DCIT, Cen. Cir-VII, Kolkata, Kolkata V. M/s Ventex Trade Pvt. Ltd., Kolkata

ITA 181/KOL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4737 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST TH E
• Keywords: Accommodation entries
• Section: 143(3); 131

Judgement Text

I.T.A. NO. 181/KOL/2014 AS SESSMENT YEAR: 2008-2009 M/S. VENTEX TRADE PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 181/KOL/2014 ASSESSMENT YEAR: 2008-2009 DEPUTY COMMISSIONER OF INCOME TAX,...... .........APPELLANT CENTRAL CIRCLE-VII, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 -VS.- M/S. VENTEX TRADE PVT. LIMITED,.................... .............RESPONDENT 1, R.N. MUKHERJEE ROAD, KOLKATA-700 001 [PAN:AAACV 8556 H] APPEARANCES BY: SHRI A.K. BANDYOADHYAY, JCIT, SR. D.R, FOR THE APPELLANT N O N E, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 28, 2019 DATE OF PRONOUNCING THE ORDER : FEBRUARY 08, 2019 O R D E R PER BENCH:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTR AL-I, KOLKATA DATED 29.11.2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY. T HE INVESTIGATION CARRIED OUT BY THE DEPARTMENT OF INCOME TAX (INVEST IGATION), KOLKATA REVEALED THAT SOME ENTITIES WERE INVOLVED IN PROVID ING ACCOMMODATION ENTRIES TO VARIOUS COMPANIES BASED IN MUMBAI, WHICH IN TURN HAD USED THE SAID FUNDS FOR PAYMENTS TO MADHIPURA MERCANTILE COOPERATIVE BANK AT MUMBAI, WHICH WAS CONTROLLED BY SHRI KETAN PAREKH. SINCE THE ASSESSEE- I.T.A. NO. 181/KOL/2014 AS SESSMENT YEAR: 2008-2009 M/S. VENTEX TRADE PVT. LIMITED 2 COMPANY WAS ONE OF SUCH ENTITIES, THE STATEMENT OF ITS DIRECTOR SHRI PRAMOD SHARMA WAS RECORDED UNDER SECTION 131 BY THE DDIT(INVESTIGATION), KOLKATA ON 24.11.2006. IN THE SAID STATEMENT GIVEN ON OATH, SHRI PRAMOD SHARMA ACCEPTED THAT HE HAD GO T CASH OF EQUIVALENT AMOUNT FROM THE MUMBAI BASED COMPANIES BELONGING TO SHRI KETAN PAREKH GROUP AND AFTER DEPOSITING THE SAID CASH INT O THE BANK ACCOUNT OF THE ASSESSEE-COMPANY, CHEQUES WERE ISSUED TO THE SA ID COMPANIES. HE ALSO FURNISHED A LIST OF CHEQUES SO ISSUED AGAINST CASH THAT HAD BEEN RECEIVED BY HIM. ALTHOUGH SHRI PRAMOD SHARMA SUBSEQ UENTLY FILED AN AFFIDAVIT RETRACTING HIS STATEMENT, THE ASSESSING O FFICER DID NOT ACCEPT THE SAME ON THE BASIS OF THE ENQUIRIES CONDUCTED BY THE INVESTIGATION WING ON A TEST-CHECK BASIS, WHICH REVEALED THAT CASH WAS DEPOSITED IN VARIOUS BANK ACCOUNTS IN DIFFERENT STAGES. ACCORDING TO THE ASSESSING OFFICER, THIS FACTUAL POSITION SUBSTANTIATED THE STATEMENT OF SHR I PRAMOD SHARMA, DIRECTOR OF THE ASSESSEE-COMPANY THAT CASH WAS INDE ED RECEIVED BY THE ASSESSEE-COMPANY IN LIEU OF CHEQUES GIVEN TO VARIOU S COMPANIES BELONGING TO KETAN PAREKH GROUP. HE ACCORDINGLY HEL D THAT ACCOMMODATION ENTRIES WERE GIVEN BY THE ASSESSEE-CO MPANY TO VARIOUS MUMBAI BASED COMPANIES BELONGING TO KETAN PAREKH GR OUP AND SINCE THE ACCOMMODATION ENTRIES SO GIVEN DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09 AGGREGATED TO RS.1,14,55,000/-, HE ADDED TH E COMMISSION INCOME @ 2% AMOUNTING TO RS.2,29,100/- TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED FOR A.Y. 2008-09 UNDER SEC TION 143(3) VIDE AN ORDER DATED 28.12.2010. IN THE ASSESSMENT SO MADE, HE ALSO MADE AN ADDITION OF RS.1,14,55,000/- IN THE HANDS OF THE AS SESSEE ON PROTECTIVE BASIS OBSERVING THAT THE UNEXPLAINED INCOME TO THAT EXTENT IN THE FORM OF CASH GIVEN BY THE MUMBAI BASED COMPANIES WAS ASSESS ABLE ON SUBSTANTIVE BASIS IN THE HANDS OF THE SAID COMPANIES FOR THE CA SH GIVEN TO THE ASSESSEE-COMPANY. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) FOR A.Y. 2008-09, APPEAL WAS PREFERRED BY TH E ASSESEE-COMPANY I.T.A. NO. 181/KOL/2014 AS SESSMENT YEAR: 2008-2009 M/S. VENTEX TRADE PVT. LIMITED 3 BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING T HE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE O N RECORD, THE LD. CIT(APPEALS) DELETED THE ADDITION MADE BY THE ASSES SING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2008-09 ON AC COUNT OF THE ALLEGED ACCOMMODATION ENTRIES GIVEN TO THE MUMBAI BASED COM PANIES IN THE FORM OF COMMISSION INCOME AT THE RATE OF 2% AS WELL AS F URTHER ADDITION ON ACCOUNT OF PROTECTIVE BASIS FOR THE FOLLOWING REASO NS GIVEN IN PARAGRAPH NOS. 7 & 8 OF HIS IMPUGNED ORDER:- 7. I HAVE PERUSED THE RELEVANT ORDERS AND CONSIDER ED THE MATERIAL PLACED ON RECORD. I FIND FROM THE APPEAL F OLDER THAT IN COURSE OF THE APPELLATE PROCEEDINGS, MY LEARNED PREDECESSOR TRIED TO ASCERTAIN ABOUT THE CASES WHER E SUBSTANTIVE ADDITIONS WERE MADE CORRESPONDING TO TH E PROTECTIVE ADDITION IN THE PRESENT CASE; AND ALSO, ABOUT THE FATE OF THE APPEALS IN THOSE CASES. HOWEVER, THOUGH A SUBSTANTIAL PERIOD OF MORE THAN 2 YEARS HAS ALREADY ELAPSED, NOTHING HAS BEEN HEARD IN THIS REGARD FROM THE AO. FOR, THE LD. CIT(A) HAD CALLED FOR THE REPORT VIDE HIS LETTE R DATED 11.07.2011. ALSO THE AO HAS NOT RESPONDED TO THE NO TICES OF HEARING INASMUCH AS NONE HAS APPEARED ON BEHALF OF THE DEPARTMENT ON THE DATES OF HEARING. I NOTE FOR THE PURPOSES OF RECORD THAT THE AO HAS NOT EVEN RESPONDED TO THE LETTER OF THE CIT(A). IN THIS FACTUAL BACKGROUND; GIVEN THE F ACTS OF THE CASE AND THE FINDINGS OF THE AO IN HIS ASSESSMENT O RDER;' AND ALSO, THE DECISIONS OF THE HON'BLE JURISDICTIONAL I TAT IN THE CASE OF THE ASSESSEE AS WELL AS IN SIMILAR CASES IN VOLVING IDENTICAL FACTS AND CIRCUMSTANCES, THE PRESENT APPE AL IS NOW BEING DECIDED ON THE BASIS OF THE MATERIAL AVAILABL E ON RECORD. 8. I HAVE PERUSED THE RELEVANT ORDERS. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE AS SESSEE. I FIND THAT THE ISSUES INVOLVED IN THIS APPEAL ARE CO VERED BY THE ORDERS OF MY LEARNED PREDECESSOR AS WELL AS BY THOSE OF THE HONBLE JURISDICTIONAL ITAT WHEREIN SIMILAR ADD ITIONS, UNDER IDENTICAL FACTS AND CIRCUMSTANCES, WERE DELET ED. RESPECTFULLY FOLLOWING THE DECISIONS OF THE JURISDI CTIONAL ITAT, IT IS TO BE HELD THAT THE ADDITIONS MADE BY T HE AO ON ACCOUNT OF UNEXPLAINED INCOME AND COMMISSION INCOME IS NEITHER SUSTAINABLE IN LAW NOR ON FACTS. THE ADDITI ON OF RS.1,14,55,000/- AND RS.2,29,100/- IS DIRECTED TO B E DELETED. GROUNDS NO. 2, 3 AND 4 IS ALLOWED. GROUND NO. 1 THE REBY CONTESTING THE LEGAL VALIDITY OF THE ASSESSMENT ORD ER HAS NO MERIT. GROUND NO. 1 IS DISMISSED. GROUND NO. 5 IS G ENERAL IN NATURE . I.T.A. NO. 181/KOL/2014 AS SESSMENT YEAR: 2008-2009 M/S. VENTEX TRADE PVT. LIMITED 4 AGGRIEVED BY THE ORDERS OF THE LD. CIT(APPEALS) GIV ING RELIEF TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, THE REVE NUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING OF THIS APPEAL FIXED ON 2 8.01.2009, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. THIS APPEAL IS, THEREFORE, BEING DISPOSED OF EX-PARTE QUA THE RESPONDENT-ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LD. D.R. AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE MAIN ISSUES INVOLVED IN THIS APPEAL REL ATE TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITIONS MADE BY THE A SSESSING OFFICER ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRIES GIVEN TO T HE MUMBAI BASED COMPANIES ON PROTECTIVE BASIS AND THE DELETION BY T HE LD. CIT(APPEALS) OF THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOU NT OF COMMISSION INCOME ALLEGEDLY RECEIVED BY THE ASSESSEE FOR GIVIN G ACCOMMODATION ENTRIES. IT IS OBSERVED THAT THE SIMILAR ISSUES WER E INVOLVED IN SOME OTHER CASES AND ALL THESE CASES WERE ADJOURNED IN THE PAS T AND ALSO BLOCKED FOR SOME PERIOD FOR GETTING THE INFORMATION ABOUT THE S TATUS OR OUTCOME OF THE CASES WHERE THE SIMILAR AMOUNTS WERE ADDED ON S UBSTANTIVE BASIS. INSPITE OF SUFFICIENT TIME GIVEN TO BOTH THE PARTIE S, THEY HAVE FAILED TO FURNISH THE SAID INFORMATION. IT IS WELL SETTLED TH AT PROTECTIVE ASSESSMENT IS PERMISSIBLE IN LAW AND IN CASE OF A DOUBT OR AMB IGUITY ABOUT REAL ENTITY IN WHOSE HANDS A PARTICULAR INCOME IS TO BE ASSESSE D, THE ASSESSING AUTHORITY IS ENTITLED TO HAVE RECOURSE TO MAKE A PR OTECTIVE ASSESSMENT. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF LA LJI HARIDAS VS.- ITO (43 ITR 387), THE OFFICER MAY, WHEN IN DOUBT, TO SA FEGUARD THE INTEREST OF THE REVENUE CAN ASSESS IT IN MORE THAN ONE HAND BUT THIS PROCEDURE CAN BE PERMITTED ONLY AT THE STAGE OF ASSESSMENT. PROTECTI VE ASSESSMENT BECOMES REDUNDANT WHEN THE SUBSTANTIVE ASSESSMENT BECOMES F INAL AND IF THE SUBSTANTIVE ASSESSMENT FAILS, IT IS PROTECTIVE ASSE SSMENT WHICH IS TO BE TREATED AS SUBSTANTIVE. KEEPING IN VIEW THIS COROLL ARY BETWEEN THE SUBSTANTIVE ASSESSMENT AND PROTECTIVE ASSESSMENT, A N APPEAL AGAINST THE PROTECTIVE ASSESSMENT SHOULD ORDINARILY AWAIT THE O UTCOME OF THE I.T.A. NO. 181/KOL/2014 AS SESSMENT YEAR: 2008-2009 M/S. VENTEX TRADE PVT. LIMITED 5 SUBSTANTIVE ASSESSMENT SO THAT THE PROTECTIVE ASSES SMENT CAN BE INCONFORMITY WITH THE SUBSTANTIVE ASSESSMENT. IN TH E CASE OF CIT VS.- SURENDRA GULAB CHAND MODI (140 ITR 517), THE APPEAL ARISING OUT OF THE PROTECTIVE ASSESSMENT WAS DISPOSED OF BY THE APPELL ATE AUTHORITY I.E. TRIBUNAL VACATING THE PROTECTIVE ASSESSMENT WITHOUT WAITING FOR THE FINAL OUTCOME OF THE PROCEEDINGS ARISING FROM THE SUBSTAN TIVE ASSESSMENT, WHICH MATTER WAS PENDING IN THE HONBLE SUPREME COU RT. THE HONBLE GUJARAT HIGH COURT HELD THAT THE TRIBUNAL WAS NOT J USTIFIED IN PROCEEDING WITH THE MATTER AND IN DISPOSING OF IT INSTEAD OF B LOCKING IT TILL THE DISPOSAL OF THE MATTER PENDING IN THE HONBLE SUPRE ME COURT IN ORDER TO BRING IT INCONFORMITY WITH THE VIEW OF THE HONBLE SUPREME COURT. THE HONBLE GUJARAT HIGH COURT ACCORDINGLY DIRECTED THE TRIBUNAL TO KEEP THE MATTER ALIVE AND PENDING AWAITING THE DECISION OF T HE HONBLE SUPREME COURT IN THE PROCEEDINGS ARISING FROM THE SUBSTANTI VE ASSESSMENT. 5. IN THE PRESENT CASE, THE LD. CIT(APPEALS) DID NO T AWAIT THE OUTCOME OF THE PROCEEDINGS ARISING FROM THE SUBSTANTIVE ASS ESSMENT AND SINCE THE SAID INFORMATION WAS NOT FORTHCOMING EVEN AFTER A C ONSIDERABLE PERIOD FROM THE CONCERNED ASSESSING OFFICER, HE PROCEEDED TO DISPOSE OF THE APPEAL ARISING FROM THE PROTECTIVE ASSESSMENTS BY H IS IMPUGNED ORDER AND DELETED THE ADDITION MADE ON PROTECTIVE BASIS W ITHOUT AWAITING THE FINAL OUTCOME OF THE PROCEEDINGS ARISING FROM THE S UBSTANTIVE ASSESSMENT. KEEPING IN VIEW THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS.- SURENDRA GULAB CHAND MODI (SUPRA), WE HOLD THAT THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDI TION MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS IN THE YEAR U NDER CONSIDERATION WITHOUT AWAITING FOR THE FINAL OUTCOME OF THE PROCE EDINGS ARISING FROM THIS SUBSTANTIVE ASSESSMENT. WE, THEREFORE, SET ASI DE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO HIM FOR KEEPING IT ALIVE AND PENDING TILL THE OUTCOME OF TH E PROCEEDINGS ARISING FROM THE SUBSTANTIVE ASSESSMENT. I.T.A. NO. 181/KOL/2014 AS SESSMENT YEAR: 2008-2009 M/S. VENTEX TRADE PVT. LIMITED 6 6. AS REGARDS THE ISSUE RELATING TO THE ADDITION MA DE ON ACCOUNT OF COMMISSION INCOME ALLEGEDLY RECEIVED BY THE ASSESSE E FOR GIVING ACCOMMODATION ENTRIES, WE FIND THAT THIS ISSUE IS C ONSEQUENTIAL TO THE ISSUE RELATING TO THE ADDITION MADE ON PROTECTIVE B ASIS ON ACCOUNT OF ACCOMMODATION ENTRIES ALLEGEDLY GIVEN BY THE ASSESS EE-COMPANY TO THE MUMBAI BASED COMPANIES. SINCE THE SAID ISSUE IS REM ITTED BACK BY US TO THE LD. CIT(APPEALS), WE ALSO REMIT THE CONSEQUENTI AL ISSUE RELATING TO ADDITION ON ACCOUNT OF COMMISSION INCOME BACK TO TH E LD. CIT(APPEALS) FOR DECIDING THE SAME AFRESH. GROUNDS NO. 1 & 2 OF THE REVENUES APPEALS ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE FOR A.Y . 2008-09 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 08, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 8 TH DAY OF FEBRUARY, 2019 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-VII, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 (2) M/S. VENTEX TRADE PVT. LIMITED, 1, R.N. MUKHERJEE ROAD, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-1 , KOLKATA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.