M/s Bhagwati Motors, Ropar V. ITO, Ropar

ITA 602/CHANDI/2013

• Counselvise Citation: 60221514 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: TEJ MOHAN SINGH
• Section: 69; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 1084/CHD/2008 ASSESSMENT YEAR: 2002-03 M/S BHAGWATI MOTORS, VS THE ITO, NEAR PUNJAB & SIND BANK, WARD 6(2), ROPAR CHANDIGARH. PAN: AAAFB9291N & ITA NO. 602/CHD/2013 ASSESSMENT YEAR: 2002-03 M/S BHAGWATI MOTORS, VS THE ITO, NEAR PUNJAB & SIND BANK, WARD 2(2), ROPAR ROPAR. PAN: AAAFB9291N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SING H RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 12.10.2015 DATE OF PRONOUNCEMENT : 16.10.2015 O R D E R PER BHAVNESH SAINI,JM BOTH APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF LD. CIT(APPEALS) CHANDIGARH DATED 24.10.2 008 FOR ASSESSMENT YEAR 2002-03 AND DATED 01.04.2013 FO R ASSESSMENT YEAR 2002-03. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSI DERED MATERIAL AVAILABLE ON RECORD. BOTH THE APPEALS ARE DECIDED AS UNDER. 2 ITA 1084/2008 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 1 OF APPEAL OF THE ASSESSEE CHALLENGING THE RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 OF T HE ACT. THE SAME IS, THEREFORE, DISMISSED BEING NOT P RESSED. 4. THE GROUND OF APPEAL NOS. 2 TO 5 READ AS UNDER : 2. THAT WITHOUT PREJUDICE TO THE ABOVE LEGAL POSITION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN SUSTAINING THE ADDITION OF RS. 39,00,000/- ON SUBSTANTIVE BASIS WHICH IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN SUSTAINING THE ADDITION OF RS.5,000/- ON SUBSTANTIVE BASIS WHICH IS ARBITRARY AND UNJUSTIFIED. 4. THAT THE ADDITION HAVING ALREADY BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL ON SUBSTANTIVE BASIS & IN THE HANDS OF M/S MORINDA OVERSEAS INDUSTRIES LT D. ON PROTECTIVE BASIS, SUSTAINING ADDITION IN THE HANDS OF THE ASSESSEE APPELLANT WOULD TANTAMOUNT TO DOUBLE ADDITION WHICH IS NOT PERMITTED UNDER THE STATUTE. 5. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 5. BRIEFLY THE FACTS OF THE CASE WITH REGARD TO THE ABOVE ADDITIONS ARE THAT THE ASSESSEE FIRM FILED RE TURN OF INCOME AT RS. 48,990/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE INFORMATION FROM AC IT, CENTRAL CIRCLE, CHANDIGARH WAS RECEIVED ON THE BASI S OF WHICH ASSESSING OFFICER RECORDED THE REASONS FOR RE - OPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT 3 WHICH IS REPRODUCED IN ASSESSMENT ORDER IN WHICH TH E ASSESSING OFFICER BRIEFLY RECORDED THAT ACIT, CENTR AL CIRCLE, CHANDIGARH DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN MITTAL GROUP CASES HAS GATHERED INFORMATION ABOUT PURCHASE OF PLOT BEARING NO. 70-I A, PHASE-I CHANDIGARH BY M/S SHARVILLA ESTATES PVT. LT D. FROM SMT. ERA K. OHRI AND HER DAUGHTERS. THE ASSES SEE FIRM HAS ISSUED CHEQUES OF RS. 39 LACS TO M/S SHARV ILLA ESTATES PVT. LTD. BUT THE ASSESSEE HAS NOT SHOWN TH IS INVESTMENT IN THE RETURN OF INCOME FILED, THEREFORE , IT WAS CONSIDERED TO BE UNACCOUNTED MONEY OF THE ASSESSEE. THE ASSESSING OFFICER ISSUED STATUTORY NOTICES AND THE ASSESSEE IN REPLY THERETO SUBMITTED BEFORE ASSESSIN G OFFICER THAT THE ASSESSEE FIRM M/S BHAGWATI MOTORS IS IN THE TRADING OF OIL AND LUBRICANTS. M/S SHARVILLA E STATES PVT. LTD. CHANDIGARH WANTED TO RECEIVE SOME AMOUNT OF MONEY TO THE TUNE OF RS. 39 LACS FOR ITS USE FROM M /S MORINDA OVERSEAS INDUSTRIES LTD. BUT THE M/S MORIND A OVERSEAS INDUSTRIES LTD. DID NOT KNOW THE COMPANY M /S SHARVILLA ESTATES PVT. LTD. THEN M/S MORINDA OVERS EAS INDUSTRIES LTD. PAID THE AMOUNT TO M/S SHARVILLA ES TATES PVT. LTD. THROUGH THE ASSESSEE. THIS ENTRY OF RS. 3 9 LACS DID NOT HAVE ANY CONNECTION WITH THE BUSINESS AT AL L NOR DID THIS ENTRY HAVE ANY EFFECT ON THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FIRM. THE ASSESSING OFFICE R ASKED THE ASSESSEE TO FURNISH NECESSARY EVIDENCES I .E. BANK ACCOUNT ETC. IN SUPPORT OF THE SAME. THE ASSE SSEE FILED PHOTO COPY OF THE BANK STATEMENT WITH STATE B ANK OF 4 INDIA, SECTOR 17 AND STATE BANK OF INDIA, LUDHIANA. THE ASSESSING OFFICER ASKED FOR THE EXPLANATION OF THE ASSESSEE WHY THE BANK ACCOUNT WITH STATE BANK OF IN DIA, SECTOR 17 WAS NOT SHOWN IN THE BALANCE SHEET. THE ASSESSING OFFICER NOTED THAT THE BRIEF FACTS OF THE CASE ARE THAT CASH WAS BEING DEPOSITED IN THE BANK ACCOU NT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. LUDHIANA, A COMPANY KNOWN TO THE ASSESSEE FIRM AS CONFIRMED BY THE ASSESSEE. FOLLOWING AMOUNTS WERE CREDITED FROM THE BANK ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD . TO THE ASSESSEE'S BANK ACCOUNT NO. 0150/141502 WITH ST ATE BANK OF INDIA SECTOR 17, CHANDIGARH : S.NO. DATE AMOUNT MODE 1. 23.01.2002 RS. 20 LACS BY CLEARING 2. 22.02.2002 RS. 10 LACS -DO- 3. 25.02.2002 RS. 9 LACS -DO- 6. THE ASSESSING OFFICER FURTHER NOTED THAT FROM TH IS VERY BANK ACCOUNT OF THE ASSESSEE FIRM, THE FOLLOWI NG AMOUNT OF RS. 39 LACS WAS DEBITED AS PER THE DETAIL S ; S.NO. DATE AMOUNT MODE 1. 24.01.2002 RS. 20 LACS TO CLEARING 2. 28.02.2002 RS. 19 LACS -DO- 7. THIS AMOUNT IS ALLEGED TO HAVE BEEN CREDITED INT O THE ACCOUNT OF M/S SHARVILLA ESTATES PVT. LTD., AGA IN A COMPANY KNOWN TO THE ASSESSEE FIRM. THE AMOUNT OF 5 RS. 39 LACS HAVE STILL NOT BEEN RECEIVED BACK BY TH E ASSESSEE FIRM. THE ASSESSEE FIRM CONTENDS THAT THI S ENTRY OF RS. 39 LACS DID NOT HAVE ANY CONNECTION WI TH THE BUSINESS AT ALL, NOR THIS HAD ANY EFFECT ON THE PR OFIT OR LOSS OF THE FIRM. THE ASSESSING OFFICER AGAIN NOTE D THAT THIS ACCOUNT WAS NOT SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED T HAT ASSESSEE HAS OTHER BANK ACCOUNTS ALSO AND IF ASSESS EE WANTED TO GIVE ANY MONEY THROUGH THEIR BANK ACCOUNT , THEN IT WOULD HAVE BEEN GIVEN THROUGH THE OTHER BAN K ACCOUNTS MAINTAINED BY THE ASSESSEE. THIS CREATED A SUSPICION. IT WAS ALSO NOTED THAT THIS BANK ACCOUN T WITH STATE BANK OF INDIA, SECTOR 17, CHANDIGARH WAS OPEN ED BY ASSESSEE FIRM ON 22.01.2002 BY DEPOSITING CASH O F RS. 5000/- CHEQUE BOOK WAS ISSUED AND TWO CHEQUES WERE ISSUED FOR RS. 20 LACS AND RS. 19 LACS (TOTAL RS. 3 9 LACS) AND AFTER THAT, THIS ACCOUNT WAS NEVER OPERATED BY THE ASSESSEE FIRM AND WAS HAVING THE CREDIT BALANCE OF RS. 4800/- AS ON 28.02.2002 AND ULTIMATELY THE BALANCE BECOME ZERO. THE ASSESSING OFFICER, THEREFORE, N OTED THAT CIRCUMSTANTIAL EVIDENCE THUS, PROVED THAT ASSE SSEE FIRM HAS DEPOSITED THEIR UNACCOUNTED CASH IN THE BA NK ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. ON DIFFERENT DATES AND GOT THE CHEQUE ISSUED, DEPOSITE D IN THEIR BANK ACCOUNT AND THEN THE ASSESSEE FIRM ISSUE D CHEQUES OF RS. 39 LACS TO M/S SHARVILLA ESTATES PVT . LTD. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH EVIDENCE THAT THE AMOUNT OF RS. 39 LACS RECEIVED FR OM 6 M/S MORINDA OVERSEAS INDUSTRIES LTD., LUDHIANA AND GIVEN TO M/S SHARVILLA ESTATES PVT. LTD. BELONGS TO THESE COMPANIES. THE ASSESSING OFFICER ALSO ASKED FOR EXPLANATION OF THE ASSESSEE WHY THE ADDITION OF RS. 39 LACS MAY NOT BE MADE IN THE HANDS OF THE ASSESSEE F IRM. IT WAS EXPLAINED BEFORE ASSESSING OFFICER THAT ADDI TION OF RS. 39 LACS HAS ALREADY BEEN MADE BY THE ASSESSING OFFICER IN THE CASE OF M/S MORINDA OVERSEAS INDUSTR IES LTD. AND ALSO IN THE HANDS OF SHRI MUKESH MITTAL IN HIS INDIVIDUAL CAPACITY FOR SAME ASSESSMENT YEAR 2002-0 3 BY THE ASSESSING OFFICER OF CENTRAL CIRCLE, CHANDIGARH . THE ASSESSING OFFICER ARRANGED THE ASSESSMENT ORDERS FO R ASSESSMENT YEAR 2002-03 IN THE CASES OF M/S MORINDA OVERSEAS INDUSTRIES LTD., M/S SHARVILLA ESTATES PVT . LTD. AND SHRI MUKESH MITTAL AND ALSO OBTAINED COPY OF TH E BANK ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD . 8. THE PERUSAL OF THE ORDER OF M/S MORINDA OVERSEAS INDUSTRIES LTD. REVEALED THAT AN ADDITION OF RS. 1,00,55,500/- HAVE BEEN MADE BY ASSESSING OFFICER O N PROTECTIVE BASIS. M/S MORINDA OVERSEAS INDUSTRIES LTD. IN THEIR ASSESSMENT PROCEEDINGS HAS STATED THAT CAS H DEPOSITED OF RS. 1,00,55,500/- IN THE ACCOUNT NO. 5 0057 IN THE NAME OF M/S MORINDA OVERSEAS INDUSTRIES LTD. WITH STATE BANK OF PATIALA, SECTOR 8-C, CHANDIGARH BELONGS TO M/S SHARVILLA ESTATES PVT. LTD. AND THE ENTIRE AMOUNT WAS DEPOSITED BY THEM. THEY HAVE GIVEN ACCOMMODATION ENTRY ONLY. PERUSAL OF THE ASSESSMEN T 7 ORDER OF M/S SHARVILLA ESTATES PVT. LTD. REVEALED T HAT NO ADDITION HAS BEEN MADE AND IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT THE ADDITION HAVE BEEN MADE IN THE HANDS OF SHRI MUKESH MITTAL, THE FOUNDER DIRECTOR O F THE COMPANY M/S SHARVILLA ESTATES PVT. LTD. THE PERUSA L OF THE ASSESSMENT ORDER OF SHRI MUKESH MITTAL REVEALED THAT ADDITION OF RS. 1,07,05,000/- HAS BEEN MADE ON ACCO UNT OF UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT NO. 445 IN CHANDIGARH STATE COOPERATIVE BANK, SECTOR 22, CHANDIGARH IN THE NAME OF M/S SHARVILLA ESTATES PVT . LTD. 9. THE COPY OF THE BANK ACCOUNT FILED BY ASSESSEE REVEALED THAT CHEQUE AMOUNTING TO RS. 20 LACS WAS RECEIVED FROM THE ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AND WAS DEPOSITED AND THEN THE ASSE SSEE FIRM ISSUED CHEQUE OF RS. 20 LACS IN FAVOUR OF M/S SHARVILLA ESTATES PVT. LTD. NO OTHER EVIDENCE WAS FILED BY ASSESSEE. THE ASSESSING OFFICER, THEREFORE, NOT ED THAT ASSESSEE HAS FAILED TO ADDUCE EVIDENCE IN SUPPORT O F THE CLAIM THAT RS. 39 LACS BELONG TO M/S MORINDA OVERSE AS INDUSTRIES LTD. THE EXPLANATION OF ASSESSEE WAS NO T ACCEPTED THAT ASSESSEE FIRM WAS MERELY CONDUIT FOR TRANSFERRING RS. 39 LACS OF M/S MORINDA OVERSEAS INDUSTRIES LTD. TO M/S SHARVILLA ESTATES PVT. LTD. THE ASSESSING OFFICER, THEREFORE, NOTED THAT IN FACT IT IS THE ASSESSEE'S OWN UNACCOUNTED MONEY WHICH WAS FIRST DEPOSITED IN CASH WITH M/S MORINDA OVERSEAS INDUSTR IES 8 LTD. THEN ROUTED THROUGH THEIR UNDISCLOSED BANK ACC OUNT FOR BUILDING UP CASH AVAILABILITY WITH M/S SHARVILL A ESTATES PVT. LTD. WHO IN-TURN ISSUED CHEQUES TO SMT . ERA K. OHRI AND OTHERS FOR BECOMING REGISTERED OWNER OF THE PROPERTY IN QUESTION. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER TREATED RS. 39 LACS AS UNACCOUNTE D MONEY OF THE ASSESSEE AND MADE ADDITION UNDER SECTI ON 69 OF THE ACT. THE INITIAL AMOUNT DEPOSITED IN THE SAME BANK ACCOUNT IN A SUM OF RS.5000/- WAS ALSO TREATED AS UNEXPLAINED MONEY AND THE ASSESSING OFFICER MADE ADDITION OF RS. 39,05,000/- AND COMPLETED THE ASSESSMENT. 10. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND SAME SUBMISSIONS WERE REITERATED. IT WAS EXPLAINED THAT ASSESSEE WAS ONLY A CONDUIT FOR TRANSFER OF MONEY OF RS. 39 LACS FROM M/S MORINDA OVERSEAS INDUSTRIES LTD. TO M/S SHARVILLA ESTATES P VT. LTD. PROTECTIVE ASSESSMENT WAS MADE IN THE CASE OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AND FURTHER ADDITI ON WAS MADE IN THE CASE OF SHRI MUKESH MITTAL. THE ASSESSEE ALSO FILED LETTER DATED 08.04.2008 WRITTEN BY M/S MORINDA OVERSEAS INDUSTRIES LTD. AND LETTER DAT ED 18.12.2006 WRITTEN BY ITO, WARD-VI, LUDHIANA TO M/S MORINDA OVERSEAS INDUSTRIES LTD. AND AFFIDAVIT OF S MT. RAJ BANS KAUR, DIRECTOR OF M/S MORINDA OVERSEAS INDUSTRIES LTD. TO SHOW THAT ADDITION IS UNJUSTIFIE D. THE LD. CIT(APPEALS) MADE THE SAME LETTERS AND AFFIDAVI T AS 9 ANNEXURE WITH THE IMPUGNED ORDER. HOWEVER, LD. CIT(APPEALS) DID NOT ACCEPT CONTENTION OF THE ASSES SEE AND DISMISSED THE APPEAL OF THE ASSESSEE. 11. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. HE HAS REFERRED TO VARIOUS ASSESSMENT ORDERS PASSED IN THE CASES OF BOTH THESE COMPANIES AND SUBMITTED THAT IN THE C ASE OF M/S MORINDA OVERSEAS INDUSTRIES LTD., PROTECTIVE ADDITION WAS MADE WHICH WAS ALSO DELETED AND NO SEC OND APPEAL HAVE BEEN FILED AGAINNT THE SAME ORDER. IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD. ALSO, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION AND ACC EPTED RETURNED INCOME AND IN THAT CASE ALSO, NO PROCEEDIN GS UNDER SECTION 263 HAVE BEEN INITIATED WHICH FACT IS ALSO CONFIRMED BY THE LD. DR IN HIS REPLY WHICH IS SUPPO RTED BY THE LETTERS OF THE CONCERNED ASSESSING OFFICER. HE HAS SUBMITTED THAT IN THE CASE OF SHRI MUKESH MITTAL, W HO IS DIRECTOR OF M/S SHARVILLA ESTATES PVT. LTD., SUBSTA NTIAL ADDITION WAS MADE WHICH WAS DELETED BY LD. CIT(APPE ALS) AND ORDER OF THE LD. CIT(APPEALS) HAS BEEN CONFIRME D BY ITAT CHANDIGARH BENCH. HOWEVER, DEPARTMENT IS IN APPEAL IN THE HIGH COURT AGAINST THE SAID DECISION. HE HAS ALSO SUBMITTED THAT ITAT IN THE CASES OF SHRI V IVEK MOHAN MITTAL ETC. WHO WERE ALSO DIRECTORS OF M/S SHARVILLA ESTATES PVT. LTD., HAVE ALSO DELETED THE ADDITION. HE HAS SUBMITTED THAT IN THE CASE OF SHR I 10 MUKESH MITTAL, LD. CIT(APPEALS) ON DETAILED REASONI NG HAS DELETED THE ADDITION. THE ASSESSEE IS NOT BENE FICIARY OF ANY PROPERTY SO PURCHASED. HE HAS REFERRED TO L ETTERS ANNEXED BY THE LD. CIT(APPEALS) WITH THE APPELLATE ORDER AND AFFIDAVIT TO SHOW THAT ADDITION AGAINST ASSESSE E IS WHOLLY UNJUSTIFIED. THE LD. COUNSEL FOR THE ASSESS EE, THEREFORE, SUBMITTED THAT SINCE NO SUFFICIENT EVIDE NCES BROUGHT AGAINST THE ASSESSEE TO MAKE THIS ADDITION, THEREFORE, WHOLE ADDITION MAY BE DELETED. 11(I) ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. HE HAS, HOWEVER, SUBMITTED THAT NO ACTION UNDER SECTION 263 HAS BEEN TAKEN IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD. FURTHER, IN THE CAS E OF M/S MORINDA OVERSEAS INDUSTRIES LTD., THE LD. CIT(APPEALS) DELETED THE ADDITION AMOUNTING TO RS. 1,00,55,500/- WHICH WAS MADE BY ASSESSING OFFICER O N PROTECTIVE BASIS AND NO SECOND APPEAL HAS BEEN FILE D BY THE DEPARTMENT. THE REPLY OF THE LD. DR IS SUPPORT ED BY LETTERS OF THE CONCERNED ASSESSING OFFICER. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS REFERRED TO VARIOUS ASSESSMENT ORDERS PASSED IN THE CASES OF AFORESAID COMPANIES AND THE PERSONS. COPY OF TH E ASSESSMENT ORDER IN THE CASE OF M/S MORINDA OVERSEA S INDUSTRIES LTD. FOR ASSESSMENT YEAR IN APPEAL DATED 27.12.2006 HAS BEEN FILED WHICH REVEALED THAT AN ADDITION OF RS. 1,00,55,500/- HAS BEEN MADE BY 11 ASSESSING OFFICER ON PROTECTIVE BASIS. M/S MORINDA OVERSEAS INDUSTRIES LTD. IN THEIR ASSESSMENT PROCEE DINGS HAS STATED THAT THE CASH DEPOSIT OF RS. 1,00,55,500 /- IN THE ACCOUNT NO. 50057 IN THE NAME OF M/S MORINDA OVERSEAS INDUSTRIES LTD. WITH STATE BANK OF PATIALA , SECTOR 8-C, CHANDIGARH BELONGS TO M/S SHARVILLA EST ATES PVT. LTD. AND THE ENTIRE AMOUNT WAS DEPOSITED BY TH EM. THEY HAVE GIVEN ACCOMMODATION ENTRY ONLY. THE ASSESSING OFFICER, THEREFORE, ON THE BASIS OF SUCH FACTS RECORDED IN THE ASSESSMENT ORDER THAT SINCE THE ASS ESSEE M/S MORINDA OVERSEAS INDUSTRIES LTD. HAS ADMITTED T HAT THE ENTIRE AMOUNT OF RS. 1,00,55,500/- BELONGS TO M /S SHARVILLA ESTATES PVT. LTD. AND ASSESSEE HAD ONLY G IVEN ACCOMMODATION ENTRY, THEREFORE, ASSESSMENT OF THIS AMOUNT WAS MADE ON PROTECTIVE BASIS IN THE HANDS OF THIS COMPANY WITH FINDINGS THAT SUBSTANTIVE ADDITION SHA LL BE MADE IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD. ACCORDING TO THE SUBMISSIONS OF BOTH PARTIES AND RE PLY OF THE CONCERNED ASSESSING OFFICER ON RECORD, THE LD. CIT(APPEALS) DELETED THE ADDITION OF RS. 1,00,55,50 0/- IN THE CASE OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AN D NO SECOND APPEAL HAVE BEEN FILED BY THE DEPARTMENT BEF ORE THE TRIBUNAL. THE ASSESSMENT ORDER IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD. DATED 27.12.2006 IS FIL ED ON RECORD WHICH REVEALED THAT ASSESSING OFFICER DID NO T MAKE ANY ADDITION IN THIS CASE. ACCORDING TO THE STATEMENTS OF BOTH THE PARTIES, NO ACTION UNDER SEC TION 263 HAVE BEEN TAKEN IN THIS CASE AND AS SUCH, THE O RDER 12 IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD. ALLO WED TO BECOME FINAL WHO IS THE ULTIMATE BENEFICIARY OF PUR CHASE OF THE PROPERTY. THE COPY OF THE ASSESSMENT ORDER IN THE CASE OF SHRI MUKESH MITTAL WHO IS ONE OF THE DIRECT ORS IN M/S SHARVILLA ESTATES PVT. LTD. IS FILED IN THE PAP ER BOOK WHICH IS DATED 27.12.2006, REVEALED THAT ASSESSING OFFICER MADE ADDITION OF RS. 1,07,05,000/- ON ACCOU NT OF UNEXPLAINED DEPOSIT IN BANK ACCOUNT NO. 445 IN CHANDIGARH STATE COOPERATIVE BANK, SECTOR 22, CHANDIGARH IN THE NAME OF M/S SHARVILLA ESTATES PVT . LTD. WHICH INCLUDES THE AMOUNT OF RS. 19 LACS IN TH E CASE OF M/S BHAGWATI MOTORS. IT IS STATED THAT THE LD. CIT(APPEALS) IN THE CASE OF SHRI MUKESH MITTAL VIDE ORDER DATED 26.02.2008 DELETED THE ADDITION AND ALLOWED T HE APPEAL OF THE ASSESSEE ON THE SAME FACTS. THE DEPARTMENTAL APPEAL IN THE CASE OF SHRI MUKESH MITT AL HAS BEEN DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 28.11.2008. IT IS STATED THAT DEPARTMENTAL APPEAL IS PENDING AGAINST THIS ORDER OF THE TRIBUNAL BEFORE H ON'BLE HIGH COURT. 13. THE LD. CIT(APPEALS) ATTACHED THE LETTER DATED 08.04.2008 AS ANNEXURE WITH THE IMPUGNED ORDER WHIC H IS WRITTEN BY M/S MORINDA OVERSEAS INDUSTRIES LTD. TO THE ASSESSEE M/S BHAGWARI MOTORS. THIS COMPANY HAS REFERRED TO LETTER OF THE ASSESSING OFFICER DATED 18.12.2006 REGARDING ACCOMMODATION ENTRY OF RS. 1,00,55,500/- IN WHICH THE ASSESSING OFFICER STATED THAT 13 ALL THE CASH DEPOSITS WERE MADE BY SHRI MUKESH MITT AL IN THE BANK ACCOUNT. THEREFORE, IT IS PROPOSED TO MAK E PROTECTIVE ADDITION. IN THIS LETTER, M/S MORINDA O VERSEAS INDUSTRIES LTD. MADE IT CLEAR THAT THE ENTIRE CASH AMOUNT OF RS. 1,00,55,500/- WHICH INCLUDED THE AMOUNT OF R S. 39 LACS, CHEQUES OF WHICH WERE ISSUED IN FAVOUR OF M/S BHAGWATI MOTORS (ASSESSEE), WAS DEPOSITED FIRSTLY I N THE ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AND THEN TRANSFERRED TO THE BANK ACCOUNT OF M/S SHARVIL LA ESTATES PVT. LTD., CHANDIGARH THROUGH VARIOUS ENTRI ES. THE COPY OF THE LETTER OF THE ITO, WARD 6(1) LUDHIA NA DATED 18.12.2006 ISSUED AT ASSESSMENT STAGE IN THE CASE OF M/S MORINDA OVERSEAS INDUSTRIES LTD. IS ALSO ANN EXED WITH THE IMPUGNED ORDER IN WHICH THE ASSESSING OFFI CER ALSO MENTIONED THAT AMOUNT IN QUESTION WAS CASH DEPOSITED BY SHRI MUKESH MITTAL, THEREFORE, PROPOSE D TO MAKE PROTECTIVE ADDITION IN THE CASE OF M/S MORINDA OVERSEAS INDUSTRIES LTD. 13(I) THE LD. CIT(APPEALS) FURTHER ANNEXED AFFID AVIT OF SMT. RAJ BANS KAUR, DIRECTOR OF M/S MORINDA OVERSEA S INDUSTRIES LTD. IN WHICH SHE HAS CONFIRMED THAT ENT IRE CASH OF RS. 1,00,55,500/- IN THE ACCOUNT OF M/S MOR INDA OVERSEAS INDUSTRIES LTD. BELONGED TO SHRI MUKESH MI TTAL. THEREFORE, THE AMOUNT IN QUESTION OF RS. 39 LACS AL SO BELONG TO SHRI MUKESH MITTAL. THE CHEQUES OF RS. 3 9 LACS WERE ISSUED IN FAVOUR OF M/S BHAGWATI MOTORS (ASSES SEE) FROM THE ACCOUNT OF M/S MORINDA OVERSEAS 14 INDUSTRIES LTD. OUT OF THE CASH DEPOSIT OF RS. 1,00,55,500/- WHICH WERE ULTIMATELY TRANSFERRED TO THE BANK ACCOUNT OF M/S SHARVILLA ESTATES PVT. LTD. WHO SE DIRECTORS WERE MRS. ALKA MITTAL, W/O SHRI MUKESH MI TTAL AND SHRI RAJIV AGGARWAL, WHO IS REAL BROTHER OF MRS . ALKA MITTAL. IT WAS ALSO CONFIRMED THAT MODUS-OPERANDI FOLLOWED BY SHRI MUKESH MITTAL WAS THAT THE CASH WA S DEPOSITED IN THE ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. BY HIS EMPLOYEES AND CHEQUES WERE ISSUED FROM THE ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. TO VARIOUS DIFFERENT PERSONS INCLUD ING THE ASSESSEE FIRM M/S BHAGWATI MOTORS AND THEN THE AMOU NT WAS ROUTED TO THE ACCOUNT OF M/S SHARVILLA ESTATES PVT. LTD. VARIOUS ASSESSMENT ORDERS IN THE CASES OF BOT H THE COMPANIES IN QUESTION AND IN THE CASE OF SHRI MUKES H MITTAL AND THE LETTERS ISSUED BY ASSESSING OFFICER AND AFFIDAVIT OF THE DIRECTOR OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AND LETTER WRITTEN BY THIS COMPANY IN FAVOUR OF THE ASSESSEE, AS REFERRED TO ABOVE CLEARL Y SUGGEST THAT THE MONEY OF RS. 39 LACS DID NOT BELO NG TO THE ASSESSEE FIRM AT ALL. THE ASSESSEE HAS BEEN US ED AS A CONDUIT TO ROTATE THE MONEY IN QUESTION FROM M/S MORINDA OVERSEAS INDUSTRIES LTD. THROUGH SHRI MUKES H MITTAL TO THE ASSESSEE FIRM AND ULTIMATELY TO M/S SHARVILLA ESTATES PVT. LTD. THE ASSESSEE DID NOT S HOW THIS BANK ACCOUNT IN HIS BOOKS OF ACCOUNT BECAUSE T HE TRANSACTION ROUTED THROUGH THIS BANK ACCOUNT WITH S TATE BANK OF INDIA, CHANDIGARH, DID NOT BELONG TO THE 15 ASSESSEE FIRM. THE COPY OF THE BANK ACCOUNT IN QUE STION IS ALSO FILED AT PAGE 4 & 5 OF THE PAPER BOOK WHICH ALSO SHOWS THAT THE ACCOUNT WITH STATE BANK OF INDIA, CHANDIGARH WAS OPENED WITH RS. 5000/- AND M/S MORINDA OVERSEAS INDUSTRIES LTD. ISSUED THREE CHEQU ES IN FAVOUR OF THE ASSESSEE FIRM FOR RS. 20 LACS, 10 LAC S AND 9 LACS AND THEREAFTER, THERE WERE TWO CLEARING ENTRIE S MADE FOR RS. 20 LACS AND RS. 19 LACS IN FAVOUR OF M/S SH ARVILLA ESTATES PVT. LTD. AND THEN THIS ACCOUNT WAS ULTIMAT ELY HAVING ZERO BALANCE IN AUGUST,2004. THUS, IN THI S BANK ACCOUNT IN QUESTION, ASSESSEE DID NOT CONDUCT ANY TRANSACTION FOR BUSINESS PURPOSE BUT THERE WERE ENT RIES OF CHEQUES RECEIVED THROUGH CLEARING FROM M/S MORIN DA OVERSEAS INDUSTRIES LTD. AND THEN THE SAME AMOUNT W AS TRANSFERRED TO M/S SHARVILLA ESTATES PVT. LTD. THE REVENUE DEPARTMENT WAS, THEREFORE, REQUIRED TO EXAM INE THE CHAIN OF TRANSACTIONS IN DETAIL IN THE CASES OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AS WELL AS IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD., BUT, IN BOTH T HESE CASES, THE DEPARTMENT HAS NOT TAKEN ANY ACTION IN T HE MATTER AND MERELY IN THE CASE OF M/S MORINDA OVERSE AS INDUSTRIES LTD., MADE PROTECTIVE ADDITION WHICH WAS ULTIMATELY DELETED AND NO SECOND APPEAL WAS FILED I N THIS CASE. IN THE ASSESSMENT ORDER OF THIS COMPANY, THE ASSESSING OFFICER HAS SPECIFICALLY NOTED THAT SUBST ANTIVE ADDITION SHALL BE MADE IN THE CASE OF M/S SHARVILLA ESTATES PVT. LTD. BUT NO ACTION IS TAKEN IN THE CA SE OF M/S SHARVILLA ESTATES PVT. LTD. IT WAS ALSO NOTED IN THIS 16 ASSESSMENT ORDER THAT CASH WAS DEPOSITED IN THE BAN K ACCOUNT OF THIS COMPANY THROUGH THE EMPLOYEES OF SH RI MUKESH MITTAL. IT IS ADMITTED FACT THAT THE PROTEC TIVE ADDITION OF RS.1,00,55,500/- INCLUDED THE AMOUNT OF RS. 39 LACS IN QUESTION UNDER REFERENCE IN THIS APPEAL. THEREFORE, ONCE THE DEPARTMENT HAS TAKEN A VIEW THA T THE AMOUNT IN QUESTION BELONGS TO SHRI MUKESH MITTAL, W HO IS ONE OF THE DIRECTORS OF M/S SHARVILLA ESTATES PV T. LTD., THE DEPARTMENT SHOULD NOT CHANGE ITS STAND LATER ON HOLDING THE ASSESSEE FIRM TO BE LIABLE FOR UNACCOUN TED MONEY OF RS. 39 LACS. 13(II) THE DEPARTMENT IS PURSUING THEIR DEPARTMEN TAL APPEAL BEFORE HON'BLE HIGH COURT IN THE CASE OF SHR I MUKESH MITTAL, WOULD ALSO STRENGTHEN THE CASE OF TH E ASSESSEE FIRM THAT THE AMOUNT IN QUESTION DID NOT B ELONG TO ASSESSEE FIRM. THERE IS NO EVIDENCE ON RECORD T HAT ASSESSEE FIRM HAS TAKEN ANY LOAN OF RS. 39 LACS FRO M M/S MORINDA OVERSEAS INDUSTRIES LTD. THE AUTHORITIES BE LOW, MERELY ON ASSUMPTION OF CERTAIN FACTS WHICH ARE NOT PART OF THE RECORD, PRESUMED THAT ASSESSEE HAS TAKEN LOA N OF RS. 39 LACS FROM M/S MORINDA OVERSEAS INDUSTRIES LT D., THEREFORE, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION SHOULD BE PROVED BY THE ASSESSEE. THE ANNEXURES ATTACHED BY THE LD. CIT(APPEALS) WITH THE APPELLATE ORDER ALSO SUPPORT THE CASE OF THE ASSESS EE THAT AMOUNT IN QUESTION DID NOT BELONG TO THE ASSESSEE A ND ASSESSEE MERELY ACTED AS A CONDUIT TO TRANSFER THE MONEY 17 FROM THE BANK ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. TO THE BANK ACCOUNT OF M/S SHARVILL A ESTATES PVT. LTD. THE ASSESSEE IS NOT BENEFICIARY OF ANY AMOUNT IN QUESTION BECAUSE NOTHING WAS GIVEN TO THE ASSESSEE IN ANY MANNER. NO EVIDENCE HAS BEEN BROUG HT ON RECORD IF ASSESSEE DEPOSITED CASH IN THE ACCOUNT OF M/S MORINDA OVERSEAS INDUSTRIES LTD. THE PROPERTY IN QUESTION IS NOT PURCHASED BY THE ASSESSEE. THE DEPARTMENT DID NOT TAKE ANY ACTION IN THE CASES OF M/S MORINDA OVERSEAS INDUSTRIES LTD. AND M/S SHARVILLA ESTATES PVT. LTD. WHO HAVE CONDUCTED THE TRANSACTIO N WITH THE ASSESSEE OF RS. 39 LACS IN QUESTION. ONCE NO ACTION HAVE BEEN TAKEN AGAINST THESE TWO COMPANIES FROM WHERE THE AMOUNTS WERE TRANSFERRED THROUGH ASSESSEE , WOULD CLEARLY PROVE THAT THE AMOUNT IN QUESTION DID NOT BELONG TO THE ASSESSEE AT ALL AND IT IS MERELY AN I NFERENCE OF THE ASSESSING OFFICER, THE ADDITION OF THE AMOUN T IN QUESTION SHOULD HAVE BEEN MADE AGAINST THE ASSESSEE WITHOUT ANY BASIS OR LOGIC. THE ASSESSEE FIRM IS N OT OWNER OF MONEY IN QUESTION AND HAS BEEN ABLE TO EXP LAIN NATURE OF TRANSACTION. 14. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR T HAT REVENUE DEPARTMENT HAS FAILED TO BRING ANY EVIDENCE ON RECORD THAT AMOUNT OF RS.39 LACS BELONG TO THE ASSE SSEE OR THAT ASSESSEE WAS BENEFICIARY OF THE SAME AMOUNT IN QUESTION. THE OPENING OF THE BANK ACCOUNT WITH MEA GER AMOUNT OF RS. 5000/- COULD NOT JUSTIFY ANY ADDITION 18 AGAINST THE ASSESSEE IN VIEW OF FACTS OF CASE. WE A RE, THEREFORE, OF THE VIEW THAT SINCE THE DEPARTMENT IS PROSECUTING THEIR APPEAL AGAINST SHRI MUKESH MITTAL WHO IS ONE OF THE DIRECTORS OF M/S SHARVILLA ESTATES PV T. LTD. AND THE ASSESSING OFFICER IN THE CASE OF M/S MORIND A OVERSEAS INDUSTRIES LTD. ALSO HELD THAT SINCE THE A MOUNT BELONGS TO M/S SHARVILLA ESTATES PVT. LTD., AND THI S COMPANY HAS GIVEN ONLY ACCOMMODATION ENTRY, WOULD CLEARLY PROVE THAT M/S MORINDA OVERSEAS INDUSTRIES LTD. HAS GIVEN ONLY ACCOMMODATION ENTRY TO ASSESSEE M/S BHAGWATI MOTORS FOR BENEFIT OF M/S SHARVILLA ESTATE S PVT. LTD., THEREFORE, ASSESSEE MERELY ACTED AS A CONDUIT WITHOUT ANY RIGHT IN MONEY, THEREFORE, NO ADDITION UNDER SECTION 69A OF THE ACT COULD BE MADE AGAINST THE ASSESSEE. 15. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS O F AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.39,05,000/-. 16. IN THE RESULT, GROUND NOS. 2 TO 5 OF THE APPEAL OF ASSESSEE ARE ALLOWED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 602/2013 18. IN THIS APPEAL, ASSESSEE CHALLENGED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE A DDITION 19 MADE OF RS.39,05,000/-. SINCE WE HAVE DELETED THE ADDITION ON MERIT, THEREFORE, LEVY OF THE PENALTY W OULD NOT SURVIVE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY UNDER SECT ION 271(1)(C) OF THE ACT. 19. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA 1084/2008 IS PARTLY ALLOWED, HOWEVER, APPEAL OF THE ASSESSEE IN ITA 602/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH OCT., 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD