ITO, New Delhi V. M/s. Srishti Fincap Private Ltd., New Delhi

ITA 2264/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97503 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHIS GOYAL
• Keywords: Bogus purchase; Unexplained cash credit; Accommodation entries
• Section: 40A(3); 143(3); 142(1); 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G , NEW DELHI) BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.2264 /DEL/2013 ASSESSMENT YEAR : 2004-05 ITO, WARD 9(2), VS. M/S. SRISHTI FINCAP PVT. LTD ., NEW DELHI 54, BLOCK B, MAHATTA TOWERS, COMMUNITY CENTRE., JANAKPURI, NEW DELHI GIR / PAN:AAFCS8819M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUJIT KUMAR, SR. DR RESPONDENT BY : SHRI VED JAIN, CA AND SHRI ASHIS GOYAL, CA DATE OF HEARING : 26.08.2015 DATE OF PRONOUNCEMENT : 07.10.2015 ORDER PER KULDIP SINGH, JM: THE APPELLANT ITO WARD 9(2), NEW DELHI BY FILING T HE PRESENT APPEAL SOUGHT TO SET ASIDE THE ORDER DATED 11.01.2005 PASS ED BY LD. CIT(A) XII, NEW DELHI FOR THE ASSESSMENT YEAR 2004-05 ON THE GR OUND THAT: LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN DELETING TH E ADDITION MADE U/S 68 OF THE I. T. ACT AMOUNTING TO RS.25,10,000/- ON ACC OUNT OF UNEXPLAINED CASH CREDIT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE: THAT ON THE BASIS OF INFORMATION RECEIVED FORM INVESTIGATION WING OF THE DEPARTMENT THAT THE ITA NO.2264/DEL/2013 2 ASSESSEE WAS IN THE BUSINESS OF BOGUS /ACCOMMODATIO N ENTRY DETAILED AS UNDER: S.NO. VALUE OF ENTRY TAKEN (RS.) DATE ON WHICH ENTRY TAKEN NAME OF THE ACCOUNT HOLDER OF ENTRY PROVIDER BANK FROM WHICH ENTRY RECEIVED ACCOUNT NO. OF THE ENTRY PROVIDER 1 40,40,000 04.08.2003 EXCLUSIVE GARMENTS RATNAKAR BAGH, KAROL BAGH, NEW DELHI 403 THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF TH E ACT AND SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 28.03. 2011. CONSEQUENTLY, NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ALSO ISSUED AND IN RESPONSE THERETO, SHRI NARESH SHARMA, CA AND AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEEDINGS AND FILED DETAILS AND DOCUMENTS CALLED FOR FROM TIME TO TIME. 3. THE REASONS RECORDED FOR REOPENING OF THE CASE W ERE PROVIDED TO THE ASSESSEE AND IN RESPONSE THERETO, THE ASSESSEE STAT ED AS UNDER: FURTHER TO NOTICE DATED 06.09.2011, IT IS SUBMITTE D THAT THE ASSESSEE COMPANY HAS RECEIVED TWO CHEQUES I.E. EN. NO. 078035 OF RS. 505000/- AND CHEQUE NO. 078036 OF RS.505000/- 0;1 0 4.08.2004 AND NOT OF RS. 40,40,000/- AS STATED IN THE NOTICE. THE ASSESSEE COMPANY HAS NOT ALLOTTED ANY SHARES TO M/S EXCLUSIVE GARMEN TS AND PAYMENTS WERE RECEIVED 011 ACCOUNT OF REGULAR BUSINESS TRANS ACTIONS WRT SALES AND PURCHASES. AS THE AMOUNTS RECEIVED WERE THROUGH ACCOUNT PAYEE CHEQUES AGAINST BUSINESS TRANSACTIONS AND DULY RECO RDED IN THE BOOKS OF ACCOUNT HAS NOT ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS SOLD SHARES TO M/S EXCLUSIVE GARME NTS AMOUNTING TO RS. 25.10 LACS. DURING THE YEAR UNDER CONSIDERATION. FURTHER THE ASSESSEE HAS RECEIVED TOTAL PAYMENT FRO M THE PARTY FOR THE SALES OF SHARES THRU ACCOUNT PAYEE CHEQUES ONLY. ITA NO.2264/DEL/2013 3 THE ASSESSEE WAS HAVING OPENING STOCK OF RS. 142.50 LACS AND THERE WERE NO PURCHASES DURING THE YEAR. FURTHER TH E ASSESSEE IS HAVING SALES OF RS. 142.85 LACS DURING THE YEAR UND ER CONSIDERATION. THE ASSESSEE COMPANY HAS ALREADY FILED BALANCE SHEE T AND TAX AUDIT REPORT ALONG WITH THE RETURN OF INCOME. THE ASSESSE E COMPANY HAS NOT ALLOTTED ANY SHARES TO M/S EXCLUSIVE GARMENTS AND P AYMENTS WERE RECEIVED ON ACCOUNT OF REGULAR BUSINESS TRANSACTION S WRT SALES AND PURCHASES. AS THE AMOUNTS RECEIVED WERE THROUGH ACC OUNT PAYEE CHEQUES AGAINST BUSINESS TRANSACTIONS AND DULY RECO RDED IN THE BOOKS ACCOUNTS HAS NOT ESCAPED ASSESSMENT IN THE HANDS O F THE ASSESSEE. 4. HOWEVER, THE ASSESSING OFFICER HAS NOT AGREED WI TH THE EXPLANATION FURNISHED BY THE ASSESSEE AND OBSERVED THAT FROM TH E DETAILED REPORT RELATING TO THE ACCOMMODATION ENTRIES PROVIDED BY DIT( INVES TIGATION) AND FROM THE SURVEY CONDUCTED ON MUKESH GUPTA GROUP OF CASES, IT WAS FOUND THAT ACCOMMODATION ENTRIES WERE ALSO GIVEN THROUGH THE D ISGUISED CHANNELS OF SALES AND PURCHASE OF SHARES AND THEY HAD OPERATED ACCOUNTS IN VARIOUS BANKS OUT OF WHICH ONE OF THE BANK WAS RATANAKAR BA NK, KAROL BAGH. FROM THE BANK ACCOUNT CALLED FROM THE ENTRY PROVIDER, RE TURN U/S 133(6) FROM EXCLUSIVE GARMENTS, IT WAS FOUND BEING OPERATED BY SHRI SANJAY KUMAR CHAUDHARY WITH ADDRESS, F-229, LADO SARAI, NEW DELH I. THE A.O. HELD THAT AS PER THE PROVISION OF SECTION 68 OF THE ACT, AN A MOUNT OF RS.25,10,000/- ON ACCOUNT OF M/S. EXCLUSIVE GARMENTS IS BEING TREA TED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR. 5. THE ASSESSEE CONTESTED A.O.S ORDER BEFORE LD. C IT(A), WHO HAS DELETED THE ADDITION OF RS.25,10,000/- MADE BY THE A.O. BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COM E UP BEFORE THE TRIBUNAL BY WAY OF FILLING THE PRESENT APPEAL. ITA NO.2264/DEL/2013 4 6. LD. D.R. CHALLENGING THE IMPUGNED ORDER CONTENDE D THAT WHEN THE ASSESSEE HAS FAILED TO EXPLAIN THE CREDIT OF RS.40, 40,000/-, PROVISIONS CONTAINED U/S 68 OF THE ACT ARE ATTRACTED AND THE A .O. HAS RIGHTLY TREATED THE AMOUNT OF RS.25,10,000/- AS UNDISCLOSED INCOME OF T HE ASSESSEE AND HAS RELIED UPON THE ORDER DATED 23.11.2011 PASSED BY TH E A.O. 7. HOWEVER, ON THE OTHER HAND, LD. A.R. REPELLED TH E CONTENTION MADE BY LD. D.R. BY CONTENDING INTER ALIA THAT AMOUNT OF RS .25,10,000/- TERMED AS UNDISCLOSED INCOME IS THE SALE PROCEEDS OF SHARES SOLD BY THE ASSESSEE WHICH HAVE ALREADY BEEN INCLUDED BY THE ASSESSEE IN ITS INCOME AND AS SUCH, SECTION 68 IS NOT APPLICABLE; THAT TWO CHEQUES FOR RS.5,05,000/- EACH RECEIVED BY THE ASSESSEE FROM EXCLUSIVE GARMENTS AR E IN RESPECT OF SALES MADE TO EXCLUSIVE GARMENTS AND THIS IS NOT THE AMOU NT RECEIVED ON ACCOUNT OF SHARE CAPITAL OR SHARE APPLICATION MONEY; THAT T HE PURCHASE OF SHARES IN QUESTION HAVE ALREADY BEEN SHOWN BY THE ASSESSEE IN THE BALANCE SHEET FOR THE PRECEDING YEAR; THAT A.O. HAS NOT GIVEN FINDING S THAT IT WAS A BOGUS TRANSACTION IN THE HANDS OF ASSESSEE NOR POINTED OU T THAT SHARES WERE BOGUS PURCHASE BY THE ASSESSEE AND RELIED UPON THE JUDGEM ENTS CITED AS ITO VS JATIN INVESTMENT PVT. LTD. I.T.A. NO. 4325 AND 4326 /DEL.2009 AND IN THE CASE OF CIT VS VISHAL HOLDING & CAPITAL (P) LTD. (2 011) 200 TAXMAN 186 (DEL.). 8. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, GONE THROUGH THE DOCUMENTS RELIED UPON IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, SU BMISSIONS MADE BY THE PARTIES AND CASE LAW CITED IN THIS CASE, WE ARE OF THE CONSIDERED VIEW THAT ITA NO.2264/DEL/2013 5 NO GROUND IS MADE OUT TO INTERFERE INTO THE ORDER P ASSED BY LD. CIT(A) FOR THE FOLLOWING REASONS: I) THAT IN THE INSTANT CASE, A.O. HAS MERELY ACTED UPON INFORMATION SUPPLIED BY DIT (INV.) AND HAS NOT PREFERRED TO ANA LYZE THE PREVIOUS RETURNS FILED BY THE ASSESSEE TO MAKE OUT IF HE HAS ALREADY DISCLOSED THE PURCHASE OF SHARES IN QUESTION. II) THAT FROM THE PERUSAL OF COPIES OF ASSESSMENT P ROCEEDINGS INITIATED U/S 147 READ WITH SECTION 143(3) OF THE ACT, PERTAINING TO ASSESSMENT YEAR 2003-04 LYING AT PAGES 45-46 OF THE LEDGER BOOK, IN LEDGER ACCOUNT SHOWING PURCHASE OF SHARES QUA THE ASSESSMENT YEAR 2003-04 LYING AT PAGE 34 WHICH HAVE NEVER BEEN DISPUTED BY THE A.O., IT IS ABUNDAN TLY CLEAR THAT THE ASSESSEE HAD PURCHASED THE SHARES IN ASSESSMENT YEAR 2003-04 . III) THAT WHEN THE ASSESSEE HAS SOLD THE SHARES FOR RS.25,10,000/- UNDISPUTEDLY PURCHASED BY HIM IN ASSESSMENT YEAR 20 03-04, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST HIM. IV) THAT WHEN PURCHASED SHARES NOW SOLD BY THE ASSE SSEE IN ASSESSMENT YEAR 2003-04 HAS BEEN ACCEPTED IN THE PRECEDING ASS ESSMENT YEAR, THE ASSESSEE CANNOT BE PUT TO SUCH A SITUATION TO PROVE THE SOURCE OF BUYER IN THE SUBSEQUENT ASSESSMENT YEAR. MOREOVER, THE SELLER C AN MAKE SALE OF SHARES IN CASH U/S 40A(3) OF THE ACT. V) THAT WHEN ASSESSEE HAS SHOWN AN AMOUNT OF RS.25, 10,000/- AS SALE PROCEEDS OF SHARES AS INCOME, THERE IS NO GROUND FO R MAKING THE SAME AS ADDITION IN THE INCOME WHICH WOULD AMOUNT TO DOUBLE ADDITION. VI) THAT THE BOOKS OF ACCOUNT MAINTAINED BY ASSESSE E HAVE NEVER BEEN DISPUTED BY THE A.O. NOR HE HAS HELD THAT THE PURCH ASE OF SHARES WAS BOGUS TRANSACTION OR THE SHARES SOLD BY THE ASSESSEE WERE BOGUS ONE. ITA NO.2264/DEL/2013 6 VII) IN I.T.O. VS JATIN INVESTMENT PVT. LTD. (SUPRA), IT IS HELD THAT WHEN THE ASSESSEE PURCHASED THE SHARES IN EARLIER YEAR W HICH WERE SHOWN AS INVESTMENT IN THE BOOKS OF ACCOUNT AND REFLECTED IN THE BALANCE SHEET THEN THE ASSESSEE SOLD CERTAIN INVESTMENTS AND ACCOUNTED FOR THE PROFIT OR LOSS, THE PROVISIONS OF SECTION 68 OF THE ACT WERE NOT APPLIC ABLE. VIII) SIMILARLY, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CITED AS CIT VS VISHAL HOLDING AND CAPITAL PVT. LTD. VIDE ORDER DATED 9 TH AUGUST, 2010 UPHELD THE ORDER DATED 30.07.2009 OF THE ITAT IN I.T.A. NO. 1788/DEL/2007 FOR THE ASSESSMENT YEAR 2000-2001 WHEREIN THE ORDER OF THE LD. CIT(A) MAKING THE SIMILAR DELETION WAS UPHE LD BY OBSERVING IN PARA 6 AS UNDER:- WE ARE OF THE VIEW THAT THE ASSESSEE HAD PRODUCED C OPIES ) OF ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S. M KM FINSEC PVT. LTD., AND HAD BEEN MAINTAINING BOOKS OF ACCOUNT AS PER COMPANIES ACT. THE ASSESSEE HAD ALSO DEMONSTRATED THE PURCHAS E AND SALE OF SHARES OVER A PERIOD OF TIME AS SEEN FROM THE BALAN CE SHEET. IN OUR OPINION, THE ASSESSING OFFICER HAS SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFY ING THE DETAILS FURNISHED BY THE ASSESSEE. THE ASSESSEE HAS ALSO PR ODUCED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAIM. CONSEQUENTL Y THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED.' IX) THAT THE ISSUE IN CONTROVERSY IS SQUARELY COVER ED BY THE JUDGEMENTS: VISHAL HOLDING AND CAPITAL PVT. LTD. AND JATIN INVE STMENT PVT. LTD. (SUPRA) AS THE ASSESSEE IN THE INSTANT CASE HAS PURCHASED THE SHARES TO THE TUNE OF RS.25,10,000/- IN THE ASSESSMENT YEAR 2003- 04 AND THEN CREDITED THE RECEIPT ON ACCOUNT OF SALE OF SHARES TO THE TUNE OF RS.25,10,000/- TO ITS P & L ACCOUNT, WHICH HAS ALREADY BEEN DECLARED AND CONSID ERED AS ITS INCOME BY THE APPELLANT / ASSESSEE. SO LD. CIT(A) HAS LEGALL Y AND RIGHTLY DELETED THE ADDITION OF RS.25,10,000/- VIDE IMPUGNED ORDER. ITA NO.2264/DEL/2013 7 11. AS A SEQUEL TO THE DISCUSSION MADE IN THE PRECE DING PARAGRAPHS AND IN VIEW OF THE RATIO OF JUDGEMENT IN THE CASE OF VISHAL HOLDING AND CAPITAL PVT. LTD. (SUPRA), WE ARE OF THE OPINION THAT WHEN THE ASSESSEE HAS P ROVED TO HAVE PURCHASED THE SHARES OF RS.25,10,000/- IN THE PRECEDING ASSESSMENT YEAR DULY SHOWN IN THE BALANCE SHEET AND THEN SOLD THE SAME AND SHOWN AN AMOUNT OF RS.25,10,000/- AS SALE PROCEEDS OF THE S HARE AS INCOME, THE PROVISIONS CONTAINED IN SECTION 68 OF THE ACT ARE N OT ATTRACTED AND HOLDING THE SAME AS INCOME WOULD TANTAMOUNT TO DOUBLE TAXAT ION WHICH IS NOT PERMISSIBLE UNDER LAW AND AS SUCH, THE LD. CIT(A) H AS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. CONSEQUENTLY, NO GROUND TO INTERFERE IN THE IMPUGNED ORDER, THE APPEAL OF REVENUE IS HEREBY DIS MISSED. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH OCT., 2015. SD./- SD./- ( N. K. SAINI) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 07 TH OCT., 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.2264/DEL/2013 8 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 15/9 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 15,21/9,5,6,6/10 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 7/10/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 7/10 SR. PS/PS 7 FILE SENT TO BENCH CLERK 7/10 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER