M/s. Next Wave India (AOP), Delhi V. ITO, New Delhi

ITA 2533/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97412 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Depreciation; Opportunity of being heard; Accommodation entries
• Section: 142(1); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E , NEW DELHI) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.2533 /DEL/2013 ASSESSMENT YEAR : 2004-05 NEXT WAVE INDIA (AOP), VS. ITO, WARD 36(3), 35, VARINDAVAN APARTMENTS, NEW DELHI 110, I.P. EXTENSION, DELHI GIR / PAN:AAAAN6288L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NEERAJ JAIN, CA RESPONDENT BY : SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING : 14.09.2015 DATE OF PRONOUNCEMENT : 23.09.2015 ORDER PER KULDIP SINGH, JM: APPELLANT M/S. NEXT WAVE INDIA (A.O.) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 29.01. 2013 PASSED BY LD. CIT(A) XXVII, NEW DELHI FOR THE ASSESSMENT YEAR 200 4-05 ON THE GROUNDS INTER ALIA THAT: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS) IS BAD IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) ERRED IN SUSTAINING THE FINDING OF THE ASSESSING OFFICER THA T THE ASSESSEE WAS ENGAGED IN MONEY LAUNDERING. ITA NO.2533/DEL/2013 2 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF ALLE GED ACCOMMODATION ENTRIES TO THE TUNE OF RS.16,65,000/- BY INVOKING P ROVISIONS OF SECTION 68 THE INCOME TAX ACT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRE D IN REJECTING THE DETAILS AND EVIDENCES ADDUCED BY THE APPELLANT EXPLAINING THE DEPOSITS MADE IN THE BANK ACCOUNTS WITHOUT PROPERLY GOING THROUGH THE SAME. 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF FOLLOWING E XPENSES:- A) OUT OF CONVEYANCE RS. 1,980/- B) OUT OF SALARY & ALLOWANCES RS.16,500/- C) DEPRECIATION RS. 4,050/-. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE THAT THE ASSESSMENT ORDER WAS PASSED BY THE A.O. ON THE BASIS OF NOTICE ISSUED U/ S 148 OF THE I. T. ACT, 1961 (FOR SHORT THE ACT) DURING ASSESSMENT PROCEE DINGS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 W HEN ACCOMMODATION ENTRIES WERE NOTICED. PURSUANT TO THE NOTICE ISSUE D U/S 148, ASSESSEE FILED RETURN OF INCOME IN FORM 2D ON 03.10.2011 DECLARING AN INCOME OF RS.35,271/- AND THEREAFTER, NOTICES U/S 143(2) AND 142(1) WERE ISSUED ON 06.12.2011 AND CONSEQUENTLY, SHRI S. K. NARANG, CA/ AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS, FILED NECESSARY DETAILS A ND EXPLANATION AND THE CASE WAS DISCUSSED WITH HIM. 3. PRESENT RETURN OF INCOME HAS BEEN FILED IN THE N AME AND STYLE OF M/S. NEXT WAVE INDIA (A.O.P) AND SHRI BHARAT BHUSHAN AND SMT. RENU BHUSHAN CAME INTO EXISTENCE AND THE RETURN IN THE CAPACITY OF AOP HAS BEEN FILED. ITO, WARD 13(2), WROTE A LETTER ALONG WITH A COPY O F MOU SIGNED BY SHRI BHARAT BHUSHAN AND SMT. RENU BHUSHAN AND A COPY OF STATEMENT OF SHRI BHARAT BHUSHAN WAS RECORDED BY HIM. ITA NO.2533/DEL/2013 3 4. PURSUANT TO THE INQUIRIES CONDUCTED BY INVESTIGA TION WING OF THE DEPARTMENT, IT WAS NOTED THAT SHRI BHARAT BHUSHAN A ND SMT. RENU BHUSHAN HAD OPENED BANK ACCOUNT NO.01000050902 IN THE NAME OF NEXT WAVE INDIA PVT. LTD. WITH MAYUR VIHAR PHASE I, BRANCH OF STATE BANK OF SAURASHTRA ON 21.11.2000 AND HAD TAKEN ACCOMMODATION ENTRIES IN T HIS ACCOUNT FROM CHARMS INVESTMENTS PVT. LTD. DURING THE PERIOD RELE VANT TO ASSESSMENT YEAR 2004-05. DURING PROCEEDINGS U/S 148 BEFORE ITO WAR D 13(2), SHRI BHARAT BHUSHAN OWNED UP THE ACCOUNTS OPERATED BY HIM IN TH E NAME OF M/S. NEXT WAVE (INDIA) PVT. LTD. AND NO REGULAR BUSINESS ACTI VITIES WERE DONE BY SHRI BHARAT BHUSHAN AND SMT. RENU BHUSHAN THROUGH THE AF ORESAID ACCOUNT AS THE ENTRIES RECORDED IN THIS ACCOUNT ARE ONLY LAUND ERING OF MONEY. THE TRANSACTIONS MADE THROUGH THIS ACCOUNT WERE NEVER D ECLARED BEFORE ANY INCOME TAX AUTHORITIES AND THESE WERE COME IN LIGHT ONLY IN THE INQUIRIES MADE BY THE INVESTIGATION WING OF THE DEPARTMENT. 5. DESPITE RECEIPT BEING ADDED IN THE NAME OF THE C OMPANY M/S. NEXT WAVE (INDIA) PVT. LTD., SHRI BHARAT BHUSHAN AND SMT . RENU BHUSHAN FILED RETURN OF INCOME IN THE CAPACITY OF AOP AND OWNED U P THE TRANSACTIONS MADE BY THEM IN THE ABOVE SAID BANK ACCOUNT, WHICH WAS D ONE IN TERMS OF MEMORANDUM OF UNDERSTANDING SIGNED BY THE PRESENT D IRECTORS OF M/S. NEXT WAVE (INDIA) PVT. LTD. THE BHUSHANS WERE THE FIRST PARTY AND PRESENT DIRECTORS OF M/S. NEXT WAVE INDIA PVT. LTD. NAMELY SHRI P. K. ARORA, SMT. POOJA JUNEJA AND MR. RAJEEV JUNEJA WERE THE SECOND PARTY TO THIS AGREEMENT. THE RELEVANT CLAUSE NO.2 OF THE MEMORANDUM OF UNDER STANDING STATES AS UNDER: THAT THE FIRST PARTY DECLARE AND OWN IN THE CAPACI TY OF AN ASSOCIATION OF PERSONS, BEFORE THE INCOME TAX AUTHO RITIES WHO ARE ASSESSING NEXTWAVE, ALL THE TRANSACTIONS DONE BY IT UNDER THE NAME OF ITA NO.2533/DEL/2013 4 NEXTWAVE AND SHALL THEREFORE BE SOLELY AND EXCLUSIV ELY LIABLE FOR ANY INCOME TAX, INTEREST AND PENALTIES AND ANY OTHER LI ABILITY FINANCIAL OR OTHERWISE ARISING OUT OF SUCH TRANSACTIONS. FOR TH IS PURPOSE THE FIRST PARTY SHALL PROVIDE ITS ASSESSMENT PARTICULARS AND ALL OTHER INFORMATIONS AS MAY BE REQUIRED BY THE INCOME TAX A UTHORITIES ASSESSING NEXTWAVE. THE FIRST PARTY SHALL ALSO EXE CUTE SUCH AFFIDAVITS/UNDERSTANDINGS/DECLARATIONS/DOCUMENTS AS MAY BE REQUIRED BY SUCH AUTHORITIES. 6. IT IS ON RECORD THAT AOP IS NOTHING BUT THE COMM ITMENT MADE BY THE PREVIOUS ALLEGED DIRECTORS I.E. MR. BHARAT BHUSHAN AND SMT. RENU BHUSHAN TO THE PRESENT DIRECTORS OF M/S. NEXT WAVE (INDIA) PVT. LTD. THAT THEY WOULD BEAR THE FUTURE LIABILITIES LIKELY TO ARISE DUE TO THESE FINANCIAL TRANSACTIONS. SO, THE MONEY WITH SHRI BHARAT BHUSHAN AND SMT. RIT U BHUSHAN IN THE BOOKS OF ACCOUNT WAS OPERATED BY THEM IN THE NAME A ND STYLE OF M/S. NEXT WAVE INDIA PVT. LTD. WITH THE INTENTION OF INTRODUC ING THEIR UNACCOUNTED MONEY IN THE NORMAL PROCESS. THEREFORE, ENTIRE REC EIPT OF RS.17,00,058/- IS BEING TREATED AS UNEXPLAINED INCOME OF SHRI BHARAT BHUSHAN AND SMT. RITU BHUSHAN AND HAS BEEN ADDED U/S 68 OF THE ACT IN THE HANDS OF THE AOP PURSUANT TO MOU ANNEXED THEREWITH. 7. FEELING AGGRIEVED, THE ASSESSEE CHALLENGED THE O RDER OF A.O. BY WAY OF APPEAL BEFORE LD. CIT(A) WHO HAS PARTLY ALLOWED THE SAME. NOW, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY CHALLEN GING THE IMPUGNED ORDER. 8. LD. A.R. CHALLENGING THE IMPUGNED ORDER CONTENDE D INTER ALIA THAT ASSESSEE WAS OPERATING ACCOUNT IN THE NAME AND STYL E OF M/S. NEXT WAVE INDIA PVT. LTD. AND HE HAS EXPLAINED EACH AND EVE RY TRANSACTION OF THE AFORESAID BANK ACCOUNT VIDE VARIOUS LETTERS LYING A T PAGES 51-53 OF THE PAPER BOOK DURING ASSESSMENT PROCEEDINGS AND MR. BHARAT B HUSHAN IS A MEMBER ITA NO.2533/DEL/2013 5 OF AOP AND CONFIRMATION FROM MR. BHARAT BHUSHAN AND THE BANK STATEMENT HAS ALREADY BEEN FILED VIDE PARA 9 OF THE LETTER, T HEREFORE, THE ASSESSEE HAS EXPLAINED THE IDENTITY, GENUINENESS AND CREDITWORTH INESS OF THE PERSON FROM WHOM THE MONEY HAS BEEN RECEIVED BUT THE A.O. AS WE LL AS LD. CIT(A) HAVE PASSED THE IMPUGNED ORDERS ARBITRARILY; THAT AN IDENTICAL ISSUE IN A SIMILAR MATER HAS BEEN DECIDED BY ITAT, DELHI BENCH ES E BENCH, NEW DELHI IN THE CASE OF NEXT WAVE INDIA (AOP) AND NEXT WAVE INDIA (P) LTDD. VS ITO, NEW DELHI FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004- 05 VIDE ORDER DATED 25.01.2012 IN ASSESSEES OWN CA SE. 9. ON THE OTHER HAND LD. D.R. RELIED UPON THE ORDER OF LD. CIT(A) AND PRAYED FOR DISMISSAL OF APPEAL. 10. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND GONE THROUGH THE DOCUMENTS RELIED UPON IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE. 11. UNDER SECTION 68 OF THE ACT, IF ANY SUM IS FOUN D CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, TH E ONUS LIES UPON THE ASSESSEE TO EXPLAIN THE SOURCE OF CREDIT OTHERWISE THE SUM SO CREDITED MAY BE CHARGED TO THE INCOME TAX OR THE INCOME OF THE ASSE SSEE OF THAT PREVIOUS YEAR. IN THE INSTANT CASE, THE ASSESSEE STATED TO HAVE DISCHARGED THE INITIAL ONUS BY EXPLAINING THE CREDIT ENTRIES BEFORE THE A. O. BUT ALLEGED TO HAVE NOT CONSIDERED BY THE A.O. THE ASSESSEE HAS RELIED UPO N THE CONFIRMATION FROM APT ENTERPRISES PVT. LTD., ANIL AGENCIES PVT. LTD, NEW AGE SERVICES AND QUALITY BUILDCON PVT. LTD., WITH THE BANK STATEMENT S OF THE PARTIES STATED TO HAVE BEEN SUPPLIED TO THE A.O. 12. WHEN THE ASSESSEE HAS OWNED UP THE BANK ACCOUNT NO.010000050902 MAINTAINED WITH BANK OF SAURASHTRA REGARDING THE EN TRY OF RS.17,00,058/- ITA NO.2533/DEL/2013 6 AND ALSO DISCHARGED THE INITIAL ONUS BY PROVIDING C OMPLETE SOURCE OF SUM CREDITED IN HIS ACCOUNT, IT WAS FOR THE A.O. TO VER IFY AND DECIDE THE GENUINENESS AND CREDITWORTHINESS OF THE PERSON WHO HAD TRANSFERRED THE SUM IN QUESTION INTO THE ACCOUNT OF THE ASSESSEE. 13. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND C IRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS DULY EXPLAINED THE SOURCE OF CREDIT IN THEIR ACCOUNT ON ACCOUNT OF LOAN, INTEREST ON LOAN AND CASH DEPOSITS ETC. AND HAS ALSO CLAIMED EXPENSES ON ACCOUNT OF BANK CHARGES, CONVEYANCE, SA LARY AND ALLOWANCES AND DEPRECIATION, WE ARE OF THE CONSIDERED VIEW THA T ADDITION SHOULD NOT HAVE BEEN MADE WITHOUT VERIFYING THE GENUINENESS AN D CREDITWORTHINESS OF THE PARTIES WHO HAVE OTHERWISE CONFIRMED THE SAME. SO, IN VIEW OF THE MATTER, IT WOULD BE PROPER IN THE INTEREST OF JUSTI CE TO SET ASIDE THE ORDER PASSED BY THE AUTHORITIES BELOW AND THE MATTER IS R ESTORED BACK TO THE FILE OF A.O. FOR MAKING ASSESSMENT AFRESH AFTER AFFORDING P ROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE ACT. CONSEQUENTLY, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SES. 14. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEP., 2015. SD./- SD./- ( INTURI RAMA RAO) (KULDIP SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 23.09.2015 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.2533/DEL/2013 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 15/9 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 15,17,21 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 23/9/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 23/9 SR. PS/PS 7 FILE SENT TO BENCH CLERK 23/9 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