PSB Impex, LLP, New Delhi V. ITO, Ward-19(2), New Delhi

ITA 4858/DEL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0128 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJOG KAPOOR
• Keywords: Unexplained cash credit; Opportunity of cross examination
• Section: 131; 68; 143(3); 133(6); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI , MS. SUSHMA CHOWLA, JUDICIAL MEMBER / ITA NO- 4858/DEL/2018 / ASSESSMENT YEAR: 2015-16 M/S PSB IMPEX, LLP (I.E. SUCCESSOR/L/H OF .......... /APPELLANT M/S PSB IMPEX (P) (LTD.) D-981, NEW FRIENDS COLONY NEW DELHI PAN-AAECP4002C VS INCOME TAX OFFICER WARD-19(2), NEW DELHI . ! / RESPONDENT '#$ / APPELLANT BY : SH. SOMIL AGGRAWAL, AD : SH. DR. RAKESH GUPTA, ADV !'#$ / RESPONDENT BY :SH. SANJOG KAPOOR, SR. DR %&''() / DATE OF HEARING : 04.12.2019 *+ ''() / DATE OF PRONOUNCEMENT: 31.12.2019 / ORDER PER SUSHMA CHOWLA, JM THE APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER O F CIT(A)-7, NEW DELHI, DATED 18.05.2018 RELATING TO ASSESSMENT YEAR 2015-16 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL WHICH READ AS UNDER:- / ITA NO- 4858/DEL/2018 PAGE | 2 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN IGNORING THAT IMPUGNED ASSESSMENT ORDER IS NULLITY AND VOID-AB- INITIO SINCE THE SAME WAS PASSED UPON NON EXISTING ENTITY AND THEREFORE LD. CIT(A) OUGHT TO HAVE QUASHED THE ASSE SSMENT ORDER ON THIS GROUND ITSELF. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, THE IMPUGNED ASSESSMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT(A) ARE ILL EGAL AND VOID-AB-INITIO AND DESERVES TO BE QUASHED. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN OBSERVING THAT GENUINE NESS OF LOAN RECEIVED BY THE ASSESSEE COMPANY IS NOT ESTABLISHED AND THEREFORE A DDITION MADE BY THE LD. AO SHOULD BE SUBSTANTIAL, AND NOT PROTECTIVE AS WAS DONE BY LD. AO. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN TREATING THE ADDITION AS SUBSTANTIAL THAT TOO WITHOUT GRANTING OPPORTUNITY OF HEARING IN THIS REG ARD. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.20,00,000/- ON ACCOUNT OF LOAN RECEIVED FROM M/S AARTI SECURITIES AND SERVICES LTD. BY TREATING IT AS ALLEGED UNEXPLAINED CASH CREDIT U/S 68 BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT PROVIDING THE ENTIRE ADVERSE MATERIAL AVAILABLE ON RECORD AND WITHOUT PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION AND IN VIOLATION OF PRINCIPLES OF NATUR AL JUSTICE. 3. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSE E IS NOT PRESSED, HENCE THE SAME IS DISMISSED AS NOT PRESSED. 4. THE ISSUE RAISED IN THE GROUND OF APPEAL NOS. 2 TO 6 IS AGAINST THE ADDITION OF RS. 20,00,000/- UNDER SECTION 68 OF THE ACT. 5. BRIEFLY IN THE FACTS OF THE CASE, THE ASSESSEE H AD FILED RETURN OF INCOME DECLARING LOSS OF RS. 13,736/-. THE CASE OF THE ASS ESSEE WAS PICKED UP FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE AO NOTED THAT THE ASSESSEE HAD RECEIVED LOANS FROM DIFFERENT PARTIES TOTALING RS. 78,00,000/-. THE ASSESSEE WAS ASKED TO PROVIDE THE DETAILS OF TH E SAME. THE AO ALSO ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT AND THE STATEMENTS UNDER SECTION 131 OF THE ACT WERE RECORDED. THE AO FURTHE R OBSERVED, FROM THE / ITA NO- 4858/DEL/2018 PAGE | 3 STATEMENTS RECORDED, IT IS NOTICED THAT ASSESSMENT OF M/S AARTI SECURITIES AND SERVICES PVT. LTD. FOR AY 2014-15 HAS BEEN COMPLETE D U/S 143(3) DATED 29.12.2016 WHEREIN COMPLETE SHARE APPLICATION MONEY INCLUDING PREMIUM HAS BEEN ADDED BACK U/S 68 OF THE IT ACT, 1961. ACCORDI NGLY, IN THE ORDER TO SAFEGUARD THE INTEREST OF REVENUE, AN AMOUNT OF RS. 20,00,000/- RECEIVED BY THE ASSESSEE FROM M/S AARTI SECURITIES AND SERVICES PVT. LTD., IN THE FORM OF LOANS AND ADVANCES IS ADDED BACK TO THE INCOME OF T HE ASSESSEE ON PROTECTIVE BASIS U/S 68 OF THE IT ACT, 1961. 6. THE LEARNED CIT(A) HELD THAT EVEN THOUGH IDENTIT Y IS ESTABLISHED THE CLOUDED STATUS OF THE LENDER RAISES DOUBTS ABOUT TH E CREDITWORTHINESS AS WELL AS GENUINENESS OF THE PARTY. IT IS FURTHER HELD THAT I AM OF THE CONSIDERED VIEW THAT MERELY SUBMISSION OF THE NAME AND ADDRESS OF T HE SHARE SUBSCRIBER, INCOME TAX RETURNS, BALANCE SHEET/STATEMENT OF AFFA IRS OF THE SHARE SUBSCRIBER AND BANK STATEMENT IS NOT SUFFICIENT AS THE AO IS T O BE SATISFIED AS TO THEIR IDENTITY AND CREDITWORTHINESS AS WELL AS TO THE GEN UINENESS OF THE TRANSACTION ENTERED INTO. THE ALLEGED SHARE HOLDERS WERE NOT FOUND TO BE GEN UINE AND THUS, THE ONUS SHIFTS BACK TO THE APPELLANT TO PROD UCE THE SHAREHOLDERS BEFORE THE AO AND IF THE APPELLANT FALTERS, THE ADD ITIONS CAN BE MADE U/S 68 OF THE ACT. HENCE THE ADDITION WAS CONFIRMED IN THE HANDS OF THE ASSESSEE, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED AR FOR THE ASSESSEE TOOK US THROUGH THE VARIOUS DOCUMENTS/EVIDENCES WHICH WERE FILED BEFORE THE AUT HORITIES BELOW AND POINTED OUT THAT THE ASSESSEE HAD ESTABLISHED THE C REDITWORTHINESS OF THE / ITA NO- 4858/DEL/2018 PAGE | 4 PERSON AND IN SUCH CIRCUMSTANCES, NO ADDITION IS WA RRANTED IN THE HANDS OF THE ASSESSEE. 8. THE LEARNED DR FOR THE REVENUE PLACED RELIANCE O N THE ORDERS OF THE AUTHORITIES BELOW. 9. ON THE PERUSAL OF THE RECORD AND AFTER HEARING B OTH THE AUTHORIZED REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRES ENT APPEAL IS AGAINST THE ADDITION MADE UNDER SECTION 68 OF THE ACT. THE ASSE SSEE CLAIMS THAT IT HAD RECEIVED SUM OF RS. 20 LACS FROM M/S ARTI SECURITIE S AND SERVICES PRIVATE LIMITED AS LOANS AND ADVANCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED VARIOUS DOCUMENTS IN ORDER TO ES TABLISH THE IDENTITY, CREDITWORTHINESS OF THE SAID PARTY AND IN ORDER TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. THE COPY OF THE INCOME TAX RETU RN FILED FOR THE CAPTIONED ASSESSMENT YEAR BY M/S ARTI SECURITIES AND SERVICES PRIVATE LIMITED IS PLACED AT PAGE 3 ALONGWITH COMPUTATION OF INCOME AT PAGES 4 TO 6 OF THE PAPER BOOK. THE COPY OF THE AUDITED BALANCE-SHEET OF PROFIT & L OSS ACCOUNT ETC., ARE PLACED AT PAGES 11 TO 25 OF THE PAPER BOOK. IN ORDER TO PR OVE THE EXISTENCE OF THE SAID COMPANY, THE ASSESSEE ALSO FILED INFORMATION FROM R OC REGISTRAR OF COMPANIES WHEREIN THE SAID CONCERN HAD INTIMATED IT S CHANGE IN THE ADDRESS OF THE REGISTERED OFFICE FROM GHAZIABAD TO NOIDA W. E.F. 7.7.2016. OTHER DOCUMENTS WHICH WERE FILED INCLUDING THE BANK STATE MENT FROM WHICH THE DEBIT OF RS. 20 LACS WAS MADE, WHICH IS PLACED AT P AGE 32 OF THE PAPER BOOK. COPY OF THE CONFIRMATION IS PLACED AT PAGE 34 OF TH E PAPER BOOK. THE AO SOUGHT INFORMATION FROM THE SAID PERSON DIRECTLY AN D THE COPY OF THE REPLY / ITA NO- 4858/DEL/2018 PAGE | 5 ALONGWITH THE CONFIRMATION, BANK STATEMENT AND THE ITR FILED BY THE SAID PARTY ARE PLACED AT PAGES 59 TO 62 OF THE PAPER BOO K. THE STATEMENT OF THE DIRECTOR SHRI. ARUN SHARMA WAS RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS FURTHER PLACED AT PAGES 63 TO 65 OF THE PAPER BOOK. BOTH THE AUTHORITIES HAVE ADMITTED THAT THE ASSESSEE EST ABLISHED THE IDENTITY OF THE CREDITOR BUT HIS CREDITWORTHINESS WAS NOT ACCEPTED AND HENCE THE ADDITION. THERE IS NO MERIT IN THE AFORESAID ADDITION MADE IN THE HANDS OF THE ASSESSEE WHEREIN THE ASSESSEE HAD FURNISHED COMPLETE DETAILS TO ESTABLISH THE IDENTITY OF THE CREDITOR AND ALSO THE CREDITWORTHINESS OF TH E SAID CREDITOR. IT MAY BE POINTED OUT THAT HEREIN ITSELF THAT THE SAID CREDIT OR IS DULY ASSESSED TO TAX AND IN SUCH FACTS AND CIRCUMSTANCES, THERE IS NO MERIT IN NOT ACCEPTING THE CREDITWORTHINESS OF THE CREDITOR, ESPECIALLY WHERE THE STATEMENT OF THE DIRECTOR WAS ALSO RECORDED AND IT WAS ACCEPTED THAT THE COMPANY HAD ADVANCED SUM OF RS. 20 LACS TO THE ASSESSEE IN THE FINANCIAL YEAR 2014-15. ACCORDINGLY, THE ADDITION MADE BY THE AO OF RS. 20 LACS IS DELETED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS A LLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF DECEMBER, 2019. SD/- (SUSHMA CHOWLA) - - - - /JUDICIAL MEMBER / DATED : 31 ST DEC, 2019 SH / ITA NO- 4858/DEL/2018 PAGE | 6 $,' './$.'0 COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT 3. %1 2 3 / THE CIT(A) 4. %4 %1 / THE PR. CIT 5. 6. .56 ' / DR, ITAT, DELHI 678&0 GUARD FILE. $,% $,% $,% $,% / BY ORDER , !.' ' // TRUE COPY // :;-< , ASSISTANT REGISTRAR, ITAT, DELHI