M/s. Moksha Securities (P) Ltd., New Delhi V. ITO, New Delhi

CO 74/DEL/2016

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4295 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 17-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 25-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P K KAMAL
• Keywords: Source of fund; Tangible material; Accommodation entries; Reassessment proceedings
• Section: 69C; 142(1); 131; 68; 69; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6251/DEL/2015 ASSESSMENT YEAR: 2005-06 ITO, WARD 17(1), VS. M/S MOKSHA SECURITIES (P) ROOM NO. 323A, LTD., CR BUILDING, H-60, UPPER GROUND FLOOR, NEW DELHI 02 CONNAUGHT PLACE, NEW DELHI (PAN: AAACM8069Q)) (APPELLANT) (RESPONDENT) AND CROSS OBJECTION NO. 74/DEL/2016 (IN ITA NO. 6251/DEL/2015) ASSESSMENT YEAR: 2005-06 M/S MOKSHA SECURITIES (P) VS. ITO, WARD 17(1), LTD., NEW DELHI H-60, UPPER GROUND FLOOR, CONNAUGHT PLACE, NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : NONE ASSESSEE BY : SHRI GAUTAM JAIN, AD V. & SH. P.K. KAMAL DATE OF HEARING : 17-08-2016 DATE OF ORDER : 02-09-2016 ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THE APPEAL AND ASSESSEE H AS FILED THE CROSS OBJECTION WHICH IS EMANATE FROM THE ORDER DAT ED 16.9.2015 OF LD. CIT(A)-6, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2 005-06. THE GROUNDS RAISED IN THE REVENUES APPEAL READS AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 60,00,000 MADE BY THE ASSESSING OFFICER (AO) U/S 68 OF THE INCOME TAX ACT (ME ACT) ON ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 2 ACCOUNT OF DISALLOWANCE FOR RECEIVING BOGUS ACCOMMO DATION ENTRIES EVEN WHEN THE ASSESSEE DID NOT DISCHARGE ITS ONUS U/S 68 OF THE ACT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCE E CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 60,000 M ADE BY THE AO U/S 69 OF THE ACT ON ACCOUNT OF COMMISSION PAID FOR ARRAN GING THE ACCOMMODATION ENTRIES EVEN WHEN THE ASSESSEE DID R IOT DISCHARGE ITS ONUS U/S 69 OF THE ACT? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAVING NOTICED WANT OF PROPER ENQUIRY IS JUS TIFIED IN ALLOWING THE APPEAL AND DELETING DISALLOWANCE MADE WITHOUT ENSURING THAT EF FECTIVE ENQUIRY WAS CARRIED OUT AS LAID DOWN BY HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS JANSAMPARK ADVERTISING AND MARKETING (P) LTD (2015) 375 (DEL)? 4. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF T HE APPEAL 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AASSES SEE HAD FILED ITS INCOME TAX RETURN U/S 139 ON 31.03.2006 DECLARING LOSS OF RS.19,44,961 WHICH WAS DULY ACCOMPANIED BY THE AUDITED STATEMENT OF ACCOUN TS. IT WAS NOTED THAT THE ADDRESS OF THE ASSESSEE COMPANY WAS DECLARED A S 12/15 EAST PATEL NAGAR, NEW DELHI. HOWEVER, THE RETURNS FOR ASSESSME NT YEARS 2009-10 AND ONWARDS WERE FILED DECLARING THE NEW ADDRESS OF THE COY AS H -69, CONNAUGHT CIRCUS, NEW DELHI. THE INSPECTION OF FILE SHOWS THAT THE NOTICE U/S 148 DATED 30.03.2012 WAS ISSUED ON 31.03.2012 T HROUGH SPEED POST AT THE WRONG ADDRESSES I.E. 39/1, EAST PATEL NAGAR, NE W DELHI AND DESPITE THE FACT THAT NEW ADDRESS OF THE COMPANY WAS WITHIN THE KNOWLEDGE OF THE ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 3 ASSESSING OFFICER. ACCORDING TO THE ASSESSEE, THIS NOTICE WAS NEVER SERVED UPON THE ASSESSEE. AO OBSERVED THAT IT REVEALS THAT NOTICES U/S 142(1) WERE ISSUED ON 13.08.2012,8.10.12,27.11.12 AND 14.1 2.12 & 4.03.2013 BUT THE SAME WERE ALSO NEVER RECEIVED BY THE ASSESS EE SINCE ISSUED AT THE WRONG ADDRESS. THEREAFTER, THE ASSESSEE RECEIVED TH E COPY OF FINAL NOTICE U/S 142(1) FROM ONE MR. JOLLY HAVING HIS OFFICE AT 3911, EAST PATEL NAGAR, NEW DELHI THROUGH EMAIL ON 18.12.2012. SUBSEQUENTLY , THE ASSESSEE OBJECTED TO THE SERVICE OF THE ALLEGED NOTICE U/S 1 48 AND REQUESTED THE AO, VIDE LETTER DATED 21.12.2012, TO TREAT THE ORIGINAL RETURN AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. THE ASSESSEE, VIDE L ETTER DATED 21.12.2012, ALSO REQUESTED FOR THE COPY OF THE REASONS RECORDED U/S 148 WHICH WAS SUPPLIED TO THE ASSESSEE ON THE SAME DATE. IN RESPO NSE TO THE SAME, THE ASSESSEE FILED OBJECTIONS AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS VIDE LETTER DATED 7.2.2013 WHEREIN IT WAS STATED TH AT THE ASSESSEE HAD RECEIVED THE ADVANCE OF RS. 60,00,000/- IN TERMS OF AGREEMENT TO SELL THE PROPERTY FROM M/S CUBIC COMMERCIAL RESOURCES LTD. T HROUGH ACCOUNT PAYEE CHEQUE IN THE NORMAL COURSE OF ITS BUSINESS ACTIVIT Y AND THE SAME WAS DULY REFLECTED IN THE AUDITED STATEMENT OF ACCOUNTS. ACC ORDINGLY, IT WAS REQUESTED THAT REASSESSMENT PROCEEDINGS BE DROPPED. THE ASSESSING OFFICER, VIDE ORDER DATED NIL, REJECTED THE REQUEST OF THE ASSESSEE. THEREAFTER, WITHOUT ISSUING ANY NOTICE U/S. 143(2), THE NOTICE U/S. 142(1) DATED 4.3.2013 WAS SERVED ON ASSESSEE WHICH DIRECT ED THE ASSESSEE TO PRODUCE (I) CONFIRMATION IN RESPECT OF THE MONEY RE CEIVED FROM THE ABOVE SAID PARTY, (II) THE NATURE OF THE TRANSACTION WITH THE SAID PARTY, (III) BANK STATEMENT FOR THE YEAR UNDER CONSIDERATION AND (IV) RETURN OF INCOME ALONG ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 4 WITH THE BALANCE SHEET AND AUDIT REPORT. IN RESPONS E TO THE SAME, THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS ON 18. 03.2013 AND FILED ALL THE INFORMATION MENTIONED ABOVE VIDE LETTER DATED 1 5.3.2013 ALONG WITH THE SUBMISSIONS. THE ASSESSMENT PROCEEDINGS WERE AD JOURNED TO 20.03.2013. ON 20.03.2013, THE PROCEEDINGS WERE VER BALLY ADJOURNED TO 26.03.13 BUT ON THAT DATE, THE AO REFUSED TO ACCEPT THE ADDITIONAL DOCUMENTS AND THEREFORE THE SAME WERE SENT BY THE A SSESSEE THROUGH SPEED POST. THEREAFTER, THE AO COMPLETED THE ASSESS MENT VIDE HIS ORDER DATED 26.03.13 U/S. 147/143(3) OF THE INCOME TAX A CT, 1961 AND ADDED THE SUM OF RS. 60 LAKHS AND FURTHER AN AMOUNT OF R S. 60,000/- WAS ADDED BEING COMMISSION PAID @1% U/S. 69C OF THE ACT BEING EXPENDITURE INCURRED OUT OF UNDISCLOSED SOURCES. 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER, A SSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUG NED ORDER DATED 16.9.2015 HAS DELETED THE ADDITIONS IN DISPUTE AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNE D ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. IN THIS CASE, NOTICE OF HEARING TO BOTH THE PAR TIES, IN SPITE OF THE SAME, DEPARTMENT NOR ITS REPRESENTATIVE APPEARED T O PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR A DJOURNMENT BY THE DEPARTMENT. KEEPING IN VIEW THE FACTS AND CIRCUM STANCES 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 ISSUE NOTICE A GAIN AND AGAIN TO THE ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 5 DEPARTMENT, THEREFORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA REVENUE, AFTER HEARING THE LD. AR AND PERUSING THE RECORDS. 6. LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, THE SAME MAY BE UPHELD AND ACCORDINGLY, THE APPEAL OF THE REVENUE M AY BE DISMISSED. 7. I HAVE HEARD THE LD. COUNSEL OF THE ASSESSEE AN D PERUSED THE RECORDS, ESPECIALLY THE IMPUGNED ORDER PASSED BY TH E LD. CIT(A). I FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE BY CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND ADJUDICATED THE ISSUE AS UNDER FROM PAGES 24 TO 26 OF THE IMPUGNED ORDER. THE SAID RELEVANT PARAS ARE REPRODUCED AS UN DER:- FROM THE ABOVE STATEMENT, SH. SK GUPTA WAS STATING THAT HE RECEIVED CASH AND IN TURN ISSUED CHEQUES. BUT FROM THE BANK STATEMENT, THE SOURCE OF FUNDS FOR M/S CUBIC COMMERCIALS, IN MOST OF THE CA SES WAS CLEARANCE OF CHEQUES, TO ADVANCE MONEY TO THE ASSESSEE. WITH REGARD TO THE RECEIPT OF MONEY ASSESSEE STATED THAT IT RECEIVED RS 60 LAKHS FROM M/S CUBIC COMMERCIAL AGAINST BOOKING OF PROPERTY. COPY OF THE AGREEMENT OF SALE WAS ALSO PRODUCED BEFORE THE ASSESSING OFFICER (LAST PARA OF PAGE 2 OF THE ASSES SMENT ORDER). WITH THIS EVIDENCE THE ONUS HAS SHIFTED FRO M ASSESSEE TO ASSESSING OFFICER. BUT AO MADE NO ATTEM PTS ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 6 TO DISPROVE THE CONTENTS OF THE SALE AGREEMENT. NON E OF THE DIRECTORS OF M/S CUBIC COMMERCIALS WERE SUMMONE D BY THE AO. NO LETTER OF ENQUIRY WERE ALSO ISSUED TO THE COMPANY OR ITS PR. OFFICERS. AO DID NOT ASK THE ASS ESSEE ALSO TO PRODUCE THEM. THE ENTIRE ADDITION WAS BASED ON THE STATEMENT OF S H. S.K. GUPTA WHO WAS NEITHER A SHARE HOLDER NOR A DIRECTOR OF M/S CUBIC COMMERCIALS. BUT THE COPY OF THE SWORN STATEMENT OF SH. S.K. GUPTA WAS NEVER MADE AVAILABLE TO THE ASSESSEE. EVEN ON 15 TH MARCH, 2013 ASSESSEE AGAIN REQUESTED FOR COPY OF THE STATEMENT AND REQUESTED FOR CROSS EXAMINATION OF SH. S.K. GUPTA, WHICH WAS NOT PROVIDED TO THE ASSESSEE. AS PER THE LETTER DT. 30.03.2012 OF ACIT, CENTRAL C IRCLE 18, NEW DELHI ADDRESSED TO THE AO, SH. ANEJA JI IS THE CONDUIT FOR THESE ACCOMMODATION ENTRIES. BUT SH. AN EJA JI WAS NEVER EXAMINED BY THE AD, NEVER SUMMONED BY HIM, NO STATEMENT WAS RECORDED BY THE AO. THE ABOVE EVENTS SHOW THE COMPLETE LACK OF ENQUIRY FROM THE SIDE OF THE AO REGARDING THE GENUINENESS O R OTHERWISE OF THE TRANSACTION. IN SUCH CASES, WHAT WOULD BE THE FATE OF ADDITION, HAS BEEN DECIDED IN VARIOUS CASES AS UNDER.- 333 ITR 119 (DEL) OASIS HOSPITALITIES P. LTD. ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 7 AS FAR AS THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR / SUBSCRIBER IS CONCERNED, THAT CAN BE PROVED BY PRODUCING THE BANK STATEMENT OF TH E CREDITORS / SUBSCRIBERS SHOWING THAT IT HAD SUFFICI ENT BALANCE IN ITS ACCOUNTS TO ENABLE IT 10 SUBSCRIBE T O THE SHARE CAPITAL. ONCE THE DOCUMENTS ARE PRODUCED, THE ASSESSEE WOULD HAVE SATISFACTORILY DISCHARGED THE O NUS CAST UPON HIM. THEREAFTER, IT IS FOR THE ASSESSING OFFICER TO SCRUTINISE THE SAME AND IN CASE HE NURTURES ANY DOUBT ABOUT THE VERACITY OF THESE DOCUMENTS, TO PR OBE THE MATTER FURTHER. HOWEVER, TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE ASPECTS, THERE HAVE TO BE SOME COGENT REASONS AND MATERIALS FOR THE ASSESSING OFFICER AND HE CANNOT GO INTO THE REA LM OF SUSPICION. HELD, DISMISSING THE APPEAL, THAT THE ADDITION WAS RIGHTLY DELETED BY THE COMMISSIONER (APPEALS) AND T HE TRIBUNAL. REQUISITE DOCUMENTS WERE FURNISHED SHOWIN G THE EXISTENCE OF THE SHAREHOLDERS FROM ACCOUNTS AND EVEN THEIR INCOME- TAX DETAILS. FROM HANK ACCOUNTS OF THESE SHAREHOLDERS, IT WAS FOUND THAT THEY HAD DEPOSITED CERTAIN CASH AND THE SOURCE THEREOF WAS QUESTIONABLE. THE ASSESSING OFFICER SHOULD HAVE MA DE FURTHER PROBE WHICH HE FAILED TO DO. MOREOVER, THE REMEDY WITH THE DEPARTMENT LAY IN REOPENING THE CAS E ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 8 OF THE INVESTORS AND THE ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSESSEE. MOD CREATIONS PVT. LTD. (DELHI) ALL DOCUMENTS FILED SUFFICIENT BALANCE IN ACCOUNTS OF CREDITORS JUST FOUR DAYS TIME GIVEN TO PRODUCE THE THE SUB CREDITORS ASSESSEE NEED NOT PROVE EITHER GENUINENESS OF TRANSACTIONS EXECUTED BETWEEN CREDITORS AND SUB CREDITORS OR CREDITWORTHINESS OF SUB CREDITORS. AO MADE NO ATTEMPTS TO VERIFY SOURCES OF SUB CREDIT ORS, WHEN ALL DETAILS ABOUT THEM ARE AVAILABLE ADDITION DELETED. 3571TR 146 (DEL)- FAIR FINVEST LTD. RECENT AFFIDAVITS FILED SHARES STILL HELD BY THE APPLICANTS SHARES ISSUED ON PAR NO ENQUIRIES BY AO NO SUMMONS U/S 131 ISSUED BY AO AO SIMPLY BASING ON INV REPORT ADDITION DELETED 361 ITR 10 (DEL)- GANGESHWARI METAL P. LTD. AMOUNT RECEIVED BY ALE PAYEE CHEQUE ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 9 DOCUMENTARY EVIDENCE BY A IDENTITY OF INVESTORS ESTABLISHED NO ENQUIRY BY AO NO ATTEMPT TO PROVE DOCUMENTS WERE FABRICATED. MERE RELIANCE ON INV. REPORT NOT ENOUGH. 361 ITR 155 (DEL)-NIPUA AUTO PVT. LTD. AO FAILED TO PRODUCE ANY TANGIBLE MATERIALS TO DOUB T VERACITY OF DOCUMENTS FURNISHED BY ASSESSEE. ADDITION DELETED. IN ALL THE ABOVE CASES, IT HAS BEEN HELD BY THE HON BLE JUDICIARY THAT ADDITION CANNOT BE MADE SIMPLY BASI NG ON SOME REPORT LIKE REPORT RECEIVED FROM INVESTIGAT ION WING ETC. AND WHEN THE ASSESSEE PRODUCES CERTAIN EVIDENCE, THE ONUS LIES ON THE AO TO CAUSE ENQUIRIE S / VERIFICATION TO DEMOLISH THAT EVIDENCE. IN THE PRES ENT CASE, NO SUCH ATTEMPT HAS BEEN MADE BY THE AO TO CAUSE ENQUIRIES / VERIFICATION TO DEMOLISH THAT EVI DENCE. IN THE PRESENT CASE, NO SUCH ATTEMPT HAS BEEN MADE BY THE AO. AND NO ENQUIRY OR VERIFICATION WAS EVER DON E BY HIM. THE ADDITION MADE IS HEREBY DELETED. IN EFFECT, THE APPEAL IS PARTLY ALLOWED. ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 10 8.1 AFTER GOING THROUGH THE FINDINGS OF THE LD. CIT (A), AS AFORESAID, I AM OF THE CONSIDERED VIEW THAT IT IS A WELL SETTLED LAW THAT ADDITION CANNOT BE MADE SIMPLY BASING ON SOME REPORT LIKE REPORT R ECEIVED FROM INVESTIGATION WING ETC. AND WHEN THE ASSESSEE PRODU CES CERTAIN EVIDENCE, THE ONUS LIES ON THE AO TO CAUSE ENQUIRIE S/ VERIFICATION TO DEMOLISH THAT EVIDENCE. HOWEVER, IN THE PRESENT CAS E NO SUCH ATTEMPT HAS BEEN MADE BY THE AO AND NO ENQUIRY OR VERIFICAT ION WAS EVER DONE BY HIM. HENCE, LD. CIT(A) HAS RIGHTLY RELIED UPON THE FOLLOWING VARIOUS CASE LAWS OF THE HONBLE DELHI HIGH COURT WHEREIN SIMILA R AND IDENTICAL SITUATION WAS DEALT WITH AND THE ADDITION IN DISP UTE WAS DELETED. - 333 ITR 119 (DEL) OASIS HOSPITALITIES P. LTD. - MOD CREATIONS PVT. LTD. (DELHI) - 357 ITR 146 (DEL) FAIR FINVEST LTD. - 361 ITR 10 (DEL) GANGESHWARI METAL P LTD. - 361 ITR 155 (DEL) NIPUA AUTO PVT. LTD. 8.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS RELIED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDER , I AM OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS PASSED A WELL R EASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE SAME AND REJECT THE GROUNDS RAISED BY THE REVENUE AND DI SMISS THE APPEAL FILED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ITA NO. 6251/DEL/2015 & CO NO. 74/DEL/2016 11 ASSESSEES CROSS OBJECTION 10. AS FAR AS ASSESSEES CROSS OBJECTION IS CONCERN ED, THE SAME IS ONLY SUPPORTIVE THE LD. CIT(A)S ORDER. SINCE I HAVE DI SMISSED THE APPEAL OF THE REVENUE AS AFORESAID, HENCE, THE CROSS OBJECTI ON FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND DISMISSED AS SU CH. 11. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/09/2016. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 02/9/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR