Nova Power Pvt Ltd, New Delhi V. ITO, New Delhi

ITA 4055/DEL/2009

• Counselvise Citation: 405520114 RSA 2009
• Duration Of Justice: 4 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 17-07-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 06-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Assessee Lawyers: A K SRIVASTAVA
• Keywords: Opportunity of being heard; Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F , NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4055 /DEL/2009 ASSESSMENT YEAR : 2004-05 NOVA POWER PVT. LTD., VS. ITO, WARD 13(3), 8A/8, WEA KAROL BAGH, NEW DELHI DELHI - 110005 GIR / PAN:AAACN3792K I.T.A. NO.4056 /DEL/2009 ASSESSMENT YEAR : 2004-05 NOVA PORTFOLIO P. LTD. VS. ITO, WARD 13(3), 8A/8, WEA KAROL BAGH, NEW DELHI DELHI - 110005 GIR / PAN:AAACN0366P (APPELLANTS) (RESPONDENTS) APPELLANT BY : SHRI A. K. SRIVASTAVA, CA RESPONDENT BY : SHRI MANOJ KUMAR CHOPRA, SR. DR ORDER PER T.S. KAPOOR, AM: THESE TWO APPEALS ARE FILED BY TWO DIFFERENT ASSES SEES AGAINST SEPARATE ORDERS OF LD. CIT(A) BOTH DATED 30.07.2009. SIMILA R ISSUES ARE INVOLVED IN BOTH THESE APPEALS AND THEREFORE, THE SAME WERE HEA RD TOGETHER AND FOR THE SAKE OF CONVENIENCE, A COMMON AND CONSOLIDATED ORDE R IS BEING PASSED. THE ITA NOS.4055,4056/DEL/2009 2 ASSESSEES HAVE TAKEN GROUNDS OF APPEALS CHALLENGING THE LEGALITY OF REASSESSMENT AS WELL HAVE CHALLENGED THE ADDITIONS ON MERITS. 2. THE BRIEF FACTS INVOLVING THESE CASES ARE THAT T HE CASES OF THE ASSESSEES WERE REOPENED U/S 147 / 148 OF THE ACT ON THE BASIS OF INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSES SEES HAD ACCEPTED ACCOMMODATION ENTRIES FROM ENTRY PROVIDERS. AS PE R RECORDS, INFORMATION AVAILABLE WITH THE INVESTIGATION WING WAS IN RESPEC T OF ENTRY OF RS.7.50 LACS RECEIVED BY THE ASSESSEE IN THE CASE OF I.T.A.NO. 4 055/DEL/2009 WHEREAS IN I.T.A.NO. 4056/DEL/2009, THE INFORMATION WITH THE D EPARTMENT WAS REGARDING RECEIPT OF AN AMOUNT OF RS.5 LACS. HOWEV ER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED CERTAIN CREDITS ON VARIOUS DATES IN THE BANK ACCOUNTS OF THE ASSESSEES WHICH AS PER THE ASSESSING OFFICER WERE NOT EXPLAINED BY THE ASSESSE ES, THEREFORE, ASSESSING OFFICER FURTHER MADE AN ADDITION OF RS.12.50 LACS A ND RS.23.50 LACS IN I.T.A.NO. 4055/DEL/2009 AND IN I.T.A.NO. 4056/DEL/2 009 RESPECTIVELY. AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE LD. CI T(A) AND CHALLENGED THE ADDITIONS BOTH LEGALLY AND ON MERITS. HOWEVER, LD. CIT(A) UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER AND REJECTE D THE LEGAL GROUNDS RAISED BY THE ASSESSEES BY RECORDING FINDINGS IN RE SPECT OF EACH GROUND. AGGRIEVED, THE ASESSEES ARE IN APPEAL BEFORE US. 3. AT THE OUTSET LD. A.R. FIRST TOOK UP THE APPEAL IN I.T.A.NO. 4056/DEL/2009. THE LD. A.R. DID NOT MAKE ANY SPECI FIC ARGUMENTS ON LEGAL GROUNDS AND STRAIGHTAWAY TOOK UP THE MERITS OF THE CASE. WE WERE TAKEN TO PAPER BOOK PAGE 7 AND OUR ATTENTION WAS INVITED TO A COPY OF BALANCE SHEET ITA NOS.4055,4056/DEL/2009 3 WITH SPECIFIC REFERENCE TO SHARE CAPITAL AS REFLECT ED AS ON 31.03.2003 AND 31.03.2004 AND IT WAS SUBMITTED THAT THERE WAS NO C HANGE IN THE SHARE CAPITAL IN THESE TWO YEARS AND THE ASSESSEE HAD NOT OBTAINED ANY ACCOMMODATION ENTRY AS ALLEGED BY THE DEPARTMENT IN THE NOTICE FOR REOPENING OF THE CASE AND IN THIS RESPECT, OUR ATTE NTION WAS INVITED TO PAPER BOOK PAGE 13 WHEREIN COPY OF REASONS RECORDED WAS P LACED. LD. A.R. ALSO INVITED OUR ATTENTION TO THE CONTENTS OF THE LETTER AND SUBMITTED THAT NO CAPITAL WAS RAISED BY THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION AS IS APPARENT FROM THE COPY OF BALANCE SHEET AS PLACED AT PAPER B OOK PAGE 7 AND, THEREFORE, ADDITION U/S 68 COULD NOT HAVE BEEN MADE . LD. A.R. FURTHER TOOK US TO PAPER BOOK PAGE 22 WHERE A COPY OF LETTER DAT ED 23.10.2007 WRITTEN BY ASSESSING OFFICER TO THE ASSESSEE WAS PLACED AND SU BMITTED THAT THE ALLEGATION OF THE ASSESSING OFFICER THAT ASSESSEE H AD FILED DETAILS OF PARTIES FROM WHOM SHARE CAPITAL WAS RECEIVED, IS WRONG AS N O SHARE CAPITAL WAS RECEIVED BY THE ASSESSEE. HIGHLIGHTING THE FACTS O F THE CASE, LD. A.R. SUBMITTED THAT THE ASSESSEE HAD SOLD CERTAIN SHARES OF SOME COMPANIES IN WHICH IT HAD MADE INVESTMENT IN THE EARLIER YEARS A ND THE AMOUNTS WERE RECEIVED ON ACCOUNT OF SALE PROCEEDS OF SUCH SHARES . THEREFORE, THE AMOUNTS RECEIVED REPRESENT CONSIDERATION FROM SALE OF ASSET S ALREADY OWNED BY THE ASSESSEE AND, THEREFORE, SECTION 68 WAS NOT APPLICA BLE. IN THIS RESPECT LD. A.R. TOOK US TO PAPER BOOK PAGE 27 WHERE A COPY OF CONFIRMATION LETTER FROM M/S. J K SECURITIES PVT. LTD. WAS PLACED. LD. A.R. FURTHER TOOK US TO PAPER BOOK PAGE 35 AND INVITED OUR ATTENTION TO SCHEDULE C REFLECTING INVESTMENTS OF THE COMPANY OF THE ASSESSEE AS ON 31 .03.2001. LD. A.R. ITA NOS.4055,4056/DEL/2009 4 SUBMITTED THAT 35000 EQUITY SHARES OF M/S. KAUSHAL SHAH SHARES & SECURITIES LTD. WERE PURCHASED BY THE ASSESSEE DURI NG THE YEAR ENDED 31.03.2001 AND WHICH WERE SOLD BY THE ASSESSEE DURI NG THE YEAR UNDER CONSIDERATION AND IN SUPPORT OF HIS ARGUMENTS, ASSE SSEE TOOK US TO PAPER BOOK PAGE 9, WHERE THE INVESTMENT AS ON 31.03.2003 AMOUNTING TO RS.13.75 LACS WAS REFLECTED AS NIL AS ON 31.03.2004. LD. A.R. FURTHER SUBMITTED THAT BESIDES SALE OF THESE SHARES, THE ASSESSEE HAD ALSO SOLD SHARES WORTH RS.10 LACS OF M/S. SIDDHI SHARES AND SECURITIES P. LTD. A ND SHARES WORTH RS.5 LACS OF M/S. V V S FINANCIAL SERVICES PVT. LTD. AND, THE REFORE, A TOTAL AMOUNT OF RS.28.75 LACS WAS RECEIVED ON ACCOUNT OF SHARES, SO LD DURING THE YEAR UNDER CONSIDERATION AND THE AMOUNTS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE IN FACT WERE SALE PROCEEDS OF THESE INVESTMENTS. H E FURTHER SUBMITTED THAT MONEY RECEIVED ON ACCOUNT OF SALE OF ASSETS OF THE ASSESSEE CAN NEVER BE SAID TO BE CASH CREDIT ENTRY AND, THEREFORE, ADDITION U/ S 68 WAS NOT JUSTIFIED. LD. A.R. SUBMITTED THAT IN I.T.A.NO. 4055/DEL/2009, SIM ILAR ADDITIONS WERE MADE WHICH WERE ALSO ON ACCOUNT OF SALE OF SHARES A CQUIRED BY THE ASSESSEE DURING EARLIER YEARS AND THERE WAS NO ISSUE OF FRES H SHARE CAPITAL AS ALLEGED BY THE DEPARTMENT. TO SUPPORT HIS ARGUMENT, LD. A. R. TOOK US TO PAPER BOOK PAGE 26 WHERE A COPY OF BANK ACCOUNT OF THE AS SESSEE WAS PLACED. LD. A.R. SUBMITTED THAT THE DEPOSITS IN THE BANK ACCOUN T REPRESENT SALE OF INVESTMENTS OWNED BY THE ASSESSEE IN THE EARLIER YE ARS. TO SUPPORT HIS ARGUMENT, LD. A.R. TOOK US TO PAGE 10 WHERE A COPY OF BALANCE SHEET OF THE ASSESSEE COMPANY WAS PLACED. OUR SPECIFIC ATTENTIO N WAS INVITED TO SCHEDULE B RELATING TO INVESTMENTS AND WITH REFER ENCE TO PAPER BOOK PAGE ITA NOS.4055,4056/DEL/2009 5 26, IT WAS SUBMITTED THAT THE MONEY DEPOSITED THROU GH CHEQUES IN THE BANK ACCOUNT REPRESENTS SALE OF INVESTMENT IN M/S. AJIT MITTAL AND ASSOCIATES, DELHI INTERNATIONAL INFOTECH LTD., MITTAL MAXPACK L TD. ETC. 4. LD. D.R. ON THE OTHER HAND INVITED OUR ATTENTION TO LD. CIT(A)S FINDINGS IN RESPECT TO LEGAL GROUNDS AND SUBMITTED THAT LD. CIT(A) HAD DEALT WITH EACH AND EVERY ARGUMENT OF THE ASSESSEE AND HA S RIGHTLY ARRIVED AT THE CONCLUSION FOR REOPENING OF THE CASES. AS REGARD S THE ARGUMENT OF LD. A.R. ON MERITS, LD. D.R. SUBMITTED THAT THE ENTRIES OBTA INED BY THE ASSESSEE REPRESENT ENTRY FROM ENTRIES PROVIDERS ONLY AS THE COMPANIES FROM WHOM THE MONEY HAS BEEN RECEIVED, HAS BEEN FOUND TO BE ENGAG ED IN ENTRY PROVIDING BUSINESS. HE FURTHER SUBMITTED THAT DESPITE VARIOU S OPPORTUNITIES GIVEN TO THE ASSESSEE, THE ASSESSEE HAD NOT PROVIDED ANY PRO PER EXPLANATION FOR THE ENTRIES IN THEIR BOOKS OF ACCOUNTS. 5. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. THE LD. A.R. HAS NOT MADE ANY SPECIFIC ARGUMENTS ON LEGAL GROUNDS & THEREFORE, WE TREAT HIS ARGUMENTS BEFORE LD. CIT(A) AS THE ARGUMENTS BEFORE US ALSO. THE LEGAL GROUNDS TAKEN BY THE ASSESSEE HAS BEEN DEALT WITH BY LD. CIT(A) AND HE HAS REJECTED THE AR GUMENTS OF THE ASSESSEE AND HAS HELD REOPENING OF THE CASES AS VALID. WE F IND THAT LD. CIT(A)S FINDINGS IN RESPECT OF LEGAL OBJECTIONS RAISED BY T HE ASSESSEE ARE CORRECT AND WE ARE IN AGREEMENT WITH HIS FINDINGS. THEREFORE, LEGAL GROUNDS TAKEN BY THE ASSESSEE IN BOTH THESE APPEALS ARE DISMISSED. 6. AS REGARDS THE GROUNDS ON MERITS, WE FIND FORCE IN THE ARGUMENTS OF LD. A.R. THAT THE AMOUNTS RECEIVED BY THE ASSESSEE WERE ON ACCOUNT OF SALE ITA NOS.4055,4056/DEL/2009 6 OF INVESTMENTS MADE BY THE ASSESSEE WHICH WERE ACQU IRED BY IT DURING THE EARLIER YEARS. THE ARGUMENT OF LD. A.R. IS STRENGT HENED FROM THE ENTRIES OF INVESTMENTS IN THE BALANCE SHEETS OF THE ASSESSEE C OMPANIES WHEREIN THE DEPOSITS IN BANK SEEM TO BE DIRECTLY CORRELATED WIT H THE SALE OF INVESTMENT IN VARIOUS COMPANIES. HOWEVER A FEW OF THE DOCUMENTS SUBSTANTIATING THE SALE OF SHARES WERE NOT BEFORE THE ASSESSING OFFICER, TH EREFORE, IN THE INTEREST OF JUSTICE, WE REMIT BACK THE APPEALS TO THE OFFICE OF THE ASSESSING OFFICER WHO WOULD RE-ADJUDICATE ON THE ISSUE OF MERITS OF THE C ASES. THE ASSESSING OFFICER WILL EXAMINE THE BALANCE SHEETS OF THE ASSE SSEE COMPANIES TO ARRIVE AT THE CONCLUSION AS TO WHETHER THE AMOUNTS RECEIVE D BY THE ASSESSEE COMPANIES WERE ON ACCOUNT OF SALE OF INVESTMENTS OR NOT. THE ASSESSING OFFICER WILL ALSO BE AT LIBERTY TO ASK THE ASSESSEE FOR ANY OTHER RELEVANT DOCUMENT IN ORDER TO ARRIVE AT THE CONCLUSION. NEE DLESS TO SAY THAT THE ASSESSEE WILL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 7. IN VIEW OF ABOVE, BOTH THE APPEALS FILED BY THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH AUG., 2014 SD./- SD./- (I. C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 08 TH AUG., 2014 SP ITA NOS.4055,4056/DEL/2009 7 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).