ITO, New Delhi V. M/s Lenzing Polypack Ltd., New Delhi

ITA 5327/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0392 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Bogus Share capital; Accommodation entries
• Section: 144; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.5327/DEL/2010 ASSESSMENT YEAR : 2007-08 ITO, WARD 4 (3), NEW DELHI. VS. M/S LENZING POLYPACK LTD., B-321, MANDOLI ROAD, ASHOK NAGAR, NEW DELHI 110 093 PAN : AAACL1675M (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI A.K. MONGA, DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 25 TH OCTOBER, 2010 FOR ASSESSMENT YEAR 2007-08. GROUNDS OF APPEAL READ AS UNDER:- 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CON TRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS. 1,37,61,000/- MADE U/S 68 OF THE ACT BEING THE UNEXPLAINED SHARE CAPITAL AND RS. 1,37,610/- BEING TH E UNACCOUNTED CASH PAID AS COMMISSION FOR OBTAINING THE ACCOMMODATION ENTRIES. 2.1 THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS OF TRADING ACCOMMODATION ENTRI ES AND FAILED TO PROVE THE CREDIT WORTHINESS OF THE CREDITOR S AND GENUINENESS OF THE TRANSACTIONS. 3. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS. 5 LAKH MADE U/S 68 OF THE ACT BEING THE UNEXPLA INED ITA NO.5327/DEL/2010 2 UNSECURED LOAN. 3.1 THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVING THE CREDITWORTHI NESS OF THE CREDITORS AND GENUINENESS OF TRANSACTIONS. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEN D ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF TH E HEARING. 2. THE ASSESSMENT ORDER IN THE PRESENT CASE WAS PASSED U/S 14 4 OF THE IT ACT, 1961 AS THE ASSESSEE WAS NOT REPRESENTED BEFOR E THE ASSESSING OFFICER. A SUM OF ` 1,38,98,610/- WAS ADDED ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY U/S 68 OF THE ACT . ANOTHER SUM OF ` 5 LAC WAS ADDED ON ACCOUNT OF UNEXPLAINED UNSECU RED LOAN. BOTH THE ADDITIONS WERE AGITATED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE CIT (A) BEFORE WHOM THE EVIDENCES WERE FILED AND IT WAS SUBMITTED THAT NONE OF THE AMOUNTS ADDED CAME TO THE CREDIT OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. LEARNED CIT (A) AFTER RECEIVING THE SAID SUBMISSIONS HAD FORWARDED THE SAME TO THE ASSESSING OFFICER UNDER RULE 46A(3) OF THE INCOME-TAX RULES, 1962 AND AFTER RECEIVING THE SAID REMAND REPORT, LEARNED CIT (A) HAS RECORDED A FINDIN G THAT THERE WERE NO FRESH SHARE CAPITAL OR FRESH UNSECURED LOANS INTRODUC ED DURING THE YEAR UNDER CONSIDERATION AND, IN THIS MANNER, HE HAS D ELETED THE CONSOLIDATED ADDITION OF ` 1,43,99,570/-. THE DEPAR TMENT IS AGGRIEVED WITH SUCH DELETION AND HAS FILED THE AFOREMENTIONED A PPEAL. 3. NOTICE OF HEARING WAS SENT TO THE ASSESSEE, HOWEVER, N ONE WAS PRESENT ON BEHALF OF THE ASSESSEE. THEREFORE, WE PROCEE DED TO DECIDE THE PRESENT APPEAL AFTER HEARING LEARNED DR. 4. LEARNED DR, AFTER NARRATING THE FACTS AND RELYIN G UPON THE ORDER OF ASSESSING OFFICER, PLEADED THAT THE ASSESSEE COULD NOT E XPLAIN THE AFOREMENTIONED CREDITS AND, HENCE, THE ADDITION WAS R IGHTLY MADE BY THE ASSESSING OFFICER AND THE CIT (A) HAS WRONGLY DELETE D THE ADDITION. ITA NO.5327/DEL/2010 3 5. WE HAVE HEARD LEARNED DR AND CAREFULLY GONE THRO UGH THE FINDINGS RECORDED BY THE CIT (A). LEARNED CIT (A) H AS RECORDED THE FOLLOWING FINDINGS OF THE FACTS:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT, THE FINDINGS OF THE AO IN THE ASSESSMENT O RDER AS WELL AS IN THE REMAND REPORT AND THE FACTS ON RECORD. I FIND THAT THE ASSESSING OFFICER HAS FAIRLY ADMITTED IN THE REMAND REPORT THAT THERE WERE NO FRESH SHARE CAPITAL OR FRESH UNSECUR ED LOANS INTRODUCED DURING THE YEAR UNDER CONSIDERATION. THE P ERUSAL OF THE BALANCE SHEET AS ON 31.3.07 REVEALS THAT NO NEW MON EY HAS BEEN INTRODUCED DURING THE YEAR UNDER CONSIDERATION. IN OTHER WORDS, THERE HAS NEITHER BEEN FRESH SHARE CAPITAL NOR FRESH LOAN INTRODUCED IN THE ACCOUNTS OF THE APPELLANT COMPANY DURI NG THE YEAR UNDER CONSIDERATION. UNDER THE FACTS AND CIRCUMS TANCES OF THE CASE STATED ABOVE, IT IS HELD THAT THE ADDITION OF RS. 1,43,99,570/- CANNOT BE SUSTAINED AND ACCORDINGLY, THE SAME IS DIRECTED TO BE DELETED. AS A RESULT, GROUNDS OF APPEA L NO. 1, 2 & AS A RESULT, GROUNDS OF APPEAL NO. 1, 2 & AS A RESULT, GROUNDS OF APPEAL NO. 1, 2 & AS A RESULT, GROUNDS OF APPEAL NO. 1, 2 & 3 ARE ALLOWED. 3 ARE ALLOWED. 3 ARE ALLOWED. 3 ARE ALLOWED. 6. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO CONTROV ERT THE FINDINGS RECORDED BY THE CIT (A) ACCORDING TO WHICH THERE IS NO FRESH SHARE CAPITAL OR FRESH UNSECURED LOAN INTRODUCED DURIN G THE YEAR UNDER CONSIDERATION. IF IT IS SO, THEN, ADDITION CANNOT BE M ADE U/S 68 AS THE SAID ADDITION WILL PERTAIN TO THE YEAR IN WHICH SUCH CREDIT HAD COME TO THE ACCOUNTS OF THE ASSESSEE. LEARNED CIT (A) HAS ALSO RE CORDED A FINDING THAT HE HAS PERUSED THE BALANCE SHEET AS ON 31 ST MARCH, 2007 AND IT REVEALS THEREFROM THAT NO MONEY WAS INTRODUCED DURING THE YEAR UNDER CONSIDERATION. IN THE ABSENCE OF ANY MATERIAL TO CONTROVERT THIS FACTUAL FINDINGS RECORDED BY THE CIT (A), WE DECLINE TO INTERFERE IN THE DELETION MADE BY HIM AND HE IS JUSTIFIED IN DELETING THE ADDITION. 7. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED. 8. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.02. 2011. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 11.02.2011. ITA NO.5327/DEL/2010 4 DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES DATE OF DICTATION 01.02.2011 DATE OF PRESENTATION OF THE DRAFT ORDER TO THE MEMBER 02.02.2011 DATE OF RETURN FROM THE BENCH AFTER PRONOUNCEMENT &SIGNING DATE OF DISPATCH OF THE ORDER TO THE BENCH