ITO, New Delhi V. M/s Fair Finvest Ltd., New Delhi

ITA 1794/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3558 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: DEVINDER KR JAINFCA
• Keywords: Accommodation entries; Onus to prove
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A. NO.1794/DEL/2011 ASSESSMENT YEAR : 2001-02 INCOME TAX OFFICER, VS. INCOME TAX OFFICER, VS. INCOME TAX OFFICER, VS. INCOME TAX OFFICER, VS. M/S FAIR FINVEST M/S FAIR FINVEST M/S FAIR FINVEST M/S FAIR FINVEST LIMITED, LIMITED, LIMITED, LIMITED, WARD WARD WARD WARD- -- -11(2), 11(2), 11(2), 11(2), 212, JAINA TOWER 212, JAINA TOWER 212, JAINA TOWER 212, JAINA TOWER- -- -I, DISTRICT CENTRE, I, DISTRICT CENTRE, I, DISTRICT CENTRE, I, DISTRICT CENTRE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI JANAK PURI, NEW DELHI JANAK PURI, NEW DELHI JANAK PURI, NEW DELHI JANAK PURI, NEW DELHI PAN NO.AAACF 0324 M (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y. KAKKAR, DR RESPONDENT BY : SHRI DEVINDER KR. JAIN,FCA ORDER PER RAJPAL YADAV:JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LEARNED CIT(A) DATED 7 TH FEBRUARY 2011 PASSED FOR ASSESSMENT YEAR 2001-02. THE SOLITARY GRIEVANCE O F THE REVENUE IS THAT THE LEARNED CIT(A) HAS ERRED IN DEL ETING THE ADDITION OF `9 LACS WHICH WAS ADDED BY THE ASSESSIN G OFFICER WITH THE AID OF SECTION 68 OF THE INCOME-TAX ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-CO MPANY HAS FILED ITS RETURN OF INCOME ON 31.10.2001 DECLAR ING AN INCOME OF `15,880/-. THE RETURN OF THE ASSESSEE WA S PROCESSED U/S 143(1) OF THE INCOME-TAX ACT. THE AS SESSING OFFICER HAD RECEIVED AN INFORMATION FROM THE INVEST IGATION 2 WING OF DELHI THAT ASSESSEE HAD RECEIVED ACCOMMODAT ION ENTRIES FROM THE ENTRY OPERATORS, AFTER PAYING ITS UNACCOUNTED CASH. THE ASSESSING OFFICER HAS REOPEN ED THE ASSESSMENT BY ISSUANCE OF A NOTICE U/S 148 OF THE I NCOME- TAX ACT. IN THE REASSESSMENT PROCEEDING, ASSESSING OFFICER CONFRONTED THE ASSESSEE THAT IT HAS RECEIVED THE SU M OF `9 LACS FROM M/S M.V. MARKETING PVT. LTD., WHY THIS AM OUNT MAY NOT BE TREATED AS UNEXPLAINED INCOME OF THE ASSESSE E? IN RESPONSE TO THE QUERY OF ASSESSING OFFICER, IT WAS CONTENDED BY THE ASSESSEE THAT IT HAS RECEIVED THIS AMOUNT FR OM M/S M.V. MARKETING (P) LIMITED AS A SHARE APPLICATION M ONEY. IN ORDER TO EXPLAIN ITS POSITION WITH REGARD TO THE RE CEIPT OF SHARE APPLICATION MONEY, ASSESSEE HAS SUBMITTED THE FOLLOWING DOCUMENTS BEFORE THE ASSESSING OFFICER:- A) COPY OF SHARE APPLICATION FORM. B) CONFIRMATION OF SHARE CAPITAL CONTRIBUTION FROM THE ABOVE SHAREHOLDER, GIVING COPIES OF THE CHEQUES AND BANK THROUGH WHICH THE SHARE APPLICATION HAS BEEN MADE. C) PAN DETAILS AND ASSESSING OFFICER JURISDICTION O F THE SHAREHOLDER. D) I.T. RETURN COPIES OF THE SHAREHOLDER. E) COPY OF RESOLUTION PASSED BY BOARD OF SHARE APPLICANT COMPANY IN RESPECT OF AUTHORIZATION TO INVEST IN SHARES IN THE APPELLANT COMPANY. 3 2.1 THE LEARNED ASSESSING OFFICER WAS NOT SATISFIED WITH THE DOCUMENTS SUBMITTED BY THE ASSESSEE. HE MADE THE ADDITION OF `9 LACS BY MAKING THE FOLLOWING OBSERVA TIONS:- IT IS SETTLED LAW THAT MERE PRODUCTION OF CONFIRMATORY LETTERS OR DOCUMENTS SUPPORTING THE EXISTENCE OF THE SHARE SUBSCRIBERS WOULD NOT BE SUFFICIENT WHERE THERE IS EVIDENCE TO ESTABLISH THA T THE STATE OF THINGS APPARENT FROM THE DOCUMENTS PRODUCED IS A MERE FAADE PUT ON TO CONCEAL THE TRUTH NATURE OF FACTS. THE PRODUCTION OF THE DIRECTOR OF M/S M.V. MARKETING (P) LTD. ALSO SERVED NO PURPOSE AS HE PROFESSED HIS IGNORANCE OF THE NATURE OF TRANSACTION SINCE HE HAD NOT BEEN THE DIRECTOR OF THAT COMPANY IN FINANCIAL YEAR 2000- 01. THE RELIANCE PLACED BY THE ASSESSEE COMPANY ON THE COURT DECISIONS IS NOT RELEVANT TO THE CASE OF THE ASSESSEE AS IN THOSE CASES THERE WAS NO DOUBT AS TO THE GENUINENESS OF THE TRANSACTIONS AND THERE WAS NO OCCASION FOR THE COURT TO CONSIDER THE CASE OF ACCOMMODATION ENTRIES INVOLVING GIVING FALSE ENTRIES IN LIEU OF CASH. SI NCE THE ASSESSEE COMPANY FAILED TO DISCHARGE ITS ONUS TO PROVE THE ABOVE, THE TOTAL AMOUNT OF `9,00,000/-, MENTIONED ABOVE, IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY U/S 68 OF THE INCOME-TAX ACT, 1961. FOR THE REASONS DISCUSSED ABOVE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, ARE INITIATED SEPARATELY AGAINST THE ASSESSEE FOR CONCEALING TRUE PARTICULARS OF ITS INCOME. 3. ON APPEAL, LEARNED CIT(A) DELETED THE ADDITION A FTER PUTTING RELIANCE ON THE FOLLOWING CASES:- CIT VS. LOVELY EXPORT (P) LTD. (SUPREME COURT) 216 CTR 194; CIT VS. STELLAR INVESTMENT LTD. 251 ITR 263 (SUPREME COURT); 4 DCIT VS. GSV INVESTMENT (P) LTD. 146 ITD 36 (ITAT); CIT VS. ASHWANI GUPTA (2010) I.T.A. NO.1264/2008 (DELHI HIGH COURT); INCOME TAX OFFICER VS. ORBITAL COMMUNICATION (P) LTD, (2010) 38 SOT 6 DELHI (URO); SHREE BARKHA SYNTHETIC LTD. VS. ACIT (2006) 155 TAXMAN 286 (RAJ. HIGH COURT) CIT VS. VICTOR ELECTRODES LTD. (2010) 329 ITR 271 (DELHI). 4. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT AS SESSEE HAS PRODUCED DOCUMENTARY EVIDENCE EXHIBITING THE ID ENTITY OF THE SHARE APPLICANT. FROM THE FINDING OF ASSESS ING OFFICER EXTRACTED ABOVE, IT IS DISCERNABLE THAT LEARNED ASS ESSING OFFICER WAS NOT TAKING COGNIZANCE OF ANY DOCUMENTAR Y EVIDENCE OF ANY EVIDENCE OVER AND ABOVE THE ALLEGED INFORMATION SUPPLIED BY THE DIT(INV.) WHEREAS LEARN ED CIT(A) HAS EVALUATED BOTH THESE SETS OF FACTS I.E., THE IN FORMATION SUPPLIED BY THE DIT (INV.) AND DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE, IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS. THE INFORMATION OF THE INVESTIGATI ON WING COULD BE SUFFICIENT FOR AN INQUIRY. THE ASSESSING OFFICER HAS TREATED SUCH INFORMATION AS A GOSPEL TRUTH. HE COU LD NOT BRING ANY EVIDENCE TO SUBSTANTIATE THAT WHATEVER DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE WAS NOT IN EXISTENCE OR FABRICATED ONE. 5. THE LEARNED DR AT THE TIME OF HEARING RELIED UPO N THE 5 ORDER OF LEARNED ITAT IN THE CASE OF OMEGA BIOTECH LTD. SHE PLACED ON RECORD THE COPY OF THE TRIBUNALS ORDER. 6. WE HAVE DULY CONSIDERED THIS ORDER AND WE ARE OF THE VIEW THAT IT IS AN ORDER GIVEN IN PARTICULAR SETS O F FACTS. IT DOES NOT LAY DOWN ANY RATIO OF LAW. IT IS AN ADJUD ICATION OF LIST BETWEEN THE PARTIES. THE TRIBUNAL HAS JUST SE T ASIDE THE ISSUE FOR REINVESTIGATION TO THE ASSESSING OFFICER, WHEREAS THE LEARNED FIRST APPELLATE AUTHORITY HAS MADE A RE FERENCE TO A LARGE NUMBER OF DECISIONS OF THE HONBLE DELHI HIGH COURT. TAKING INTO CONSIDERATION ALL THESE FACTS, WE DO NOT FIND ANY MERIT IN THIS APPEAL. 7. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 08.07.2011. SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 08.07.2011. NS 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 DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).