ITO, New Delhi V. M/s Abhishek Fincap Services Ltd., New Delhi

ITA 2750/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4770 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: RAKESH GUPTA
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.2750/DEL./2017 ASSESSMENT YEAR 2010-2011 THE INCOME TAX OFFICER, WARD-1(2), NEW DELHI. VS. M/S. ABHISHEK FINCAP SERVICES PVT. LTD., 205, BASANT COMPLEX, 38, VEER SAVARKAR BLOCK, SHAKARPUR, NEW DELHI 110 092. PAN AABCA0437B (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI RAKESH GUPTA & SHRI SOMIL AGARWAL, ADVOCATES FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. DATE OF HEARING : 05.09.2017 DATE OF PRONOUNCEMENT : 13 . 09.2017 ORDER THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-1, NEW DELHI, DATED 16 TH FEBRUARY, 2017, FOR THE A.Y. 2010-2011, CHALLENGING THE DELETION OF ADD ITION OF RS.33,57,951 ON ACCOUNT OF DISALLOWANCE OF BOGUS LO SS CLAIMED BY THE ASSESSEE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT, IN THIS CASE, ORIGINAL RETURN OF INCOME WAS FILED ON 18 TH SEPTEMBER, 2010 DECLARING NIL 2 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. INCOME. THEREAFTER, INFORMATION WAS RECEIVED FROM D IRECTOR OF INCOME TAX (I & CI) ON 27'' FEB. 2015, WHEREBY IT WAS INFO RMED THAT THERE WERE FICTITIOUS PROFITS AND LOSSES CREATED BY SOME BROKERS BY MISUSING THE CLIENT CODE MODIFICATION FACILITY IN F &O SEGMENT ON NSE DURING MARCH 2010. THE ASSESSEES NAME WAS FIGURING IN SUCH CLIENT CODE MODIFICATION, THEREFORE, BASED ON SUCH INFORMA TION ASSESSMENT WAS REOPENED IN THE CASE OF ASSESSEE AND NOTICE UND ER SECTION 148 WAS ISSUED ON 24.03.2015. THE ASSESSEE SUBMITTED BE FORE A.O. THAT RETURN ORIGINALLY FILED MAY BE TREATED AS RETURN FI LED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. ACT. THE A.O. PASSED THE ASSESSMENT ORDER DATED 3 RD FEBRUARY, 2016 DETERMINING THE INCOME AT RS.44,96,171 BY MAKING ADDITION OF RS.33,57,951 ON THE GROUND THAT ASSESSEE HAS TAKEN BOGUS LOSS BY CHANGING THE CLIENT CODE. 2.1. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT BEFORE LD. CIT(A). THE WRITTEN SUBMISSIONS OF THE ASSESSEE WERE REPRODUCED IN THE APPELLATE ORDER. THE LD. CIT(A), HOWEVER, CONFIRMED THE REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT AND DISMISSED THIS GROUND OF APPEAL OF ASSESSEE. 3 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. 2.2. FURTHER, AS REGARDS ADDITION ON MERIT, THE LD . CIT(A) DELETED THE ADDITION. HIS FINDINGS IN THE APPELLATE ORDER ARE REPRODUCED AS UNDER : I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND OBSERVATION OF THE AO MADE IN THE ASSESSMENT ORDER. IT IS SEEN THAT ASSESSMENT OF THE APPELLANT WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM DIT (I & CI), MU MBAI ON THE GROUND THAT APPELLANT HAS RECEIVED ACCOMMODATIO N ENTRY IN THE FORM OF PURCHASE OF LOSS. THE APPELLAN T HAS SUBMITTED BEFORE ME THAT ASSESSING OFFICER HAS NOT GIVEN ANY BASIS OR MATERIAL OR EVIDENCE IN SUPPORT OF HIS ALLEGATION IN ASSESSMENT ORDER. THE AO HAS ALSO NOT SPELT OUT IN THE ASSESSMENT ORDER AS TO ON WHICH SCRIPTS THE APPELLA NT HAS TAKEN LOSS ENTRIES. IT IS ALSO ALLEGED BY THE APPEL LANT THAT AO HAS NEVER CONFRONTED THE APPELLANT ON THE ISSUE OF THE LOSS CLAIMED TO BE OBTAINED BY THE APPELLANT. IT IS ALLEGED BY THE APPELLANT THAT ASSESSING OFFICER HAS SIMPLY TAK EN THE REPORT OF THE DIT (I & CI), MUMBAI AND PASTED THE S AME IN THE ASSESSMENT ORDER WITHOUT BRINGING ANY MATERIAL ON 4 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. RECORD. IT IS ALSO STATED BY THE APPELLANT THAT ASS ESSING OFFICER HAS NOT CONFRONTED ANY MATERIAL OR STATEMEN T RECEIVED FROM DIT (I & CI), MUMBAI WHEREIN IT IS AL LEGED THAT APPELLANT HAS OBTAINED ACCOMMODATION ENTRY OF THE L OSS. THERE IS NO MATERIAL IN THE SUPPORT OF THE ALLEGATI ONS.' THE REPORT DATED 27.02.2015 IS FILED BY THE APPELLANT I N THE PAPER BOOK. HOWEVER, IN THE SAID REPORT IT IS SIMPL Y MENTIONED THE LOSS OF RS.33,57,951/-. THERE IS NO W ORKING GIVEN AS TO HOW THE APPELLANT HAS TAKEN THESE LOSS ENTRIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO HAS NOT CALLED FOR ANY INFORMATION ABOUT ALLEGED LOSS OF RS.33,57,951/-. IT IS ALSO STATED THAT AO HAS RELIE D UPON THE STATEMENTS OF KUNAL KHALEJA AND SUBHASH CHANDRA KHALEJA BUT ON READING OF THOSE STATEMENTS, IT IS S EEN THAT THERE IS NO CORRELATION BETWEEN THE SUM OF RS.33,57 ,951/- AND THE STATEMENTS OF ABOVE MENTIONED BROKERS. AT P AGE 6 OF THE ASSESSMENT ORDER, THE AO HAS STATED THAT THE APPELLANT HAS REDUCED PROFIT OF RS.10,08,220/- AND THERE IS 5 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. NO REFERENCE TO THE LOSS OF RS.33,57,951/- IN ANY O F THE MATERIAL RELIED UPON BY THE AO IN THE ASSESSMENT OR DER. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND THE REPORT RECEIVED FROM DIT (I & CI), MUMBAI. ON G OING THROUGH THE SAME, IT IS SEEN THAT IN THE NAME OF AB HISHEK FINCAP SERVICES PVT. LTD, A LOSS OF RS.33,57,951/- HAS BEEN SHOWN. HOWEVER, FROM THIS INFORMATION NOWHERE IT HA S BEEN PROVIDED AS TO HOW THE APPELLANT COMPANY HAS TAKEN LOSS FROM THESE CLIENT CODE MODIFICATIONS. THE NAME OF S CRIPTS IN WHICH THE CLIENT CODE HAS BEEN CHANGED BY THE BROKE RS AND DETAILS OF THE TRANSACTIONS HAS NOT BEEN PROVIDED B Y THE AO TO THE APPELLANT. THEREFORE, THE ASSESSING OFFICER HAS FAILED TO BRING ANY ADVERSE INFORMATION ON RECORD TO PROVE THE ALLEGATION THAT APPELLANT HAS TAKEN LOSS OF RS.33,5 7,951/- BY MISUSING THE CLIENT CODE FACILITY. IN ITS SUBMIS SION THE APPELLANT HAS GIVEN DETAILS OF PURCHASE AS WELL AS SALES AND CLOSING BALANCE OF THE SHARES DURING F.Y. 2009- 10 AND THE APPELLANT HAS GIVEN THE PROFIT AS WELL AS LOSS INCURRED FROM EACH TRANSACTION IN THE F & O SEGMENT. THE ASS ESSING 6 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. OFFICER HAS NOT PIN POINTED IN THE ASSESSMENT ORDER AS TO IN WHICH TRANSACTION APPELLANT OBTAINED DELIBERATE LOS S BY CHANGING CLIENT CODE, THEREFORE, IT IS HELD THAT AD DITION OF RS.33,57,951/- MADE BY THE AO IS BASED ON VAGUE INFORMATION AND SAME CANNOT BE SUSTAINED. HENCE, TH E SAME IS DELETED. 3. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. AND SUBMITTED THAT IN CASE A.O. FAILED TO DISCHARGE HIS FUNCTIONS PROPERLY, THE OBLIGATION TO CONDUCT PROPER ENQUIRY SHIFTS TO THE COMMISSIONER (APPEALS) AND TRIBUNAL AND THEY CANNOT SIMPLY DELET E THE ADDITION MADE BY THE A.O. ON THE GROUND OF LACK OF ENQUIRY. IN SUPPORT OF HIS CONTENTION, THE LD. D.R. RELIED UPON THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERT ISING & MARKETING (P.) LTD., (2015) 375 ITR 373 (DEL.) AND DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S. DEEPAK AGRO FOODS VS. STATE OF RAJASTHAN & OTHERS 2008-TIOL-134. LD. D.R. SUBMITTE D MATTER MAY BE REMANDED BACK TO A.O. 4. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND 7 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. SUBMITTED THAT ASSESSEE HAS NOT TAKEN ANY LOSS FROM ANY PARTY. THERE IS NO EVIDENCE OF CHANGING THE CLIENT CODE. IN ASSE SSMENT YEAR UNDER APPEAL, THE GROSS LOSS OF THE ASSESSEE IS ZERO AN D IN THE PRECEDING ASSESSMENT YEAR, THE LOSS WAS RS.6.38 CRORES. IT WO ULD MEAN THAT LOSS HAS REDUCED IN ASSESSMENT YEAR UNDER APPEAL. T HEREFORE, THERE IS NO QUESTION OF ASSESSEE TAKING ANY BOGUS ENTRY O N ACCOUNT OF BOGUS LOSS. HE HAS FILED COPY OF THE P & L A/C ON R ECORD. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO N OT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THE A.O. HAS NO T POINTED OUT ANY BASIS OR MATERIAL OR EVIDENCE TO SUPPORT HIS FINDIN GS THAT ASSESSEE RECEIVED ANY BOGUS ENTRY OF LOSS. THE A.O. HAS NOT GIVEN ANY DETAILS HOW THE ADDITION HAS BEEN WORKED-OUT TO MAKE THE IM PUGNED ADDITION AGAINST THE ASSESSEE. THE A.O. HAS NOT CON FRONTED ANY MATERIAL OR STATEMENT WHICH MAY BE INCRIMINATING IN NATURE AGAINST THE ASSESSEE SO AS TO PROVE ALLEGATION OF RECEIVING ACCOMMODATION ENTRY OF THE LOSS. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE A.O. IN SUPPORT OF HIS FINDINGS. THERE IS NO WORKING GIV EN AS TO HOW THE ASSESSEE HAS TAKEN THESE LOSS ENTRIES. THE LD. CIT( A) ON GOING THROUGH THE STATEMENTS OF KUNAL KHALEJA AND SUBHASH CHANDRA 8 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. KHALEJA WHICH HAVE BEEN RELIED UPON BY THE A.O. FOU ND THAT THERE IS NO CO-RELATION BETWEEN A SUM OF RS.33,57,951 AND TH E STATEMENTS OF THE ABOVE BROKER WITH THE ASSESSEE. THE FINDING OF FACT RECORDED BY THE LD. CIT(A) HAVE NOT BEEN REBUTTED THROUGH ANY E VIDENCE OR MATERIAL ON RECORD. NO INFORMATION IS AVAILABLE ON RECORD AS TO HOW THE ASSESSEE COMPANY HAS TAKEN LOSS FROM THESE CLIE NT CODE MODIFICATION. THERE IS NO WORKING GIVEN IN THE ASSE SSMENT ORDER AS TO HOW THE IMPUGNED ADDITION HAS BEEN CALCULATED BY THE A.O. AND ITS BASIS. IN THE ABSENCE OF ANY INCRIMINATING MATE RIAL AVAILABLE ON RECORD AGAINST THE ASSESSEE, IT IS DIFFICULT TO INT ERFERE WITH THE FINDINGS OF THE LD. CIT(A). IT MAY ALSO BE NOTED HERE THAT E VEN NO DETAILS HAVE BEEN BROUGHT ON RECORD AS TO FROM WHOM ASSESSEE HAS TAKEN THE BOGUS ENTRY OF LOSSES. LEARNED COUNSEL FOR THE ASSE SSEE ALSO DEMONSTRATED THROUGH P & L A/C THAT IN ASSESSMENT Y EAR UNDER APPEAL THE LOSS AS COMPARED TO THE EARLIER YEAR HAS REDUCED TO ZERO. THEREFORE, THERE IS NO QUESTION OF MAKING ANY ADDIT ION AGAINST THE ASSESSEE. THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD, CORRECTLY DELETED THE ADDITION. SINCE TH E A.O. DID NOT BRING ANY EVIDENCE AGAINST THE ASSESSEE TO SUSTAIN THE AD DITION, THEREFORE, 9 ITA.NO.2750/DEL./2017 M/S. ABHISHEK FINCAP SERVICES PVT. LTD., NEW DELHI. THERE IS NO REASON TO REMAND BACK THE MATTER TO THE FILE OF THE A.O. FOR RECONSIDERATION AS IS ARGUED BY THE LD. D.R. TH E DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 13 TH SEPTEMBER, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES DELHI.