Classic Display Systems Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3760/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6218 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: ALOK PERIWAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Additional evidence; Accommodation entries; Onus to prove
• Section: 142(1); 133(6); 147; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC - I : NEW DELHI BEFORE SMT. DIVA SINGH , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 3760 /DEL/ 2014 ASSESSMENT YEAR: 2004 - 05 M/S. CLASSIC DISPLAY SYSTEMS PVT. LTD., S - 179/B, PANCHSHEEL PARK, NEW DELHI. (PAN:AACCC2109D) VS. INCOME TAX OFFICER, WARD - 3(2), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. ALOK PERIWAL, CA RESPONDENT BY SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING 23.02.2016 DATE OF PRONOUNCEMENT 30.03.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31/03/2014 PASSED BY THE COMMISSIONER OF INCOME - TAX( APPEALS) - VI, NEW DELHI FOR ASSESSMENT YEAR 2004 - 05, RAISING FOLLOWING GROUND OF APPEAL: ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS. 20 LACS IS UNJUST/ILLEGAL/ARBITRARY AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. T HE FACTS IN BRIEF ARE THAT RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 25/10/2004. SUBSEQUENT TO THE FILING OF RETURN OF INCOME, THE ASSESSING OFFICER ON THE BASIS OF THE INFORMATION RECEIVED FROM THE ACIT, CENTRAL CIRCLE - IV, NEW DELHI THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRY IN THE FORM OF SHA RE APPLICATION MONEY OF RS. 10 L ACS FROM 2 ITA NO. 3760/DEL/2014. AY: 2004 - 05 THE COMPANY , NAMELY , GEEFCEE FINANCE LTD (GFL) OF TARUN GOYAL G ROUP , RECORDED REASONS TO BELIEVE THAT INCOME ESCAPED ASSESSMENT AND A NOTICE UNDER SECTION 1 48 OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) WAS ISSUED FOR INITIATION OF PROCEEDING UNDER SECTION 147 OF THE ACT . THE ASSESSEE DID NOT RESPOND TO THE NOTICE ISSUED UNDER SECTION 1 48 OF THE ACT BY THE ASSESSING OFFICER. THE ASSESSING O FFICER ISSUED A SHOW CAUSE NOTICE D ATED 7 TH OF OCTOBER 2011 , MENTIONING THEREIN THE REASONS FORMING THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT AND ASKING FOR THE DETAILS OF SHARE CAPITAL RAISED BY THE ASSESSEE DURING THE YEAR . AGAIN A NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED ON 20/10/2011 AND IN RESPONSE TO THAT THE ASSESSEE STATED THAT THE RETURN FILED UNDER SECTION 139(1) OF THE ACT MIGHT BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICED THAT ASSESSEE COMPANY ALSO RECEIVED A SUM OF RS. 10 LAKH FROM ANOTHER COMPANY M/S VIV SUN PROPERTIES PRIVATE LIMITED ( VSPPL) BUT THE NOTICE SENT UNDER SECTION 133(6) OF THE ACT FOR VERIFICATION OF THE SHARE APPLICATION MONEY TO THE SAID PARTY RETUR N ED UNSERVED WITH THE COMMENT OF THE POSTAL DEPARTMENT THAT THERE WAS NO SUCH COMPANY AT THE GIVEN ADDRESS. THE ASSESSING O FFICER ALSO FOUND THAT NAME OF M/S VPSPPL WAS ALSO APPEARED IN THE LIST OF COMPANIES WHO HAD TRANSACTED WITH M/S GFL . IN VIEW OF THE OBSERVATION, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ADVERSE INFERENCE MIGHT NOT BE TAKEN IN RESPECT OF RECEIPT OF SHARE APPLICATION MONEY FROM AFORESAID TO SHARE APPLICANTS. IN RESPONSE, THE ASSESSEE FILED SHARE APPLICATION 3 ITA NO. 3760/DEL/2014. AY: 2004 - 05 FORM, REGULATION ETC . I N RESPECT OF THE AFORESAID TO COMPANIES BUT NO CONFIRMATION OR ANY OTHER DOCUMENT IN RESPECT OF THE AFORESAID 2 PARTIES WERE FI LED. IN VIEW OF THE ABOVE, THE ASSESSING O FFICER, HELD THAT THE ASSESSEE FAILED TO DISCHARGE THE BURDEN OF PROOF IN RESPECT OF TH E CREDITS RECEIVED FROM THE AFORESAID TWO PARTIES AND ALSO THE INFORMATION RECEIVED WHEREIN MR . TARUN GOYAL ADMITTED IN THE COURSE OF SEARCH COND UCTED UNDER SECTION 132 OF THE INCOME T AX ACT ON 15/09/2008 AT THE PREMISES ADMITTED THAT HE WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES FOR THE LAST 6 YEARS AND HAD PROVIDED ACCOMMODATION ENTRIES TO THE TUNE OF RS. 30 TO 35 CRORE S TO VARIOUS PERSONS THROUGH COMPANIES FL OATED BY HIM. ACCORD INGLY, THE ASSESSING O FFICER IN THE ASSESSMENT COMPLETED UNDER SECTION 147 OF THE ACT ON 15 TH OF DECEMBER 2011 , HELD THAT SHARE APPLICATION MONEY OF RS. 10 LACS FROM M/S . GFL AND RS. 10 LACS FROM M/S . VS PPL AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF TH E ACT. ON APPEAL, BEFORE THE L D. COMMISSIONER OF INCOME - TAX( APPEALS), THE ASSESSEE F ILED ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX R UL ES, WHICH WERE ACCEPTED BY THE L D. COMMISSIONER OF INCOME - TAX( APPEALS), HOWEVER, HE OBSERVED THAT MR . TARUN GOY AL IN HIS STATEMENT CLEARLY ADMITTED OF PROVIDING ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY AND THE FACT THAT NOTICE UNDER SECTION 133( 6) OF THE ACT SENT TO M/S VS PPL RETURNED UNSERVED ALSO COUPLED WITH THE FACT THAT UNDATED SHARE APPLICATION FORMS OF M/S GFL AND M/S VSPPL FI LED BY THE ASSESSEE BEFORE THE ASSESSING O FFICER DID NOT CONTAIN NAME OF THESE TWO COMPANIES. ACCORDINGLY , HE SUSTAINED THE ADDITION MADE BY THE ASSESSING O FFICER. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4 ITA NO. 3760/DEL/2014. AY: 2004 - 05 3. IN THE SOLE GROUND OF APP EAL, THE ASSESSEE HAS CHALLENGED THE ADDIT ION OF RS. 20 LAKH MADE BY THE ASSESSING O FFICER UNDER SECTION 68 O F THE ACT AND SUSTAINED BY THE L D. COMMISSIONER OF INCOME - TAX( APPEALS). 4. BEFORE US, THE L D. AUTHORIZED REPRESENTATIVE SUBMITTED THAT ALL THE DOCUMENTS REQUIRED IN SUPPORT OF THE IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS IN RESPECT OF SHARE APPLICATION MONEY OF RS. 10 LAKH EACH RECEIVED FROM TWO COMPANIES WER E ALREADY SUBMITTED BEFORE TH E ASSESSING OFFICER AS WELL AS BEFORE THE L D. COMMISSIONER OF INCOME - TAX( APPEALS), HOWEVER, BOTH THE AUTHORITIES HAVE IGNORED THE DOCUMENTS FILED WITH THE ASSESSEE AND ADDITIONS HAVE BEEN MADE RELYING ON THE STATEMENT OF MR . TARUN GOYAL, COPIES OF WHICH WE RE NOT P ROVIDED TO THE ASSESSEE BY THE ASSESSING O FFICER BEFORE COMPLETION OF THE ASSESSMENT AND , THEREFORE , ASSESSMENT MADE BY THE ASSESSING O FFICER MAY BE RESTORED BACK TO HIM FOR DE - NOVO CONSIDERATION. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRE SENTATIVE R ELYING ON THE AUTHORITIES BELOW , OPPOSED THE SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE TO RESTORE THE MATTER BACK TO THE ASSESSING OFFICER . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. DURING THE YEAR THE ASS ESSEE HAS RECEIVED FRESH SHARE APPLICATION MONEY OF RS. 82 LAKHS, WHICH INCLUDES RS. 10 LAKHS EACH FROM M/S GEEFCEE FINANCE LTD AND M/S VIV SUN PROPERTIRS P LTD. THE ASSESSING O FFICER ON THE BASIS OF THE INFORMATION RECEIVED FROM THE A SSESSING O FFICER OF T HE M/S GEEFCEE FINANCE LTD . THAT THE COMPANY ONLY PROVIDED ACCOMMODATION ENTRY AND AFTER OBSERVING 5 ITA NO. 3760/DEL/2014. AY: 2004 - 05 THAT NOTICE UNDER SECTION 133(6) RETURNED UNSERVED IN T HE CASE OF M/S VIV SUN PROPERTIE S P VT. LTD., HELD THE SHARE APPLICATION MONEY RECEIVED FROM THESE TWO PARTIES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE ASSESSING OFFICER EMPHASISED ON THE FACT THAT MR TARUN GOYAL, WHO IN THE COURSE OF SEARCH PROCEEDING AT HIS PREMISES, UNDER SECTION 132 OF THE INCOME TAX ACT ON 15/09/2008 AND IN SUBSEQUEN T POST SEARCH PROCEEDING, ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES THROUGH THE C OMPANIES MANAGED BY HIM AND M/S. GEEFCEE FINANCE LTD . WAS MANAGED BY HIM. THE ASSESSING OFFICER ALSO BASED HIS FINDING ON THE FACT THAT SHARE APPLICATION FORMS OF THESE TWO COMPANIES DID NOT CONTAIN THEIR NAMES IN THE FORM NO. 2 PROVIDED BY THE ASSESSEE TO THE ASSESSING OFFICER. 7. THE A SSESSED HAS CLAIMED BEFORE THE L D. COMMISSIONER OF INCOME - TAX(APPEALS) THAT ALL THE DOCUMENTS SATISFYING THE REQUIREMENT OF SECTION 68 O F THE ACT WERE DULY FILED BEFORE THE ASSESSING OFFICER. THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE ALSO FILED ADDITIONAL DOCUMENTS BEFORE THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) IN SUPPORT OF THE REQUIREMENTS OF SECTION 68 OF THE ACT, WHICH WERE DULY ADMITTED BY HIM AS ADDITIONAL EVIDENCE, HOWEVER, HE OMITTED TO CONSIDER ALL THOSE DOCUMENTS AND RELIED MAINLY ON THE FINDING OF THE ASSESSING OFFICER. THE RELEVANT FINDING OF TH E COMMISSIONER OF INCOME - TAX( APPEALS) IN THIS RESPECT ARE AS UNDER: HOWEVER, FROM THE REPORT OF THE ASSESSING OFFICER, IT IS CLEAR THAT THE GENUINENESS OF THE TRANSACTION & CREDITWORTHINESS OF THE TRANSACTIONS CLAIMED BY THE APPELLANT REMAINED UNPROVED. EVEN THE APPELLANT COULD NOT 6 ITA NO. 3760/DEL/2014. AY: 2004 - 05 CONTROVERT THE SAME, DESPITE SUFFICIENT INFORMATION AND OPPORTUNITY WAS GIVEN TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS EVI DENT FROM THE ORDER SHEET ENTRIES MAINTAINED BY THE ASSESSING OFFICER. MOREOVER, SH. TARUN GOYAL HAD STATED IN HIS STATEMENT THAT HE DID NOT REMEMBERS THE NAMES OF THE COMPANIES & NAME OF THE BANK ACCOUNTS, WHICH WERE USED FOR ACCOMMODATION ENTRIES TO PLOU GH BACK UNACCOUNTED MONEY FOR THE PURPOSE OF ITS BUSINESS. IN THE INSTANT CASE, THE ASSESSEE FAILED TO RESPOND TO NOTICE U/S 148 OF THE ACT CALLING FOR FILING OF RETURN FOR A.Y. 2004 - 05. A SHOW CAUSE LETTER DATED 07.10.2011 WAS ISSUED TO THE ASSESSEE BY TH E ASSESSING OFFICER DESCRIBING THEREIN THE REASONS FORMING THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT IN THE CASE AND ASKING FOR DETAILS OF SHARE CAPITAL RAISED DURING THE YEAR. IN RESPONSE TO FOLLOW UP NOTICE U/S 142(1) ONLY, THAT A LETTER DATED 20.10. 2011 WAS FILED BY THE APPELLANT REQUESTING THAT RETURN FILED U/S 139(1) FOR A.Y. 2004 - 05 BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. HOWEVER, THE ASSESSEE WAS REQUIRED TO FILE A RETURN OF INCOME IN RESPONSE TO ISSUE OF NOTICE U/S 1 48 OF THE ACT, EVEN IF, IT HAS FILED RETURN U/S 139(1) OF THE ACT; AS PER THE RATIO OF JUDGMENT OF THE APEX COURT IN GKN DRIVE SHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER (2003) 259 ITR 19 (SC). FURTHER, THE ORDER PASSED BY THE ASSESSING OFFICER INDICATED T HE BASIS ON WHICH INCOME ELIGIBLE TO TAX IN HIS OPINION ESCAPED ASSESSMENT I.E. TRANSACTION WITH M/S. GEEFCEE FINANCE LTD. (GFL) WHERE SH. TARUN GOYAL IS ONE OF THE DIRECTOR S OF THE SAID COMPANY AND THROUGH WHICH THE APPELLANT HAD HELD TO HAVE INTRODUCED ITS OWN UNACCOUNTED INCOME OF RS. 10,00,000/ - IN THE GARB OF SHARE CAPITAL, IN ITS BOOKS OF ACCOUNT BY WAY OF CHEQUE AGAINST CASH. FURTHER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED A SUM OF RS. 10,00,000/ - ALSO FROM M/S. VIV SUN PROPERT IES PVT. LTD. AS SHARE APPLICATION MONEY BUT NOTICE U/S 133(6) ISSUED TO THE SAID VIV SUN PROPERTIES PVT. LTD. (VSPPL) WAS RECEIVED BACK UNSERVED FROM THE POSTAL AUTHORITIES WITH THE REMARKS THAT THERE WAS NO SUCH COMPANY IN THE GIVEN ADDRESS . EVEN, DU RING THE COURSE OF PROCEEDINGS ON 13.12.2011, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY AN ADVERSE VIEW MIGHT NOT TO BE TAKEN IN THE MATTER OF RECEIPT OF RS. 10,00,000/ - FROM M/S. GFL AS WELL AS M/S. VSPPL SINCE THE NOTICE ISSUED U/S 133(6) OF THE ACT TO M/S. VSPPL WAS RECEIVED BACK UNSERVED BY THE ASSESSING OFFICER & HENCE THE SAME ALSO REMAINED INDEPENDENTLY UNVERIFIED. ON 15.12.2011, THE ASSESSEE FILED A LETTER GIVING ONCE AGAIN THE DETAILS OF THE SHARES ISSUED. HOWEVER, FROM THE DETAILS FILED, IT W AS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD FILED COPIES OF UNDATED SHARE APPLICATION FORMS OF M/S. GFL & VSPPL & EVEN COPY OF FORM NO. 2 FILED BY THE ASSESSEE DID NOT CONTAIN THE NAMES OF M/S. GFL & VSPPL. IN FACT NAME OF M/S. VSPPL ALSO AP PEARED IN THE LIST OF COMPANIES WHO HAD TRANSACTED WITH M/S. GFL. THE STAND TAKEN BY THE ASSESSING OFFICER IN MAKING ADDITION U/S 68 OF THE ACT OF 7 ITA NO. 3760/DEL/2014. AY: 2004 - 05 RS. 20,00,000/ - IS FOUND TO BE LEGALLY & FACTUALLY TENABLE. THEREFORE, THE APPELLANT GETS NO RELIEF ON THE SO LE EFFECTIVE GROUND OF APPEAL & THE ORDER OF THE ASSESSING OFFICER PASSED U/S 147 OF THE ACT IS HEREBY CONFIRMED. 8. ON PERUSAL OF THE ABOVE FINDING OF THE L D. COMMISSIONER OF INCOME - TAX(APPEALS), WE OBSERVE THAT FOLLOWING DOCUMENTS WERE FILED BY THE A SSESSEE IN SUPPORT OF IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS IN RESPECT OF THE M/S GEEFCEE FIANACE LTD AND M/S VIV SUN PROPERTIRS P LTD: A) GEEFCEE FINANCE LTD. I) COPY OF SHARE APPLICATION FORM FOR ALLOTMENT OF SHARES IN THE COMPANY CLASSIC DISPLAY SYSTEMS (P) LTD. II) BALANCE SHEET FOR THE YEAR ENDING 31.03.2004 III) COPY OF INCOME TAX RETURN FILED. IV) COPY OF BANK STATEMENTS FOR THE ABOVE PERIODS REFLECTING THE CHEQUES ISSUED TO THE ABOVE NAMED COMPANY. V) DULY EXECUTED AFFIDAVITS OF THE DIRECTOR OF THE INVESTING COMPANY IS ENCLOSED. THE DIRECTOR HAS STATED ABOUT THE ADDRESS OF THE REGISTERED OFFICE OF THE COMPANY. THE REGISTRATION PARTICULARS OF THE COMPANY HAVE BEEN PROVIDED. THE ASSESSMENT PARTICULARS O F THE COMPANY HAVE BEEN PROVIDED. THE PARTICULARS OF INVESTMENT MADE IN THE ASSESSEE COMPANY ALONGWITH PARTICULARS OF PAYMENT MADE HAS BEEN STATED. THE CONFIRMATION AS REGARDS TO THE SHARES HAVING BEEN ALLOTTED AS ON 31.03.2004 HAS ALSO BEEN CONFIRMED. B) VIV SUN PROPERTIES PVT. LTD. (PRESENTLY ANTHEM INFRATECH PVT. LTD. ) I) COPY OF SHARE APPLICATION FORM FOR ALLOTMENT OF SHARES IN THE COMPANY CLASSIC DISPLAY SYSTEMS (P.) LTD. II) BALANCE SHEET FOR THE YEAR ENDING 31.03.2004 III) COPY OF INCOME TAX RETURN FILED. IV) COPY OF BANK STATEMENTS FOR THE ABOVE PERIODS REFLECTING THE CHEQUES ISSUED TO THE ABOVE NAMED COMPANY. V) DULY EXECUTED AFFIDAVITS OF THE DIRECTOR OF THE INVESTING COMPANY IS ALSO REFERRED TO THE DIRECTOR HAS STATED ABOUT THE ADDRESS OF THE REGISTERED OFF ICE OF THE COMPANY. THE REGISTRATION PARTICULARS OF THE COMPANY HAVE BEEN PROVIDED. 8 ITA NO. 3760/DEL/2014. AY: 2004 - 05 THE ASSESSMENT PARTICULARS OF THE COMPANY HAVE BEEN PROVIDED. THE PARTICULARS OF INVESTMENT MADE IN ASSESSEE COMPANY ALONGWITH PARTICULARS OF PAYMENT MADE HAS BEEN STATED. THE CONFIRMATION AS REGARDS TO THE SHARES HAVING BEEN ALLOTTED AS ON 31.03.2004 HAS ALSO BEEN CONFIRMED. 9. HOWEVER, NEITHER THE ASSESSING O FFICER , NOR THE COMMISSIONER OF INCOME TAX(APPEALS) APPEAL HAS CONSIDERED THESE DOCUMENTS SUBMITTED BY THE ASSESSEE IN SUPPORT OF THE REQUIREMENTS OF S ECTION 68 OF THE ACT, THEREFORE, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING O FFICER, WHO IS DIRECTED TO CONFRONT ALL THE INFORMATION GATHERED BY H IM TO THE ASSESSEE AND PROVIDE DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND TAKING INTO ACCOUNT THE DOCUMENTS SUBMITTED BY HIM, PASS A SPEAKING AND REASONED ORDER IN ACCORDANCE TO LAW. ACCORDINGLY, THE GROUND OF APPEAL IS ALLOWE D FOR STATISTICAL PURPOSE. 10. IN THE RESULT, THE APPEAL FILED WITH ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 3 0 T H MARCH , 2016 . S D / - S D / - ( DIVA SINGH ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H MARCH , 2016 . LAPTOP COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI