PR. COMMISSIONER OF INCOME TAX CENTRAL vs. ADARSH CO-OPERATIVE BANK LTD.

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 129/2017 Pr. Commissioner Of Income Tax-Central, Jaipur. ----Appellant Versus Adarsh Co-Operative Bank Ltd., Teen Batti Chouraha, N.h.-14, Sirohi Raj.. ----Respondent and D.B. Income Tax Appeal No. 135/2017 Pr. Commissioner Of Income Tax-Central, Jaipur. ----Appellant Versus Adarsh Co-Operative Bank Ltd., Teen Batti Chouraha, N.h.-14, Sirohi Raj.. ----Respondent For Appellant(s) : Mr. KK Bissa For Respondent(s) : HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE DINESH MEHTA Judgment Per Hon'ble Dinesh Mehta, J. 14/11/2018 DB Income Tax Appeal No.129/2017: Feeling aggrieved of the order dated 19.6.2017, passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in Appeal No.67/Jodh/16, the Commissioner of Income Tax, Jaipur has preferred the present appeal under Section 260A of the

(2 of 7) [ITA-129/2017] Income Tax Act, 1961 contending that the following substantial questions of law require adjudication by this Court: “1. Whether on the facts and circumstances of the case and in law, the learned ITAT is justified in not confirming the addition of Rs.1,14,00,000/- made by the AO u/s 69 of the Income Tax Act or acount of unverified share application money? 2. Whether on the facts and circumstances of the case and in law, the learned ITAT is justified in holding that addition of share application money cannot be made when identity of the share applicants have been proved despite the fact that summons could not be served on several share applicants? 3. Whether on the facts and circumstances of the case and in law, the Ld. ITAT is justified in not confirming the addition of share capital despite the fact that share applicants who appeared before the AO could not substantiate their creditworthiness? 4. Whether on the facts and circumstances of the case and in law, the ld. ITAT is justified in differentiating the application of the provisions of Section 68 in the case of a banking vis-a-vis non-banking assessee?” A look at the above quoted four questions shows that they are nothing, but projection of one question in four different ways. The essence or grievance in this appeal is regarding deletion of addition of Rs.1,14,00,000/-, made by the assessing officer under Section 68 of the Income Tax Act, in relation to the share application money received by the respondent-assessee. The facts relevant for the present purposes are that the respondent-assessee engaged in banking activities filed its return

(3 of 7) [ITA-129/2017] of income for assessment year 2008-09 on 30.9.2008 declaring an income of Rs.8,25,70,620/-. Meanwhile, a search under Section 132 of the Income Tax Act came to be conducted by the investigation unit of the department for which a notice under Section 153A of the Income Tax Act, 1961 was issued. In pursuance whereof, the assessee filed a return on 7.2.2011 reiterating its income to be Rs.8,25,70,620/-. During the assessment proceedings, the assessing officer examined the books of the assessee and issued a questionnaire to it, which included a query about the share application money received by the assessee. The assessing officer examined the same and found that some transactions of share application money were not verifiable, as the concerned investors/applicants did not appear before the assessing officer, though requested by the assessee. The assessing officer vide order dated 23.12.2011 bifurcated the said amount in table-A and table-B, out of which, sum of Rs.41 lacs and 1 crore respectively had been held to be unexplained leading to an addition of Rs.1,14,00,000/- as unexplained investment in the shares issued by the respondent- assessee. The assessee preferred appeal challenging the aforesaid addition of Rs.1,14,00,000/- on account of share application money alongwith various additions. As far as the addition in relation to share application money is concerned, the appellate authority allowed assessee’s appeal and set aside the same by observing that sufficient evidence in relation to the identity of share holders, complete name and address of the share holders,

(4 of 7) [ITA-129/2017] source of share capital contribution, PAN Card, Photo identify card etc. had been submitted by the assessee before the assessing officer. The appellate authority also observed that the assessee had discharged his initial burden of showing the genuineness of the transaction including particulars and identity of each applicant. The appellate authority further observed that the assessee had placed enough material to satisfy that the entire application money, including the contentious amount of Rs.1,14,00,000/- had been received by the assessee through proper banking channels and the applicants were identifiable. Having recorded the aforesaid finding and in the light of the law law laid down by this Court and other High Courts, the appellate authority held that impugned addition was uncalled for and thus deleted the same vide his order dated 7.12.2015. Impugning the aforesaid order of Commissioner (Appeals), the department filed an appeal before the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur (Appeal No.67/Jodh/16), which came to be decided alongwith a batch of appeals by the Income Tax Appellate Tribunal, vide its common order dated 19.6.2017. As far as contentious addition of Rs.1,14,00,000/- is concerned, the tribunal after dealing with the evidence available on record held that the assessee had sufficiently discharged the burden cast upon it, under Section 68 of the Act and there remains no reason for making any addition in the hands of the assessee bank. While rejecting the department’s appeal qua this issue, the Tribunal held that the respondent-assessee had disclosed identities of all the applicants having invested in its share capital and out of such applicants, many had appeared before the assessing officer and admitted to have invested in the

(5 of 7) [ITA-129/2017] share application money. That apart, the tribunal recorded a finding that all the members/share holders have given their confirmation, which evidence remained uncontroverted by the department. Calling in question, the order dated 19.6.2017, Mr. Bissa, learned counsel for the appellant submitted that the assessing officer was justified in making addition of Rs.1,14,00,000/- under Section 68 of the Income Tax Act, 1961, as the assessee had failed to produce the concerned persons who had invested in the share capital of the assessee. Mr. Bissa asserted that it was the duty of the respondent-assessee to prove the factum of the investment in its share capital by leading cogent evidence. We have heard learned counsel for the appellant and perused the orders under consideration. After going through the orders passed by the learned Commissioner of Income Tax (Appeals) as well as Income Tax Appellate Tribunal, we find that after thoroughly examining the material available on record they have concurrently held that assessee had discharged its burden of proof envisaged under Section 68 of the Act. According to us, it is essentially a question of fact or appreciation of evidence, which exercise has been done properly by the appellate authorities. Having examined the entire material, they have concluded that the assessee had produced not only the particulars and details of the applicants having invested in its share capital, but it had given permanent account numbers, details of payment and mode of payment etc. It is also pertinent that many of the investors had even appeared before the assessing officer and owned their investment or admitted to have invested in the assessee’s share

(6 of 7) [ITA-129/2017] capital. That apart, all the investors had given their confirmation in writing. In this view of the matter, merely because some of the investors did not turn up before the assessing officer at the request of the assessee, addition in assessee’s hands was absolutely uncalled for and unjustified. According to us the assessee had discharged its burden to a great extent rather sufficient. If the assessing officer had any doubt about the remaining transactions,he ought to have issued notice to the concerned applicants with a view to illicit proper explanation. The appellate authorities below have relied upon various judgments of different High Courts, consistently holding in the identical circumstances that no addition can be made in the hands of an assessee in relation to share application money, if the assessee had received the money through banking channels and he has given permanent account number and other relevant details. Learned counsel for the appellant could not point out any perversity worth-name, in the findings of fact recorded by the appellate authorities. We hardly find any question of law, much less substantial question of law requiring adjudication under Section 260A of the Income Tax Act, 1961. The appeal is, therefore, dismissed summarily. DB Income Tax Appeal No.135/2017: This appeal emanates from appeal No.68/Jodh/16 decided by the learned Income Tax Appellate Tribunal, which too was decided vide common judgment dated 19.6.2017, referred in above captioned appeal.

(7 of 7) [ITA-129/2017] The questions proposed by the department are also ad- verbetium similar to the above referred four questions proposed in the above captioned appeal (DB Income Tax Appeal NO.129/2017). The facts are absolutely identical, except that the assessment year involving the present appeal is 2009-10 and disputed amount of share application money is Rs.1,08,08,000/-. Hence, following the reasoning given qua appeal No.129/2017, the present appeal is also dismissed. (DINESH MEHTA),J (SANGEET LODHA),J Cpgoyal/chamber.