Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
ननधााररती की ओर से /Assessee by : Shri S.R.Rao, Advocate & Nilesh Jain, CA राजस्व की ओर से /Revenue by : Shri Choudhary N.C.Roy, Sr. DR सुनिाई की तारीख / Date of Hearing : 02/01/2023 घोषणा की तारीख/Date of Pronouncement : 17/02/2023 आदेश / O R D E R
Per Arun Khodpia, AM :
This appeal is filed by the assessee against the order passed by the CIT(A)-II, Raipur, dated 10.02.2017 for the assessment year 2012-2013, on the following grounds:-
1. In the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition of Rs. 1,65,00,000/- made u/s 68 of the Income- tax Act 1961, without considering the facts of the case in their entirety.
2. The Ld. Commissioner of Income-tax (Appeals) is not justified in overlooking the fact that all the subscribers are Income-tax assessees with the same Assessing Officer and disputed investment were accepted in their individual cases without any reservations and those assessments attained finality.
3. The Ld. Commissioner of Income-tax (Appeals) has erred in confirming addition of Rs.20,00,000/- subscribed by M/s Shiv India Tracom Pvt Ltd out of total addition of Rs. 1,65,00,000/- which was received in the preceding year.
4. The order of Ld. Commissioner of Income-tax (Appeals) is bad in law and on facts.
The appellant reserves the right to add, amend, alter and omit all or any of the grounds of appeal
with permission of the Hon’ble Appellate Authority.
2. Brief facts of the case are that the assessee is engaged in the business of manufacturing of rice and by-products of paddy by milling. Besides these operations the assessee also undertakes customised milling of government paddy for which it received milling charges and transportation charges from the government. In the process of customised milling the assessee supplies rice to the DMO Durg and CGCFCI and retained its by-products as his own stock in trade. The assessee filed its return of income on 30.9.2013 declaring total income at Rs.11,65,272/-. The case was selected for scrutiny for regular assessment with the assistance of CASS and statutory notices u/s.143(2) and 142(1) were issued to the assessee. In compliance of the notice the AR of the assessee attended and submitted compliance. During the year under consideration the assessee's paid-up and subscribed share capital has been increased by Rs. 1.65 Crore, however, regarding the said increase in share capital the assessee’s explanations / submissions werenot considered as plausibly explained by the Ld A.O.. Books of account of the assessee were also produced and verified on the basis of test check method.. The AO after verifying the documents placed by the assessee and submission made during the course of assessment proceedings, framed the assessment order u/s.143(3) of the Act after making various following additions:-
3 i) On account of under valuation of gunny bags (Bardana) amounting to Rs. 13,30,090/- as unexplained investment u/s. 69 of the Act. ii) Unexplained expenditure u/s. 69C by rejecting the books of accounts u/s. 145 relating to the purchases of broken rice showing difference between the purchases in the audit report and in the ledger submitted to the AO amounting to Rs. 5,26,963/-. iii) On account of excess revenue expenditure amounting to Rs. 4,03,756/- u/s. 69C pertaining to excess revenue expenditure on average cost of the paddy as shown in the audit report. iv) On account of capital expenditure for an amount of Rs. 3,32,706/- pertaining to repairs and maintenance of mill machinery. v) Addition of Rs. 1,00,000/- to plug the leakage of revenue in the absence of proper vouchers in support of expenses claimed. vi) Addition of Rs. 1,65,00,000/- on account of unexplained cash credits pertaining to receipt of share application money.
Against the above additions made by the AO, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) deleted all the additions made by the AO except the addition of Rs.1,65,00,000/- made by the AO on account of unexplained cash credits pertaining to receipt of share application money, which has been confirmed by the ld. CIT(A) observing that the assessee could not prove creditworthiness and genuineness of the transactions in establishing the justification of claims with respect to receipt of share application money.
Now, the assessee is in further appeal against order of CIT(A) in confirming the addition made u/s.68 of the Act. 5 At the outset, ld. AR before us submitted that the transactions of Share application money received during the relevant assessment year are genuine, the addition made by the ld AO and upheld by the Ld CIT(A)
4 are without considering the facts of the case in their entirety. It is also submitted that all the investors / subscribers are Income Tax assessees and are being assessed by the same AO whereas in their individual assessments the ld AO has accepted the said investments, their assessments also completed without any negative inference or reservation towards the same. To strengthen assessee’s contentions, Id AR has submitted a paper book (82 pages) consisting of copies of additional evidences under affidavit under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, which contains copies of documents pertaining to subscribers such as Confirmations, ITR Acknowledgments, Capital Accounts, Bank Statements, Sale bills of jewellery etc. Ld AR requested to consider the additional evidences with a prayer that transactions of share capital are duly accounted for by all the subscribers in their books of accounts, thus, the Identity & creditworthiness of subscribers and genuineness of the transaction is a proven fact and no addition on this account is warranted. It was also submitted that an amount of Rs. 20 lacs subscribed by M/s Shiv India Tracom Pvt. Ltd. in the preceding year to the relevant financial year cannot be added as unexplained cash credit u/s 68 of the Act. in the relevant assessment year. It was therefore the submission that the decision of the Ld CIT(A) deserves to be reversed.
Ld AR also submitted that onus on the assessee was only to provide details about the subscribers from whom the share capital money was received through proper banking channel, once the documents 5 related to identity of the subscribers have been submitted to the department, the department is free to reopen individual cases of the said subscribers in accordance with law, the same cannot be regarded as undisclosed or unexplained cash credit of the assessee u/s 68 of the Act, to substantiate towards this contention, Ld AR relied upon the decision of the Jurisdictional High Court in the case of Venkateshwar Ispat (P.) Ltd. Reported in (2009) 319 ITR 393 (Chhattisgarh) (01-05-2009), wherein it was held that:- “Section 68 of the Income-tax Act, 1961 - Cash credit - Assessment year 1989-90 - If share application money is received by assessee- company from alleged bogus shareholders whose names are given to Assessing Officer, then Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee-company.”
On the other hand, ld. Sr.DR submitted that the assessee has the persistent behaviour to submit the details with higher authorities instead of providing the same to ld. AO, as is visible that during appellate proceedings before the Ld CIT(A), some details were submitted under Rule 46A of the Income Tax Rules, 1962 and now before ITAT under rule 29 of the of Income Tax (Appellate Tribunal) Rules, 1963. Thus, benefit of such provisions should not be granted to the assessee, the order of the Ld CIT(A) on this issue, therefore should be upheld. If an opportunity is being provided to the assessee to submit additional evidences and to rely upon the same, then the matter needs to be restored back to the files of AO for verification of the additional evidences/documents so as to arrive at a factual conclusion on the same.
We have heard the rival submissions, have gone through the paper book of the assessee and additional evidences with affidavit submitted under Rule 29 of the of Income Tax (Appellate Tribunal) Rules, 1963. Admittedly, the additional evidence submitted by the assessee along with affidavit running into 82 pages are relevant to be looked into so as to reach to a logical conclusion on the issue, therefore the additional evidences need a close verification, the same has been fairly admitted by both the parties. We therefore of the view that to examine the additional evidences it is necessary in accordance with the principle of natural justice to restore this issue back to the files of ld. AO to re-adjudicate the issue and we do so. Needless to say, the assessee shall be provided with reasonable opportunity of being heard and to explain the facts to substantiate its contentions.
In the result the appeal of the assessee is allowed in terms of our observations as above for statistical purposes. Order pronounced in pursuance to the Rule 34(4) of ITAT Rules,1963 on 17/02/2023. Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER रायऩुर/Raipur; ददनाांक Dated 17/02/2023 Prakash Kumar Mishra, Sr.P.S आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1. प्रत्यथी / The Respondent- 2. आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. विभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, रायऩुर/ DR, ITAT, 5. Raipur