DCIT, Central Circle - VII, Kolkata, Kolkata V. M/s. Pentex Expo Pvt. Ltd., Kolkata

ITA 399/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59620 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Keywords: Unexplained investment; Presumptive income; Accommodation entries; Retraction
• Section: 143(3); 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , ! ! ! ! /AND ' #!' ' #!' ' #!' ' #!' , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] !$ !$ !$ !$ / I.T.A NOS. 394 & 395/KOL/2011 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEARS : 2006-07 & 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. IRIS COMMERCIAL PVT. LTD. CENTRAL CIRCLE-VII, KOLKATA. (PAN:AAACI 5557 R) (*+ /APPELLANT ) (,*+/ RESPONDENT ) & !$ !$ !$ !$ / I.T.A NOS. 396 TO 398/KOL/2011 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEARS : 2005-06 TO 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. NILHA T PROMOTERS FISCAL PVT. LTD. CENTRAL CIRCLE-VII, KOLKATA. (PAN:AABCN 5606 K) (*+ /APPELLANT ) (,*+/ RESPONDENT ) & !$ !$ !$ !$ / I.T.A NOS. 399 TO 401/KOL/2011 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEARS : 2005-06 TO 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S.PENTEX EXPO PVT. LTD. CENTRAL CIRCLE-VII, KOLKATA. (PAN:AABCP 4861 E) (*+ /APPELLANT ) (,*+/ RESPONDENT ) FOR THE APPELLANT: SHRI L. K. S. DEHIYA FOR THE RESPONDENT: SHRI SUBASH AGARWAL DATE OF HEARING: 13.02.2012 DATE OF PRONOUNCEMENT: .02.2012 - / ORDER PER BENCH: ALL THESE 8 APPEALS BY REVENUE IN RESPECT OF 3 DIFF ERENT ASSESSEES MENTIONED ABOVE ARE ARISING OUT OF SEPARATE ORDERS OF CIT(A), CENTRAL-I , KOLKATA IN APPEAL NOS.405/CIT(A).C- 1/CC-VII/08-09 & 249/CIT(A).C-1/CC-VII/09-10 DATED 23.12.2010, 391/CIT(A),C-1/CC- VII/08-09, 382/CIT(A),C-1/CC-VII/08-09 & 274/CIT(A) ,C-1/CC-VII/09-10 DATED 22.12.2010 AND 400/CIT(A),C-1/CC-VII/08-09, 398/CIT(A),C-1/CC- VII/08-09 & 259/CIT(A),C-1/CC- VII/09-10 DATED 20.12.2010. ASSESSMENTS WERE FRAMED BY DCIT, CC-VII, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) FOR ASSESSMENT YEARS 2 ITA 394-401/K/2011 M/S. IRIS COMMERCIAL PVT. LTD. & ORS. MENTIONED ABOVE VIDE HIS SEPARATE ORDERS DATED 29.1 2.2008, 18,12,2009, 31.12.2008, 29.12.2008.30.12.2009, 31.12.2008, 29.12.2008 AND 3 1.12.2009 RESPECTIVELY. 2. IN ITA NOS.394, 395, 397, 398,400 AND 401/KOL/2 011 THE FOLLOWING TWO COMMON GROUNDS, EXCEPT VARIANCE IN AMOUNT, HAVE BEEN RAISE D BY THE REVENUE. WE REPRODUCE THE GROUNDS FROM ITA NO. 394/KOL/2011: 1. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION MADE ON PROTECTIVE BASIS OF RS.10,29,34,00 0/- BY WAY OF IGNORING THE STATEMENT MADE BY THE DIRECTOR OF THE ASSESSEE COMPANY BEFORE DDIT (INV,), KOLKATA. 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAD ERRED IN DELETING THE 2% COMMISSION INCOME OF RS.20,58,680/- FOR ENTRY PROVI DE BY THE ASSESSEE COMPANY WHICH IS BASED ON A CASE UNEARTHED BY THE DDIT (INV.), KOLKA TA DECIDED BY THE HONBLE ITAT, KOLKATA. IN ITA NOS. 396 AND 399/KOL/2011 THE FOLLOWING THRE E COMMON GROUNDS, EXCEPT VARIANCE IN AMOUNT, HAVE BEEN RAISED BY THE REVENUE. WE REPROD UCE GROUNDS FROM ITA NO.396/KOL/2011: 1. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION MADE ON PROTECTIVE BASIS OF RS.13,03,50,00 0/- BY WAY OF IGNORING THE STATEMENT MADE BY THE DIRECTOR OF THE ASSESSEE COMPANY BEFORE DDIT (INV,), KOLKATA. 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAD ERRED IN DELETING THE 2% COMMISSION INCOME OF RS.26,07,000/- FOR ENTRY PROVI DE BY THE ASSESSEE COMPANY WHICH IS BASED ON A CASE UNEARTHED BY THE DDIT (INV.), KOLKA TA DECIDED BY THE HONBLE ITAT, KOLKATA. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAD ERRED IN DELETING THE CASH AMOUNT OF RS.9,00,000/- DEPOSITED IN TO THE BA NK WITHOUT CONSIDERING THE FACT THAT THE SOURCES OF DEPOSIT WERE NOT EXPLAINED BEFORE THE AS SESSING OFFICER. 3. AT THE OUTSET, AT THE TIME OF HEARING THE LD. CO UNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS SUBMITTED THAT ON EXACTLY SIMILAR FACTS (EVEN T HE ASSESSMENT ORDER IN ALL THESE CASES ARE SIMILARLY WORDED EXCEPT THE AMOUNTS) THIS TRIBUNAL HAS DECIDED THE CASE AGAINST THE REVENUE IN ITA NOS.2009/KOL/2008 IN THE CASE OF DCIT,CC-VII VS M/S. ANKITA FININVEST PVT. LTD., 2010/KOL/2008 IN THE CASE OF DCIT,CC-VII VS M/S.BAN SHIDHAR VYAPAAR PVT. LTD. AND 2011/KOL/2008 IN THE CASE OF DCIT,CC-VII VS M/S.BAK LIWAL FINVEST PVT. LTD. ALL DATED 30.04.2010 AND LD. CIT(A) HAS DECIDED THE ISSUES PL ACING RELIANCE ON THIS TRIBUNALS ORDERS. THEREFORE, THE REVENUES APPEALS ARE LIABLE TO BE D ISMISSED. 4. ON THE OTHER HAND, LD. DR APPEARING ON BEHALF O F THE REVENUE RELIED ON THE ORDERS OF THE AO BUT CONCEDED THE POSITION THAT THESE APPEALS ARE COVERED BY TRIBUNALS EARLIER ORDERS AND THERE IS NO DIFFERENCE IN FACTS. HOWEVER, LD. DR STATED THAT ONLY FACT TO BE RECORDED IS THAT 3 ITA 394-401/K/2011 M/S. IRIS COMMERCIAL PVT. LTD. & ORS. THE ADDITIONS ARE MADE ON THE BASIS OF STATEMENT MA DE BY DIRECTOR OF ASSESSEE COMPANY BEFORE DDIT (INV.), KOLKATA. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT THE FACTS INVOLVED IN AL L THE PRESENT CASES ARE IDENTICAL TO THAT OF THE ONE DECIDED BY THIS TRIBUNAL IN THE CASE OF DCIT,CC -VII, KOLKATA VS M/S.ANKITA FINVEST PVT. LTD. VIDE ITA NO.2009/KOL/2008 DATED 30.04.2010 WHE REIN THE FACTS MENTIONED BY THE TRIBUNAL ARE AS UNDER :- 2. BRIEF FACTS OF THIS CASE ARE THAT INVESTIGATION S WERE CARRIED OUT BY THE DIRECTOR OF INVESTIGATION (INVESTIGATION), KOLKATA AGAINST CERT AIN ACCOMMODATION ENTRY OPERATORS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO VARI OUS COMPANIES BASED IN MUMBAI WHO USED THE SAID FUNDS FOR PAYMENTS TO MADHEPURA M ERCANTILE BANK BASED IN MUMBAI. CONSEQUENT TO THIS, SHRI SURESH KUMAR SETHI , DIRECTOR OF THE ASSESSEE COMPANY WAS SUMMONED BY THE DDIT (INVESTIGATION), K OLKATA ON 15.12.2006 BEFORE WHOM HE SUBMITTED ON OATH THAT HE GOT CASH AT EQUI VALENT AMOUNT FROM THE COMPANIES AND AGAINST THE SAME.. . CHEQUES HAS BEEN ISSUED. HE ALSO GAVE A DETAILED LIST OF CHEQUES ISSUED TO VARIOUS MUMBAI BASED COMPANIES. H OWEVER, IN THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, SHRI SURESH KR.SET HI RETRACTED HIS STATEMENT MADE EARLIER BEFORE THE DDIT (INV.) ON 24.12.07 AND ALSO FILED A SWORN AFFIDAVIT TO THAT EFFECT. THE AO HAS REJECTED THE RETRACTION AND OBSE RVED THAT INVESTIGATION CONDUCTED BY THE INVESTIGATION WING REVEALED THAT CASH WAS DEPOS ITED BY THE ASSESSEE COMPANY IN VARIOUS BANK ACCOUNTS AT 4 TO 5 STAGES EARLIER. ON THIS BASIS, HE CAME TO THE CONCLUSION THAT CASH WAS RECEIVED BY THE ASSESSEE COMPANY IN L IEU OF CHEQUES GIVEN TO VARIOUS COMPANIES. HE THEN PROCEEDED TO ADD THE ENTIRE AMOU NT OF CHEQUES ISSUED BY THE ASSESSEE TO VARIOUS COMPANIES ON PROTECTIVE BASIS H OLDING THAT THE PROVIDER OF CASH TO THE ASSESSEE HAS TO BE ASSESSED ON SUBSTANTIVE BASI S IN RESPECT OF THE UNEXPLAINED INCOME IN THE FORM OF CASH PROVIDED. IN ADDITION TO THIS, THE AO ADDED 2% OF THE ENTIRE CHEQUES ISSUED BY THE ASSESSEE BEING RS.37,68,518/- IN THE HANDS OF THE ASSESSEE HOLDING THAT THE SAME TO BE THE COMMISSION INCOME O N THE PURPORTED ACCOMMODATION ENTRIES. THE AO FURTHER ADDED RS.18,40,000/- ON ACC OUNT OF CASH DEPOSITED BY THE ASSESSEE IN ITS BANK ACCOUNT. 6. ON THE ABOVE FACTS THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER :- 7. AFTER BEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE MAJOR ADDITIO N OF RS.18,84,25,906/- WAS MADE BY THE AO ON PROTECTIVE BASIS ON ACCOUNT OF THE ENTIRE CHEQUES ISSUED FROM THE DISCLOSED BANK ACCOUNTS MAINTAINED WITH HDFC BANK AND SOUTH I NDIAN BANK. THE ADDITION IS MADE PRIMARILY ON THE VIEW THAT IN THE ORIGINAL DEP OSITION MADE BEFORE THE DDIT (INV.) BY ONE OF THE DIRECTORS, SRI SURESH KR. SETHI THAT HE RECEIVED EQUIVALENT CASH IN LIEU OF THE CHEQUES ISSUED IN FAVOUR OF THE MUMBAI BASED CO MPANIES. FROM THE COPY OF THE DEPOSITION PLACED AT PAGE NO.8 OF THE PAPER BOOK, I T IS OBSERVED THAT THE ENTIRE DEPOSITION IS A COMPUTER TYPED COPY, WHEREIN THE SI GNATURE OF MR. SURESH KR SETHI IS PLACED AT THE BOTTOM MR SETHI SUBSEQUENTLY RETRACTE D HIS STATEMENT BY FILING AFFIDAVIT IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE STATEME NT RECORDED ON 24 12 07, HE STATED BEFORE THE AO THAT HE HAS NOT RECEIVED ANY CASH FRO M ANY PERSON ON BEHALF OF THE INVESTEE COMPANIES HE WAS FORCED TO DEPOSE BEFORE T HE DDIT (INV) IN THAT WAY TO SAVE HIMSELF FROM HARASSMENT AND TO GET IMMEDIATE PEACE THEREFORE, WE FIND NO JUSTIFICATION ON THE PART OF THE AO TO DISBELIEVE THE RETRACTION WE FURTHER OBSERVE THAT THE AOS CONTENTION THAT CASH WAS RECEIVED FROM VARIOUS ENTI TIES AGAINST WHICH CHEQUES WERE ISSUED BY THE ASSESSEE COMPANY IS NOT SUBSTANTIATED IN THE ABSENCE OF ANY MATERIAL ON 4 ITA 394-401/K/2011 M/S. IRIS COMMERCIAL PVT. LTD. & ORS. RECORD TO THIS EXTENT. THE FACT THAT THE INVESTMENT MADE BY THE ASSESSEE IN THE SHARE CAPITAL OF OTHER COMPANIES IS RECORDED IN THE BOOKS OF THE ASSESSEE AND ALL THE TRANSACTIONS MADE BY THE ASSESSEE ARE THROUGH HIS D ISCLOSED BOOKS OF ACCOUNTS AND SINCE, THIS FACT WAS ALSO NOT CONTROVERTED BY THE L D. DR, APPEARING BEFORE US, WE FIND NO JUSTIFICATION ON THE PART OF THE AO TO MAKE THE INVESTMENTS MADE BY THE ASSESSEE COMPANY, BASED ON THE STATEMENT RECORDED BY THE DDI T (INV.) WITHOUT CORROBORATIVE EVIDENCE. THE AO HAS NOT STATED THE PROVISION OF TH E ACT UNDER WHICH THE ADDITION HAS BEEN MADE. THE POSSIBLE PROVISION, UNDER WHICH THE ADDITION FOR UNEXPLAINED INVESTMENT CAN BE MADE, IS SECTION 69 OF THE I.T. A CT. WE OBSERVE THAT THE PRE-CONDITION FOR INVOKING THE PROVISIONS OF SECTION 69 IS THAT THE INVESTMENTS IN QUESTION ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE SINCE, IN THE INSTANT CASE, ALL INVESTMENTS WERE RECORDED IN THE BOOKS OF THE A SSESSEE, THERE WAS NO WARRANT FOR THE AO TO MAKE ADDITIONS IN RESPECT OF SUCH INVESTMENTS, THAT TOO, ON PROTECTIVE BASIS. THEREFO RE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE ISSUE NO.1 RAISED BY THE REV ENUE. 7 1. AS REGARDING ISSUE NO 2 IS CONCERNED, SINCE W E HAVE ALREADY HELD THAT THERE IS NO SUBSTANTIAL MATERIAL ON RECORD TO THE AOS CONTE NTION THAT CASH WAS RECEIVED FROM VARIOUS ENTITIES AGAINST WHICH THE CHEQUES WERE ISS UED BY THE ASSESSEE COMPANY, THERE WILL NOT BE ANY PRESUMPTIVE INCOME IN THE FORM OF C OMMISSION. THEREFORE, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE COMMIS SION INCOME ESTIMATED BY THE AO FOR THE ALLEGED ACCOMMODATION ENTRIES PROVIDED. HENCE, THIS ISSUE OF THE REVENUE IS ALSO DISMISSED. 7.2. AS REGARDING THE ISSUE NO.3, WE HOLD THAT THE RE IS NO MERIT IN THIS ADDITION ALSO WHICH WAS MADE BY THE AO IN REGARD TO THE DEPOSIT O F CASH OF RS. 18,40,000/- IN THE BANK ACCOUNTS OF THE ASSESSEE. THE AO HAS NOT DISPU TED THE FACT THAT THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE HIM. FROM THE EXTRACT OF THE CASH BOOK, PLACED AT PAGE NO. 17 OF THE PAPER BOOK, WE FIND THAT SUFFICIENT F UNDS WERE AVAILABLE WITH THE ASSESSEE COMPANY FOR DEPOSITS MADE IN THE BANK ACCOUNTS, THE REFORE, WE CONFIRM THE ACTION OF THE LD.CIT(A) ON THIS ISSUE AND DISMISS THE ISSUE N O.3 RAISED BY THE ASSESSEE. 7. IT IS FURTHER OBSERVED THAT LD. CIT(A) HAS ALLO WED THE APPEAL OF ASSESSEE FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S. ANKIT A FINVEST PVT. LTD. (SUPRA) BY OBSERVING AS UNDER :- 3.4. CONSIDERING ABOVE FACTS IT IS HELD THAT THE ADDITION MADE BY THE A.O. IS NOT SUPPORTED BY ANY CORROBORATIVE OR SUPPORTIVE EVIDEN CE. IN SHRISHAIL NAGESHI PARE V. STATE OF MAHARASHTRA AIR 1985 SC 866, THE HONBLE S UPREME COURT HAS HELD THAT, THE RETRACTED CONFESSION BY AN ACCUSED MAY FORM THE BAS IS OF CONVICTION OF THAT ACCUSED IF IT RECEIVES SOME GENERAL CORROBORATION FROM OTHER INDE PENDENT SOURCES. HOWEVER IN THE CASE UNDER CONSIDERATION NO EVIDENCE HAS BEEN BROUG HT ON RECORD TO PROVE THAT THE TRANSACTION DECLARED IN THE BOOKS OF THE ASSESSEE I S NOT CORRECT. MOREOVER EVEN IF THE RETRACTED STATEMENT IS MADE SOLE BASIS OF ADDITION, THEN ALSO, THERE WAS NO BASIS TO MAKE PROTECTIVE ADDITION IN THE HAND OF THE ASSESSEE. HE NCE CONSIDERING ABOVE AND RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITA T IN THE CASE OF M/S. ANKITA FINVEST PVT. LTD. (I.T.A. NO.2009(KOL) OF 2008. A.Y. 2005-0 6, DT.30.04.2010), M/S. BANSIDHAR VYAPAAR PVT. LTD. (I.T.A.NO.2010(KOL) OF 2008, A.Y. 2005-06, DT. 30.04.2010) AND M/S. BAKLIWAL FINVEST PVT. LTD. (I.T.A. NO.2011 (KOL) OF 2008 A.Y.2005-06, DT. 30.04.2010) ON IDENTICAL ADDITIONS MADE BY THE A.O. CONSIDERING IDENTICAL FACTS, THE GROUND NO.2 TO 4 TAKEN BY THE APPELLANT IS ALLOWED AND ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INCOME RS.10,70,27,500/- ON PROTECTIVE BASIS AND RS.21,40,550/- ON ACCOUNT OF COMMISSION IS DELETED. 5 ITA 394-401/K/2011 M/S. IRIS COMMERCIAL PVT. LTD. & ORS. 4.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. A.R. THE A.O. HAS NOT DISPUTED THE FACT THAT THE BOOKS OF ACCOUNTS WERE PRODUCED B EFORE HIM FROM THE EXTRACT OF THE CASH BOOK FILED, IT IS APPARENT THAT SUFFICIENT FUN DS WERE AVAILABLE WITH THE ASSESSEE COMPANY FOR DEPOSITS MADE IN THE BANK ACCOUNTS, THE REFORE GROUND NO.5 TAKEN BY THE APPELLANT IS ALLOWED AND ADDITION OF RS.2,00,000/- IS DELETED. 8. SINCE CIT(A) HAS FOLLOWED THE DECISION OF THIS TRIBUNAL AND THE LD. DR ALSO COULD NOT BRING OUT ANY CONTRARY DECISION/FACTS TO THAT OF TH E ONE DECIDED BY THIS TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDERS OF CIT(A) AND THE SAME IS H EREBY UPHELD. THEREFORE, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED. 10. ORDER PRONOUNCED IN OPEN COURT ON 29.02.2012. SD/- SD/- , ' ' ' ' #!' #!' #!' #!' , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 29TH FEBRUARY, 2012 /0 #%12 #3 JD.(SR.P.S.) - 4 ##5 65'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT DCIT, CENTRAL CIRCLE-VII, KOLKATA. 2 ,*+ / RESPONDENT, M/S. IRIS COMMERCIAL PVT. LTD., 47, K ALI KRISHNA TAGORE ST., KOLKATA-700 007. M/S. NILHAT PROMOTERS FISCAL PVT. LTD., 205, RABIND RA SARANI, KOLKATA-700 007. M/S. PENTEX EXPO PVT. LTD., 1, R. N. MUKHERJEE ROAD , 5 TH FLOOR, ROOM NO. 45B, KOLKATA-700 001. 3 . #-% ( )/ THE CIT(A), KOLKATA 4. #-% / CIT, KOLKATA 5 . >#? #% / DR, KOLKATA BENCHES, KOLKATA ,5 #/ TRUE COPY, -%/ BY ORDER, ' !2 /ASSTT. REGISTRAR .