Jagdish Lal, V. ITO, Ward-3,

ITA 2208/DEL/2006

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61621 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 16-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL K GUPTA
• Keywords: Income from undisclosed sources; Accommodation entries
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI DELHI BENCH : A NEW DELHI DELHI BENCH : A NEW DELHI DELHI BENCH : A NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 2208/DEL/06 ASSTT. YEAR 1996-97 SHRI JAGDISH LAL, PROP. OF M/S. SWASTIKA TEXTILE INDS. JATAL ROAD, PANIPAT, VS. THE INCOME TAX OFFICER, WARD 3, PANIPAT (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANIL K GUPTA, CA RESPONDENT BY: SHRI A.K. SINGH, SR. DR DATE OF HEARING : 11-04-2012 DATE OF PRONOUNCEMENT : -04-2012 ORDER PER K.G. BANSAL, AM: IN THIS CASE, THE TRIBUNAL HAD PASSED THE ORDER ON 17.4.2009 IN WHICH THE APPEAL OF THE ASSESSEE WAS DISMISSED IN L IMINE FOR NON- PROSECUTION. THIS ORDER WAS RECALLED ON 6.11.2009 S O THAT THE APPEAL COULD BE DECIDED ON MERITS. ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 2 1.1 THE ASSESSEE HAS TAKEN ON FOUR GROUNDS IN APPEA L. GROUND NOS. 2,3 AND 4 HAVE NOT BEEN PRESSED BEFORE US BY THE LD. CO UNSEL FOR THE ASSESSEE. THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND 1 IS TO THE EFFECT THAT THE LD. CIT(A) ERRED IN MAK ING ADDITION OF 2,76,126/- TREATING THE LONG TERM CAPITAL GAIN (LTCG) AS BOGUS AND MAKING FURTHER ADDITION OF ` 27614/-. AS PREMIUM ON BOGUS LTCG. . 2. THE FACTS MENTIONED IN THE ASSTT. ORDER ARE THAT THE ASSESSEE HAD FIELD HIS RETURN ON 29.10.1996 DECLARING TOTAL INCO ME OF ` 106760/-. THE RETURN WAS PROCESSED U/S 143(I)(A). THEREAFTER A CO MMUNICATION WAS RECEIVED FROM THE DDIT (INVESTIGATION) THAT THE ASS ESSEE RECEIVED ENTRIES IN RESPECT OF CAPITAL GAIN AMOUNTING TO ` 209685/- AND ` 66441/- FOR WHICH THE ASSESSEE HAD INTRODUCED HIS OWN UNACCOUNTED MON EY IN THE BOOKS WITH THE HELP OF SHRI SHANKAR HARI MAHESWARI WHO HA D ISSUED THE DRAFTS FOR EQUIVALENT AMOUNT TO THE ASSESSEE FROM HIS BANK AC COUNT OBTAINED FROM THE BANK AFTER DEPOSITING CASH. THE INQUIRIES IN TH IS REGARD HAD LED TO THE CONCLUSION THAT NO SALE AND PURCHASE OF SHARES HAD ACTUAL TAKEN PLACE. THE ASSESSEE PAID CASH TO SHRI MAHESHWARI WHO DEPOS ITED IT IN THE BANK ACCOUNT. THEREAFTER HE PURCHASED BANK DRAFTS AND GA VE THEM TO THE ASSESSEE. IN THESE TRANSACTIONS, HE EARNED COMMISSI ON ONLY. THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE. HE DISP UTED THESE FINDINGS AND FURNISHED EVIDENCE IN RESPECT OF PURCHASE AND SALE. THE EVIDENCE HAS BEEN LISTED ON PAGE 2 OF THE ASSTT. ORDER, WHICH CO NSIST OF THE FOLLOWING :- ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 3 I) CONTRACT NOTE IN FORM A DATED 7.4.1994 FOR PURCH ASE OF 6500 SHARES OF NILAMBER HOLIDAYS LTD. @ `3/55 PER SHARE. II) DAILY QUOTATION LIST FROM STOCK EXCHANGE FOR RA TE OF PURCHASE OF SHARES III) BILL NO. 419 DATED 21.1.1994 FOR PURCHASE OF S HARES FOR ` 23075/- IV) CONTRACT NOTE IN FORM-A DATED 18.5.1995 FOR SAL E OF 6500 SHARES OF NILAMBER HOLIDAYS LTD. @ ` 42.55 PER SHAR E V) CUTTING OF THE TRIBUNE NEWSPAPER FOR QUOTATIO N OF SALE OF SHARES VI) BILL NO. 1477 DATED 25.5.1995 FOR SALE OF SHARE S FOR ` 276575/- ON 18.5.1995 VIDE DISTINCTIVE NO. 157008-158507 AND 710301 0 715300. VII) PHOTOCOPIES OF TWO DEMAND DRAFTS DATED 30.5.19 95 AND 31.5.1995 FOR ` 209685/- AND 66441/- RESPECTIVELY. VIII) PROOF OF TRANSFER OF SHARES ALONGWITH SHARE C ERTIFICATES 2.1 THE AO REFERRED TO THE STATEMENT OF SHRI MAHASH WARI RECORDED U/S 131 ON 8.12.1999. FURTHER HE REFERRED TO THE STATEM ENT OF INTRODUCERS OF BANK ACCOUNT. HE ALSO REFERRED TO CERTAIN OTHER STA TEMENTS AND ANALYSED THE BANK ACCOUNT. THE ASSESSEE WAS ALSO REQUESTED T O PRODUCE THE BOOKS OF ACCOUNTS. HE, HOWEVER, DID NOT DO SO. THE CASE O F THE ASSESSEE WAS THAT HE HAS FURNISHED ALL THE DOCUMENTS PROVING PU RCHASE AND SALE OF SHARES. NO MATERIAL HAS BEEN PRODUCED ADVERSE TO TH E ASSESSEE. IN THESE CIRCUMSTANCES, THE STATEMENT OF A THIRD PARTY RECOR DED AT HIS BACK CANNOT BE CONSTRUED AGAINST HIM. HOWEVER, ON CONSIDERATION OF THE FACTS AND SUBMISSIONS, THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES FOR BOGUS LTCG FOR WHICH HE H AD ALSO PAID COMMISSION TO SHRI MAHASHWARI. THEREFORE, THE SUM O F ` 2,76,126/- HAS ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 4 BEEN TAXED AS UNEXPLAINED MONEY LAUNDERED AS LTCG. FURTHER SUM OF ` 66441/- HAS BEEN ADDED AS A COMMISSION PAID TO SHRI MAHASHWARI FROM UNACCOUNTED INCOME. 3. THE MATTER WAS AGITATED BEFORE THE CIT(A) KARNAL . HE HAS DECIDED THE MATTER AGAINST THE ASSESSEE BY MENTIONING THAT THE ASSESSEE HAS BEEN CONFRONTED WITH ALL THE MATERIAL COLLECTED BY THE INVESTIGATION WING AND THE AO. THEREAFTER, IT WAS FOR THE ASSESSEE TO PRODUCE RELEVANT PERSONS OR DOCUMENTS FOR PROVING GENUINENESS OF THE TRANSACTION. HE FAILED TO DO SO. THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE ADDITION OF THE TWO AMOUNTS WHICH ARE SUBJECT MATTER OF APPEAL. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE HAS PURCHASED 6500 SHARES OF NILAMBER HOLI DAYS LTD. THROUGH MAHASHWARI SONS ON 7.4.1994 @ ` 3/55 PER SHARE. THI S IS EVIDENCED BY THE MEMO OF CONFIRMATION ISSUED BY MAHASHWARI SONS PLACED ON PAGE NO. 46 OF THE PAPER BOOK. THE QUOTATION OF THAT SHARE W AS ` 3.50 ON THE STOCK EXCHANGE AS SEEN FROM PAGE 47 OF THE PAPER BOOK. TH ESE SHARES WERE TRANSFERRED BY THE COMPANY IN THE NAME OF THE ASSES SEE ON 27.4.1994 AS SEEN FROM THE LETTER OF NILAMBER HOLIDAYS. PVT. LTD . PLACED ON 53 OF THE PAPER BOOK. THE BALANCE SHEET OF THE ASSESSEE SHOW S A SUM OF ` 23075/- IN THE NAME OF NILAMBER HOLDING PVT. LTD. UNDER TH E HEAD SUNDRY DEBTOR. THE REASON FOR SHOWING THE AMOUNT AS DEBT IS THAT TILL 31.3.1995, SHARES WERE NOT TRANSFERRED IN THE NAME OF THE ASSE SSEE. THESE SHARES WERE SOLD ON 18.5.1995 THROUGH M/S. MAHASHWARI SON S @ ` 43 PER SHARE, AS EVIDENCED BY THE MEMO OF CONFIRMATION PLACED ON PAGE 49. THE QUOTED ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 5 VALUE ON LUDHIANA STOCK EXCHANGE WAS ` 43/-,AS SEEM S FROM PAGE 50. THE ASSESSEE HAD BROUGHT ALL THE EVIDENCE RECORD OF THE AO. IT WAS ALSO SUBMITTED BEFORE HIM THAT NONE OF THE ALLEGATIONS I S CORRECT. ALTHOUGH THE SERIOUS CHARGE HAS BEEN LEVELLED AGAINST THE ASSESS EE, BUT NO COPY OF INFORMATION AVAILABLE WITH THE AO HAS BEEN SUPPLIED FOR REBUTTAL. THE ALLEGED MATERIAL COLLECTED BY THE DEPARTMENT HAS NO T BEEN SHOWN TO THE ASSESSEE. THE NAME OF THE ASSESSEE AND THE SHARES O F NILAMBER HOLIDAYS LTD. NOT APPEAR ANYWHERE IN THE EVIDENCE COLLECTED FROM THIRD PARTIES. 4.1 IT IS ARGUED THAT THE FACTS SHOW THAT THE ASSES SEE HAD PURCHASED 6,500 SHARES OF NILAMBER HOLIDAYS PVT. LTD EARLIER. THESE SHARES WERE SOLD ON 18.5.95. THE SALE PROCEEDS WERE RECEIVED BY WAY OF DRAFT, AS THE ASSESSEE WAS STAYING AT PANIPAT. THE SALE PROCEEDS WERE UTILIZED FOR CONSTRUCTION OF HOUSE AND THEREFORE DEDUCTION U/S 5 4F WAS CLAIMED. THUS THERE IS NOTHING IN THE EVIDENCE TO CONCLUDE THAT T HE ENTRIES WERE MERE ACCOMMODATION ENTRIES. IN FACT THERE IS NO EVIDENCE OF PAYMENT OF CASH BY THE ASSESSEE TO SHRI MAHASHWARI. THEREFORE, VARI OUS CONCLUSIONS HAVE BEEN ARRIVED AT ON MERE JUNCTURES AND SURMISES AND BY RELYING ON UNVERIFIED EVIDENCE. 5. IN REPLY, THE LD. SR. DR SUBMITTED THAT AUTHENTI C INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING. THE BANK ACCO UNT OF M/S. MAHASHWARI SONS WAS FOUND TO BE BOGUS AS CASH WAS D EPOSITED AND DRAFTS WERE ISSUED. THIS BANK ACCOUNT WAS USED FOR MAKING PAYMENT TO THE ASSESSEE. ALTHOUGH THE ASSESSEE FILED EVIDENCE REGARDING PURCHASE AND SALE OF SHARES, BOOKS OF ACCOUNTS WERE NEVER PR ODUCED BEFORE THE AO ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 6 OR THE LD. CIT(A). IN ABSENCE OF PRODUCTION OF BOOK S OF ACCOUNTS, THE INITIAL BURDEN CAST ON THE ASSESSEE TO ESTABLISH THE ENTRIE S AS GENUINE HAS NOT DISCHARGED. THEREFORE, IT IS ARGUED THAT ORDERS OF THE LOWER AUTHORITIES MAY BE UPHELD. 5.1 IN THE REJOINDER REPLY THE LD. COUNSEL SUBMITS THAT STATEMENT OF SHRI MAHASHWARI HAS NOT BEEN SUPPLIED TO THE ASSESSEE. T HE TRANSACTIONS OF PURCHASE AND SALE OF SHARES ARE NOT RELATED TO THE BUSINESS OF ASSESSEE, THEREFORE, NON PRODUCTION OF BOOKS CANNOT LEAD TO T HE CONCLUSION THAT INITIAL BURDEN HAS NOT BEEN DISCHARGED. 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS MADE BEFORE US. THE FINDINGS IN THE ORDER OF ASSESSMEN T ARE PRELIMINARY BASED ON THE INFORMATION COLLECTED BY THE INVESTIGATION W ING ON MAKING INQUIRIES WITH SHRI SHANKER HARI MAHASHWARI AND HIS BANK ACCO UNT. SHRI MAHASHWARI DEPOSED THAT HE NEVER DEALT IN SHARES IN DELHI. HE WAS MEMBER OF UP STOCK EXCHANGE FROM 1986 TO DECEMBER 1995. HE HAD M AINTAINED AN ACCOUNT IN DELHI IN BANK OF BARODA, ASAF ALI ROAD B UT NO TRANSACTION HAS BEEN UNDERTAKEN THROUGH THIS ACCOUNT. HE HAD NOT MA INTAINED ANY BANK ACCOUNT WITH PUNJAB NATIONAL BANK, KAROL BAGH IN WH ICH VARIOUS TRANSACTIONS WERE RECORDED. IT IS POSSIBLE THAT SO MEONE ELSE FORCED HIS SIGNATURE FOR OPENING THIS ACCOUNT. THESE INQUIRIES ALONGWITH THE STATEMENT OF THE INTRODUCERS OF THE ACCOUNT RAISED A SERIOUS DOUBT ABOUT THE ACTUAL PERSON WHO OPENED AND OPERATED THIS ACCO UNT . THIS ACCOUNT HAS BEEN USED FOR PROVIDING ACCOMMODATION ENTRIES. THIS ACCOUNT HAS ALSO BEEN USED FOR MAKING PAYMENTS TO THE ASSESSEE. THUS WHILE THERE ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 7 MAY BE A PRIMA FACIE CASE THAT SHRI MAHASHWARI HAS INDULGED IN PROVIDING ACCOMMODATION ENTRIES, YET HIS EVIDENCE HAS TO BE T ESTED WITH REFERENCE TO THE CASE OF THE ASSESSEE. THEREFORE IT WOULD HAV E BEEN APPROPRIATE TO FURNISH THE STATEMENTS OF SHRI SHANKER HARI MAHESHW ARI , SHRI RAJESH GULATI, SHRI SANJAY HASIJA, AND SHRI PARVEEN MITTAL AND BANK ACCOUNT THROUGH WHICH PAYMENTS HAVE BEEN MADE TO THE ASSESS EE SO THAT HE COULD STATE HIS CASE CLEARLY AFTER PERUSING THE ADV ERSE EVIDENCE IN TOTALITY. IN ABSENCE THEREOF, WE THINK IT FIT TO RESTORE THE MATTER TO THE FILE OF AO TO PROVIDE THE AFORESAID EVIDENCES TO THE ASSESSEE FOR REBUTTAL. THEREAFTER THE EVIDENCES I.E, THE EVIDENCE FILED BY THE ASSESS EE , EVIDENCE GATHERED BY THE AO AND THE REBUTTAL BY THE ASSESSEE MAY BE C ONSIDERED FOR TAKING A FRESH ASSESSMENT AS WARRANTED BY LAW. THUS, AO I S DIRECTED TO MAKE A DENOVO ASSTT. ORDER COMPLYING WITH THE TERMS OF THI S ORDER IN ACCORDANCE WITH LAW. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- [R.P. TOLANI] [K.G. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT ITA NO. 2208/DEL/06 ASSTT. YEAR 1996-97 8 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT