ITO, New Delhi V. M/s. Integrated Infosoft Pvt. Ltd., New Delhi

ITA 6145/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97742 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA SINGH
• Keywords: Unexplained cash credit; Opportunity of being heard; Accommodation entries; Reassessment proceedings
• Section: 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SMT. DIVA SINGH , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 6145 /DEL/201 3 ASSESSMENT YEAR: 2004 - 05 INCOME TAX OFFICER, VS. M/S INTEGRATED INFOSOFT PVT. LTD., WARD 11(4), NEW DELHI 14, SAINIK FARMS, KHANPUR, NEW DELHI (PAN: AAACM8067A ) (APPELLANT) (RESPONDENT) AND C.O. NO. 134/DEL/2014 ( IN ITA NO. 6145/DEL/2013 ) ASSESSMENT YEAR: 2004 - 05 INTEGRATED INFOSOFT PVT. LTD. VS. INCOME TAX OFFICER, 14, SAINIK FARMS, KHANPUR, WARD - 11(4), NEW DELHI NEW DELHI (PAN: AAACM8067A ) (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. PRIYANKA SINGH, SR. DR ASSESSEE BY : SH. G.N. GUPTA DATE OF HEARING: 15.10.2015 DATE OF PRONOUNCEMENT: 06.11.2015 ORDER PER INTURI RAMA RAO, A.M. : THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECT ED AGAINST THE ORDER OF LEARNED CIT(A), DATED 30.09.2013 PASSED FOR THE ASSESSMENT YEAR 2004 - 05. CROSS OBJECTIONS HAVE ALSO BEEN FILED BY THE ASSESSEE IN THE PRESENT APPEAL . THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 2 I. WHETHER ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW WAS CIT(A) JUSTIFIED IN DELETING AN ADDITION OF RS. 20,02,030/ - MADE U/S 68 ON ACCOUNT OF ALLEGED BOGUS ACCOMMODATION ENTRIES RECEIVED FROM M/S GARG FINVEST PVT. LTD. AND M/S SHEKHAWATI FINANCE PVT. LTD. II. THE APPELLAN T CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT ASSESSEE IS A COMPANY DULY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004 - 05 WAS FI LE D ON 09.10.2004 DECLARING INCOME OF RS . 5,36,520/ - . THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) O F THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) . THERE WAS NO SCRUTINY ASSESSMENT. SUBSEQUENTLY, BASED ON THE INFORMATION RECEIVED FROM THE DIRECTORATE OF INCOME TAX (INVESTIGATION), NEW DELHI, THAT THE RESPONDENT ASSESSEE COMPANY WAS BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY M/S. CENTENARY SOFTWARE (P.) LTD. , ISSUED NOTICE UNDER SECTION 148 OF THE ACT DATED 17 TH MARCH, 2011. IN RESPONSE TO THIS NOTICE, THE ASSESSEE COMPANY SUBMITTED THAT THE ORIGINAL RETURN OF INCOM E MAY BE TREATED AS RETURN IN RESPONSE TO THE NOTICE U/S 148 . DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE RESPONDENT ASESSEE COMPANY WAS CALLED UPON TO PRODUCE THE PROOF OF SHARES ALLOTTED TO M/S GARG FINVEST (P) LTD. AND M/S SEKHAWATI FINANCE (P.) LTD. AND COPIES OF ITR FILED BY THOSE COMPANIES AND BANK STATEMENTS AND CONFIRMATION LETTERS. THE ASSESSEE COMPANY FAILED TO COMPLY WITH THIS DIRECTION OF THE ASSESSING OFFICER AND THEREFORE, THE ASSESSING OFFICER PROCEEDED TO MAKE THIS ASSESSMENT TREATING THE SHARE APPLICATION MONEY RECEIVED OF RS. 20,02,030/ - AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT. BEING AGGRIEVED BY THIS ORDER, AN APPEAL WAS FILED 3 BEFORE THE CIT(A) WHO VIDE IMPUGNED ORDER DATED 30.09.2013 , WHILE UPHOLDING THE VALIDITY OF THE R EASSESSMENT PROCEEDINGS, DELETED THE ADDITION AND HELD THAT THERE WERE NO CREDITS IN THE NAME OF THOSE TWO COMPANIES. THE RELEVANT PARAGRAPHS I.E. PARA 5.5 IS REPRODUCED BELOW: 5.5 FROM THE REPLY, IT IS APPARENT THAT IN THE ACCOUNT BOOKS OF THE APPELLANT COMPANY, THERE IS AMOUNT OF RS. 20 LACS RECEIVED VIDE 2 CHEQUES AS SHARE APPLICATION MONEY RECEIVED FROM B.T. TECHNET LTD. THUS, IN THE BOOKS OF THE APPELLANT COMPANY THERE ARE NO CREDITS IN THE ACCOUNT OF GARG FINVEST PVT. L TD. AND SHEKHAWATI FINANCE PVT . LTD. IN THIS REGARD, DETAILED CONFIRMATION HAS BEEN FIELD BEFORE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH ARE AVAILABLE IN THE PAPER BOOK. SO AS PER REQUIREMENT OF SECTION 68, AO HAS TRAVELLED BEYOND THE JURISDICTION AND WITHOUT MAKING ANY ME ANINGFUL ENQUIRY IN THIS REGARD. THE RELIANCE IN THE CASE OF GANGESHWARI METALS PVT. LTD. & M/S RHOMBUS INFRASTRUCTURE PVT. LTD. BY THE LD. AR OF THE APPELLANT, IS APPRECIATED. GROUND OF APPEAL NO. 1 IS ALLOWED. BEING AGGRIEVED FROM THE ABOVE ORDER, T HE REVENUE IS BEFORE US WITH THE PRESENT APPEAL. 3. BEFORE US, LEARNED SR. DR VEHEMENTLY ARGUED THAT THE ASSESSEE COMPANY HAD FAILED TO DISCHARGE THE PRIMARY ONUS LYING UPON HIM IN TERMS OF THE PROVISIONS OF SECTION 68 OF THE ACT. THE LD. CIT(A) WAS NOT J USTIFIED IN DELETING THE ADDITION WITHOUT EXAMINING THE DETAILS. 4. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATION PLACED RELIANCE ON THE ORDER OF CIT(A). 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN APPEAL IS WHETHER THE ASSESSEE COMPANY HAD DISCHARGED ITS ONUS THAT IS LYING UPON IT IN TERMS OF THE PROVISIONS OF SECTION 68 OR NOT. A PERUSAL OF THE ASSESSMENT, REVEAL S THAT THE ASSESSEE COMPANY FAILED TO DISCHARGE THE INITIAL ONUS 4 THAT WAS LYING UPON IT IN TERMS OF THE PROVISIONS OF SECTION 68 OF THE ACT AS HE FAILED TO FURNISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF SHARE APPLICATION MONEY RECEIVED OF RS. 20,02,030/ - . THE LD. CIT(A) HAD DELETED THE ADDITION SOLELY ON THE GRO UND THAT THERE WERE NO CREDIT IN THE NATURE OF M/S GARG FINVEST PVT. LTD. AND SHEKHAWATI FINANCE PVT. LTD. IN OUR OPINION, THE LD. CIT(A) FELL IN ERROR BY HOLDING THAT THE PROVISIONS OF SECTION 68 ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. I T IS UNDISPUTED FACT THAT THE SHARE APPLICATION MONEY HAD BEEN RECEIVED FOR M/S GARG FINVEST PVT. LTD. AND M/S SHEKHAWATI FINANCE PVT. LTD. WHO ARE ALLEGED TO BE THE ACCOMMODATION ENTR Y PROVIDERS. HAVING REGARD TO THE MODUS OPERANDI OF ACCOMMODATION ENTRY PROVI DERS, THE PRACTICE OF TAKING CASH AND RECEIVING CHEQUES IN T HE GUISE OF SUBSCRIPTION AND SHARE CAPITAL CONSIDERATION IN THE FORM OF COMMISSION, THE ASSESSEE COMPANY HAD NOT DISCHARGED ITS INITIAL ONUS LYING UPON IT, NOR REBUTTED THE REPORT OF INVESTIGATION WING. FURTHER, WE FIND FROM THE ORDER OF THE CIT(A) THAT CERTAIN ADDITIONAL EVIDENC ES / DETAILS WERE FILED BY WAY OF PAPER BOOK AND THERE IS NOTHING ON RECORD TO SHOW THAT THE REQUIREMENTS OF THE PROVISIONS OF SECTION 46A OF THE INCOME TAX RULES, 1962 HAD B EEN COMPLIED WITH BY THE LD. CIT(A). IN THE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION TH AT THE INTEREST OF JUSTICE WOULD BE SERVED, IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE - NOVO ASSESSMENT AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE COMPANY. WE ORDER ACCORDINGLY. HENCE, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5 C.O. NO. 134/DEL/2014 (IN ITA NO. 6145/DEL/2013) 6 . WE ARE OF THE CONSIDERED OPINION THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT ENABLE D THE ASSESSING OFFICER TO FORM AN OPINION THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IT IS TRITE LAW THAT AT THE STAGE OF INITIATION OF THE REASSESSMENT PROCEEDINGS , THERE NEED NO T BE CONCLUSIVE FINDING O N FACT AGAINST THE ASSESSEE , ONLY REQUIREMENT IS REASONABLE BELIEF OF THE ASSESSING OFFICER . IN SUPPORT OF THIS PROPOSITION, WE REFER THE DECISION S OF THE HON BLE SUPREME COURT AS WELL AS THE HON BLE HIGH COURTS IN THE CASE S OF SOW DAGAR AHMED KHAN VS. IT O , (1968) 70 ITR79 (SC); BRIJ MOHAN AGGARWAL VS. ACIT, 2 68 ITR 400 (ALL.) ; & PRAFUL CHUNILA PATEL: VASANT CHUNILAL PATEL VS. ASSTT. CIT, (1999) 236 ITR 832 (GUJ.) . 7 . IN THE CIRCUMSTANCES, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE COMPANY ARE DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 6 T H NOVEMBER , 2015. S D / - S D / - ( DIVA SINGH ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 6 T H NOVEMBER , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI