DCIT, New Delhi V. M/s. International Credits Ltd., New Delhi

ITA 2027/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82079 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-10-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 01-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: SUNEEL AGARWAL
• Keywords: Accommodation entries; Onus to prove
• Section: 142(1); 68

Judgement Text

ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 2027/DEL/2012 ASSTT.YEAR: 2001-02 DCIT, VS INTERNATIONAL CREDITS LTD., CIRCLE-11(1), 4, COMMUNITY CENTRE, ROOM NO.12, E AST OF KAILASH, C.R. BUILDING, NEW DELHI-110065 NEW DELHI. (PAN: AAACI2990L) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATPAL SINGH, SR.DR RESPONDENT BY: SHRI SUNEEL AGARWAL, CA O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL OF THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-XV, NEW DELHI DATED 07.02.2012 IN APPEAL NO. 712/08-09 FOR AY 2001-02. 2. THE SOLE GROUND RAISED BY THE REVENUE READS AS U NDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25, 50,150/- MADE ON ACCOUNT OF ACCOMMODATION ENTRIES RECEIVED B Y THE ASSESSEE, THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 2 3. THE BRIEF FACTS OF THE CASE READ AS UNDER:- THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2 001 DECLARING A LOSS OF RS.RS.2,04,15,948.00. THEREAFTE R, A NOTICE U/S 142(1) DT. 26.09.08 WAS ISSUED BY THE DEPARTMEN T INFORMING THAT IT INTENDED TO ADD TOASSESSEE'S INCOME A SUM O F RS. 25,50,150.00 PERTAINING TO THE AMOUNT OF BUSINESS A DVANCES RECEIVED BY THE ASSESSEE FROM M/S. ANKUR MARKETING LIMITED SINCE THE ABOVE PARTY HAD ADMITTED BEFORE THE INVES TIGATION WING THAT THEY WERE INVOLVED IN PROVIDING ACCOMMODA TION ENTRIES ONLY. THE ASSESSEE FILED INFORMATION & EXPLANATIONS THROU GH THEIR A.R. VIDE THEIR LETTERS DT. 21/11/08, 26/11/08 & 28 /11/08 WHEREIN THE CONTENTIONS OF THE DEPARTMENT WERE VEHE MENTLY REFUTED. THE DEPARTMENT WAS INFORMED THAT OF THE AB OVE AMOUNT OF RS. 25,50,150.00, ONE AMOUNT OF RS.1,50,150.00 W AS NEVER RECEIVED BY THE ASSESSEE. THE REMAINING AMOUNTS TOT ALING TO RS. 24,00,000.00 WERE TRADE ADVANCES WHICH WERE DULY RE TURNED BY THE ASSESSEE IN THE FINANCIAL YEAR 2002- 2003. STAT EMENT OF ACCOUNTS DULY CONFIRMED BY THE PARTY SHOWING RECEIP T OF ADVANCES IN THE YEAR 2001-02 & THEIR RETURN IN THE YEAR 2002- 03 WERE ALSO FILED IN ORIGINAL THE DEPARTMENT WAS F URTHER REQUESTED TO ALLOW THE ASSESSEE AN OPPORTUNITY TO C ROSS EXAMINE THE PARTY. A COPY OF THE STATEMENT MADE BY THE PART Y WAS ALSO DEMANDED FROM THE A.O. THE LEARNED DCIT DID NOT TAKE ANY COGNIZANCE OF THE ASSESSEE'S PLEAS/DEMANDS & ADDED THE ENTIRE SUM OF RS. 25,50,1 50.00 TO THE ASSESSEE'S INCOME.' 4. BEING AGGRIEVED BY THE ACTION AND ADDITION MADE BY THE AO, THE ASSESSEE PRE-FIXED AN APPEAL WHICH WAS ALLOWED DELETING THE IMPUGNED ADDITION. NOW THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL WITH THE SOLE GROUND AS REPRODUCED HEREINABOVE. ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 3 5. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. LD. DR SUBMITTED THAT THE AO NOTED THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF R S.25,50,150/- FROM M/S ANKUR MARKETING LTD. AND SINCE THE SAME PARTY HAD A DMITTED BEFORE THE INVESTIGATION WING OF THE DEPARTMENT THAT THEY WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES, HENCE, THE AO RIGHTLY MADE A DDITION TO THE INCOME OF THE ASSESSEE IN THIS REGARD. THE DR FURTHER CONTEN DED THAT THE CIT(A) DELETED THE ADDITION WITHOUT HAVING ANY BASIS AND JUSTIFIED REASON, HENCE, THE IMPUGNED ORDER MAY SET ASIDE BY RESTORING THAT OF THE AO. 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, A T THE OUTSET, FROM BARE READING OF THE ORDER OF THE AO, WE NOTE THAT THE AO MADE ADDITION WITH FOLLOWING CONCLUSION:- 3. THE ASSESSEE HAS SUBMITTED THAT THE ASSESSMENT CANNOT BE RE-OPENED ON THE BASIS OF INFORMATION AVA ILABLE FROM DIT(INV.). THE ASSESSEES OBJECTION IS CONSID ERED BUT THE SAME IS NOT ACCEPTABLE BECAUSE IN THE INSTANT CASE, DETAILED INVESTIGATION HAS BEEN CARRIED OUT BY THE INVESTIGA TION WING. THE PERSONS WHO HAVE GIVEN THE ENTRIES HAVE ACCEPTE D THAT THEY ARE MERELY THE ENTRY PROVIDERS WHICH ARE BEING PROVIDED AFTER RECEIPT OF CASH FROM THE PARTIES WHO NEED ENT RIES. THE ASSESSEES SUBMISSIONS ARE, THEREFORE, NOT ACCEPTAB LE IN VIEW OF THE FACTUAL POSITION THAT THE PARTIES WHO HAVE G IVEN THE ENTRY HAVE ADMITTED IN NO UNCERTAIN TERMS THAT THEY ARE M ERELY THE ENTRY PROVIDERS. HENCE, THE SAME IS DISALLOWED AND ADDED TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE I.T. ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICU LARS OF INCOME. ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 4 7. WE FURTHER OBSERVE THAT THE CIT(A) DELETED THE A DDITION WITH FOLLOWING OBSERVATIONS:- 6.4 EVEN ON MERITS FROM THE PERUSAL OF THE ASSESSM ENT ORDER, I FIND THAT AO HAS NOT GIVEN ANY MATERIAL TO THE APPELLANT TO PRESENT THE ARGUMENTS AND THE ASSESSME NT IS CONCLUDED WITHOUT AFFORDING AN OPPORTUNITY OR CROSS EXAMINING THE THIRD PARTY WHOSE STATEMENT IS USED AGAINST THE APPELLANT. HENCE, THE BASIC PRINCIPLE OF NATURAL JU STICE HAS NOT BEEN ADHERED TO WHILE COMPLETING THE ASSESSMENT. 6.5 I ALSO FIND FROM THE RECORDS AVAILABLE THAT T HE APPELLANT HAS STATED THAT THEY RECEIVED A SUM OF RS.24,50,000 (INSTEAD OF RS.25,50,150) FROM ANKUR MARKETING LTD. AS BUSINESS ADVANCE AND THE SAME IS RECEIVED THROUGH BANKING CHANNELS A ND THE CONFIRMATION OF THE PARTY GIVING THE ADVANCES WERE DULY FILED AND THE SAID PARTY IS A REGULAR INCOME TAX PAYEE AL SO. IN THESE CIRCUMSTANCES, THE AO HAS NOT BROUGHT ANYTHING ON R ECORD TO PROVE THAT THE IDENTITY AND CREDITWORTHINESS AND GE NUINENESS OF THE TRANSACTION IS NOT PROVED. AO HAS JUST BLINDLY RELIED ON THE INFORMATION OF TH E INVESTIGATION WING WITHOUT BRINGING ANY EVIDENCE OR CONFRONTING THESE EVIDENCE TO THE APPELLANT. EVEN A O HAS ALSO NOT BROUGHT ANY MATERIAL ON RECORD WHICH CAN PROVE THAT THIS MONEY OF RS.25,50,150 WAS APPELLANT'S OWN UNDISCLOS ED INCOME, BEFORE MAKING AN ADDITION UNDER SECTION 68 OF THE ACT. 6.6 THE AO IN HIS ASSESSMENT ORDER HAS NOT BROUGHT ANY MATERIAL ON RECORDS TO SHOW THAT THE CONFIRMATION F ILED BY THE INVESTOR COMPANIES WERE NOT GENUINE. IT IS ALSO SEE N THAT NO ENQUIRY WAS CONDUCTED TO EXAMINE THE CONTENTS OF TH E INFORMATION FILED BY THE APPELLANT. 6.7 IN A RECENT JUDGMENT DATED 30/01/2009 HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. GANGOUR INVESTME NT LTD. (INCOME TAX ACT NO. 34/2007) HAS HELD THAT REVENUE CAN MAKE ADDITION UNDER SECTION 68 OF THE ACT ONLY IF THE AS SESSEE IS UNABLE TO EXPLAIN THE CREDITS APPEARING IN ITS BOOK S OF ACCOUNTS. IN THE SAID CASE THE APPELLANT HAS DULY E XPLAINED THE SAID CREDIT ENTRIES IN THE FORM OF VARIOUS DOCUMENT ARY EVIDENCES. THE SAID DOCUMENTARY EVIDENCE CONTAINED DETAILS, ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 5 WHICH SET OUT NOT ONLY THE IDENTITY OF THE SUBSCRIB ERS, BUT ALSO GAVE INFORMATION, WITH RESPECT TO THEIR ADDRESS, AS WELL AS, PAN, ASSESSMENT PARTICULARS ETC. BASED ON THESE FAC TS, THE HON'BLE DELHI COURT DISMISSED THE APPEAL OF REVENUE . 6.8 HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V S. PRADEEP GUPTA 207 CTR 115, WHICH HAS ALSO BEEN RELIED UPON BY THE DELHI ITAT IN THE RECENT JUDGMENT IN THE CASE OF BA BITA GUPTA ITA NO. 2897/06, WHEREIN IT IS HELD THAT IN THE FAC TS OF THE CASE BEFORE US IT MAY BE SEEN THAT FROM THE VERY BEGINNI NG LD AO HAD SHIFTED ENTIRE BURDEN UPON THE ASSESSEE AND NO MATERIAL WAS BROUGHT BY HIM TO PROVE HIS ALLEGATION THAT THE IMPUGNED AMOUNT REPRESENTED ASSESSEE COMPANY'S UNDISCLOSED I NCOME. THEREFORE, ON THIS GROUND ALONE THE ENTIRE ADDITION DESERVES TO BE DELETED AND MAY KINDLY BE HELD SO. 6.9 IN VIEW OF THE FACTUAL POSITION AS WELL AS THE JUDICIAL PRONOUNCEMENT ON THE SUBJECT, DISCUSSED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS DISCHARGED T HE INITIAL ONUS OF ESTABLISHING THE BONA-FIDES OF THE TRANSACT IONS AND THE AO WAS NOT JUSTIFIED IN IGNORING VARIOUS EVIDENCES PROVIDED TO HIM BY THE APPELLANT. NOTHING ADVERSE HAS BEEN BROU GHT ON RECORD BY THE AO TO ESTABLISH THAT THE AMOUNT OF RS . 25,50,150 RECEIVED BY THE APPELLANT FROM THE SAID PARTIES REP RESENTS ITS OWN UNDISCLOSED INCOME. HENCE, THE ADDITION MADE BY THE AO DESERVES TO BE DELETED. 8. IN VIEW OF ABOVE NOTED ASSESSMENT ORDER, WE NOTE THAT THE AO DID NOT BOTHER TO ADJUDICATE THE EXPLANATION OF THE ASSESSE E AND SIMPLY NOTED THAT WHEN THE ENTRY PROVIDER HAS ACCEPTED THAT THEY PROVIDED ACCOMMODATION ENTRIES AFTER RECEIPT OF CASH FROM THE PARTIES WHO NEED ENTRIES A ND THE AO FURTHER HELD THAT, THEREFORE, THE SUBMISSIONS OF THE ASSESSEE ARE NOT ACCEPTABLE IN VIEW OF ADMISSION OF ENTRY PROVIDERS. 9. ON APPEAL, THE CIT(A) FOLLOWED THE DECISION OF H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS PRADEEP GUPTA (SUP RA) AND ORDER OF THE ITAT ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 6 DELHI IN THE CASE OF BABITA GUPTA (SUPRA) AND HELD THAT THE AO HAD SHIFTED ENTIRE BURDEN UPON THE ASSESSEE AND NO MATERIAL WAS BROUGH T BY HIM TO PROVE HIS ALLEGATION THAT IMPUGNED AMOUNT ACTUALLY REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE. LD. DR VEHEMENTLY CONTENDED THAT THE ASS ESSEE WAS NOT PROVIDED DUE OPPORTUNITY TO CROSS EXAMINE THE SO-CALLED ENTRY PR OVIDERS AND THEIR STATEMENT RECORDED ON THE BACK OF THE ASSESSEE CANNOT BE A RE ASONABLE AND VALID BASIS FOR MAKING ADDITION TO THE INCOME OF THE ASSESSEE. AT THIS JUNCTURE, WE RESPECTFULLY TAKE GUIDANCE FROM THE DECISION OF HONBLE HIGH COU RT OF DELHI IN THE CASE OF CIT VS PRADEEP KUMAR GUPTA (SUPRA) WHEREIN SPEAKING FOR HONBLE JURISDICTIONAL HIGH COURT, THEIR LORDSHIPS IN PARA 5 (AT PAGE 118) HAS HELD THUS:- 5. THIS IS WHERE THE FAILURE OF THE REVENUE TO PRO DUCE SHRI ANAND PRAKASH FOR CROSS-EXAMINATION BY THE ASS ESSEES, ASSUMES FATAL CONSEQUENCES. REASSESSMENT PROCEEDING S HAVE BEEN INITIATED AFTER SEVERAL YEARS OF THE ACCEPTANC E OF THE RETURN UNDER S. 143(1) OF THE IT ACT. THE ASSESSEES HAVE THEMSELVES RELIED ON THE BANKING TRANSACTIONS BETWE EN THEMSELVES AND SHRI ANAND PRAKASH; SECONDLY ON BILL S ISSUED BY THEM TO SHRI ANAND PRAKASH, AND ON THE UNASSAILE D PAYMENT OF RENT TO SHRI MOOL CHAND. IT IS TRUE THAT THE ASSESSEES' FAILURE TO PRODUCE SHRI KISHAN CHAND HAD THE CONSEQUENCES OF NOT PROVING THAT THE SAID PERSON WA S TILLING THE LAND ON THEIR BEHALF. THIS FAILURE CANNOT INEX ORABLY LEAD TO THE CONCLUSION THAT NO AGRICULTURAL INCOME HAD BEEN GENERATED BY THE ASSESSEES. SUCH AN INFERENCE CAN ONLY BE DRA WN FROM THE STATEMENT OF SHRI ANAND PRAKASH TO THE EFFECT T HAT THE TRANSACTIONS BETWEEN HIM AND THE ASSESSEES WERE BOG US THEREFORE, IT WAS MANDATORY FOR THE REVENUE TO PROD UCE SHRI ANAND PRAKASH FOR CROSS-EXAMINATION BY THE ASSESSES ON THEIR SPECIFIC DEMAND IN THIS REGARD. THE FACTS ON WHICH THE DECISION TO INVOKE S. 147/148 IS PREDICATED MAY IN SOME CASE S BE SUFFICIENT BOTH FOR DECISION TO CARRY OUT A REASSES SMENT AS WELL TO JUSTIFY OR SUSTAIN THE FRESH ASSESSMENT. HOWEVER , THERE MAY ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 7 WELL BE INSTANCES WHERE THE FORMER REOPENING MAY PA SS MUSTER IN THE LIGHT OF SOME FACTS, BUT THOSE FACTS BY THEM SELVES MAY TURN OUT TO BE INSUFFICIENT TO PRESERVE THE ASSESSM ENT ITSELF. ONCE SS. 147 AND 148 ARE RESORTED TO, THE AO MUST F IRST DISCHARGE THE BURDEN OF SHOWING THAT INCOME HAS ESC APED ASSESSMENT. IT IS ONLY THEREAFTER THAT THE ASSESSEE HAS TO PROVIDE ALL THE ANSWERS. WE FIND NO REASON WHY THE INITIAL BURDEN OF PROOF SHOULD NOT REST ON THE AO EVEN WHER E THE ASSESSMENT HAS GONE THROUGH UNDER S. 143(1) OF THE ACT. THE TRIBUNAL HAS, THEREFORE, ARRIVED AT THE CORRECT CON CLUSION. 10. UNDER FACTUAL MATRIX OF THE CASE, AS NOTED ABOV E, WE REACH TO A LOGICAL CONCLUSION THAT THE PRESENT CASE IS SQUARELY COVERE D IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS PRADEEP KUMAR GUPTA (SUPRA). HENCE, WE ARE UNABLE TO SEE A NY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGN ED ORDER AND WE UPHOLD THE SAME. ACCORDINGLY, SOLE GROUND OF THE REVENUE BEIN G DEVOID OF MERITS IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 28 TH NOVEMBER, 2014 GS ITA NO.2027/DEL/2012 ASSTT.YEAR: 2001-02 8 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR