ITO, New Delhi V. M/s. Indwell Trade India Pvt. Ltd., New Delhi

ITA 1227/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0552 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-02-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHOR B
• Assessee Lawyers: RAHUL GOYAL
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 68

Judgement Text

ITA NO. 1227/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1227/DEL/2010 A.Y. : 2004-05 INCOME TAX OFFICER, WARD 11(4), ROOM NO. 324, CR BUILDING, NEW DELHI (PAN/GIR NO. : AAACI8247H) VS. M/S INDWELL TRADE INDIA PVT. LTD., 1399, DR. MUKERJEE NAGAR, DELHI 110009 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. RAHUL GOYAL, CA DEPARTMENT BY : SH. KISHOR B., SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 18.2.2 010 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE U/S 68 OF THE IT ACT AND COMMISSION EXPENSES AMOUNTING TO ` 7,01,750/-. 3. IN THIS CASE AS PER THE INFORMATION RECEIVED, AS SESSING OFFICER NOTED THAT ASSESSEE HAS RECEIVED FOLLOWING ACCOMMODA TION ENTRIES:- NAME OF THE ASSESSEE/BENEFICIARIES NAME OF THE OPERATOR OPERATORS A/C NO. AND BANK DATE OF ENTRY AMOUNT (IN `) M/S INDWELL TRADE INDIA PVT. LTD. M/S GARG FINVEST A/C NO. 24643 20/08/2003 4,00,000/- ITA NO. 1227/DEL/2010 2 PVT. LTD. SBBJ, NEW ROTHAK ROAD, NEW DELHI 110 005 -DO- M/S RAHUL FINLEASE PVT. LTD. A/C NO. 24619 SBBJ, NEW ROHTAK ROAD, NEW DELHI 110 005 21/08/2003 3,00,000/- 3.1 ASSESSEE HAS GIVEN COPY OF CONFIRMATION, COPY O F SHARE APPLICATION MONEY, COPY OF RESOLUTION, AFFIDAVITS, C OPY OF ITR, BALANCE SHEET ETC. OF THESE PARTIES. ASSESSING OFFICER PROCEEDED TO ANALYSE THE MODUS OPERANDI OF SUCH TRANSACTIONS AND WAS NOT SATISFIED WITH THE ASSESSEES EXPLANATION. HE REFERRED TO INSPECTOR S REPORT WHERE THE ADDRESSEE WERE NOT FOUND ON THE GIVEN ADDRESSES. A SSESSING OFFICER ALSO NOTED IN THE BANK STATEMENT OF THESE PARTIES, THERE WERE CASH DEPOSITS BEFORE ISSUE OF CHEQUE TO THE ASSESSEE. A SSESSING OFFICER PROCEEDED TO HOLD A SUM OF ` 7 LACS AS UNEXPLAINED CASH CREDIT U/S 68 AND HE ESTIMATED COMMISSION EXPENSES IN THIS REGARD AT ` 1750/-. SO HE ADDED THE TOTAL AMOUNT OF ` 701750/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED TO THE ASSESSEES SUBMISSIONS AND SEVERAL CASE LAWS. HE OBSERVED THAT ASSESSEE HAS FILED NECE SSARY PARTICULARS SUCH AS CONFIRMATION LETTERS, PAN, COPIES OF ACKNOWLE DGEMENT WITH RETURN OF INCOME FILED BY BOTH THE SHARE APPLICANT S AND THUS SATISFIED ITA NO. 1227/DEL/2010 3 THE INITIAL BURDEN OF PROVING THE IDENTITY OF THE A PPLICANTS. IN THIS REGARD, HE REFERRED TO SEVERAL CASE LAWS AND CONCLU DED AS UNDER:- WHEN THE FACTS OF THE PRESENT CASE, AS EXTRACTED H ERE IN BEFORE, ARE ANALYZED IN THE LIGHT OF THE JUDGEMENTS DELIVERE D IN THE AFORE MENTIONED CASES, THERE REMAINS NO DOUBT THAT NO ADDIT ION WAS CALLED FOR IN THE CASE OF THE APPELLANT ASSESSEE. ON MERITS ALSO, THE CASE OF THE ASSESSING OFFICER DOES NOT STAND T HE TEST OF SCRUTINY. IT HAS BEEN ADEQUATELY DEMONSTRATED BY THE APPELLANT THAT THERE WAS NO IMMEDIATE NECESSITY / REQUIREMENT ON ITS PART TO GO FOR ARRANGING ACCOMMODATION ENTRIES IN CONSIDER ATION OF PAYMENT OF COMMISSION ALLEGEDLY PAYABLE TO THE HAWALA OPERATORS. AS STATED BY THE LD. COUNSEL, THE SHAR E APPLICATION MONEY OF ` 7,00,000/- RECEIVED BY THE APPELLANT COMPA NY FROM THE AFORESAID APPLICANTS WAS INITIALLY LYING IDLE IN ITS BANK ACCOUNT AND THEREAFTER, THE SAME WAS CONVERTED INTO SHORT TERM FDRS. THUS, I HAVE NO HESITATION IN HOLDING THAT THE ENTIRE ADDITION OF ` 7,01,750/- HAS BEEN MADE BY THE ASSES SING OFFICER MERELY ON CONJECTURES AND SURMISES AND THE SAME IS NO T SUSTAINABLE IN LAW. ACCORDINGLY, THE ENTIRE ADDITI ON OF ` 7,01,750/- IS BEING DELETED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT A SSESSEE HAS GIVEN THE CONFIRMATIONS, THE NAMES OF THE PARTIES, THEIR R EGISTRATION CERTIFICATE BEFORE THE REGISTRAR OF COMPANIES AND PAN AND COPIES OF INCOME TAX RETURNS. UNDER THESE CIRCUMSTANCES, I DENTITY OF THE SHARE APPLICANTS IS DULY PROVED. ITA NO. 1227/DEL/2010 4 5.1 IN THIS REGARD, WE REFER TO THE DECISION OF THE HONBLE APEX COURT DELIVERED IN THE CASE OF CIT VS. LOVELY EXPORTS 21 6 CTR 195. IN THIS CASE IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WH OSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANC E WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASS ESSEE. 5.2 CONSIDERING THE PRESENT CASE ON THE ANVIL OF AF ORESAID HONBLE APEX COURT DECISION, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ). HENCE, WE UPHOLD THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/2/2011. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 4/2/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES