Rajasthan High Court - Jodhpur
Pr. Commissioner Of Income Tax- Udaipur vs M/S Saileela Synthetics Pvt. Ltd on 4 March, 2024
Bench: Pushpendra Singh Bhati, Madan Gopal Vyas
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Income Tax Appeal No. 12/2021
Pr. Commissioner Of Income Tax- Udaipur, Udaipur.
----Appellant
Versus
M/s Saileela Synthetics Pvt. Ltd., 147, New Cloth Market,
Bhilwara.
----Respondent
For Appellant(s) : Mr. K.K. Bissa
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
HON'BLE MR. JUSTICE MADAN GOPAL VYAS
Order
04/03/2024
1. This appeal under Section 260A of the Income Tax Act, 1961
(hereinafter referred as Act of 1961) has been preferred by the
appellant-Income Tax Department claiming the following reliefs:
"It is, therefore, prayed that this appeal may kindly be
allowed. By an appropriate order or direction, the impugned
order dated 21.12.2020 passed by the Tribunal may kindly
be set aside and the order of AO may kindly be restored and
upheld.
Any other order which may be considered just and
proper in the facts and circumstances of the case may
kindly be passed in favour of the appellant. Cost of the
appeal be awarded in favour of the appellant."
2. The respondent-Company (assessee) is engaged in the
manufacturing & trading of synthetic fabric and filed its e-return
on 28.09.2015 declaring its total income as Rs.1,14,56,120/-.
Thereafter, the case was selected for scrutiny through CASS and a
(2 of 9) [ITA-12/2021]
notice under Section 143 (2) of the Act of 1961 was issued on
27.07.2016 to the respondent-Company, and subsequently,
another notice under section 142 (1) of the Act of 1961 was
issued, which was duly was served to the respondent-Company,
while fixing the date of hearing.
2.1 The respondent Company, during the Assessment Year 2015-
16, raised its share capital by allotment of equity shares; firstly it
issued 1,81,816 number of equity shares and later issued
3,40,665 number of equity shares, in total 5,22,481 numbers of
equity shares each having face value of Rs. 10/- and share
premium of Rs. 45/- and Rs. 50/- were issued to total 11
companies. The respondent-Company accordingly, received a sum
of Rs.3,04,39,780/- on allotment of total 5,22,481 paid up shares.
2.2 As per the appellant, the details furnished by the respondent
-Company regarding the said 11 companies was not found to be
proper, and therefore the Income Tax Department issued
Assessment Order (AO) dated 29.12.2017, assessing the total
income of the respondent-Company as Rs. 4,20,76,100/- including
lump-sum addition, employees contribution towards ESI, and on
account of unsecured loan of Rs.25 lacs and interest on unsecured
loan Rs. 24,658/- under Section 143 (3) of the Act of 1961 and
tax and interest was charged as per ITNS-150, and the penalty
proceedings under Section 271 (1) (c) of the Act of 1961 were
initiated.
2.3 Being aggrieved by the aforesaid assessment order dated
29.12.2017, the respondent-Company preferred an appeal (Appeal
No. 557/2017-2018) before the Commissioner of Income-Tax
(3 of 9) [ITA-12/2021]
(Appeals), Ajmer (in short, 'CIT'); the learned CIT vide order
dated 13.03.2018 partly allowed the appeal, while quashing the
assessment order dated 29.12.2017, accordingly, deleted the
addition of Rs.25 lacs made by the Assessing Officer under Section
68 of the Act of 1961 and disallowance of the interest of
Rs.24,658/-.
2.4. Being aggrieved by the order dated 13.03.2018 passed by
the learned CIT, the appellant preferred an appeal (I.T.A. No. 279/
Jodh/2018) before the learned Income Tax Appellate Tribunal,
Jodhpur Bench, (in short, 'Appellate Tribunal'). The learned
Appellate Tribunal vide the impugned order dated 21.12.2020
dismissed the said appeal. The copy of the said order was received
on 10.02.2021. Thus, being aggrieved of the said order, the
present appeal has been preferred claiming the afore-quoted
reliefs.
3. Learned counsel for the appellant-Department submits that
during the assessment proceedings, the Assessing Officer had
made enquiry under Section 133 (6) of the Act of 1961 regarding
those 11 Companies stated by the respondent-Company, wherein
none of the Companies filed a reply to the notice and even the five
notices have been returned by the postal authority with the
remark "Left".
3.1. Learned counsel further submits that the details of
shareholders/investors Companies of the assessee was furnished
on 15.12.2017 and thereafter on 28.12.2017, new addresses of
investor companies were provided, which is clearly at the end of
the year, and the same was done to avoid and evade verification
(4 of 9) [ITA-12/2021]
of such addresses, and that, the source of investment also
remained unexplained, and therefore, the impugned order is not
justified in law.
3.2. Learned counsel also submits that the respondent-Company
did not explain the allotment of total 5,22,481 paid up shares, but
the learned CIT has deleted the addition made by the Assessing
Officer without appreciating the facts of the case and the same
was also upheld by the Appellate Tribunal vide the impugned
order, and therefore, the present appeal has been preferred
raising the substantial questions of law.
4. Heard the counsel for the appellant-Department as well as
perused the record of the case.
5. This Court observes that the respondent-Company filed its e-
return on 28.09.2015 declaring a total income of Rs.
1,14,56,120/-. Thereafter, the case was selected for scrutiny
through CASS and notices were issued. The respondent-Company
raised its share capital by allotment of equity shares; firstly, it
issued 1,81,816 number of equity shares, and later, issued
3,40,665 number of equity shares, in total 5,22,481 number of
equity shares each having face value of Rs. 10/- and share
premium of Rs. 45/- and Rs. 50/- were issued to total 11
companies; the respondent-Company received a sum of Rs.
3,04,39,780/- on allotment of total 5,22,481 shares.
5.1. Thereafter, the appellant-Department issued the Assessment
Order (AO) dated 29.12.2017, assessing the respondent-
Company's total income as Rs. 4,20,76,100/-, and accordingly, the
penalty proceedings under Section 271 (1) (c) of the Act of 1961
(5 of 9) [ITA-12/2021]
were initiated. Aggrieved by the same, the respondent-Company
preferred an appeal before the learned CIT, and the learned CIT
vide order dated 13.03.2018 has partly allowed the appeal, while
quashing the assessing order dated 29.12.2017; aggrieved
thereby, the appellant-Department preferred an appeal before
Appellate Tribunal, but the same was dismissed vide the impugned
order.
6. This Court further observes that subject to the remarks, as
contained in the assessment order dated 29.12.2017, the
assessee's total income was computed as indicated in the
following table, as mentioned in the said order:
Income as per Return of Income filed by the Rs.1,14,56,120/-
assessee
Add:- (i) As discussed Rs.3,04,39,780/-
in Para-3 above u/s.68
of the I.T. Act.
(ii) Lump-sum addition Rs.1,50,000/-
as discussed in Para-4
(iii) Employees' Rs.5,540/-
contribution towards
ESI (Para 5)
(iv) On account of
Unsecured Loan of Rs.25,00,000/-
Rs.25.00 lakhs and
Interest on unsecured Rs.24,658/-
loan Rs.24,658/- as
discussed in Para 6 Rs.3,06,19,978/-
Total Income Rs.4,20,76,098/-
Round off u/s.288 A Rs.4,20,76,100/-
7. This Court also observes that the grounds of appeal as raised
by the present respondent-Company before the learned CIT are
reproduced as hereunder:
"1. The learned assessing officer has grossly erred in law
and on the facts of the case on ad-hoc addition i.r.o.
consideration received on allotment of new shares
(6 of 9) [ITA-12/2021]
amounting to Rs.30439780. The Ld Assessing Officer has
invoked and initiated section 68 of the act (i.e. unexplained
credit) without considering the facts provision of the act and
reasoning of the various judgments.
2. Ld AO grossly erred in disallowing Rs.150000 out of
various expenses without appreciating that all the
expenditure are supported by details, voucher and fully
explained and considering the volume of business of the
assessee.
3. The Ld AO grossly erred in disallowing Rs. 5540 of
Employees Contribution to ESI without appreciating the fact
that all the contributions are deposited on or before the due
date of filing the return by the assessee.
4. The learned assessing officer has grossly erred in law and
on the facts of the case on making addition of Rs.25,00,000
on account of unsecured loan obtained from the
shareholders and Rs.24,658 which is interest on the same."
7.1. This Court further observes that the respondent-Company
furnished each and every necessary and requisite documents to
prove the identity and creditworthiness of the persons from whom
the respondent-Company received share application(s) and the
same was recorded in the order dated 13.03.2018 of the learned
CIT; relevant portion whereof is reproduced hereunder:-
"4.4 The appellant has furnished, in respect of each
person following documentary evidences to prove the
identity and creditworthiness of the persons from whom
the appellant has received share application money and
genuineness of the transactions:
➢ Copy of the share applications
➢ Copy of Bank statement of shareholder showing
that it had sufficient balance in its accounts to enable it to
subscribe to the share capital
➢ Acknowledgement copy of Income Tax Return of
shareholder
(7 of 9) [ITA-12/2021]
➢ Copy of PAN card to verify the identity
➢ Copy of Balance sheet alongwith audit report of the
above share applicants confirming complete details of
Sources of funds and Investments made.
➢ Copy of balance confirmation cum affidavit to verify
the genuineness
➢ Copy of memorandum and copy of resolution.
➢ Details of the immediate sources of the funds
invested by the share applicants
➢ Copy of Bank statement of the company
➢ ROC Share allotment form alongwith complete
annexures
➢ Ledger copy of share application money, Share
capital and share premium"
7.2. This Court also observes that once the respondent-Company
furnished all the relevant and requisite documents, and in the
assessment order, there is nothing which could show that the
respondent-Company introduced its own income from undisclosed
sources in the form of shares; the assessment order was passed
only on the basis of suspicion and doubt, which is not permissible
under the law, as has rightly been held by the learned CIT in its
order, which in turn has rightly been upheld by the learned
Appellate Tribunal vide the impugned order.
7.3. This Court further observes that the learned CIT as well as
learned Appellate Tribunal have rightly ordered deletion of the
above-said amounts, because the respondent-Company had
furnished all the required the details, and further held that it
cannot be said to be an unexplained credit under Section 68 of the
Act of 1961. Therefore, the impugned order passed by the learned
Appellate Tribunal is justified in law.
(8 of 9) [ITA-12/2021]
8. This Court also observes that in the Assessment Order there
is a disallowance of Rs. 1,50000/- out of various expenses, and
the said disallowing is on a higher side and the same was
considered by the learned CIT, and that the disallowance was
restricted to Rs.75,000/- and the respondent-Company got the
relief of Rs. 75,000/-, which is completely justified in law.
9. This Court further observes that there is another aspect
regarding the Assessment Order to the effect that there is
disallowance of Rs.5540/- of employees contribution to ESI, and in
this regard, the learned CIT directed the Assessment Officer to
verify the contention of the respondent-Company that the
employees' contribution towards PF and ESI was deposited on or
before the due date of filing the return under Section 139 (1) of
the act of 1961; the same was upheld by the learned Appellate
Tribunal. Therefore, now the same does not require any
reconsideration by this Court.
10. This Court further observes that there are concurrent
findings arrived at by the learned CIT as well as learned Appellate
Tribunal, which are well reasoned and have been arrived at after
taking into due consideration the overall facts and circumstances
of the case and upon duly analyzing the material available on
record before them.
11. Thus, in light of the aforesaid observations and looking into
the factual matrix of the present case, this Court does not find it a
fit case so as to grant any relief to the appellant in the present
appeal.
(9 of 9) [ITA-12/2021]
12. Consequently, the present appeal is dismissed. All pending
applications stand disposed of.
(MADAN GOPAL VYAS),J (DR.PUSHPENDRA SINGH BHATI),J
68-SKant/-
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