DCIT, New Delhi V. M/s. Gee Diamond Steels P. Ltd., New Delhi

ITA 5154/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4654 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-05-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 05-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN YADAV
• Keywords: Reopening of assessment; Unexplained cash credit; Reason to believe
• Section: 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5154/DEL/2012 A.Y. 2002-03 DCIT, CIRCLE 12(1), VS. M/S GEE DIAMOND STEELS NEW DELHI (P) LTD., C/O S. KUMAR JAIN & ASSOCIATES 2481/9, 2 ND FLOOR, GURDWARA ROAD, KAROL BAGH, NEW DELHI (PAN: AABCG5754B) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. ARUN YADAV, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI DATED 03.7.2012 PERTAINING TO ASSESSMENT YEAR 2002-03 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,13,83,772/- MADE BY THE AO U/S. 68 OF THE I.T. ACT. 2 2. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 8,250/- ON 31.10.200 2. THE RETURN OF THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). THEREAFTER, A NO TICE U/S. 148 OF THE ACT WAS ISSUED IN THE CASE OF THE ASSESSEE ON 31.3.2009 AFTER DULY RECORDING THE REASONS FOR REOPENING AND AFTER TAKING THE NECE SSARY APPROVAL. AS PER THE PROVISIONS OF THE AFORESAID NOTICES, THE AS SESSEE WAS REQUIRED TO FILE A RETURN OF INCOME WITHIN 30 DAYS OF THE SERVI CE OF SUCH NOTICE. THE ASSESSEE, VIDE ITS LETTER FILED ON 09.09.2009, HAS STATED THAT THE RETURN ORIGINALLY FILED MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THEREFORE, A NOTICE U /S.143(2) DATED 21.08.2009 WAS ISSUED TO THE ASSESSEE ASKING IT TO ATTEND THE OFFICE ON 21.07.2009 IN RESPONSE TO WHICH, THE ASSESSEE, INFO RMED THAT THE AMOUNT OF PAYMENT RECEIVED IS RS.59,83,772/- AS AGAINST TO TAL PAYMENT OF RS.1,13,83,752/- AS REFLECTED IN THE REASONS. ASSES SEE OBJECTED ON THE REOPENING OF ASSESSMENT U/S 148 OF THE ACT ON THE G ROUND THAT AO HAS NOT RECORDED HIS SATISFACTION BEFORE REOPENING OF T HE CASE WHICH IS FACTUALLY WRONG. THE SATISFACTION RECORDED BY AO DU RING THE REOPENING OF ASSESSMENT IS THAT I HAVE GONE THROUGH THE REPORT AND ASSOCIATE RECOR D ON THE BASIS OF THE SAME / HAVE REASON TO BELIEVE T HAT UNDISCLOSED INCOME TO THE TUNE OF RS. 11383772/- FOR A. Y 2002-03 HAS ESCAPED ASSESSMENT' . 3 THEREFORE, THE OBJECTION OF ASSESSEE COMPANY IS DIS POSED OFF AS OBJECTION WAS NOT BASED ON FACTS. HOWEVER, THE ASSESSEE HAS N OT FURNISHED ANY DETAILS WHATSOEVER DESPITE A NUMBER OF OPPORTUNITIE S GIVEN. IN THE INSTANT CASE THE ASSESSEE HAS OBTAINED ENTRY OF RS.1,13,83, 772/-FROM M/S. AYUSHI STOCK BROKERS(P) LTD.(FORMERLY KNOWN AS M/S COSMOS COSMOS FINANCIAL SERVICES P LTD., 38-4B, 1F, FRIENDS CENTR E, SANJAY PLACE, AGRA. IN THIS CASE, INVESTIGATIONS MADE BY THE INVESTIGAT ION WING OF THE DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENTRY. IT IS ALSO NOTICED THAT THE TRANSACTIONS WERE ROUTED THROUGH CANARA BANK. THE ASSESSEE HAS ALSO N OT FURNISHED ANY EVIDENCE WHATSOEVER IN THIS REGARD. THUS ENTRY REMA INS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY TH E INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS. 1,13,83,7 72/- RECEIVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME AND ACCORDINGLY AS SESSMENT ORDER PASSED U/S. 143(3)/148 OF THE ACT BY ASSESSING THE INCOME OF THE ASSESSEE AT RS. 1,13,92,022/-. AGAINST THE ASSESSM ENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE H IS IMPUGNED ORDER DATED 03.7.2012 HAS DELETED THE ADDITION IN DISPUT E BY PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE I MPUGNED ORDER PASSED BY THE LD. CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 4 4. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE W OULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THERE FORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEAR ING THE LD. DR AND PERUSING THE RECORDS. 5. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORD S, ESPECIALLY THE ORDER OF THE LD. CIT(A). WE FIND THAT LD. FIRST APP ELLATE AUTHORITY HAS ADJUDICATED THE ISSUE AND HELD AS UNDER:- 7. NOW COMING TO THE MERITS OF ADDITION, I HAVE CONSIDERED THE OBSERVATIONS OF THE AO AS CONTAINED IN THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT AND THE FACTS AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE. AT THE VERY OUTSET THE APPELLANT BROUGHT TO MY NOTICE THAT THOUGH THE AMOUNT MENTIONED IN THE ASSESSMENT ORDER SHOWS. THAT THEY HAVE RECEIVED FROM AYUSHI STOCK BROKER (P) LTD A RS.1,13,83,772/- BUT FACTUALLY THE TRANSACTIONS ON 19.06.2001 IS OF RS.6,OO,OOO AND NOT 5 RS.60,OO,OOO (AS MENTIONED BY THE INVESTIGATION WING), THEREFORE THE AO HAS WRONGLY ADDED THE AMOUNT OF RS.1,13,83,772. 7.1. IT IS SEEN FROM THE PERUSAL OF BALANCE SHEET AS ON 31.03.2001 (I.E. PRIOR TO THE YEAR UNDER CONSIDERATION) WHICH IS FILED ALONGWITH THE RETURN OF INCOME FOR ASSESSMENT YEAR 2001-02, THE APPELLANT HAD MADE VARIOUS INVESTMENTS WORTH RS.94,71,100 WHICH INCLUDES THE INVESTMENT IN SHARES OF G.K. CONSULTANTS LTD. WORTH RS.79,68,560. FROM THE PERUSAL OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR ASSESSMENT YEAR 2002-03 IT IS SEEN THAT THE APPELLANT IN THE YEAR UNDER CONSIDERATION HAS SOLD THESE SHARES OF G.K. CONSULTANTS LTD. THROUGH A BROKER NAMELY AYUSHI STOCK BROKER (P) LTD. FOR RS.87,73,540 WHOSE COPY OF ACCOUNT AND CONFIRMATION WAS PLACED BEFORE THE AO ALSO DURING THE ASSESSMENT PROCEEDINGS. ON ACCOUNT OF THESE SALE OF SHARES THROUGH AYUSHI STOCK BROKERS (P) LTD. THE APPELLANT IN THE YEAR UNDER CONSIDERATION RECEIVED, RS.59,83,772 THE INFORMATION OF WHICH 6 WAS MADE AVAILABLE TO THE AO FROM THE INVESTIGATION WING AT RS. 1,13,83,772 AS THE SALE ON 19.06.2001 WHICH WAS ACTUALLY FOR RS.6,OO,OOO BUT WRONGLY TAKEN BY THE INVESTIGATION WING FOR RS..6O,OO,OOO. 7.2 IT IS ALSO WORTH MENTIONING HERE THAT AYUSHI STOCK BROKER IS ASSESSED TO TAX AND HAS A PAN NO.AADCA0825F AND IN SUPPORT OF THESE TRANSACTIONS, I FIND THAT THE COPY OF ACCOUNT AND CONFIRMATION RELATING TO THE TRANSACTION BETWEEN THE APPELLANT AND AYUSHI STOCK BROKER WERE DULY FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH HAVE NOT BEEN VERIFIED BY THE AD AT ALL, RATHER AO TREATED THE MONEY RECEIVED BY THE APPELLANT FROM AYUSHI STOCK BROKERS PVT. LTD. AS A SHAM TRANSACTION AND AO BLINDLY RELIED ON THE INFORMATION PASSED BY THE INVESTIGATION WING AND TREATED THIS BUSINESS TRANSACTION AS A NON- GENUINE ONE AND MADE ADDITION UNDER SECTION 68. 7.3 THE APPELLANT FURTHER SUBMITTED THE BROKER'S NOTE AND BANK STATEMENT OF AYUSHI STOCK BROKERS (P) LTD. EVIDENCING THE TRANSFER OF FUNDS ON ACCOUNT OF SALE OF SHARES THROUGH THEM AND 7 CLAIMING THAT THE SAID TRANSACTION IS A GENUINE BUSINESS TRANSACTION. FROM THE PERUSAL OF THE ASSESSMENT ORDER AND THE ASSESSMENT FOLDER AND FROM THE FACTS AVAILABLE ON RECORD, IT IS SEEN THAT NO NOTICES OR ENQUIRY HAVE BEEN DONE BY THE AD IN RESPECT OF THE TRANSACTION THE APPELLANT HAD WITH AYUSHISTOCK BROKERS {P} LTD. AT ALL. 7.4 IN THE CIRCUMSTANCES WHERE THE APPELLANT HAD A BUSINESS TRANSACTION WITH AYUSHI STOCK BROKERS PVT. LTD. WHICH HAS DULY BEEN REFLECTED IN THEIR BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND THE INCOME FROM SUCH SALE OF SHARES HAVE ALSO BEEN DECLARED, IT IS THEREFORE HELD THAT IN THESE CIRCUMSTANCES THE ADDITION MADE ON ACCOUNT OF SUMS RECEIVED FROM AYU.SHI STOCK BROKERS (P) LTD. AS AN UNEXPLAINED CREDIT, HAS NO BASIS AT ALL. 7.5 FURTHER ALSO I FIND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO AS TO UNDER WHAT CIRCUMSTANCES, THE BUSINESS TRANSACTION BY THE APPELLANT IS NOT A GENUINE TRANSACTION. I FIND THAT AO HAS BLINDLY RELIED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND AO HAS NOT 8 BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD WHICH CAN PROVE THAT THE SAID MONEY WAS APPELLANT'S OWN UNDISCLOSED INCOME. 7.6 IN THE LIGHT OF THE ABOVE DISCUSSION, I AM INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELLANT TO SUBSTANTIATE THAT THE TRANSACTION WITH AYUSHI BROKERS (P) LTD. WAS A GENUINE BUSINESS TRANSACTIONS AND THE SAME WAS NOT AN ACCOMMODATION ENTRY AND I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE AO WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO IS NOT JUSTIFIED IN TREATING THE AMOUNT RECEIVED BY THE APPELLANT AS IT UNDISCLOSED INCOME. IN VIEW OF AFORESAID DISCUSSION, I DELETE THE ADDITION OF RS.L,13,83,772/- MADE BY THE AO UNDER SECTION 68 OF THE INCOME TAX-ACT, 1961. 8. IN THE RESULT, APPEAL IS PARTLY ALLOWED. 9 6. ON GOING THROUGH THE AFORESAID FINDINGS OF THE LD.CIT(A) AS WELL AS THE FINDING OF THE ASSESSING OFFICER MADE IN THE AS SESSMENT ORDER, WE FIND THAT AO HAS PASSED THE ASSESSMENT ORDER U/S. 143(3)/148 OF THE INCOME TAX ACT, 1961 BY HOLDING THAT INVESTIGATION MADE BY THE INVESTIGATION WING OF THE DEPARTMENT CLEARLY SHOWS THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENT RY. HE FURTHER HELD THAT THE TRANSACTIONS WERE ROUTED THROUGH CANARA BA NK WHICH HAS BEEN IN THE ABOVE INFORMATION AND THE ASSESSEE HAS NOT FURN ISHED ANY EVIDENCE WHATSOEVER IN THIS REGARD. THUS ENTRY REMAINS UNEXP LAINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIG ATION WING OF THE DEPARTMENT.. HOWEVER, THE LD. CIT(A) IN HIS IMPUGNE D ORDER HAS OBSERVED THAT EVIDENCES PRODUCED BY THE ASSESSEE T O SUBSTANTIATE THAT THE TRANSACTIONS WITH AYSHI BROKERS (P) LTD. WAS A GENUINE BUSINESS TRANSACTION AND THE SAME WAS NOT AN ACCOMMODATION E NTRY AND HENCE, THE EVIDENCE COLLECTED BY THE AO WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO IS NOT JUSTIFIED IN TREATING TH E AMOUNT RECEIVED BY THE ASSESEE AS ITS UNDISCLOSED INCOME. IN VIEW OF AFORE SAID DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE REMAIN NON-COOPERATIVE BEFORE THE AO AND DID NOT FILE REQUISITE DOCUMENTS BEFORE THE AO, THUS THE ENTRY REMAINS UNEXPLAINED IN THE HANDS OF THE A SSESSEE AND ALSO NO INDEPENDENT INQUIRY HAS BEEN UNDERTAKEN BY THE AO I N THE INSTANT CASE AND AO HAS MAINLY RELIED UPON THE INVESTIGATION WI NG REPORT. THEREFORE, IN THE INTEREST OF JUSTICE, WE THINK IT PROPER TO SET ASIDE THE ISSUE IN DISPUTE TO THE FILE OF THE AO TO DECIDE THE SAME A FRESH, AFTER MAKING 10 INDEPENDENT INQUIRY AND VERIFICATION, AS DEEM FIT. HOWEVER, THE ASSESSEE IS ALSO DIRECTED TO SUBMIT ALL THE NECESSARY DOCUME NTS, AS ASKED BY THE AO DURING THE ASSESSMENT PROCEEDINGS AND FULLY COOP ERATE WITH THE AO AND DID NOT TAKE ANY UNNECESSARY ADJOURNMENT. ACCOR DINGLY, THE ISSUE IN DISPUTE IS SET ASIDE TO THE FILE OF THE AO WITH THE AFORESAID DIRECTIONS. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 11/09/2017. SD/- SD/- (L.P. SAHU) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:11/09/2017 'SRBHATNAGAR' COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES