M/s. Finesse Traders India Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 265/DEL/2012

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3468 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-06-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 18-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHINA NEB
• Keywords: Unexplained cash credit; Opportunity of being heard; Difference of opinion; Accommodation entries; Change of opinion; Reassessment proceedings
• Section: 143(3); 68; 148; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 600/DEL/2012 A.Y. 2003-04 ITO, WARD 11(2), VS. M/S FINESSE TRADERS INDIA PV T LTD. ROOM NO. 321, E-131, GREATER KAILASH-II, C.R. BUILDING, NEW DELHI 110 048 NEW DELHI (PAN: AAACF6789J) (APPELLANT) (RESPONDENT) AND C.O. NO. 265/DEL/2012 (IN ITA NO. 600/DEL/2012) A.Y. 2003-04 M/S FINESSE TRADERS INDIA PVT LTD. VS. ITO, WARD 11(2), E-131, GREATER KAILASH-II, NEW DELHI NEW DELHI 110 048 (PAN: AAACF6789J) (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. ASHINA NEB, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AND BOTH ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIII, NEW DELHI DATED 2 13.12.2011 PERTAINING TO ASSESSMENT YEAR 2003-04. S INCE THE ISSUES INVOLVED IN THIS APPEAL AND CROSS OBJECTION ARE IN TER-CONNECTED, HENCE, THE SAME ARE DISPOSED OF BY THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE, BY FIRST DEALING WITH REVENUES APPEAL . 2. THE GROUNDS RAISED IN THE REVENUES APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THE PROCEEDING U/S. 148 OF THE I.T. ACT AS INVALIDLY INITIATED. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 50 LACS UNDER SECTION 68 OF THE I.T. ACT ON ACCOUNT OF ACCOMMODATION ENTRIES TAKEN IN THE FORM OF SHARE CAPITAL. 3. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN IGNORING THE FINDINGS U/S. 68 RECORDED BY THE AO IN THE ASSESSMENT ORDER WITH RESPECT TO THE CREDITWORTHINESS AND IDENTITY OF CREDITORS AND GENUINENESS OF THE TRANSACTIONS. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE GROUNDS RAISED IN THE ASSESSEES CROSS OBJE CTION READ AS UNDER:- 3 1. THAT THE LD. CIT(A) ERRED IN NOT HOLDING THAT THE REASSESSMENT PROCEEDINGS ARE NOT SUSTAINABLE FOR T HE REASON BEING A CHANGE OF OPINION BECAUSE THE STATEMENT OF MR. MAHESH GARG RELIED UPON BY THE AO WAS ALREADY AVAILABLE WITH THE DEPARTMENT EVEN AT THE TIME OF PROCESSING OF THE RETURN U/S. 143(1) AND T HE AO HAD AMPLE OCCASION TO EXAMINE THE SAME AND THE ORD ER IS CONTRARY TO BINDING JUDGEMENT OF THE JURISDICTIO NAL HIGH COURT IN 329 ITR 110 2. THAT THE LD. CIT(A) HAVING HELD THAT THE PROCEED INGS U/S. 148 HAVE BEEN INVALIDLY INITIATED BY THE AO E RRED IN NOT ANNULLING THE ASSESSMENT ORDER AND FURTHER E RRED IN NOT HOLDING THAT ANY SUBSEQUENT GROUNDS OF APP EAL WERE INFRUCTUTOUS AND NEED NOT BE ADJUDICATED UPON. 4. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED HERE, HENCE, THE SAME ARE NOT REPEATED FOR THE SAKE OF BR EVITY. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. IT IS NOTED FROM THE O RDER SHEET THAT ON 15.9.2016; 20.12.2016 THE CASE WAS EARLIER ADJOURNE D ON THE WRITTEN 4 REQUEST OF THE ASSESSEES COUNSEL. IT IS ALSO NOTED THAT THE NOTICE FOR HEARING HAS BEEN RETURNED BACK WITH THE REMARKS THA T NO SUCH COMPANY AT SUCH ADDRESS. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSU E NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT APPEAL AS WELL AS CROSS OBJECTION EXPARTE QUA ASSESSEE, AFTE R HEARING THE LD. DR AND PERUSING THE RECORDS. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORD S, ESPECIALLY THE ORDER OF THE LD. CIT(A). ON GOING THROUGH THE FINDI NGS OF THE LD.CIT(A) MADE IN THE IMPUGNED ORDER AS WELL AS THE FINDING O F THE ASSESSING OFFICER MADE IN THE ASSESSMENT ORDER, WE FIND THAT ASSESSEE FILED RETURN OF INCOME OF RS. 1,07,090/- ON 28.11.2003 AND THE SAME WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED AS THE ACT) ON 24.3.2004. SUBSEQUENTLY THE CASE WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 15.3.2010 AFTER RECORDING THE REASONS AND IN RESPONSE TO THE NOTICE, ASSESSEE SUBMITTED I TS LETTER DATED 22.3.2010 AND STATED THAT THE RETURN ALREADY FILED ON 28.1.2003 MAY BE TREATED AS FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THEREAFTER NOTICE U/S. 143(2)/142(1) WERE ISSUED TO THE ASSESSEE. THE ASSESSEE, IN ORDER TO ESTABLISH THE GENUINENESS OF THE SHARE APPLICATI ON MONEY FILED CERTAIN DOCUMENTS TO ESTABLISH THE IDENTITY OF THE SHARE AP PLICANT COMPANIES AND TO SHOW THAT THE SOURCE OF MONEY EMANATED FROM THE BANK ACCOUNTS OF THE COMPANIES ETC. THE AO COMPLETED THE ASSESSMENT U/S. 143(3)/147 OF 5 THE ACT BY RELYING ON THE INVESTIGATIONS CARRIED OU T BY THE DIRECTORATE OF INVESTIGATION. IN THE ASSESSMENT ORDER DATED 16.12 .2010 PASSED U/S. 143(3) OF THE ACT, THE AO MADE ADDITION OF RS. 50 L ACS BEING SHARE APPLICATION MONEY RECEIVED FROM THE VARIOUS COMPANI ES AND TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE BY HOLDI NG THAT ASSESSEE WAS ASKED TO SUBMIT COMPLETE BANK STATEMENT FOR THE REL EVANT PREVIOUS YEAR AND AFTER PERUSING THE SAME, IT IS PROVED THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES FROM THE SAID CONCERNS IN THE FORM OF SHARE CAPITAL DURING THE YEAR UNDER CONSIDERATION. WE FURTHER NO TE THAT THE ASSESSEE HAS FILED IN THIS REGARD CERTIFICATE OF INVESTMENT, COPY OF ACKNOWLEDGEMENT OF THEIR ITRS ETC AND ALL THESE DOC UMENTS ARE PREPARED IN A SIMILAR STYLED MANNER AS TO USE THE SAME AT AL L THE TIME TO COME AND ALSO THE CONFIRMATIONS FROM THE PARTIES SHOULD BE L ATEST AND DEFINITE. WE FURTHER NOTE THAT UNDER THE PROVISIONS OF SECTION 6 8 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE, MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HI S IS NOT, SATISFACTORY AND ASSESSEE COULD NOT PROVE THE IDENTITY OF THE CR EDITOR, CAPACITY OF THE CREDITOR TO ADVANCE MONEY AND THE GENUINENESS OF TH E TRANSACTION. IT IS ALSO NOTED THAT NO EXPLANATION OF THE GENUINENESS O F THE TRANSACTIONS FURTHER CONFIRMS THAT THE TRANSACTION WAS NOT AT A LL GENUINE AND IN SPITE OF THE REPEATED ADJOURNMENTS, THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE SHARE APPLICANTS. IT IS ALSO NOTED THAT AO ASKED THE ASSESSEE TO GIVE THE PRESEN T STATUS OF SHARE 6 ALLOTTED TO THE FIVE COMPANIES VIDE ORDER SHEET ENT RY DATED 18.10.2010, BUT ASSESSEE HAS NOT STATED ANYTHING IN THIS REGARD . ACCORDINGLY, AO HELD THAT THE ASSESSEE HAS NOT DISCHARGED ITS ONUS CAST UPON IT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, AN ADDITION OF RS. 50,00,000/- WAS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS UNDER S ECTION 68 OF THE ACT AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 51, 07,086/-. HOWEVER, ON THE OTHER HAND, LD. CIT(A) HAS ALLOWED THE APPEA L OF THE ASSESSEE ON LEGAL ASPECT AS WELL AS ON MERITS BY RELYING UPON T HE VARIOUS CASE LAWS. WE FIND THAT AO ASKED THE ASSESSEE TO GIVE THE PRES ENT STATUS OF SHARE ALLOTTED TO THE FIVE COMPANIES VIDE ORDER SHEET ENT RY DATED 18.10.2010, BUT ASSESSEE HAS NOT STATED ANYTHING IN THIS REGARD AND TOOK ADJOURNMENTS AND IN THE ABSENCE OF RELEVANT EVIDEN CE AS ASKED BY THE AO, AS A RESULT THEREOF, THE AO DID NOT VERIFY THE DOCUMENTS FURNISHED BY THE ASSESSEE AND ALSO NOT DONE THE INDEPENDENT INQ UIRY AND VERIFICATION PROPERLY. WE FURTHER FIND THAT LD. CIT(A) HAS COMP LETELY IGNORED THIS FINDING OF THE AO AND SIMPLY RELYING UPON THE VARIO US CASE LAWS DELETED THE ADDITION. LD. CIT(A) ALSO UNABLE TO JUSTIFY THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OR FINANCIAL STRE NGTH OF THE SHARE APPLICANTS AND EVEN IGNORED THE AOS VERSION RECORD ED ON THE NOTE SHEET DATED 18.10.2010, WHICH GOES TO THE ROOT OF THE MATTER AND IS VERY MUCH ESSENTIAL WHILE CONSIDERING THE CASE OF THE AS SESSEE, WHICH HAS NOT BEEN DONE BY BOTH THE AUTHORITIES. THEREFORE, IN T HE INTEREST OF JUSTICE, WE THINK IT PROPER TO SET ASIDE THE ISSUE IN DISP UTE TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH, AFTER MAKING INDEPENDE NT INQUIRY AND 7 VERIFICATION, AS DEEM FIT. HOWEVER, THE ASSESSEE I S ALSO DIRECTED TO SUBMIT ALL THE NECESSARY DOCUMENTS, AS ASKED BY THE AO DUR ING THE ASSESSMENT PROCEEDINGS AND FULLY COOPERATE WITH THE AO AND DID NOT TAKE ANY UNNECESSARY ADJOURNMENT. ACCORDINGLY, THE ISSUES IN DISPUTE ARE SET ASIDE TO THE FILE OF THE AO WITH THE AFORESAID DIRECTIONS . IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. ASSESSEES CROSS OBJECTION 8. AS REGARDS, ASSESSEES CROSS OBJECTION IS CONCE RNED, SINCE WE HAVE ALREADY SET ASIDE THE ISSUES INVOLVED IN THE R EVENUES APPEALS, THE GROUNDS TAKEN BY THE ASSESSEE IN THE CROSS OBJECT ION ALSO STANDS REMITTED TO THE FILE OF THE AO TO DECIDE THE SAME A FRESH, AS PER LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE STAND ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED ON 04/01/2018. SD/- SD/- (T.S. KAPOOR) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:04/01/2018 'SRBHATNAGAR' COPY FORWARDED TO:- 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES