ITO, New Delhi V. M/s. Jagdish & Sons Pvt. Ltd., Delhi

ITA 1250/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4002 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 19-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Bogus purchase; Unexplained cash credit; Additional evidence; Accommodation entries
• Section: 143(3); 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.1250 /DEL/2010 ASSESSMENT YEAR : 2001-02 ITO, M/S JAGDISH & SONS PVT. LTD., CO. WARD-4 (1), 991-BHOKPURA, MALIWARA, NEW DELHI. V. DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACJ0790 AAACJ0790 AAACJ0790 AAACJ0790- -- -P PP P APPELLANT BY : SHRI A.K. MONGA, DR. RESPONDENT BY : SHRI R.S. SINGHVI, C.A. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) VII, NEW DELHI DATED 1.1.2010 FOR ASSESSMENT YE AR 2001-02. REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. THE ORDER OF THE LD CIT(A) IS ERRONEOUS AND CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF `.14,56,955//- BY THE ASSESSING OFFICER U/S 68 OF THE IN COME TAX ACT, 1961 BEING UNEXPLAINED CASH CREDITS AND `.36 ,424/- PAGE 2 OF 8 ITA NO.1250/DEL/10 BEING THE UNACCOUNTED CASH PAID AS COMMISSION FOR OBTAI NING ACCOMMODATION ENTRIES. 3. THE CIT(A) HAS IGNORED THE FACT THAT THE ASSESSEE DID N OT DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF T HE CREDITORS AND GENUINENESS OF THE OF THE TRANSACTIONS. 2. RETURN DECLARING TOTAL INCOME OF `.2,32,440/- WA S FILED BY THE ASSESSEE COMPANY ON 29.10.2001. ASSESSMENT U/S 143(3) WAS COMPLETED ON 31.3.2003 AT A TOTAL INCOME OF `.2,42, 943/-. SUBSEQUENTLY THE SAME WAS REOPENED U/S 147 OF THE ACT B Y ISSUE OF NOTICE U/S 148 OF THE ACT. INVESTIGATION WING OF THE DEPARTMENT INTIMATED THE ASSESSING OFFICER THAT M/S NOUMAN EXIM TR ADING COMPANY WAS WORKING AS A PROVIDER OF ACCOMMODATION EN TRIES. THE ASSESSING OFFICER WAS SUPPLIED WITH THE REQUISITE ENTRIES R ELATING TO THE COMPANY ON THIS BASIS THE CASE OF THE ASSESSEE WAS REOPENED. SUBSEQUENTLY, THE ASSESSING OFFICER OBTAINED COPY OF BAN K ACCOUNT OF M/S NOUMAN EXIM TRADING CO. FROM STATE BANK OF PATIA LA, DARYA GANJ, DELHI AND ISSUED NOTICE U/S 131 TO THE SAID PARTY. THER E WAS NO COMPLIANCE BY THE SAID PARTY. THE ASSESSING OFFICER, TH EREFORE, ON THE BASIS OF EVIDENCE ON RECORD CAME TO THE CONCLUSION THA T THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE GENUINENESS OF THE TRAN SACTIONS ENTERED INTO WITH M/S NOUMAN EXIM TRADING CO. HE, T HEREFORE, CONCLUDED THAT THE SALE SHOWN TO THE SAID PARTY AMOUNT ING TO `.7,51,085/- WAS FICTITIOUS AND THE AMOUNT RECEIVED W AS NOTHING BUT INTRODUCTION OF ASSESSEES OWN MONEY REDUCING GP AT 6.02 % FROM THE ABOVE AMOUNT OF SALE, IT WAS HELD BY HIM THAT `.7,05, 870/- WAS SHOWN BY THE ASSESSEE AS BOGUS PURCHASES. THUS, TOTAL AMOUNT OF `.14,56,955/- WAS ADDED BY THE ASSESSING OFFICER AS UNEXP LAINED CASH CREDIT U/S 68 OF THE ACT. PAGE 3 OF 8 ITA NO.1250/DEL/10 3. IT WAS OPINED BY THE ASSESSING OFFICER THAT ON SUCH ACCOMMODATION ENTRIES COMMISSION OF 2.5% IS GENERALLY PAID. THUS, AN AMOUNT OF `.36,424/- WAS ALSO ADDED BY HIM AS COMMISSIO N PAID TO ENTRY OPERATOR OUTSIDE BOOKS OF ACCOUNTS. 4. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A). DURING THE APPELLATE PROCEEDINGS BEFORE THE LD CIT(A ), THE ASSESSEE PRODUCED FOLLOWING ADDITIONAL EVIDENCES:- 1) COPY OF DEATH CERTIFICATE OF MR. MOHD. NOUMAN PROP. OF M/S NOUMAN EXIM TRADING CO. 2) COPY OF PAN CARD OF THE ABOVE PARTY. 3) COPY OF LEDGER ACCOUNT OF OTHER BUYERS OF ASSESSEE WHOSE OPENING AND CLOSING BALANCES WERE ALSO NIL. 5. THE ABOVE ADDITIONAL EVIDENCES WERE SENT BY THE L D CIT(A) TO THE ASSESSING OFFICER FOR A REMAND REPORT. THE REMAND REPOR T FILED BY THE ASSESSING OFFICER WAS AS UNDER:- THE ASSESSEE COMPANY HAS SUBMITTED THREE ADDITIONAL EVIDENCES IN SUPPORT OF ITS CONTENTIONS BEFORE YOUR HO NOUR. AS REGARDS FILING OF DEATH CERTIFICATE AND PAN CARD OF THE ENTRY PROVIDER SHRI MOHD. NOMAN IS CONCERNED, THE ASSESSEE WAS CONFRONTED ABOUT NON ATTENDANCE BY MOHD. NOMAN IN R ESPONSE TO SUMMONS DATED 26.11.2008 FOR 5.12.2008. WHEN CONFR ONTED ON 10.12.2008 THE ASSESSEE ONLY STATED THAT WE HAVE ALRE ADY SUBMITTED OUR REPLY PM 20.11.2008. THE FACT OF DEATH OF MOHD. NOMAN WAS NEVER BROUGHT THE NOTICE OF THE ASSESSING OFFI CER. PAGE 4 OF 8 ITA NO.1250/DEL/10 THE ASSESSEE HAS FURTHER FILED COP7Y OF LEDGER ACCOUNT O F CERTAIN OTHER BUYERS OF ASSESSEE WHOSE OPENING AND CLOSING BALANC ES WERE ALSO NIL. IN THIS CONNECTION IT IS SUBMITTED THAT THE ACCOUNTS OF OTHER SUCH PARTIES WERE NOT PLACED ON REC ORD AT THE TIME OF FRAMING ASSESSMENT. EACH ISSUE IS JUDGED ON ITS M ERITS. IF THERE WERE CERTAIN DISCREPANCIES/SHORT COMINGS IN OTHE R ACCOUNTS OF BUYERS, THEY SHOULD HAVE ALSO BEEN DEALT WITH ON SIM ILAR BASIS AS HAS BEEN DONE IN THE PRESENT CASE. IN VIEW OF THE ABOVE, IT IS STRONGLY RECOMMENDED THAT THE APPEAL OF THE ASSESSEE COMPANY MAY BE REJECTED. 6. THE REPLY OF THE ASSESSEE OF THE SAID REMAND REPORT W AS AS UNDER- COPY OF DEATH CERTIFICATE & PAN CARD OF MR. NOMAN MOHD. PROP. OF M/S NOUMAN EMIT TRADING CO. THE ASSESSEE WAS NOT ABLE TO TRACK THE PARTY AT THE TIME OF ASSESSMENT PROCEEDINGS DU E TO THE DEATH OF MR. NOUMAN MOHD. THEREFORE, THESE DOCUMENTS ARE BEING FILED AS ADDITIONAL EVIDENCE S IN THE COURSE OF APPEAL PROCEED9NGS. THE ASSESSING OFFICER HAS NOT OBJECTED TO TH E IDENTITY/DEATH OF MR. NOUMAN MOHD. THEREFORE, THE APPEAL MAY BE DECIDED ON THE BASIS OF THE ABOCE FASTS. COPY OF LEDGER ACCOUNT OF CERTAIN OTHER BUYERS OF ASSE SSEES WHOSE OPENING AND CLOSING BALANCES WERE NIL. IN THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DID NOT ENQUIR E ABOUT ANY SUCH PARTIES. THEREFORE, THESE LEDGER ACCOU NTS WERE NOT SUBMITTED BEFORE HIM. THIS POINT AROSE ONLY WHEN T HE ASSESSMENT ORDER WAS PASSED AS THE ASSESSING OFFICER HAS MADE PAGE 5 OF 8 ITA NO.1250/DEL/10 SOME SUCH OBSERVATIONS TO HOLD THE PARTY M/S NOUMAN EXIM TRADING CO. TO BE NON GENUINE. LEDGER ACCOUNTS OF TH ESE PARTIES WERE NOT OBJECTED BY THE ASSESSING OFFICER. THEREFORE, THE APPEAL BE DECIDED ON THE BASIS OF THESE FACTS. AFTER CONSIDERING THE SAME, LD CIT(A) ADMITTED THE AD DITIONAL EVIDENCE. 7. BEFORE THE LD CIT(A), IT WAS CONTENDED BY THE ASSESSE E THAT THE ENTRIES RELATING TO THE PARTIES WERE ENTERED BY THE A SSESSEE IN ITS REGULAR BOOKS OF ACCOUNTS. THE PAYMENTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUE FROM THE PARTY WHO WAS HOLDING A VALID PAN CARD. SUMMONS ISSUED BY THE ASSESSING OFFICER U/S 131 COULD NOT BE COMPLIED WITH BY THE SAID PARTY AS THE PROP. EXPIRED ON 1.3.2008. IN THE ABOVE FACTS AND AFTER CONSIDERING THE FACT THAT T HERE WAS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS MERELY G OT ACCOMMODATION ENTRIES FROM THE SAID PARTY, IT WAS CONT ENDED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE IMPUGNE D ADDITION OF `.14,56,955/- U/S 68 OF THE ACT AND `,36,424/- AS CO MMISSION PAYMENT TO THE SAID PARTY OUTSIDE BOOKS OF ACCOUNTS. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: 1. OM METAL & MINERALS V. DCIT 32 TAX WORLD 54. 2.RADHA MOHAN AGARWAL V. ITO 30 TAX WORLD 54 3.ACIT V. GEM STONES 26 TAX WORLD 511. 4. CIT V. MK BROS. 163 ITR 249 (GUJ.) 5. CIT V. GOTAN LIME KHANIZ UDYOG 256 ITR 243 6. ST. TERESA OIL MILLS V. STATE OF KERALA 76 ITR 365 (K ER.). 7. SURESH CHAND TALERA V. UNION OF INDIA 282 ITR 341 (M P). 8. JUGGILAL KAMLAPAT UDYOG LTD. V. CIT 272 ITR 52 (CAL .). PAGE 6 OF 8 ITA NO.1250/DEL/10 8. AFTER CONSIDERING THE RELEVANT EVIDENCE ON RECORD , THE LD CIT(A) OPINED THAT THE ASSESSEE HAD DISCHARGED THE PRIMARY ONU S COST ON IT IN TERMS OF SECTION 68 OF THE ACT. ACCORDING TO HIM AL L THE THREE CONDITIONS NAMELY I) IDENTITY OF THE PARTY, II) CAP ACITY OF THE PARTY TO ADVANCE THE MONEY AND III) GENUINENESS OF THE OF THE TRANSACTIONS WERE PROVED BY THE ASSESSEE INITIALLY AND THEREFORE THE BURDEN SHIFTED TO THE REVENUE TO DISPROVE THE SAME. ACCORDING TO LD CIT(A), THE ASSESSING OFFICER HAS FAILED TO BRING SUFFICIENT EVIDENC E ON RECORD TO SHIFT THE ONUS BACK TO THE ASSESSEE. THEREFORE, HE DELETE D THE ADDITION OF `. 7,51,085/- BEING THE AMOUNT OF SALE CONSIDERAT ION RECEIVED FROM M/S NOUMAN EXIM TRADING CO. AS THE ADDITION OF `.7,05 ,870/- AND `.36,424/- WERE CONSEQUENTIAL ADDITION, THE LD CIT(A ) DELETED THE SAME ALSO. AGGRIEVED, THE REVENUE HAS FILED APPEAL BEFORE THE TRIBUNAL. 9. BEFORE US, LD DR HAS RELIED ON THE ORDER OF THE AS SESSING OFFICER. THOUGH ADEQUATE OPPORTUNITY WAS ALLOWED TO HIM TO BR ING ON RECORD ANY EVIDENCE ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION, LD DR WAS NOT ABLE TO PRODUCE AN Y EVIDENCE OTHER THAN THE ANNEXURE A1 WHICH IS THE DETAILS OF SALES MADE BY THE ASSESSEE TO M/S NOUMAN EXIM TRADING CO. SENT BY INVESTIGAT ION WING TO THE ASSESSING OFFICER. 10. LD AR FOR THE ASSESSEE, ON THE OTHER HAND, HAS RELIE D ON THE ORDER OF LD CIT(A). 11. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO DISLODGE TH E FINDINGS OF THE LD CIT(A) ON THE IMPUGNED ISSUE. THE ANNEXURE A-I SEN T BY THE INVESTIGATION WING TO THE ASSESSING OFFICER IS MERELY AN OPINION OF THE PAGE 7 OF 8 ITA NO.1250/DEL/10 INVESTIGATION WING AND THE SAME IS NOT SUFFICIENT FOR M AKING ANY ADDITION DURING THE ASSESSMENT. THE EVIDENCE ON THE BA SIS OF WHICH THE OPINION WAS EXPRESSED BY THE INVESTIGATION WING WER E REQUIRED TO BE BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE A SSESSEE SHOULD HAVE BEEN CONFRONTED WITH THE SAME. IN THE PRESENT C ASE, THIS HAS NOT BEEN DONE BY THE ASSESSING OFFICER AT THE STAGE OF ASSESSMEN T PROCEEDINGS AS WELL AS DURING THE REMAND PROCEEDINGS BE FORE THE LD CIT(A). EVEN BEFORE US, NO SUCH EVIDENCE HAS BEEN PR ODUCED BY THE REVENUE. IN THIS VIEW OF THE MATTER, WE FIND NO INFI RMITY IN THE ORDER OF LD CIT(A) AND CONFIRM THE SAME ON THE IMPUGNED ADDIT ION. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20TH DAY OF MAY, 2011. SD/- SD/- (R.P. TOLANI) (B.K. HALDAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 20.5.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). PAGE 8 OF 8 ITA NO.1250/DEL/10 DATE OF HEARING 12.5.2011 DATE OF DICTATION 19.5.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. DATE OF ORDER SENT TO THE CONCERNED BENCH