M/s. Design & Decor (India) (P) Ltd., Noida V. ITO, New Delhi

ITA 6252/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97572 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT GUPTA SENIOR
• Keywords: Unexplained cash credit; Opportunity of being heard; Accommodation entries
• Section: 143(3); 147; 68; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.6252/DEL./2013 (ASSESSMENT YEAR : 2002-03) M/S. DESIGN & DCOR (INDIA) (P) LTD., VS. ITO, WAR D 10 (1), D 5, SECTOR 20, NEW DELHI. NOIDA 201 301. (PAN : AABCD8853C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRATAP GUPTA, CA REVENUE BY : SHRI HEMANT GUPTA, SENIOR DR DATE OF HEARING : 13.10.2015 DATE OF PRONOUNCEMENT : 21.10.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V , NEW DELHI DATED 18.04.2012 FOR THE ASSESSMENT YEAR 2002-03. 2. THE ASSESSEE FILED RETURN DECLARING NIL INCOME O N 31.10.2002 AND THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT). THE AO RECEIVED AN INFORM ATION FROM DIT (INV), NEW DELHI THAT THE ASSESSEE COMPANY HAD RECEIVED AC COMMODATION ENTRIES AMOUNTING TO RS.5,01,000/- FROM SAAR ENTERPRISES PV T. LTD. ON 21.3.2002. ITA NO6252/DEL./2013 2 THE AO RECORDED THE REASONS AND NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 16.3.2009. IN RESPONSE TO NOTICE U/S 148, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE RETURN OF INCOME FILED ON 31. 10.2002 BE TREATED THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. ACCORD INGLY, NOTICE DATED 04.12.2009 U/S 143(2) WAS ISSUED. AFTER GOING THRO UGH THE SUBMISSIONS MADE BY THE ASSESSEE, THE AO HELD AS UNDER:- THE ASSESSEE COMPANY FILED CONFIRMATION FROM M/S SAAR ENTERPRISES PVT. LTD. BUT DID NOT PRODUCE ANY PERSO N FOR PERSONAL DEPOSITION WHEREAS IT WAS GIVEN SEVERAL OPPORTUNITI ES TO DO SO. DETAILS OF BANK ACCOUNT OF SAAR ENTERPRISES PVT. LT D. HAVE BEEN RECEIVED. FROM THE VERIFICATION OF DETAILS IT IS OB SERVED THAT THE COMPANY HAS GIVEN THE AMOUNT OF RS.5,00,000/- BY DD FOR WHICH IT PAID A CHEQUE OF RS.5,01,000/- TO THE BANK. THE ASSESSEE COMPANY AND THE COMPANY GIVING SHARE APPLICATION MO NEY ARE HAVING BANK ACCOUNTS IN DELHI. FROM THIS IT IS EVID ENT THAT THE ASSESSEE COMPANY HAS PURCHASED THE ACCOMMODATION EN TRY OF RS.5,00,000- AS THE AMOUNT HAS BEEN RECEIVED BY DD, WHICH IS AS GOOD AS CASH, AS THE ASSESSEE COMPANY DID NOT HAVE FAITH IN THE COMPANY GIVING THE ACCOMMODATION ENTRY IN THE GUISE OF SHARE APPLICATION MONEY FOR WHICH NO SHARES HAVE BEEN ALL OTTED. M/S SAAR ENTERPRISES PVT. LTD. IS NOT A GENUINE INV ESTOR. FROM THE VERIFICATION OF COPY OF BALANCE SHEET FILE D BY THE ASSESSEE COMPANY IT IS OBSERVED THAT M/S SAAR ENTER PRISES PVT. LTD. HAS SUBSCRIBE SHARE CAPITAL OF RS.1,86,000/- AND HA S NO RESERVES AND SURPLUS DURING THE YEAR UNDER CONSIDERATION AND EARLIER YEAR. THE COMPANY HAS NO CREDIBILITY FOR GENUINE INVESTME NTS AS IT DOES NOT HAVE ITS FUNDS FOR INVESTMENT. THIS SHOWS THAT THIS COMPANY IS BEING USED AS CONDUIT FOR GIVING ACCOMMODATION ENTR IES. HENCE, A SUM OF RS.5,01,000/- IS ADDED TO INCOME OF THE ASS ESSEE COMPANY AS UNEXPLAINED CASH CREDITS OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION. THE DIRECTOR OF M/S SAAR ENTERPRISES PVT. LTD. HAS ADMITTED BEFORE THE INVESTIGATION WING OF INCOME TAX DEPARTM ENT THAT ACCOMMODATION ENTRIES ARE GIVEN ON RECEIPT OF COMMI SSION. THERE IS NORMAL TREND TO GIVE SUCH ENTRIES @2% COMMISSION . THE ASSESSEE COMPANY HAS PAID COMMISSION OF RS.10,000/- FOR GETTING THE ACCOMMODATION OVER AND ABOVE THE AMOUNT OF DD A ND ITA NO6252/DEL./2013 3 COMMISSION THEREON. THUS, AN ADDITION OF RS.10,000 /- IS MADE TO INCOME OF THE ASSESSEE COMPANY FOR THE YEAR UNDER C ONSIDERATION AS EXPENSES INCURRED FOR ILLEGAL ACTIVITIES OF TAKI NG ACCOMMODATION ENTRIES DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE AO MADE THE ADDITION RS.5,01,000/- ON ACCOUNT OF INVESTMENT FROM UNDISCLOSED SOURCES AND RS.10,000/- ON ACCOUNT OF EXPENSES FROM UNDISCLOSED SOURCES. 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY AND THE LD. CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER :- 3. I HAVE CONSIDERED THE GROUNDS OF APPEAL TAKEN B Y THE APPELLANT AND ALSO CONSIDERED THE NON COOPERATION O N THE PART OF THE APPELLANT. IT APPEALS THAT THE ASSESSEE IS NOT INT ERESTED IN HAVING HIS APPEAL DECIDED. THE APPEAL FILED BY THE APPELLANT IS LIABLE TO BE DISMISSED FOR NON-PROSECUTION AND ALSO ON MERITS AS THE APPELLANT HAS NOT FILED ANY WRITTEN SUBMISSIONS ALONGWITH DOC UMENTARY EVIDENCES REGARDING HIS CLAIM. I FIND SUPPORT FROM THE DECISION IN THE CASE OF CIT VS. B.N. BHATTACHARJEE (1977), REPO RTED IN 118 ITR 461 (SC) [RELEVANT PAGES 477 AND 478] WHEREIN THEIR LORDSHIPS HAVE HELD THAT :- THE APPEAL DOES NOT MEAN MERELY FILING OF THE APPE AL BUT ACTIVELY PURSUING IT. THE DELHI TRIBUNAL IN CIT V/S MULTIPLAN INDIA (P) L TD AS REPORTED IN 38 ITD 320 (DELHI) WHEN FACED WITH A SI MILAR SITUATION OF NON PROSECUTION OF APPEAL DISMISSED THE APPEAL O F THE REVENUE. IN THE GIVEN CIRCUMSTANCE, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED FOR NON-PROSECUTION AND ALSO NON-AVAILABI LITY OF ANY SUBMISSIONS ALONG WITH EVIDENCES IN SUPPORT OF GROU NDS TAKEN BY HIM. 4. THE ASSESSEE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US. ITA NO6252/DEL./2013 4 5. AT THE OUTSET OF THE HEARING, THE LD. AR PRESSED IN RESPECT TO GROUNDS NO.1 AND 2, WHICH ARE AGAINST THE IMPUGNED ACTION O F THE LD CIT(A) IN DISMISSING THE APPEAL OF THE ASSESSEE WITHOUT GIVI NG PROPER OPPORTUNITY OF BEING HEARD AND FOR DOING SO, HE RELIED ON THE DECI SION OF THE DELHI TRIBUNAL IN THE CASE OF MULTIPLAN INDIA (P) LTD. ON ACCOUNT OF NON- PROSECUTION OF APPEAL WHICH, ACCORDING TO LD AR, IS BEYOND THE POWERS OF LD. CIT (A). IT WAS SUBMITTED BY THE LD. AR THAT B Y NOT GIVING PROPER OPPORTUNITY OF BEING HEARD, THE EX-PARTE ORDER OF T HE LD. CIT (A) IS AGAINST THE INTEREST OF JUSTICE AND EQUITY. HE, THEREFORE, PRAYED THAT THE MATTER BE SET ASIDE TO THE FILE OF THE LD. CIT (A) TO BE DECI DED AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND POINTED OUT THAT THE LD. CIT (A) HAS GIVE N SEVERAL OPPORTUNITIES TO THE ASSESSEE TO PRESENT ITS CASE BEFORE HIM, HOW EVER, FOR REASONS BEST KNOWN, IT DID NOT COOPERATE WITH THE LD. CIT(A), SO HE OPPOSED THE REQUEST OF THE ASSESSEE TO REMAND THE MATTER BACK TO LD. CI T(A). 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REC ORD. WE FIND THAT THE IMPUGNED ORDER IS AN EX-PARTE ORDER AND THE LD. CIT (A) HAS DISMISSED THE APPEAL FOR NON-PROSECUTION. THE IMPUGNED ORDER OF THE LD. CIT(A) IS THE APPELLATE ORDER FROM REASSESSMENT ORDER U/S 147 / 143(3) OF THE ACT AND IS IN RESPECT TO ADDITION UNDER SECTION 68 OF T HE ACT FOR AN AMOUNT OF RS.5,01,000/- AND RS.10,000/- ON ACCOUNT OF COMMISS ION TO ITA NO6252/DEL./2013 5 ACCOMMODATION ENTRY PROVIDER. IT IS NOTICED FROM A PERUSAL OF THE IMPUGNED ORDER THAT THE LD. CIT (A) HAD GIVEN 5 OPP ORTUNITIES TO THE ASSESSEE, HOWEVER, NONE TURNED UP AND THE LAST TWO NOTICES RETURNED BACK UN-SERVED AND IN THE SAID CIRCUMSTANCES, WE FIND TH AT THE LD. CIT (A) PASSED THE EX-PARTE ORDER AGAINST THE ASSESSEE. HOW EVER, BEFORE US, THE LD. AR TOOK AN UNDERTAKING THAT THE ASSESSEE WILL DEFIN ITELY COOPERATE WITH THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT (A) INCASE AN OPPORTUNITY IS GRANTED TO IT. IN SUCH A SCENARIO, WE DEEM IT FIT T O SET ASIDE THE IMPUGNED ORDER AND REMAND THE MATTER BACK TO THE FILE OF THE LD. CIT (A) TO DECIDE ON MERITS THE GROUNDS RAISED BEFORE HIM AND THE LD CIT(A) IS DIRECTED TO ADJUDICATE THE APPEAL ON MERITS IN ACCORDANCE TO LA W AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE WILL EXTEND ALL COOPERATION BEFORE THE LD. CIT(A) AND PROVIDE ITS CORRECT ADDRESS TO THE CIT (A) AND SHALL NOT TAKE ANY ADJOURNMENT WITHOUT JUST CAUSE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2015. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 21 ST DAY OF OCTOBER, 2015 TS ITA NO6252/DEL./2013 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-V, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.