DCIT, Central Circle - VII, Kolkata, Kolkata V. M/s. PNR Holdings (P) Ltd, Kolkata

ITA 61/KOL/2011

• Counselvise Citation: 6123514 RSA 2011
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 11-01-2011
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: R SALARPURIA; SUBHAS AGARWA
• Keywords: Unexplained investment; Presumptive income; Accommodation entries; Retraction
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , KOLKATA [ , ,, , . .. . . .. . , , , , ! ] [BEFORE SHRI MAHAVIR SINGH , JUDICIAL MEMBER & SRI C.D.RAO , ACCOUNTANT MEMBER] ' ' ' ' / ITA NOS. 59-60/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARA 2006-07 & 2007-08 D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA M/S.STAR TRAFIN (P) LTD. KOLKATA . (PAN-AADCS 5989 A) ()* / APPELLANT ) - # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 61-62/ (KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2006-07 & 2007-08 D.C.I.T., CENTRAL CIRCLE-VII KOLKATA M/S.P.N.R. HOLDINGS (P)LTD., KOLKATA . (PAN-AABCP 8586 C) ()* / APPELLANT ) - # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 63-64/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2006-07 & 2007-08 D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA M/S.AMIT GOODS & SUPPLIERS (P)LTD. KOLKATA . (PAN-AACCA 1198 E) ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 65-67/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08 D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA M/S.PLATINUM COMMERCE (P)LTD. KOLKATA . (PAN-AABCP 8186 E) ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) ' ' ' ' / ITA NOS. 68-70/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08 D.C.I.T., CENTRAL CIRCLE-VI, KOLKATA M/S.YULAN MARKETING (P) LTD. KOLKATA (PAN-AAACY 1811 C) ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) 2 ' ' ' ' / ITA NOS. 71-72/(KOL) OF 2011 #$ %&/ ASSESSMENT YEARS 2006-07, & 2007-08 D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA M/S.LYTON CONSULTANCY (P) LTD. KOLKATA (PAN-AAACL 5926 D) ()* / APPELLANT ) # - VERSUS - (-.)*/ RESPONDENT ) )* / 0 / FOR THE APPELLANTS: / SHRI NIRAJ KUMAR -.)* / 0 / FOR THE RESPONDENT: / SHRI R.SALARPURIA & SHRI SUBHAS AGARWAL 1 / ORDER ( (( ( 234 234 234 234) )) ), , , , PER BENCH THESE FOURTEEN APPEALS FILED BY DEPARTMENT IN RESPE CT OF SIX ASSESSEES MENTIONED ABOVE, ARE AGAINST SEPARATE ORDERS OF THE C.I.T.(A), CENTRAL-I, KOLKATA, ALL DATED 22.10.2010 RELATING TO ASSESSMENT 2005-06, 20 06-07 AND 2007-08. SINCE THE FACTS OF THE CASE AND GROUNDS OF APPEAL IN ALL THES E APPEALS ARE IDENTICAL AND SIMILAR IN NATURE, ALL THE FOURTEEN APPEALS ARE DISPOSED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THEREFORE, WE DEAL WITH APPEAL FILED B Y THE REVENUE IN ITA NOS.59 AND 60/KOL/2011 FOR ASSESSMENT YEARS 2006-07 AND 2007-0 8 IN THE CASE OF M/S.STAR TRAFIN (P) LTD. 2. IN ITA NOS.59, 63-64, 68 AND 71/KOL/2011 THE FOL LOWING THREE GROUNDS HAVE BEEN RAISED BY THE REVENUE.: 1. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION MADE ON PROTECTIVE BASIS OF RS.10,70,27,50 0/- BY WAY OF IGNORING THE STATEMENT MADE BY THE DIRECTOR OF THE ASSESSEE COMP ANY BEFORE DDIT(INV.)KOLKATA 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE LD.C IT(A) HAD ERRED IN DELETING THE 2% COMMISSION INCOME OF RS.21,40,550/- FOR ENTRY PROVI DED BY THE ASSESSEE COMPANY WHICH IS BASED ON A CASE UNEARTHED BY THE DDIT (INV .), KOLKATA AND DECIDED BY THE HONBLE ITAT, KOLKATA. 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE LD.C IT(A) HAD ERRED IN DELETING THE CASH AMOUNT OF RS.2,00,000/- DEPOSITED IN TO THE BA NK WITHOUT CONSIDERING THE FACT THAT THE SOURCES OF DEPOSIT WERE NOT EXPLAINED BEFO RE THE ASSESSING OFFICER. 3 THE ABOVE GROUNDS ARE RELATING TO ITA NO.59/KOL/201 1. IN RESPECT OF OTHER ITA NOS. THE FIGURES ARE VARYING FROM EACH OTHER. 2.1. IN THE APPEAL OF THE REVENUE IN ITA NOS.60, 61-62, 65-67, 69-70 AND 72/KOL/2011 ONLY THE FIRST TWO GROUNDS HAVE BEEN RA ISED BY THE REVENUE. IN THESE CASES ALSO THE FIGURES ARE DIFFERENT FROM THE ONE M ENTIONED ABOVE. 3. AT THE OUTSET, AT THE TIME OF HEARING THE LD. CO UNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS SUBMITTED THAT ON SIMILAR FACTS THIS T RIBUNAL HAS DECIDED THE CASE AGAINST THE REVENUE IN ITA NOS.2009/KOL/2008 IN THE CASE OF DCIT,CC-VII VS M/S.ANKITA FININVEST PVT. LTD., 2010/KOL/2008 IN THE CASE OF D CIT,CC-VII VS M/S.BANSHIDHAR VYAPAAR PVT. LTD. AND 2011/KOL/2008 IN THE CASE OF DCIT,CC-VII VS M/S.BAKLIWAL FINVEST PVT. LTD. ALL DATED 30.04.2010 AND LD. CIT( A) HAS DECIDED THE ISSUES PLACING RELIANCE ON THIS TRIBUNALS ORDERS . THEREFORE, THE REVENUES APPEALS ARE LIABLE TO BE DISMISSED. 4. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE RELIED ON THE ORDERS OF THE AO. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT THE FACTS I NVOLVED IN ALL THE PRESENT CASES ARE IDENTICAL TO THAT OF THE ONE DECIDED BY THIS TRIBUN AL IN THE CASE OF DCIT,CC-VII, KOLKATA VS M/S.ANKITA FINVEST PVT. LTD. VIDE ITA NO .2009/KOL/2008 DATED 30.04.2010 WHEREIN THE FACTS MENTIONED BY THE TRIBU NAL ARE AS UNDER :- 2. BRIEF FACTS OF THIS CASE ARE THAT INVESTIGATION S WERE CARRIED OUT BY THE DIRECTOR OF INVESTIGATION (INVESTIGATION), KOLKATA AGAINST C ERTAIN ACCOMMODATION ENTRY OPERATORS INVOLVED IN PROVIDING ACCOMMODATION ENTRI ES TO VARIOUS COMPANIES BASED IN MUMBAI WHO USED THE SAID FUNDS FOR PAYMENTS TO M ADHEPURA MERCANTILE BANK BASED IN MUMBAI. CONSEQUENT TO THIS, SHRI SURESH KU MAR SETHI, DIRECTOR OF THE ASSESSEE COMPANY WAS SUMMONED BY THE DDIT (INVESTIG ATION), KOLKATA ON 15.12.2006 BEFORE WHOM HE SUBMITTED ON OATH THAT HE GOT CASH AT EQUIVALENT AMOUNT FROM THE COMPANIES AND AGAINST THE SAME.. . CHEQUES HAS BEEN ISSUED. HE ALSO GAVE A DETAILED LIST OF CHEQUES ISSUED TO VARIOUS MUMBAI BASED COMPANIES. HOWEVER, IN THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, SHRI SUR ESH KR.SETHI RETRACTED HIS STATEMENT MADE EARLIER BEFORE THE DDIT (INV.) ON 24 .12.07 AND ALSO FLIED A SWORN AFFIDAVIT TO THAT EFFECT. THE AO HAS REJECTED THE R ETRACTION AND OBSERVED THAT INVESTIGATION CONDUCTED BY THE INVESTIGATION WING R EVEALED THAT CASH WAS DEPOSITED BY THE ASSESSEE COMPANY IN VARIOUS BANK ACCOUNTS AT 4 TO 5 STAGES EARLIER. ON THIS BASIS, HE CAME TO THE CONCLUSION THAT CASH WAS RECE IVED BY THE ASSESSEE COMPANY IN LIEU OF CHEQUES GIVEN TO VARIOUS COMPANIES. HE THEN PROCEEDED TO ADD THE ENTIRE AMOUNT OF CHEQUES ISSUED BY THE ASSESSEE TO. VARIOU S COMPANIES ON PROTECTIVE BASIS HOLDING THAT THE PROVIDER OF CASH TO THE ASSESSEE H AS TO BE ASSESSED ON SUBSTANTIVE 4 BASIS IN RESPECT OF THE UNEXPLAINED INCOME IN THE F ORM OF CASH PROVIDED. IN ADDITION TO THIS, THE AO ADDED 2% OF THE ENTIRE CHEQUES ISSUED BY THE ASSESSEE BEING RS.37,68,518/- IN THE HANDS OF THE ASSESSEE HOLDING THAT THE SAME TO BE THE COMMISSION INCOME ON THE PURPORTED ACCOMMODATION EN TRIES. THE AO FURTHER ADDED RS.18,40,000/- ON ACCOUNT OF CASH DEPOSITED BY THE ASSESSEE IN ITS BANK ACCOUNT. 5.1. ON THE ABOVE FACTS THE RELEVANT FINDINGS OF TH E TRIBUNAL ARE AS UNDER :- 7. AFTER BEARING THE RIVAL SUBMISSIONS AND ON CAR EFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE MAJOR ADDITIO N OF RS.18,84,25,906/- WAS MADE BY THE AO ON PROTECTIVE BASIS ON ACCOUNT OF THE ENTIRE CHEQUES ISSUED FROM THE DISCLOSED BANK ACCOUNTS MAINTAINED WITH HDFC BANK AND SOUTH I NDIAN BANK. THE ADDITION IS MADE PRIMARILY ON THE VIEW THAT IN THE ORIGINAL DEP OSITION MADE BEFORE THE DDIT (INV.) BY ONE OF THE DIRECTORS, SRI SURESH KR. SETH I THAT HE RECEIVED EQUIVALENT CASH IN LIEU OF THE CHEQUES ISSUED IN FAVOUR OF THE MUMBAI BASED COMPANIES. FROM THE COPY OF THE DEPOSITION PLACED AT PAGE NO.8 OF THE PAPER BOOK, IT IS OBSERVED THAT THE ENTIRE DEPOSITION IS A COMPUTER TYPED COPY, WHEREIN THE SI GNATURE OF MR SURESH KR SETHI IS PLACED AT THE BOTTOM MR SETHI SUBSEQUENTLY RETRACTE D HIS STATEMENT BY FILING AFFIDAVIT IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE STAT EMENT RECORDED ON 24 12 07, HE STATED BEFORE THE AO THAT HE HAS NOT RECEIVED ANY C ASH FROM ANY PERSON ON BEHALF OF THE INVESTEE COMPANIES HE WAS FORCED TO DEPOSE BEFO RE THE DDIT (INV) IN THAT WAY TO SAVE HIMSELF FROM HARASSMENT AND TO GET IMMEDIATE P EACE THEREFORE, WE FIND NO JUSTIFICATION ON THE PART OF THE AO TO DISBELIEVE T HE RETRACTION WE FURTHER OBSERVE THAT THE AOS CONTENTION THAT CASH WAS RECEIVED FROM VAR IOUS ENTITIES AGAINST WHICH CHEQUES WERE ISSUED BY THE ASSESSEE COMPANY IS NOT SUBSTANTIATED IN THE ABSENCE OF ANY MATERIAL ON RECORD TO THIS EXTENT. THE FACT THA T THE INVESTMENT MADE BY THE ASSESSEE IN THE SHARE CAPITAL OF OTHER COMPANIES IS RECORDED IN THE BOOKS OF THE ASSESSEE AND ALL THE TRANSACTIONS MADE BY THE ASSES SEE ARE THROUGH HIS DISCLOSED BOOKS OF ACCOUNTS AND SINCE, THIS FACT WAS ALSO NOT CONTROVERTED BY THE LD. DR, APPEARING BEFORE US, WE FIND NO JUSTIFICATION ON TH E PART OF THE AO TO MAKE THE INVESTMENTS MADE BY THE ASSESSEE COMPANY, BASED ON THE STATEMENT RECORDED BY THE DDIT (INV.) WITHOUT CORROBORATIVE EVIDENCE. THE AO HAS NOT STATED THE PROVISION OF THE ACT UNDER WHICH THE ADDITION HAS BEEN MADE. THE POSSIBLE PROVISION, UNDER WHICH THE ADDITION FOR UNEXPLAINED INVESTMENT CAN BE MADE , IS SECTION 69 OF THE I.T. ACT. WE OBSERVE THAT THE PRE-CONDITION FOR INVOKING THE PR OVISIONS OF SECTION 69 IS THAT THE INVESTMENTS IN QUESTION ARE NOT RECORDED IN THE BOO KS OF ACCOUNTS MAINTAINED BY THE ASSESSEE SINCE, IN THE INSTANT CASE, ALL INVESTMENT S WERE RECORDED IN THE BOOKS OF THE ASSESSEE, THERE WAS NO WARRANT FOR THE AO TO MAKE A DDITIONS IN RESPECT OF SUCH INVESTMENTS, THAT TOO, ON PROTECTIVE BASIS. THEREFO RE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE ISSUE NO.1 RAISED BY THE REV ENUE. 7 1. AS REGARDING ISSUE NO 2 IS CONCERNED, SINCE WE HAVE ALREADY HELD THAT THERE IS NO SUBSTANTIAL MATERIAL ON RECORD TO THE AOS CONTE NTION THAT CASH WAS RECEIVED FROM VARIOUS ENTITIES AGAINST WHICH THE CHEQUES WERE ISS UED BY THE ASSESSEE COMPANY, THERE WILL NOT BE ANY PRESUMPTIVE INCOME IN THE FORM OF C OMMISSION. THEREFORE, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE C OMMISSION INCOME ESTIMATED BY THE AO FOR THE ALLEGED ACCOMMODATION ENTRIES PROVIDED. HENCE, THIS ISSUE OF THE REVENUE IS ALSO DISMISSED. 5 7.2. AS REGARDING THE ISSUE NO.3, WE HOLD THAT THER E IS NO MERIT IN THIS ADDITION ALSO WHICH WAS MADE BY THE AO IN REGARD TO THE DEPOSIT O F CASH OF RS. 18,40,000/- IN THE BANK ACCOUNTS OF THE ASSESSEE. THE AO HAS NOT DISPU TED THE FACT THAT THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE HIM. FROM THE EXTRACT OF THE CASH BOOK, PLACED AT PAGE NO. 17 OF THE PAPER BOOK, WE FIND THAT SUFFICI ENT FUNDS WERE AVAILABLE WITH THE ASSESSEE COMPANY FOR DEPOSITS MADE IN THE BANK ACCO UNTS, THEREFORE, WE CONFIRM THE ACTION OF THE LD.CIT(A) ON THIS ISSUE AND DISMISS T HE ISSUE NO.3 RAISED BY THE ASSESSEE. 5.2 . IT IS FURTHER OBSERVED THAT LD. CIT(A) HAS AL LOWED THE APPEAL OF ASSESSEE FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S. ANKITA FINVEST PVT. LTD. (SUPRA) BY OBSERVING AS UNDER :- 3.4. CONSIDERING ABOVE FACTS IT IS HELD THAT TH E ADDITION MADE BY THE A.O. IS NOT SUPPORTED BY ANY CORROBORATIVE OR SUPPORTIVE EVIDEN CE. IN SHRISHAIL NAGESHI PARE V. STATE OF MAHARASHTRA AIR 1985 SC 866, THE HONBLE S UPREME COURT HAS HELD THAT, THE RETRACTED CONFESSION BY AN ACCUSED MAY FORM THE BAS IS OF CONVICTION OF THAT ACCUSED IF IT RECEIVES SOME GENERAL CORROBORATION FROM OTHER I NDEPENDENT SOURCES. HOWEVER IN THE CASE UNDER CONSIDERATION NO EVIDENCE HAS BEEN B ROUGHT ON RECORD TO PROVE THAT THE TRANSACTION DECLARED IN THE BOOKS OF THE ASSESSEE I S NOT CORRECT. MOREOVER EVEN IF THE RETRACTED STATEMENT IS MADE SOLE BASIS OF ADDITION, THEN ALSO, THERE WAS NO BASIS TO MAKE PROTECTIVE ADDITION IN THE HAND OF THE ASSESSE E. HENCE CONSIDERING ABOVE AND RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITA T IN THE CASE OF M/S. ANKITA FINVEST PVT. LTD. (I.T.A. NO.2009(KOL) OF 2008. A.Y . 2005-06, DT.30.04.2010), M/S. BANSIDHAR VYAPAAR PVT. LTD. (I.T.A.NO.2010(KOL) OF 2008, A.Y. 2005-06, DT. 30.04.2010) AND M/S. BAKLIWAL FINVEST PVT. LTD. (I. T.A. NO.2011 (KOL) OF 2008 A.Y.2005-06, DT. 30.04.2010) ON IDENTICAL ADDITIONS MADE BY THE A.O. CONSIDERING IDENTICAL FACTS, THE GROUND NO.2 TO 4 TAKEN BY THE APPELLANT IS ALLOWED AND ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INCOME R S.10,70,27,500/- ON PROTECTIVE BASIS AND RS.21,40,550/- ON ACCOUNT OF COMMISSION I S DELETED. 4.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. A.R. THE A.O. HAS NOT DISPUTED THE FACT THAT THE BOOKS OF ACCOUNTS WERE P RODUCED BEFORE HIM FROM THE EXTRACT OF THE CASH BOOK FILED, IT IS APPARENT THAT SUFFICIENT FUNDS WERE AVAILABLE WITH THE ASSESSEE COMPANY FOR DEPOSITS MADE IN THE BANK ACCOUNTS, THEREFORE GROUND NO.5 TAKEN BY THE APPELLANT IS ALLOWED AND ADDITION OF R S.2,00,000/- IS DELETED. 5.3. SINCE LD. CIT(A) HAS FOLLOWED THE DECISION OF THIS TRIBUNAL AND THE LD. DR ALSO COULD NOT BRING ANY CONTRARY DECISION/FACTS TO THAT OF THE ONE DECIDED BY THIS TRIBUNAL WE FIND NO INFIRMITY IN THE ORDERS OF LD.CIT(A). TH EREFORE WE DISMISS ALL THE APPEALS OF THE REVENUE. 6 6. IN THE RESULT THE APPEALS OF THE REVENUE ARE DI SMISSED.. ORDER PRONOUNCED IN THE COURT ON 26.08.2011. SD/ SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . . .. . , ,, , ! ! ! ! , C.D.RAO, ACCOUNTANT MEMBER. ( (( (! ! ! !) )) ) DATE: 26.08.2011. 1 / -5 6 5%7- COPY OF THE ORDER FORWARDED TO: 1. M/S.STAR TRAFIN (P)LTD.,4A, GANPAT BAGLA ROAD, K OLKATA-700001. 2..M/S.PNR HOLDINGS (P) LTD., 41, SHIBTOLLA STREET, KOLKATA-700007. 3. M/S. AMIT GOODS & SUPPLIERS (P)LTD., 41, SHIBTOL LA STREET, KOLKATA-700007. 4. M/S.PLATINUM COMMERCE (P) LTD., 51, NALINI SETH ROAD, KOLKATA. 5. M/S.YULAN MARKETING (P)LTD., 205, RABINDRA SARAN I, KOLKATA-700007. 6. M/S.LYTON CONSULTANCY (P) LTD., 41, SHIBTOLLA ST REET, K OLKATA -700007. 9. D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA 10. CIT. 11. CIT(A)-CENTRAL-I, KOLKATA 11. DR, KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, 1#8/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)