A.C.I.T., Circle-4(1), Agra V. M/s O.P.Chains Ltd., Agra

ITA 445/AGR/2011

• Counselvise Citation: 44520314 RSA 2011
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-05-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 01-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N AGARWAL
• Keywords: Accommodation entries
• Section: 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.445/AGR/2011 ASSESSMENT YEAR : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, VS. M/S O.P. CHAINS LIMITED, CIRCLE 4(1), AGRA. 8/16 A, SETH GALI, AGRA. (PAN: AAACO 4467 A). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI P.N. AGARWAL, ADVOCATE DATE OF HEARING : 23.05.2012 DATE OF PRONOUNCEMENT OF ORDER : 01.06.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 16.08.2011 PASSED BY THE LEARNED CIT (APPEALS)-II, AGRA FOR TH E ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS :-. 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ENTIRE ADDITION MADE BY THE AO U/S 68 AMOUNTING TO RS.11737350/-, BEING UNEXPLAINED SHARE APPLICATION/ CAPITAL WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND RELYING ON THE SUBMISSION MADE BY THE ASSESSEE WITHOUT ADJUDIC ATING THE ISSUES HELD BY THE AO IN THE ASSESSMENT ORDER. ITA NO.445/AGR/2011 A.Y. 2003-04 . 2 2. THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS IN L AW AND ON FACTS DESERVE TO BE QUASHED AND THAT THE ORDER OF AO TO B E RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR ALTER ANY O R MORE GROUND OR GROUNDS OF APPEAL AS MAY BE DEEMED FIT AT THE TI ME OF HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING, DELHI STAT ING THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES BY OBTAINING/ARRANGING BOGUS DOCUMENTS ETC. AND THEREBY INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS ACCOUNT . THE DETAILS OF SUCH ACCOMMODATION ENTRIES HAVE BEEN NOTED BY THE ASSESS ING OFFICER IN PAGE NOS.1 & 2 OF HIS ORDER. THE ASSESSING OFFICER REOPENED THE CASE UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). THE ASSESSING OFFICER MADE ADDITION OF RS.1,17,37,350/- UNDER SECTION 68 OF TH E ACT AS UNDER :- (A.O. PAGE NO.10) CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE EVIDENCES COLLECTED BY THE DEPARTMENT IN TOTALI TY AS DISCUSSED ABOVE, IT IS HELD THAT THE ENTIRE SHARE APPLICATION /CAPITAL CLAIMED TO HAVE BEEN RECEIVED FROM THE COMPANIES OF ENTRY PROV IDER IS BOGUS AND ASSESSEES OWN MONEY. THEREFORE, THE UNDERSIGNED I S CONSTRAINED TO HOLD THAT THE SAID SUM BE CHARGED TO BE INCOME TAX AS THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND T HE SAME IS BEING ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE I .T. ACT, 1961. 3. THE CIT(A) DELETED THE SAID ADDITION AS UNDER :- (CIT(A) PAGE NO.17). ITA NO.445/AGR/2011 A.Y. 2003-04 . 3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMI SSION MADE BY THE LD. AR AND IT IS NOTICED THAT A SIMILAR ADDITION WAS A SUBJECT MATTER OF APPEAL FOR THE AY 2002-03 AND AY 2004-05 BEFORE THE HONBLE ITAT, AGRA WHO VIDE ITS CONSOLIDATED OR DER IN ITA NO.33 & 34/AGR/2008 VIDE ORDER DATED 31.8.09 HELD AS UNDE R :- IN THE PRESENT APPEAL IT IS NOTICED THAT THE ASSESSEE HAS PRODUCED THE NAMES, ADDRESS, PAN ACCOU NT DETAILS AND AFFIDAVIT, RESOLUTION OF THE BOARD OF D IRECTORS AND ALSO THE NECESSARY DOCUMENTS FAILED BEFORE THE REGISTRAR OF COMPANIES FOR THE PURPOSE OF MAKING INVESTMENT IN THE SHARE OF THE ASSESSEE COMPANY BY THE APPLICANT COMPANIES. IN THE CIRCUMSTANCES, AS IT I S NOTICED THAT THE FACTS OF THE ASSESSEES CASE ARE I DENTICAL TO THE FACTS IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. AS ALSO THE DECISION IN THE CASE OF MIDAS GOLDEN DISTILLERIES (P) LTD VS. CIT, RESPECTFULLY FOLLOWIN G THE DECISION OF THE HONBLE SUPREME COURT THE FINDING O F THE LD. CIT(A) ON THIS ISSUE STANDS UPHELD. THESE FINDINGS OF THE HONBLE ITAT, AGRA HAVE BEEN AFFIRMED BY THE HONBLE ALLAHABAD HIGH COURT IN ITA NO.137 O F 2010 VIDE ORDER DATED 13.12.2010 BY OBSERVING AS UNDER :- THE TRIBUNAL IN ITS ORDER HAS MENTIONED THAT THE ASSESSEE HAD PRODUCED THE NAMES, ADDRESSES, PAN ACCOUNT DETAILS AND AFFIDAVIT, RESOLUTION OF THE BO ARD OF DIRECTORS AND ALSO THE NECESSARY DOCUMENTS FILED BE FORE THE REGISTRAR OF COMPANIES THAT HAD INVESTED IN THE SHARES OF THE ASSESSEE. IT IS IN VIEW OF THIS THAT THE COMMISSIONER (APPEALS) AS WELL AS TRIBUNAL DELETED IT. THIS IS A FINDING OF FACT. THERE IS NO ILLEGALITY IN THE SAME. THE APPEALS HAVE NO MERIT. BOTH THE APPEALS ARE DISMISSED. AS THE FACTS IN THE YEAR UNDER APPEAL ARE SIMILAR, THEREFORE, FOLLOWING THE ORDER OF THE HONBLE JURISDICTIONAL H IGH COURT, I DELETE THE ADDITION MADE BY THE AO. THE GROUNDS ARE ALLOW ED. ITA NO.445/AGR/2011 A.Y. 2003-04 . 4 4. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HE CIT(A) WITHOUT APPRECIATING THE FACTS OF THE CASE DELETED THE ADDI TION. HE SUBMITTED THAT THE CIT(A) DELETED THE ADDITION WITHOUT EXAMINING CREDI TWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. HE FURTHER SUB MITTED THAT THE ASSESSING OFFICER IS EMPOWERED TO ENQUIRE TO THE REAL NATURE OF THE TRANSACTION. THE LD. DEPARTMENTAL REPRESENTATIVE IN SUPPORT OF HIS CONTE NTION RELIED UPON THE JUDGEMENT OF HONBLE HIGH COURT OF DELHI IN THE CAS E OF CIT VS. DIVINE LEASING AND FINANCE, 158 TAXMAN 440 (299 ITR 268) AS REGARD S THE I.T.A.T. ORDER FOR ASSESSMENT YEARS 2002-03 & 2004-05 WHICH HAS BEEN U PHELD BY THE HIGH COURT IN ITA NO.137/2010 VIDE ORDER DATED 13.12.2010, LD. DE PARTMENTAL REPRESENTATIVE SUBMITTED THAT HIGH COURT HAS CONFIRMED THE ORDER O F I.T.A.T. ON THE BASIS OF FACTS RECORDED BY THE I.T.A.T. BUT IN THE CASE UNDER CONS IDERATION THE CIT(A) WITHOUT CONSIDERING THE ASPECT OF CREDITWORTHINESS AS REQUI RED UNDER SECTION 68 HAS DELETED THE ADDITION. LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAND, S UBMITTED THAT THE FACTS OF THE CASE UNDER CONSIDERATION AND FACTS OF THE CASE FOR ASSESSMENT YEARS 2002-03 & 2004-05 ARE IDENTICAL. I.T.A.T., AGRA BENCH HAS DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE ORDER OF I.T.A.T. HAS BEEN CONFIRM ED BY THE ALLAHABAD HIGH COURT. ITA NO.445/AGR/2011 A.Y. 2003-04 . 5 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE FIND THAT ON IDENTICAL SET OF FACTS, ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY UNDER SECTION 68 OF THE ACT HAS BEEN DECIDED BY THE I.T.A.T., AGRA BENCH IN ASSESSMENT YEARS 2002-03 & 2004-05 VIDE ITA NOS. 33 & 34/AGR 2008 ORDER DATED 31.08.2009. THE RELEVANT FINDING OF THE I.T. A.T. HAS BEEN REPRODUCED BY THE CIT(A) AT PAGE NO.17 OF HIS ORDER WHICH IS REPRODUC ED ABOVE. 6. THE ORDER OF THE I.T.A.T. HAS BEEN CONFIRMED BY THE JURISDICTIONAL HIGH COURT OF ALLAHABAD AND THE RELEVANT FINDING HAS BEE N REPRODUCED BY THE CIT(A) AT PAGE NO.17 OF HIS ORDER WHICH IS REPRODUCED AS ABOV E. WE NOTICED THAT IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS PRODUCED THE NAMES, ADDRESSES, PAN ACCOUNT DETAILS, AFFIDAVITS, RESOLUTION OF THE BOARD OF DIR ECTORS ETC. AND THE PARTY-WISE DOCUMENTS HAS BEEN NOTED BY CIT(A) FROM PAGE NOS.11 TO 13 OF HIS ORDER. THESE DOCUMENTS ARE IDENTICAL DOCUMENTS WHICH WERE FILED IN THE CASE WHICH WAS BEFORE THE JURISDICTIONAL HIGH COURT. THE JUDGEMENT CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE IN THE CASE OF CIT VS. DEVINE LEASIN G & FINANCE (SUPRA) DOES NOT HELP THE REVENUE AS THERE IS A JUDGEMENT OF JURISDI CTIONAL HIGH COURT OF ALLAHABAD IN THE ASSESSEES OWN CASE CITED SUPRA. SINCE ON I DENTICAL SET OF FACTS THERE IS A JUDGMENT OF JURIDICAL HIGH COURT IN ASSESSEES OWN CASE, THEREFORE, WE ARE BOUND TO FOLLOW THE SAID JUDGEMENT AS REQUIRED UNDER THE BASIC PRINCIPLES IN THE ITA NO.445/AGR/2011 A.Y. 2003-04 . 6 ADMINISTRATION OF JUSTICE AND JUDICIAL DISCIPLINE. IN THIS REGARD, WE WOULD LIKE TO QUOTE THE OBSERVATION IN THE CASE OF NOKIA CORPORAT ION VS. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) AND ANOTHER (2007) 162 TAX MAN 369 (DELHI) (292 ITR 22 (DELHI) WHICH ARE AS UNDER :- 12. THE SUPREME COURT STATED, MANY YEARS AGO, IN UNION OF INDIA VS. KAMALAKSHI FINANCE CORPORATION LTD. 1991 (55) E LT 433 (SC) AS FOLLOWS : THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. IT WAS FURTHER OBSERVED BY THE SUPREME COURT THAT I F THE ORDER OF AN APPELLATE AUTHORITY IS THE SUBJECT-MATTER OF FURTHER APPEAL, THAT CANNOT FURNISH ANY GROUND FOR NOT FOLLOWING IT, UNL ESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. THE SUPRE ME COURT WENT ON TO SAY THAT IF THIS HEALTHY RULE IS NOT FOLLOWED , THE RESULT WILL NOT ONLY BE UNDUE HARASSMENT TO ASSESSEES BUT CHAOS IN THE ADMINISTRATION OF TAX LAWS. 13. IN CIT(A) VS. RALSON INDUSTRIES LTD (2007) 207 CTR (SC) 201 : (2007) 2 SCC 326, THE SUPREME COURT HELD : WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY, THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRIN CIPLES OF JUDICIAL DISCIPLINE. THE SUPREME COURT DREW SUPPORT FROM BHOPAL SUGAR IN DUSTRIES LTD. VS. ITO (1960) 40 ITR 618 (SC) WHEREIN IT WAS HELD: IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIR ECTIONS GIVEN TO IT BY A SUPERIOR TRIBUNAL IN THE EXERCISE OF ITS APPELLATE POWERS, THE RESULT WILL BE CHAOS IN THE ADMINISTRAT ION OF JUSTICE ITA NO.445/AGR/2011 A.Y. 2003-04 . 7 IT WAS FURTHER OBSERVED IN BHOPAL SUGAR INDUSTRIES (SUPRA) : THE JUDICIAL COMMR. WAS NOT SITTING IN APPEAL OVER THE TRIBUNAL AND WE DO NOT THINK THAT IN THE CIRCUMSTAN CES OF THIS CASE IT WAS OPEN TO HIM TO SAY THAT THE ORDER OF TH E TRIBUNAL WAS WRONG AND, THEREFORE, THERE WAS NO INJUSTICE IN DISREGARDING THAT ORDER. AS WE HAVE SAID EARLIER S UCH A VIEW IS DESTRUCTIVE OF ONE OF THE BASIS PRINCIPLES OF ADMIN ISTRATION OF JUSTICE. 7. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE FIND T HAT THE CIT(A) HAS FOLLOWED THE JUDGEMENT OF JURISDICTIONAL HIGH COURT. THEREF ORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ORDER OF CIT(A) IS CONFIRMED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY