Diwakar Marketing P.Ltd, Delhi V. ACIT, Central circle-30, New Delhi

ITA 4750/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1576 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 02-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S RAWAT
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries
• Section: 142(1); 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.4750/DEL/2018 ASSESSMENT YEAR: 2010-11 DIWAKAR MARKETING P. LTD., C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI. PAN: AABCD0904E VS. ACIT, CENTRAL CIRCLE-30, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : SHRI D.S. RAWAT, SR.DR DATE OF HEARING : 08.10.2018 DATE OF PRONOUNCEMENT : 20.11.2018 ORDER PER R.K. PANDA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 7 TH JUNE, 2018 OF THE CIT(A)-30, NEW DELHI, RELATING TO ASSESSMENT YE AR 2010-11. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS AN NBFC AND FILED ITS RETURN OF INCOME ON 22.09.2010 DECLARING TOTAL INCO ME OF RS.4,787/-. SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S 1 47 OF THE ACT BY RECORDING REASONS WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER AT PARA 2 OF THE ASSESSMENT ORDER. IN RESPONSE TO NOTICE U/S 148 OF THE IT ACT, THE AS SESSEE FILED ITS RETURN OF INCOME ON ITA NO.4750/DEL/2018 2 26 TH APRIL, 2017 DECLARING AN INCOME OF RS.4,790/- WHIC H WAS DECLARED IN THE ORIGINAL RETURN. THE ASSESSEE FURTHER SUBMITTED THAT THERE IS NO LIVE LINK OF DISCLOSED INCOME TO ESCAPEMENT OF INCOME. THE ASSESSING OFFICER PROVID ED A COPY OF REASONS RECORDED BEFORE THE ISSUE OF NOTICE U/S 148 AND COPY OF APPR OVAL OF THE PCIT AND ASKED THE ASSESSEE TO SUBMIT ITS OBJECTIONS WITHIN SEVEN DAYS OF THE RECEIPT OF THE LETTER. HOWEVER, NO OBJECTION WAS FILED BEFORE THE ASSESSIN G OFFICER BEFORE THE STIPULATED TIME, BUT, WAS FILED THEREAFTER ON 11 TH SEPTEMBER, 2017 WHICH WAS DISPOSED OF BY THE ASSESSING OFFICER, VIDE LETTER DATED 3 RD OCTOBER, 2017. THE ASSESSING OFFICER ISSUED NOTICE U/S 143(2) AND 142(1) ALONG WITH SPECIFIC QU ESTIONNAIRE ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE ACCOMMODATION ENTRIES AMOUNTI NG TO RS.10 LAKHS SHOULD NOT BE CONSIDERED AS UNEXPLAINED CREDIT U/S 68 OF THE IT A CT. THE ASSESSEE FILED ITS REPLY STATING THAT AN AMOUNT OF RS.10 LAKHS WAS RECEIVED ON 29 TH MARCH, 2010 FROM M/S HIGHLIGHT IMPEX PVT. LTD., TOWARDS PAYMENT RECEIVED AGAINST SALE OF SHARES OF M/S RICHFIELD TRACON PVT. LTD. IN THE NORMAL COURSE OF BUSINESS ACTIVITY. THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) TO M/S RICHFIELD T RACON PVT. LTD., WHICH WAS RETURNED UNSERVED. THE ASSESSING OFFICER, THEREAFTER, ISSUE D COMMISSION U/S 131(1)(D) OF THE ACT TO THE ADIT, INVESTIGATION, KOLKATA, TO CARRY O UT NECESSARY VERIFICATION OF THE GENUINENESS OF THE ABOVE MENTIONED COMPANIES AND TH E BUSINESS ACTIVITIES UNDERTAKEN BY THEM. AFTER CONSIDERING THE REPORT OF THE ADIT, INVESTIGATION, KOLKATA AND THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.10 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE AS WELL AS M/S RICHFIELD TRACON PVT. LTD. AND M/S HIGHLIGHT IMPEX PVT. LTD. ARE SHELL/PAPER COMPANIES AND ARE ITA NO.4750/DEL/2018 3 DOING NO REAL BUSINESS. ALL THE TRANSACTIONS ARE U NDERTAKEN IN A CONTROLLED MANNER TO GIVE ACCOMMODATION ENTRIES TO THE BENEFICIARIES. 3. SINCE NONE APPEARED BEFORE THE CIT(A), THE LD.CI T(A), IN THE EX PARTE ORDER PASSED BY HIM ON 7 TH JUNE, 2018, UPHELD THE ADDITION MADE BY THE ASSESS ING OFFICER. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3)WITHOUT APPRECIATING THAT ASSUMPTION OF JURISDICTION U/S 14 8 WAS BY LD ASSESSING OFFICER WAS IN VIOLATION OF JURISDICTIONAL CONDITIO NS STIPULATED UNDER THE ACT; 1.1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT- A ERRED IN SUSTAINING THE ORDER PASSED BY LD ASSESS ING OFFICER U/S 147/143(3) WITHOUT APPRECIATING THAT RUBBER STAMP REASONS IN PRESENT CASE ARE BASED ON UNCONFRONTED APPRAISAL REPORT OF INVESTIGATION WI NG AND ARE WITHOUT INDEPENDENT APPLICATION OF MIND; 1.2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AS SESSING OFFICER U/S 147/143(3) WITHOUT APPRECIATING THAT REASONS ARE I NCHOATE AND DICTATED BY INVESTIGATION WING AS LD AO HAS NO WHERE STRAINED H IS NERVE TO FIND OUT THE NATURE OF TRANSACTION (HERE SALE OF SHARES) WHICH W ERE COMPLETELY OVERLOOKED AND ABORTED IN REASONS RECORDED, WITHOUT WHICH, CHARGE OF INCOME ESCAPING ASSESSMENT REMAINED AMORPHOUS; NOTA BLY PURCHASE/SALE OF SHARES WAS DULY RECORDED IN BOOKS OF ACCOUNTS AND N O SUPPRESSION OF INCOME WAS MADE ON THIS COUNT. 1.3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 1 47/143(3) WITHOUT APPRECIATING THAT SINE QUA NON CROSS EXAMINATION HA S BEEN KEPT AT BAY WHICH IS SUFFICIENT TO QUASH THE ORDERS PASSED BY LD AO A ND LD CIT-A; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 1 47/143(3) WITHOUT APPRECIATING THAT ON BASIS OF SURFEIT AND INUNDATED EVIDENCES ON RECORDS BURDEN LYING ON ASSESSEE HAS BEEN FULLY DISCHARGED AND MET , SO ADDITION MADE BY LD AO (RS 10,00,000) AND CONFIRMED BY CIT-A IN IMPUGNED O RDER DESERVES TO BE DELETED. 2.1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, ID CIT-A ITA NO.4750/DEL/2018 4 ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 1 47/143(3) WITHOUT APPRECIATING THAT ASSESSEE SOLD SHARES OF M/S RICHF IELD TRACKON PVT LTD WHICH WERE ACQUIRED DURING FINANCIAL YEAR 2006-07 AND HAS BEEN DULY REFLECTED IN AUDITED BALANCE SHEET AS ON 31/3/2007, 31/3/2008, 3 1/03/2009 AND SAID SHARES ARE SOLD IN SUBJECT PERIOD FOR RS 10 LACS TO M/S HIGHLI GHT IMPEX PVT LTD DULY RECORDED IN BOOKS OF ACCOUNT AND BEST EVIDENCE IN A SSESSEES POSSESSION TO ESTABLISH ITS CASE WAS DULY FILED TO LD AO/LD CIT-A . NOTABLY, ASSESSMENT FOR AY 2007-08 WAS DONE U/S 143(3). 2.2. THAT ORDER PASSED BY LD AO AND FURTHER ORDER PASSE D BY ID C1T A ARE BAD IN LAW IN SO FAR AS ADDITION AMOUNTING TO RS 10 ,00,000 ON A/C OF SALE OF SHARES IS CONCERNED WHICH IS ARBITRARILY MADE SUBJE CT MATTER OF ADDITION U/S 68 WITHOUT ANY INCRIMINATING MATERIAL ON RECORDS AND M ERELY ON BASIS OF IF AND BUTS AND MERE SUSPICION. 2.3. THAT ORDER PASSED BY LD AO AND FURTHER ORDER PASSE D BY ID C1T A ARE BAD IN LAW IN SO FAR AS ADDITION AMOUNTING TO RS 10 ,00,000 ON A/C OF SALE OF SHARES IS CONCERNED, WITHOUT DISPOSING ASSESSEES S EMINAL CONTENTION THAT SECTION 68 PER SE IS NOT ATTRACTED TO MERE SALE OF SHARES ( SHARE SALE PROCEEDS) 2.4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT THERE IS NO BASIS OF ANY OF THE A DDITION OF RS 10,00,000 AS WHOLE ADDITION IS BASED MERELY ON ASSUMPTION , CONJECTURE S AND SURMISES AND SUSPICION ONLY WITHOUT ANY IOTA OF EVIDENCE TO SUPPORT THE BA LD ALLEGATION 2.5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT ALL THE ADDITIONS MADE ARE WITHOU T BRINGING LEGALLY ADMISSIBLE DOCUMENT; 2.6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT NONE OF EVIDENCE FILED BY ASSESSE E IS OVERRULED IN ACCORDANCE WITH LAW; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN NOT RESTORING THE RETURNED INCOME DECLARED BY ASSESSEE IN ITS RETURN OF INCOME. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT-A ERRED IN NOT DELETING THE ADDITION MADE BY LD AO WH ICH WAS ALSO UNLAWFUL AND MADE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THAT THE APPELLANT CRAVES LEAVE TO ADD ADD/ALTER AN Y/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.4750/DEL/2018 5 4. I HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH THE S IDES AND PERUSED THE ORDER OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT DESPITE GIVING REPEATED OPPORTUNITIES, NONE APPEARED BEFORE THE CIT(A) FOR WHICH HE WAS CONSTRAINED TO PASS THE EX PARTE ORDER WHEREIN HE HAS SUSTAINED NOT ONLY THE ADDITI ON MADE BY THE ASSESSING OFFICER, BUT, HAS ENHANCED THE SAME TO RS .10,24,790/-. EVEN THE PAPER BOOK ALLEGED TO HAVE BEEN FILED BY THE ASSESSEE BEF ORE THE CIT(A) WAS ALSO NOT AVAILABLE ON RECORD AS PER PARA 5 OF THE ORDER OF T HE CIT(A). SINCE THERE WAS NO COMPLIANCE BY THE ASSESSEE AND THE PAPER BOOK WAS N OT FILED, THE LD.CIT(A) HAS DECIDED THE ISSUE ON THE BASIS OF THE MATERIAL AVAI LABLE ON RECORD AND ON THE BASIS OF JUDICIAL PRINCIPLES. THEREFORE, CONSIDERING THE TOTALITY 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 CIT(A) WITH A DIRECTION TO GRANT ONE FINAL OPPORTUN ITY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE AND DECIDE THE ISSUE AS PER F ACT AND LAW. THE ASSESSEE IS ALSO HEREBY DIRECTED TO APPEAR BEFORE THE CIT(A) WITHOUT SEEKING ANY ADJOURNMENT UNDER ANY PRETEXT, FAILING WHICH THE LD.CIT(A) IS A T LIBERTY TO PASS APPROPRIATE ORDER AS PER LAW. WE HOLD AND DIRECT ACCORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 0.11.2018. SD/- (R.K. PANDA) ACCOUNTANT MEMFBER DATED: 20 TH NOVEMBER, 2018 DK ITA NO.4750/DEL/2018 6 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI