M/s. Indian Business Network Ltd., New Delhi V. ITO, New Delhi

CO 178/DEL/2013

• Counselvise Citation: [2014] 123 COUNSELVISE.COM (IT) 0153 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-12-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 21-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D R R KUMAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Accommodation entries; Reassessment proceedings
• Section: 147; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 341/DEL/2012 ASSESSMENT YEAR: 2002-03 ITO, WARD 11(4), ROOM NO. 324, C.R. BLDG., NEW DELHI. VS. INDIAN BUSINESS NETWORK LTD., L-77, LAJPAT NAGAR-II, NEW DELHI. AAACI3422M (APPELLANT) (RESPONDENT) & CROSS OBJECTION NO.178/DEL/2013 (IN ITA NO.341/DEL/2012) ASSESSMENT YEAR: 2002-03 INDIAN BUSINESS NETWORK LTD., C/O O.P. SAPRA & ASSOCIATES, C-763, NEW FRIENDS COLONY, NEW DELHI. AAACI3422M VS. ITO, WARD 11(4), ROOM NO. 324, C.R. BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. D.R.R. KUMAR, SR. DR RESPONDENT BY : SH. SANDEEP SAPRA, ADV. O R D E R PER SH. H.S. SIDHU, J.M. THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CI T(A)-XIII, NEW DELHI DATED 30.11.2011 FOR A.Y. 2002-03 ON THE FOLLOWING GROUNDS: ITA NO. 341/D/12 & CO NO. 178/D/13 INDIAN BUSINESS NETWORK LTD. 2 GROUNDS OF REVENUES APPEAL ITA NO. 341/D/2012 : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A)-VIII, NEW DELHI WAS JUSTIFIED IN DEC LARING THE PROCEEDING U/S 147 AS INVALID BY RELYING ON THE DEC ISIONS IN THE CASES OF COMMISSIONER OF INCOME TAX VS. SFIL STOCK BROKIN G LTD., 325 ITR 285 (DEL.), CIT VS. ATUL JAIN & VINITA JAIN, 299 IT R 383 (DEL.) & SARTHAK SECURITIES CO. PVT. LTD. VS. INCOME TAX OFF ICER, 329 ITR 110 (DEL.). 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A)-VIII, NEW DELHI WAS JUSTIFIED IN TRE ATING THE ADDITION OF RS. 33,00,000/- MADE U/S 68 ON ACCOUNT OF ALLEGED S HARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM KRISHNA CINEMA (INDIA) LTD., M/S ONYX EXIM SALES LTD., M/S IBEX INFOTECH PVT. LT D. AND M/S IME INTERNATIONAL PVT. LTD. AS PURELY ACADEMIC IN VIEW OF THE PROCEEDING U/S 147 DECLARED AS INVALID. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. GROUNDS OF CROSS OBJECTION ITA NO. 178/D/2013 : 1. THAT THE LD. CIT(A) WAS FULLY JUSTIFIED THAT THE P ROCEEDINGS U/S 147/148 OF THE I.T. ACT AS INITIATED WERE INVALID. CONSEQUENTLY THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSE D. 2. THAT WITHOUT PREJUDICE TO CROSS OBJECTION NO. 1 ABO VE, THERE WAS NO JUSTIFICATION ON THE PART OF THE LD. CIT(A) TO HOLD THAT THE AO WAS JUSTIFIED IN CONCLUDING THAT THE ASSESSEE HAD FAILE D TO DISCHARGE THE ONUS U/S 68 AND THAT THE SUM OF RS. 33,00,000/- REP RESENTED ASSESSEES INCOME FROM UNDISCLOSED SOURCES. 3. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE AD DITIONS AGGREGATING AT RS. 33,00,000/- AS MADE BY THE AO WE RE VERY EXCESSIVE. 4. THAT THE RESPONDENT ASSESSEE RESERVES ITS RIGHT TO ADD, AMEND/MODIFY THE GROUNDS OF CROSS OBJECTION. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT ASSESSEE FILED ITS RETURN OF INCOME ON 24/10/2002 DECLARING LOSS OF RS . 1,99,713/-. THE CASE WAS PROCESSED U/S 143(1). THEREAFTER PROCEEDINGS U /S 147 WERE INITIATED VIDE NOTICE DATED 07.03.2007, FOR BRINGING TO TAX T HE SUM OF RS. 30 LAKHS SHOWN IN THE BALANCE SHEET AS SHARE APPLICATION MON EY, BUT AS PER INFORMATION RECEIVED, REPRESENTING THE APPELLANTS OWN UNACCOUNTED MONEY ROUTED IN THE GARB OF SHARE APPLICATION MONEY. IN THE COURSE OF ITA NO. 341/D/12 & CO NO. 178/D/13 INDIAN BUSINESS NETWORK LTD. 3 REASSESSMENT PROCEEDINGS, THE AO PROVIDED THE APPEL LANT WITH A COPY OF THE REASONS RECORDED AND ALSO REQUIRED THE APPELLAN T TO PROVE THE GENUINENESS OF THE SHARE APPLICATION MONEY. THERE WAS ONLY PART COMPLIANCE. THE AO HELD THAT THE APPELLANT WAS UNA BLE TO PROVE THE CREDITWORTHINESS OF THE SHARE APPLICANTS AS WELL AS GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, THE SUM OF RS. 33 LAKHS REFLECTED IN THE BALANCE SHEET AS SHARE APPLICATION MONEY FROM KRISHNA CINEMA (INDIA) LTD. RS. 5,00,000/-, ONYX EXIM SALES LTD. RS. 5,00,000/-, IB EX INFOTECH PVT. LTD. RS. 3,00,000, IME INTERNATIONAL PVT. LTD. RS. 20,00 , 000 WAS ADDED TO THE INCOME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE IN COME TAX ACT . AGAINST THE ASSESSMENT ORDER PASSED U/S 143(3)/147 OF THE I NCOME TAX ACT DATED 31/12/2007 ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 30/11/2011 DELETED TH E ADDITION IN DISPUTE BY HOLDING THAT PROCEEDING U/S 148 HAVE BEEN INVALI DLY INITIATED BY THE AO AND LD. CIT(A) DID NOT DECIDE THE CASE OF THE ASSES SEE ON MERIT BECAUSE THAT ACCORDING TO LD. CIT(A) THAT ISSUE HAS BECOME ACADEMIC. NOW THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IM PUGNED ORDER. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORD AVAILABLE WITH US SPECIALLY THE ORDERS PASSED BY TH E REVENUE AUTHORITIES ALONG WITH THE CASE LAWS CITED BY THE LD. COUNSEL F OR THE ASSESSEE AND WE ARE OF THE CONSIDERED VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DISPUTE AFTER GOING THROUGH THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AS WELL AS VARIOUS CASE LAWS MENTIONED IN THE IMPUGNED ORDER. LD. FIRST APPELLATE AUTHORITY HAS DECLARED THE PROC EEDING U/S 148 OF THE ACT INVALID ON THE POINT THAT THE AO HAS NOT APPLIED HI S MIND WHILE RECORDING REASONS FOR REOPENING THE PROCEEDING IN THE CASE OF ASSESSEE U/S 147 OF THE ACT. FOR THE SAKE OF CONVENIENCE THE REASONS R ECORDED BY THE AO IN THE CASE OF ASSESSEE ARE REPRODUCED AS UNDER: ITA NO. 341/D/12 & CO NO. 178/D/13 INDIAN BUSINESS NETWORK LTD. 4 6.2 THAT THE AO ERRED IN INVOKING THE SECTION 147 I.E. REASSESSMENT BY NOT APPLYING HIS OWN MIND BUT WAS G UIDED BY REPORT OF THE DIT(INV.) SUGGESTING/DIRECTING ACTION U/S 147, HENCE REASSESSMENT WAS NOT LAWFUL AND NOT JUSTIFIED (SART HAK SECURITIES COMPANY PVT. LTD. VS. ITO 195 TAXMAN 262). IT HAS BEEN STATED THAT FOR REOPENING THE PROCEEDINGS U/S 147, THE AO RECORDED THE FOLLOWING REASONS: THE ASSESSEE FILED RETURN OF INCOME ON 24.10.2002 DECLARING LOSS OF RS. 199713/-. THE RETURN WAS PRO CESSED ON THE DECLARED LOSS. AS PER INFORMATION RECEIVED FROM THE OFFICE OF THE DIT(INV.), NEW DELHI VIDE LETTER NO. DIT(INV.)1/200 6- 07/AE/253 DATED 16.06.2006, THE ASSESSEE COMPANY HA S TAKEN ACCOMMODATION ENTRIES OF RS. 33.00 LAC DURING THE MONTH OF JUNE AND JULY 2001 FROM ONYX EXIM AND SALE S PVT. LTD., IME INTERNATIONAL, KRISHNA CINEMA (INDIA ) AND IBEX INFOTECH PVT. LTD. FROM THEIR BANK ACCOUNT WIT H FEDERAL BANK, KVB, KESHAV SEHKARI AT KAROL BAGH. T HE CHEQUES/DDS FOR ACCOMMODATION ENTRIES FROM THE ABOV E SAID PARTY ARE STATED TO HAVE BEEN CREDITED TO THE ASSESSEES BANK ACCOUNT WITH ALLAHABAD BANK, SANSAD MARG, NEW DELHI. IN VIEW OF THE ABOVE INFORMATION, IT IS EVIDENT THA T THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN IS BANK BY WAY OF ACCOMMODATION ENTRIES. THEREFORE, I HAVE REASONS TO BELIEVE THAT THE INCOM E AMOUNTING TO RS. 33.00 LAC HAS ESCAPED ASSESSMENT, WHICH IS REQUIRED TO BE ASSESSED TO TAX UNDER THE PROVISI ON OF SECTION 147 OF THE I.T. ACT. 4. AS PER RECORD THE AO HAS NOT MADE ANY ENQUIRY BE FORE INITIATING OF THE ASSESSMENT PROCEEDING TO ARRIVE AT HIS OWN INDE PENDENT SATISFACTION REGARDING THE ESCAPEMENT OF INCOME. HE WAS GUIDED BY REPORT OF DIT(INV.) SUGGESTING/DIRECTING ACTION U/S 147 OF THE I.T. ACT IN THE CASE OF ASSESSEE. AS PER RECORD THE REASONS RECORDED INDICATE THAT RE OPENING HAS BEEN DONE WITHOUT ANY MATERIAL ON RECORD WHICH IS NOT PERMISS IBLE UNDER THE LAW AS WELL AS VARIOUS DECISIONS RENDERED BY THE HONBLE J URISDICTIONAL HIGH COURT WHICH INCLUDES THE SIGNATURE HOTELS PVT. LTD. VS. I TO (2011) 338 ITR 51(DEL.) AND COMMISSIONER OF INCOME TAX VS. SFIL ST OCK BROKING LTD., 325 ITR 285 (DEL.). SECONDLY, AS PER RECORD THE AO HAS ALSO IGNORED THE ITA NO. 341/D/12 & CO NO. 178/D/13 INDIAN BUSINESS NETWORK LTD. 5 OBJECTION FILED BY THE ASSESSEE RAISED REGARDING JU RISDICTION AND HE CHOOSES NOT TO DECIDE THE SAME AND PASS A QUASI JUD ICIAL SPEAKING ORDER WITHOUT GRANTING A HEARING TO THE ASSESSEE WHICH IS MANDATORY REQUIREMENT. ACCORDING TO THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVE SHAFT IDNIA LTD. VS. ITO ( 2003) 259 ITR 19 (SC). MEANING THEREBY AO HAS PASSED THE ORDER WITH PRECON CEIVED MIND, WITHOUT CONSIDERING THE SUBMISSION FILED BY THE ASSESSEE BY TAKING BEYOND THE BACK OF THE ASSESSEE AND WITHOUT PROVIDING OPPORTUN ITY TO REBUT THE NEGATIVE INFERENCES DRAWN BY HIM WHICH IS NOT PERMI SSIBLE UNDER THE LAW. LD. FIRST APPELLATE AUTHORITY HAS CONSIDERED EACH A ND EVERY ASPECT OF THE CASE ALONG WITH THE CASE LAWS CITED BY THE ASSESSEE . 5. AFTER HEARING THE BOTH PARTIES AND PERUSING THE ORDERS PASSED BY THE REVENUE AUTHORITY ALONG WITH THE VARIOUS CASE LAWS MENTIONED IN THE IMPUGNED ORDER, WE ARE OF THE CONSIDERED VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE ADDITION IN DISPU TE BY DECLARING INVALID PROCEEDING INITIATED IN THE CASE OF ASSESSEE U/S 14 8 OF THE I.T. ACT. WE UPHOLD THE IMPUGNED ORDER BY DISMISSING THE APPEAL FILED BY THE REVENUE. 6. KEEPING IN VIEW OF THE FINDING GIVEN IN THE REVE NUES APPEAL THE ASSESSEES CROSS OBJECTION HAS BECOME INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INFRUCTUO US. ORDER PRONOUNCED IN THE OPEN COURT ON12/12/2014 SD/- SD/- (G.D. AGARWAL) (H.S. SIDHU) VICE PRESIDENT JUDICIAL MEMBER DATED: 12/12/2014 *KAVITA ITA NO. 341/D/12 & CO NO. 178/D/13 INDIAN BUSINESS NETWORK LTD. 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR