M/s. AAR Securities Ltd., New Delhi V. ITO, New Delhi

ITA 611/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3578 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-07-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 09-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Reopening of assessment; Corroborative evidences; Accommodation entries
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.D. RANJAN ITA NO. 611(DEL)/2010 ASSESSMENT YEAR: 2001-02 AAR SECURITIES LTD., INCOME-TAX OFFICER, 6/233, DOONGRA MOHALLA, VS. WARD 1(1), NEW DELHI. FARASH BAZAR, SHAHDARA, DELHI-110032. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH MALHOTRA, C.A. RESPONDENT BY: SHRI AMRENDRA KUMAR, SR. DR ORDER PER K.D. RANJAN: A.M. THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEA R 2001-02 ARISES OUT OF ORDER OF CIT(APPEALS)-IV, NEW DELHI. TH E FIRST ISSUE FOR CONSIDERATION RELATES TO ASSUMPTION OF JURISDICT ION U/S 147 OF THE ACT. THE RELEVANT GROUND OF APPEAL IS REPRODUCED AS UN DER:- 1. THAT THE LD. CIT(APPEALS) FAILED TO APPRECIA TE THAT THE ASSESSMENT MADE BY THE ITO U/S 143(3)/147 OF THE I.T.ACT, 1961, WAS INVALID SINCE NO RELEVANT EVIDENCE OR MATERIAL WAS ON RECORD FOR HAVING ANY REASON TO BELIEV E FOR THE ITO THAT THE SUM OF RS. 2,00,000/- WAS ENTERED AS CASH CREDIT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, WHICH THE ASSESSEE ALLEGEDLY FAILED TO EXPLAIN AND CONSEQUENTLY C IT(APPEALS) ERRED IN HOLDING THE RE-ASSESSMENT PROCEEDINGS A S VALID. ITA NO. 611(DEL)/2010 2 2. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT ASSESSEE FILED RETURN OF INCOME DECLARING LOSS OF RS. 6,850/- ON 31 ST OCTOBER, 2001. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) ON 12. 6.2002. SUBSEQUENTLY, AN INFORMATION WAS RECEIVED FROM ADIT (INVESTIG ATION), GHAZIABAD THAT THE ASSESSEE COMPANY HAD ACCEPTED ACCOMMODATION ENTRIES FROM THE PERSONS WHO HAD NO CREDITWORTHINESS. THE AO ON T HE BASIS OF INFORMATION RECEIVED AFTER RECORDING THE REASONS AND APPROV AL FROM ADDITIONAL CIT, RANGE-I, NEW DELHI, ISSUED NOTICE U/S 148. IN RESPONSE TO NOTICE U/S 148 IT WAS SUBMITTED THAT RETURN OF INCOME FILED EARLIER MIGHT BE TREATED RETURN IN RESPONSE TO NOTICE U/S 148 . THEREAFTER, THE AO COMPLETED ASSESSMENT U/S 143(3). 3. BEFORE LD. CIT(APPEALS), THE ASSESSEE HAD NO T TAKEN ANY GROUND FOR REOPENING OF ASSESSMENT U/S 148. HOWEVER, BEFORE THIS TRIBUNAL, A GROUND HAS BEEN TAKEN BY THE ASSESSEE. IT IS A SETTLED LAW THAT ASSESSEE CAN TAKE A LEGAL GROUND AT ANY STAGE PRO VIDED ALL THE FACTS RELATING TO SUCH A GROUND ARE AVAILABLE ON R ECORD. IN THE INSTANT CASE, THE REOPENING OF ASSESSMENT WAS NEITHER CHALLEN GED BEFORE AO NOR BEFORE CIT(APPEALS). THEREFORE, THE MATERIAL RELATING T O REOPENING OF ASSESSMENT IS NOT AVAILABLE ON THE BASIS OF WHICH THE LEGAL GROUND TAKEN ITA NO. 611(DEL)/2010 3 BEFORE US COULD BE ENTERTAINED. HOWEVER, ON FAC TS ALSO IN THIS CASE NO ASSESSMENT WAS MADE U/S 143(3) AND RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED U/S 143(1). THEREFORE, PRO CESSING OF RETURN U/S 143(1) CANNOT BE TAKEN AS ASSESSMENT. THIS ISSU E IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD., W HEREIN IT HAS BEEN HELD THAT INTIMATION U/S 143(1)(A) COULD NOT BE TREA TED TO BE AN ORDER OF ASSESSMENT. IT WAS ALSO HELD THAT AS LONG AS THE INGREDIENTS OF SECTION 147 ARE SATISFIED, THE AO WILL BE FREE TO INI TIATE PROCEEDINGS U/S 147 OF THE ACT. THUS, ON MERITS THE GROUND RAISED BEFOR E US BY THE ASSESSEE REGARDING ASSUMPTION OF JURISDICTION HAS TO BE DE CIDED AGAINST IT. ACCORDINGLY, THIS GROUND OF APPEAL RAISED BY TH E ASSESSEE IS DISMISSED. 4. THE NEXT ISSUE FOR CONSIDERATION RELATES TO UPHOLDING THE ADDITION OF RS. 2.00 LAKH MADE BY THE AO U/S 68 OF THE ACT . THE RELEVANT GROUNDS OF APPEAL ARE REPRODUCED AS UNDER:- 2. THAT ON FACTS AND IN LAW THE LD. CIT(A) ERRE D IN UPHOLDING THE ADDITION OF RS. 2,00,000/- MADE BY THE ITO U/S 68 OF IT ACT, 1961, EVEN THOUGH THERE WAS NO CASH CREDIT ENTRY OF T HE SAME IN THE ACCOUNT BOOKS OF THE ASSESSEE. 3. THAT ON FACTS THE LD. CIT(A) ERRED IN STATI NG IN THE IMPUGNED ORDER THAT THE APPELLANT HAD NOT PROVIDED ANY SUPPORTING EVIDENCE OR PROPER EXPLANATION TO EXPLAIN THE RECEIPT OF RS. 2,00,000/- FROM ITA NO. 611(DEL)/2010 4 MR. MAHINDER KUMAR GUPTA, IGNORING AND NOT CO NSIDERING THE EXPLANATION OF THE APPELLANT GIVEN IN THE WRITTEN SUBMISSIONS MADE BEFORE HIM AND THE DOCUMENTS ATTACHED THEREWIT H AS ANNEXURE I, II AND III. 4. THAT CONSEQUENTLY, THE LD. CIT(APPEALS) ERRE D ON FACTS AS WELL AS IN LAW IN UPHOLDING THE ADDITION OF RS. 2,00,0 00/- MADE BY THE ITO. 5. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT ASSESSEE RECEIVED RS. 2.00 LAKH FROM M/S AYUSH FINCAP LTD. ACCORDIN G TO THE INFORMATION RECEIVED BY THE AO, THE ASSESSEE RECEIVED RS. 2 .00 LAKH AS BOGUS ENTRY FROM M/S AYUSH FINCAP PVT. LTD., WHICH WAS A FRONT COMPANY FOR SUCH ACTIVITY OF SHRI MAHENDRA KUMAR GUPTA. THE AO RELIED ON THE STATEMENT OF ENTRY OPERATOR, SHRI MAHENDRA KUMAR GUPTA, WHERE IN IT WAS STATED THAT DURING THE YEAR THE ASSESSEE M/S AYUSH FINCAP PVT. LTD. HAD TAKEN A SUM OF RS. 2.00 LAKH THROUGH CHEQUE NO. 664096 ON 20.06.2000 DRAWN ON SYNDICATE BANK FROM M/S AAR SECURITIES LTD., W HICH WAS RETURNED TO THEM THROUGH CHEQUE NO. 474812 DATED 27.6.2000 DRAWN ON STATE BANK OF PATIALA, NAVYUG MARKET, GHAZIABAD. IT WAS ALS O STATED THAT EXCEPT THIS, THERE WAS NO OTHER TRANSACTION WITH M/S AAR SECURITIES LTD. THE AO ON THE BASIS OF THE STATEMENT GIVEN BY SHRI MAHE NDRA KUMAR GUPTA, ADDED THE AMOUNT OF RS. 2.00 LAKH U/S 68 OF THE ACT. ITA NO. 611(DEL)/2010 5 6. BEFORE CIT(APPEALS), IT WAS SUBMITTED THAT THE AMOUNT OF RS. 2.00 LAKH GIVEN TO M/S AYUSH FINCAP PVT. LTD., WAS RECEIVED BACK ON 26.6.2000. THEREFORE, IT WAS ASSESSEES OWN MONEY WHICH WAS RECEIVED AGAINST THE LOAN ADVANCED EARLIER AND NO ADDITION COULD BE MADE. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTION OF ASSESSEE ON THE GROUND THAT ASSESSEE HAD NOT PRO VIDED ANY SUPPORTING EXPLANATION TO EXPLAIN THE RECEIPT OF RS. 2.00 LA KH FROM SHRI MAHENDRA KUMAR GUPTA. THE ONUS WAS ON THE ASSESSEE TO PR OVE THAT THE AMOUNT WAS RECEIVED AGAINST THE LOAN ADVANCED ON EARLIER D ATE. IN ABSENCE OF ANY SUCH MATERIAL, THE LD. CIT(A) UPHELD THE ADDITION OF RS . 2.00 LAKH. 7. BEFORE US, THE LEARNED AR OF THE ASSESSEE R EITERATED THE SAME ARGUMENTS. ON THE OTHER HAND, THE LD. SENIOR DR S UPPORTED THE ORDER OF THE CIT(APPEALS). 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF HEARING THE ASSESSEE WAS ASKED TO EXPLAIN RECEIPT OF THE AMOUNT OF RS. 2.00 LAKH THROUGH BANK ACCOUNT. THE LD. AR OF THE ASSESSEE COULD NOT PROVIDE THE COPY OF BANK ACCOUNT IN SUPPORT OF THE ENTRIES. HOWEVER, HE SUBMITTED THA T HE WILL PROVIDE THE ITA NO. 611(DEL)/2010 6 NECESSARY EVIDENCE IN FORM OF BANK STATEMENT BEFO RE AO IF HE IS PROVIDED AN OPPORTUNITY FOR THE SAME. ON CONSIDERATION O F THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE AN D PRAYER MADE, WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE SHOULD BE RESTORED TO THE FILE OF THE AO WITH THE DIRECTION TO OBTAIN THE BANK STATEMENT OF THE ASSESSEE AND EXAMINE WHETHER THE CONTENTION OF THE ASSESSEE IS CORRECT. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE THE BANK STATEMENT IN SUPPORT OF ITS CLAIM. THE AO WILL PROVIDE NECESSARY OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 6TH JULY, 2010. SD/- SD/- (I.P.BANSAL) (K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 16TH JULY, 2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- M/S AAR SECURITIES LTD., NEW DELHI. ITO, WARD 1(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.