ITO Ward-8 (4), V. Signature Towers (P) Ltd,

ITA 1700/DEL/2008

• Counselvise Citation: 170020114 RSA 2008
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 30-09-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 05-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: S M MANJAN; KAMAL JETLEY SUDHIR GUPT A
• Keywords: Accommodation entries; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 1700(DEL)2008 ASSESSMENT YEAR: 2000-01 INCOME TAX OFFICER, M/S. S IGNATURE TOWERS PVT. LTD., WARD 8(4), NEW DELHI. V. GF 3, ANTR IKSH BHAWAN, KG MARG, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B.R.R. KUMAR, DR RESPONDENT BY: S/SHRI KAMAL JETLEY, SUDHIR GUPT A & S.M. MANJAN, AR ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 200 0-01 AGAINST THE ORDER DATED 15.2.2008 PASSED BY THE LEARNED CIT(A)- XI, NEW DELHI, CONTENDING THAT THE LD. CIT(A) HAS ERRED IN DELETIN G THE ADDITION OF ` 27 LAKHS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED MONE Y. 2. THE AO RECEIVED INFORMATION FROM THE OFFICE OF T HE DIT(INV.), THAT THE ASSESSEE HAD RECEIVED ` 9 LAKHS FROM ONE MY MONEY SECURITIES LTD. (MMSL FOR SHORT) ON 17.8.99, WHICH, ALLEGEDLY, WA S AN ACCOMMODATION ENTRY AND NOT A GENUINE TRANSACTION. SIMILAR INFO RMATION WAS RECEIVED ITA 1700(DEL)08 2 AGAINST TWO MORE PAYMENTS OF ` 9 LAKHS EACH TO THE ASSESSEE FROM MMSL ON 31.3.2000. THE AO ASKED THE ASSESSEE TO EXPLAIN T HE NATURE OF THIS INFORMATION. THE ASSESSEE SUBMITTED THAT SIMILAR ADDITION IN RESPECT OF THE AMOUNT RECEIVED FROM MMSL, MADE FOR ASSESSMENT YEAR 1999-2000, STOOD DELETED BY THE LD. CIT(A) VIDE HIS ORDER DATED 30.3 .2007; AND THAT ON THE SAME BASIS, SINCE THE IDENTITY AND CREDIT WORTHINES S OF THE ASSESSEE STOOD PROVED, THE AMOUNTS RECEIVED FROM MMSL COULD NOT BE TREATED AS ACCOMMODATION ENTRIES. THE AO, HOWEVER, DID NOT A CCEPT THE ASSESSEES CONTENTION, OBSERVING THAT AN APPEAL HAD BEEN PREFE RRED BY THE DEPARTMENT BEFORE THE TRIBUNAL AGAINST THE SAID ORDER OF THE C IT(A) FOR ASSESSMENT YEAR 1999-2000; AND THAT THE NATURE OF THE TRANSACTIONS OF THE ASSESSEE WITH MMSL IN THE YEAR UNDER CONSIDERATION REMAINED THE S AME. IT WAS IN THIS MANNER THAT THE AO ADDED THE AGGREGATE AMOUNT OF ` 27 LAKHS, U/S 68 OF THE I.T. ACT, TREATING THE SAME AS UNEXPLAINED. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION, OBSERVING AS FOLLOWS:- 2.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION S MADE BY THE APPELLANT. I CALLED FOR AND EXAMINED THE CASE RECO RDS. I HAVE ALSO SEEN THE APPEAL ORDER FOR ASSESSMENT YEAR 1999-00 W HICH WAS ALSO PASSED BY ME ON 30.3.07. IT IS NOTED THAT THE MMSL HAD APPLIED FOR SHARES OF THE APPELLANT COMPANY IN F.Y. 97-98 AND A LL THE PAYMENTS ITA 1700(DEL)08 3 WERE MADE IN PURSUANCE TO THOSE APPLICATIONS. ALL THE PAYMENTS WERE MENTIONED IN THE TABLE IN PARA 4.1 OF APPEAL ORDER DATED 30.3.07. THE DATE FOR LAST TWO PAYMENTS WAS MENTIONED AS 2.4.00 IN THE ASSESSMENT ORDER. HOWEVER, IT WAS CLARIFIED BY THE APPELLANT THAT THE ACTUAL DATE OF RECEIPT WAS 31.3.00 AND THE DATE MENTIONED BY TH E AO MIGHT BE THE CLEARING DATE IN THE BANK ACCOUNT OF MMSL. IT IS N OTED THAT THE ISSUE WAS DISCUSSED IN DETAIL FROM PAGES 4 TO 9 OF THE AP PEAL ORDER DATED 30.3.07. THE ADDITION OF ` 9 LAKHS FALLING IN THE ASSESSMENT YEAR 99- 00 WAS DELETED FOR THE REASON THAT THE APPELLANT HA D DISCHARGED ITS ONUS TO PROVE THE THREE INGREDIENTS REQUIRED FOR CR EDIT ENTRY. IT IS NOTED THAT IN THIS YEAR ALSO ALL THE THREE CRITERIA STAND PROVED AS THE PAYMENTS ARE PART OF THE SAME TRANSACTION WHICH WAS DISCUSSED IN ASSESSMENT YEAR 99-00. THE APPELLANT HAD DULY DIS CHARGED ITS ONUS BUT THEREAFTER THE AO HAS NOT BROUGHT ON RECORD ANY OTHER MATERIAL OR FACTS TO PROVE THE CONTRARY AND ESTABLISH THAT THE PAYMENT RECEIVED FROM MMSL WERE NOT GENUINE. THEREFORE, FOLLOWING T HE DISCUSSION MADE IN LAST YEARS APPEAL ORDER THE ADDITION OF ` 27 LAKHS IS DELETED. 4. AGGRIEVED, THE DEPARTMENT IS IN APPEAL. 5. CHALLENGING THE IMPUGNED ORDER, THE LD. DR RELIE D ON THE ASSESSMENT ORDER. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) H AS ERRED IN DELETING THE ADDITION OF ` 27 LAKHS CORRECTLY MADE BY THE AO U/S 68 OF THE AC T, ON ACCOUNT OF UNEXPLAINED MONEY; AND THAT THE LD. CIT( A) FAILED TO CONSIDER THAT IT IS A CASE OF ACCOMMODATION ENTRIES AND NOT THAT OF GENUINE TRANSACTIONS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS STATED THAT FOR ASSESSMENT YEAR 1999-2000, THE TRIBUNAL, VIDE O RDER DATED 3.10.2008 (COPY PLACED ON RECORD), HAS DELETED A SIMILAR ADDI TION OF ` 9 LAKHS, UNDER ITA 1700(DEL)08 4 FACTS AND CIRCUMSTANCES SIMILAR TO THOSE CONCERNING THE YEAR UNDER CONSIDERATION; AND THAT, THEREFORE, THERE BEING NO MERIT THEREIN, THE APPEAL FILED BY THE DEPARTMENT BE DISMISSED. 7. IN THIS REGARD, IT IS SEEN THAT THE ASSESSEE HAD RECEIVED THE FOLLOWING PAYMENTS FROM MMSL, AGAINST SHARE APPLICATIONS OF 1 ,80,000 SHARES, WHICH SHARES WERE ALLOTTED TO MMSL:- A B C D SR. DATES AMOUNTS AY A. 11.08.97 10,00,000 98-99 B. 16.12.97 10,00,000 98-99 C. 11.03.98 8,00,000 98-99 D. 13.03.98 8,00,000 98-99 E. 15.01.99 9,00,000 99-00 F. 17.08.99 9,00,000 00-01 G. 31.03.00 9,00,000 00-01 H. 31.03.00 9,00,000 00-01 TOTAL 72,00,000 8. IT HAS BEEN STATED ON BEHALF OF THE ASSESSEE THA T FOR ASSESSMENT YEAR 1998-99, UNDER SCRUTINY ASSESSMENT, NO ADDITION WAS MADE. 9. FOR ASSESSMENT YEAR 1999-00, AN ADDITION OF ` 9 LAKHS WAS MADE. THE LD. CIT(A) DELETED THIS ADDITION. THE TRIBUNAL, V IDE ITS AFORESAID ORDER ITA 1700(DEL)08 5 DATED 3.10.2008, IN ITA NO. 2907(DEL)07, UPHELD THE CIT(A)S ORDER, HOLDING AS FOLLOWS:- 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW AND THE JUDGMENTS CITED BY THE LD. AR OF THE ASSESSEE. WE FIND THAT AO HAS HIMSELF NOTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY HAS RECEIVED ` 36.00 LAKHS FROM MMSL DURING FINANCIAL YEAR 1997-98 AND WE FIND THAT THERE IS NO ADDITION MADE BY THE A O IN THAT YEAR. SIMILARLY A SUM OF ` 9 LAKHS WAS RECEIVED BY THE ASSESSEE COMPANY FROM MMSL DURING FINANCIAL YEAR 1998-99 AND ` 27 LAKHS WAS RECEIVED IN FINANCIAL YEAR 1999-2000 AND NO ADDITIO N WAS MADE IN ASSESSMENT YEAR 2000-01. THIS SUM OF ` 9 LAKHS WAS RECEIVED IN THE PRESENT YEAR IS PART OF ` 72 LAKHS, BALANCE OF WHICH ARE RECEIVED BY THE ASSESSEE IN EARLIER YEAR AND SUBSEQUENT YEAR FOR WH ICH NO ADDITION HAS BEEN MADE BY THE AO IN THOSE YEARS. THESE FAC TS SHOW THAT IDENTITY OF THE PERSON, I.E., MMSL AND GENUINENESS OF TRANSACTION STANDS ACCEPTED BY THE AO. THE DIRECTOR OF MMSL H AS APPEARED BEFORE THE AO AND HIS STATEMENT WAS RECORDED BY THE AO ON 26.09.2006 AND IN THE SAID STATEMENT, THIS INVESTME NT BY THEM IN THE ASSESSEE COMPANY HAS BEEN ACCEPTED. UNDER THESE F ACTS, WE FEEL THAT THE ISSUE IN THE PRESENT CASE IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT REND ERED IN THE CASE OF LOVELY EXPORT PVT. LTD. (SUPRA). RELEVANT PARA OF THE JUDGMENT IS REPRODUCED BELOW:- 2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SEC. 68 OF THE I.T. ACT, 1 961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR TH E SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEI VED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMP UGNED JUDGMENT. ITA 1700(DEL)08 6 13. IN THE PRESENT CASE, NOT ONLY THE NAME OF THE S HAREHOLDER WAS GIVEN TO THE AO BUT THE DIRECTOR OF MMSL HAS APPEAR ED BEFORE THE AO AND HAS CONFIRMED THE INVESTMENT IN THE ASSESSEE COMPANY. PART OF INVESTMENT IN THE EARLIER YEAR AND SUBSEQUENT YE AR STANDS ACCEPTED BY THE AO AS NO ADDITION HAS BEEN MADE IN THE EARL IER YEAR OR IN SUBSEQUENT YEAR. UNDER THESE FACTS, WE FEEL THAT T HE ADDITION MADE BY THE AO IN THE PRESENT CASE IS NOT SUSTAINABLE AS PE R THIS JUDGMENT OF HONBLE APEX COURT. WE, THEREFORE, DECIDE THIS IS SUE IN FAVOUR OF THE ASSESSEE. THIS GROUND OF THE REVENUE IS REJECTED. 10. THE FACT OF THE LD. CIT(A) HAVING DELETED THE A DDITION OF ` 9 LAKHS MADE BY THE AO FOR ASSESSMENT YEAR 1999-00, UNDER S IMILAR CIRCUMSTANCES, WAS BROUGHT TO THE NOTICE OF THE AO BY THE ASSESSEE . THE AO, HOWEVER, WENT ON TO MAKE THE ADDITION OF ` 27 LAKHS FOR THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) DELETED THE ADDITION, FOLLOWING HIS DECISION FOR ASSESSMENT YEAR 1999-00, OBSERVING, AS ABOVE, THAT THE ASSESSE E HAD PROVED THE THREE INGREDIENTS REQUIRED FOR CREDIT ENTRIES, AS THE PAY MENTS WERE PART OF THE SAME TRANSACTION AS THE ONE INVOLVED IN THE CASE FOR ASS ESSMENT YEAR 1999-00 AND THAT, THE AO HAD NOT BROUGHT ANY OTHER MATERIAL ON RECORD TO PROVE OTHERWISE AND ESTABLISH THAT THE PAYMENTS RECEIVED FROM MMSL WERE NOT GENUINE. 11. THE CHALLENGE OF THE DEPARTMENT TO THE CIT(A)S ACTION DOES NOT CARRY FORCE. THE FINDINGS OF THE LD. CIT(A) FOR ASSESSM ENT YEAR 1999-00 STAND CONFIRMED BY THE TRIBUNAL. THE FACTS HAVE NOT BEEN SHOWN TO HAVE ITA 1700(DEL)08 7 UNDERGONE ANY CHANGE FOR THE YEAR UNDER CONSIDERATI ON. THE PAYMENTS OF ` 27 LAKHS WERE PART OF THE SAME TRANSACTION, AS CONC ERNING ASSESSMENT YEAR 1999-00. FOR ASSESSMENT YEAR 1999-00, THE ASSESSE E WAS HELD TO HAVE DULY DISCHARGED ITS ONUS U/S 68 OF THE ACT. FOR THE YE AR UNDER CONSIDERATION, THE AO DID NOT BRING ON RECORD ANY OTHER EVIDENCE TO PR OVE THAT THE PAYMENTS IN QUESTION WERE NOT GENUINE. 12. IN VIEW OF THE ABOVE, FINDING NO MERIT THEREIN, THE GRIEVANCE OF THE DEPARTMENT IS REJECTED. 13. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) PRESIDENT JUDICIAL MEMBER DATED: 21.10.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY ITA 1700(DEL)08 8 BY ORDER DEPUTY REGISTRAR