ACIT, New Delhi V. M/s. Decor Investment & Finance Pvt. Ltd., New Delhi

ITA 3631/DEL/2010

• Counselvise Citation: 363120114 RSA 2010
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 29-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Assessee Lawyers: ADITYA KUMAR
• Keywords: Unexplained expenditure
• Section: 69C; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NO. 3631/DEL/2010 ASSESSMENT YEAR: 2001- 2002 ACIT, VS. M/S. DCOR INVEST MENT & FINANCE PVT. LTD. CIRCLE 10(1) F-7/21, KRISHNA N AGAR, NEW DELHI. NEW DELHI. PAN (AAACD3457H) (APPELLANT) (RESPONDENT ) APPELLANT BY : SHRI GAGAN SOOD, DR RESPONDENT BY : SHRI ASHWANI KUMAR, CA & SHRI ADITYA KUMAR , CA ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPE LLATE ORDER ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS WRONG, PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 34 ,63,022/- MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME BY RECOURSE TO THE PROVISIONS OF SECTION 68 OF THE I.T. ACT. ITA NO. 3631/DEL/2010 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAWS, THE LD. CIT(A) HAS ERRED DELETED THE ADDITION OF RS. 17,315 /- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF I .T. ACT. 2. GROUND NO. 1 IS GENERAL IN NATURE. HENCE DOES NOT NEED INDEPEND ENT ADJUDICATION. GROUND NO. 2 AND 3 3. THE FACTS IN BRIEF ARE THAT THE AO FOUND THA T THE ASSESEEE HAD RECEIVED AN AMOUNT OF RS. 12,63022/- ON 1.8.2000 AN D RS. 12,00,000/- ON 3.8.2000 FROM M/S. MKM FINANCE P. LTD. ON VERIFICAT ION BY INVESTIGATION WING OF THE DEPARTMENT IT WAS FOUND THAT M/S. MKM F INANCE P. LTD. WAS NOT DOING ANY BUSINESS BUT ONLY PROVIDING ACCOMMODA TION ENTRY. SHRI MAHESH BATRA DIRECTOR OF M/S. MKM FINANCE P LTD. IN HIS STATEMENT RECORDED U/S 131 OF THE ACT BY THE ADDITIONAL DIREC TOR OF INCOME TAX (INV) ADMITTED THAT THEY WERE NOT DOING ANY BUSINESS BUT ONLY PROVIDING ACCOMMODATION ENTRY. THE AO NOTED FURTHER THAT ASSE SSEE HAS SHOWN PURCHASE AND SALE FROM / TO CONCERN / COMPANY WHOSE DIRECTOR IS NOT A PERSON OF ANY MEANS AND ADMITTED THAT THE COMPANY W AS ENGAGED IN PROVIDING ENTRY FOR SALE PURCHASE OF SHARES. THE AO OBSERVED FURTHER THAT THERE WAS NO OTHER TRANSACTION BUT ONLY PURCHASES F ROM TWO SHARES AT HIGHER RATE. IT NOTED THAT THE ASSESSEE HAS PURCHAS ED SHARES WORTH RS. ITA NO. 3631/DEL/2010 3 9,00,204/- BUT MADE NO PAYMENTS TO M/S. MKM FINANCE P LTD FOR TWO THREE MONTHS. THE AO ACCORDINGLY HELD THAT THE TRANSACTIO N WAS NOTHING BUT AN ARRANGEMENT MADE BY THE ASSESSEE TO TAKE ENTRY FROM A BOGUS CONCERN. HE ACCORDINGLY MADE ADDITION OF RS. 34,63,022/- U/S 69 C OF THE ACT RECEIVED BY THE ASSESEE DURING THE PERIOD. THE AO MADE FURTHER ADDITION OF RS. 17,315/- UNDER THE PROVISION OF SECTION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE IN RESPECT OF COMMISSION PAID TO M/S. MKM FINANCE P. LTD. LD. CIT(A) HAS HOWEVER DELETED THE ADDITIONS BEING CONV INCED WITH THE EXPLANATION OF THE ASSESSEE. THIS ACTION OF THE LD. CIT(A) HAS BEEN IMPUGNED BY THE REVENUE BEFORE US. 4. IN SUPPORT OF THE GROUNDS, THE LD. DR HAS BASICALLY PLACED RELIANCE IN THE ASSTT. ORDER. HE POINTED OUT THAT INVESTMENT IN SHARES WERE MADE IN CASH AND THESE WERE SOLD TO THE SAME BROKER AFTER S OME TIME FROM WHOM THESE WERE PURCHASED WITHIN TWO THREE MONTHS. THUS THE PROFITS SHOWN BY THE ASSESSEE WAS UNREALISTIC. THE AO WAS THEREFORE JUSTIFIED IN MAKING THE ADDITIONS MADE IN QUESTION. LD. CIT(A) WITHOUT APPR ECIATING THESE MATERIAL ASPECT OF THE CASE HAS DELETED THE ADDITION MADE BY THE AO. 5. LD. AR ON THE OTHER HAND SUBMITTED THAT THE BROKER WITH WHOM TRANSACTIONS WERE THERE IS A REGISTERED BROKER WITH DELHI STOCK EXCHANGE. LD. AR REFERRED PAGE NOS. 9 TO 40 OF THE PAPER BOOK WITH THIS SUBMISSION ITA NO. 3631/DEL/2010 4 THAT THESE WERE THE EVIDENCE FILED BEFORE THE AO BY THE ASSESSEE IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION IN QUESTION. THESE ARE COPIES OF COMPUTATION OF INCOME FOR ASSTT. YEAR 2001-02; BALA NCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31.3.2001, ASS TT. ORDER DATED 26.3.2004 (ASSTT. YEAR 2001-02), ACCOUNT OF M/S. MK M FINANCE PVT. LTD. IN THE BOOKS OF THE ASSESSEE COMPANY FOR ASSTT. YEAR 2 001-02; BANK ACCOUNT OF ASSESSEE COMPANY AND DETAILS OF PURCHASE AND SAL E OF SHARES DURING ASSTT. YEAR 2000-01. HE SUBMITTED FURTHER THAT THE AO IN THE ASSTT. ORDER HAS MENTIONED ABOUT THE COPY OF ACCOUNT OF M/S. MK M FINANCE PVT. LTD. FILED WITH THE COPY OF BANK ACCOUNT OF THE ASSESSEE , WHEREIN PAYMENTS RECEIVED FROM THE SAID PARTY ON ACCOUNT OF SALE OF SHARES OF M/S. KLG SYSTEL AND PADMINI POLYMERS DURING LAST YEAR ARE RE FLECTED. HE SUBMITTED THAT COPIES OF BILLS OF M/S. MKM FINANCE LTD. FOR PURCHASE AND SALE OF SHARES EFFECTED DURING LAST YEAR WERE ALSO FURNISHE D BEFORE THE AO. THE ASSESSEE HAD ALSO REQUESTED THE AO TO USE HIS GOOD OFFICES AND THE POWERS BY THE VIRTUE OF THE PROVISIONS OF THE INCOME TAX ACT TO CALL FOR THE RELEVANT DOCUMENTS AND PERSONAL ATTENDANCE IN THIS REGARD. THE LD. AR SUBMITTED FURTHER THAT IN HIS STATEMENT SHRI MAHESH BATRA, WHICH HAS BEEN REPRODUCED IN THE FORM OF QUESTION AND ANSWER BY TH E AO AT PAGE NO. 2 OF THE ASSTT. ORDER HAS NOT MENTIONED ABOUT ASSESSEE F OR PROVIDING ACCOMMODATION ENTRY FOR PURCHASE AND SALES OF SHAR ES. HE SUBMITTED FURTHER THAT SHARES WERE BOUGHT / SOLD FROM / TO M/ S MKM FINANCE PVT. LTD. ITA NO. 3631/DEL/2010 5 AT PREVAILING MARKET PRICE ON THE DATE OF TRANSACT ION AND THE PAYMENTS WERE RECEIVED ONLY AGAINST THOSE SHARES. 6. HAVING GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW WE FIND THAT THE ASSESSEE HAD FILED COPIES OF COMPUTATION OF INC OME FOR THE YEAR, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE Y EAR, ASSTT. ORDER DATED 26.3.2004 FOR THE YEAR, ACCOUNT OF M/S. MKM FINANC E PVT. LTD. IN THE BOOKS OF THE ASSESEE COMPANY AND DETAILS OF PURCHASE AND SALES OF SHARES DURING THE ASSTT. YEAR 2000-01 BY THE ASSESSEE BEFORE THE AO IN SUPPORT OF GENUINENESS OF THE TRANSACTION. THE AO HAS HOWEVER MADE ADDITION ON THE BASIS THAT ON VERIFICATION BY THE INVESTIGATION WIN G IT WAS FOUND THAT M/S. MKM FINANCE P LTD. WAS NOT DOING ANY BUSINESS BUT O NLY PROVIDING ACCOMMODATION ENTRY. HE ALSO REFERRED STATEMENT OF SHRI MAHESH BATRA, DIRECTOR OF M/S. MKM FINANCE LTD. RECORDED U/S 131 OF THE ACT BY THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION) ADMITTING THE ABOVE FACTS. THE AO ALSO NOTED THAT THE DIRECTOR OF M/S. MKM FINANCE P LTD. IS NOT A PERSON OF ANY MEANS AND THAT PURCHASE AND SAL E OF SHARES HAVE BEEN MADE DURING THE PERIOD OF THREE MONTHS ONLY. HE NOT ED FURTHER THAT THERE WAS NO OTHER TRANSACTION BUT ONLY PURCHASES FROM M/ S. MKM FINANCE LTD. AND SALE OF THESE TWO SHARES AT HIGHER RATE. BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS PURCHASED AND SOLD SHARES IN RESPECT OF M/S. KLG SYSTEL AND PADMINI POLYMERS IN E ARLIER YEARS THROUGH ITA NO. 3631/DEL/2010 6 M/S. MKM FINANCE P LTD., SHARE BROKER AND HAD TO R ECOVER AN AMOUNT OF RS. 3463022/- FROM IT ON ACCOUNT OF THE DIFFERENCE IN THE SALE AND PURCHASE OF THE SHARES. THE ENTIRE AMOUNT OF RS. 34,63,022/- WAS RECEIVED BY THE ASSESSEE DURING THE YEAR VIDE DIFFERENT CHEQUES DET AILS OF WHICH WERE FURNISHED. IT WAS SUBMITTED THAT SHARES WERE BOUGH T / SOLD FROM / TO M/S. MKM FINANCE PVT. LTD. AT PREVAILING MARKET PRICE O N THE DATE OF TRANSACTION AND THE PAYMENTS WERE RECEIVED ONLY AGAINST THOSE S HARES. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS A CONFIRMATION FROM M/S. MKM FINANCE PVT. LTD. WAS FILED AND COPIE S OF BILLS AND CONTRACT NOTES ISSUED BY M/S MKM FINANCE PVT. LTD. IN RESPEC T OF PURCHASE AND SALES OF SHARES WERE ALSO FILED. ALL THE PAYMENTS WERE RE CEIVED THROUGH ACCOUNT PAYEE CHEQUES / DEMAND DRAFT AND WERE DULY CREDITED IN THE BANK ACCOUNT AND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS MAI NTAINED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE SAID PARTY IS A N EXISTING ASSESSEE AND IT WAS NOT A CASE OF CASH CREDIT RATHER IT WAS ONLY A BUSINESS TRANSACTION. IT WAS CONTENDED THAT VARIOUS REFERENCES HAVE BEEN MA DE BY THE AO TO THE FINDING OF THE INVESTIGATION WING, WHICH WERE NOT C ONFRONTED WITH OR PROVIDED TO THE ASSESSEE AT ANY STAGE OF ASSESSMENT PROCEEDINGS NOR ANY SHOW CAUSE NOTICE WAS SERVED ON IT WITH REGARD TO T HE PROPOSED ADDITION. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS THE AO HAS NOT MENTIONED ANY DETAILS OF THE INVESTIGATION CARRIED OUT AND THE SPECIFIC INFORMATION COLLECTED BY THE DEPARTMENT ON THE BASIS OF WHICH IT ITA NO. 3631/DEL/2010 7 WAS HELD THAT THE PAYMENT RECEIVED BY THE ASSESSEE FROM THE PERSON IN THE GARB OF SALE OF SHARES WAS ACTUALLY ACCOMMODATION E NTRY. THE ASSESSEE ALSO CONTENDED THAT THE STATEMENT MADE DURING THE C OURSE OF SEARCH / SURVEY PROCEEDINGS IS NOT THE FINAL WORD FOR MAKING ANY ADDITION BUT IT HAS TO BE SEEN IN THE LIGHT OF SUPPORTING FACTS AND MAT ERIALS. IT WAS SUBMITTED THAT WHERE ASSESSEE HAD SHOWN CERTAIN CREDIT ENTRY, WHICH IS SUPPORTED BY BILLS AND THE PAYMENTS HAVE BEEN RECEIVED THROUGH B ANKING CHANNEL, SUCH CREDIT ENTRY COULD NOT BE TREATED AS UNEXPLAINED CA SH CREDIT IN ASSESSEES HAND. THE AO HAS ALSO NOT GIVEN ANY DETAILS ABOUT T HE ENQUIRY CONDUCTED BY HIM ON THE BASIS OF WHICH IT WAS HELD THAT THE S AID PARTY WAS INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY TO TH E ASSESSEE. NOR THE AO IN THE ASSTT. ORDER HAS BROUGHT ANY MATERIAL ON REC ORD WHICH CAN PROVE THAT THAT THE MONEY WAS ASSESSEES OWN UNDISCLOSED INCOM E. CONSIDERING THESE CONTENTIONS AND THE FACTS OF THE CASE WE FULLY CON CUR WITH THE FINDING OF THE LD. CIT(A) THAT THE ASSESSMENT ORDER HAS BEEN F RAMED BY THE AO ONLY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE I NVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING ANY FURTHER INVESTIGATION AND IGNORING VARIOUS EVIDENCE PROVIDED BY THE ASSESSEE TO THE AO. WE ARE THUS OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE AO WAS NOT JUSTIFIED IN TREATING RS. 34,63,022/- RECEIVED BY THE ASSESSE E ON SALE OF SHARES AS IF UNDISCLOSED INCOME AND IN MAKING FURTHER ADDITION O F RS. 17,315/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 68C OF THE A T IN THE ARRANGEMENT OF ITA NO. 3631/DEL/2010 8 THE ALLEGED ACCOMMODATION ENTRY TO THE ASSESSEE. TH E FIRST APPELLATE ORDER IS COMPREHENSIVE AND REASONED ONE. THE SAME IS THUS UPHELD. THE GROUND NOS. 2 AND 3 ARE ACCORDINGLY REJECTED. 7. IN THE RESULT APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT O N 8 TH AUGUST, 2014. SD/- SD /- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER DATED 8 TH AUGUST, 2014 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT