Jay Polychem India Ltd., New Delhi vs Department Of Income Tax

ITA No. 4850/Del/2009 Assessment Year: 2006-07 Deputy CIT, vs. Jay Polychem India Ltd. Circle 4(1), A-101, Lajpat Nagar-I, New Delhi. New Delhi. (PAN: AAACJ0657M) (Appellant) (Respondent)

Revenue by: Shri P. Damkaunjma, Sr. DR Assessee by: Shri Ajay Wadhwa, CA

Date of hearing : 27.01.2015 Date of pronouncement: :03.2015

ORDER

PER I.C. SUDHIR: JUDICIAL MEMBER The Revenue has questioned First Appellate Order mainly on the

ground that the Learned CIT(Appeals) has erred in deleting the addition of

Rs.5,43,40,000 made by the Assessing Officer on account of unexplained

cash credits under sec. 68 of the Income-tax Act, 1961.

2. In support of the ground, the Learned Sr. DR placed reliance on the

assessment order with this contention that the Learned CIT(Appeals) while

deleting the addition in question has failed to appreciate that the assessee

had not discharged its onus of proving the creditworthiness of the creditors

and genuineness of the transaction.

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3. The Learned AR on the other hand tried to justify the First Appellate

Order on the issue with the submission that in the present case, matter is to

be considered from the stand point that it is a case of introduction of fresh

capital in a company. He submitted that the shares were allotted for a face

value of Rs.5,50,00,000, however, only a sum of Rs.6,60,000 was received

in cash in the assessment year 2006-07 under consideration and the balance

amount of Rs.5,43,40,000 was shown as receivable as on 31.3.2006 and was

received only after 31.3.2006 i.e. in the assessment year 2007-08. Besides,

the assessee had also furnished sufficient evidence in support of the claim

and the parties had appeared before the Assessing Officer in response to the

notices issued under sec.133(6) of the Income-tax Act, 1961 and had

submitted their confirmations and copy of balance sheet. The Learned AR

reiterated the submissions made before the Learned CIT(Appeals) and

placed reliance on the documents filed before the authorities below as well

as the decisions cited thereto.

4. We have gone through the orders of the authorities below, material

available on record and the decisions relied upon. We find that above stated

material facts by the Learned AR and noted by the Learned CIT(Appeals) 3

have not been rebutted before the ITAT. Besides, before the Assessing

Officer, the assessee had furnished following documents to confirm the

allotment of shares in the assessment year 2006-07 and further receipt of

money in assessment year 2007-08:

"a) Documents pertaining to allotment of shares filed with the Registrar of Companies (ROC).

b) Details of Book entries made pertaining to allotment of shares.

c) 1. Confirmation of Investment by the parties

2. Complete details of payment

3. Acknowledgment of Income-tax Return along with PAN

4. Copy of income tax assessment order

5. Computation of income

6. Copy of audited balance sheet of these parties for the years ending 31st March 2005, 31st March 2006 and 31st March 2007 showing the net worth and ability of invest.

Further, the A.O. also issued notices to these parties u/s. 133(6) whereby (i) These parties appeared before the A.O. and further submitted their confirmation and copy of balance sheet.

(ii) They also provided the A.O. with details of cheques issued, against the shares allotted which clearly showed that the amounts were paid in the next financial year i.e. 2006-07 (i.e asst. Year 2007-08).

5. During the year, following capital shares were allotted to these

companies:

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a) Ganapati Breweries Ltd., Rs. 1,79,75,000

b) Baweja Exports Pvt. Ltd. Rs. 2,54,50,000

c) Ganapati Sugar Ltd. Rs. 1,15,75,000 Rs. 5,50,00,000

6. The Learned CIT(Appeals) has given relief on the basis that share

allotment money was received by the assessee only in the assessment year

2007-08 and not in the assessment year 2006-07 and that the shareholders

had complied before the Assessing Officer in response to the notices issued

under sec.133(6) of the Income-tax Act, 1961 and had submitted their

confirmations, copies of balance sheet and the details of cheques issued,

against the shares allotted showing that amounts were paid in the financial

year 2006-07 relevant to the assessment year 2007-08. The Learned

CIT(Appeals) has thereafter observed that during the course of assessment

as well as appellate proceedings, the assessee had furnished all the necessary

particulars/details as reproduced by him in para No.4 of the first appellate

order. He, thereafter, following several decisions of the Hon'ble Courts

including the decision of Hon'ble Supreme Court in the case of CIT vs.

Lovely Exports (P) Ltd. (2008) 216 CTR(S.C) 198 and of Hon'ble Delhi

High Court in the cases of CIT vs. Divine Leasing & Finance Ltd. (2007)

299 ITR 268 (Del.), CIT vs. Value Capital services Ltd. (2008) 307 ITR 334

(Del.) and Ors. has deleted the addition in question. 5

7. We are of the view that considering the entire material placed on

record, it was fair on the part of the Learned CIT(Appeals) to delete the

addition in question on the basis that the share applicants were existing

parties and the payments were made through banking channels and further

that the Assessing Officer could not point out any discrepancy in the

evidences relied upon by the assessee regarding genuineness of the

transaction and year of the payment. We thus do not find infirmity in the

First Appellate Order on the issue. The same is upheld. The ground is

accordingly rejected.

8. In the result the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 31.03.2015

Sd/- Sd/-

( PRAMOD KUMAR ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 31/03/2015 Mohan Lal Copy forwarded to: 1) Appellant 2) Respondent 3) CIT 4) CIT(Appeals) 5) DR:ITAT ASSISTANT REGISTRAR 6

Date Draft dictated on computer 16.03.2015 Draft placed before author 16.03.2015 Draft proposed & placed before the second member

Draft discussed/approved by Second Member. 27.03.2015 Approved Draft comes to the Sr.PS/PS 31.03.2015 Kept for pronouncement on 31.03.2015 File sent to the Bench Clerk 31.03.2015 Date on which file goes to the AR Date on which file goes to the Head Clerk.

Date of dispatch of Order.