Hamilton Electronics P.Ltd, New Delhi V. ACIT, Ward-11(1), New Delhi

ITA 4611/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4568 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Accommodation entries
• Section: 147; 68; 69; 148; 69C; 133(6); 143(1); 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4611/DEL/2018 ASSESSMENT YEAR: 2010-11 HAMILTON ELECTRONICS PVT. LTD. BT-59, SHALIMAR BAGH, NEW DELHI PAN NO. AAACH2529N VS ACIT WARD -11 (1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH.K. SAMPATH, ADVOCATE RESPONDENT BY SHRI S. L. ANURAGI, SR. DR DATE OF HEARING: 14/08/2019 DATE OF PRONOUNCEMENT: /08/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 25.05.2018 OF THE CIT(A)-4, NEW DELHI R ELATING TO A. Y. 2010-11. 2. THE COUNSEL FOR THE ASSESSEE DID NOT PRESS THE G ROUND OF APPEAL NO.1 CHALLENGING THE VALIDITY OF REASSESSMEN T PROCEEDINGS FOR WHICH THE LD. DR HAS NO OBJECTION. ACCORDINGLY THE GROUND NO.1 IS DISMISSED AS NOT PRESSED. 3. IN GROUND OF APPEAL NO.2 THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING TO ADDITION OF RS .10 LACS MADE BY THE ASSESSING OFFICER U/S. 68 OF THE IT ACT AND RS.25,000/- PAGE | 2 BEING UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 21.09.201 0 DECLARING TOTAL INCOME OF RS.10,81,340/- WHICH WAS PROCESSED U/S. 143 (1) ON 29.08.2011. SUBSEQUENTLY INFORMATION WAS RE CEIVED FROM THE ADIT (INVESTIGATION) UNIT-2 (1), NEW DELHI THAT A SEARCH AND SEIZURE ACTION WAS CARRIED OUT ON 18.11.2005 ON SH. PRADEEP KUMAR JINDAL WHO WAS INVOLVED IN PROVIDING VARIOUS TYPES OF ACCOMMODATION ENTRIES IN LIEU OF CASH TO A LARGE NU MBER OF BENEFICIARIES THROUGH DIFFERENT COMPANIES FLOATED B Y HIM. THE ASSESSEE COMPANY IS ONE OF THE BENEFICIARY WHOSE NA ME FIGURES IN THAT LIST. THE ASSESSING OFFICER AFTER RECORDING REASONS REOPENED THE ASSESSMENT U/S. 147 AND ISSUED NOTICE U/S. 148 OF THE IT ACT. SUBSEQUENTLY THE ASSESSING OFFICER ISSUED NOTICE U/S. 142 (1) AND 143(2). THE ASSESSING OFFICER ISS UED NOTICE U/S. 133 (6) TO THE COMPANIES FROM WHOM THE ASSESSE E HAS RECEIVED LOAN OF RS.10 LACS. SUBSEQUENTLY HE ALSO RECORDED THE STATEMENT OF SH. MANOJ JAIN DIRECTOR OF M/S. INSTAN T TRAVEL AND TOUR PRIVATE LIMITED WHICH IS ONE OF THE MAIN COMPA NY OPERATED BY ENTRY OPERATOR SH. PRADEEP KUMAR JINDAL. 5. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE A SSESSEE THE ASSESSING OFFICER MADE ADDITION U/S. 68 OF THE IT A CT OF RS. 10 LACS TO THE TOTAL INCOME OF THE ASSESSEE AND ALSO M ADE ADDITION OF RS.25000 BEING EXPENDITURE INCURRED FOR ARRANGIN G THE ACCOMMODATION ENTRIES. THE CONCLUSION GIVEN BY THE ASSESSING OFFICER FOR MAKING SUCH ADDITION HAS BEEN SUMMARIZE D BY HIM AT PARA 6 AND 7 OF THE ORDER WHICH READS AS UNDER : - PAGE | 3 CONCLUSIONS SOUGHT TO BE DRAWN ON BASIS OF FACTS:- IT IS CLEARLY EVIDENT FROM THE ABOVE DISCUSSION THA T IN CASE OF PRIVATE LIMITED COMPANIES, GENERALLY PERSONS KNOWN TO DIRECTORS OR SHAREHOLDERS, DIRECTL Y OR INDIRECTLY FROM WHOM MONEY BORROWED BUT ASSESSEE COMPANY HAS NEVER MET WITH THE DIRECTOR OF THE LENDING COMPANY. II. THE ASSESSEE COMPANY HAS FAILED TO, PRODUCE THE DIRECTORS OF THE LENDER NOR ANY COGENT EVIDENCE ABOUT GENUINENESS OF TRANSACTION AND CRED ITWORTHINESS OF THE LENDER WAS FILED. THE ASSESSEE RECEIVED FUNDS FROM THE COMPANIES WHIC H DID NOT HAVE ANY INDEPENDENT EXISTENCE BUT WERE PAPER COMPANIES BEING OPERATED, CONTROLLED AND USED BY PRADEEP KUMAR JINDAL AND HIS CLOSE BUSINESS ASSOCIATES TO PROVIDE ACCOMMODATION ENTRIES. THE SAID COMPANY WAS THE PART OF GROUP OF PAPER COM PANIES USED AND OPERATED BY SHRI PRADEEP KUMAR JINDAL FOR PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH PAYMENTS AND THE SAME WAS MERGED/AMALGAMATED WITH M/S FOCUS INDUSTRIAL RESOUR CES PVT. LTD. DURING THE COURSE OF SEARCH/SURVEY PROCEEDING, INCR IMINATING DOCUMENTS WERE SEIZED FROM THE PREMISES CONTROLLED BY PRADEEP KUMAR JINDAL, REVEAL S THAT ACCOMMODATION ENTRIES WERE TAKEN BY THE ASSESSEE COMPANY. CASH PAYMENTS RECEIVED BY PRADEEP KUMAR JINDAL FROM BENEFICIARY COMPANIES (ASSESSEE COMPANY IS A ONE OF THEM) WERE ROUTED THROUGH COMPLEX WEB O F COMPANIES TO CREATE MULTIPLE LAYER OF TRANSACTIONS SO THAT CASH PAYMENTS SHOULD NOT BE LI NKED EASILY WITH CHEQUE PAYMENT MADE TO THE ASSESSEE COMPANY. SUCH LAYERING OF TRANSACTIONS HAD NO BUSINESS PURPOSE EXCEPT FOR EVASION OF TAXES. IT IS EVIDENT FROM THE STATEMENT OF SHRI PRADEEP KU MAR JINDAL THAT PRADEEP KUMAR JINDAL WAS CHARGING COMMISSION @ 2.5 % FOR PROVIDING ACCOMMODA TION ENTRIES IN LIEU OF CASH PAYMENT. NOTICE UNDER SECTION 133(6) HAS ALSO BEEN ISSUED TO THE LENDER BUT NO COMPLIANCE HAS BEEN MADE SO FAR. IN THESE CIRCUMSTANCES I AM CONSTRAINED TO ADD RS. 10,00,000/- TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CREDIT U/S 68 OF THE I.T.ACT,1961, BECA USE THE PROVISIONS OF SECTION ARE CLEAR WHEREIN IT IS CONTAINED THAT WHERE ' AN V SUM IS FOUND CRED ITED IN THE BOOKS OF THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER , SATISFACTORY, THEN SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE. HE RE, IN THIS CASE AN AMOUNT OF RS. 10,00,000/- HAS BEEN CREDITED IN THE BOOKS OF THE ASSESSEE, THE SOURCE OF WHICH WAS FOUND NOT TO BE GENUINE. THE ASSESSEE HAS CATEGORICALLY FAILED TO DISCHARGE ITS ONUS OF ESTABLISHING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SOURCE OF F UNDS INTRODUCED IN ITS BOOKS OF ACCOUNTS DURING THE FY-2009-10. IT IS LOGICALLY CONCLUDED FROM THE ABOVE DISCUSSION THAT ASSESSEE HAS INTRODUCED ITS UNACCOUNTED MONEY OF RS.10,00,000/- IN BOOKS TH ROUGH ABOVE PARTIES IN THE GARB OF UNSECURED LOAN RECEIVED FROM M/S INSTANT TRAVEL AND TOUR PVT. LTD. (NOW KNOWN AS M/S FOCUS INDUSTRIAL PAGE | 4 RESOURCES PVT. LTD.). THE SAME IS TREATED AS UNEXPL AINED CASH CREDITS IN THE HAND OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT , 1961. 6. IN APPEAL THE LD. CIT(A) UPHELD THE ADDITION MAD E BY THE ASSESSING OFFICER. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER U/S . 68 OF THE IT ACT ON THE GROUND THAT ASSESSEE FAILED TO DISCHA RGE THE ONUS CAST ON IT BY PROVING THE IDENTITY AND CAPACITY OF THE LOAN CREDITOR AND GENUINENESS OF THE TRANSACTION. THE A SSESSING OFFICER ALSO MADE ADDITION U/S. 69 C BEING THE EXPE NDITURE INCURRED FOR ARRANGING SUCH ACCOMMODATION ENTRY. H E SUBMITTED THAT GIVEN AN OPPORTUNITY THE ASSESSEE IS IN A POSITION TO SUBSTANTIATE HIS CASE BEFORE THE ASSESS ING OFFICER. 9. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE CIT(A) AND SUBMITTED THAT IN VIEW OF THE DECISI ON OF HONBLE DELHI HIGH COURT IN THE CASE OF NDR PROMOTERS VIDE ITA NO.49/2018 ORDER DATED 17.01.2019 AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NRA ISPAT VIDE ITA NO.1731/DEL/2016 ORDER DATED 30.04.2019, THE ADDITI ON MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A ) IS JUSTIFIED. HE ACCORDINGLY SUBMITTED THAT THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE ORDERS OF THE AO AND CIT(A). I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. IT IS AN PAGE | 5 ADMITTED FACT THAT THE ASSESSING OFFICER MADE ADDIT ION OF RS.10 LACS U/S. 68 OF THE IT ACT ON THE GROUND THAT THE A SSESSEE FAILED TO DISCHARGE THE ONUS CAST ON IT IN TERMS OF SECTIO N 68 OF THE IT ACT BY PROVING THE IDENTITY AND CREDIT WORTHINESS O F THE LOAN CREDITOR AND THE GENUINENESS OF THE TRANSACTION. T HE ASSESSING OFFICER ALSO MADE ADDITION U/S.69C BEING THE UNEXPL AINED EXPENDITURE INCURRED BY THE ASSESSEE FOR ARRANGING THE ACCOMMODATION ENTRY OF RS. 10 LACS. IT IS THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT GIVEN AN OPPORTUN ITY THE ASSESSEE IS IN A POSITION TO SUBSTANTIATE WITH EVID ENCE TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITOR AND THE GENUI NENESS OF THE TRANSACTION. IT IS THE SUBMISSION OF THE LD. DR TH AT IN VIEW OF THE RECENT DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NDR PROMOTERS (SUPRA) AND THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF NRA ISPAT (SUPRA), THE ADDITIO N SUSTAINED BY THE CIT(A) SHOULD BE UPHELD. CONSIDERING THE TO TALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFI CER WITH A DIRECTION TO GRANT ONE FINAL OPPORTUNITY TO THE ASS ESSEE TO SUBSTANTIATE ITS CASE REGARDING THE LOAN OF RS.10 L ACS OBTAINED FROM A COMPANY FLOATED BY THE ENTRY OPERATOR SH. PR ADEEP KUMAR JINDAL AND DECIDE THE ISSUE AS PER FACT AND L AW. THE ASSESSING OFFICER WHILE DECIDING THE ISSUE SHALL AL SO KEEP IN MIND THE DECISIONS RELIED ON BY THE LD. DR ON THIS ISSUE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE A SSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. PAGE | 6 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2019. SD/- (R.K PANDA) ACCOUNTANT MEMBER *NEHA* DATE:-27 .08.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 14.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.08.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 27.08.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 27.08.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 27.08.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 27.08.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.08.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER