Omni Infoword Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 1837/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97929 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Keywords: Income from undisclosed sources; Accommodation entries
• Section: 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SH. C.M. GARG, JUDICIAL MEMBER AND SH. PRASHANT MAHAR I SHI , ACCOUNTANT MEMBER ITA NO . 1837 /DEL/201 2 ASSESSMENT YEAR: 2009 - 10 OMNI INFOWORLD PVT. LTD. VS. DCIT, CENTRAL CIRCLE 14, C/O - KAPIL GOEL ADV. ROOM NO. 320 ARA CENTRE, A - 1/2 5 SECTOR 15 ROHINI, JHANDEWALAN EXTN., NEW DELHI (PAN: AAACP6799F ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. KAPIL GOEL, ADV. RESPONDENT BY : MS. NANDITA KANCHAN, CIT(DR) DATE OF HEARING: 05.11.2015 DATE OF PRONOUNCEMENT: 23 .11.2015 ORDER PER PRASHANT MAHARISHI , A .M. : 01 . THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) , DATED 29.02.2012 PASSED FOR THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: I . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 70,00,000/ - MADE LD. AS SESS ING OFFICER ON MERE BASIS OF SUSPICION, CONJECTURES AND SURMISES. II . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 70,00,000/ - MADE BY LD. ASSESING OFFICER WITHOUT APPRECIATING TH AT STATED ADDITION AND ACTION ON PART OF THE LD. AO HAS RESULTED IN PATENT AND GLARING DOUBLE TAXATION. III . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 70,00,000/ - MADE BY LD. ASSES SING OFFICER WITHOUT APPRECIATING THE STATEMENT OF SEARCHED PERSON RECORDED U/S 131(1A) OF THE ACT, AS REGARDS UTILIZATION OF SURRENDERED CASH/AMOUNT. IV . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 70,00,000/ - MADE BY THE LD. ASSESSING OFFICER, WITHOUT KEEPING IN MIND THAT ASSESSEE HAS DISCHARGED ITS ONUS SATISFACTORILY BEYOND SHADOW OF DOUBT AS TO SOURCE OF STATED CASH AMOUNT. PAGE | 2 V . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 70,00,000/ - MADE BY LD. ASSESSING OFFICER, WITHOUT APPRECIATING THAT UNLESS PROVED OTHERWISE BY REVENUE, IT SHALL BE AVAILABLE TO ASSESSEE TO EXPLAIN THE SOURCE OF CASH FOUND FROM AVAILABLE CASH GENERATION. 02 . THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING OF COMPUTER HARDWARE/SOFTWARE AND OTHER INFORMATION TECHNOLOGY RELATED ITEMS. FOR THE ASSESSMENT YEAR 2009 - 10, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 29.09.2009 DECL ARING A TOTAL INCOME OF RS. 37,95,500/ - . THE CASE WAS TAKEN UNDER SCRUTINY BY ISSUING NOTICE UNDER SECTION 143(2) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT) . IN A SEARCH OPERATION CONDUCTED IN THE CASE OF SH. VISHAN SINGH AND MUKESH KUMAR JADON AT NEW DELHI RAILWAY STATION UNDER SECTION 132 OF THE ACT, AN AMOUNT OF RS. 45,00,000/ - WAS FOUND AND SEIZED. IN THE STATEMENT RECORDED BY THE ASSESSING OFFICER, SH. MUKES H KUMAR ADMITTED THAT HE HAD ALSO CARRIED RS. 25,00,000/ - BY PURSHOTAM EXPRESS AND DELIVERED TO BHUBANESHWAR OFFICER ON 07.08.2008. HE FURTHER ADMITTED THAT HE HAD VISITED CHENNAI BY TAMILNADU EXPRESS ON 06.06.2008 TO DELIVER CASH OF RS. 8,00,000/ - TO DRIV ER RAVI SHANKAR OF M/S SAP CHENNAI. THEREAFTER, VIDE LETTER DATED 23.12.2010 THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE AMOUNT OF RS. 78,00,000/ - SHOULD NOT BE TREATED AS ITS UNEXPLAINED CASH AND ADDED TO THE INCOME FROM UNDISCLOSED SOURCES. THE ASSES SEE COMPANY VIDE ITS LETTER DATED 28.12.2010 REPLIED THAT THE CA SH AMOUNTING TO RS. 8,00,000/ - TRANSFERRED TO CHENNAI, RS. 25,00,000/ - TRANSFERRED TO BHUBANESHWAR AND RS. 45,00,000/ - SEIZED BY THE I.T. DEPARTMENT WAS FROM THE CASH PAGE | 3 GENERATED FROM THE SURREN DERED AMOUNT OF RS. 247.19 LAKHS AND HENCE THE SAME CANNOT BE TREATED AS OUR INCOME AS IT WOULD TAXING TWICE ON SAME INCOME. OUT OF THE ABOVE AMOUNT AO ALLOWED SET OFF OF RS 8,00,000/ - BEING CASH AMOUNT RECEIVED ON THAT DATE FROM MR. SANDEEP GUPTA. H OWEVER AO DID NOT ALLOW ANY SET OFF FOR FURTHER RS 70,00,000/ - FOR THE REASON THAT AMOUNT OF RS 25,00,000/ - TRANSFERRED TO BHUVENESHWAR ON 5.8.2008 AND RS 45,00,000/ - ON 22.8.2008 AS THERE IS NO IMMEDIATE SOURCES OF FUNDS AVAILABLE ON THE DATES BEFOR E THE DATES OF CASH FOUND / TRANSFERRED. AO ALSO DID NOT ACCEPTED THE ARGUMENTS OF THE ASSESSEE THAT SOURCES OF THESE AMOUNTS OF RS 70,00,000/ - IS DISCLOSURE MADE BY THE ASSESSEE BECAUSE AO WAS OF THE VIEW THAT NOBODY WOULD KEEP SUCH A HEAVY CASH WITH HIM IDLE FOR SUCH A LONG TIME. THEREFORE THE ASSESSING OFFICER, HAVING FOUND UNSATISFACTORY THE REPLY OF THE ASSESSEE - COMPANY, MADE ADDITION OF RS. 70,00,000/ - AS UNDISCLOSED INCOME VIDE ORDER DATED 31.12.2010. BEING AGGRIEVED BY THIS ASSESSMENT O RDER, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE ORDER DATED 29.02.2012 , DISMISSED THE APPEAL. CIT (A) ALSO HELD THAT THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE UTILIZATION OF THESE CASH DURING INTERVENING PERIOD OF SURRENDER AND AMOUNT U TILIZED FOR THE PERIOD OF SIXTEEN MONTHS I.E. DATE OF DISCLOSURE AND THE DATES OF UTILIZATION SHOWN BY THE ASSESSEE. THEREFORE CIT (A) ALSO DID NOT GRANT THE BENEFIT OF THE DISCLOSURE MADE BY THE PAGE | 4 ASSESSEE AND CONFIRMED THE ADDITION OF RS 70,00,000/ - AS UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE NOW ASSESSEE IS IN APPEAL BEFORE US. 03 . BEFORE US ASSESSEE SUBMITTED CASH FLOW STATEMENT OF THE AMOUNT OF CASH AVAILABLE WITH IT FROM 1 - 4 - 2008 TO THE 29.8.2008 PREPARED FROM THE CASH BOOK TO JUSTIFY THAT ASSESSEE WAS HAVING A SUFFICIENT CASH AVAILABLE WITH HIM AND WHICH SHOULD BE CONSIDERED AS PART OF THE DISCLOSURE ALREADY MADE BY ASSESSEE. HE FURTHER SUBMITTED THAT IT AMOUNTS TO DOUBLE ADDITION IN THE HANDS OF THE ASSESSEE ONCE IT IS ALREADY DIS CLOSED AND SECOND TIME WHEN APPLICATION OF SUCH INCOME IS FURTHER ADDED SEPARATELY. HE ALSO DREW OUR ATTENTION TO A DATE WISE CASH FLOW STATEMENT AND ALSO THE DISCLOSURE MADE BY THE ASSESSEE FOR WHICH ENTRIES HAVE BEEN PASSED IN THE BOOKS OF ACCOUNTS. IN THE STATEMENT HE ALSO POINTED OUT THAT AN AMOUNT OF RS 25 LAK HS SENT TO BHUVENESHWAR AND RS 8 LAKHS CASH SENT TO CHENNAI AND RS 45 LAKH SEIZED BY THE INCOME TAX DEPARTMENT ARE ALREADY SHOWN AND OUT OF WHICH AO HAS GIVEN CREDIT OF RS 8 LAKHS ONLY. R EGARDING THE PERIOD OF SIXTEEN MONTH S BEING INTERVENING PERIOD FROM THE DATE OF SURRENDER TO THE DATE OF UTILIZATION OF CASH HE EXPLAINED THAT THE AMOUNT IS ALREADY AVAILABLE IN THE BOOKS OF THE ASSESSEE AND WHEN IT IS DEPICTED FROM CASH FLOW CHART PREPARE D FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE IT SHOULD BE ACCEPTED AND NO FURTHER ADDITION SHOULD HAVE BEEN MADE. HIS FURTHER SUBMISSION WAS THAT THE ENTRIES IN BOOKS OF ACCOUNTS WERE ACCEPTED BY THE AO WHERE IN ENTRIES OF DISCLOSURE IS MADE FOR THIS H E PAGE | 5 TOOK US TO PAGE NO 2 & 5 TO 7 OF THE PAPER BOOK FILED FOR THE SAME. HE FURTHER RELIED ON FOLLOWING JUDICIAL PRECEDENTS SUPPORTING HIS VIEWS : - I . M/S SUNIL M ANTR I REALTIES LIMITED V ACIT ITA NO 6988/ MUM/2011 II . INFO WORLD V DCIT 796, 797 & 798/DEL/2012 III . CIT V PREMCHAND ITA NO 419 OF 2006 DATED 20.7.2012 ( P&H) 04 . LD CIT DR VEHEMENTLY DEFENDED THE ORDER OF AO AS WELL AS CIT (A) AND SHE FURTHER STRESSED THAT IN THE EVENT ASSESSEE HAS FAILED MISERABLY TO GIVE DETAILS OF THE USE OF CASH IN INTERVE NING PERIOD OF SIXTEEN MONTHS, THE EXPLANATION GIVEN BY THE ASSESSEE IS SELF SERVING AND CANNOT BE BELIEVED . SHE FURTHER SUBMITTED THAT CASH FLOW SUBMITTED BY THE ASSESSEE IS NOT FROM ANY RECORD KEPT BY THE ASSESSEE BUT MERELY A RECORDING OF TRANSACTION ENTERED JUST TO JUSTIFY THE EXISTENCE OF CA SH. SHE FURTHER SUBMITTED RELYING ON PARA NO 2 OF THE ASSESSMENT ORDER THAT WHEN THERE IS NO AVAILABILITY OF CASH WITH THE ASSESSEE THE ADDITION IS RIGHTLY MADE AND WHEREVER THE SOURCES OF THE FUND WERE AVAILAB LE ASSESSEE HAS GRANTED CREDIT OF RS 8 LATHS . SHE FURTHER RELIED ON THE PARA NO 7 OF OTHER ORDER OF CIT (A) THAT ASSESSEE IS ENGAGED IN ACCOMMODATION ENTRY BUSINESS AND IN SUCH BUSINESS NO CASH ON HAND IS AVAILABLE AS IT IS ALWAYS IN CIRCULATION. HER F URTHER STRESS WAS ON THE ARGUMENT THAT CASH FLOW STATEMENT IS SUBMITTED PAGE | 6 BY ASSESSEE BUT SAME IS NOT THE CASH BOOK OF THE ASSESSEE SO BASED ON SUCH CASH FLOW STATEMENT THE BENEFIT IS RIGHTLY NOT GRANTED BY THE AO. 05 . IN REJOINDER LD AR OF THE ASSESSEE ONCE AG AIN RELIED ON THE DECISION CITED SHOWING THAT IN THOSE DECISIONS INTERVENING PERIOD WAS MORE THAN THE PERIOD IN THE CASE OF THE ASSESSEE BUT HON ITAT HAS CONSIDERED THE SET OFF / TELESCOPING. THEREFORE IT WAS SUBMITTED THAT IN THE EVEN T HE CASH FLOW STATEMENTS SHOWN BY THE ASSESSEE PREPARED FROM THE BOOKS OF THE ACCOUNTS OF THE ASSESSEE SHOWS THE AVAILABILITY OF THE CASH, ADDITION SHOULD NOT HAVE BEEN MADE. HE FURTHER SUBMITTED THAT THE CASH FLOW STATEMENTS ARE BASED ON THE CASH BOOK OF THE ASSESSE E. 06 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AS WELL AS THE ORDERS OF LOWER AUTHORITIES. WE HAVE ALSO PERUSED RELEVANT PAGES OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE. THE ONLY REASON WHY THE ASSESSEE IS NOT GRANTED BENEFIT OF THE SURRENDER MADE BY THE ASSESSEE IS THAT ASSESSEE HAS FAILED TO EXPLAIN THE U S E OF THE CASH FOR THE INTERVENING PERIOD. BOTH THE LOWER AUTHORITIES FURTHER SWAYED BY THE REASON THAT NO PRUDENT BUSINESSMAN WILL KEEP THE CASH IDLE FOR SUCH A LONG TIME. IN THIS CA SE ASSESSEE HAS PREPARED A CASH FLOW STATEMENT FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND SHOWN THAT SOURCES OF THE AMOUNT OF RS 25,00,000/ - TAKEN TO BHUVENESHWAR ON 5.8.2008 AND RS 45,00,000/ - CASH SE IZED ON 22.8.208 ARE OUT OF THE AMOUNT AVAILABLE WITH THE ASSESSEE ON ACCOUNT OF SURRENDER MADE . AS PER THE DETAILED BREAKUP OF THE ENTRIES PASSED BY THE PAGE | 7 ASSESSEE ON ACCOUNT OF SURRENDER SHOWS THAT AN AMOUNT OF R S 45,00,000/ - SEIZED BY INCOME TAX DEPARTMENT AND RS 2 5,00,000/ - BEING CASH SENT TO BHUVENSHWAR SHOW N AS CASH TO BBS AS PER PAGE NO 6 OF THE PAPER BOOK.. AS PER PAGE 2 OF THE PAPER BOOK , CASH FLOW STATEMENT SHOWS THAT AS ON 6.8.2008 ASSESSEE WAS HAVING THE CASH BALANCE OF RS 1 , 50 , 85 , 236/ - AND OUT OF WHICH ON 31.7.2008 AN AMO UNT OF RS 6 , 14 , 597/ - WAS SPENT ON INFO AGE , ON 5.8.2008 RS 25,00,000/ - UTILIZED FOR SENDING FOR CASH TO BHUVNESHWAR AND ON 22.8.2008 CASH WAS SEIZED BY I NCOME TAX DEPARTMENT OF RS 45,00,000/ - . AS PER THAT STATEMENT ASSESSEE STILL HAS THE BALANCE O F RS 74,70,639/ - AS AT 22.8.2008 WHICH IS TAKEN IN TO THE BOOKS OF ACCOUNTS. THIS CASH FLOW STATEMENT IS NOT CONTROVERTED BY THE A O AS WELL AS CIT(A) WHEN IT WAS SPECIFICALLY SUBMITTED THAT SAME IS MADE BASED ON THE ENTRIES MADE IN THE CASH BOOK IMMEDI ATELY AFTER THE SURRENDER OF RS 2,47,85,236/ - . IT IS SURPRISING THAT AO WANTS TO TAX THE SURRENDER AMOUNT AS WELL AS ITS APPLICATION WHICH DEFINITELY AMOUNTS TO DOUBLE ADDITION IN THE HANDS OF THE ASSESSEE SPECIALLY WHEN THE AMOUNTS ARE RECORDED IN THE BOO KS OF ACCOUNTS AND THERE IS NO EVIDENCE THAT SAME IS NOT AVAILABLE WITH THE ASSESSEE . REGARDING THE INTERVENING TIME PERIOD IT IS APPARENT THAT WHEN THE BOOKS OF ACCOUNTS SHOWS THE ENTRIES RECORDED THERE IN AND AO MAKES AN ASSESSMENT WITHOUT DISPUTING I T THE CASH FLOW STATEMENT MADE BY ASSESSEE FROM THE SAME MATERIAL CANNOT BE REJECTED MERELY ON SURMISES THAT NO PAGE | 8 PRUDENT PERSON WILL KEEP THE MONEY FOR SUCH A LONG TIME OF SIXTEEN MONTHS. THERE IS NO EVIDENCE WITH THE AO THAT THIS MONEY IS USED BY THE ASSESSEE FOR SOME OTHER PURPOSES WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. IN ABSENCE OF SUCH A FINDING IT CAN BE SAFELY PRESUMED THAT THE CASH WAS AVAILABLE WITH THE ASSESSEE ON WHICH IT HAS ALREADY PAID THE TAXES AT THE TIME OF SURRENDER. FURTHER AS ALLEGED THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF ACCOMMODATING ENTRIES BUT HAS SURRENDERED THE AMOUNT ON ACCOUNT OF ACCOMMODATION ENTRIES. ASSESSEE IS IN THE BUSINESS OF THE TRADING OF COMPUTERS / SOFTWARE AND OTHER IT R ELATED ITEMS. THEREFORE WE DO NOT AGREE WITH THE ARGUMENT THAT AS ASSESSEE IS ENGAGED IN THE BUSINESS OF ACCOMMODATING ENTRIES CASH CANNOT BE AVAILABLE WITH THE ASSESSEE BUT IS USED IN THAT BUSINESS OF PROVIDING ACCOMMODATING ENTRIES. WE ALSO DO NOT SUBSCRIBE TO THE ARGUMENT THAT THAT ASSESSEE COULD NOT HAVE KEPT THE CASH FOR SIXTEEN MONTHS IDLE AS PRUDENT BUSINESSMAN AND THEREFORE BENEFIT OF TELESCOPING CANNOT BE GIVEN. OUR ATTENTION IS DRAWN TO THE DECISION OF HONORABLE PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT V SHRI PREMCHAND ( SUPRA) , THE CREDIT FOR TELESCOPING/ BENEFIT OF SURRENDER IS GIVEN EVEN AFTER 10 YEARS IN ABSENCE OF ANY EVIDENCE THAT ASSESSEE HAD ACQUIRED ANY ASSETS OR HAD USED IT TO MEET SOME EXPENSES. IN ANOTHER DECISION CI TED BEFORE US THE INTERVENING PERIOD OF 21 MONTHS WAS NOTED AND STILL ALLOWED THE BENEFIT OF TELESCOPING OR CREDIT OF SURRENDER TO THE ASSESSEE IN ABSENCE OF ANY PAGE | 9 ADVERSE EVIDENCE OF USER OF THAT AMOUNT FOR ACQUIRING SOME ASSETS OR USER OF THE SAME FOR ANY PURPOSES. IN THE CASE OF THE ASSESSEE ALSO THERE IS NO SUCH EVIDENCE AVAILABLE WITH THE AO. MERELY ON THE BASIS OF TIME PERIOD IN ABSENCE OF ANY CONTRARY MATERIAL ASSETS/ CASH AVAILABLE WITH THE ASSESSEE IN ITS BOOKS CANNOT BE DISBELIEVED. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HONORABLE PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT V PREMCHAND AS WELL THE DECISIONS RENDERED BY THE COORDINATE BENCH CITED BEFORE US, WE REJECT THE CONTENTION OF THE REVENUE THAT BECAUSE OF ELAPSE OF SUCH A LO NG TIME , CREDIT OF SURRENDER MADE BY ASSESSEE CANNOT BE GRANTED FOR THE AMOUNT USED BY ASSESSEE OUT OF THAT DISCLOSURE/SURRENDER. THEREFORE WE REVERES THE ORDER OF CIT (A) AND DELETE THE ADDITION OF RS 70,00,000/ - . 4 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION IS PRONOUNCED ON 23RD NOVEMBER , 2015. - SD/ - - SD/ - ( C.M. GARG ) ( PRASHANT MAHAR I SHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 RD NOVEMBER , 2015. RK/ - COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI