Malhan Constructions Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3149/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3767 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Assessee Lawyers: AMIT O SH MORITRA
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence; Onus to prove; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.3149/DEL/2017 ASSESSMENT YEAR : 2005-06 M/S MALHAN CONSTRUCTIONS PRIVATE LIMITED, MALHAN ONE, PLOT NO.1, SUNLIGHT COLONY, ASHRAM, NEW DELHI-110014 VS DCIT, CIRCLE-6(1), NEW DELHI PAN-AAECM5142L APPELLANT RESPONDENT APPELLANT BY SH. AMIT O SH MORITRA, C.A. RESPONDENT BY SH. GAURAV PUNDIR, SR. DR DATE OF HEARING 13.09 .20 21 DATE OF PRONOUNCEMENT 11 . 1 0.2021 ORDER PER KUL BHARAT, JM : THIS APPEAL FILED BY THE ASSESSEE PERTAINING TO ASS ESSMENT YEAR 2005- 06 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-6, N EW DELHI DATED 22.03.2017. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN FRA MING THE ASSESSMENT ORDER AND THE LEARNED CIT (A) HAS ER RED IN CERTIFYING IT PARTLY, TREATING THE UNSECURED LOANS OF RS. 45,00,000 AS UNEXPLAINED CREDITS U/S 68, AS IN DOIN G SO HE HAS COMPLETELY DISREGARDED THE FACTS, INFORMATIONS/ DOCUMENTS PRODUCED BEFORE THEM AND EXPLANATIONS PRO VIDED BY THE ASSESSEE DURING THE ASSESSMENT AND APPEAL PROCEEDINGS. 2. THAT IN MAKING AND CONFIRMING THESE ADDITIONS THE L D. ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS-6) HAVE IGNORED THE RULINGS OF THE VARIOUS COURTS OF THE COUNTRY AND HAS GONE ON TO MAKE THE ADDITIONS O N COMPLETELY BASELESS AND WHIMSICAL GROUNDS, WITHOUT EVEN CONSIDERING THE INFORMATION VERIFIABLE AND TRACEABL E WITH THE DEPARTMENT ITSELF. ITA NO. 3149/DEL/2017 2 | P A GE 3. THE LEARNED ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOME TAX (APPEALS-6) HAVE PASSED THE ORDERS BY COMPLETELY IGNORING THE ASSESSEE'S REPLIE S WHICH CONTAINED PERTINENT INFORMATION MERELY TO MAKE AN A DDITION TO AUGMENT REVENUE FOR THE INCOME TAX DEPARTMENT. 4. THAT IN MAKING AND CONFIRMING THE ADDITION, THE LEA RNED ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS-6) HAVE NOT ADDUCED ANY REASONS FOR DISBEL IEVING THE INFORMATION AND DOCUMENTS SUBMITTED BY THE ASSESSEE EVEN IN THE FACE OF CIRCUMSTANTIAL EVIDENCE IN THE FORM OF SUBSEQUENT EVENTS INFORMED TO THE LD. ASSESSING OFFICER AND TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS-6). 5. THAT IN MAKING AND CONFIRMING THESE ADDITIONS THE L D. ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS-6) HAVE COMPLETELY IGNORED THE PROVISIONS OF THE INCOME TAX ACT. 6. THAT IN MAKING THESE ADDITIONS THE LD. ASSESSING OF FICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS-6) H AVE GONE AGAINST THE PRINCIPLES OF NATURAL JUSTICE IN THE LI GHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST THE SUSTAINING THE ADDITION OF RS.45,00,000/- AS UNEXPLAINED CREDIT U/ S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 3. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS AS WERE MADE BEFORE LD.CIT(A). LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT BEFORE THE ASSESSING OFFICER, CERTAIN EVIDENCES IN SUPPORT OF THE CLAIM WITH REGARD TO INFORMATION BELONG FROM MS. NEHA MADAN, SHRI K.L.AR ORA & SHRI R.N.ARORA COULD NOT FILE BEFORE THE ASSESSING OFFICER. HOWEV ER, THE SAME WAS FILED BEFORE LD.CIT(A) BY WAY OF ADDITIONAL EVIDENCES. L D.CIT(A) TREATED THE TRANSACTION WITH SHRI K.L.ARORA AS GENUINE AND DELE TED THE ADDITION OF RS.8,00,000/- AND REST OF THE ADDITION OF RS.20,00, 000/- IN RESPECT OF MS. ITA NO. 3149/DEL/2017 3 | P A GE NEHA MADAN AND RS.25,00,000/- IN RESPECT OF SHRI R. N.ARORA WAS CONFIRMED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AUTHORI TIES BELOW FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD DISCHARGE D ITS PRIMARY ONUS BY FILING THE EVIDENCES IN SUPPORT OF ITS CLAIM. FURT HER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATED AND IN THE INTEREST OF PRINCIPLE OF NATURAL JUSTICE OUG HT NOT TO HAVE DISREGARDED THE EVIDENCES FILED BY THE ASSESSEE. LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE ADDITIONS HAVE BEEN SUSTAINED ON THE BASIS THAT THERE WAS SOME ADVERSE COMMENTS BY THE INVESTIGATION WING REGARDIN G THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN RESPECT OF MS. NEHA MADAN INADVERTENTLY DONE BY MISTAKE AND EVEN WRONG BUT S AME WAS RECTIFIED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN RESPECT OF SHRI R.N.ARORA, LD.CIT(A) HAS RECORDED THE FACT THAT THE ASSESSEE H AS SUBMITTED ITS OWN BANK STATEMENT BUT DID NOT FILE ANY BANK STATEMENT OF THE CREDITOR THEREFORE, THE CREDITWORTHINESS OF THE CREDITORS COULD NOT BE ASCERTAINED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT REVENUE HAS SUFFICI ENT POWER. THE ASSESSING OFFICER COULD HAVE ISSUED NOTICE AND SUMMONED THE PERSON FOR VERIFYING THE GENUINENESS OF THE TRANSACTION BUT THE ASSESSING OF FICER CHOSE NOT TO MAKE INQUIRIES IN THE PREJUDICED MANNER MADE ADDITION OF THE AMOUNT. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT CARRIE D OUT ANY INDEPENDENT INQUIRY BY HIMSELF WHETHER HE WAS INFLUENCED BY TH E REPORTS SUBMITTED BY THE INVESTIGATION WING. IT WAS FURTHER SUBMITTED T HAT THE REASONS FOR RE- OPENING OF THE ASSESSMENT WAS ALSO ON THE BASIS THA T THE INVESTIGATION WING HAD STATED IN ITS COMMUNICATION DATED 31.03.2012 TH AT THE COMPANY HAS ITA NO. 3149/DEL/2017 4 | P A GE RECEIVED ACCOMMODATION ENTRY OF RS.20,00,000/-. HO WEVER, THE ASSESSING OFFICER MADE ADDITIONS OF RS.53,00,000/-. HE SUBMI TTED THAT THE ORDER OF THE AUTHORITIES BELOW CANNOT BE SUSTAINED IN VIEW OF TH E BINDING PRECEDENTS ON THIS ISSUE. 4. LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ASSESSEE HAD FIELD CERTAIN ADDITIONAL EVIDENCES BEFORE LD.CIT(A) RELATED TO IM PUGNED ADDITIONS. THESE DOCUMENTS WERE SUPPLIED TO THE ASSESSING OFFICER FO R HIS COMMENTS AND VERIFICATION. LD.CIT(A) OUT OF THREE TRANSACTIONS FOUND THAT ONE TRANSACTION WAS GENUINE OF RS.8,00,000/- RELATED TO SHRI K.L.AR ORA BUT THE LOAN OF RS.25,00,000/- AND RS. RS.20,00,000/- RECEIVED FROM SHRI R.N.ARORA AND MS. NEHA MADAN WAS FOUND TO BE UNEXPLAINED THEREFOR E, HE MADE ADDITIONS. ADMITTEDLY, THE ADDITION HAD BEEN MADE U/S 68 OF TH E ACT. THE ASSESSEE WAS REQUIRED TO PROVE TONE OF THE IDENTITY OF THE CREDI TORS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS. IT IS THE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE I TS ONUS TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE PERSONS GIV ING UNSECURED LOANS. TO PROVE THE GENUINENESS OF THE TRANSACTION, IT IS CAS E OF THE ASSESSEE THAT IT HAS SUPPLIED EVIDENCE IN THE FORM OF BANK STATEMENT HENCE, THE TRANSACTION WAS GENUINE AND WITH REGARD TO THE CREDITWORTHINESS , INCOME TAX RETURN AND THE PAN NO. OF THE CREDITOR WERE GIVEN TO THE ASSES SING OFFICER. THE ITA NO. 3149/DEL/2017 5 | P A GE ASSESSING OFFICER DID NOT ACCEPT THESE DOCUMENTS AN D PROCEEDED TO MAKE ADDITION WITHOUT MAKING ANY INDEPENDENT INQUIRY BY HIMSELF. WE FIND MERIT INTO THIS CONTENTION OF THE ASSESSEE AS FROM THE RE CORDS, IT IS EVIDENT THAT THE ASSESSING OFFICER HAD NOT ISSUED ANY NOTICE TO THE CREDITORS. THE RELEVANT FINDINGS OF THE ASSESSING OFFICER IN PARAS 3 & 4 OF HIS ASSESSMENT ORDER ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CLARITY:- 3. TO SUBSTANTIATE THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, NEW DELHI THAT CERTAIN PERSONS, CALLED BENEFI CIARIES, HAS RESORTED TO MONEY LAUNDERING BY GIVING UNACCOUNTED CASH TO P ERSONS CALLED ENTRY OPERATORS & IN TURN TAKING FROM THEM CHEQUES/DDS IN THE GARB OF SHARE APPLICATION MONEY, UNSECURED LOANS OR SALE PROCEEDS OF NONEXISTENT GOODS THEREBY PLOUGHING BACK UNDECLARED CASH INTO I TS ACCOUNTS/BUSINESS, THE ASSESSEE COMPANY WAS ASKED TO FILE THE CONFIRMATIONS OF ALL THE UNSECURED LOANS RAISED DUR ING THE FINANCIAL YEAR, ALONG WITH LEDGER ACCOUNT, COPY OF RETURN AND BANK STATEMENTS OF THE LENDERS. IN RESPONSE THE ASSESSEE COMPANY HAS S UBMITTED INFORMATION IN RESPECT OF PARTIES MENTIONED BELOW V IDE ITS LETTERS DATED 18.02.2013, 28.02.2013, & 06.03.2013: TABLE-I S.NO. NAME OF LENDER PARTY PAN NO. & ADDRESS AMOUNT (RS.) CLOSING BALANCE AS ON 31.03.2005 1. K.L.ARORA ADJPA2623D 800000 800000 2. NEHA MADAN AEPPM7026L 2000000 2000000 3. R N ARO RA AAKPA5265H 2500000 2500000 4. ARUNA MALHAN AHVPM7935L 86075 86075 5. DEVI DASS MALHAN AHVPM7951J 10931075 10931075 6. MALHAN BUILDERS AAAFM8130D 2007000 2007000 7. MALHAN CONSTRUCTIONS AAJFM3366L 8622533 8622533 8. MANISH MALHAN AIDPM5790Q 4731075 4731075 ITA NO. 3149/DEL/2017 6 | P A GE 9. N K MALHAN AHVPM7964R 350000 350000 10. RAJIV MALHAN AJSPM2713K 4755000 4755000 4. A PERUSAL OF SUBMISSIONS RECEIVED FROM THE ASSES SEE COMPANY REVEALS THAT IN THE NAME OF CONFIRMATIONS FROM LEND ERS ASSESSEE COMPANY HAS ONLY FILED ONE PAGE STANDARD PROFORMA C LAIMED TO BE CONFIRMATION OF THE UNSECURED LOANS OBTAINED FROM T HE SAID PARTIES. THEREFORE, THE INFORMATION IN RESPECT OF THE PARTIE S LISTED BELOW IS INADEQUATE TO PROVE THEIR GENUINENESS & CREDITWORTH INESS:- TABLE-II S.NO. NAME OF LENDERS PAN NO. & ADDRESS AMOUNT (RS.) CLOSING BALANCE AS ON 31.03.2005 1. K.L.ARORA ADJPA2623D 800000 800000 2. NEHA MADAN AEPPM7026L 2000000 2000000 3. R N ARORA AAKPA5265H 2500000 2500000 TOTAL 5300000 5300000 4.1. FURTHER VERIFICATION REVEALS THAT THE PAN MENT IONED IN THE CONFIRMATION OF MS. NEHA MADAN IS INVALID AND HENCE , THE PARTY MS. NEHA MADAN IS TREATED AS, NON EXISTING. HOWEVER, T HE REMAINING CONFIRMATIONS FILED BY THE ASSESSEE COMPANY ACCOMPA NIED WITH THE LEDGER ACCOUNT AND COPY OF ACKNOWLEDGEMENT OF ROI O F THE LENDING PARTIES, WHEREAS COPY OF THEIR BANK STATEMENT FOR T HE RELEVANT PERIOD IS STILL MISSING. 6. THE ASSESSING OFFICER OUGHT TO HAVE MADE NECESSA RY INQUIRY FROM THE LENDERS REGARDING THEIR SOURCE OF INCOME ETC. WE, THEREFORE, CONSIDERING THE TOTALITY OF FACT HEREBY, SET ASIDE THE FINDING OF L OWER AUTHORITIES QUA AMOUNT RECEIVED FROM MS. NEHA MADAN AND SHRI R.N.ARORA AND RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR DECISION AFRESH. NEEDLESS TO SAY THAT ASSESSING OFFICER WOULD PROVIDE REASONABLE OPPORTUN ITY TO THE ASSESSEE. THE ASSESSING OFFICER SHALL CAUSE INQUIRY FROM THE LEND ERS AND RECORD A CLEAR ITA NO. 3149/DEL/2017 7 | P A GE FINDING REGARDING GENUINENESS AND CREDITWORTHINESS OF THE LENDERS. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTI CAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 11 TH OCTOBER, 2021. SD/- SD/- (R.K.PANDA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIA L MEMBER F{X~{TBT| T F{X~{TBT| T F{X~{TBT| T F{X~{TBT| T COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI