JHARKHAND HIGH COURT
CIT VS SIDHI VINAYAK
METCON LTD. I J ON
5 APRIL, 2018
Tax Appeal No. 39 of 2009
This Tax Appeal has
been preferred by the Department under Section 206 A of the Income Tax Act,
1961 raising the following substantial question of law:
"a) "Whether
on the facts and in the circumstances of the Case the learned ITAT was
justified in confirming the Order of CIT (A) who has deleted the entire
addition and had failed to appreciate that the Identity of 5 Share Applicants
remained unidentified and genuineness of the transaction of 2 persons were not
verified?"
b) "Whether on the
facts and in the circumstances of the Case the learned ITAT was justified in
confirming the Order of CIT (A) who has deleted the entire addition and had
failed to remand the Case to AO for thorough investigation in spite of his
clear finding with respect to the existence and identity of the five share
applicants remained unidentified and genuineness of the transaction of
regarding 2 persons remained unverified?"
2. Having heard
counsels appearing for both sides and looking to the facts and circumstances of
the case, it appears that this case is pertaining to Assessment Year 2005-06.
Looking to the Assessment Order dated 27th December, 2007, it appears that an
addition of Rs.95,15,000/- has been made mainly for the reason that though this
amount pertained to share applications, but, the identity of the applicants
remained unverified and the assessee could not give reply in this regard. Order
dated 27th December, 2007 is at Annexure 1 to the memo of this Tax Appeal.
3. Thereafter, being
aggrieved and dissatisfied by the Assessment Order for the assessment year 2005-06,
appeal was preferred before the Commissioner of Income Tax (Appeals) in which a
detailed explanation was given by the assessee as to from where the amount was
received. The amount was received by way of cheque and hence, the Department
could have followed up the bank entries etc. which was not done. Therefore,
said appeal, being Appeal No. 416/JSR/2007-08, was allowed on 20th November,
2008 and the addition made by the Assessing Officer was quashed and set aside.
The said order is at Annexure 2 to the memo of this Tax Appeal.
4. Being aggrieved and
feeling dissatisfied by the said order, appeal was preferred before the Income
Tax appellate Tribunal , Ranchi Circuit Bench, Ranchi by the Department. The
learned I.T.A.T. dismissed the appeal preferred by the Department mainly on the
ground that Assessee has not only disclosed, relevant particulars with respect
to the shareholders, but, the amount received by the Assessee towards share
application was also by way of cheque and the Department could have also followed
the bank entries because all the share amount was received by the assessee by
way of cheques from the applicants. The learned I.T.A.T. has dismissed the
appeal rightly relying upon the decision of the Hon'ble Supreme Court in Lovely
Exports (Pvt.) Ltd. reported in 216 CTR 195 (Para 5).
5. Having heard
counsels appearing for both sides and looking to the facts and circumstances of
the case, we see no reason to entertain this Tax Appeal mainly for the reason
that the addition made by the Assessing Officer should not have been made by
him because amount received towards the share applications was by way of
cheque. All the details regarding applicants were furnished by the assessee and
Department could have issued notices to such applicants. Hence, there was no
need for the Assessing Officer to make addition of Rs. 95,15,000/-.
6. It appears that
before the Commissioner of Income Tax (Appeals) also such prayer could have
been made by the Department for issuance of Notices upon share applicants. No
such application was preferred before C.I.T. (Appeals) by this appellant.
Hence, we see no reason at this stage to remand the matter to the Assessing
Officer for further verification of share applications.
7. It appears that
similar type of cases are coming to this court often and most of the time same
type of error is committed by the Assessing Officers, either deliberately or
due to "induced ignorance". This is not the first time such type of
matter has been taken up by this Court It is now high time for the Commissioner,
Income Tax to have orientation courses or induction courses conducted for the
Assessing Officers to make them understand that whenever assessee receives any
amount by cheque, there is a need for the Assessing Officer to give notice to
the drawers of those cheques.
8. In view of the
aforesaid facts and reasons, there is no substance in this Tax Appeal as no
error has been committed by the Income Tax Appellate Tribunal while passing
Order dated 10th July, 2009 in I.T.A. No. 18/Ran/2009 (Annexure 3 to the memo
of this appeal) and the Commissioner of Income Tax has also not committed any
error while passing Order dated 20th November, 2008 in Appeal No. 416/JSR/07-08
(Annexure 2 to the memo of this Tax Appeal) and as there is no substantial
question of law involved in this Tax Appeal, this Tax Appeal is, hereby,
dismissed.
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