ACIT, New Delhi V. Divine (India) Infrastructure Pvt. Ltd., New Delhi

ITA 2082/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82181 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Question of law; Accommodation entries
• Section: 131; 68

Judgement Text

ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 2082/DEL/2011 ASSTT.YEAR: 2007-08 ACIT, VS DIVINE (INDIA) INFRASTRUCTURE PVT. LTD., CIRCLE-10(1), 323, AGARWAL PLAZ A, PLOT NO.3, NEW DELHI. COMMUNITY CENTRE, SECTOR-14, ROHINI, NEW DELHI. (PAN:AABCD9891N) (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. PARWINDER KAUR, SR. DR RESPONDENT BY: SHRI VIVEK GUPTA, CA O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)- XVIII, NEW DELHI DATED 06.01.2011 IN APPEAL NO. 47/ 10-11 FOR AY 2007-08. THE REVENUE HAS RAISED SOLE GROUND IN THIS APPEAL W HICH READS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.21,00,000/- MADE BY THE AO U/S 68 OF THE I.T.ACT , 1961, ON ACCOUNT OF SHARE APPLICATION MONEY. 2. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS A PPEAL ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND FILED RETURN OF INCOME ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 2 ELECTRONICALLY ON 15.11.2007 DECLARING AN INCOME OF RS.91,21,962/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AS SESSMENT AND THE AO MADE CERTAIN DISALLOWANCES INCLUDING AN ADDITION OF RS. 21 LAKH U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF INTRODUCTION OF BOGUS S HARE CAPITAL. THE ASSESSEE PREFERRED AN APPEAL WHICH WAS ALLOWED BY DIRECTING THE AO TO DELETE THE IMPUGNED ADDITION MADE U/S 68 OF THE ACT. NOW, THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL WITH THE SOLE GROUND AS REPROD UCED HEREINABOVE. 3. APROPOS SOLE GROUND OF THE ASSESSEE, WE HAVE HEA RD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERI AL PLACED ON RECORD, SPECIALLY ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER OF THE C IT(A). LD. DR SUBMITTED THAT THE AO RIGHTLY OBSERVED THAT THE ASSESSEE HAD RECEIVED RS.21 LAKH AS SHARE APPLICATION MONEY. THE DR FURTHER CONTENDED THAT T HE AO WAS INFORMED BY THE INVESTIGATION WING OF THE DEPARTMENT THAT FOUR ENTR Y OPERATOR COMPANIES WERE INDULGED IN PROVIDING ACCOMMODATION ENTRIES TO THE VARIOUS BENEFICIARIES EITHER IN THE FORM OF LOANS OR SHARE APPLICATION MONEY AND , THEREFORE, THE ASSESSEE WAS ASKED TO PRODUCE THESE ENTITIES IN PERSON ALONG WIT H THEIR BOOKS OF ACCOUNTS, BANK STATEMENT FOR THE RELEVANT PERIOD AND SOURCE O F INVESTMENT FOR VERIFICATION OF THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE DR FURTHER SUBMITTED THAT DESPITE SEVERAL OPPORTUNITIE S, THE ASSESSEE FAILED TO PRODUCE THESE PERSONS OR REPRESENTATIVE OF THE ENTI TIES AND ALLEGED ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 3 ACCOMMODATION ENTRY PROVIDERS DID NOT RESPOND TO TH E SUMMONS ISSUED U/S 131 OF THE ACT AND, THEREFORE, THE AO RIGHTLY MADE THE ADDITION IN THIS REGARD. 4. THE DR FURTHER CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION MERELY OBSERVING THAT WHERE T HE ASSESSEE PROVIDES DETAILS PERTAINING TO THE ALLEGED SHARE APPLICATION MONEY CONTRIBUTORS AND THE ASSESSEE IS UNABLE TO PRODUCE THEM, THEN MERE NON-P RODUCTION OF LENDERS/SHAREHOLDERS CANNOT BE A GROUND FOR MAKING ADDITION. THE DR ALSO CONTENDED THAT THE CONCLUSION OF THE CIT(A) IS NOT SUSTAINABLE THAT THERE IS NO FURTHER RESPONSIBILITY OF THE ASSESSEE TO SHOW THAT IT HAS COME FROM ACCOUNTED SOURCE OF THE LENDER/SHARE APPLICATION MONEY CONTRI BUTOR. 5. REPLYING TO THE ABOVE, LD. AR SUPPORTED THE IMPU GNED ORDER AND SUBMITTED THAT THE ASSESSEE SUBMITTED ALL DETAILS B EFORE THE AO BUT THE AO PROCEEDED TO MAKE ADDITION IN A HASTY MANNER IGNORI NG THE FACT THAT THE ASSESSEE VIDE ITS REPLY DATED 8.10.2009 FURNISHED A CHART SH OWING NAMES ALONG WITH ADDRESSES OF THE 15 PARTIES FROM WHOM SHARE APPLICA TION MONEY WAS RECEIVED WITH THEIR SHARE APPLICATION FORM AND PAN NO. THE AR FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FURNISHED COPIES OF THE AFFID AVITS IN RESPECT OF ALL PARTIES ALONG WITH COPIES OF THE RETURN OF INCOME. THE AR FURTHER CONTENDED THAT THE AO SIMPLY CONSIDERED THE NOTE OF POSTAL AUTHORITIES IN THREE CASES AND THE AO WITHOUT VERIFYING THE EXPLANATION AND DETAIL SUBMIT TED BY THE ASSESSEE AND WITHOUT ALLOWING OPPORTUNITY FOR THE ASSESSEE TO CR OSS-EXAMINE THE PERSONS ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 4 WHOSE STATEMENT WERE RECORDED BY THE INVESTIGATION WING ON THE BACK OF THE ASSESSEE. SUPPORTING THE IMPUGNED ORDER, THE LD. A R SUBMITTED THAT THE ASSESSEE DISCHARGED ITS ONUS TO SUBMIT RELEVANT DET AILS, ADDRESSES, PAN NO., COPIES OF THE AFFIDAVITS BEFORE THE AO BUT WITHOUT PROPERLY EXAMINING AND VERIFYING THE SAME AND WITHOUT AFFORDING DUE OPPORT UNITY OF CROSS-EXAMINATION ON THE PERSONS WHOSE STATEMENTS WERE RECORDED BY TH E INVESTIGATION WING, THE AO PROCEEDED TO MAKE ADDITION U/S 68 OF THE ACT WHI CH IS NOT JUSTIFIED AND SUSTAINABLE AND THE SAME WAS RIGHTLY DELETED BY THE CIT(A). 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS OF BOTH T HE PARTIES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. ON BARE READING OF THE IMPUGNED ORDER, WE SEE THAT CIT(A) GRANTED RELIEF F OR THE ASSESSEE WITH FINAL CONCLUSION AND BY RELYING UPON VARIOUS DECISIONS OF HONBLE SUPREME COURT AND JURISDICTIONAL HIGH COURT INCLUDING THE JUDGME NT OF HONBLE APEX COURT IN THE CASE OF LOVELY EXPORT (SUPRA). THE RELEVANT OP ERATIVE PART OF THE IMPUGNED ORDER READS AS UNDER:- 9.2.7. FURTHER, THE HON'BLE DELHI HIGH COURT RELYI NG ON THE JUDGEMENT OF THE APEX COURT IN LOVELY EXPORTS PVT. LTD. (SUPRA) HAS DISMISSED THE DEPARTMENT'S APPEALS IN L IMINE VIDE ITS RECENT ORDERS IN THE CASE OF CIT V. DWARKADHISH INVESTMENT PVT. LTD. AND DWARKADHISH CAPITAL PVT. LTD (ITA NOS . 911/2010 AND 913/2010 ORDER DATED 02.08.2010), CIT V. GREEN TECH TOWER BUILDERS PVT. LTD. (ITA NO. 1113/2 010 ORDER DATED 12.08.2010) AND CIT V. ULTRATECH FINANC E & INVESTMENT LTD. (ITA NO. 1122/2010 ORDER DATED 12.0 8.2010). IN THE CASE OF-DWARKADHISH INVESTMENT PVT. LTD. AND DWARAKDHISH CAPITAL PVT. LTD. (SUPRA) THE HON'BLE ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 5 JURISDICTIONAL HIGH COURT VIDE ITS COMMON ORDER DAT ED 02.08.2010 HAS INTERALIA OBSERVED AS UNDER: '7. CONSEQUENTLY, THE DOCTRINE OF MERGER WOULD APPL Y AND THE JUDGMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P ) LTD. (SUPRA) WOULD COVER THE FIELD WITH REGARD TO INTERP RETATION OF SECTION 68 OF ACT, 1961. 8. IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC ONE. THOUGH IN SECTION 68 PROCEEDINGS, THE INITIAL BURDEN OF P ROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF TH E CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THE IR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWS TH E GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY AN Y OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REV ENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE TH E RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE F ACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER, IT IS SETTLED LAW THAT THE AS SESSEE NEED NOT TO PROVE THE 'SOURCE OF SOURCE'. ........... 10. WE ARE ALSO INFORMED THAT A SPECIAL LEAVE PETIT ION AGAINST THE AFORESAID DIVISION BENCH JUDGMENT IN THE CASE O F THE RESPONDENT-ASSESSEE HAS BEEN DISMISSED BY THE SUPRE ME COURT. ACCORDINGLY, WE ARE OF THE OPINION THAT NO Q UESTION OF LAW ARISES IN THE PRESENT CASES AS THE MATTER IS FU LLY COVERED BY THE JUDGMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) AS WELL AS THE DIVISION BENCH JUDGMENT OF T HIS COURT IN THE CASE OF THE RESPONDENT-ASSESSEE ITSELF 11. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE PRESE NT APPEALS AMOUNT TO RELITIGATION. THE SUPREME COURT IN K.K. M ODI VS. K.N. MODI AND ORS., (1998) 3 SCC 573 HAS HELD, 'IT IS AN ABUSE OF THE PROCESS OF THE COURT AND CONTRARY TO J USTICE AND PUBLIC POLICY FOR A PARTY TO RELITIGATE THE SAME IS SUE WHICH HAS ALREADY BEEN TRIED AND DECIDED EARLIER AGAINST HIM. THE REAGITATION MAYOR MAY NOT BE BARRED AS RES JUDICATA . BUT IF THE SAME ISSUE IS SOUGHT TO BE REAGITATED, IT ALSO AMOU NTS TO AN ABUSE OF THE PROCESS OF THE COURT.... ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 6 12. THOUGH WE WERE INITIALLY INCLINED TO IMPOSE COS TS YET WE ARE OF THE OPINION THAT ENDS OF JUSTICE WOULD BE M ET BY GIVING A DIRECTION TO THE REVENUE TO BE MORE CAREFUL BEFOR E FILING APPEALS IN A ROUTINE MANNER, IN OUR VIEW, APPEAL SH OULD NOT BE FILED IN MATTERS WHERE EITHER NO QUESTION OF LAW AR ISES OR THE ISSUE OF LAW IS A SETTLED ONE. WE GIVE THIS DIRECTI ON BECAUSE THE 'JUDICIAL CAPITAL' IN TERMS OF MANPOWER AND RESOURC ES IS EXTREMELY LIMITED. 13. REGISTRY IS DIRECTED TO COMMUNICATE COPIES OF T HIS ORDER TO ALL THE CHIEF COMMISSIONERS OF INCOME TAX IN DELHI FOR NECESSARY ACTION. WITH THE AFORESAID DIRECTION, THE PRESENT APPEALS ARE DISMISSED IN LIMINE BUT WITHOUT ANY ORD ER AS TO COSTS. ' 9.2.8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF T HE CASE AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE PLET HORA OF JUDICIAL PRONOUNCEMENTS ON THE SUBJECT, THE IMPUGNE D ADDITION OF RS. 21,00,000/- IN THE HANDS OF THE APPELLANT CO MPANY IS FOUND TO BE LEGALLY UNSUSTAINABLE. IN VIEW OF THE A BOVE, THE IMPUGNED ADDITION IS DELETED. 7. CONSIDERING THE FACTUAL MATRIX OF THE PRESENT CA SE, WE NOTE THAT THE INITIAL ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION ALONG WITH IDENTITY OF THE INVESTOR AND ITS CREDITWORTHINESS. WE FURTHER NOTE THAT HAVING DONE SO, THE ASSESSEE COMPANY HAD DISCHARGED THE AB OVE ONUS CAST UPON IT BY FURNISHING DETAILS, PAN NOS., ADDRESSES AND CONFIRM ATIONS IN THE FORM OF AFFIDAVITS OF SHARE APPLICANTS/CONTRIBUTORS. WE FUR THER NOTE THAT AFTER DISCHARGE OF ONUS BY THE ASSESSEE, THE ONUS SHIFTS ON THE AO TO DISPROVE THE CLAIM OF THE ASSESSEE BY ESTABLISHING THAT THE EVIDENCE FILED BY THE ASSESSEE WAS FALSE AND BY BRINGING NEW ADVERSE MATERIAL ON RECORD AND FAILURE TO DO SO AT THE END OF AO WOULD CERTAINLY VITIATE THE ADDITION MADE U/S 68 OF THE ACT. THE C IT(A) HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS BEDI & CO. PVT. LTD. 230 ITR 580(SC) WHEREIN IT WAS HELD THAT WHERE PRIMA FACIE, THE INFERENCE O N FACTS IS THAT THE ASSESSEES EXPLANATION ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 7 IS PROBABLE, THEN THE ONUS WILL SHIFT ON THE REVENU E TO DISPROVE IT AND THE ASSESSEES EXPLANATION IN SUCH CASES CANNOT BE REJE CTED MERELY ON THE BASIS OF SURMISES AND CONJECTURES. IN THE PRESENT CASE, WHE N THE SUMMONS ISSUED TO THE ALLEGED INVESTORS COULD NOT BE COMPLIED WITH, WITHO UT ANY FURTHER EFFORT AND VERIFICATION, THE AO PROCEEDED TO MAKE AN ADDITION U/S 68 OF THE ACT MERELY RELYING ON THE INFORMATION RECEIVED FROM THE INVEST IGATION WING OF THE DEPARTMENT WHICH IS NOT A PROPER APPROACH. FROM TH E ASSESSMENT ORDER, WE OBSERVE THAT THE ASSESSEE CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONEY OF RS. 1,01,77,000 DURING THE YEAR UNDER CONSIDERATION BUT THE AO DISPUTED THE FOUR TRANSACTIONS ON THE BASIS OF INFORMATION OF IN VESTIGATION WING OF THE DEPARTMENT. THE AO ISSUED SUMMONS U/S 131 OF THE A CT TO THESE FOUR ENTITIES. THE SUMMON TO M/S SAMRENDRA LEATHERS PVT. LTD. WAS RETURNED BY POSTAL AUTHORITIES WITH THE REMARK LOCK CLOSED AND THE S UMMONS U/S 131 OF THE ACT TO OTHER THREE ENTITIES WAS RECEIVED UNSERVED WITH THE COMMON REMARK NO SUCH PERSON AT THE GIVEN ADDRESS. AT THIS JUNCTURE, WE RESPECTFULLY TAKE NOTE OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF C IT VS LOVELY EXPORT (SUPRA) WHEREIN IT HAS BEEN HELD THAT IF THE SHARE APPLICAT ION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WH OSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO R EOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT NO SUCH EXERC ISE HAS BEEN CONDUCTED BY THE AO IN THE INSTANT CASE. HENCE, WE ARE UNABLE T O SEE ANY PERVERSITY, ITA NO.2082/DEL/2011 ASSTT.YEAR: 2007-08 8 AMBIGUITY OR ANY OTHER VALID REASON TO INTERFERE WI TH THE IMPUGNED ORDER AND WE UPHOLD THE SAME. ACCORDINGLY, SOLE GROUND OF THE R EVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08. 12.2014 SD/- SD/- (J.S. REDDY) (CHANDRAMOHA N GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 08 TH DECEMBER, 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER AS STT. REGISTRAR