UKG Securities Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5151/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7598 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 18-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: SHAILASH GUPTA
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE S H.I.C.SUDHIR , JUDICIAL MEMBER AND SH. J.S.REDDY, ACCOUNTANT MEMBER I.T.A .NO. 5151/ DEL/201 1 (ASSESSMENT YEAR - 2003 - 04 ) UKG SECURITIES PVT. LTD., 101/17, COMMERCIAL COMPLEX, MEERA TOWER, WAZIRPUR INDUSTRIAL AREA, NEW DELHI - 110052. PAN - AAACU9517F ( APPELLANT) VS ITO, WARD - 18(1), NEW DELHI (RESPONDENT) APPELLANT BY SH. SALIL AGARWAL, ADV. & MR. SHAILASH GUPTA, CA RESPONDENT BY SH. SAMEER SHARMA, SR. DR ORDER PER I.C.SUDHIR, JM IN THIS APPEAL THE ADDITION OF RS.38,33,880/ - ( CONSISTING OF RS.38,00,000 ON ACCOUNT OF UNEXPLAINED CREDIT AND RS.19,000 ON ACCOUNT OF COMMISSION PAID FOR ARRANGING THE SAID CREDIT) UPHELD BY THE LD. CIT(A) HAS BEEN QUESTIONED ON SEVERAL GROUNDS (GROUND N OS. 1 TO 10). IN GROUND NO.11 CHA R GING OF INTEREST U/S 234 AND 234B HAS BEEN IMPUGNED. 2. IN GROUND NO.7 THE ASSESSEE HAS ALLEGED THAT REQUEST OF THE ASSESSEE TO CROSS EXAMINE THE ALLEGED ACCOMMODATION OPERATORS WAS REJECTED BY THE AO. 3. IN THIS REGARD, THE LD. AR CONTENDED THAT THE AO HAS MADE ADDITION IN QUESTION U/S 147 ASSESSMENT ON THE BASIS OF A VAGUE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AND WITHOUT MAKING INQUIRY ALLEGING THAT THE CLAIMED PREMIUM AMOUNT OF RS.90 PER SHARE AS WELL AS SHARE CAPITAL IS THE ASSESSEE S OWN UNACCOUNTED MONEY REINTRODUCED IN THE GARB OF SHARE APPLICATION MONEY . H E SUBMITTED THAT THE AO, WHILE FOLLOWING THE INFORMATION 2 OF THE INVESTIGATION WING HAS NOT ALLOWED THE ASSESSEE TO C ROSS EXAMINE THE DIRECTIONS OF THE ENTRY PROVIDE COMPANIES WHOSE CONFESSIONAL STATEMENTS ADVERSE TO THE ASSESSEE HAVE BEEN RECORDED BY THE INVESTIGATION WING. IN SUPPORT OF THE LD. AR REF ERRED CONTENTS OF PARA NO.3 AT PAGE NO.7 OF THE ASSESSMENT ORDER AND PAGE NO.91, 101 OF THE PAPER BOOK I.E. COPY OF THE SUBMISSION (PAGE 85 TO 136) DATED 11.04.2011, SHOWING THAT THE OPPORTUNITY TO CROSS EXAMINE THOSE DIRECTORS WAS NOT GIVEN TO THE ASSESSEE. HE SUBMITTED THAT COPY OF THE STATEMENTS WERE PROVIDED TO THE ASSE SSEE ON 15.12.2010 AND WITHOUT GIVING OPPORTUNITY TO CROSS EXAMINE, ASSESSMENT ORDER HAS BEEN PASSED ON 21.12.2010. 4. THE LD. AR SUBMITTED FURTHER THAT EVEN DURING THE REMAND PROCEEDINGS THE ASSESSING OFFICER COULD NOT PRO DUCE THOSE DIRECTIONS FOR AFFOR D ING OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THEM. ON THE CONTRARY THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS BY FURNISHING ALL THE NECESSARY INFORMATION THAT THE TRANSACTIONS WERE THROUGH BA NKING CHANNELS AND THE SHARE APPLICANTS WERE FOUND ON THE GIVEN ADDRESS. THE LD. AR CONTENDED THAT ABSENCE OF PRO VIDI NG OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THOSE PERSONS WHOSE STATEMENTS HAVE BEEN USED ADVERSELY AGAINST THE ASSESSEE, THOSE STATEMENTS ARE NOT WORTH RELIABLE AND IT IS ALSO AGAINST THE PR INCIPLE OF NATURAL JUSTICE. 5. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS TO SUPPORT HIS CONTENTION THAT IN ABSENCE OF CROSS - EXAMINATION OF THE PERSONS, TH ESE ADVERSE STATEMENTS BECOME A NULLITY:_ I) CIT VS DEVINE LEASING & FINANCE & OTHERS 299 ITR 268 (DEL.); II) COMMISSIONER OF WEALTH TAX, GUJARAT VS VIMLABEN VADILAL MEHTA 145 ITR 11 (SC); III) CIT VS ASHWANI GUPTA [2010] 322 ITR 396 (DEL.); IV) ITO VS. M.PIRAI CHOODI [2011] 334 ITR 262 (SC); V) TIN BOX CO. VS CIT [2001] 249 ITR 216 (SC); VI) SIGNATUR E HOTELS (P) LTD. VS ITO (2011) 338 ITR 51 (DEL); VII) CIT VS PRADEEP KR. GUPTA (2008) 303 ITR 95 (DEL); 3 VIII) SARTHAK SECURITIES CO. P.LTD. VS ITO [2010] 329 ITR ITR 110 (DEL); IX) CIT VS REAL TIME MARKETING P. LTD. [2008] 306 ITR 35 (DEL.) 6. THE LD. SR. DR ON THE OTHE R HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE. HE SUBMITTED THAT THERE WAS SUFFICIENT INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT FOR INITIATION OF THE PROCEEDINGS U/S 147 OF THE AR AND AFTER MAKING THE REQUIRED EN QUIRY THE AO HAS MADE THE ADDITION. HE SUBMITTED FURTHER THAT COPY OF THE STATEMENTS OF THE ENTRY PRO VIDERS WERE SUPPLIED TO THE ASSESSEE FOR THEIR CONFIRMATION AND EVEN DEHORS THE STATEMENTS THERE WERE SUFFICIENT MATERIAL TO JUSTIFY THE ADDITION MADE. T HE LD. SR. DR SUBMITTED THAT THE CONFIRMATION S FILED BY THE ASSESSEE HAVING SIMILAR LANGUAGE ARE NOT RELIABLE AND THE ASSESSEE HAS THOROUGHLY FAILED TO ESTABLISH THE CREDITWORTHINESS OF THOSE CLAIMED SHARE APPLICANTS. 7. IN REJOINDER THE LD. AR REFERRED TH E DOCUMENTS FILED BEFORE THE AO IN SUPPORT OF THE CLAIMED SHARE APPLICATION MONEY, COPIES OF WHICH HAVE BEEN MADE AVAILABLE PAGE NOS. - 37, 38, 43 TO 46 OF THE PAPER BOOK. HE ALSO PLACED RELIANCE ON THE DECISION OF HON BLE JURISDICTIONAL DELHI HIGH COURT I N THE CASE OF CIT VS INSECTICIDES (INDIA) LTD. 357 ITR 330 (DEL.) TO SUPPORT HIS CONTENTION THAT THE INFORMATION ON THE BASIS OF WHICH THE AO HAD INITIATED PROCEEDINGS U/S 147 WAS VAGUE AND UNCERTAIN AND COULD NOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL. 8. HAVING GONE THROUGH THE DECISIONS RELIED UPON, WE FIND THAT IT IS AN ESTABLISHED PROPOSITION OF LAW THAT A STATEMENT RECORDED IN ABSENCE OF A PERSON CAN NOT BE USED ADVERSELY AGAINST THAT PERSON WITHOUT AFFORDING OPPORTUNITY TO THAT PERSON T O CROSS - EXAMINE THE PERSON WHO HAS MADE THE STATEMENTS. DENIAL OF SUCH OPPORTUNITY IS VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE AND SUCH STATEMENTS ARE NOT WORTH RELYING. IN THE PRESENT CASE, S TATEMENTS OF THE DIRECTORS OF THE SHARE APPLICANTS COMPA NIES WERE RECORDED BY THE INVESTIGATION WING OF THE DEPARTMENT HAVE BEEN USED ADVERSELY AGAINST THE ASSESSEE BY THE 4 AO IN THE ASSESSMENT FRAMED U/S 147 R.W.S 143(3) OF THE ACT. THUS IT IS CLEAR THAT THESE DIRECTORS WERE WITNESSES OF THE REVENUE WHOSE STAT EMENTS HAVE BEEN USED AGAINST THE ASSESSEE. THE REVENUE WAS THUS DUTY - BOUND TO ENSURE PRESENCE OF THESE DIRECTORS I.E. WITNESSES FOR PROVIDING OPPORTUNIT Y TO THE ASSESSEE TO CROSS - EXAMINE THEM. IT IS ALSO AN UNDISPUTED POSITION THAT UNDER THE PROVISIONS OF THE I.T.ACT, 1961 THE AO IS EMPOWERED TO SECURE PRESEN CE OF THESE WITNESSES. UNDER THE FACTS OF THE PRESENT CASE STATEMENTS OF THESE DIRECTORS ARE GOING TO THE RO OT OF THE MATTER FOR JUST DECISION ON THE ISSUE OF GENUINENESS OF THE CLAIMED SHARE APPLIC ATION S . WE THUS IN THE INTEREST OF JUSTICE SET ASIDE THE MATTER TO THE FILE OF THE AO TO SECURE THE PRESENCE OF THE ABOVE STATED DIRECTORS AND AFFORD OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THEM AND DECIDE THE ISSUE OF THE CORRECTNESS OF THE CLAIM ED SHARE APPLICATION MONEY AFRESH AFTER HEARING THE ASSESSEE IN THIS REGARD. THE GROUND NO - 7 IS THUS ALLOWED FOR STATISTICAL PURPOSES. 9. SINCE THE ISSUES RAISED IN THE OTHER GROUNDS ARE CONSEQUENTIAL IN NATURE , HENCE DO NOT NEED SEPARATE ADJUDICATION. 10. IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.11. 2014. SD/ - SD/ - ( J. S.REDDY ) ( I.C.SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 / 1 1 /2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI