ACIT, New Delhi V. M/s. Quality Synthetics Industries Ltd., Kolkata

ITA 6658/DEL/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5282 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 28-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Income from undisclosed sources; Search and seizure; Set aside
• Section: 142(1); 153A; 143(2); 153; 153C; 68; 132; 15

Judgement Text

1 ITA NO. 6658/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO.6658/DEL/2016 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) ACIT CIRCLE-3, ROOM NO. 332, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI (APPELLANT) VS QUALITY SYNTHETICS INDUSTRIES LTD. ROOM NO. 107, ANAND JYOTI BUILDING, NETAJI SUBHASH ROAD, KOLKATA AAACQ0508Q (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER D ATED 21/010/2016 PASSED BY CIT(A)-23, NEW DELHI FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6,00,00,000/- MADE BY AO ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN APPELLANT BY SMT. SUSHMA SINGH, CIT(DR) RESPONDENT BY SH. VED JAIN, ADV, SH. AKSHIT GOEL, CA & SH. ASHISH GOEL, CA DATE OF HEARING 21.01.2021 DATE OF PRONOUNCEMENT 09.02.2021 2 ITA NO. 6658/DEL/2016 QUASHING THE ASSESSMENT ORDER PASSED BY AO U/S 153 C OF THE I.T.ACT,1961. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW IN ITS DECISION THAT AO HAS NOT GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 3. THE ASSESSEE IS A NON-BANKING FINANCE COMPANY LI STED ON STOCK EXCHANGE KOLKATA, AND IS IN THE BUSINESS OF FINANCI NG AND TRADING IN SHARES & SECURITIES SALES REAL ESTATE. IT IS A GROUP CONC ERN OF MAURIA GROUP COMPANIES. SEARCH AND SEIZURE PROCEEDINGS U/S 132 OF THE INCOME TAX ACT, 1961 WERE CONDUCTED IN THE CASE OF MAYURIA UDYOG LT D. AND ITS GROUP CONCERNS AND RESIDENTIAL/FACTORY PREMISES OF PARTNERS, DIREC TORS AND PROPRIETORS OF THE GROUP ON 7/8/2013. THE WARRANT OF AUTHORITIES FOR SEARCH OF VARIOUS RESIDENTIAL AND BUSINESS PREMISES WERE ISSUED ON 6/ 8/2013 AND 7/8/2013. DURING THE COURSE OF SEARCH DOCUMENTS CASH JEWELLER Y ETC. WERE FOUND AND SEIZED. PROCEEDINGS U/S 153C IN ASSESSEES CASE WA S INITIATED ON 31/12/2015 AND NOTICE U/S 153C READ WITH SECTION 153A WAS ISSU ED AFTER RECORDING SATISFACTION NOTE ACCORDINGLY. THE ASSESSEE VIDE I TS REPLY DATED 13/01/2016 SUBMITTED THAT IN THE ASSESSEES CASE NO INCRIMINAT ING DOCUMENT WAS SEIZED AND ANYTHING RELATING TO SUCH DOCUMENTS WERE NOT IN TIMATED TO THE ASSESSEE. THEREFORE, REQUESTED TO DROP THE PROCEEDINGS U/S 15 3C OF THE ACT. THE ASSESSEE AGAIN FILED OBJECTION REGARDING PROCEEDING S U/S 153C OF THE ACT. IT WAS AGAIN REBUTTED ON 13/1/2016, THE ASSESSEE HAD F ILED ORIGINAL ITR ON 23/09/2013 DECLARING TOTAL INCOME OF RS. NIL. NO TICE U/S 143(2) WAS ISSUED ON 15/1/2016 WHICH WAS DULY SERVED TO THE ASSESSEE. NOTICE U/S 142(1) WAS ISSUED WITH DETAILED QUESTIONNAIRE ON 31/12/2115. IN RESPONSE TO THE SAID NOTICES CA OF THE ASSESSEE APPEARED FROM TIME TO TI ME AND FILED WRITTEN SUBMISSIONS IN RESPONSE TO THE VARIOUS QUERIES RAIS ED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY HAS INVESTED SHA RE APPLICATION MONEY IN TWO COMPANIES I. E. M/S NEXUS COMMO SALES PVT. LTD. AND M/S LINK WISE MARKETING PVT. LTD. AMOUNTING TO RS. 2,99,50,000/- THESE SHARES HAVE BEEN FURTHER SOLD BY THE ASSESSEE COMPANY TO THE KOLKATA BASE COMPANIES WHICH ARE 3 ITA NO. 6658/DEL/2016 M/S DEW DROPS MERCANTILE LTD., M/S SHARMA HIGHER PU RCHASE PVT. LTD., M/S PRAGYA COMMODITIES PVT. LTD. AND M/S SIDDHESHWARI V YAPAR PVT. LTD. THE ASSESSING OFFICER CALLED FOR BANK STATEMENT OF THES E COMPANIES WHICH WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THESE FACT S ARE EMERGING FROM THE ASSESSMENT ORDER ITSELF. THE ASSESSING OFFICER FUR THER OBSERVED THAT THESE COMPANIES ARE MERELY CHANNELS TO LAYERS THE FUND FL OW ULTIMATELY BEING CREATED INTO MAURIA GROUP OF COMPANIES. THE ASSESSING OFFI CER FURTHER OBSERVED THAT WHATEVER AMOUNT IS CREDITED INTO THE BANK ACCOUNTS GETS DEBITED THE SAME DAY OR THE NEXT DAY AND EVERY OTHER DAY, THE BANK ACCOU NT IS LEFT WITH UTMOST IDENTICAL MINIMUM BALANCE. THE ASSESSING OFFICER F ROM PARA 5.2.1 TILL 5.2.3 MENTIONED THE DETAILS OF THE CASH TRAILS. THE ASSE SSING OFFICER IN PARA 5.3 OBSERVED THAT THE COMPANY DID NOT GIVE ANY SHARE DI VIDEND OR INTEREST TO THESE SHARE HOLDERS. THUS, WHILE GIVING THE FINAL FINDIN G THE ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THESE PARTIES AND THE TRANSACTIONS ARE ALSO NOT GENUINE, AND HENCE, MADE ADDITION OF RS. 6 CRORE WHICH WAS INTRODUCED AS SALE OF SHARES FROM THESE PARTIES THEREBY TREATING THE SAME AS UNACCOUNTED INCOME OF THE COMP ANIES U/S 68 OF THE ACT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE A SSESSEE ON THE LEGAL ISSUE AS WELL AS ON THE MERITS. 5. THE LD. DR SUBMITTED THAT THE ASSESSMENT AND THE DOCUMENTS BELONGING TO MAURIA GROUP WAS VERY MUCH RELATED TO THE ASSESS EE COMPANY WHICH IS A GROUP COMPANY OF MAURIA UDYOG LTD. THE LD. DR POIN TED OUT FROM PAGE NO. 15 OF THE ORDER OF THE CIT(A) THAT THE SATISFACTION WA S PROPERLY RECORDED. THUS, THE LD. DR SUBMITTED THAT THE CIT(A) WAS NOT RIGHT IN Q UASHING THE ASSESSMENT ORDER ON THIS GROUND. ON MERIT, THE LD. DR SUBMITT ED THAT THE CIT(A) HAS NOT AT ALL CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER WHEREIN IT IS CLEARLY INDICATED THAT IDENTITY, CREDITWORTHINESS AND THE G ENUINENESS OF THE SHARE TRANSACTION WAS NOT AT ALL ESTABLISHED BY THE ASSES SEE RELATING TO THOSE PARTIES. 4 ITA NO. 6658/DEL/2016 THUS, THE LD. DR SUBMITTED THAT THE ORDER OF THE CI T(A) BE SET ASIDE AND THE ASSESSMENT ORDER BE CONFIRMED. 6. THE LD. AR SUBMITTED THAT NO INCRIMINATING MATER IAL WAS FOUND WHICH WAS RELATED TO THE ASSESSEE COMPANY. FROM THE PERU SAL OF THE SATISFACTION NOTE ALSO IT CAN BE SEEN THAT THERE WAS NOTHING ON RECOR D WHICH RELATED TO THE ASSESSEE COMPANY. THUS, THE LD. AR SUBMITTED THAT THE CIT(A) HAS RIGHTLY HELD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER D ID NOT EMANATE FROM THE SEIZED MATERIAL AND CANNOT BE CALLED AS INCRIMINATI NG MATERIAL WITHIN THE MEANING OF PROVISIONS OF SECTION 153A/153C OF THE A CT. THEREFORE, THE CIT(A) HAS RIGHTLY QUASHED THE REASSESSMENT ORDER. ON MER IT, THE CIT(A) HAS CATEGORICALLY GIVEN THE FINDING THAT ALL THE DETAIL S ABOUT THE TRANSACTION RELATING TO PURCHASE AND SALE OF SHARES OF M/S NEXUS COMMO S ALES PVT. LTD. AND M/S LINK WISE MARKETING PVT. LTD., M/S DEW DROPS MERCAN TILE LTD., M/S SHARMA HIGHER PURCHASE PVT. LTD, M/S PRAGYA COMMODITIES PV T. LTD. AND M/S SIDDHESHWARI VYAPAR PVT. LTD. WAS BEFORE THE ASSESS ING OFFICER . BUT THE SAME WAS NOT TAKEN BY THE ASSESSING OFFICER. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) MOST SPECIFICALLY PARA 4.2 AND THE CHART REP RODUCED BY THE CIT(A) RELATED TO CORRESPONDING PAYMENTS MADE/RECEIVED THR OUGH BANKING CHANNELS. THE LD. AR RELIED UPON THE FOLLOWING ORDERS/DECISI ON:- I) MAURIA UDYOG LTD. (ITA NO. 6660/DEL/2016 ORDER D ATED 29.11.2018 DEL. TRI.) II) CIT VS. RRJ SECURITIES LTD. 380 ITR 612 (DEL HC ) III) PCIT VS. M/S DREAMCITY BUILDWELL PVT. LTD. (IT A NO. 1152/17 ORDER DATED 9.8.2019 DEL. HC) IV) KISHINCHAND CHELLARAM VS. DCIT 125 ITR 713 (SC) 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AT THE OUTSET FROM THE PERUSAL OF THE SATI SFACTION NOTE REPRODUCED IN THE ORDER OF THE CIT(A) AS WELL AS THE ASSESSMENT O RDER, IT CAN BE SEEN THAT NO INCRIMINATING MATERIAL WAS FOUND IN ASSESSEES CASE WHICH WAS BELONGING TO THE ASSESSEE DURING THE SEARCH AND SEIZURE OPERATION IN CASE OF MAURIA GROUP OF 5 ITA NO. 6658/DEL/2016 CASES. THUS, THE REASSESSMENT U/S 153C IS NOT COMP LIED PROPERLY. SECONDLY, THOUGH THE LD. DR POINTED OUT THAT THE ORIGINAL RET URN OF INCOME WAS NOT FILED, THE SAME IS CONTRARY TO THE FACTS MENTIONED IN PARA 2 OF THE ASSESSMENT ORDER. THUS, AT THE THRESHOLD ITSELF THE ASSESSMENT ORDER PASSED U/S 153C WAS RIGHTLY QUASHED BY THE CIT(A). THE CIT(A) HAS FURTHER GIVE N THE OBSERVATIONS ON MERIT WHICH IS DETAILED AND THE REVENUE HAS NOT GIVEN ANY CONTRARY FACTUAL ASPECT. THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09TH D AY OF FEBRUARY, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 09/02/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 6658/DEL/2016