M/s. Pashupati Textiles & Prints Pvt. Ltd., Meerut V. ACIT, Meerut

ITA 5797/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3557 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Assessee Lawyers: K SAMPAT
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.5797/DEL/2016 ASSESSMENT YEARS 2010-11 PASHUPATI TEXTILES & PRINTS PVT. LTD., ALEEM MARKET, KHANDAK BAZAR, MEERUT. PAN: AABCP 0275C VS. ACIT, CIRCLE-2, MEERUT. (APPELLANT) (RESPONDENT) ASSESSEE(S) BY : S/SHRI K. SAMPAT & V.RAJA KUMAR, ADV. REVENUE BY : MS. BEDOBANI CHAUDHURI, SR.D.R. / DATE OF HEARING : 18/04/2017 / DATE OF PRONOUNCEMENT: 20/04/2017 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A), MEERUT, VIDE ORDER DATED 02.09.2016 FOR THE ASSESSM ENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. THE CIT(A) HAS ERRED IN SUMMARILY REJECTING THE PL EA OF THE APPELLANT COMPANY WITH RESPECT TO FOLLOWING A) THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITION U/S.68 OF THE INCOME TAX ACT, 1961. B) THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN PROVED BEYOND DOUBT. C) THAT THE SEVERAL OBSERVATIONS AS MADE AND INFERE NCES DRAWN ARE UNTENABLE, INCORRECT, UNWARRANTED. 3. THE BRIEF FACTS OF THE CASE AS ARE EMANATING FRO M THE ORDER OF THE AO ARE REPRODUCED HEREINBELOW: 3. THE ASSESSEE WAS REQUIRED TO PRODUCE THE DIRECTO RS OF THE TWO COMPANIES, NAMELY, M L S HUM TUM MARKETING PVT. LTD. & M L S VICTORY SOFTWARE PVT. LTD., FROM WHOM IT HAD MADE TRANSACTIONS, FOR STATEMENTS VIDE ORDER SHEET ENTRY DATED 08.10.2014 . THE ASSESSEE HAS FILED COPY OF ACCOUNT OF BOTH THE COMPANIES, BU T HE FAILED TO PRODUCE THEM FO R STATEMENT . THE ASSESSEE HAS ALSO FILED COPY OF BANK TRANSACTIO N AND COPY OF ITR - V FOR A. Y 2010-11 OF BOTH THE PARTIES. AFTER CAREFUL OBS ERVATION OF THESE DOCUMENTS, IN THE CASE OF M/S. HUM TUM MARKETING PVT . LTD, RETURN INCOME FOR A.Y 2010 - 11 WAS NIL AND IN ITA NO.5797/DEL/2016 2 THE BANK ACCOUNT, THERE WERE TRANSFER ENTRIES WHICH PROVING THE FACT OF ACCOMMODATION ENTIRES . IN THE CASE OF M L S. VICTORY SOFTWARE PVT. LTD., THE RETURN INCOME WA S ONLY RS.16, 015 / - AND HAVING THE SAME KIND OF TRANSACTION WHICH CLEAR LY INDICATES THAT THESE WERE ONLY ACCOMMODATION ENTRIES. BUT AGAIN THE ASSE SSEE WAS AFFORDED OPPORTUNITY TO PRODUCE THE DEPOSITORS. BUT HE FAILED TO PRODUCE TH EM AND ACCORDINGLY, SUM M ONS U / S 131 OF THE I . T ACT, 1961 WERE ISSUED TO M L S HUM TUM MARKETING PVT. LTD & M L S VICTORY SOFTWARE PVT. LTD . BUT BOTH THE SUMMONS WERE SENT BACK UNDELIVERED. TH E ASSESSEE WAS COMMUNICATED REGARDING THE SAME AND WAS REQUIRED TO SHOW CAUSE AS TO WHY THE AMOUNT CREDITED BY THEM MAY NOT BE ADDED TO THE INCOME OF THE ASSESSEE U / S 68 AS THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS, GENUINENESS O F TRANSACTION AND IDENTITY OF THESE PARTIES. 4. AS THE ASSESSEE COMPLETELY FAILED TO PRODUCE OR FURNISH THE REQUIRED DETAILS OF THESE PARTIES WHICH PROVE THEIR CREDITWORTHINESS FO R AMOUNTING TO RS.10, 00, 000 / - & RS.15,00 , 000 / - TOTALING TO RS.25 , 00 , 000 / - . EVEN DURING THE SEARCH OPERATION MADE BY THE OFFICE OF THE DIRECTOR OF INCOME TAX (INV . ) - NEW DELHI , IT REVEALED THAT BOTH THE PARTIES WERE PROVIDING ACCOMMODATION ENTRIES. EVEN MULTIPLE OPPORTUNITIES WERE AFFORDED TO THE ASSESSEE TO PROVE ITS CLAIM BY PRODUCING THESE PART IES , NAMELY , M L S HUM TUM MARKETING PVT. LTD & M/S. VICTORY SOFTWARE PVT. LTD. , BUT THE ASSESSEE FAILED TO AVAIL THESE OPPORTUNITIES AND THE CREDITWORTHINESS , GENUINENESS AND IDENTITY OF THE DEPOSITORS REMAINED TOTALLY UNEXPLAINED AT THE END OF THE ASSE SSEE AND THE SAME ARE , THEREFORE, LIABLE TO ADD TO BE ADDED TO THE TOTAL INCOME OF TH E ASSESSEE. ACCORDINGLY , THE AMOUNT OF RS.10,00 , 000 / - & RS.15 , 00, 000 / - TOTALING TO RS.25 , 00,000 / - IS ADDED U / S. 68 OF THE I . T. ACT, 1961 AS UNEXPLAINED CASH CREDIT .. . . 4. LEARNED CIT(A) HAS CONFIRMED THE ACTION OF THE A O. 5. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. IT WAS BROUGHT TO MY NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE, MR. K. SAMPAT, ADV., TO THE ORDER OF THE AO AT PAGES 1 TO 3 THAT THE ASSESSEE HAS FILED A COPY OF CONFIRMATION AMOUNTING TO RS.25 LAK H TOWARDS SUBSCRIPTION OF SHARE CAPITAL BY TWO COMPANIES, NAMELY, M/S. HUM TUM MARKETING PVT. LTD. AND M/S. VICTORY SOFTWARE PVT. LTD. FROM WHOM THE ASSESSEE MADE THE TRANSACTIONS. THE ASSESSEE FILED THE WRITTEN SUBMIS SIONS AND ALL THE DOCUMENTS AS REQUIRED. THE ASSESSEE STRAIGHTWAY WAS ASKED TO PRODUCE DIRECTORS OF THE TWO COMPANIES IN THIS REGARD. LEAR NED COUNSEL FOR THE ASSESSEE BROUGHT TO MY NOTICE THAT THE ASSESSEE OF THE SAID COMPANY FOR THE IMPUGNED YEAR U/S.153C/153A WHICH ARE DATED 28.03.2 013 WHERE THE DETAILED SCRUTINY HAS BEEN MADE OF BOTH THE COMPANI ES AND NO ADDITIONS HAVE BEEN MADE ON THIS ACCOUNT. THE ORDERS OF BOTH THE COMPANIES ARE PLACED ON RECORD AND NO ADVERSE VIEW HAS BEEN TAKEN ABOUT THE SAID COMPANIES BY THE INCOME TAX DEPARTMENT. ON ONE HAND , THE INCOME TAX ITA NO.5797/DEL/2016 3 DEPARTMENT IS ACCEPTING BOTH THE CONDITIONS AS GENU INE AND THERE IS NO QUESTION OF THEIR CREDITWORTHINESS OR IDENTITY, ON THE OTHER HAND, IN THE CASE OF THE ASSESSEE THESE COMPANIES ARE HELD TO BE ACCO MMODATION ENTRIES GIVER. THIS APPROACH OF THE DEPARTMENT, CANNOT BE ACCEPTED , ESPECIALLY, WHERE THE ASSESSEE HAS NOT BEEN ASKED ANY QUESTIONS ON THE ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THESE COMPANIES AND ASSESSEE HAV ING PRODUCED ALL THE DOCUMENTS WITH REGARD TO THE SAID COMPANIES AND NO DEFECT HAVING BEEN FOUND OUT IN SUCH CIRCUMSTANCES, THEREFORE, THE DEP ARTMENT CANNOT BLOW HOT AND COLD IN THE SAME BREATHE. THEREFORE, THE ADDITI ONS SO MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) IS BAD IN LAW A ND IS DIRECTED TO BE DELETED. LEARNED COUNSEL FOR THE ASSESSEE HAS RELIE D UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS. NEE LKANTH FINBUILD LTD. REPORTED IN (2015) 70 SOT 368 (DEL). THE RELIANCE I S ALSO PLACED IN THE CASE OF GOEL SOM GOLDEN STATE (P) LTD DECIDED BY HONBLE DELHI HIGH COURT IN ITA NO.212/12 DATED 11.04.2012 WHERE THE AO DID NOT CONDUCT ANY INQUIRY ABOUT THE ASSESSEE TO RECEIVE SHARE CAPITAL FROM FI VE COMPANIES TREATED AS SHAM AND BOGUS AND APPEAL OF THE REVENUE WAS DISMIS SED BY THE HONBLE COURT. IN THE CIRCUMSTANCES AND FACTS OF THE CASE A LL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 20 TH APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 20/04/2017