DCIT, Central Circle, Noida V. YPT Entertainment House P. Ltd., Patiala

ITA 4949/DEL/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7825 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 11-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Document seized; Documents seized; Set aside
• Section: 68; 132; 143(3); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. AMIT SHUKLA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA Nos. 4946 & 4949/Del/2018 (Assessment Years : 2011-12 & 2014-15) DCIT Central Circle Noida PAN : AAACY 2718 C Vs. YPT Entertainment House Pvt. Ltd., 1696/3B, Back Side Old Police Lines, Ghee Wali Gali, Patiala – 147 001 (APPELLANT) (RESPONDENT) CO Nos. 161 & 164/Del/2019 (Assessment Years : 2011-12 & 2014-15) YPT Entertainment House Pvt. Ltd., 1696/3B, Back Side Old Police Lines, Ghee Wali Gali, Patiala – 147 001 Vs. DCIT Central Circle Noida (APPELLANT) (RESPONDENT) Assessee by Shri Ved Jain, Adv. Shri Ashish Sachdeva, C.A. Revenue by Shri T. Kipgen, CIT-D.R. Date of hearing: 22.02.2022 Date of Pronouncement: 28.02.2022 2 ORDER PER ANIL CHATURVEDI, AM: These appeals by the Revenue and cross objection (CO) by the assessee are preferred against the very same order of the Commissioner of Income Tax (Appeals)-IV, Kanpur dated 25.04.2018 pertaining to Assessment Years 2011-12 & 2014-15. 2. Before us, at the outset, both the parties submitted that the issues raised in both the appeals of Revenue and CO of the assessee are identical. In view of the aforesaid submissions, we for the sake of convenience proceed to dispose of both the appeals and CO by a consolidated order but however refer to the facts for A.Y. 2009-10. 3. The relevant facts as culled from the material on records are as under: 4. Assessee is a company stated to be engaged in television and other entertainment activities. AO has noted that a search and seizure operation u/s 132 of the Act was conducted on 27.11.2014 in the case of Maconns, Meenu and Yadav Singh Group Noida covering its business premises and residences of Director, their family members and other business associates concern and other key persons. During the course of search operation at the residence of Shri Abhay Maheshwari at New Delhi, a laptop was found and seized. On scanning of seized data, 3 it was found that M/s. Golf Link Hospitality Pvt. Ltd. has obtained unsecured loan, share application money and share capital from various doubtful entities, assessee being one of them. Accordingly, notice u/s 153C of the Act was issued on 28.06.2016 and in response to which assessee filed the return of income on 29.09.2011 declaring total income of Rs.4,49,330/-. Thereafter case was taken up for scrutiny and assessment was framed u/s 153C r.w.s 143(3) of the Act and the total income was determined at Rs.14,57,28,670/-. 5. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who by consolidated order for A.Y. 2009-10 to 2014- 15 in Appeal No.CIT(A)-IV/11307, 11309, 11313, 11317, 11323 & 11324/DCIT-CC-Noida/2016-17 granted partial relief to the assessee. 6. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following grounds of appeals: “1. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law while holding that there was no incriminating material for the issuance of notice u/s 153C, without appreciating that in the satisfaction note the AO had clearly brought out all the facts and circumstances, which indicated that the names of the entities including the assessee, appearing on seized documents pertaining to Golf Link Hospitality Pvt. Ltd. were in the nature of accommodation entries only for routing the undisclosed income of Yadav Singh Group and hence such documents constituted “incriminating material” for the purpose of the issue of notice u/s 153C in the context of assessee. 4 2. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law while holding that the seized balance sheet of Golf Link Hospitality Pvt. Ltd. did not constitute “incriminating material” on grounds that the balance sheet was part of regular books, without appreciating that since all the searched entities of the Yadav Singh Group were found to be engaged in routing the unaccounted funds by layering through various entities including assessee, controlled by them as mentioned in the satisfaction note, therefore the mere fact that the entries were recorded in regular balance sheet of the beneficiary could not by itself allow the treatment of such seized documents as non-incriminating in the context of entities providing accommodation entries i.e. assessee as the expression used in 153C is “in relation to” person other than the searched person. 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law while holding that the seized balance sheet of Golf Link Hospitality Pvt. Ltd. did not constitute “incriminating material” on grounds that the balance sheet was part of regular books, without appreciating that whether the material is incriminating or not, is to be seen in context of totality of facts and circumstances and in the context of the person in whose hands such entries in the document represent the unexplained income. 4. Whether on facts and circumstances of the case and in law, the Ld. CIT (A) erred in law while holding that there was no incriminating material for the issuance of notice u/s 153C, without appreciating that while recording the satisfaction for issue of 153C the test for “incriminating material” has to be only in nature of prima facie belief based on some material having live nexus and not in the nature of absolute evidence established after detailed investigation of facts or law. 5. Whether on facts and circumstances of the case and in law, the Ld. CIT (A) erred in law while holding that there was no incriminating material found during the search for the issuance of notice u/s 153C, without appreciating that he himself accepted that for AY. 2011-12 the satisfaction recorded in respect of loan entry of 45 lacs to Golf Link 5 Hospitality Pvt. Ltd. as per seized documents, was factually correct to that extent. 6. Whether on facts and circumstances of the case and in law, the Ld. CIT (A) erred in applying the decision of the Hon’ble Supreme Court in the case of M/s Sinhgad Technical Education Society, which was distinguishable on the facts of the present case. 7. The order of the CIT (A) is erroneous in law and on facts of the case and is liable to be set aside and the order of the AO be restored.” 7. Similar grounds have been raised by Revenue in ITA No.4949/Del/2018 for A.Y. 2014-15. 8. Assessee in the CO No. 161/Del/2019 for Assessment Year 2011-12 has raised the following grounds: 1. “On the facts and circumstances of the case, the order passed by the learned CIT (A) is bad both in the eyes of law and facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not adjudicating and dismissing the grounds raised on merits of the additions made by the AO treating the same as infructuous. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not adjudicating the ground that the AO has erred in making an addition under section 68 of the Income Tax Act on account of share capital amounting to Rs. 14,61,78,000/- treating the same as unexplained investment. 4. That the respondent craves leave to add, amend or alter any of the grounds of appeal.” 9. Similar grounds have been raised by assessee in CO No.164/Del/2019 for A.Y. 2014-15. 6 10. Before us, at the outset, Learned AR submitted that if the appeals of Revenue are dismissed then the assessee does not wish to press the Cross Objections. 11. Before us, at the outset, Learned DR submitted that though the various grounds have been raised by the Revenue but the sole grievance of the Revenue is setting aside of the order passed by AO u/s 153C of the Act. 12. Before us, Learned DR pointing to the observations of the CIT(A) submitted that during the year under consideration, assessee had raised money in the form of share capital including premium amounting to Rs.14,56,28,000/- from various persons listed under Para 7 of the order. AO had concluded that the receipt of money in the form of share capital was the case of rotation of money through bogus entities and paper company and the amount was finally brought into the books of account of beneficiary through the banking channel and thus the AO held that genuineness of the transactions to be not verifiable and accordingly made the additions. He submitted that CIT(A) had erred in quashing the assessment order passed by AO. 13. Learned AR on the other hand submitted that proceedings u/s 153C of the Act was initiated against the assessee by issuing notice u/s 153C of the Act. He submitted that the reasons for issuance of notice was that assessee had given unsecured loan to the M/s. Golf Link Hospitality Pvt. Ltd. He submitted that 7 assessee had not provided unsecured loan to M/s. Golf Link Hospitality Pvt. Ltd. but the transaction was in fact an investment in share capital of M/s. Golf Link Hospitality Pvt. Ltd. amounting to Rs.45,00,000/-. He submitted that the amount had already been shown in the books of accounts of the assessee and the AO had accepted the same and no adverse inference was drawn by the AO with respect to the transaction of the M/s. Golf Link Hospitality Pvt. Ltd. He submitted that during the year under consideration assessee had received share capital including premium amounting to Rs.14,61,78,000/- from various parties which was added by the AO and submitted that the addition was made despite no incriminating material being found during the course of search. He submitted that the addition made by AO were not emanating from any incriminating material found during the course of search and CIT(A) had rightly following the decision of Hon’ble Apex Court in the case of PCIT vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) quashed the assessment. He thus supported the order of CIT(A). 14. We have heard the rival submissions and perused the materials available on record. The issue in the present appeal is with respect to the quashing of the assessment order passed by AO u/s 153C of the Act. We find that CIT(A) after considering the submissions of the assessee, remand the report from the AO and assessee’s reply to the remand report has given a finding that the satisfaction note, the basis on which the proceedings u/s 153C against the assessee were initiated, was on the basis of the 8 investment made by assessee in M/s. Golf Link Hospitality Pvt. Ltd. He has given a finding that AO had noted in the satisfaction note that assessee had invested Rs.45,00,000/- each in A.Y. 2011-12 & 2012-13 but the factual position was that investment exist only in A.Y. 2011-12 and thus there was no satisfaction of the AO for other year than 2012-13 u/s 153C of the Act. He has further given a finding that even for A.Y. 2011-12, the satisfaction recorded were not based on incriminating document found as a result of search, all the additions made by the AO were either of the items reflected in the Balance Sheet or Profit and Loss account of the assessee. He has further noted that no addition was made by AO on the basis of any incriminating material found and the addition made by AO did not co-relate with satisfaction noted by him. He thereafter relying on the decision of Hon’ble Apex Court in the case of Sinhgad Technical Education Society (supra) held the notice issued u/s 153C of the Act to be void ab initio invalid and legal not sustainable and therefore annulled the assessment order. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor Revenue has pointed to any contrary binding decision in its support. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the grounds of Revenue are dismissed. 15. As far as ITA No. 4949/Del/2018 for A.Y. 2014-15 is concerned, before us, both the parties have submitted that the issue raised in the appeal for A.Y. 2014-15 is identical to that of A.Y. 2011-12. We have hereinabove while deciding the appeal for 9 A.Y. 2011-12 for the reasons stated therein have dismissed the appeal of the Revenue. We for similar reasons also dismiss the appeal of the Revenue for A.Y. 2014-15. Thus the grounds of the Revenue are dismissed. 16. Since, we have dismissed the Revenue’s appeal, as submitted by Learned AR, the Cross Objections of the assessee raised in A.Y. 2011-12 & A.Y. 2014-15 are also dismissed as not pressed. 17. In the combined result, the appeals of Revenue are dismissed and Cross Objections of assessee are also dismissed. Order pronounced in the open court on 28.02.2022 Sd/- Sd/- (AMIT SHUKLA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 28.02.2022 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI