ITO, New Delhi V. M/s. Lipi Softech Pvt. Ltd., New Delhi

ITA 4427/DEL/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1676 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI I.C. SUDHIR : JUDICIAL MEMBER ITA NOS. 4426 /DEL/2010 ASSTT. YRS: 2006-07 INCOME-TAX OFFICER, VS. M/S LIPI BUILDCON PVT. LT D., WARD 4(4), NEW DELHI. A-218, MANGAL APPTT., VASUN DHARA ENCLAVE, NEW DELHI. PAN: AABCL-0881-C AND ITA NOS. 4427 /DEL/2010 ASSTT. YRS: 2006-07 INCOME-TAX OFFICER, VS. M/S LIPI SOFTECH PVT. LTD ., WARD 4(4), NEW DELHI. A-218, MANGAL APPTT., VASUN DHARA ENCLAVE, NEW DELHI. PAN: AABCL-0880-D ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI SAMEER SHARMA SR. DR RESPONDENT BY : SHRI VINOD KUMAR BINDAL CA DATE OF HEARING : 30/07/2015. DATE OF ORDER : 06/10/2015. O R D E R PER S.V. MEHROTRA, A.M. : THE CAPTIONED APPEALS, PREFERRED BY DIFFERENT ASSES SEES OF THE SAME GROUP, HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST SEPARATE ORDERS DATED 30- 7-2010 PASSED BY THE LD. CIT(APPEALS)-VII, NEW DEL HI IN APPEAL NOS. 196/08-09 AND 197/08-09 RESPECTIVELY, RELATING TO ASSTT. YEAR 2006-07. COMMON GROUNDS HAVE BEEN RAISED IN BOTH THE APPEALS , THEREFORE, THEY WERE 2 ITA 4426 & 4427/D/2010 HEARD TOGETHER AND ARE BEING DISPOSED OF BY A CONSO LIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 4426/DEL/2010: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME DECLARING LOSS OF RS. 583/-. THE AO NOTICED THAT DURING THE YEAR THE ASSESSEE COMPANY HAD NOT CARRIED OUT ANY BUSINESS A CTIVITY. THE AO, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS MADE ADDITIO N OF RS. 15,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 IN RESPEC T OF SHARE CAPITAL RECEIVED FROM M/S WELL WISH CREDITS PVT. LTD. 3. LD. CIT(A) DELETED THE ADDITION, INTER ALIA, FO LLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195. BEING AGGRIEVED, THE DEPRT MENT IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL . 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONE OUS & CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.15,00,000/-MADE BY THE A.O U/S 68 OF THE I.T. AC T 1961, BEING THE UNEXPLAINED CASH CREDITS. 2.1 THE ID CIT(A) IGNORED THE FACT THAT THE ASSESSE E DID NOT DISCHARGE THE ONUS OF PROVING THE EXISTENCE/CREDIT WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ID CIT(A) ALSO IGNORED THE FINDINGS RECORDED BY THE A. O THAT THE ASSESSEE RECEIVED THE MONEY IN QUESTION FROM THE EN TRY OPERATORS. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF T HE HEARING. 3 ITA 4426 & 4427/D/2010 4. BRIEF FACTS OF THE CASE ARE THAT IN COURSE OF AS SESSMENT PROCEEDINGS THE AO NOTICED THAT DURING PREVIOUS YEAR ASSESSEE HAD RECEIVED SHARE CAPITAL AMOUNTING TO RS. 62,50,000/- OUT OF WHICH RS. 15,00 ,000/- WAS SHOWN TO HAVE BEEN RECEIVED FROM M/S WELL WISH CREDITS PVT. LTD. HE NOTED THAT AS PER THE INVESTIGATION CONDUCTED BY DIRECTORATE OF I NCOME TAX (INVESTIGATION), THIS COMPANY WAS FOUND TO BE AN E NTRY OPERATOR. ACCORDINGLY, HE ISSUED NOTICE U/S 133(6) TO M/S WE LL WISH CREDITS PVT. LTD. AT THE ADDRESS SUBMITTED BY ASSESSEE BUT THE SAID N OTICE WAS RECEIVED BACK UNDELIVERED FROM THE POSTAL AUTHORITIES. THIS FACT WAS INFORMED TO THE ASSESSEE AND HE WAS REQUIRED TO PRODUCE THE PARTY, GIVE CORRECT ADDRESS OF M/S WELL WISH CREDITS PVT. LTD. TO PROVE THAT THIS WAS NOT AN ACCOMMODATION ENTRY. THE AO HAS OBSERVED IN PARA 3 OF HIS ORDER THAT ASSESSEE NEITHER FURNISHED THE LATEST ADDRESS NOR P RODUCED THE ABOVE PARTY NOR PROVED ITS CREDITWORTHINESS. INSTEAD, VIDE LETT ER DATED 24-12-2008 THE ASSESSEE SUBMITTED THAT IT HAD ALREADY FILED CONFIR MATION, COPY OF ITR, CERTIFICATE OF INCORPORATION AND BANK STATEMENT OF THE SAID COMPANY AND, THEREFORE; AMOUNT RECEIVED FROM M/S WELL WISH CREDI TS PVT. LTD. SHOULD NOT BE ADDED U/S 68. THE AO AFTER CONSIDERING THE ASSES SEES SUBMISSIONS MADE ADDITION OF RS. 15,00,000/- BY OBSERVING AS UNDER: THE INVESTIGATIONS OF THE DEPARTMENT HAVE CLEARLY ESTABLISHED THAT M/S WELL WISH CREDIT PVT. LTD WAS AN ACCOMMODA TION ENTRY PROVIDER COMPANY MANAGED AND OPERATED BY SH R AJESH BANSAL W.B0 HAD ADMITTED BEFORE THE INVESTIGATION A UTHORITIES THAT HE WAS DOING WORK OF PROVIDING ACCOMMODATION E NTRIES ON COMMISSION. THE ASSESSEE COULD NOT PRODUCE THE SAI D PARTY OR FURNISH ITS LATEST ADDRESS. GENUINENESS AN D 4 ITA 4426 & 4427/D/2010 CREDITWORTHINESS OF THE SAID SHARE CAPITAL SUBSCRIB ER HAVE NOT BEEN ESTABLISHED BY THE ASSESSEE. IN VIEW OF THESE FACTS, THE AMOUNT OF RS.15,00,000/ - RECEIVED FROM THE ABOVE COMPANY HAS TO BE TREATED A S UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESS EE COMPANY. 4.1. HE ALSO RELIED ON THE LEGAL POSITION, WHICH HA S BEEN NOTED IN PARA 5 OF HIS ORDER. 5. BEFORE LD. LD. CIT(A), THE ASSESSEE HAD GIVEN DE TAILED SUBMISSIONS WHICH HAVE BEEN REPRODUCED AT PAGES 2 TO 5 OF HIS ORDER. THE ASSESSEE HAD ALSO RELIED ON FOLLOWING CASE LAWS: - CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195; - CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 299 IT R 268 (DEL.); - CIT VS. VALUE CAPITAL SERVICES LTD. (2008) 307 ITR 334 (DEL.); - CIT VS. TDI MARKETING PVT. LTD. (2009) 26 DTR (DEL. ) 358; AND - BHAV SHAKTI STEEL MINES (P) LTD. VS. CIT (2009) 179 TAXMAN 25. 5.1. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS A ND VARIOUS CASE LAWS, RELIED UPON BY ASSESSEE, LD. CIT(A) DELETED THE ADD ITION, INTER ALIA, OBSERVING IN PARA 5.3 THAT ASSESSEE HAD GIVEN ALL THE NECESSA RY DETAILS IN ORDER TO ESTABLISH THE IDENTITY OF THE SHARE APPLICANT. THER EFORE, IT WAS FAIR TO CONCLUDE THAT THE SHARE APPLICANT WAS AN EXISTING P ARTY AND THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL. THE AO DID NOT P OINT OUT ANY DISCREPANCY IN THE EVIDENCES RELIED UPON BY ASSESSE E. 6. LD. DR SUBMITTED THAT THE FINDINGS OF LD. CIT(A) ARE BASED ON EARLIER ORDERS. HE REFERRED TO THE DECISION OF HONBLE DELH I HIGH COURT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169 A ND POINTED OUT THAT THE 5 ITA 4426 & 4427/D/2010 LAW ON THIS ISSUE HAS BEEN SUCCINCTLY ELABORATED. H E SUBMITTED THAT IN THIS CASE THE AO HAD MADE INQUIRIES AND WHEN THE NOTICE U/S 133(6) WAS RECEIVED BACK, THE ASSESSEE WAS REQUIRED TO PRODUCE THE PAR TY BUT THE SAME WAS NOT DONE. HE FURTHER REFERRED TO THE DECISION OF HONBL E DELHI HIGH COURT IN THE CASE OF EMPIRE BUILDTECH P. LTD. 366 ITR 110, WHER EIN IT HAS BEEN HELD THAT IF A PERSON WHO IS INVESTING THE MONEY HAS MEAGER I NCOME THEN THE SAME IS TO BE ADVERSELY VIEWED. IN THIS REGARD LD. DR REFER RED TO PAGE 5 OF PB WHEREIN THE ACKNOWLEDGEMENT IN REGARD TO RETURN OF INCOME FILED BY M/S WELL WISH CREDITS PVT. LTD. IS CONTAINED AND POINTE D OUT THAT THE TOTAL INCOME RETURNED BY THE COMPANY WAS ONLY RS. 530/-. HE, THEREFORE, SUBMITTED THAT THE INVESTMENT OF RS. 15,00,000/- BY THE SAID COMPANY WAS WHOLLY INCONCEIVABLE. LD. DR FURTHER SUBMITTED THAT MERE DISCLOSURE OF IDENTITY IS NOT SUFFICIENT AND THE GENUINENESS OF T HE TRANSACTION IS TO BE VIEWED HAVING REGARD TO THE CREDITWORTHINESS OF THE LENDER. 7. LD. COUNSEL SUBMITTED THAT THE INCOME CANNOT BE THE CRITERIA FOR DECIDING THE CREDITWORTHINESS OF THE PARTY AND, THE REFORE, MATTER MAY BE RESTORED TO THE FILE OF AO FOR FRESH ADJUDICATION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. WE FIND CONSIDERABLE FORCE IN THE SUBM ISSION OF LD. DR. IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) AND IN THE CASE OF EMPI RE BUILDTECH PVT. LTD. (SUPRA), UNLESS ALL THE THREE INGREDIENTS FOR INVOK ING SECTION 68 ARE FULLY SATISFIED, ADDITION CANNOT BE DELETED MERELY ON THE GROUND THAT THE IDENTITY HAD BEEN ESTABLISHED. WE FIND THAT IN ORDER TO ESTA BLISH THE CREDITWORTHINESS THE ASSESSEE HAD CLAIMED THAT THE INVESTOR COMPANY WAS ASSESSED TO TAX. 6 ITA 4426 & 4427/D/2010 HOWEVER, AS RIGHTLY POINTED OUT BY LD. CIT(DR), THE INVESTOR HAD RETURNED INCOME OF RS. 530/-. THEREFORE, IT IS NECESSART6Y T HAT WHAT WAS THE SOURCE OF INVESTMENT OF THE INVESTOR HAS TO BE CLEARLY BROUGH T ON RECORD. MERE FILING OF RETURN CANNOT ESTABLISH THE CREDITWORTHINESS.THEREF ORE, WE RESTORE THIS MATTER TO THE FILE OF AO TO PROVIDE ONE MORE OPPORTUNITY T O ASSESSEE TO ESTABLISH THE GENUINENESS AND CREDITWORTHINESS OF M/S WELL WISH C REDITS PVT. LTD., AS REQUESTED BY LD. COUNSEL FOR THE ASSESSEE. 9. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ITA NO. 4427/DEL/2010: 10. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY FILED ITS RETURN OF INCOME DECLARING LOSS OF RS. 15/-. THE AO NOTICED T HAT DURING THE YEAR THE ASSESSEE COMPANY HAD NOT CARRIED OUT ANY BUSINESS A CTIVITY. THE AO, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS MADE ADDITIO N OF RS. 8,00,000/- U/S 68 ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 IN RESPECT OF SHARE CAPITAL RECEIVED M/S HARI HAR EXPORT PVT. LTD. 11. LD. CIT(A) DELETED THE ADDITION, INTER ALIA, F OLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195. BEING AGGRIEVED, THE DEPAR TMENT IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL . 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONE OUS & CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.8,00,000/-MADE BY THE A.O U/S 68 OF THE I.T. ACT 1961, BEING THE UNEXPLAINED CASH CREDITS. 7 ITA 4426 & 4427/D/2010 2.1 THE ID CIT(A) IGNORED THE FACT THAT THE ASSESSE E DID NOT DISCHARGE THE ONUS OF PROVING THE EXISTENCE/CREDIT WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ID CIT(A) ALSO IGNORED THE FINDINGS RECORDED BY THE A. O THAT THE ASSESSEE RECEIVED THE MONEY IN QUESTION FROM THE EN TRY OPERATORS. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF T HE HEARING. 12. ADMITTEDLY, FACTS OF THE CASE IN RESPECT OF THI S ASSESSEE ARE IDENTICAL TO THE FACTS IN THE CASE OF M/S LIPI BUILDCON PVT. LTD ., ABOVE, WHEREIN WE HAVE RESTORED THE MATTER BACK TO THE FILE OF AO TO PROVI DE ONE MORE OPPORTUNITY TO ASSESSEE TO ESTABLISH THE GENUINENESS AND CREDITWOR THINESS OF THE INVESTOR COMPANY. FOR THE SAME REASONS HEREIN ALSO WE RESTOR E THE MATTER TO THE FILE OF AO FOR DECISION AFRESH. 13. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 06/10/2015. SD/- SD/- (I.C. SUDHIR) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06/10/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 8 ITA 4426 & 4427/D/2010 - + DATE INITIAL 1. DRAFT DICTATED ON - 1 0.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 1 .9.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.