M/s. Continental Telepower Industries Ltd., New Delhi V. ITO, New Delhi

CO 238/DEL/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5491 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-12-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-11-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 13-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y S KOCHAR
• Assessee Lawyers: SHRIV K SABHARWAL
• Keywords: Reopening of assessment; Unexplained cash credit; Additional evidence; Accommodation entries
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 3503(DEL)/2010 ASSESSMENT YEAR: 2001-02 INCOME-TAX OFFICER, M/S CONTINENTAL TELEPOWER INDUSTRIES WARD 3(4), NEW DELHI. VS. LTD., A- 25, NIZAMUDDIN WEST, NEW DELHI. C.O. NO. 238(DEL)/2010 (ARISING OUT OF ITA NO. 3503(DEL)/2010) ASSESSMENT YEAR: 2001-02 M/S CONTINENTAL TELEPOWER INCOME- TAX OFFICER, INDUSTRIES LTD., NEW DELHI. VS. WARD 3(4), NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. Y.S. KOCHAR, SR. DR ASSESSEE BY : SHRIV.K. SABHARWAL, ADVOCATE ORDER PER K.G. BANSAL : AM THE AFORESAID APPEAL AND THE CROSS OBJECTION EMA NATE FROM THE ORDER OF CIT(APPEALS)-IV, NEW DELHI, PASSED ON 6.5.2010 IN APPEAL NO. 152/09-10, PERTAINING TO ASSESSMENT YEAR 2001-0 2. THE ONLY GROUND TAKEN BY THE REVENUE IS THAT THE LD. CIT(APPEALS ) ERRED IN DELETING THE ADDITION OF RS. 25.00 LAKH MADE BY THE AO U/S 68 OF THE ACT AS ITA NO.3503 & CO 238(DEL)/2010 2 UNEXPLAINED CASH CREDIT. ON THE OTHER HAND, THE ASSESSEE HAS TAKEN UP THREE SUBSTANTIVE GROUNDS IN THE CROSS OBJECTION. IN GROUND NOS. 1 AND 2, THE FINDING OF THE LD. CIT(APPEALS) UPHOLDING TH E REOPENING OF ASSESSMENT U/S 147 HAS BEEN ASSAILED. IN GROUN D NO. 3, THE ORDER OF THE LD. CIT(APPEALS) DELETING THE ADDITION OF RS. 25.00 L AKH HAS BEEN SUPPORTED. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 31.10.2001 DECLARING TOTAL INCOME OF RS. 15,12,830/-. THIS RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBS EQUENTLY, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, NE W DELHI, THAT CERTAIN PERSONS HAVE RESORTED TO LAUNDERING OF THEIR UN ACCOUNTED MONEY BY GIVING UNACCOUNTED CASH TO PERSONS CALLED ENTRY-OPERATOR S AND IN TURN TAKING CHEQUE OR DRAFT OF EQUIVALENT AMOUNT AS SHARE APPLICATION MONEY OR SALE PROCEEDS OF NON-EXISTENT GOODS. SUCH PERSONS WERE SHRI PRADEEP KUMAR JINDAL AND OTHERS AND SHRI S.K. GUPTA & OTHERS. STATEMENTS OF THESE PERSONS WERE RECORDED ON OATH. THESE STATEMENTS WERE RECEIVED BY THE AO. THE INVESTIGATION WING HAD ALSO EXAMINED THE INFORMATION COLLECTED FROM BANKS AND THE AFORESAID PERSONS. IN THE LI GHT OF THESE ENQUIRIES AND INFORMATION RECEIVED THEREON, THE AO REOPENED THE ASSESSMENT IN THE CASE OF THE ASSESSEE AND ISSUED A NOTICE U/S 1 48 AFTER RECORDING THE ITA NO.3503 & CO 238(DEL)/2010 3 REASONS U/S 147. IN RESPONSE, THE ASSESSEE IN FORMED THAT THE RETURN FILED ON 31.10.2008 MAY BE TAKEN AS RETURN U/S 148. THEREAFTER ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUING NOTICES U/S 143(2) AND 142(1). THE ASSESSEE WAS REQUIRED TO FURNISH DETAILS REGARDING INCREASE IN SHARE CAPITAL. THE ASSESSEE FILED CONFIRMATION LETTER FROM MODERATE CREDIT CORPORATION CLAIMED TO BE SUMA FINANCE & INVESTMENT LTD. IT WAS EXPLAINED THAT THE ASSESSEE RAISED CAPITA L OF RS. 98,95,000/- IN THIS YEAR. THE DETAILS IN THIS RESPECT WERE FILED. HOWEVER, THE ASSESSEE DID NOT PRODUCE ANY PERSON ON BEHALF OF THE CONTRIBU TORS TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IN PARTICULAR, IT WAS NOTED THAT THE ASSESSEE R ECEIVED A SUM OF RS. 20.00 LAKH FROM SUMA FINANCE LTD. AND RS. 5.00 LAKH FR OM S.N. ELECTRICALS. NO CONFIRMATION WAS FILED IN RESPECT OF S.N. ELECTRI CALS. HOWEVER, STATEMENT OF SHRI PRADEEP JINDAL WAS RECORDED, WHO CLAIME D TO BE ONE OF THE DIRECTORS OF M/S S.N. ELECTRICALS (P) LTD. IT APPEARS THAT HE DEPOSED TO THE EFFECT THAT HIS COMPANIES HAVE BEEN USED BY HIM FOR PROVIDING ACCOMMODATION ENTRIES. IN REGARD TO CONFIRMATION FROM SUMA FINANCE & INVESTMENT LTD., THE AO FOUND THAT TWO CONFIRMATION LETTERS WERE FILED IN WHICH THE SIGNATURES DIFFERED. AFTER TAKING INT O ACCOUNT VARIOUS FACTS, ITA NO.3503 & CO 238(DEL)/2010 4 BOTH THE CONTRIBUTIONS WERE HELD TO BE UNEXPLAINE D CASH CREDITS AND THE SUM OF RS. 25.00 LAKH WAS ADDED TO THE TOTAL INCO ME. 2.1 IN THE COURSE OF HEARING BEFORE THE LD. CIT(APP EALS), THE ASSESSEE FILED ADDITIONAL EVIDENCE BY WAY OF CONFIRMATIO NS, PAN, COPIES OF INCOME-TAX RETURN, COPIES OF STATEMENTS OF INCOM E ETC. PERTAINING TO BOTH THE CONTRIBUTORS. IT WAS SUBMITTED THAT SUFF ICIENT OPPORTUNITY HAD NOT BEEN GRANTED BY THE AO TO ADDUCE THESE EVIDENC ES. THE EVIDENCES WERE ADMITTED BY THE LD. CIT(APPEALS) AND FORWARD ED TO THE AO FOR HIS REMAND REPORT, WHICH WAS RECEIVED. AFTER CONSID ERING THE ASSESSMENT ORDER, THE REMAND REPORT AND THE SUBMISSIONS OF T HE ASSESSEE, THE LD. CIT(APPEALS) CAME TO THE CONCLUSION THAT THE ASSES SEE HAS BEEN ABLE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUIN ENESS OF TRANSACTIONS IN RESPECT OF BOTH THE CONTRIBUTORS. THEREFORE, THE ADDITION WAS DELETED BY MAKING THE FOLLOWING OBSERVATIONS:- AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCE S OF THE CASE, OBSERVATIONS OF THE ASSESSING OFFICER, SUBMISSIONS OF THE AR OF THE APPELLANT, DETAILS IN THE REMAND REPORT AND VARIOUS JUDICIAL PRONOUNCEMENTS, THESE GROUNDS OF THE AP PELLANT ARE BEING DECIDED AFTER MAKING THE FOLLOWING OBSERVA TIONS:- A) ON GOING THROUGH THE ASSESSMENT ORDER IT IS O BSERVED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER HAD HELD THAT COMPLETE DETAILS R EGARDING ITA NO.3503 & CO 238(DEL)/2010 5 ITR/PAN, CONFIRMATIONS/BANK STATEMENT HAD NOT BEE N PROVIDED BY THE ASSESSEE TO SUBSTANTIATE THE SHARE APPLICATION MONEY RECEIVED FROM TWO PARTIES M/S S.N. ELECTRI CALS P. LTD. AND M/S SUMA FINANCE & INVESTMENT LTD. DURING THE APPELLATE PROCEEDINGS THE AR SUBMITTED THAT DUE TO SHORTAGE OF TIME THESE DETAILS HAD NOT BEEN PROVIDED TO TH E ASSESSING OFFICER AND THE SAME MAY THEREFORE BE ADMITTED T O ENSURE PROPER APPRECIATION OF FACTS WITH REGARD TO THE ADDITIONS MADE BY THE ASSESSING OFFICER. AFTER CONSIDERING THE NATURE OF THE DOCUMENTS AND TO ARRIVE AT A FAIR DECISIO N, THE REQUEST OF THE AR OF THE APPELLANT REGARDING ADMISSION OF ADDITIONAL EVIDENCE IS BEING ADMITTED. B) THE ASSESSING OFFICER WAS PROVIDED COPIES OF THE VARIOUS DOCUMENTS RELATING TO ASSESSMENT ORDERS U/S 143(3) OF M/S SUMA FINANCE & INVESTMENT LTD., COPY OF ITR/ AUDIT ACCOUNTS OF M/S S.N. ELECTRICALS P. LTD. ETC. TH E DOCUMENTS PRIMA FACIE CERTAINLY INDICATE THE EXISTENCE A ND IDENTITY OF THE PARTIES. THE ASSESSING OFFICER HAS ONLY SU BMITTED THAT THE PAN NO. OF M/S S.N. ELECTRICALS P. LTD. WAS NOT AVAILABLE AND AT THE SAME TIME THE SIGNATURE OF THE CONFIR MATIONS OF M/S SUMA FINANCE & INVESTMENT LTD. WERE NOT RELIABLE. THE ASSESSING OFFICER HAS FURTHER RELIED UPON T HE GENERAL STATEMENTS OF SHRI PRADEEP JINDAL REGARDING ACCO MMODATION ENTRIES BEING PROVIDED BY VARIOUS COMPANIES. HOWE VER, NO SPECIFIC ALLEGATION OR DOCUMENTS WITH REGARD TO THE APPELLANT COMPANY HAS BEEN BROUGHT ON RECORD BY THE APPEL LANT TO INDICATE THAT UNACCOUNTED MONEY OF THE APPELLANT WAS BEING CIRCULATED THROUGH THE SHARE APPLICATION MONEY. KEEPING IN VIEW THE VARIOUS JUDICIAL PRONOUNCEMENTS OF CIT VS. VALUE CAPITAL SERVICES (SUPRA), CIT VS. SAMIR BIOTECH (S UPRA) AS WELL AS CIT VS. LOVELY EXPORTS (SUPRA) IT IS CL EAR THAT ONCE THE IDENTITY OF THE SUBSCRIBER HAS BEEN ESTABLISHE D BY THE APPELLANT THERE IS NO JUSTIFICATION FOR CONSIDERI NG THE SHARE APPLICATION MONEY IN THE HANDS OF THE APPELLANT. I N THE PRESENT CASE THE ASSESSING OFFICER HAS NOT BEEN ABLE TO DI SPUTE THE IDENTITY OF THE PARTIES AND HAS ALSO NOT MADE FUR THER ANY INVESTIGATIONS EVEN DURING THE REMAND PROCEEDINGS TO CONTROVERT THE DOCUMENTS SUBMITTED BY THE AR OF T HE APPELLANT. ONCE THE NAME, ADDRESS, PAN NO. OR INC OME-TAX ITA NO.3503 & CO 238(DEL)/2010 6 RETURNS OF THE PARTIES ARE AVAILABLE WITH THE ASSE SSING OFFICER AND DOCUMENTARY EVIDENCE FOR ESTABLISHING THE ID ENTITY OF THE PARTY HAS BEEN PROVIDED BY THE APPELLANT, THE INIT IAL ONUS HAS BEEN DISCHARGED BY THE APPELLANT TO ESTABLISH THE IDENTITY OF THE SUBSCRIBER. KEEPING IN VIEW THE VARIOUS JUD ICIAL PRONOUNCEMENTS ON THIS ISSUE INCLUDING THE DECISI ON OF THE APEX COURT IN CIT VS. LOVELY EXPORTS, THE ASSESSI NG OFFICER IS FREE TO INITIATE ACTION AGAINST THE SUBSCRIBERS /CREDITORS, BUT THERE DOES NOT APPEAR TO BE ANY CASE FOR MAKIN G THE ADDITION IN THE HANDS OF THE APPELLANT UNLESS THE ASSESSING OFFICER HAS BEEN ABLE TO ESTABLISH THAT ANY UNACCO UNTED MONEY RELATING TO SHARE CAPITAL APPLICATION HAD ORIGINAT ED FROM THE COFFERS OF THE ASSESSEE. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE AS WELL AS THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE, I AM O F THE OPINION THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO CON TROVERT THE VARIOUS DOCUMENTS AND SUBMISSIONS OF THE AR O F THE APPELLANT WHICH ESTABLISHES THE IDENTITY OF THE SUBSCRIBERS. ACCORDINGLY WHILE THE ASSESSING OFFICER IS FREE TO TAKE NECESSARY FOLLOW UP ACTION IN THE HANDS OF THE SUBSCRIBERS/CREDITORS, THERE IS NO JUSTIFICATION FOR MAKING THE ADDITION IN THE HANDS OF THE APPELLANT. ACCORDINGL Y, THESE GROUNDS OF THE APPELLANT ARE TREATED AS ALLOW ED. 3. BEFORE US, THE LD. DR RELIED ON THE ORDER OF T HE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FINDINGS OF THE LD. CIT(APPEALS), WHICH HAVE BEEN REPRODUCED BY US EA RLIER. IT WAS SUBMITTED THAT ALL THE DETAILS IN RESPECT OF TH E CONTRIBUTORS HAD BEEN FILED, WHICH ESTABLISH THEIR IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. OUR ATTENTION WAS DRAWN TOWARDS PAGE NOS. 6 TO 30 OF THE PAPER, WHICH CONTAIN CONFIRMATION, BANK STATEMENT , BALANCE-SHEET AS ON ITA NO.3503 & CO 238(DEL)/2010 7 31.3.2001, ASSESSMENT ORDERS FOR ASSESSMENT YEA RS 2001-02 AND 2002-03, COPY OF INCOME-TAX RETURN FOR ASSESSMENT YEAR 2 008-09, COPY OF FRESH CERTIFICATE OF INCORPORATION CONSEQUENT UPON CHANG E OF THE NAME AND BALANCE-SHEET AS ON 31.3.2008 IN RESPECT OF SUMA FINANCE & INVESTMENT LTD. IT WAS EXPLAINED THAT THIS COMPANY HAD T HE NAME AS MODERATE CREDIT CORPORATION LTD., WHICH WAS CHANGED TO SU MA FINANCE & INVESTMENT (P) LTD. IN THE CASE OF S.N. ELECTRIC ALS (P) LTD., COPIES OF CONFIRMATION LETTER, INCOME-TAX RETURN FOR ASSESS MENT YEAR 2000-01 AND ANNUAL ACCOUNTS FOR THE PERIOD ENDED ON 31.03.200 1 WERE ALSO PLACED IN THE PAPER BOOK ON PAGE NOS. 31 TO 60. THE CASE OF THE LD. COUNSEL IS THAT THESE DOCUMENTS SATISFY ALL THE THREE INGREDIEN TS FOR PROVING GENUINENESS OF CREDIT U/S 68 IN RESPECT OF BOTH THE CONTRIBUTO RS. THEREFORE, NOTHING CAN BE ADDED TO THE INCOME OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE US. WE FIND THAT ALTHOUGH THE AO HAS MEN TIONED ABOUT INVESTIGATIONS CARRIED OUT BY THE INVESTIGATION W ING, NEW DELHI, BUT THE DETAILS OF INVESTIGATION HAVE NOT BEEN MENTIONED I N THE ASSESSMENT ORDER. THE AO HAS ALSO EXAMINED SHRI PRADEEP JINDAL, BUT OPPORTUNITY TO CROSS- EXAMINE HAS NOT BEEN GIVEN TO THE ASSESSEE. ON THE OTHER HAND, THE ITA NO.3503 & CO 238(DEL)/2010 8 ASSESSEE HAS BROUGHT ON RECORD VARIOUS EVIDENC ES SUCH AS ANNUAL ACCOUNTS, COPIES OF RETURNS AND CONFIRMATIONS F ROM BOTH THE PARTIES TO ESTABLISH THE EXISTENCE, CAPACITY AND GENUINENESS OF TRANSACTIONS. AS A MATTER OF FACT BOTH THE CONTRIBUTORS ARE LIMITED COMPANIES AND ALL THESE DETAILS CAN BE FOUND FROM THE OFFICE OF REGISTRAR OF COMPANIES ALSO. THE WHOLE OF THE EVIDENCE PRODUCED BY THE ASSESSEE HAS BEEN REJECTED WITHOUT FINDING ANY FAULT WITH THE SAME. THE STATEMENT OF SHRI PRADEEP JINDAL REMAINS UNAUTHENTICATED AND, THEREFORE, V ERY LITTLE EVIDENTIARY VALUE CAN BE ATTACHED TO IT. IN THESE CIRCUMSTAN CES, WE ARE OF THE VIEW THAT THE LD. CIT(APPEALS) RIGHTLY DELETED THE ADDITION. AS MENTIONED BY HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPOR TS (P) LTD., ONCE THE IDENTITY HAS BEEN PROVED AND THE CONTRIBUTORS HA VE ADMITTED TO THE CONTRIBUTION, THE DEPARTMENT SHOULD HAVE TAKEN AC TION IN THEIR CASES. THIS HAS ALSO BEEN REITERATED BY THE LD. CIT(APPEALS) IN LAST PARAGRAPH OF HIS FINDING. WE CONCUR WITH THIS FINDING ALSO. THUS, THE ORDER OF THE LD. CIT(APPEALS) IS UPHELD. 4.1 IN VIEW OF AFORESAID FINDING, THE GROUNDS TAK EN BY THE ASSESSEE IN THE CROSS OBJECTION ABOUT VALIDITY OF MAKING THE ASSESSMENT U/S 147 BECOME INFRUCTUOUS. ITA NO.3503 & CO 238(DEL)/2010 9 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INFRUCT UOUS. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH DECEMBER, 2010. SD/- SD/- (C.L. SETHI) (K.G.BANSA L) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 27TH DECEMBER, 2010. SP SATIA COPY OF THE ORDER IN ITA NO. 3503 & C.O. NO. 238(DE L)/2010 FORWARDED TO: 1. CONTINENTAL TELEPOWER INDUSTRIES LTD., NEW DELHI. 2. ITO, WARD 3(4), NEW DELHI. 3. CIT(A) 4. CIT 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.