DCIT, New Delhi V. M/s. Harjee Stock & Share Brokers Pvt. Ltd., New Delhi

ITA 4121/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65735 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-09-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Principle of natural justice; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.4121/DEL/2010 ASSESSMENT YEAR : 2001-02 DCIT, CIRCLE 12 (1), NEW DELHI. VS. HARJEE STOCK & SHARE BROKERS PVT. LTD., 101, AMAN CHAMBER, 47/21, OLD RAJINDER NAGAR, NEW DELHI. PAN : AAACH8993C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGGARWAL, ADVOCATE REVENUE BY : SHRI SATPAL SINGH, SR.DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT FOR ASSESSMENT YEAR 2001-02 AGAINST THE ORDER DATED 22.06.2010 PASSED BY T HE CIT (A)-X, NEW DELHI, CONTENDING THAT THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF ` 7,80,000/- MADE ON ACCOUNT OF BOGUS ACCOMMODATION ENTRIES FROM M/S KANODIA AGENCY IGNORING THAT THESE EN TRIES WERE FOUND TO BE BOGUS BY THE INVESTIGATION WING OF THE DE PARTMENT. 2. AS PER THE ASSESSMENT ORDER, IN THE FINANCIAL YEAR RE LEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, I.E., A.Y. 2001-02, THE ASSESSEE HAD OBTAINED THE FOLLOWING ENTRIES:- ASSESSEE BANK A/C VALUE OF ENTRY TAKEN INSTRUMENT NO. BY WHICH ENTRY TAKEN DATE ON WHICH ENTRY TAKEN NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT CITI BANK 530000 23560 21/03/2001 KANODIA AGENCY CITI BANK 250000 23561 21/03/2001 KANODIA AGENCY ITA NO.4121/DEL/2010 2 3. THE ASSESSING OFFICER OBSERVED THAT THE ABOVE ENTRIES SHOWED THAT THE ASSESSEE HAD OBTAINED ENTRIES TOTALING TO ` 7,80,000/- FROM M/S KANODIA AGENCY DURING THE YEAR; THAT THE INVESTIG ATION WING OF THE DEPARTMENT SHOWED THAT THESE WERE NOTHING BUT SHAM TRA NSACTIONS OF ACCOMMODATION ENTRY; THAT SHRI MAHESH GARG, DIRECTOR OF KANODIA AGENCY IN HIS STATEMENTS RECORDED BEFORE THE ADDL. DIT (INV.), HAD ADMITTED THAT HE AND HIS COMPANIES WERE NOT DOING ANY REAL BUSINESS BUT WERE ONLY PROVIDING BOGUS ACCOMMODATION ENTRIES IN LIEU OF UNACCOUNTED CASH; THAT ON QUERY, THE ASSESSEE, IN SPITE OF SPECIFIC OPPORTUNITY, HAD NOT FURNISHED ANY EVIDENCE TO REBU T THE STATEMENT OF SHRI MAHESH GARG; THAT IN THE LIGHT OF THE CATEGORIC AL STATEMENTS OF SHRI MAHESH GARG, IT WAS CLEAR THAT THE ASSESSEE HAD OBTAINED THESE ENTRIES BY PAYING UNACCOUNTED CASH TO M/S KANODIA AGENCY; AND THAT THEREFORE, THE SAID ENTRIES TOTALING TO ` 7,80,000/-, WERE BEING ADDED TO THE INCOME OF THE ASSESSEE. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. 6. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS CO NTENDED THAT THE LD. CIT (A) HAS GONE WRONG IN DELETING THE ADDIT ION CORRECTLY MADE BY THE ASSESSING OFFICER, IGNORING THAT THE ENTRIES IN Q UESTION WERE BOGUS ACCOMMODATION ENTRIES OBTAINED BY THE ASSESSEE FROM M/S KANODIA AGENCY; THAT THE LD. CIT (A) ALSO IGNORED TH E FACT THAT THESE ENTRIES WERE FOUND TO BE BOGUS BY THE INVESTIGATION W ING OF THE DEPARTMENT; THAT BEFORE THE LD. CIT (A), THE ASSESSEE C LAIMED THAT NO PROPER OPPORTUNITY WAS PROVIDED TO THE ASSESSEE TO CROSS- EXAMINE SHRI MAHESH GARG, DIRECTOR OF M/S KANODIA AGENCY; THAT THI S BEING AN IRREGULARITY AND NOT AN ILLEGALITY, THE MATTER OUGH T TO HAVE BEEN ITA NO.4121/DEL/2010 3 REMITTED TO THE ASSESSING OFFICER FOR PROVIDING SUCH O PPORTUNITY TO THE ASSESSEE; AND THAT IT MAY NOW BE SO ORDERED. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS STRONGLY SUPPORTED THE ORDER UNDER APPEAL. IT HAS BEEN CONTEN DED THAT NON- PROVIDING OF OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMIN E SHRI MAHESH GARG IS AN ILLEGALITY AND NOT AN IRREGULARITY IN LAW . FOR THIS PROPOSITION, HE HAS PLACED RELIANCE ON THE FOLLOWING CASE LAWS:- I) COMMISSIONER OF INCOME-TAX VS. ASHWANI GUPTA, 322 IT R 396 (DEL); II) ADDL. COMMISSIONER OF INCOME-TAX, BIHAR VS. HANUMAN AGGARWAL, 151 ITR 150 (PATNA); AND III) MATHER & PLATT (INDIA) LTD. VS. COMMISSIONER OF INCOM E-TAX, 168 ITR 493 (CAL). 8. IT HAS FURTHER BEEN CONTENDED THAT MOREOVER, NO MATERIAL WHATSOEVER AGAINST THE ASSESSEE IS THERE ON RECORD TO SUSTAI N THE ADDITION. 9. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. IT REMAINS UNDISPUTED THAT THE ASSESSEE WAS NEVE R PROVIDED ANY OPPORTUNITY TO CROSS-EXAMINE SHRI MAHESH GARG, DIR ECTOR OF M/S KANODIA AGENCY. THIS ISSUE WAS TAKEN UP BY THE ASSESSEE B EFORE THE LD. CIT (A). THE LD. CIT (A) DISPOSED OF THE MATTER BY OBSERVING AS FOLLOWS:- 6. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT CER TAIN INFORMATION WAS RECEIVED BY THE A.O. WITH REGARD TO THE BOGUS ACCOMMODATION ENTRIES. IT IS ALSO SEEN THAT THE A.O. HAS BASED HIS ADDITION SOLELY ON THE STATEMENT OF MAHESH GARG, DIR ECTOR OF KANODIA AGENCY WHO ADMITTED THAT HE AND HIS COMPANY WE RE NOT DOING ANY REAL BUSINESS BUT WERE ONLY PROVIDING B OGUS ACCOMMODATION ENTRIES IN LIEU OF UNACCOUNTED CASH. ITA NO.4121/DEL/2010 4 7. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND RELYING ON THE JUDGEMENTS WHICH SUPPORT THE APPELLANTS CONTENTIONS AND TAKING NOTE OF THE FACT THAT THE TRANSACTION WAS THROUGH BANKING CHANNELS AND THAT THERE I S NOTHING ON RECORD TO SUGGEST THAT ANY UNACCOUNTED CASH WA S PAID IN LIEU THEREOF, IT IS HELD THAT THE A.O. WAS NOT JU STIFIED IN MAKING THE ADDITION. THE ENTIRE ADDITION OF RS.7,80, 000/- IS HELD TO BE DELETED. 10. FROM THE ABOVE, IT IS SEEN THAT UNDENIABLY, THE A DDITION WAS MADE BY THE ASSESSING OFFICER ONLY ON THE GROUND THAT IN HIS STATEMENTS BEFORE THE DCIT (INV.), SHRI MAHESH GARG, D IRECTOR OF KANODIA AGENCY HAD ADMITTED THAT HE AND HIS COMPANY WERE ONLY PROVIDING BOGUS ACCOMMODATION ENTRIES IN CONSIDERATIO N OF UNACCOUNTED CASH AND WERE NOT DOING ANY REAL BUSINESS. THERE WAS NO OTHER MATERIAL WHATSOEVER FOUND AGAINST THE ASSESSEE. 11. NOW, IN ASHWANI GUPTA (SUPRA), THE TRIBUNAL HA D CONFIRMED THE CIT (A)S ORDER WHEREIN THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER HAD BEEN HELD TO BE INVALID AND THE ADDITIO N HAD BEEN DELETED ON THE GROUND THAT THE ASSESSING OFFICER HAD PASSED THE A SSESSMENT ORDER IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTI CE INASMUCH AS HE HAD NEITHER PROVIDED COPIES OF THE SEIZED MATERIAL TO THE ASSESSEE, NOR HAD HE ALLOWED THE ASSESSEE TO CROSS-EXAMINE THE PERSON ON THE BASIS OF WHOSE STATEMENT THE ADDITION WAS MADE. THE HONBLE JURISDICTIONAL HIGH COURT HELD, DISMISSING THE DEPARTMENTS APPEAL, TH AT THE DEPARTMENT HAD ACCEPTED THE FINDINGS OF THE TRIBUNAL ON FACTS, AS ALSO THE POSITION THAT THERE HAD BEEN A VIOLATION OF PRIN CIPLES OF NATURAL JUSTICE; THAT HOWEVER, ITS PLEA WAS THAT THE VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WAS NOT FATAL SO AS TO JEOPARDIZE THE E NTIRE PROCEEDINGS; AND THAT THE TRIBUNAL HAD CORRECTLY HELD THAT ONCE IT WAS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SEIZED MATERIA L WAS NOT PROVIDED TO THE ASSESSEE, NOR WAS CROSS-EXAMINATION OF TH E PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER HAD RELIED UPON, GR ANTED, THEN, ITA NO.4121/DEL/2010 5 SUCH FINDINGS WOULD AMOUNT TO A DENIAL OF OPPORTUNITY AND, CONSEQUENTLY, WOULD BE FATAL TO THE PROCEEDINGS. IN HOLDING SO, THEIR LORDSHIPS FOLLOWED SMC SHARE BROKERS LTD. 288 ITR 3 45 (DEL), WHEREIN IT WAS HELD, UNDER SIMILAR CIRCUMSTANCES, THAT IN THE A BSENCE OF THE DEPONENT BEING MADE AVAILABLE FOR CROSS-EXAMINATION , HIS STATEMENT COULD NOT BE RELIED UPON TO THE DETRIMENT OF THE ASSE SSEE. 12. NO DECISION TO THE CONTRARY HAS BEEN BROUGHT TO O UR NOTICE BY THE DEPARTMENT. 13. IT IS ALSO SEEN THAT IN THE PRESENT CASE, UNDISPUTEDL Y, THE ASSESSEE HAD FILED ITS OBJECTIONS BEFORE THE ASSESSING OFFICE R VIDE LETTER DATED 19.12.2007, MAKING A SPECIFIC REQUEST T O FURNISH THE COPIES OF ANY MATERIAL AVAILABLE WITH HIM FOR REBUTT AL TO THE ASSESSEE. THE ASSESSING OFFICER, HOWEVER, DID NOT FURNISH ANY MATE RIAL TO THE ASSESSEE FOR REBUTTAL. THE ADDITION WAS MADE RELYING ON A MERE GENERAL STATEMENT RECORDED AT THE BACK OF THE ASSESSEE A ND THAT TOO, WITH REGARD TO SOME OTHER CASE, WITHOUT PROVIDING THE ASSESSEE ANY OPPORTUNITY TO CROSS-EXAMINE THE DEPONENT, I.E., SHR I MAHESH GARG. 14. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHW ANI GUPTA (SUPRA), WE DO NOT FIND ANY ERROR WHATSOEVER IN THE ORDER OF THE LD. CIT (A) AND WE HEREBY CONFIRM THE SAME. 15. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.10.20 12. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 19.10.2012. ITA NO.4121/DEL/2010 6 DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES