tax (Appeals) was justified in accepting the explanation of the assessee about the source of share application money and share premium and thereby deleting the addition of Rs. 1,72,72,320/- made by the Assessing Officer? ii) Whether on the facts and the circumstances of the case, and in law the Ld. CIT(A) was justified in deleting the addition of Rs. 1,72,72,320/- by not appreciating the fact that the assessee could not discharge its onus to the satisfaction of the Assessing Officer by not producing Sh. Hitesh Goyal from whom the assessee has received share application money and share premium and thus the assessee could not fulfill the requirement of section 68 of the Act. iii) That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off.”
3. The brief fact of the case is that the assessee is a Private Limited Company wherein return of income for the impugned assessment year was filed on 28.10.2014 by declaring a loss of Rs. 28,25,072/-.The case of the assessee was selected under compulsory scrutiny under CASS. The assessment was completed with addition amounting to Rs. 1,72,72,320/- was made to the total income of the assessee. The only dispute is with regard to the shares issued during the impugned year to Sh. Hitesh Goel. It is submitted that 899600 shares of the face value of Rs. 10 each were issued during the year at a premium of Rs. 9.2 each. The assessee claimed that the complete details with regard to identity,
3 Assessment Year 2014-15 creditworthiness and genuineness of the entire transaction was submitted with the ld. AO, but rejecting the same, addition of the entire share capital amount was made to the total income of the assessee. Though the shares for an amount of Rs. 1,72,72,320/- was issued during the year but the actual amount as received during the year under consideration was only to the tune of Rs. 47,73,000/-. The remaining amount of Rs. 1,25,00,000/- was in fact the amount already standing in the books of the assessee. The grievance of the revenue is that the assessee was failed to substantiate the identity & creditworthiness the investor, Sh. Hitesh Goyal. The total addition was made by the ld. AO amount to Rs. 1,72,72,320/- with the total income of the assessee. Aggrieved assessee filed appeal before the ld. CIT(A). The CIT(A) dismissed the order of the ld. AO. Being aggrieved the revenue filed appeal before us.
The ld. Sr. Dr. vehemently argued & relied on the order of revenue authorities. The ld. Sr. Dr mentioned that the assessee was unable to prove the identity & creditworthiness of investor who invested in share capital of assessee-company.
The ld. Counsel for assessee ( in brief AR), Mr Sudhir Sehgal argued and placed that out of total investment in assessee-company, the investment in impugned year amount to Rs. Rs. 47,73,000/-& the remaining amount of Rs. 1,25,00,000/- was in fact the amount already standing in the books of the assessee from earlier years i.e. AY 2013-14, the relevant copy of accounts are enclosed in the APB at Page-13-14.Appeal was filed before the ld. CIT(A) and the same was allowed vide order dated 31.07.2019 by relying upon the order as passed by the CIT(A) for the AY 2012-13 wherein on similar facts addition was 4 Assessment Year 2014-15 deleted by the CIT(A). The copy of the ld. CIT(A) order for the AY 201-13 is enclosed in the APB at Page-63-93. The ld. CIT(A) has also referred to the fact that the assessment for the AY 2013-14 has been done by the ld. AO wherein no adverse inference has been drawn by the same the ld. AO for the amount received from Sh Hitesh Goel. The copy of Assessment order for the AY 2013- 14 along with the copy of account for the Ay 2013-14 is enclosed in the APB at Page-94-97.
5.1. The complete details with regard to identity, creditworthiness and genuineness of the entire transaction was submitted with the ld. AO, but rejecting the same, addition of the entire amount was made to the total income of the Assessee. The ld. AR in argument placed that the assessee-company has filed the following documents during the course of assessment proceedings, which proves the identity, creditworthiness and the genuineness of the entire transaction which are as follows: - a) Copy of PAN card of Sh. Hitesh Goel, APB Page-23. b) Copy of the Passport of Sh. Hitesh Goel, APB Page-8-9. c) Copy of bank accounts of Sh. Hitesh Goel as maintained with SBI Bank wherein the immediate credit entries are also explained by way of complete documents, APB Page-15-21. d) Copy of confirmation of the Sh. Hitesh Goel, APB Page-12. e) Share application forms were even produced before the Assessing Officer. f) Copy of account of Sh. Hitesh Goel in the books of the Company, APB page-13. h) Copy of letter dated 13.03.2015 as issued by the AO for calling information in the case of the assessee from M/s Rajiv Associates at the time of assessment proceedings for AY 2012-13, APB, Pg- 24. i) Copy of reply dated 18.03.2015 as furnished by M/s Rajiv Associates Pvt. Ltd. to the Assessing Officer alongwith the relevant extract of Balance Sheet for the year ending 31.03.2011 to 31.03.2014 at the time of assessment proceedings for AY 2012-13, APB Pg-25-29.
5.2. The AR argued that the Assessing Officer has not given any comment with regard to the documents. Rather, the Assessing Officer in para 2.6 of his order has held that the Assessee has shown his inability to produce Sh. Hitesh Goel. It was duly submitted that, Sh. Hitesh Goel is presently living in Dubai and it is not possible to produce him. The present address of Sh. Hitesh Goel was also provided to the Assessing Officer. But the Assessing Officer has not given any comment with regard to the same and had made the addition by applying the provisions of section 68 of the Act.
5.3. The AR mentioned that amount as received by the assessee-company source of Source of those Entries. Entry dated 22.08.2013 amounting to Rs. 7,73,000, entry dated 26.08.2013 amounting to Rs. 20,00,000/- and also entry dated 25.09.2013 amounting to Rs. 20,00,000/-. The said amount is duly reflected in the bank statement of Sh. Hitesh Goel. The source of the said
6 Assessment Year 2014-15 amount is the amount received from M/s Rajiv AssociatesPvt Ltd from which Sh. Hitesh Goel had to received Rs. 47,73,300/- as on 01.04.2013. The copy of account of Sh. Hitesh Goel in the books of M/s Rajiv Associates Pvt Ltd was also duly filed before the ld. AO, copy is enclosed in the APB at page-22.
The ld. AO has also called the information u/s 133(6) of the Act from M/s Rajiv Associates in relation to the assessee.
The relevant documents in this regard including the confirmed copy of account of Hitesh Goel in the books of M/s Rajiv Associates Pvt Ltd, letter as issued by the ld. AO to M/s Rajiv Associates Pvt Ltd. u/s 133(6) and the reply to the same along with relevant attachments are enclosed herewith in APB at Page-25-29.
5.4. The AR argued that the reliance in this regard is being placed upon the following Judgments wherein it has been held that provisions of section 68 of the Act are not applicable wherein identity, creditworthiness and genuineness of the transaction is explained:
5.4.1. Hon’ble Supreme Court in the case of Earth Metal Electric Pvt. Ltd., vs. CIT dated 30th July, 2010 in SLP.No.21073 of 1999, in which it was held as under:
We have examined the position; we find that the shareholders are genuine parties. They are not bogus and fictitious therefore; the impugned order is set aside.
G.P International Ltd. 325 ITR 25 (P& H HC) “As far as the addition of Rs. 3,30,000 is concerned, it has been held that during the proceedings under section 143(3) read with section 250 of the Act, the assessee furnished a confirmation certificate from M/s. Axis Chemicals & Pharmaceuticals Ltd., Faridabad along with PAN. On asking of the Assessing Officer, the assessee has confirmed that the said liability is still outstanding. In spite of that material, the Assessing Officer made the addition of the amount on the basis that this liability has ceased to exist and the same is not payable
7 Assessment Year 2014-15 by the assessee, and treated the said liability as income by invoking provision of section 41(1) of the Act. The CIT(A), while deleting the said addition, has observed that the similar addition was made in the case of Febon Con, Faridabad, where the similar liability was shown to be payable to the same party i.e., M/s. Axis Chemicals & Pharmaceuticals Ltd., Faridabad. In that case, the said addition was deleted by the ITAT. It is the admitted position that the said order of the ITAT passed in ITA Nos. 114 to 116/Delhi/2004 has become final. In view of these facts, in our opinion, the ITAT has rightly come to the conclusion that the aforesaid liability of the assessee cannot be said to have ceased to exist and the provision of section 41(1) and Explanation to this provision are not applicable, because the assessee is still showing it as a liability in its books and has not written off the same.
We heard the rival submission & perused the documents available on the record. The grievance of the revenue about the assessee, that the assessee was not able to substantiate the identity &creditworthiness of assessee. In fact, the same issue was raised in earlier years. We perused the order of the ld. CIT(A) for AY 2012-13 date of order 31/01/2017. The relevant paragraph 3.10 is extracted here:
3.10. in view of detailed facts as discussed in paragraphs, apparently this case in particular there has been no doubt wrt identity, genuineness and credit worthiness of Sh. Hitesh Goyal. Moreover, the AO has not raised any doubt w.r.t identity, genuineness and credit worthiness of Sh. Hitesh Goyal in subsequent year. This is an important fact that the same assessing officer has scrutinised the case of the Assessee for the AY 2013-14, where in n amount of Rs. 2,49,69,000/- was received from Sh. Hitesh Goel. It is important to note that the assessment of the said year has been done by the same Assessing Officer and no adverse remark has been given by him. So, the identity and credit worthiness of city Sh. Hitesh Goelhas duly been accepted by him in the saidyear. So, by applying the principle off consistency also, no addition u/sec 68of the Act is called for in case of the appellant. The closing balance in the case of Sh. Hitesh Goelfor the A.Y. 2013-14 is Rs 1,26,69,900/-. Therefore, I have no hesitation in holding that the addition of the share premium also as made by the Assessing Officer, alternatively, cannot be sustained. Therefore, these grounds of appeal are allowed.
(Emphasis supplied)
8 Assessment Year 2014-15 The observation of CIT(A)’s order for AY 2012-13 is favour of the assessee related investment received from the party. For proof of genuineness of party the relevant documents are filed by the assessee& also declared the that the status of the party is NRI. The entire transaction was through banking channel. The assessee has received part share capital in impugned assessment year amount to Rs. 47,73,000/- from party. The source of source was verified with the help of notice U/s 133(6) of the Act. The same issue was accepted by the ld.AO for AY 2013-14. During hearing ld. AR has invited our attention in copy of affidavit of Sh. Hitesh Goyal & licence of business in Dubai, enclosed in APB Page 2-6. We find that the revenue should not take different stand in different assessment year. The rule of consistency should be followed. We find no infirmity in the order of the ld. CIT(A). The assessment order is dismissed 7. In the result, the appeal of the revenue, IT No- 637/Asr/2019 is dismissed.
Order pronounced in the open court on 22.02.2023