ITO, New Delhi V. M/s Bhagwan Mahavir Properties Pvt. Ltd., New Delhi

ITA 1284/DEL/2011

• Counselvise Citation: 128420114 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-07-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 11-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: SHRI
• Keywords: Reopening of assessment; Unexplained cash credit; Income from undisclosed sources; Additional evidence; Accommodation entries; Non compliance
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1284/DEL/2011 ASSESSMENT YEAR : 2002-03 ITO, M/S BHAGWAN MAHAVIR WARD-2 4), PROPERTIES PVT. LTD., B-3/58, NEW DELHI. V. SAFDARJUNG ENCLAVE, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACB AAACB AAACB AAACB- -- -2879 2879 2879 2879- -- -H HH H APPELLANT BY : MRS. ANUSHA KHURANA, SR. DR. RESPONDENT BY : SHRI GURJEET SINGH, C.A., SHRI BL GOYAL & SHRI PANKAJ JAIN, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 8.12.2010. THE GROUNDS RAISED BY THE REVENUE AR E AS UNDER:- 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELE TING ADDITION OF ` .60,00,000/- ON ACCOUNT OF UNEXPLAINED SHARE APPLICA TION MONEY U/S 68 OF THE INCOME TAX ACT, 1961 IGNORING THAT AL L THE COMPANIES FROM WHOM SHARE APPLICATION MONEY WAS RECEIV ED BY THE ASSESSEE ARE CONTROLLED BY SHRI PRADEEP KUMAR JINDA L WHO HAS ADMITTED ON OATH THAT HE IS ENGAGED IN PROVIDING ITA NO1284/DEL/2011 2 ACCOMMODATION ENTRIES TO VARIOUS CONCERNS THROUGH THES E COMPANIES. 2. THAT THE APPELLANT CRAVES LEAVES FOR RESERVING THE RI GHT TO AMEND, MODIFY ALTER ADD OR FOREGO ANY GROUND(S) OF A PPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES CAS E WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 AND T HEREAFTER ON THE BASIS OF SOME INFORMATION RECEIVED FROM DIT (INV.) REGARDING ACCEPTANCE OF ACCOMMODATION ENTRIES, THE CASE WAS SELEC TED FOR RE- ASSESSMENT PROCEEDINGS U/S 147/148 OF THE ACT. DURING RE -ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CONFRONTED REGARDING RECEIP T OF ` .60,00,000/- FROM FOUR PARTIES NAMELY M/S RELIABLE SE CURITIES PVT. LTD., JAR METAL INDUSTRIES (P) LTD., ETISHA FINANCE & INVESTM ENT (P) LTD. AND SEHGAL TELEVISIONS LTD. NECESSARY NOTICES U/S 133(6) WERE ALSO ISSUED TO ALL THE ABOVE PARTIES. NO REPLY WAS RECEIVED FROM THESE PARTIES. THE ASSESSEE IN SUPPORT OF ITS CLAIM OF HAVING RECEIVED THE A MOUNT FROM ABOVE PARTIES FILED PHOTO COPIES OF SHARE APPLICATION FORMS, AFFIDAVITS FROM THE PARTIES. ON PERUSAL OF DOCUMENTS, THE ASSESSING OFFICER OBSERVED THAT PHOTO COPIES OF SHARE APPLICATION MONEY, PHOTO COPY OF RESOLUTION, COPY OF ACKNOWLEDGEMENT OF DELIVERY OF SH ARES WERE UN- DATED AND MOREOVER PHOTO COPY OF ANNUAL ACCOUNTS OF M/S RELIABLE SECURITIES PVT. LTD. WAS FOR THE YEAR ENDED 31.3.2002 WHEREAS IN RESPECT OF OTHER COMPANIES IT WAS FOR THE YEAR ENDED O N 31.3.2000. THE ASSESSING OFFICER HARBORED A BELIEF THAT SUBSCRIBERS T O THE SHARE CAPITAL OF PRIVATE LIMITED COMPANY CAN ONLY BE CLOSE ASSOCIATES AND UN- KNOWN PERSON WOULD NEVER BE SUBSCRIBERS TO THE CAPITAL OF SUCH COMPANY THE ASSESSING OFFICER ALSO RELIED UPON THE STATEM ENT OF MR. PRADEEP KUMAR JINDAL WHO CONTROLLED ALL THESE COMPAN IES AND WHO HAD GIVEN STATEMENT BEFORE THE DIT (INV.) ON 15.4.2000 R EGARDING ITA NO1284/DEL/2011 3 INDULGENCE IN PROVIDING ACCOMMODATION ENTRIES THROUG H THESE COMPANIES. THEREFORE, ASSESSING OFFICER WANTED TO EXAMIN E AND VERIFY THE SUBSCRIBERS BUT ASSESSEE COULD NOT PRODUCE THEM AND TH E SUBSCRIBERS DID NOT COMPLY WITH NOTICES N U/S 133 (6) OF THE ACT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER TREATED THE EN TIRE SHARE CAPITAL OF ` .60 LAKHS AS INCOME FROM UNDISCLOSED SOURCES AND ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT, 1961 . 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD CIT( A) AGAINST REOPENING OF ASSESSMENT AND AGAINST MAKING OF ADDITION U/S 68 OF THE ACT. THE REOPENING OF THE CASE WAS UPHELD BY THE LD CIT(A) WHEREAS ADDITION OF ` .60 LAKHS WAS DELETED BY LD CIT(A) AFTER RELYING UPON A NUMBER OF JUDGMENTS SPECIFICALLY IN THE CASE OF CIT V. LOVELY EXPORTS PVT. LTD. 216 CTR 195 AND THAT OF DIVINE LEASING PVT . LTD. 299 ITR 268. THE LD CIT(A) ALSO FOUND THAT THE FOUR SUBSCRIBERS HAD FULFILLED ALL THE CONDITIONS REQUIRED FOR FULFILLMENT OF REQUIREMENT O F LAW SUCH AS COPY OF PAN NUMBER, COPY OF REGISTRATION CERTIFICATE, COPY O F BOARD MEETING RESOLUTION, COPY OF CONFIRMATION BY DIRECTOR, COPY O F ACKNOWLEDGEMENT OF INCOME TAX RETURN AND COPIES OF B ALANCE SHEETS FOR THE RELEVANT YEARS WERE FILED AND SOME OF THESE D OCUMENTS WERE FILED AS ADDITIONAL EVIDENCE UNDER RULE 46A. THE REM AND REPORT WAS CALLED FROM ASSESSING OFFICER. HOWEVER, ASSESSING OFFICER D ID NOT OFFER ANY COMMENTS IN THE REMAND REPORT. THE LD CIT(A) ALSO OBSERVED THAT ASSESSING OFFICER HAD SUFFICIENT DATA AND INFORMATION RE GARDING THE ASSESSING OFFICER OF THE SAID FOUR COMPANIES FROM WHOM T HE SHARE CAPITAL HAD BEEN RECEIVED BY APPELLANT AND THEREFOR E HE WAS OF THE OPINION THAT IF ASSESSING OFFICER REQUIRED TO MAKE FURT HER INVESTIGATION HE COULD HAVE OBTAINED INFORMATION FROM ASSESSING OFFI CER BEFORE ARRIVING AT AN ADVERSE CONCLUSION. THE RELEVANT PORTI ON OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- ITA NO1284/DEL/2011 4 THE ISSUE OF SHARE APPLICATION MONEY VIS-A-VIS THE APP LICABILITY OF SEC. 68 ON THE DEPOSITS RECEIVED FOR SHARE APPLICATI ON HAS RECENTLY BEEN REVIEWED BY THE JURISDICTIONAL HIGH C OURT DELHI AND THE APEX COURT. IN VIEW OF THE RECENT DECISION OF TH E CASE OF CIT V. VALUE CAPITAL (SUPRA), THE ASSESSING OFFICER HAS TO SU BSTANTIATE THAT THE UNDISCLOSED INCOME OF THE APPELLANT HAS BEEN RECEIVED THROUGH THE SHARE CAPITAL. IN THE CASE OF CIT V. LOV ELY EXPORTS (SUPRA) AS WELL AS IN CASE OF CIT V. DIVINE LEASING (SUPR A) AND OTHERS TOO, IT IS HELD THAT THE ADDITION OF SHARE CAPI TAL SHOULD BE MADE IN THE HANDS OF SHAREHOLDERS ONLY. FURTHER IN TH E CASE OF CIT V. DIVINE LEASING, IT HAS BEEN HELD BY THE JURISDI CTIONAL HIGH COURT OF DELHI THAT ONCE THE IDENTITY OF SUBSCRIBER H AS BEEN ESTABLISHED AND DETAILS REGARDING PAN IDENTITY HAS BEE N SUBMITTED TO THE DEPARTMENT, JUST BECAUSE THE SUBSCRIBER DOES NOT RESPOND TO ITS NOTICES, ADVERSE INFERENCE CANNOT BE DRAWN BY THE DEPARTMENT AND THE ASSESSING OFFICER IS DUTY BOUND T O INVESTIGATE, THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IN THE CASE OF CIT V. VALUE CAPITAL SERV ICES (P) LTD. (SUPRA) TOO IT HAS BEEN HELD BY THE DELHI HIGH COURT THAT THE ADDITIONAL BURDEN WAS ON REVENUE TO SHOW THAT THE SHAR E APPLICANT DID NOT HAVE THE MEANS TO MAKE SUCH INVESTME NTS AND THE AMOUNTS EMANATED FROM THE COFFERS OF THE ASSESSEE. I FIND MERIT IN THE ARGUMENTS OF THE LD AR AS IT IS EVIDENT T HAT IN THE LIGHT OF THESE JUDGMENTS, IN THE PRESENT CASE IT IS APPA RENT THAT THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE IDENTI TY OF THE SUBSCRIBER. THE VARIOUS SUPPORTING DOCUMENTS FILED BY THE APPELLANT HAVE NOT BEEN CONTROVERTED BY THE ASSESSING O FFICER. THERE IS NO SPECIFIC EVIDENCE TO ESTABLISH THAT THE APP ELLANT WAS HAVING ANY FINANCIAL IRREGULARITIES IN HIS ACCOUNTS OR BANK ITA NO1284/DEL/2011 5 STATEMENTS. THEREFORE, THE CONCLUSION OF THE ASSESSING OFF ICER WHICH IS BASED MERELY ON SUSPICION AND WITHOUT MAKING ANY DEEPER INVESTIGATION DOES NOT APPEAR JUSTIFIED. THE A SSESSING OFFICER HAD SUFFICIENT INFORMATION REGARDING THE ASSE SSING OFFICERS OF THE FOUR COMPANIES FROM WHOM THE SHARE CA PITAL HAD BEEN RECEIVED BY THE APPELLANT, THEREFORE, HE WAS RE QUIRED TO MAKE FURTHER INVESTIGATION BEFORE ARRIVING AT AN ADV ERSE INFERENCE. HOWEVER, NO SUCH FACTS OR ADVERSE DOCUMENT S HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER, IT APP EARS THAT THE ONLY REASON FOR DRAWING AN ADVERSE INFERENCE BY T HE ASSESSING OFFICER WAS THAT THE DOCUMENTS WERE UNDATED AND THE SHAREHOLDERS WERE NOT PRODUCED. WE HAVE ALREADY SEEN F ROM THE NUMBER OF COURT CASES ALREADY QUOTED EARLIER THAT NON COMPLIANCE TO NOTICE U/S 133(6) IS NOT ENOUGH TO ADD THE AMOUNT U/S 68 AND THE ASSESSING OFFICER IS REQUIRED TO FURTHER INVESTIGATE. IN ADDITION TO THIS FACT, IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, TOO THE ADDITION OF ` .60 LAKHS MADE BY THE ASSESSING OFFICER DOES NOT APPEAR TO BE JUST IFIED BECAUSE THE APPELLANT HAD DISCHARGED ITS INITIAL BURDE N OF ESTABLISHING THE IDENTITY OF THE PARTIES AND ALSO SUBMIT TED DOCUMENTS WHICH PRIMA FACIE PROVE THE TRANSACTION. T HE ASSESSING OFFICER CANNOT SUMMARILY REJECT ALL THE DOCUME NTS WITHOUT DEEPER INVESTIGATION WHICH COULD INDICATE TH AT AMOUNTS WERE NOT GENUINE DEPOSITS RECEIVED TOWARDS SHARE CAPITA L BY CITING REASONS OF DOCUMENTS BEING UNDATED. IN THE LIGHT OF THESE OBSERVATIONS AND RESPECTFULLY FO LLOWING THE RATIO LAID DOWN BY THE APEX COURT AS WELL AS DELHI HI GH COURT THE ADDITION OF ` .60 LAKHS MADE BY THE ASSESSING OFFICER ON ACCOUNT ITA NO1284/DEL/2011 6 OF SHARE MONEY RECEIVED FROM THE FOUR COMPANIES IS DIR ECTED TO BE DELETED. 4. AGGRIEVED THE REVENUE FILED APPEAL BEFORE THIS TR IBUNAL. 5. AT THE OUTSET, THE LD DR POINTED OUT AT PAGE 13 O F LD CIT(A)S ORDER WHEREIN THE FINDINGS OF ASSESSING OFFICER WERE RE CORDED WHICH READ AS THAT ASSESSEE DID NOT PRODUCE ANY SHAREHOLDER BEFORE ASSESSING OFFICER AND HAD FILED ONLY CONFIRMATIONS, DETA ILS OF PAN CARD, INCOME TAX RETURN, AFFIDAVITS AND DETAIL OF BANK ACC OUNT WHICH ACCORDING TO ASSESSING OFFICER DO NOT PROVE THE GENUINE NESS OF TRANSACTION OF SHARE APPLICATION MONEY. 6. THE LD DR FURTHER STRESSED THAT IN THE ABSENCE OF AN Y CROSS EXAMINATION OR FURTHER ENQUIRIES MERELY FILING OF DO CUMENT CANNOT PROVE THE GENUINENESS AND CREDITWORTHINESS OF TRANSACTIO N AND THEREFORE THE ASSESSING OFFICER HAD RIGHTLY MADE THE AD DITION. 7. ON THE OTHER HAND, THE LD AR ARGUED THAT NO EXAM INATION WAS ALLOWED TO THE ASSESSEE OF THE STATEMENT OF MR. JINDAL ON WHOSE STATEMENT THE CASE OF THE ASSESSEE WAS REOPENED. HE FURTHE R ARGUED THAT ASSESSING OFFICER HAD WRONGLY PRESUMED THAT ALL EN TRIES ARE BOGUS ENTRIES. THEREFORE, HE STRESSED THAT LD CIT(A) HAS RIGH TLY DELETED THE ADDITION FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT MAIN GRIEVANCE OF REVENUE IS THAT OF NON PRODUC TION OF SUBSCRIBERS. THOUGH SUBSCRIBERS HAD PLACED ON RECORD ALL DOCUMENTS REGARDING IDENTITY AND GENUINENESS OF TRANSACTION IN T HE FORM OF COPY OF PAN CARD, COPIES OF BANK ACCOUNT BUT CREDITWORTHI NESS CANNOT BE ITA NO1284/DEL/2011 7 SAID TO BE PROVED SIMPLY BY FILING OF COPIES OF ANNUAL ACCOUNTS. THEREFORE, ASSESSING OFFICER HAS EVERY RIGHT TO EXAMINE THE SUBSCRIBERS. IF NOT SATISFIED THE ASSESSING OFFICER HAS EVER Y RIGHT TO TREAT IT AS UNEXPLAINED CREDITS. THE QUESTION AS TO WHE RE TO MAKE THE ADDITION WHETHER IN THE HANDS OF ASSESSEE OR IN THE HAND S OF SUBSCRIBERS IS A SEPARATE ISSUE AND WILL DEPEND UPON FAC TS AND CIRCUMSTANCES OF EACH CASE. THE ASSESSING OFFICER CAN INIT IATE ACTION AGAINST SUBSCRIBERS ONLY IF HE IS NOT SATISFIED WITH THE GENUINENESS AND CREDITWORTHINESS OF TRANSACTIONS. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT CASE BE REMANDED BACK TO THE OFFICE OF ASSESSING OFFICER WHO WILL RE-ADJUDICATE ON THE SAME AFT ER CALLING RECORD OF MR. JINDAL AND ITS COMPANIES (THE ALLEGED ENTRY PROVIDER) SO AS TO ARRIVE AT THE CONCLUSION ABOUT GENUINENESS OF TRA NSACTIONS. THE ASSESSING OFFICER SHALL ALSO SEE AS TO WHAT ULTIMATELY HA PPENED TO THE CASE OF MR. JINDAL AND ITS COMPANIES AND WILL RE-ADJUD ICATE KEEPING IN VIEW THE ASSESSMENTS IN THE CASES OF ABOVE FOUR COMPANIES. NEEDLESS TO SAY, THAT PROPER OPPORTUNITY WILL BE GIVEN TO THE ASSESSEE OF BEING HEARD. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DAY OF AUGUST, 2012. SD/- SD/- (R.P. TOLANI) (T.S. KAPOO R) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 9.8.2012. HMS ITA NO1284/DEL/2011 8 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). DATE OF HEARING 5.7.2008 DATE OF DICTATION 6.8.2008 DATE OF TYPING 6.8.2008 DATE OF ORDER SIGNED BY 9.8.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 9.8.2012 & SENT TO THE BENCH CONCERNED.