ITO, New Delhi V. M/s. Vivsun Exports Pvt. Ltd., New Delhi

ITA 1584/DEL/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4750 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 14-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA SENIOR
• Assessee Lawyers: C S GUPTA
• Keywords: Reopening of assessment; Opportunity of being heard; Principle of natural justice; Accommodation entries
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1584/DEL./2010 (ASSESSMENT YEAR : 2004-05) ITO, WARD 17 (4), VS. M/S. VIVSUN EXPORTS PVT. LT D., NEW DELHI. M 7, ESSEL HOUSE, ASAF ALI ROAD, NEW DELHI. (PAN : AAACV3779J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. GUPTA, ADVOCATE REVENUE BY : SHRI SAMEER SHARMA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE CIT (APPEALS)-XIX, NEW DELHI DATED 01.02.2010 FOR A SSESSMENT YEAR 2004-05. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF EXPORT OF HANDICRAFTS. DURING THE YEAR, THE ASSESSEE HAS SHOW N RECEIPT OF SHARE APPLICATION MONEY/SHARE CAPITAL OF RS.28,00,000/- I N SEVEN COMPANIES OF RS.4 LACS EACH. THE ASSESSING OFFICER RECEIVED AN I NFORMATION FROM INVESTIGATION WING THAT THIS AMOUNT WAS NOT ACTUALL Y THE SHARE CAPITAL OR SHARE APPLICATION MONEY BUT IT WAS ACCOMMODATION MO NEY AND HE MADE ITA NO.1584/DEL/2010 2 THE ADDITION OF RS.28 LACS FOR UNDISCLOSED INCOME U /S 68 AND RS.56,000/- U/S 69 OF THE INCOME-TAX ACT, 1961. THE CIT (A) ALL OWED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 25. I HAVE NO HESITATION TO CONCLUDE THAT THE ASSE SSEE HAS PROVIDED NECESSARY DETAILS INCLUDING THE WARD/ CIRCLE WHERE THE SHARE APPLICANTS/INVESTING COMPANIES WERE ASSESSED TO INCOME TAX AND DISCHARGED THE ONUS CAST ON IT. A FEEBLE ATTEMPT TO VERIFY THE DETAILS WAS MADE BY THE AO BY ISSUING NOTICE U/S 133(6). 26. THE LAW OF EVIDENCE MANDATES THAT IF THE BEST EVIDENCE IS NOT PLACED BEFORE THE COURT, AN ADVERSE INFERENCE CAN BE DRAWN AS AGAINST THE PERSON WHO OU GHT TO HAVE PRODUCED IT. AS STATED ABOVE THAT THE ASSES SEE HAS PRODUCED POSSIBLE/BEST EVIDENCE_ TO SUPPORT ITS CLA IM. THE ASSESSEE CANNOT BE FASTENED WITH TAX LIABILITY FOR FAILING TO DO AN IMPOSSIBLE/UNJUSTIFIED ACT OF PROD UCTION OF DIRECTORS OF INVESTING COMPANIES. 27. THE AO HAS SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFY ING THE DETAILS FURNISHED BY THE ASSESSEE COMPANY AND A LSO NOT PLACING BEFORE THE ASSESSEE THE INFORMATION AND FINDINGS OF THE INVESTIGATION WING VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 28. IF THERE IS ANY DISCREPANCY IN THE BOOKS OF ACC OUNTS MAINTAINED BY THE INVESTING COMPANIES, THERE IS A C ASE FOR REOPENING OF THE ASSESSMENT OF THE RESPECTIVE SHAREHOLDERS/INVESTING COMPANIES. 29. THE ASSESSEE CANNOT BE PENALIZED FOR THE MISTAKES/FAULTS COMMITTED BY THE SHARE HOLDERS. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOU NT AND BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. 30. IT IS SETTLED PRINCIPLE OF LAW THAT NO ADDITION/DISALLOWANCE CAN BE MADE ON SUSPICION, ITA NO.1584/DEL/2010 3 SURMISES AND CONJECTURES AS HELD BY THE HON'BLE SUP REME COURT IN THE FOLLOWING CASES. A) DHIRAJLAL GIRDHARILAL V CIT 26 ITR 736 B) OMAR SALAY MOHAMMED SAIT V CIT 371TR 151 C) DHAKESHWARI COTTON MILLS LTD. V CIT 26 ITR 775 D) LALCHAND BHAGAT AMBICA RAM V CIT 37 ITR 288 31. IN THE CASE OF ACCHYALAL SHAW V. ITO (2009) 30 SOT 44 (KO!.) (URO), THE HON'BLE ITAT OBSERVED AS UNDER: 'SUSPICION CANNOT REPLACE EVIDENTIAL DOCUMENT. SIMPLE ARGUMENT OR ALLEGATION OF MANIPULATION IS NOT SUFFICIENT WITHOUT PROPER EVIDENCE.' 32.1 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES A ND AVAILABLE LEGAL POSITION, THE SHARE CAPITAL TO THE EXTENT OF RS.28,00,000/ - STANDS EXPLAINED. 32.2 SINCE THE MAIN ADDITION IS DELETED, THERE IS N O CASE FOR ADDITION OF RS.56,000/- TOWARDS ALLEGED COMMISS ION PAYMENT. ACCORDINGLY, GROUND NOS.2 & 5 ARE ALLOWED. RELIEF : RS.28,00,000 + 56,000 = 28,56,000/ - 3. NOW, THE REVENUE IS IN APPEAL BEFORE US BY TAKIN G THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2800000/- MADE UNDER SECTION 68 OF THE INCOME TA X ACT 1961 ESPECIALLY WHEN THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND GENUIN ENESS OF TRANSACTION WAS NOT ESTABLISHED SATISFACTORILY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HA S PROVIDED NECESSARY DETAILS IGNORING THE FACT THAT M ERE FILING OF ASSESSMENT PARTICULARS DOES NOT TANTAMOUN T TO DISCHARGE OF ONUS U/S 68 OF THE INCOME TAX ACT 1961 . ITA NO.1584/DEL/2010 4 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD CIT(A) HAS ERRED IN HOLDING THAT THE AO HAS SIMP LY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIG ATION WING IN COMPLETE DISREGARD OF THE FINDING GIVEN IN THE ASSESSMENT ORDER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD CIT(A) HAS ERRED IN HOLDING THAT THE AO HAD NOT FOUND ANY DISCREPANCY IN THE BOOKS OF THE ASSESSEE ESPECIALLY WHEN THE CASH CREDITS APPEARING IN ASSES SEE' BOOKS REMAINED UNEXPLAINED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD CIT (A) HAS ERRED IN HOLDING THAT IF THERE WAS A NY DISCREPANCY IN THE BOOKS OF THE INVESTING COMPANIES , THERE WAS A CASE FOR REOPENING OF ASSESSMENT OF INV ESTING COMPANIES. LD. CIT (A) HAS IGNORED THE FACT THAT IT IS THE BENEFICIARY WHO HAS OBTAINED ACCOMMODATION ENTRIES, IS LIABLE FOR TAX. 4. WHILE PLEADING ON BEHALF OF THE REVENUE, THE LD. DR SUBMITTED THAT IN THIS CASE, THE ASSESSEE SUBMITTED THE COPY OF BA NK ACCOUNT OF VARIOUS COMPANIES FROM WHERE THIS SHARE APPLICATION MONEY W AS RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO CALLED FOR COP Y OF BANK ACCOUNT OF THESE COMPANIES FROM THE RESPECTIVE BANK. THERE IS A WIDE DISCREPANCY IN THE BANK ACCOUNT STATEMENTS SUBMITTED BY THE ASSESS EE AND THE BANK ACCOUNT STATEMENT RECEIVED BY THE ASSESSING OFFICER DIRECTLY FROM THE CONCERNED BANK. THE CIT (A) HAS NOT GIVEN ANY FINDI NG ON THESE VITAL VARIATIONS IN STATEMENT OF BANK ACCOUNTS FILED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER AND DIRECTLY RECEIVED FROM BANK. THE ASSESSING OFFICER HAS DEALT THESE DISCREPANCIES IN HIS ORDER IN DETAI L WHICH READ AS UNDER :- ITA NO.1584/DEL/2010 5 1. IN CASE OF M/S ACOOT INDIA PVT. LTD., AS PER TH E BANK STATEMENT FILED BY THE ASSESSEE THERE IS A CLEARING BALANCE OF RS.415000/- IN THE BANK ACCOUNT OF M/S ACOOT INDIA PVT. LTD. ON 18/2/2004 BEFORE THE CHEQUE OF RS.400000/- ISSUE D TO THE ASSESSEE ON 19/2/2004. HOWEVER, A PERUSAL OF THE BA NK STATEMENT (A/C NO. 3365) WOULD REVEAL THAT THERE IS A CASH DEPOSIT OF RS.50000/- ON 19/2/2004 IN THE ACCOUNT O F M/S ACOOT INDIA PVT. LTD. APPARENTLY THERE IS NO CREDI T BY CLEARING OF RS.415000/- IN THE BANK A/C STATEMENT F ROM THE BANK. APPARENTLY BANK STATEMENT FILED BY THE ASSESS EE IS FORGED. NOTICE UNDER SECTION 133(6) WAS ISSUED TO A COOT INDIA PVT. LTD. WERE RECEIVED BACK AND THE ASSESSEE HAS A LSO NOT PRODUCED ANY OF THE DIRECTORS FOR FURTHER EXAMINATI ON AS TO THE CREDIT WORTHINESS AND THE GENUINENESS OF THE TR ANSACTION AND THEREFORE THE CREDIT REMAINS UNEXPLAINED. 2. IN CASE OF M/S ZIGMA TELECOM PVT. LTD., THE BANK STATEMENT WAS FILED BY THE ASSESSEE COMPANY REVEALE D THAT THERE IS A CREDIT OF RS.398000/- BY WAY OF CLEARING ON 17/2/2004 IN THE ACCOUNT OF ZIGRNA TELECOM PVT. LTD . WHILE AS PER BANK STATEMENT THERE IS A DEPOSIT OF CASH OF RS.390000/- ON 18/2/2004. APPARENTLY BANK STATEMENT FILED BY THE ASSESSEE IS FORGED AND NOT RELIABLE. A LETTE R UNDER SECTION 133(6) WAS ISSUED TO THE COMPANY WHICH COUL D NOT BE SERVED AND THE ASSESSEE HAS ALSO NOT PRODUCED ANY D IRECTOR OF ZIGMA TELECOM PVT. LTD. FOR EXAMINATION AS TO FIND OUT THE GENUINENESS OF TRANSACTION COULD NOT BE GONE INTO. 3. M/S AMBA ALLOYES (P) LTD. : AS PER BANK STATEMEN T FILED BY THE ASSESSEE THERE ARE CREDITS OF RS.29500 0/- AND RS.100000/- ON 10/2/2004 & 11/2/2004 IN THE BANK AC COUNT OF THE ASSESSEE I.E. IMMEDIATELY BEFORE THE ISSUE O F CHEQUE TO THE ASSESSEE OF RS.400000/- TO THE ASSESSEE ON 12/2 /2004. HOWEVER, AS PER BANK STATEMENT RECEIVED FROM THE BA NK A/C OF M/S AMBA ALLOYS PVT. LTD. A/C NO. 3341, IT IS SEEN THAT THERE IS A CASH DEPOSIT OF RS.400000/- ON 12/2/2004 I.E. BEFORE THE ISSUE OF CHEQUE TO THE ASSESSEE. APPARENTLY THE BAN K STATEMENT FILED BY THE ASSESSEE IS FORGED. LETTER U NDER SECTION 133(6) WAS ISSUED TO THE AMBA ALLOYS WHICH COULD NO T BE SERVED AND THE ASSESSEE HAS ALSO NOT PRODUCED THE D IRECTORS AS TO FIND OUT THE CREDIT WORTHINESS AND GENUINENESS O F THE TRANSACTION. APPARENTLY IT APPEARS THAT THE BANK ST ATEMENT FILED BY THE ASSESSEE VIDE LETTER DATED 23/08/2007 IS ALSO FORGED. THE CREDIT REMAINS UNEXPLAINED. ITA NO.1584/DEL/2010 6 4. M/S SAURAB PETROCHEM (P) LTD. : AS PER BANK STATEMENT FILED BY THE ASSESSEE OF SAURAB PETROCHEM (P) LTD. THERE ARE CREDITS OF RS.250000/- & RS.150000/- ON 1 0/2/2004 & 11/2/2004 INTO THE BANK OF THE ASSESSEE MAINTAINE D WITH JAILAXMI COOPERATIVE BANK. HOWEVER, A PERUSAL OF TH E BANK STATEMENT RECEIVED FROM THE BANK IN A/C NO. 3381, I T IS SEEN THAT THERE IS A CASH DEPOSIT OF RS.4 LAKHS ON 12/2/ 2004 I.E. IMMEDIATELY BEFORE A CHEQUE OF RS.400000/- WAS ISSU ED TO THE ASSESSEE. THE BALANCE IN THE BANK ACCOUNT IS OF RS. 4507/-. APPARENTLY BANK STATEMENT FILED BY THE ASSESSEE IS FORGED. THE DEPOSIT OF CASH REMAINS UNEXPLAINED BECAUSE NOT ICE UNDER SECTION 133(6) ISSUED TO THE COMPANY I.E. WAS NOT SERVED AND THE ASSESSEE HAS ALSO FAILED TO PRODUCE ANY OF THE DIRECTORS OF THE COMPANY FOR EXAMINATION AS TO THE CREDITWORTHINESS AS ALSO TO THE GENUINENESS OF THE CONCERNED PARTY AND THEREFORE CREDIT REMAINS UNEXPLAINED. 5. M/S ENPOL PVT. LTD. : FROM A COPY OF BANK ACCOUN T STATEMENT FILED BY THE ASSESSEE THERE ARE TWO CREDI TS ON ACCOUNT OF CLEARING OF RS.310000/- RS.1110000/- ON 09/02/2004 & 10/02/2004. HOWEVER, FROM THE PERUSAL OF BANK ACCOUNT RECEIVED FROM THE BANK A/C NO.3340 IT IS SE EN THAT THERE IS A CASH DEPOSIT OF RS.150000/- ON 12/2/2004 BESIDES A CREDIT ON ACCOUNT OF CLEARING OF RS.200000/- ON 06/ 02/2004. COPY OF BANK STATEMENT FILED BY THE ASSESSEE IS APP ARENTLY FORGED. LETTER UNDER SECTION 133(6) WAS ISSUED TO M /S ENPOL PVT. LTD. WHICH COULD NOT BE SERVED AND THE ASSESSE E HAS ALSO NOT PRODUCED ANY DIRECTORS OF M/S ENPOL PVT. LTD. A S TO FIND OUT THE GENUINENESS OF THE TRANSACTION. THE CREDIT REMAINS UNEXPLAINED. 6. M/S RSG MARKETING (P) LTD.: FROM A PERUSAL OF TH E BANK STATEMENT FILED BY THE ASSESSEE IN RESPECT OF M/S RSG MARKETING PVT. LTD., THERE IS A CREDIT BY CLEARING OF RS.4 LAKHS ON 10/2/2004. HOWEVER, FROM THE COPY OF BANK STATEM ENT RECEIVED FROM JAILAXMI COOPERATIVE BANK (A/C NO. 35 50) IT APPEARS THAT THERE IS A DEPOSIT OF RS.4 LAKHS ON 12 /2/2004 IMMEDIATELY BEFORE A CHEQUE WAS ISSUED ON 12/2/2004 . APPARENTLY THE BANK STATEMENT FILED BY THE ASSESSEE IS FORGED. A LETTER UNDER SECTION 133(6) WAS ISSUED TO M/S RSG MARKETING PVT. LTD. COULD NOT BE SERVED AND THE ASS ESSEE HAS ALSO NOT PRODUCED ANY OF THE DIRECTORS OF M/S RSG M ARKETING PVT. LTD. FOR EXAMINATION AS TO FIND OUT CREDITWORT HINESS AND GENUINENESS OF THE TRANSACTION OF THE CONCERNED PAR TY THE CREDIT OF RS.400000/- THEREFORE, REMAINS UNEXPLAINE D. ITA NO.1584/DEL/2010 7 7. IN CASE OF M/S MAPLE SALES (P) LTD., AS PER THE ROPY OF BANK ACCOUNT / STATEMENT FILED BY THE ASSESSEE THER E IS A CREDIT ENTRY INTO THE BANK ACCOUNT ON 18/02/2004 BY WAY OF CLEARING OF RS.380000/- BEFORE A CHEQUE OF RS.4 LAKHS WAS IS SUED TO THE ASSESSEE ON 19/02/2004. HOWEVER, A COPY OF THE BANK STATEMENT RECEIVED FROM THE BANK VIZ. JAILAXMI CO-O PERATIVE BANK A/C NO. 3581, IT IS NOTICED THAT THERE IS A DE POSIT OF CASH AMOUNT ON 18/2/2004 OF A SUM OF RS.905000/-. A PERU SAL OF THE BANK STATEMENT WOULD REVEAL THAT THE BALANCE AV AILABLE WITH THE COMPANY WAS ONLY RS.900/- BEFORE A CHEQUE WAS ISSUED TO THE ASSESSEE COMPANY. THE DEPOSIT OF CASH REMAINS UNEXPLAINED BECAUSE NOTICE UNDER SECTION 133(6) ISS UED TO THE COMPANIES WAS NOT SERVED AND THE ASSESSEE ALSO FILE D TO PRODUCE ANY OF THE DIRECTORS OF THE COMPANY FOR EXA MINATION AS TO CREDITWORTHINESS AS ALSO GENUINENESS OF THE C ONCERNED PARTY. APPARENTLY IT APPEARS THAT BANK STATEMENT FI LED BY THE ASSESSEE VIDE LETTER DATED 23/08/2007 IS ALSO FORGE D. LD. DR PLEADED THAT CIT (A) WAS NOT JUSTIFIED IN GR ANTING THE RELIEF TO THE ASSESSEE ONLY RELYING ON THE CASE LAWS WHERE FACTS WERE AT COMPLETE VARIANCE. THE CASE LAWS CAN BE APPLIED ONLY WHEN TH E FACTS OF THE CASE ARE SIMILAR. HE PLEADED TO SET ASIDE THE ORDER OF CIT ( A). 5. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE ASSESSEE WAS NOT CONFRONTED WITH THE COPY OF THE BANK STATEMENTS DIR ECTLY CALLED BY THE ASSESSING OFFICER DIRECTLY FROM THE RESPECTIVE BANK S, THEREFORE, THE ASSESSEE MAY BE PROVIDED AN OPPORTUNITY TO REBUT OR TO EXPLAIN THE DISCREPANCY IN THE STATEMENTS. LD. AR PLEADED TO SE T ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT ASSES SEE FILED COPY OF BANK STATEMENTS OF THE COMPANIES FROM WHERE THE SHA RE APPLICATION MONEY WAS RECEIVED. THE ASSESSING OFFICER ALSO COLL ECTED THE COPY OF THE ITA NO.1584/DEL/2010 8 BANK ACCOUNTS DIRECTLY FROM BANK. THERE IS APPARENT LY VARIATION IN THE ENTRIES IN THESE TWO SET OF BANK STATEMENTS. THESE VARIATIONS DEFINITELY GIVE THE IMPRESSION THAT THE BANK STATEMENTS OF THE SE SHARE HOLDING COMPANIES SUBMITTED BY THE ASSESSEE WERE NOT TRUE O R WERE MANIPULATED. HOWEVER, SINCE THE ASSESSEE WAS NOT PROVIDED AN OPP ORTUNITY TO EXPLAIN THE DISCREPANCY IN BOTH THE STATEMENTS, THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE FIND IT APPROPRIATE TO RESTORE THE I SSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE DE NOVO AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF AUGUST, 2013. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 27 TH DAY OF AUGUST, 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XIX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI