ACIT, New Delhi V. M/s. Delhi Telecom Pvt. Ltd., New Delhi

ITA 3117/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0447 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-01-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 22-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Assessee Lawyers: V K SABHALWAL
• Keywords: Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 3117(DEL)/2010 ASSESSMENT YEAR: 2002-03 ASSISTANT COMMISSIONER OF DELHI T ELECOM PVT. LTD., INCOME-TAX, CIRCLE 10(1), VS. B-21, O KHLA INDL. AREA, PHASE-I, NEW DELHI. NEW DELHI. C.O. NO. 237(DEL)/2010 (ARISING OUT OF ITA NO. 3137(DEL)/2010) ASSESSMENT YEAR: 2002-03 DELHI TELECOM PVT. LTD., AS SISTANT COMMISSIONER OF B-21, OKHLA INDL. AREA, VS. INCO ME-TAX, CIRCLE 10(1), PHASE-I, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. BANITA DEVI NAOREM , SR. DR. ASSESSEE BY: SHRI V.K. SABHALWAL, ADVOCATE ORDER PER K.G. BANSAL : AM THE ASSESSEE HAD FILED ITS RETURN ON 31.3.2003 DECLARING LOSS OF RS. 43,948/- SUBSEQUENTLY, THE AO RECEIVED SPECIFI C INFORMATION FROM THE INVESTIGATION WING THAT THE ASSESSEE-COMPANY REC EIVED ACCOMMODATION ENTRIES AS SHARE APPLICATION MONEY, AMOUNTING T O RS. 24.00 LAKH, WHICH ARE BOGUS AND WHICH REPRESENT INCOME FROM UNDIS CLOSED SOURCES. A SUM OF RS. 18.00 LAKH WAS RECEIVED FROM SUMA FINAN CE INVESTMENT LTD. (NOW KNOWN AS MODERATE CREDIT CORPORATION LTD.) AND A FURTHER SUM OF ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 2 RS. 6.00 LAKH WAS RECEIVED FROM SEHGAL TELEVISI ON PRIVATE LTD. ACTING ON THE INFORMATION, ACTION WAS INITIATED U/S 147 AND NOTICE U/S 148 WAS ISSUED ON 20.3.2009. IN PROCEEDINGS U/S 147, THE ASSESSEE FILED COPIES OF BANK STATEMENT, ACKNOWLEDGEMENT OF INCOME-T AX RETURN, BALANCE-SHEET, ASSESSMENT ORDER AND PAN CARD IN RESPECT MODER ATE CREDIT CORPORATION LTD. IN THE CASE OF SEHGAL TELEVISION PVT. LTD. , COPIES OF CONFIRMATION OF FILING APPLICATION FOR ALLOTMENT OF SHARES, CH EQUE OF RS. 6.00 LAKH DRAWN ON STATE BANK OF INDIA, SHARE APPLICATION FOR M AND PAN CARD WERE FILED. THE AO NOTED THAT THE ASSESSEE COMPANY D ID NOT FILE THE COPY OF INCOME-TAX RETURN IN THE CASE OF SEHGAL TELEVISI ON PVT. LTD. THEREAFTER, THE ASSESSEE WAS REQUESTED TO PRODUCE THE DIRE CTORS OF THESE COMPANIES. IT EXPRESSED INABILITY ON THE GROUND THAT THESE C OMPANIES ARE NOT IN CONTACT WITH THE ASSESSEE NOW. THEREFORE, SUMMONS WERE ISSUED TO BOTH THE COMPANIES AT HIS REQUEST TO PRODUCE BOOKS OF ACCOUNT, BANK ACCOUNT AND SOURCE OF MONEY PAID AS SUBSCRIPTION FOR A LLOTMENT OF SHARES. NONE ATTENDED TO THE SUMMONS. HOWEVER, THE AR OF THE A SSESSEE APPEARED AND AGAIN EXPRESSED INABILITY TO PRODUCE THE PARTIES OR FURNISH THEIR PRESENT WHEREABOUTS BUT SUBMITTED THAT THEY CONTINUE TO B E SHAREHOLDERS OF THE ASSESSEE-COMPANY. THE AO NOTED IN THE CASE OF M ODERATE CREDIT CORPORATION LTD. THAT MONIES WERE TRANSFERRED T O ITS ACCOUNT JUST BEFORE ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 3 ISSUING CHEQUES TO THE ASSESSEE-COMPANY. OTHER WISE, OPENING AND CLOSING BALANCES WERE NOMINAL. ON THESE FACTS, HE CAME TO THE CONCLUSION THAT THE SUBSCRIBERS WERE MERELY NAME LENDERS. ACCORDINGLY, ADDITION OF RS.24.00 LAKH WAS MADE TO THE INCOME BY INVOK ING THE PROVISION CONTAINED IN SECTION 68 OF THE ACT. A SUM OF RS. 48,000/- WAS ALSO ADDED AS UNACCOUNTED COMMISSION PAID TO THESE C OMPANIES FOR PROVIDING ACCOMMODATION ENTRIES. 2. AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED A PPEAL BEFORE CIT(APPEALS)-XII, NEW DELHI. THE CASE OF THE ASSESSEE WAS THAT IT HAD DISCHARGED THE INITIAL ONUS CAST ON IT U/S 68 BY PRODUCING VARIOUS EVIDENCES FROM BOTH THE SUBSCRIBERS. THEREAFTER , THE AO DID NOTHING TO REBUT THE EVIDENCE BUT RELIED ON THE FINDINGS OF THE INVESTIGATION WING. THE LD. CIT(APPEALS) CAME TO THE CONCLUSION THA T THE EVIDENCES PRODUCED BY THE ASSESSEE REGARDING SUBSCRIPTION TO ITS SHARE CAPITAL DISCHARGED THE ONUS CAST ON IT AND THEREAFTER IT IS FOR THE AO TO BRING ON RECORD TANGIBLE EVIDENCE TO HOLD THAT THE AMOUNT S RECEIVED WERE NOT IN THE NATURE OF SHARE SUBSCRIPTION OR ITS SOURC E REMAINED UNPROVED. SINCE THE MONEY WAS RECEIVED AS SHARE SUBSCRIPTIO N, HE PARTICULARLY RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 4 EXPORTS LTD., IN WHICH IT HAS BEEN HELD THAT IN CA SE THE REVENUE FOUND OR NOTICED ANY BOGUS SHAREHOLDER OR ENTRY OPERAT OR, WHO INVESTED MONEY FOR PURCHASE OR SALE OF SHARES OF ANY COMPANY, THE REVENUE IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT NO ACTION LIES IN THE HANDS OF THE COMPANY WHO RECEIVED THE SHARE APPLICATION MONEY FROM SUCH COMPANIES BY WAY OF A CCOUNT PAYEE CHEQUES AND ALSO FILED CONFIRMATIONS WITH PAN, COPY OF ACCOUNT CONFIRMING THE TRANSACTION ETC. THEREFORE, H E DELETED THE ADDITION MADE BY THE AO. 3. AGGRIEVED BY THIS ORDER, THE REVENUE IS IN APPEAL BEFORE US AND IT HAS TAKEN TWO SUBSTANTIVE GROUNDS AGAINST DELETI NG THE ADDITION OF THE AMOUNT OF RS. 24.00 LAKH RECEIVED AS SHARE AP PLICATION MONEY AND THE COMMISSION OF RS. 48,000/-. THE ASSESSEE HAS AL SO FILED CROSS OBJECTION, IN WHICH THE FINDING OF THE LD. CIT(APPEALS) UPHOL DING THE VALIDITY OF PROCEEDINGS U/S 147 HAS BEEN ASSAILED. A GROUND HAS ALSO BEEN TAKEN IN SUPPORT OF THE ORDER OF THE LD. CIT(APPEALS) DE LETING THE ADDITION OF RS. 24.00 LAKH. ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 5 4. BEFORE US, THE LD. DR REFERRED TO THE FINDINGS OF THE AO. IT WAS SUBMITTED THAT INFORMATION OF FACT HAD BEEN RECE IVED FROM THE INVESTIGATION WING, WHICH IS ENGAGED IN COLLECTION AND DISSEMINATION OF INFORMATION ALSO. PROCEEDINGS WERE INITIATED U /S 147 ON THE BASIS OF SUCH INFORMATION, WHICH IS IN THE NATURE OF AUTHENTIC IN FORMATION. IN THE COURSE OF ASSESSMENT PROCEEDINGS, VARIOUS DETAILS WER E FILED. BUT THE ASSESSEE WAS NOT ABLE TO PRODUCE DIRECTORS OF THE SUBSCR IBING COMPANIES AND THEIR BOOKS OF ACCOUNT. THEREFORE, THE AO WAS JUS TIFIED IN HOLDING THAT THE NATURE AND SOURCE OF CREDITS DOES NOT STAND P ROVED U/S 68. COMING TO THE ORDER OF THE LD. CIT(APPEALS), IT IS SUBMITTE D THAT A VERY CRISP ORDER WAS PASSED DISTINGUISHING THE CASE FROM MCDOWE LS CASE, (1958) 158 ITR 148 (SC), AND MENTIONING THAT THE AO FAILE D TO BRING ANY CLINCHING EVIDENCE ON RECORD TO SUPPORT THE PRESUMPTION MA DE BY HIM. IT HAS BEEN FINALLY HELD THAT THE SHARE APPLICATION MONEY AN D THE LOAN RECEIVED BY IT WERE GENUINE. 5. IN REPLY, THE LD. COUNSEL REFERRED TO THE FIND INGS OF THE AO AND RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF CO NTINENTAL TELEPOWER INDUSTRIES LTD. IN ITA NO. 3503(DEL)/2010 FOR A SSESSMENT YEAR 2001-02 ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 6 DATED 27.12.2010, A COPY OF WHICH HAS BEEN PLAC ED BEFORE US. THUS, IT IS URGED THAT THE ORDER OF THE LD. CIT(APPEALS) MAY BE UPHELD. 6. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THERE APPEARS TO BE SOME CONFUSION IN THE ORDER OF THE LD. CIT(APPEALS) AS TO WHETHER BOTH THE AMOUNTS ARE I N THE NATURE OF SHARE APPLICATION MONEY OR ONE OR BOTH ARE IN THE NATU RE OF LOAN. ON PAGE 28, IT HAS BEEN MENTIONED THAT IN THE LIGHT OF ABO VE DISCUSSION, I AM INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDE NCES PRODUCED BY THE APPELLANT TO SUBSTANTIATE THAT THE SHARE CAPITAL , SHARE APPLICATION MONEY AND LOAN RECEIVED BY IT WERE GENUINE TRANSACTION S AND THE SAME WERE NOT ACCOMMODATION ENTRIES. I ALSO DONT FIND ANY EVID ENCE COLLECTED BY THE AO WHICH COULD PROVE OTHERWISE. THE FACT OF THE MATTER IS THAT BOTH THE AMOUNTS ARE IN THE NATURE OF SHARE APPLICATION MONEY, WHICH BECOMES CLEAR FROM THE ASSESSMENT ORDER, GROUNDS OF APPEA L AND THE SUBMISSIONS OF THE ASSESSEE. THE ORDER IN THE CASE OF CONTINENT AL TELEPOWER INDUSTRIES LTD. (SUPRA) CLEARLY DEALS SIMILAR ISSUE. IN FACT, SUMA FINANCE & INVESTMENT LTD. IS COMMON TO BOTH THESE ASSESSEE S. THE FINDINGS OF THAT ORDER ARE CONTAINED IN PARAGRAPH NO. 4, WHICH I S REPRODUCED BELOW:- 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. WE FIND THAT ALTHOUGH THE AO ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 7 HAS MENTIONED ABOUT INVESTIGATIONS CARRIED OUT BY THE INVESTIGATION WING, NEW DELHI, BUT THE DETAILS O F INVESTIGATION HAVE NOT BEEN MENTIONED IN THE ASS ESSMENT ORDER. THE AO HAS ALSO EXAMINED SHRI PRADEEP JINDA L, BUT OPPORTUNITY TO CROSS-EXAMINE HAS NOT BEEN GIVEN TO THE ASSESSEE. ON THE OTHER HAND, THE ASSESSEE HAS B ROUGHT ON RECORD VARIOUS EVIDENCES SUCH AS ANNUAL ACCOUNTS , COPIES OF RETURNS AND CONFIRMATIONS FROM BOTH THE PARTIES TO ESTABLISH THE EXISTENCE, CAPACITY AND GENUINENESS OF TRAN SACTIONS. AS A MATTER OF FACT BOTH THE CONTRIBUTORS ARE LIMITED COMPANIES AND ALL THESE DETAILS CAN BE FOUND FROM THE OFFICE O F REGISTRAR OF COMPANIES ALSO. THE WHOLE OF THE EVIDENCE PRODU CED BY THE ASSESSEE HAS BEEN REJECTED WITHOUT FINDING ANY FAULT WITH THE SAME. THE STATEMENT OF SHRI PRADEEP JINDAL REM AINS UNAUTHENTICATED AND, THEREFORE, VERY LITTLE EVIDE NTIARY VALUE CAN BE ATTACHED TO IT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. CIT(APPEALS) RIGHTLY DELETE D THE ADDITION. AS MENTIONED BY HONBLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS (P) LTD., ONCE THE IDENTITY HA S BEEN PROVED AND THE CONTRIBUTORS HAVE ADMITTED TO THE CONTRIB UTION, THE DEPARTMENT SHOULD HAVE TAKEN ACTION IN THEIR CA SES. THIS HAS ALSO BEEN REITERATED BY THE LD. CIT(APPEALS) IN L AST PARAGRAPH OF HIS FINDING. WE CONCUR WITH THIS FINDING ALSO. THUS, THE ORDER OF THE LD. CIT(APPEALS) IS UPHELD. 6.1 FOLLOWING THE ORDER, IT IS HELD THAT THE A O WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 24.00 LAKH IN THE HANDS OF THE ASSESSEE. THIS FINDING IS GIVEN WITHOUT PREJUDICE TO THE RIGHT OF THE REVENUE TO TAKE APPROPRIATE IN THE CASE OF THE CONTRIBUTORS. ITA NO. 3117(DEL)/2010 & C.O.NO. 237(DEL)/2010 8 6.2 AS THE AMOUNT HAS BEEN DELETED FROM THE INCO ME OF THE ASSESSEE BY WAY OF ACCOMMODATION ENTRIES, THE QUESTION OF ADDING UNACCOUNTED COMMISSION DOES NOT SURVIVE. 7. THE LD. AR DID NOT PRESS THE CROSS OBJECTION . 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 FEBRUARY, 2011. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 18TH FEBRUARY, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- M/S DELHI TELECOM PRIVATE LTD., NEW DELHI. ACIT, CIRCLE 10(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.