M/s. Homeway Marketing (P) Ltd., New Delhi V. ITO, New Delhi

ITA 6272/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6604 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 01-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Opportunity of being heard; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: B : NEW DELHI BEFORE SHRI R.S. SYAL, AM & SHRI A.T. VARKEY, JM ITA NO.6272/DEL/2015 ASSESSMENT YEAR : 2008-09 HOMEWAY MARKETING (P) LTD., 315, DAKHA CHAMBERS, 39/2068, NALWALA, KAROL BAGH, NEW DELHI. PAN: AABCH0130Q VS. ITO, WARD-12(4), NEW DELHI. ITA NO.6273/DEL/2015 ASSESSMENT YEAR : 2008-09 HOPEWIN ADMARK & CONSULTANCY SERVICES (P) LTD., 315, DAKHA CHAMBERS, 39/2068, NALWALA, KAROL BAGH, NEW DELHI. PAN: AAACH6960P VS. ITO, WARD-12(4), NEW DELHI. ASSESSEE BY : SHRI DEEPAK OSTWAL, CA DEPTT. BY : SHRI SAMEER SHARMA, SR. DR DATE OF HEARING : 01.03.2016 DATE OF PRONOUNCEMENT : 01.03.2016 ORDER PER R.S. SYAL, AM: THESE TWO APPEALS BY DIFFERENT BUT CONNECTED ASSESS EES RELATE TO ASSESSMENT YEAR 2008-09. SINCE COMMON IS SUES ARE ITA NOS.6272 & 6273/DEL/2015 2 RAISED IN BOTH THESE APPEALS, WE ARE, THEREFORE, PR OCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIRST TAKE UP APPEAL FILED BY HOMEWAY MARKETI NG (P) LTD. IN ITA NO.6272/DEL/2015. THE ASSESSEE FILED IT S RETURN DECLARING TOTAL INCOME AT RS.1,790/-. THE AO REFER RED TO THE PROCEEDINGS FOR THE AY 2003-04 IN WHICH IT WAS HELD THAT THE ASSESSEE IS ENGAGED IN PROVIDING ACCOMMODATION ENTR IES. HE ALSO REPRODUCED CERTAIN PARTS OF THE STATEMENT GIVE N IN THE YEAR 2005 BY SHRI VISHAL AGGARWAL, CONNECTED WITH THESE GROUP COMPANIES, ADMITTING THAT SUCH COMPANIES IN THE GRO UP WERE USED BY HIM FOR GIVING ACCOMMODATION ENTRIES TO DIF FERENT PERSONS IN THE SHAPE OF SHARE APPLICATION MONEY/LOA NS/GIFTS, ETC. THE AO NOTICED THAT A SUM OF RS.36,000/- WAS CREDITED BY THE ASSESSEE TO ITS PROFITS & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. TAKING COGNIZANCE OF THE STATEMENT O F SHRI VISHAL AGGARWAL, HE CAME TO HOLD THAT THE ASSESSEE WAS ITA NOS.6272 & 6273/DEL/2015 3 ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. HE SUB JECTED RS.36,000/- TO TAX ON PROTECTIVE BASIS. HE FURTHER HELD THAT 1% WAS THE ASSESSEES COMMISSION INCOME FROM ACCOMMODA TION ENTRIES. BY APPLYING THIS RATE OF 1% ON RS.36,000/ -, HE DETERMINED INCOME OF RS.3,600/- ON SUBSTANTIVE BASI S AND INCLUDED THE SAME IN THE ASSESSEES TOTAL INCOME. T HAT IS HOW, TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.5 ,390 PLUS RS.36,000 ON PROTECTIVE BASIS. THE LD. CIT(A) UPHEL D THE ASSESSMENT ORDER. THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL. THOUGH THERE IS A REFERENCE IN T HE ASSESSMENT ORDER TO THE STATEMENT OF SHRI VISHAL AG GARWAL RECORDED IN THE YEAR 2005 WHO ADMITTED THAT HIS COM PANIES WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, BU T, THE AO HAS NOT LINKED ANY SUCH TRANSACTION. HE HAS SIMPLY ADDED RS.36,000/- ON PROTECTIVE BASIS, BEING THE AMOUNT W HICH WAS VOLUNTARILY CREDITED BY THE ASSESSEE TO THE PROFIT & LOSS ITA NOS.6272 & 6273/DEL/2015 4 ACCOUNT. IN THE ABSENCE OF ANY LINK MANIFESTLY BROU GHT OUT BY THE AO, WE ARE UNABLE TO UNDERSTAND AS TO HOW ADDIT ION OF RS.36,000/- WAS MADE ON PROTECTIVE BASIS AND UPHELD IN THE FIRST APPEAL. IT IS FURTHER OBSERVED THAT THE AO RE FERRED TO 1% COMMISSION ON RS.36,000/-, BUT, HE DETERMINED THE A MOUNT AT RS.3,600/- AS AGAINST THE CORRECT AMOUNT WHICH OUGH T TO HAVE BEEN RS.360/-, BEING 1% OF RS.36,000/-. UNDER SUCH CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR MAKING A PROPER NEXUS OF THE RACKET OF ACCOMMODATION ENTRIES WITH THE ASSESSEES ACCOUNTS, SO AS TO JUSTIFY THE ADDITION. IN SUCH FRESH PROCE EDINGS, HE WILL ALSO PROPORTIONATELY REDUCE THE AMOUNT OF COMMISSIO N INCOME. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REA SONABLE OPPORTUNITY OF BEING HEARD IN SUCH FRESH PROCEEDING S. 4. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF THE OTHER APPEAL IN ITA NO.6273/DE L/2015 BY HOPEWIN ADMARK & CONSULTANCY SERVICES (P) LTD. ARE MUTATIS ITA NOS.6272 & 6273/DEL/2015 5 MUTANDIS SIMILAR TO THOSE OF ITA NO.6272/DEL/2015 DISCUSSED ABOVE. FOLLOWING THE VIEW TAKEN IN THE CASE OF HOM EWAY MARKETING (P) LTD., WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH IN CONFORMITY WITH OUR DECISION RENDERED IN THE CASE O F HOMEWAY MARKETING (P) LTD. (SUPRA). 5. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.03.2016. SD/- SD/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 01 ST MARCH, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.