Delhi High Court
Commissioner Of Income Tax vs Samtel Color Limited on 17 January, 2011
Author: A.K.Sikri
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA No.660/2008
% Date of Decision: January 17, 2011
COMMISSIONER OF INCOME TAX .... PETITIONER
Through Ms.P.L. Bansal, Advocate
Versus
SAMTEL COLOR LIMITED .... RESPONDENT
Through Mr.Ajay Vohra with Ms.Kavita Jha and
Mr.Somnath Shukla, Advocates
AND
+ ITA No.599/2010
SAMTEL COLOR LIMITED .... PETITIONER
Through Mr.Ajay Vohra with Ms.Kavita Jha and
Mr.Somnath Shukla, Advocates
Versus
COMMISSIONER OF INCOME TAX .... RESPONDENT
Through Ms.P.L. Bansal, Advocate
CORAM:
HON'BLE MR. JUSTICE A.K.SIKRI
HON'BLE MR. JUSTICE M.L.MEHTA
1. Whether reporters of Local papers may be No.
allowed to see the judgment?
2. To be referred to the reporter or not? No.
3. Whether the judgment should be reported No.
in the Digest?
ITAs No.660/2008 and 599/2010 Page 1 of 9
A.K. SIKRI, J. (Oral)
CM No.7300/2009 in ITA No.660/2008
By this application, the respondent seeks to place on record
some additional documents. The application is allowed and the
documents are taken on record.
The application is disposed of.
CMs No.5474 & 5475 of 2010 in ITA No.599/2010
1. In this appeal filed by the assessee against the orders dated
06.07.2007, condonation of delay is sought in filing the appeal as
well as refilling the appeal. Further against the same order,
Revenue has also filed the appeal, i.e., ITA No.660/2008.
2. For these reasons, we condone the delay of 19 days in filing
the appeal and 372 days in refilling the appeal, subject to a
payment of Rs.5,000/- as costs to Delhi High Court Legal Services
Committee within two weeks.
3. The applications are disposed of.
ITAs No.660/2008 and 599/2010
1. In both these appeals, one preferred by the assessee and
other by the Revenue, same order of the Tribunal is under
challenge. This order pertains to one issue only that the assessee
had filed the return for the assessment year 1997-98. During the
assessment proceedings, the Assessing Officer observed that the
assessee had taken deposits from public, which was to the tune of
Rs.261.41 lakhs. According to the Assessing Officer, however,
credit-worthiness in respect of 18 depositors could not be
established by the Assessee and, therefore, deposits given by those
18 depositors, which were to the tune of Rs.18.00 lakhs, were added
in the income of the assessee under Section 68 of the Income Tax
Act. The details of these persons as given by the Assessing Officer
are as follows:-
S.No. Name of the Depositors Amount
(in Rs.)
1. Ms.Urmila Agarwal 1,00,000/-
2. Mr.Kapil Bihari Saxena 1,00,000/-
3. Ms.Geeta Devi Chauhan 70,000/-
4. Ms.Nishi Goel 50,000/-
5. Ms.Prabha Goel 50,000/-
6. Ms.Kavita Saxena 50,000/-
7. Ms.Vibha Saxena 50,000/-
8. Mr.Sandeep Kumar 50,000/-
9. Mr.Baldev Kumar 2,00,000/-
10. Ms.Bela Khanna 1,20,000/-
11. Ms.Sneh Agarwal 2,50,000/-
12. Ms.Shipli Agarwal 1,00,000/-
13. Mr.Shobit Agarwal 1,00,000/-
14. Mr.Rajesh Kumar Sharma 60,000/-
15. Mr.Ramcharan Sharma 50,000/-
16. Ms.Rajkumari Sharma 50,000/-
17. Mr.R.C. Sharma 1,00,000/-
18. Ms.Rajkumari Sharma 1,00,000/-
2. The CIT(Appeal) had allowed the appeal of the assessee on
the ground that the assessee has been able to satisfactorily
discharge the onus laid on it by furnishing requisite documents and
information establishing the identity of those aforesaid persons and,
therefore, deleted the entire amount of Rs.18.00 lakhs. The
Revenue preferred an appeal against the order to the Income Tax
Appellate Tribunal. The Tribunal has sustained the addition in
respect of eight depositors which is to the tune of Rs.5.20 lakh and
has sustained the order of the CIT(Appeals) so far as deletion is
made in respect of other depositors at serial num.9 to 18, which was
to the tune of Rs.12.80 lakhs. This is the reason that both the
assessee and the Revenue have filed the appeals. The Revenue is
aggrieved by the deletion of Rs.12.80 lakhs which is made by the
CIT(Appeals) and sustained by the ITAT. On the other hand, the
assessee is aggrieved by the order of the ITAT restoring the addition
to the tune of Rs.5.20 lakhs, which was deleted by the CIT(Appeals).
3. In this backdrop, we admit the appeal of the Revenue with the
following substantial question of law:
(i) Whether ITAT was correct in law in deleting the addition
of Rs.12.80 lakhs out of total addition of Rs.18 lakhs
made by the Assessing Officer under Section 68 of the
Act?
4. The appeal of the assessee is also admitted framing the
following substantial question of law:
(i) Whether on the facts and in the circumstances of the
case the Tribunal erred in law in sustaining the addition
of Rs.5.20 lakhs on account of unexplained deposits
under Section 68 of the Act?
5. Both the appeals are heard at this stage itself with the
consent of the learned counsel for the parties.
6. The Assessing Officer took the view, as noticed above, stating
that there was no confirmation given by depositors at serial number
1 to 18, and, therefore, neither the identity nor the credit-worthiness
was proved in these cases. In respect of depositors at serial number
9 to 14, assessee had furnished the confirmations, however, the
additions were made on the ground that these depositors were not
assessed to tax. Insofar as persons mentioned at serial No.15 to 18
are concerned, these are the retired government servants and their
confirmation letters were filed. However, the Assessing Officer was
of the view that merely by filing confirmation letters, identity and
credit-worthiness of these persons could not be established.
7. The CIT (Appeals), on the other hand, while deleting the entire
addition, was persuaded by the fact that the assessee is a public
limited company; it had received these deposits from a public offer
and not privately; the assessee had been receiving such deposits;
for each deposit, an application form was required to be filed up by
the depositors giving his name, address and details of the
payments; payments were received by account payee cheques or
demand draft and these deposits were also repaid through cheques
or demand drafts. It was also noted that in respect of interest paid,
even tax at source was deducted under Section 194 (A) of the Act.
On this premise, the CIT(Appeal) came to the conclusion that basic
information with regard to these deposits was made available to the
Assessing Officer and, therefore, onus shifted on the Assessing
Officer to probe the matter further, if he was not satisfied with the
aforesaid details, by issuing summons to those parties and
examining them giving opportunity to the assessee to cross-
examine such persons. He was also of the view that merely
because some of the depositors were not assessed to income tax
and had not given PAN/GIR numbers etc. could not be the reason for
making addition under Section 68 of the Act. The Income Tax
Appellate Tribunal, as noted above, has sustained the addition in
respect of the depositors at serial number 1 to 8 and has sustained
the order of the CIT(Appeals) so far as deletion is made in respect of
other depositors at serial number 9 to 18. We are of the opinion
that the order of the Tribunal confirming the order of the
CIT(Appeal) on the grounds made in the order are perfectly justified.
In the additional documents filed by the assessee, the application
form is also produced on which comments are made by the
CIT(Appeals). The perusal of this application form would indicate
that every possible information of the depositors was sought by the
assessee, which includes particulars of the applicant/depositors,
telephone number, the particulars of demand draft or cheque vide
which the deposit is received, tax status of the applicant, other
depositors with the assessee, if any, and more particularly the
declaration in the following form:
"Declarations: I/We hereby declare that the amount
being deposited herewith is not out of any funds
acquired by me/us by borrowing or from deposits from
any other person(s). I/we declare that I am/we are
residents(s) in India and am/are not depositing this
amount as nominee of any other resident. I/we declare
that the first named depositor mentioned in our
application is the beneficial owner of this deposit and as
such should be treated as the payee for the purpose of
deduction of tax under Section 194 A of the Income Tax
Act, 1961 and for other purposes. I hereby solemnly
declare that as on the date of this application, I/we have
no amount of deposits or loans with company whether
original (in cash or otherwise) remaining unpaid
(whether repayment has fallen due or not, which by
itself or taken together with the present applicants for
Rs.20,000/- or more, in terms of section 269 SS of the
Income Tax Act, 1961 (applicable only in case of
application made in cash and not in Account Payee's
cheque/demand drafts). I/we declare that what is stated
in this application is true and correct. I/we have read,
understood and agree to abide by the attached terms
and conditions governing the deposits."
8. It is stated at the cost of repetition that assessee is a public
limited company and the deposits were invited by public notice and
not privately. It is also important to note that total deposits in this
year, which was received, were to the tune of Rs.2.61 crores and the
Assessing Officer has raised dispute only qua 18 persons and whose
total deposits are Rs.18.00 lakhs. By giving the information, which
was available with the assessee in the form received in the
aforesaid application form filled by the depositors, we are of the
view that assessee had, in the aforesaid circumstances, discharged
the initial onus.
9. Therefore, we do not find any merit in the appeal filed by the
Revenue and answering the question in the appeal of the Revenue
against it and in favour of the assessee; we dismiss the appeal.
10. Insofar as addition of Rs.5.20 lakhs sustained by the ITAT is
concerned, the only reason given is that in respect of these persons
no confirmation letters could be filed. In view of the reasons given
above, in a case where public company receives the deposit through
public notice and not privately and various depositors make the
deposits, it is possible that at relevant time, the assessing company
is not in a position to take the confirmation from each and every
depositor. The deposits of those eight persons are nominal in
nature when compared to the total deposits received by the
assessee. Moreover, the information given in the application forms
submitted by these depositors would have served the purpose and it
cannot be said that the assessee did not discharge the onus. Thus,
on the facts of this case, we are of the opinion that even in respect
of these eight depositors, the assessee had discharged the onus.
The order of CIT(Appeals) in deleting the entire amount was
perfectly justified and could not have been interfered with by the
ITAT qua those eight depositors.
11 We, accordingly, decide the question of law framed in the
appeal of the assessee in favour of the assessee and against the
Revenue thereby setting aside the order of the Tribunal and
restoring the order of CIT(Appeals) in its entirety.
12. Both the appeals are disposed of accordingly.
A.K.SIKRI,
(JUDGE)
M.L.MEHTA
JANUARY 17, 2010 (JUDGE)
Dev
