M/s. Sohali Financials Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3418/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65543 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-09-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 13-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SALIL AGGARWAL SH R P MALL S
• Keywords: Opportunity of being heard; Accommodation entries; Onus to prove
• Section: 68

Judgement Text

ITA NO. 3418/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI I.C. SUHDIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3418/DEL/2010 A.Y. : 2001-02 M/S SOHALI FINANCIALS PVT. LTD., C-19, KIRTI NAGAR, NEW DELHI (PAN: AABCS3643M) VS. INCOME TAX OFFICER, WARD-9(1), NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. SALIL AGGARWAL, SH. R.P. MALL, ADVOCATES & SH. SHAILESH GUPTA, CA DEPARTMENT BY : SH. S ANJAY KUMAR JAIN, 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 T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, NEW DELH I DATED 31.3.2010 PERTAINING TO ASSESSMENT YEAR 2001-02. 2. THE FIRST ISSUE RAISED IS PERTAINING TO REOPENIN G OF ASSESSMENT. ON THIS ACCOUNT, LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT HE SHALL NOT BE PRESSING THIS ISSUE, HENCE, THIS ISSUE IS DI SMISSED AS NOT PRESSED. 3. ON MERITS, THE ISSUE RAISED IS THAT LD. COMMISSION ER OF INCOME TAX (A) HAS ERRED IN UPHOLDING THE ADDITION OF ` 15 ,07,500/- REPRESENTING THE SHARE CAPITAL RECEIVED BY THE ASSE SSEE UNDER SECTION 68 OF THE I.T. ACT. ITA NO. 3418/DEL/2010 2 4. ON THIS ISSUE, ASSESSING OFFICER NOTED THAT INF ORMATION WAS RECEIVED FROM THE INVESTIGATION WING THAT ASSESSEE HAS RECEIVED THE AMOUNT OF ` 15,00,000/- DURING THE PREVIOUS YEAR 200 -01 IN THE FORM OF CHEQUES/DDS AS ACCOMMODATION ENTRIES FROM VARIOUS ENTI TIES CREATED BY ONE MAHESH GARG AND USED BY THEM IN THE BUSINESS O F ACCOMMODATION ENTRIES. IN THE STATEMENT OF SH. MAH ESH GARG RECORDED ON 29.9.2003 HE ADMITTED THAT HE CREATED TH ESE ENTITIES FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES. H E HAS FURTHER ADMITTED THAT THESE ENTITIES WERE NOT ENGAGED IN THE BUSINESS ACTIVITY. IN THESE ENTITIES CASH USED TO BE DEPOSITED AND THE N THE COMPANIES /ENTITIES USED TO SIGN THE BLANK CHEQUE BOOK. 4.1 ON ENQUIRY FROM THE ASSESSING OFFICER, ASSESSEE SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF HONBLE SUPREME COURT DECISION IN THE CASE OF C.I.T. VS. LOVELY EXPORTS PVT. LTD. 216 CTR 195. ASSESSING OFFICER O BSERVED THAT THE CASE OF LOVELY EXPORTS CITED ABOVE WAS DIFFERENT FR OM THE CASE OF THE ASSESSEE. HE OPINED IN THE PRESENT CASE THAT AS SESSEE HAS GIVEN CASH TO RECEIVE THE ACCOMMODATION ENTRIES BY WAY OF CHEQUE IN THE FORM OF SHARE APPLICATION MONEY AS ADMITTED BY SH. MAHE SH GARG IN HIS STATEMENT RECORDED BY THE INVESTIGATION WING. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE PAID ` 15 ,00,000/- PLUS COMMISSION @ 0.5% TO SH. MAHESH GARG. THEREFORE, DIS ALLOWANCE OF ` 15,07,500/- WAS MADE. 5. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A), AS SESSEE SUBMITTED THAT NO PROPER OPPORTUNITY OF BEING HEARD WAS GIVEN TO IT. HOWEVER, LD. COMMISSIONER OF INCOME TAX (A) CONSIDERE D THE SUBMISSION OF THE ASSESSEE NOT TENABLE. REGARDING THE STATEMENT OF ITA NO. 3418/DEL/2010 3 THE ASSESSEE THAT ASSESSEE WAS NOT GIVEN ADEQUATE O PPORTUNITY TO EXAMINE SH. MAHESH GARG, LD. COMMISSIONER OF INCOME TA X (A) OBSERVED THAT THE ONUS TO PROVE THE GENUINENESS, CA PACITY OF IDENTITY OF THE SHARE APPLICANT IS ON THE ASSESSEE. HE OBS ERVED THAT IN FACT IT WAS THE RESPONSIBILITY AND DUTY OF THE ASSESSEE TO PRODUCE SH. MAHESH GARG THROUGH WHOSE COMPANIES THE SAID AMOUNT WAS REC EIVED AS APPLICATION MONEY. HE OBSERVED THAT THIS IS NOT A CASE OF FRESH /HOSTILE/ THIRD PARTYS STATEMENT BEING USED BY THE DEPARTMENT. HENCE, HE HELD THAT AS SUCH THE ASSESSEE HAD BUSINESS DEA LINGS WITH SH. MAHESH GARGS COMPANY AND HENCE THERE IS NO ONUS ON T HE DEPARTMENT TO GIVE OPPORTUNITY TO CROSS EXAMINE SH. MAHESH GARG WITH WHOM TO ASSESSEE HAD BUSINESS DEALINGS. LD. COMMISSIONER OF INCOME TAX (A) FURTHER REFERRED TO THE DECISION OF THE DCIT VS. SMT. PHOOLWATI DEVI (2009) 314 ITR (AT) 0001 WHEREIN IT W AS HELD THAT DESPITE DOCUMENTATION SUPPORTING CLAIM OF THE ASSESS EE SUPERFICIALLY, EVIDENCE COULD NOT BE ACCEPTED IN VIEW OF THE SURRO UNDING CIRCUMSTANCES AND HUMAN PROBABILITIES. IN VIEW OF THE ABOVE DISCUSSIONS, LD. COMMISSIONER OF INCOME TAX (A) CONF IRMED THE ASSESSING OFFICERS ACTION. 6. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. LD. COUNSEL O F THE ASSESSEE SUBMITTED THAT THE STATEMENT OF SH. MAHESH GARG HAS BEEN RELIED UPON BY THE REVENUE. THE COPY OF HIS STATEMENT WAS NOT GIVEN TO THE ASSESSEE AND ALSO ASSESSEE WAS NOT GIVEN OPPOR TUNITY TO CROSS EXAMINE THE SAID PERSON. HOWEVER, LD. COUNSEL FURT HER SUBMITTED THE PROPER DOCUMENTS WERE FILED BEFORE THE ASSESSING OF FICER AND LD. ITA NO. 3418/DEL/2010 4 COMMISSIONER OF INCOME TAX (A) TO PROVE THE CREDITW ORTHINESS AND THE IDENTITY AND GENUINENESS OF THE SHARE APPLICANT. THERE WERE TOTAL FIVE SHARE APPLICANTS BEING THE COMPANIES. IT HAS BEEN CLAIMED THAT ASSESSEE HAS SUBMITTED THE SHARE APPLICATION FORM, C ONFIRMATIONS, RETURN OF INCOME, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT, BOARD RESOLUTION, AFFIDAVIT FROM THESE PARTIES. HE SUBMI TTED THAT ASSESSEE HAS DISCHARGED ITS ONUS AND SUPPLIED THE REQUISITE INFORMATION AND DOCUMENTATION. HE FURTHER PLACED RELIANCE UPON THE DECISION OF THIS TRIBUNAL IN I.T.A. NO. 871/DEL/2010 (A.Y. 2003-04) IN THE CASE OF ITO VS. M/S EXCELLENCE TOWN PLANNERS PVT. LTD. VIDE ORDER DATE D 25.5.2012. IN THIS CASE THE TRIBUNAL HAS REFERRED THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF C.I.T. VS. NOVA PROMOTERS & FINLEA SE (P) LTD. 342 ITR 169 AND ALSO NOTED THAT IN THE LATEST JUDGEMENT IN THE CASE OF GOYAL SONS GOLDEN ESTATE PVT. LTD, THE HONBLE HIGH COURT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 8. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE FURTHER PL ACED RELIANCE ON THE NOVA PROMOTERS CASE. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT IN THE ASSESSING OFFICERS ORDER AS WELL AS LD. COMMISSIONER OF INCOME TAX (A)S ORDER, THERE IS NO DISCUSSION OF THE DOCUMENTATION SUBMITTED IN SUPPORT OF THE SHARE APPL ICANT. IN THIS REGARD, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT A SSESSEE HAS DULY SUBMITTED ALL THE RELEVANT DETAILS. HENCE, ASSESSE E HAS DISCHARGED THE ONUS. HOWEVER, WE FIND THAT IN THE ORDERS OF AUTHO RITIES BELOW THERE IS NO DISCUSSION REGARDING THE DOCUMENTS CLAIMED BY THE ASSESSEE TO HAVE BEEN SUBMITTED. IN FACT THERE IS NO MENTION OF T HE DOCUMENTS ITA NO. 3418/DEL/2010 5 SUBMITTED BY THE ASSESSEE IN THIS REGARD. THUS, THERE IS APPARENT CONTRADICTION IN THE ORDERS OF THE AUTHORITIES BELO W AND THE CLAIM BEING MADE BY THE ASSESSEE. IN OUR CONSIDERED OPINION, IN SUCH CIRCUMSTANCES, IT WOULD BE APPROPRIATE TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE DOCUMENTATION IN THIS REGARD BEING SUBMITTED BY THE ASSESSEE AND ADDRESS THE OTHER SUBMISSIONS OF THE ASSESSEE IN TH IS REGARD. 10. IN THIS REGARD, WE FIND THAT THE HONBLE APE X COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT, 131 ITR 451, HELD THAT THE APPELLATE AUTHORITY HAS JURISDICTION AS WELL AS THE DUTY TO C ORRECT THE ERRORS IN THE PROCEEDINGS UNDER APPEAL AND ISSUE PROPER DIRECTION AS NECESSARY. HENCE, IN THE INTEREST OF JUSTICE, WE REMIT THE ISSUE RAISED IN THE APPEAL TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER T HE SAME DE NOVO, IN LIGHT OF THE OUR ABOVE OBSERVATIONS. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28/9/2012. SD/- SD/- [ [[ [I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 28/9/2012 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