ACIT, New Delhi V. M/s. Bluemoon Infrastructure (P) Ltd., Delhi

ITA 58/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6526 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: S K GUPTA
• Keywords: Search and seizure; Opportunity of being heard; Additional evidence; Accommodation entries
• Section: 153A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH A NEW DELHI BEFORE : SHRI SUNIL KUMAR YADAV , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 58/DEL./2014 ASSTT. YEAR : 2006 - 07 A.C.I.T., CENTRAL CIRCLE - 3, VS. BLUEMOON INFRASTRUCTURE (P) LTD., NEW DELHI. BA - 17A, DDA FLATS, ASHOK VIHAR, PHASE - I, DELHI.(PAN: AACCB7494G) C.O. NO. 236/DEL./2014 (IN ITA NO. 58/DEL./2014) ASSTT. YEAR : 2006 - 07 BLUEMOON INFRASTRUCTURE (P) LTD., V S. A.C.I.T., CENTRAL CIRCLE - 3, BA - 17A, DDA FLATS, ASHOK VIHAR, NEW DELHI. PHASE - I, DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SH. RAVI JAIN, CIT/DR ASSESSEE BY : SH. S.K. GUPTA, C.A. DATE OF HEARING : 22.09.2016 DATE OF PRONOUNCEMENT : 09.12 .2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THE ABOVE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 24.10.2013 OF LD. CIT(A) - I, NEW DELHI FOR THE ASSESSMENT YEAR 2006 - 07. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL : ITA NO. 58 & CO NO. 236/DEL./2014 2 1. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,50,00,000/ - (WRONGLY MENTIONED AS 15,00,000) U/S. 68 OF THE ACT W.R.T. PROCUREMENT OF ACCOMMODATION ENTRIES THROUGH SHARE APPLICATION MONEY FROM NON - DESCRIPT COMPANIES. 2. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AND ON FACTS IN DELETING AN ADDITION OF RS.75,000/ - MADE BY THE AO W.R.T. COMMISSION PAID @ 5% FOR PROCUREMENT O F ACCOMMODATION ENTRIES THROUGH SHARE APPLICATION MONEY FROM NON - DESCRIPT COMPANIES. 3. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A. 4. THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON F ACTS. 2. THE ASSESSEE HAS ALSO CHALLENGED THE IMPUGNED ORDER IN ITS CROSS OBJECTION ON THE GROUND THAT THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS IN NOT QUASHING THE ADDITION OF RS.1,50,75000/ - (WRONGLY MENTIONED AS RS.15,75,000/ - ) ON THE GROUND THAT THE ADDITIONS IN QUESTION HAVE NO RELATION WHATSOEVER TO THE MATERIAL OR EVIDENCE FOUND IN THE COURSE OF SEARCH AND THERE WERE NO PENDING ASSESSMENT PROCEEDINGS ON THE DATE OF SEARCH ABATING UNDER SECOND PROVISO TO SECTION 153A(1). 3. THE BRIEF FACTS OF T HE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN MAHESH MEHTA GROUP OF CASES ON 30.06.2009 AND AS PER SEARCH WARRANT AND PANCHNAMA THE ASSESSEE COMPANY WAS ALSO COVERED U/S. ITA NO. 58 & CO NO. 236/DEL./2014 3 132/133A OF THE IT ACT. NOTICE U/S. 153A WAS ISSUED ON 06.04.201 0 FOR FURNISHING THE RETURN OF INCOME WITHIN 16 DAYS FROM THE SERVICE OF NOTICE. IN RESPONSE TO THE NOTICE, THE ASSESSEE STATED THAT THE ORIGINAL RETURN ALREADY FILED ON 28.11.2006 DECLARING LOSS OF RS.11,300/ - BE TREATED AS FILED IN RESPONSE TO NOTICE ISS UED U/S. 153A. THE AO NOTICED IN THE ASSESSMENT PROCEEDINGS THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN RECEIPT OF SHARE APPLICATION MONEY OF RS.1,50,00,000/ - FROM THE EIGHT PERSONS AS ENUMERATED IN THE TABLE GIVEN AT PARA 5 OF THE ASSESSMENT ORDER U/S. 153A. THE ASSESSING OFFICER MADE INDEPENDENT VERIFICATION OF THE RECEIPTS BY ISSUING SUMMONS U/S. 131 TO THE SHARE APPLICANTS REQUIRING THEM TO FURNISH THE INFORMATION REGARDING SOURCE OF INVESTMENT, BANK ACCOUNTS, P & L ACCOUNTS, PRESENT STATUS OF SHARES PURCHASED ETC. THE SUMMONS, HOWEVER, REMAINED UN - COMPLIED WITH. THE ASSESSING OFFICER, THEREFORE, RELYING ON VARIOUS DECISIONS AND OTHER ATTENDING FACTS OF THE CASE, CONCLUDED THAT SOURCE OF SHARE APPLICATION MONEY AND EXISTENCE OF SHARE APPLICANTS COULD NOT BE PROPERLY EXPLAINED AND THUS, A SUM OF RS.1,50,00,000/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68 OF THE ACT TREATING THE SAME AS ACCOMMODATION ENTRY RECEIVED BY THE ASSESSEE IN THE FORM OF SHARE APPLIC ATION MONEY. THE AO FURTHER MADE ADDITION OF RS.75,000/ - ON ACCOUNT OF COMMISSION PAID ON PROCURING SUCH ACCOMMODATION ENTRIES. ITA NO. 58 & CO NO. 236/DEL./2014 4 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE ASSESSMENTS OF SIX SHARE APPLICANT S OUT OF EIGHT AND ALSO THAT THERE IS NO EVIDENCE FOUND DURING THE SEARCH INDICATING SUCH ACTIVITIES OF THE ASSESSEE (TAKING ACCOMMODATION ENTRIES) TO SUPPORT THE ALLEGATION OF REVENUE, DELETED THE ADDITION OF RS.1,50,00,000/ - MADE U/S. 68 AND RS.75,000/ - MADE BY AO ON ACCOUNT OF ALLEGED COMMISSION PAID BY ASSESSEE. THE REVENUE IN ITS APPEAL AS WELL AS THE ASSESSEE IN ITS CROSS OBJECTION HAVE CHALLENGED THE IMPUGNED ORDER OF LD. CIT(A) BEFORE THE TRIBUNAL ON THE GROUNDS ENUMERATED ABOVE. 5. THE LD. DR REITERATING THE GROUNDS OF REVENUE S APPEAL CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS WITHOUT CONSIDERING THE FINDINGS OF THE ASSESSING OFFICER IN RIGHT PERSPECTIVE. THE SHARE APPLICANTS DID NOT COMPLY WITH THE SUMMONS ISSUE D BY AO NOR FILED THE REQUISITE DETAILS SOUGHT BY AO. THE SHARE S WERE NOT ALLOTTED DESPITE RECEIPT OF SHARE APPLICATION MONEY. THE EXISTENCE OF SHARE APPLICANTS ALSO COULD NOT BE ESTABLISHED. HENCE, THE ADDITIONS MADE BY AO DESERVE TO BE SUSTAINED. ITA NO. 58 & CO NO. 236/DEL./2014 5 6. THE LD. AR, ON THE OTHER HAND, SUBMITTED THAT THE ADDITIONS, WHATSOEVER, MADE BY THE AO ARE NOT BASED ON ANY MATERIAL FOUND DURING THE COURSE OF SEARCH, AS NO EVIDENCE OR DOCUMENTS WERE POINTED OUT BY THE AO TO HAVE BEEN FOUND IN THE SEARCH WHICH COULD INDICA TE THAT THE ASSESSEE HAD RECEIVED ANY ACCOMMODATION ENTRY IN THE FORM OF SHARE APPLICATION MONEY . THEREFORE, IN VIEW OF VARIOUS DECISIONS RELIED BEFORE THE LD. CIT(A) AS WELL AS BEFORE US INCLUDING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF C IT(CENTRAL) VS. KABUL CHAWLA, 380 ITR 573 (DELHI) WHEREIN IT HAS BEEN HELD THAT IN THE SEARCH CASES, ADDITIONS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH , THE ADDITIONS SO MADE BY AO HAVE RIGHTLY BEEN DELETED BY T HE LD. CIT(A) . IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS COLLECTED THE INFORMATION ABOUT SHARE APPLICATION MONEY FROM THE BOOKS OF ACCOUNTS OF ASSESSEE AND BALANCE SHEET . IT WAS ALSO SUBMITTED THAT THE LD. CIT(A) SHOULD HAVE ALSO DELETED THE ADD ITION ON FURTHER GROUND THAT THERE WAS NO PENDING ASSESSMENT PROCEEDING ON THE DATE OF SEARCH WHICH COULD BE ABATED UNDER SECOND PROVISO TO SECTION 153A(1). THE AO, THEREFORE, WAS NOT JUSTIFIED IN MAKING ADDITION ON THE BASIS OF MATERIAL GATHERED IN THE CO URSE OF ASSESSMENT PROCEEDINGS PARTICULARLY WHEN NO ASSESSMENT PROCEEDINGS WERE ABATED UNDER THE PROVISIONS OF THE ACT. HE, THEREFORE, URGED THAT THE ADDITION SO MADE DESERVES TO BE DELETED. ITA NO. 58 & CO NO. 236/DEL./2014 6 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUG H THE ENTIRE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF IMPUGNED ORDER SHOWS THAT THE LD. CIT(A) HAS DELETED THE ADDITIONS AFTER CONSIDERING THE ASSESSMENTS O F SIX SHARE APPLICANTS OUT OF EIGHT. HE HAS ALSO CATEGORICALLY RECORDED A FINDING THAT THE ADDITIO NS SO MADE ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IT IS NOW SETTLED THAT IN THE CASES OF SEARCH, NO ADDITION CAN BE MADE UNLESS THERE IS INCRIMINATING MATERIAL FOUND IN THE SEARCH TO SUPPORT SUCH ADDITIONS. HOWEVER, IN THE INSTANT CASE, THERE IS NO MATERIAL ON RECORD AND THERE IS NO WHISPER IN THE ASSESSMENT ORDER AS WELL AS IN THE ORDER OF LD. CIT(A) TO SHOW AS TO WHAT MATERIAL WAS FOUND AT THE TIME OF SEARCH, WHICH LED THE ASSESSING OFFICER TO MAKE THE IMPUGNED ADD ITION. THE SEARCH MEMO IS NOT AVAILABLE BEFORE US TO KNOW ABOUT THE MATERIAL FOUND IN THE SEARCH. THE LD. CIT(A) HAS ALSO NOT RECORDED ANY FINDING AS TO THE MATERIAL FOUND IN THE COURSE OF SEARCH. THEREFORE, UNLESS IT IS ASCERTAINED AS TO WHAT MATERIAL WAS FOUND ON SEARCH AND WHETHER IT WAS INCRIMINATING OR NOT , THE DECISION OF MAKING ADDITION BY THE ASSESSING OFFICER AND ITS DELET ION BY THE LD. CIT(A) CANNOT BE SUPPORTED. BESIDES, THE LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCES U/S. 46A. THE IMPUGNED ORDER SHOWS THAT THE LD. CIT(A) CALLED FOR THE REMAND REPORT OF THE AO, BUT WE DO NOT FIND IN THE IMPUGNED ITA NO. 58 & CO NO. 236/DEL./2014 7 ORDER AS TO WHAT WAS THE REBUTTAL OR CONTENTION OF THE ASSESSING OFFICER IN THE SAID REMAND REPORT ON ADMISSION OF ADDITIONAL EVIDENCE, WHATSOEVER, SUBMITTED BEFORE THE LD. CIT(A). THE REMAND REPORT OF THE AO IS ALSO NOT AVAILABLE ON RECORD BEFORE US TO DECIDE THE ISSUE OF ADMISS IBILITY OF ADDITIONAL EVIDENCES FILED BEFORE THE LD. CIT(A). WE, ACCORDINGLY RESTORE THE MATTER TO THE FILE OF LD. CIT(A) FOR DECIDING THE APPEAL AFRESH AFTER MAKING PROPER EXAMINATION OF RECORDS IN THE LIGHT OF OBSERVATIONS MADE ABOVE. NEEDLESS TO SAY, TH E PARTIES SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE APPEAL OF THE REVENUE DESERVES TO BE ALLOWED FOR STATISTICAL PURPOSES. 8. SINCE THE MATTER UNDER CONSIDERATION HAS BEEN REMANDED TO THE LD. CIT(A), THE CROSS - OBJECTION FILED BY THE ASSESSEE BECOMES INFRUCTU O S AND IS ACCORDINGLY DISMISSED. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COUR T ON 09.12.2016 . SD/ - SD/ - ( SUNIL KUMAR YADAV ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09.12.2016 *AKS/ -