ITO, New Delhi V. M/s International Computer Graphics Pvt. Ltd., New Delhi

ITA 3380/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58514 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 30-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Accommodation entries
• Section: 133(6); 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.3380/DEL/2011 ASSESSMENT YEAR : 2002-03 ITO, WARD 11 (4), ROOM NO.324, CR BUILDING, NEW DELHI. VS. INTERNATIONAL COMPUTER GRAPHICS PVT. LTD., 1/11645, SAT NAGAR, TANK ROAD, KAROL BAGH, NEW DELHI. PAN : AAACH0477P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. SINGHVI, CA REVENUE BY : SHRI SALIL MISHRA, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 19 TH APRIL, 2011 FOR ASSESSMENT YEAR ASSESSMENT YEAR 2002-03. THE GROUNDS OF APPEAL READ AS U NDER:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.40 LA CS IGNORING: (A) THAT M/S B.T. TECHNET LTD. WAS THE GROUP CONCERN O F SH. S.K. GUPTA WHO HAS ADMITTED IN HIS STATEMENT, RECORDED DURING THE SEARCH OPERATION, THAT: (A) BILLS WERE RAISED IN THE NAME OF VARIOUS COMPANIES BY HIS GROUP CONCERNS, THE CHEQUES WERE RECEIVED BUT CASH WAS RETURNED TO THE RESPECTED PARTIES OR CHEQUE PAYMENTS WERE MADE TO THEM THROUGH OTHER GROUP ENTITIES. ITA NO.3380/DEL/2011 2 (B) HIS GROUP COMPANIES WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES OF THE FOLLOWING NATURE: (I) PROVIDING ACCOMMODATION SALES/ EXPENSES BILLS TO BENEFICIARY COMPANIES (II) PROVIDING ACCOMMODATION INVESTMENTS ENTRIES IN THE FORM OF SHARE CAPITAL OR LOANS TO BENEFICIARY COMPANIES. (B) THAT THE ASSESSEE COMPANY, DURING THE ASSESSMENT PROCEEDINGS, HAS ALREADY SURRENDERED AN AMOUNT OF RS.2,40,000/- STATED TO BE DIFFERENCE BETWEEN PURCHASES AND SALES WHICH PROVES THAT THE TRANSACTIONS WERE NOT GENUINE . (C) THAT THE BROKERAGE IS ALWAYS CHARGED BY THE ENTRY PROVIDER IN LIEU OF ACCOMMODATION ENTRIES. 2. THE APPELLANT CRAVES TO ADD, ALTER, AMEND ANY GROUN D OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. THE RETURN OF INCOME IN THE PRESENT CASE WAS FILED AT ` 1,71,766/- IT WAS PROCESSED U/S 143 (1) (A) OF THE ACT. LATER ON, ON THE BASIS OF INFORMATION RECEIVED FROM DIRECTOR OF INCOME-TAX (I NVESTIGATION), NEW DELHI, A SEARCH WAS CONDUCTED IN THE GROUP CASES OF S.K . GUPTA AND IT WAS REVEALED THAT THE SAID GROUP WAS ENGAGED IN PROVID ING ACCOMMODATION ENTRIES OF VARIOUS NATURE. IT WAS POINT ED OUT THAT THE ASSESSEE HAD ENTERED INTO A TRANSACTION OF JOB WORK WITH M/S B.T. TECHNET LTD., BOLINI DURING THE YEAR UNDER CONSIDERA TION FOR A SUM OF ` 40 LAC AND, IN THIS MANNER, THE ASSESSMENT WAS REOPENED V IDE NOTICE ISSUED U/S 148 DATED 27 TH MARCH, 2009. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE AFOREMENTIONED TRANSACTION. IT WAS SUBMIT TED THAT ` 40 LAC RECEIVED BY THE ASSESSEE REPRESENTED PURCHASE MADE BY THE ASSESSEE OF A SOFTWARE FROM THE SAID FIRM VIDE INVOICE NO.2001 -02/04/9 DATED 10 TH APRIL, 2001. COPY OF THE INVOICE WAS SUBMITTED. IT WAS SUBMITTED THAT THE SAID PAYMENT WAS MADE BY THE ASSESSEE THROUGH CH EQUE NO.824959 DATED 16 TH APRIL, 2001 DRAWN ON UNION BANK OF INDIA. COPY OF ACCOUNT OF THE SAID PARTY WAS ALSO SUBMITTED. IT WA S SUBMITTED THAT THE AFOREMENTIONED SOFTWARE WAS SOLD TO COMSOFT INDIA P VT. LTD. VIDE ITA NO.3380/DEL/2011 3 SALE INVOICE NO.ICGL/003/2001-02 DATED 3 RD AUGUST, 2001 FOR A SUM OF ` 42,40,000/-. COPY OF SALE INVOICE WAS ALSO SUBMITTED A ND IT WAS SUBMITTED THAT THE AMOUNT OF SALE IS CREDITED TO SALE O F SOFTWARE AND THE SALE AMOUNT WAS ALSO REALIZED DURING THE YEAR THRO UGH ACCOUNT PAYEE CHEQUE DEPOSITED IN THE BANK ACCOUNT OF THE ASSE SSEE. COPY OF THE ACCOUNT OF THE SAID PARTY WAS ALSO ENCLOSED. IT WA S ALSO SUBMITTED THAT IN RESPONSE TO NOTICE U/S 133(6) ISSUED BY THE DEPA RT M/S B.T. TECHNET LTD. HAD SENT THE FOLLOWING CONFIRMATION:- (I) COPY OF SALES-TAX RETURN FOR RELEVANT ASSESSMENT Y EAR; (II) COPY OF BANK STATEMENT; (III) OTHER DOCUMENTS INDEPENDENTLY CONFIRMING THE TRANSACTION. 3. THE ASSESSEE ALSO SUBMITTED THEIR SALES-TAX ASSESSMENT FOR T HE RELEVANT YEAR CONFIRMING THAT THE TURNOVER OF THE A SSESSEE WAS SUBJECT TO SALES-TAX ASSESSMENT AND NO DISCREPANCY WAS NOTICED. T HUS, IT WAS SUBMITTED THAT THE TRANSACTION OF THE ASSESSEE WITH THE SA ID CONCERN IS FULLY BACKED BY DOCUMENTARY EVIDENCES INCLUDING INDE PENDENT CONFIRMATIONS SOUGHT AND INQUIRIES MADE DURING THE ASSESSM ENT PROCEEDINGS AND IT IS NOT A CASE OF INFLATED PURCHASES MADE WITH A VIEW TO REDUCE THE PAYMENT OF INCOME-TAX AND, THUS, IT WAS SUBMITTED THAT NO ADDITION COULD BE MADE. IT WAS ALSO SUBMITTED THAT AS A GOOD GESTURE THE ASSESSEE IS SURRENDERING A SUM OF ` 2,40,000/- AS ADDITIONAL TAXABLE INCOME PROVIDED NO CONCEALMENT P ENALTY IS INITIATED U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER REJECTE D SUCH CONTENTION OF THE ASSESSEE AND DEPENDING UPON THE REPOR T OF INVESTIGATION HE MADE THE ADDITION OF ` 40 LAC AND A LSO ` 10,000/- ON ACCOUNT OF COMMISSION THEREON AND, IN THIS MANNER, THE INCOME OF THE ASSESSEE WAS ASSESSED AT ` 41,81,770/- AGAINST THE RETURNED I NCOME OF ` 1,71,766/-. ITA NO.3380/DEL/2011 4 4. THE ADDITION WAS AGITATED IN AN APPEAL FILED BEFO RE THE CIT (A). KEEPING IN VIEW THE AFOREMENTIONED EVIDENCE PLACED BY THE ASSESSEE ON RECORD, LEARNED CIT (A) HAS DELETED THE ADDITION. IT IS AGAINST SUCH DELETION OF ADDITION THE DEPARTMENT IS AGGRIEVED, HE NCE, IN APPEAL. 5. RELYING UPON THE ASSESSMENT ORDER, IT IS THE CASE OF T HE LEARNED DR THAT RELIEF HAS WRONGLY BEEN GIVEN BY CIT (A). T HE PURCHASE MADE BY THE ASSESSEE FROM M/S B.T. TECHNET LTD. WERE BOGUS AS T HE SAID CONCERN WAS INVOLVED IN BOGUS BUSINESS ACCOMMODATION ENT RIES. THUS, IT WAS PLEADED BY THE LEARNED DR THAT ORDER OF THE C IT (A) SHOULD BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 6. ON THE OTHER HAND, RELYING UPON THE EVIDENCE SUBM ITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND ALSO THE FACTS AND CIRCUMSTANCES SUBMITTED BEFORE THE CIT (A), IT IS THE C ASE OF THE LEARNED AR THAT THE CIT (A) HAS RIGHTLY DELETED THE ADDITION. HE SUBMITTED THAT SALE AND PURCHASE OF SOFTWARE BY THE ASSESSE E IS A REGULAR COURSE OF ITS BUSINESS AND THE ASSESSEE HAD LARGE TU RNOVER FOR THE SALE AND PURCHASE OF SOFTWARE. THE TRANSACTIONS ENT ERED INTO BY THE ASSESSEE WITH M/S B.T. TECHNET LTD. WAS A TRANSACTION ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS FOR WHICH ALL THE SUP PORTING EVIDENCES WERE FILED. HE DREW OUR ATTENTION TOWARDS THE TURNOVER OF THE ASSESSEE RELATING TO SOFTWARE SALE WITH REGARD TO VAR IOUS ISSUES WHICH WERE SUBMITTED BEFORE THE CIT (A) AND WHICH IS DESCRIBED IN PARA 7.4 OF THE CIT (A). IT WAS PLEADED BY HIM THAT THE TURNOVER OF THE ASSESSEE FOR SOFTWARE PACKAGES RUNS INTO CRORES OF RUPEES. FOR THE SAKE OF CONVENIENCE THE SAID TABLE IS REPRODUCED BELOW :- ASSESSMENT YEAR PARTICULARS SALES TURNOVER 2001-02 SALE OF SOFTWARE PACKAGES RS.3.95 CRORE 2001-01 SALE OF SOFTWARE PACKAGES RS.7.99 CRORE 1999-2000 SALE OF SOFTWARE PACKAGES RS.26.85 CRORE 1998-99 SALE OF SOFTWARE PACKAGES RS.12.10 CRORE 1997-98 SALE OF SOFTWARE PACKAGES RS.2.35 CRORE ITA NO.3380/DEL/2011 5 7. THUS, IT WAS SUBMITTED BY HIM THAT THE LEARNED CIT (A) HAS RIGHTLY DELETED THE ADDITION AND HIS ORDER SHOULD UPHELD. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE EVIDENCE FILED B Y THE ASSESSEE HAS ALREADY BEEN DISCUSSED IN THE ABOVE PART OF THIS ORDER. AS A MATTER OF REGULAR BUSINESS ACTIVITY, THE ASSESSEE IS ENGAGED IN THE P URCHASE AND SALE OF SOFTWARE FOR THE LAST SO MANY YEARS AND THE TURN OVER THEREOF HAS ALSO BEEN DESCRIBED IN THE AFOREMENTIONED TABLE. THE ASSESSING OFFICER ALSO MADE INQUIRIES FROM THE SAID FIRM. SALES -TAX ORDERS SUPPORT THE SAID TRANSACTION. THE PAYMENTS HAVE BEEN M ADE THROUGH BANKING CHANNELS. THE PARTY FROM WHOM THE PURCHASES H AVE BEEN MADE HAS CONFIRMED THE TRANSACTION AND THE PARTY TO W HOM THE SALE HAS BEEN MADE HAS ALSO CONFIRMED THE TRANSACTION. KEEP ING IN VIEW ALL THESE FACTS, WE FIND THAT THE LEARNED CIT (A) HAS RIGH TLY DELETED THE ADDITION. THEREFORE, WE DECLINE TO INTERFERE. THE COPY OF THE AFOREMENTIONED EVIDENCE HAS BEEN FILED BY THE ASSESSEE I N THE PAPER BOOK. THE EVIDENCE FILED BY THE ASSESSEE HAS NOT BEEN C ONTROVERTED AND NO CONTRARY FACT HAS BEEN BROUGHT ON RECORD BY T HE REVENUE. THEREFORE, THE DELETION OF ADDITION IS JUSTIFIED. 9. SO FAR AS IT RELATES TO A SUM OF ` 2,40,000/- OFFER ED BY THE ASSESSEE, IT IS SEEN THAT THE ASSESSING OFFICER HIMSELF HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE AND NO SUCH ADDITION WAS MADE, SO, THE GROUNDS RAISED BY THE REVENUE IN RESPECT OF A SUM OF ` 2,40,000/- DOES NOT ARISE OUT OF THE ORDER OF THE CIT (A) AND IT HAS NO RELEVANCE TO DECIDE THE ISSUE OF ADDITION OF ` 40 LAC. IN VIEW OF THE ABOVE DISCUSSION, THE DEPARTMENTAL APPEAL BEING DEVOID OF ME RITS IS DISMISSED. ITA NO.3380/DEL/2011 6 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 25.01.20 12. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 25.01.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES