ITO, New Delhi V. M/s. Vishdeva Leasing & Investment Pvt. Ltd., New Delhi

ITA 2104/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65355 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 30-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 06-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VED JAIN RANO JAIN; V MOHAN C AS
• Assessee Lawyers: MRS SHUMANA SEN
• Keywords: Reopening of assessment; Accommodation entries

Judgement Text

ITA NO. 2104/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER I.T.A. NO. 2104/DEL/2010 A.Y. : 2003-04 ITO, WARD 17(4), ROOM NO. 238, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S VISHVDEVA LEASING & INVESTMENT PVT. LTD., B-13/68-A, JANAKPURI, NEW DELHI (PAN/GIR NO. : AAACV 1015 F) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : MRS. SHUMANA SEN, SR. D.R. DEPARTMENT BY : SH. VED JAIN, RANO JAIN & SH. V. MOHAN, CAS ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIX, NEW DEL HI DATED 17.2.2010 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETIN G THE ADDITION OF ` 1001500/- MADE U/S. 68 OF INCOME TAX ACT, 1961 ESPECIALLY WHEN THE IDENTITY AND CRED IT WORTHINESS OF THE SHARE APPLICANTS AND GENUINENESS OF TRANSACTION WAS NOT ESTABLISHED SATISFACTORILY. ITA NO. 2104/DEL/2010 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAS PROVIDED NECESSARY DETAILS IGNORING THE FACT THAT MERE FILING OF ASSESSMENT PARTICULARS DOES NOT TANTAMOUNT TO DISCHARGE OF ONUS U/S. 68 OF INCOME TAX ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN HOLDING THAT THE ASSESSING OFFICER HAS SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING IN COMPLETE DISREGARD OF THE FINDING GIVEN IN THE ASSESSMENT ORDER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN HOLDING THAT THE ASSESSING OFFICER HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF THE ASSESSEE ESPECIALLY WHEN THE CASH CREDITS APPEARING IN ASSESSEES BOOKS REMAINED UNEXPLAINED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN HOLDING THAT IF THERE WAS ANY DISCREPANCY IN THE BOOKS OF T HE INVESTING COMPANIES, THERE WAS A CASE FOR REOPENING OF ASSESSMENT OF INVESTING COMPANIES. LD. COMMISSIONER OF INCOME TAX (A) HAS IGNORED THE FACT THAT IT IS THE BENEFICIARY WHO HAS OBTAINED ACCOMMODATION ENTRIES, IS LIABLE FOR TAX. ITA NO. 2104/DEL/2010 3 3. IN THIS CASE DURING THE YEAR ASSESSEE COMPANY HAD SHOWN RECEIPT OF SHARE APPLICATION MONEY/ SHARE CAPITAL OF ` 10 LACS FROM THE FOLLOWING TWO PARTIES (I) M/S J. SINGH TRADINMG & INVESTMENTS PVT. LTD. 17 .8.02 - ` 500000/- II) M/S PARTICULAR MANAGE FINLEASE (INDIA) PVT. LTD. 18.8.02 - ` 500000/- 3.1 THE ASSESSING OFFICER RECEIVED INFORMATION FR OM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE COMPANI ES WHICH CONTRIBUTED TOWARDS SHARE APPLICATION MONEY/ SHARE CAPITAL WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IN V IEW OF THIS INFORMATION ASSESSING OFFICER INITIATED THE ACTION U/S. 148 OF THE I.T. ACT. BEFORE THE ASSESSING OFFICER ASSESSEE SUBMI TTED THE CONFIRMATIONS FROM THESE PARTIES, THEIR ADDRESSES AND PAN ALONGWITH COPY OF THE INCOME TAX RETURNS. HOWEVER, THE ASSE SSING OFFICER NOTED THAT LETTERS ADDRESSED TO THESE PARTIES COULD NOT BE SERVED. ASSESSING OFFICER ASKED THE INFORMATION FROM THE S TATE BANK OF PATIALA FROM WHERE THESE CHEQUES WERE ISSUED TO THE A SSESSEE COMPANY. ASSESSING OFFICER NOTED THAT IN BOTH TH E CASES CASH WAS DEPOSITED BEFORE PAYMENT BY WAY OF CHEQUES. ASSESS ING OFFICER OBSERVED THAT THE DEPOSITS OF CASH INTO THE BANK AC COUNTS OF BOTH THE CREDITORS LEADS HIM TO IRRESISTIBLE CONCLUSION TH AT ASSESSEE HAS USED ITS OWN UNDISCLOSED INCOME IN OBTAINING THE CHEQUES FROM THESE PARTIES. ASSESSING OFFICER FURTHER OBSERVED THA T LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS REQUIRED TO PROD UCE THE DIRECTORS OF THE ASSESSEE COMPANIES BUT HAS SHOWN HIS INABILIT Y TO PRODUCE THEM FOR CROSS EXAMINATION TO DETERMINE THE SOURCE OF DEPO SIT OF CASH AND TO THE GENUINENESS OF THE TRANSACTION. ASSESSIN G OFFICER HELD THAT A SUM OF ` 10,01,500/- RECEIVED BY THE ASSESSEE ON S HARE CAPITAL ITA NO. 2104/DEL/2010 4 AMOUNT WAS TO BE ADDED U/S. 68 OF THE I.T. ACT TO TH E INCOME OF THE ASSESSEE. FURTHER, THE ASSESSING OFFICER OBSERVE D THAT ASSESSEE MUST HAVE PAID COMMISSION @2% TO OBTAIN THE CHEQUE IN LIE U OF CASH AND HENCE, COMMISSION PAID @ 2% WAS ALSO TO BE ADDED TO THE INCOME OF THE ASSESSEE. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT ASSESSEE HAD FILED FOLLOWING DOCUMENTS I N THE COURSE OF ASSESSMENT PROCEEDINGS TO PROVE THE TRANSACTIONS. A) NAME AND ADDRESS OF THE SHAREHOLDERS. B) INCOME TAX PARTICULARS OF SHAREHOLDERS. C) SHARE APPLICATION FORMS. D) CONFIRMATION OF SHAREHOLDERS WITH REGARD TO SHARE CAPITAL SUBSCRIBED BY THEM. E) AFFIDAVIT OF THE SHAREHOLDERS WITH REGARD TO SHA RE CAPITAL SUBSCRIBED BY THEM. 4.1 LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT AS SESSING OFFICER HAS NOT VERIFIED THE DETAILS FURNISHED BY THE ASSE SSEE AND INCOME TAX RECORDS OF THE SHARE HOLDERS/ INVESTING COMPANIES. LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT ASSESSING OFFICER HAS NOT CONTROVERTED THIS ASPECT AND OBSERVED THAT ASSESSEE HAS DISCHARG ED ITS BURDEN OF PROVIDING BASIC DETAILS WHICH WERE REQUIRED FOR V ERIFICATION TO FULFILL THE CONDITIONS VIZ. IDENTITY OF THE CREDITOR, CREDI TWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. LD. COMMISSIONER OF INCOME TAX (A) THEREAFTER REFERRED THE SEVERAL CASE LAWS AND HELD THAT HE HAS NO HESITATION TO CONCLUDE THAT ASSESSEE HAS PROVIDED ITA NO. 2104/DEL/2010 5 NECESSARY DETAILS AND HAS DISCHARGED ONUS CAST ON I T. HE NOTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO DISPUTE THAT FACTS /DETAILS FURNISHED BY THE ASSESSEE. IN VIEW OF THE ABOVE, LD. COMMISSIONER OF INCOME TAX (A) DELETED THE ADDITIO N OF ` 10,00,000/- ON SHARE CAPITAL. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT IN THIS CASE THE LD. COMMISSIONER OF INCOME TAX (A) HAS NOTED THAT ASSESSE E HAS SUBMITTED THE VARIOUS DETAILS WHICH THE ASSESSING O FFICER HAS NOT EXAMINED/ENQUIRED PROPERLY AS FOLLOWS:- A) NAME AND ADDRESS OF THE SHAREHOLDERS. B) INCOME TAX PARTICULARS OF SHAREHOLDERS. C) SHARE APPLICATION FORMS. D) CONFIRMATION OF SHAREHOLDERS WITH REGARD TO SHARE CAPITAL SUBSCRIBED BY THEM. E) AFFIDAVIT OF THE SHAREHOLDERS WITH REGARD TO SHA RE CAPITAL SUBSCRIBED BY THEM. 6.1 WE FURTHER FIND THAT THE ASSESSING OFFICER HA S OBSERVED THAT LETTERS WERE ISSUED TO THE ABOVE PARTIES WHICH COULD NOT BE SERVED. ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE WAS NOT ABLE TO PRODUCE THE DIRECTORS OF THE CREDITOR COMPANI ES. FURTHERMORE, ASSESSING OFFICER HAS FOUND THAT CASH WAS DEPOSITED IN ITA NO. 2104/DEL/2010 6 THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE FOR SHARE C APITAL. ACCORDINGLY, ASSESSING OFFICER HAS MADE THE ADDI TION TOWARDS THE SHARE CAPITAL/ SHARE APPLICATION MONEY. LD. COMMISSIO NER OF INCOME TAX (A) ON THE OTHER HAND HAS HELD THAT THE ASSESS EE HAS DISCHARGED ITS ONUS AND ASSESSING OFFICER HAS NOT BROUGHT ANY THING ON RECORD TO DISPUTE THE DETAILS/ FACTS FURNISHED BY THE ASSESSE E. 6.2 IN THIS REGARD, WE NOTE THAT IT IS NOT THE CASE THAT, THE ENQUIRY THE ASSESSING OFFICER HAS NOT MADE, WAS DONE BY THE LD . COMMISSIONER OF INCOME TAX (A) HIMSELF. IT IS A SETTLED LAW THAT TH E POWERS OF THE COMMISSIONER OF INCOME TAX IS CO-TERMINUS WITH THAT OF ASSESSING OFFICER. UNDER THE CIRCUMSTANCES, THE PARTICU LAR ENQUIRY THAT WAS NOT MADE BY THE ASSESSING OFFICER WHICH WAS NECESS ARY IN THE FACTS OF THE CASE, SHOULD HAVE BEEN DONE BY THE LD. COMMISSION ER OF INCOME TAX (A). 6.3 FURTHERMORE, WE FIND THAT IN THIS CASE SHARES OF ` 10 OF FACE VALUE HAS BEEN ISSUED AT A SHARE PREMIUM OF ` 40/-. HOW THIS COMPANY WAS COMMANDING ` 40/- PREMIUM ON ` 10/- SHARE HAS NOT BEEN ENQUIRED. NO COGENT EXPLANATION WAS SUBMITTED IN THIS REGARD BEFORE US. IN THIS REGARD, WE FIND THAT THE HONBLE AP EX COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT, 131 ITR 451, HELD THAT THE APPELLATE AUTHORITY HAS JURISDICTION AS WELL AS THE DUTY TO C ORRECT THE ERRORS IN THE ITA NO. 2104/DEL/2010 7 PROCEEDINGS UNDER APPEAL AND ISSUE PROPER DIRECTION AS NECESSARY. HENCE, IN THE INTEREST OF JUSTICE, WE REMIT THE ISSU ES RAISED IN THE APPEAL TO THE FILE OF THE ASSESSING OFFICER TO CON SIDER THE SAME DE NOVO, IN LIGHT OF THE OUR ABOVE OBSERVATIONS. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07/9/2012. SD/- SD/- [ [[ [C.M. GARG C.M. GARG C.M. GARG C.M. GARG] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 07/9/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES