Txa/66/2016 Of The Principal Commissioner Of Income Tax, Panaji v. M/S. Paradise Inland Shipping Pvt. Ltd

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 66 OF 2016 THE PRINCIPAL COMMISSIONER OFINCOME TAX, PANAJI., ... Appellant V e r s u s M/S. PARADISE INLAND SHIPPING PVT.LTD., ... Respondent Ms. Susan Linhares, Junior Standing Counsel for the Appellant.Mr. Jitendra Jain, Mr. Jitendra Supekar and Ms. Janaki Garde, Advocates forthe Respondents. Coram :-F. M. REIS, NUTAN D. SARDESSAI, JJ.thDate: 10 April, 2017 ORAL ORDER (Per F. M. Reis, J.) Heard Ms. Susan Linhares, learned Counsel appearing for theAppellant and Mr. Jain, learned Counsel appearing for the Respondents. 2. The challenge in the above Appeal is to Orders passed by theCommissioner of Income Tax (Appeals) and confirmed by the Income TaxAppellate Tribunal, whereby an Order passed under Section 147 of theIncome Tax Act on the ground of escaped assessment, came to be set aside. Learned Counsel appearing for the Appellant has pointed out that the main ground on which the Assessing Officer has made theassessment under Section 147 of the Income Tax Act, is that shares whichwere purchased are by fictitious Companies which are not existing. It isfurther pointed out that the Appellants-Revenue had recorded statements oftwo persons one from Calcutta and the other from Delhi to show that suchCompanies were not existing nor the addresses mentioned disclosed anyexistence of the Company. Learned Counsel further pointed out that the CITAppeals has erroneously relied upon the documents produced by theRespondents overlooking the statement of the said two persons whichclearly proved otherwise. It is further pointed out that the Assessing Officer iswilling to subject the said two persons for cross examination and, as such,the matter be remanded to the Assessing Officer to take a fresh decisionafter giving the Respondents an opportunity to cross examine the said twopersons. Learned Counsel has further pointed out that such findings of theAppellate Authorities are erroneous and contrary to the record, withoutexamining that the Respondents have failed to discharge the burden toestablish the existence of such Companies who had invested the shares inthe Company of the Respondent. Learned Counsel as such pointed out thatthere are substantial questions of law which arise in the present Appeal forconsideration under Section 260-A of the Income Tax Act. 4.On the other hand, Mr. Jain, learned Counsel appearing for theRespondents, initially brings to our notice the findings of the CIT Appeals at 4.On the other hand, Mr. Jain, learned Counsel appearing for theRespondents, initially brings to our notice the findings of the CIT Appeals at page 44 wherein it has been clearly observed that a case can be re-openedunder Section 147 of the Income Tax Act for assessing escaped assessmentand not for making verification. Learned Counsel further pointed out thatthese observations of the CIT Appeals have not been challenged before theIncome Tax Appellate Tribunal which itself would show that the veryjurisdiction of the Assessing Officer to proceed to examine escapedassessment under Section 147 of the Income Tax Act itself stands vitiatedand cannot be sustained. Learned Counsel further submits that it is wellsettled that the initial burden with regard to the existence of the investmentsCompany would lie on the assessee which has been clearly discharged byproducing voluminous documents which included the incorporation of suchCompanies, the Memorandum of Association, the assessment Orders forthree preceding years and other materials to establish the existence of theCompanies. Learned Counsel further submits that the alleged contentions ofthe Appellants that the Companies itself were not in existence has not beenestablished by the Appellants by any material on record and having failed todischarge such burden, the Appellants are not entitled to now contend thatthe Assessing Officer was willing to present the persons for crossexamination. Learned Counsel further submits that the Order is passedwithout giving any opportunity to the Assessee for cross examination is anullity in law and, as such, the question of reviving such Order on the basisof such contention by the learned Counsel appearing for the Appellants,would not at all be justified. Learned Counsel further pointed out that both the authorities be it CIT Appeals as well as ITAT on the basis of theappreciation of evidence on record, concurrently came to the conclusionthat the existence of the Companies was based on documents producedfrom the public records. Learned Counsel further pointed out that theAppellants have not shown any perversity in such findings and, as such,according to him, there are no substantial questions of law which arise in thepresent Appeal for consideration. Learned Counsel in support of hissubmission ha relied upon the Judgment of this Court reported in 2011(15)Taxmann 183 Bombay in the case of Commissioner of Income-taxvs.Creative World Telefilms Ltd., the Judgment passed in Income TaxAppeal no. 1613/14 dated 28.03.2017 in the case of Commissioner fIncome Tax-1 vs. M/s. Gagandeep Infrastructure Pvt.Ltd. and a Judgmentdated 13.02.17 passed in Tax Appeal No. 16/2012 in the case of TheCommissioner of Income Tax vs. Goa Sponge and Power Ltd. LearnedCounsel has also relied upon the Judgment of the Apex Court reported in1986(1) Scale 446 in the case of Commissioner of Income Tax, Orissa vs.Orissa Corporation Private Limited giving emphasis to Para 13 thereof topoint out that the contention of the Appellants are basically questions of factsand not substantial questions of law. 5.We have given our thoughtful considerations to the rivalcontentions of the learned Counsel and we have also gone through therecords. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether theshareholders who have invested in the shares of the Respondents arefictitious or not. In this connection, the Respondents in support of their standabout the genuineness of the transaction entered into with such Companieshas produced voluminous documents which, inter alia, have been noted atPara 3 of the Judgment of the CIT Appeals which reads thus : 5.We have given our thoughtful considerations to the rivalcontentions of the learned Counsel and we have also gone through therecords. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether theshareholders who have invested in the shares of the Respondents arefictitious or not. In this connection, the Respondents in support of their standabout the genuineness of the transaction entered into with such Companieshas produced voluminous documents which, inter alia, have been noted atPara 3 of the Judgment of the CIT Appeals which reads thus : “The assessment is completed without rebuttingthe 550 page documents which are unflinchingrecords of the companies. The list of documentssubmitted on 09.03.2015 are as follows :the 550 page documents which are unflinchingrecords of the companies. The list of documentssubmitted on 09.03.2015 are as follows : 1.Sony Financial Services Ltd. - CINU74899DL1995PLC068362- Date of Registration 09/05/1995 a)Memorandum of Association and Article ofAssociationAssociation b)Certificate of Incorporation c)Certificate of Commencement of Business d)Acknowledgment of the Return of IncomeAY 08-09AY 08-09 e)Affidavit of the Director confirming theinvestmentinvestment f)Application for allotment of shares g)Photocopy of the share certificate h)Audited account and Directors reportthereon including balance sheet, Profit and LossAccount and schedules for the year ended31.03.2009.thereon including balance sheet, Profit and LossAccount and schedules for the year ended31.03.2009. i)Audited account and Directors report thereon including balance sheet, Profit and LossAccount and schedules for the year ended31.03.2010 j)The Bank Statement highlighting receipt ofthe amount by way of RTGS. k)Banks certificate certifying the receipt ofthe amount through Banking channels.” 6.On going through the documents which have been producedwhich are basically from the public offices, which maintain the records of theCompanies. The documents also include assessment Orders for last threepreceding years of such Companies. 7.The Appellants have failed to explain as to how such Companieshave been assessed though according to them such Companies are notexisting and are fictitious companies. Besides the documents also includedthe registration of the Company which discloses the registered address ofsuch Companies. There is no material on record produced by the Appellantswhich could rebut the documents produced by the Respondents herein. Insuch circumstances, the finding of fact arrived at by the authorities belowwhich are based on documentary evidence on record cannot be said to beperverse. Learned Counsel appearing for the Appellants was unable to pointout that any of such findings arrived at by the authorities below were on thebasis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantialquestion of law, this Court in an Appeal under Section 260A of the IncomeTax Act cannot re-appreciate the evidence to come to any contrary evidence.Considering that the authorities have rendered the findings of facts based ondocuments which have not been disputed, we find that there are nosubstantial question of law which arises in the present Appeal forconsideration. 8.The Apex Court in the case of Commissioner of Income Tax,Orissa vs. Orissa Corporation Private Limited (supra), has observed atPara 13 thus : whilst coming to such conclusions. Under the guise of the substantialquestion of law, this Court in an Appeal under Section 260A of the IncomeTax Act cannot re-appreciate the evidence to come to any contrary evidence.Considering that the authorities have rendered the findings of facts based ondocuments which have not been disputed, we find that there are nosubstantial question of law which arises in the present Appeal forconsideration. 8.The Apex Court in the case of Commissioner of Income Tax,Orissa vs. Orissa Corporation Private Limited (supra), has observed atPara 13 thus : “13.In this case the assessee had giventhe names and addresses of the allegedcreditors. It was in the knowledge of therevenue that the said creditors were income-tax assessees. Their index number was inthe file of the revenue. The revenue, apartfrom issuing notices under S. 131 at theinstance of the assessee, did not pursue thematter further. The revenue did not examinethe source of income of the said allegedcreditors to find out whether they werecredit-worthy or were such who couldadvance the alleged loans. There was noeffort made to pursue the so called allegedcreditors. In those circumstances, the assessee could not do anything further. Inthe premises, if the Tribunal came to theconclusion that the assessee has dischargedthe burden that lay on him then it could notbe said that such a conclusion wasunreasonable or perverse or based on noevidence. If the conclusion is based on someevidence on which a conclusion could bearrived at, no question of law as sucharises.” 9.This Court in the Judgments relied upon by the learned Counselappearing for the Respondents, have come to the conclusion that once theAssessee has produced documentary evidence to establish the existence ofsuch Companies, the burden would shift on the Revenue-Appellants hereinto establish their case. In the present case, the Appellants are seeking torely upon the statements recorded of two persons who have admittedly notbeen subjected to cross examination. In such circumstances, the question ofremanding the matter for re-examination of such persons, would not at all bejustified. The Assessing Officer, if he so desired, ought to have allowed theAssessee to cross examine such persons in case the statements were to berelied upon in such proceedings. Apart from that, the voluminous documentsproduced by the Respondents cannot be discarded merely on the basis oftwo individuals who have given their statements contrary to such publicdocuments. 10.We find no infirmity in the findings arrived at by the ITAT as wellas CIT Appeals on the contentions raised by the Appellants-Revenue in thepresent case and, as such, the question of interference by this Court in thepresent proceedings under Section 260A of the Income Tax Act would not atall be justified. Apart from that, as rightly pointed out by the learned Counselappearing for the Respondents, the CIT Appeals had also noted thatproceedings under Section 147 of the Income Tax Act cannot lead to re-verification of the records. These findings of the CIT Appeals have not beenassailed before the Income Tax Appellate Court. 11.In such circumstances, we find that there is no case made out bythe Appellants-Revenue for any interference in the impugned Orders passedby the Courts below. 12.Hence, the Appeal stands rejected. NUTAN D. SARDESSAI, J. F. M. REIS, J. arp/*