ITO, New Delhi V. Smt. Abha Gupta, New Delhi

ITA 457/DEL/2011

• Counselvise Citation: 45720114 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 27-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANOOP KUMA R SINGH
• Assessee Lawyers: D C GUPTA
• Keywords: Business income; Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.457/DEL/2011 457/DEL/2011 457/DEL/2011 457/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2002 2002 2002 2002- -- -03 0303 03 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -20(3), 20(3), 20(3), 20(3), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SMT. A SMT. A SMT. A SMT. ABHA GUPTA, BHA GUPTA, BHA GUPTA, BHA GUPTA, A AA A- -- -1, C.C. COLONY, 1, C.C. COLONY, 1, C.C. COLONY, 1, C.C. COLONY, DELHI DELHI DELHI DELHI 110 007. 110 007. 110 007. 110 007. PAN : PAN : PAN : PAN : AERPG0334E. AERPG0334E. AERPG0334E. AERPG0334E. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANOOP KUMAR SINGH, DR. RESPONDENT BY : SHRI D.C.GUPTA, CA. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXII, NEW DELHI DATED 26 TH OCTOBER, 2010 FOR THE AY 2002-03. 2. FOLLOWING GROUNDS ARE RAISED BY THE REVENUE :- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS AN D CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.38,41,200/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 TREATING ALL BANK DEPOSITS AS INCOME FROM UNDISCLOSED AND FROM UNEXPL AINED SOURCES WHEN THE ASSESSEE HAD SHOWN GROSS RECEIPTS FROM BUSINESS AT RS.9,02,660/- ONLY IN HER RETURN OF INC OME. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.76,824/- MADE BY THE AO @ 2% OF RS.38,41,200/- O N ACCOUNT OF COMMISSION PAID FOR ACCOMMODATION ENTRY. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES INCOME FROM PURCHASE AND SALE OF BUILDING MATERIAL. SINCE THE TURNOVER OF THE ITA-457/DEL/2011 2 ASSESSEE WAS BELOW ` 40 LAKHS, THE ASSESSEE FURNISHED THE RETURN DECLARING THE INCOME UNDER SECTION 44AF OF THE INCO ME-TAX ACT, 1961. THE ASSESSMENT WAS REOPENED ON RECEIPT OF INFORMATI ON FROM DIRECTORATE OF INVESTIGATION THAT SOME PERSONS WHO ARE INDULGING IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES HAD TRA NSACTIONS WITH THE ASSESSEE. THE ASSESSING OFFICER HAS GIVEN THE DETA ILS OF SUCH TRANSACTIONS IN THE ASSESSMENT ORDER WHICH READ AS UNDER:- NAME DATE AMOUNT DRAWN ON A/C NO. SH.BRIJESH KUMAR 16/04/2004 150000 CORPN. BANK 14660 KAMLA NAGAR SH.SATISH KUMAR SHARMA 14/07/2001 400000 INNOVATIVE, 56 WAZIRPUR SH.VINOD GARG 14/07/2001 400000 SBP, DG 6776 4. THE ASSESSING OFFICER FURTHER EXAMINED THE ASSES SEES BANK ACCOUNT AND FOUND THAT THERE WAS TOTAL CREDIT OF ` 38,41,200/- IN THE ASSESSEES BANK ACCOUNT. HE ASKED THE ASSESSEE TO EXPLAIN SUCH CREDIT. THE ASSESSEE FURNISHED THE EXPLANATION AND IT WAS CLAIMED BY THE ASSESSEE THAT THE CREDIT IS MAINLY OUT OF THE S ALE PROCEEDS. THE ASSESSING OFFICER EXAMINED THE BILLS AND VOUCHERS A ND NOT BEING SATISFIED WITH THE BILLS ETC. PRODUCED BY THE ASSES SEE, HE MADE THE ADDITION OF THE ENTIRE CREDIT IN THE ASSESSEES BAN K ACCOUNT I.E. ` 38,41,200/- AS ASSESSEES OWN INCOME FROM UNDISCLOS ED SOURCES. HE ALSO MADE FURTHER ADDITION OF 2% HOLDING THAT THE A SSESSEE HAD TAKEN ACCOMMODATION ENTRIES ON WHICH THE COMMISSION INCUR RED BY THE ASSESSEE WOULD BE 2%. THE RELEVANT FINDING OF THE ASSESSING OFFICER READS AS UNDER:- ALONGWITH THE COPIES OF OTHER BILLS WHICH ARE OF T HE SAME NATURE. VIDE THIS LETTER DATED 20/11/2007 THE ASSE SSEE HAS ALSO SUBMITTED THAT SHE IS A DEALER IN BUILDING MAT ERIAL AND THE TOTAL SALES DURING THE YEAR OF THE ASSESSEE IS RS.902660/-. THE ASSESSEE HAS DECLARED INCOME UNDE R SECTION 44AF OF THE INCOME TAX ACT AND IS NOT REQUI RED TO ITA-457/DEL/2011 3 MAINTAINED BOOKS OF ACCOUNT IN RESPECT OF INCOME DE CLARED U/S 44AF. VIDE ORDER SHEET ENTRY DATED 20/11/2007 IT WAS HEL D THAT THE COPIES OF SALES BILLS FILED ARE NOT PROPER AS NO ADDRESS IS THERE AND AS SUCH CROSS VERIFICATION OF THE TRANSACTIONS CAN NOT BE MADE. HE WAS AGAIN REQUEST ED TO SUPPLY THE COMPLETE ADDRESSES AND WHERE ABOUT OF TH E PURCHASES/SALES TO CROSS VERIFY THE TRANSACTIONS AN D THE CASE WAS ADJOURNED TO 23/11/2007. ON 23/11/2007 ASSESSEE FILED A LETTER STATING THAT WHATEVER ADDRESSES HAS BEEN SUBMITTED EARLIER ARE O NLY AVAILABLE WITH THE ASSESSEE AND NO FURTHER INFORMAT ION WAS SUBMITTED FOR THE VERIFICATION OF THE TRANSACTIONS. SINCE THE CASE WAS REOPENED U/S 147 BY ISSUE OF NOTICE U/ S 148 AS SUCH ALL THE TRANSACTIONS MADE DURING THE A.Y. 2 005-06 HAS TO BE VERIFIED IN ADDITION TO THE INFORMATION O N THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED. SINCE THE ASSESSEE IS NOT ABLE TO PROVE THE GENUINENESS OF TH E TRANSACTION THE SUBMISSION OF THE ASSESSEE ARE NOT ACCEPTED AND THE SAME ARE REJECTED. THE ASSESSEES WHO HAVE UNACCOUNTED MONEY HAS TAKEN THE ACCOMMODATION ENTRY AS BENEFICIARY AND INTRODUCED THE SAME IN THE BOOKS OF ACCOUNTS THROUG H A PERSON TO WHOM CASH (PLUS COMMISSION) IS HANDED OVE R AND CHEQUES/DDS/POS ARE RECEIVED. THE BENEFICIARY IN TURN DEPOSITS THESE INSTRUMENTS IN HIS BANK ACCOUNTS AND THE MONEY COMES TO HIS REGULAR BOOKS OF ACCOUNTS IN THE FORM OF PAYMENT RECEIVED BY CHEQUES ON SALE OF BUILDING MATERIAL THROUGH BANKING CHANNELS. SINCE THE FUNDS HAVE COME THROUGH BANKING CHANNELS IN THE BOOKS OF THE BENEFICIARY THESE APPARENT LOOK AS GENUINE. THE CH ANNEL IS USED FOR ROUTING THE MONEY FOR PROVIDING ACCOMMOD ATION ENTRIES. THE BENEFICIARYS MONEY SAILS THROUGH SEVERAL ACCOUNTS BEFORE REACHING THE END BENEFICIARY THROUG H A NUMBER OF LAYERS. THE BILLS FOR BOGUS EXPENSES ARE ALSO PROVIDED BY THESE PERSONS TO THE ASSESSEE/BENEFICIA RY BY CHARGING THE COMMISSION WHICH IS USUALLY 1.5% TO 2% . THERE IS NO REAL SUPPLY OF MATERIAL IN SUCH CASES A S EVIDENT FROM THE COPIES OF BILLS SUPPLIED BY THE ASSESSEE D URING THE COURSE OF ASSESSMENT PROCEEDINGS. THE CASH GIVEN BY ASSESSEE TO THE PERSON, INSTEAD DEPOSITING IN THE BANK ACCOUNT CARRIES COMMISSION F ROM ITA-457/DEL/2011 4 THE BENEFICIARY WHICH IS UTILIZED FOR THE PURPOSE O F ACCOMMODATION ENTRY. WITH THESE FACTS IN BACK GROUND, IT IS CRYSTAL CLE AR THAT THE TRANSACTIONS MADE BY THE ASSESSEE FROM DIF FERENT PARTIES WHICH HAVE INCOMPLETE ADDRESSES OF NON VERI FIABLE NATURE ARE NOTHING BUT AN ACCOMMODATION BOOK ENTRY WHEREIN THE BENEFICIARIES HAVE INTRODUCED THEIR OWN CASH FROM UNDISCLOSED SOURCES AND PAID A COMMISSION OF @ 2% FOR PROVIDING SUCH COLOURED TRANSACTIONS. NO REAL SALE OF MATERIAL HAS BEEN MADE AS IT HAS CONCLUSIVELY BEEN HELD IN THE CASES REPORTED BY THE INVESTIGATION WING OF THE DEPARTMENT. IT HAS BEEN HELD IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR-801 (SC). WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR IT MAY BE CHARGED TO TAX AS THE INCOME OF THE ASSES SEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY TH E ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF WHICH IS IN THE OPINION OF THE ASSESSING OFFICER IS NOT SATISFA CTORY WILL BE ASSESSED ACCORDINGLY. SINCE THE TRANSACTIONS OF SALE OF MATERIAL HAS BEE N HELD TO BE BOGUS AND IS TREATED ONLY AN ACCOMMODATI ON ENTRY PROCURED BY THE ASSESSEE ON THIS TRANSACTION IS REJECTED. ACCORDINGLY, THE AMOUNT OF RS.3841200/- CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE IS HEL D AS NOTHING BUT THE ASSESSEES OWN INCOME FROM UNDISCLO SED SOURCES INTRODUCED IN THE GARB OF SALE OF MATERIAL TO FICTITIOUS PARTIES IS ASSESSED TO TAX U/S 68 OF THE I.T.ACT AS INCOME FROM UNDISCLOSED/UNEXPLAINED SOURCES. IT IS ALSO HELD THAT COMMISSION HAS BEEN CHARGED FOR PROVIDING SUCH ACCOMMODATION BOOK ENTRIES @ 2%. THUS, A FURTHER S UM OF RS.76824/- BEING 2% OF THE TOTAL AMOUNT OF RS.38412 00/- IS ALSO ADDED TO THE TOTAL INCOME OF THE ASSESSEE BEIN G EXPENDITURE INCURRED FOR OBTAINING SUCH ACCOMMODATI ON ENTRIES AND MET OUT OF THE UNDISCLOSED INCOME OF TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION. I AM AL SO SATISFIED THAT THE ASSESSEE HAS DELIBERATELY AND KN OWINGLY FURNISHED INACCURATE PARTICULARS THEREBY CONCEALING THE TRUE INCOME. ACCORDINGLY, PENALTY PROCEEDINGS U/S 271(1)(C) HAVE SEPARATELY BEEN INITIATED. 5. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON HOLDING THAT THE ASSESSEE HAS DULY EXPLAINED THE CREDIT IN HER B ANK ACCOUNT. THE REVENUE, AGGRIEVED WITH THE ORDER OF THE CIT(A), IS IN APPEAL BEFORE US. ITA-457/DEL/2011 5 6. IT WAS STATED BY THE LEARNED DR THAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED THE EXPLANATION FOR THE CREDIT OF ` 38,41,200/- IN HER BANK ACCOUNT. THE CIT(A) DELETE D THE ADDITION WITHOUT ANY EVIDENCE HAVING BEEN PRODUCED BEFORE HI M SIMPLY RELYING UPON CERTAIN JUDICIAL PRONOUNCEMENTS. HE STATED TH AT THERE IS NO DISPUTE WITH REGARD TO JUDICIAL PRONOUNCEMENTS RELI ED UPON BY THE LEARNED CIT(A) BUT, ON THE FACTS OF THE ASSESSEES CASE, THOSE DECISIONS WOULD NOT BE APPLICABLE BECAUSE IN THIS CASE, THE A SSESSEE HAS NOT FURNISHED ANY SPECIFIC EXPLANATION FOR CREDIT IN TH E BOOKS OF ACCOUNT. HIS ONLY EXPLANATION WAS THAT THE CREDIT IS OUT OF SALE PROCEEDS AND THAT THE TOTAL CREDIT IN THE ASSESSEES BOOKS OF AC COUNT WAS ` 38,41,200/- WHILE THE SALE DURING THE YEAR UNDER CO NSIDERATION WAS ONLY ` 9,02,660/-. THUS, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEES EXPLANATION IS PRIMA-FACIE INCORRECT. HE, THEREFOR E, SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, STATED THAT THE ASSESSEE IS A SMALL BUSINESSWOMAN CARRYING ON THE BUSINESS OF SALE AND PURCHASE OF BUILDING MATERIAL. HER TUR NOVER IS BELOW ` 40 LAKHS, THEREFORE, SHE FURNISHED THE RETURN UNDER SE CTION 44AF. HE SUBMITTED THAT THE CREDIT IN THE BOOKS OF ACCOUNT I S OUT OF THE SALE PROCEEDS OF THE YEAR UNDER CONSIDERATION, RECOVERY FROM THE TRADE DEBTORS OF EARLIER YEARS AND ALSO CERTAIN LOAN TAKE N BY THE ASSESSEE. HE POINTED OUT THAT AS PER THE STATEMENT OF AFFAIRS OF THE IMMEDIATELY PRECEDING YEAR I.E. AS ON 31 ST MARCH, 2001, THERE WERE SUNDRY DEBTORS OF ` 20,52,633/-. ENTIRE AMOUNT FROM ALL THE PERSONS WA S REALIZED DURING THE YEAR UNDER CONSIDERATION. APART FROM TH AT ` 20 LAKHS, THERE WAS SALE PROCEEDS OF ` 9 LAKHS OF THE YEAR UNDER CONSIDERATION AND THE ASSESSEE TOOK LOAN OF ` 10,41,200/- FROM TWO PARTIES. THUS, THE ENTIRE CREDIT IN THE ASSESSEES BANK ACCOUNT WAS DULY EXPL AINED. ITA-457/DEL/2011 6 8. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE MAIN ISSUE BEFORE THE ASSESSING OFFICER WAS WITH REGARD TO EXAMINING THE CREDIT IN THE ASSESSEES BANK ACCOUNT. APPARENTLY, THE EXPLANATION FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER WAS NOT SATISFACTORY TO EXPLAIN THE CREDIT. BUT, AT THE SA ME TIME, WE DO NOT FIND ANY JUSTIFICATION FOR THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRY OF ` 38,41,200/-. THE FINDING OF THE ASSESSING OFFICER WITH REGARD TO ACCOMMODATI ON ENTRY IS BASED UPON HIS PRESUMPTION AND SUSPICION. WE ARE ALSO UN ABLE TO ACCEPT THE FINDING OF THE LEARNED CIT(A) THAT THE ASSESSEE HAS EXPLAINED THE CREDIT IN HIS BANK ACCOUNT. FROM THE PERUSAL OF THE ORDER OF THE LEARNED CIT(A), WE DO NOT FIND ON WHAT BASIS HE HAS ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAS EXPLAINED THE CREDIT IN HER B ANK ACCOUNT. AS WE HAVE ALREADY MENTIONED THAT THE ASSESSEE DID NOT FU RNISH COGENT EXPLANATION BEFORE THE ASSESSING OFFICER EXPLAINING THE CREDIT IN HER BANK ACCOUNT. THE ONLY EXPLANATION WAS THAT THE CR EDIT WAS OUT OF THE SALE PROCEEDS OF THE BUILDING MATERIAL BUT THE SALE PROCEED OF THE BUILDING MATERIAL WAS MUCH LESS THAN THE CREDIT. B EFORE THE LEARNED CIT(A), NO FURTHER EXPLANATION OR EVIDENCE WAS PROD UCED. THEREFORE, IN OUR OPINION, THE CIT(A) WAS NOT JUSTIFIED IN DELETI NG THE ADDITION. HOWEVER, AT THE TIME OF HEARING BEFORE US, THE LEAR NED COUNSEL FOR THE ASSESSEE EXPLAINED THAT IN ADDITION TO SALE PROCEED OF THE YEAR UNDER CONSIDERATION, THERE WAS RECOVERY FROM THE TRADE DE BTORS AND SUCH TRADE DEBTORS WERE DISCLOSED IN THE ASSESSEES STAT EMENT OF AFFAIRS OF THE IMMEDIATELY PRECEDING YEAR. THE RETURN OF THE PRECEDING YEAR IS CLAIMED TO HAVE BEEN FILED BEFORE THE ASSESSMENT PR OCEEDINGS OF THE YEAR UNDER CONSIDERATION. IT WAS ALSO EXPLAINED TH AT THE ASSESSEE ALSO MADE SOME BORROWINGS. CONSIDERING THE TOTALITY OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, THE MATTER NEEDS FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. W E, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTO RE THE MATTER BACK ITA-457/DEL/2011 7 TO THE FILE OF THE ASSESSING OFFICER. WE DIRECT HI M TO ALLOW ADEQUATE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE CREDIT I N HER BANK ACCOUNT. WE ALSO DIRECT THE ASSESSEE TO FURNISH PROPER EXPLA NATION AS WELL AS NECESSARY EVIDENCES WITH REGARD TO CREDIT IN HER BA NK ACCOUNT AND, THEREAFTER, THE ASSESSING OFFICER IS DIRECTED TO PA SS A SPEAKING ORDER AFRESH. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DEEM ED TO BE ALLOWED FOR STATISTICAL PURPOSES AS ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2012. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 23.03.2012 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR