ITO, New Delhi V. M/s. Beacon Sales Pvt. Ltd, New Delhi

ITA 1352/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5525 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 08-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMBIT TRIPATHY
• Assessee Lawyers: V K AGGARWAL
• Keywords: Accommodation entries
• Section: 133(6); 131; 68

Judgement Text

I.T.A. NO.1352 /DEL/2009 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH A BEFORE SHRI K. G. BANSAL, ACCOUTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 1352 /DEL/2009 (ASSESSMENT YEAR 2005-06) ITO, WARD 2(4), VS. M/S. BEACON SALES PVT. LTD., NEW DELHI. 212, OKHLA INDUSTRIAL ESTATE, NEW DELHI (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AABCB5632P APPELLANT BY: SHRI SAMBIT TRIPATHY, SR. DR RESPONDENT BY: SHRI V.K. AGGARWAL, CA ORDER PER GEORGE MATHAN, JM: 1. THIS APPEAL BY THE REVENUE HAS BEEN PREFERRED AG AINST THE ORDER OF LD. CIT(A) V, NEW DELHI IN APPEAL NO.152/2007-08 DATED 29.01.2009 FOR THE ASSESSMENT YEAR 2005-06. SHRI SUMBIT TRIPATHY, SR. DR REPRESENTED FOR THE REVENUE AND SHRI V K AGGARWAL, CA REPRESENTED FOR THE REVENUE. IN THE REVENUES APP EAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: I) THE ADDITION WAS MADE BY THE A.O. ON THE BASIS OF STATEMENT OF SHRI P K JINDAL WHO GAVE A STATEMENT THAT ALL THE SHARE APPLICANT COMPANIES BELONGED TO HIM AND NO REAL BUSINESS WAS BEING CARRIED OUT BY THESE COMPANIES AND THE SAME WERE BEING USED FOR PROVIDING OF ACCOMMODATION ENTRIES ONLY. II) SHRI P K JINDAL WAS PROVIDING ENTRIES TO VARIOUS CONCERNS AFTER TAKING CASH AND ISSUING I.T.A. NO.1352 /DEL/2009 2/7 CHEQUES THROUGH ONE OF HIS COMPANIES IN LIEU OF CASH RECEIVED. III) SH. P K JINDAL WAS EITHER A DIRECTOR OR AUTHORIZED SIGNATORY IN ALL THE COMPANIES FROM WHOM SHARE APPLICATION WAS RECEIVED. IV) NOTICES U/S 133(6) AND SUMMONS U/S 131 ISSUED BY THE A.O. TO SHARE APPLICANT COMPANIES WERE RECEIVED BACK UNSERVED. V) THE ASSESSEE FAILED TO PRODUCE INDIVIDUAL SHARE HOLDERS/PRINCIPAL OFFICERS OF THE SHARE APPLICANT COMPANIES. VI) THE ENQUIRIES CONDUCTED BY THE A.O. ALSO REVEALED THAT THESE COMPANIES WERE NOT DOING ANY REAL BUSINESS FORM THE GIVEN ADDRESSES. 2. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE L D. D.R. THAT THE ASSESSEE HAD SHOWN RECEIPT OF SHARE APPLIC ATION MONEY OF RS.87,68,800/- AND UNSECURED LOANS AMOUNTING TO RS.16,56,200/-. IT WAS THE SUBMISSION THAT THE LOAN AND SHARE APPLICATION MONEY WERE RECE IVED THROUGH VARIOUS COMPANIES IN WHICH ONE SHRI P K JIN DAL WAS INVOLVED AND SHRI P K JINDAL HAD BEEN FOUND TO BE AN ENTRY OPERATOR. IT WAS THE SUBMISSION THAT THE INVESTIGATION WING OF THE DEPARTMENT HAD RECORDED T HE STATEMENT OF SHRI P K JINDAL AS EARLY AS IN 2004 AN D THE STATEMENT OF SHRI P K JINDAL HAD BEEN GIVEN TO THE ASSESSEE TO WHICH THE ASSESSEE HAD RESPONDED THAT T HE SHARE APPLICATION MONEY AND THE LOANS HAD BEEN RECEIVED AFTER THE STATEMENT HAD BEEN RECORDED AND THE ASSESSEES NAME WAS NOT COMING OUT OF THE STATEMENT RECORDED. IT WAS THE SUBMISSION THAT UNDER THESE I.T.A. NO.1352 /DEL/2009 3/7 CIRCUMSTANCES, ANOTHER STATEMENT WAS RECORDED FROM SHRI P K JINDAL ON 17.12.2007 WHEREIN THE SAID SHRI P K JINDAL HAD AFFIRMED HIS EARLIER STATEMENT. OPPOR TUNITY FOR CROSS EXAMINATION HAD BEEN GIVEN TO THE ASSESSE E ON 26.12.2007 ON WHICH DATE SHRI P K JINDAL FAILED TO APPEAR AND CONSEQUENTLY FURTHER OPPORTUNITY OF CROS S EXAMINATION COULD NOT BE GIVEN. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSEE HAD BEEN ASKED TO PROD UCE ALL THE SHARE APPLICANTS AND THE UNSECURED LENDERS, WHICH THE ASSESSEE HAD ALSO FAILED. IT WAS THE SUBMISSION THAT AS THE A.O. WAS OF THE VIEW THAT TH E SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AN D THE UNSECURED LOANS RECEIVED BY THE ASSESSEE THROUG H THE CONCERN UNDER THE CONTROL OF SHRI P K JINDAL WA S NOT PROVED HE HAD TREATED THE SAME AS UNEXPLAINED INCOM E OF THE ASSESSEE AND HAD BROUGHT THE SAME TO TAX BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE A.O. HAD ALSO ADDED 0.2% OF THE AMOUNT AS THE COMMISSION PAID BY THE ASSESSEE TO SHRI P K JINDAL. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD DELETED THE ADDITION BY FOLLOWING THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF LOVELY EXPORTS REPORTED IN 158 TAXMAN 440 AS ALSO THE DECISION OF HON'BLE HIGH COU RT OF DELHI IN CASE OF VALUE CAPITAL SERVICES REPORTED IN 192 ITR 287 AND ACHAL INVESTMENTS LTD. REPORTED IN 268 ITR 211. IT WAS THE SUBMISSION THAT AS THE I.T.A. NO.1352 /DEL/2009 4/7 ASSESSEE HAD NOT PROVED THE GENUINENESS OF THE SHAR E APPLICATION MONEY RECEIVED AS ALSO THE UNSECURED LO ANS RECEIVED BY THE ASSESSEE, THE DELETION AS MADE BY T HE LD. CIT(A) WAS WRONG AND THE ORDER OF THE A.O. WAS LIABLE TO BE RESTORED. 3. IN REPLY, THE LD. A.R. SUBMITTED THAT NOTICE U/S 133(6) HAD BEEN ISSUED TO ALL THE SHARE APPLICANTS AND THE Y HAD ALSO RESPONDED TO THE A.O. IT WAS THE SUBMISSION T HAT THE ASSESSEE HAD ALSO PRODUCED THE CONFIRMATION LET TER FROM VARIOUS SHARE APPLICANTS, COPIES OF THE SHARE APPLICATION FORMS, COPIES OF THEIR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05, COPIES OF THE BANK ACCOUNTS FROM WHICH THE CHEQUES HAD BEEN ISSUED TO THE ASSESSEE AS ALSO THE COPIES OF THEIR CERTIFICATE OF INCORPORATION. IT WAS THE SUBMISSION THAT THE FACT THAT THE ASSESSEE HAD PRODUCED THE CONFIRMATION LETTERS AND THE BALANCE SHEETS OF THE SHARE APPLICANTS AND THE SHARE APPLICATION FORMS AND THE BANK ACCOUNTS FROM WHICH THE SHARE APPLICATION MONEY HAD BEEN ISSUED TO THE ASSESSEE, THE GENUINENESS OF THE TRANSACTION STOOD PROVED. IT WAS THE FURTHER SUBMISSION THAT THE ASS ESSEE HAVING PRODUCED THE CONFIRMATION OF THE SHARE APPLICANTS AND THE COPIES OF THE SHARE APPLICATION FORMS AND THE BANK ACCOUNTS OF THE SHARE APPLICANTS WHICH SHOWED ADEQUATE FUNDS IN THEIR ACCOUNTS, THE CREDITWORTHINESS OF THE SHARE APPLICANTS STOOD PROV ED. I.T.A. NO.1352 /DEL/2009 5/7 IT WAS THE FURTHER SUBMISSION THAT AS THE ASSESSEE HAD PRODUCED THE COPIES OF THE RETURN FILED BY THE SHAR E APPLICANTS FOR THE ASSESSMENT YEAR 2004-05 AND HAD ALSO PRODUCED THE BALANCE SHEET AND P & L ACCOUNTS FOR THE YEAR ENDED 31.3.2005 AND THE RETURN OF INCOME F OR THE ASSESSMENT YEAR 2004-05 AND THE CERTIFICATE OF INCORPORATION ISSUED BY THE REGISTRAR OF COMPANIES IN RESPECTS OF ALL THE SHARE APPLICANT COMPANIES, THE IDENTITY OF THE SHARE APPLICANTS STOOD PROVED. IT WAS THUS A SUBMISSION THAT THE IDENTITY OF THE SHARE APPLICANTS HAVING BEEN PROVED, THE DECISION OF HON' BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS REFERRE D TO SUPRA SQUARELY APPLIES AND THE FINDINGS OF LD. CIT( A) IN DELETING THE ADDITION WAS LIABLE TO BE UPHELD. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE PAPER BOOK AS SUBMITTED. FOR BETT ER APPRECIATION OF THE ISSUE, IT WOULD BE WORTHWHILE T O EXTRACT THE DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF LOVELY EXPORTS (P) LTD., REFERRED TO SUPRA: CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S.68 OF I. T. ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR TH E SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY I S RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE A.O., TH EN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HEN CE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGEMENT. I.T.A. NO.1352 /DEL/2009 6/7 SUBJECT TO THE ABOVE, SPECIAL LEAVE PETITION IS DISMISSED. 5. A PERUSAL OF THE DECISION OF HON'BLE SUPREME COU RT CLEARLY SHOWS THAT IF THE IDENTITY OF THE SHARE APP LICANT IS GIVEN TO THE A.O., THEN THE RESPONSIBILITY ON TH E PART OF THE ASSESSEE STAND DISCHARGED AND EVEN IF THE SH ARE APPLICANTS ARE BOGUS, PROCEEDINGS COULD BE TAKEN BY THE A.O. AGAINST THE SHARE APPLICANTS IN ACCORDANCE WIT H LAW. A PERUSAL OF THE PAPER BOOK CLEARLY SHOWS THA T THE ASSESSEE HAS PRODUCED THE COPIES OF THE RETURNS FIL ED BY THE VARIOUS SHARE APPLICANT COMPANIES FOR THE ASSESSMENT YEAR 2004-05. A PERUSAL OF THE PAPER BOOK ALSO SHOWS THAT THE ASSESSEE HAS PRODUCED THE CERTIFICATE OF INCORPORATION OF ALL THE SHARE APPLI CANTS IN THE ASSESSEE COMPANY. A PERUSAL OF SECTION 35 OF T HE COMPANIES ACT SHOWS THAT IF A CERTIFICATE OF INCORPORATION IS GIVEN BY THE REGISTRAR IN RESPECT OF ANY ASSOCIATION IT SHALL BE CONCLUSIVE EVIDENCE THAT AL L THE REQUIREMENTS OF THE COMPANIES ACT HAVE BEEN COMPLIE D WITH IN RESPECT OF REGISTRATION AND MATTERS PRECEDE NT AND INCIDENTAL THERETO AND THAT THE ASSOCIATION IS A CO MPANY AUTHORIZED TO BE REGISTERED AND DULY REGISTERED UND ER THE COMPANIES ACT. IN ALL THESE CASES, AS IT IS NOTICED THAT THE CERTIFICATE OF INCORPORATION ISSUED BY THE REGI STRAR OF COMPANIES HAS BEEN PRODUCED AND AS IT IS NOTICED THAT THE ASSESSEE HAS ALSO PRODUCED COPIES OF INCOM E TAX I.T.A. NO.1352 /DEL/2009 7/7 RETURNS FOR THE ASSESSMENT YEAR 2004-05 FILED BEFOR E THE INCOME TAX AUTHORITIES, IT WOULD HAVE TO BE HEL D THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE SHARE APPLICANTS AND IN THESE CIRCUMSTANCES, THE FINDINGS OF LD. CIT(A) ON THIS ISSUE BEING IN CONSONANCE WITH T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD., REFERRED TO SUPRA, IS FOUN D TO BE IN ORDER AND IS UPHELD. HOWEVER, IN LINE WITH T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD., IT IS ALSO DIRECTED THAT T HE REVENUE SHALL HAVE THE LIBERTY TO INITIATE PROCEEDI NGS IN ACCORDANCE WITH LAW IN THE CASE OF SHARE APPLICANTS IF THEY DOUBT THE SHARE APPLICANTS AND THE LENDERS. I N THESE CIRCUMSTANCES, APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 7. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 12 TH FEB., 2010. SD./- SD./- (K.G. BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:12 TH FEB., 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI