COMMISSIONER OF INCOME TAX FARIDABAD vs. M/S SRAJAN BUILDTECH PVT LTD

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ITA/407/2014HC Punjab & HaryanaPHHC01109560201419 March 2015Author: MR. JUSTICE A.B. CHAUDHARI,MR. JUSTICE M.M. AGGARWAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises from the order of the Income Tax Appellate Tribunal. The Court found that the matter essentially turned on facts. Both the CIT (Appeals) and the ITAT had relied upon relevant material, including written confirmations from the seven companies, their PAN details, bank statements, and the fact that payments were made by cheques, in concluding that the advances were not mere accommodation entries. The Court found that the findings of the lower authorities could not be considered perverse, as they did not rely on irrelevant facts. Therefore, the appeal filed by the revenue was dismissed.

What were the facts?

The appeal by the Commissioner of Income Tax (CIT), Faridabad, concerns assessment year 2006-2007. The assessee, M/s Srajan Buildtech Pvt. Ltd., had an issued and paid-up capital of ₹1 lac. The company received ₹50 lacs as share capital advanced by seven companies through cheques. The Assessing Officer (AO) issued a notice under Section 133(6) seeking information about these advances, concluding they were accommodation entries. The AO contended that the amounts belonged to the assessee and were routed back through the seven entities. The CIT (Appeals) and the Income Tax Appellate Tribunal (ITAT) ruled against the revenue, finding no material to establish the entries as accommodation. They relied on written confirmations, PAN, bank statements, and cheque payments from the seven companies. The revenue, however, pointed out that some of these companies did not respond to the notice.

What were the issues?

1. Whether a substantial question of law arises from the findings of the Income Tax Appellate Tribunal and the CIT (Appeals) regarding the nature of share capital advances, considering the AO's conclusion that they were accommodation entries? (Question of law turning on Section 68 of the Income Tax Act, 1961). Assessee's Contention: The judgment does not record specific contentions made by the assessee before the High Court. However, the ITAT and CIT (Appeals) relied on written confirmations, PAN, bank statements, and cheque payments from the seven companies, indicating the genuineness of the transactions. Revenue's Contention: The revenue contended that the advances aggregating to ₹50 lacs were mere accommodation entries, suggesting the amounts belonged to the assessee and were routed back through the seven entities. The revenue also highlighted that some of the seven companies had not responded to the notice issued by the AO.

Which sections of the Income-tax Act were involved?

Section 133(6),Section 68

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA-407-2014 (O&M) Date of decision:- 19.03.2015

Commissioner of Income Tax, Faridabad ...Appellant Versus

M/s Srajan Buildtech Pvt. Ltd. ...Respondent

CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE

HON’BLE MR. JUSTICE G.S. SANDHAWALIA

Present: Mr. Tajender K. Joshi, Advocate,

for the appellant. * * * * S.J. VAZIFDAR, A.C.J. (ORAL) CM-25606-CII-2014

This is an application for condoning 344 days' delay in re-filing the appeal.

For the reasons mentioned in the application, the delay of 344 days in re-filing the appeal is condoned.

Disposed of. ITA-407-2014

This is an appeal against the order dated 22.02.2013 of the Income Tax Appellate Tribunal dismissing the appellant's appeal against the order of the CIT (Appeals). The assessment pertains to the assessment year 2006-2007. The respondent has two share holders. The issued subscribed and paid up capital is ` 1 lac. ` 50 lacs were advanced by seven companies by cheques as the share capital. The A.O. issued notice under Section 133(6) and sought information regarding the advances aggregating to ` 50 lacs. The A.O. came to the conclusion that these were mere accommodation entries. It was contended before us that these were amounts that belonged to the respondent/assessee and were routed back to the respondent through the seven entities. AMODH SHARMA 2015.03.25 11:11 I attest to the accuracy and authenticity of this document chandigarh

ITA-407-2014 (O&M)

2

2.

The CIT (Appeals) and the Income Tax Appellate Tribunal have come to the conclusion against the appellant. It is observed for instance there was no material that established that the entries were mere accommodation entries. They relied upon the written confirmations of the seven companies alongwith the PAN and bank statements and the fact that payments had been made through cheques. On the other hand, the appellant relies upon the fact that some of these seven companies had not responded to the notice.

3.

The matter, therefore, turns essentially on facts. The CIT (Appeals) and the ITAT relied upon the relevant material. They did not rely upon irrelevant facts in coming to the conclusion.

No question of law, therefore, arises. The findings cannot be said to be perverse.

4.

The appeal is, therefore, dismissed.

(S.J. VAZIFDAR) ACTING CHIEF JUSTICE

(G.S. SANDHAWALIA)

JUDGE 19.03.2015 Amodh

AMODH SHARMA 2015.03.25 11:11 I attest to the accuracy and authenticity of this document chandigarh

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