ITO, New Delhi V. M/s. Cee Aar Decors Pvt. Ltd., New Delhi

ITA 4792/DEL/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7127 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV SAXENA ADV SH R P MALL
• Keywords: Search and seizure; Source of fund; Additional evidence; Accommodation entries
• Section: 133(6); 13; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.4792/DEL/2015 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER, WARD-5(4), NEW DELHI. VS. M/S CEE AAR DECORS PVT. LTD., H-54, 2 ND FLOOR, DDA FLATS, ASHOK VIHAR, NEW DELHI-110052, PAN AABCC 6962D (APPELLANT) (RESPONDENT) APPELLANT BY SH. RAJIV SAXENA, ADV. SH. R.P. MALL, ADV. RESPONDENT BY MS. RAKHI VIMAL, SR. DR DATE OF HEARING 10.06.2020 DATE OF PRONOUNCEMENT 31.08.2020 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE DEPARTMENT AGAINST ORDER DATED 30.03.2015 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, NEW DELHI {CIT(A)} FOR ASSESSMENT YEAR 2008-09. 2 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE RETUR N OF INCOME FOR THE CAPTIONED YEAR WAS FILED DECLARING THE INCOM E AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AS PER THE CBDT INSTR UCTION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE HAD RECEIVED ADVANCE AGAI NST SHARES AMOUNTING TO RS.6,30,46,500/- AS REFLECTED UNDER TH E HEAD CURRENT LIABILITIES AND PROVISIONS. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE THE DETAILS OF THE 19 COMPANIE S FROM WHOM THE ADVANCES HAD BEEN RECEIVED ALONG WITH CONFIRMATIONS AND BANK STATEMENTS. THE ASSESSING OFFICER ALSO ISSUED NOTIC ES U/S 133(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE A CT) TO THE SAID 19 COMPANIES. HOWEVER, NONE OF THE PARTIES FILED ANY C ONFIRMATIONS IN RESPONSE TO THE NOTICES. IN CASE OF FIVE COMPANIES VIZ. (I) MAHESH BUILDWELL PVT. LTD.; (II) KAILASH PROPCON PVT. LTD. ; (III) SIDDHI BUILDWELL PVT. LTD.; (IV) TEXCITY CONSTRUCTION PVT. LTD.; AND (V) RADHA BALLABH CONSTRUCTION PVT. LTD, THE POSTAL AUTHORITI ES RETURNED THE NOTICES UN-SERVED. THE ASSESSING OFFICER MADE ENQ UIRIES FROM THE BANK AND IT WAS ASCERTAINED THAT EITHER ONE OR BOTH THE DIRECTORS OF THE ASSESSEE COMPANY WERE ALSO DIRECTORS IN THE COM PANIES MAKING 3 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. ADVANCES TOWARDS SHARE CAPITAL. THE ASSESSING OFFICE R ALSO OBSERVED THAT ALL THE COMPANIES WERE HAVING ADDRESSES OF EIT HER CHENNAI OR KOLKATA BUT THE BANK ACCOUNTS OF ALL THESE COMPANIE S WERE MAINTAINED WITH AXIS BANK, ASHOK VIHAR BRANCH, DELHI AND THAT THE ADDRESSES OF THESE COMPANIES AS APPEARING IN TH E BANK STATEMENTS WERE THE SAME AS THAT OF THE ASSESSEE CO MPANY. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE COMP ANY HAD HARDLY ANY BUSINESS ACTIVITY AND THAT THERE WERE NO ACCUMU LATED RESERVES WHICH WOULD MERIT THE ASSESSEE COMPANY RECEIVING ADVA NCES FOR SHARES. THE ASSESSING OFFICER ALSO NOTED THAT IN TH E BANK ACCOUNTS OF THE COMPANIES, THE DEBIT ENTRIES WERE MOSTLY THE SAME AS THE CREDIT ENTRIES, WHICH CREATED A SUSPICION ABOUT THE GENUINENESS OF THE TRANSACTIONS AND THE IDENTITY AND CREDITWORTHINE SS OF THE LENDING COMPANIES. THE ASSESSEE COMPANY DID FILE CONFIRMATIONS FROM THE VARIOUS COMPANIES REGARDING ADVANCES RECEI VED BY IT BUT THE ASSESSING OFFICER WAS OF THE OPINION THAT IDENTI TY AND THE CREDITWORTHINESS COULD NOT BE ESTABLISHED BECAUSE TH ERE WAS NON- COMPLIANCE TO THE NOTICES ISSUED U/S 133(6) OF THE ACT AND ALSO BECAUSE NOTICES WERE RECEIVED BACK IN SOME OF THE CA SES. BASED 4 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. ON THESE OBSERVATIONS, THE ASSESSING OFFICER CONCLU DED THAT ALL THE 19 COMPANIES WERE MERELY PAPER ENTITIES CREATED BY THE ASSESSEE COMPANY. THE ASSESSING OFFICER ALSO WAS OF THE OPIN ION THAT THE ONUS U/S 68 OF THE ACT WAS NOT SUFFICIENTLY DISCHARG ED BY THE ASSESSEE COMPANY BY WAY OF ESTABLISHING THE IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS RELATING TO ADVANCE AGAINST SHARES. THE ASSESSING OFFICER PROCE EDED TO TREAT THE ENTIRE AMOUNT OF RS.6,30,46,500/- AS UNEXPLAINE D CASH CREDIT U/S 68 OF THE ACT AND COMPLETED THE ASSESSMENT AT RS.6,30,46,500/-. 2.1 AGGRIEVED, THE ASSESSEEE APPROACHED THE LD. F IRST APPELLATE AUTHORITY CHALLENGING THE ADDITION. THE A SSESSEE ALSO MOVED APPLICATION BEFORE THE LD. FIRST APPELLATE AU THORITY TO ADMIT ADDITIONAL EVIDENCE UNDER RULE-46A OF THE INCOME TA X RULES, 1962. REMAND REPORT WAS CALLED FOR BY THE LD. CIT (A) WITH RESPECT TO THE ADDITIONAL EVIDENCE AND, THEREAFTER, CONSIDERING TH E REJOINDER OF THE ASSESSEE TO THE REMAND REPORT, THE LD. CIT (A) ADMI TTED ADDITIONAL EVIDENCES AND, THEREAFTER, BASED ON SUCH EVIDENCES DIRECTED THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 5 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. 2.2 NOW, THE DEPARTMENT IS BEFORE THIS TRIBUNAL C HALLENGING THE DELETION OF RS.6,30,46,500/- BY THE LD. CIT (A) ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE A DDITION OF RS.6,30,46,500/- MADE U/S 68 OF THE INCOME TAX ACT, 1961. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE AD DITION OF RS.6,30,46,500/- U/S 68 OF THE INCOME TAX ACT, 1961 HOLDING THAT THE ASSESSEE HAS DISCHARGED ITS ONUS I N EXPLAINING THE CREDITS IN THE BOOKS OF ACCOUNT WITH OUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THE ALLEGED CREDITORS AND GENUINENESS OF THE TRANSACTIONS. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3.0 THE LD. SR. DR SUBMITTED THAT IN THIS CASE THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED ADVANCES AGAINST SHARE S FROM 19 COMPANIES BUT NONE OF THE PARTIES TO WHOM NOTICES U/ S 133(6) OF THE ACT WERE ISSUED HAVE GIVEN ANY CONFIRMATION IN RESPONSE THERETO AND IN FACT IN CASE OF FIVE COMPANIES SUCH NOTICES WERE RETURNED UN-SERVED BY THE POSTAL DEPARTMENT. IT WAS SUBMIT TED THAT, THUS, 6 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. IT WAS APPARENT THAT THESE COMPANIES WERE SIMPLY PAP ER COMPANIES AND THE IDENTITY, CREDITWORTHINESS AS WELL AS GENUIN ENESS IN ALL THE TRANSACTIONS WAS ABSENT. IT WAS ALSO SUBMITTED BY THE LD. SR. DR THAT THE ASSESSEE COMPANY HAD NO BUSINESS ACTIVITY AND THAT THE DIRECTORS OF THE ASSESSEE COMPANY WERE ALSO DIRECTOR S OF THE LENDING COMPANIES. THE LD. SR. DR ALSO SUBMITTED T HAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD BEEN GIVEN NUME ROUS OPPORTUNITIES BUT THE ASSESSEE DID NOT AVAIL THE SA ME AND IT WAS ONLY LATER THAT THE ADDITIONAL EVIDENCES WERE FILED BEFORE THE LD. CIT (A). IT WAS FURTHER SUBMITTED THAT THAT IT WAS A CASE WHERE THE CORPORATE VEIL NEEDED TO BE LIFTED TO ASCERTAIN THE ACTUAL TRANSACTION AND BRING TO IT TAX. THE LD. SR. DR ARGUED THAT THE LD. CIT (A) HAD NOT GIVEN ANY CONCRETE FINDING ON THE GENUINENESS O F THE TRANSACTIONS. THE LD. SR. DR PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF PCIT VS. NRA IRON & STEEL (P.) LTD. [2019] 412 ITR 161 (SC) WHEREIN THE HONBLE APEX COURT HAD HELD THAT WHERE THERE WAS A FAILURE OF THE ASSESSEE TO EST ABLISH THE CREDITWORTHINESS OF THE INVESTORS COMPANIES, THE ASS ESSING OFFICER WAS JUSTIFIED IN MAKING ADDITIONS U/S 68 FOR SHARE C APITAL/ SHARE 7 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. PREMIUM. THE HONBLE APEX COURT HAD HELD THAT MEREL Y BECAUSE THE ASSESSEE COMPANY HAD FILED ALL THE PRELIMINARY EVID ENCES, IT COULD NOT BE SAID THAT THE ONUS ON THE ASSESSEE TO ESTABL ISH THE CREDITWORTHINESS STOOD DISCHARGED. THE SR. DR ALSO P LACED RELIANCE ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. NDR PROMOTERS PVT. LTD. REPORTED IN [2019] 410 ITR 379 (DELHI) WHEREIN IT HAD BEEN HELD BY THE HONBLE DELHI COURT THAT WHERE THE ASSESSING OFFICER HAD MADE ADDITIONS TO ASSESSEES INCOME U/S 68 IN RESPECT OF AMOUNT RECEIVED AS SHARE CAPITAL FROM SEVERAL COMPANIES, IN VIEW OF THE FACT THAT ALL THESE COMPAN IES WERE MANAGED BY ONE PERSON ONLY, WHO WAS ENGAGED IN PROVID ING ACCOMMODATION THROUGH PAPER COMPANIES AND ALL SUCH COMPANIES WERE LOCATED AT THE SAME ADDRESS, THE IMPUGNED ADDIT ION WAS JUSTIFIED. THE LD. SR. DR PRAYED THAT THE ADDITION DELETED BY THE LD. CIT (A) DESERVED TO BE RESTORED. 4.0 IN RESPONSE, THE LD. AR SUBMITTED THAT THE LD. CIT (A) HAD RIGHTLY DELETED THE IMPUGNED ADDITION. IT WAS SU BMITTED THAT THE ADVANCE AGAINST SHARE CAPITAL HAD BEEN RECEIVED FROM THE 19 8 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. COMPANIES WHICH WERE GROUP COMPANIES AND WERE DULY A SSESSED TO TAX. IT WAS SUBMITTED THAT THE SHARE APPLICATION MON EY HAD BEEN RECEIVED THROUGH BANKING CHANNELS AND COMPLETE DETA ILS IN RESPECT OF SHARE APPLICATION MONEY RECEIVED HAD BEEN FURNIS HED BEFORE EITHER OF THE LOWER AUTHORITIES I.E., THE ASSESSING OFFICER OR THE LD. CIT (A). IT WAS FURTHER SUBMITTED THAT THE SHARE AP PLICANTS HAD RESPONDED TO THE ASSESSING OFFICER IN THE REMAND PR OCEEDINGS AND CONFIRMED THE TRANSACTIONS WHICH CONTROVERT THE FIND INGS OF THE ASSESSING OFFICER THAT SHARE APPLICANTS WERE PAPER C OMPANIES WHICH WERE NON- EXISTENT. IT WAS ALSO SUBMITTED THAT THE A SSESSING OFFICER HAD COMPLETED THE ASSESSMENT IN RESPECT OF MOST OF THE LENDING COMPANIES AND THERE WAS NO ADVERSE REMARKS BY THE AS SESSING OFFICER IN ANY OF THE SAID ASSESSMENTS. IT WAS FURT HER ARGUED THAT THERE IS NO ALLEGATION AGAINST ANY OF THE COMPANIES THAT THEY WERE ACCOMMODATION ENTRIES PROVIDERS. IT WAS ALSO SUBMITT ED THAT THE CASE LAWS RELIED UPON BY THE SR. DR WERE PERTAINING TO ENTRY PROVIDERS AND, THEREFORE, THESE CASE LAWS CANNOT BE RELIED UPON IN THE PRESENT CASE. THE LD. AR ALSO SUBMITTED THAT TH E ADVANCE RECEIVED AGAINST SHARES WAS RETURNED IN MARCH, 2019 I.E. IN THE 9 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. IMMEDIATELY SUCCEEDING YEAR AND, THEREFORE, IT CANN OT BE SAID THAT THE TRANSACTIONS WAS NOT GENUINE. THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THAT IN THIS CASE, TH E IMPUGNED TRANSACTIONS STOOD EXPLAINED IN VIEW OF THE VARIOUS DOCUMENTS AND RESPONSES SUBMITTED BY THE PARTIES EITHER BEFORE TH E ASSESSING OFFICER OR BEFORE THE LD. FIRST APPELLATE AUTHORITY AND, THEREFORE, THE LD. CIT (A), AFTER DULY CONSIDERING ALL THE EVIDENC ES, HAD RIGHTLY ALLOWED THE ASSESSEES APPEAL. THE LD. AR PRAYED TH AT THE ORDER OF THE LD. CIT (A) BE UPHELD. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAD SUBMITTED COMPLETE DETA ILS OF THE LENDERS BEFORE THE ASSESSING OFFICER. HOWEVER, WHEN THE ASSESSING OFFICER MADE ENQUIRIES BY ISSUING NOTICES TO EACH O F THE LENDERS U/S 133(6) OF THE ACT, NO RESPONSE WAS RECEIVED AND NOTI CES IN 5 OF THE 19 COMPANIES WERE RETURNED UN-SERVED. HOWEVER, TH E ASSESSEE FURNISHED ADDITIONAL EVIDENCES BEFORE THE LD. CIT ( A) UNDER RULE- 46A OF THE INCOME TAX RULES, 1962 AND THE LD. CIT ( A) DULY CALLED 10 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. FOR REMAND REPORT FROM THE ASSESSING OFFICER SEEKIN G HIS COMMENTS ON THE ADDITIONAL EVIDENCES SUCH FILED. IT HAS BEEN ONLY AFTER CONSIDERING THE COMMENTS OF THE ASSESSING OFFICER T HAT THE LD. CIT (A) HAS ACCEPTED THE ASSESSEES CONTENTION THAT THE SE WERE GENUINE LOANS AND, THEREAFTER, THE ASSESSEE WAS GIVEN RELIE F. IT IS ALSO TO BE NOTED THAT ALL THE FIVE COMPANIES FROM WHOM THE NOTI CES WERE RETURNED UN-SERVED IN THE ORIGINAL ASSESSMENT PRO CEEDINGS RESPONDED DIRECTLY THIS TIME DURING THE REMAND PROC EEDINGS. THEREFORE, IT CANNOT BE SAID THAT THEIR IDENTITY OR GENUINENESS CAN BE DOUBTED. THESE COMPANIES HAVE DULY CONFIRMED THA T THEY HAVE MADE THE ADVANCE TO THE ASSESSEE COMPANY. IT IS ALS O SEEN THAT THE BANK STATEMENTS AND INCOME TAX RETURNS OF THESE COM PANIES ARE ALSO ON RECORD. THUS, FROM THE EVIDENCES ON RECORD, THE IDENTITY AND EXISTENCE OF THE LENDERS CANNOT BE DOUBTED AS REPLI ES HAVE BEEN RECEIVED IN RESPONSE TO NOTICES ISSUED U/S 133(6) O F THE ACT. BY PLACING ON RECORD, THE BANK ACCOUNTS PARTICULARS, P AN NO., INCOME TAX RETURNS AND FINANCIALS ETC., THERE IS A PRIMA F ACIE MATERIAL TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TR ANSACTIONS. THEREFORE, KEEPING IN VIEW THE ABOVE POSITION, WE ARE OF THE 11 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. CONSIDERED OPINION THAT THERE IS NO INFIRMITY IN TH E ORDER OF THE LD. CIT (A) VIDE WHICH AFTER CONSIDERING ALL THESE EVIDE NCES, HE HAS DELETED THE IMPUGNED ADDITION. IN OUR CONSIDERED OP INION, THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING IDENTIT Y OF THE LENDERS, GENUINENESS OF THE TRANSACTIONS AS WELL AS CREDITOR S. IT ALSO TO BE NOTED THAT THE ASSESSMENTS OF THESE LENDING COMPANI ES HAVE ALSO BEEN COMPLETED AND ORDERS OF THE SAME ARE ON RECORD AND NOTHING ADVERSE HAS BEEN FOUND OR POINTED OUT IN THESE ASSE SSMENT ORDERS. AS FAR AS THE DECISION RELIED UPON BY THE LD. SR. D R IN THE CASE OF NRA IRON& STEEL (P.) LTD. ( SUPRA ) IS CONCERNED, WE MAY MENTION THAT THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIFFEREN T FROM THE FACTS OF THE SAID CASE. IN THE SAID CASE NONE OF THE SHARE A PPLICANTS PRODUCED THE BANK STATEMENT TO ESTABLISH THE SOURCE OF FUNDS FOR MAKING THE HUGE INVESTMENT IN SHARES EVEN THOUGH TH EY WERE DECLARING A VERY MEAGER INCOME IN THEIR RETURNS AND MANY OF THE SHARE APPLICANTS WERE FOUND NON-EXISTENT AT THE ADDR ESSES PROVIDED BY THE ASSESSEE. HOWEVER, IN THE PRESENT CASE THE R EPLIES HAVE BEEN RECEIVED IN RESPONSE TO ALL THE NOTICES SENT U/S 13 3(6) OF THE ACT. COPIES OF THEIR ITRS, COPY OF THEIR FINANCIALS AND COPY OF THEIR BANK 12 ITA NO.4792/DEL/2015 ITO VS. M/S CEE AAR DE CORS PVT. LTD. ACCOUNTS OF THE APPLICANT COMPANIES ARE ALSO ON REC ORD. THUS, THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THE CA SE-LAW RELIED UPON BY THE LD. SR. DR. SIMILARLY, THE OTHER CASE LAWS BE ING RELIED UPON BY THE DEPARTMENT ARE ALSO ON A DIFFERENT FOOTING A LTOGETHER AND WE ARE AFRAID THAT THEY DO NOT HELP THE DEPARTMENTS C AUSE IN ANY WAY. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT (A) WA S CORRECT IN DELETING THE ADDITION AND IMPUGNED ORDER DOES NOT C ALL FOR ANY INTERFERENCE BY THIS TRIBUNAL. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED ON 31/08/2020. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:31/08/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI