ITO, New Delhi V. M/s. Goel Sons Golden Estates Pvt. Ltd, Delhi

ITA 4152/DEL/2010

• Counselvise Citation: 415220114 RSA 2010
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: ASHWANI TANEJA; RAKESH GUPTA
• Keywords: Accommodation entries; Set aside
• Section: 68; 143(1); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 4152(DEL)/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, M/S GOEL SONS GOLDEN ESTATES PVT. WARD 12(2), NEW DELHI. VS. LTD., 25, HARSH VIHAR, PITAMPURA, DELHI-34. PAN-AACCG1922A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL MISHRA, SR. DR RESPONDENT BY : S /SHRI RAKESH GUPTA & ASHWANI TANEJA, ADVOCATES ORDER PER K.G. BANSAL : AM THE REVENUE HAS TAKEN TWO GROUNDS IN THIS APPEAL TO THE EFFECT THAT THE CIT(APPEALS) ERRED IN DELETING THE ADDIT ION OF RS. 30.00 LAKH MADE BY THE ASSESSING OFFICER (AO FOR SHORT) UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961, IN RESPECT OF BOGUS SHARE CAPITAL, IGNORING THE FACT THAT THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE CONTRIBUTORS AND GENUINENESS OF THE TRANSACTIONS. 1.1 THE FACTS OF THE CASE ARE THAT THE ASSESSEE -COMPANY WAS INCORPORATED ON 16.01.2004 FOR CARRYING ON THE BU SINESS OF REAL ESTATE. THE RETURN FOR THIS YEAR WAS FILED ON 30.06.2006 D ECLARING TOTAL INCOME OF RS. ITA NO. 4152(DEL)/2010 2 12,770/- AND ADJUSTED BOOK PROFIT OF RS. 2,29,92 4/- U/S 115JB. THE RETURN WAS PROCESSED U/S 143(1) AND THEREAFTER S TATUTORY NOTICES WERE ISSUED FOR SCRUTINIZING IT. 1.2 IT APPEARS THAT INVESTIGATION WING OF THE INC OME-TAX DEPARTMENT HAD CARRIED OUT INVESTIGATION AND STATEDLY UNEARTHED A HUGE MONEY LAUNDERING OPERATION. THE INFORMATION GATHERED BY IT WAS D ISSEMINATED TO VARIOUS AOS INCLUDING THE AO OF THIS ASSESSEE. IN THE COURSE OF INVESTIGATION, STATEMENT OF SHRI S.H. MALIK WAS RECORDED ON OA TH ON 23.06.2004. IT WAS INTER-ALIA DEPOSED THATM/S ONYX EXIM PVT. L TD., OF WHOM HE, SHIV LAL AND KISHAN LAL ARE DIRECTORS, HAD BEEN OSTENS IBLY CARRYING ON THE BUSINESS OF MARKETING, BUT IN FACT IT WAS NOT CA RRYING ON ANY BUSINESS EXCEPT THAT OF PROVIDING ACCOMMODATION ENTRIES. THE MODUS OPERANDI OF PROVIDING ENTRY WAS EXPLAINED. IT WAS FURTHER DEPOSED THAT HE DOES NOT REMEMBER THE AMOUNT OF CAPITAL OF M/S ONYX EXIM PV T. LTD. AND M/S SHIMMERS MARKET P. LTD. BASED UPON THIS INFORMA TION, THE AO SCRUTINIZED THE RETURN AND FOUND THAT THE ASSESSE E RECEIVED MONEY BY WAY OF SHARE CAPITAL FROM M/S SHIMMERS MARKET P. LTD. - RS. 5.00 LAKH; KOHINOOR OILS MILLS LTD.- RS. 10.00 LAKH; PURI MIL K & FOOD LTD.- RS. 5.00 LAKH; ONYX EXIM PVT. LTD.- RS. 5.00 LAKH AND RAPI D IMPEX P. LTD.- RS. ITA NO. 4152(DEL)/2010 3 5.00 LAKH, TOTALING TO RS. 30.00 LAKH. IT MAY BE MENTIONED HERE THAT THE NAMES OF SHIMMERS MARKET P. LTD. AND ONYX EXIM P VT. LTD. APPEAR IN THE STATEMENT OF SHRI S.H. MALIK, ABOUT WHICH I T HAS BEEN DEPOSED THAT THEY WERE CARRYING ON THE BUSINESS OF PROVIDING AC COMMODATION ENTRIES ONLY. IN VIEW THEREOF, THE ASSESSEE WAS REQUIRED TO PROVE IDENTITY AND CAPACITY OF THE CONTRIBUTORS AND GENUINENESS OF TH E TRANSACTIONS. IT ALSO APPEARS THAT THE AO ISSUED NOTICES TO THE CONTR IBUTORS INDEPENDENTLY. THE ASSESSEE FILED THE DETAILS IN RESPECT OF AL L THESE COMPANIES, WHICH CONTAIN CONFIRMATION, PAN, ASSESSMENT DETAILS, AF FIDAVIT, BANK STATEMENT, ACKNOWLEDGEMENT AND BALANCE-SHEET. THESE COMPANIES ALSO FORWARDED THEIR REPLIES THROUGH POST TO THE AO IN THE FO RM OF CONFIRMATION AND AFFIDAVIT. THE CONFIRMATION AND THE AFFIDAVIT H AVE BEEN IDENTICALLY WORDED AND THE CONTENTS OF ADDITION BY WAY OF HANDWRITI NG IN THE CONFIRMATION LETTER IS ALSO THE SAME. IT IS INTER-ALIA MENTIO NED THAT VARIOUS DETAILS HAVE ALREADY BEEN SUBMITTED TO THE COMPANY IN WHICH CONTRIBUTION WAS MADE. IT WAS REITERATED THAT THE CONTRIBUTION HAS BEEN MADE BY CHEQUE. HOWEVER, NO DIRECTOR FROM ANY COMPANY COULD BE PR ODUCED BEFORE THE AO FOR AUTHENTICATING THE CONTENTS OF THE AFFIDAVI T. THEREFORE, IT WAS CONCLUDED THAT THE BURDEN CAST ON THE ASSESSEE U /S 68 HAS NOT BEEN ITA NO. 4152(DEL)/2010 4 DISCHARGED. THEREFORE, A SUM OF RS. 30.00 LA KH WAS ADDED TO THE TOTAL INCOME. 1.3 AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS)-XV, NEW DELHI, WHO DISPOSED IT OFF ON 29.07.2010 IN APPEAL NO. 239/08-09. HE CAME TO THE CONCLUSION THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO PROVE THAT TH E MONEY REPRESENTING CONTRIBUTION FLOWED FROM THE COFFERS OF THE ASSE SSEE-COMPANY. THE ASSESSEE HAS FILED SUFFICIENT EVIDENCE TO ESTAB LISH THE IDENTITY OF THE CONTRIBUTORS. NO ATTEMPT HAS BEEN MADE BY THE AO TO BRING EVIDENCE ON RECORD THAT CONTRIBUTORS WERE NOT CREDITWORTHY OR THE TRANSACTIONS WERE NON-GENUINE. THEREFORE, THE ADDITION HAS B EEN DELETED. 2. BEFORE US, THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT ALL THE CONTRIBUTORS ARE LIMITED COMPANIES. TH E IDENTITY HAS BEEN ESTABLISHED. THE MONIES HAVE BEEN RECEIVED THR OUGH BANKING CHANNELS. SUFFICIENT EVIDENCE HAS BEEN PLACED ON RECORD TO PROVE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THESE COMPA NIES HAVE INDEPENDENTLY FURNISHED EVIDENCES BEFORE THE AO. THESE EVIDE NCES HAVE BEEN IGNORED BY THE AO AND THE ADDITION HAS BEEN MADE MERE LY BECAUSE DIRECTORS OF ITA NO. 4152(DEL)/2010 5 THE CONTRIBUTING COMPANIES WERE NOT /PRODUCED FOR CROSS-EXAMINATION. ADDITION COULD NOT HAVE BEEN MADE ON THIS GROUND. IN THIS CONNECTION, RELIANCE HAS BEEN PLACED ON VARIOUS DECISIONS OF THE HIGH COURT AND THE TRIBUNAL, COPIES OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK FROM PAGE NOS. 87 TO 173, WHICH ARE AS UNDER:- S. NO. PARTICULARS 1. CIT VS. DWARKADHISH INVESTMENT (P) LTD. IN ITA NO. 911/2010 & 913/2010 DATED 02.08.2010 2. CIT VS. MERITON TOWERS PVT. LTD. IN ITA NO. 13 81/2010 DATED 16.09.2010 3. CIT VS. VRM GLOBAL INFRASTRUCTURE PVT. LTD. IN ITA NO. 1364/2010 DATED 14.09.2010. 4. CIT VS. M/S ROCK METAL & MINERALS LTD. IN ITA NO. 1303/2010 DATED 07.09.2010. 5. CIT VS. M/S ORBITAL COMMUNICATION (P) LTD. IN I TA NO. 989/2010 DATED 80.08.2010. 6. CIT VS. ULTRATECH FINANCE & INVESTMENT LTD. IN ITA NO. 1122/2010 DATED 12.08.2010. 7. CIT VS. VICTOR ELECTRODES LTD. IN ITA NO. 586/201 0 DATED 12.05.2010. 8. CIT VS. VINSTRAL PETROCHEMICALS PVT. LTD. IN ITA N O. 592/2010 DATED 12.05.2010. 9. CIT VS. SIRI RAM SYAL HYDRO POWER PVT. LTD. IN ITA NO. 1360/2010 DATED 06.09.2010. 10. CIT VS. CREATIVE WORLD TELEFILMS LTD. IN ITA NO. 2182/2009 DATED 12.10.2009. 11. CIT VS. GOURDIN HERBALS INDIA LTD. IN ITA NO. 665 /2009 DATED 17.09.2009. 12. CIT VS. JAY I RON & STEELS LTD. IN ITA NO. 30(DEL)//2010 DATED 13.08.2010 (ITAT, DEL) 13. SURYA PACKAGING PVT. LTD. VS. DCIT IN ITA NO.6 5 & 93(DEL)/2009 DATED 16.07.2010 (ITAT DEL) 14. ITO VS. MARSHALL FOUNDRY WORKS IN ITA NO. 817(DEL) /2010 DATED 13.08.2010. ITA NO. 4152(DEL)/2010 6 2.1 IN REPLY, THE LD. DR SUBMITTED THAT INVESTIG ATION WING HAD CARRIED OUT ELABORATE ENQUIRIES TO SHOW THAT SOME PER SONS WERE CONDUCTING ENTRY OPERATOR BUSINESS FOR MONEY LAUNDERING. T HE STATEMENT OF SHRI S.H. MALIK WAS RECORDED AND HE MENTIONED THE NAME OF SHIMMERS MARKET P. LTD. AND ONYX EXIM P. LTD. SUCH A MENTION IMP LICATE THE ASSESSEE- COMPANY. WHEN QUESTIONED AS TO WHAT ENQUIRIES WERE CONDUCTED IN THE CASE OF KOHINOOR OILS MILLS LTD., PURI MILK & FO OD LTD. AND RAPID IMPEX P. LTD., NO SATISFACTORY EXPLANATION HAS BEEN SUBMITTED. FURTHER, THE LD. DR STRESSED THAT NONE OF THE DIRECTORS OF CONTRI BUTING COMPANIES COULD BE PRODUCED AND, THEREFORE, AFFIDAVITS FILED ON BEHA LF OF THESE COMPANIES CANNOT BE RELIED UPON. ACCORDINGLY, IT IS VEHE MENTLY ARGUED THAT THE ORDER OF THE LD. CIT(APPEALS) MAY BE SET ASIDE A ND THAT OF THE AO MAY BE RESTORED ON THIS ISSUED. 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. FROM THE EVIDENCE FILED BY THE CONTRI BUTING COMPANIES, IT IS CLEAR THAT THE IDENTITY IS NOT IN DOUBT. IN FACT , THE AO HAS NOT DOUBTED THE IDENTITY. THIS ISSUE HAS ALSO NOT BEEN RAISED I N THE GROUNDS OF APPEAL, IN WHICH ONLY THE MATTERS REGARDING CREDITWORTHINESS OF CONTRIBUTORS AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN MENTIO NED. THE QUESTION IS- ITA NO. 4152(DEL)/2010 7 WHETHER, THE LD. CIT(APPEALS) WAS RIGHT IN DELET ING THE ADDITION MADE BY THE AO? 3.1 THE ASSESSEE HAS CITED A LARGE NUMBER OF CASES TO SUPPORT THE ORDER OF THE LD. CIT(APPEALS). WE NEED NOT GO THROUGH ALL THE CASES AS THEY ULTIMATELY LEAD TO THE SAME CONCLUSION, T HEREFORE, FOR THE SAKE OF BREVITY WE MAY REPRODUCE THE RELEVANT PORTION OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MERITON TOWERS P. LTD. (SUPRA):- 4. THE TRIBUNAL IN ITS IMPUGNED ORDER HAS A LSO OBSERVED AS UNDER:- 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR OF THE REVENUE AND SINCE THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF LOVELY EXPORT PVT. LTD. (SUPRA), WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) BECAUSE IT IS NOTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS ) ON PAGE 4 OF HIS ORDER THAT THE IDENTITY OF THESE INVESTORS STANDS PROVED BEYOND ANY DOUBT. IT IS FURTHER OBSERVED BY THE COMMISSIONER OF INCOME TAX (APPEA LS) THAT IN FACT, THE ASSESSING OFFICER HAS ALSO NOT RAISED ANY DOUBT IN RESPECT OF THE IDENTITY OF THE SHA RE APPLICANTS. IN VIEW OF THESE FACTS, WE CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) BY FOLLOWING THE JUDGMENT OF THE HONBLE APEX COUR T RENDERED IN THE CASE OF LOVELY EXPORTS PVT. LT D. (SUPRA), WHEREIN IT WAS HELD BY HONBLE APEX COU RT THAT IF THE IDENTITY OF THE INVESTORS IS ESTABLI SHED, THE ASSESSMENT IN THE CASE OF THE INVESTORS CAN BE RE OPENED AS PER LAW, BUT NO ADDITION CAN BE MADE IN THE HA NDS OF THE COMPANY, WHO HAS RECEIVED THE SHARE APPLICAT ION ITA NO. 4152(DEL)/2010 8 MONEY. IN VIEW OF THE ABOVE, WE DECIDE THIS ISS UE IN FAVOUR OF THE ASSESSEE. 5. KEEPING IN VIEW THE MANDATE OF LAW IN COM MISSIONER OF INCOME-TAX VS. LOVELY EXPORTS (P) LTD., 216 CTR 195 (SC) AND THE CONCURRENT FINDINGS OF FACT ARRIVED AT BY THE TWO AUTHORITIES BELOW, THE SHARE APPLICATION MONEY, IN THE PRESENT CASE, CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT, 1961. CON SEQUENTLY, THE PRESENT APPEAL, BEING BEREFT OF MERIT, IS DISMI SSED IN LIMINE. 3.2 THUS, THE REQUIREMENT OF LAW UNDER SECTION 6 8 IN THE CASE OF CAPITAL CONTRIBUTION IS THAT THE IDENTITY OF THE CONTRIBUT OR IS REQUIRED TO BE ESTABLISHED BY THE ASSESSEE. THE IDENTITY IS NOT UNDER CHALLENGE AT ALL. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(AP PEALS) RIGHTLY DELETED THE ADDITION. 4. IN THE RESULT, THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 AUGUST, 2011. SD/- SD/- (C.L. SETHI) (K.G. BANSA L) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 05.08.2011. SP SATIA ITA NO. 4152(DEL)/2010 9 COPY OF THE ORDER FORWARDED TO:- GOEL SONS GOLDEN ESTATES PVT. LTD., NEW DELHI. ITO, WARD 12(2), NEW DELHI. CIT CIT(APPEALS) THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.