ITO, New Delhi V. M/s. MKM Finsee Pvt. Ltd, New Delhi

ITA 4021/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3957 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-05-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Reopening of assessment; Accommodation entries
• Section: 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA ITA NO. 4021/DEL/2009 ASSESSMENT YEAR: 2000-01 INCOME-TAX OFFICER, VS. M/S. MKM FINSEE PVT. LT D. WARD 6(1), 301 DHAKA CHAMBER, NEW DELHI. 2068/39, NAIWALA, KAROL BAGH, NEW DELHI. (PAN- AAACM6961H) (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.375/DEL/2009 (IN ITA NO. 4021/DEL/2009) ASSESSMENT YEAR: 2000-01 M/S. MKM FINSEE PVT. LTD. VS. INCOME-TAX OFFICER, 301 DHAKA CHAMBER, WARD 6(1), 2068/39, NAIWALA, KAROL BAGH, NEW DELHI. NEW DELHI. APPELLANT BY: SMT. S. MOHA NTY, SR. DR RESPONDENT BY: SHRI ASHWANI TAN EJA, ADV. ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 31.07.2009 PASSED FOR ASSESSMENT YEAR 2000-01. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, ASSESSEE HAS FILED CROSS-OBJECTION BEARING NO. 375/DEL/2009. GROUND NOS. 1, 3.1 AND 4 IN THE REVENUES APPEAL 2 ARE GENERAL IN NATURE, THE LEARNED REPRESENTATIVES HAVE NOT ADVANCED SPECIFIC ARGUMENTS ON THESE ISSUES, HENCE THEY ARE REJECTED. 2. IN GROUND NO.2, GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.7,50,000. THE BRIEF FACTS OF THE CASE AS EMERGING OUT FROM THE ASSESSME NT ORDER ARE THAT ASSESSING OFFICER HAS RECEIVED AN INFORMATION FROM THE INVESTIGATION WING THAT ASSESSEE WAS INVOLVED IN PROVIDING ACCOMMODATI ON ENTRY IN LIEU OF CASH DURING THE RELEVANT PREVIOUS YEAR. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE HAD PROVIDED ENTRIES TO THE TUNE OF RS.2,6 3,84,025 HENCE HE RECORDED THE REASONS FOR REOPENING OF ASSESSMENT AN D A NOTICE UNDER SEC. 148 OF THE INCOME-TAX ACT, 1961 WAS ISSUED ON 29.3.2007 WHICH WAS DULY SERVED UPON THE ASSESSEE. SHRI SK SHARMA, CA APPEARED ON B EHALF OF THE ASSESSEE AND SUBMITTED THAT THE ORIGINAL RETURN ALREADY FILE D VIDE ACKNOWLEDGEMENT RECEIPT NO.1202 DATED 30.11.2000 MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER SEC. 148 OF THE INCOME -TAX ACT, 1961. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESS ING OFFICER THAT ASSESSEE HAD RECEIVED A SUM OF RS.6,50,000 FROM M/S. PCB CON SULTANCY PVT. LTD., RS.75,000 FROM MRS. ASHA SACHDEVA AND RS.3,50,000 F ROM SHRI PREM CHAND BATRA AS SHARE APPLICATION MONEY. ASSESSING OFFICER DIRECTED THE ASSESSEE TO 3 FILE CONFIRMATION AND COPY OF BANK STATEMENT OF THE ABOVE APPLICANT. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE HAD FI LED BANK STATEMENT OF M/S. PCB CONSULTANCY VIDE LETTER DATED 30.11.2007. IT FILED BANK STATEMENT WITH REGARD TO SHRI PREM CHAND BATRA FOR RS. 3 LACS . ASSESSING OFFICER FURTHER DIRECTED THE ASSESSEE TO FILE THE BANK STAT EMENT OF THE REMAINING ACCOUNT IN RESPECT OF SHRI PREM CHAND BATRA AND IN RESPECT OF MRS. ASHA SACHDEVA. ACCORDING TO THE ASSESSEE, IT HAS SUBMITT ED ALL THE NECESSARY DETAILS BUT ASSESSING OFFICER REJECTED ITS EXPLANAT ION ON THE GROUND THAT IN THE BANK STATEMENT OF SHRI PCB CONSULTANCY, THERE W AS LARGE NUMBER OF TRANSACTIONS EXHIBITING DEPOSIT OF CASH AND BANK CH EQUE. ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION OF RS.7,50,000. 3. DISSATISFIED WITH THE ADDITION, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(APPEALS). LEARNED CIT(APPEAL S) HAS DELETED THE ADDITION BY OBSERVING THAT IN ORDER TO EXPLAIN THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE, IT HAS FILED THE FOLLOWIN G DOCUMENTS: CONFIRMATION LETTER FROM M/S. PCB CONSULTANTS P. LT D., INDICATING CHEQUE NO., NAME AND ADDRESS OF THE BANK BRANCH 4 ON WHICH THE SAME IS DRAWN, PAN AND THE PARTICULARS OF THE ASSESSING OFFICER. COPY OF THE ACKNOWLEDGEMENT OF HAVING FILED RETURN FOR THE A.Y. 2000-01 IN THE CASE OF M/S. PCB CONSULTANTS P. LTD. CONFIRMATION LETTER FROM MR. PREM CHAND BATRA INDIC ATING CHEQUE NOS., NAME AND ADDRESS OF THE BANK BRANCH ON WHICH THE SAME IS DRAWN, PAN AND THE PARTICULARS OF THE A SSESSING OFFICER. COPY OF THE ACKNOWLEDGEMENT OF HAVING FILED RETURN FOR THE A.Y. 2000-01 IN THE CASE OF MR. PREM CHAND BATRA. CONFIRMATION LETTER FROM MRS. ASHA SACHDEV INDICATI NG CHEQUE NO., NAME AND ADDRESS OF THE BANK BRANCH ON WHICH THE SAME IS DRAWN ALONG WITH THE PARTICULARS OF THE ASSESSING OFFICER. COPY OF THE ACKNOWLEDGMENT OF HAVING FILED RETURN F OR THE A.Y. 2000-01 IN THE CASE OF MRS. ASHA SACHDEV. 4. LEARNED DR POINTED OUT THAT FROM THE PAN WITH TH E INCOME-TAX AUTHORITIES AND THE BANK STATEMENTS ETC. ASSESSEE M IGHT HAVE PROVED THE IDENTITY OF THE SHARE APPLICANT BUT FAILED TO PROVE THE CREDITWORTHINESS. IT IS REQUIRED TO PROVE THIS INGREDIENTS FOR ABSOLVING IT SELF FROM APPLICATION OF SECTION 68 OF THE INCOME-TAX ACT, 1961. ON THE OTHE R HAND, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT MAJOR CONTRIBUTION HAS BEEN MADE BY M/S. PCB CONSULTANTS PVT. LTD. THIS CONCERN IS AN INCOME -TAX ASSESSEE AND 5 DETAILS OF ITS ITRS WERE FILED BEFORE THE ASSESSING OFFICER. THE AMOUNTS HAVE BEEN TAKEN THROUGH ACCOUNT PAYEE CHEQUES, THER EFORE, ASSESSEE HAS FULFILLED ALL THE NECESSARY INGREDIENTS OF SEC. 68. HE FURTHER POINTED OUT THAT LEARNED CIT(APPEALS) HAS EXAMINED THE FACTS AND CIR CUMSTANCES IN THE LIGHT OF VARIOUS AUTHORITATIVE PRONOUNCEMENTS OF HON'BLE DELHI HIGH COURT I.E. CIT VS. DEVANE LEASING REPORTED IN 158 TAXMAN 440 A ND IN THE CASE OF CIT VS. LOVELY EXPORTS ETC. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. ON PERUSAL OF THE ORDER OF THE LE ARNED CIT(APPEALS), WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AU THORITY HAS APPRECIATED THE CONTROVERSY IN RIGHT PERSPECTIVE. ASSESSEE HAS PROVED THE IDENTITY OF THE SHARE APPLICANTS, GENUINENESS OF THE TRANSACTION AS WELL AS THEIR CREDITWORTHINESS. IT HAS FURNISHED THEIR BANK STATE MENT AND THE DETAILS OF THEIR ITRS. WE DO NOT SEE ANY REASON TO INTERFERE I N THE ORDER OF THE LEARNED CIT(APPEALS). 6. IN GROUND NO.3, THE GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.3,95,760. ASSESSING OFFICER HAS OBSERVED THAT DIRECTOR OF THE ASSESSEE SHRI PREM CHAND BATRA 6 APPEARED BEFORE HIM DURING THE ASSESSMENT PROCEEDIN GS AND HIS STATEMENT WAS RECORDED UNDER SEC. 131 OF THE INCOME-TAX ACT, 1961. SHRI BATRA HAD ADMITTED THAT ASSESSEE HAD PROVIDED ACCOMMODATION E NTRY TO THE TUNE OF RS.2,63,84,025. ASSESSING OFFICER ON THE STRENGTH O F HIS STATEMENTS ARRIVED AT A CONCLUSION THAT ASSESSEE MUST HAVE EARNED COMM ISSION @ 2% FOR GIVING SUCH ACCOMMODATION ENTRY AND THESE RECEIPTS MUST HA VE NOT BEEN DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. HE ASSESSE D THIS COMMISSION INCOME AS INCOME FROM OTHER SOURCES. HE FURTHER OBS ERVED THAT ASSESSEE MUST HAVE SPENT 0.5% AS EXPENSES ON THIS ACTIVITY. THUS, THE ALLEGED COMMISSION INCOME HAS BEEN COMPUTED AT 1.5% OF THE TOTAL ACCOMMODATION ENTRIES. THE LEARNED CIT(APPEALS) DELETED THIS ADDI TION ON THE GROUND THAT SHRI BATRA HAD NOT ADMITTED ABOUT THE ACCOMMODATION ENTRIES BUSINESS CARRIED ON BY THE ASSESSEE OUT OF BOOKS. 7. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. BEFORE APPRECIATING THIS ISS UE, WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE QUESTIONS AND ANSWER FROM THE S TATEMENT OF SHRI PC BATRA. THE RELEVANT QUESTIONS AND ANSWERS ARE QUEST ION NOS. 7 & 8, THEY READ AS UNDER: 7 Q.7. IT HAS BEEN INFORMED BY THE INVESTIGATION WIN G OF THE I.T. DEPARTMENT THAT YOU WERE ENGAGED IN PROVIDING ACCOM MODATION ENTRIES. YOU ARE BEING SHOWN A LIST CONTAINING SUCH ENTRIES TO THE TUNE OF RS.2,63,84,025. YOU ARE REQUIRED TO GO THROUGH T HESE & STATE WHETHER OR NOT, THESE WERE THE ACCOMMODATION ENTRIE S? ANS. THESE WERE THE TRADING OF SHARES MADE THROUGH THE COMPANY. THESE WERE OFF-FLOOR TRADING. HOWEVER, WE HAVE REFL ECTED COMMISSION/BROKERAGE ACCRUED THROUGH THESE TRANSACT IONS IN OUR BOOKS OF A/C. Q.8. WHAT WAS THE MODUS-OPERANDI OF THESE TRANSACT IONS? ANS. THE BUYERS/SELLERS OF THESE TRANSACTIONS USED TO FINALIZE THE DEAL ON THEIR OWN. THEY USED TO BRING THE DOCUMENTS TO U S & PASS THE ENTRIES THROUGH US BECAUSE WE WERE THE AUTHORIZED B ROKERS OF DELHI STOCK EXCHANGE. 8. ON PERUSAL OF THIS STATEMENT, IT REVEALED THAT A SSESSING OFFICER HAS MISCONSTRUED AND MISINTERPRETED THE STATEMENTS OF S HRI PC BATRA. SHRI BATRA HAS NOWHERE SAID THAT THESE TRANSACTION WAS DONE OU T OF BOOKS AND THE INCOME DESERVES TO BE ASSESSED AS INCOME FROM OTHER SOURCES. ASSESSING OFFICER IS NOT POSSESSING ANY OTHER MATERIAL. IN OU R OPINION, LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE ADDITIO N. 9. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE, IT IS DISMISSED. 8 10. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PR ESS THE CROSS-OBJECTION AT THE TIME OF HEARING, HENCE IT IS REJECTED. 11. IN THE RESULT, THE APPEAL AS WELL AS THE CROSS- OBJECTION ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 13.05.201 1 SD/- SD/- ( SHAMIM YAHYA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13/05/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR