ITO, Ghaziabad V. M/s. S.K. Sons (HUF), Ghaziabad

ITA 4661/DEL/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98105 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 18-11-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 10-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUJIT KUMAR SENIOR
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Accommodation entries
• Section: 147; 148; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.4661/DEL./2009 (ASSESSMENT YEAR : 2001-02) ITO, WARD-2(3), VS. M/S. SATISH KUMAR & SONS (HUF ), GHAZIABAD B - 155A, ASHOK NAGAR, GHAZIABAD (PAN : AAMHS2089B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AKHILESH KUMAR, ADVOCATE REVENUE BY : SHRI SUJIT KUMAR, SENIOR DR DATE OF HEARING : 18.11.2015 DATE OF PRONOUNCEMENT : 11.12.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE REVENUE, IS FIL ED AGAINST THE ORDER OF CIT (APPEAL), GHAZIABAD DATED 07.09.2009 FOR T HE ASSESSMENT YEAR 2001-02. 2. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GR OUNDS OF APPEAL :- 1. WHETHER ON FACTS AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.10,00,000/- MADE U/S 68 OF THE INCOME TAX ACT, 1961 AND IN NOT PROPERLY APPRECIATI NG THE FACTS AS WELL AS THE REASONS GIVEN BY THE AO IN HIS ORDER . 2. WHETHER ON FACTS AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,00,000/- MADE U/S 69 OF ITA NOS.4661/DEL./2009 2 THE INCOME TAX ACT, 1961 AND IN NOT PROPERLY APPREC IATING THE FACTS AS WELL AS THE REASONS GIVEN BY THE A.O. IN H IS ORDER. 3. BRIEF FACTS OF THE CASE RELATING TO THE AFORESAI D TWO GROUNDS ARE AS FOLLOWS. 3.1 A SEARCH AND SEIZURE WAS CARRIED OUT BY THE INV ESTIGATION WING, GHAZIABAD, IN THE PREMISES OF ONE SHRI MAHENDER KUM AR GUPTA, WHO WAS FOUND TO HAVE INDULGED IN GIVING ACCOMMODATION ENTR IES IN THE NATURE OF CAPITAL GAIN/LOANS IN LIEU OF CASH RECEIVED FROM IN TENDING BENEFICIARIES BY CHARGING SOME COMMISSION IN CASH. ON THE BASIS OF S EARCH AND SEIZURE OPERATION, INFORMATION FROM THE CONCERNED BANKS WER E GATHERED FROM WHERE SHRI MAHENDRA KUMAR GUPTA AND HIS COMPANIES H AD ISSUED DDS/CHEQUES TO THE INTENDING BENEFICIARIES AND ALSO FROM THE BRANCHES FROM WHERE THESE CHEQUES/DD WERE ENCASHED. AS A RES ULT OF THE ABOVE INVESTIGATION, INFORMATION WAS RECEIVED FROM ADI (I NV.) GHAZIABAD, THAT FOLLOWING CHEQUES WERE ISSUED IN THE NAME OF ASSESS EE, M/S SATISH KUMAR & SONS (HUF), GHAZIABAD :- CHEQUE NO. DATE OF CLEARING OF CHEQUE NAME OF CLEARING BANK AMOUNT (RS.) 474801 21.06.2000 OBC, NEHRU NAGAR, GHAZIABAD 5,00,000/- 474802 21.06.2000 OBC, NEHRU NAGAR, GHAZIABAD 5,00,000/- ACCORDINGLY, THE AO INITIATED PROCEEDINGS U/S 147 O F THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AGAINST THE ASSESSEE F OR THE ASSESSMENT YEAR UNDER CONSIDERATION AND ISSUED A NOTICE U/S 148 ON 27.03.2008. IN ITA NOS.4661/DEL./2009 3 RESPONSE, THE ASSESSEE FILED A RETURN ON 29.04.2008 DECLARING AN INCOME OF RS.59,000/-. THEREAFTER, THE AO ISSUED STATUTORY N OTICES U/S 143(2) & 142(1). 3.2 DURING ASSESSMENT PROCEEDINGS, THE AO NOTICED T HAT THE ASSESSEE WAS MAINTAINING A SB A/C NO.03022010061740 (OLD NO. 13849) WITH ORIENTAL BANK OF COMMERCE, NASIRPUR, NEHRU NAGAR, G HAZIABAD. THE AO ASKED THE SAID BANK TO PROVIDE THE BANK STATEMENT O F THE ASSESSEE FOR THE FY 1999-00 & 2000-01 TO VERIFY THE INFORMATION ABOU T THE AFORESAID CHEQUES, BUT THE BANK HAD INFORMED THAT DUE TO FIRE IN THEIR BRANCH, THEY WERE UNABLE TO PROVIDE THE STATEMENT FOR THE SAID P ERIOD. THE AO FURTHER ASKED THE BANK ABOUT CLEARING OF THE CHEQUES TO WHI CH THE BANK REPLIED THAT THEY HAD CHECKED ALL THEIR VOUCHERS FROM THE P ERIOD 18.06.2008 TO 22.06.2008 BUT NO SUCH CHEQUES WERE ON OUR RECORDS. THE AO, HOWEVER, NOTED THE DISCREPANCY IN THE REPLY FURNISHED BY THE BANK AND OBSERVED THAT WHEN THE RECORDS OF F.Y. 2000-01 WERE DESTROYED IN FIRE, HOW THE BANK COULD CATEGORICALLY STATE THAT NO SUCH CHEQUES WERE CLEARED BY THE BANK ON ABOVE DATES. THE RECORDS FURTHER SHOW THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS REFUTED THE RECEIPT OF THESE CHEQU ES AND ALSO FILED AN AFFIDAVIT TO THIS EFFECT. THE AO, HOWEVER, POINTED OUT THAT THE ASSESSEE HAS FAILED TO PRODUCE THE COPY OF HIS BANK STATEMENT FO R THE A.Y. 2000-01. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FUR NISHED HIS STATEMENT OF AFFAIRS AS ON 31.03.2000 AND 31.03.2001, DETAILS OF WHICH HAVE BEEN ITA NOS.4661/DEL./2009 4 REPRODUCED AT PAGE 2 OF THE ASSESSMENT ORDER. FROM THE SAME, THE AO NOTICED THAT THE ASSESSEE HAD SHOWN BALANCE AS PER OBC A/C NO.13849 AT RS.1,30,169 AS ON 31.03.2000 AND AS ON 31.03.2001 N O BANK BALANCE WAS SHOWN AND ONLY CASH IN HAND WAS SHOWN AT RS.47,136/ -. THEREFORE, THE AO REQUIRED THE ASSESSEE TO PROVIDE THE BIFURCATION OF CASH IN HAND AND BALANCE AS PER BANK AS ON 31.03.2001 ALONG WITH BANK STATEM ENT OF THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. IN RESPONSE, THE ASSESSEE SU BMITTED AS UNDER :- ' IT IS EXPLAINED THAT AT THE TIME OF PREPARATION O F BALANCE SHEET FOR FY 1999-00 ASSESSEE HAD THE PASS BOOK WITH HIM AND BALANCE AS ON 31.03.2000 OF RS.1,30,169/- WAS FROM IT. IN FY 2 000-01 THE BANK BALANCE WAS INCLUDED IN CASH IN HAND AND BANK. IN T HIS RESPECT PLEASE REFER TO OUR LETTER DATED 25.08.2008, WHERE IT WAS STATED THAT ASSESSEE HAS MISPLACED THE PASS BOOK. ASSESSEE HAS TRIED FRO M BANK ALSO BUT RECORD IS NOT AVAILABLE WITH BANK ALSO. BANK ACCOUN T NUMBER AND ADDRESS OF BANK HAVE ALREADY BEEN FURNISHED. TRANS ACTION FOR AY 2001-02 CAN BE VERIFIED FROM BANK ALSO. ASSESSEE HAS FILED AFFIDAVIT WITH LETTER DATED 25.0 8.2008 WHERE IT IS CATEGORICALLY STATED THAT THE ASSESSEE HAS NOT RECEIVED ANY AMOUNT FROM MAHENDRA KUMAR GUPTA THROUGH CHEQUE NO. 474801 & 474802 OF RS. 5 LAKH EACH. ' FROM THE AFORESAID REPLY, THE AO NOTED THAT THE ASS ESSEE HAD NOT BEEN ABLE TO GIVE THE BIFURCATION OF CASH IN HAND AND THAT OF THE BALANCE AS PER THE BANK. THE AO FOUND CONTRADICATION IN THE REPLIES F ILED BY THE ASSESSEE AND WONDERED AS TO WHEN THE BANK STATEMENT WAS NOT AVAI LABLE WITH THE ASSESSEE, HOW IT WAS POSSIBLE FOR HIM TO ARRIVE AT THE FIGURE OF BANK BALANCE AT RS.5,616 AS ON 31.03.2001 AND HELD THAT THIS WAS A CLEAR CUT EVIDENCE THAT THE ASSESSEE WAS DELIBERATELY AVOIDIN G THE FURNISHING OF THE ITA NOS.4661/DEL./2009 5 BANK STATEMENT AND THAT THERE WAS NO TRUTH IN THE E ARLIER SUBMISSIONS AND AFFIDAVIT FILED BY THE ASSESSEE THEREBY REFUTING TH E RECEIPT OF RS.10,00,000 THROUGH ACCOMMODATION ENTRIES. ACCORDINGLY, THE AO TREATED THE RECEIPT OF THE SUM OF RS.10,00,000/- AS UNEXPLAINED CASH CREDI TS IN THE BOOKS OF THE ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3.3 THE AO FURTHER ADDED A SUM OF RS.1,00,000/- BEI NG COMMISSION PAID TO SHRI MAHENDER KUMAR GUPTA BY OBSERVING AS U NDER :- ' IN VIEW OF THE CLEAR ADMISSION OF SHRI MAHENDER KUM AR GUPTA, THE ENTRY OPERATOR, THAT HE HAD GIVEN ENTRIES BY CHARGING SOM E COMMISSION, THE COMMISSION PAID IS ESTIMATED @ 10% ON THE ACCOMMOD ATION ENTRY OF RS.10,00,000/-, WHICH COMES TO RS.1,00,000/-. THE S AME IS BEING TREATED AS UNEXPLAINED INVESTMENT MADE U/S 69 OF THE INCOME TA X ACT, 1961, AND ADDED BACK TO THE INCOME OF THE ASSESSEE.' 3.4 AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY AGAINST THE AFORESAID TWO ADDITIONS AND T HE LD. CIT (A) DELETED THE BOTH THE ADDITIONS BY OBSERVING AS UNDER :- 5.3 THE ISSUE HAS BEEN CONSIDERED. THE AO HAS PROC EEDED TO ADD BACK THE SUM OF RS.10,00,000/- ON THE BASIS OF INFORMATION R ECEIVED FROM THE ADI THAT SHRI MAHENDER KUMAR GUPTA IS INDULGED IN GIVING ACC OMMODATION ENTRIES IN THE NATURE OF CHEQUES AND THAT TWO CHEQUES WERE ISS UED BY IN FAVOUR OF THE ASSESSEE. THE ASSESSEE, HOWEVER, REFUTED THE RECEIP T OF THESE CHEQUES. THE AO HAS MADE DIRECT ENQUIRIES FROM THE BANK, BUT UPON E NQUIRY, NO EVIDENCE HAS BEEN OBTAINED BY THE AO FROM THE BANK TO ESTABLISH THE ISSUE OF ABOVE TWO CHEQUES BY SHRI MAHENDER KUMAR GUPTA IN FAVOUR OF T HE ASSESSEE. THE MATERIAL AVAILABLE ON RECORD CLEARLY INDICATES THAT THE DEPA RTMENT HAS NOT BROUGHT ON RECORD ANY MATERIAL TO ESTABLISH THAT SHRI MAHENDER KUMAR GUPTA HAD ISSUED TWO CHEQUES RS.5,00,000/- EACH IN FAVOUR OF THE ASS ESSEE WHICH WERE CLEARED ON 21.06.2000. WHEN THE ASSESSEE HAS REFUTED THE RECE IPTS OF THE SAID CHEQUES AND THAT THE AO HAS NO MATERIAL EVIDENCE TO ESTABLISH T HE RECEIPT OF THE SAID CHEQUES BY THE ASSESSEE, THERE IS NO REASON TO ADD THE SAID SUM OF RS.10,00,000/- TO ASSESSEE'S TOTAL INCOME AS UNEXPLAINED CASH CREDIT. AS REGARDS NON-SUBMISSION OF ASSESSEE'S BANK STATEM ENT FOR THE RELEVANT PERIOD, THE FACTS ON RECORD SHOW THAT THE ASSESSEE COULD NOT OBTAIN THE SAME FROM THE BANK BECAUSE THERE WAS A FIRE IN THE BANK ON 21.09.2001 AND IN THE FIRE ITA NOS.4661/DEL./2009 6 THE BANK RECORDS OF F. Y. 2000-01 WERE DESTROYED SO THE ASSESSEE COULD NOT FURNISH THE SAME BEFORE THE AO. THE BANK HAS ALSO C ONFIRMED REGARDING DESTRUCTION OF THEIR RECORDS OF F.Y. 2000-01 IN FIR E. THE BANK HAS FURTHER INFORMED THE AO THAT THEY HAVE CHECKED ALL OVER VOU CHERS FOR THE RELEVANT PERIOD BUT NO SUCH CHEQUES ARE ON THEIR RECORDS. TH ESE FACTS THUS CLEARLY SHOW THAT THERE IS NOTHING ON RECORD TO ESTABLISH THE RE CEIPT OF TWO CHEQUES OF RS.5,00,000/- EACH BY THE ASSESSEE AND ITS CLEARING . IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION MADE BY THE AO AT RS.10,00,000/- IS HEREBY DELETED. 6. THE NEXT ISSUE PERTAINS TO THE ADDITION OF RS.1, 00,000/- BEING THE COMMISSION PAID BY THE ASSESSEE ON THE ABOVE AMOUNT OF RS.10,00,000/-. SINCE I HAVE ALREADY DELETED THE ADDITION OF RS.10,00,000 /- AS DISCUSSED IN THE PRECEDING PARA, THIS ADDITION OF RS.1,00,000/- IS A LSO HEREBY DELETED. 4. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFOR E US. 5. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE AO NOTED DISCREPANCY IN THE REPL Y FURNISHED BY THE BANK BY OBSERVING THAT WHEN THE RECORDS OF FY 2000-01 WE RE DESTROYED IN FIRE HOW COULD THE BANK CATEGORICALLY STATE THAT NO SUCH CHEQUES WERE CLEARED BY THE BANK ON THE SAID DATES AND POINTED TO THE AS SESSEES REPLY THAT IT HAD RS.5,616/- AS ON 31.03.2011 AND WONDERED AS TO HOW THE ASSESSEE COULD KNOW HOW MUCH ASSESSEE HAD IN THE ABSENCE OF BANK-S TATEMENT AND LD. DR SUBMITTED THAT THUS, THE AO RIGHTLY DISBELIEVED THE AFFIDAVITS FILED BY THE ASSESSEE REFUTING THE RS.10 LAKH ENTRY IN ITS ACCOU NT. ACCORDINGLY, RELYING ON THE ORDER OF THE AO, HE PLEADED THAT THE ORDER O F THE CIT (A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 6. LD. AR FOR THE ASSESSEE RELIED ON THE ORDER OF T HE LD. CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT (A). THE LD. AR SUBMITTED THAT THE ASSESSEE HAD NOT RECEIVED ANY CH EQUE FROM SHRI ITA NOS.4661/DEL./2009 7 MAHENDER KUMAR GUPTA. HE FURTHER SUBMITTED THAT AS REGARDS THE NON- SUBMISSION OF ASSESSEE'S BANK STATEMENT FOR THE REL EVANT FINANCIAL YEAR, THE ASSESSEE HAD APPROACHED THE BANK TO PROVIDE THE BAN K STATEMENT BUT THE BANK COULD NOT PROVIDE THE SAME AS THEIR RECORDS WE RE DESTROYED IN FIRE. HE SUBMITTED THAT THIS FACT WAS ALSO CONFIRMED BY THE BANK IN THEIR LETTER FILED BEFORE THE AO IN RESPONSE TO AO'S ENQUIRY. THE LD. AR SUBMITTED THAT IN FACT THE ASSESSEE HAD NOT RECEIVED ANY CHEQUE FROM SHRI MAHENDER KUMAR GUPTA. HE ALSO SUBMITTED THAT THE AO HAS ALSO NO EV IDENCE TO ESTABLISH THAT THE ASSESSEE HAD RECEIVED TWO CHEQUES OF RS.5,00,00 0/- EACH FROM THE SAID PERSON. HE ACCORDINGLY SUBMITTED THAT WHEN THE ASSE SSEE HAD, IN FACT, NOT RECEIVED ANY CHEQUE FROM THE SAID PARTY AND THAT TH E AO HAS ALSO NO EVIDENCE TO PROVE THE RECEIPT OF THE SAID CHEQUES B Y THE ASSESSEE, THERE WAS NO JUSTIFICATION TO ADD THE SUM OF RS.10,00,000/- T O ASSESSEES TOTAL INCOME AS UNEXPLAINED CASH CREDITS AND ALSO COMMISSION OF RS.1 LAKH. HE, THEREFORE, WANT US NOT TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. APART FROM LETTER FROM DIRECTOR (INVESTIGATION) DAT ED 17.03.2008 (PAGE NO. 13 PB) TO THE AO, WHEREIN IT IS STATED THAT VIDE TW O CHEQUES ,THE ASSESSEE IS IN RECEIPT OF RS.10 LAKHS, NO OTHER EVIDENCE IS FOUND ON RECORD. THE LD. DR COULD NOT POINT OUT FROM THE STATEMENT OF SHRI M AHENDRA GUPTA, THE PURPORTED ENTRY OPERATOR AGAINST WHOM SEARCH WAS DO NE AND STATEMENT RECORDED U/S 132(4) OF THE ACT, ANY STATEMENT WHICH COULD THROW SOME ITA NOS.4661/DEL./2009 8 LIGHT ON THE ISSUE BEFORE US. WHEN THE ASSESSEE WAS CONFRONTED, THE ASSESSEE HAS DENIED THE RECEIPT OF THE SAID AMOUNT FROM MAHENDER GUPTA AND HAS FILED AFFIDAVIT SAYING SO; AND ALSO THE AR POINTED OUT THAT THE ASSESSEE HAD IN FACT FILED RETURN OF INCOME AND THE AVERMENT IN THE REASONS RECORDED BY THE AO TO REOPEN U/S 147 AND 148 THAT T HE ASSESSEE HAD NOT FILED THE RETURN OF INCOME TIMELY IN THE ASSESSMENT YEAR WAS FACTUALLY INCORRECT. THE BANK ALSO HAS EXPRESSED ITS INABILI TY TO PROVIDE ANY DETAILS AND BLAMED THE FIRE WHICH OCCURRED IN ITS PREMISES, HOWEVER, HAS MADE A STATEMENT ALBEIT HOW IS A MYSTERY, THAT THE TWO EN TRIES AS NOTED BY ADI (INV), HAS NOT HAPPENED IN THE ASSESSEES ACCOUNT. SO, IN THE ABSENCE OF ANY OTHER EVIDENCE/MATERIAL WHICH COULD LINK THE RS .10 LAKHS IN HIS ACCOUNT, AND THE FACT REMAINS THAT THE ASSESSEE HAS DENIED THE SAME, IT CANNOT BE ADDED AS INCOME OF THE ASSESSEE AND HAS B EEN RIGHTLY DELETED BY THE LD. CIT (A) AND SO THE COMMISSION OF RS.1 LAKH ADDED ALSO CANNOT BE SUSTAINED, SO RIGHTLY DELETED BY THE LD. CIT(A). A CCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT (A) AND DISMISS BOTH THE GR OUNDS. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF DECEMBER, 2015. SD/- SD/- (N.K. SAINI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF DECEMBER, 2015 TS ITA NOS.4661/DEL./2009 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.