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Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘A’, CHANDIGARH
Before: SMT.DIVA SINGH & SMT.ANNAPURNA GUPTA
आदेश/ORDER Per Annapurna Gupta, Accountant Member: This appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals), Patiala [(in short ‘CIT(A)’] dated 3.11.2015, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), relating to assessment year 2010-11.
2 ITA No.51/Chd/2016 A.Y.2010-11
2 . E a r l i e r t h e a b o v e a p p e a l o f t h e a s s e s s e e w a s
d i s m i s s e d f o r n o n p r o s e c u t i o n b y t h e Tr i b u n a l v i d e
o r d e r d a t e d 0 1 . 0 3 . 2 0 1 8 a n d t h e s a me w a s r e c a l l e d
v i d e o r d e r d a t e d 2 4 . 0 4 . 2 0 1 9 p a s s e d i n M A
N o . 2 1 3 / C h d / 2 0 1 8 . H e n c e , t h i s a p p e a l b e f o r e u s .
Grounds raised by the assessee read as under:
That the CIT(A) has in view of the facts and circumstances of the case erred on facts and in law in upholding the impugned assessment u/s 143(3) dated 05.03.2013 assessing the income at Rs 18,89,211/-. 2. That the CIT(A) has grossly erred in law and on facts in adjudicating all the ground of appeal raised before him and has also erred in not considering the case law relied on by the appellant. 3. That the CIT(A) has in view of the facts and circumstances of the case erred on facts and in law in upholding the addition of Rs 16,14,901/-on account of share application money received during the year. 4. That the CIT(A) has grossly erred in ignoring and misinterpreting the important facts of the stand taken by the appellant qua the amount of Rs 16,14,901/- and the CIT(A) also erred in ignoring the well settled position of law on the issue . 5. That the CIT(A) has grossly erred in upholding the additions notwithstanding the fact that the Appellant has discharged its burden of proof u/s 68 of the Act . 6. That the CIT(A) has grossly erred in ignoring and misinterpreting the facts available on record and has passed the order based on guesswork and surmises and conjectures.
3 ITA No.51/Chd/2016 A.Y.2010-11
That the various observations made by the CIT(A) in the appellate order are illegal, contrary to facts on record and based on surmises and conjectures. 8. That the evidence, explanation given by the appellant and the material available on record have not been properly considered and judiciously interpreted. 9. That the additions have been made on basis of mere surmises and conjectures and contrary to facts and evidence on record and cannot be justified by any material on record. 10. That the order of respondent is challenged on facts and law since the addition made by the learned AO is patently invalid, wrong and most unjustified. The said addition is also contrary to the facts, material and evidence existing on records. The impugned addition is contrary to the provisions of law and all canons of natural justice. 11. That the Id CIT (A) has failed to appreciate the fact that the books of account and audited statements of the Appellant company show that the amount of share capital was received by them through regular banking channels from the seven individuals, majority of them are existing income-tax assesses and all of them had confirmed the fact of contributing the amount of share capital. 12. That the CIT(A) has failed to appreciate the fact that all seven share investors were summoned u/s 133(6) of the Act by the respondent and all of them appeared before the respondent and acknowledged their respective investment in the Appellant company along with the complete detail of the qua the source of the said investments, Bank Statements and income tax statement 13. Because the order of the CIT(A) confirming the action of the respondent is contrary of the material facts and particulars of the case since the whole addition is on the mere suspicion of the respondent Assessing Office devoid of any corroborative/ positive evidence on record.
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That the CIT(A) has erred in confirming the action of the respondent despite of the fact that the no adverse finding has been pointed out by the respondent in respect of genuineness of transaction, Investors and their creditworthiness or source of investment. 15. Because the order of the CIT(A) is bad in law since Id first appellant authority over sighted the principle laid down by the Honb'le Supreme Court in the case of CIT vs. Lovely Export (P) Ltd. [2008] 216 CTR 195, wherein the Hon'ble Apex court has held that “if share application money was received by the assessee company from alleged bogus shareholders, whose names were given to the Assessing Officer, then Department was free to proceed to reopen their individual assessments in accordance with the law but this amount of share application money could not be regarded as undisclosed income under section 68, of the asseessee company.” 4. Referring to the above, the Ld.Counsel for the assessee
pointed out that the sole issue raised in the impugned
appeal related to addition made of share application money
amounting to Rs.16,14,901/- u/s 68 of the Act on account
of the same remaining unexplained. Taking us through the
facts of the case, as find mention in the assessment order,
the Ld.Counsel for the assessee pointed out that the
assessee was a NBFC (Non Banking Finance Company)
engaged in the business of providing finance and property
consultation. That during the impugned year, the assessee
had received share application money of Rs.24 lacs from the
following persons:
5 ITA No.51/Chd/2016 A.Y.2010-11
1) Sh. Daljit Singh, # 7813-C, Rs.2,00,000/- Passi Road, Patiala
2) Sh. Inderjit Singh, # 1921, Rs.6,00,000/- Urban Estate, Phase-II, Patiala
3) Smt.Parminder Kaur, St.No.122, Rs. 50,000/- #1222, Guru Nanak Nagar, Patiala 4) Sh. J.S.Dhindsa, Mohalla Rs.6,50,000/- Arorian, Patiala 5) Sh. Amarjit Singh, Vill. Rs.5,00,000/- Dhakraba, Patiala 6) Sh. Rupinder Singh, St.No. Rs.2,00,000/- 122 # 1222, Guru Nanak Nagar, Patiala
7) Smt.Vitesha Bedi, 4154/1 Rs.2,00,000/- Sirhind Gate, Patiala 5. During assessment proceedings, the A.O. issued
summons to these persons and recorded statements of those
who appeared in response. The A.O. noted the vital points
which emerged from the statements recorded of these
investors and also noted his comments on the same in a
tabular form reproduced at pages 3 to 7 of the assessment
order. From the same, he derived that when the investors
were specifically asked as to why they had invested in an
unlisted company, they had a common and crammed reply
that the company would rise in future and they would get
benefit. He further derived from the same that the
shareholders were not even aware of the finance growth or
6 ITA No.51/Chd/2016 A.Y.2010-11
results of the company and also that the company had not
issued any notice or letter calling for share application
money and that the shareholders were just close associates
of the assessee, who were trying save the assessee by giving
such statements without furnishing any corroborative
evidentiary documents regarding the shares issued or
justification for the source of such investment. He,
therefore, held that the share application money was only
the own undisclosed income of the assessee and added back
the same to the income of the assessee u/s 68 of the Act.
The assessee carried the matter in appeal before the
Ld.CIT(A) and filed detailed submissions in writing against
the addition so made, which is reproduced at para 5.1 of the
CIT(A)’s order. The Ld.Counsel for the assessee contended
that the assessee had discharged its onus of proving the
identity and capacity of the creditors to advance the money
and also the genuineness of the transaction and the A.O.
made the disallowance on mere suspicion. That the investors
had accepted the fact that the investment was made by them
by their own sources in the statements recorded by the A.O.
and, therefore there was no reason to treat the same
unexplained. The written submissions filed by the assessee
7 ITA No.51/Chd/2016 A.Y.2010-11
were forwarded to the A.O. for his comments, who relied on
the line of argument given in the assessment order and
further stated that another opportunity was given to the
investors to substantiate the source of investment and out
of seven investors, only three had replied and further that
the genuineness of the transaction had not been proved by
the assessee on the basis of which the addition was made by
the A.O. The Ld.CIT(A) after considering the above, deleted
the addition made on account of share application money
received from Shri Inderjit Singh and Shri Daljit Singh on
finding that the source of their investments had been duly
substantiated. The investment made by the rest was upheld
by the CIT(A) holding that the creditworthiness of the
investors had not been duly proved. The relevant findings of
the Ld.CIT(A) at para 5.3 of his order are as under:
“5.3 I have considered the submission made by the appellant and counter comments made by the Assessing Officer. The final position in respect of each of the impugned investors has emerged as under: i). Sh. Inderjit Singh is claimed to have received Rs.6,62,000/- on 24.08.2009 from his GPF account on 24.08.2009. He has furnished a copy of the order of the Competent Authority to that effect. Out of these proceeds, Rs.6,00,000/- have been invested with the appellant company. Thus, the genuineness of this transaction stands
8 ITA No.51/Chd/2016 A.Y.2010-11
established. The addition made on account of this investment, is therefore, deleted. ii). Smt. Vitesha Bedi is claimed to have invested Rs.2,00,000/- with the appellant. Her bank account No.SB/10247 with Punjab & Sind Bank, Patiala shows a cash credit of Rs.2,00,000/- on 19.02.2010. On that very day it has been invested in the appellant company. Before and after these entries, her bank passbook shows negligible balances only. As per the income computation for Assessment Year 2010-11 submitted before the Assessing Officer on 28.09.2015, she has shown an income of Rs.3,67,000/- including Rs.3,60,000/- from the appellant company as salary as Director. She has claimed a deduction of Rs.1,27,000/ under section 80C. There is hardly any regular flow of funds in her bank account as is evident from the copy of her bank passbook. The specific source of the credit entry of Rs.2,00,000/- in her bank account remains unexplained. Therefore, the Assessing Officer is justified in taking adverse cognizance in respect of investment attributed to her. iii). Sh. Rupinder Singh is claimed to have invested Rs.2,00,000/- with the appellant. His bank account No. 160634001000484 with Cooperative Bank shows a cash credit of Rs.2.24 lac on 16.02.2010 out of which Rs.2,00,000/- have been invested with the appellant on 19.02,2010. The source of the cash credit entry of Rs.2,24,000/- has not been established/stated. The balance in the bank account before and after this transaction remains negligible. Thus, his credit worthiness is not proved and the Assessing Officer has rightly taken an adverse view on the investment attributed to him. iv). Smt. Parminder Kaur is claimed to have invested Rs.50,000/- with the appellant. She does not appear to be an income tax assessee. She has a nominal balance of slightly more than Rs.7000/- in her bank account since long. There are cash credit
9 ITA No.51/Chd/2016 A.Y.2010-11
entries of Rs.2000/- and Rs. 44,820- on 10.04.2009 and 10.08.2009. She has invested Rs. 50,000/- on 04.09.2009. After that her balance in the bank account remains nominal only. The source of deposits is also not stated/established. Thus, her creditworthiness is not established and the view taken by the Assessing Officer is upheld. v). Sh. Amarjit Singh is stated to have invested Rs.5,00,000/- with the appellant company in January 2010. It is stated that he is a retired bank employee and had made investment out of his retirement funds. However, no evidence in support thereof has been filed by the appellant or by the alleged investor either during assessment proceedings or in appellate proceedings. In view thereof his creditworthiness and capacity remains unestablished and the view taken by the Assessing Officer is upheld. vi). Sh.J.S. Dhindsa is alleged to have made an investment of Rs.6.5 lacs on 03.11.2009 with the appellant company. A perusal of his bank statement reveals a credit entry of Rs.8.5 lacs on 07.10.2009. Soon thereafter the account shows four cash withdrawals of Rs.50,000/- each on 10.10.2009, 14.10.2009, 19.10.2009 and 27.10.2009, before the impugned investment of Rs.6.5 lacs with the appellant company on 03.11.2009. Thereafter the bank balance of this investor remains modest at around Rs.20,000/- before closing on 05.02.2010 at Rs.5,385/-. The source of deposit of Rs.8.5 lacs on 07.10.2009 has not been explained at all. Thus, the creditworthiness of Sh. J.S.Dhindsa is not established and the view taken by the Assessing Officer is upheld. vii). Sh. Daljit Singh is claimed to have invested Rs.2,00,000/- with the appellant out of the maturity proceeds of his fixed deposits with HDFC Bank Ltd., Patiala and SBOP, Patiala. In support of his contention, the copies of bank passbook evidencing the accumulation are furnished.
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Therefore, the creditworthiness of this investor is established. The addition made on account of this investment deleted. It will also be pertinent to mention here a recent decision of the Hon'ble ITAT Kolkata bench 'B' in the case of Subhlakshmi Vanijya (P.) Ltd. Vs. CIT-I, Kolkata [2015] 60 taxmann.com 60, wherein it has been held that the amendment to section 68 by insertion of proviso vide Finance Act, 2012 which casts onus on closely held company to explain source of share capital is clarificatory and hence applicable with retrospective effect. The relevant portion of the judgment is reproduced below : "13.ae. The above discussed judgments from the Hon'ble Summit Court holding a clarificatory substantive provision as retrospective, despite the same being made applicable from a particular year, fully govern the position under consideration. It is interesting to note that the judgment of the Hon'ble jurisdictional High Court in Maithan International (supra) holding that the burden of proving the credit of share capital etc. is on a closely held company and failure to do so attracts the rigour of section 68, has been delivered on 21.1.2015, much after the amendment carried out by the Finance Act, 2012. This case pertains to pre-amendment era as the order of the tribunal assailed in this case is dated 24.6.2011. It shows that the Hon'ble High Court has also impliedly approved the proposition that the position anterior to the A. Y. 2013-14 was the same inasmuch as the onus to prove the share capital by a closely held company was on it. We, therefore, hold that the amendment to section 68 by insertion of proviso is clarificatory and hence retrospective. The contrary arguments advanced by the Id. AR, being devoid of any merit, are hereby jettisoned." In the above view of the matter, the Addition made on this count is upheld to extent mentioned in relevant paras. Therefore this ground of appeal is partly allowed.” 7. Before us, the Ld.Counsel for the assessee reiterated
the contention made before the lower authorities stating
11 ITA No.51/Chd/2016 A.Y.2010-11
that the assessee had discharged its onus of proving the
identity and creditworthiness of the creditors and
genuineness of the transaction. Referring to the statements
recorded of all the investors, the Ld.Counsel for the
assessee contended that admittedly all the investors had
accepted the fact of having made the investments in the
impugned company and had also stated the source of the
same. Referring to the findings of the Ld.Counsel for the
assessee at para 5.3 the Ld.Counsel for the assessee pointed
out that even the Ld.CIT(A) had noted the fact that
Smt.Vitesha Bedi was a Director in the company drawing
salary of Rs.3.60 lacs duly disclosed in her return of
income, which was the source claimed by the investor in her
statement recorded also. Ld.Counsel for the assessee
pointed out that this was sufficient for the investment made
of Rs.2 lacs by her as share application money. As for Shri
Amarjit Singh, the Ld.Counsel for the assessee pointed out
from para 5.3(v) that the investor had stated that he was a
retired bank employee and made the investment out of his
retirement funds, which fact had remained uncontroverted.
The Ld.Counsel for the assessee stated that having so
declared their sources in the statements recorded, and the
investors being at no point asked to prove the source of
12 ITA No.51/Chd/2016 A.Y.2010-11
their source, nor their creditworthiness ever being doubted
by the A.O, the action of the Ld.CIT(A) in upholding the
addition on this count was not in accordance with law. The
Ld.Counsel for the assessee further stated at Bar that it had
all evidences to prove the source of the investors for making
the impugned investment, if given an opportunity.
Alternatively, the Ld.Counsel for the assessee contended
that there was no requirement under law for the assessee to
prove the source of the source and relied upon the following
case laws in support of his contention:
1) CIT Vs. Lovely Exports Pvt. Ltd., 299 ITR 268 (SC). 2) CIT Vs. Shree Dadu Auto Pvt. Ltd., ITA No.704 of 2009 (P&H). 3) Pr.CIT Vs. Vidhata Tower Pvt. Ltd., ITA No.819 of 2015 (Bom) 4) Pr.CIT Vs. M/s Acquatic Remedies Pvt. Ltd., ITA No.83 of 2015 (Bom) 5) CIT Vs. M/s Gagandeep Infrastructure Pvt. Ltd., ITA No.1613 of 2014 (Bom) 8. Vis-à-vis the addition made on account of investment
by Shri J.S. Dhindsa of Rs.6.5 lacs, the Ld.Counsel for the
assessee contended that all necessary evidences to prove the
source of their investments had been filed to the CIT(A), who
had ignored the same completely and upheld the addition.
13 ITA No.51/Chd/2016 A.Y.2010-11
Drawing our attention to the Paper Book filed before us, the
Ld.Counsel for the assessee pointed out to the documents
placed at Paper Book page No.31 and stated that it was a
settlement entered into by Shri J.S. Dhindsa and another
party, in which it had been agreed to pay Rs.8,50,000/- to
Shri J.S.Dhindsa, which was paid to him by way of a draft
dated 3.10.2009. Copy of the same was placed at Paper Book
Page No.25 to which our attention was drawn. The
Ld.Counsel for the assessee pointed out that it was
explained to the Ld.CIT(A) that the investment had been
made out of this amount received but the Ld.CIT(A) for his
own reasons has chosen to ignore the evidence filed and
upheld the addition made.
The Ld. DR, on the other hand, supported the order of
the Ld.CIT(A) and stated that the contention of the
Ld.Counsel for the assessee that the investors were not
asked to substantiate their source of investments, were
incorrect. Drawing our attention to page No.48 of the Paper
Book, being the statement recorded of Shri Amarjit Singh
one of the investors, the Ld. DR pointed out to question
No.10 wherein the investor was asked to filed year wise
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details of investment and the source of making investment.
The same is reproduced hereunder:
“Q.10 Have you made the investment in a single go or in different years. Please tell the yearwise detail of investments and the sources of making investment. A:- I have made investment in single go in January, 2010. It is out of funds received at the time of retirement. Statement of a/c will be furnished on later date.” 10. The Ld. DR referring to the same stated that all the
investors were specifically asked to prove the source of the
investments made and, therefore, the contention of the
Ld.Counsel for the assessee was incorrect in this regard that
the investors were not asked to prove the source. The Ld. DR
further relied on the decision of the Hon'ble Delhi High
Court in the following cases with respect to the onus on the
assessee to prove the creditworthiness of the parties in
discharging of its onus to prove the genuineness of the
transaction:
1) CIT Vs. Nova Promoters & Finease (P) Ltd., ITA No.342 of 2011 (Delhi). 2) CIT NR Portfolio Pvt. Ltd., ITA No.1019 of 2011(Delhi). 11. As for the contentions made by the Ld.Counsel for the
assessee regarding the source of investment made by Shri
15 ITA No.51/Chd/2016 A.Y.2010-11
J.S.Dhindsa, Ld.DR fairly conceded that the source of the
investment had been duly explained and substantiated as
contended by the assessee.
We have heard the rival contentions carefully, gone
through the orders of authorities below and also gone
through the documents and case laws referred to before us
by both the parties.
Vis-à-vis the investment made by Shri J.S.Dhindsa of
Rs.6,50,000/-, we find that the assessee had duly explained
the source of the same as out of money received from
settlement arrived at by Shri J.S.Dhindsa with another
party. Evidences in this regard were placed before the CIT(A)
in the form of the order of the Hon’ble Punjab and Haryana
High Court noting the fact of settlement arrived between the
assessee and another party in Crl. Misc. No.M-19877 of
2009 dated September 10 2009 for a sum of Rs.8,50,000/-
and also the copy of the demand draft for the said amount
dated 3 October 2009. The Ld. DR has been unable to
controvert the same. The Ld.CIT(A) we find has himself
noted the fact of deposit of Rs.8,50,000/- in the bank
account of Sh Dhindsa on 07-10-2009 and investment
thereafter in the impugned company of Rs.6,50,000/-. The
16 ITA No.51/Chd/2016 A.Y.2010-11
investment made by Sh.Dhindsa, we therefore hold, stands
duly explained and substantiated also ,from the amount of
money received by him on account of settlement . In view of
the same, we find no reason to treat the share application
money received from Shri J.S.Dhindsa as unexplained and
direct deletion of addition made to the extent of
Rs.6,50,000/-.
For the balance, on going through the order of the
A.O., we find that the A.O. had treated the share application
money received as unexplained and ingenuine transaction,
since he found that the investors could not offer a plausible
reason or explanation for making the investment in the
company considering the fact that investments had been
made in preceding years also but the assessee company had
not given any dividend and was not doing the work of
herbal farming for which purportedly the investors had put
their money and no share certificates had been issued to
them. This is evident from the comments of the A.O.
recorded in tabular form in the assessment order at pages 3
to 7 as under:
S. Particular Amount Gist of statement Comments No. s recorded 1. Sh.Inderjit ----00,000/- • • Invested Rs.50,000 Investing money Singh s/o invested in September 1999 since 1999 and Sr.Amarjit during the
17 ITA No.51/Chd/2016 A.Y.2010-11
Singh, r/o year pumping more and • Invested 1921, Urban more money till Rs.6,00,000/- in Estate, 2010 and also did September, 2009 Phase-11, not get any dividend • Patiala Invested till date. It is Rs.1,00,000 in certainly against the October, 2010 principles of human probability as • Retired in 2009 upheld by Hon'ble • apex Court in the Only one office in case of CIT vs P.K. the premises Noorjahan reported 4154/1, Sirhind Gate, Patiala. in 237 ITR 570. The contention of the • No dividend has shareholder is nor been received till acceptable as a date. retired government • employee will not Purpose for invest in an unlisted investment is that NBFC who is not the company may giving him any arrange suitable return since land for herbal inception is not farming and will get acceptable to a higher returns. rational human • As informed he was mind as decided in allotted 75000 Sumati Dayal vs CIT equity shares but reported in 214 ITR could not show the 801 (SC). same either in • The company is not physical mode or doing the work like Demat form and purchase of land for promised to show herbal farming etc. later. Promised but rather it is engaged never shown till in money lending date of passing of business and other order. consultations for • No advertisement purchase of was given by the movable/immovable company calling property and for share earning interest application money thereon. The and he come to memorandum and know about the Articles of share issue from the Association do not Directors as they permit the company were known to me. to carry out such • business of herbal Retired farming (as per Government object clause) employee • No share certificates were shown means that the assessee is
18 ITA No.51/Chd/2016 A.Y.2010-11
misrepresenting the facts to the department by producing such persons. • It is establishes the fact that the share holder has never visited the premises as there are two companies running from the same premises since long.
Sh.Daljit 100,000/- • • Invested Rs.40,000 Investing since Singh, 7813- in 1999 1999 and did not C, Passi get any dividend. • Road, Patiala Invested Rs.50,000/- in It is certainly September, 2000 against the principles of human • Invested Rs.30,000 probability as in 2001 upheld by Hon'ble • Invested apex Court in the Rs.1,00,000 in case of CIT vs P.K. Noorjahan reported 1.9.2009 in 237 ITR 570. • Only one office in • the premises The company is not 4154/1, Sirhind engaged in the work Gate, Patiala. like purchase of land for herbal • No dividend has farming etc. rather been received till it is engaged in date. money lending • business and Purpose for earning interest investment is that thereon. the company may arrange suitable • No share certificates land for herbal were shown means farming. that the assessee is • misrepresenting the Allotted 32000 facts to the shares but could not department by show the same and promised to show producing such later. Promised not persons. fulfilled till date of • It is establishes the passing the order. fact that the share • holder has never No advertisement visited the premises was given by the company calling as there are two for share companies running
19 ITA No.51/Chd/2016 A.Y.2010-11
application money from the same and come to know premises since long. from my brother • As claimed by the Amarjit Singh,. assessee Sh.Daljit • Retired Singh has invested Government Rs.200000/- during employee the year but Sh.Daljit Singh in his statement stated that he has invested Rs.1,00,000/-. Thus the claim of the assessee has no basis.
Sh.Amarjit 5,00,000/- • • Invested Invested in 2010 Singh, 15-A, invested Rs.5,00,000 in and did not get any Hembagh, during the Janyuary, 2010 dividend. It is Patiala year certainly against the • Two offices in the principles of human premises 4154/1, probability as Sirhind Gate, upheld by Hon'ble Patiala. One M/s apex Court in the Galley and other of case of CIT vs P.K. Avancer Finlease. Noorjahan reported • No dividend has in 237 ITR 570. been received till • The company is in date. money lending • business etc. and Invested in the charging interest company with the though that it is a thereon and is not growing company giving any dividend and will given to shareholders. benefit in long run. • No share certificates • were shown means Allotted 50000 that the assessee is shares but could not show the same and misrepresenting the promised to show facts to the later. But he did not department by keep his work. producing such persons. • No advertisement • The contention of was given by the company calling the shareholder is for share not acceptable as a application money retired government and come to know employee will not from the Directors invest in an unlisted as they were known NBFC who is not to me. giving him any return since • Investment made inception is not
20 ITA No.51/Chd/2016 A.Y.2010-11
out of retirement acceptable to a funds but no proof rational human for the same given. mind as decided in Sumati Dayal vs CIT • Retired Chief reported in 214 ITR Manager from 801 (SC). Punjab & Sind Bank
Smt.Vitesha 2,00,000/- • • Invested Rs.20,000 Investing since Bedi, on 1.4.99 1999 and did not Director, get any dividend. • 4154/1, Invested Rs.5,000/- Sirhindi on 17.12.99 It is certainly Gate, against the • Invested Rs.25,000 Patiala. principles of human on 31.3.2001 probability as • Invested upheld by Hon'ble Rs.1,05,000 on apex Court in the 1.10.2001 case of CIT vs P.K. Noorjahan reported • Invested in 237 ITR 570. Rs.15,000/- on 31.1.2002 Pumping more and more money not • Invested getting any return Rs.3,00,000/- on thereon is illogical 15.3.2007 and irrational to a • Invested rational mind. Rs.5,75,000/- on • As claimed by the 31.3.2008 assessee • Invested Smt.Vitesha Bedi Rs.2,00,000/- on has invested 1.4.2011 Rs.2,00,000/- during the year but Sh.Daljit Singh in his statement stated that he has invested Rs.2,00,000/- on 1/4/2011 (List of investment on file). Thus the claim of the assessee has no basis.
Sh.J.S. 6,50,000/- • • Invested Invested in 2009 Dhindsa, r/o invested Rs.6,50,000 in and did not get any New Officers during the September, 2009 dividend. It is Colony, 117, year certainly against the • Patiala Two offices in the principles of human premises 4154/1, probability as
21 ITA No.51/Chd/2016 A.Y.2010-11
Sirhind Gate, upheld by Hon'ble Patiala. One M/s apex Court in the Galley and other of case of CIT vs P.K. Avancer Finlease. Noorjahan reported in 237 ITR 570. • No dividend has • been received till The company is in date. money lending business etc. and • Invested in the charging interest company to thereon and is not support the giving any dividend company to rise to shareholders. • Allotted shares but • No share certificates do not remember were shown means the number of that the assessee is shares. He could not misrepresenting the show the share facts to the certificates and department by promised to show producing such later. persons. • No advertisement • From the statement was given by the it is evident that the company calling amount was given for share application to support the money and come company and not as to know from the an investment. Directors as they were known to me. • Investment made by cheque but did not produce the pass book.
Parminder 50,000 • Father of Ms.Parminder Kaur d/o Kaur appeared and S.Misra stated that she has Singh, settled abroad. St.No.122, 1222, Guru How a person could Nanak forego his/her Nagar, investment and is not Patiala concerned about the return on money invested. Moreover, the case is same like other so called investors i.e. not getting any money/return in the form of dividend etc. till date. 7. Rupinder 2,00,000 • Father of Ms.Parminder Kaur d/o
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S.Misra Kaur appeared and Singh, stated that she has St.No.122, settled abroad. 1222, Guru How a person could Nanak forego his/her Nagar, investment and is not Patiala concerned about the return on money invested. Moreover, the case is same like other so called investors i.e. not getting any money/return in the form of dividend etc. till date.
The AO therefore, we find, treated the investment as
unexplained finding it highly improbable for any sane
person to invest in a company giving no returns and which
was indulging in activities other than those for which the
investors had put in their money expecting high returns
therefrom. He also noted that no share certificates
evidencing the shares was produced before him and also
that the investors were unaware of the financials of the
assessee company. The A.O., we find, has not recorded any
finding vis-a-vis the creditworthiness of the investors being
doubtful, in his entire notes on his observations from the
statements recorded of the investors. At the same time ,we
find, that the investors had stated that the investments had
been made through banking channels and their sources of
investment as being salary as director from the assessee
23 ITA No.51/Chd/2016 A.Y.2010-11
company in the case of Smt.Videsha Bedi and retirement
funds of Sh.Amarjit Singh who claimed to be a retired bank
employee. These facts we find mentioned in the CIT(A)’s
order itself at para 5.3 reproduced above. Having claimed
so, we find, no further questions were asked from the
investors.
On the contrary, we find, the Ld.CIT(A), has upheld the
addition for a totally different reason from that recorded by
the A.O ,holding that the creditworthiness of the investors
remained unproved. The Ld.CIT(A) has given findings about
cash being immediately deposited in the bank account of
Smt.Vitesha Bedi, Shri Rupinder Singh, Smt.Parminder Kaur
and has upheld the addition for this reason. But the
Ld.CIT(A) did so without giving the assessee an opportunity
to rebut or controvert his adverse observations. The findings
doubting the source of investments was never made by the
A.O, but were made by the CIT(A) only and we find that he
did not afford the assessee an opportunity to explain the
same also. The assessee all along justified the genuineness
of the transaction, countering the findings of the AO, and
the CIT(A) did not uphold the addition for the same reason
as the AO but for a totally different reason that too without
confronting his adverse observations to the assessee. This
24 ITA No.51/Chd/2016 A.Y.2010-11
act of the Ld.CIT(A), we hold, is against all cannons/principles of natural justice. The Ld.Counsel for the assessee has stated before us at Bar that he has all evidences to prove the source of investment made. In the interest of justice, we, therefore, consider it fit to restore the issue back to the file of the Ld.CIT(A) to adjudicate the issue afresh after giving the assessee due opportunity of hearing. The assessee is free to file all evidences in support of his contention. 17. In the result, the appeal of the assessee partly allowed for statistical purposes. Order pronounced in the Open Court.
Sd/- Sd/- �दवा �संह अ�नपूणा� गु�ता (ANNAPURNA GUPTA) (DIVA SINGH ) �याय�क सद�य/Judicial Member लेखा सद�य/Accountant Member �दनांक /Dated: 09th July, 2019 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
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