ITO, New Delhi V. M/s I.P. India, New Delhi

ITA 1450/DEL/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2858 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: V RAJA KUMAR ADVS
• Keywords: Accommodation entries; Onus to prove
• Section: 133(6); 131; 68

Judgement Text

1 ITA NO. 1450/DEL/2010 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO.145 0/DEL/2010 (ASSESSMENT Y EAR-2005-06) ITO WARD 11 (4), ROOM NO. 324 C. R. BUILDING, NEW DELHI (APPELLANT) VS I.P. INDIA P. LTD. A-3/3A, GREEN APARTMENTS PASCHIM VIHAR, NEW DELHI AAACS1792C (RESPONDENT) APPELLANT BY SH. AMRIT LAL, SR. DR RESPONDENT BY SH. K. SAMPATH & V. RAJA KUMAR, ADVS. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 03/03/2010 PASSED BY CIT(A)-XIII, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER OF THE LD.CIT(A) IS WRONG, PERVERSE, ILLEGAL AND AGAIN ST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ORDER OF THE LD. CIT(A) AS ERRED IN DELETING THE ADDITION MA DE U/S 68 DATE OF HEARING 09.05.2017 DATE OF PRONOUNCEMENT 16.06.2017 2 ITA NO. 1450/DEL/2010 3. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY RAISED SHARE APPLICATION MONEY OF RS.4,75,35/-. THE ASSESSEE CO MPANY WAS ASKED TO FILE DETAILS SUCH AS SHARE APPLICANTS GIVING THEIR NAME, ADDRESS, PAN, SOURCE OF THEIR INVESTMENTS, BANK STATEMENTS BY THE ASSESSING OFFICER. THE ASSESSEE WAS ALSO ASKED TO ESTABLISH THE SHARE APPLICANTS CREDIT WORTHINESS AND GENUINENESS OF THEIR TRANSACTIONS. AS PER THE DETAILS FILED BY THE ASSESSEE, THE SHARE APPLICATION MONEY WAS RAISED FROM 47 PARTIES. NECE SSARY INFORMATION U/S 133(6) WAS CALLED FOR INDEPENDENTLY. FOR THIS PURP OSE LETTERS WERE ISSUED ON 25/7/2007 TO 24 PARTIES OUT OF TOTAL 47 PARTIES. T HE INFORMATION U/S 133(6) WAS NOT RECEIVED IN 9 CASES OUT OF 24. THE ASSESSE E COMPANY WAS SHOW CAUSE TO EXPLAIN AS TO WHY THE TRANSACTIONS ENTERED WITH THESE PARTIES ARE NOT TO BE TREATED ONLY PAPER TRANSACTIONS. ACCORDINGLY THE AS SESSING OFFICER INCLUDED THE INCOME OF THE ASSESSEE COMPANY AS PER THE PROVISION S OF SECTION 68 OF THE ACT, AND 8 CONCERNS PARTIES WERE HELD TO BE NON GENUINE AND AMOUNT OF RS.64,50,000/- WAS ADDED ON ACCOUNT OF CREDIT ENTRI ES WHOSE NATURE, GENUINENESS AND CREDITWORTHINESS COULD NOT BE PROVE D. 4. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS THE ADDITION S OF RS.64,50,000/- MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED BECAUSE THE ASSESSEE HAD DISCHARGED PRIMA FACIE BURDEN OF PROOF AND A.O CANNOT SUMMARIL Y REJECT ALL THE DOCUMENTS WHEN DEEPER INVESTIGATION BRINGS UP SPECIFIC ADVERS E MATERIAL. THUS, THE CIT(A) DELETED THE ADDITION. 5. THE LD. DR SUBMITS THAT THE ASSESSING OFFICER HA S MADE EVERY ATTEMPT TO CONFIRMED THE DETAILS OF THE CONCERNED PARTIES BY I SSUING SECTION 133 (6) NOTICES FOR VERIFYING THE GENUINENESS OF SHARE APPL ICANTS. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS CATEGORICA LLY MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT PRODUCE SUFFICIENT DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE ALLEGED SH ARE HOLDERS AS THE ASSESSEE HAD ONLY FILED CONFIRMATION DETAILS OF PAN AND IT R ETURNS AND AFFIDAVITS OF THE 3 ITA NO. 1450/DEL/2010 INVESTORS WHICH DO NOT PROVE THE IDENTITY & GENUINE NESS OF THE TRANSACTION OF SHARE APPLICATION AND CREDITWORTHINESS. THE LD. DR RELIED ON THE JURISDICTIONAL HIGH COURT JUDGMENT IN CASE OF CIT V S. MAF ACADEMY PVT. LTD. 214 42 TAXMAN.COM 377 WHEREIN IT IS HELD THAT THE C OURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTIONS. THE ONUS TO PROVE THE THREE FACTUM I S ON THE ASSESSEE AS THE FACTS ARE WITHIN THE PERSONAL KNOWLEDGE OF THE ASSE SSEE. MERE PRODUCTION OF DETAILS OF PAN NUMBERS OR INCOME TAX RETURNS MAY NO T BE SUFFICIENT THOUGH THE PRODUCTION OF DETAILS SUCH AS PAN NUMBERS OR INCOME RETURNS OF INCOME MAY INDICATE TOWARDS COMPLETION OF PAPER WORK OR DOCUME NTATION, BUT GENUINENESS, CREDITWORTHINESS, IDENTITY OF INVESTMENT AND THE IN FORMATION OF INVESTORS ARE DEEPER THAN MERE COMPLETION OF PAPER WORK OR DOCUME NTATION. 6. THE LD. AR SUBMITTED THAT THE CIT(A) HAS GIVEN C ATEGORICAL FINDING THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER CALLED INFORMATION FROM THE PARTIES TO WHOM NOTICE U/S 131 WERE ISSUED AND THE SAID INF ORMATION WAS RECEIVED BY THE ASSESSING OFFICER. THE INSPECTOR OF THE REVENU E SUBMITTED THE REPORT THAT NO COMPANY EXIST AT THE GIVEN ADDRESS. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS STOPPED HIS ENQUIRY AT THIS S TAGE AND DID NOT MADE ANY ATTEMPT FOR FURTHER INVESTIGATION OF THOSE CONCERNE D COMPANIES. THE INCOME TAX DETAILS WERE MADE AVAILABLE BY THE ASSESSEE TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. IN ADDITION TO THIS, TH E CIT(A) ALSO OBSERVED THAT THE ASSESSING OFFICER HAS NOT SPECIFICALLY BROUGHT ON RECORD ANY MATERIAL TO ESTABLISH THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS ACTUALLY RECEIVED AS ACCOMMODATION ENTRIES. THE DOCUMENTS INCLUDING PAN CONFIRMATIONS, COPY OF IT RETURNS, DETAILS OF BANK ACCOUNTS, AFFIDAVITS OF DIRECTORS HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. THUS, THE AS SESSEE HAS ESTABLISHED THE GENUINENESS, CREDITWORTHINESS, IDENTITY OF INVESTME NT. THE ASSESSEE HAS HEAVILY RELIED ON THE JUDGMENT OF THE APEX COURT IN CASE OF LOVELY EXPORTS 216 CTR 195. 4 ITA NO. 1450/DEL/2010 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE LD. DR RELIED UPON THE JURISDICTIONAL HIGH COURT JUDGMENT IN CASE OF CIT VS. MAF ACADEMY PVT. LTD. (2014) 42 TAXMAN.C OM 377 WHEREIN IT IS HELD THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOU T THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WI THIN THE PERSONAL KNOWLEDGE OF THE ASSESSEE. MERE PRODUCTION OF DETAILS OF PAN NUMBERS OR INCOME TAX RETURNS MAY NOT BE SUFFICIENT THOUGH THE PRODUCTION OF DETAILS SUCH AS PAN NUMBERS OR INCOME RETURNS OF INCOME MAY INDICATE TO WARDS COMPLETION OF PAPER WORK OR DOCUMENTATION, BUT GENUINENESS, CREDI TWORTHINESS, IDENTITY OF INVESTMENT AND THE INFORMATION OF INVESTORS ARE DEE PER THAN MERE COMPLETION OF PAPER WORK OR DOCUMENTATION. IN THIS CASE, LETTE RS WERE ISSUED ON 25/7/2007 TO 24 PARTIES OUT OF TOTAL 47 PARTIES. T HE INFORMATION U/S 133(6) WAS RECEIVED IN 9 CASES OUT OF 24. THE CIT(A) IN HI S ORDER OBSERVED THAT THE ASSESSING OFFICER HAS NOT INVESTIGATED. BUT THE IDE NTITY, GENUINENESS AND CREDITWORTHINESS WAS NOT FULLY ESTABLISHED BY THE A SSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). THUS, THE C IT(A) WAS NOT CORRECT IN DELETING THE DISALLOWANCE U/S 68 MADE BY THE ASSESS ING OFFICER WITHOUT GOING INTO THE THREE DETAILS OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLICANTS. THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORT IS NOT APPLICABLE IN THE PRESENT CASE AS IN THIS CASE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLI CANT WAS NOT FULLY ESTABLISHED BY THE ASSESSEE. MERELY PRESENTING THE DOCUMENTS WILL NOT AMOUNT TO ESTABLISH THE TRANSACTIONS AS GENUINE. THE CRED ITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER WAS NOT ESTABLI SHED BY THE ASSESSEE IN THE PRESENT CASE. THE CIT(A) HAS TOTALLY IGNORED THESE THREE COMPONENTS WHILE ALLOWING THE APPEAL OF THE ASSESSEE. THEREFORE, THE CIT(A) ORDER IS SET ASIDE. 5 ITA NO. 1450/DEL/2010 8. IN RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 16/06/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 03/05/2017 PS 2. DRAFT PLACED BEFORE AUTHOR /05/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 6 ITA NO. 1450/DEL/2010 5. APPROVED DRAFT COMES TO THE SR.PS/PS .06.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK .06.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.