Dhenu Holding & Suppliers (P) Ltd., Kolkata V. ITO, WD-1(3), KOLKATA, Kolkata

CO 31/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0819 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NOS. 848 TO 850 /KOL/2016 ASSESSMENT YEARS : 2005- 06 TO 2007-08 ITO, WARD-13(1), KOLKATA -VS- M/S DHENU HOLDING & SUPPLIERS PVT. LTD. [PAN: AABCD 1987 F ] (APPELLANT) (RESPONDENT) C.O. NOS. 29 TO 31/KOL/2016 (ARISING OUT OF I.T.A NOS. 848 TO 850 /KOL/2016) ASSESSMENT YEARS : 2005- 06 TO 2007-08 M/S DHENU HOLDING & SUPPLIERS PVT. LTD. -VS- ITO, W ARD-13(1), KOLKATA [PAN: AABCD 1987 F ] (CROSS OBJECTOR) (RESPONDENT) FOR THE APPELLANT : SHRI P.K. SRIHARI, CIT DR SHRI SAURABH KUMAR, ADDL. CIT SR. DR FOR THE RESPONDENT : NONE DATE OF HEARING : 27.11.2018 DATE OF PRONOUNCEMENT : 30.11.2018 ORDER PER M.BALAGANESH, AM 1. THESE APPEALS BY THE REVENUE AND THE CROSS OBJE CTIONS BY THE ASSESSEE ARISE OUT OF THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS)-8, KOLKATA [IN 2 ITA NOS.848 TO 850/KOL/2016 C.O. NOS. 29 TO 31/KOL/2016 M/S DHENU HOLDING & SUPPLIERS P LTD. A.YRS. 2005-06TO2007-08 2 SHORT THE LD CIT(A)] IN APPEAL NOS. 1018,1019&1020/ 2014-15 DATED 23.02.2016 AGAINST THE SEPARATE ORDERS PASSED BY THE ITO, WARD -1(3), KOLKATA, ITO, WARD-11(2), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3 )/ 147/ 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AS THE CASE MAY BE, DATED 05.06.2013, 28.03.2013 RESPECTIVELY FOR THE ASSESSMENT YEARS 2005-06 , 2006-07 AND 200 7-08 RESPECTIVELY. AS IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEALS THEY ARE T AKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST COMMON ISSUE TO BE DECIDED IN THESE AP PEALS IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS UNEXPLAINED CASH DEPOSIT MADE IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY IN THE HAN DS OF THE ASSESSEE COMPANY AND DIRECTING THE LD. AO TO ADD ONLY COMMISSION @0.25%O N THE TOTAL TRANSACTIONS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS OF ASST YEAR 2005-06 ARE TAKEN UP FOR ADJUDICATION AND DECISION RENDERED THEREON WOULD AP PLY WITH EQUAL FORCE FOR ASST YEARS 2006-07 AND 2007-08 ALSO EXCEPT WITH VARIANCE IN FI GURES. 3. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE ASSESSMENT WAS COMPLETED U/S 147 OF THE ACT BY THE LD. AO FOR THE ASST YEAR 2005-06. THE ASSESSEE VIDE LETTER DATED 24.09.2012 REQUESTED THE LD. AO TO TREAT THE ORIGINAL RETURN AS RETURN FILED IN RESPONSE TO NOTICE U/S 14 8 OF THE ACT. THE LD. AO ISSUED SEVERAL LETTERS TO THE ASSESSEE REQUESTING TO FURNISH THE E VIDENCE OF HAVING FILED THE RETURN OF INCOME ORIGINALLY. THERE WAS NO COMPLIANCE ON THE P ART OF THE ASSESSEE IN THIS REGARD. THE LD. AO OBSERVED THAT THE LD. AR OF THE ASSESSEE APPEARED ONCE AND FURNISHED AUDITED ACCOUNTS WITH MINIMUM DETAILS. THE ASSESSEE THEREAFTER DID NOT CO-OPERATE IN THE ASSESSMENT PROCEEDINGS BY MAKING APPEARANCE AND FURNISHING THE REQUISITE DETAILS AND THEREFORE THE LD. AO WAS FORCED TO COMPLETE THE ASSESSMENT U/S 144 OF THE ACT. THE 3 ITA NOS.848 TO 850/KOL/2016 C.O. NOS. 29 TO 31/KOL/2016 M/S DHENU HOLDING & SUPPLIERS P LTD. A.YRS. 2005-06TO2007-08 3 LD. AO ASKED THE ASSESSEE FOR EXPLAINING THE SOURCE OF HUGE DEPOSITS MADE IN THE BANK ACCOUNT WITH ROYAL BANK OF SCOTLAND AMONG OTHER DET AILS. SINCE NO DETAILS WERE FURNISHED, THE LD. AO PROCEEDED TO TREAT THE ENTIRE CASH DEPOSITS MADE IN THE BANK ACCOUNT AS UNEXPLAINED AND ACCORDINGLY PROCEEDED TO ADD A SUM OF RS. 4,39,18,960/- TO THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2005-06. S IMILAR ADDITIONS WERE MADE OTHER ASSESSMENT YEARS ALSO. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE IS ONLY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND HENCE THE CREDI TS FOUND IN THE BANK ACCOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND MOR EOVER, THE DIRECTORS OF THE ASSESSEE COMPANY ARE PERSONS OF NO MEANS AND ILLITERATES AN D THAT THE POSSIBILITY OF THE COMPANYS BANK ACCOUNT BEING MISUSED FOR ROUTING IL LEGAL TRANSACTIONS CANNOT BE RULED OUT. ACCORDINGLY, HE HELD THAT THE ASSESSEE COMPANY SHOULD BE TREATED ONLY AS ACCOMMODATION ENTRY PROVIDER OR PASS THROUGH AGENT AND ONLY THE COMMISSION ATTRIBUTABLE ON THE TOTAL DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE (I.E. BOTH CASH AND CHEQUE DEPOSITS) SHOULD BE BROUGHT TO TAX. THE LD. CIT(A) PLACED RELIANCE ON VARIOUS APPELLATE ORDERS AND ASSESSMENT ORDERS PAS SED BY THE INCOME TAX DEPARTMENT AND DETERMINED THE COMMISSION @ 0.25% OF TOTAL CASH AND CHEQUE DEPOSITS FOR THE ASSESSMENT YEAR 2005-06 AND DIRECTED THE LD. AO TO TAX A SUM OF RS. 3 LACS FOR THE ASSESSMENT YEAR 2005-06. SIMILAR DIRECTION WAS GIVE N FOR ASSESSMENT YEAR 2006-07 TO BE TAXED AT RS. 3,75,000/- AND FOR ASSESSMENT YEAR 200 7-08 AT RS. 6 LACS AS AGAINST ADDITIONS MADE BY THE LD. AO IN THE SUMS OF RS. 5,5 0,45,360/- AND RS. 8,19,99,100/- TOWARDS CASH DEPOSITS IN THE BANK ACCOUNT FOR ASSES SMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY. AGGRIEVED THE REVENUE IS IN APPEAL BE FORE US ON DELETION OF ADDITION MADE TOWARDS CASH DEPOSITS. THE ASSESSEE ALSO IS IN CROS S OBJECTION BEFORE US WITH A PRAYER TO REDUCE THE RATE OF COMMISSION FROM 0.25% TO 0.10%. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE FIN D NO EFFECTIVE REPRESENTATION BY FURNISHING PROPER DETAILS WERE MADE EVEN BEFORE THE LD. AO THEREBY WARRANTING THE LD. 4 ITA NOS.848 TO 850/KOL/2016 C.O. NOS. 29 TO 31/KOL/2016 M/S DHENU HOLDING & SUPPLIERS P LTD. A.YRS. 2005-06TO2007-08 4 AO TO FRAME THE ASSESSMENT U/S 144 READ WITH 147 OF THE ACT. WE HAVE HEARD THE LD. DR. WE FIND FROM THE FACTS OF THE INSTANT CASE, WE DEEM IT FIT AND APPROPRIATE, TO REMAND THE APPEALS TO THE FILE OF LD. AO FOR DE NOVO ADJUD ICATION WITH A DIRECTION TO THE ASSESSEE TO CO-OPERATE WITH THE LD. AO FOR PRESENTI NG THE TRUE FACTS. IN VIEW OF THESE DIRECTIONS GIVEN IN THE REVENUES APPEAL, THE ADJUD ICATION OF COMMISSION PERCENTAGE WHETHER AT 0.25% OR 0.10%, BECOMES PREMATURE AT THI S STAGE. HENCE THE CROSS OBJECTION PREFERRED BY THE ASSESSEE IS ALSO REMANDED BACK TO THE FILE OF LD. AO. SINCE DE NOVO ADJUDICATION OF THIS ENTIRE ISSUE IS DIRECTED TO T HE FILE OF THE LD. AO, THE ASSESSEE IS GIVEN FULL LIBERTY TO ADDUCE FRESH EVIDENCES, IF ANY, IN SUPPORT OF ITS CONTENTIONS. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE IN THIS REGARD AND GR OUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION IN THIS REGARD ARE ALLOWED FOR STATISTIC AL PURPOSES. 6. THE NEXT COMMON ISSUE RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS WITH REGARD TO ACTION OF THE LD. CIT(A) IN UPHOLDING THE ADDITION MADE TOWARDS UNEXPLAINED LIABILITIES IN THE FORM OF SHARE APPLICATION MONEY, SUNDRY CRED ITORS FOR ALL THE THREE ASSESSMENT YEARS. 7. WE HAVE HEARD THE LD. DR. WE HAVE ALREADY STATED THAT THE ASSESSEE HAD NOT CO- OPERATED AT ALL BEFORE THE LD. AO BY FILING NECESS ARY DETAILS IN THIS REGARD. THE LD. CIT(A) ALSO UPHELD THIS ADDITION FOR WANT OF EVIDEN CES FROM THE ASSESSEE. IT IS NOT THE CAES OF THE REVENUE THAT THESE CREDITORS, SHARE APP LICATION MONEYS WERE NOT RECEIVED BY CHEQUES BY THE ASSESSEE COMPANY. HENCE THESE TRANS ACTIONS MIGHT EVEN BE CREDITED IN THE BANK ACCOUNT I.E. ROYAL BANK OF SCOTLAND WHICH IS DIRECTED HEREINABOVE TO BE VERIFIED BY THE LD. AO AFRESH. HENCE, WE DEEM IT FI T AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO REMAND THIS ISSUE ALSO TO THE FILE OF LD. AO FOR DE NOVO ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESSEE IS GIVEN FULL LIBERTY TO FURNISH FRESH 5 ITA NOS.848 TO 850/KOL/2016 C.O. NOS. 29 TO 31/KOL/2016 M/S DHENU HOLDING & SUPPLIERS P LTD. A.YRS. 2005-06TO2007-08 5 EVIDENCES, IF ANY, IN SUPPORT OF ITS CONTENTIONS. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION IN THIS REGARD ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEALS OF THE REVENUE AS WEL L AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 30.11.2 018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30.11.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-13(1), KOLKATA, 3 RD FLOOR, 110, SHANTIPALLY, AAYAKAR BHAWAN (POORVA), KOLKATA-700107. 2. M/S DHENU HOLDING & SUPPLIERS PVT. LTD., 9, LAL BAZAR STREET, MERCANTILE BUILDING, 3 RD FLOOR, KOLKATA-700001. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES