ITO, New Delhi V. M/s Doon Data Nest P. Ltd., Delhi

ITA 3855/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3624 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 11-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: A K JAIN
• Keywords: Opportunity of being heard; Additional evidence; Accommodation entries
• Section: 142(1); 133(6); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH B DELHI ] BEFORE SHRI RAJPAL YADAV, JM AND SHRI K. D. RAN JAN, AM I. T. APPEAL NO. 3855 (DEL) OF 2009. ASSESSMENT YEAR : 2003-04. THE INCOME-TAX OFFICER, M/S. DOO N DATA NEST P. LTD., W A R D : 10 (4), VS. F 5, F LAT NO. 8, MADHU VIHAR, N E W D E L H I. P A T P A R G A N J, D E L H I. PAN / GIR NO. AAA CD 0414 E. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI A. K. JAIN, C. A.; DEPARTMENT BY : MS. Y. S. KAKKAR, SR. D. R. O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 3-04 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-XIII, NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE LD. CIT (APPEALS) IS WRONG, PERVERSE, ILLEGAL A ND AGAINST PROVISIONS OF LAW WHICH IS LIABLE TO BE SET-ASIDE; 2. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 13,63,000/- UNDER SECTION 68 OF THE I. T. ACT, 1961 AS CREDITWORTHINESS AND GENUINE NESS OF THE TRANSACTION REGARDING RECEIPT OF SHARE APPLICATION MONEY FROM M /S. SAURABH CHEM. P. LTD. 2 I. T. APPEAL NO. 3855 (DEL) OF 2009. AND M/S. ZIGMA TELECOM P. LTD. WERE NOT PROVED BEFO RE THE AO IN SPITE OF SEVERAL OPPORTUNITIES AFFORDED TO THE ASSESSEE; 3. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 13,63,000/- UNDER SECTION 68 OF THE I.T. ACT WHEN THE DEPTT. HAS CLEARLY ESTABLISHE D THAT THESE TRANSACTIONS WERE ACCOMMODATION ENTRIES AND THE GENUINENESS AND IDENT ITY OF THE SHARE APPLICANTS COULD NOT BE PROVED; 4. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 13,63,000/- UNDER SECTION 68 BY RELYING UPON THE DECISION OF LOVELY EXPORT P. LTD. 12 DTR (2009) (SC) WHICH IS NOT APPLICABLE IN THIS CASE. 3. THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO DELETING THE ADDITION OF RS.13,63,000/- UNDER SECTION 68 OF THE I. T. ACT, 1961 AS CREDITWO RTHINESS AND GENUINENESS OF TRANSACTION REGARDING RECEIPT OF SHARE APPLICATION MONEY FROM S AURABH PETROCHEM. P. LTD. AND M/S. ZIGMA TELECOM P. LTD. WERE NOT PROVED BEFORE THE ASSESSIN G OFFICER IN SPITE OF SEVERAL OPPORTUNITIES AFFORDED TO THE ASSESSEE. THE FACTS OF THE CASE ST ATED IN BRIEF ARE THAT THE RETURN OF INCOME DECLARING INCOME OF RS.19,222/- WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM DIT (INV.) THAT THE A SSESSEE COMPANY HAD TAKEN ACCOMMODATION ENTRIES OF RS.4,50,000/- FROM SAURABH PETROCHEM. P. LTD. AND RS.4,50,000/- FROM M/S. ZIGMA TELECOM P. LTD. THE AO REOPENED ASSESSMENT UNDER S ECTION 148 OF THE ACT. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2) OF THE A CT ON 5/06/2007 FIXING THE CASE FOR HEARING ON 20 TH JUNE, 2007. THERE WAS NO COMPLIANCE OF THE NOTICE BY THE ASSESSEE. THE AO ISSUED NOTICE UNDER SECTION 142(1) ALONG WITH A QUESTIONNAIRE REQ UIRING THE ASSESSEE TO FILE REQUISITE INFORMATION ON OR BEFORE 23/11/2007. THE NOTICE AN D QUESTIONNAIRE WERE SERVED ON THE ASSESSEE ON 16/11/2007. SHRI MANISH GUPTA, THE AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE APPEARED AND REQUESTED FOR COPY OF THE REASONS RECORDED UNDER SE CTION 148 OF THE ACT. THE ASSESSEE WAS PROVIDED COPY OF REASONS ON 16/11/2007 AND THE DATE OF HEARING WAS FIXED ON 23 RD NOVEMBER, 2007. NONE APPEARED ON THIS DATE. THE AO ISSUED N OTICE U/S. 133(6) TO M/S. ZIGMA TELECOM P. 3 I. T. APPEAL NO. 3855 (DEL) OF 2009. LTD. AND M/S. SAURABH PETROCHEM P. LTD. REQUIRING T HEM TO FILE REPLIES ALONG WITH PROOF OF CREDITWORTHINESS, IDENTITY AND GENUINENESS OF THE T RANSACTION ON OR BEFORE 4/12/2007. THERE WAS NO REPLY FROM THESE PARTIES. THE AO AGAIN ISSUED N OTICE UNDER SECTION 142(1) ALONG WITH QUESTIONNAIRE ISSUED ON 4/12/2007 REQUIRING THE ASS ESSEE TO FILE DETAILS / EVIDENCE ON 12/12/2007. THE ASSESSEE DID NOT COMPLY WITH THIS NOTICE. ANOT HER SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE FIXING THE DATE FOR HEARING ON 17/12/2007. THERE WAS NO COMPLIANCE FROM THE ASSESSEE. SINCE THE ASSESSEE WAS NOT CO-OPERATING AND THE ASS ESSMENT WAS GOING TO BE BARRED BY LIMITATION ON 31 ST DECEMBER, 2007, THE AO CONCLUDED THAT THE ASSESSEE HAD FAILED TO DISCHARGE ONUS OF PROVING THE GENUINENESS/CREDITWORTHINESS OF THE SHA RE APPLICANTS. THE AO TREATED THE AMOUNT OF RS.13,63,000/- AS BOGUS CASH CREDIT AND ADDED THE S AME UNDER SECTION 68 OF THE ACT. 4. ON APPEAL, IT WAS SUBMITTED THAT THE AO ISSUED N OTICE ON 13/12/2007 FIXING THE DATE OF HEARING ON 17/12/2007. 15 TH & 16 TH DECEMBER, 2007 WERE HOLIDAYS. THE AO TOOK UP THE ASSESSMENT AT LAST MOMENT AND SUFFICIENT OPPORTUNIT IES WERE NOT PROVIDED TO THE ASSESSEE TO EXPLAIN AND PROVIDE EVIDENCES REGARDING THE ENTRIES . IT WAS ARGUED THAT OUT OF THREE ENTITIES, THE DETAILS OF PAN, INCOME-TAX RETURNS ETC. WERE AVAILA BLE FOR TWO PARTIES I.E. M/S. ZIGMA TELECOM P. LTD. AND M/S SAURABH PETROCHEM P. LTD. THE ADDI TION WITH REGARD TO RS.4,63,000/- WAS BASELESS AS THERE WERE NO DETAILS OR BASE FOR MAKIN G THIS ADDITION. THE ASSESSEE PROVIDED PAN NUMBERS OF BOTH THE PARTIES. THE LD. AR OF THE ASS ESSEE FILED COPIES OF INCOME-TAX RETURNS AND CONFIRMATIONS OF ABOVE PARTIES BEFORE LD CIT(A) AS ADDITIONAL EVIDENCES WHICH WERE FORWARDED TO THE AO. IN REMAND REPORT THE AO SUBMITTED THAT D ESPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE RELEVANT DOCUMENTS HAD NOT BEEN PROVIDED A T THE TIME OF ASSESSMENT AND, THEREFORE, THERE WAS NO GROUND FOR ADMITTING THE ADDITIONAL EV IDENCE. THE LD. CIT (APPEALS) ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE OBSERVED THAT ADEQ UATE OPPORTUNITIES HAD NOT BEEN PROVIDED TO THE ASSESSEE TO SUBMIT THE VARIOUS DOCUMENTS AND SU BMISSIONS AT THE TIME OF ASSESSMENT. THE ADDITIONAL EVIDENCE WAS, THEREFORE, ADMITTED. LD CI T(A) HAD NOTED THAT NO JUSTIFICATION WAS PROVIDED BY THE AO REGARDING THE ADDITION OF RS.4,6 3,000/-. WITH REGARD TO ADDITION ON THE GROUND OF SHARE APPLICATION, THE AR OF THE ASSESSEE HAD PROVIDED DETAILS TO ESTABLISH THE IDENTITY OF THE PARTIES AND WAS ALSO PROVIDED COPIES OF THE INCOME-TAX RETURNS, WHICH PRIMA FACIE HAD NOT BEEN DISPUTED BY THE AO. THE LD. CIT (APPEALS) REL YING ON THE DECISION OF HONBLE SUPREME 4 I. T. APPEAL NO. 3855 (DEL) OF 2009. COURT IN THE CASE OF CIT VS. LOVELY EXPORTS P. LTD. 216 CTR 195 (SC) HELD THAT ONCE THE IDENTITY OF THE PERSONS HAD BEEN ESTABLISHED WITH E VIDENCE, EVEN IF ANY ADDITION WAS TO BE CONSIDERED IT COULD NOT BE IN THE HANDS OF THE COMP ANY, WHICH HAD RECEIVED SHARES CAPITAL ACCOUNT. THE LD. CIT (A) ALSO NOTED THAT NO ADVERS E MATERIAL WAS BROUGHT ON RECORD TO JUSTIFY THE ADDITION. SINCE THE ASSESSEE HAD ESTABLISHED THE I DENTITY OF THE PARTIES AND ALSO SUBMITTED DOCUMENTS WHICH PRIMA FACIE PROVE THE CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTION, THEREFORE, NO ADDITION COULD BE MADE IN THE HANDS O F THE ASSESSEE. HE, ACCORDINGLY, DELETED THE ADDITION. 5. BEFORE US THE LD. SR. DR SUBMITTED THAT THE LD. CIT (APPEALS) WHILE ADMITTING ADDITIONAL EVIDENCE ASKED FOR REMAND REPORT FROM THE AO. THE AO IN HIS REMAND REPORT OBJECTED TO ADMISSION OF ADDITIONAL EVIDENCE ON THE GROUND THAT SUFFICIENT OPPORTUNITIES WERE GIVEN TO THE ASSESSEE. REQUIREMENT OF RULE 46-A WERE NOT SATISFI ED FOR ADMISSION OF THE ADDITIONAL EVIDENCE. HOWEVER, THE LD. CIT (A) ADMITTED THE ADDITIONAL EV IDENCE, BUT NO FURTHER OPPORTUNITY WAS PROVIDED TO THE AO. THEREFORE, THE LD. CIT (A) WAS NOT JUSTIFIED TO RELY ON THE ADDITIONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO THE AO. SHE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. MODERN CHAR ITABLE FOUNDATION (2011) - TIOL 363 HC- (DEL.) IT, WHEREIN ON IDENTICAL FACTS THE MAT TER WAS REMANDED BACK TO THE AO. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE RELIED ON TH E ORDER OF THE LD. CIT (APPEALS). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE ASSESSMENT WAS MADE UNDER SECTION 144/147 OF T HE ACT. FROM THE FACTS STATED ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAD NOT FILED EVIDENCE BE FORE THE AO THOUGH SEVERAL OPPORTUNITIES WERE GIVEN TO THE ASSESSEE FROM 5 TH JUNE, 2007 TO 17/12/2007. THE SHARE APPLICANTS NA MELY, M/S. ZIGMA TELECOM P. LTD. AND M/S. SAURABH PETROCHEM P. LTD. DID NOT RESPOND TO THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT. THE ASSESSEE FILE D ADDITIONAL EVIDENCED BEFORE THE LD. CIT (A) IN THE FORM OF PAN NUMBER, COPIES OF INCOME-TAX RET URNS AND CONFIRMATIONS. THE LD. CIT (A) OBTAINED COMMENTS OF THE AO FOR ADMISSION OF ADDITI ONAL EVIDENCE, WHICH WAS OBJECTED TO BY THE AO ON THE GROUND THAT SUFFICIENT OPPORTUNITIES WERE PROVIDED. THE LD. CIT (A) ADMITTED THE 5 I. T. APPEAL NO. 3855 (DEL) OF 2009. ADDITIONAL EVIDENCE BUT DID NOT PROVIDE ANY OPPORTU NITY TO THE AO TO INQUIRE INTO VERACITY OF THE EVIDENCES. 7. UNDER RULE 46-A THE APPELLANT SHALL NOT BE ENTIT LED TO PRODUCE BEFORE THE LD. CIT (APPEALS) ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY , OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE AO EXCE PT IN THE FOLLOWING CIRCUMSTANCES, NAMELY, A ) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR ( B ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT C AUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER ; OR ( C ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT C AUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR ( D ) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER AP PEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. 8.1 THE LD. CIT (APPEALS) HAD ADMITTED THE ADDITION AL EVIDENCE ON THE GROUND THAT SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE WAS NOT PROVIDED. SUB RULE (3) OF RULE 46-A PROVIDES THAT (A) THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB RULE (1) UNLESS THE AO HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENTS OR TO CROSS EXAMINE THE WITNE SS PRODUCED BY THE ASSESSEE; OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. UNDER RULE 46-A(4) THE COMMISSIONER OF INCOME-TAX (APPEALS) CAN DIRECT THE PRODUCTION OF ANY DOCUMENT OR EXAMINATION OF ANY WI TNESS TO ENABLE HIM TO DISPOSE OF THE APPEAL OR ANY OTHER SUBSTANTIAL CAUSE INCLUDING ENHANCEMEN T OF ASSESSMENT OR PENALTY WHETHER ON HIS 6 I. T. APPEAL NO. 3855 (DEL) OF 2009. OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFIC ER UNDER CLAUSE (A) OF SUB SECTION (1) OF SECTION 251 OR IMPOSITION OF PENALTY UNDER SECTION 271 OF THE ACT. IN THE CASE BEFORE US IT IS NOT THE LD. CIT (APPEALS) WHO ON HIS OWN MOTION DIRECTE D THE ASSESSEE FOR PRODUCTION OF ANY DOCUMENT FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. IT IS A CASE WHERE THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE, WHICH HAS BEEN ADMITTED BY THE LD. CIT (A) FOR WANT OF PROPER OPPORTUNITY OF BEING GIVEN BY THE ASSESSING OFFICER. AFTER ADM ISSION OF ADDITIONAL EVIDENCE, THE LD. CIT (A) HAS NOT GIVEN ANY OPPORTUNITY AS REQUIRED UNDER RUL E 46-A(3) FOR THE PURPOSE OF EXAMINATION OF EVIDENCE OR DOCUMENTS OR TO CROSS EXAMINE THE WITNE SS PRODUCED BY THE ASSESSEE. THEREFORE, IN OUR CONSIDERED OPINION, THE LD. CIT (APPEALS) WAS N OT JUSTIFIED IN TAKING INTO ACCOUNT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WITHOUT G IVING OPPORTUNITY TO THE AO TO EXAMINE THE EVIDENCE. IN THE CASE OF DIT VS. MODERN CHARITABLE FOUNDATION (SUPRA) THE ASSESSING OFFICER IN REMAND REPORT DID NOT GO INTO THE VERACITY OF THE A DDITIONAL EVIDENCE AND REPRODUCED SOME FACTS FROM THE ASSESSMENT ORDER. LD. CIT (A) AFTER ADMIT TING THE ADDITIONAL EVIDENCE RELIED UPON THE SAME WITHOUT ANY VERIFICATION AND ALLOWED THE RELIE F TO THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER. THE AO STRONGLY FELT THAT T HERE WAS LAPSE ON THE PART OF THE ASSESSEE IN NOT PRODUCING THE EVIDENCE BEFORE HIM WHEN HE HAD BEEN GIVEN NUMBER OF OPPORTUNITIES AND, THEREFORE, HE OBJECTED TO ADMISSION OF THE SAME EVI DENCE AND DID NOT DO ANY FURTHER EXERCISE TO VERIFY THE SAME. THE HONBLE COURT FURTHER FOUND T HAT EVEN THE LD. CIT (A) DID NOT GO INTO THESE DOCUMENTS AND SIMPLY RELIED UPON THE DOCUMENTS. HO NBLE DELHI HIGH COURT, UNDER THESE CIRCUMSTANCES, CAME TO THE CONCLUSION THAT ON THE O NE HAND, THE ASSESSEE BE PERMITTED TO RELY UPON THE ADDITIONAL EVIDENCE BEFORE THE LD. CIT (A) AND AT THE SAME TIME, THE AO SHOULD ALSO BE GIVEN OPPORTUNITY TO VERIFY THOSE DOCUMENTS. HONB LE DELHI HIGH COURT, THEREFORE, SET ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTIONS TO GO INTO THE VERACITY OF THE DOCUMENTS. 8.2 IN THE CASE BEFORE US THE FACT ARE IDENTICAL TO THE FACTS OF MODERN CHARITABLE FOUNDATION (SUPRA). SINCE THE LD. CIT (A) HAS NOT GIVEN OPPOR TUNITY TO THE AO TO VERIFY THE VERACITY OF ADDITIONAL EVIDENCE FILED BEFORE HIM AND THE LD. CI T (A) HAD JUST RELIED ON THE ADDITIONAL EVIDENCE WITHOUT VERIFYING THE ADDITIONAL EVIDENCE, IN OUR CONSIDERED OPINION, THE MATTER REQUIRES TO BE SET ASIDE TO THE FILE OF THE LD. CIT (APPEALS) WITH THE DIRECTIONS THAT THE LD. CIT (A) WILL PROVIDE OPPORTUNITY TO THE ASSESSING OFFICER T O LOOK INTO THE VERACITY OF THE DOCUMENTS, 7 I. T. APPEAL NO. 3855 (DEL) OF 2009. EXAMINE THE CREDITWORTHINESS AND IDENTITY OF THE CR EDITORS AND GENUINENESS OF TRANSACTIONS. THE LD. CIT (APPEALS) WILL DECIDE THE ISSUE AFTER PROVI DING THE ASSESSING OFFICER AS WELL AS THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT AFTER THE C LOSE OF HEARING ON : 07 TH JULY, 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07 TH JULY, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.