Delhi High Court
Commissioner Of Income Tax vs M/S. Orbital Communication (P) ... on 30 August, 2010
Author: Manmohan
#18
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 989/2010
COMMISSIONER OF
INCOME TAX ..... Appellant
Through: Mrs. Prem Lata Bansal,
Advocate
versus
M/S. ORBITAL COMMUNICATION
(P) LTD. ..... Respondent
Through: Mr. Piyush Kaushik, Advocate
% Date of Decision: 30th August, 2010
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment? No.
2. To be referred to the Reporter or not? No.
3. Whether the judgment should be reported in the Digest? No.
MANMOHAN, J:
CM 13064/2010
For the reasons stated in the application, delay in re-filing the
appeal is condoned.
Accordingly, application stands disposed of.
ITA 989/2010
1. The present appeal has been filed under Section 260A of the
Income Tax Act, 1961 (hereinafter referred to as "Act, 1961")
challenging the order dated 29th July, 2009 passed by the Income Tax
Appellate Tribunal (for brevity "Tribunal") in ITA No. 14/Del/2007 for
the Assessment Year 2001-2002.
2. Ms. Prem Lata Bansal, learned counsel for the Revenue
submitted that the Tribunal had erred in deleting the addition of
` 1,70,00,000/- made by the Assessing Officer on account of share
application money received by the respondent-assessee during the
period under consideration. She pointed out that the Assessing Officer
had reached the said conclusion as the assessee had deliberately failed
to produce Mrs. Shakuntala Devi and, therefore, the deposits in her
account remained unconfronted.
3. However, upon a perusal of the file, we find that the said addition
was deleted by the Commissioner of Income Tax (Appeals) [for short
"CIT(A)] and the Tribunal on the ground that the assessee had
produced substantial evidence to establish the identity and
creditworthiness of Mrs. Shakuntala Devi. In fact, the CIT(A) in its
order deleting the addition has observed as under :-
"5.2 I have examined the remand report furnished by the
A.O. as well as the submission filed by the AR of the appellant
vide his letter dated 11.06.2005 and rejoinder dated
02.01.2008. The appellant has filed copy of the bank
statement of M/s. S.K. Land and Finance Co. (Prop.) Smt.
Shakuntala Devi alongwith a typed copy of bank statement
where narrations of the credit and debit entries have been
given. The appellant has also filed copy of the assessment
order of Smt. Shakuntala Devi for the AY 2001-02. It is seen
from the details that entire money of Rs. 1,70,00,000/- which
was received during the F.Y. 2000-01 as share application
money by the appellant was transferred from the bank
account of M/s. S.K. Land and Finance Co. running with
State Bank of India, Mahrauli Road branch, Gurgaon as
under:-
Date Cheque No. Amounts
20.06.2000 520686 10,00,000/-
21.08.2000 521086 20,00,000/-
17.11.2000 521983 50,00,000/-
01.09.2000 521898 10,00,000/-
06.12.2000 521997 20,00,000/-
30.12.2000 349910 20,00,000/-
07.02.2001 86946 10,00,000/-
06.03.2001 349958 10,00,000/-
14.03.2001 349966 10,00,000/-
17.03.2001 349970 10,00,000/-
It is also seen from the bank statement that most of the money
deposited in M/s. S.K. Land and Finance Co. is credited by
way of transfer or clearing. Therefore, the observation made
by the A.O. in remand report that most of money was
deposited by way of cash is not correct.
I have also gone through the copy of balance sheet of
M/s. S.K. Land & Finance Co. filed before me. It is seen that
the entire amount of Rs 1,70,00,000/- received by the
appellant is shown in her balance sheet as "advance to be
recoverable in cash or in kind". The balance amount of Rs.
13,00,000/- was received in F.Y. 1999-2000 relevant to A.Y.
2000-01. It is also seen from the details filed by the appellant
that Smt. Shakuntala Devi Prop, M/s. S.K. Land & Finance
Co. is assessed to tax with Assistant Commissioner of
Income-tax Central Circle 14 and for A.Y. 2001-02, she has
been assessed at Rs. 93,33,166/-.
4. Further, the Tribunal in the impugned order has observed as
under:-
"7. We have heard the rival contentions and perused the
material available on record. The facts have been narrated
above. In our view the assessee produced substantial
evidence to establish the identity and credit worthiness of
Smt. Shakuntla Devi, genuineness of share application is also
manifest from record. Therefore, non-production of Smt.
Shakuntla Devi cannot be considered to negate the
evidentiary value of rest of material. The issue about share
application money being undisclosed of income of assessee
has been set at rest by Hon'ble Supreme Court in the case of
Lovely Exports (supra) hold that such additions cannot be
made in assessee's hands. In view thereof, we uphold the
order of CIT(A)."
5. In our considered opinion, the approach adopted by CIT(A) and
Tribunal is in consonance with the decision of Supreme Court in
Commissioner of Income Tax Vs. Lovely Exports (P) Ltd., 216 CTR
195 (SC) wherein it has been held as under :-
"2. Can the amount of share money be regarded as
undisclosed income under s. 68 of IT Act, 1961? We find no
merit in this Special Leave Petition for the simple reason that
if the share application money is received by the assessee
company from alleged bogus shareholders, whose names are
given to the AO, then the Department is free to proceed to
reopen their individual assessments in accordance with law.
Hence, we find no infirmity with the impugned judgment......"
6. Keeping in view the aforesaid mandate of law, the share
application money cannot be regarded as undisclosed income of
assessee under Section 68 of Act, 1961.
7. Accordingly, present appeal, being bereft of merit, is dismissed
in limine.
MANMOHAN, J
CHIEF JUSTICE
AUGUST 30, 2010
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