ITO, New Delhi V. M/s. Goldy Traders Pvt. Ltd., New Delhi

ITA 3136/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6893 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-09-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 17-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: SSH VED JAI N; ASHISH GOEL CAS; PRANJAL SRIVASTA
• Keywords: Reopening of assessment; Gift; Period of limitation; Corroborative evidences; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 147; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH C NEW DELHI BEFORE : SHRI H.S. SIDHU , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3136/DEL./2013 ASSTT. YEAR : 2004 - 05 INCOME - TAX OFFICER, VS. GOLDY TRADERS PVT. LTD., WARD 12(2), NEW DELHI. 109, RECTANGLE ONE, D - 4, DISTRICT CENTRE, SAKET, NEW DELHI. (PAN: AAACG 2816M) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMRIT LAL, SR. DR RESPONDENT BY : S/SH. VED JAIN & ASHISH GOEL, C.AS. & SH. PRANJAL SRIVASTAVE, ADV. & DATE OF HEARING : 07.09.2016 DATE OF PRONOUNCEMENT : 20 .09.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - XV, NEW DELHI DATED 26.02.2013 FOR THE ASSESSMENT YEAR 2004 - 05 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LD CIT(A) ERRED IN QUASHING THE RE - ASSESSMENT ORDER AS BAD IN LAW DESPITE THE FACT THAT THE REAS SESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF CREDIBLE AND TANGIBLE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. IN SIMILAR CIRCUMSTANCE, THE HON'BLE DELHI HIGH COURT IN VARIOUS RECENT JUDICIAL PRONOUNCEMENTS HAS UPHELD THE VAL IDITY OF INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING REGARDING ACCOMMODATION ENTRY PROVIDERS. ITA NO. 3136/DEL./2013 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT TH ERE IS NO REQUIREMENT UNDER THE LAW THAT REASONS FOR REOPENING SHOULD BE PROVIDED TO THE ASSESSEE WITHIN SIX YEARS FROM THE END OF ASSESSMENT YEAR SOUGHT TO BE REOPENED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HON'BLE CIT(A) HAS ERRED IN HOLDING THE REASSESSMENT PROCEEDINGS BAD IN LAW ON THE GROUND THAT REASONS FOR REOPENING OF ASSESSMENT WAS GIVEN TO THE ASSESSEE AFTER 5 MONTHS FROM THE DATE OF NOTICE, DESPITE THE FACT THAT THE REASONS WERE PROVIDED WELL WITHIN THE PERIOD OF LIMITATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS. 65,05,590/ - U/S 68 OF THE ACT DESPITE THE SETTLED POSITION OF LAW THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GEN UINENESS OF THE TRANSACTION AS THE ASSESSEE COULD NOT EVEN FURNISH NAME AND COMPLETE ADDRESSES OF THE INVESTORS, THEIR CONFIRMATION, COPY OF BANK ACCOUNTS AND I. T. PARTICULARS OF THE CASH CREDITORS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 31.10.2004 DECLARING AN INCOME OF RS.84,000/ - . THE RETURN WAS PROCESSED U/S. 143(1) OF THE IT ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED BY AO FROM THE OFFICE OF THE DIT(INV.) NEW DELHI, THE CASE OF ASSESSEE WAS RE OPENED U/S. 147 READ WITH SECTION 148 OF THE ACT. THE INFORMATION SO RECEIVED WAS ABOUT THE COMPANIES WHO WERE INVOLVED IN PROVIDING/TAKING ACCOMMODATION ENTRIES FOR UNACCOUNTED MONEY. THE SAID INFORMATION REPORT WAS ALSO ACCOMPANIED BY A DETAILED LIST OF CASES SHOWING NAME, DATE OF ENTRY TAKEN/GIVEN AND AMOUNT INVOLVED ETC. IN THE SAID LIST THE NAME OF THE ASSESSEE WAS ALSO FOUND APPEARING, WHICH LED THE ASSESSING OFFICER TO OBSERVE THAT THE ASSESSEE COMPANY WAS ONE OF THE BENEFICIARIES WHO HAS TAKEN ACCOM MODATION ENTRY FROM THE PARTIES FOR ITS ITA NO. 3136/DEL./2013 3 OWN UNACCOUNTED MONEY. ACCORDINGLY, THE AO ISSUED NOTICE U/S. 148 ON 25.03.2011 AFTER RECORDING FOLLOWING REASONS : 'AS PER INFORMATION RECEIVED FROM THE OFFICE OF THE DIT(INV.), NEW DELHI, THE ASSESSEE COMPANY HAS T AKEN FOLLOWING ACCOMMODATION ENTRY TOTALING TO RS.65.06,590/ - : VALUE OF ENTRY TAKEN DATE OF ENTRY FROM WHOM TAKEN RS. 10,01,015 19.04.2003 M/S. K.R. FINCAP PVT. LTD. (A/C 24622, SBBJ, NEW ROHTAK ROAD, DELHI) RS.15,01,515 19.04.2003 M/S SEKHAWATI FINANCE PVT. LTD. (A/C NO. 24685, SBBJ NEW ROHTAK ROAD, DELHI) RS.7,00,715 28.04.2003 M/S NIKHIL BUILDER PROMOTER (A/C NO. 24664, SBBJ, NEW ROHTAK ROAD, DELHI) RS.8,00,815 28.04.2003 M/S NIKHIL BUILDER PROMOTER (A/C NO. 24664, SBBJ, NEW ROHTAK ROAD, DELHI) RS.10,01,015 01.05.2003 M/S BASANT AGENCIES PVT. LTD. (A/C NO. 24645, SBBJ, NEW ROHTAK ROAD, DELHI) RS.15,01,515 01.05.2003 M/S M/S. KULDEEP TEXTILES (P) LTD. (A/C NO. 24624, SBBJ, NEW ROHTAK ROAD, DELHI) THE SAID AMOUNT HAS BEEN CREDITED INTO ASSESSEE'S BANK ACCOUNT BY WAY OF TRANSFER ENTRIES. ON INVESTIGATION MADE BY THE INVESTIGATION WING IT HAS BEEN FOUND THAT ASSESSEE IS A BENEFICIARY OF TAKING THE AFORESAID ACCOMMODATION ENTRIES. I HAVE ALSO PERUSED V ARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IF IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES, THEREFORE, I HAVE REASON TO BELIEVE THAT THE INCOME AMOUNTIN G TO AT LEAST RS. 65,06,590/ - HAS ESCAPED ASSESSMENT. IN RESPONSE, THE ASSESSEE SUBMITTED ITS REPLY ON 23.08.2011, THEREBY FURNISHING THE REQUISITE DETAILS LIKE NAMES & ADDRESS, PAN, PHOTOCOPIES OF CHEQUES AND AMOUNTS ETC. AND FURTHER VIDE SUBSEQUENT LE TTERS, THE ASSESSEE STATED THAT BLIND ACCEPTANCE OF THE INFORMATION FURNISHED BY DIT(INV.) CANNOT FORM REASON TO BELIEVE BY THE AO REGARDING ESCAPEMENT OF INCOME UNLESS PROPER VERIFICATION/INVESTIGATION IS MADE BY THE AO HIMSELF TO DISCARD THE DETAILS AND EVIDENCES FURNISHED BY THE ASSESSEE. THE AO AFTER CONSIDERING THE REPLIES OF ITA NO. 3136/DEL./2013 4 ASSESSEE AND RELYING ON THE IMPUGNED INFORMATION, CONCLUDED THAT THE ASSESSEE, BEING ONE OF THE BENEFICIARIES, WAS ENGAGED IN THE ACTIVITIES OF TAKING ACCOMMODATION ENTRIES TO R O U TE THROUGH ITS OWN UNACCOUNTED MONEY INTO THE BUSINESS WITHOUT GIVING ANY TAXES, AS THE SUPPORTING EVIDENCES LAID BY ASSESSEE DO NOT PROVE THE CREDITWORTHINESS OF THE CREDITORS. HE, ACCORDINGLY, MADE AN ADDITION OF RS.65,06,590/ - TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE ASSESSMENT ORDER U/S. 147 BOTH ON VALIDITY OF ORDER AS WELL AS ON MERITS. THE LD. CIT(A) QUASHED THE ORDER OF AO ON LEGAL GROUND AND ALSO DELETED THE ADDITION ON MERITS. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE COURSE OF HEARING, THE LD. DR, RELYING UPON THE ORDER OF THE AO, SUBMITTED THAT EXTENSIVE ENQUIRIES WERE MADE BY DIT (INV.), NEW DELHI WHERE VARIOUS COMPANIES WERE PROVIDING ACCOMMODA TION ENTRIES OF SHARE CAPITAL, GIFTS ETC. TO DIFFERENT BENEFICIARIES IN LIEU OF CASH RECEIVED BY THEM. THE ASSESSEE WAS ALSO FOUND TO BE ONE OF SUCH BENEFICIARIES TAKING ACCOMMODATION ENTRIES FROM SUCH BOGUS COMPANIES SIMPLY TO ROUTE THROUGH ITS OWN UNACCO UNTED MONEY. THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF TRANSACTIONS COULD NOT BE PROVED , WHICH WAS THE INITIAL ONUS TO BE DISCHARGED BY THE ASSESSEE U/S. 68 OF THE ACT. THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. ITA NO. 3136/DEL./2013 5 4. IN HIS RIVAL SUBMISSIONS, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO HAS FAILED TO APPLY HIS OWN MIND OR TO MAKE ANY INDEPENDENT ENQUIRY BEFORE FORMING A BELIEF THAT ANY INCOME HAS ESCAPED ASSESSMENT. THE AO HAS SIMPLY ADHERED TO THE GENERAL INFORMAT ION RECEIVED FROM DIT(INV.). EXCEPT THIS GENERAL INFORMATION THERE WAS NO MATERIAL IN POSSESSION OF THE AO TO FORM SUCH A BELIEF OF ESCAPEMENT OF INCOME NOR ANY SUCH MATERIAL WAS CONFRONTED TO THE ASSESSEE. IT WAS SUBMITTED THAT THE RESPONDENT HAD FILED CO NFIRMATORY LETTERS, PAN DETAILS, COPY OF ITR, COPY OF SHARE APPLICATION FORM, COMPLETE NAMES AND ADDRESS OF THE SHARE APPLICANTS, PHOTOCOPIES OF CHEQUES THROUGH WHICH THE PAYMENTS WERE RECEIVED FROM SHARE APPLICANTS, WHICH GO TO DISCHARGE THE INITIAL ONUS LAID ON THE ASSESSEE U/S. 68 OF THE ACT AND THE AO FAILED TO POINT OUT ANY DEFECT THEREIN NOR MADE ANY ENQUIRY TO BELIE THE SAME. THE AO HAD NO MATERIAL TO PRESUME THAT THE MONEY RECEIVED BY ASSESSEE TRAVELLED FROM THE COFFERS OF THE ASSESSEE. ACCORDINGLY, THE AO HAS RECORDED VAGUE REASONS BASED ON GENERAL INFORMATION IN A MECHANICAL MANNER WITHOUT APPLYING HIS MIND TO THE GENERAL INFORMATION RECEIVED FROM DIT(INV.) WHICH VITIATE THE PROCEEDINGS U/S. 147/148 OF THE ACT. RELIANCE IS PLACED, INTER ALIA, ON TH E FOLLOWING DECISIONS : (I). ITO VS. M/S. SOFTLINE CREATIONS PVT. LTD. (ITA NO. 744/DEL./2012 DT. 10.02.2016 (ITAT DELHI). (II). CIT VS. SOFTLINE CREATIONS PVT. LTD. (ITA NO. 504/2016 DATED 31.08.2016)(DELHI HIGH COURT) ITA NO. 3136/DEL./2013 6 (III). CIT VS. M/S. RAKAM MONEY MA TTERS PVT. LTD. (ITA NO. 778 OF 2015 DATED 13.10.15) (DELHI H.C.) (IV). CIT VS. VRINDAVAN FARMS (P) LTD. (ITA NO. 71, 72 , 85/D/2015 DATED 12.08.15) (V). CIT VS. NOVA PROMOTORS AND FINLEASE P. LTD., 342 ITR 169 (DEL.) IT WAS ALSO SUBMITTED THAT THE NOTIC E U/S. 148 WAS ISSUED ON 25.03.2011, BUT THE REASONS RECORDED FOR REOPENING THE CASE WERE COMMUNICATED ONLY ON 19.08.2011, WHICH IS BEYOND THE STATUTORY PERIOD OF LIMITATION AS CONTEMPLATED U/S. 149 OF THE ACT . THE AO HAS WRONGLY REJECTED THE OBJECTION OF ASSESSEE RELYING ON THE DECISION OF HON BLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD VS. ITO 259 ITR 19 (SC). IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF HARYANA ACRYLIC MFG. CO. VS. CIT, 308 ITR 38 (DEL.) WHEREIN THE ABOVE DECISION OF APEX COURT WAS DISTINGUISHED BY THE HON BLE JURISDICTIONAL HIGH COURT. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ENTIRE MATERIALS AVAILABLE ON RECORD. ON PERUSAL OF THE REASONS RECORDED, AS REPRODUCED ABOVE , AND ALSO THE FINDINGS RECORDED BY THE LD. CIT(A), WE DO NOT FIND ANY MATERIAL ON RECORD TO DISCARD THE OBSERVATIONS OF THE LD. CIT(A) THAT THERE WAS NO INDEPENDENT MATERIAL IN POSSESSION OF THE AO TO FORM A BELIEF OF ESCAPEMENT OF INCOME ON THE PART OF THE ASSESSEE. EVEN THE NATURE OF TRANSACTIONS ARE NOT MENTIONED IN THE SAID REASONS RECORDED . THE AO HAS ALSO ITA NO. 3136/DEL./2013 7 FAILED TO MAKE ANY INDEPENDENT ENQUIRY TO VERIFY THE INFORMATION RECEIVED FROM DIT(INV.). PER CONTRA, THE ASS ESSEE HAD FURNISHED COGENT EVIDENCES IN THE FORM OF ITRS, PHOTOCOPIES OF CHEQUES RECEIVED FROM SHARE APPLICANTS, PAN DETAILS, COMPLETE NAMES AND ADDRESSES OF THE CREDITORS, COPIES OF SHARE APPLICATION FORMS ETC. TO DISCHARGE THE INITIAL ONUS LAID ON THE AS SESSEE U/S. 68 OF THE ACT. HOWEVER, THE AO HAS FAILED TO CONDUCT ANY ENQUIRY WHATSOEVER EITHER TO VERIFY THE INFORMATION RECEIVED FROM INVESTIGATION WING OR TO DISCARD THE EVIDENCES PLACED BY ASSESSEE BEFORE HIM. THEREFORE, IT BEING A CASE OF COMPLETE LACK OF ENQUIRY AND NON - APPLICATION OF MIND, IN OUR CONSIDERED OPINION, THE EVIDENCES OR MATERIAL PRODUCED BY THE ASSESSEE CANNOT BE THROWN OUT WITHOUT ANY INQUIRY AND THUS THE REASONS RECORDED ARE NOT SUFFICIENT TO FORM A BELIEF OF ESCAPEMENT OF INCOME. THE C ONTENTION OF THE ASSESSEE IS THAT ALL THE ABOVE COMPANIES ARE REGISTERED WITH THE REGISTRAR OF COMPANIES AND ARE REGULAR INCOME TAX ASSESSEES AND THE TRANSACTIONS HAVE BEEN UNDERTAKEN THROUGH ACCOUNT PAYEE CHEQUES . ALL THE DETAILS AND DOCUMENTS RELATING TO ALL THE ABOVE MENTIONED SHARE HOLDERS WERE FURNISHED , WHICH HAVE NOT BEEN ADVERSELY COMMENTED BY THE ASSESSING OFFICER. ALSO, THE REVENUE HAS BROUGHT NO EVIDENCE OR MATERIAL ON RECORD TO PROVE THAT THE IMPUGNED SHARE APPLICATION MONEY EMANATED FROM THE C OFFERS OF THE ASSESSEE/RESPONDENT. A PERUSAL OF THE IMPUGNED ORDER FURTHER REVEALS, THAT THE ISSUE OF LIMITATION RAISED BY THE ASSESSEE HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE RELYING ON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE ITA NO. 3136/DEL./2013 8 OF HARYANA ACRYLIC MFG. CO. (SUPRA) WHEREIN IT IS OBSERVED BY HON BLE COURT THAT THE EXPRESSION WITHIN A REASONABLE PERIOD OF TIME AS USED BY THE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD. (SUPRA) CANNOT BE STRETCHED TO SUCH AN EXTENT THAT IT EXTENDS EVEN BEYOND THE SIX YEARS STIPULATED IN SECTION 149. NO CONTRARY DECISION IS BROUGHT ON RECORD BY THE REVENUE. THEREFORE, LAYING OUR HANDS ON THE CATENA OF DECISIONS, RELIED UPON BY THE ASSESSEE BEFORE US , WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WI TH THE ORDER OF THE LD. CIT(A) EITHER ON LEGAL ASPECT OF THE CASE OR ON MERITS OF ADDITION. WE, ACCORDINGLY, FIND NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME DESERVES TO BE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.09.2016 . SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20.09.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI