S.K. Embroidery Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3702/DEL/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6535 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 02-03-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 17-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Initiation of penalty proceedings; Difference of opinion; Accommodation entries
• Section: 68; 148

Judgement Text

ITA NO. 3702 /DEL./201 2 ASSESSMENT Y EAR: 2000 - 01 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMB E R AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMEBR ITA NO. 3702 /DEL./201 2 ASSESSMENT YEAR: 20 0 0 - 0 1 S.K. EMBROIDERY PVT. LTD. S - 129, PARAMPURI, UTTAM NAGAR, NEW DELHI VS. DCIT CIRCLE - 7(1), NEW DELHI (APPLICANT) (RESPONDENT) (PAN: A ABCS4780M ) ASSESSEE BY: SH. P. C. YADAV, ADVOCATE REVENUE BY: SH. N.K. BANSAL, SR. DR DATE OF HEARING 0 2 / 0 3 /201 7 DATE OF PRONOUNCEMENT 06 / 0 3 /201 7 ORDER PER B.P. JAIN , ACCOUNTANT MEMBER : 1. THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE LD. CIT(A) - 10, NEW DELHI VIDE ORDER DATED 8.5.2012 FOR THE A.Y. 20 0 0 - 0 1 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF LD. CIT(A) IS BAD IN LAW AND ON FACTS 2. THE LD, CIT(A) HAS ERRED IN NOT APPRECIATING THAT MERE MENTIONING ABOUT THE INITIATION OF PENALTY PROCEEDINGS, IN THE LAST PARA OF THE ASSESSMENT ORDER DOES NOT AMOUNT TO RECORDING OF PAGE 2 OF 10 SATISFACTION AS ENVISAGED U/S 271 (1)(C). 3. THE LD. CI T(A) HAS FAILED TO APPRECIATE THAT THE SATISFACTION OF THE A.O. AS TO WHETHER ASSESSES HAS CONCEALED HIS PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME IS A CONDITION PRECEDENT BEFORE LEVYING PENALTY U/S 271 (1 )(C). 4. THE LD. C I T(A) HAS FAI LED TO APPRECIATE THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS ARE TWO DIFFERENT CONNOTATION AND HENCE A CLEAR CHARGE AS TO WHETHER ASSESSEE HAS CONCEALED HIS PARTICULARS OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME HAS TO B E FRAMED AGAINST AN ASSESSEE BEFORE LEVYING PENALTY U/S 271(1)(C). 5. THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE AO NEITHER IN THE NOTICE OF PENALTY NOR IN THE ORDER OF PENALTY HAS SPECIFICALLY FRAMED THE APPROPRIATE CHARGE AGAINST THE ASSESSEE . 6. THE LD. CIT AS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE PROVISION OF SECTION 271(1)(C) ARE DISCRETIONARY PROVISONS AND SHOULD BE EXECUTED IN A JUDICIAL MANNER. 7. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THER E WAS DIFFERENCE OF OPINION AMONG THE AO AND THE ITAT IN RESPECT OF ADDITIONS SUSTAINED IN QUANTUM PROCEEDINGS. 8 . THE LD. CIT (A) HAS FURTHER ERRED IN RELYING ON THE DECISION OF ESCORTS AND ZOOM COMMUNICATIONS BECAUSE THE FACTS OF THESE CASES ARE ENTIRELY O N DIFFERENT FOOTAGE. 9 . I HE LD. CIT(A) HAS FAIIED TO APPRECIATE THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF OASIS HOSPITALITY AND HENCE NO PENALTY IS LEVIABLE. PAGE 3 OF 10 10 . ASSESSEE CRAVES LEAVE TO AMEND, ALTER AND ADD ANY GROUND OF APPEAL AT TH E TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.11.2000 DECLARED AN INCOME OF RS. 5,27,830/ - UNDER NORMAL PROVISIONS AND RS. 8,88,348/ - U/S 115JA OF THE IT ACT. THE SAID RETURN WAS PROCESSED U/S 143(1) ON 26.7.2001 AT AN INCOME OF RS. 8,83,348/ - . THEREAFTER, INFORMATION WAS RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT THAT THE APPELLANT HAS OBTAINED BOGUS ACCOMMODATION ENTRIES FROM THREE PARTIES AMOUNTING TO RS.18,51,600/ - AS PER THE F OLLOWING DETAILS: - S.NO. VALUE OF ENTRY INSTRUMENT NO. DATED NAME OF A/C BANK NAME AND BRANCH A/C NO. OF ENTRY GIVING A/C 1 10,01,600 897084 16.3.2000 TE EM METALS PVT LTD VIJAYA BANK, RAM NAGAR 2789 2 6,00,600 287114 24.3.2000 C HANGIA STEELS PVT LTD VIJAYA BANK, RAM NAQAR 2566 3. 2,50,000 897084 28.3.2000 TEEM METALS PVT. LTD. KVB KAROL BAGH 2789 4 . 2 . ON THE BASIS OF THE AFORESAID INFORMATION OBTAINED FROM THE INVESTIGATION WING, THE ASSESSMENT WAS RE - OPENED BY ISSUING NOTICE PAGE 4 OF 10 U/S 148 OF THE IT ACT. IN THE RE - OPENED PROCEEDINGS, THE AO MADE AN ADDITION OF RS. 18,51,600/ - ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE IT ACT. THE SAID ADDITION WAS CHALLENGED BEFORE THE CIT(APPEALS), WHICH PROVED UNSUCCESSFUL ALTHOUGH THE QU ANTUM OF ADDITION WAS REDUCED TO RS. 13,50,000/ - . DURING THE APPELLATE PROCEEDINGS, CERTAIN FRESH ENQUIRIES WITH BANKS WERE GOT CONDUCTED BY THE AO ON THE INSTRUCTIONS OF THE CIT(APPEALS). IT FINALLY TURNED OUT THAT THE QUANTUM OF ACCOMMODATION ENTRIES OBT AINED BY THE APPELLANT DURING THE YEAR AMOUNTED TO RS. 13,50,000/ - AS PER THE DETAILS REPRODUCED HERE UNDER: S.NO. VALUE OF ENTRY INSTRUMENT NO. DATED NAME OF A/C BANK NAME AND BRANCH A/C NO. OF ENTRY GIVING A/C 1 5,00,000 742844 16.3.2000 TEEM METALS PVT LTD VIJAYA BANK, 2789 2 6,00,000 743016 24.3.2000 TEEM METALS PVT LTD VIJAYA BANK, 2789 3 2,50,000 897084 25.3.2000 CHANGIA STEELS PVT LTD KVB KAROL BAGH NOT MENTIONED 4 . 3 . THE CIT( APPEALS) UPHELD ADDITION TO THE EXTENT OF RS.13,50,000/ - . THE APPELLANT CHALLENGED THE CIT(APPEAL)'S ORDER UNSUCCESSFULLY BEFORE THE ITAT. THE HON'BLE ITAT, WHILE UPHOLDING THE ADDITION MADE BY ASSESSING OFFICER, HAS NEGATIVED PAGE 5 OF 10 THE CONTENTIONS OF THE ASSESS EE WITH FOLLOWING REMARKS: - '5.1 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS OF THE CASE ARE THAT THE ASSESSEE RECEIVED THREE CHEQUES AGGREGATING TO RS. 13.50 LAKH FROM TEEM METALS (P) LTD. AND CHANGIA STEELS (P) LTD. ACCORDING TO THE ASSESSEE, THE CHEQUES WERE RECEIVED FOR ALLOTMENT OF SHARES, HOWEVER, THE SHARES WERE NOT ALLOTTED AND THE MONEY WAS RETURNED BY WAY OF CHEQUES IN THIS VERY YEAR. THE CHEQUES WERE ENCASHED AFTER THE CLOSE OF THE YEAR. RECEIPT AND PAYMENT ARE BY LIMITED COMPANIES AND ALL TRANSACTIONS HAVE BEEN CONDUCTED THROUGH BANKING CHANNELS. NO BENEFIT HAS BEEN RECEIVED BY THE ASSESSEE. THE TRANSACTIONS HAVE NOT BEEN RECORDED IN THE BOOKS BECAUSE THE ASSESSEE MADE THE REPAYMENT IN THIS VERY YEAR. ON THE SE FACTS, IT CAN BE SAID THAT THE ASSESSEE WAS IN POSSESSION OF MONEY EQUIVALENT TO THE AGGREGATE OF THE AMOUNTS INVOLVED IN THE CHEQUES. /4S THESE CHEQUES WERE CLEARED AND CREDITED IN ASSESSEE'S BANK ACCOUNT, THE POSSESSION OF CHEQUES CANNOT BE DENIED. AS NO EVIDENCE EXISTS ON RECORD REGARDING APPLICATIONS MADE BY THE TWO COMPANIES FOR ALLOTMENT OF SHARES, THE AMOUNTS FOUND WITH THE ASSESSEE CA N AT BEST BE SAID TO BE MERELY A CREDIT RECEIVED AND NOT THE MONIES RECEIVED FOR ALLOTMENT OF SHARES. IN RESPECT OF THE CREDITS OR THE MONIES FOUND IN POSSESSION OF THE ASSESSEE, THE BURDEN TO LEAD SATISFACTORY EVIDENCE REGARDING NATURE AND SOURCE IS ON TH E ASSESSEE. THE ASSESSEE HAS NOT EVEN FILED CONFIRMATION LETTERS FROM THESE PERSONS. THE VERY FACT THAT THE CREDITORS ARE LIMITED COMPANIES AND TRANSACTIONS HAVE BEEN UNDERTAKEN THROUGH BANKING CHANNELS DOES NOT LEAD TO ESTABLISHMENT OF IDENTITY AND CREDIT WORTHINESS OF THE CREDITORS. OBVIOUSLY, IT DOES NOT LEAD TO AN INFERENCE THAT THE AMOUNT WAS GENUINELY RECEIVED FROM THE ALLEGED CREDITORS AS LOANS OR SHARE APPLICATION MONEY. THE ALLEGED REPAYMENT OF THE LOAN ALSO DOES NOT DISCHARGE THE BURDEN FOR THE SIM PLE REASON THAT THE AMOUNTS COULD BE CREDITED TO A SPURIOUS BANK ACCOUNT FROM WHICH THE LOAN ORIGINATED. WHAT IS MORE DAMAGING FOR THE ASSESSEE IS THAT ENTRIES OF THE TRANSACTION HAVE NOT BEEN MADE IN THE BOOKS OF ACCOUNT, WHICH SHOWS THAT THE ASSESSEE INT ENDED TO CAMOUFLAGE THE ENTRIES ALTHOUGH THE MONEY REMAINED WITH IT FOR QUITE SOME TIME. AT THE SAME TIME, THE ENQUIRIES CONDUCTED BY INVESTIGATION WING ALSO SHOWED THAT THE TRANSACTIONS ARE IN THE NATURE OF ACCOMMODATION ENTRIES. THE CUMULATIVE EFFECT IS THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS PRIMARY BURDEN U/S 69A OF THE ACT IT MAY BE MENTIONED HERE THAT THE AO HAS MADE ADDITION UNDER A WRONG SECTION 68, BUT IT IS PAGE 6 OF 10 FOUND THAT NO ENTRY HAS BEEN MADE IN THE BOOKS OF THE ASSESSEE. THEREFORE, THE ADDITI ON SHOULD HAVE BEEN CORRECTLY MADE U/S 69A. THE TRIBUNAL HAS ALL THE POWERS TO CORRECT SUCH MINOR ERROR IN REGARD TO THE CORRECT PROVISION APPLICABLE ON THE FACTS. THUS , IT IS HELD THAT THE ID. CIT(APPEALS) RIGHTLY UPHELD THE ADDITION OF RS. 13.50 LAKH. 3. LD. CIT (A) CONFIRMED THE ACTION OF THE A.O. 4. THE LD. COUNSEL FOR THE ASSESSEE SH. P.C. YADAV, ADVOCATE ARGUED AT LENGTH AND ALSO PLACED ON RECORD THE WRITTEN SUBMISSIONS CONTAINING 7 PAGES ALONG WITH JUDGMENT OF VARIOUS COURTS OF LAW AND THE PAPER BOOKS WHICH ARE ON RECORD. 5. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IN RESPECT OF GROUND NOS. 2 TO 5 WHICH ARE LEGAL GROUNDS THE ASSESSEE HAS ARGUED THAT THE PENALTY IS NOT AT ALL LEVIABLE IN THIS CASE FOR THE REASON THAT THE ASSESSING OFFICER HAS ISSUED A VAGUE NOTICE FOR THE INITIATION OF THE PENALTY PROCEEDINGS . W IT H TH E ASSISTANCE OF LD. COUNSEL, W E HAVE SEEN THE COPY OF THE NOTICE PLACED AT PAGE 7 OF 10 PAGE NO. 26 OF THE PAPER BOOK WHICH SHOWS THAT IRRELEVANT CLAUSES OF THE NOTICE WERE NOT STR UCK BY THE ASSESSING OFFICER AT THE TIME OF INITIATION OF PROCEEDINGS. THE LD. COUNSEL AR GUED THAT THESE TYPES OF NOTICES ARE SEVERELY CRITICIZED BY VARIOUS COURTS INCLUDING SUPREME COURT IN THE CASE OF MANJU NATH COTTON MILLS REPORTED IN 359 ITR 565 WHICH HELD THAT PENALTY PROCEEDINGS ARE LIABLE TO BE QUASHED IF THE SAME ARE INITIATED ON THES E TYPE OF NOTICES. THE HON BLE HIGH COURT OF KARNATAKA HAS HELD THAT WHILE DECIDING THE ISSUE IN THE CASE OF MANJU NATH COTTON MILLS REPORTED IN 359 ITR 565 HAS HELD THAT THE ISSUANCE OF THESE TYPE OF NOTICES WOULD SHOW COMPLETE NON APPLICATION OF MIND OF THE ASSESSING OFFICER WHICH IS NOT PERMISSIBLE. IT IS RELEVANT TO POINT OUT THAT FOR CONTROVERTING THE ARGUMENTS OF THE LD. COUNSEL, THE LD. DR HAS SUBMITTED THAT THE NOTICE ANNEXED IN P.B. IS MERELY A PHOTO COPY AND THE ORIGINAL IS TO BE SEEN FIRST FOR AD JUDICATING THE ISSUE OF INITIATION OF PROCEEDINGS. THE LD. COUNSEL FOR THE ASSESSEE HAS BROUGHT THE ORIGINAL NOTICE AND SHOWN TO THE BENCH. ON PERUSAL OF THE SAME IT IS FOUND THAT THERE IS NO DIFFERENCE BETWEEN THE PHOTO COPY ANNEXED AT PAPER BOOK AS WELL AS ORIGINAL NOTICE AND HENCE THE SUBMISSION OF THE LD. DR DESERVES TO BE IGNORED. THE LD. DR FAILED TO POINT OUT ANY CONTRARY DECISION IN THE CASE OF MANJU NATH COTTON MILLS REPORTED PAGE 8 OF 10 IN 359 ITR 565. HENCE THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED ON THIS GROUND ALONE . 7. THE LD. DR MADE ARGUMENTS THAT IT IS A CASE OF DIFFERENCE OF OPINION BECAUSE THE AS SESSING OFFICER HAS MADE THE ADDITION, IN QUANTUM PROCEEDINGS U/S 68 . W HILE ITAT IN QUANTUM PROCEEDINGS HAS UPHELD THE ADDITION U/S 69A WHICH PROVISIONS ARE MATERIAL LY DIFFERENT FROM THE PROVISIONS OF SECTION 68 AND HENCE IT IS A CASE OF DIFFERENCE OPINIO N . O N THIS POINT ALSO PENALTY IS NOT LEVIABLE. FURTHER IT WAS NOTICED BY THE BENCH THAT THE ASSESSEE HAS TURNOVER OF RS. 4.79 CRORE AND HAS PAID SALARY TO THE TUNE OF RS. 2043 LACS IN THE IMPUGNED YEAR AND WHATEVER THE ASSESSEE HAS ALSO PRODUCED A CERTIFIC ATE FROM THE NATIONAL BANK CERTIFYING THAT ALLEGED SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WAS ACTUALLY RETURNED TO THE SUBSCRIBER. THE LD. DR COULD NOT CONTROVERT THESE ARGUMENTS AND HENCE WE ARE FULLY CON VINCED WITH THE LD. AR THAT WHATEVER ENTR IES WERE PASSED IN THE BOOKS WERE PASSED IN THE BONA FIDE MANNER. 8. WITHOUT PREJUDICE TO THE ABOVE IT IS ALSO SETTLED POSITION OF LAW THAT NO PENALTY IS LEVIABLE FOR VIOLATION OF DEEMING PR OVISIONS. R EFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS IN THE CASE OF CIT VS. S. KOLYAN PAGE 9 OF 10 REPORTED IN 527 ITR 477 AND ITO VS. RAKESH GUPTA 107 TTJ 909 (AMRITSAR). IN VIEW OF THE FACTUAL AND LEGAL POSITION THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE PENALTY IMPOSE D U/S 271(1)(C ) IS DIRECTED TO BE DELETED. 9 . IN THE RESULT, THE APPEAL IS ALLOWED. 10 . P RONOUNCED IN THE OPEN COURT ON 06 . 0 3 .201 7. SD/ - SD/ - (SUDHANSHU SRIVASTAVA) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06 . 0 3 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR PAGE 10 OF 10 DATE DRAFT DICTATED ON 02 .0 3 .2017 DRAFT PLACED BEFORE AUTHOR 02 .0 3 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 06 .3.2017 KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK 06 .3.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.