DCIT, New Delhi V. M/s. Globe Industrial Reasources Ltd., New Delhi

ITA 5644/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97079 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: P C
• Keywords: Accommodation entries; Onus to prove
• Section: 143(3); 133(6); 131; 148

Judgement Text

1 ITA NO. 5644/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBL E, JUDICIAL MEMBER I.T.A .NO.- 5644/DEL/2012 (ASSESSMENT YEA R-2004-05) DCIT CIRCLE-12(1) NEW DELHI (APPELLANT) VS GLOBE INDUSTRIAL RESOURCES LTD. D-9, JANGPURA EXTENSION NEW DELHI AABCG6924H (RESPONDENT) APPELLANT BY SH.T. VASANTHAN, SR. DR RESPONDENT BY SH.P.C. PANWAL, FCA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER D ATED 01/08/2012 PASSED BY CIT(A) XV NEW DELHI. THE GROUND OF APPE AL RAISED HEREIN, IS AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.30, 00,515/- MADE U/S 68 OF THE ACT IN RESPECT OF ALLEGED SALE CONSID ERATION OF SHARES. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND FI LED ITS RETURN OF INCOME OF RS.1,47,260/- FOR THE A.Y 2004-05. THE ASSESSEE SHOWED SHARES FOR VARIOUS PARTIES AND HAS TAKEN ACCOMMODATION ENTRIES FROM ENTRY DATE OF HEARING 26.08.2015 DATE OF PRONOUNCEMENT 31.08.2015 2 ITA NO. 5644/DEL/2012 OPERATORS. THE DETAILS OF WHICH FOR THE YEAR UNDER ASSESSMENT IS HEREIN BELOW :- ASSESSEE BANK A/C VALUE ENTRY TAKEN DATE OF WHICH ENTRY TAKEN NAME OF A/C HOLDER OF ENTRY GIVING A/C BANK A/C FROM WHICH ENTRY GIVEN 24585 5,00,000/- 8 TH MAY 2003 S.J. CAPITAL LTD. SBBJ 24585 5,00,000/- 10 TH MAY 2003 S.J. CAPITAL LTD. SBBJ 24585 5,00,000/- 14 TH MAY 2003 S.J. CAPITAL LTD. SBBJ 24585 5,00,000/- 31 ST MAY 2003 S.J. CAPITAL LTD. SBBJ 24585 5,00,515/- 1 ST JULY 2003 S.J. CAPITAL LTD. SBBJ 24585 5,00,000/- 20 TH SEPTEMBER 2003 S.J. CAPITAL LTD. SBBJ 30,00,515/- 3. THE ASSESSING OFFICER HELD THAT THE INVESTIGATION W ING OF THE DEPARTMENT UNEARTHED A HUGE MONEY LAUNDERING OPERATION AND SEN T THE REQUISITE INFORMATION TO THE FIELD INFORMATIONS. IT WAS ALLE GED THAT THE ASSESSEE HAS RECEIVED CHEQUES IN LIEU OF CASH PAYMENTS FROM THE ENTRY OPERATORS PROVIDING ACCOMMODATION ENTRIES. THE MONEY WAS REC EIVED IN THE FORM OF SHARE APPLICATION MONEY OR SHARE CAPITAL OR UNSECUR ED LOANS. THE UNACCOUNTED MONEY IS GIVEN TO THE ENTRY OPERATOR WH O IN TURN ISSUES THE CHEQUE TO THE BENEFICIARY. IN LIEU, THE ENTRY OPER ATOR CHARGES SOME COMMISSION WHICH IS A CERTAIN PERCENTAGE OF THE AMO UNT SOUGHT TO BE 3 ITA NO. 5644/DEL/2012 LEGITIMIZED IN THE GARB OF CHEQUES RECEIVED AS SHAR E APPLICATION MONEY OR SHARE CAPITAL OR UNSECURED LOAN OR PROCEEDS OF SALE OF SHARES OF CERTAIN NON-DESCRIPT COMPANIES. 4. THE A.O FURTHER HELD THAT THE ASSESSEE HAS RECEI VED CHEQUES AMOUNTING TO RS.30,00,515/- THROUGH TRANSACTIONS, WHERE IN FA CT NO REAL TRANSACTIONS TOOK PLACE. AS THE ASSESSEE FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE PERSON WHO CLAIMED TO BE THE SHARE HOLDER OF THE ASSESSEE COMPANY, THE AO ADDED RS. 30,00,515/- TO THE INCOME OF ASSESSEE. 3. THE CIT(A) HOLD THAT THOUGH THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE DIRECTORS, NOTHING PREVENTED THE AO TO ISSUE NO TICES U/S 133(6) OR SECTION 131 TO MAKE THE RELEVANT ENQUIRIES. AS THE EVIDENCE PLACED ON RECORDS SHOWS THAT THE ASSESSEE BUSINESS TRANSACTIO N WITH S.J CAPITAL LTD. HAVE DULY REFLECTED IN THE BOOKS OF ACCOUNT. I T IS THEREFORE HELD THAT THE ADDITION MADE ON ACCOUNT OF SUMS RECEIVED FROM S. J. CAPITAL LTD., HAS NO BASIS AT ALL. FURTHER NO MATERIAL HAS BEEN B ROUGHT ON RECORD BY THE AO AS TO UNDER WHAT CIRCUMSTANCES, THE BUSINESS TRANSACTION BY THE ASSESSEE IS NOT A GENUINE TRANSACTION. 5 . THE CIT(A) FURTHER OBSERVED THAT AO HAS BLINDLY REL IED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND AO HAS NOT BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD WHICH CAN PROVE THAT THE SAID MONEY WAS ASSESSEES OWN UNDISCLOSED INCOME. 6. THE FACTS AND EVIDENCE AVAILABLE ON RECORD SHOWS THAT FROM THE VERY BEGINNING AO HAS SHIFTED ENTIRE BURDEN UPON THE ASS ESSEE AND NO MATERIAL HAS BEEN BROUGHT BY THE AO HIMSELF TO PROV E HIS ALLEGATION THAT THE TRANSACTION OF THE ASSESSEE WITH S.J CAPITAL IS NOT GENUINE AND THE IMPUGNED AMOUNT REPRESENTED THE ASSESSEE OWN UNDISC LOSED INCOME. THUS, THE CIT(A) DELETED THE ADDITION MADE BY THE A .O. THE CIT(A) RELIED 4 ITA NO. 5644/DEL/2012 UPON THE DECISION OF DELHI HIGH COURT IN THE CASE O F CIT VS. PRADEEP GUPTA 207 CTR 115 WHICH HAS ALSO BEEN RELIED UPON B Y DELHI ITAT IN THE CASE OF BABITA GUPTA ITA NO. 2897/2006. 7. WE HAVE GONE THROUGH THE RECORDS AND FINDING OF THE ASSESSING OFFICER AS WELL AS THE CIT(A). WE HAVE HEARD BOTH THE PARTIES. THE CIT(A) CORRECTLY GIVEN A FINDING THAT THE AO HAS NOT COLLECTED ANY E VIDENCE AND THE AO WAS NOT JUSTIFIED IN TREATING THE AMOUNT OF SHARE A PPLICATION MONEY RECEIVED BY THE ASSESSEE AS ITS UNDISCLOSED INCOME. THE ASSESSEES BUSINESS TRANSACTION WITH S. J. CAPITAL LTD. HAVE D ULY REFLECTED IN BOOKS OF ACCOUNTS. THE CIT(A) HAS CORRECTLY TAKEN A RATIO OF DELHI HIGH COURT IN CASE OF CIT VS. PRADEEP KUMAR GUPTA [2007] 207 CTR 115. ONCE SECTION 148 OF THE INCOME TAX ACT, 1961 IS RESORTED TO, THE AO MUST FIRST DISCHARGE THE BURDEN OF SHOWING THAT INCOME HAS ESC APED ASSESSMENT. IT IS ONLY THEREAFTER THAT THE ASSESSEE HAS TO PROVIDE ALL THE ANSWERS. WE FIND NO REASON WHY THE INITIAL BURDEN OF PROOF SHOU LD NOT REST ON THE AO EVEN WHERE THE ASSESSMENT HAS GONE THROUGH UNDER S. 143(3) OF THE ACT. THE CIT(A) HAS, THEREFORE, ARRIVED AT THE CORRECT C ONCLUSION. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OF AUGUST 2015. SD/- SD/- ( N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/08/2015 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5 ITA NO. 5644/DEL/2012 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 26.08.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 27.08.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 27.08.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 31.08.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK .08.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.