DCIT CC 45, MUMBAI V. NIKETAN MERCANTILE P. LTD, NAVI MUMBAI

ITA 2026/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101241 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 05-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MOHANDAS
• Keywords: Unexplained cash credit; Accommodation entries

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND PAWAN SINGH , JM ./ I.T.A. NO . 2026 / MUM/20 1 1 ( / ASSESSMENT YEA R : 200 5 - 06 ) DY. COMMISSIONER OF INCOME TAX - CC - 45, ROOM NO.659, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. / VS. M/S NIKETAN MERCANT ILE PVT. LTD., S.S - 4,GROUND FLOOR, SHOP NO.285, XEROX LANE, SECTOR - 2, VASHI, NAVI MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AACCNO893K / APPELLANT BY SHRI MOHANDAS / R EVENUE BY NONE / DATE OF HEARING : 5.10. 201 5 / DATE OF PRONOUNCEMENT: 5.10. 201 5 / O R D E R P ER B R BASKARAN, AM : THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 31 - 12 - 2010 PASSED BY LD CIT(A) - 36, MUMBAI FOR ASSESSMENT YEAR 2005 - 06 ASSAILING HIS DECISION TO DELETE THE ADDITION OF RS.2.75 CRORES MADE BY THE AO BY ASSESSING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH SEVERAL NOTICES WERE SENT TO THE ASSESSEE BY REGISTERED POST AND ALSO THROUGH THE REVENUE. WE NOTICE THAT THE ASSESSING OFFICER HAS GIVEN A CERTIFICATE ABOUT THE SERVICE OF NOTICE TO THE ASSESSEE BY AFFIXURE. HENCE WE PROCEED TO DISPOSE OF THE APPEAL EX - PARTE, WITHOUT THE PRESENCE OF THE ASSESSEE. ITA NO. 2026 / MUM/20 1 1 2 3. THE FACTS RELATING TO THE CASE ARE THAT TH E AO NOTICED THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY TO THE TUNE OF RS.5.75 CRORES FROM VARIOUS PERSONS, WHO WERE MAINLY PRIVATE LIMITED COMPANIES. THE ASSESSEE FURNISHED DETAILS TO SUPPORT THE CLAIM OF RECEIPT OF SHARE APPLICATION MONEY. HOWEVER, THE AO NOTICED THAT ONE OF THE DIRECTORS OF M/S SKS ISPAT GROUP HAD ADMITTED IN THE ASSESSMENT PROCEEDINGS THAT THEY WERE PROVIDING ONLY ACCOMMODATION ENTRIES IN CONNECTION WITH THE SHARE APPLICATION MONEY. THE AO NOTICED THAT THE ASSESSEE HAS RE CEIVED SHARE APPLICATION MONEY OF RS.2.75 CRORES FROM M/S SKS ISPAT GROUP. HENCE THE AO ASSESSED THE SAME AS INCOME OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DELETED THE SAME AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE LD CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD (216 CTR (SC) 195). IN OUR CONSIDERED VIE W, THE SAID DECISION IS NOT APPLICABLE TO THE FACTS AVAILABLE IN THE PRESENT CASE. WE NOTICE THAT THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE STATEMENT GIVEN BY THE DIRECTOR OF SKS ISPAT GROUP, WHEREIN HE HAS CATEGORICALLY ADMITTED THAT THE SHARE APP LICATION MONEY GIVEN BY THEIR GROUP WAS ONLY ACCOMMODATION ENTRIES, MEANING THEREBY, THEY HAVE NOT MADE INVESTMENT OUT OF THEIR OWN FUNDS. THE QUESTION OF APPLICATION OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD (SUPRA) SHALL APPLY ONLY IF THE SHARE APPLICANT HAS MADE INVESTMENT OUT OF HIS OWN FUNDS. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS TAKEN THE VIEW THAT M/S SKS ISPAT GROUP HAS NOT MADE ANY INVESTMENT OUT OF THEIR OWN FUNDS, BUT PROVIDED ONLY ACCOMMO DATION ENTRIES, I.E., THE CASE OF THE AO IS THAT THE ASSESSEES OWN FUNDS HAVE BEEN INTRODUCED THROUGH M/S SKS ISPAT GROUP. ITA NO. 2026 / MUM/20 1 1 3 HENCE, IN OUR VIEW, THE LD CIT(A) HAS MISGUIDED HIMSELF AND ACCORDINGLY HIS ORDER REQUIRES REVERSAL. HOWEVER, IN THE INTEREST OF N ATURAL JUSTICE, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO EXPLAIN ITS STAND BEFORE LD CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH THE DIRECTION TO EXAMINE THE ISSUE AF RESH AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 5 TH OCTOBER, 2 015. 5 TH OCTOBER, 2 015 SD SD ( PAWAN SINGH ) ( B.R. BASKARA N) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 5 TH OCTOBER, 2 015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI