M/S Indus Valley Promoters Ltd v. Commissioner of Income Tax

V. B. GUPTA, J.

April 01, 2008

MADAN B. LOKUR, J. Bisht

* HIGH COURT OF DELHI : NEW DELHI ITA No.495/2003 % Judgment reserved on: 14th March, 2008 Judgment delivered on: 1st April, 2008 M/S INDUS VALLEY PROMOTERS LTD. 54, Deepak Building, 13, Nehru Place New Delhi-110019. ..... Petitioner. Through: Dr.Rakesh Gupta with Ms.Poonam Ahuja, Advs. Vs. COMMISSIONER OF INCOME TAX I.P.Estate New Delhi. ..... Respondent Through: Mr.R.D.Jolly, Adv. Coram: HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE V.B. GUPTA 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes V.B.Gupta, J. Present appeal has been filed under Section 260A of the Income Tax Act, 1961 (for short as 'Act') by the Assessee against the order dated 29th May, 2003 passed by Income Tax Appellate Tribunal Delhi Bench 'B' (for short as 'Tribunal') in ITA No.3785/Del/01 relevant for the assessment year 1998-99. 2. The brief facts of this case are that the Assessee company filed return declaring a loss of Rs.4,93,218/- and which was processed under Section 143(1)(a) of the Act on the same figure. Subsequently, notice under Section 143(2) of the Act was issued and regular assessment proceedings under Section 143(3) of the Act were taken up. During the course of assessment proceedings, the Assessing Officer noticed an increase in the share application money account as compared to the preceding assessment year and vis-à-vis the account of Shri Sanjay Gupta who is the Director of the Assessee company, it was noticed that a sum of Rs.11.82 lacs had been received during the previous year under consideration. It was noted by the Assessing Officer that in fact no shares were allotted during the previous year under consideration and the share application money retained the same form and character even in two subsequent years. Thus, the Assessing Officer treated this amount as unsecured amount and not as share application money. The Assessing Officer proceeded to test the credit on the touchstone of Section 68 of the Act and asked the Assessee to explain the source of the amount in question. As regard the account of Shri Sanjay Gupta with M/s Indwheels, the Assessing Officer asked the Assessee to explain the deposits in the said account as all the deposits were made in cash. As per enquiries conducted by the Assessing Officer, the address furnished by the Assessee to be the office of M/s Indwheels was not found located at the said premises. A copy of Inspector's report dated 3rd January, 2001 vis-a-vis the aforesaid facts were confronted to the Assessee but according to the Assessing Officer, no further evidence was produced by the Assessee and on the ground that the source of the deposits were not explained within the meaning of Section 68 of the Act and, thus, the Assessing Officer added a sum of Rs.11,82 lacs. 3. The Assessing Officer also made additions in respect of following amounts deposited in the Petitioner company's books:- (1)Smt. Rima Sood Rs. 2 lacs (2)Sh.Rajiv Aggarwal Rs. 2 lacs (3)Sh.Mayank Jain Rs. 2 lacs These deposits were made against the booking of flat/plot in the scheme of the Assessee company but were later cancelled by the parties. 4. Thus, the Assessing Officer had made addition of Rs. 5 lacs. 5. Being dissatisfied with the decision of the Assessing Officer, the Assessee filed an appeal before the CIT(A). However, the CIT(A) dismissed the appeal filed by the Assessee. 6. Thereafter, the Assessee challenged the order passed by the CIT(A) before the Tribunal and vide impugned order it has dismissed the appeal filed by the Assessee with regard to these additions. 7. It is contended by learned counsel for the Assessee that all the amounts credited in the account of Sanjay Gupta in the books of the Assessee have come directly from the account of Sanjay Gupta in M/s Indwheels by cheques and Sanjay Gupta is a partner in the firm M/s Indwheels and he has explained the sources of amounts d