M/s. Synergy Textiles Ltd., New Delhi V. DCIT, New Delhi

CO 356/DEL/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5744 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-01-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 26-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT GOEL
• Assessee Lawyers: BANITA DEVI
• Section: 133(6); 68; 148

Judgement Text

I.T.A. NO. 2357/DEL/2010 C.O.NO.356/DEL/2010 1/4 IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH G NEW DELHI, BENCH G NEW DELHI, BENCH G NEW DELHI, BENCH G BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER AND SHRI K. D. RANJAN, ACCOUTANT MEMBER ITA NO. 2357 /DEL/2010 (ASSESSMENT YEAR 2001-02) DCIT, CIRCLE 7(1), VS. M/S. SYNERGY TEXTILES LTD ., NEW DELHI 308, K C HOUSE, 5/66, PADAM SINGH ROAD, KAROL BAGH, NEW DELHI. C.O. NO.356/DEL/2010 IN I.T.A. NO. 2357/DEL/2010 (ASSESSMENT YEAR 2001-02) M/S. SYNERGY TEXTILES LTD., VS. DCIT, CIRCLE 7(1), 308, K C HOUSE, 5/66, NEW DELHI PADAM SINGH ROAD, KAROL BAGH, NEW DELHI (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAECS6458H APPELLANT BY: MS. BANITA DEVI, DR RESPONDENT BY: SHRI AMIT GOEL, CA ORDER ORDER ORDER ORDER PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: 1. THE APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BY THE ASSESSEE ARISE OUT OF ORDER AT CIT(A)-X, NEW DELHI. THESE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE , ARE BEING DISPOSED OF BY THIS COMMON ORDER. THE GROUND OF AP PEAL RAISED BY THE REVENUE READS AS UNDER: LD CIT(A) ERRED, IN LAW AND ON THE FACTS AND CIRCU MSTANCES OF THE CASE, IN DELETING THE ADDITION OF ` 9,50,000/- MADE BY THE A.O. U/S 68 OF THE I. T. ACT. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TION OF ADDITION OF ` 9.50 LACS MADE BY THE A.O. U/S 68 OF THE ACT. THE FACTS OF THE I.T.A. NO. 2357/DEL/2010 C.O.NO.356/DEL/2010 2/4 CASE STATED IN BRIEF ARE THAT IN THIS CASE, THE ORI GINAL ASSESSMENT CWAS MADE U/S 143(3). THE A.O. RECEIVED INFORMATIO N FORM INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSES SEE HAD ACCEPTED THE ACCOMMODATION ENTRY FROM THE PERSONS W HO ARE INVOLVED IN PROVIDING ENTRIES TO A NUMBER OF PERSON S WHEREIN CASH IS TAKEN AND CHEQUES AND DRAFTS ARE GIVEN BY NAMING DI FFERENT COMPANIES. THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY OF ` 3.50 LACS FROM VASANT AGENCY LTD AND ` 6 LACS FROM PARTICULAR MANAGE FINLEASE PVT. LTD., DURING THE COURSE OF AS SESSMENT PROCEEDINGS, NONE ATTENDED THE ASSESSMENT PROCEEDIN GS AND THE A.O. COMPLETED THE ASSESSMENT EX-PARTE ON THE BASIS OF INFORMATION/MATERIAL AVAILABLE ON RECORD. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE LD. CITA, IT WAS SUBMITTED BY THE ASSESSEE THAT THE IDE NTITY OF THE SHAREHOLDERS WAS ESTABLISHED. THE SHAREHOLDERS WER E COMPANIES INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT AND THEREFORE, THERE COULD BE NO DOUBT ABOUT THEIR IDENTITY. AS R EGARDS GENUINENESS OF TRANSACTION, IT WAS SUBMITTED THAT T HE PAYMENTS WERE MADE THROUGH ACCOUNTS PAYEE CHEQUES. THE CRED ITWORTHINESS OF THE SHAREHOLDERS HAS BEEN ESTABLISHED AND PROVED . THEREFORE, PROVISIONS OF SECTION 68 WERE NOT ATTRACTED. LD. C IT(A) CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE. HE OBSERVED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE A.O. ALSO VERIFIED THE SHARE CAPITAL INDEPENDENTLY WHILE ISSUING NOTICE U/ S 133(6) OF THE ACT WHICH WAS DULY COMPLIED WITH AND REPLIES WERE F URNISHED BY THE SHAREHOLDERS BEFORE THE A.O. THE INFORMATION RECEI VED FORM THE INVESTIGATION WING MAY BE SUFFICIENT FOR REOPENING THE ASSESSMENT. HOWEVER, FOR MAKING THE ADDITION OF ` 9.50 LACS, TH E A.O. WAS DUTY BOUND TO BRING ON RECORD DOCUMENTARY EVIDENCE AND M ATERIAL TO JUSTIFY THE ADDITION. SINCE THE A.O. HAD NOT BROUG HT ON RECORD ANY I.T.A. NO. 2357/DEL/2010 C.O.NO.356/DEL/2010 3/4 SUCH MATERIAL OR EVIDENCE NOR THE ASSESSEE HAD BEEN CONFRONTED WITH ANY SUCH ADVERSE MATERIAL, THE A.O. WAS NOT JU STIFIED IN MAKING THE ADDITION U/S 68 OF THE ACT. LD CIT(A) ALSO PLA CED RELIANCE ON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS DEVINE LEASING & FINANCE LTD. AS REPORTED IN 207 CTR 38 WH EREIN IT HAS BEEN HELD THAT IF THE A.O. HARBOURS DOUBT OF LEGITI MACY OF ANY SUBSCRIPTION, HE IS EMPOWERED RATHER DUTY BOUND TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE A.O. FAILS TO UNEARTH OF ANY WRONG OR ILLEGAL DEALING, HE CANNOT OBDURATELY ADHE RE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE ASSESSEE. LD. CIT(A) RELYING ON THE DECISION OF HON'BLE HIGH COURT OF DELHI, DELETED THE ADDITION. 4. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE AS SEEN FROM THE ASSESSMENT ORDER, THE A.O. HAD REOPENED THE ASSESSM ENT ON THE BASIS OF INFORMATION-RECEIVED FORM INVESTIGATION WI NG OF THE DEPARTMENT. THE A.O. HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT SHARE APPLICATION MONEY RECEIVED FROM M /S. VASANT AGENCY PVT. LTD. AND PARTICULAR MANAGE FINLEASE PV T. LTD. WERE NOT GENUINE AND HAVE COME OUT OF THE COFFERS OF THE ASS ESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS 216 CTR 195 (S.C.) HAS HELD THAT WHERE IDENTITY OF THE SHAREHOL DERS IS PROVED, THE A.O. IS FREE TO INVESTIGATE THE CASE OF SHAREHOLDER BUT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN THIS CASE, THE A.O. IN THE COURSE OF ORIGINAL ASSESSMENT HAD EXAMINED THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. THEREF ORE, IN OUR CONSIDERED OPINION, LD. CIT(A) IS JUSTIFIED IN DELE TING THE ADDITION. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. I.T.A. NO. 2357/DEL/2010 C.O.NO.356/DEL/2010 4/4 6. AS REGARDS THE C.O. FILED BY THE ASSESSEE, THE G ROUNDS OF APPEAL ARE AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE VALIDITY OF REOPE NING OF ASSESSMENT AND ISSUE OF NOTICE U/S 148 OF I. T. ACT . THE NOTICE U/S 148 ISSUED BY THE A.O. WAS ILLEGAL AND WITHOUT JURISDICTION AND LD. CIT(A) SHOULD HAVE HELD SO. 7. DURING THE COURSE OF HEARING, LD. COUNSEL FOR TH E ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL. THEREFORE, THE C. O. FILED BY THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND THE C.O. FILED BY THE ASSESSEE ARE DISMISSED. 9. PRONOUNCED IN THE OPEN COURT ON 18 TH FEB., 2011. SD./- SD./- (A.D.JAIN) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH FEB., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI