ACIT, UDAIPUR V. M/s. Heena Investment Pvt. Ltd., UDAIPUR

ITA 345/JODH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54334 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-07-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Reopening of assessment; Unexplained investment; Gift; Search and seizure; Accommodation entries
• Section: 69A; 147; 131; 68; 69; 148

Judgement Text

ITA NO. 345/JU/2009 & CO 44/JU/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A. NO. 345/JU/2009 A.Y. : 2000-01 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, UDAIPUR, 6-NEW FATEHPURA, UDAIPUR VS. M/S HEENA INVESTMENT PVT. LTD. (NOW KNOWN AS M/S NAKUL BUILDERS AND DEVELOPERS PVT. LTD.), 60-D, PANCHWATI, UDAIPUR (PAN NO.: AAACH 4321G) CROSS OBJECTION NO. 44/JU/2009 (IN ITA NO. 345/JU/2009) A.Y. 2000-01 M/S NAKUL BUILDERS AND DEVELOPERS PVT. LTD.), 60-D, PANCHWATI, UDAIPUR (PAN NO.: AAACH 4321G) VS. ACIT, CIRCLE - 2, UDAIPUR (RAJASTHAN) ASSESSEE BY: SH. AMIT KOTHARI, A.R. DEPARTMENT BY : SH. G.R. KOKANI, (D.R.) ORDER ORDER ORDER ORDER PER PER PER PER RAJPAL YADAV, JM RAJPAL YADAV, JM RAJPAL YADAV, JM RAJPAL YADAV, JM THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 19.3.2009 PASSED FOR ASSESSMENT YEAR 2000-01. ON RECEIPT OF NOTICE IN REVENUES APPEAL ASSESSEE HAS FILED CROSS OBJECTION BEARING NO. 44/J U/2009. 2. IN THE SOLITARY GROUND OF APPEAL REVENUE HAS PLE ADED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DE LETING THE ADDITION OF ` 12 LACS MADE BY THE ASSESSING OFFICER U/S. 69A OF THE IT ITA NO. 345/JU/2009 & CO 44/JU/2009 2 ACT, WHEREAS IN THE CROSS OBJECTION ASSESSEE IS IMPUG NING REOPENING OF ASSESSMENT U/S 147 BY ISSUANCE OF NOTICE U/S 148 OF THE IT ACT. 3. FIRST WE TAKE THE APPEAL OF THE REVENUE. THE BRIEF FACTS OF THE CASE THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSIN ESS OF DEVELOPMENT OF REAL ESTATE. IT HAS FILED ITS RETURN OF INCOME ON 29.11.2000 DECLARING TOTAL LOSS AT ` 2,06,970/-. I T EMERGES OUT FROM THE RECORD THAT SEARCH AND SEIZURE OPERATION WAS C ARRIED OUT AT THE PREMISES OF SHRI GAJENDRA PORWAL AND HIS GROUP CONC ERN ON 11.3.2005. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT SHRI GAJENDRA PORWAL GROPU WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES UNDER VARIOUS HEADS I.E. UNSECURED LOANS, SHARE APPLICATI ON MONEY, SHARE CAPITAL SUBSCRIPTION, BOGUS BILLING AND GIFTS. T HE STATEMENT OF SHRI GAJENDRA PORWAL WAS RECORDED WHO ADMITTED ABOUT HIS I NVOLVEMENT IN PROVIDING THE ACCOMMODATION ENTRIES ON COMMISSION. TH E COMMISSION WAS CHARGED @0.5% TO 2.%. THE ASSESSING OFFICER ALSO OBSERVED THAT DURING THE COURSE OF POST-SEARCH PROCEEDINGS, SOME O F THE MAJOR BENEFICIARIES WERE EXAMINED BY INVESTIGATION WING, U DAIPUR BY ISSUING OF SUMMONS U/S 131 OF THE ACT. AFTER THAT 21 BENEFICIARIES CAME FORWARD AND VOLUNTARILY SURRENDERED THE UNDISC LOSED INCOME OF NEARLY ` 14.6 CRORES IN RESPECT OF ACCOMMODATION ENT RIES TAKEN BY THEM FROM SHRI GAJENDRA PORWAL. ON THE BASIS OF THIS INFORMATION, ASSESSING OFFICER HAS ISSUED NOTICE U/S 148 AND R EOPENED THE ASSESSMENT. IN RESPONSE TO THE NOTICE, IT WAS CO NTENDED BY THE ASSESSEE THAT RETURN FILED ORIGINALLY BE TREATED A S FILED IN RESPONSE TO THIS NOTICE. ON AN ANALYSIS OF THE DETAILS IT REV EALED TO THE ASSESSING OFFICER THAT SHRI GAJENDRA PORWAL HAD MAINLY FIVE E NTITIES, THROUGH WHOM HE AND HIS ASSOCIATES HAVE PROVIDED THE ALLEGE D ACCOMMODATION ENTITIES. THE ONE OF THE ENTITIES IS M/S JALKAN TA TECHNICAL AND ITA NO. 345/JU/2009 & CO 44/JU/2009 3 FINANCIAL SERVICES PVT. LTD. ACCORDING TO THE ASS ESSING OFFICER THIS CONCERN HAS PROVIDED THE LOAN OF ` 12 LACS TO THE A SSESSEE THROUGH ACCOUNT PAYEE CHEQUES ON DIFFERENT DATES. IN TH IS ASSESSMENT YEAR ASSESSEE HAS REPAID THE ALLEGED LOAN/CREDIT BALANC E TO M/S JTFSPL. IN HIS OPINION, IT IS UNEXPLAINED INVESTMENT OF THE AS SESSEE WHICH DESERVES TO BE ASSESSED U/S 69A OF THE IT ACT. T HE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT IT HAD REPAID THE LOAN TAKEN IN EARLIER YEARS. NO FRESH LOAN WAS TAKEN BY THE ASSESSEE DURING THIS ASSESSMENT YEAR, AND THEREFORE, THERE C ANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE U/S 69A OF TH E IT ACT. THE ASSESSING OFFICER TO SOME EXTENT AGREED WITH THE C ONTENTION OF THE ASSESSEE, BUT OBSERVED THAT IT IS A SPECIAL CASE , THEREFORE, THE SUBMISSIONS MADE ACCORDING TO THE POSITION OF LAW I S NOT ACCEPTABLE. IT IS IMPERATIVE UPON US TO TAKE NOTE OF THESE OBSE RVATIONS MADE BY THE ASSESSING OFFICER IN PARAGRAPH NO. 12 WHICH RE AD AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSION OF THE ASSESSEE. THE MAIN EMPHASIS OF THE ASSESSEE IS THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS REPAID THE AMOUNT OUTSTANDING LOAN BY WAY OF ACCOUNT PAYEE CHEQUE. IN NORMAL CIRCUMSTANCES, THE SUBMISSI ON OF THE ASSESSEE WOULD HAVE BEEN ACCEPTED, BUT IN TH E INSTANT CASE IS NOT THE CASE OF REPAYMENT OF LOAN/ OTHER LIABILITY IN THE NORMAL COURSE OF BUSINESS. IT IS THE CASE OF REVERSAL OF ACCOMMODATION ENTRY IN THE GUISE OF LOAN / LIABILITY ACQUIRED IN THE EARLIER YEAR. AFTER THE SEARCH AND SEIZURE ACTION CONDUCTED BY THE DEPARTMENT AND IN T HE POST SEARCH PROCEEDINGS IT HAS BEEN PROVED THAT SH RI GAJENDRA PORWAL AND THE CONCERNS FLOATED BY HIM M/S JTFS PL ITA NO. 345/JU/2009 & CO 44/JU/2009 4 AND JOCL BEING TWO OF THEM, DID NOT DO ANY REAL BUS INESS. THESE CONCERNS WERE THE CONDUCT FOR PROVIDING ACCOMMODATION ENTRY TO THE NEEDY CLIENTS IN LIEU OF COMMISSION. THESE CONCERNS DO NOT HAVE ANY CREDITWORTHINESS WHATSOEVER. THEY WERE JUST THE M EDIA TO ROTATE THE MONEY OF THE NEEDY CLIENTS AND TO GIVE IT THE GARB OF LOAN, BILLS, COMMISSION, GIFTS ETC. THE DE PARTMENT HAS ALSO TREATED THESE CONCERNS AS ACCOMMODATION ENTR Y PROVIDER AND ASSESSED THEM AS SUCH ON THE BASIS OF THE COMMISSION INCOME RECEIVED FOR PROVIDING ACCOMMODATIO N ENTRIES. WHEN LOAN/ LIABILITY IS NOT GENUINE THEN H OW CAN REPAYMENT BE GENUINE? 4. ON APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETE THE ADDITION. 5. BEFORE US LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. WHEREAS LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ADMITTEDLY NO FRESH LOAN WAS TAKEN BY THE ASSESSEE FROM M/S JTFSPL DURING THE ACCOUNTING PERIOD RELEVANT TO THIS ASSESSMENT YEAR. IT IS THE ASSESSEE WHO MADE PA YMENT BY WAY OF CHEQUE AGAINST THE OLD DUES, ANY PAYMENT MADE AGAIN ST THE OLD DUES CANNOT BE SAID TO BE UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. IT COULD NOT BE TAXED, AS PER THE UNDER STANDING OF THE ASSESSING OFFICER. THE ASSESSEE FURTHER CONTENDE D THAT IT HAS MADE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. IT HAD ALRE ADY SHOWN THOSE LOANS IN THE BOOKS OF ACCOUNTS. THEIR GENUINEN ESS WAS NOT DOUBTED BY THE ASSESSING OFFICER IN THE YEAR IN WHICH SUCH LOAN WAS RECEIVED BY THE ASSESSEE. SHRI KOTHARI LD. COUNSEL OF THE A SSESSEE TOOK US ITA NO. 345/JU/2009 & CO 44/JU/2009 5 THROUGH SECTION 69A OF THE ACT IN ORDER TO APPRISE WHAT CAN BE ADDED UNDER THIS SECTION. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SECTION 69A OF THE IT ACT PROVIDE THAT WHEREIN IN THE FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES AND SU CH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED BY THE ASSESSE FOR ANY SOURCE OF IN COME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF SUCH MONEY, BULLION, JEWELLERY ETC. OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSI NG OFFICER SATISFACTORY, THEN THE MONEY AND THE VALUE OF BULLIO N, JEWELLERY, ARTICLES MAY BE DEEMED TO BE THE INCOME OF THE ASSE SSEE FOR SUCH FINANCIAL YEAR. SIMILARLY, SECTION 69 PROVIDE TH AT IN ANY FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT, THE ASSES SEE HAS MADE INVESTMENT WHICH ARE NOT RECORDED IN THE BOOKS OF A CCOUNTS, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE A SSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE OF SOURCE OF THE INVES TMENT OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY, THEN THE VALUE OF INVESTMENT MAY BE D EEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. ITA NO. 345/JU/2009 & CO 44/JU/2009 6 7. A PLAIN READING OF BOTH THESE SECTIONS WOULD REV EAL THAT ACCORDING TO SECTION 69, THERE SHOULD BE INVESTMEN T WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY MAINTAINED BY THE ASSESSEE. WHEREAS SECTION 69A CONTEMPLATE THAT ASSESSEE SHOU LD BE FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY ETC. W HICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. IN THE PRESENT CASE, NO SUCH CIRCUMSTANCE HAS BEEN POINTED OUT BY THE ASSESSING OFFICER. THE LOAN TAKEN BY THE ASSESSEE FROM M/S JTFSPL AND GAJE NDRA PORWAL WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT MAINTAINED BY IT. ITS GENUINENESS WAS NOT DOUBTED BY THE ASSESSING OFFI CER. IN THIS YEAR ASSESSEE HAS JUST REPAID THE OLD EXISTING CREDIT BAL ANCE. THEIR REPAYMENT WOULD NOT COME WITHIN THE AMBIT OF SECTION 69 OF 69A OF THE IT ACT. THE REPAYMENT HAS ALSO BEEN DISCLOSED IN T HE BOOKS. THE SOURCE OF REPAYMENT IS NOT IN DOUBT. THE ASSESSI NG OFFICER HIMSELF HAS OBSERVED THAT IN NORMAL CIRCUMSTANCE THE SUBMISSIO NS OF THE ASSESSEE WOULD HAVE BEEN ACCEPTED. TO OUR MIND, TH E ASSESSEE CAN BE PUT TO THE TAX LIABILITY ONLY, IF BY HIS CONDUCT HE HAS COMMITTED A BREACH OF ANY PROVISION OF INCOME TAX ACT. THE IN COME CHARGEABLE TO TAX SHOULD BE BROUGHT UNDER THE AMBIT OF THE PROVIS ION. THE ASSESSING OFFICER COULD HAVE ENQUIRED THE GENUINE NESS OF THE LOAN IN THE YEAR THE ASSESSEE TOOK THEM AND COULD HAVE MADE A DDITION U/S 68 ITA NO. 345/JU/2009 & CO 44/JU/2009 7 OF THE ACT. BUT IN THE PRESENT YEAR, NO ADDITION CAN BE MADE U/S 69 AND 69A OF THE ACT. LD. FIRST APPELLATE AUTHORI TY HAS EXAMINED THIS ISSUE IN DETAIL AND WE DO NOT SEE ANY REASON TO IN TERFERE IN HIS ORDER. 8. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE, DID NOT PRESS THE CROSS OBJECTION, HENCE, THE CROSS OBJECTION IS REJECTED. 9. IN THE RESULT, THIS APPEAL BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/8/2011. SD/- SD/- [ [[ [K.D. RANJAN K.D. RANJAN K.D. RANJAN K.D. RANJAN] ]] ] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE 29/8/2011 SRB 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, JODHPUR