ACIT, New Delhi V. M/s. Saarthak Vanijya India Ltd., Kolkata

ITA 6367/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6622 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Search and seizure; Opportunity of being heard; Question of law; Accommodation entries; Block assessment; Retraction; Set aside
• Section: 153A; 143(1); 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NOS. 6367 & 6368/DEL/2016 ASSESSMENT YEARS: 2008-09 & 2010-11 ACIT, CENTRAL CIRCLE-28, VS. M/S. SARTHAK VANIJYA INDIA LTD., NEW DELHI. 11, GOENKA LANE, SHIVATALLA STREET, KOLKATA. C.O. NO.71 & 72/DEL/2020 (IN ITA NOS. 6367 & 6368/DEL/2016) ASSESSMENT YEARS: 2008-09 & 2010-11 M/S. SARTHAK VANIJYA INDIA LTD., VS. ACIT, CENTRAL CIRCLE-28, 11, GOENKA LANE, SHIVATALLA NEW DELHI. STREET, KOLKATA. PAN : AACCR1635F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. H.K. CHOUDHARY, CIT/DR RESPONDENT BY: SH. R.S. SINGHVI, C.A. DATE OF HEARING: 25.08.2021 DATE OF ORDER : 09.09.2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDERS DATED 19.09.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-29, NEW DELHI ('LD. CIT(A)') IN THE CASES OF M/S. SARTHAK VANIJYA INDIA LIMITED (T HE ASSESSEE) FOR THE 2 ASSESSMENT YEARS 2008-09 & 2010-11, THE REVENUE PRE FERRED THESE APPEALS. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIO NS AGAINST THESE APPEALS OF THE REVENUE. 2. BRIEF FACTS OF THE CASES ARE THAT THE ASSESSEE I S A COMPANY AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2008-09 AND 2010-11 ON 27.09.2008 AND 25.09.2010 DECLARING INCOME OF RS .2,50,769/- AND RS.6,12,550/- RESPECTIVELY AND THE SAME WERE PROCES SED U/S. 143(1) OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT). 3. THERE WAS A SEARCH AND SEIZURE ACTION U/S. 132 O F THE ACT CARRIED OUT IN BINDAL GROUP OF CASES INCLUDING THE ASSESSEE ON 07.03.2014, IN WHICH, ACCORDING TO THE REVENUE, VARIOUS BOOKS OF A CCOUNT/DOCUMENTS ETC. WERE FOUND AND SEIZED AND STATEMENTS OF VARIOU S PERSONS WERE ALSO RECORDED. SUBSEQUENTLY, ASSESSEE WAS ISSUED A NOTIC E U/S. 153A OF THE ACT ON 18.05.2015, IN REPLY TO WHICH THE ASSESSEE F ILED RETURN OF INCOME ON 09.02.2016 FOR BOTH THE YEARS DECLARING INCOME O F RS.2,50,770/- FOR THE ASSESSMENT YEAR 2008-09 AND RS.6,12,610/- FOR T HE ASSESSMENT YEAR 2010-11. ASSESSMENTS WERE COMPLETE BY ORDERS DATED 31.03.2016 FOR BOTH THE YEARS AT AN INCOME OF RS.1,67,50,770/- FOR THE ASSESSMENT YEAR 2008-09 AND RS.8,47,12,580/- FOR THE ASSESSMENT YEA R 2010-11 BY MAKING ADDITION OF RS.1.65 CRORES FOR THE ASSESSMEN T YEAR 2008-09 AND RS.8.41 CRORES FOR THE ASSESSMENT YEAR 2010-11 ON A CCOUNT OF UNEXPLAINED CREDITS IN THE BOOKS OF ACCOUNT U/S. 68 OF THE ACT. 4. AGGRIEVED BY SUCH ADDITIONS, THE ASSESSEE PREFER RED APPEALS BEFORE THE LD. CIT(A), WHO BY WAY OF THE IMPUGNED O RDERS DELETED THE ADDITIONS HOLDING THAT THE ADDITION WAS MADE BY REL YING UPON THE 3 STATEMENT OF MR. BRIJESH BHAGAT RECORDED ON 16.03.2 016 WITHOUT HAVING ANY PROOF OR CORROBORATIVE EVIDENCE TO ESTABLISH TH E TRANSACTION TO BE BOGUS, NO FURTHER INVESTIGATION WAS DONE IN THIS RE GARD, NOTHING WAS FOUND DURING THE SEARCH WITH REGARD TO THE ALLEGED BOGUS ENTRIES AS UNEXPLAINED SHARE CAPITAL, THE STATEMENT RECORDED O N 16.03.2016 WAS RETRACTED ON 29.03.2016 BY WAY OF AN AFFIDAVIT, BUT THE ASSESSING OFFICER HAD NOT PROVIDED OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND REJECTED THE RETRACTION OF STATEMENT BY MR. BRIJESH BHAGAT WITHOUT ANY BASIS BY SIMPLY SAYING THAT HE HAS GIVEN CONTRADICT ORY STATEMENTS, WHICH ACCORDING TO THE LD. CIT(A) DOES NOT SUBSTANTIATE O R PROVE CONCLUSIVELY THAT THE SAID SHARE CAPITAL AND PREMIUM, RECEIVED I S GENERATED OUT OF UNEXPLAINED INCOME OF THE ASSESSEE ROUTED THROUGH I T AS AN ACCOMMODATION ENTRY. LEARNED CIT(A) FURTHER HELD TH AT THE STATEMENT OF MR. RAJESH AGARWAL IS NOT DIRECTLY RELATED TO THE CASE OF THE ASSESSEE AND WAS TAKEN BEFORE THE SEARCH. LASTLY, LD. CIT(A) OBS ERVED THAT THE ASSESSING OFFICER BASED THE ADDITION AT THE BEHEST OF THE SUGGESTION BY DDIT(INVESTIGATION) REGARDING RETRACTION OF STATEME NT BY MR. BHAGAT AND THEREFORE, SUCH AN OPINION WAS NOT INDEPENDENT ONE WITHOUT BEING SUPPORTED BY ANY FURTHER MATERIAL. 5. BEFORE THE LD. CIT(A), ASSESSEE ALSO CHALLENGED THE ADDITION TO BE UNSUSTAINABLE ON THE GROUND THAT THERE WAS NO INCRI MINATING MATERIAL FOUND OR SEIZED DURING THE SEARCH QUA THE ASSESSMEN T YEAR QUA THE ADDITION AND THEREFORE, IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. KABUL CHAWLA, 380 ITR 573(DE L), NO SUCH ADDITION IS SUSTAINABLE. LEARNED CIT(A) OBSERVED THAT IN VIEW O F THE FACT THAT THE 4 RELIEF WAS GIVEN TO THE ASSESSEE ON MERITS, DECIDIN G THIS QUESTION OF LAW IS ACADEMIC IN NATURE AND THEREFORE, HE LEFT IT OPE N. 6. CHALLENGING THE DELETION OF THE ADDITION, REVENU E PREFERRED ITA NO. 6367 AND 6368/DEL/2016 FOR THE ASSESSMENT YEARS 2008-09 AND 2010-11 RESPECTIVELY, WHEREAS THE ASSESSEE, AGGRIEV ED BY THE FINDINGS OF THE LD. CIT(A) THAT THE VALIDITY OF REOPENING PROCE EDINGS IN THE ABSENCE OF ANY INCRIMINATING MATERIAL IN RESPECT OF A CONCL UDED ASSESSMENT NEED NOT BE DECIDED, THE ASSESSEE FILED CROSS OBJECTIONS NO. 71 & 72/DEL/2020 FOR BOTH THE YEARS RESPECTIVELY. 7. IT IS ARGUED BY THE LD. DR THAT ONE MR. BRIJESH BHAGAT, DIRECTOR OF THE ASSESSEE COMPANY HIMSELF ADMITTED TWICE IN HIS STATEMENT THAT THE ASSESSEE COMPANY WAS INVOLVED IN PROVIDING ACCOMMOD ATION ENTRIES AND THEREFORE, LD. CIT(A) IS NOT CORRECT IN HOLDING THA T THERE IS NO INCRIMINATING MATERIAL AGAINST THE ASSESSEE. FURTHE R, SUCH AN ADMISSION OF MR. BHAGAT ESTABLISHES THAT THE ASSESSEE ROUTED THEIR OWN MONEY INTO THE BUSINESS BY WAY OF ACCOMMODATION ENTRIES AND TH EREFORE, THE IMPUGNED ORDER HAS TO BE SET ASIDE. 8. IT IS SUBMITTED ON BEHALF OF THE ASSESSEE THAT T HE LD. ASSESSING OFFICER HIMSELF ADMITTED THAT ABSOLUTELY NOTHING WA S FOUND DURING THE SEARCH WITH REGARD TO THE ALLEGED BOGUS INVESTMENT AND THE ASSESSING OFFICER BASED THE ADDITION AT THE SUGGESTION OF DDI T(INVESTIGATION) AND THE STATEMENT OF MR. BHAGAT STOOD AN UNCORROBORATED STATEMENT, WHICH CANNOT BE A BASIS FOR MAKING ANY ADDITION. HE PLACE D RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF PCIT VS. ANAND KUMAR JAIN (HUF) AND OTHERS IN ITA NO. 23/2021 AND BATCH BY ORDER 5 DATED 12.02.2021 WHEREIN THE COURT HELD IN UNEQUIVO CAL TERMS THAT THE STATEMENTS RECORDED U/S. 132(4) OF THE ACT DO NOT B Y THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLA INED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. BEST INFRA STRUCTURE (INDIA) P. LTD. (2017) 84 TAXMANN.COM 287 (DELHI HC). HE ALSO BROUG HT TO OUR NOTICE THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD. CIT(A) WHICH THE LD. CIT(A) RECORDED IN THE ORDER TO THE EFFECT THAT THE LD. ASSESSING OFFICER HIMSELF ADMITTED THAT ABSOLUTELY THERE WAS NOTHING FOUND DURING THE SEARCH WITH REGARD TO THE ALLEGED BOGUS INVESTMENTS BY THE SEARCH TEAM. HE, THEREFORE, PRAYED THAT THE CROSS OBJECTIONS MAD E BE ALLOWED BY RETURNING A FINDING THAT IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), THE NOTI CE U/S. 153A OF THE ACT AND CONSEQUENTIAL ASSESSMENT PROCEEDINGS ARE BAD UN DER LAW. 9. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF SUBMISSIONS MADE ON EITHER SIDE IN THE APPEAL AND THE CROSS OBJ ECTIONS. IT REMAINS AN UNDISPUTED FACT THAT THE LD. ASSESSING OFFICER PLAC ED HEAVY RELIANCE ON THE STATEMENT OF MR. BRIJESH BHAGAT RECORDED ON 16. 03.2016 DESPITE THE FACT THAT THE SAID PERSON RETRACTED THE SAME BY WAY OF AN AFFIDAVIT ON 29.03.2016 AND EXCEPT THE STATEMENT OF MR. BHAGAT A ND THE SUGGESTION OF DDIT(INVESTIGATION), THERE IS NO MATERIAL, WHATS OEVER, TO CORROBORATE AND SUBSTANTIATE THE ADDITION. IN VIEW OF THE DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANAND KUMA R JAIN (HUF) (SUPRA), WHEREIN THE HONBLE HIGH COURT FOLLOWED THE DECISIO N IN CIT VS. HARJEEV AGGARWAL (2016) 70 TAXMANN.COM 95 (DELHI) AND OBSER VED THAT THOUGH THE STATEMENT RECORDED U/S. 132(4) OF THE ACT HAS E VIDENTIARY VALUE AND THE RELEVANCE AS CONTEMPLATED UNDER THE EXPLANATION THEREFORE, ON 6 STANDALONE BASIS SUCH STATEMENT DOES NOT EMPOWER TH E ASSESSING OFFICER TO FRAME THE BLOCK ASSESSMENT WITHOUT THERE BEING ANY MATERIAL DISCOVERED DURING THE SEARCH AND SEIZURE OPERATIONS . IN SO FAR AS THE MERITS ARE CONCERNED, THE OBSERVATIONS OF THE LD. C IT(A) ARE LAWFUL AND HIS CONCLUSIONS ARE IMPECCABLE. THE STATEMENT OF MR . BRIJESH BHAGAT ON STANDALONE BASIS CANNOT AFFORD ANY SUPPORT TO THE A DDITION AND IN VIEW OF THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF BEST INFRASTRUCTURE (INDIA) PVT. LTD. (SUPRA) AND CIT VS . HARJEEV AGGARWAL (SUPRA), SUCH A STATEMENT REQUIRES CORROBORATION OF SOME OTHER MATERIAL DISCOVERED DURING THE SEARCH AND SEIZURE OPERATIONS . IT, THEREFORE, FOLLOWS THAT ANY ADDITION CONTRARY TO THIS POSITION CANNOT BE SUSTAINED. ON THIS SCORE, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE OBSERVATIONS OF THE LD. CIT(A). 10. NOW, COMING TO THE CROSS OBJECTIONS OF THE ASSE SSEE, IT REMAINS AN ADMITTED FACT THAT THE RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2008-09 AND 2010-11 WERE FILED ON 27.09.2008 AND 25 .09.2010 RESPECTIVELY WHEREAS SEARCH OPERATION TOOK PLACE ON 07.03.2014. ADMITTEDLY, THE RETURNS OF INCOME FOR BOTH THE ASSE SSMENT YEARS WERE PROCESSED U/S. 143(1) OF THE ACT. LONG PRIOR TO THE SEARCH, THE TIME PERIOD PERMISSIBLE FOR ISSUANCE OF NOTICE U/S. 143( 2) BY PROVISO THEREUNDER EXPIRES. IT LEAVES NO DOUBT THAT AS ON T HE DATE OF SEARCH, THERE WERE NO ASSESSMENTS PENDING OR WERE ABATED DU E TO SEARCH. IN CIT VS. KABUL CHAWLA, HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE ASSESSMENT CANNOT BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL AND AN ASSESSMENT HAS TO B E MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. IT IS FURTHER HELD BY THE 7 HONBLE COURT THAT COMPLETED ASSESSMENTS CAN BE INT ERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A O NLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR THE DOCUMENTS REQUISITIONED OR UNDISCLOSED INCOME/P ROPERTY DISCOVERED IN THE COURSE OF SEARCH. 11. IN VIEW OF THIS UNDISPUTED FACTS AND THE SETTLE D POSITION OF LAW, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITIONS QUA THE ASSESSMENT YEAR ARE UNSUSTAINABLE IN THE ABSENCE OF ANY INCRIM INATING MATERIAL THAT WAS UNEARTHED DURING THE SEARCH AND SEIZURE OPERATI ONS. ON THIS PREMISE, WE ALLOW THE CROSS OBJECTIONS OF THE ASSES SEE. 12. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 9 TH DAY OF SEPTEMBER, 2021. SD/- SD/- ( PRASHANT MAHARISHI) (K. NARSIM HA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/09/2021 AKS