Delhi High Court
Principal Commissioner Of Income ... vs M/S Rathi Ispat Pvt. Ltd. on 9 February, 2018
$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision : 09.02.2018
+ ITA 151/2018
PRINCIPAL COMMISSIONER OF INCOME TAX-7 ..... Appellant
Through Mr. Sanjay Kumar, Adv.
versus
M/S RATHI ISPAT PVT. LTD. ..... Respondent
Through None
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A. K. CHAWLA
HON'BLE MR. JUSTICE S. RAVINDRA BHAT (ORAL)
%
The Revenue's appeal seeks deletion of the sum of
Rs.1,78,51,005/- brought to tax added by the Assessing Officer.
2. The assessee had reported receipt of the said sum of
Rs.1,78,51,005/- as share premium and call in arrears. These amounts
pertain to offering in the public issue made by the assessee in 1994-95.
The offer was made to both existing shareholders and the general
public. The call arrears were reflected in the assessee's books for
several years and in the assessment year - AY 2005-06, the books
reflected that the arrears were paid off. The Assessing Officer
considered this feature to be unusual and queried the assessee with
respect to the identity of the shareholders and the genuineness of the
ITA 151/2018 Page 1 of 4
investments made. The assessee provided the particulars it could and
stated that its books had been assessed by the Central Excise
Authorities and also that its plant and offices were plagued by strikes.
The Assessing Officer conducted a survey under Section 133(6) and
on the basis of the report received, brought to tax the amount under
Section 68. Both the CIT and the ITAT were of the opinion that
though the features of the case were unusual and the call arrears were
liquidated after 10 years, equally the assessee was a public limited
company and could not be expected to keep track of its individual
shareholders and their details. Their orders also disclosed that the
assessee had 50,000 shareholders and that the difficulties it expressed,
during the course of assessment and appellate proceedings were
genuine. The ITAT returned the following finding:-
"4.3 Having gone through the orders of the authorities
below, in view of above submissions, material available
on record and the decisions relied upon, we find that the
Assessing Officer had made the addition in question on
the basis that the assessee had failed to explain the mode
of receipts of money received as share premium and calls
in arrears. It has failed to furnish the address of all such
persons, claimed to be share holders, despite sufficient
time and several opportunities provided. He noted that
these receipts are stated to be relating to issue of 'zero'
interest debentures of Rs.150/- each for cash at par fully
convertible into 5 equity shares after 3 months brought
by the company in June, 1994. The forfeiture clause of
the issue provided for liability of interest on the amount
unpaid on allotment till the date of actual payment and
also of forfeiture of such debentures. The Assessing
Officer found it unusual that total amount of
Rs. 1,78,51,005/- stood outstanding for almost 10 years
ITA 151/2018 Page 2 of 4
and suddenly, the emoluments gets paid up. The
Assessing Officer held that the assessee failed to
discharge the primary onus of furnishing full details of
the receipts and names and addresses of the payers. He
noted that the results of enquiry made by way of test
check was confronted to the assessee company. The
assessee failed to prove the genuineness of the received
transactions and accordingly he added Rs.1,78,51,005/-
as cash credit under section 68 of the Act in the income
of the assessee.
.....................................................................
....................................................................
4.6 Certain material facts recorded by the ld. CIT
(Appeals) while deciding the issue, have not been
disputed by the Revenue before us. These facts are that
the assessee is a public limited company, having more
than 50,000 share holders and its shares were quoted at
Bombay and Delhi Stock Exchanges. Its trading results
have been accepted year after year. Thus there was no
reason to suspect that the assessee was having funds
outside the account books. There was also no reason to
doubt that its Directors would deposit their own money,
nor was there any evidence on record in the names of
share holders distantly related to any of the Directors. It
has also not been disputed that the share holders had paid
calls in arrears / share premium in the earlier years and
accepted. Under these circumstances, we are of the view
that the ld. CIT (Appeals) was justified in deleting the
addition in question. In this regard the ld. CIT (Appeals)
has followed several decisions cited before it including
decision of Hon'ble jurisdictional High Court of Delhi in
the case of Divine Leasing & Finance Ltd. (2007) 207
CTR 38 holding that in the case of public issue, the
company concerned cannot be expected to know every
detail pertaining to the identity as well as financial worth
of each of its subscribers. The first appellate order on the
issue being reasoned one is thus upheld. The Ground
No. 3 is accordingly rejected."
3. This Court is of the opinion that while initially the addition
based upon the Assessing Officer's assessment of the facts were
premised upon the unusual feature of liquidation of the arrears after a
substantial period, the fact equally remains that the assessee was
placed under certain difficulties and therefore, unable to explain these
transactions. Moreover, the assessee is a company with large
shareholding.
4. In these circumstances, the findings of fact concurrently made
by the Appellate Authorities therefore, do not call for interference.
Appeal is therefore, dismissed.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J
FEBRUARY 09, 2018
SRwt
