ITO, New Delhi V. M/s Bhavya Business Strategies (P) Ltd., Delhi

ITA 2923/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61651 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 11-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K UPADYAY
• Assessee Lawyers: PRATAP GUPTA CA ITA NO DEL; CO NO DEL
• Keywords: Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI U.B.S BEDI, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER I.T.A NO. 2923/DEL/10 ASSTT. YEAR 2001-02 ITO WARD 2(4), ROOM NO. 381, C.R. BUILDING, I.P. ESTATE, NEW DELHI. VS. BHAVYA BUSINESS STRATEGIES (P) LTD. 149, RPS, MANSAROVAR PARK, SHAHDARA DELHI AAACA5307M (APPELLANT) (RESPONDENT) AND CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 BHAVYA BUSINESS STRATEGIES (P) LTD. 149, RPS, MANSAROVAR PARK, SHAHDARA DELHI AAACA5307M VS. ITO WARD 2 (4), ROOM NO. 381, C.R. BUILDING, I.P. ESTATE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K. UPADYAY, SR. DR RESPONDENT BY: SHRI PRATAP GUPTA, CA ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 2 PER S.V. MEHROTRA, AM THIS APPEAL FILED BY THE DEPARTMENT IS AGAINST TH E ORDER OF LD. CIT(A)-V, NEW DELHI DATED 4.3.2010 FOR ASSTT. YEAR 2001-02. THE ASSESSEE HAS FILED CROSS OBJECTION. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPAN Y IN THE RELEVANT ASSTT. YEAR WAS CARRYING ON INVESTMENT BUSINESS. IT HAD FILED ITS RETURN OF INCOME DECLARING LOSS OF ` 2,102/-. THE AO HAD RECE IVED INFORMATION FROM THE OFFICE OF THE DIT(INVESTIGATION) THAT THE ASSES SEE COMPANY WAS A BENEFICIARY FROM THE ENTRIES PROVIDED BY M/S. SHRUT I FINSTOCK LIMITED AND SUMA FINANCE AND INVESTMENTS LIMITED. THE CASE WAS REOPENED AND NOTICE U/S 148 WAS ISSUED ON 25 TH MARCH, 2008. THE ASSESSEE COMPANY FILED A LETTER REQUESTING FOR TREATING THE RETURN F ILED EARLIER AS RETURN FILED U/S 148. REASONS RECORDED FOR REOPENING THE CASE U/ S 148 WERE FURNISHED TO ASSESSEE COMPANY ON 3 RD OCTOBER 2008 AND THE ORDER DISPOSING OFF THE OBJECTIONS FILED BY THE ASSESSEE COMPANY WAS SENT O N 20 TH OCTOBER, 2008. THE SAME IS REPRODUCED IN PARA 2.1 OF HIS ORDER. TH E ASSESSEE COMPANY IN ITS REPLY POINTED OUT THAT SHARE APPLICATION WAS RE CEIVED FROM SHRUTI FINSTOCK LIMITED AND ` 5 LAC WAS RECEIVED FROM SUMA FINANCE AND INVESTMENTS LIMITED. SUMMONS WERE ISSUED TO BOTH T HESE COMPANIES FOR PERSONAL APPEARANCE OF THE DIRECTORS TO VERIFY THE GENUINENESS OF THE TRANSACTIONS IN VIEW OF THE INFORMATION GIVEN BY DI T (INVESTIGATION). ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 3 HOWEVER, NO COMPLIANCE WAS MADE BY ANY OF THESE COM PANIES. THE AO HAS OBSERVED IN PARA 2.5. AND 2.6 AS UNDER :- 2.5 IT WAS SEEN FROM THE BANK STATEMENT OF THE ASS ESSEE COMPANY THAT CHEQUE WAS RECEIVED FROM M/S. SUMA FINANCE AND INVE STMENT LTD. ON 17/5/2000 AMOUNTING TO ` 3,75,000/-. CASH WAS DE POSITED IN THE ACCOUNT OF THE ASSESSEE COMPANY ON 6/1/2001 AND ON THE SAME DAY CHEQUE WAS ISSUED TO SUMA FINANCE INVESTMENT LTD. A MOUNTING TO ` 5 LAKHS. AGAIN ON 12/1/2001, CASH WAS DEPOSITED IN THE BANK ACCOUNT AND CHEQUE WAS ISSUED ON THE SAME DAY AMOUN TING TO ` 3 LAKHS. ON 17/1/2001 CHEQUE WAS RECEIVED AMOUNTING T O ` 5,00,000/- FROM SUMA FINANCE AND INVESTMENT LTD. AGAIN A CHEQU E OF ` 1,41,000/- WAS ISSUED TO SUMA FINANCE AND INVESTMEN T LTD. ON 18/1/2001. AGAIN ON 30/1/2001 A CHEQUE OF ` 50,000/ - WAS RECEIVED FROM SUMA FINANCE AND INVESTMENT LTD. AND AN CHEUQE OF ` 3,50,000/- WAS RECEIVED FROM SUMA FINANCE. AGAIN ON 2/2/2001., CHEQUE OF ` 3,50,000/- WAS RECEIVED FROM SUMA FINAN CE AND INVESTMENT LTD. 2.6 THUS A TOTAL OF ` 17,25,000/- WAS RECEIVED FROM SUMA FINANCE AND INVESTMENT LTD. AND ` 9,41,000/- WAS GIVEN TO SUMA FINANCE AND INVESTMENT LTD. RESULTING IN A DIFFERENCE OF ` 7,84 ,000/- WHICH IS EXPLAINED BY THE CASH OF ` 8 LAKHS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY, THE BALANCE BEING COMMISSION IN THE HANDS OF SUMA FINANCE INVESTMENT LTD. THE EXPLANATION OF THE ASSESSEE TALKS OF ONLY ` 5 LAKHS PAID TO SUMA ON 17/1/2001 W HICH WAS RECEIVED FORM SUMA FINANCE ON 6/1/2001, STATING IT TO BE A BUSINESS TRANSACTION. ALL OTHER ENTRIES REMAIN UNEXPLAINED B Y THE ASSESSEE COMPANY. THIS IS A CLEAR CUT CASE OF ENTRY PROVIDED TO THE ASSESSEE COMPANY NOT TO THE TUNE OF ` 5 LAKHS BUT 8 LAKHS TH AT IS INDICATED BY THE CASH DEPOSIT IN THE BANK OF THE ASSESSEE COMPAN Y WHICH IS TRANSFERRED TO SUMA FINANCE AND INVESTMENT AND THE N RECEIVED BACK SO THAT IT APPEARS TO BE A SQUARED UP ACCOUNT. HENCE, AN AMOUNT OF ` 8 LAKHS IS ADDED BACK TO THE INCOME OF THE ASSESSEE COMPANY BEING THE CASH DEPOSIT FROM UNDISCLOSED SOU RCES. 3. AS REGARDS M/S. SHRUTI FINSTOCK, THE AO HAS OBSE RVED THAT IT DID NOT FILE BANK STATEMENT AND MERE CONFIRMATION LETTER F ROM ALLEGED CREDITORS COULD NOT BE TREATED AS SUFFICIENT EVIDENCE TO PROV E THE GENUINENESS OF CASH CREDIT. HE, THEREFORE, MADE AN ADDITION OF ` 2 4 LACS ALLEGEDLY RECEIVED FROM SHRUTI FINSTOCK LTD. ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 4 4. BEING AGGRIEVED WITH THE ABOVE ORDER, THE ASSESS EE PREFERRED AN APPEAL BEFORE LD. CIT(A) CHALLENGING THE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 AND ALSO ASSAILING THE ADDITION S MADE ON MERITS. LD. CIT(A) UPHELD THE REASSESSMENT PROCEEDINGS. ON MERI TS, LD. CIT(A) HAS OBSERVED THAT ASSESSEE COMPANY HAD FILED ITS DETAIL ED SUBMISSIONS ON WHICH REMAND REPORT WAS CALLED FOR FROM THE AO. LD. CIT(A) DELETED THE ADDITION OF ` 8 LAC ALLEGEDLY GIVEN BY M/S. SUMA F INANCE AND INVESTMENT LTD. FOR THE FOLLOWING REASONS :- A) M/S. SUMA FINANCE AND INVESTMENT LTD. HAD FILED CONFIRMATION DIRECTLY WITH THE AO. B) THE ASSESSMENT OF M/S. SUMA FINANCE INVESTMENT L TD. HAD BEEN COMPLETED U/S. 143(3) OF THE INCOME TAX ACT WITHOUT ANY ADVERSE FINDING. NO ASSESSMENT OF SUMA FINANCE AND INVESTM ENT LTD. WAS REOPENED U/S 147 OF THE INCOME TAX ACT. C) AO HAD NOT CONDUCTED HIS OWN INQUIRY AND HAD NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL AGAINST THE DOCUMENTS A ND EVIDENCES FILED BY THE ASSESSEE PARTICULARLY WHEN I T WAS DENIED BY THE ASSESSEE THAT NEITHER ASSESSEE COMPANY NOR O THER ASSOCIATED CONCERN WITH WHOM THE ASSESSEE HAD THE T RANSACTIONS HAD ANY DIRECT OR INDIRECT TRANSACTIONS WITH THE PE RSONS AND THEIR ASSOCIATE CONCERNS WHOSE STATEMENT HAD BEEN PROVIDE D TO THE ASSESSEE. D) THE ADDITION HAD BEEN MADE SOLELY ON THE BASIS O F THE STATEMENT OF PERSONS GIVEN BEFORE INVESTIGATION UNIT. ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 5 E) AO FAILED TO CALL THESE PERSONS FOR HIS OWN VERI FICATION AND EXAMINATIONS. F) SINCE TWO PERSONS NAMELY SHRI ASEEM GUPTA AND SH RI RAKESH GUPTA I.E. MAJORITIES OF DIRECTORS IN ALL THE COMPA NIES ARE COMMON, THEREFORE, TRANSACTIONS AMONG THESE COMMON MANAGEMENT COMPANIES COULD NOT BE BOGUS OR ACCOMMOD ATION ENTRY TRANSACTIONS. 5. AS REGARDS THE ADDITION OF ` 24 LAC MADE BY AO O N ACCOUNT OF ALLEGED ACCOMMODATION ENTRY RECEIVED FROM M/S. SHRU TI FINSTOCK LTD., LD. CIT(A) DELETED THE ADDITION FOR THE REASONS NOTED A BOVE IN REGARD TO DELETION OF ` 8 LAC AND FURTHER RELIED ON THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD . 216 CTR 195 OBSERVING THAT AMOUNT FROM M/S. SHRUTI FINSTOCK LTD. WAS RECE IVED TOWARDS SHARE CAPITAL. 6. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), TH E DEPARTMENT HAS FILED APPEAL AGAINST DELETION OF BOTH THE ADDITIONS MADE BY AO AND ASSESSEE HAS FILED CROSS OBJECTION ASSAILING THE IN ITIATION OF PROCEEDINGS U/S 147 ON VARIOUS GROUNDS. 7. FIRST WE TAKE UP THE CROSS OBJECTION FILED BY AS SESSEE REGARDING INITIATION OF PROCEEDINGS U/S 147 AS THE SAME GOES TO THE ROOT OF THE PROCEEDINGS. THE ASSESSEE HAS TAKEN FOLLOWING GROUN DS OF CROSS OBJECTION :- ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 6 A. LD. CIT(A) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN INITIATING THE PROCEEDINGS U/S 147 AND ISSUE OF NOTICE UNDER SECTION 148 OF THE I.T. ACT W ITHOUT COMPLYING WITH THE PROVISION OF SECTION 147 TO 151 OF THE I.T. ACT. B. LD. CIT(A) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IS NOT JUSTIFIED IN CONFI RMING THE ACTION OF ASSESSING OFFICER IN INITIATION OF RE-ASS ESSMENT PROCEEDINGS IN ABSENCE OF ANY TANGIBLE AND SPECIFIC MATERIAL AGAINST THE ASSESSEE AND WITHOUT VERIFYING THE CORRECTNESS OF INFORMATION RECEIVED FROM INVESTIGAT ION UNIT. C. NOTICE ISSUED BY THE ASSESSING OFFICER WITHOUT PROV IDING COPY OF REASONS RECORDED WITH IN THE SIX YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IS BARRED BY LIMITATION IN VIEW OF DECISION OF DELHI ITAT IN CASE OF SHRI BALWANT R AI WADHWA VS. ITO WARD 18(2)[ITA NO. 4806/DEL/2010] AN D THEREFORE ORDER SO PASSED ON THE BASIS OF INVALID N OTICE SHOULD BE HELD AS NULL AND VOID. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BASI S OF INFORMATION WHICH TRAVELLED TO AO DID NOT RELATE TO ASSESSEE AN D, THEREFORE, THERE WAS NO REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF I NCOME. HE FURTHER SUBMITTED THAT THERE WAS NO TANGIBLE AND SPECIFIC M ATERIAL AGAINST THE ASSESSEE TO JUSTIFY INITIATION OF PROCEEDINGS U/S 1 47. THE AO HAD NOT VERIFIED THE CORRECTNESS OF INFORMATION RECEIVED FR OM INVESTIGATION UNIT. AS REGARDS GROUND NO. 3, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2001-02. NOT ICE U/S 148 WAS ISSUED ON 24 TH MARCH, 2008 I.E. JUST SIX DAYS BEFORE THE EXPIRY OF INITIATION OF PROCEEDINGS U/S 147. HE FURTHER POINTED OUT THE ASSESSEE APPLIED FOR REASONS ON 10 TH SEPTEMBER, 2008 WHICH HAD BEEN SUPPLIED TO HIM ON 3 RD OCTOBER, 2008. HE SUBMITTED THAT REASONS WERE NOT F URNISHED WITHIN SIX ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 7 YEARS FROM THE END OF RELEVANT ASSTT. YEAR AND, THE REFORE, IN VIEW OF THE DECISION IN THE CASE OF SHAGUN IMPEX PVT. LTD. VS. ITO IN ITA NO. 2756/DEL/2010 WHEREIN TRIBUNAL HAS RELIED ON THE DE CISION OF HONBLE DELHI HIGH COURT IN HARYANA ACRYLIC MANUFACTURING C O. V. COMMISSIONER OF INCOME-TAX [2009] 308 ITR 38 (DEL), THE REOPENING W AS BAD IN LAW. IN RESPONSE TO A SPECIFIC QUERY OF THE BENCH WHETHER T HIS GROUND WAS TAKEN BEFORE LD. CIT(A) OR NOT, LD. COUNSEL SUBMITTED THA T THIS BEING A LEGAL GROUND CAN BE TAKEN AT ANY STAGE OF PROCEEDINGS. IN THIS REGARD, HE RELIED ON THE DECISION IN THE CASE OF NATIONAL THERMAL POW ER CO. LTD. VS COMMISSIONER OF INCOME TAX ON REPORTED IN 229 ITR 383 AND JUTE CORPORATION OF INDIA VS CIT REPORTED IN 187 ITR 688 . LD. DR VEHEMENTLY OPPOSED THE ADMISSION OF GROUND NO. 3 TAKEN BY THE ASSESSEE. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD. AS FAR AS GROUND NOS. 1, 2 OF T HE CROSS OBJECTION ARE CONCERNED, WE DO NOT FIND MUCH SUBSTANCE IN THE SAM E BECAUSE IT IS WELL SETTLED LAW THAT AT THE TIME OF INITIATION OF PROCE EDINGS U/S 147, ONLY PRIMA FACIE BELIEF OF THE AO IS RELEVANT AND NOT THE CONCLUSIVE BELIEF REGARDING THE ESCAPEMENT OF INCOME. IN THE PRESENT CASE, SPECIFIC INFORMATION HAD BEEN RECEIVED BY THE AO FROM THE IN VESTIGATION UNIT ALONGWITH THE DETAILED REPORT AS NOTED BY LD. CIT(A ) IN HIS ORDER AT PAGE 5. REASONS RECORDED ARE CONTAINED IN PAGE 65 OF THE PA PER BOOK AND THE SAME READS AS UNDER :- ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 8 REASONS RECORDED FOR ISSUE OF NOTICE U/S REASONS RECORDED FOR ISSUE OF NOTICE U/S REASONS RECORDED FOR ISSUE OF NOTICE U/S REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 OF TH E I.T. ACT 148 OF THE I.T. ACT 148 OF THE I.T. ACT 148 OF THE I.T. ACT M/S BHAVYA BUSINESS STRATEGIES PVT. LTD. A.Y : 2001 -02 DIRECTORATE OF INVESTIGATION-1, NEW DELHI, HAD SEN T A LIST CONTAINING THE DETAILS OF TRANSACTIONS AND PARTICULARS OF BENE FICIARIES AND OPERATORS OF ACCOMMODATION ENTRIES IN DELHI. A PERUSAL OF THE LI ST SHOWS THAT M/S. BHAVYA BUSINESS STRATEGIES PVT. LTD., WHOSE JURISDI CTION LIES WITH THE UNDERSIGNED, HAS BEEN A BENEFICIARY OF ENTRIES PROV IDED BY PERSONS AS MENTIONED BELOW: SL NO. AMOUNT DATE PROVIDER 1 3,00,000 04.02.2001 SHRUTI FINSTOCK LTD. 2. 2,50,000 18.02.2001 SHRUTI FINSTOCK LTD. 3. 60,000 23.01.2001 SHRUTI FINSTOCK LTD. 4. 5,00,000 17.01.2001 SUMA FINANCE INVESTMENT LT D. IN VIEW OF THE ABOVE CREDIBLE INFORMATION RECEIVED FORM THE DIT (INV.), I HAVE REASONS TO BELIEVE THAT THE INCOME O F MY ASSESSEE WHO STANDS AS A BENEFICIARY FROM THE ENTRY PROVIDER, WH ICH IS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, AS PER THE PROVISIONS OF SE CTION 147(A),(B) & (C) OF THE INCOME TAX ACT 1961. I AM THEREFORE, SATISFIED THAT THE SAID INCOME ON ACCOMMODATION ENTRIES AS MENTIONED ABOVE HAS ESCAPED ASSESSMENT A ND ACCORDINGLY AFTER RECORDING THE ABOVE SAID REASONS AS LAID DOW N UNDER THE PROVISIONS OF SECTION 148 (2) OF THE INCOME TAX ACT, PROPOSE T O ISSUE A NOTICE TO THE ABOVE MENTIONED ASSESSEE U/S 148 (1) OF THE IT ACT. 10. THUS, IT IS EVIDENT THAT THE ASSESSEE HAD SPECI FICALLY BEEN NAMED AS BENEFICIARY OF ENTRIES PROVIDED BY M/S. SHRUTI FIN STOCK LTD. AND M/S. SUMA FINANCE LTD. THEREFORE, THE INITIATION OF REASSESSM ENT PROCEEDINGS WAS FULLY JUSTIFIED. ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 9 11. NOW COMING TO GROUND NO. 3, WE FIND THAT PROCEE DINGS WERE NOT ASSAILED BEFORE LD. CIT(A) ON THIS BASIS. HOWEVER, THIS BEING PURELY LEGAL IN NATURE, WE CONSIDER IT APPROPRIATE TO ADMIT THE SAM E AND RESTORE IT TO LD. CIT(A) FOR ADJUDICATION AFTER VERIFICATION OF RELEV ANT FACTS IN THE LIGHT OF DECISION OF HONBLE DELI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MFG. (SUPRA). 12. IN THE RESULT, THIS GROUND IS ALLOWED FOR STATI STICAL PURPOSE 13. IN THE RESULT CO IS PARTLY ALLOWED FOR STATISTI CAL PURPOSE. NOW WE TAKE UP THE APPEAL FILED BY THE DEPARTMENT V IDE ITA NO. NOW WE TAKE UP THE APPEAL FILED BY THE DEPARTMENT V IDE ITA NO. NOW WE TAKE UP THE APPEAL FILED BY THE DEPARTMENT V IDE ITA NO. NOW WE TAKE UP THE APPEAL FILED BY THE DEPARTMENT V IDE ITA NO. 2923/DEL/2010 2923/DEL/2010 2923/DEL/2010 2923/DEL/2010 14. THE GROUNDS TAKEN BY THE DEPARTMENT ARE AS UNDE R :- 1. LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELE TING THE ADDITION OF ` 8,00,000/- MADE ON ACCOUNT OF ACCOMMO DATION ENTRY TAKEN FROM M/S. SUMA FINANCE AND INVESTMENT L TD. IGNORING THE FACT THAT THE ONUS OF PROVING NECESSAR Y INGREDIENTS OF SECTION 68 WAS NOT DISCHARGED BY THE ASSESSEE. 2. LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELE TING THE ADDITION OF ` 24,00,000/- MADE ON ACCOUNT OF ACCOMM ODATION ENTRY TAKEN FROM M/S. SHRUTI FINSTOCK LTD. IGNORING THE FACT THAT THE ONUS OF PROVING NECESSARY INGREDIENTS OF S ECTION 68 WAS NOT DISCHARGED BY THE ASSESSEE. 15. WE HAVE CONSIDERED THE FACTS IN DETAIL IN PARA 2 AND 3 OF OUR ORDER EARLIER. LD. CIT(A) HAS DELETED THE ADDITION IN RES PECT OF BOTH THE GROUNDS FOR IDENTICAL REASONS AND APROPOS GROUND NO. 2 HE H AS ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. LOVELY EXPORTS ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 10 (P) LTD. REPORTED IN 216 CTR 195 LD. CIT(A). HE DEL ETED THE ADDITION, INTER ALIA OBSERVING THAT AO DID NOT CONDUCT HIS OWN INQU IRIES AND HAD NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL BUT HE HAS NOT TAKEN INTO CONSIDERATION THE FACT THAT CASH WAS DEPOSITED IN T HE BANK OF THE ASSESSEE COMPANY WHICH WAS TRANSFERRED TO SUMA FINANCE AND I NVESTMENT LTD. AND THEN RECEIVED BACK SO THAT IT APPEARED TO BE A SQUA RED UP ACCOUNT. LD. CIT(A) HAS NOT GIVEN ANY FINDING IN THIS REGARD. 16. FURTHER LD. CIT(A) HAS, INTERALIA, OBSERVED THA T AO FAILED TO CALL THE PERSONS FOR HIS OWN VERIFICATION AND EXAMINATION. I N THIS REGARD, WE FIND THAT LD. CIT(A) FAILED TO TAKE NOTE OF THE FACT THA T AO HAD ISSUED SUMMONS TO BOTH THE COMPANIES FOR PERSONAL APPEARANCE OF TH E DIRECTORS TO VERIFY THE GENUINENESS OF THE TRANSACTIONS IN VIEW OF THE INFORMATION GIVEN BY DIT (INVESTIGATION). HOWEVER, NO COMPLIANCE WAS MAD E BY ANY OF THESE COMPANIES. THUS, THE FINDINGS OF LD. CIT(A) CANNOT BE SUSTAINED. FURTHER LD. DR HAS RELIED ON THE DECISION OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. IN ITA NO. 342 OF 2011 DATED 15 TH FEBRUARY, 2012 AND SUBMITTED THAT UNDER SIMILAR CI RCUMSTANCES HONBLE JURISDICTIONAL HIGH COURT HAS UPHELD THE AO S ACTION. CONSIDERING THE ENTIRE CONSPECTUS OF THE CASE, WE CONSIDER IT I N THE INTEREST OF JUSTICE TO SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE TH E MATTER BACK TO THIS FILE FOR DECIDING THE ISSUE ON MERITS ALSO AFTER TAKING INTO CONSIDERATION THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. NOVA ITA NO. 2923/DEL/2010 & CO. NO. 185/DEL/2011 ASSTT. YEAR 2001-02 11 PROMOTERS & FINLEASE (P) LTD. (SUPRA) AS THE SAID D ECISION WAS NOT AVAILABLE TO LD. CIT(A) WHEN HE PASSED THE ORDER ON 4 TH MARCH, 2012. 17. IN THE RESULT, BOTH THE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSE. 18. IN THE RESULT, DEPARTMENTS APPEAL IS ALLOWED F OR STATISTICAL PURPOSE AND THE CO FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2012. SD/- SD/- [U.B.S. BEDI] [S.V. MEHROTRA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.4.2012 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT