M/s. Artlink Vintrade Pvt. Ltd., Mumbai V. ITO, Ward - 1(1), Kolkata , Kolkata

CO 27/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0427 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Accommodation entries; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

1 ITA NO. 1121/KOL/2016 & CO NO. 27/KOL/2018 ARTLINK VINTRADE PVT. LTD., AY 2006-07 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1121/KOL/2016 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD- 1(1), KOLKATA. VS. M/S. ART LINK VINTRADE PVT. LTD. (PAN: AACCA1533H) APPELLANT RESPONDENT & C.O. NO. 27/KOL/2018 IN I.T.A. NO. 1121/KOL/2016 ASSESSMENT YEAR: 2006-07 M/S. ARTLINK VINTRADE PVT. LTD. VS. INCOME-TAX OFFI CER, WD- 1(1), KOLKATA. CROSS OBJECTOR RESPONDENT DATE OF HEARING 03.09.2018 DATE OF PRONOUNCEMENT 14.09.2018 FOR THE REVENUE SHRI ROBIN CHOUDHURY, ADDL. CIT, S R. DR FOR THE RESPONDENT SHRI MANOJ KATARUKA, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE AND THE CROSS OBJECTION PREFERRED BY THE ASSESSEE ARE AGAINST THE ORDER OF LD. CIT(A)-9, KOL KATA DATED 25.02.2016 FOR AY 2006-07. 2. AT THE OUTSET WE NOTE THAT THE CROSS OBJECTION O F THE ASSESSEE IS IN RESPECT TO LEGAL ISSUE RAISED CHALLENGING THE REOPENING U/S. 147/148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH IS NOT PRESSED AND, THEREFORE, STANDS DISMISSED. 2 ITA NO. 1121/KOL/2016 & CO NO. 27/KOL/2018 ARTLINK VINTRADE PVT. LTD., AY 2006-07 3. NOW COMING TO THE REVENUES APPEAL WHICH IS TIME BARRED BY THREE DAYS FOR WHICH CONDONATION PETITION HAS BEEN FILED. ON PERUSAL OF THE SAME AND SINCE NO OBJECTION HAS BEEN RAISED ON BEHALF OF THE ASSESSEE, WE CONDONE THE DE LAY AND ADMIT THE APPEAL FOR HEARING. 4. IN THIS APPEAL, REVENUE HAS CHALLENGED THE ACTIO N OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.5,76,16,000/-. BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES AND FILED THE RETURN OF INCOME FOR AY 2006-07 ON 30.11.2006 DECLA RING NIL INCOME. THEREAFTER, ASSESSEE RECEIVED AN INTIMATION OF ASSESSMENT U/S. 143(1) OF THE ACT ACCEPTING THE DECLARED INCOME. LATER ON, AO ISSUED NOTICE U/S. 147 READ WITH SEC. 148 OF THE ACT AND THE ASSESSMENT WAS REOPENED. FROM THE REASONS RECORDED IT IS DISCERNE D THAT ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DCIT , CC-XXVIII, KOLKATA THAT THE ASSESSEE COMPANY HAS TAKEN ACCOMMODATION ENTRIES IN THE FORM OF LOANS AND ADVANCES FROM M/S. BASANT MARKETING PVT. LTD. (M/S. BMPL) TO THE EXTEN T OF RS.5,76,16,000/-. ACCORDING TO AO, SINCE THE ASSESSEE DID NOT PROVIDE MATERIAL TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION, THE AO WAS PLEA SED TO ADD THE SAID UNSECURED LOAN TO THE TOTAL INCOME U/S. 68 OF THE ACT. AGGRIEVED, THE AS SESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE THE SAME. AGGRIE VED, REVENUE IS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE COMPANY HAD RECEIV ED UNSECURED LOANS FROM M/S. BMPL TO THE TUNE OF RS.5,76,16,000/- IN THE YEAR UNDER CONS IDERATION WHICH WAS TREATED BY THE AO TO HAVE BEEN RECEIVED AS AN ACCOMMODATION ENTRY FROM M /S. BMPL AND SINCE THE ASSESSEE FAILED TO PRODUCE EVIDENCE TO PROVE THE IDENTITY, C REDITWORTHINESS AND GENUINENESS OF THE LENDER, THE UNSECURED LOAN SHOWN BY THE ASSESSEE IN ITS BOOKS WAS TREATED AS UNEXPLAINED AND ADDED U/S. 68 OF THE ACT. ON APPEAL, THE LD. C IT(A) NOTED THAT THE LENDER/CREDITOR M/S. BMPL IS A SISTER CONCERN OF THE ASSESSEE COMPANY AN D SUBSTANTIAL SHARES OF BOTH THE COMPANIES ARE HELD BY FAMILY/FRIENDS OF MR. ARUN DA LMIA WHO IS THE GROUP CHAIRMAN. ON A QUERY FROM THE BENCH AS TO WHY THE ASSESSEE FAILED TO PRODUCE THE DOCUMENTS WHEN CALLED UPON BY THE AO TO PROVE THE IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTION 3 ITA NO. 1121/KOL/2016 & CO NO. 27/KOL/2018 ARTLINK VINTRADE PVT. LTD., AY 2006-07 BEFORE THE AO, THE LD. AR POINTED OUT THAT THERE WA S A CBI SEARCH DATED 24.03.2010 AND THE ENTIRE DOCUMENTS WERE IN THE CUSTODY OF THE CBI AND , THEREFORE, THE ASSESSEE COULD NOT PRODUCE THE DOCUMENTS RELATING TO M/S. BMPL FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND, THEREFORE, THE AO DREW ADVERSE INFERENCE AGAIN ST THE ASSESSEE. HOWEVER, THE LD. AR DREW OUR ATTENTION TO THE PAPER BOOK FILED BEFORE U S AND DREW OUR ATTENTION TO THE FACT THAT ITEM NOS. 2 TO 18 I.E. FROM PAGE NOS. 17 TO 135 AS WELL AS ITEM NOS. 21 AND 22 I.E. FROM PAGE NOS. 142 TO 157 WERE FILED BEFORE THE AO DURING THE REASSESSMENT PROCEEDINGS AND ALL OTHER DOCUMENTS WERE FILED BEFORE THE LD. CIT(A) AND THE FIRST ITEM PAGE 1 TO 16 IS THE WRITTEN SUBMISSION BEFORE LD. CIT(A). HOWEVER, THE AO BRUS HED ASIDE ALL THE EVIDENCE/MATERIAL FILED BEFORE HIM AND SADDLED THE ADDITION AGAINST T HE ASSESSEE. 6. THE LD. AR FURTHER DREW OUR ATTENTION TO PAGE NO S. 95 TO 97 OF THE PAPER BOOK WHEREIN THE COPY OF THE ASSESSMENT ORDER U/S. 143(3 ) OF THE ACT DATED 15.02.2018 FRAMED AGAINST M/S. BMPL (LENDER WHO PROVIDED THE UNSECURE D LOAN TO ASSESSEE FOR AY 2006-07) IS ATTACHED FROM WHERE WE NOTE THAT THE AO HAS PASSED THE SCRUTINY ASSESSMENT IN THE CASE OF THE LOAN CREDITOR M/S. BMPL VIDE ORDER DATED 15.12. 2008 FOR AY 2006-07 AND HAS FRAMED THE ASSESSMENT, WHICH IS THE RELEVANT YEAR OF THE A SSESSEE UNDER CONSIDERATION BEFORE US. THEREFORE, THE QUESTION OF IDENTITY OF THE LOAN CRE DITOR CANNOT BE DISPUTED. MOREOVER, IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THE IMPUGN ED ADDITION IS IN CONSEQUENCE TO THE SEARCH CONDUCTED IN THE CASE OF SHRI ARUN DALMIA AN D OTHERS AND THAT ASSESSMENT HAD BEEN COMPLETED U/S. 143(3) OF THE ACT AFTER THE SEARCH P ROCEEDINGS FOR AY 2009-10 WHEREIN ALL THE TRANSACTIONS OF M/S. BMPL HAVE BEEN ACCEPTED AS GENUINE BUSINESS TRANSACTIONS. HOWEVER, IT WAS DECLARED AS A FICTITIOUS ENTITY IN AY 2010-11 BY THE AO WHICH WAS CHALLENGED BY M/S. BMPL BY FILING AN APPEAL BEFORE THE LD. CIT(A), KOLKATA. THE LD. CIT(A) HAS PASSED THE ORDER ON 04.02.2015 FOR AY 20 10-11 WHEREIN HE HAS HELD THAT M/S. BMPL IS NOT A BOGUS ENTITY AND FURTHER HE OBSERVED THAT THERE IS NO MATERIAL ON RECORD TO SUPPORT THE ADVERSE FINDING GIVEN BY THE AO. ACCOR DINGLY, THE LD. CIT(A), HAS HELD THAT THE BUSINESS CARRIED ON BY M/S. BMPL CANNOT BE CONS IDERED AS BOGUS. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE ORDER PASSED BY THE LD. CIT( A), KOLKATA IN RESPECT OF M/S. BMPL HAS BEEN ACCEPTED BY THE DEPARTMENT BY NOT PREFERRING A N APPEAL BEFORE THE TRIBUNAL. FOR 4 ITA NO. 1121/KOL/2016 & CO NO. 27/KOL/2018 ARTLINK VINTRADE PVT. LTD., AY 2006-07 SUPPORTING THE SAID CONTENTION, HE DREW OUR ATTENTI ON TO THE LETTER DATED 23.02.2016 VIDE NO. ITO,WD-8(1),KOLKATA/BASANT MARKETING 15-16 WRITTEN BY ITO, WD-8(1), KOLKATA TO THE DY. CIT-3(3)(2), MUMBAI WHICH CLARIFIES THIS FACT A ND WE NOTE THAT THE LETTER IS PLACED AT PAGES 139 TO 141 OF THE PAPER BOOK. WE NOTE FROM T HE PERUSAL OF PAGE 47 OF THE PAPER BOOK WHICH IS THE LETTER WRITTEN BY THE ASSESSEE WHEREIN IT REPLIED TO THE AO VIDE LETTER DATED 19.08.2013 WHICH INCLUDED CONFIRMATION OF ACCOUNT W ITH M/S. BMPL AND COPIES OF BANK LEDGER WITH BANK STATEMENT OF ASSESSEE. FROM A PER USAL OF PAGES 49 TO 65 OF THE PAPER BOOK IT REVEALS THE DOCUMENTS VIZ., COPY OF LOAN CONFIR MATION FROM M/S. BMPL ALONG WITH COPY OF BANK LEDGER AND COPIES OF BANK STATEMENT OF ASSE SSEE SHOWING LOAN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. WE NOTE FROM PERUSAL OF PAG ES 66 TO 81 THE ASSESSEE HAD FILED THE AUDITED ACCOUNTS OF M/S. BMPL FOR AY 2006-07 BEFORE THE AO/LD. CIT(A). AND PAGES 82 TO 93 DISCLOSES THE COPY OF LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF BMPL WITH BANK STATEMENT OF M/S. BMPL FOR AY 2006-07 WHEREIN THE LOAN TRANSACTIONS HAVE BEEN HIGHLIGHTED AND BROUGHT TO OUR NOTICE WHICH WE HAV E CROSS CHECKED WITH THE ASSISTANCE OF LD. DR. PAGE NO. 94 OF THE PAPER BOOK IS THE CONFI RMATION OF ACCOUNT FILED BEFORE THE AO AND PAGES 95 TO 97 IS THE COPY OF THE ASSESSMENT OR DER U/S. 143(3) OF THE ACT OF M/S. BMPL FOR AY 2006-07. THUS, THE ASSESSEE HAS BEEN ABLE T O DISCHARGE THE ONUS CASTED UPON IT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENES S OF THE LOAN CREDITOR. FOR TAKING SUCH A VIEW WE RELY ON THE ORDER OF THE HONBLE CALCUTTA H IGH COURT IN S. K. BOTHRA & SONS HUF VS. ITO 347 ITR 347 (CAL). THE HONBLE CALCUTTA HI GH COURT IN CRYSTAL NETWORK (P) LTD. VS. CIT 353 ITR 171 (CAL) HAS OBSERVED THAT THE CRE DITORS CANNOT BE DISBELIEVED MERELY BECAUSE THEY DID NOT RESPOND TO SUMMONS WHEN ALL O THER DOCUMENTS TO SUBSTANTIATE THE LOAN TRANSACTION HAS BEEN FILED BEFORE THE ASSESSING AUT HORITY. THE HONBLE CALCUTTA HIGH COURT IN CIT VS. DATAWARE (P) LTD. ITA NO. 263 OF 2011 DA TED 21.09.2011 HAS HELD THAT IN CASE IF THE AO HAS DOUBT REGARDING THE CREDITWORTHINESS OF THE LOAN CREDITOR, THEN THE AO IN TURN HAD TO SEEK REPORT FROM THE AO OF THE LOAN CREDITOR AND THEREAFTER ONLY DRAW ADVERSE INFERENCE AGAINST THE LOAN CREDITOR. IN THIS CASE, THE AO HAS NOT MADE ANY EXERCISE OF THIS NATURE TO DISCREDIT THE LOAN CREDITOR. THE ASSESSE E HAS DISCHARGED THE ONUS BY PLACING ALL THE DOCUMENTS BEFORE THE AO/LD. CIT(A); AND THE LD. CI T(A) HAS TAKEN NOTE OF ALL THESE FACTS TO DELETE THE ADDITION WHICH IS SUPPORTED BY RELEVA NT MATERIAL, SO THE IMPUGNED ORDER 5 ITA NO. 1121/KOL/2016 & CO NO. 27/KOL/2018 ARTLINK VINTRADE PVT. LTD., AY 2006-07 WARRANTS NO INTERFERENCE AND, THEREFORE, WE DISMISS THE APPEAL OF THE REVENUE. THUS, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF TH E ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14TH SEP TEMBER, 2018. SD/- (DR. A. L. SAINI) SD/-(ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14TH SEPTEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WARD-1(1), KOLKATA. 2 RESPONDENT M/S. ARTLINK VINTRADE PVT. LTD., 101 0, MAKER CHAMBER-V, NARIMAN POINT, MUMBAI-400 021 3. 4. CIT(A)-9, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY