Sh. Sandeep Sharma, Delhi V. ITO, New Delhi

ITA 5514/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6577 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: ADHIR SAMAL; APOORVA BHARDWAS
• Keywords: Unexplained cash credit; Peak credit; Accommodation entries
• Section: 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.5514/DEL/2016 ASSESSMENT YEAR : 2009-10 SANDEEP SHARMA, D-5/212, 2 ND FLOOR, AWADH COMPLEX, LAXMI NAGAR, DELHI. VS. ITO, WARD 70(4), NEW DELHI. PAN : AQTPS 5071 Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ADHIR SAMAL, & MS. APOORVA BHARDWAS, CA RESPONDENT BY : SHRI S. K. JAIN, SR.DR DATE OF HEARING : 02-02-2017 DATE OF PRONOUNCEMENT : 16-02-2017 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26.08.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-28, NEW DELHI, U/S 147 OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT) RELATING TO ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAD E- FILED RETURN OF INCOME DECLARING NET TAXABLE INCOME OF RS.2,58,650/-. NOT ICE U/S 148 WAS ISSUED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING O FFICER NOTICED THAT MANY CREDIT ENTRIES WERE APPEARING IN THE BANK STAT EMENT OF THE ASSESSEE. 2 ITA NO.5514/DEL/2016 HE DIRECTED THE ASSESSEE AS TO WHY THE CUMULATIVE C REDIT OF RS.2,99,60,030/- INCLUDING THE OPENING BALANCE OF RS.30,05,970/- BE NOT ADDED TO THE INCOME AND ALSO REQUIRED THE ASSESSEE TO EXPLAIN THE SOURC ES OF THE DEPOSIT WITH PUNJAB NATIONAL BANK, LAXMI NAGAR. AFTER CONSIDERI NG THE ASSESSEES SUBMISSIONS, THE TOTAL INCOME WAS DETERMINED AT RS. 15,55,480/- BY ASSESSING OFFICER VIDE HIS ORDER DATED 25.03.2013, AFTER MAKING ADDITION ON THE BASIS OF PEAK CREDIT OF RS.10,68,655/- AND COMM ISSION OF RS.2,28,174/- AS PER COMPUTATION GIVEN IN THE ASSESSMENT ORDER. LD. CIT(A), WHILE PARTLY ALLOWING THE ASSESSEES APPEAL, RESTRICTED THE ADDI TION ONLY TO PEAK CREDIT. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE T HE TRIBUNAL AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS, IN UPHOLDING THE ADDITION MADE BY THE LD. ASSESSING OFFICER OF RS.10,68,655/- IN RESPECT OF PEAK CREDIT AND AS SUC H THE ADDITION OF RS.10,68,655/- MAY PLEASE BE DELETED. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, D ELETE & MODIFY ANY OF THE GROUND OF APPEAL AT THE TIME OF HEARING. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE FILED A COPY OF TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR ASSESSM ENT YEAR 2008-09 IN ITA NO.142/DEL/2012, ORDER DATED 22.07.2015, WHEREIN, T HE REVENUE HAD TAKEN FOLLOWING GROUNDS OF APPEAL :- 3 ITA NO.5514/DEL/2016 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN:- 1. REDUCING THE ADDITION OF RS.4,29,98,561/- TO RS. 4,39,985/- RIGHTLY MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN ASSESSEE'S BANK ACCOUNT. 2. DIRECTING THE A.O. TO COMPUTE THE INCOME OF THE ASSESSEE AS COMMISSION INCOME WITHOUT ANY SUBSTANTIATING EVIDENCE AGAINST THE A.O'S FINDING THAT THE AMOUNT UNDER DISPUTE IS UNEXPLAINED INCOME OF THE A SSESSEE. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL, AFTER CONSIDERING ALL THE ASPECTS IN DETAIL, DIRECTED THE ASSESSING OFFICER FOR DE- NOVO ASSESSMENT. HE SUBMITTED THAT SINCE THE FACTS ARE SIMILAR IN THE CURRENT YEAR, THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. LD. DR DID NOT OBJECT TO THE PRAYER OF TH E ASSESSEE. 5. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE RECORD OF THE CASE. IT IS NOT DISPUTED THAT FACTS IN THE CURRENT YEAR ARE SIMILAR TO ASSESSMENT YEAR 2008-09. I FIND THAT TRIBUNAL I N ASSESSEES OWN CASE HAS OBSERVED AS UNDER :- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER MADE THE ADDITIO N OF RS.4,29,98,561/- U/S 68 OF THE ACT, ON THE GROUND THAT THE ASSESSEE WAS NOT AB LE TO FURNISH THE EXPLANATION REGARDING THE NATURE AND SOURCE OF CASH AND OTHER D EPOSITS AND HELD THE AMOUNT AS UNEXPLAINED. WE FIND THAT THE LD. CIT (A) HAS SI MPLY ACCEPTED THE ADMISSION OF THE ASSESSEE THAT HE WAS PROVIDING ACCOMMODATION EN TRY FOR COMMISSION @ 0.25% TO 0.50% OR MORE IN CASH AND THAT BEING HIS P ROFIT OR INCOME SHOULD ONLY BE TAXED AND NOT THE ENTIRE AMOUNT DEPOSITED IN HIS BANK ACCOUNT. EX-CONSEQUENT, LD. CIT (A) ESTIMATED THE INCOME OF THE ASSESSEE @ RS.1/- PER RS.100/- AND CALCULATED THE INCOME AS RS.4,39,985/- ALONG WITH O THER INCOME OF ASSESSEE WHICH IS REFLECTED IN HIS RETURN. THE REVENUE IS AG GRIEVED BY THE SAID IMPUGNED ORDER OF THE LD. CIT (A). IN THIS CASE, WE FIND THA T THE AO ISSUED FIRST NOTICE DATED 06.08.2009. PURSUANT TO IT, LD. AR OF THE ASSESSEE, SHRI PAWAN KEDIA APPEARED ON 24.12.2009 AND THEREAFTER, WE FIND THAT SEVERAL NOT ICES/ QUESTIONNAIRE WERE 4 ITA NO.5514/DEL/2016 ISSUED TO THE ASSESSEE/AR, WHO DID NOT BOTHER TO RE SPOND. ONLY AFTER SHOW CAUSE NOTICE U/S 271(1)(B) WAS ISSUED ON 01.07.2010, THE ASSESSEE CAME UP WITH PARTIAL DETAILS. WE FIND THAT ASSESSEE'S STATEMENT WAS RECO RDED ON 29.10.2010 & 22.11.2010, AND THEREAFTER, WHEN THE ASSESSEE WAS A SKED TO COME ON 26.11.2010 FOR FURTHER EXAMINATION, HE DID NOT TURN UP. THEREA FTER, WE FIND THAT THE AO COMPLETED THE ASSESSMENT ON 16.12.2010, U/S 144 OF THE ACT BY STATING THE NON- COOPERATION CONDUCT OF ASSESSEE. LATER, WE FIND THA T THE ASSESSEE CONTENDED BEFORE THE LD. CIT (A) THAT HE HAD SENT A LETTER DA TED 16.12.2010, WHEREIN HE HAS EXPLAINED AND ADMITTED HIS BUSINESS OF PROVIDING AC COMMODATION ENTRIES, WHICH COULD NOT HAVE BEEN ACTED UPON BY THE AO BECAUSE HE PASSED THE ORDER ON 16.12.2010, SO THE ASSESSEE WANTED THE SAID LETTER TO BE ADMITTED AS EVIDENCE AS PER RULE 46A OF THE INCOME-TAX RULES, 1962. IN THE AFORESAID BACK-GROUND, WE FIND THAT THE FOLLOWING FACTS EMERGE FROM THE PROCE EDINGS BEFORE THE AO : (A) THE ASSESSEE HAD A PROPRIETARY CONCERN AND WAS THE DIRECTOR OF TWO COMPANIES. THE ASSESSEE DOES NOT KNOW WHO THE O THER DIRECTORS IN THE SAID COMPANIES ARE, NAMELY, M/S. PROLON MARKETI NG PVT. LTD. AND M/S. JA GANG PLASTICS (INDIA) PVT. LTD.; (B) HE DOES NOT KNOW WHO DEPOSITED THE AMOUNTS IN H IS ACCOUNT IN PUNJAB & NATIONAL BANK; AND (C) HE DOES NOT DIVULGE ANYTHING ABOUT PROVIDING AC COMMODATION ENTRIES ETC BEFORE THE AO TILL THE ASSESSMENT ORDER IS PASSED. SO, WE FIND THAT THE AO FELT HELPLESS BECAUSE ASSES SEE DID NOT DISCLOSE ANYTHING BEFORE HIM, SO HE RESORTED TO SECTION 144 ASSESSMEN T, WITHOUT RESORTING TO ANY INVESTIGATION AS TO WHERE THE MONEY DEPOSITED IN AS SESSE'S BANK ACCOUNT IS BEING TRANSFERRED AND WHERE THE MONEY TRAIL ENDS. WHEREAS , WE FIND THAT CIT(A) AFTER GOING THROUGH THE WRITTEN SUBMISSIONS OF THE ASSESS EE, WITHOUT SEEKING A REMAND REPORT FROM AO, COMES TO THE CONCLUSION THAT MODUS- OPERANDI OF THE ASSESSEE WAS THAT FIRST, CASH WAS DEPOSITED IN THE PROPRIETA RY CONCERN ACCOUNT OF ASSESSEE IN PUNJAB NATIONAL BANK ; AND IN THE SECOND STAGE, IT WAS TRANSFERRED BY THE ASSESSEE THROUGH BANKING CHANNEL TO TWO COMPANIES W HEREIN HE IS THE DIRECTOR ; AND IN THE THIRD STAGE, THE OTHER TWO DIRECTORS, NA MELY, SHRI MUKESH GAUAM AND SHRI CHANDRA PRAKASH BHARDWAJ USED TO ISSUE CHEQUES TO THE ENTRY SEEKERS, THUS THE CASH DEPOSITED IN BANK IS BACK IN THE HANDS OF THE DEPOSITORS. HOWEVER, WE FIND THIS MODUS OPERANDI DOES NOT COME OUT OF THE W RITTEN SUBMISSION OR EMERGE FROM THE RECORDS BEFORE US. WE ARE UNABLE TO UNDERS TAND HOW THE CIT (A) ACCEPTED THE MODUS SIMPLY ACCEPTING THE VERSION OF THE ASSESSEE WITHOUT AT LEAST CALLING FOR THE BANK STATEMENT OF THE TWO COMPANIES WHEREIN HE IS THE DIRECTOR TO VERIFY WHETHER THE CONTENTION OF THE ASSESSEE SAYIN G THAT HE IS ONLY AN ACCOMMODATION ENTRY PROVIDER IS CORRECT OR NOT; OR BY CALLING FOR REMAND REPORT AND FIND OUT TO WHOM ACCOMMODATION ENTRIES WERE GIV EN ETC. IN THE SAID SCENARIO, WE SET ASIDE THE ORDER OF THE CIT (A) AND REMAND TH E MATTER BACK TO THE FILE OF THE AO FOR DE NOVO ASSESSMENT. NEEDLESS TO SAY, ADEQUAT E OPPORTUNITY MAY BE GRANTED TO THE ASSESSEE TO PUT FORTH HIS CASE BEFOR E THE AO. THE AO SHALL NOT BE INFLUENCED BY ANY OF THE OBSERVATIONS WHICH WE HAVE MADE ABOVE AND HAS TO PASS 5 ITA NO.5514/DEL/2016 THE ASSESSMENT ORDER IN ACCORDANCE TO LAW, UNTRAMME LED BY ANY OBSERVATIONS BY US. 6. THEREFORE, IT WOULD BE PROPER AND IN THE INTERES T OF JUSTICE THAT FOR THE CURRENT YEAR ALSO THE MATTER BE RESTORED BACK TO TH E FILE OF ASSESSING OFFICER FOR DE-NOVO AVERMENT AS DIRECTED IN ASSESSMENT YEAR 2008-09. I DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF FEBRUARY, 2017. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 16-02-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI