M/s. Jaksons Buildwell Private Limited, New Delhi V. DCIT, New Delhi

ITA 2467/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98059 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 22-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C MOHANTY
• Assessee Lawyers: D C AGARWAL
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 153A; 131; 68

Judgement Text

I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2467/DEL/2014 ASSTT.YEAR: 2004-05 JAKSONS BUILDWELL PRIVATE LIMITED, VS DCIT, 5 TH FLOOR, BLOCK-A, NDM-I, CENTRAL CIRCLE-23, NETAJI SUBHASH PLACE, NEW DELHI. NEW DELHI. (PAN: AAACJ2793G) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.C. AGARWAL, ADV. RESPONDENT BY : SHRI A . C. MOHANTY, DR DATE OF HEARING: 23.11.015 DATE OF PRONOUNCEMENT: 23.12.2015 O R D E R PER L.P. SAHU, A.M. THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF THE CIT(A)-XXXIII, NEW DELHI DATED 2.7.2013 WITH THE FO LLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT (A) ERRED IN SUSTAINING ADDITION OF RS. 10,00,000/- BEING THE SHARE APPLICATION MONEY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) ERRED IN RELYING ON THE FINDING OF THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A ON 26.12 .2007 I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 2 WHEN SUCH ASSESSMENT WAS DECLARED NULL AND VOID BY LD. CIT (A) VIDE HIS ORDER DATED 09.03.2009 AND WHICH ORDER HAS BECOME FINAL. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY HAVING IGNORED THE FACT THAT NO O PPORTUNITY OF BEING HEARD WAS PROVIDED AGAINST THE MATERIAL PERTA INING TO ASSESSMENT PROCEEDINGS RELEVANT TO THE ASSESSMENT O RDER DATED 26.12.2007 WHILE USING THE SAME IN THE PRESENT ASSE SSMENT PROCEEDINGS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) ERRED IN SUSTAINING THE ADDITION IN RESPECT OF SHARE APPLICATION MONEY WHEN NO SUCH ADDITION CAN BE MADE IN A COMPLETED ASSESSMENT IN ABSENCE OF ANY INCRIMINATIN G MATERIAL FOUND IN THE SEARCH. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT (A) ERRED IN GIVING A FINDING THAT THE LD. A.O. NEED NOT RESTRICT THE ADDITION ON THE BASIS OF SEIZED DOCUME NTS WHEN IN FACT THERE WAS NO MATERIAL FOUND AND SEIZED IN THE SEARCH DATED 01.09.2005 OR IN THE SEARCH DATED 19.01.2009 IN RES PECT OF SHARE APPLICATION MONEY. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CONDUCTED ON 1.9.2005 ON VIKAS SURYA GROUP CASES IN CLUDING THE ABOVE NAMED COMPANY WHICH IS A PART OF THIS GROUP. THE MAIN AL LEGATION AGAINST THE ASSESSEE COMPANY IS THAT IT HAD TAKEN ACCOMMODATION ENTRY OF RS. 1,000,000/- RECEIVED FROM JAI SHIV FABRICATORS (P) LTD. AND COMMISSION O F RS. 5000/- WAS PAID TO THE ENTRY PROVIDER. CONSEQUENT UPON THE SEARCH, A NOTI CE U/S 153A WAS ISSUED. IN COMPLIANCE OF THIS, RETURN WAS FILED AT NIL INCOME AND ON THE BASIS OF THIS I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 3 RETURN, SCRUTINY ASSESSMENT WAS MADE WITH AN ADDITI ON OF RS.10,00,000/- FOR SHARE APPLICATION MONEY RECEIVED FROM JAI SHIV FABR ICATORS (P) LTD. AND RS.5000/- PAID TO ENTRY PROVIDER. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY WAS ASKED TO FURNISH NECESSARY DETAILS FOR SHARE CAPITAL RECEIVED BY IT. IN THIS REGARD, THE ASSESSEE COMPA NY DID NOT FURNISH THE REQUIRED DETAILS, VIZ. CONFIRMATION, BANK STATEMENT, AUDITED ACCOUNTS, AND ITR OF THE SHARE ALLOTTEE COMPANY. SUMMONS U/S 131 WAS ISSUED AND RECEIVED BACK WITH REMARKS NO SUCH FIRM AT THE GIVEN ADDRESS. THE A BOVE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE ON 7.12.2007 BY ISSUING A LETTER WITH REMARKS FOR BRINGING SOME DOCUMENTS OF SHARE APPLICATION MONEY REQUIRED AS PROOF U/S 68. 3. IN THIS REGARD, THE ASSESSEE FURNISHED NEW ADDRE SS OF JAI SHIV FABRICATORS (P) LTD. VIDE LETTER DATED 12.12.07. AN INSPECTOR WAS DEPUTED ALONG WITH THE SUMMONS BUT UPON MAKING LOCAL INQUIRY, HE CAME TO K NOW THAT NO SUCH COMPANY IS IN EXISTENCE. IN VIEW OF THIS, LD. ASSE SSING OFFICER HELD THAT THE SHARE CAPITAL RECEIVED FROM JAI SHIV FABRICATORS (P ) LTD. IS NOTHING BUT UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE COMPANY AND MADE AN ADDITION ON THAT ACCOUNT U/S 68. LD. ASSESSING OFFICER ALSO ADDED RS.5000 TOWARDS COMMISSION PAID TO ENTRY PROVIDER. 4. AGGRIEVED AGAINST THE ORDER OF THE ABOVE ADDITIO N, THE ASSESSEE PREFERRED AN APPEAL BEFORE FIRST APPELLATE AUTHORITY. HE DEL ETED THE ADDITION VIDE ORDER DATED 6.5.2009 PASSED U/S 250 OF THE INCOME TAX ACT , 1961 APPEAL NO. 480/07- I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 4 08 DATED 9.3.2009 BUT NO SUCH ORDER WAS PRODUCED BE FORE US. AGAIN, A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 19.1.2009 ON THE APPELLANT COMPANY WHICH IS A PART OF KURELE GROUP. CONSEQUENT UPON S EARCH, A NOTICE U/S 153A OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 18.11.2009 A ND ACCORDINGLY, RETURN WAS FILED WITH NIL INCOME ON 18.12.2009. SUBSEQUENTLY, RETURN WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED ON 30.12.2010 WITH THE ADDITION IN THE FOLLOWING MANNER. 5. HE DISALLOWED THE ABOVE EXPENSES OF RS.318956 ON LY ON THE BASIS OF LIKE MANDATED INFORMATION IS NOT CONTAINED IN THE BILLS LIKE TELEPHONE NO., BILL NO. ETC. WHEREAS THE APPELLANT HAD DEDUCTED TDS AS WHEREVER APPLICABLE. 6. AGAINST THE ABOVE ORDER, HE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND HE CONFIRMED THE ADDITION OF RS.10,05 ,000 (RS.10,00,000 TOWARDS SHARE APPLICATION MONEY AND RS. 5000 FOR COMMISSION PAID TO ENTRY PROVIDER) AND HE DELETED THE ADDITION OF RS.3,18,956. AGAINS T THIS ORDER, HE CAME UP IN APPEAL BEFORE US. 7. ALL GROUNDS OF APPEAL ARE RELATED ONLY EXCEPT ON E ISSUE OF RAISING OF SHARE CAPITAL. LD. AR VEHEMENTLY CONTENDED THAT THE ADDI TIONS WERE CONFIRMED BY THE CIT(A). THE LD. ASSESSING OFFICER HAS HEAVILY RELI ED ON THE LIST OF PERSONS INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES, HOWEVER, NO SUCH LIST ALONG WITH RELEVANT MATERIAL HAS BEEN PROVIDED OR SHOWN TO THE ASSESSEE DURING THE COURSE OF EARLIER OR PRESENT ASSESSMENT PROCEEDINGS. THEREFORE, I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 5 ADDITION IS BEING MADE WITHOUT PROVIDING AND CONFRO NTING ANY SPECIFIC ADVERSE MATERIAL TO THE APPELLANT AT ALL, ACCORDINGLY, THE ADDITION SO MADE IS AGAINST THE WELL LAID PRINCIPLES OF JUSTICE, EQUITY AND FAIR PL AY. HE PLACED RELIANCE ON THE STATE OF KERALA VS K.T. SHADULI REPORTED IN 1977 AI R 1627. AS REGARDS ADDITION OF RS.10,00,000 U/S 68 OF THE INCOME TAX A CT, 1961, ALL DOCUMENTS WERE PRODUCED BEFORE THE ASSESSING OFFICER FOR EARL IER ASSESSMENT PROCEEDINGS LIKE IDENTITY OF SHAREHOLDER, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION. HE FURTHER SUBMITTED THAT WITH REGARD TO NON-SERVICE/N ON-COMPLIANCE OF SUMMONS ISSUED U/S 131, IT WAS FOR THE ASSESSING OFFICER TO EXERCISE THE POWERS VESTED IN HIM U/S 131 TO THE HILT AND IN THE EVENT OF HIS FAI LURE TO DO SO, THE BLAME CANNOT LIE AT THE DOOR OF THE ASSESSEE, AS HELD BY THE HONBLE APEX COURT IN THE CASE OF CIT VS ORISSA CORPORATION P. LTD. (1986) 159 ITR 78 AND REPLY DATED 12.12.07. REGARDING INSPECTORS REPORT, IT IS SUBM ITTED THAT THE SAME HAD NEVER BEEN CONFRONTED TO THE APPELLANT ASSESSEE. HE SUBM ITTED THAT THE INVOKING OF DEEMING PROVISION U/S 68 IS UNCALLED FOR DUE TO THE FOLLOWING REASONS WHICH WERE PLACED ON RECORD BEFORE THE ASSESSING OFFICER: - (A) SHARE APPLICATION MONEY HAD BEEN RECEIVED FROM THE PERSON (AS PER PARTICULARS ON PAGE 2 OF THE ASSES SMENT ORDER DATED 26:12.2007 ITSELF); (B) THE SHAREHOLDER IS IDENTIFIABLE FROM THEIR INCO ME-TAX PARTICULARS (WHICH WERE DULY PLACED ON RECORD DURIN G ASSESSMENT PROCEEDINGS); AND (C) REMITTANCES HAVE BEEN RECEIVED THROUGH PROPER B ANKING CHANNEL FROM THE BANK ACCOUNTS OF THE PERSON CONCER NED. I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 6 8. IT IS CLEAR FROM THE ABOVE THAT MY CLIENT HAS DI SCHARGED HIS LIABILITY. ONCE THE IDENTITY OF THE INVESTOR IS ESTABLISHED, WHICH HAS BEEN DONE IN THE INSTANT CASE IN AMPLE MEASURE, NO FURTHER PROBE IS CALLED F OR AND THE ISSUE LIKE CREDITWORTHINESS OF THE DEPOSITORS IS AN ALIEN MATT ER. LD. AR RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS SOPHIA FINANCE & INV. LTD. (1994) 205 ITR 98 (DEL) (FB) AND HE ALSO RELIED ON ANOTHER JUDGMENT IN THE CASE OF CIT VS STELLAR INVESTMENT LTD. REPORTED IN (1991) 192 ITR 287 (DEL). 9. LD. DR RELIED ON THE ORDER OF CIT(A) AND HE ARGU ED THAT THE ORDER OF LD. CIT(A) IS CORRECT. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. WE FIND THAT THE DEPART MENT HAS CONDUCTED SEARCH AND SEIZURE OPERATION ON THE BASIS OF INVESTIGATION WING OF THE DEPARTMENT WHICH HAS INFORMED THAT THE APPELLANT IS A GROUP CO MPANY AND HAS RECEIVED ACCOMMODATION ENTRY FOR ISSUING SHARE CAPITAL THROU GH ENTRY PROVIDER. ON THE BASIS OF FIRST SEARCH AND SEIZURE, THE ASSESSING OF FICER ADDED RS.10,000,000/- U/S 68 FOR UNEXPLAINED CASH CREDIT FOR WANT OF NON-COMP LIANCE. AGAINST THIS ORDER, THE LD. CIT(A) VIDE ORDER DATED 06.05.09 HAS DELET ED THE ADDITIONS (CIT(A) ORDER NOT PRODUCED BEFORE US). AGAIN, SEARCH AND SE IZURE WAS CONDUCTED ON 19.01.09 AND IN RESPONSE TO THAT, THE ASSESSING OFF ICER HAS RELIED THE ABOVE FIRST ORDER DATED 26.12.07 AND HE HAS NOT MENTIONED THAT ANY INCRIMINATING MATERIAL WAS FOUND DURING THE PRE AND POST SEARCH OPERATION. THE ASSESSEE HAS RELIED ON THE VARIOUS I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 7 JUDGEMENTS IN THIS REGARD.:- 1. CIT VS KABUL CHAWLA IN I.T.A. 707/2014 (DELHI HIGH COURT) 2. PR.CIT(CENTRAL-II) VS SMT. KUSUM GUPTA IN I.T.A.634 /2015 3. CIT(C)-I VS MGF AUTOMOBILES LTD. IN I.T.A. 13/2014 4. SANJAY AGGARWAL VS DCIT (2014) 47 TAXMANN.COM 210 ( DELHI TRIB.) 11. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS KABUL CHAWLA IN I.T.A. 707/20 14 WHEREIN IT HAS BEEN HELD THAT SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREAD Y ASSESSEED, WE HOLD THAT THE COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTH ED DURING THE COURSE OF SEARCH IN THE EARLIER ASSESSMENT YEARS. SINCE NO IN CRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WITH REGARD TO TH E IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ASSESSEE COMPANY, WE HOLD T HAT THE ADDITION MADE BY THE LD. CIT(A) IS UNSUSTAINABLE AND DESERVES TO BE DELE TED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2015. SD/- SD/- (I.C. SUDHIR) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 23RD DECEMBER 2015 GS I.T.A. 2467/D/2014 ASSESSMENT YEAR 2004-05 8 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR