ACIT, Noida V. M/s Dhankari Investment Ltd., Noida

ITA 65/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7294 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-05-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 06-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G M SEMA
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Principle of natural justice; Accommodation entries; Reason to believe
• Section: 142(1); 147; 68; 69; 27; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI G. D. AGARWAL, HONBLE VICE PRESIDENT AND SHRI A. T. VARKEY, JUDICIAL MEMBER C.O. NO.389/DEL/2011 (IN ITA NO. 65 /DEL/ 2011) (ASSESSMENT YEAR: 2000 - 01 ) DHANKARI INVESTMENT LTD. 2 ND FLOOR, DHARAM MARKET, SECTOR - 27, NOIDA PAN:AAACD3623P VS. ACIT CIRCLE, NOIDA, G - BLOCK, SHOPPING COMPLEX, SECTOR - 20, NOIDA (APPELLANT) (RESPONDENT) ITA NO. 65/DEL/2011 ASSESSMENT YEAR 2000 - 01 ACIT CIRCLE, NOIDA G - BLOCK, SHOPPING COMPLEX, SECTOR - 20 , NOIDA VS. DHANKARI INVESTMENT LTD. 2 ND FLOOR, DHARAM MARKET, SECTOR - 27 NOIDA PAN:AAACD3623P (APPELLANT) (RESPONDENT) APPELLANT BY : G.M SEMA, SR. DR RESPONDENT BY : ROHIT GARG, ADV O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THE CAPTIONED APPEAL FILED BY REVENUE AND CROSS - OBJECTION FILED BY THE ASSESSEE ARISE FROM THE ORDER DATED 04.10.2010 OF THE CIT(A), GHAZIABAD RELEVANT TO THE ASSESSMENT YEAR 2000 - 01 . 2. THE GROUNDS RAISED IN THE C.O. ARE AS FOLLOWS: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX(APPEAL) ERRED IN NOT HOLDING THAT THE ORDER, DATED 28.12.2007, PASSED BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) OF THE INCOME - TAX ACT, 1961 ('THE ACT') IS BEYOND JURISDICTION, BAD IN LAW AND VOID - AB - INITIO. 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT WITHOUT FORMING ANY 'REASON TO BELIEVE' THAT ANY I NCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND WITHOUT SATISFYING OTHER CONDITIONS PRECEDENT FOR INITIATING PROCEEDINGS UNDER THAT SECTION. 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PAGE NO. 2 COMMISSIONER OF INCOME TAX APPEALS ERRED IN UPHOL DING THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT SOLELY ON THE BASIS OF CERTAIN INFORMATION PURPORTEDLY RECEIVED FROM ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE - L 0, NEW DELHI WITHOUT ANY INDEPENDENT APPLICA TION OF MIND, WHICH IS A SINE QUA NON FOR ASSUMPTION OF VALID JURISDICTION. 3. IN THE C.O., THE SOLITARY GRIEVANCE IS REGARDING THE ASSUMPTION OF JURISDICTION BY THE AO U/S 147 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) FOR RE - OPENING THE ASSES SMENT. THE LD CIT(A) HAS DEALT WITH THE SAME IN PARA 5(1) OF THE ORDER AND HELD AS UNDER: - ( 1) GROUND NO.1 : GROUND NO.1 IS IN RESPECT OF REOPENING OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAS ARGUED THAT THE HAD NOT ENOUGH INFORMATION FOR FORMING ANY 'REASON TO BELIEVE'; A.O HAD NOT APPLIED HIS MIND AND ALSO THAT THE. AO HAD NOT PASSED SPEAKING ORDER DEALING WI TH APPELLANT'S OBJECTIONS IN RESPECT OF REOPENING PROCEEDINGS AND BECAUSE OF THESE, ISSUANCE OF NOTICE U/S 1471148 WAS NOT VALID. I REJECT ALL THESE CONTENTIONS BECAUSE FIRSTLY, THE AO HAD RECEIVED VALID INFORMATION FROM AN IMPORTANT AND AUTHENTIC FUNCT IONARY OF THE INCOME TAX DEPARTMENT, STATING' THAT M/S MY MONEY SECURITIES LIMITED HAD ADMITTED; DIRECTLY OR INDIRECTLY, TO HAVE PROVIDED ACCOMMODATION ENTRIES. THUS POSSESSION OF SUCH INFORMATION BY THE AO IS AN UNDISPUTED FACT. SECONDLY, FROM THE REAS ONS RECORDED, IT IS CLEAR THAT THE AO HAS APPLIED HIS MIND AND HAS A BONA - FIDE REASON/ REASONABLE BELIEF. THIRDLY, THERE ARE VARIOUS JUDICIAL PRONOUNCEMENT ON THE ISSUE HOLDING THAT FOR DETERMINING WHETHER COMMENCEMENT OF RE - ASSESSMENT PROCEEDINGS WERE VALID, IT HAS TO BE SEEN WHETHER THERE WAS, PRIMA FACIE, SOME MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER COULD RE - OPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. RELIANCE IS PLACED ON R AYMONDS WOOLLEN MILLS VS. ITO & OTHERS 236 ITR 34 (S.C.) & RAJESH JHAVERI STOCK BROKERS (P) LTD. (2007) 291 ITR 500 (SC). AT THE TIME OF INITIATION OF PROCEEDINGS U/S 147, SUFFICIENCY OR ACCURACY OF MATERIAL IS NOT IMPORTANT; ONLY THING IMPORTANT IS THA T THERE SHOULD BE A BONA FIDE APPLICATION OF MIND ON THE BASIS OF INFORMATION RECEIVED OR EMANATING FROM THE MATERIALS AVAILABLE FROM RECORD. I WOULD LIKE TO MENTION HERE THAT IN SUCH CASES OF INFORMATION REGARDING ACCOMMODATION ENTRIES; THE AO, BEING A QU ASI JUDICIAL OFFICER, CAN HAVE ONLY A REASONABLE BELIEF; IT IS NOT POSSIBLE FOR HIM' TO REACH A FINAL CONCLUSION IMMEDIATELY. AFTER ALL, THE AO OR ANY JUDICIAL OFFICER IS NOT 'AN OMNISCIENT WHO CAN UNDERSTAND, IN ADVANCE, AS TO WHAT IS GOING TO BE THE OUTC OME OF THE INVESTIGATION. WHAT IS IMPORTANT IS THAT HE HAS RECEIVED INFORMATION WHICH INDICATES THAT THE ASSESSEE HAS BEEN A BENEFICIARY OF ACCOMMODATION ENTRIES. THAT IS SUFFICIENT FOR HIM TO REACH A REASONABLE BELIEF REGARDING ESCAPEMENT OF TRUE INCOME. IT IS ONLY AFTER PAGE NO. 3 HE TAKES UP PROCEEDINGS VIS 147 AND THE ASSESSEE PUTS FORWARD THE RELEVANT DETAILS AND SUBMISSIONS SO AS TO ARGUE THAT IT WAS A GENUINE TRANSACTION IN CASE OF THE ASSESSEE; THAT AO CAN REACH A FINAL CONCLUSION. FOURTHLY, I ALSO FIND THA T THE AO HAS BRIEFLY PUT FORWARD HIS COUNTER ARGUMENTS IN PARA 4 OF THE ASSESSMENT ORDER. THERE IS NO REQUIREMENT FOR AO TO PASS A SEPARATE ORDER. AFTER ALL THE AO IS NOT SUPPOSED TO BE A DRAFT MASTER! ONCE HE IS ABLE TO COMMUNICATE HIS POINT OF VIEW, ALBE IT, IN BRIEF; IT IS A SUFFICIENT APPLICATION TOWARDS NATURAL JUSTICE. THUS I HOLD THAT PROCEEDINGS U/S 147 WERE PROPERLY AND VALIDLY INITIATED. GROUND NO.1 ACCORDINGLY FAILS. 4. THE LD AR IN THE COURSE OF HEARING REITERATED THE CONTENTION S BEFORE THE LOWER AUTHORITIES. ON THE OTHER HAND THE LD DR SUPPORTED THE ORDER OF THE LD CIT(A). 5. APROPOS DELETION OF ADDITION OF RS.10,02,198/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE FORM OF ACCOMMODATION ENTRIES. 6 . THE ASSESSEE HAS FILED R ETURN OF INCOME ON 21.10.2000 DECLARING A TOTAL INCOME OF RS.4,62,401/ - . ON THE BASIS OF CERTAIN INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX (THE ACIT), NEW DELHI, THE ASSESSING OFFICER, VIDE NOTICE DATED 29.09.2006 INITIATED PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961(THE ACT). IN THE IMPUGNED ASSESSMENT COMPLETED ON 28.12.2007 UNDER SECTION 143(3)/147, THE ASSESSING OFFICER ASSESSED THE INCOME OF THE APPELLANT AT RS.14, 64,600/ - AGAINST INCOME OF RS.4,62,401/ - DECLARED BY THE APPELLANT IN THE RETURN FILED PURSUANT TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. 7 . WE FIND THAT A NOTICE U/S 142(1) DATED 22.01.2007 WAS ISSUED TO THE ASSESSEE IN WHICH HE WAS REQUIRED TO JUSTIFY THE GENUINENESS OF THE TRANSACTIONS ENTERED WITH M/S. MY MONEY SECURITIES LIMITED, DETAILS AS UNDER: - 16.04.1999 6,15,930/ - 26.04.1999 8,54,744/ - 03.05.1999 45,775/ - 12.05.1999 19,03,655/ - 08.06.1999 5,00,831/ - 11.06.1999 3,00,000/ - 14.06.1999 2,11,367/ - TOTAL 44,22,302/ - PAGE NO. 4 8 . THE ASSESSEE WAS ALSO INFORMED THAT ONE COMPANY M/S. MONEY SECURITIES LTDS FOR ASSESSMENT YEAR 2000 - 01 WAS REOPENED BECAUSE IT IS PROVIDING ACCOMMODATION ENTRIES AND THAT THE SAID COMPANY IS PROVIDING ACCOMMODATION ENTRIES TO THE ASSESSEE; AND IN THE SAID CIRCUMSTANCES, THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE AFORESAID INVESTMENT THROUGH M/S. MONEY SECURITIES LTD MAY NOT BE TREATED AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT . 9 . IN PURSUANC E TO THE AFORESAID NOTICES THE ASSESSEE OBJECTED TO THE INITIATION OF PROCEEDINGS U/S 147 OF ACT WHEREIN IT WAS COMMUNICATED THAT THE ASSESSEE HAS RECEIVED THE AMOUNT OF RS.2,01,771/ - FROM M/S. MONEY SECURITIES LTD FOR THE RELEVANT ASSESSMENT YEAR 2000 - 01. THE ASSESSEE CONTENDED THAT COMPLETE INFORMATION RECEIVED FROM THE ADCIT, RANGE - 10, NEW DELHI WAS NOT PROVIDED TO THE ASSESSEE, SO IT WAS KEPT IN THE DARK AND DID NOT UNDERSTAND THE BASIS ON WHICH THE RE - OPENING WAS CARRIED OUT. T HE ASSESSEE DENIED THE ALLEGATION THAT IT HAS RECEIVED ACCOMMODATION ENTRY FROM M/S. MY MONEY SECURITIES LTD . ACCORDING TO THE ASSESSEE IT HAS MADE SALE AND PURCHASE OF SHARES THROUGH M/S. MY MONEY SECURITIES LTD ; AND THESE TRANSACTIONS WERE DULY SUPPORTED WITH BILLS, CONTRACT NOTE, DELIVERY RECEIPTS ETC. THE AO DID NOT ACCEPT THE SAID SUBMISSIONS OF THE ASSESSEE AND HELD THAT THE PROCEEDINGS U/S. 147 OF THE ACT WAS RIGHTY INITIATED AND CAME TO THE CONCLUSION THAT M/S. MY MONEY SECURITIES LTD. WAS IN THE BUSINESS OF THE PROVIDING ACCOMMODATION ENTRY TO THE ASSESSEE AND THE AO HELD AS UNDER: - 5. ON GOING THROUGH THE COPY OF ACCOUNT OF M/S MY MONEY SECURITIES LIMITED IN ASSESSEE ACCOUNT, IT WAS FOUND THAT M/S. MY MONEY SECURITIES LIMITED HAVE ALLEGED PURCHA SE OF SHARES FOR ASSESSEE ON 16.04.1999, 26.04.1999, 03.05.1999 AND 12.05.1999 AND PROFIT (DIFFERENCE BETWEEN SALE PRICE PURCHASE PRICE WAS RECEIVED THROUGH FOLLOWING PAYMENTS BY THE ASSESSEE, AS DETAILED BELOW: - 5.1 FOR THE PAYMENT OF ABOVE, AMOUNTS, THERE ARE ONLY BOOK ENTRIES ALLEGED SALES AND PURCHASES OF SHARES. HENCE ASSESSEE IS A BENEFICIARY TO THE TUNE OF RS.10,02,198/ - IN RESPECT OF TRANSACTIONS ENTERED WITH M/S. MY MONEY SECURITIES LIMITED, WHICH IS BEING ADD ED IN ASSESSEE INCOME U/S 68 OF THE INCOME TAX ACT AS THEY MONEY WAS INTRODUCED BY THE I) 08.06.1999 RS.5,00,831/ - II) 11.06.1999 RS.3,00,000/ - III) 14.06.1999 RS.2,01,367/ - RS.10.02.198/ - PAGE NO. 5 ASSESSEE IN HIS BOOKS OF ACCOUNT THROUGH M/S MY MONEY SECURITIES LIMITED, WHICH WERE PROVIDING ACCOMMODATION ENTRIES. ADDITION OF RS.10,02,198/ - 10 . AGGRIEVED BY THE S AID ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO WAS PLEASED TO DELETE THE IMPUGNED ADDITION MADE BY THE AO. AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A), THE REVENUE IS BEFORE US AND HAS ASSAILED THE ORDER OF THE LD CIT(A). 11 . WE FIND THAT T HE APPELLANT HAD SUBMIT TED THE ENTIRE DETAILS AND DOCUMENTS RELEVANT TO PURCHASE AND SALE OF SHARES, LIKE PHOTO COPES OF BILLS, CONTRACT NOTES AS WELL AS DELIVERY RECEIPTS FOR PURCHASE AS WELL AS SALE OF SHARES. ONCE THE DELIVE RY RECEIPTS WERE PLACED ON RECORD BY THE ASSESSEE, THE LD CIT(A) HAS RIGHTLY OBSERVED THAT THE ONUS SHIFTED TO THE AO TO PROVE THAT THE TRANSACTION WERE NOT GENUINE ; AND THAT THE SALE PROCEEDS WERE IN REALITY, MERE ACCOMMODATION ENTRIES. THE AO HAS NOT BEEN SUCCESSFUL TO PLACE ON RECORD ANY EVIDENCE WHICH COULD CONTROVERT THE EVIDENCE PLACED BY THE ASSESSEE ON RECORD TO SUBSTANTIATE ITS CLAIM OF GENUINE SALE AND PURCHASE OF SHARE THROUGH THE M/S. MONEY SECURITIES LTD. THE LD CIT(A) HAS TAKEN NOTE THAT THE TRANSACTIONS HAVE BEEN ENTERED INTO BY THE APPELLANT THROUGH THE BROKER AND IN SUCH TRANSACTIONS THE SELLER AND THE BUYER NEED NOT CO ME IN CONTACT WITH EACH OTHER AND SINCE THE BILLS AND THE CONTRACT NOTES OF THE BROKER WERE ALREADY BROUGHT ON RECORD BEFORE THE AO , THE ASSESSEE HAS DONE WHATEVER WAS WITHIN HIS MEANS AND CONTROL TO PROVE THE GENUINENESS OF THE TRANSACTION. IT HAS ALSO BEEN OBSERVED BY THE LD CIT(A) THAT THE TRANSACTION OF PURCHASE AND SALE OF THE SHARES IN QUESTION HAD BEEN UNDERTAKEN THROUGH A RECOGNIZE D BROKER OF THE STOCK EXCHANGE AND THE ASSESSEE IS THEREFORE NOT DUTY BOUND TO KNOW THE PURCHASER. SINCE THERE IS NO DISPUTE THAT THE ASSESSEE HAS IDENTIFIED THE STOCKBROKER AND THIS ASPECT IS NOT IN DISPUTE . AND THE EVIDENCE PLACED BY THE ASSESSEE ON REC ORD CONFIRM THE PURCHASE AND SALE OF SHARES IN QUESTION. THE ONLY GROUND ON WHICH THE AO HAS MADE THE ADDITION IS ON THE BASIS THAT THERE IS DIFFERENCE BETWEEN THE PURCHASE PRICE AND THE SALE PRICE OF THE SHARES. DOUBT AND SUSPICION CANNOT TAKE THE PLACE OF EVIDENCE TO FASTEN THE LIABILITY ON THE ASSESSEE AS HAS BEEN RIGHTLY BEEN HELD BY THE LD CIT(A) AND OTHER THAN THESE CONJECTURES AND SURMISES , THE AO HAS NOT BEEN ABLE TO PLACE ON RECORD ANY INCRIMINATING EVIDENCE TO PAGE NO. 6 SUBSTANTIATE THE IMPUGNED ADDITION M ADE AGAINST THE ASSESSEE. THEREFORE WE FIND NO REASON TO INTERFERE IN THE REASONED ORDER OF THE LD CIT(A) AND THEREFORE WE DISMISS THE APPEAL OF THE REVENUE. 12 . IN THE RESULT CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME ANFRACTUOUS AND SO THE SAME IS DISMISSED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 . 09 . 2014. - S D / - - S D / - ( G. D. AGARWAL) (A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED : 2 6 / 09 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI