Rosemary Hospitality Pvt. Ltd., Gurgaon V. ITO, New Delhi

ITA 2336/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3469 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH GOEL
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries
• Section: 68; 132

Judgement Text

1 ITA NO. 2336/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 2336/DEL/201 7 ( A.Y 2012-13) ROSEMARY HOSPITALITY PVT. LTD. M-3/60, GROUND FLOOR, DLF CITY, PHASE-II GURGAON AADCR9331B (APPELLANT) VS ITO WARD-21(4) NEW DELHI (RESPONDENT) APPELLANT BY SH. VED JAIN, ADV & SH. ASHISH GOEL, CA RESPONDENT BY SH. ATIQ AHMAD SR. DR ORDER PER SUCHITRA KAMBLE THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01/03/2017 PASSED BY CIT(A)-36, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE CIT(A) IS BAD, BOTH IN THE EYE OF LAW AND ON THE FA CTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CI T(A) HAS ERRED BOTH ON FACTS AND IN LAW IN PASSING THE ORDER WITHOUT GIVIN G ASSESSEE PROPER AND ADEQUATE OPPORTUNITY TO REPRESENT HIS CASE IN VIOLA TION OF PRINCIPLE OF NATURAL JUSTICE. DATE OF HEARING 02.01.2018 DATE OF PRONOUNCEMENT 09.02.2018 2 ITA NO. 2336/DEL/2017 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CI T(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF AN A MOUNT OF RS. 1,00,00,000/- ON ACCOUNT OF SHARE CAPITAL, UNDER SECTION 68 OF TH E ACT. 4. (I) THAT THE SAID ADDITION WAS MADE DESPITE THE AS SESSEE BRINGING ON RECORD ALL MATERIAL & EVIDENCES TO PROVE THE IDENTITY & CR EDITWORTHINESS OF THE SHARE APPLICANTS & GENUINENESS OF THE TRANSACTION. (II) THAT THE ADDITION WAS MADE WITHOUT POINTING OU T ANY ERROR OR DEFECT IN THE EVIDENCES FILED BY THE ASSESSEE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CI T(A) HAS ERRED IN CONFIRMING THE ABOVE SAID ADDITION WHICH WAS MADE O N THE BASIS OF MATERIAL COLLECTED/STATEMENT RECORDED AT THE BACK OF THE ASS ESSEE WITHOUT GIVING HIM AN OPPORTUNITY TO REBUT/CROSS-EXAMINE THE SAME. 6. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E CIT(A) HAS ERRED IN CONFIRMING AN ADDITION OF AN AMOUNT OF RS. 1,50,000 /- ON ACCOUNT OF COMMISSION. (II) THAT THE SAID ADDITION WAS MADE ARBITRARILY @ 1.5%, WITHOUT THERE BEING ANY BASIS FOR THE SAME. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 3. DURING THE YEAR, THE ASSESSEE COMPANY WAS ENGAGE D IN THE BUSINESS OF BUILDERS AS IN EARLIER YEARS. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE COMPANY ON 29.09.2012 DECLARING INCOME OF RS.12,56, 610/-. DURING THE YEAR, THE ASSESSEE HAS SHOWN GROSS RECEIPTS OF 1,95,14,41 2/- FROM INCOME FROM OPERATIONS AND INTEREST INCOME AS AGAINST GROSS REC EIPTS OF RS. 2,62,13,947/- IN THE PRECEDING YEAR. THE ASSESSING OFFICER NOTED THAT DURING THE YEAR, THE ASSESSEE RECEIVED SHARE APPLICATION MONEY AND ISSUE D SHARES AT A PREMIUM. DETAILS OF SHARE APPLICATION MONEY AND CONFIRMATION FROM PARTIES WERE FILED BY THE ASSESSEE. IN THIS CASE, INFORMATION WAS RECEIVE D FROM DCIT, CENTRAL CIRCLE- 16, NEW DELHI REGARDING DISSEMINATION OF DATABASE O F BENEFICIARIES PROVIDED BY SH. HIMANSHU VERMA & ITS ASSOCIATES. AS PER THIS IN FORMATION RECORDED IN CD, A COMPANY M/S. MITHILANCHAL INVESTMENT & FINANCE (P ) LTD., ONE OF THE COMPANIES CONTROLLED AND OPERATED BY SH. HIMANSHU V ERMA AND ITS ASSOCIATES 3 ITA NO. 2336/DEL/2017 FOR PROVIDING ACCOMMODATION ENTRIES WAS PROVIDING S HARE APPLICATION MONEY AMOUNTING TO RS. 1,00,00,000/- TO THIS ASSESSEE COMPANY DURING THE YEAR UNDER ASSESSMENT. THE ASSESSEE WAS ASKED TO SHOW CA USE VIDE ORDER-SHEET DATED 16.02.2015 AS TO WHY SHARE APPLICATION MONEY/ PREMIUM RECEIVED FROM M/S. MITHILANCHAL INVESTMENT & FINANCE (P) LTD. AMO UNTING TO RS. 1 CRORE SHOULD NOT BE TREATED AS THE UNACCOUNTED MONEY INTR ODUCED IN THE GARB OF SHARE APPLICATION MONEY/PREMIUM AS FOUND AND REPORT ED BY INVESTIGATION WING DURING THE COURSE OF SEARCH U/S. 132 OF THE I. T ACT ON THE BUSINESS & RESIDENTIAL PREMISES OF SH. HIMANSHU VERMA AND HIS GROUP OF COMPANIES ON 29.03.2012, WHO WAS INVOLVED IN THE BUSINESS OF PRO VIDING ACCOMMODATION ENTRIES. IN HIS STATEMENT RECORDED ON OATH BEFORE A DIT(LNV.), UNIT-VI(2), NEW DELHI ON 29.03.2012, SH. HIMANSHU VERMA HAS ADMITTE D TO HAVE GIVEN ACCOMMODATION ENTRIES THROUGH VARIOUS COMPANIES OUT OF WHICH M/S. MITHILANCHAL INVESTMENT & FINANCE (P) LTD. IS ONE O F THOSE COMPANIES. COPIES OF SWORN STATEMENT OF SH. HIMANSHU VERMA RUNNING IN TO 28 PAGES ARE GIVEN TO THE ASSESSEE'S COUNSEL. NO EXPLANATION TO THIS SHOW CAUSE WAS FILED. INSPECTOR OF AO'S OFFICE WAS DEPUTED TO CONDUCT ENQUIRY ON M/ S. MITHILANCHAL INVESTMENT & FINANCE (P) LTD. AT THE ADDRESS GIVEN BY THE ASSE SSEE AND CONFIRMATION FILED FROM THE ALLEGED SHARE APPLICANT. VIDE HIS REPORT D ATED 23.032015, IT WAS SUBMITTED THAT NO SUCH COMPANY IS OPERATING FROM TH E SAID PREMISES. ASSESSEE WAS PROVIDED COPY OF INSPECTOR'S REPORT AND ASKED T O SHOW CAUSE AS TO WHY THE SAID PARTY SHOULD NOT BE TREATED AS PROVIDER OF ACC OMMODATION ENTRIES AS REPORTED BY INVESTIGATION WING AND WHY THE AMOUNT O F RS. 1 CRORE SHOULD NOT BE TREATED AS UNEXPLAINED CREDITS U/S. 68 OF THE I. T ACT. THE CASE WAS FINALLY ADJOURNED TO 27.03.2015 BUT THE ASSESSEE WAS UNABLE TO PRODUCE THE ALLEGED SHARE SUBSCRIBER. M/S. MITHILANCHAL INVESTMENT & F INANCE (P) LTD. THE DETAILS FILED BY THE PARTY WERE PERUSED BY THE ASSESSING OF FICER. THE ASSESSING OFFICER OBSERVED THAT M/S. MITHILANCHAL INVESTMENT & FINANC E (P) LTD. FILED ITS RETURN OF INCOME FOR AY 2012-13 AT NIL. THE ASSESSING OFFI CER FURTHER OBSERVED THAT FROM THE PERUSAL OF THE BANK STATEMENT REVEALS EQUA L AMOUNT OF CREDIT ENTRIES ON THE SAME DATE OF ISSUING CHEQUE TO THE ASSESSEE. THE ASSESSING OFFICER 4 ITA NO. 2336/DEL/2017 OBSERVED THAT MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE. THUS , THE ASSESSING OFFICER HELD THAT THE NATURE AND SOURCE OF CREDIT OF RS. 1, 00,00,000/- REMAINED UNEXPLAINED AND THE SAME WAS TREATED AS UNEXPLAINED CREDIT AS PER THE PROVISIONS OF SECTION 68 OF IT ACT WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. FURTHER, THE COMMISSION PAID FOR TAKING A CCOMMODATION ENTRIES AT 1.5% AMOUNTING TO RS.1,50,000/- WAS TREATED AS PAYM ENT MADE OUT OF UNDISCLOSED SOURCES AND THE SAME WAS ADDED TO THE I NCOME OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT NONE SUBMISSION OF DETAILS REGARDING QU ERIES RAISED ON 3/2/2017 BY THE ASSESSEE IS THE SOLE REASON FOR ADDITION MAD E BY THE ASSESSING OFFICER AND THUS SUSTAINED THE ADDITION U/S 68 OF RS.1 AND RS.1.5 LAKHS. 5. THE LD. AR SUBMITTED THAT THE WRITTEN SUBMISSION ALONG WITH DOCUMENTS DATED 03.02.2017 FILED BEFORE THE CIT(A) BY THE ASS ESSEE WAS NOT AT ALL CONSIDERED. THUS, THE MATTER MAY BE REMANDED BACK F OR FRESH ADJUDICATION BEFORE THE CIT(A) FOR CONSIDERING THE DOCUMENTS FIL ED BY THE ASSESSEE ON 03.02.2017. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS SUBMITTED BY THE LD. AR THAT THE WRI TTEN SUBMISSION ALONG WITH DOCUMENTS DATED 03.02.2017 WERE FILED BEFORE THE CI T(A) BY THE ASSESSEE. THERE IS NO FINDING RELATING TO THOSE DOCUMENTS BY THE CIT(A). THE DOCUMENTS ANNEXED TO THE WRITTEN SUBMISSION WERE NOT AT ALL C ONSIDERED BY THE CIT(A). THEREFORE, THE ORDER OF THE CIT(A) IS SET ASIDE AND REMAND BACK THE APPEAL TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. NEED LESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSE. 5 ITA NO. 2336/DEL/2017 8. IN RESULT, THE APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH FEBRUARY, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 09/02/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 02/01/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 02/01/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 9.02.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 6 ITA NO. 2336/DEL/2017 7. FILE SENT TO THE BENCH CLERK 9 .02.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.