Commissioner Of Income-Tax vs Antartica Investment Pvt. Ltd.
2002 Latest Caselaw 2089 Del

JUDGMENT

D.K. Jain, J.

1. This is an appeal by the Revenue under Section 260A of the Income-tax Act, 1961 (in short "the Act"), against the order dated May 9, 2002, passed by the Income-tax Appellate Tribunal, Delhi Bench "D", New Delhi (for short "the Tribunal"), in I. T. A. No. 1379/Delhi of 1996 pertaining to the assessment year 1992-93. According to the Revenue, the order involves the following substantial questions of law :

"(a) Whether, the Income-tax Appellate Tribunal was justified in confirming the order of the Commissioner of Income-tax (Appeals) and thereby deleting the additions of Rs. 1,34,50,000 to the income of the assessed ?

(b) Whether the Income-tax Appellate Tribunal was justified in treating the share application money as explained even though the major share investing companies were non-existing ?

(c) Whether the Income-tax Appellate Tribunal was correct in holding that the assessed had discharged its onus of proving the identity and credit-worthiness of both the creditors as well as the genuineness of the transactions ?

(d) Whether the Income-tax Appellate Tribunal was justified in law in holding that the director of those companies could not be said to be non-existent because somebody appeared on behalf of the director in pursuance of summons under Section 131 ?

(e) Whether the order of the Income-tax Appellate Tribunal is perverse in law and on facts when it, while arriving at a conclusion, had considered the non-relevant material and the relevant material had not been considered ?"

2. Briefly stated, the facts giving rise to the present appeal are as follows :

3. During the course of assessment proceedings for the relevant assessment year, the Assessing Officer noticed that the assessed had received a sum of Rs. 1,34,50,000 as advance against share application money as on March 31, 1992, from two private limited companies, namely, (1) Nobru Commercial Ltd. (Rs. 45,00,000) and (2) National Commercial (P) Ltd. (Rs. 89,50,000). It was claimed that against the said amounts 45,000 and 89,500 equity shares, respectively, were allotted to the two companies. The Assessing Officer required the assessed to produce necessary evidence to prove the existence and identity of the said two companies, as also the source of funds in their hands. In response thereto, the assessed produced confirmation letters from the two companies ; copies of the accounts as found in their books of accounts; copies of the memorandum and articles of association of both the companies ; copies of bank accounts of the two companies from where the cheques had been issued and certified copies of the auditor's report with final accounts for the period ending March 31, 1992.

4. The Assessing Officer, however, not being satisfied with the evidence adduced, came to the conclusion that the assessed had failed to prove the genuineness of the share subscription, recorded in its books of account. For coming to the said conclusion, the Assessing Officer relied on four circumstances, namely, (1) the Assessing Officer of another company, Lovely Investment (P) Ltd., wherein the said two companies had made share subscription, had visited Gangtok but had found that these companies did not exist at the given address; (2) Ajay Gupta, who was the common director in both the subscribing companies, did not respond to the summons issued to him to appear before the Assessing Officer and make statement; (3) the payments had been received by the assessed-company through cheques drawn on banks at Delhi whereas the said companies were stated to be carrying on business in Gangtok, Sikkim ; and (4) there was no evidence that these two companies were assessed to income-tax in Sikkim. Consequently, he treated the said amounts as unexplained cash credits in terms of Section 68 of the Act and added the same to the returned income of the assessed.

5. Aggrieved, the assessed preferred appeal to the Commissioner of Income-tax (Appeals), who vide his order dated December 22, 1995, deleted the said addition by holding that the assessed has been able to establish the identity and the existence of the said two companies. The said conclusion was arrived at by the Commissioner of Income-tax (Appeals) on the basis of the aforenoted documents and the letters dated March 29, 1989, received from the Under Secretary (Land Revenue, Government of Sikkim, Gangtok), stating that both the companies were incorporated in Gangtok and their addresses were disclosed in the return of allotments (Form No. 2) filed in pursuance of Section 75(1) of the Companies Act, 1956.

6. The Revenue took the matter in further appeal to the Tribunal. The Tribunal, vide the impugned order, has upheld the view taken by the Commissioner of Income-tax (Appeals). Hence, the present appeal.

7. We have heard Ms. Prem Lata Bansal, learned senior standing counsel for the Revenue. Learned counsel submits that mere production of confirmation letters from the two companies and the receipt of money by means of cheques, on which too much emphasis is laid by the appellate authorities, is not sufficient to prove the genuineness of the transaction. She would urge that despite summons issued under Section 131 of the Act Ajay Gupta, a common director of both the subscribing companies, did not appear before the Assessing Officer with the result that the Assessing Officer could not elicit further information with regard to the transactions in question. It is thus, pleaded that the Tribunal having ignored the relevant factors germane to the determination of question of genuineness of the transactions, its finding, based on irrelevant material, is perverse and, therefore, a substantial question of law does arise from the impugned order.

8. We do not agree. Admittedly, the aforenoted finding of the Tribunal is factual. Therefore, the only question for consideration is whether the said finding could be said to be without any evidence or material or is it contrary to the evidence on record or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. It is only under any one of these circumstances, a finding of fact may be interfered with. Otherwise, a bare question of fact cannot be turned into a question of law by asking whether as a matter of law the authority came to a correct conclusion upon a matter of fact.

9. In the present case, as noticed above, the Tribunal's finding, which is essentially factual, is based on cogent material highlighted by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) had even gone to the extent of examining the bank account of the two companies from where the cheques in question were issued and had found that there were numerous transactions of deposits and withdrawals and whenever the cheques in favor of the assessed were issued, there was sufficient balance available. It is pertinent to note that it was not the case of the Assessing Officer that any amount found credited in the account of the two companies, has direct or indirect nexus with the assessed-company.

10. Having regard to the material available on record, which we consider to be relevant, we find it difficult to hold that the concurrent findings of fact recorded by the two appellate authorities are such that no person, properly instructed as to the relevant law, could have come to the same conclusion, as the Tribunal has come to.

11. For the aforegoing reasons, we do not find any merit in the appeal. It is, therefore, not entertained.