M/s. Shark Communication Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3212/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97874 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Accommodation entries; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH G BENCH G BENCH G BENCH G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI ABY T. VARKEY SHRI ABY T. VARKEY SHRI ABY T. VARKEY SHRI ABY T. VARKEY, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 3205/DEL/2012, 3206/DEL/2012, 3207/DEL/2012 & 3208/ DEL/2012 3205/DEL/2012, 3206/DEL/2012, 3207/DEL/2012 & 3208/ DEL/2012 3205/DEL/2012, 3206/DEL/2012, 3207/DEL/2012 & 3208/ DEL/2012 3205/DEL/2012, 3206/DEL/2012, 3207/DEL/2012 & 3208/ DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2002 2002 2002 2002 - -- - 03, 2004 03, 2004 03, 2004 03, 2004 - -- - 05, 05, 05, 05, 2005 2005 2005 2005 - -- - 06 & 2003 06 & 2003 06 & 2003 06 & 2003 - -- - 04 0404 04 M/S SWEN TELEVISION LIMITED, M/S SWEN TELEVISION LIMITED, M/S SWEN TELEVISION LIMITED, M/S SWEN TELEVISION LIMITED, H HH H- -- -108, IIND FLOOR, 108, IIND FLOOR, 108, IIND FLOOR, 108, IIND FLOOR, NEW ASIATIC BUILDING, NEW ASIATIC BUILDING, NEW ASIATIC BUILDING, NEW ASIATIC BUILDING, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAKCS4209E. PAN : AAKCS4209E. PAN : AAKCS4209E. PAN : AAKCS4209E. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -9, 9,9, 9, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDE NT) ITA NO ITA NO ITA NO ITA NO .3212/DEL/2012 .3212/DEL/2012 .3212/DEL/2012 .3212/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2007 2007 2007 2007 - -- - 08 0808 08 M/S SHARK COMMUNICATION M/S SHARK COMMUNICATION M/S SHARK COMMUNICATION M/S SHARK COMMUNICATION PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, H HH H- -- -108, IIND FLOOR, 108, IIND FLOOR, 108, IIND FLOOR, 108, IIND FLOOR, NEW ASIATIC BUILDING, NEW ASIATIC BUILDING, NEW ASIATIC BUILDING, NEW ASIATIC BUILDING, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACS4876P. PAN : AAACS4876P. PAN : AAACS4876P. PAN : AAACS4876P. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -9 99 9, ,, , NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT S BY : SHRI K. SAMPATH, ADVOCATE. RESPONDENT BY : SMT. SUNITA KEJRIWAL, CIT - DR. DATE OF HEARING : 03.11.2015 03.11.2015 03.11.2015 03.11.2015 DATE OF PRONOUNCEMENT : 17.11.2015 17.11.2015 17.11.2015 17.11.2015 ORDER ORDER ORDER ORDER PER G.D. PER G.D. PER G.D. PER G.D. AGRAWAL, VP AGRAWAL, VP AGRAWAL, VP AGRAWAL, VP : :: :- -- - THESE APPEALS BY THE ASSESSEES FOR THE ASSESSMENT YEARS 2002- 03, 2003-04, 2004-05, 2005-06 & 2007-08 ARE DIRECTE D AGAINST THE ORDER OF LEARNED CIT(A)-XXXII, NEW DELHI DATED 17 TH FEBRUARY, 2012 AND 5 TH MARCH, 2012. ITA-3205/D/2012 & 4 OTHERS 2 2. THE APPEALS UNDER CONSIDERATION ARE DELAYED BY 4 3 DAYS. IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT IDENTICAL I SSUE HAS BEEN CONSIDERED BY THE ITAT IN THE CASE OF GROUP COMPANI ES AND THE DELAY OF 43 DAYS HAS BEEN CONDONED BY THE ITAT. COPY OF THE ORDER IS FILED BEFORE US. 3. LEARNED CIT-DR, ON THE OTHER HAND, OBJECTED TO T HE CONDONATION OF DELAY AND SHE STATED THAT NO EVIDENCE IS BROUGHT ON RECORD BY THE ASSESSEE THAT THESE COMPANIES ALSO BELONGED TO THE S.K. GUPTA GROUP OF COMPANIES. SHE, THEREFORE, SUBMITTED THAT THE D ELAY SHOULD NOT BE CONDONED. 4. IN THE REJOINDER, IT WAS POINTED OUT BY THE LEAR NED COUNSEL THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HIMSELF HAS MENTIONED THAT THE ASSESSEE COMPANIES ARE THE COMPANIES BEING OPERATED AND CONTROLLED BY SHRI S.K. GUPTA. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSING OFFICER AT PAGE 19 PARAGRAPH 4.1 OF HIS O RDER HAS RECORDED THE FOLLOWING FINDING:- 4. INFERENCES: INFERENCES: INFERENCES: INFERENCES: I. I.I. I. IT IS PROVED BEYOND DOUBT ON THE BASIS OF DOCUMENTARY EVIDENCES, CONFESSIONAL STATEMENT OF SH RI S.K. GUPTA, THE MAIN PERSON CONTROLLING THE STATE O F AFFAIRS OF THE ASSESSEE, HUSBAND OF SMT. SAROJ GUPTA, DIREC TOR OF THE ASSESSEE COMPANY AND RESULTS OF THE ASSESSMENT THAT ASSESSEE IS ENGAGED IN THE ACCOMMODATION ENTRY BUSI NESS AND NOT DOING ANY GENUINE SALE & PURCHASE AS CLAIME D IN THE FINAL ACCOUNT STATEMENTS ANNEXED WITH RETURN OF INCOME. ITA-3205/D/2012 & 4 OTHERS 3 6. THUS, THE ASSESSING OFFICER HIMSELF HAS ARRIVED AT THE CONCLUSION AFTER CONSIDERING ALL THE DOCUMENTARY EVIDENCE AND THE STATEMENT OF SHRI S.K. GUPTA THAT HE WAS THE MAIN PERSON CONTROL LING THE AFFAIRS OF THE ASSESSEE COMPANY. THAT THE ITAT HAS CONSIDERED THE IDENTICAL ISSUE OF CONDONATION OF DELAY OF 43 DAYS IN THE CAS E OF ANOTHER COMPANY WHICH IS ALSO CLAIMED TO HAVE BEEN CONTROLL ED AND OPERATED BY SHRI S.K. GUPTA. IN THE SAID CASE, I.E., IN THE CASE OF M/S KONICHIVA BUILDERS PVT.LTD. VIDE ITA NO.3213/DEL/2012 AND OTH ERS, ORDER DATED 14 TH FEBRUARY, 2014, THE ITAT CONDONED THE DELAY OF 43 DAYS IN FILING THE APPEALS. 7. THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITAT I N THE CASES OF GROUP CONCERN, CONDONE THE DELAY OF 43 DAYS AND ADMIT THE APPEALS. 8. IN ALL THESE APPEALS, COMMON GROUNDS HAVE BEEN R AISED. THOUGH AS PER THE MEMORANDUM OF APPEAL VARIOUS GROUNDS WER E RAISED, BUT, AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE ONLY DISPUTED WITH REGARD TO THE ESTIMATION OF PROF IT FROM ENTRY BUSINESS. THE LEARNED COUNSEL POINTED OUT THAT THE ASSESSING OFFICER HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSE SSEE COMPANIES ARE ONE OF THE COMPANIES WHICH ARE BEING OPERATED A ND CONTROLLED BY SHRI S.K. GUPTA AND THE ASSESSING OFFICER ESTIMATED 2% NET PROFIT FROM THE ACCOMMODATION ENTRIES GIVEN BY THE ASSESSEE. H E POINTED OUT THAT THE ISSUE OF OTHER COMPANIES OF THE SAME GROUP HAS ALREADY BEEN DECIDED BY THE ITAT WHEREIN THE ITAT SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ALLOWING THE DEDUCTION OF THE EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING OF COMMISSION INCOME. COPIES OF THE ORDERS ARE FILED BEFORE US. 9. LEARNED CIT-DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF AUTHORITIES BELOW AND SHE STATED THAT THE ESTIMATIO N OF 2% OF THE PROFIT ITA-3205/D/2012 & 4 OTHERS 4 FROM ACCOMMODATION ENTRY BUSINESS IS QUITE FAIR AND REASONABLE AND NO FURTHER DEDUCTION FOR ANY EXPENDITURE INCURRED I S TO BE ALLOWED. THE 2% IS TAKEN BY THE ASSESSING OFFICER AS NET INC OME AND NOT THE GROSS COMMISSION. SHE FURTHER SUBMITTED THAT EVEN IF THE ITAT IS OF THE OPINION THAT SOME FURTHER DEDUCTION FOR THE EXPENDI TURE INCURRED IS TO BE ALLOWED, THEN SOME ESTIMATED DEDUCTION SAY .25% CAN BE ALLOWED AS A DEDUCTION INSTEAD OF SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RELEVANT MATERIAL PLACED BEFORE US. WE FIND THAT T HE ITAT, IN THE CASE OF GROUP CONCERN I.E. IN THE CASE OF M/S KONICHIVA BUILDERS PVT.LTD. IN ITA NO.3213/DEL/2012 CITED ABOVE, HELD AS UNDER:- 11. IN THIS CASE THE ASSESSEE COMPANYS DIRECTOR H AS AGREED THAT THE COMMISSION WAS TO THE TUNE OF 1.5% TO 2%. HENCE, ESTIMATION OF COMMISSION INCOME @ 2% CANNOT BE DISPUTED. HOWEVER, AT THE SAME TIME IT HAS ALSO BE EN SUBMITTED IN THE SAME STATEMENT THAT THE ASSESSEE H AS TO INCUR THE EXPENDITURE ON ACCOUNT OF SALARY, RENT BA NK CHARGES, CONVEYERS, TELEPHONE, WATER AND ELECTRICIT Y. HOWEVER, IT IS ALSO SETTLED THAT MERE SUBMISSION TH AT EXPENDITURE HAS BEEN INCURRED CANNOT LEAD TO ALLOWA NCE OF EXPENDITURE. ASSESSEE HAS TO PROVE WITH COGENT MAT ERIAL THAT THE EXPENDITURE HAS BEEN INCURRED TO EARN THE INCOME. IN THESE CIRCUMSTANCES WE REMIT THE ISSUE TO THE FI LE OF THE AO. THE ASSESSING OFFICER SHALL EXAMINE THE ASPECT OF ALLOWANCE OF EXPENDITURE ON THE BASIS OF COGENT MAT ERIALS TO BE SUBMITTED BY THE ASSESSEE. 11. SINCE THE FACTS OF THE APPEALS BEFORE US ARE ID ENTICAL, WE DEEM IT PROPER TO RESPECTFULLY FOLLOW THE ABOVE DECISION OF THE ITAT AND SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER FOR ALLOWING THE DEDUCTION FOR EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING OF COMMISSION INCOME IN THE LIGHT OF THE ABOVE DIRECTI ON OF THE ITAT. ITA-3205/D/2012 & 4 OTHERS 5 12. WITH REGARD TO THE GROUND NO.5 RAISED BY THE AS SESSEE IN THE CASE OF M/S SHARK COMMUNICATION PVT.LTD. OF ADDITIO N OF `10,00,000/- ON ACCOUNT OF ALLEGED SALES TO M/S RELIANCE INDUSTR IES LTD., IT IS OBSERVED THAT THE SAID ISSUE IS COVERED IN FAVOUR O F THE REVENUE BY THE EARLIER DECISION OF ITAT DATED 14 TH FEBRUARY, 2014 (SUPRA) PASSED IN THE CASE OF THE GROUP CONCERN. THE ITAT, IN THE AFORES AID ORDER, HELD AS UNDER:- 30. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT AUTHORITIES BELOW ON THE FAC TS AND CIRCUMSTANCES OF THE CASE HAVE HELD THAT THE STATEMENT/AFFIDAVIT OF THE ASSESSEE AFTER TWO MONTH S OF THE SEARCH WAS AN AFTER THOUGHT AND WAS NOT BACKED BY NECESSARY EVIDENCES ABOUT GENUINE AND NON-GENUINE BUSINESS. DURING THE APPELLATE PROCEEDINGS THE ASS ESSEE HAD NOT BEEN ABLE TO COUNTER ANY OF THE FINDINGS OF THE AUTHORITIES BELOW WITH SUITABLE EVIDENCE. WE FURTH ER NOTE THAT THE ADDITION HAS BEEN MADE ONLY ON PROTECTIVE BASIS. IN THIS REGARD, LD.CITS RELIANCE UPON THE CASE LAW FROM THE APEX COURT IN THE CASE OF LALJI HARIDAS V. ITO 43 I TR 387 (SUPRA) IS GERMANE. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), ACCORD INGLY, WE UPHOLD THE SAME. 13. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF IT AT IN THE CASE OF GROUP CONCERN, WE UPHOLD THE IMPUGNED ORDER OF LEAR NED CIT(A) ON THIS ISSUE AND DISMISS GROUND NO.5 OF THE ASSESSEES APP EAL. 14. IN THE RESULT, THE APPEALS OF M/S SWEN TELEVISI ON LIMITED ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSE, WHILE THE APPEAL OF M/S SHARK COMMUNICATION PRIVATE LIMITED IS DEEMED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 17.11.2015 . SD/- SD/- (ABY T. VARKEY (ABY T. VARKEY (ABY T. VARKEY (ABY T. VARKEY ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. ITA-3205/D/2012 & 4 OTHERS 6 COPY FORWARDED TO: - 1. APPELLANT : M/S SWEN TELEVISION LIMITED AND M/S SWEN TELEVISION LIMITED AND M/S SWEN TELEVISION LIMITED AND M/S SWEN TELEVISION LIMITED AND M/S SHARK COMMUNICATION PRIVATE LIMITED, M/S SHARK COMMUNICATION PRIVATE LIMITED, M/S SHARK COMMUNICATION PRIVATE LIMITED, M/S SHARK COMMUNICATION PRIVATE LIMITED, H HH H- -- -108, IIND FLOOR, NEW ASIATIC BUILDING, 108, IIND FLOOR, NEW ASIATIC BUILDING, 108, IIND FLOOR, NEW ASIATIC BUILDING, 108, IIND FLOOR, NEW ASIATIC BUILDING, CONNAUGHT PLACE, NEW DELHI CONNAUGHT PLACE, NEW DELHI CONNAUGHT PLACE, NEW DELHI CONNAUGHT PLACE, NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. RESPONDENT : ASSISTANT COMMISSIONER OF INCOME TA X, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -9, NEW D 9, NEW D 9, NEW D 9, NEW DELHI. ELHI. ELHI. ELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR