ITO, New Delhi V. M/s. Grip Buildtech Pvt. Ltd., New Delhi

ITA 4470/DEL/2010

• Counselvise Citation: 447020114 RSA 2010
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: PRAKASH NARAIN
• Keywords: Share purchase agreement; Additional evidence; Accommodation entries; Bogus loan
• Section: 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI C.L. SETHI, JM & SHRI A.N. PAHUJA, AM ITA NO.4470/DEL/2010 ASSESSMENT YEAR:2006-07 INCOME TAX OFFICER, WARD 12 (2) ROOM NO.337, C.R. BUILDING, NEW DELHI V/S . M/S GRIP BUILDTECH (P) LTD. 1/18-B, ASAF ALI ROAD, NEW DELHI [PAN NO.: AACCG 3257G] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI PRAKASH NARAIN, AR REVENUE BY SHRI SALIL MISHRA, DR DATE OF HEARING 02-11-2011 DATE OF PRONOUNCEMENT 02-11-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 7.10.2010 BY THE ASSESSEE AGAI NST AN ORDER DATED 26.08.2010 OF THE LEARNED CIT(A)-XV, NE W DELHI, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` ` 35.50 LACS ON ACCOUNT OF BOGUS LOANS RECEIVED BY THE ASSESSEE DUR ING THE YEAR. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` `35.50 LACS MADE U/S 68 OF I.T. ACT IGNORING THE FACT THAT ASSESSEE HAD FAILED TO PROVE CREDITWORTHINESS AND GENUINENESS OF TRANSACTI ON THEREBY NOT DISCHARGING THE ONUS COST ON IT BY LAW. 3. THE APPELLANT CRAVES TO ADD, ALTER, AMEND, DELET E OR WITHDRAW ANY GROUND OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT E-RETURN DECLARING LOSS OF ` `21,334/-/- FILED ON 24 TH NOVEMBER, 2006 BY THE ASSESSEE, CARRYING ON THE BUSINESS OF CONTRACTORS, BUILDERS AND DEVELOPERS, A FTER IT A NO.4470/DEL./2010 2 BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1 961 (HEREAFTER REFERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY WITH THE SERV ICE OF A NOTICE U/S 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED ON PERUSAL OF BALANCE SHEET THAT THE ASSESSEE RECEIVED UNSECURED LOANS FROM THE FOLLOWING PARTIES:- I) ` `4,50,000/- FROM M/S G.K. CONSULTANTS PVT. LTD. II) ` ` 5,00,000/- FROM M/S PRIMA UDYOG LTD. III) ` ` 10,00,000/- FROM M/S GHAZIABAD EXPORTS PVT. LTD. IV) ` ` 5,50,000/- FROM M/S LYRA CAPITAL SERVICES PVT. LTD. V) ` `9,00,000/- FROM M/S LAS TRADERS PVT. LTD. VI) ` `1,50,000/- FROM M/S CADIX ELECTRONICS PVT. LTD. TOTAL: ` `35,50,000/- 2.1 THESE COMPANIES WERE MANAGED DIRECTLY OR INDIRE CTLY BY SHRI SUBODH GUPTA, DIRECTOR OF M/S G.K. CONSULTANT PVT. LTD. AN D OPERATED FROM COMMON ADDRESS AT 301, GK HOUSE, 186-A, SANT NAGAR, EAST O F KAILASH, NEW DELHI AND G-236, SARITA VIHAR, NEW DELHI. DURING THE COU RSE OF SURVEY U/S 133A OF THE ACT CONDUCTED ON 30 TH OCTOBER, 2003 ,SHRI SUBODH GUPTA ADMITTED THAT HE WAS THE DIRECTOR IN M/S G.K. CONSULTANT LTD. AND AL SO CONTROLLED M/S LYRA CAPITAL SERVICES PVT. LTD. IN WHICH ONE OF HIS PEON SHRI LAKHAN SINGH WAS ONE OF THE DIRECTOR WHILE M/S GHAZIABAD EXPORTS PVT . LTD. AND M/S PRIME UDYOG PVT. LTD. WERE CONTROLLED THROUGH HIS FRIEND SHRI SURESH MITTAL. IN A REPLY TO QUESTION NO.24, HE ADMITTED THAT HE WAS IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES THROUGH THE VARIOUS COMPANIES CONTROLLED BY HIM IN LIEU OF PREMIUM RANGING BETWEEN 0.5% TO 1.5% OF THE AMOUNT INVOLVED. THE ENTRIES WERE GIVEN IN THE GARB OF SHARE CAPITAL, SH ARE PREMIUM AND UNSECURED IT A NO.4470/DEL./2010 3 LOANS. SHRI LAKHAN SINGH IN HIS STATEMENT ON OAT H SUBMITTED THAT HE WAS A PEON IN M/S GK CONSULTANTS AND HAD NO BANK ACCOUNT BUT WAS ONE OF THE DIRECTOR IN M/S LYRA CAPITAL SERVICES PVT. LTD. AND WAS NOT AWARE OF THE ACTIVITIES UNDERTAKEN BY THE COMPANY. DURING THE C OURSE OF SURVEY, DOCUMENTS FOUND INCLUDED CHEQUE BOOKS OF M/S LYRA C APITAL SERVICES PVT. LTD., M/S GHAZIABAD EXPORTS PVT. LTD. AND M/S PRIMA UDYOG PVT. LTD. IN ORDER TO ASCERTAIN THE GENUINENESS OF THE TRANSACTI ONS ,THE AO ASKED THE ASSESSEE TO PRODUCE SHRI SUBODH GUPTA AND SHRI SURE SH MITTAL. THOUGH THEY ATTENDED OFFICE ON 4 TH DECEMBER ,2008 AND 5 TH DECEMBER, 2008, THEY FILED ONLY CONFIRMATION OF ACCOUNTS DATED 01.04.2006. IN THESE CIRCUMSTANCES RELYING ON THE STATEMENT OF SHRI SUBODH GUPTA DURIN G THE COURSE OF SURVEY, THE AO ADDED THE AMOUNT OF ` ` 35,50,000/- U/S 68 OF THE ACT ON THE GROUND THAT THESE LOANS WERE SECURED AGAINST PAYMENT OF UN ACCOUNTED MONEY OF THE ASSESSEE. INTER ALIA, SINCE THE COMPANY DID NOT CO MMENCE ANY COMMERCIAL ACTIVITIES, THE AO DISALLOWED EXPENSES, THESE BEIN G PRE OPERATIVE. 3. ON APPEAL, APART FROM THEIR SUBMISSIONS AND COPI ES OF NOTICES AS ALSO BALANCE SHEET AND RELEVANT CASE LAWS, THE ASSESSEE SUBMITTED THE FOLLOWING DOCUMENTS BEFORE THE LD. CIT(A):- I) COPY OF CONFIRMATION, ITR, BANK STATEMENT AND DE TAILS OF REPAYMENT OF AMOUNTS IN FY 2008-09[PAGE 23-52 OF T HE PB] AND II),COPY OF CERTIFICATE OF INCORPORATION, AUDITED B ALANCE SHEET FOR THE FY 2005-06 OF ALL THE LOANER COMPANIES[PG. 53 T O 111 OF PB] 3.1 THE LD. CIT(A) WHILE OBSERVING THAT NONE OF T HE FOLLOWING DOCUMENTS WERE REBUTTED DURING THE COURSE OF ASSESSMENT PROCE EDINGS ,CONCLUDED AS UNDER: 'I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIO NS OF THE APPELLANT AND THE FINDINGS OF THE AO. IN THE CASE U NDER APPEAL IT IS SEEN THAT THE APPELLANT HAD FURNISHED VARIOUS DOCUM ENTS IN SUPPORT OF THE CREDITS RECEIVED BY HIM BEFORE THE A O AND ALSO IT A NO.4470/DEL./2010 4 DURING THE APPELLATE PROCEEDINGS.: THE ONUS OF PROV ING CASH CREDIT IN THE BOOKS IS REBUTTABLE. THE ASSESSEE HAS TO DIS CHARGE THE INITIAL ONUS BY PROVING THE IDENTITY OF THE CREDITO R BY FILING THE CONFIRMATORY LETTER AND OTHER RELEVANT DETAILS. THE PRESUMPTION IS REBUTTABLE AND THE DEPARTMENT IS ALSO REQUIRED TO B RING EVIDENCE ON RECORD IF WANTS TO REJECT THE EXPLANATION OF THE ASSESSEE. IT IS NOW SETTLED LAW THAT THERE ARE THREE BASIC REQUIREM ENTS IN CASE OF A CASH CREDIT: 1. THE IDENTITY OF THE CREDITOR. 2. THE CREDITWORTHINESS OF THE CREDITOR, AND 3. THE GENUINENESS OF THE TRANSACTION THE FIRST ISSUE IS THE IDENTITY OF THE CREDITORS. T HE APPELLANT FILED THE FOLLOWING DETAILS IN REGARD TO THE IDENTI TY OF THE PERSONS WHO HAD GIVEN UNSECURED LOAN . (I) COPY OF CONFIRMATION LETTERS. (II) COPY OF PARTIES' BANK ACCOUNT (III) COPY OF ITR (IV) PAN DETAILS (V) COPY OF BALANCESHEETS .. THE AO HAS NOT BROUGHT ANY INFORMATION OR EVIDENCE ON RECORD TO DISPROVE CLAIMS OF THE APPELLANT SUBSTANT IATED BY IRREBUTTABLE EVIDENCE BROUGHT ON RECORD BY THE APPE LLANT. PERUSAL OF THE RECORDS SHOW THAT SH. SUBODH GUPTA A ND SH. SURESH MITTAL HAD APPEARED BEFORE THE AO AND HAD AL SO FILED CONFIRMATORY LETTERS. THIS FACT IS ACKNOWLEDGED BY THE AO IN THE ASSESSMENT ORDER. MOREOVER, THE STATEMENT RELIED UP ON BY THE AO IS OF A PERIOD PRIOR TO THE PERIOD WHEN THE TRAN SACTIONS HAD TAKEN PLACES. THE HON'BLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELLA RAM VS CIT 125 ITR 713 HAS HELD THAT T HE BURDEN IS ON REVENUE TO SHOW THAT THE MONEY BELONGE D TO THE ASSESSEE BY BRINGING PROPER EVIDENCES ON RECORD AND EVIDENCE IF ANY GATHERED BEHIND THE BACK OF THE ASSESSEE CAN NOT BE USED AGAINST HIM WITHOUT CONFRONTING HIM WITH IT. N O SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO THAT THE AMOUNT CREDITED IN THE BANK ACCOUNT OF THE APPELLAN T EMANATED FROM THE COFFERS OF THE APPELLANT. THE HON'BLE ITAT DELHI 'C' BENCH IN THE CASE OF ITO VS. NAVEEN GUPTA 5 SOT 94 (DEL) ALSO HELD AS UNDER:- IT A NO.4470/DEL./2010 5 'SECTION 68 OF THE INCOME TAX ACT, 1961-CASH CREDI TS- ASSESSMENT YEAR 1997-98-ASSESSEE DECLARED LONG TERM CAPITAL GAIN ON SALE OF CERTAIN SHARES OF COMPANY 'A'-ASSESSING OFF ICER HAVING NOTED THAT BROKER THROUGH WHOM ASSESSEE CLAIMED TO HAVE P URCHASED SAID SHARES WAS NOT A LEGALLY RECOGNISED ENTITY, THAT DE LHI STOCK EXCHANGE HAD REPORTED THAT BROKER THROUGH WHOM ASSESSEE CLAI MED TO HAVE SOLD SAID SHARES WAS NOT ITS MEMBER, THAT COMPANY ' A' WAS NOT AVAILABLE AT GIVEN ADDRESS, AND THAT ASSESSEE WAS A SKED TO FILE COPIES OF SHARE CERTIFICATES INDICATING TRANSFER OF SHARES IN HIS INCOME BUT NO SUCH COPIES HAD BEEN FIELD, TREATED SALE PROCEEDS O F SHARES DEPOSITED IN BANK ACCOUNT AS UNEXPLAINED AND, ACCORDINGLY, AD DED SAME TO INCOME OF ASSESSEE UNDER SECTION 68-WHETHER SINCE C OMPANY 'A' WAS ALSO LISTED ON DELHI STOCK EXCHANGE, PLEA OF ASSESS ING OFFICER THAT ASSESSEE HAD NOT EXPLAINED SHAREHOLDING IN COMPANY 'A' WAS WRONG- HELD, YES- WHETHER SINCE ASSESSING OFFICER HAD NOT ESTABLISHED THAT IN LIEU OF AFORESAID SALE PROCEEDS ASSESSEE HAD SURREP TITIOUSLY INTRODUCED HIS UNACCOUNTED MONEY IN BANK ACCOUNT. ASSESSING OF FICER WAS WRONG IN ADDING SALE PROCEEDS TO INCOME OF ASSESSEE UNDER SECTION 68 - HELD, YES- WHETHER, THEREFORE, ADDITION MADE UNDER SECTIO N 68 WAS LIABLE TO BE DELETED - HELD, THE APPELLANT HAS BROUGHT EVIDENCES ON RECORD REGAR DING THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSA CTION BY BRINGING OF THE RECORD THE COPY OF THE BANK ALCS OF THE CREDITORS THROUGH WHICH CHEQUES WERE ISSUED AND I EVIDENCES REGARDING THE CREDITWORTHINESS OF THE CREDITORS BY FILING THE BALANCE SHEET OF THE CREDITORS, THE HON'BLE SUPREME COURT IN THE CASE OF UMA CHARAN SHAW & BROS. VS CIT 37 ITR 271 & OMAR SALAY MOHAMMAD SAIT VS JGTT 37 ITR 151 HAS OBSERVED THAT NO ADDITION CAN BE MADE NEARLY ON SUSPICION, SURMISES AND CONJECTURES. IN VIEW OF THE DISCUSSIONS ABOVE AND JUDICIAL PRECEDENTS ON THE ISSUES DISCUSSED ABOVE THESE GROU NDS ARE ALLOWED IN FAVOR OF THE APPELLANT. THE ADDITION OF RS. 35.50 LAKHS MADE BY THE AO IS DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF LEARNED CIT(A).THE LD. DR POINTED OUT THAT THE L D. CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE DOCUMENTS FILED BEF ORE THE LD. CIT(A) WERE AVAILABLE DURING THE ASSESSMENT PROCEEDINGS AND HAD NOT BEEN REBUTTED BY THE AO.. THESE DOCUMENTS WERE NOT BEFORE THE AO EVE N AS PER CERTIFICATE RECORDED ON THE PAPER BOOK FILED ON BEHALF OF THE A SSESSEE.. IN THESE IT A NO.4470/DEL./2010 6 CIRCUMSTANCES, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION WITHOUT GIVING ANY OPPORTUNITY TO THE AO. IN FACT, THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE, EVEN WHEN THE ASSESSEE DID NOT FILE ANY A PPLICATION UNDER RULE 46A OF I.T. RULES, 1962, THE LD. DR ADDED. ON THE O THER HAND, LEARNED AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF LE ARNED CIT(A). TO A QUERY BY THE BENCH, THE LEARNED AR ADMITTED THAT THE DOCU MENTS MENTIONED IN SERIAL NOS., 3 AND 4 OF THE PAPER BOOK WERE NOT F ILED BEFORE THE AO. AFTER DISCUSSION, BOTH THE PARTIES, AGREED THAT THE MAT TER MAY BE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATING THE ISSUE IN ACC ORDANCE WITH LAW AFTER CONSIDERING THE DOCUMENTS FILED BEFORE THE LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, ON PERUSAL OF THE PAPER BOOK FILED BY THE ASSESSEE, IT IS REVEALED THAT THE DOCUMENTS MENTIONED AT SERIAL NOS . 1 TO 6 OF THE PAPER BOOK WERE COPY OF THE DOCUMENTS FILED BEFORE THE FIRST A PPELLATE AUTHORITY ALONE. ADMITTEDLY, THE DOCUMENTS AT SERIAL NOS. 3 & 4 OF T HE PAPER BOOK WERE NOT BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. UNDER THESE CIRCUMSTANCES, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION WHILE CONCLUDING THAT THESE DOCUMENTS HAVE NOT BEEN REBUTTED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. INDIS PUTABLY, THE LD. CIT(A) ,WITHOUT GIVING ANY OPPORTUNITY TO THE AO, D ELETED THE ADDITION MADE BY THE AO, ON THE BASIS OF WRITTEN SU BMISSIONS, DETAILS AND DOCUMENTS FILED BEFORE HIM, EVEN WHEN H E WAS FULLY AWARE THAT HE ASSESSEE DID NOT SUBMIT THE NECESSARY DETAILS/DOCUMENTS BEFORE THE AO DESPITE SUFFICIENT OPPORTUNITY ALLOWED. THERE IS NO MATERIAL BEFORE US TO INDICAT E AS TO WHETHER OR NOT THE WRITTEN SUBMISSIONS OR THE DETAILS FI LED BEFORE THE LD. CIT(A),WERE CONFRONTED TO THE AO. IN NUTSHELL, THE LD. CIT(A) DELETED THE ADDITION ON THE BASIS OF ADDITIONAL EVI DENCE SUBMITTED BEFORE HIM, WITHOUT FOLLOWING THE PROCEDURE LAID D OWN UNDER RULE 46A OF THE IT RULES,1962 AND THE PRINCIPLES OF NATU RAL JUSTICE. IT A NO.4470/DEL./2010 7 ADMITTEDLY THE AFORESAID DETAILS/DOCUMENTS WERE NEV ER SUBMITTED BEFORE THE AO. MOREOVER, THERE IS NOTHING TO SUGGES T AS TO WHETHER OR NOT THE LD. CIT(A) RECORDED ANY REASONS BEFORE ADMITTING THE AFORESAID DETAILS/DOCUMENTS BY WAY OF ADDITIONAL EVIDENCE. IN THIS CONNECTION, HONBLE GUJRAT HIGH C OURT IN THEIR DECISION IN THE CASE OF CIT VS. VALIMOHMED AHMEDBHA I,134 ITR 214(GUJ) WHILE REFERRING TO PROVISIONS OF SEC. 46A OF THE IT RULES,1962 OBSERVED THAT NOTICE OF APPEAL ISSUED BY AN AAC CANNOT BE EQUATED WITH NOTICE OF A FUTURE APPLICATI ON TO LEAD ADDITIONAL EVIDENCE WHICH NO ONE COULD HAVE ANTICIP ATED OR REASONABLY FORESEEN. HONBLE HIGH COURT HELD THAT ORDINARILY, THE APPEAL WOULD BE DECIDED ON THE EVIDENCE RECORDED IN THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE IN THE CASE UNDER CONSIDERATION, THE ADDITIONAL EVIDENCE/DOCUMENTS FI LED BEFORE THE LEARNED CIT(A) HAVE BEEN ADMITTED WITHOUT RECORD ING ANY FINDINGS AS TO WHETHER OR NOT THE ASSESSEE WAS PREV ENTED BY SUFFICIENT CAUSE FROM PRODUCING THE SAID EVIDENCE/D OCUMENTS BEFORE THE AO AND WITHOUT RECORDING ANY REASONS IN TERMS OF RULE 46A(2) OF THE IT RULES,1962, WE FIND MERIT IN THE U NDISPUTED CONTENTIONS OF THE LEARNED DR AND THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE ISSUES RAISED IN GROUND NOS.1 TO 2 IN THE APPEAL TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCOR DANCE WITH LAW, AFTER CONSIDERING THE DOCUMENTS FILED BEFORE THE LEARNED CIT(A) AND OF COURSE AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. A CCORDINGLY, GROUND NS. 1 & 2 IN THE APPEAL ARE ALLOWED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE U S IN TERMS OF RESIDUARY GROUND NO. 3 IN THE APPEAL, THEREFORE, TH IS GROUND IS DISMISSED. IT A NO.4470/DEL./2010 8 7. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STATIS TICAL PURPOSES. SD/- SD/- (C.L. SETHI) (A.N. PAHUJ A) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) COPY OF THE ORDER FORWARDED TO :- 1. M/S GRIP BUILDTECH PVT. LTD., 1/18-B, ASAF ALI R OAD, NEW DELHI. 2. INCOME TAX OFFICER, COY. WARD 12 (2) ROOM NO.337 , NEW DELHI. 3. CIT(A)-XV, NEW DELHI. 4. CIT CONCERNED. 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT