TC SOFTWARE CONSULTANCY PVT. LTD., MUMBAI V. ITO WARD - 10(3)(4), MUMBAI

ITA 6142/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1272 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: PUNITA BANSAL
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 143(3); 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6142/M/2016 ASSESSMENT YEAR: 2011-12 M/S. T.C. SOFTWARE CONSULTANCY PVT. LTD., OFFICE NO.30, 2 ND FLOOR, 327, NAWAB BUILDING, DR. D.N. ROAD, FORT, MUMBAI 400 001 PAN: AACCT 1356K VS. INCOME TAX OFFICER WARD 10(3)(4), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PUNITA BANSAL, A.R. REVENUE BY : SHRI D.G. PANSARI, SR. D.R. DATE OF HEARING : 17.09.2018 DATE OF PRONOUNCEMENT : 28.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 25.07.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT THE ISSUE IN THE PRESENT APPE AL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.13,26,25,000/- B Y THE LD. CIT(A) AS MADE BY THE AO UNDER SECTION 68 OF THE AC T TOWARDS THE SUBSCRIPTION OF SHARE CAPITAL WHICH BY TREATIN G THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . THE LD. ITA NO.6142/M/2016 M/S. T.C. SOFTWARE CONSULTANCY PVT. LTD. 2 COUNSEL POINTED OUT THAT THE AO HAS OBSERVED THAT A SSESSEE COMPANY WAS PART OF ENTRY PROVIDER OF SHRI SHIRISH CHANDRAKANT, SHAH GROUP ON WHOM A SEARCH WAS CONDUC TED UNDER SECTION 132 OF THE ACT. THE LD. COUNSEL OF T HE ASSESSEE SUBMITTED THAT THE ISSUE IN THE PRESENT APPEAL NEED S TO BE RESTORED TO THE FILE OF THE AO IN VIEW OF THE DECIS ION OF THE COORDINATE BENCH IN WHICH THE SIMILAR ISSUE BASED UPON THE STATEMENT OF SHRI SHIRISH CHANDRAKANT SHAH WAS REST ORED TO THE FILE OF THE AO TO LOOK INTO THE MATTER AND ASSESS T HE INCOME IN THE RIGHT HAND AS THE ASSESSMENT OF SAME AMOUNT CA N NOT SURVIVE IN THE HANDS OF TWO PERSON. IN VIEW OF TH E FACT THAT THE PRESENT ADDITION IS MADE BY THE AO ON THE BASIS OF STATEMENT GIVEN BY SHIRISH CHANDRAKANT SHAH DURING THE SEARCH THAT HE WAS ENGAGED IN THE ACCOMMODATION ENTRIES TO VARIOUS PEOPLE THROUGH ENTRIES DIRECTLY/INDIRECTLY ASSOCIATED OR C ONTROLLED BY HIM AND IT IS ONLY FOR THE SAID REASON THE AO HELD THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE WERE AT TH E BEHEST OF SHIRISH CHANDRAKANT SHAH. THE LD. A.R. SUBMITTED T HAT IN THE CASE OF M/S. NISHOTTAM TRADERS PVT. LTD. VS. ITO IN ITA NO.6874/M/2014 A.Y. 2010-11 THE CO-ORDINATE BENCH O F THE TRIBUNAL SET ASIDE THE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE ON THE GROUND THAT THERE ARE CONTRADICTORY FI NDINGS BY THE AO ON THE GROUND THAT THE INCOME HAS TO BE ASSESSED IN THE HANDS OF THE SHIRISH CHANDRAKANT SHAH AS HE WAS THE REAL BENEFICIAL OF THE SAID TRANSACTIONS AND THE ASSESS EE COMPANY IN THE SAID CASE WAS MERELY A CONDUIT. 3. THE LD. D.R., ON THE OTHER HAND, OPPOSED THE ARG UMENTS OF THE LD. A.R. ON THE ISSUE OF RESTORATION TO THE FIL E OF THE AO AND ITA NO.6142/M/2016 M/S. T.C. SOFTWARE CONSULTANCY PVT. LTD. 3 PRAYED THAT THE ISSUE SHOULD BE DECIDED ON MERITS A ND RELIED HEAVILY ON THE ORDERS OF LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE GATHER FROM THE PERUSAL OF THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN ITA NO.6874/M/2014 IN THE CASE OF M/S. NISHOTTAM TRADER S PVT. LTD. VS. ITO A.Y. 2011-11 THAT ISSUE HAS BEEN RESTO RED TO THE FILE OF THE AO FOR DENOVA CONSIDERATION AND ASSESS THE I NCOME AS PER FACTS AND LAW AS THE FINDING THE AO WERE CONTRADICT ORY. THE FINDINGS OF THE BENCH ARE AS UNDER: 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUB MISSIONS. OSTENSIBLY, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION FURNISHED BY THE ASSESSEE WITH REGARD TO THE EQUITY SHARE CAPITAL AND SHARE P REMIUM RECEIVED BY THE ASSESSEE-COMPANY DURING THE YEAR UNDER CONSIDERATIO N. INSOFAR AS THE MERITS OF SUCH A FINDING IS CONCERNED, THE SAME IS NOT THE SU BJECT MATTER OF THE PRELIMINARY ARGUMENT WHICH IS SET-UP BY THE ASSESSEE BASED ON T HE SUBSEQUENT ASSESSMENT MADE U/S 143(3) R.W.S. 153C OF THE ACT DATED 4.3.20 16. THE POINT RAISED IS AS TO WHETHER ANY ADDITION WITH RESPECT TO THE IMPUGNE D TRANSACTION IS MAINTAINABLE IN THE HANDS OF THE ASSESSEE-COMPANY, CONSIDERING T HE SUBSEQUENT ASSESSMENT ORDER DATED 04/03/2016(SUPRA). NOTABLY, A SEARCH ACTION TOOK PLACE ON ONE SHRI SHIRISH C. SHAH, WHICH REVEALED THAT THE ASSESSEE-C OMPANY WAS USED AS A CONDUIT BY THE SAID PERSON TO PROVIDE ACCOMMODATION ENT RIES TO VARIOUS BENEFICIARIES. IN THE ASSESSMENT FINALISED FOR THE INSTANT ASSESS MENT YEAR U/S 153C R.W.S. 143(3) OF THE ACT DATED 4.3.2016, THE ASSESSING OFFICER AL LUDES TO THE SAID SITUATION AND CONCLUDES THAT THE REAL INCOME FROM SUC H TRANSACTIONS IS ASSESSABLE IN THE HANDS OF SHRI SHIRISH C. SHAH, AND NOT THE ASSESS EE-COMPANY. IN FACT, IN THE ASSESSMENT ORDER DATED 04/03/2016(SUPRA), THE A SSESSING OFFICER NOTES THAT DURING THE COURSE OF SEARCH ON SHRI SHIRISH C. SHAH BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY WERE SEIZED FROM THE COMPUTER OF SHRI SHIRI SH C. SHAH, AND HE CONCLUDED THAT THE ASSESSEE COMPANY WAS 'DIRECTLY OR INDIRECT LY CONTROLLED BY SHRI SHIRISH C. SHAH.' THE MOOT QUESTION IS AS TO WHAT IS THE IMPLI CATION OF SUCH FINDINGS OF THE ASSESSING OFFICER QUA THE EARLIER ASSESSMENT MADE B Y HIM U/S 143(3) OF THE ACT, WHICH IS PRESENTLY IN APPEAL BEFORE US ? THE TRANSA CTIONS OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WERE SCRUTINIZED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT AND HE WAS NOT SATISFIED WITH THE NATURE AND SOURCE OF THE AMOUNTS SO RECEIVED, AND THEREFORE, THE RESPECTIVE AMOUNTS WER E ADDED EITHER AS UNEXPLAINED CREDIT U/S 68 OF THE ACT OR AS INCOME FROM OTHER SO URCES U/S 56(1) OF THE ACT. SO HOWEVER, IN THE ASSESSMENT FINALISED FOR THE VERY S AME ASSESSMENT YEAR, CONSEQUENT TO THE SEARCH ON SHRI SHIRISH C. SHAH, T HE ASSESSING OFFICER HAS CONCLUDED THAT THE REAL BENEFICIARY OF THE TRANSACT IONS IS NOT THE ASSESSEE, SINCE IT ITA NO.6142/M/2016 M/S. T.C. SOFTWARE CONSULTANCY PVT. LTD. 4 WAS MERELY A CONDUIT WHEREAS THE REAL BENEFICIARY O F THE INCOME FROM SUCH TRANSACTIONS WAS SHRI SHIRISH C. SHAH. 9. IT IS QUITE CLEAR THAT SO FAR AS THE IMPUGNED AS SESSMENT IS CONCERNED, IT DOES NOT ABATE IN TERMS OF THE SECOND PROVISO TO SEC. 153A(1 ) OF THE ACT, WHEN THE ASSESSING OFFICER INVOKED SEC. 153C OF THE ACT. THUS, THE IMP UGNED ASSESSMENT MADE U/S 143(3) OF THE ACT STANDS EVEN WHEN THE ASSESSING OF FICER HAS MADE A SUBSEQUENT ASSESSMENT U/S 153C R.W.S. 143(3) OF THE ACT DATED 4.3.2016. SO HOWEVER, THE MOOT POINT IS AS TO WHETHER ON THE SAME POINT CONTRADICT ORY FINDINGS OF THE ASSESSING OFFICER CAN SURVIVE IN THE TWO ASSESSMENTS? FIRSTLY , IN THE INSTANT ASSESSMENT MADE U/S 143(3) OF THE ACT, THE ASSESSING OFFICER HAS TR EATED THE IMPUGNED AMOUNTS AS ASSESSABLE IN THE HANDS OF THE ASSESSEE-COMPANY, WH EREAS IN THE SUBSEQUENT ASSESSMENT MADE U/S 153C R.W.S. 143(3) OF THE ACT, HE HAS HELD THAT ASSESSEE- COMPANY IS A MERE CONDUIT AND THE REAL INCOME FROM THE TRANSACTIONS IS ASSESSABLE IN THE HANDS OF SHRI SHIRISH C. SHAH, AND NOT THE A SSESSEE-COMPANY. THOUGH THE TWO ASSESSMENTS ARE INDEPENDENT IN THE EYES OF LAW, YET IN OUR CONSIDERED OPINION, IT WOULD BE INCONGRUENT THAT THE TWO ASSESS MENTS CONCURRENTLY SURVIVE WITH CONTRADICTORY FINDINGS BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, WE DEEM IT FIT AND PROPER TO SET-ASIDE THE IMPUGNED AS SESSMENT AND DIRECT THE ASSESSING OFFICER TO RE-VISIT THE CONTROVERSY AFRES H KEEPING IN MIND HIS STAND IN THE SUBSEQUENT ASSESSMENT FINALISED U/S 153C R.W.S. 143 (3) OF THE ACT FOR THE INSTANT ASSESSMENT YEAR. THUS, WITHOUT GOING INTO ANY OF THE OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE US, WE SET-ASIDE THE ORDER OF CIT( A) AND DIRECT THE ASSESSING OFFICER TO RE-DETERMINE THE ASSESSMENT IN THIS CASE AFRESH AND AS PER LAW,CONSISTENT WITH HIS FINDINGS IN THE REASSE SSMENT PROCEEDINGS FINALISED U/S 153C R.W.S. 143(3) OF THE ACT. 5. IT IS CLEAR FROM THE ABOVE THAT THE BENCH HAS OB SERVED THAT IT HAS TO BE ASCERTAINED IN WHOSE HAND THE INCOME I S TO BE ASSESSED WHETHER IN THE HANDS OF SHIRISH CHANDRAKAN T SHAH OR THE ASSESSEE AND IT WAS ALSO OBSERVED THAT THE ASSE SSEE COMPANY IS ONLY PROVIDING THE ACCOMMODATION ENTRIES WHEREAS THE REAL BENEFICIARY OF THE OF THE INCOME FROM THE SAID TRANSACTIONS WAS SHIRISH CHANDRAKANT SHAH. WE, THE REFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE C O-ORDINATE BENCH OF THE TRIBUNAL, RESTORE THE ISSUE BACK TO TH E FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME FOR DENOVO AF TER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE. ITA NO.6142/M/2016 M/S. T.C. SOFTWARE CONSULTANCY PVT. LTD. 5 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.11.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.