ITO vs. Rakam Money Matters P. Ltd (ITAT Delhi)

DATE: October 16, 2014 (Date of pronouncement)
DATE: October 21, 2014 (Date of publication)
AY: 2003-04
FILE: Click here to download the file in pdf format
S. 68: Law regarding addition of share application money as unexplained credit explained

The only issue here is the addition of Rs.60 lacs made by the Assessing Officer as unexplained credit on account of the share application money. On going through the facts of the case, we notice that assessee has filed the relevant details which it could have filed in support of its contention of having received the share application money from each of these shareholder companies. The Assessing Officer has issued summons to the directors of these shareholder companies. In response there to, the directors have not attended. Assessing Officer has not conducted any further inquiry for non-attendance of the persons. Non-attendance on issuing summons itself, cannot be a ground for rejecting all the relevant documents furnished by the assessee company. Summons issued by Assessing Officer have not been received back as unserved. Therefore, it cannot be said that these companies were not in existence at the given addresses. The documents filed with the Registrar of Companies show that these companies were active during the relevant period. Assessing Officer has not verified any of the relevant documents submitted by Assessing Officer for discharging onus u/s 68 of the Act. We also note that the Assessing Officer has not referred nor discussed about the so-called alleged statement of entry providers against the assessee company. It is also not known whether assessee’s name figured in that statement. The contention of the assessee has been rejected without examination and verification of the documents submitted by the assessee. The information received by him from the Investigation department has been made the basis of addition without any further investigation in this regard. Even the process of examination of the directors by issue of summons has not been taken to the logical end as after the failure of the directors to attend in response to the summons issued to them no further steps were taken. The Assessing Officer could have done cross verification about the status of these companies with the respective Assessing Officer of these shareholder companies.

4 comments on “ITO vs. Rakam Money Matters P. Ltd (ITAT Delhi)
  1. See sir,
    How illogical is AO; such are AOs in Revenue; is it worth AO is sensible man, if revenue has in its dept, can we call Revenue is logical; logical is a two traffic road not a one way lane is the simple definition of law.

    I am happy a CA Ved properly represented the matter of Assessee. Good. CAs need to be so.

    I think in future ITATs as fact finding judicial tribunal need to recommend pass severe strictures on Revenue, and if Revenue appeals to HC that should levy heavy fines on Revenue and that fine be credited to consolidated fund of india so that , that fund can be a source of income for judicial necessary budgets for improving its infrastructures like appointing more judges for normal judiciary right from ITATs onward, as ITATs are also not funded for their own salaries properly by finance ministries.

    this way ITATs can be more and more effective on illogical revenue is my gut feel!

    • Ashit Baran Das says:

      It is easy to point out revenue as illogical but we should appreciate that revenue has to complete assessment under time stipulated period and the assessee know the matter very well and never co-operate with the revenue for their own interest. it is sometime not possible for so many reason to verify, investigate the matter within time. If assessment is not time bound job only then it is possible to complete is logically. ITAT have no stipulated time to deliver its decision. still there are so many cases where illogical decision have challenged in the higher court by the revenue.

      • great Mr. Asit Baran Das,

        i appreciate may be you are an AO perhaps.

        Understand the AO has to do things in time bound periods, that means you can do things as you like it . Then you can throw to winds the norms laid down by statutory rules, is there any rule that permits you to take umbrage?

        It is natural assesse is placed in an equally much more tougher position as he has to do his other duties to earn his genuine revenue income to help government to get revenue from him by way of taxes .

        You assume the assesse is just getting income without working very hard and if you know he is to face his customers in his day to day life with other controlling statutory laws and rules and if he fails he might land in jails as also likely to lose his job, as he is not protected by Art 311 which protects public servants.

        therefore it would be clear that he has to depend on some CAs to help him file his returns for AY every year under your statutes and rules; while certainly he is or can not be as familiar as you are supposed to be knowing your statutes and laws, is it not?.

        Incidentally you are certainly expected to know your statutes and apply the same on facts of each assesse in a most possible best way possible, that is the presumption, so you are paid such salaries and remunerations, culled out of the tax payers funds collected by the government, as public funds, is it not?

        If you are not able to do the job in a time bound manner due to so much work load, you need to ask more complements of officers to help you or increase more number of tax wards would be the saner approach , with the help of your associations or like that.

        You know without assesses from where you would get tax income. So assesse is your customer, and you know asesse is your Godess Lakshmi, as we say
        Customer is god to any, like voters are Gods to any MP or MLA to be of any party and if the government is formed by the party in power MPs, naturally they have perforce per se to be accountable to voters and very voters mostly are the assesses, how the assesses could be blamed for the governance inefficiencies please?

        so you have get angry with your employers the governments in place and obvious not on assesses sir!

        You know perhaps ‘No Taxation without representation’ is a principle of Natural Justice that way due process is again legal liability imposed by Taxation Article 265 in the constitution of India that Article only allows governments get taxes , which imposes a condition that you shall work within four walls of law, else the government might face ‘ null and void ‘ (Ultra Vires) constitution under Art 226 or 32 means none of the fundamental rights could by could be abrogated by governmental action is basic structure if the constitution, you are expected to know as you too as a citizen is an assesse tax laws is it not?

        would you as an assessee voter would like to forego your constitutional rights, you may not is it not, when so, it is the bound and duty of tax man rack your brains as an employee in tax administration of the state, since you chose to become a tax public servant if you are a revenue collections man is it not?

        What role one has to play that role one needs to play most satisfactorily, if he chooses to, by way of an employment, that way duties came to be established and Art.51A in Part IV A of constitution is laid down, no citizen means all Art 12 set up ie government is deemed to be a legal person as company is under Companies Act 1956 as is valid today and you as an employee need to be carefully safe guarding the relevant interests in either personal or general capacity you are placed is called Duty that perception applies to all without exception per constitutional basic tenets.

        When so, every assesse need to pay most minimum possible tax legally means every assesse need to be prudent to save his net income as he is taxed both inder direct and indirect taxes but indian assessees are the most taxed in the whole world, when so what is the wrong you find in you as you are also an assesse too !

        So assesses are over burdened today any where as his own life is based as a wage earner as also as a tax payer !

        so please be considerate on assesse as also on you as an assessee, as a tax payer sir!

  2. I see your problems from Boston USA as now i am in USA as visiting faculty from India for some seminars too here.

    I do not charge any fee for the lectures i deliver as i consider voluntary work is to share our views with humanity for its own betterment, and it is our bound and duty .

    we are called to share, for that, the seminar organizers provide us air tickets and stay in a reasonable accommodation, after all in our short lives we need to daily learn is the message that is we should not quarrel with our plights of life.

    best wishes with a happy divali to all of you ,hearts of hearts!

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