DCIT, New Delhi V. M/s. Metro Management Service Pvt. Ltd., New Delhi

ITA 6456/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97635 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund
• Section: 68

Judgement Text

ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.6455/DEL/2013 ASSESSMENT YEAR : 2007-08 I.T.A.NO.6456/DEL/2013 ASSESSMENT YEAR : 2008-09 DCIT, VS METRO MANAGEMENT SERVICE PVT. LTD., CENTRAL CIRCLE-11, L-60B, MALAVIYA NAGAR, ROOM NO. 364, NEW DELHI. ARA CENTRE, (PAN: AACCM1766A) JHANDEWALAN EXTN. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI ATIQ AHMAD, SR. DR, GAJANAND MEENA CIT DR RESPONDENT BY : NONE DATE OF HEARING: 19.8.2015 DATE OF PRONOUNCEMENT: 14.10.2015 O R D E R PER BENCH THESE APPEALS BY THE REVENUE HAVE BEEN DIRECTED AGA INST THE ORDER OF CIT(A)-XXXI, NEW DELHI BOTH DATED 19.3.2013 IN APPE AL NO. 414/2013-14 & 415/2013-14 FOR AY 2007-08 AND 2008-09 RESPECTIVEL Y. ITA NO.6455/D/2013 FOR AY 2007-08 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS AP PEAL:- ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 2 (1) THE ORDER OF LD.CIT (A) IS NOT CORRECT IN LAW AND FACTS. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,26,00,000/- MADE BY AO ON ACCOUNT OF INVESTMENT IN LAND FROM UNDISCLOSED INCOME. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION OF RS.63,00,000/- MA DE BY AO UNDER SECTION.68 OF THE I T ACT ON PROTECTIVE BASIS . 3. AT THE OUTSET, IT IS RELEVANT TO MENTION THAT WH EN THE APPEALS WERE CALLED FOR HEARING, NEITHER THE ASSESSEE NOR HIS REPRESENT ATIVE APPEARED BEFORE US NOR ANY ADJOURNMENT APPLICATIONS WERE FILED ON BEHALF O F THE ASSESSEE. HOWEVER, ON CAREFUL PERUSAL OF THE APPEAL FILES AND RELEVANT MA TERIAL PLACED ON RECORD BEFORE US, INTER ALIA ASSESSMENT ORDERS, IMPUGNED ORDERS O F THE CIT(A), WE ARE OF THE VIEW THAT THESE APPEALS CAN BE DISPOSED OF IN THE A BSENCE OF THE ASSESSEE AFTER HEARING THE LD. DR. HENCE, WE PROCEED TO DECIDE T HE APPEALS. GROUND NO. 1 OF THE REVENUE 4. LD. DR SUPPORTING THE ACTION OF THE AO SUBMITTED THAT THE AO OBSERVED THAT THE ASSESSEE SHARE IN CASH PAYMENT OF 34.70 CR ORES FOR PURCHASE OF LAND IS TAKEN AT RS.2.26 CRORES WHICH WAS CONSIDERATION AS INVESTMENT IN LAND FROM UNDISCLOSED INCOME. HENCE, TO PROTECT THE INTEREST OF THE REVENUE, A PROTECTIVE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE AND SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF M/S OM METAL DEVELOPERS PRIVAT E LIMITED. LD. DR ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 3 VEHEMENTLY CONTENDED THAT THE CIT(A) DELETED THE AD DITION WITHOUT ANY JUSTIFIED REASON, HENCE, THE SAME MAY BE SET ASIDE BY RESTORI NG THAT OF THE AO. 5. ON CAREFUL PERUSAL OF THE ASSESSMENT ORDER AND I MPUGNED ORDER, WE NOTE THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- 4.2 GROUND NO.2 4.2.1 THE AR HAS MADE AN ADDITION OF RS. 2.26 CRORE S TOWARDS APPELLANTS SHARE IN THE CASH PAID BY OM METAL DEVEL OPERS PVT. LTD. THE RELEVANT FACTS ARE MENTIONED AT PARA 3 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED BELOW: DURING THE COURSE OF SEARCH OPERATION ON 06/01/2011 AN AGREEMENT TO SALE DATED 0710812006 WAS FOUND & SEIZ ED FROM OFFICE PREMISES OF SHIV-VANI GROUP AT F-315, GROUND FLOOR, LADO SARAI, NEW DELHI VIDE PAGE 135 TO 146 OF ANNEX URE A -5 OF PARTY B-L4, PAGE 4 OF ANNEXURE A-I SEIZED FROM RESI DENCE OF R.K. SOMANI FROM HIS MALVIYA NAGAR RESIDENCE CONFIRMS TH AT 10 ACRE OF LAND WAS PURCHASED BY THE OM METAL GROUP & METRO MANAGEMENT SERVICES PRIVATE LIMITED (OF SHIV VANI G ROUP) AT THE RATE OF 5 CRORE PER ACRES. HOWEVER, ONLY 10 ACR ES WAS PURCHASED FOR A CONSIDERATION OF RS. 20.30 CRORES I N THE BOOKS OF OM METAL DEVELOPERS PRIVATE LIMITED. AS PER PAPER S EIZED FROM RESIDENCE OF R K SOMANI SHOWS CONSIDERATION PAID IS 55 CRORES (I.E. 10 CRORES @5 CRORE PER ACRE), THE DIFFERENCE OF RS. 34.70 CRORES (I.E. 55 CRORE 20.30 CRORES) HAS BEEN PAID I N CASH. THE ASSESSEE COMPANY M/S METRO MANAGEMENT SERVICES PRIV ATE LIMITED HAD 6.5% SHARES IN M/S OM METAL DEVELOPERS PRIVATE LIMITED; HENCE THE SHARE OF M/S METRO MANAGEMENT SE RVICES PRIVATE LIMITED IN CASH PAYMENT OF RS. 34.70 CRORES COMES TO 2.26 CRORES APPROX. 4.2.2 THE AR HAD SUBMITTED BEFORE THE AO THAT THE A CTUAL PURCHASE OF THE LAND WAS NOT DONE BY THE APPELLANT. THE PURCHASER WAS OM METAL DEVELOPERS PVT. LTD. THE AMO UNT PAID BY THE APPELLANT WAS ALL IN CHEQUE AND THAT THE SAM E HAS BEEN DULY ACCOUNTED IN ITS BOOKS. IT WAS SUBMITTED BEFOR E THE AO THAT THE APPELLANT HAD ONLY PAID RS. 5.10 CRORES AS LOAN S TO THE SAID ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 4 OM MANAGEMENT SERVICES PVT. LTD. TOWARDS ITS SHARE IN THE PROPERTY. THE APPELLANT ALSO SUBMITTED CONFIRMATION FROM THE SAID PARTY BEFORE THE AO. THE APPELLANT ALSO SUBSTA NTIATED ITS ARGUMENTS ON THE LINES THAT EVEN BY WORST OF THE CA LCULATIONS THE TOTAL AMOUNT PAID, INCLUDING THE CASH PORTION, WORK S OUT TO RS. 75 CRORES. THE ASSESSEE'S SHARE OF 6.5% WORKS OUT T O 4.88 CRORES AGAINST THE PAID AMOUNT OF 5.1 CRORES. HENCE THE AS SESSEE WAS NOT LIABLE FOR ANY ADDITION TO ITS TOTAL INCOME. TH E RELEVANT PARAGRAPH CONTAINING AR'S ARGUMENTS MADE BEFORE THE AO IS REPRODUCED BELOW: THE ASSESSEE COMPANY IS HAVING ONLY 6.5% SHARE FOR WHICH IT HAD PAID THE AMOUNT OF RS. 5.10 CRORES THROUGH B ANKING CHANNEL FOR ITS SHARE. THE 6.5% SHARE OF RS. 55 CRO RE WORKS OUT TO RS. 3.58 CRORE (APPROX) AND EVEN IF THE AMOUNT P AID OF RS. 55 CRORES & ADVANCE OF ANOTHER 10 ACRE OF LAND FOR RS. 20 CRORES (APPROX) IS CONSIDERED THE TOTAL WORKS OUT TO RS. 7 5 CRORES AND THE OF LAND FOR RS. 20 CRORES (APPROX) IS CONSIDERE D THE TOTAL WORKS OUT TO RS. 75 CRORES AND THE ASSESSEE COMPANY 'S 6.5% SHARES COMES TO RS. 4.88 CRORES AGAINST THE PAID AM OUNT OF RS.5.10 CRORES. 4.2.3 THE AO HAS ACCEPTED THE APPELLANT'S ARGUMENTS . HE HAS OBSERVED THAT FOR THE PURCHASE OF 10 ACRES OF LAND THE PURCHASER I.E. OM METAL DEVELOPERS PVT. LTD. HAVE PAID RS. 34 .70 CRORES IN CASH AND RS. 20.30 CRORES BY CHEQUE. THE RELEVANT P ARAGRAPH OF THE AO'S CONCLUSION IN THIS REGARD IS AS UNDER: FROM THE ABOVE IT IS CLEAR THAT RS. 2Q.30 CRORES HA S BEEN PAID THROUGH CHEQUE AND THE BALANCE AMOUNT OF RS. 3 4.70 CRORES (I.E. 55 CRORES - 20.30 CRORES HAS BEEN PAID IN CAS H BY THE PURCHASER (MLS. OM METAL DEVELOPERS PRIVATE LIMITED ). THE ASSESSEE COMPANY M/S. METRO MANAGEMENT SERVICES PRI VATE LIMITED HAS 6.5% SHARES IN M/S. OM METAL DEVELOPERS PRIVATE LIMITED. THE SHARE OF THE ASSESSEE COMPANY IN CASH PAYMENT COMES TO RS. 2.26 CRORES APPROXIMATELY. 4.2.4 THE AO HAS HOWEVER, MADE AN ADDITION OF RS. 2 .26 CRORES ON PROTECTIVE BASIS IN ORDER TO PROTECT THE INTERES T OF REVENUE. 4.2.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR O N THE ISSUE. THE APPELLANT HAS BEEN ABLE TO CONVINCE THE AO THAT IT HAD ONLY MADE CHEQUE PAYMENTS TO OM METAL DEVELOPERS PVT. LT D. AND NO CASH PAYMENT HAS BEEN MADE BY THE APPELLANT. THE AO HIMSELF HAS GIVEN A FINDING THAT THE CASH PAYMENT HAS BEEN MADE BY OM ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 5 DEVELOPERS PVT. LTD. SINCE THE PURCHASE OF PROPERTY IS NOT IN THE NAME OF THE APPELLANT COMPANY, IN MY VIEW, THERE AR E NOT ENOUGH EVIDENCES TO ATTRIBUTE 'CASH PAYMENT' TO THE APPELL ANT COMPANY. FURTHER THE AO ALSO DOES NOT SAY THAT THE CASH PAYM ENT WAS MADE BY THE APPELLANT COMPANY. THE AO MERELY SAYS T HAT THE APPELLANT'S SHARES IN THE CASH PAYMENT COMES TO RS. 2.26 CRORES. 4.2.6 IT IS ALSO NOTED THAT EVEN IF THE AMOUNT PAID , INCLUDING THE CASH PORTION, ON THE ABOVE TRANSACTION IS TAKEN AT RS. 75 CRORES WHICH INCLUDES RS. 20 CRORE ADVANCE, FOR ANOTHER 10 ACRE OF LAND, THE APPELLANT'S SHARE IN THE SAID AMOUNT WORK S OUT TO MUCH LESS THAN THE AMOUNT PAID BY THE APPELLANT BY CHEQU E. THE AO ACCEPTS THAT THE CASH PAYMENT HAS BEEN MADE BY OM M ETAL DEVELOPERS PVT. LTD. HAVING DONE SO, NO PURPOSE WIL L BE SERVED BY MERELY ADDING THE AMOUNT ON PROTECTIVE BASIS. TH E FINDING OF THE AO ITSELF IS AGAINST SUCH ADDITION. IN VIEW OF THIS, THE ADDITION MADE ON THE ISSUE ON PROTECTIVE BASIS IS H EREBY DELETED. 6. FROM OPERATIVE PART OF THE SAID ORDER, WE OBSERV E THAT THE CIT(A) NOTED THAT THE APPELLANT/ASSESSEE WAS ABLE TO CONVINCE TH E AO THAT IT HAD ONLY MADE CHEQUE PAYMENTS TO M/S OM METAL AND NO CASH PAYMENT HAS BEEN MADE BY THE ASSESSEE COMPANY. THE CIT(A) ALSO NOTED THAT THE C ASH PAYMENT HAS BEEN MADE BY M/S OM METAL AND THE PROPERTY WAS NOT PURCHASED IN THE NAME OF PRESENT ASSESSEE AND AS SUCH THERE IS NOT ENOUGH EVIDENCE T O ALLEGE CASH PAYMENT TO THE ASSESSEE AND THE AO ALSO DOES NOT SAY THAT CASH PAYMENT WAS MADE BY THE ASSESSEE. FURTHERMORE, THE CIT(A) ALSO CONCLUDED T HAT EVEN IF THE AMOUNT PAID, INCLUDING CASH PORTION, ON THE ABOVE TRANSACTION IS TAKEN AT RS. 75 CRORES (INCLUDING RS. 20 CRORES ADVANCE). FOR ANOTHER 10 ACRE LAND, THE EXTANT ASSESSEES SHARE IN THE SAID AMOUNT WORKED OUT TO M UCH LESS THAN THE AMOUNT PAID BY THE ASSESSEE BY CHEQUE. IN THIS SITUATION, WHEN THE AO ACCEPTS THAT THE ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 6 CASH PAYMENT HAS BEEN MADE BY M/S OM METAL THEN PRO TECTIVE ADDITION IN THE HANDS OF ASSESSEE IS NOT SUSTAINABLE AND THE SAME W AS CORRECTLY DELETED BY THE FIRST APPELLATE AUTHORITY I.E. CIT(A). WE ARE UNAB LE TO SEE ANY VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND WE UPHOLD THE SAME ON THIS GROUND. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE BEING DEVO ID OF MERITS IS DISMISSED. GROUND NO. 2 OF THE REVENUE 7. APROPOS GROUND NO.2 OF THE REVENUE, WE HAVE HEAR D ARGUMENTS OF LD. DR AND ALSO CAREFULLY PERUSED THE RELEVANT MATERIAL PL ACED ON RECORD BEFORE US. LD. DR SUBMITTED THAT THE AO NOTICED THAT AS PER FACTS BROUGHT ON RECORD BY THE AO, SHRI N.K. JAIN WAS AN ENTRY OPERATOR WHO WAS I NVOLVED IN GIVING ENTRIES TO VARIOUS GROUP CONCERNS OF SHRI VANI GROUP WHICH WAS ALSO PROVED BY THE VARIOUS PAGES OF SEIZED MATERIAL. LD. DR FURTHER P OINTED OUT THAT THE SUBSTANTIAL ADDITION WAS MADE IN THE HANDS OF SHIV VANI OIL & G AS EXPLORATION SERVICES LTD., HENCE, PROTECTIVE ADDITION WAS RIGHTLY MADE I N THE HANDS OF THE ASSESSEE WHO WAS BENEFICIAL OWNER OF THESE TRANSACTIONS. LD . DR VEHEMENTLY CONTENDED THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE WITH OUT ANY JUSTIFIED REASON, HENCE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RE STORING THAT OF THE AO. 8. ON CAREFUL PERUSAL OF THE IMPUGNED ORDER, WE NOT ED THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS UNDE R:- 4.3.4 IT IS NOTICED THAT THE AMOUNT MENTIONED IN T HE SAID PAGE OF THE ANNEXURE AGAINST THE APPELLANT'S NAME IS VER Y MUCH ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 7 SUPPORTED BY CREDIT ENTRIES III THE APPELLANT'S BAN K ACCOUNT. AT PAGE 21 OF THEIR PAPER BOOK THE APPELLANT HAS ENCLO SED BANK STATEMENT OF THE APPELLANT MAINTAINED WITH ABN AMBR O BANK (PRODUCED BEFORE THE AO), WHEREIN THERE ARE FOLLOWI NG ENTRIES IN ALL ADDING UP TO 1,62,00,000. DATE DESCRIPTION DEPOSIT 02-11-2006 BY CLEARING - 673410 20,00,000.00 (BRABDURKE ROAD) 08-11-2006 BY CLEARING - 673411 28,00,000.00 (BRABDURKE ROAD) 2-12-2006 BY CLEARING - 673412 15,00,000.00 (BRABDURKE ROAD) 4.3.5 IT HAS BEEN EXPLAINED THAT WHEREVER THERE WAS CASH ELEMENT IN THE TRANSACTION WITH MR. JAIN, THE APPELLANT HAS DULY INCLUDED THE SAME IN THEIR SURRENDERED INCOME. THE DETAILS FOUND AT PAGE 56 OF B14.A14 ARE NOT HAVING ANY CASH ELEMENT NOT A CCOUNTED IN THE ASSESSEE'S BOOKS. IT HAS BEEN FURTHER SUBMITTED THAT SINCE MR. JAIN WAS MAINTAINING THE BANK ACCOUNTS AT KOLKOTA, HIS NAME APPEARS AT THE TOP OF THE PAGE. HOWEVER THE AMOUNTS WRITTEN AGAINST VARIOUS NAMES OF THE COMPANIES ARE NOT CASH TRANSACTIONS BUT BANK TRANSACTIONS DULY REFLECTED I N THE BOOKS AND EXPLAINED TO THE AO WITH ALL SUPPORTING DOCUMEN TS DURING THE ASSESSMENT PROCEEDINGS. 4.3.6 I FIND THAT NONE OF THE CREDIT ENTRIES RELATE TO ANY CASH DEPOSITS. THEY ARE ALL EITHER BANK-TO-BANK TRANSFER S OR CHEQUE DEPOSITS. THE NARRATIONS IN THE BANK ACCOUNT GIVE T HE DETAILS OF THE ACCOUNT NOS. FROM WHERE THE AMOUNT HAS BEEN REC EIVED OR THE CHEQUE NUMBERS. I ALSO OBSERVE THAT THERE APPEARS T O BE NO DISPUTE ABOUT AMOUNTS HAVING BEEN RECEIVED IN THE A PPELLANT'S BANK ACCOUNT THROUGH BANKING CHANNELS. THE AO ALSO ADMITS IN THE ASSESSMENT ORDER THAT ALL THESE TRANSACTIONS HA VE BEEN DULY REFLECTED IN THE BANK ACCOUNTS OF THE APPELLANT WHE N HE STATES THAT 'UNEXPLAINED TRANSACTION MATERIALIZED THROUGH BANKING CHANNEL'. HOWEVER HE HOLDS THAT THE SOURCE IS NOT E XPLAINED. 4.3.7 IT IS OBSERVED THAT IN THE ASSESSMENT PROCEED INGS THE COMPLETE BOOKS OF ACCOUNTS, BANK STATEMENTS & TRAN SACTIONS WERE EXPLAINED TO THE AO AND NO ADVERSE INFERENCE W AS DRAWN BY ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 8 THE AO ON THE BOOKS OF ACCOUNTS & TRANSACTIONS MENT IONED THEREIN. 4.3.8 THE AO HAS ADDED RS. 63 LAKHS. THE AR HAS SUB MITTED THAT THE SAME REPRESENTS SHARE APPLICATION AMOUNT RECEIV ED FROM GROUP CONCERN WHICH IS VERY MUCH ASSESSED BY THE SA ME AO. THE AMOUNT OF RS. 63 LAKHS WAS RECEIVED FROM THE NKP HO LDING PVT. LTD. ON 3 DIFFERENT DATES. SINCE THE BANK ACCOUNT W AS MAINTAINED BY MR. N. K. JAIN HIS NAME APPEARS AT THE TOP OF TH E PAGE. THE SOURCE OF THE AMOUNT, IS THUS EXPLAINED FULLY. FURT HER THE ENTRIES TO THIS FACT ARE ALSO AVAILABLE IN THE BANK ACCOUNT STATEMENT OF THE APPELLANT COMPANY WITH PUNJAB NATIONAL BANK ON THE RESPECTIVE DATES. THE AR HAD ALSO SUBMITTED BEFORE THE AO CONFIRMATION FROM NKP HOLDING PVT. LTD., THE COPY O F WHICH HAS ALSO BEEN SUBMITTED IN THE PAPER BOOK AT PAGE NO. 3 9. THE AR HAS ALSO ENCLOSED COPY OF ASSESSMENT ORDER OF NKP H OLDING PVT. LTD. FOR A.Y. 2007-08 PASSED BY THE SAME ASSESSING OFFICER ON 28.03.2013 AND SUBMITTED THAT IN THE SAID ORDER, TH E AO HAS NOT DISTURBED THE TOTAL INCOME RETURNED BY THE AO. 4.3.9 THUS IT IS CLEAR THAT THE AMOUNT ADDED BY TH E AO WAS RECEIVED FROM NKP HOLDINGS PVT. LTD. A GROUP CONCER N WHICH IS ALSO ASSESSED TO TAX BY THE ASSESSING OFFICER. IN T HE ASSESSMENT ORDER OF NKP HOLDINGS PVT. LTD. THERE IS NO ADVERSE FINDING OF THE AO. CONSIDERING THESE FACTS, THERE IS NO GROUND FOR HOLDING THE AMOUNT AS UNEXPLAINED. THUS RS. 63 LAKH ADDED O N PROTECTIVE BASIS IS HEREBY DELETED. 9. ON BARE READING OF ABOVE OPERATIVE PART OF THE I MPUGNED ORDER, WE OBSERVE THAT THE CIT(A) NOTED THAT WHEREVER THERE W AS A CASH ELEMENT IN THE TRANSACTION WITH MR. JAIN, THE APPELLANT HAS DULY I NCLUDED THE SAME IN THE SURRENDERED INCOME. HOWEVER, THE DETAILS FOUND AT PAGE 56 OF B-14/A-14 (BEING SEIZED MATERIAL) WERE NOT HAVING ANY CASH EL EMENT NOT ACCOUNTED IN THE ASSESSEES BOOKS. THE CIT(A) HAS FURTHER OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS, THE COMPLETE BOOKS OF ACCOUNTS, BANK S TATEMENT AND TRANSACTIONS WERE EXPLAINED TO THE AO AND NO ADVERSE INFERENCE W AS DRAWN BY THE AO ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 9 THEREIN. THE CIT(A) EXPLICITLY HELD THAT NONE OF T HE CREDIT ENTRIES RELATE TO ANY CASH DEPOSIT AND THEY ARE EITHER BANK TO BANK TRANS FERS OR CHEQUE DEPOSITS AND HENCE, UNDISPUTEDLY, ALLEGED AMOUNTS WERE RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNELS WHICH WERE ALSO DULY REFLECTED IN THE BANK ACCOUNTS OF THE ASSESSEE. IN THIS SITUATION, THE CIT(A) DID NOT FI ND HIMSELF IN AGREEMENT WITH THE CONCLUSION OF THE AO THAT SOURCE OF IMPUGNED AM OUNTS/ENTRIES IS NOT EXPLAINED. 10. WHILE WE ANALYSE LAST OPERATIVE PARAS OF CIT(A) , IT IS AMPLY CLEAR THAT THE AO ADDED RS.63 LAC RECEIVED FROM NKP HOLDING PVT. L TD. (NKPH) ON THREE DIFFERENT DATES AND SOURCE OF THE SAME WAS FULLY EX PLAINED AS THE BANK ACCOUNT WAS MAINTAINED BY SHRI N.K. JAIN IN HIS NAME WHICH APPEARED IN THE COPY OF THE BANK STATEMENT. THESE ENTRIES WERE VERY WELL REFLE CTED IN THE BANK STATEMENT OF ACCOUNT WITH PUNJAB NATIONAL BANK. THE CIT(A) ALSO NOTED THAT CONFIRMATION FROM NKPH WAS SUBMITTED BEFORE THE AO DURING ASSESS MENT PROCEEDINGS AND FROM THE ASSESSMENT ORDER FOR AY 2007-08 PASSED IN THE CASE OF NKPH, THE AO HAS NOT DISTURBED THE RETURNED AMOUNT AND THE SAME HAS BEEN ACCEPTED. IN VIEW OF ABOVE NOTED FACTS, THE CIT(A) RIGHTLY CONCLUDED THAT THE AMOUNT ADDED BY THE AO WAS RECEIVED BY THE ASSESSEE FROM NKPH AND WHEN THERE IS NO ADVERSE INFERENCE IN THE CASE OF NKPH, THE SAME CANNOT BE H ELD AS UNEXPLAINED IN THE CASE OF ASSESSEE. HENCE, WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE CIT(A) THAT THE PROTECTIVE ADDITION IN THE HANDS OF ASSESS EE IS NOT SUSTAINABLE AND HE ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 10 RIGHTLY DIRECTED THE AO TO DELETE THE SAME. ACCORD INGLY, GROUND NO. 2 OF THE REVENUE BEING DEVOID OF MERITS IS ALSO DISMISSED. ITA NO. 6456/DEL/2013 OF THE REVENUE 11. THE SOLE GROUND RAISED BY THE REVENUE IN THIS A PPEAL READS AS FOLLOWS:- (4) THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LA W AND FACTS. (5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITION OF RS.5,00,00,000/- MADE BY THE AO U/S 68 OF THE I.T. ACT. 12. LD. DR SUBMITTED THAT THE AO NOTICED THAT TRANS ACTIONS AT PAGE 56 OF ANNEXURE -1 SHOW THAT IMPUGNED TRANSACTIONS THROUGH SHRI N.K. JAIN, AN ENTRY OPERATOR, WERE BOGUS ENTRY TRANSACTIONS FINANCED BY THE ASSESSEE OUT OF ITS UNDISCLOSED SOURCE OF INCOME AS THE SOURCE OF FUNDS FOR ALL THESE TRANSACTIONS THROUGH MR. JAIN, M/S SHIV VANI, A FLAGSHIP COMPANY AT THE GROUP, HENCE, SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF M/S S HIV VANI AND PROTECTIVE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. 13. LD. DR ALSO CONTENDED THAT THE AO WAS QUITE COR RECT AND JUSTIFIED IN MAKING PROTECTIVE ADDITION IN THE HANDS OF THE ASSE SSEE AS IT WAS A BENEFICIAL OWNER OF THESE TRANSACTIONS. LD. DR VEHEMENTLY CON TENDED THAT THE AO WAS QUITE JUSTIFIED IN MAKING IMPUGNED ADDITION PERTAIN ING TO THE ALLEGED TRANSACTION RELATED TO THE ASSESSEE PERTAINING TO ASSESSMENT YE AR UNDER CONSIDERATION AND RIGHTLY TREATED THE SAME AS UNEXPLAINED TRANSACTION MATERIALISED THROUGH ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 11 BANKING CHANNEL WHEREIN SOURCE WAS NOT PROPERLY EXP LAINED. LD. DR LASTLY SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 14. LD. DR ALSO CONTENDED THAT THE AO WAS QUITE COR RECT AND JUSTIFIED IN MAKING PROTECTIVE ADDITION IN THE HANDS OF THE ASSE SSEE AS IT WAS BENEFICIAL OWNER OF THESE TRANSACTIONS. LD. DR VEHEMENTLY CON TENDED THAT THE AO WAS QUITE JUSTIFIED IN MAKING IMPUGNED ADDITION PERTAIN ING TO THE ALLEGED TRANSACTION RELATED TO THE ASSESSEE PERTAINING TO ASSESSMENT YE AR UNDER CONSIDERATION AND RIGHTLY TREATED THE SAME AS UNEXPLAINED TRANSACTION MATERIALISED THROUGH BANKING CHANNEL WHEREIN SOURCE WAS NOT PROPERLY EXP LAINED. LD. DR LASTLY SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 15. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS O F THE REVENUE, AT THE OUTSET, FROM BARE READING OF THE IMPUGNED ORDER, WE NOTED THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS UNDE R:- 4.2.4 IT IS NOTICED THAT THE AMOUNT MENTIONED IN THE SAID PAGE OF THE ANNEXURE AGAINST THE APPELLANT'S .NAME IS VE RY MUCH SUPPORTED BY CREDIT ENTRIES IN THE APPELLANT'S BANK ACCOUNT. AT PAGE 21 OF THEIR PAPER BOOK THE APPELLANT HAS ENCLO SED BANK STATEMENT OF THE APPELLANT MAINTAINED WITH ABN AMBR O BANK (PRODUCED BEFORE THE AO), WHEREIN THERE ARE FOLLOWI NG ENTRIES IN ALL ADDING UP TO 1,62,00,000. ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 12 DATE DESCRIPTION DEPOSIT 04 - 09 - 2007 BY CLEARING - 454961 (BRABDURKE ROAD) 60,00,000.00 05 - 09 - 2007 BY CLEARING 454963 (BRABDURKE ROAD 50,00,000.00 05 - 09 - 2007 BY CLEARING 454965 (BRABDURKE ROAD) 50,00,000.00 05 - 09 - 2007 BY CLEARING 454964 (BRABDURKE ROAD) 50,00,000.00 05 - 09 - 2007 BY CLEARING 454962 (BRABDURKE ROAD) 50,00,000.00 06 - 09 - 2007 BY CLEARING 454966 (BRABDURKE ROAD) 50,00,000.00 06 - 09 - 2007 BY CLEARING 454967 (BRABDURKE ROAD) 50,00,000.00 06 - 09 - 2007 BY CLEARING 454968 (BRABDURKE ROAD) 50,00,000.00 06 - 09 - 2007 BY CLEARING 454969 (BRABDURKE ROAD) 50,00,000.00 07 - 09 - 2007 BY CLEARING 454970 (BRABDURKE ROAD) 40,00,000.00 4.2.5 IT HAS BEEN EXPLAINED THAT WHEREVER THERE WAS CASH ELEMENT IN THE TRANSACTION WITH MR. LAIN, THE APPELLANT HAS DULY INCLUDED THE SAME IN THEIR SURRENDERED INCOME. THE DETAILS FOUND AT PAGE 56 OF B14.A14 ARE NOT HAVING ANY CASH ELEMENT NOT A CCOUNTED IN THE ASSESSEE'S BOOKS. IT HAS BEEN FURTHER SUBMITTED THAT SINCE MR. JAIN WAS MAINTAINING THE BANK ACCOUNTS AT KOLKOTA, HIS NAME APPEARS AT THE TOP OF THE PAGE. HOWEVER THE AMOUNTS WRITTEN AGAINST VARIOUS NAMES OF THE COMPANIES ARE NOT CASH TRANSACTIONS BUT BANK TRANSACTIONS DULY REFLECTED I N THE BOOKS AND EXPLAINED TO THE AO WITH ALL SUPPORTING DOCUMEN TS DURING THE ASSESSMENT PROCEEDINGS. 4.2.6 I FIND THAT NONE OF THE CREDIT ENTRIES RELATE TO ANY CASH DEPOSITS. THEY ARE ALL EITHER BANK-TO-BANK TRANSFER S OR CHEQUE DEPOSITS. THE NARRATIONS IN THE BANK ACCOUNT GIVE T HE DETAILS OF THE ACCOUNT NOS FROM WHERE THE AMOUNT HAS BEEN RECE IVED OR THE CHEQUE NUMBERS. I. ALSO OBSERVE THAT THERE APPEARS TO BE NO DISPUTE ABOUT AMOUNTS HAVING BEEN RECEIVED IN THE A PPELLANT'S BANK ACCOUNT THROUGH BANKING CHANNELS. THE AO ALSO ADMITS IN THE ASSESSMENT ORDER THAT ALL THESE TRANSACTIONS HA VE BEEN DULY ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 13 REFLECTED IN THE BANK ACCOUNTS OF THE APPELLANT WHE N HE STATES THAT 'UNEXPLAINED TRANSACTION MATERIALIZED THROUGH BANKING CHANNEL'. HOWEVER HE HOLDS THAT THE SOURCE IS NOT E XPLAINED. 4.2.7 IT IS OBSERVED THAT IN THE ASSESSMENT PROCEED INGS THE COMPLETE BOOKS OF ACCOUNTS, BANK STATEMENTS & TRANS ACTIONS WERE EXPLAINED TO. THE AO AND NO ADVERSE INFERENCE WAS DRAWN BY THE AO ON THE BOOKS OF ACCOUNTS & TRANSACTIONS M ENTIONED THEREIN. 4.2.8 THE AO HAS ADDED RS. 5,00,00,000/-. THE AR HA S SUBMITTED THAT THE SAME REPRESENTS SHARE APPLICATION AMOUNT R ECEIVED FROM GROUP CONCERN WHICH IS VERY MUCH ASSESSED BY THE SA ME AO. THE AMOUNT OF RS. 5,00,00,000/- WAS RECEIVED FROM THE M ACRO LEAFIN PVT. LTD. ON 10 DIFFERENT DATES. SINCE THE BANK ACC OUNT WAS MAINTAINED BY MR. N. K. JAIN HIS NAME APPEARS AT TH E TOP OF THE PAGE. THE SOURCE OF THE AMOUNT IS THUS EXPLAINED F ULLY. FURTHER THE ENTRIES TO THIS EFFECT ARE ALSO AVAILABLE IN TH E BANK ACCOUNT STATEMENT OF THE APPELLANT COMPANY WITH PUNJAB NATI ONAL BANK ON THE RESPECTIVE DATES. THE AR HAD ALSO SUBMITTED BEFORE THE AO CONFIRMATION FROM MACRO LEAFIN PVT. LTD., THE COPY OF WHICH HAS ALSO BEEN SUBMITTED IN THE PAPER BOOK AT PAGE NO. 2 4. THE AR HAS ALSO ENCLOSED COPY OF ASSESSMENT ORDER OF MACRO LEAFIN PVT. LTD. FOR A:Y. 2008-09 PASSED BY THE SAME ASSESSING OFFICER ON 28.03.2013 AND SUBMITTED THAT IN THE SAID ORDER, TH E AO HAS NOT DISTURBED THE TOTAL INCOME RETURNED BY THE AO. 4.2.9 THUS IT IS CLEAR THAT THE AMOUNT ADDED BY THE AO WAS RECEIVED FROM MACRO LEAFIN PVT. LTD. A GROUP CONCER N WHICH IS ALSO ASSESSED TO TAX BY THE SAME ASSESSING OFFICER. IN THE ASSESSMENT ORDER OF MACRO LEAFIN PVT. LTD. THERE IS NO ADVERSE FINDING OF THE AO. CONSIDERING THESE FACTS, THERE I S NO GROUND FOR HOLDING THE AMOUNT AS UNEXPLAINED. THUS RS. 5,00,00 ,000/- ADDED ON PROTECTIVE BASIS IS HEREBY DELETED. 16. IN THE LIGHT OF CONCLUSION OF THE AO AND OBSERV ATIONS OF THE FIRST APPELLATE AUTHORITY, WE NOTE THAT THE CIT(A) HAS DELETED THE ADDITION IN THE SAME LINE AS WAS DELETED IN AY 2007-08 (GROUND NO. 2 OF THE REVE NUE). THE CIT(A) PRECISELY NOTED THAT ALLEGED AMOUNTS HAVING BEEN RE CEIVED THROUGH BANKING CHANNEL IN THE APPELLANTS/ASSESSEES BANK ACCOUNT AND ALL THESE TRANSACTIONS ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 14 HAVE BEEN DULY REFLECTED IN THE BANK ACCOUNTS OF TH E ASSESSEE, SPECIALLY WHEN THE AO HAD NOTED THAT UNEXPLAINED TRANSACTIONS MATE RIALIZED THROUGH BANKING CHANNELS. PER CONTRA, THE AO HELD THAT THE SOURCE WAS NOT EXPLAINED BY THE ASSESSEE WHICH IS NOT IN ACCORDANCE WITH THE FACTS OF THE CASE AS THE AO DID NOT POINT OR BRING ON RECORD ANY ADVERSE EVIDENCE OF FA CT FROM THE COMPLETE BOOKS OF ACCOUNTS, BANK STATEMENTS WHICH WERE PLACED BEFO RE HIM DURING ASSESSMENT PROCEEDINGS. THE CIT(A) ALSO RIGHTLY OBSERVED THAT SINCE THE BANK ACCOUNT WAS MAINTAINED BY MR. N.K. JAIN, THE SOURCE OF AMOUNT I S THUS EXPLAINED FULLY. FURTHERMORE, ENTRIES TO THESE TRANSACTIONS WERE ALS O AVAILABLE IN THE BANK ACCOUNT STATEMENT OF THE ASSESSEES ACCOUNT WITH PU NJAB NATIONAL BANK. THE CIT(A) ALSO CONSIDERED THE CONFIRMATION FROM M/S MA CRO LEAFIN PVT. LTD., WHICH WAS ALSO PLACED BEFORE THE AO, AND COPY OF TH E ASSESSMENT ORDER PASSED IN THE CASE OF MACRO LEAFIN FOR AY 2008-09 WHEREIN RETURNED INCOME HAS BEEN ACCEPTED BY THE SAME AO AND THE AO HAS NOT DISTURBE D DISCLOSED TAXABLE INCOME OF M/S MACRO LEAFIN FOR THE SAME FINANCIAL P ERIOD. 17. LASTLY, WE ARE INCLINED TO HOLD THAT THE CIT(A) CORRECTLY APPRECIATED THE RELEVANT FACTS OF THE CASE AND RIGHTLY HELD THAT AM OUNTS RECEIVED BY THE ASSESSEE WERE RECEIVED BY THE ASSESSEE FROM M/S MACRO LEAFIN , A GROUP CONCERN WHICH WAS ALSO ASSESSED BY THE SAME AO AND WHEN THERE IS NO ADVERSE FINDING IN THE CASE OF M/S MACRO, THERE IS NO VALID GROUND TO TREA T THE SAME AMOUNT AS UNEXPLAINED IN THE CASE OF THE ASSESSEE. HENCE, CI T(A) WAS CORRECT IN DELETING ITA 6465 & 6456/D/2013 AY 2007-08 & 2008-09 15 THE PROTECTIVE ADDITION IN THE CASE OF THE ASSESSEE AND WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE SAME AND WE UPHO LD THE CONCLUSION OF THE CIT(A) ON THIS SOLE ISSUE. ACCORDINGLY, SOLE GROUN D NO. 1 OF THE REVENUE IS DISMISSED BEING DEVOID OF MERITS. 18. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.15. SD/- SD/- (N.K. SAINI) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14TH OCTOBER, 2015 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR