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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI
Before: SHRI C.M. GARG & SHRI L.P. SAHU
ORDER
Per L.P. Sahu, Accountant Member:
This appeal is directed by assessee against the order of ld. CIT(A), Bareilly dated 27.02.2013 for the assessment year 2003-04 on the following grounds : “
1. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in confirming the addition of Rs.4,50,000/- in respect of share Application Money contributed by Rs.1,00,000/- Shri Fakeera Singh S/o Shri Babu, Rs.2,00,000/- Shri Bundu Miyan S/o Sayeed Ali and Rs.1,50,000/- Shri Azeez Ahmed S/o Shri Ashfaq Ali.
2. That the confirmation of addition of Rs.4,50,000/- in respect of share application money is arbitrary, illegal, unjustified and against the facts and circumstances of the case.”
2. The only question involved in this appeal is with respect to addition made by AO of Rs.4,50,000/- on account of unexplained cash credits u/s. 68 of the IT Act. The assessee was required to explain the cash credits. In compliance, the assessee stated these cash credits as share application money received from following three persons :
(i). Shri Farira Singh S/o Ballu Rs.1,00,000/- (ii). Sri Bundu Miyan S/o Sayeed Ali Rs.2,00,000/- (iii). Sri Aziz Ahmad S/o Ashfaq Ali Rs.1,50,000/- The Assessing Officer required the assessee to submit the confirmations and other proofs to establish the genuineness of the funds taken as cash credits. However, the assessee did not furnish any of the evidence before the AO with respect to alleged share application money received from above three persons. This led the Assessing Officer to observe that the assessee has failed discharge the onus to prove the identity, genuineness and creditworthiness in the above cases. The AO also observed that the assessee is not a public limited company and took over the business from partnership firm namely M/s. U.S. Foods and it is settled law that the assessee has to establish the genuineness of the cash credit which he failed to do. Accordingly, the AO treated the cash credits of Rs.4,50,000/- as unexplained and added the same back to the total income of the assessee vide assessment u/s. 143(3) of the IT Act. The assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) confirmed the addition after distinguishing the decision relied on by the assessee in the case of Lovely Exports (216 CTR 195)(SC) and relying upon the decision of Hon’ble Delhi High Court in the case of Nova Promoters and Finlease (P) Ltd., 342 ITR 169 (Del.). The ld. CIT(A) also observed that the said share applicants are persons with no history of paying taxes. They have no PAN and apparently, the onus cast on the assessee company to prove the flow of funds was not discharged. He also observed that the appellant-company is not a widely held company which could have invited people to apply for its shares through a public advertisement. Aggrieved by this order, the assessee is in appeal before the Tribunal.
The ld. AR of the assessee by way of written synopsis, submitted that the ld. Authorities below have wrongly made and confirmed the addition made on account of unexplained cash credits ignoring the fact that similar addition on the same ground with respect to cash credits from the same persons stood deleted by CIT(A) in A.Y. 2006-07 and no appeal was filed by the Revenue. It was submitted that the addition is not justified after rejecting the confirmations of share applicants filed by the assessee before the authorities below. It was submitted that the decision relied by ld. CIT(A) in Nova Promoters (supra) is not applicable in the instant case in view of the decisions rendered by Hon’ble Supreme Court in the case of Lovely Exports Pvt. Ltd., 216 CTR 195 and Steller Investment Limited 251 ITR 263. Further reliance is placed on the following decisions :
(i). Jaya Securities Ltd. vs. CIT, 166 Taxman 7 (All.) (ii). CIT vs. Al Anam Agro Foods (P) Ltd., 219 Taxman 125 (All) (iii). CIT vs. Kamna Medical Centre (P) Ltd. 217 Taxman 16(All) (iv). CIT vs. Miq Steels (P) Ltd., 217 Taxman 209 (All).
The ld. DR on the other hand relied on the orders of the authorities below and submitted that the authorities below have passed well reasoned orders and the same need no interference.
We have considered the rival submissions and have perused the impugned order and entire material on record. A perusal of the impugned order reveals that the ld. CIT(A) has relied upon the decision of Hon’ble Delhi High Court in the case of Nova Promoters (supra), wherein the extent of applicability of decision of Hon’ble Supreme Court rendered in Lovely Exports (supra) has been analyzed in detail. On this, it is opined by Hon’ble Delhi High Court that where the complete particulars of the share applicants in respect of their identity, creditworthy and genuineness are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company u/s 68 of the Income Tax Act, 1961 and the remedy open to the revenue is to go after the Share Applicants in accordance with law. In the instant case a perusal of written synopsis furnished by the ld. AR speaks that the Assessing Officer made addition of aggregate sum of Rs.4,50,000/- as unexplained cash credit to the total income of assessee after rejecting the confirmations filed by each one of the cash creditors, whereas the assessment order categorically speaks that regarding the share application money, the assessee was asked to submit the confirmation and other proofs to establish the genuineness of the funds taken as cash credits. In the following three cases, the assessee could not even submit the PAN. Also, there is no whisper in the impugned order that the assessee submitted any documentary evidence before the authorities below with respect to the alleged share applicants. The ld. CIT(A) while applying the decision of Hon’ble Delhi High Court in the case of Nova Promoters (supra) also does not record any finding that complete particulars of the share applicants were not furnished by the assessee before the authorities below or that the Assessing Officer had sufficient material in his possession to show that those particulars so furnished by the assessee are false or fabricated. The photocopies of confirmations of share applicants are placed on record before us, but there being doubt on their submission before the authorities below and lack of findings of lower authorities thereupon, the decisions relied upon by the ld. CIT(A) and the assessee, cannot be applied to the case in hand. Keeping in view the averments made on behalf of the assessee in the written synopsis regarding submission of confirmation etc. before the Assessing Officer and the contradictory finding of Assessing Officer in this regard given in the assessment order, we deem it expedient in the interest of justice that the matter should be restored to the file of Assessing Officer to decide the issue afresh after considering the documentary evidence evidences alleged to have been furnished or to be furnished by the assessee. The assessee is directed to furnish complete particulars of the share applicants and necessary documentary evidences in respect of their identity, creditworthiness and genuineness, as contemplated u/s. 68 of the IT Act. Needless to say, the assessee shall be afforded reasonable opportunity of being heard to put up its case both on factual and legal aspects of the case. We order accordingly.