PR COMMISSIONER OF IT JAIPUR vs. M/S INTERARCH ESTATE P LTD

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 258 / 2016 Principal Commissioner of Income Tax-1, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus M/s Interarch Estate (P) Ltd., A-6, Sardar Patel Marg, C-Scheme, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Mahendra Gargeiya _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 14/11/2017 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department. 2. This Court while admitting the matter framed following questions of law:- ““1. Whether the Tribunal was justified in deleting the addition of Rs. 1,80,00,000/- made on account of unexplained share application money u/s 68 of the Act, ignoring that the share applications alongwith premium were merely accommodation entries and the identity, genuineness and creditworthiness of the applicants was not proved. 2. Whether the Tribunal was justified in deleting the addition of Rs. 2,70,000/- made u/s 69B of the Act on account of commission payment made for obtaining

accommodation

entry

Rs. 1,80,00,000/-?”

(2 of 4) [ITA-258/2016] 3. Now the issue is squarely covered by the decision of Supreme Court in case of Lovely Exports (P) Ltd., reported in (2008) 299 ITR 268 (SC), wherein it has been held as under:- “It the share application money is received by the assessee-company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the department is free to proceed to re-open their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment.” 4. Counsel for the respondent has relied upon the decision of this court in CIT vs. M/s Hotel Gaudavan Pvt. Ltd., DBITA No. 608/2009 decided on 25/4/2017. He also relied on judgment in PCIT vs. Shubh Mines Pvt. Ltd. in DBITA No. 96/2015 decided on 3/5/2016 wherein it has been held as under:- “7. A bare perusal of the assessment order reveals that the AO has made the addition on suspicion which is based on the statements of third party Shri Aseem Kumar Gupta, admittedly, recorded in the back of the assessee. It has come on record that the share application money of Rs. 50,00,000/- was received from Moderate Credit Corporation Ltd., a listed company. It is not disputed before this Court that the investment made was received by account payee cheque and the same was refunded by an account payee cheque when the company dropped its project. In the considered opinion of this court, in absence of any cogent evidence on record establishing that the money shown to have received as share application money, was as a matter of fact, unaccounted money belonging to the assessee company, the finding arrived at by the AO, which is based on suspicion, has rightly been held not sustainable in the eyes of law. Suffice it to say that the finding arrived at by the CIT(A), affirmed by the ITAT, which remains a finding of fact, cannot be said to be capricious or perverse.” 4.1. He has also relied upon the judgment in case of CIT vs.

(3 of 4) [ITA-258/2016] Supertech Diamond Tools Pvt. Ltd. (2014) 44 taxmann.com 460 (Raj.) wherein it has been held as under:- “8.The reference to the statements made by some of the persons related with the said investing companies is of no effect because such statements could not have been utilized against the assessee Company when the assessee company had not been afforded an opportunity of confronting and cross-examining the persons concerned. There does not appear anything occurring in the statements of the persons relating with the assessee Company so as to provide a basis for the findings recorded by the AO. 9. In any case, the points as sought to be raised by the appellant in the present case are all the matters relating to appreciation of evidence. The relevant factors have been taken into account and considered by the appellate authorities before returning the findings in favour of the assessee. As regards the referred share capital contributors, it is noticed that they are existing assessees having PA numbers; and are being regularly assessed to tax. The appellate authorities cannot be said to have erred in deleting the additions in their regard at the hands of assessee-company. 10. Ultimately, the question as to whether the source of invest- ment or of credit has been satisfactorily explained or not remains within the realm of appreciation of evidence; and the Courts have consistently held that such a matter does not give rise to any substantial question of law. In the case of Commissioner of In- come Tax Vs. Orissa Corporation (P) Ltd.: (1986) 159 ITR 78 (SC), the Hon'ble Supreme Court held as under:- “13. In this case, the assessee had given the names and ad- dresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Rev- enue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged credi- tors to find out whether they were credit- worthy or were such who could advance the alleged loans. There was no effort made to pursue

(4 of 4) [ITA-258/2016] the socalled alleged creditors. In those circumstances, the assessee could not do any thing further. In the premises, if the Tribunal came to the conclusion that the assessee has dis- charged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 11. In CIT Vs. Shree Barkha Synthetics Ltd.: 182 CTR (Raj.) 175, in a similar nature matter, this Court observed that the Tri- bunal having found that the companies from which the share ap- plication money had been received by the assessee-company were genuinely existing and the identity of the individual in- vestors were also established and they had confirmed the fact of making investment, the finding that assessee had discharged ini- tial burden and addition under Section 68 could not be sustained, was essentially a finding of fact. This Court said,- "19. A perusal of the aforesaid finding goes to show that deletion has been made on appreciation of evidence, which was on record Finding that there was existence of investors and their confirma- tion has been obtained, were found to be satisfactory. All these conclusions are conclusions of fact based on material on record and, therefore, cannot be said to be perverse so as to give rise to question of law, which may be required to be considered in this appeal under s.260A of the IT Act." 5. In view of the above, the issue is required to be answered in favour of the assessee against the department. 6. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/28