ITO Ward-4 (2), New Delhi V. Jay Dee Securities & Finance Ltd, New Delhi

ITA 2898/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8578 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 11-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 195; 207

Judgement Text

I.T.A. NO.2897, 2898/DEL/2008 C.O.NO.148/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH D BEFORE SHRI K. G. BANSAL, ACCOUTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO.2897 & 2898 /DEL/2008 (ASSESSMENT YEAR 2001-02 & 2005-06) I.T.O. WAD 4(2), VS. M/S. JAY DEE SECURITIES & NEW DELHI FINANCE LTD. 308, CHABRA COMPLEX, 8, VEER SAVARKAR BLOCK, SHAKARPUR, DELHI C.O. NO.148/DEL/2009 (ASSESSMENT YEAR 2001-02) M/S. JAY DEE SECURITIES & FINANCE LTD., VS. ITO, 308, CHABRA COMPLEX, WARD 4(2), 8, VEER SAVARKAR BLOCK, NEW DELHI SHAKARPUR, DELHI (APPELLANTS) (RESPONDENTS) APPELLANT BY: SHRI B K GUPTA, SR. DR RESPONDENT BY: SHRI RAJESH JAIN, CA ORDER PER BENCH: 1. I.T.A. NO.2897/DEL/2008 IS AN APPEAL FILED BY TH E REVENUE AGAISNT THE ORDER OF LD. CIT(A) VII, NEW DE LHI IN APPEAL NO.15/2007-08 DATED 04.06.2008 FOR THE I.T.A. NO.2897, 2898/DEL/2008 C.O.NO.148/DEL/2009 2 ASSESSMENT YEAR 2001-02. I.T.A. NO.2898/DEL/2008 I S AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDE R OF LD. CIT(A)-VII, NEW DELHI IN APPEAL NO.104/2007-08 DATED 04.06.2008 FOR THE ASSESSMENT YEAR 2005-06 AN D C.O. NO.148/DEL/2009 IS CROSS OBJECTION FILED BY TH E ASSESSEE AGAINST THE APPEAL OF THE REVENUE IN I.T.A . NO.2897/DEL/2008. AS THE ISSUE IN BOTH THESE APPEA LS OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSES SEE ARE IDENTICAL AND INTERCONNECTED, BOTH THESE APPEAL S AND THE CROSS OBJECTION ARE BEING DISPOSED OFF BY THIS COMMON ORDER. AT THE TIME OF HEARING SHRI RAVI GUP TA, ADVOCATE FILED A REQUEST FOR ADJOURNMENT AND SHRI B K GUPTA, SR. DR APPEARED ON BEHALF OF THE REVENUE. S HRI RAJESH JAIN, CA REPRESENTED ON BEHALF OF THE ASSESS EE AS HE HAD FILED A LETTER OF ADJOURNMENT ON BEHALF OF S HRI RAVI GUPTA. 2. IN THE REVENUES APPEAL, THE REVENUE HAS CHALLEN GED THE DELETION OF THE ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED AS ALSO THE ALLEGED COMMISSION ON ACCOUNT OF THE ACCOMMODATION ENTRY IN RELATION TO THE SHARE APPLICATION MONEY. IT WAS TH E SUBMISSION BY THE LD. D.R. THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY WHICH THE ASSESSIN G AUTHORITY HAD TREATED AS UNEXPLAINED CASH CREDIT ON I.T.A. NO.2897, 2898/DEL/2008 C.O.NO.148/DEL/2009 3 ACCOUNT OF THE FACT THAT THE DIRECTORS OF THE COMPA NY FROM WHOM THE ASSESSEE HAD RECEIVED THE SHARE APPLICATION MONEY, WERE INDULGING IN GIVING ACCOMMODATION ENTRY AND HAD ALSO ACCEPTED THAT THEY WERE GIVING ACCOMMODATION ENTRIES. IT WAS HIS FURT HER SUBMISSION THAT THE ASSESSING AUTHORITY HAD ALSO MA DE ADDITION OF 2% OF SHARE APPLICATION MONEY HOLDING T HE SAME TO BE THE COMMISSION FOR THE ARRANGEMENT OF ACCOMMODATION ENTRY. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING AUTHORITY. 3. WE HAVE CONSIDERED THE SUBMISSIONS. A PERUSAL OF THE ORDER OF THE LD. CIT(A) SHOWS THAT THE ASSESSEE HAD PRODUCED THE CONFIRMATION OF SHARE HOLDERS INDICATI NG THE DETAILS OF ADDRESSES, PAN AND PARTICULARS OF CHEQUE S THROUGH WHICH THE AMOUNT WAS PAID TOWARDS THE SHARE APPLICATION MONEY. IT IS ALSO NOTICED THAT THE ASS ESSEE HAD PRODUCED THE RETURN OF INCOME FILED BY THE RELEVANT SHAREHOLDERS WHO HAD PAID SHARE APPLICATION MONEY. IT IS FURTHER NOTICED THAT THE AUDITED BALANCE SHEET OF T HE COMPANY AS ALSO THE LATEST BALANCE SHEET AS AVAILAB LE AND LIST OF SHAREHOLDERS OF THE COMPANY HAD BEEN PRODUC ED. IT IS NOTICED THAT AS THE DETAILS HAV BEEN PRODUCED, T HE IDENTITY OF THE PERSONS FROM WHOM THE AMOUNT WAS RECEIVED IN THE FORM OF SHARE APPLICATION MONEY AS ALSO THE I.T.A. NO.2897, 2898/DEL/2008 C.O.NO.148/DEL/2009 4 GENUINENESS AND THE CREDITWORTHINESS OF THE SHAREHO LDERS HAD BEEN PROVED. IT IS FURTHER NOTICED THAT THE CI T(A) HAS TAKEN INTO CONSIDERATION THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF SOFIA FINANCE TO DELETE THE AD DITION. FURTHER IT IS NOTICED THAT THE ISSUE OF THE SHARE A PPLICATION MONEY RECEIVED STANDS SUBSTANTIALLY COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LO VELY EXPORTS (216 CTR 195 S.C.) WHEREIN IT HAS BEEN HELD THAT IF THE ASSESSEE PRODUCES THE NAMES, ADDRESSES, PAN DETAILS OF THE SHARE HOLDERS THEN THE ONUS ON THE ASSESSEE TO PROVE THE SOURCE OF SHARE APPLICATION MONEY STANDS DISCHA RGED AND IF THE ASSESSING AUTHORITY WAS NOT SATISFIED WI TH THE CREDITWORTHINESS OF THE SHAREHOLDERS, IT WAS OPEN T O THE ASSESSING AUTHORITY TO VERIFY THE SAME IN THE HANDS OF THE SHAREHOLDERS CONCERNED. IT IS ALSO NOTICED THAT TH IS ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DEVINE LEASING REPORTED IN 207 CTR 38 (2007) WHEREIN IT WAS HELD THAT; IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY EVEN FROM THE BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE A.O. THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW. 4. ACCORDINGLY, ADDITION MADE U/S 68, WHICH WAS DEL ETED BY THE HON'BLE HIGH COURT WAS UPHELD BY HON'BLE SUPREM E I.T.A. NO.2897, 2898/DEL/2008 C.O.NO.148/DEL/2009 5 COURT. A PERUSAL OF THE ORDERS OF THE HON'BLE SUPR EME COURT IN THE CASE OF DIVINE LEASING & FINANCE LTD. REFERRED TO SUPRA IS IN REGARD TO SLP FILED BY THE REVENUE A GAINST THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT, THE HON'BLE SUPREME COURT HAS SPECIFICALLY WITH A SPEAK ING ORDER DISMISSED THE SLP. THE HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORTS (PVT.) LTD. DISMISSING THE S LP NO.11993/07 DATED 11.1.08, HELD THAT WHEN THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPA NY FROM ALLEGED BOGUS SHARE HOLDERS WHOSE NAMES ARE GI VEN TO THE A.O., THEN THE DEPARTMENT IS FREE TO PROCEED TO RE- OPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW. SIMILAR WAS THE FINDING OF THE HON'BLE SUPREME COUR T IN THE CASE OF SHIPRA RETAILERS (PVT.) LTD. IN SLP NO. 451/08 DATED 21.1.08 AS ALSO IN THE CASE OF DIVINE LEASING AND FINANCE LTD. IN SLP NO.375/08 DATED 21.1.08. 5. IN THESE CIRCUMSTANCES, THE DELETION OF ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY AS MADE BY THE C IT(A) IS ON THE RIGHT FOOTING AND CONSEQUENTLY, THE SAME IS CONFIRMED. 6. AS THE ADDITION MADE ON ACCOUNT OF THE SHARE APP LICATION MONEY AS DELETED BY THE CIT(A) STANDS CONFIRMED, CONSEQUENTLY, THE DELETION OF THE ALLEGED COMMISSIO N WOULD ALSO STAND CONFIRMED AS THE TRANSACTION OF SH ARE I.T.A. NO.2897, 2898/DEL/2008 C.O.NO.148/DEL/2009 6 APPLICATION MONEY ITSELF HAS BEEN ACCEPTED IN THE H ANDS OF THE ASSESSEE. IN THE RESULT THE APPEALS OF THE REV ENUE STAND DISMISSED. 7. AS THE ORDER OF LD. CIT(A) ON THE ISSUE OF SHARE APPLICATION MONEY HAS BEEN CONFIRMED, THE C.O. AS F ILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND CONSEQUENTL Y THE SAME IS DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (K.G.BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:24 TH JULY, 2009 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI