M/s. Dwarka Properties Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3229/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5449 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-02-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 22-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NIDHI SRIVASTAVA
• Assessee Lawyers: ROHIT JAIN
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

ITA NO. 3229/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3229/DEL/2012 A.Y. : 2004-05 M/S DWARKA PROPERTIES PVT LTD., B-9/6345, VASANT KUNJ, NEW DELHI VS. ACIT, CENTRAL CIRCLE - 9, NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. ROHIT JAIN, ADV. DEPARTMENT BY : MRS. NIDHI SRIVASTAVA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-XXXII), NEW DELHI DATED 19.4.2012 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE ISSUE RAISED IS THAT LD. CIT(A) ERRED IN UP HOLDING THE ADDITION MADE U/S. 68 OF THE I.T. ACT ON ACCOUNT OF UNSECURED LOAN OF RS. 6,04,442/- PAYABLE TO M/S USHA MARKETING PVT . LTD.. 3. IN THIS CASE AO NOTED THAT ASSESSEE HAD SHOWN UN SECURED LOAN OF RS. 6,04,442/- FROM USHA MARKETING PVT. LTD.. BU T THERE WAS NO CORRESPONDING ENTRY IN THE NAME OF M/S DWARKA PROPE RITES PVT. LTD. IN THE BALANCE SHEET AS ON 31.3.2004 OF M/S USHA MA RKETING PVT. LTD. ON QUERY IN THIS REGARD, ASSESSEE RESPONDED AS UND ER:- ITA NO. 3229/DEL/2012 2 ON THE ABOVE MENTIONED, WE WISH TO MENTION THAT M/S USHA MARKETING PVT. LTD. HAD OWED RS. 6,04,442/- TO M/S BURR BROWN COMMUNICATIONS PVT. LTD.. DURING THE YEAR 2003-04, AS PER AGREEMENT BETWEEN M/S BURR BROWN COMMUNICATIONS PVT. LTD. AND M/S DWARKA PROPERTIES PVT. LTD., THE LIABILITY OF M/S USHA MARKETING PVT. LTD. OF RS. 6,04,442/- WAS TAKEN OVE R BY M/S DWARKA PROPERTIES PVT. LTD., 3.1 AO WAS NOT SATISFIED WITH THE ABOVE. HE CON CLUDED AS UNDER:- THE ASSESSEE COMPANY FAILED TO FILE THE COMPANY OF LOAN ACCOUNT AND WAS UNABLE TO JUSTIFY THE CLAIM . NEITHER ANY DOCUMENTARY EVIDENCE WAS FILED NOR ANY CONFIRMATION FROM M/S USHA MARKETING PVT LTD. THE ASSESSEE COMPANY COULD NOT RECONCILED THE ACCOUNT AS WELL AS FAILED TO PROVIDE THE REASONS F OR THE DIFFERENCE. IN VIEW OF THESE FACTS, THE LOAN O F RS. 6,04,442/- IS TREATED AS UNEXPLAINED CREDIT IN THE BOOKS OF ASSESSEE AND AS SUCH ADDED TO ASSESSEE INCOME AS UNEXPLAINED INCOME. 4. BEFORE THE LD. CIT(A) ASSESSEE FILED THE ADDITIO NAL DOCUMENTS WHICH WAS REMANDED BY THE LD. CIT(A) TO THE AO AND THE REMAND REPORT WAS OBTAINED. LD. CIT(A) CONSIDERED THE IS SUE AND DECLINED TO GIVE THE RELIEF TO THE ASSESSEE. HE HELD THAT N O CONFIRMATION FROM M/S USHA MARKETING PVT. LTD. COULD BE PRODUCED EVEN DURING THE REMAND PROCEEDING. HE HELD THAT THE AMOUNT OF RS. 6 ,04,442/- AS CREDITED IN THE ASSESSEES BOOKS OF ACCOUNTS DURING THE RELEVANT PREVIOUS YEAR AS LOAN TAKEN FROM M/S USHA MAREKTING PVT. LTD. HAS ITA NO. 3229/DEL/2012 3 REMAINED UNEXPLAINED AND THE ADDITION MADE BY THE AO WAS UPHELD. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US.. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. THE FACTS OF THE CASE ARE THAT ASSESSEE HAS TAKEN OVER THE LOAN LIABILITY OUTSTANDING IN THE NAME OF M/S BURR BROWN COMMUNICA TION LTD. IN THE BOOKS OF M/S USHA MARKETING PVT. LTD. WITH THE UNDERSTANDING THAT IT WILL PAY ALL THE OUTSTANDING AMOUNT TO THE CREDITORS AT AN AGREED FIGURE WHICH WILL BE AFFORDED AFTER BARGAIN. M/S BURR BROWN COMMUNICATION PVT. LTD. WAS TO PAY THE ASSESSEE THE FINAL AMOUNT AFTER BARGAIN WITH 15% COMMISSION ON THE AMOUNT GOT WAIVED FROM THE CREDITOR. 7. IN THIS REGARD, LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAS PASSED ONLY THE FOLLOWING ENTRIES IN H IS BOOKS OF ACCOUNTS:- M/S BURR BROWN COMMUNICATION PVT. LTD. DR. 6,04,44 2/- TO M/S USHA MARKETING PVT. LTD. 6,04,442/ - 7.1 FROM THE ABOVE, LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAS NOT INCURRED ANY LIABILITY AS SUCH , NOR IT HAS PURCHASED ANY GOODS OR SERVICES, NOR IT HAS TAKEN A NY CASH LOAN. HE CLAIMED THAT THE ABOVE ENTRY WAS MADE BY THE ASSESS EE ONLY AS PER THE TERMS OF AGREEMENT AND THE ASSESSEE WAS ONLY EN TITLED TO 15% COMMISSION. HENCE, LD. COUNSEL PLEADED THAT THE RE IS NO CASE OF ADDITION OF RS. 6,04,442/- U/S. 68 OF THE I.T. ACT. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT IF THE ASSESSEE HAS ONLY PASSED CONTRA ENTRIES IN HIS BOOKS OF ACCOUNT AND ASSESSEE HAS NOT INCURRED ANY LIABILITY IN THE ACTUAL SENSE, THEN THERE CANNOT BE ANY CASE OF ADDITION U/S. 68 O F UNEXPLAINED ITA NO. 3229/DEL/2012 4 CREDIT. ASSESSEE WAS ONLY ENTITLED TO 15% COMMISS ION ON THE AMOUNT GOT WAIVED FROM THE CREDITORS. IN THESE CIR CUMSTANCES, ASSESSEE HAS MADE THE SUPERFLUOUS CONTRA ENTRIES IN HIS BOOKS OF ACCOUNTS. HENCE, ADDITION U/S. 68 IS NOT WARRANTE D. HOWEVER, THE SCHEME OF ENTRY AS ABOVE AS CLAIMED BY THE LD. COU NSEL OF THE ASSESSEE NEEDS TO BE EXAMINED BY THE AO FOR ITS VER ACITY. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF T HE AO TO EXAMINE THE VERACITY OF THE SCHEME OF ENTRY AS MENTIONED BY TH E LD. COUNSEL OF THE ASSESSEE AS ABOVE. IF THE SAME IS CORRECT, NO ADDITION U/S. 68 IS LIABLE TO BE LEVIED IN THIS REGARD. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21/2/2014. SD/- SD/- [ [[ [U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI] ]] ] [SHAMIM [SHAMIM [SHAMIM [SHAMIM YAHYA] YAHYA] YAHYA] YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 21/2/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 3229/DEL/2012 5