ITO, New Delhi V. M/s. Innovative Finvest Ltd., New Delhi

ITA 5723/DEL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69171 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-08-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S VASANTHAM
• Assessee Lawyers: HARDIPENDER SINGHADV
• Keywords: Accommodation entries
• Section: 147; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C: NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER ITA NO.5723/DEL/ 2011 (ASSESSMENT YEAR: 2002-03) ITO VS. INNOVATIVE FINVEST LTD. WARD-11(4), ROOM NO. 324, E-45/2, OKHLA INDUSTRIAL AREA, C. R. BUILDING, PHASE-II. NEW DELHI. NEW DELHI. PAN: AABC13312G. ASSESSEE BY : SHRI HARDIPENDER SINGH,ADV. REVENUE BY : SHRI T. S. VASANTHAM, SR.DR. ORDER PER C. M. GARG, J M: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XXX, NEW DELHI DATED 10.10.2011 IN APPEAL NO- 309/2009-10 FOR THE ASSESSMENT YEAR 2 002-03. THE SOLE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS A S UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, LD. CIT (A) WAS JUSTIFIED IN DELETING A DDITION OF RS.22,25,000/- MADE U/S 68 ON ACCOUNT OF ALLEGED BO GUS ACCOMMODATION ENTRIES RECEIVED FROM M/S R. N. AGGAR WAL & CO. BY RELYING ON THE DECISION IN THE CASE OF CIT V S. DIVINE LEASING & FINANCE LTD. (2008) 299 ITR 262 (DEL). 2. BRIEFLY STATED TO THE FACTS GIVING RISE TO THIS APPEAL ARE THAT THE CASE WAS OPEN FOR REASSESSMENT U/S 147 AND 148 OF THE AC T. THE ASSESSING ITA NO.5723/DEL/2011 2 OFFICER OBSERVED THAT IN VIEW OF INFORMATION RECEIV ED FROM DIRECTORATE OF INCOME TAX (INVESTIGATION, NEW DELHI). THE ASSESSEE HAS RECEIVED RS.22,25,000/- OUT OF BOGUS ACCOMMODATION TRANSACTI ON BETWEEN ENTRY PROVIDER AND THE ASSESSEE. THE ASSESSING OFFICER OB SERVED THAT THE ASSESSEE HAS FAIL TO PROVE THE GENUINENESS AND CREDITWORTHIN ESS OF THE ENTRY PROVIDER AND THE ASSESSING OFFICER ADDED ENTIRE AMOUNT OF CR EDIT ENTRIES TO THE INCOME OF ASSESSEE U/S 68 OF THE INCOME TAX ACT 196 1 (FOR SHORT THE ACT). 3. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, T HE ASSESSEE PREFERRED AN APPEAL BEFORE CIT (A)-XXX, NEW DELHI. WHICH WAS ALLOWED BY THE IMPUGNED ORDER AND THE IMPUGNED ADDITION MADE BY TH E ASSESSING OFFICER WAS DELETED. 4. NOW, THE DEPARTMENT IS BEFORE THIS TRIBUNAL IN T HE SECOND APPEAL WITH SOLE GROUND AS MENTIONED HEREINABOVE. 5. WE HAVE HEARD RIVAL ARGUMENT OF BOTH THE PARTIES AND CAREFULLY PERUSED THE RECORD PLACED BEFORE US. FROM A BARE GL ANCE ON THE ASSESSMENT ORDER, WE OBSERVE THAT THE CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS: 3.1 FROM THE FACTS NOTED ABOVE, THERE IS NO DOUBT FROM THE TRANSACTIONS ENTERED INTO BY THE APPELLANT, THERE A RISES A DOUBT REGARDING THE SALE OF UNLISTED SHARES BECAUSE M/S R . N. AGGARWAL & CO. HAS BEEN FOUND TO BE A BOGUS ACCOMMO DATION ENTRY PROVIDER AS PER DIRECTORATE OF INCOME TAX (IN VESTIGATION), NEW DELHI. HE HAD GIVEN REFERENCE TO DEALINGS WITH THE ITA NO.5723/DEL/2011 3 APPELLANT CO. AND THE DEPARTMENT INITIATED PROCEEDI NGS AGAINST APPELLANT COMPANY. DURING THE ASSESSMENT PROCEEDING S APPELLANT HAD FILED DETAILS OF SALE OF UNLISTED SHA RES WITH DETAILED BACKGROUND AND AS FURTHER VERIFICATION OF THE SAME, THE TRANSACTIONS HAVE BEEN CERTIFIED BY THE CONCERNED B ANK. REGISTRAR OF COMPANIES ANNUAL REPORTS CONFIRM THE GENUINENESS OF THE SHARES INVOLVED IN TRANSACTION. IN ABSENCE OF ANY EVIDENCE TO THE CONTRARY, MERELY ON THE BASIS T HAT THE STATEMENT OF M/S R. N. AGGARWAL COULD NOT BE RECORD ED BY THE ASSESSING OFFICER., THE TRANSACTIONS CANNOT BE HELD TO BE NON- GENUINE. THEREFORE THE ASSESSING OFFICER HAS WRONGL Y DISALLOWED THE TRANSACTIONS OF THE APPELLANT IN RES PECT OF SHARES SOLD OF FOUR UNLISTED COMPANIES AS PER DETAILS PLAC ED ON RECORD. THE CREDITWORTHINESS OF M/S R. N. AGGARWAL & CO. AN D GENUINENESS OF TRANSACTIONS OF SALE OF UNLISTED SHA RES AS PER THE EXPLANATIONS GIVEN BY THE APPELLANT COUNSEL BASED O N THE DETAILS AND DOCUMENTS SUBMITTED DURING THE PROCEEDINGS, ARE FOUND TO BE CORRECT. THE ASSESSING OFFICER HAS ON THE BASIS OF INFORMATION THAT M/S R. N. AGGARWAL IS ENTRY PROVID ER, CONSIDERED THE TRANSACTION AS BOGUS WITHOUT BRINGIN G OUT ANY EVIDENCE ON RECORD THAT THE TRANSACTIONS ARE NON GE NUINE. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS T REATED THE APPELLANT TO BE PRIVATE LTD. CO. AND THE TRANSACTIO NS UNDER CONSIDERATION AS ACCEPTANCE OF SUBSCRIPTION OF SHAR E CAPITAL OR DEPOSITS FROM THE FRIENDS OR RELATIVES OF THE PROMO TERS. THIS IS CONTRARY TO THE FACTS PLACED ON RECORD AS FOLLOWS; A) THE APPELLANT COMPANY WAS DOING BUSINESS IN NON BANKING FINANCIAL DEALINGS AND WAS ALSO HOLDING SHA RES OF 4 UNLISTED COMPANIES. THE ANNUAL REPORTS OF REGISTRAR S OF COMPANIES LIST THESE DETAILS. B) THE APPELLANT COMPANY SOLD SHARES OF THESE 4 COM PANIES TO M/S R. N. AGGARWAL & CO., STOCK & SHARE BROKERS. THE CREDIT NOTES, CONTRACT NOTES, THE PAYMENTS MADE THROUGH CH EQUES AS TESTIFIED BY THE BANK CERTIFICATE, PROVE THESE TRAN SACTIONS. ITA NO.5723/DEL/2011 4 C) THE IDENTITY OF THE COMPANY TO WHOM SHARES WERE SOLD, IS GIVEN BY THE APPELLANT COMPANY IN TERMS OF ITS REFE RENCE WITH SEBI, ITS ADDRESS AND TELEPHONE NUMBER. D) THE CREDITWORTHINESS OF THE PURCHASER IS PROVED BY THE BANK CERTIFICATE SHOWING THE FACT EXCESS PAYMENT WE RE MADE BY THE PURCHASER THROUGH CHEQUES AND IN FACT EXCESS PA YMENT OF RS.2,00,000/- WAS MADE BY IT TO THE APPELLANT COMPA NY. MOREOVER THE PURCHASER COMPANY BEING STOCK & SHARE BROKERS AND HAVING REGISTRATION WITH SEBI PROVES CREDITWORT HINESS OF THE PURCHASER. E) THE GENUINENESS OF TRANSACTIONS IS PROVED BY ROC S ANNUAL REPORTS SHOWING DETAILS OF SHARES OF THE SAI D 4 UNLISTED COMPANIES, CREDIT/ CONTRACT NOTES OF PURCHASER COMP ANY AND SUBSEQUENT PAYMENTS MADE THROUGH CHEQUES AS CONFIRM ED BY BANK CERTIFICATE. THEREFORE, THE ASSESSING OFFICER HAS WRONGLY DISALLOWED THESE TRANSACTIONS WITH M/S R. N. AGGARW AL & CO. AND THE ADDITION MADE BY HIM TOWARDS COMMISSION, IS ALSO WITHOUT MERIT. 6. AS PER ABOVE OBSERVATIONS AND FINDINGS OF CIT (A ), WE ARE OF THE CONSIDERED OPINION THAT THE CIT (A) VERIFIED THE DE TAILS AND EVIDENCES SUBMITTED BY THE ASSESSEE IN A PROPER MANNER AND HE LD THAT THE ASSESSING OFFICER WRONGLY TREATED THE APPELLATE COMPANY TO BE A PRIVATE LTD. CO. AND THE IMPUGNED TRANSACTIONS AS ACCEPTANCE OF SUBSCRIP TION OF SHARE CAPITAL OR DEPOSITS FROM THE FRIENDS AND RELATIVES OF THE PROM OTERS. FROM THE EVIDENCE AND DETAILS SUBMITTED BY THE ASSESSEE. IT WAS REVEA LED THAT THE ABOVE OBSERVATIONS OF ASSESSING OFFICER WERE NOT RIGHT AN D THE APPELLANT COMPANY WAS DOING BUSINESS OF NON BANKING FINANCIAL DEALING S AND WAS ALSO HOLDING ITA NO.5723/DEL/2011 5 SHARES OF 4 UNLISTED COMPANIES. THE ANNUAL REPORTS OF REGISTRARS OF COMPANIES LIST THESE DETAILS. 7. THE CIT (A) ALSO NOTED THE FACT THAT THE ASSESSE E COMPANY SOLD SHARES OF THESE FOUR COMPANIES TO M/S R. N. AGGARWAL & CO. , AND COMPANY STOCK AND SHARE BROKER ANT THE CIT (A) ALSO CONSIDERED TH E CREDIT NOTES, CONTRACT NOTES, MODE OF PAYMENT THROUGH CHEQUES SUPPORTED BY BANK CERTIFICATES TO VERIFY THE GENUINENESS OF TRANSACTIONS. THE CIT (A) ALSO CONSIDERED THE CREDITWORTHINESS OF THE PURCHASER THAT WAS M/S R. N . AGGARWAL & CO. BY CONSIDERING THE BANK CERTIFICATES SHOWING THE FACT THAT ALL PAYMENTS WERE MADE BY PURCHASER THROUGH BANKING CHANNELS. THE CIT (A) ALSO OBSERVED THAT THE FACT THAT THE PURCHASER COMPANY BEING STOC K AND SHARE BROKERS WAS HAVING REGISTRATION WITH SEBI WHICH ALSO SUPPORTS T HE CREDITWORTHINESS OF THE PURCHASER COMPANY. THE COMMISSIONER OF INCOME T AX (APPEALS) ALSO CONSIDERED REGISTRATION OF COMPANYS ANNUAL REPORT SHOWING DETAILS OF SHARES OF SAID 4 UNLISTED COMPANIES, CREDIT/ CONTRACT OF T HE PURCHASER COMPANY, AND SUBSEQUENTLY PAYMENTS MADE THROUGH CHEQUES AS CONFI RMED BY THE BANK REPORTS. 8. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSI NG OFFICER HAS WRONGLY DISALLOWED THESE TRANSACTIONS WITH M/S R. N. AGGARW AL & CO. AND WRONGLY MADE THE ADDITION IN THIS REGARD WITHOUT HOLDING AN Y MERIT. ITA NO.5723/DEL/2011 6 9. PER CONTRA, THE CIT (A) RIGHTLY VERIFIED THE GEN UINENESS OF THE TRANSACTION AS WELL AS CREDITWORTHINESS OF THE PURC HASER COMPANY AND HELD THAT THE TRANSACTIONS WERE GENUINE AND THE CREDITWO RTHINESS OF THE PURCHASER WAS PROVED BY RELIABLE AND COGENT EVIDENCE. ACCORDI NGLY, WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER RIGHTLY DELE TED BY THE CIT (A) ON REASONABLE AND JUSTIFIED BASIS. WE ARE UNABLE TO SE E ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE W ITH THE SAME. RESULTANTLY THE SOLE GROUND OF THE REVENUE BEING DEVOID OF MERI TS AND DESERVE TO BE DISMISSED AND WE DISMISS THE SAME. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 16/08/ 2013. SD/- SD/- (J. S. REDDY) (C. M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16TH DAY OF AUGUST, 2013 S.SINHA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DELHI.