M/s. RL Agencies Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2196/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6688 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Reopening of assessment; Unexplained cash credit; Peak credit; Source of fund; Reassessment proceedings
• Section: 69C; 147; 68; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2196/DEL/2015 ASSESSMENT YEAR: 2005-06 R.L. AGENCIES PVT. LTD., 118, ANSAL BHAWAN, KASTURBA GANDHI MARG, NEW DELHI. PAN- AABCR 6010P (APPELLANT) VS. DCIT, CENTRAL CIRCLE 12, NEW DELHI (RESPONDENT) A PPELLANT BY SH. SURENDER KUMAR, FCA RE SPONDENT BY SH. S.R. SENAPATI, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER LD. CIT(A)-24, NEW DELHI DATED 16.02.2015 FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS : 1. THAT THE ORDER DATED 16-02-2015 PASSED U/S 250 OF THE INCOME-TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPE ALS) 24, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MU CH AS HE WAS NOT JUSTIFIED IN ADDING BACK A SUM OF RS. 6,40,622/- ON THE BASIS OF THE CONTENTS OF A PRINTOUT OF A PEN DRIVE ALLEGEDLY RECOVERED FROM TH E POSSESSION OF SH. CHETAN GUPTA, A DIRECTOR OF THE APPELLANT COMPANY A ND RECEIVED FROM THE PUNJAB VIGILANCE BUREAU BY THE INCOME -TAX AUTHORIT IES ON THE GROUND THAT THE ENTRIES IN SUCH PEN DRIVE ALLEGEDLY AMOUNT TO UNEXPLAINED CASH CREDITS WITHIN THE MEANING OF SECTION 68 OF THE INC OME-TAX ACT, 1961 BY IGNORING THE FACT THAT ALLEGED PEN DRIVE HAS NOT BE EN RECOVERED FROM AND DOES NOT BELONG TO THE APPELLANT COMPANY. 2. THAT THE ORDER DATED 16-02-2015 PASSED U/S 250 OF THE INCOME-TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPE ALS) 24, NEW DATE OF HEARING 18.07.2018 DATE OF PRONOUNCEMENT 30 .07.2018 ITA NO. 2196/DEL/2015 2 DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MU CH AS HE WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE LD ASSESSING OFFICER IN RESORTING TO THE REASSESSMENT PROCEEDINGS U/S 148 AND THE NOTICE ISS UED UNDER THAT SECTION IN BAD IN LAW IN AS MUCH AS THE REQUISITE CONDITION S FOR RESORT TO THE REASSESSMENT PROVISIONS WERE NOT FULFILLED AND SATI SFIED IN THE INSTANT CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 27.10.2005 DECLARING TOTAL LOSS OF RS.71,89,337/ -. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S. 147 AFTER RECORDING TH E FOLLOWING REASONS : 'RETURN OF LOSS FOR THE AY 2005-06 WAS FILED BY THE ASSESSEE ON 27/10/2005 VIDE ACKNOWLEDGMENT NO, 1511000326 DECLA RING TOTAL LOSS OF RS. 71,89,337/-. RETURN FILED BY THE ASSESSEE WAS P ROCESSED U/S 143(1)(A) OF THE INCOME TAX ACT, 1961 ON 18/04/2006. 2. A SEARCH OPERATION WAS CARRIED OUT BY THE PUNJAB VIGILANCE BUREAU ON 17/05/2007 IN THE CASE OFSH. CHETAN GUPTA AT HIS BU SINESS PREMISES SITUATED AT 118, ANSAL BHAWAN, K.G. MARG, NEW DELHI . DURING SEARCH, A PEN DRIVE WAS FOUND FROM THE POSSESSION OF SH. CHETAN G UPTA, WHO IS ONE OF THE DIRECTORS OF ASSESSEE COMPANY. IN THE SAID PEN DRIV E, LEDGER ACCOUNTS OF DIFFERENT PARTIES WERE FOUND TO BE MAINTAINED BY SH . CHETAN GUPTA. PRINTOUTS OF THE YEAR WISE LEDGER ACCOUNTS HAD BEEN TAKEN BY THE PUNJAB VIGILANCE BUREAU FROM THE PEN .DRIVE AND WERE SENT TO THE INCOME TAX DEPARTMENT. IT HAS BEEN ALLEGED BY THE PUNJAB VIGIL ANCE BUREAU THAT SH. CHETAN GUPTA WAS MAINTAINING UNACCOUNTED MONEY OF V ARIOUS PERSONS/ENTITIES IN THE SAID PEN DRIVE. 3. AS PER INFORMATION AVAILABLE IN THIS OFFICE, THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR ENTERED INTO FINANCIAL TRANS ACTIONS OF EXPENDITURE AND INVESTMENTS WHICH ARE NOT ENTERED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ARE ALSO NOT IN COMMENSURATION WITH TH E DECLARED SOURCES OF INCOME AS PER PARTICULARS OF INCOME DECLARED IN THE RETURN OF INCOME FILED FOR THE AY 2005-06. 4. AS PER DETAILS AVAILABLE ON PAGE 57 OF THE ANNEX URE, THERE ARE CREDITS OF RS. 2,09,380/- WITH PARTICULARS 'TRFTO KOTHIA/C' IN T HE ACCOUNT MAINTAINED IN THE NAME OF 'RL AGENCY EXP. ' THERE AR E DEBITS OF RS. 4,31,242/- IN THE AFORESAID ACCOUNT WHICH APPEAR TO BE EXPENSES MADE ON VARIOUS HEADS WHICH ARE NOT ENTERED IN THE BOOKS OF ACCOUNT OF THE ITA NO. 2196/DEL/2015 3 ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION A ND NOT DECLARED IN THE RETURN OF INCOME. THE AMOUNT OF UNDISCLOSED EXPE NDITURE MADE BY THE ASSESSEE IS COVERED WITHIN THE PROVISIONS OF SECTIO N 69C OF THE INCOME TAX ACT, 1961. IN VIEW OF THE FACTS OF THE CASE, IT IS CRYSTAL CLEAR THAT EXPENDITURE OF RS. 4,31,242/- HAS BEEN MADE FROM TH E UNDISCLOSED SOURCES AND THE SAME HAVE NOT BEEN ENTERED IN THE BOOKS OF ACCOUNTS OF ASSESSEE COMPANY, BEING REASONS THAT AS PER INFORMATION AVAI LABLE, SH. CHETAN GUPTA IS MAINTAINING UNACCOUNTED ACCOUNTS IN THE SA ID PEN DRIVE. PAGE 57 ON WHICH UNACCOUNTED ENTRIES ARE APPEARING IS PLACE D CONTRA. 5. IN VIEW OF THE FACTS, AS DISCUSSED ABOVE, I HAVE REASONS TO BELIEVE THAT IN THE CASE OF THE ASSESSEE, FOR THE AY 2005-0 6, A TOTAL AMOUNT OF RS. 6,40,622/- HAS ESCAPED FROM ASSESSMENT WITHIN THE P ROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, 1961 BY REASON OF THE FAI LURE ON THE PART OF THE ASSESSEE. ' 3. IN RESPONSE TO STATUTORY NOTICES, THE ASSESSEE F ILED A DETAILED REPLY, AS REPRODUCED IN THE ASSESSMENT ORDER, INTER ALIA, STA TING THAT ALL THE ENTRIES RELATING TO THE ALLEGED PEN DRIVE HAVE ALREADY BEEN CONSIDERED IN THE MATTER OF SHRI CHETAN GUPTA AND THEREFORE, THE SAME ENTRIES/T RANSACTIONS CANNOT AGAIN BE CONSIDERED IN THE HANDS OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER, HOWEVER, BEING NOT SATISFIED WITH THE DETAILED REPL Y OF ASSESSEE, AND AFTER WORKING OUT THE PEAK CREDIT OF RS.6,40,000/- OF DIF FERENT ACCOUNTS AND MADE ADDITION THEREOF IN THE HANDS OF THE ASSESSEE U/S. 68 OF THE ACT AND ACCORDINGLY, REDUCED THE DECLARED LOSS OF THE ASSES SEE TO RS.65,48,715/-. THE APPEAL FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) STOOD DISMISSED VIDE IMPUGNED ORDER. AGGRIEVED, THE ASSESSEE IS IN APPEA L BEFORE THE TRIBUNAL. 4. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE CAS E OF THE APPELLANT IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE FROM THE FOLLOWING ORDERS OF CO- ORDINATE BENCH OF TRIBUNAL ON MERITS OF THE CASE, W HEREIN ON THE BASIS OF SAME PEN DRIVE, THE ADDITIONS HAVE BEEN DELETED IN OTHER GROUP CASES OF ASSESSEE: ITA NO. 2196/DEL/2015 4 (I). M/S. R.L. EXPORTS INTERNATIONAL VS. ACIT(ITA N OS.2364 & 2365/DEL/2015- AY 2001-02 & 2002-03 DATED 17.02.2 016). (II). M/S. RL EXPORTS INTERNATIONAL VS. DCIT (ITA N O. 2195/DEL/2015- A.Y. 2005-06 ORDER DATED 17.02.2016. (III). CHETAN GUPTA VS. DCIT (ITA NO. 1788 & 2389/D EL./2016 A.Y. 2005-06 ORDER DATED 07.06.2018 ) THE ASSESSEE DID NOT ARGUE ON THE LEGAL ISSUE CHALL ENGING THE VALIDITY OF REOPENING OF ASSESSMENT U/S. 147/148 OF THE ACT, AS TAKEN IN THE GROUNDS OF APPEAL. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE PEAK CREDIT TAKEN BY T HE ASSESSING OFFICER SHOULD BE UPHELD. 6. AFTER HEARING BOTH THE SIDE AND PERUSING THE ENT IRE MATERIAL AVAILABLE ON RECORD AND THE DECISIONS OF TRIBUNAL CITED BY ASSES SEE, WE OBSERVE THAT THE ONLY DISPUTE WHICH NEEDS ADJUDICATION AT THIS STAGE PERTAINS TO THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK CR EDITS WORKED OUT ON THE BASIS OF PEN DRIVE OF RS.6,40,622/- IS TAXABLE IN T HE HANDS OF THE ASSESSEE OR NOT. IN THIS CONTEXT, ON PERUSAL OF VARIOUS DECISIO NS OF TRIBUNAL AS REFERRED TO ABOVE, WE FIND THAT THE PEAK CREDITS OF THE TRANSAC TIONS IN THE PEN DRIVE STOOD ACCEPTED BY ONE SHRI CHETAN GUPTA AS ITS INCOME. TH EREFORE, THE ADDITION MADE IN THE HANDS OF ASSESSEE COMPANY ON THE SAME B ASIS CANNOT BE SUSTAINED. ONCE THE SAID PEAK CREDITS HAVE BEEN ADD ED IN THE HANDS OF SHRI CHETAN GUPTA, THE SAME CANNOT BE AGAIN ADDED IN THE HANDS OF ASSESSEE COMPANY. SIMILAR VIEW HAS BEEN TAKEN BY SMC BENCH O F TRIBUNAL IN ASSESSEES GROUP CASES M/S. R.L. EXPORT INTERNATIONAL VS. DCIT (ITA NOS. 2364 & 2365/DEL/2015 FOR A.Y. 2001-02 & 2002-03 AND ITA NO . 2195/DEL/2015 FOR ITA NO. 2196/DEL/2015 5 A.Y 2005-06. OUR AFORESAID VIEW ALSO STANDS SUPPORT ED BY THE DECISION OF TRIBUNAL IN THE CASE OF CHETAN GUPTA VS. DCIT (ITA NO. 1788/DEL/2016 AND 2389/DEL/2016 FOR A.Y. 2005-06). NO CONTRARY MATERI AL IS PLACED ON RECORD ON BEHALF OF THE REVENUE. WE, ACCORDINGLY, DO NOT FIN D ANY JUSTIFICATION TO SUSTAIN THE ADDITION MADE BY THE AUTHORITIES BELOW IN THE H ANDS OF ASSESSEE COMPANY. THEREFORE, THE APPEAL OF THE ASSESSEE DESERVES TO B E ALLOWED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2018. SD/- SD/- (BHAVNESH SAINI) ( L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JULY, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI