DCIT, New Delhi V. M/s. Gomati Consultants Pvt. Ltd, New Delhi

ITA 4594/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7176 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH TAHKUR
• Assessee Lawyers: RAVINDER MANI
• Keywords: Accommodation entries
• Section: 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 4594/DEL/ 2013 (ASSESSMENT YEAR: 2008 - 09 ) DCIT, CENTRAL CIRCLE - 11, NEW DELHI VS. GOMATI CONSULTANTS PVT. LTD, 333, 2 ND FLOOR, SANT NAGAR, EAST OF KAILASH, NEW DELHI PAN:AACCG3616M (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. RAVINDER MANI, SR. DR REVENUE BY: MR. UMESH TAHKUR, CA DATE OF HEARING 09/05/ 2016 DATE OF PRONOUNCEMENT 04 / 07 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - I, NEW DELHI DATED 21.05.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 6700000/ - ON ACCOUN T OF INCOME FROM OTHER SOURCES. 3. THE ASSESSEE IS PRIVATE LTD COMPANY, WHO FILED ITS RETURN OF INCOME ON 30.09.2008 SHOWING INCOME OF RS. 451580/ - FROM THE BUSINESS OF TRADING OF COMPUTERS AN D ITS PARTS BUT DURING THE YEAR, HOWEVER, THE MAIN SOURCE OF INCOME FOR THE YEAR IS INTEREST ON LOAN. LD AO WAS OF THE VIEW THAT THERE IS ALLEGATION AGAINST THE COMPANY THAT IT HAS TAKEN A LARGE NUMBER OF ACCOMMODATION ENTRIES FROM VARIOUS ENTRY OPERATORS. DURING THE YEAR THE ASSESSEE HAS RECEIVED RS. 6700000/ - IN THE FORM OF SHARE APPLICATION MONEY FROM 11 PARTIES. ON THE ADDRESSES GIVEN THE INSPECTORS WAS DEPUTED AND FOUND THAT NO SUCH PERSON WHOSE NAME & ADDRESS WERE GIVEN BY THE ASSESSEE EXISTED AT THAT ADDRESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED CONFIRMATION FROM PAGE 2 OF 5 THE APPLICANT ALONG WITH COPY OF THE BANK STATEMENT AND COPY OF THE RETURN FOR THE AY 2009 - 10. THE ASSESSEE ALSO FILED AFFIDAVITS, PHOTOCOPY OF PAN CARDS AND IN CASE OF COMPANY PRINT OUT FROM WEB SITE OF THE REGISTER OF COMPANIES. LD ASSESSING OFFICER ISSUED SUMMONS TO 11 PARTIES OUT OF WHICH ONLY 3 SUMMONS COULD BE SERVED AND 8 PARTIES CANNOT BE. THE INSPECTORS REPORT INFORMED TO THE AO THAT THE OTHER PARTIES DO ES NOT EXIST AT THE GIVEN ADDRESS. AS THE COMPANY HAS NOT DECLARED ANY DIVIDEND FOR PAST MANY YEARS STILL IT HAS RECEIV ED SHARE CAPITAL OF RS. 550000/ - AND SHARE PREMIUM OF RS. 59.50 LAKHS AND FURTHER AS THE INCOME SHOWN BY DEPOSITORS IN THEIR RETURN OF INCOME IS MEAGER, THE LD ASSESSING OFFICER WAS OF THE VIEW THAT AS DEPOSITS IN BANK ACCOUNTS OF THE APPLICANTS IS JUST BE FORE THE ISSUE OF CHEQUE TO THE ASSESSEE CANNOT BE BELIEVED THAT THE DEPOSITORS ARE CREDITWORTHY AND TRANSACTIONS ARE GENUINE, THEREFORE MADE AN ADDITION OF RS. 67 LAKHS U/S 68 OF THE INCOME TAX ACT. THE LD CIT(A) DELETED THE ADDITION HOLDING THAT AS APPELLANT HAS SUBMITTED NAME AND ADDRESS, PERMANENT A/C NO., DETAILS OF BANK ACCOUNTS WHEREFROM MONEY WAS PAID, COPY OF BANK STATEMENT AND COPY OF ACKNOWLEDGE OF INCOME TAX RETURN AND BALANCE ETC WERE FILED BY THE ASSESSEE. THEREFORE, THE ASSESSEE HAS DISC HARGED ONUS CAST ON HIM. 4. LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUPPORTED THAT FOR THE REASONS GIVEN BY THE ASSESSING OFFICER THE ADDITION IS RIGHTLY MADE. HE, THEREFORE, SUBMITTED THAT ORDER OF THE LD ASSESSING OFFICER MAY BE U PHELD. 5. LD AR OF THE APPELLANT SUBMITTED THAT AS ASSESSEE HAS COMPLETELY DEMONSTRATED THAT IDENTITY, CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE SHARE APPLICATION MONEY BY FURNISHING CONFIRMATION, BANK STATEMENT AND INCOME TAX RETURNS OF THE DEPOSITORS. HE FURTHER SUBMITTED THAT MERE FAILURE ON PART OF THE INSPECTORS TO LOCATE THESE PERSONS THE ADDITIONS CANNOT BE MADE AS DETAILS OF BANK ACCOUNT AND INCOME TAX RETURNS OF THE DEPOSITORS ARE ALREADY PROVIDED. HE THEREFORE SUBMITTED THAT ADDITION S HAS RIGHTLY BEEN DELETED BY LD CIT(A). PAGE 3 OF 5 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD CIT(A) HAS DEALT WITH THIS ISSUE AS UNDER: - 4.3 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMI SSIONS FILED BY THE APPELLANT. THE APPELLANT SUBMITTED THE FOLLOWING DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS - NAME AND ADDRESS. SHARE APPLICATION FORM. PERMANENT ACCOUNT NUMBER, DETAIL OF BANK ACCOUNT FROM WHERE MONEY WAS PAID ALONG WITH COPY OF BANK STATEMENT. COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN. CONFIRMATION FROM THE SUBSCRIBERS. COPY OF BALANCE SHEETS OF COMPANIES. 4.4 THE APPELLANT HAD THUS, DISCHARGED THE PRIMARY ONUS OF ESTABLISHING THE IDENTITY OF THE SHAREHOLDERS. ALL THE SHAR EHOLDERS ARE ASSESSED TO INCOME TAX. IF THERE WAS ANY DOUBT ON THE BONA FIDE OF THE TRANSACTIONS, THE APPROPRIATE COURSE WOULD HAVE BEEN TO COMMUNICATE THE FINDING TO THE AOS OF THE RESPECTIVE SHAREHOLDERS. MERE FAILURE ON PART OF THE INSPECTOR 10 LOCATE S OME OF THE PERSONS AT THE GIVEN ADDRESS, OR THE FACT THAT PREMIUM WAS PAID ALONG WITH SHARE APPLICATION CANNOT BE THE BASIS FOR MAKING HUGE ADDITION TO THE RETURN INCOME OF THE APPELLANT COMPANY. IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDI TION MADE IS NOT LEGALLY SUSTAINABLE AND IS DELETED. AS PAN IS AVAILABLE IN RESPECT OF ALL THE ELEVEN SHAREHOLDERS, I DIRECT THE AO TO MAKE A REFERENCE TO THE RESPECTIVE AOS OF THESE SHAREHOLDERS GIVING THE DETAILS OF TRANSACTIONS AND FOR CAUSING NECESSARY INQUIRY IN THE MATTER. IN CASE THOSE AOS CONFIRM THAT THE TRANSACTIONS ARE NOT GENUINE, NECESSARY ACTION MAY BE TAKEN IN THOSE CASES AND ALSO TO REOPEN THE ASSESSMENT IN APPELLANT'S CASE. 7. ON PERUSAL OF THE ABOVE ORDER IT IS APPARENT THAT ASSESSEE HAS FUR NISHED CONF I RMATION OF THE PARTIES STATING THEIR NAME, ADDRESS, PAN, COPY OF THEIR BANK STATEMENT, ACKNOWLEDGEMENT OF INCOME TAX RETURNS AND COPY OF THE BALANCE SHEET IN CASE OF THE COMPANIES. THEREFORE, BEFORE THE LD CIT(A) ASSESSEE HAS DISCHARGED PRIMARY ONUS OF THE ABOVE SHARE CAPITAL PROVING IDENTITY OF THE CREDITORS, AND CREDITWORTHINESS OF THOSE CREDITORS. REGARDING THE GENUINENESS OF THE TRANSACTION THE LD ASSESSING OFFICER COULD NOT POINT OUT THAT HOW THE SHARE CAPITAL INCREASED BY THE COMPANY IS NO T GENUINE IN ABSENCE OF ANY VERIFICATION FROM THE ASSESSING OFFICER OF THE DEPOSITORS. THE LD ASSESSING OFFICER HAS HELD THAT AS INSPECTOR COULD NOT LOCATE SOME OF THE PARTIES THE SUMMONS COULD NOT BE SERVED TO THEM. THIS REASON CANNOT HELP THE REVENUE AS IT HAD THE BANK STATEMENTS OF THE PARTIES WHERE THE ADDRESS PAGE 4 OF 5 OF THE PARTIES AND THE PERSONS OPERATING THOSE ACCOUNTS COULD EASILY BE LOCATED. FURTHER, MERELY THE INCOME OF THE PARTIES IS MEAGER CANNOT BE THE REASON FOR MAKING AN ADDITION IN VIEW OF DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. VRINDAVAN FARMS ITA NO. 71/2015 DATED 12.08.2015 HAS HELD AS UNDER: - 3. MS. SURUCHI AGGARWAL, LEARNED SENIOR STANDING COUNSEL FOR THE APPELLANT, RELIED UPON THE DECISION OF THIS COURT IN CIT V. NOVA PROMOTER S & FINLEASE LTD. 342 ITR 169 AND URGED THAT THE ASSESSING OFFICER (AO) WAS NOT REQUIRED TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. ON THE OTHER HAND, IT WAS INCUMBENT UPON THE ASSESSEE TO OFFER A SATISFACTORY EXPLANATION R EGARDING NATURE AND SOURCE OF THE FUNDS. 4. THE ITAT HAS IN THE IMPUGNED ORDER NOTICED THAT IN THE PRESENT CASE THE REVENUE HAS NOT DOUBTED THE IDENTITY OF THE SHARE APPLICANTS. THE SOLE BASIS FOR THE REVENUE TO DOUBT THEIR CREDITWORTHINESS WAS THE LOW INC OME AS REFLECTED IN THEIR INCOME TAX RETURNS. THE ENTIRE DETAILS OF THE SHARE APPLICANTS WERE MADE AVAILABLE TO THE AO BY THE ASSESSEE. THIS INCLUDED THEIR PAN NUMBERS, CONFIRMATIONS, THEIR BANK STATEMENTS, THEIR BALANCE SHEETS AND PROFIT AND LOSS ACCOUNTS AND THE CERTIFICATES OF INCORPORATION ETC. IT WAS OBSERVED BY THE ITAT THAT THE AO HAD NOT UNDERTAKEN ANY INVESTIGATION OF THE VERACITY OF THE ABOVE DOCUMENTS SUBMITTED TO HIM. IT HAS BEEN RIGHTY COMMENTED BY THE ITAT THAT WITHOUT DOUBTING THE DOCUMENTS, THE AO COMPLETED THE ASSESSMENT ONLY ON THE PRESUMPTION THAT LOW RETURN OF INCOME WAS SUFFICIENT TO DOUBT THE CREDIT WORTHINESS OF THE SHARE HOLDERS. 5. THE COURT IS OF THE VIEW THAT THE ASSESSEE BY PRODUCED SUFFICIENT DOCUMENTATION DISCHARGED ITS INITIAL ONUS OF SHOWING THE GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLICANTS. IT WAS INCUMBENT TO THE AO TO HAVE UNDERTAKEN SOME INQUIRY AND INVESTIGATION BEFORE COMING TO A CONCLUSION ON THE ISSUE OF CREDITWORTHINESS. IN PARA 39 OF THE DECISION IN NOVA PR OMOTERS (SUPRA), THE COURT HAS TAKEN NOTE OF A SITUATION WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS ARE FURNISHED TO THE AO AND THE AO FAILS TO CONDUCT AN INQUIRY. THE COURT HAS OBSERVED THAT IN THAT EVENT NO ADDITION CAN BE MADE IN THE HANDS O F THE ASSESSEE UNDER SECTION 68 OF THE ACT AND IT WILL BE OPEN TO THE REVENUE TO MOVE AGAINST THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. 8. IN THIS PARTICULAR CASE ALSO THE LD ASSESSING OFFICER DESPITE HAVING COMPLETE INFORMATION DID NOT CARRY ON ANY FURTH ER INVESTIGATION WITH RESPECT TO THE BANK ACCOUNTS OR TO THE INFORMATION FROM THE ASSESSING OFFICER OF THE DEPOSITORS, THEREFORE, RELYING ON THE DECISION OF THE PAGE 5 OF 5 HONBLE DELHI HIGH COURT AS ABOVE WE CONFIRM THE FINDING OF THE LD CIT(A) AND APPEAL OF THE REV ENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 0 4 / 07 /2016 . - S D / - - S D / - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 / 07 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI