M/s Gupta Metal Sheet (P) Ltd., Delhi V. DCIT, Faridabad

ITA 1926/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6701 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Keywords: Search and seizure; Opportunity of being heard; Accommodation entries; Onus to prove
• Section: 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C: NEW DELHI BEFORE SH. I.C. SUDHIR, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA NO. 1926/DEL/2013 ASSESSMENT YEAR: 2010-11 M/S. GUPTA METAL SHEET (P) LTD, ROOM NO. 2, 1 ST FLOOR, 5948- 5489, BATI HARPOOL SINGH, DELHI. (PAN: AABCG0343G) VS. DCIT, CIRCLE-II, FARIDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SH. SATYEN SETHI, ADV. RESPONDENT BY SH. A.K. SAROHA, CIT(DR) DATE OF HEARING 18.01.2016 DATE OF PRONOUNCEMENT 04.03.2016 ORDER PER O.P. KANT, A.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 07.01.2013 OF LD. COMMISSIONER OF INCOME TAX (CENTRAL), GURGAO N, RAISING SOLE GROUND OF APPEAL, WHICH IS AS UNDER: THAT ON THE FACTS AS WELL AS IN LAW THE LD. CIT(A) CENTRAL GURGAON WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 38, 55,577/- U/S 68 OF THE INCOME TAX ACT, 1961. 2. THE FACTS IN BRIEF ARE THAT THE PREMISES OF THE ASSESSEE COMPANY WERE SUBJECTED TO SEARCH AND SEIZURE ACTION UNDER SECTIO N 132 OF THE ACT ON 30.07.2009 ALONG WITH OTHER CONNECTED ASSESSEES OF THE GROUP. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 10,9 8,47,908/- FOR THE YEAR UNDER 2 ITA NO. 1926/DEL/2013, AY: 2010-11 CONSIDERATION ON 30.12.2010. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961 (F OR SHORT THE ACT) WAS ISSUED. THE ASSESSING OFFICER OBSERVED THAT THE ASS ESSEE COMPANY WAS ENGAGED IN MANUFACTURING AND TRADING OF METAL SHEETS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR. THE ASSESSING OFFICER ALSO OBSERVE D THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION, THE DIRECTOR OF THE ASSE SSEE COMPANY SH. RADHEY SHYAM GUPTA ADMITTED UNDISCLOSED INCOME IN RESPECT OF THE COMPANY OF RS. 7 CRORES RELATED TO THE YEAR UNDER CONSIDERATION AND RS. 3.5 CRORES RELATED TO THE ASSESSMENT YEAR 2009-10. THE ASSESSING OFFICER MADE ADDITION IN THE ASSESSMENT ORDER CORRESPONDING TO THE UNDISCLOSED T RANSACTIONS, EVIDENCES OF WHICH WERE FOUND AND SEIZED IN THE COURSE OF SEARCH ACTION. IN ADDITION TO THE ABOVE, THE ASSESSING OFFICER ALSO OBSERVED THAT DUR ING THE SEARCH ACTION AT THE RESIDENTIAL PREMISES OF ONE OF THE DIRECTORS SH. RA DHE SHYAM GUPTA, SOME LOOSE CHEQUES OF M/S. SHIVALIK ENTERPRISES (HUF), DULY SI GNED, WERE FOUND AND SEIZED. THE LD. ASSESSING OFFICER WAS OF THE OPINIO N THAT M/S. SHIVALIK ENTERPRISES(HUF) WHO WAS APPEARING AS CREDITORS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, HAD NOT SUPPLIED THE GOODS TO THE ASSESSE E AND IT HAS PROVIDED ONLY ACCOMMODATION ENTRIES TO THE ASSESSEE. IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, A CREDIT BALANCE OF RS. 38,55,557/- WAS APPEARING IN THE NAME OF M/S. SHIVALIK ENTERPRISES(HUF). THE ASSESSEE EXPLAINED THAT THE S AID PARTY LEFT SOME SIGNED BLANK CHEQUES WITH THE DIRECTOR OF THE ASSESSEE COM PANY WHICH WAS TO BE GIVEN TO THEIR REPRESENTATIVES ON THEIR INSTRUCTIONS AND REPRESENTATIVE ALONG WITH A 3 ITA NO. 1926/DEL/2013, AY: 2010-11 PERSON OF THE COMPANY USED TO GO TO THE BANK TO WIT HDRAW THE MONEY FROM THEIR ACCOUNT AND FOR UTILIZATION IN REWADI I.E. THE FACT ORY PLACE OF THE ASSESSEE OR ELSEWHERE AND THOSE CHEQUES WERE KEPT WITH THE DIRE CTORS OF THE ASSESSEE COMPANY FOR SAFETY PURPOSES. THE ABOVE SUBMISSION O F THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. IN THE ABSENCE O F ANY DOCUMENTARY EVIDENCE PROVIDED BY THE ASSESSEE SUCH AS NAME OF THE REPRES ENTATIVE OF THE CREDITORS, THE REPRESENTATIVE CONFIRMATION ETC., THE EXPLANATION G IVEN BY THE ASSESSEE THAT THE REPRESENTATIVE ALONG WITH THE PERSON OF THE COMPANY USED TO GO TO BANK TO WITHDRAW THE MONEY FROM THEIR ACCOUNTS AND UTILIZED IN REWADI OR ELSEWHERE, WAS ALSO FOUND ILLOGICAL BY THE ASSESSING OFFICER. THE LD AO ALSO NOTICED THAT AS THE CREDITOR WAS LOCATED AT YAMUNANAGAR , HOW HE FELT THE NEED OF OPENING BANK ACCOUNT IN REWARI WHICH WAS ALMOST 500 KILOM ETERS AWAY FROM YAMUNANAGAR WAS NOT EXPLAINED BY THE ASSESSEE. TH E ASSESSING OFFICER ALSO OBSERVED THAT FROM THE BANK STATEMENT OF THE CREDIT ORS THAT CASH WAS WITHDRAWN IMMEDIATELY AFTER THE CHEQUE WAS DEPOSITED IN THE B ANK. ON THE BASIS OF ALL THE CIRCUMSTANTIAL EVIDENCES, THE ASSESSING OFFICER OBS ERVED THAT IT WAS A PRE- PLANNED DECISION OF THE ASSESSEE IN COLLUSION WITH THE CREDITORS TO KEEP THE SIGNED CHEQUES SO THAT THE ASSESSEE CAN IMMEDIATELY WITHDRAW THE MONEY FROM THE BANK ACCOUNT, AFTER DEPOSIT OF CHEQUE IN THE AC COUNT OF THE CREDITOR, WHICH ACCORDING TO THE AO WAS ACTUALLY AN ACCOMMODATION E NTRY. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER HELD THAT THE CREDIT O F RS. 38,55,557/- WAS UNEXPLAINED AND HE ADDED THE SAME UNDER SECTION 68 OF THE ACT. AGGRIEVED, THE 4 ITA NO. 1926/DEL/2013, AY: 2010-11 ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) OBSERVED THAT THE ASSESSEE FAILED TO COMPLY WITH THREE INGREDIENTS OF SECTION 68 AND THE ASSESSEE FAILED TO DISCHARGE THE ONUS CASTED UPON HIM UNDER THE PROVISIONS OF SECTION 68 AND, THEREFORE, HE CONFIRMED THE ADDITION MADE BY T HE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS BEFORE US. 3. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESS EE SUBMITTED THAT M/S. SHIVALIK ENTERPRISES (HUF) WAS A REGULAR SUPPLIER O F THE RAW MATERIAL AND THE OUTSTANDING BALANCE OF THE CREDITORS WAS DULY RECOR DED IN THE BOOKS OF THE ASSESSEE AND THE SAID PARTY KEPT BLANK CHEQUES WITH THE DIRECTORS OF THE ASSESSEE TO BE GIVEN TO THEIR REPRESENTATIVE SO THAT HE MAY NOT BE REQUIRED TO CARRY CASH FROM ONE PLACE TO ANOTHER. THE LEARNED AR MADE FIRS T PROPOSITION THAT THE PURCHASES IN REFERENCE WERE MADE NOT IN THE ASSESSM ENT YEAR UNDER CONSIDERATION AND HENCE NO ADDITION COULD BE MADE IN THE YEAR UND ER CONSIDERATION. THE LD. AUTHORIZED REPRESENTATIVE RELYING ON PAGE ONE OF TH E PAPER BOOK SUBMITTED THAT IN THE ASSESSMENT YEAR 2009-10, THE ASSESSEE PURCHA SED COPPER SCRAP OF RS. 1,12,65,189/- FROM M/S. SHIVALIK ENTERPRISES (HUF) AND IN ASSESSMENT YEAR 2010-11, THERE WAS AN OUTSTANDING OF RS. 38,35,557/ - ON 27.04.2009 ( REFERRED PAGE 11 OF THE PAPER BOOK) , WHICH HAS BEEN ADDED B Y THE ASSESSING OFFICER AND AFTER THAT AN AGGREGATE PURCHASE OF RS. 3,35,69,237 /- WERE MADE FROM SHIVALIK ENTERPRISES (HUF) IN THAT YEAR( REFERRED PAGE 11-13 OF THE PAPER BOOK) . THUS, ACCORDINGLY TO THE LD. AUTHORIZED REPRESENTATIVE, T HE CREDIT AMOUNT OF RS. 38,55,557/- AS ON 27.04.2009 WAS AN AMOUNT CARRIED FORWARD FROM 01.04.2009 5 ITA NO. 1926/DEL/2013, AY: 2010-11 AND IT HAS REPRESENTED THE PURCHASES MADE IN ASSESS MENT YEARS 2009-10 AND, THEREFORE, NO ADDITION COULD BE MADE IN ASSESSMENT YEAR 2010-11. SECOND PROPOSITION SUBMITTED BY LD. AUTHORIZED REPRESENTAT IVE THAT THE ASSESSING OFFICER HAS ACCEPTED THE PURCHASES FROM M/S. SHIVAL IK ENTERPRISES (HUF) EXCEPT FOR THE OUTSTANDING AMOUNT OF RS. 38,55,557/- AND T HUS, THE REMAINING PURCHASES OF RS. 2,97,13,600/- WAS ACCEPTED. THEREFORE, IT CA NNOT BE ACCEPTED THAT THE PURCHASES WERE NOT GENUINE. HE FURTHER SUBMITTED TH AT IT IS WELL SETTLED LAW THAT THE TRANSACTION CANNOT BE REJECTED IN PART AND THER EFORE AFTER HAVING ACCEPTED THE PURCHASES FROM M/S. SHIVALIK ENTERPRISES (HUF), THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING PART PURCHASES FROM VERY SAME PARTY AS BOGUS. THE LD. AUTHORIZED REPRESENTATION FURTHER PROPOSED THAT SEC TION 68 WAS NOT APPLICABLE TO THE PURCHASES. IN SUPPORT OF HIS PROPOSITION, HE RELIED ON JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS PANCHAM DASS JAIN 156 TAXMAN 507. IN FOURTH PROPOSITION, AS REGARD TO TH E INGREDIENTS OF SECTION 68, LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE PA RTY EXISTED AS THE IDENTITY OF PARTY WAS NOT DOUBTED BY THE ASSESSING OFFICER AND THE TRANSACTIONS WERE ALSO GENUINE AS THE SAME WERE GOT VERIFIED BY THE INSPEC TOR OF THE OFFICE OF THE ASSESSING OFFICER AND THE CREDITWORTHINESS ALSO CAN NOT BE DOUBTED AS FOR THE INVOICES WERE TAX PAID AND MATERIAL PURCHASED WAS A CCOUNTED FOR IN THE EXCISE RECORDS. 4. THE LD. CIT(DR), ON THE OTHER HAND, IN RESPECT OF THE FIRST PROPOSITION OF THE ASSESSEE THAT THE ADDITION SHOULD HAVE BEEN IN ASSESSMENT YEAR 2009-10 6 ITA NO. 1926/DEL/2013, AY: 2010-11 ,SUBMITTED THAT THIS ISSUE WAS NOT RAISED BEFORE TH E LD. CIT(A) AND, THEREFORE, THIS CANNOT BE RAISED BEFORE THE TRIBUNAL AT THIS J UNCTURE FOR FIRST TIME. HE FURTHER REQUESTED TO ISSUE DIRECTION TO THE ASSESSING OFFIC ER UNDER SECTION 150 OF THE ACT TO REOPEN THE PROCEEDINGS FOR ASSESSMENT YEAR 2 009-10 AND REASSESS THE CASE DE-NOVO. AS REGARD TO THE SECOND PROPOSITION, LD CI T(DR) SUBMITTED THAT THE FACTS AND CIRCUMSTANCES PROVED THAT M/S. SHIVALIK E NTERPRISES (HUF) WAS MERE AN ACCOMMODATION ENTRY PROVIDER AND OTHER PURCHASES FROM THE SAID HAVE NOT BEEN HELD AS NON GENUINE, THEN THE MATTER MAY BE RE STORED TO THE ASSESSING OFFICER FOR DISALLOWING OTHER PURCHASES FROM THE SA ID PARITY. AS REGARDS TO THE CASE OF CIT VS PANCHAMDAS (SUPRA) RELIED UPON BY TH E LD AR, THE LD CIT DR SUBMITTED THAT FACTS OF THE SAID CASE WERE DIFFEREN T FROM THE FACTS OF THE ASSESSEE. AS REGARD TO THE PROPOSITION OF FULFILLING OF INGRE DIENTS OF SECTION 68, LD. CIT(DR) SUBMITTED THAT THE LOWER AUTHORITIES HAVE A LREADY BROUGHT ON RECORD THE EVIDENCE THAT THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION WERE NOT ESTABLISHED IN THE CASE OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. WE WOULD LIKE TO FIRST DEAL THE FOURTH PROPOSITION OF THE LD AR. THE LD AR STATES THAT THE ASSESSEE HAS ALREADY DISCHARGED ITS BURDON OF PROOF REGARDING IDENTITY OF THE CREDITOR, GENUINENE SS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR, HOWEVER, THE LD C IT DR HAS DISPUTED THIS STATEMENT OF THE LD AR. WE FIND FROM THE ORDER OF THE LD CIT(A) THAT AS REGARDS TO THE IDENTITY, EVEN PERMANENT ACCOUNT NUMBER (PAN ) OR WAS BALANCE SHEET ETC 7 ITA NO. 1926/DEL/2013, AY: 2010-11 OF THE ASSESSEE WERE NOT PROVIDED. AS REGARDS TO GE NUINESS OF THE TRANSACTION, , THE SAME WAS IN DOUBT FROM THE OBSERVATION OF THE A O THAT CASH USED TO BE WITHDRAWN AFTER DEPOSIT OF CHEQUE BY THE ASSESSEE. WE FIND THAT NO DOCUMENTS HAVE BEEN SUBMITTED BY THE ASSESSEE IN SUPPORT OF T HE CREDITWORTHINESS OF THE CREDITOR. THUS ACCORDING TO US THE ASSESSEE HAS FAI LED TO DISCHARGE ITS BURDON OF PROOF FOR REQUIREMENT OF SECTION 68 OF THE ACT REGA RDING THE CREDITOR. IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THE ASSESSEE SHOULD BE PROVIDED ONE MORE OPPORTUNIT Y TO DISCHARGE ITS BURDEN OF PROOF IN RESPECT OF THE CREDITOR. ACCORDINGLY, WE R ESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH IN ACCORDANCE TO LAW. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE PROV IDED SUFFICIENT OPPORTUNITY OF BEING HEARD. AS REGARDS TO THE THIRD PROPOSITION O F THE LD AR THAT THE PROVISION OF SECTION 68 OF THE ACT ARE NOT APPLICABLE OVER TH E PURCHASES, IN VIEW OF THE JUDGEMENT OF THE CIT VS PANCHAMDAS JAIN (SUPRA) , I S CONCERNED , WE FIND THAT THE FACT IN THE CASE OF CIT VS PANCHAMDAS JAIN (SUP RA) PURCHASES WERE NOT HELD BOGUS BY THE AO AND THUS THE HONBLE COURT HELD THA T IN ABSENCE OF HOLDING THE PURCHASES AS BOGUS , THE WAS NOT CORRECT IN HOLDING THE PURCHASES ON CREDIT AS UNEXPLAINED U/S 68 OF THE ACT. BUT, WHETHER PURCHAS ES HAVE BEEN DOUBTED IN THE CASE OF THE ASSESSEE OR NOT IS NOT CLEAR FROM THE F ACTS BEFORE US AND , THUS WE HOLD THAT AS WE HAVE ALREADY RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER , THE AO IS DIRECTED TO EXAMINE WHETHER THE PURCHASES IN THE CASE HAVE BEEN FOUND BOGUS OR NOT AND THEREAFTER, HE IS DIRECTED TO TAKE ACTION IN VIEW OF THE 8 ITA NO. 1926/DEL/2013, AY: 2010-11 JUDGEMENT OF THE CIT VS PANCHAMDAS JAIN (SUPRA) ACC ORDINGLY. AS REGARDS , THE SECOND PROPOSITION OF THE LD AR THAT PART OF THE PU RCHASES FROM THE CREDITOR ARE ONLY HELD AS UNEXPLAINED, WE HOLD THAT THE ISSUE OF EXAMINATION WHETHER THE PURCHASES IN DISPUTE ARE EXPLAINED OR NOT HAS BEEN RESTORED TO THE FILE OF THE AO FOR DETERMINATION AFRESH, THE PROPOSITION IS THUS R ENDERED INFRUCTUOUS AND NOT REQUIRE OUR ADJUDICATION. AS REGARDS TO THE FIRST P ROPOSITION THAT THE PURCHASES IN DISPUTE PERTAINED TO EARLIER ASSESSMENT YEAR IS CON CERNED, WE FIND THAT THE ISSUE HAS ALREADY BEEN RESTORED TO THE FILE OF THE ASSESS ING OFFICER FOR EXAMINATION AFRESH, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUE AS IN WHICH YEAR THE PURCHASES IN QUESTION WERE CREDITED AND TAKE ACTION ACCORDINGLY IN RELEVANT YEAR, IN TERMS OF THE PROVISIONS OF SECTION 150(1) OF THE ACT. ACCORDINGLY, THE GROUND OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 4 TH FEBRUARY, 2016. SD/- SD/- (I.C. SUDHIR) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 TH FEBRUARY, 2016. RK/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 9 ITA NO. 1926/DEL/2013, AY: 2010-11 SL. NO. PARTICULARS DATE 1. DATE OF DICTATION (HAND WRITTEN ) 19.02.2016 2. DATE ON WHICH THE DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.02.2016 3. DRAFT PLACED BEFORE THE OTHER MEMBER 4. APPROVED DRAFT COMES TO THE SR. PS/PS 5. KEPT FOR PRONOUNCEMENT ON 6. FINAL ORDER RECEIVED AFTER PRONOUNCEMENT 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILES GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR 10. DATE OF DISPATCH OF ORDER