M/s Emperor International Ltd, New Delhi V. ITO, New Delhi

CO 152/DEL/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9707 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-05-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 14-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Keywords: Accommodation entries
• Section: 147; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NO. 2038/DEL/2009 ASSESSMENT YEAR: 2003-04 ITO . VS. M/S. EMPEROR INTERNATIONAL LT D. WARD 11(1) E-18, MODEL TOWN NEW DELHI. NEW DELHI. (PAN AABCE2801 J) AND CO NO. 152/DEL/2010 (ITA NO. 2038/DEL/2009) ASSESSMENT YEAR: 2003-04 M/S. EMPEROR INTERNATIONAL LTD. VS. ITO E-18, MODEL TOWN, WARD 11(1) NEW DELHI. NEW DELHI. (PAN AABCE2801J) (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI VED JAIN, CA RESPONDENT BY : SHRI GAGAN SOOD, S R. DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS:- 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 27,00,000/- M ADE U/S 68 OF THE I.T. ACT, 1961. ITA NO. 2038 /DEL/2009 & CO NO. 152/DEL/2010 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAD ERRED IN DELETING THE ADDITION OF RS. 54,000/- MADE U/S 69 OF THE I.T. ACT, 1961. 2. THE ASSESSEE ON THE OTHER HAND IN ITS CROSS OBJECTION OBJECTED THE ACTION OF THE LD. CIT(A) IN HOLDING THE REOPENING O F THE ASSESSMENT U/S 147 OF THE ACT AS VALID. FIRST WE HAVE HEARD APPEAL OF THE REVENUE. IN SUPPORT OF THE GROUNDS THE LD. DR HAS BASICALLY PLACED RELIAN CE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE ASSESSEE FAILED TO PRO DUCE THE PERSONS FROM WHOM AMOUNTS WERE RECEIVED. SUMMONS ISSUED BY THE A SSESSEE TO THEM WERE ALSO NOT COMPLIED WITH. THE AO WAS THUS JUSTIF IED IN OBSERVING THAT MERELY BY FILING THE PAN/ITR DETAILS ONUS OF THE AS SESSEE IS NOT DISCHARGED. AO HAS ALSO OBSERVED ON PERUSAL OF THE BANK ACCOUNT S OF THOSE FOUR PARTIES THAT IMMEDIATELY BEFORE ISSUING CHEQUE, CASH HAS BE EN DEPOSITED IN THEIR BANK ACCOUNTS. THUS THERE WERE SUFFICIENT REASONS T O DOUBT THE GENUINENESS OF THE CLAIMED TRANSACTION. THE LD. CIT (A) WAS THEREFORE NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 27 LACS M ADE U/S 68 OF THE ACT AND ADDITION OF RS. 54,000/- MADE U/S 69 OF THE ACT ON THE ACCOUNT OF COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES @ 2% . 3. IN OPPOSITION THE LD. AR HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND PLACED RELIANCE ON THE FO LLOWING DECISIONS OF THE TRIBUNAL, DELHI BENCHES : ITA NO. 2038 /DEL/2009 & CO NO. 152/DEL/2010 3 1. CIT VS. VISHAL HOLDING AND CAPITAL (P) LTD. IT A NO. 1031/2010 ORDER DATED 9.8.2010 ASSTT. YEAR 2000-01 2. ITO VS. F. SEVEN PHARMACEUTICALS PVT. LTD., IT A NO. 2553/D/2010 (ASSTT. YEAR 2002-03) ORDER DATED 19.11.2010 4. HE ALSO REFEREED COPIES OF SEVERAL DOCUMENTS FILED IN SUPPORT OF THE GENUINENESS OF THE CLAIMED TRANSACTIONS MADE AVAILA BLE AT PAGE NOS. 1 TO 83 OF THE PAPER BOOK. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW WE FIND THAT THE AO HAD DENIED THE GENUINENESS OF THE CLAIMED R ECEIPTS OF RS. 27 LACS ON THE BASIS THAT THE ASSESSEE FAILED TO PRODUCE AL L THOSE FOUR PERSONS, SUMMONS ISSUED BY THE AO TO THEM WERE ALSO NOT COMP LIED WITH AND THAT IMMEDIATELY BEFORE ISSUING CHEQUES THOSE FOUR PARTI ES HAD DEPOSITED CASH IN THEIR RESPECTIVE BANK ACCOUNTS. THE SUBMISSION O F THE ASSESSEE ON THE OTHER HAND REMAINED THAT IT HAD RECEIVED RS. 5 LAC FROM M/S. ETHNIC CREATIONS P. LTD., RS. 7,50,000/- FROM ARUN FINVEST PVT. LTD., RS. 10,50,000/- FROM M/S. POLO LEASING & FIN. P. LTD. A ND RS. 4,00,000/- FROM M/S. M.V. MARKETING PVT. LTD. AGAINST SELLING OF I TS INVESTMENTS ACQUIRED EARLIER YEARS. THE DETAILS OF THOSE SALES WERE PROV IDED TO THE AO ALONGIWTH DETAILS OF THE PURCHASES, CONFIRMATIONS COPY OF INC OME TAX RETURNS AND SUPPORTING DOCUMENTS. IT WAS SUBMITTED THAT THE SHA RES SOLD WERE ACQUIRED IN EARLIER YEARS AND THE SAME HAD BEEN TRANSFERRED DURING THIS YEAR ON THE ITA NO. 2038 /DEL/2009 & CO NO. 152/DEL/2010 4 BASIS OF WHICH AMOUNTS HAD BEEN RECEIVED FROM THE S AID FOUR PARTIES. IT WAS DECIDED THAT ONUS LIES UPON THE REVENUE TO PROVE TH AT UNEXPLAINED MONEY HAS ACTUALLY EMANATED FROM THE COFFERS OF THE ASSES SEE BEFORE IT COULD BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT W AS SUBMITTED THAT THE AO HAS NOT DISPUTED VARIOUS DOCUMENTS RELATING TO I NCOME TAX RETURNS, CONFIRMATIONS AND DETAILS OF INVESTMENT WHICH HAVE BEEN SOLD DURING THE YEAR. IT WAS CONTENDED FURTHER THAT IT IS NOT A CAS E FOR MAKING THE ADDITION U/S 68 OF THE ACT CONSIDERING THAT IT IS ONLY A CAS E OF RECEIVING A CONSIDERATION TOWARDS SALE OF SHARES ALREADY FULLY EXPLAINED BY THE ASSESSEE. IT WAS ARGUED THAT JUST BECAUSE THE CREDI TOR DID NOT APPEAR IN RESPONSE TO SUMMON U/S 131 SHOULD NOT LEAD TO ADVER SE INFERENCE AGAINST THE ASSESSEE. CONSIDERING THESE SUBMISSIONS AND EVI DENCE FILED IN SUPPORT THE LD. CIT(A) HAS GIVEN FOLLOWING FINDING :- I HAVE CAREFULLY GONE THROUGH THE FACTS AND CIRCUM STANCES OF THE CASE, SUBMISSIONS OF THE AR OF THE APPELLANT AND TH E VARIOUS JUDICIAL PRONOUNCEMENTS RELATED TO THE ISSUE. THE CRUCIAL OB SERVATIONS AND FINDINGS ON THE BASIS OF WHICH THIS GROUND OF THE A PPELLANT IS BEING FINALIZED ARE AS FOLLOWS:- 1. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 27 LACS U/S 68 OF THE INCOME TAX ACT PRIMERLY ON GROUNDS THAT THE PERSONS TO WHOM THE SALE WAS MADE DID NOT RESPOND TO SUMMONS U/S 1 31 AND THEY WERE ALSO NOT PRODUCED BEFORE THE ASSESSING OFFICER . THE AO ALSO OBSERVED THAT THERE WERE CASH DEPOSITS IN THE BANK ACCOUNTS OF THESE PARTIES WHICH PROVIDED INDICATIONS THAT THIS TRANSA CTION WAS IN THE NATURE OF ACCOMMODATION ENTRIES. THE AO OBSERVED TH AT PROVIDING CONFIRMATIONS OR INCOME TAX RETURNS OF THESE PARTIE S WAS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE SAME. ITA NO. 2038 /DEL/2009 & CO NO. 152/DEL/2010 5 I AM OF THE OPINION THAT SINCE THE ASSESSING OFFICE R HAS NOT DISPUTED THAT THESE SHARES HAD BEEN ACCOUNTED FOR BY THE APP ELLANT FROM EARLIER YEARS AND THE SALE OF THE SHARES HAD ALSO N OT BEEN DISPUTED BY THE AO, SINCE THE INCOME TAX RETURNS AND THE CONFIR MATIONS HAD BEEN PROVIDED BY THE APPELLANT, IT SHOULD BE SUFFICIENT TO ESTABLISH THAT A GENUINE SALE HAD TAKEN PLACE. EVEN IF THERE WERE CA SH DEPOSITS WHICH APPEAR TO THE SUSPICIOUS, THEY SHOULD BE CONSIDERED FIRST IN THE HANDS OF THOSE PARTIES UNLESS THERE IS SOME EVIDENCE TO E STABLISH THAT THESE CASH DEPOSITS BELONG TO THE APPELLANT. IN THIS REGA RD RELIANCE PLACED BY THE AR OF THE APPELLANT ALL THE DECISION OF CIT VRS. VALUE CAPITAL (SUPRA) IS ALSO VERY RELEVANT. II. THE AR OF THE APPELLANT HAS EMPHASISED THAT THE SALE OF SHARES HAS NOT BEEN DISPUTED BY THE AO AND THE RECEIPTS AG AINST THE SALE CANNOT BE TERMED AS UNEXPLAINED INCOME OF THE APPEL LANT. FROM THE FACTS AVAILABLE IT IS OBSERVED THAT THE AR HAS PROV IDED VARIOUS DETAILS REGARDING THE ACQUISITION OF THE SHARES AND THE SAL E OF THE SHARES TO THE VARIOUS PARTIES. MERELY BECAUSE OF NON COMPLIAN CE TO SUMMONS U/S 131 OR NON APPEARANCE OF THESE PARTIES BEFORE T HE AO CANNOT IN ITSELF BE CONSIDERED ENOUGH FOR TAKING AN ADVERSE V IEW AGAINST THE APPELLANT SPECIALLY SINCE ITR, CONFIRMATIONS FROM T HESE PARTIES HAD BEEN FILED BEFORE THE AO. IN THIS REGARD RELIANCE I S PLACED ON THE DECISION OF CIT VRS. DIVINE LEASING AND FINANCE PVT . LTD 299 ITR (DEL) AND CIT VRS. ORISSA CORPORATION (SUPRA). IN THE PRE SENT SET OF FACTS IT IS CLEAR THAT THE ONLY DISPUTE RAISED BY THE ASSESS ING OFFICER WAS RELATED TO THE NON APPEARANCE OF THE PARTIES TO WHO M THE SALE WAS MADE AND THE CASH DEPOSITS FOUND IN THEIR BANK ACCO UNTS. ON BOTH THESE GROUNDS, IN VIEW OF. THE VARIOUS JUDICIAL PRO NOUNCEMENTS, IT CAN BE VERY VALIDLY DECIDED THAT SINCE THE IDENTITY AND GENUINENESS OF THE TRANSACTION HAS BEEN ESTABLISHED BY THE APPELLANT T HERE WAS NO CASE FOR MAKING AN ADDITION U/S 68 OF THE INCOME TAX ACT . ON THE BASIS OF THE ABOVE OBSERVATIONS I AM INCLINED TO CONCLUDE THAT THE TRANSACTION OF SALE OF SHARES ITSELF HAS N OT BEEN DISPUTED BY THE AO AND DETAILS OF INCOME TAX RETURN; CONFIRMATI ONS ETC. HAVE BEEN PROVIDED WITH REGARDS TO THE PARTIES TO WHOM SALE W AS MADE. UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER WAS NOT J USTIFIED IN MAKING THE ADDITION U/S 68 OF THE INCOME TAX ACT. THIS GRO UND OF APPELLANT IS THEREFORE TREATED AS ALLOWED. ITA NO. 2038 /DEL/2009 & CO NO. 152/DEL/2010 6 6. BEFORE THE TRIBUNAL THE ASSESSEE HAS ALSO F ILED THOSE DOCUMENTS BEFORE THE AUTHORITIES BELOW IN SUPPORT OF THE CLAI M. THESE ARE COPIES OF ACKNOWLEDGE OF RETURN OF INCOME ALONGWITH COMPUTATI ON THEREOF, AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT, REPLIES OF THE ASSESSEE FILED BEFORE THE AO, LEDGER ACCOUNT OF INVESTMENT, STATEM ENT SHOWING DETAILS OF INVESTMENT AS ON 31.3.2002 AND 31.3.2003, STATEMENT OF DETAILS OF INVESTMENTS SOLD, STATEMENT OF BANK ACCOUNT FOR THE PERIOD 1.4.2002 TO 31.3.2003, PURCHASE DETAILS OF INVESTMENT SOLD DURI NG THE YEAR ALONGWITH CORRESPONDING BANK STATEMENT, DETAILS OF PARTIES TO WHOM INVESTMENTS WERE SOLD, ETC. CONSIDERING ALL THESE MATERIAL FACTS IN ITS TOTALITY WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE AD DITION OF RS. 27 LACS MADE BY THE AO U/S 68 OF THE ACT. IN CONSEQUENCE HE WAS ALSO JUSTIFIED IN DELETING THE ADDITION OF RS. 54,000/- MADE ON ACCOU NT OF COMMISSION FOR PROVIDING ALLEGED ACCOMMODATION ENTRIES @ 2%. THE F IRST APPELLATE ORDER AS DISCUSSED ABOVE IS COMPREHENSIVE AND REASONED ONE, HENCE WE ARE NOT INCLINED TO INTERFERE THEREWITH, THE SAME IS UPHELD . GROUND NOS. 1 & 2 ARE ACCORDINGLY REJECTED. 7. IN THE RESULT, APPEAL IS DISMISSED. 8. IN VIEW OF THE ABOVE FINDING ON THE MERITS OF THE CASE THE ISSUE RAISED IN THE CROSS OBJECTION REGARDING THE VALIDIT Y OF REOPENING PROCEEDINGS ITA NO. 2038 /DEL/2009 & CO NO. 152/DEL/2010 7 U/S 147 OF THE ACT HAS BECOME ACADEMIC IN NATURE WH ICH DOES NOT NEED ADJUDICATION. IT IS ACCORDINGLY DISPOSED OFF. 9. IN SUMMARY BOTH THE APPEAL AND CROSS OBJ ECTION ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH JULY, 2014. SD/- SD/- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER DATED 17 TH JULY, 2014 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CI T(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT