M/s. Prerna Chits (P) Ltd., Meerut V. ACIT, Meerut

CO 24/DEL/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9253 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 13-01-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 25-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 143(3); 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. P. TOLANI, JUDICIAL MEMBER AND SHRI R. S. SYAL, ACCOUNTANT MEMBER I.T.A .NO. 5206/DEL/2010 (AY-2002-03) ACIT CIRCLE-2 MEERUT (APPELLANT) VS PRERNA CHITS (P) LTD. APSARA CINEMA BUILDING MEERUT P AN-AABCP3555H (RESPONDENT) C. O-NO. 24/DEL/2011 (A. Y- 2002-03) APPELLANT BY MS. MEENAKSHI VOHRA, SR. DR RESPONDENT BY SH. SANJAY MALIK, ADV. ORDER PER R. S. SYAL, AM THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTIO N BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A) ON 25/8/2010 IN RELATION TO THE ASSESSMENT YEAR 2002-03. 2. AT THE OUTSET, IT IS PERTINENT TO MENTION THAT T HE REVENUES APPEAL IS DELAYED BY TWO DAYS. A CONDONATION APPLICATION HAS BEEN PLACED ON RECORD BY THE REVENUE. NO SERIOUS OBJECTION WAS TAKEN BY THE LD. AR. WE ARE SATISFIED BY THE REASONS OF DELAY. THE DELAY IS CONDONED AND A CCORDINGLY THE APPEAL IS ADMITTED DISPOSAL ON MERITS. PRERNA CHITS (P) LTD. APSARA CINEMA BUILDING MEERUT P AN-AABCP3555H (APPELLANT) VS ACIT CIRCLE-2 MEERUT (RESPONDENT) ITA NO. 5206 &C.O 24/DEL /11 2 3. THE ONLY ISSUED RAISED IN THIS APPEAL THROUGH DI FFERENT GROUNDS IS AGAINST THE DELETION OF ADDITION OF RS.15,52,725 MADE BY TH E AO U/S 68 ON ACCOUNT OF SHARE APPLICATION MONEY. THE FIRST ISSUE RAISED IN THE ASSESSEES CROSS-OBJECTION IS AGAINST THE INITIATION OF RE-ASSESSMENT PROCEEDI NGS. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE RE-ASSESSMENT WAS INITIATED BY MEANS OF NOTICE U/S 148 DATED 30/3/2009 WITH THE RE ASONS COMMENCING AS UNDER:- INFORMATION HAS BEEN RECEIVED FROM DI(INVESTIGATIO N),-1, NEW DELHI VIDE OFFICE LETTER D.O NO. DIT (INV.)-1/DELHI /E/2007-08/1137 DATED 3/5/09/2007 ENDORSED TO THE OFFICE OF CIT, MEERUT B Y DI(INV.) KANPUR VIDE HIS OFFICE LETTER F. NO. DI(INV.)/KNP/ACCOMMODATION ENTIRIES/2007-08 DATED 17/9/2007, WHICH HAS BEEN FORWARDED TO ASSESS ING OFFICERS OF MEERUT CHARGE. FROM THE PERUSAL OF THIS INFORMATION, IT IS SEEN TH AT THE ASSESSEE COMPANY HAD RECEIVED ACCOMMODATION ENTRIES IN F.Y 2 001-02, RELEVANT TO A.Y 2002-03, DETAILS OF WHICH ARE AS FOLLOWS: THEREAFTER A TABLE HAS BEEN DRAWN INDICATING THE NA ME OF THE ASSESSEE, THE AMOUNT OF ENTRY, DATE ON WHICH THE ENTRY WAS RECEIVED, NAM E OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT, ENTRY OPERATORS BANK ACCOUNT WITH ACCOUNT NUMBER OF ENTRY GIVING ACCOUNT. ON THE BASIS OF SUCH INFORMATION A ND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS FILED PURSUANT TO THE NOTICE U/S 148, THE ASSESSING OFFICER RECORDED IN PARAS 7 & 8 OF THE ASSESSMENT ORDER THA T THE : MONEY HAS BEEN RECEIVED IN THE ASSESSEES ACCOUNT BUT THE ASSESSEE HAS FAILED TO DISCLOSE THE SAME IN A.Y 2002-03 AND THUS THIS IS A CLEAR CASE OF INC OME THAT HAS ESCAPED ASSESSMENT IN ITS HAND. HE THEREFORE, MADE ADDITION OF RS.15,52,725/-. THE LD. CI T(A) GOT CONVINCED WITH THE ASSESSEES SUBMISSIO N AND DELETED THE ADDITION ON MERITS, THOUGH UPHOLDING THE INITIATION OF THE ASSE SSMENT PROCEEDINGS. ITA NO. 5206 &C.O 24/DEL /11 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE AVAILABLE MATERIAL ON RECORD. IN SO FAR AS THE DELETION OF ADDITION ON M ERITS, BEING THE SUBJECT MATTER OF THE REVENUES APPEAL, IS CONCERNED, IT IS NOTICED T HAT THE ASSESSEE EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT IT RECEIVED A SUM OF RS. 31 LACS AS SHARE APPLICATION MONEY WHICH WAS DULY DISCLOSED IN THE BALANCE SHEET. ALL THE AMOUNTS WERE RECEIVED THROUGH DEMAND DRAFTS OR ACCOUNT PAYEE CHEQUES AND WERE REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE . NOT ONLY THAT, THE ASSESSEE ALSO GAVE COMPLETE DETAILS ABOUT THESE RECEIPTS BY SUBMITTING DD/CHEQUE NOS, PAN AND CIN NOS. OF THE PERSONS FROM WHOM SUCH AMO UNTS WERE RECEIVED. IN ALL, A SUM OF RS.31 LACS WAS RECEIVED AS SHARE APPL ICATION MONEY FROM 9 PARTIES AND THE ASSESSING OFFICER MADE ADDITION OF RS.15,52 ,725/- (RS.2,725 BEING DRAFT COMMISSION) IN RESPECT OF FOUR PARTIES. IT CAN BE SEEN FROM THE ASSESSMENT ORDER ITSELF THAT THE ASSESSING OFFICER HAS PROCEEDED ON THE PREMISE THAT THE ASSESSEE RECEIVED SUCH MONEY THROUGH BANK ACCOUNT BUT FAILE D TO DISCLOSE THE SAME IN ITS ACCOUNTS. THIS FINDING OF THE ASSESSING OFFICER IS INCORRECT AS HAS BEEN APTLY NOTICED BY THE LD. FIRST APPELLATE AUTHORITY THAT T HE ENTIRE AMOUNT OF RS.31 LACS WAS REFLECTED IN THE BOOKS OF ACCOUNT. APART FROM THAT , THE LD. CIT(A) HAS ALSO RECORDED A CATEGORICAL FINDING, AFTER NOTICING AND REPRODUCING THE ASSESSEES SUBMISSIONS IN PARA 5.3 OF THE IMPUGNED ORDER, THAT THE AMOUNTS WERE RECEIVED THROUGH BANKING CHANNEL AND ALL THE RELEVANT DETAIL S OF THE PARTIES WHO APPLIED FOR THE SHARES, WERE GIVEN TO THE A.O. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. THIS FACT COULD NOT BE CONTROVERTED BY THE LD. DR. AS SUCH, WE ARE STANDING IN A SITUATION IN WHICH THE ASSESSEE CLAIMED TO HAVE RE CEIVED A SUM OF RS.31 LACS FROM CERTAIN PARTIES AS SHARE APPLICATION MONEY AND THE AO MADE ADDITION OF RS.15 LACS AND ODD BY HOLDING THAT SUCH ENTRIES W ERE NOT RECORDED IN THE BOOKS OF ACCOUNTS, WHICH WERE IN FACT RECORDED. FURTHER, THE ASSESSEE ADDUCED ALL THE NECESSARY PARTICULARS OF SUCH SHARE APPLICANTS AND ALSO THE MATERIAL IN SUPPORT OF ITA NO. 5206 &C.O 24/DEL /11 4 THE GENUINENESS OF THE TRANSACTIONS, WHICH HAS NOT BEEN FAULTED WITH BY THE AO. IN SUCH A SITUATION, THE QUESTION ARISES AS TO WHE THER ANY ADDITION IS CALLED FOR U/S 68 IN RESPECT OF SHARE APPLICATION MONEY. THE NECES SARY INGREDIENTS FOR THE TRIGGERING OF SECTION 68 ARE THAT THE ASSESSEE FAIL S TO PROVE THE IDENTITY OF THE CREDITOR, HIS CAPACITY AND GENUINENESS OF TRANSACTI ON. WHERE ALL SUCH CONDITIONS ARE SATISFIED, IN AS MUCH AS, NOT ONLY THE IDENTITY OF THE CREDITORS IS PROVED BUT ALSO THEIR CAPACITY AND THE GENIUSES OF TRANSACTION S, THERE CAN BE NO QUESTION OF ADDITION U/S 68. ADVERTING TO THE FACTS OF THE INST ANT CASE, IT IS NOTICED THAT THE ASSESSEE GAVE FULL DETAILS OF THE IDENTITY OF SUCH CORPORATE SHARE APPLICANTS, THEIR PAN NOS. AND THE EVIDENCE AS TO THE GENUINENESS OF TRANSACTIONS. THE AO DID NOT FIND ANYTHING WRONG WITH THIS EVIDENCE. IN SUC H A SITUATION, WE ARE OF THE CONSIDERED OPINION THAT NO EXCEPTION CAN BE TAKEN T O THE VIEW CANVASSED BY THE LD. FIRST APPELLATE AUTHORITY ON THIS ISSUE. 6. THE RELIANCE OF THE LD. DR ON THE CIT VS. NOVA PROMOTERS AND FINELEASE (P) LTD (2012) 342 ITR 169 (DELHI) IS MISPLACED AND MISCONCEIVED BECAUSE IN THAT CASE THE ASSESSING OFFICER CONDUCTED PROPER EN QUIRY AND CAME TO THE POSITIVE CONCLUSION, ON APPRECIATION OF ENTIRE MATE RIAL, THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF THE TRANSACTIONS WITH THE COMPANIES. ON THE OTHER HAND, WE ARE CONFRONTED WITH A SITUATION IN W HICH, DESPITE THE ASSESSSES MAKING AVAILABLE ALL THE NECESSARY DETAILS ABOUT TH E SHARE APPLICANTS AND OTHER RELEVANT MATERIAL, THE ASSESSING OFFICER DID NOT U TTER EVEN A SINGLE WORD AGAINST SUCH EVIDENCE. HE SIMPLY PROCEEDED TO MAKE ADDITIO N ON A WRONG PREMISE, WHICH EVEN DOES NOT EXIST BECAUSE THE ASSESSEE HAD SHOWN SUCH SHARE APPLICATION MONEY IN ITS BALANCE SHEET. THE HONBLE DELHI HIGH COURT, WHILE DEALING WITH ALMOST IDENTICAL FACTS, IN CIT VS. FAIR FINVEST LTD. (2013) 357 ITR 146 (DELH I) CONSIDERED A CASE IN WHICH ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY MADE ITA NO. 5206 &C.O 24/DEL /11 5 ON THE BASIS OF INVESTIGATION REPORT RECEIVED BY TH E A.O, WAS HELD TO BE RIGHTLY DELETED AS THE AO DID NOT ENQUIRE INTO THE MATTER. 7. A CONJOINT READING OF THESE TWO JUDGMEN TS FAIRLY INDICATES THAT THERE IS A DAZZLING LINE DRAWN BETWEEN THE CASES IN WHICH ADDI TION U/S 68 ON ACCOUNT OF SHARE APPLICATION MONEY ETC. CAN AND CANNOT BE MADE . WHERE THE AO PROPERLY ENQUIRES INTO THE MATTER AND REACHES THE CONCLUSION ON APPRECIATION OF THE EVIDENCE ADDUCED BY THE ASSESSEE THAT THE TRANSACTI ONS WERE NOT GENUINE, THE ADDITION IS CALLED FOR. IF ON THE OTHER HAND, THE A O SIMPLY BRUSHES ASIDE THE ASSESSEES EXPLANATION WITHOUT ANY COGENT REASON AN D MAKES THE ADDITION IN A MECHANICAL MANNER, NO ADDITION IS WARRANTED. IN OUR CONSIDERED OPINION, THE EXTANT CASE FALLS UNDER THE SECOND CATEGORY. HERE A LSO, THE ASSESSING OFFICER DID NOT MAKE ANY EFFORT TO ENQUIRE INTO THE MATTER. NO SUMMONS U/S 131 WERE ISSUED TO THE SHARE APPLICANTS. NO ENQUIRY WORTH THE NAME WAS CONDUCTED, BUT THE ADDITION WAS MADE IN A ROUTINE MANNER. RESPECTFULLY FOLLOWING THE JUDGMENT IN . FAIR FINVEST LTD. (SUPRA) , WE HOLD THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THIS ADDITION. 8. THE APPEAL OF THE REVENUE IS DISMISSED. 9. FIRST GROUND OF THE ASSESSEES CROSS-OBJECTION I S AGAINST THE INITIATION OF THE ASSESSMENT PROCEEDINGS. 10. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND ALSO PERUSED THE REASONS RECORDED BY THE AO BEFORE ISSUING NOTICE U/S 148 WH ICH HAVE BEEN EXTRACTED ABOVE. FROM SUCH REASONS, IT IS DISCERNIBLE THAT THE ASSESSING OFFICER RECEIVED INFORMATION FROM DI (INVESTIGATION) ABOUT THE ACCOM MODATION ENTRIES RECEIVED BY THE ASSESSEE. INITIALLY, IT WAS ARGUED BY THE LD. AR THAT ALL THE NECESSARY DETAILS IN THIS REGARD WERE FURNISHED TO THE ASSESSING OFFICER WHO EXAMINED THE ISSUE AT ITA NO. 5206 &C.O 24/DEL /11 6 LENGTH BEFORE PASSING THE ORDER U/S 143(3). ON BE ING CALLED UPON TO INVITE OUR ATTENTION TOWARDS SUCH ORIGINAL ORDER PASSED U/S 143(3), THE LD. AR EXPRESSED HIS INABILITY BY STATING THAT HE DID NOT HAVE A COPY OF SUCH ORDER. IT CAN BE SEEN FROM OUR FILE ALSO THAT NO COPY OF SUCH ASSESSMENT ORDER HAS BEEN FILED. IN SUCH A SITUATION, WE ARE LEFT WITH NO OPTION BUT TO PRESUM E THAT EITHER NO ASSESSMENT ORDER U/S 143(3) WAS ORIGINALLY PASSED OR IF AT ALL ANY SUCH ASSESSMENT ORDER WAS PASSED, NO ENQUIRY ABOUT SUCH SHARE APPLICATION MON EY WAS CONDUCTED. THIS BRINGS US TO A POSITION THAT THE ASSESSING OFFICER INITIATED THE PRESENT RE- ASSESSMENT PROCEEDINGS ON THE BASIS OF SPECIFIC INF ORMATION RECEIVED FROM DI(INV.) ABOUT THE ASSESSEE RECEIVING ACCOMMODATION ENTRIES. IN SUCH CIRCUMSTANCES, THERE CAN BE NO FETTERS ON THE POWER OF THE ASSESSING OFFICER TO INITIATE RE-ASSESSMENT PROCEEDINGS. WE, THEREFORE, UPHOLD THE VIEW TAKEN BY THE LD. CIT(A) IN REJECTING THE ASSESSEES CONTENTION O N THIS SCORE. THIS GROUND TAKEN BY THE ASSESSEE IS DISMISSED. 11. THE ONLY OTHER GROUND ABOUT THE CHARGING OF INT EREST U/S 234 B IS CONSEQUENTIAL. 12. IN THE RESULT, THE ASSESSEES C.O IS PARTLY ALLOWED IN ABOVE TERMS. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY 2014. SD/- SD/- (R. P. TOLANI) (R. S. SYAL) JUDICIAL MEMBER ACCOU NTANT MEMBER DATED: 15/01/2014 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT ITA NO. 5206 &C.O 24/DEL /11 7 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSIS TANT REGISTRAR ITAT NEW DELHI