ITO, New Delhi V. Dalmia Promoters & Develepores Pvt Ltd, New Delhi

ITA 5148/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7085 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-08-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 19-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP DINODIA SH S K S HARMA
• Keywords: Accommodation entries; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO. 5148/DEL/10 ASSTT. YR: 1999-2000 INCOME-TAX OFFICER, VS. DALMIA PROMOTERS & DEVELO PERS (P) LTD., WARD-10(2), NEW DELHI. 1-E, JHANDEWALAN EXTN., NEW DELHI. PAN/GIR NO. AAACD1137G APPELLANT BY : SH. ROHIT GARG. SR. DR RESPONDENT BY: SHRI PRADEEP DINODIA/ SH. S.K. S HARMA CA O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER D ATED 1-9-2010 RELATING TO A.Y. 1999-2000. FOLLOWING GROUNDS ARE R AISED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 10,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 2500/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION PAID TOWARDS ACCOMMODATION ENTRIES TAKEN . 2. BRIEF FACTS ARE THAT THE ASSESSEE RECEIVED LOAN OF RS. 10,00,000/- FROM M/S N SQUARE EXPORTS (P) LTD. AO ASKED THE ASSESS EE TO EXPLAIN THIS LOAN. IT WAS REPLIED THAT THE SAID AMOUNT WAS RECEIVED BY CHEQUE AND FURNISHED CONFIRMATION ALONG WITH PAN NO. OF THE SAID COMPANY . BESIDES, DIRECTOR OF THE LENDER COMPANY SHRI MUKESH GUPTA ALSO APPEARED WHO ALSO CONFIRMED THE LOAN. IT WAS FURTHER EXPLAINED THAT THE LOAN WA S SUBSEQUENTLY REPAID. THE 2 AO, HOWEVER, DID NOT ACCEPT ASSESSEES VERSION AND MADE THE ADDITION U/S 68 AND FURTHER ADDED AN AMOUNT OF RS. 2500/- ON AN EST IMATION THAT THE ASSESSEE MAY HAVE PAID COMMISSION FOR ARRANGING THE ACCOMMOD ATION ENTRY. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WHERE T HE CIT(A) DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: SO FAR AS THE GROUNDS OF APPEAL AT 3.1., 3.2 & 4 A RE CONCERNED IT IS OBSERVED THAT THE APPELLANT HAS FURNISHED ALL DOCUMENTARY EVIDENCE THROUGH HIS BANK ACCOUNTS AND BOOKS OF ACC OUNTS EVIDENCING THE FACT OF LOAN HAVING BEEN RECEIVED IN CLUDING PAN NO. AND ASSESSMENT DETAILS OF THE LENDER COMPANY VI Z. M/S FAIR N SQUARE EXPORTS P. LTD. FURTHER, SHRI MUKESH GUP TA THE DIRECTOR OF M/S FAIR N SQUARE EXPORTS P. LTD. WAS ALSO EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDING S WHO HAS CATEGORICALLY ADMITTED IN HIS STATEMENT ON OATH THAT M/S FAIR N SQUARE EXPORTS P. LTD. HAD GIVEN THE LOAN TO TH E APPELLANT. THIS COUPLED WITH THE FACT THAT THE LOAN OBTAINED B Y THE APPELLANT HAD BEEN REPAID FOR WHICH THE APPELLANT H AD FILED EVIDENCE, I AM OF THE OPINION THAT NO ADDITION COUL D BE MADE U/S 68 OF THE INCOME TAX ACT IN THE CASE OF THE APP ELLANT AS THE IDENTITY OF THE PARTY & THE GENUINENESS OF THE TRAN SACTION HAS BEEN EXPLAINED AND I ACCORDINGLY DIRECT THE SAME TO BE DELETED. THE AO MAY HOWEVER PROCEED UNDER THE IT ACT AGAINST M/S FAIR N SQUARE EXPORTS P. LTD. AND TAKE APPROPRIAT E ACTION. BUT SO FAR AS THE APPELLANT IS CONCERNED, IT HAS DISCHA RGED ITS ONUS TO PROVE THE IDENTITY OF THE LENDER AND GENUINENESS OF THE TRANSACTION, AND SOURCE OF RECEIPT OF THE LOAN. IN THIS CONNECTION THE PRINCIPLES ENUNCIATED IN THE FOLLOWING JUDICIAL DECISIONS NAMELY CIT VS. SOPHIA FINANCE LTD. 2052 ITR 98 (DEL )(FB); CIT VS. DIVINE LEASING & FINANCE LTD. 158 TAXMAN 44 0 (DEL); CIT VS. MAKHAMI & TYAGI P. LTD. 267 ITR 433 (DEL); CIT VS. ILLAC INVESTMENT P. LTD. 287 ITR 135 (DEL) & CIT VS . ACHAL INVESTMENT LTD. 268 ITR 211 AND CIT VS. VALUE CAPIT AL SERVICES P. LTD. 2008 TIOL 290 ARE QUITE RELEVANT A ND APPLICABLE TO THE FACTS OF THE APPELLANT CASE AS TH E APPELLANT AHS DISCHARGED ITS INITIAL BURDEN AND ONUS TO ESTABLISH THE IDENTITY OF THE LENDER AS ALSO THE GENUINENESS OF THE TRANSACTI ON, WHICH IS THROUGH BANKING CHANNEL. FURTHER THE DIRECTOR OF LE NDER 3 COMPANY HAS ALSO AFFIRMED ON OATH ABOUT THE TRANSAC TION OF LOAN HAVING BEEN GIVEN BY THEIR COMPANY TO THE APPELLANT . FURTHER THE AO HAS NOT BROUGHT ANY CREDIBLE EVIDENCE ON REC ORD TO SHOW THAT THE LENDER COMPANY WAS NOT CREDIT WORTHY OR THAT THE LOAN ADVANCED BY THE LENDER COMPANY WAS BASICALLY UNACCOUNTED MONEY BELONGING TO THE APPELLANT. I REFER TO THE RECENT JUDGMENT OF THE DELHI HIGH CO URT IN THE CASE OF CIT DELHI V. KISHORI LAL CONSTRUCTION LTD. 191 T AXMAN 194 (DEL), WHEREIN THE HONBLE COURT HAS HELD THAT THE MERE DENIAL BY THE CREDITOR THAT THE ACCOUNT OPERATED BY THEM WOUL D NOT AUTOMATICALLY LEAD TO THE INFERENCE THAT ASSESSEE D EPOSITED IN THE SAID ACCOUNT AND THEREFORE, IT BECOMES ITS UNACCOUN TED INCOME. ON THE TESTING OF THE FACTS OF THE APPELLANTS CASE AGAINST THE RATIO OF THE ABOVE JUDGMENT, I FIND THAT THE APPELLANT ST ANDS ON MUCH STRONGER FOOTING INASMUCH AS THAT IN THE IMPUGNED C ASE, THE CREDITOR PRESENTED HIMSELF BEFORE THE AO AND CONFIR MED THE TRANSACTION, WHICH, TO MY VIEW IS A SUFFICIENT PROO F OF THE GENUINENESS OF THE TRANSACTION IN THE HANDS OF THE APPELLANT. THE AO IS ACCORDINGLY DIRECTED TO DELETE THE ADDITION T O INCOME OF RS. 10 LAKHS. REGARDING GROUND NO. 4, IN VIEW OF MY FINDING HEREI NABOVE, THE ADDITION OF RS. 2,500/- ON ACCOUNT OF ALLEGED COMMI SSION PAID BY THE APPELLANT IS ALSO DELETED. AGGRIEVED, REVENUE IS BEFORE US. 3. LEARNED DR SUPPORTED THE ORDER OF AO. 4. LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENT ION TO ASSESSMENT ORDER WHERE A FINDING HAS BEEN GIVEN THAT MUKESH GU PTA, DIRECTOR OF THE LENDER COMPANY APPEARED BEFORE AO AND CONFIRMED TH E LOAN AND NEGATED THE ALLEGATION OF THE SAME BEING ACCOMMODATION ENTR Y. AO HAS, HOWEVER, HELD THAT SHRI MUKESH GUPTA WAS BRAIN WASHED BY THE ASSESSEE. IT WAS CONTENDED THAT THE ASSESSEE HAVING FILED THE CONFIR MATORY EVIDENCE AND PRODUCED THE DEPOSITOR BEFORE THE AO, WHO CONFIRMED THE ADVANCING OF LOAN, 4 THE BURDEN CAST BY SEC. 68 ON IT STANDS DULY DISCHA RGED AND THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DWARKADHISH FINAN CIAL SERVICES 148 TAXMAN 54 (DEL). ORDER OF CIT(A) IS RELIED ON. 5. WE HAVE HEARD RIVAL CONTENTIONS. FROM THE FACTS MENTIONED ABOVE, IT IS CLEAR THAT THE ASSESSEE DURING THE COURSE OF ASS ESSMENT ITSELF FILED CONFIRMATORY EVIDENCE IN SUPPORT OF THE CREDIT; THE DIRECTOR OF THE LENDER COMPANY WAS PRODUCED BEFORE AO WHOSE STATEMENT WAS RECORDED. HE CONFIRMED HAVING ADVANCED THE LOAN AND DENIED THE A LLEGATION OF THE TRANSACTION BEING AN ACCOMMODATION ENTRY. IN OUR VI EW, THE ASSESSEE DISCHARGED ITS ONUS CAST BY SEC. 68. RESPECTFULLY F OLLOWING THE RATIO OF DECISION IN THE CASE OF DWARKADHISH FINANCIAL SERVI CES (SUPRA), WE SEE NO INFIRMITY IN THE ORDER OF CIT(A). THE ASSESSEE HAVI NG DISCHARGED ITS BURDEN, ADDITION CANNOT BE MADE U/S 68 AND CIT(A) HAS RIGHT LY ENLIGHTENED THE AO TO TAKE ACTION IF ANY AGAINST THE LENDER AS MENTION ED ABOVE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29-08-2011. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29-08-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 5