D.C.I.T C.C - VII,Kolkata, Kolkata V. M/s Nalimbur Suppliers (P) Ltd, Kolkata

ITA 1859/KOL/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4740 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A GAINST THREE SEPARATE
• Keywords: Accommodation entries
• Section: 143(3); 131

Judgement Text

I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (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. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSMENT YEARS: 2006-2007, 2007-2008 & 2008-2009 DEPUTY COMMISSIONER OF INCOME TAX,...... .........APPELLANT CENTRAL CIRCLE-VII, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 -VS.- M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED,.......... ............RESPONDENT 26B, CAMAC STREET, KOLKATA-700 006 [PAN: AAACN 8584 F] APPEARANCES BY: DR. P.K. SRIHARI, CIT (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:- THESE THREE APPEALS ARE PREFERRED BY THE REVENUE A GAINST THREE SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS), CENTRAL-I, KOLKATA, ALL DATED 25.03.2013 FOR A.YS. 2006-07, 2007-08 AND 2008-09 RESPECTIVELY AND SINCE THE ISSUES INVOLVED THEREIN ARE COMMON, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DIS POSED OF BY A SINGLE CONSOLIDATED ORDER. 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 I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED 2 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- 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 15.12.2006. 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.7,18,20,909/-, HE ADDED TH E COMMISSION INCOME @ 2% AMOUNTING TO RS.14,36,418/- TO THE TOTAL INCOM E OF THE ASSESSEE IN THE ASSESSMENT COMPLETED FOR A.Y. 2008-09 UNDER SEC TION 143(3) VIDE AN ORDER DATED 31.12.2010. IN THE ASSESSMENT SO MADE, HE ALSO MADE AN ADDITION OF RS.7,18,20,909/- 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. THE ASSES SING OFFICER ALSO COMPLETED THE ASSESSMENTS FOR A.YS. 2006-07 AND 200 7-08 UNDER SECTION I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED 3 143(3) VIDE ORDERS DATED 31.12.2008 AND 31.12.2009 WHEREIN HE MADE SIMILAR ADDITION ON ACCOUNT OF COMMISSION INCOME AT THE RATE OF 2% AMOUNTING TO RS.25,82,000/- AND RS.14,43,919/- TO T HE TOTAL INCOME OF THE ASSESSEE FOR A.YS. 2006-07 AND 2007-08 RESPECTI VELY. HE ALSO MADE ADDITIONS OF RS.12,91,00,000/- AND RS.7,21,95,941/- SIMILARLY ON PROTECTIVE BASIS IN THE ASSESSMENTS COMPLETED UNDER SECTION 143(3) FOR A.YS. 2006-07 AND 2007-08 RESPECTIVELY FOR THE TOTA L AMOUNT OF ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE-COMP ANY TO THE MUMBAI BASED COMPANIES BELONGING TO KETAN PAREKH GROUP OBS ERVING THAT UNEXPLAINED INCOME TO THAT EXTENT WAS LIABLE TO BE ASSESSED ON SUBSTANTIVE BASIS IN THE HANDS OF THE SAID COMPANIE S FOR THE CASH GIVEN TO THE ASSESSEE-COMPANY. 3. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 143(3) FOR A.YS. 2006-07, 2007-08 AND 2008-09, APPE ALS WERE PREFERRED BY THE ASSESEE-COMPANY BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE ADDITION M ADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE FOR A.Y . 2006-07 ON ACCOUNT OF THE ALLEGED ACCOMMODATION ENTRIES GIVEN TO THE MUMB AI BASED COMPANIES IN THE FORM OF COMMISSION INCOME AT THE RATE OF 2% AS WELL AS FURTHER ADDITION ON ACCOUNT OF PROTECTIVE BASIS FOR THE FOL LOWING REASONS GIVEN IN PARAGRAPH NOS. 6 & 7 OF HIS IMPUGNED ORDER:- 6. 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 3 & 1/2 YEARS HAS A LREADY ELAPSED, NOTHING HAS BEEN HEARD IN THIS REGARD FROM THE AO. FOR, THE LD. CIT(A) HAD CALLED FOR THE REPORT VIDE HIS LETTER DATED 23.07.2009 WHICH WAS FOLLOWED BY THE REMINDER S DATED 17.08.2010AND 13.07.2011. ALSO THE AO HAS NOT RESPO NDED TO THE NOTICE U/S 250 SERVED ON HIM ON 01.03.2013. NON E HAS APPEARED ON BEHALF OF THE DEPARTMENT ON THE DATE OF HEARING ON 07.03.2013. I NOTE FOR THE PURPOSES OF RECORD TH AT THE AO I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED 4 HAS NOT EVEN RESPONDED TO THE LETTERS OF THE CIT(A) . IN THIS FACTUAL BACKGROUND; GIVEN THE FACTS OF THE CASE AND THE FINDINGS OF THE AO IN HIS ASSESSMENT ORDER;' AND AL SO, THE DECISIONS OF THE HON'BLE JURISDICTIONAL ITAT IN SIM ILAR CASES INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES, THE PR ESENT APPEALS IS NOW BEING DECIDED ON THE BASIS OF THE MA TERIAL AVAILABLE ON RECORD. 7. I HAVE PERUSED THE RELEVANT ORDERS. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE AP PELLANT. I FIND THAT THE ISSUES INVOLVED IN THIS APPEAL ARE COVERED BY THE ORDERS OF THE HONBLE JURISDICTIONAL ITAT WHERE IN SIMILAR ADDITIONS, UNDER IDENTICAL FACTS AND CIRCUMSTANCES, WERE DELETED. RESPECTFULLY FOLLOWING THE DECISIONS OF TH E JURISDICTIONAL ITAT, IT IS TO BE HELD THAT THE ADDI TION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INCOME AS WELL AS THAT ON COMMISSION INCOME IS NEITHER SUSTAINABLE IN LAW NOR ON FACTS. THE ADDITION OF RS.12,91,00,000/- AND RS.25,82,000/ - IS DIRECTED TO BE DELETED. GROUNDS NO 1 & 2 ARE ALLOWED . FOR ALMOST IDENTICAL REASONS AS GIVEN IN HIS IMPUGN ED ORDER FOR A.Y. 2006-07, THE LD. CIT(APPEALS) ALSO DELETED THE SIMI LAR ADDITIONS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE AS SESSEE FOR A.Y. 2007-08 AND 2008-09 ON ACCOUNT OF THE ALLEGED ACCOMMODATION ENTRIES GIVEN TO THE MUMBAI BASED COMPANIES IN THE FORM OF COMMISSIO N INCOME AND FURTHER ADDITION ON ACCOUNT OF PROTECTIVE BASIS. AG GRIEVED BY THE ORDERS OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESS EE FOR ALL THE THREE YEARS UNDER CONSIDERATION, THE REVENUE HAS PREFERRED THES E APPEALS BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING OF THESE APPEALS FIXED ON 28.01.2009, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. THESE APPEA LS ARE, 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 TWO COMMON ISSUES INVOLVED IN ALL THESE THREE APPEALS RELATE TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDI TIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED ACCOMMODATI ON ENTRIES GIVEN TO THE MUMBAI BASED COMPANIES ON PROTECTIVE BASIS AND THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION MADE BY THE ASSESS ING OFFICER ON ACCOUNT I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED 5 OF COMMISSION INCOME ALLEGEDLY RECEIVED BY THE ASSE SSEE FOR GIVING ACCOMMODATION ENTRIES. IT IS OBSERVED THAT THE SIMI LAR ISSUES WERE INVOLVED IN SOME OTHER CASES AND ALL THESE CASES WE RE ADJOURNED IN THE PAST AND ALSO BLOCKED FOR SOME PERIOD FOR GETTING T HE INFORMATION ABOUT THE STATUS OR OUTCOME OF THE CASES WHERE THE SIMILA R AMOUNTS WERE ADDED ON SUBSTANTIVE BASIS. INSPITE OF SUFFICIENT TIME GI VEN TO BOTH THE PARTIES, THEY HAVE FAILED TO FURNISH THE SAID INFORMATION. I T IS WELL SETTLED THAT PROTECTIVE ASSESSMENT IS PERMISSIBLE IN LAW AND IN CASE OF A DOUBT OR AMBIGUITY ABOUT REAL ENTITY IN WHOSE HANDS A PARTIC ULAR INCOME IS TO BE ASSESSED, THE ASSESSING AUTHORITY IS ENTITLED TO HA VE RECOURSE TO MAKE A PROTECTIVE ASSESSMENT. AS HELD BY THE HONBLE SUPRE ME COURT IN THE CASE OF LALJI HARIDAS VS.- ITO (43 ITR 387), THE OFFICE R MAY, WHEN IN DOUBT, TO SAFEGUARD THE INTEREST OF THE REVENUE CAN ASSESS IT IN MORE THAN ONE HAND BUT THIS PROCEDURE CAN BE PERMITTED ONLY AT THE STA GE OF ASSESSMENT. PROTECTIVE ASSESSMENT BECOMES REDUNDANT WHEN THE SU BSTANTIVE ASSESSMENT BECOMES FINAL AND IF THE SUBSTANTIVE ASS ESSMENT FAILS, IT IS PROTECTIVE ASSESSMENT WHICH IS TO BE TREATED AS SUB STANTIVE. KEEPING IN VIEW THIS COROLLARY BETWEEN THE SUBSTANTIVE ASSESSM ENT AND PROTECTIVE ASSESSMENT, AN APPEAL AGAINST THE PROTECTIVE ASSESS MENT SHOULD ORDINARILY AWAIT THE OUTCOME OF THE SUBSTANTIVE ASS ESSMENT SO THAT THE PROTECTIVE ASSESSMENT CAN BE INCONFORMITY WITH THE SUBSTANTIVE ASSESSMENT. IN THE CASE OF CIT VS.- SURENDRA GULAB CHAND MODI (140 ITR 517), THE APPEAL ARISING OUT OF THE PROTECTIVE ASSE SSMENT WAS DISPOSED OF BY THE APPELLATE AUTHORITY I.E. TRIBUNAL VACATING T HE PROTECTIVE ASSESSMENT WITHOUT WAITING FOR THE FINAL OUTCOME OF THE PROCEEDINGS ARISING FROM THE SUBSTANTIVE ASSESSMENT, WHICH MATT ER WAS PENDING IN THE HONBLE SUPREME COURT. THE HONBLE GUJARAT HIGH COU RT HELD THAT THE TRIBUNAL WAS NOT JUSTIFIED IN PROCEEDING WITH THE M ATTER AND IN DISPOSING OF IT INSTEAD OF BLOCKING IT TILL THE DISPOSAL OF T HE MATTER PENDING IN THE HONBLE SUPREME COURT IN ORDER TO BRING IT INCONFOR MITY 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 I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED 6 DECISION OF THE HONBLE SUPREME COURT IN THE PROCEE DINGS ARISING FROM THE SUBSTANTIVE 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 APPEALS ARISING FROM THE PROTECTIVE ASSESSMENTS BY HIS IMPUGNED ORDERS 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 TIONS MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS IN ALL THE TH REE YEARS UNDER CONSIDERATION WITHOUT AWAITING FOR THE FINAL OUTCOM E OF THE PROCEEDINGS ARISING FROM THIS SUBSTANTIVE ASSESSMENT. WE, THERE FORE, SET ASIDE THE IMPUGNED ORDERS OF THE LD. CIT(APPEALS) ON THIS ISS UE AND REMIT THE MATTER BACK TO HIM FOR KEEPING IT ALIVE AND PENDING TILL THE OUTCOME OF THE PROCEEDINGS ARISING FROM THE SUBSTANTIVE ASSESSMENT . 6. AS REGARDS THE ISSUE RELATING TO THE ADDITIONS M ADE 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 FOR ALL THE THREE YEARS UNDER CONSIDERATION ARE ACC ORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NOS. 1859, 1860 & 1861/KOL/2013 ASSESSME NT YEARS: 2006-07, 2007-08 & 2008-09 M/S. NALIMBUR SUPPLIERS (PVT.) LIMITED 7 7. IN THE RESULT, THE APPEALS OF THE REVENUE FOR A. Y. 2006-07, 2007- 08 AND 2008-09 ARE TREATED AS ALLOWED FOR STATISTIC AL 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. NALIMBUR SUPPLIERS (PVT.) LIMITED, 26B, CAMAC STREET, KOLKATA-700 006 (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.