Mahalaxmi Woolen Company Ltd., New Delhi V. ITO, New Delhi

ITA 3480/DEL/2011

• Counselvise Citation: 348020114 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: SHEKHAR
• Keywords: Accommodation entries
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO. 3480/DEL/2011 ASSESSMENT YEAR: 2001-2002 MAHALAXMI WOOLEN COMPANY LTD.,507, NEW DELHI HOUSE, 27, BARAKHAMBA ROAD, NEW DELHI. PAN NO. AABCA0026A VS. ITO, WARD 6(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M.S. SHEKHAR, CA RESPONDENT BY : SH. SATPAL SINGH, SR. DR DATE OF HEARING : 23/08/2012 DATE OF PRONOUNCEMENT : 28/09/2012 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A) DATED 02/05/2011 FOR A.Y. 2001-02. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFIC ER RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE INCOME-TAX DEPAR TMENT, NEW DELHI THAT THE ASSESSEE HAD RECEIVED RS. 2,83,000/- FROM M/S O NYS EXIM & SALES PVT. LTD. (HEREINAFTER CALLED OESP) ALLEGEDLY AN AC COMMODATION ENTRY PROVIDER. 3. THE AO, THEREFORE, INITIATED REASSESSMENT PROCEE DINGS BY ISSUING NOTICE U/S 148. THE ASSESSEES REPRESENTATIVE WAS ASKED TO PRODUCE THE DIRECTORS OF OESP. HOWEVER, ON ONE PRETEXT OR THE OTHER, THE DIRECTOR WAS ITA NO. 3480/D/2011 2 NOT PRODUCED. THE AO OBSERVED THAT ASSESSEE HAD RE CEIVED RS. 2,83,000/- ON ACCOUNT OF SALE OF SHARES OF UNLISTED COMPANIES FROM M/S OESP HAVING ITS BANK ACCOUNT NO. 429 WITH KESHAV SE HKARI BANK, KAROL BAGH, NEW DELHI. HE OBSERVED THAT THE INVESTIGATIO N WING OF THE DEPARTMENT HAD UNEARTHED A HUGE MONEY LAUNDRY OPERA TION AND SENT THE RELATED INFORMATION TO THE FIELD FORMATIONS. IN TH E COURSE OF THIS OPERATION, STATEMENTS OF ACCOMMODATION ENTRY PROVIDERS WERE RE CORDED. SHRI S.H. MALIK WAS ONE SUCH ACCOMMODATION ENTRY PROVIDER WHO SE STATEMENT WAS RECORDED ON 23/06/2004 ON OATH U/S 131 OF THE ACT. HE OBSERVED THAT IN HIS STATEMENT SHRI MALIK, IN THE CAPACITY OF DIRECTOR O F OESP, ACCEPTED THAT THE COMPANY I.E. OESP DID NOT DO ANY ACTUAL BUSINESS BU T WAS SOLELY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH AND COMMISSION THEREON. THE AO HAS ANNEXED THE STATEMENT AS PART OF HIS ORDER. HE, THEREFORE, MADE AN ADDITION OF RS. 2,83,000/- U/S 6 8. 4. LD. CIT(A) CONFIRMED THE AOS ACTION AS ASSESSEE DID NOT APPEAR IN SPITE OF VARIOUS OPPORTUNITIES. 5. BEING AGGRIEVED, THE ASSESSEE HAS TAKEN FOLLOWIN G GROUNDS OF APPEAL: - 1. THAT THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THE ASSESSMENT OF THE INCOME OF THE ASSESSEE AT RS. 2,88,660/- UNDER SECTIONS 68 AND 6C OF THE ACT. 2. THAT THE ORDER OF THE LD. CIT(APPEALS) IS BAD IN LAW AND ON THE FACTS OF THE CASE; AND 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. ITA NO. 3480/D/2011 3 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSE SSEE HAS NOT BEEN AFFORDED ANY OPPORTUNITY TO CROSS-EXAMINE SHRI S.H. MALIK ON THE BASIS OF WHOSE STATEMENT THE ADDITION HAS BEEN MADE. 7. LD. DR RELIED ON THE ORDER OF CIT(A). THE ASSES SEE HAS NOT CHALLENGED THE INITIATION OF RE-ASSESSMENT PROCEEDI NG AND, THEREFORE, TO THAT EXTENT THE ORDER OF LD. CIT(A) STANDS CONFIRME D. THE ASSESSEES MAIN OBJECTION ON MERITS IS THAT HE WAS NOT AFFORDED ANY OPPORTUNITY TO CROSS- EXAMINE SH. S.H. MALIK ON THE BASIS OF WHOSE STATEM ENT THE ADDITION HAS BEEN CONFIRMED. IT IS WELL SETTLED LAW THAT IF THE DEPARTMENT RELIES ON THE STATEMENT OF A PERSON THEN ASSESSEE SHOULD GET AN O PPORTUNITY TO CROSS- EXAMINE HIM BEFORE HIS STATEMENT CAN BE RELIED UPON . THEREFORE, I CONSIDER IT IN THE INTEREST OF JUSTICE THAT DEPARTM ENT SHOULD ENDEAVOUR TO PRODUCE SH. S.H. MALIK FOR CROSS-EXAMINATION. HOWE VER, I FIND THAT THE MATTER IS QUITE OLD AND, THEREFORE, IN CASE SH. MAL IK IS NOT TRACEABLE THEN DE HORS HIS STATEMENT, ASSESSEE SHOULD ESTABLISH THE C REDIT WORTHINESS OF THE SAID COMPANY. 8. I, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON MERITS ONLY AND RESTORE THE MATTER TO THE FILE OF AO IN TERMS OF AF OREMENTIONED DIRECTIONS. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28/09/2012 SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 28/09/12 *KAVITA ITA NO. 3480/D/2011 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR