ITO, New Delhi V. M/s. L R Finvest Pvt. Ltd., New Delhi

ITA 4551/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1066 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P SINGH
• Keywords: Unexplained cash credit; Additional evidence; Accommodation entries; Revised return
• Section: 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SHRI R. K. PANDA , ACCOUNTANT MEMBER AND SH. KULD IP SINGH , JUDICI A L MEMBER ITA NO. 4551 /DEL/201 5 ASSESSMENT YEAR: 20 11 - 12 ITO WARD - 15 (1) , ROOM NO.308A, C. R. BUILDING, I. P. ESTATE NEW DELHI - 110002 VS M/S LR FINVEST PVT. LTD. 65A, OMPRO TOWER, KALU SARAI, SARVAPRIYA VIHAR, NEW DELHI - 110016 PAN AAACL1553E (APPELLANT) (RESPONDENT) APPELLANT BY SH. B. P. SINGH, SR. DR RESPONDENT BY NONE DATE O F HEARING: 18 / 1 0/2018 DATE OF PRONOUNCEMENT: 30 /1 1 /2018 ORDER PER R.K. PANDA, AM: TH IS APP EAL FILED BY THE R EVENUE IS DIRECTED AGAINST THE ORDER DATED 2 0 .0 4 .2015 OF THE CIT(A) - V , NEW DELHI RELATING TO A.Y. 20 11 - 12 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. D R . 3 . FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 30.09.2011 DECLARING NIL INCOME BEING LOSS OF RS.14,47,28,576/ - . SUBSEQUENTLY , REVISED RETURN WAS FILED ON 12.11.2011 DECLARING LOSS OF RS.8,82,373/ - . THE REASONS FOR FILING REVISED RETURNS ARE 2 DUE TO NON ALLOWABILITY OF SHORT TERM CAPITAL GAIN LOSS ADJUSTED IN THE ORIGINAL RETURN. THIS RETURN WAS PROCESSED U/S 143 (1). 4. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WIN G OF THE INCOME TAX DEPARTMENT THAT ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES AMOUNTING TO RS .40,00,000/ - FROM FOUR COMPANIES, THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE IT ACT AFTER RECORDING REASONS . I N RESPONSE TO NOTICE U/S 148 , T HE ASSESSEE IN ITS REPLY SUBMITTED THAT THE ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILED IN RESP ONSE TO NOTICE U/S 1 4 8. THE ASSESSING OFFICER ISSUED NOTICE U/S 143 (2)/14 2 (1) ALONGWITH QUESTIONNAIRE IN RESPONSE TO WHICH, T HE ASSESSEE FILED ITS REPLY F ROM TIME TO TIME. NOTICE U/S 13 3 (6) WERE SENT TO THE FOUR COMPANIES PARTIES WHO HAD GIVEN TIME SH ARE MONEY OF RS.10 LACS EACH TO THE COMPANY M/S. LR FINVEST PRIVATE LIMITED TO FILE CONFIRMATION S ALONGWITH COPY OF THEIR ITR, BALANCESHSEET, P& L ACCOUNT AND BANK STATEMENT IN RESPECT O F THE SAID TRANSACTION. THE ASSESSEE WAS ALSO ASKED TO FILE THE CONF IRMATIONS ALONGWITH COPY OF ITR, BALANCE SHEET, P & L A/C AND BANK STATEMENT IN RESPECT OF THE PARTIES/ COMPANIES M/S. LUNAR GOLD INTERNATIONAL PVT. LTD. M/S.BLUE BELL FINANCE LTD. M/S. EDOPTICA DEVELOPERS AND M/S. YUVRAJ EXPORTS PVT. LTD. WHO HAVE APPLIED FOR TIME SHARE MEMBERSHIP IN THE COMPANY. IN RESPONSE TO NOTICES U/S 133 (6) NO REPLY WAS RECEIVED FROM M/S. LUNAR GOLD INTERNATIONAL PVT. LTD., M/S BLUE BELL FINANCE LTD, M/S EDOPTICA DEVELOPERS AND M/S. YUVRAJ EXPORTS PVT LTD. FURTHER SUMMONS U/S 131 W ERE ISSUED ON 24.01.2014 TO THE COMPANIES/ PARTIES VIZ, M/S. LUNAR GOLD INTERNATIONAL PVT. LTD., M/S. LUNAR GOLD INTERNATIONAL PVT. LTD., M/S BLUE BELL FINANCE LTD, M/S EDOPTICA DEVELOPERS AND M/S YUVRAJ EXPORTS PVT LTD TO FURNISH THE FOLLOWING INFORMATION AND PRODUCE THE DIRECTORS FOR PERSONAL DEPOSITION OF THE ABOVE SAID COMPANIES ON 05.02.2014. 1 . CONFIRMATION ALOGNWITH CONFIRMATION ALOGNWITH NATURE AND SOURCE OF TRANSACTION WITH THE ABOVE COMPANY. 2 . COPY OF YOUR I.T. RETURN ALONGWITH COMPUTATION OF INCOM E, BALANCE - SHEET AND P & L A/C FOR THE A. Y 2011 - 12. 3 3 . COPY OF BANK STATEMENT FOR THE PERIOD 01.04.2014 TO 31.03.2011. 4 . PERSONAL DEPOSITION ALOGNW I TH PROOF OF IDENTITY. 5 . SINCE T HERE WAS NO COMPLIANCE FROM THE ABOVE COMPANIES , T HE ASSESSING OFFICER ASKED TH E ASSESSEE TO PRODUCE THE DIRECTOR S OF THE COMPAN IES FOR TH E I R P ERSONAL DEPOSITION. HOWEVER, THE ASSESSEE DID NOT PRODUCE THE DIRECTORS BUT FILED TH EIR CONFIRMATIONS ONLY. SINCE THE ASSESSEE FAILED TO PROVE THE IDENTIT Y OF THE COMPANIES, VIZ M/S. LUNAR GOLD INTERNATIONAL PVT. LTD. M/S. BLUE BELL FINANCE LTD. M/S. EDOPTICA DEVELOPERS INDIA LTD. AND M/S. YUVRAJ EXPORTS PVT. LTD. WHO HAD GIVEN TIME SHARE MONEY TO THE COMPANY OF RS.10,00,000/ - EACH DURING THE RELEVANT YEAR A ND ALSO FAILED TO ESTABLISH GENUINENESS & CREDITWORTHINESS OF THE SAID COMPANIES WITH REFERENCE TO TRANSACTION IN RESPECT OF TIME SHARE MONEY AMOUNTING TO RS. 4 0,00,000/ - , THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED CASH CREDIT UNDER THE PROVISIO NS OF SECTION 68 OF THE I. T. ACT, 1961. CONSIDERING, THE ROLE OF INTERMEDIA RIES WITH THE ENTRY PROVIDER , HE ADOPTED THE RATE OF COMMISSION PAID BY THE ASSESSEE (BENEFICIARY) @ 2% OF THE AMOUNT OF ACCOMMODATION ENTRY AND ADDED AN AMOUNT OF RS.80,000/ - BEI NG COMMISSION PAID OUT OF UNDISCLOSED SOURCES. 6. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.90,10,000/ - BEING THE AMOUNT RECEIVED FROM THE FOLLOWING SEVEN PARTIES FROM WHOM THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY / SECURITIES / PREMIUM DU RING THE YEAR I N ABSENCE OF F URNISHING OF THE REQUI SITE DETAILS IN SUPPORT OF SUCH CLAIM : - S. NO. NAME OF THE PARTY/ PERSON AMOUNT (RS.) 1 GIRISH BATRA 27,50,000/ - 2 PUFF INDIA PVT. LTD. 1,50,000/ - 3 RAVI CHOPRA 20,00,000/ - 4 ROYAL SOFTWARES LT D. 1,60,000/ - 4 5 SANJAY KHANNA 10,000/ - 6 SANTOSH BATRA 4,00,0000/ - 7 VANSH INDUSTRIES LTD. 21,00,000/ - TOTAL 90,10,000/ - 7. THE ASSESSING OFFICER ACCORDINGLY DETERMINED THE INCOME OF THE ASSESSEE AT RS.1,22,07,630/ - . 7.1 B EFORE CIT(A) THE A SSESSEE MADE ELABORATE SUBMISSIONS AND FILED VARIOUS DETAILS IN SHAPE OF ADDITIONAL EVIDENCES. THE LD. CIT(A) FORWARDED THE ADDITIONAL EVIDENCE S TO THE ASSESSING OFFICER AND CALLED FOR A REMAND REPORT FROM HIM . AFTER CONSIDERING THE REMAND REPORT OF THE A SSESSING OFFICER AND SUBMISSION OF THE ASSESSEE TO SUCH REMAND REPORT THE LD. CIT (A) DELETED THE A DDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : - THE MATTER WAS REMANDED TO THE AO ON THE REQUEST OF THE AUTHORIZED REPRESENTATIVE!, WHERE THEAO ISSUED FRESH NOTICES TO THE FOUR PARTIES; AND ISSUED 13 1 SUMMONS TO FOUR PERSONS I.E. MANAGING DIRECTORS/ DIRECTORS OF THE COMPANY. THE ABOVE PERSONS APPEARED ON 24.03.2015 BEFORE AO AND THE STATEMENT HAVE BEEN RECORDED ON OATH. THEY HAVE FILED THEI R COPY OF IDENTITY PROOF, COPY OF 1TR AND BANK STATEMENT. THE AO EXAMINED THE BANK ACCOUNTS AND THE AMOUNT PAID IS OUT OF THEIR BANK ACCOUNT OF SHARE APPLICATION MONEY. CONFIRMATION LETTERS ARE ALSO FILED AS PER PAPER BOOK AND FOUND TO BE CORRECT. THEY ARE ALL ASSESSED TO TAX AND SHOWN IN THEIR BOOKS OF ACCOUNTS. THE AO IS SATISFIED THAT ALL THE SHARE APPLICATION MONEY / TIME MEMBERSHIP FEES PAID BY THE FOUR COMPANIES OF RS. 10,00,000/ - EACH AND 90,10,000/ - O F SHARE APPLICATION MONEY GIVEN BY TO SEVEN PERS ONS ARE SATISFACTORILY PAID OUT OF THEI R BANK A CCOUNT AND RETURNS HAVE BEEN FILED. THERE IS NO BOGUS CASH CREDIT ENTRY PROVIDED BY THESE PERSONS,, THEREFORE, THE AR ARGUED THAT THE ADDITION MADE BY THE AO OF RS. 1,30,90,000/ - IS NOT PROPER AND JUSTIFIED. THEREFORE, AFTER M/S L.R FINVEST (P) LTD. APPEAL NO. 405/2013 - 14 A.Y, 2011 - 12 VERIFYING THE REMAND REPORT AND EXAMINING THE EVIDENCES PRODUCED BY THE AR, I FOUND IT FIT TO DELETE THE ADDITION OF RS. 1,30,90,000/ - . 5 8. AGGRIEVED WITH SUCH ORDER OF THE CIT( A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : - 1 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.40,00,000/ - MADE BY AO ON ACCOUNT OF SHARE C APITAL BY ACCEPTING THE ADDITIONAL EVIDENCES DURING THE APPELLATE PROCEEDINGS EVEN BEFORE GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER TO RAISE ANY OBJECTION AGAINST SUCH ADMITTANCE OF ADDITIONAL EVIDENCES. FURTHER THE ASSESSEE HAS EXPLAINED THE ADDITION AL EVIDENCES BEFORE THE LD. CIT(A) THAT THERE WAS NO SHARE APPLICATION MONEY OF RS. 40,00,000/ - BUT IT WAS ONLY TIME MEMBERSHIP FEES OF RS. 10 LAKH EACH FROM 4TIME MEMBERS. 2 . THAT ON THE FACTS AND CIRCUMST A NCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.90,10,000/ - MADE BY AO ON ACCOUNT OF SHARE APPLICATION MONEY BY ACCEPTING THE ADDITIONAL EVIDENCES DURING THE APPELLATE PROCEEDINGS EVEN BEFORE GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER TO RAISE ANY OBJECTION AGAINST SUC H ADMITTANCE OF ADDITIONAL EVIDENCES. 3 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 40,00,000/ - MADE BY AO ON ACCOUNT OF SHARE CAPITAL. 4 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 90,10,000/ - MADE BY AO ON ACCOUNT OF SHARE APPLICATION MONEY. 5 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 80,000/ - MADE BY AO ON ACCOUNT OF UNEXPLAINED COMMISSION. 6 . THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW . 7 . THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 8 . THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 9. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE LD. CIT(A) DELETED THE ADDITION ON THE BASIS OF REMAND REPORT GIVEN BY THE ASSESSING OFFICE R WHEREIN THE ASSESSING OFFICER RECORDED THE STATEMENT OF THE FOUR CONTRIBUTORS WHO HAD CONTRIBUTED TOWARDS TIME MEMBERSHIP. THEY FILED THEIR AUDIT REPORT , COPIES OF INCOME TAX RETURN AND BANK STATEMENTS . T HE OTHER SHARE APPLICANTS ALSO APPEARED BEFORE TH E 6 ASSESSING OFFICER AND FILED THEIR BANK STATEMENT S AND CONFIRM ED TO HAVE CONTRIBUT ED TO THE SHARE APPLICATION AMOUNT. UNDER THESE CIRCUMSTANCES THE GROUND RAISED BY THE R EVENUE THAT CIT(A) HA S NOT GIVEN AN Y OPPORTUNITY TO THE ASSESSING OFFICER TO RAISE ANY OBJECTION AGAINST THE ADMISSION OF ADDITIONAL EVIDENCE IS WITHOUT ANY MERIT. SINCE THE LD. CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF REMAND REPORT OF THE ASSESSING OFFICER WHEREIN HE HAS ACCEPTED THE CONTRIBUTION TOWARDS TIME MEMBERSHIP AND THE SHARE APPLICATION MONEY AS GENUINE, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE LD. DR WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TIME MEMBERS HIP, COMMISSION FOR ARRANGING THE ACCOMMODATION ENTRIES AND THE SHARE APPLICATION MONEY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 . 1 1 .2018 . SD/ - SD/ - - ( KULD I P SINGH ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 - 1 1 - 201 8 . *NEHA* COPY OF ORDER TO : - 1 ) THE APPELLANT 2 ) THE RESPONDENT 3 ) THE CIT 4 ) T HE CIT(A) 5 ) THE DR, I.T.A.T., NEW DELHI ASSISTANT REGISTRAR ITAT , NEW DELHI 7 DATE OF DICTATION 2 9 . 1 0.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FA IR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 30.11.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 30.11.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHIC H FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER