ACIT, New Delhi V. Panchanan International (P) Ltd., New Delhi

ITA 50/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65883 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-09-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 05-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Corroborative evidences; Accommodation entries
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.50/DEL/2011 ASSESSMENT YEAR : 2002-03 ACIT, PANCHANAN INTERNATIONAL (P) LTD., CIRCLE-14 (1), 13/8, WEA, KAROL BAGH, NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AACCP AACCP AACCP AACCP- -- -8575 8575 8575 8575- -- -C CC C APPELLANT BY : SHRI SANJAY JAIN, CIT-DR. RESPONDENT BY : SHRI VED JAIN, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 29.10.2010. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN DELETING THE ADDITION OF ` .10,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 . 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN IGNORING THE FACT THAT THE JUDGM ENT OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS ( P) LTD. 216 CTR 199 (SC) CANNOT BE EXTENDED TO A SITUATION WHERE A MECHANISM HAS BEEN FORMED TO INTRODUCE UNACCOUNTED M ONEY IN THE BOOKS OF ACCOUNTS WITH THE HELP OF ACCOMMODATIO N ENTRY ITA NO50./DEL/2011 2 PROVIDER WHICH HAS BEEN EXPOSED BY DEEP AND DETAILED INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING O F THE DEPARTMENT. MOREOVER, THE FACTS IN THE PRESENT CASE A RE DISTINGUISHABLE FROM THE ABOVE CITED CASE. 3. THE APPELLANT CRAVES TO THE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRA DING OF GARMENTS. THE RETURN OF INCOME WAS FILED ON 31.10.20 02 DECLARING INCOME OF ` .2,64,740/- . THE CASE WAS PROCESSED U/S 143(1) AT RETUR NED INCOME WHICH HOWEVER WAS REOPENED U/S 147/148 OF THE ACT ON THE BASIS OF A REPORT FROM DIT THAT COMPANY HAD ACCEPTED ACCOMMODATION ENTRIES OF ` .5,00,000/- EACH FROM M/S SHRUTI FINSTOCK LTD. AND M/ S SUMA FINANCE & INVESTMENT LTD. IN THE FORM OF SHARE APPLIC ATION MONEY. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNI SH DETAIL OF SHARE APPLICATION MONEY RECEIVED DURING TH E YEAR ALONG WITH DETAILS OF SHARE APPLICATION MONEY OF ` .10,00,000/- RECEIVED FROM THE ABOVE TWO COMPANIES AND IN RESPONSE THE LD AR OF THE A SSESSEE FILED VARIOUS DOCUMENTS/DETAILS IN RESPECT OF ALL THE SUBSCRIB ERS.THE ASSESSING OFFICER AFTER GOING THROUGH THE VARIOUS DETAI LS HELD THAT AMOUNT OF ` .10,00,000/- RECEIVED FROM THE TWO COMPANIES WAS NOT GENUINE AS THE SAID COMPANIES WERE HELD TO BE AN ENTRY OPERATOR IN EARLIER YEARS. THE LD AR OF THE ASSESSEE WAS ASKED TO PROD UCE DIRECTOR OF THE COMPANY WHICH WAS NOT PRODUCED AND THEREFORE THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF ` .10,00,000/- U/S 68 OF THE ACT. 3. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A) AND SUBMITTED AS UNDER:- A) THAT THE AMOUNT OF ` . 10,00,000/- WAS RECEIVED THROUGH PROPER BANKING CHANNEL AND WERE DULY RECORDED IN THE BOOKS OF ITA NO50./DEL/2011 3 APPELLANT AS WELL AND THE SAID APPLICANTS WERE ALLOTTE D SHARES AND THE RESPECTIVE AMOUNT WAS TRANSFERRED TO SHARE CAP ITAL ACCOUNT AND RETURN OF ALLOTMENT WAS FILED WITH THE R EGISTRAR OF COMPANIES. B) THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED THROUGH LETTERS DATED 15.10.2009 AND 30.11.2009 SHARE APPLICATION FORM, CONFIRMATION, BANK STATEMENTS, COPI ES OF IT RETURN AND BALANCE SHEET AND P&L ACCOUNT OF THE SAID COMPANIES. C) THAT THE ASSESSING OFFICER WITHOUT BRINGING OUT ANY ADV ERSE MATERIAL FROM THE DETAILS FILED ADDED BACK THE AMOUN T OF ` .10,00,000/- INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. D) THAT THE ASSESSING OFFICER HAD MADE ADDITION IGNORING T HE DETAILS FILED BY THE APPELLANT WITH CLOSED EYES. E) THAT ALL EVIDENCES TO PROVE THE IDENTITY AND CREDITW ORTHINESS OF THE APPLICANTS WERE FILED BEFORE ASSESSING OFFICER AND A LSO GENUINENESS OF THE TRANSACTION WAS PROVED. F) THAT THE ASSESSING OFFICER COULD NOT BRING ANY POSITIVE MATERIAL ON RECORD TO ESTABLISH THAT THE MONEY RECEIVED BY THE ASSESSEE ON ACCOUNT OF SHARE CAPITAL EMANATED FROM THE COFFE RS OF THE APPELLANT. RELIANCE WAS PLACED ON THE JUDGMENTS IN TH E FOLLOWING CASES:- 1. CIT V. LOVELY EXPORTS (2008) 216 CTR 195 (SC). 2. CIT V. VALUE CAPITAL SERVICES (P) LTD. 307 ITR 334 ( DEL.). 3. CIT V. STELLER INVESTMENT LTD. (2001) 251 ITR 263 (S C). 4. CIT V. SOPHIA FINANCE LTD. (1983) 205 ITR 98 (DEL.) .(FB). 5. CIT V.ACHAL INVESTMENTS LTD. 268 211 (DEL.). 6. CIT V. DWARKADHISH INVESTMENT (P) LTD. I.T.A. 911/201 0 AND IN I.T.A. NO.913/2010. ITA NO50./DEL/2011 4 4. THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS FI LED BY THE LD AR DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEVANT PARAGRAPH OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- I FIND THAT THE SHARE APPLICANT IS A LIMITED COMPANY WHICH IS A SEPARATE AND LEGAL ENTITY. IT IS ASSESSED TO TAX BY A DI FFERENT ASSESSING OFFICER. THE SHARE APPLICATION MONEY PASSED THRO UGH THE BANKING CHANNELS. THE APPELLANT HAS PROVIDED THE CONFIRMATION LETTER WITH SUPPORTING EVIDENCE, LIKE C OPY OF ACKNOWLEDGMENT OF IT RETURN, PAN, DETAIL BANK STATEM ENT ETC. THE SHARES WERE ALSO ALLOTTED TO THE APPLICANT COMPANY . THE NECESSARY EVIDENCES WERE PROVIDED TO THE ASSESSING OFFICER DURING COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFIC ER HAS NOT MADE ANY INVESTIGATION DURING ASSESSMENT PROCEED INGS. THE ASSESSMENT ORDER WAS PASSED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING. THE ASSESSING OFFICER HAS NOT BROUGHT ANY POSITIVE EVIDENCE ON RECORD TO ESTABLISH T HAT THE SHARE APPLICATION MONEY WAS NOT GENUINE. CONSIDERING THE JUDICIAL PRONOUNCEMENTS QUOTED BY THE APPELLANT, I F IND THAT THE COURTS ARE LIBERAL WITH REFERENCE TO SHARE CAPITAL AP PLIED BY THE PRIVATE LIMITED COMPANIES THAN THE ORDINARY CASH CRED ITORS. IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS, I FIND THAT TH E EVIDENCE FURNISHED BY THE APPELLANT IS SUFFICIENT TO PROVE THE SHARE CAPITAL PAID BY THE AFORESAID COMPANY. AFTER CONSIDERING THE TOTALITY OF ALL THE FACTS AND CIRCUMSTANCES AND JUDICIAL PRONOUNCE MENTS MADE BY THE JURISDICTIONAL DELHI HIGH COURT AND HON' BLE SUPREME COURT, I HOLD THAT THE ADDITION OF ` .10,00,000/- MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. HENCE THE SAME IS DELE TED. 5. AGGRIEVED THE REVENUE FILED APPEAL BEFORE THIS TR IBUNAL. 6. AT THE OUTSET, THE LD AR FILED A COPY OF HON'BLE DELHI HIGH COURT IN THE CASE OF GOEL SONS GOLDEN ESTATE PVT. LTD. AND S UBMITTED THAT ITA NO50./DEL/2011 5 CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE JURISDICTI ONAL HIGH COURT AND ARGUED THAT THE LD CIT(A) HAD RIGHTLY DEL ETED THE ADDITION. 7. ON THE OTHER HAND, THE LD DR RELIED UPON THE ORD ER OF THE ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD ACCEPTED SHARE APPLICATION MONEY OF ` .10,00,000/- THROUGH BANKING CHANNEL AND HAD FILED DETAILS/DOCUME NTS REGARDING THE ABOVE SAID COMPANIES. THE ASSESSING OFFICER WITHOUT G OING INTO THE DOCUMENTS AND WITHOUT CONDUCTING ANY ENQUIRY REJECTE D THE DETAILS AND MADE THE ADDITION. THE LD CIT(A) AFTER GOING TH ROUGH THE SUBMISSIONS MADE BY THE LD AR HAD RIGHTLY DELETED THE A DDITION. THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF GOEL S ONS GOLDEN ESTATE PVT LTD. SQUARELY FITS IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IN THAT CASE, THE ASSESSEE HAD ACCEPTED ` .30 LAKHS AS SHARE APPLICATION MONEY FROM FIVE COMPANIES AND HAD FILED CONFIRMATIONS, PAN NUMBERS, BANK STATEMENT, BALANCE SHEET ETC. WITH T HE ASSESSING OFFICER. THE ASSESSING OFFICER DID NOT CONDUCT ANY ENQU IRIES AND MADE THE ADDITION. THE RELEVANT OBSERVATION OF HON'BLE HI GH COURT ARE REPRODUCED BELOW:- WE HAVE EXAMINED THE SAID CONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMATION LETTERS FROM THE COMPANIES, THEIR PAN NU MBER, COPY OF BANK STATEMENTS, AFFIDAVITS AND BALANCE SHEET. THERE AFTER THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS/PARTIES. ASSESSEE EXPRESSED ITS INABILITY TO PRODU CE THEM. THE ASSESSING OFFICER DID NOT CONSEQUENT THERETO C ONDUCT ANY INQUIRY AND CLOSED THE PROCEEDINGS. THIS IS A CASE W HERE THE ASSESSING OFFICER HAS FAILED TO CONDUCT NECESSARY INQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPEC IALLY AFTER THE ITA NO50./DEL/2011 6 AFFIDAVIT/CONFIRMATION ALONG WITH THE BANK STATEMENT S ETC. WERE FILED. IN CASE, THE ASSESSING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVESTIGATION PROBABLY THE CHALLENGE M ADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE IN QUIRIES AND NON VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSME NT PROCEEDINGS, THE FACTUAL FINDINGS RECORDED BY THE ASSE SSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED ORDE R PASSED CANNOT BE TREATED AND REGARDED AS PERVERSE. THE APPE AL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF LAW ARISES. 9. FOLLOWING THE VARIOUS JUDICIAL PRONOUNCEMENTS INCL UDING ABOVE, WE ARE OF THE OPINION THAT THE CASE OF THE ASSESSEE IS SQU ARELY COVERED BY THE ABOVE JUDGMENT AND THEREFORE THE LD CIT(A) H AD RIGHTLY DELETED THE ADDITION. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD DAY OF NOVEMBER, 2012. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 23.11.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO50./DEL/2011 7 DATE OF HEARING 6.9.2012 DATE OF DICTATION 22.11.2012 DATE OF TYPING 22.11.2012 DATE OF ORDER SIGNED BY 23.11.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 23.11.2012 & SENT TO THE BENCH CONCERNED.