ITO, New Delhi V. M/s Gopi Pvt. Ltd., New Delhi

ITA 3320/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87144 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-03-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 22-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH CHANDRA
• Assessee Lawyers: T VAGANTHAN
• Keywords: Unexplained cash credit; Corroborative evidences; Accommodation entries
• Section: 133(6); 131; 68

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL IN (DELHI BENCH C NEW DELHI) BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER AND SHRI C.M.GARG, JUDICIAL MEMBER ITA NO. 3320/DEL/2011 (ASSESSMENT YEAR: 2002-03) ITO, VS . GOPI PVT. LTD. COY, 18, RAJASTHAN UDYOG NAGAR WARD-12(2), ROOM NO. 337, GTK ROAD C.R. BUILDING NEW DELHI NEW DELHI PAN : AAACG0949F (APPLICANT) (RESPONDEN T) ASSESSEE BY : SH T. VAGANTHAN, SR. DR REVENUE BY : SH. DINESH CHANDRA, ADV. DATE OF HEARING : 17.03.2015 DATE OF PRONOUNCEMENT : 26 .03.2015 ORDER PER C.M.GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XXVI NEW DELHI DATED 19.4.2011 IN APPEAL NO. 297/2009-10 FO R AY 2002-03. ITA NO. 3320/ DEL/2011 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 20,02,200 0/- ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE I.T.AC T. IGNORING THE FOLLOWING FATE :- (V) ALL COMPANIES FROM WHOM THE ASSESSEE RECEI VED SHARE APPLICATION MONEY ARE PROVIDERS OF ACCOMMODATION EN TRIES. (VI) ALL COMPANIES (ACCOMMODATION ENTRIES PROV IDERS) FIRST DEPOSITED CASH OF THE SAME AMOUNT IN THEIR BANK ACC OUNTS AND THEN ISSUED CHEQUES TO THE ASSESSEE. (VII) IN THEIR STATEMENTS THE ACCOMMODATION EN TRIES PROVIDERS HAVE CATEGORICALLY STATED THAT WHEN THEY PROVIDED CHEQUES IN LIEU OF CASH TO THE ASSESSEE, THEY ALSO SIGNED SAME PAPER, WHICH WERE HANDED OVER TO THESE BENEFIC IARIES AND THESE PAPER MIGHT BE CONFIRMATION DEEDS OR GIF TS ETC. (VIII) THE ACCOMMODATION ENTIRES PROVIDERS HAVE GIVEN STATEMENTS UNDER OATH TO THE INCOME TAX AUTHORITIES THAT THEY ARE ENTRY PROVIDERS AND HAVE RECEIVED CASH FROM BENEFICIARIES BEFORE ISSUING CHEQUES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A) HAS FAILED TO APPRECIATE THAT FACTS OF THIS CASE AR E CLEARLY DISTINGUISHABLE FROM THAT OF LOVELY EXPORTS AND THE REFORE, THE JUDGMENT OF THE APEX COURT IS NOT APPLICABLE TO THE FACTS OF THIS CASE. 3. BRIEFLY STATED THE FACTS OF THIS APPEAL ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 29.10.2002 DECLARING THE INCOME OF RS. 55,703/- AND ASSESSMENT WAS FRAMED U/S 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) ON 9.1.2003. SUBSEQUENTLY, PROC EEDINGS U/S 147/148 OF THE ACT WERE INITIATED AGAINST THE ASSES SEE IN THE WAKE OF SPECIFIC INFORMATION RECEIVED FROM THE INVESTIGATIO N WING OF THE DEPARTMENT VIDE DIT ( INVESTIGATION), NEW DELHI, LETTER NO. 1322 AND ITA NO. 3320/ DEL/2011 3 LETTER NO. 1536 DATED 5.2.2007, WHEREIN IT WAS REPO RTED TO THE AO THAT THE ASSESSEE COMPANY WAS A BENEFICIARY OF ACCOMMODA TION ENTRIES WHICH HAD GENERALIZED ITS UNACCOUNTED MONEY IN THE GARB OF SHARE APPLICATION MONEY IN LIEU OF CASH PAID BY THE BENEF ICIARY TO THE ENTRIES PROVIDERS. THE AO OPENED THE ASSESSMENT AND FINALIZ ED RE- ASSESSMENT ORDER BY MAKING ADDITION OF RS. 20,02,00 0/- U/S 68 OF THE ACT. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEF ORE CIT(A) IT WAS ALLOWED BY PASSING OF THE IMPUGNED ORDER AND ENTIRE ADDITION WAS DELETED BY FOLLOWING THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. 2008, 216 CTR 1 95 (SC). NOW THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL IN THIS 2 ND APPEAL WITH THE GROUNDS AS REPRODUCED HEREINBEFORE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBM ITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY T HE AO ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE ACT BY THE INC LUDING CERTAIN GLARING FACTS THAT ALL COMPANIES FROM WHOM THE ASSESSEE REC EIVED SHARE APPLICATION MONEY ARE ACCOMMODATION ENTRY PROVIDERS AND AS PER MODUS OPRENDI ADOPTED BY THEM, THE ENTRY PROVIDERS DEPOSITED CASH OF THE SAME AMOUNT IN THEIR BANK ACCOUNTS AND THEN ISSUED CHEQUE TO THE ASSESSEE AND AT THE SAME TIME THEY ALSO SIGNED SAME PAPERS ITA NO. 3320/ DEL/2011 4 WHICH WERE HANDED OVER TO THE BENEFICIARIES AND THE SE PAPERS WERE CONFIRMATION DEEDS AND OTHER FABRICATED DOCUMENTS T O SUPPORT THE BOGUS TRANSACTION. THE LD. DR, FURTHER, CONTENDED T HAT BEFORE THE INVESTIGATION WING THE ACCOMMODATION ENTRY PROVIDER S HAVE GIVEN STATEMENTS UNDER OATH THAT THEY ARE ENTRY PROVIDERS AND HAVE RECEIVED CASH FROM THE BENEFICIARIES BEFORE ISSUING CHEQUES. THE LD. DR STRENUOUSLY CONTENDED THAT THE FIRST APPELLATE AUTH ORITY HAS FAILED TO APPRECIATE THAT THE PRESENT CASE IS CLEARLY DISTING UISHABLE FROM THE FACTS OF THE CASE OF LOVELY EXPORTS PVT. LTD. (SUP RA) AND THEREFORE THIS JUDGMENT OF HONBLE APEX COURT IS NOT APPLICABLE TO THE PRESENT CASE. THE LD. DR FINALLY SUBMITTED THAT THE IMPUGNED ORDE R MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 5. THE LD. DR ALSO PLACED RELIANCE ON THE DECIS ION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. EMPIRE BUILDT AC PVT. LTD. DATED 27.1.2014 IN ITA NO. 493/2013. 6. THE LD. COUNSEL OF THE ASSESSEE REPLIED THAT THE ASSESSING OFFICER OPENED THE ASSESSMENT ON THE FAKE INFORMATI ON OF INVESTIGATION WING. THE LD. COUNSE, FURTHER, POINTED OUT THAT TH E ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAS NOT R ECEIVED ANY SHARE APPLICATION MONEY FROM SH. NITIN KUMAR AND M/S ACOO T INDIA PVT. LTD. ITA NO. 3320/ DEL/2011 5 AND THE ASSESSEE RECEIVED SHARE APPLICATION MONEY F ROM M/S BLIZM METAL PVT. LTD. RS. 2,00,000/- AND M/S AMBA ALLOYS PVT. LTD. RS. 4,00,000/- TO ACCOUNT PAYEE CHEQUE. LD. COUNSEL ALS O POINTED OUT THAT THE ASSESSEE FILED WRITTEN SUBMISSIONS LETTER DAT ED 13.09.2009 BEFORE AO, WHEREIN THE ASSESSEE EXPRESSED ITS INABILITY TO FILED CURRENT IT PARTICULARS AND TO PRESENT THESE PARTIES AND PERSON S. THE LD. COUNSEL FURTHER POINTED OUT THAT THE AO DID NOT EXERCISE P OWERS AVAILABLE TO HIM U/S 131 & 133(6) OF THE ACT. THE LD. COUNSEL VE HEMENTLY CONTENDED THAT THE AO WAS NOT RIGHT IN DISCARDING THE CONFIRMATIONS AND OTHER RELEVANT EVIDENCE FILED BY THE ASSESSEE A ND IN SIMPLY RELYING ON STATEMENTS OF ALLEGED ENTRY PROVIDERS WHICH WER E RECORDED ON THE BACK OF ASSESSEE. THE LD. COUNSEL SUPPORTING THE IM PUGNED ORDER SUBMITTED THAT THE CIT(A) RECTIFIED ALL THE MISTAKE S COMMITTED BY THE AO AND PROPERLY CONSIDERED RELEVANT EVIDENCE OF THE ASSESSEE WHICH CLEARLY SHOW THAT THE TRANSACTIONS WERE GENUINE AND THE ASSESSING OFFICER WITHOUT EXAMINING THE SAME SIMPLY PROCEEDED TO REJECT THE EXPLANATION AND EVIDENCE OF THE ASSESSEE. THE LD. C OUNSEL FINALLY SUBMITTED THAT THE CIT(A) WAS QUITE JUSTIFIED IN FO LLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORT PVT. LTD. ITA NO. 3320/ DEL/2011 6 (SUPRA) AND THE CASE OF PRESENT ASSESSEE IS SQUAREL Y COVERED VIDE THIS DECISION AND HENCE IMPUGNED ORDER MAY KINDLY BE UPH ELD. 7. ON CAREFUL CONSIDERATION AND ABOVE SUBMISSI ONS AND AVAILABLE MATERIAL PLACED ON RECORD, WE NOTE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE POINTED OUT THAT THE ASSES SEE HAS NOT RECEIVED ANY SHARE APPLICATION MONEY FROM SHRI NITI N KUMAR AND M/S ACOOT INDIA PVT. LTD. APPEARING IN SERIAL NO. 3 AND 5 IN THE DOUBLE GIVEN IN THE REASONS RECORDED BY THE AO. THE ASSESSEE FUR THER, CLARIFIED THAT INSTEAD OF ABOVE TWO ENTITIES THE ASSESSEE ACTUALLY RECEIVED SHARE APPLICATION MONEY FROM M/S BLIZ PVT. LTD. AND M/S A MBA PVT. LTD. FROM LAST PARA AT PAGE 3 , WE ALSO NOTE THAT THE ASSESSE E EXPRESSED HIS INABILITY TO FILE CURRENT IT PARTICULARS AND TO PRE SENT DIRECTORS OR OFFICERS OF ALLEGED ENTITIES IN PERSON. THEREAFTER THE ASSES SING OFFICER PROCEEDED TO EXERCISE POWERS AVAILABLE TO HIM U/S 1 33(6) OF THE ACT WHICH ACT AND RECEIVED COPIES OF THE BANK ACCOUNTS WHICH REVEALED THAT ALL THE APPLICANTS WERE DEPOSITED CASH OF SAME AMOUNT OF WHICH CHEQUE WAS GIVEN TO THE ASSESSEE COMPANY. FURTHER, AO DOUBTED THE GENUINENESS AND CREDITWORTHINESS OF THE AMOUNT CRED ITS AND HELD THAT CONFIRMATION FILED BY THE ASSESSEE DOES NOT PROVE G ENUINENESS AND CREDITWORTHINESS OF THE SHAREHOLDERS. AT THE SAME T IME, THE AO RELIED ITA NO. 3320/ DEL/2011 7 ON THE STATEMENTS OF THE ENTRY PROVIDERS RECORDED B Y THE INVESTIGATION WING OF THE DEPARTMENT AND WENT ON TO HELD THAT THE ASSESSEE GOT THE CONFIRMATION FROM THESE ENTRY PROVIDERS AT THE TIME OF RECEIVING CREDITS OF THE SHARE APPLICATION MONEY AND IN FACT NO REAL TRANSACTION WERE TOOK PLACE. 8. FROM THE OPERATIVE PART OF THE IMPUGNED ORDER , WE NOTE THAT THE CIT(A) GRANTED RELIEF BY FOLLOWING DECISION OF HON BLE APEX COURT VS. CIT(A) VS. LOVELY EXPORT PVT. LTD. (SUPRA) BY HOLDI NG AS UNDER : 5.1 IT IS OBSERVED THAT THE ASSESSING OFFICE R HAS MADE THE ADDITION U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL AS ABOVE, PRIMARILY IN VIEW OF THE INFORMATION RECEIVE D FROM THE OFFICE OF THE DIT (INV.), NEW DELHI, THAT THE ASSES SEE COMPANY WAS A BENEFICIARY OF ACCOMMODATION ENTRIES, BASED ONT EH STATEMENT OF CERTAIN PERSON THAT HE WAS INVO LVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THIS, HOWEVER, CANNOT BE TAKEN AS A SUFFICIENT GROUND FOR MAKING S UCH ADDITION IN THE ABSENCE OF ANY FURTHER EVIDENCE BRO UGHT ON RECORD. 5.2. THE APPELLANT ON THE OTHER HAND HAS FURNIS HED ALL THE RELEVANT DETAILS IN THIS REGARD DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS AS WELL AS IN THE APPELLATE PROCEEDINGS, WHICH HAVE BEEN PLACED ON RECORD. 5.3. AT THE OUTSET, IT HAS BEEN SUBMITTED THAT TH E ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER WITHOUT BRINGI NG ANY MATERIAL ON RECORD IN SUPPORT OF HIS CONTENTION. TH E ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY FRO M HIS OWN SIDE TO VERIFY THE TRANSACTIONS STATED IN THE R EPORT OF INVESTIGATION WING, EITHER FROM THE BOOKS OF ACCOUN T OF THE ASSESSEE OR FROM THE SUBSCRIBERS. THEREFORE, HE HAS FAILED TO DISCHARGE THE STATUTORY DUTY CAST UPON HIM AS LAID DOWN BY HIGHER JUDICIAL AUTHORITIES FOR EXAMINING THE ISSUE U/S 68 OF THE ACT. ON THE OTHER HAND, THE ASSESSEE HAS DISCHA RGED ITS ITA NO. 3320/ DEL/2011 8 ONUS FULLY AS CAST BY SECTION 68 OF THE ACT, WITH RESPECT TO IDENTITY OF SUBSCRIBERS, GENUINENESS OF THE TRANSAC TIONS AND CREDITWORTHINESS OF THE SUBSCRIBERS TO SHARE CAPITA L, BY DISCLOSING ALL THE MATERIAL FACTS TRULY AND CORRECT LY AND PRODUCED/ FILED THE FOLLOWING DETAILS DURING THE CO URSE OF THE ASSESSMENT PROCEEDINGS WITH RESPECT TO ITS SUBSCRIB ERS TO SHARE CAPITAL :- - NAME AND ADDRESS OF SUBSCRIBERS AS REGISTERED WIT H THE COMPANY ALONG WITH COMPLETE DETAIL OF INVESTMENTS. - CHANGED ADDRESS AS AVAILABLE WITH REGISTRAR OF CO MPANIES. - CERTIFICATE OF INCORPORATION ALONG WITH COPY OF M EMORANDUM OF ASSOCIATION - PERMANENT ACCOUNT NO. ALONG WITH COPY OF RETURN OF INCOME - CONFIRMATION / AFFIDAVIT. - COPY OF RESOLUTION PASSED BY THE SUBSCRIBER COMPA NY AUTHORIZING ITS DIRECTOR TO INVEST IN SHARES OF THE ASSESSEE COMPANY - SHARE APPLICATION FORM - DETAIL OF SHARES ALONG WITH COPY OF SHARE CERTIFI CATES - STATUS AS PER ROC RECORD - COPY OF BANK STATEMENT WITH CREDIT ENTRY OF AMOUN T RECEIVED. IT IS FURTHER SUBMITTED THAT ALL THE INVESTING COMP ANIES WERE INCORPORATED MANY YEARS BACK. IN VIEW OF OBSERVATIONS OF THE AO AS WELL AS CIT(A) WE CLEARLY NOTE THAT THE AO NOTED THAT THE ASSESSEE EXPRESSED ITS I NABILITY TO PRODUCE COPIES OF IT RETURN AND DIRECTOR OR OF OFFI CER OF THE COMPANY WHICH PROVIDED OR CONTRIBUTED SHARE APPLICA TION MONEY AND THE CIT(A) IN PARA 5.2 AT PAGE 16 OBSERVES THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AND GRANTED RELIEF BY RELYIN G OF DECISION OF HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS (S UPRA). HENCE, ITA NO. 3320/ DEL/2011 9 WE ARE UNABLE TO SATISFY OURSELVES AS TO WHETHER TH E ASSESSEE DISCHARGED ITS ONUS BEFORE AO TO PROVE THE IDENTITY OF THE THIRD PARTY OR CONTRIBUTOR WHICH MADE PAYMENT, ITS CREDITWORTHY NESS AND GENUINENESS OF THE TRANSACTION ON CASTED UPON THE A SSESSEE TO ESCAPE FROM ADDITION U/S 68 OF THE ACT TO PRESUME T HAT THE ONUS IS THUS SHIFTED TO THE REVENUE TO CONTROVERED EXPLANAT ION AND SUPPORTING EVIDENCE AND MATERIAL FILED BY THE ASSES SEE WHILE DISCHARGING ITS ONUS AS REQUIRED AS PER RATIO OF TH E RECENT DECISION DATED 19.02.2015 OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. M/S JASAMPARK ADVERTISING AND MARKETING (P) LTD . IN ITA NO. 525/2014. THEREFORE, IN VIEW OF CONTRARY OBSERVATIONS O F THE AUTHORITIES BELOW WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW HAVE NOT ADJUDICATED THE ISSUE AS PER PROVISIONS OF THE ACT AND AS PER RATIO OF THE DECISION OF HONBLE SUPREME COURT IN CASE OF LO VELY EXPORTS (SUPRA) AND DECISION OF HONBLE HIGH COURT OF DELH I IN THE CASE OF M/S JANSAMPARK (SUPRA), HENCE, SOLE ISSUE REQUIRE V ERIFICATION AND EXAMINATION ATHT END OF THE AO. THEREFORE, THE SOLE ISSUE IS RESTORED TO THE FILE OF THE AO FOR PROPER OF ADJUDICATION AF TER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND WITHOUT BEING PREJUDICED ITA NO. 3320/ DEL/2011 10 FROM EARLIER ORDERS AND BY FOLLOWING PROVISIONS OF THE ACT AND THE RATIO OF THE DECISIONS ON THIS ISSUE INCLUDING RATI O OF THE DECISION AS RESPECTFULLY NOTED ABOVE. THEREFORE, GROUND NO. 1 & 2 OF THE REVENUE ARE DEEMED TO BE ALLOWED FOR STATISTICAL PU RPOSES. IN THE RESULT, APPEAL OF THE REVENUE IS DEEMED TO B E ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 26 TH MARCH, 2015. SD/- SD/- (R.S.SYAL) (C.M.GARG) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED 26 TH MARCH, 2015 B.RUKHAIYAR COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI. BY ORDER AR, ITAT NEW DELHI ITA NO. 3320/ DEL/2011 11 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 1 9 - 25 .03. 2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 25.03.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER