Pearl Studios Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3156/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9272 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VED PRAKASH MISHRA
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained investment; Depreciation; Search and seizure; Document seized; Wrong claim; Corroborative evidences; Documents seized
• Section: 13; 68; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 3156/DEL/2016 [ASSESSMENT YEAR: 2010-11] & ITA NO. 3157/DEL/2016 [ASSESSMENT YEAR: 2011-12] PEARL STUDIOS PVT. LTD VS. THE DY. C.I.T. FLAT NO. 909, KAILASH BUILDING CENTRAL CIRCLE - 13 K.G. MARG, NEW DELHI NEW DELHI PAN: AAFCP 0886 P [APPELLANT] [RESPONDENT] DATE OF HEARING : 08.01.2020 DATE OF PRONOUNCEMENT : 09.01.2020 ASSESSEE BY : NONE REVENUE BY : SHRI VED PRAKASH MISHRA, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THE ABOVE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX [ APPEALS] - 25, NEW DELHI DATED 29.02.2016 PERTAINING TO ASSESSMENT YEARS 2010-11 2 AND 2011-12. SINCE BOTH THESE APPEALS INVOLVE COMMO N ISSUES, THEREFORE, THESE ARE BEING DISPOSED OF BY THIS COMM ON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. WE DECIDED TO PROCEED EXPARTE. 3. HAVING HEARD THE LD. DR AT LENGTH, WE HAVE CAREF ULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 3156/DEL/2016 [A.Y 2010-11] 4. BRIEFLY STATED, THE FACTS OF THE CASE IN ARE THA T SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1 961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] WA S CONDUCTED ON M/S CENTURY COMMUNICATION GROUP OF CASES ON 11.0 3.2011. THE ASSESSEE WAS ALSO COVERED U/S 132 OF THE ACT. STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE, I N COMPLIANCE TO WHICH, THE ASSESSEE CHOSE NOT TO FILE RETURN OF INCOME. HOWEVER, THE ASSESSEE FILED OBJECTIONS VID E ITS LETTER DATED 26.10.2012 IN CONNECTION WITH THE PROC EEDINGS. 3 5. THE OBJECTIONS WERE DISMISSED BY THE ASSESSING O FFICER VIDE LETTER DATED 01.11.2012. THE ASSESSEE ONCE AG AIN FILED OBJECTIONS VIDE LETTER DATED 06.11.2012, WHICH WERE ONCE AGAIN REJECTED BY THE ASSESSING OFFICER ON 22.02.20 13. FINALLY, THE ASSESSEE SUBMITTED ITS RETURN OF INCOM E ON 27.02.2013 DECLARING TOTAL INCOME AT RS. NIL. DETA ILED QUESTIONNAIRES WERE ISSUED AND SERVED UPON THE ASS ESSEE. HOWEVER, THE ASSESSEE DID NOT FILE ANY REPLY IN RES PONSE TO THESE QUESTIONNAIRES. 6. THE ASSESSING OFFICER PROCEEDED TO COMPLETE ASSE SSMENT AS PER MATERIAL AVAILABLE ON RECORD AND AFTER ANALY SING THE SEIZED MATERIAL/DOCUMENTS, THE ASSESSING OFFICER FO UND THAT THE ENTIRE SHARE CAPITAL IS HIT BY PROVISIONS OF SE CTION 68 OF THE ACT AND MADE ADDITION OF RS. 68 CRORES AS UNEXP LAINED CASH CREDIT. THE ASSESSING OFFICER FURTHER FOUND TH AT THE ASSESSEE HAS CLAIMED BOGUS CLAIM OF DEPRECIATION WH ICH WAS DENIED AND ADDITION OF RS. 17.54 CRORES WAS MADE. 7. AS PER THE SEIZED DOCUMENTS, THE ASSESSING OFFIC ER FOUND THAT THE ASSESSEE HAS ACQUIRED THREE PROPERTI ES AND NO SUPPORTING EVIDENCES/EXPLANATIONS HAVE MADE IN RESP ECT OF 4 ACQUISITION OF THESE PROPERTIES. ACCORDINGLY, ADDI TION OF RS. 14.92 CRORES WAS MADE AS UNEXPLAINED INVESTMENT. 8. THE ASSESSING OFFICER FURTHER NOTICED THAT THE A SSESSEE HAS BOOKED PURCHASES OF ASSETS OF RS. 161.01 CRORES FROM VARIOUS SUPPLIERS. SINCE NO BILLS WERE PRODUCED FO R VERIFICATION, THE ENTIRE PURCHASES OF FIXED ASSETS WERE TREATED AS BOGUS AND ADDITION OF RS. 161.01 CRORES WAS MADE. 9. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 10. DURING THE APPELLATE PROCEEDINGS ALSO, THE ASSE SSEE COULD NOT JUSTIFY THE GENUINENESS OF THE CASH CREDITS NOR COU LD FURNISH ANY EVIDENCES IN SUPPORT OF ITS CLAIM OF PURCHASES OF I TS ASSETS. 11. WHILE UPHOLDING THE ADDITION MADE U/S 68 OF THE ACT, THE LD. CIT(A) HELD AS UNDER: 34.8.2 THE ABOVE DECISION OF THE HONBLE DELHI HIG H COURT HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT IN NAVOD AYA CASTLES PVT. LTD. VS. CIT (2015) 56 TAXMANN.COM 18 (SC). THE HONBLE 5 SUPREME COURT HEARD THE PETITION OF THE ASSESSEE, C ONDONED THE DELAY AND CLEARLY HELD IN THE CONCLUDING PARA THAT WE DO NOT SEE ANY MERIT IN THIS SPECIAL LEAVE PETITION, WHICH IS HEREBY DISMISSED. 7.34.8.3 IN THE INSTANT CASE, THE APPELLANT COMPANY FAILED TO SATISFY THE PRIMARY REQUIREMENTS IE. THE IDENTIFICA TION OF THE CREDITORS/ SHAREHOLDERS, CREDITWORTHINESS OF CREDIT ORS/ SHAREHOLDER AND THE GENUINENESS OF THE TRANSACTION, AND FAILED MISERABLY WHEN NOT THE MATTER WAS LOOKED INTO IN DE PTH HAVING REGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. 7.34.9 IN VIEW OF THE FACTUAL MATRIX OF THE CASE AN D THE JUDICIAL DECISIONS DISCUSSED ABOVE, IT IS OBVIOUS THAT THE A PPELLANT COMPANY HAS FAILED TO DISCHARGE THE ONUS UPON IT AND HENCE THE CLAIMED SHARE CAPITAL AND SHARE PREMIUM AMOUNTING TO RS.68, 00,00,000/- HAS TO BE TAXED AS UNEXPLAINED CREDITS U/S 68 OF TH E INCOME TAX ACT, 1961. ACCORDINGLY, THE ADDITION MADE BY GROUND NO. 8 OF THE APPEAL IS REJECTED . 12. ADDITION OF RS. 14.92 CRORES AS UNEXPLAINED INV ESTMENT IN PROPERTIES WAS UPHELD AS UNDER: 6 7.35.1 ADDITION OF RS. 14,92,83,642/-, WAS MADE O N ACCOUNT OF INVESTMENTS IN THE PROPERTY BEARING PROPERTY ON 16 LH FLOOR, SECTOR-5, INFINITY BUSINESS PARK, BLOCK- EP & GP, B IDHNA NAGAR, SALT LAKE CITY, KOLKATTA (8454 SQ. FEET) [RS.4,20,93,611/-] (B) PROPERTY ON 16 TH FLOOR, SECTOR-5, INFINITY BUSINESS PARK, BLOCK- EP & GP, BIDHNA NAGA R, SALTLAKE CITY, KOLKATTA (12,774 SQ. FEET) [RS.6,36,01,475/-] AND (C) PROPERTY ON 16 LH FLOOR, SECTOR-5, INFINITY BUSINESS PARK, BLOCK- EP & GP, BIDHNA NAGAR, SALTLAKE CITY, KOLKAT TA (8,217 SQ. FEET) [RS.4,35,88,556/-] TOTALING (RS. 14,92,83,642) THE ASSESSEE COMPANY DID NOT PROVIDE ANY DETAILS OR EXP LANATIONS REGARDING THE PROPERTIES OR THE INVESTMENT THEREIN IN THE ASSESSMENT PROCEEDING NOR IN APPELLATE PROCEEDINGS. THE APPELLANT HAD MORE THAN SUFFICIENT OPPORTUNITY, PAR TICULARLY DURING THE APPELLATE PROCEEDINGS, BUT THE APPELLANT EVADED COMPLIANCE IN THE APPELLATE PROCEEDINGS AND NO DETA ILS OR EXPLANATIONS REGARDING THE THREE PROPERTIES OR THE SOURCE OF INVESTMENT THEREIN WERE GIVEN. HENCE NO RELIEF CAN BE ALLOWED TO THE APPELLANT ON THIS ISSUE. ACCORDINGLY, THE AD DITIONS MADE TOWARDS UNACCOUNTED INVESTMENT IN THE ABOVEMENTIONE D THREE PROPERTIES AMOUNTING TO RS. 14,92,83,642/- AR E HEREBY CONFIRMED. THIS GROUND OF APPEAL IS ALSO REJECTED. 13. ADDITION ON ACCOUNT OF BOGUS PURCHASES ON FIXED ASSETS WAS CONFIRMED AS UNDER: 7 7.36.5 DURING THE APPELLANT PROCEEDINGS ALSO, T HE ASSESSEE COMPANY COULD NOT JUSTIFY THE CLAIMED PURCHASES. IT IS SEEN THAT THE ASSESSEE COMPANY WAS REQUIRED TO PRODUCE T HE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS, BUT THE SAME WERE NOT PRODUCED. EVEN DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAD MORE THAN SUFFICIENT OPPORTUNITY TO PRODUCE THE BOOKS OF ACCOUNT AND TO JUSTIFY AND PROVE THE GENUINENESS OF THE CLAIMED PURCHASES AND TRANSACTIONS, BUT THE SAME WAS NOT DONE. NO JUSTIFI CATION COULD BE GIVEN BY THE APPELLANT FOR ITS CLAIMS REGA RDING THE INVESTMENTS MADE IN THE PURCHASES. THE ADDITIONS MA DE ARE ON THE BASIS OF THE SEARCH & SEIZURE OPERATION U/S 132 (1) AND THE ENQUIRIES MADE, WHICH THE APPELLANT HAS BEE N UNABLE TO REBUT. THE ADDITIONS MADE ARE FULLY JUSTIFIED ON THE BASIS OF THE FACTS BROUGHT OUT IN THE ASSESSMENT ORDER. N OTHING COULD BE BROUGHT ON RECORD IN THE APPELLATE PROCEED ING, BY THE APPELLANT COMPANY AGAINST THE ADDITION OF RS 161,01,10,888/-. 7.36.6 IT HAS BEEN CLAIMED THAT THE OBSERVATION S OF THE LD. ASSESSING OFFICER ARE EITHER FACTUALLY INCORRECT OR ARE LEGALLY UNTENABLE, WITHOUT SPECIFYING WHETHER THEY ARE FACT UALLY INCORRECT OR LEGALLY UNTENABLE, AND THAT TOO WITHOU T ANY EVIDENCE OR MATERIAL IN SUPPORT OF THE CLAIM OF THE APPELLANT. IT HAS ALSO BEEN CLAIMED THAT THE INVESTMENTS IN TH E SAID 8 PLANT & MACHINERY WERE DULY ACCOUNTED FOR/ RECORDED IN THE BOOKS OF ACCOUNT AND WERE REFLECTED IN THE BALANCE SHEET. IF IT WAS SO THEN, THE APPELLANT HAD MORE THAN SUFFICI ENT OPPORTUNITY IN THE APPELLATE PROCEEDINGS TO PRESENT ITS CLAIM ON THE BASIS OF SUCH BOOKS OF ACCOUNT AND OTHER DOC UMENTS, EVIDENCE, MATERIAL ETC, BUT THE APPELLANT EVADED SU CH OPPORTUNITY: IN VIEW OF THE FACTS OF THE CASE, NO R ELIEF CAN BE ALLOWED ON THIS ISSUE AND THE ADDITIONS MADE BEING FULLY JUSTIFIED ARE TO BE UPHELD. THE ADDITION OF THE AMO UNT OF RS. 161,01,10,888/- IS TREATED AS UNEXPLAINED INVESTMEN T OF THE ASSESSEE COMPANY IS HEREBY CONFIRMED. THE GROUND OF APPEAL NO. 10 IS REJECTED. 14. SINCE THE FIXED ASSETS WERE TREATED AS BOGUS, D ENIAL OF DEPRECIATION WAS ALSO CONFIRMED. 15. WE HAVE CAREFULLY PERUSED THE FINDINGS OF THE L D. CIT(A). AS MENTIONED ELSEWHERE, NONE APPEARED ON BEHALF OF THE ASSESSEE. SINCE NOTHING HAS BEEN PROVIDED TO US BY THE ASSESSEE, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GRO UNDS RAISED BY THE ASSESSEE STAND DISMISSED. 9 ITA NO. 3157/DEL/2016 [A.Y 2011-12] 16. FIRST ADDITION IS ON ACCOUNT OF BOGUS CLAIM OF DEPRECIATION. SINCE IN ITA NO. 3156/DEL/2016 FOR A.Y 2010-11 WE HAVE CO NFIRMED THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF FIXED ASSETS, THE CLAIM OF DEPRECIATION THEREON IS AUTOMATICALLY DENIED. 17. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED DEPRECIATION OF RS. 28,22,86,033/-. THE ASSESSEE WAS ASKED TO FURN ISH DETAILED COMPUTATION OF DEPRECIATION ALONGWITH DATE-WISE DET AILS OF ADDITIONS IN FIXED ASSETS AND PRODUCE ORIGINAL BILLS AND CHALLAN S FOR VERIFICATION. ON RECEIVING NO PLAUSIBLE REPLY, THE ASSESSING OFFICER DISALLOWED DEPRECATION OF RS. 6,43,74,650/- AND MADE ADDITION OF RS. 6.43 CRORES. 18. PROCEEDING FURTHER, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT FOR THE YEA R UNDER CONSIDERATION. FROM THE PERUSAL OF THE RETURN OF I NCOME, THE ASSESSING OFFICER FURTHER FOUND THAT THE ASSESSEE HAS NOT EVE N GOT ITS BOOKS OF ACCOUNT AUDITED. IN THE ABSENCE OF BOOKS OF ACCOUN T, GENUINENESS OF 10 THE EXPENSES CLAIMED AT RS. 115.89 CRORES COULD NOT BE VERIFIED. THE ASSESSING OFFICER ACCORDINGLY, MADE ADDITION OF RS. 115.89 CRORES. 19. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 20. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. SINCE IN A.Y 2010-11 [SUPRA] WE HAVE TREATED THE ENTIRE PURCHASES OF FIXED ASSETS AS BOGUS, THERE IS NO QUESTION OF ANY ALLOWANCE OF DEPRECIATION. IN RESPECT OF OTHER ASS ETS, WE FIND THAT NO SUPPORTING EVIDENCES HAVE BEEN FURNISHED AND, THERE FORE, DENIAL OF DEPRECIATION IS JUSTIFIED. 21. IN SO FAR AS CLAIM OF EXPENDITURE IS CONCERNED, THE ONUS IS UPON THE ASSESSEE TO FURNISH NECESSARY EVIDENCES IN SUPP ORT OF ITS CLAIM OF EXPENDITURE. SINCE NO DOCUMENTARY EVIDENCES HAVE B EEN FURNISHED, THE ADDITION ON ACCOUNT OF NON AVAILABILITY OF BILL S IN RESPECT OF EXPENSES IS CONFIRMED. ACCORDINGLY, ALL THE GROUND S RAISED BY THE ASSESSEE STAND DISMISSED. 11 22. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE IN ITA NO. 3156 & 3157/DEL/2016 ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09.01 .2020. SD/- SD/- (BHAVNESH SAINI) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09 TH JANUARY, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 12 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER