DCIT, New Delhi V. M/s. Sincere Developers Pvt. Ltd., New Delhi

ITA 6897/DEL/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1469 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Source of fund; Accommodation entries
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 6897/DEL/2015 A.Y. : 2011-12 DCIT, CENTRAL CIRCLE 20, 1 ST FLOOR, ROOM NO. 104, E-2 ARA CENTRE, JHANDEWALAN NEW DELHI 110 055 VS. M/S SINCERE DEVELOPERS PVT. LTD. 3/16, WEST PATEL NAGAR, NEW DELHI (PAN: AABCE1738P) (ASSESSEE) (RESPONDENT) REVENUE BY : MS. NIDHI SRIVASTAVA, CIT(DR) ASSESSEE BY : SH. KAPIL GOEL, ADV. ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDER DATED 30.10.2015 OF THE LD. CIT(A)-27, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER:- 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,90,00,000/- MADE 2 U/S. 68 OF THE ACT, WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES AS THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE INVESTOR. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE COMPANIES FROM WHICH SHARE CAPITAL WAS INTRODUCED ARE NOT DOING ANY GENUINE BUSINESS ACTIVITIES BUT MERELY ACTING AS CONDUIT TO CONDUIT THE FUNDS A PART OF SCHEME OF PROVIDING ACCOMMODATION ENTRIES. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF THE AS SESSEE ON 18.12.2012. ASSESSEE IS A COMPANY FILED ITS RETURN OF INCOME AT RS. NIL ON 23.12.2014. THE AO MADE AN ADDITION OF RS. 2.90 CRORES AS UNDISCLOSED INCOME U/S. 68 OF THE IN COME TAX ACT, 1961 (IN SHORT ACT) ON ACCOUNT OF RECEIPT OF SHARE APPLICATION MONEY AND PASSED ORDER DATED 31.03.2015 U/S. 143(3)/153A OF THE ACT. AGAINST THE SAID ASSESSMENT ORDER DATED 31.03.2015, ASSESSEE APPEALED BEFORE THE LD. CIT (A), WHO VIDE HIS IMPUGNED ORDER DATED 30.10.2015 ALLOWE D THE 3 APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAS PRODUCED AND PROVED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS AND THE ASSESSEE HAS DISCHARGED THE ONUS LIES ON HIM, HENCE, HE DELETED TH E ADDITION IN DISPUTE. AGAINST THE IMPUGNED ORDER, REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD. CIT(DR) RELIED UPON TH E ORDER PASSED BY THE ASSESSING OFFICER AND STATED THAT IT IS QUITE EVIDENT THAT THE ASSESEE HAS RECEIVED CHEQUES OF RS . 2.90 CRORES AS SHARE APPLICATION MONEY FROM SUCH, OPERATO RS THROUGH TRANSACTION, WHERE IN FACT NO REAL TRANSACT IONS WERE TOOK PLACE. THE GENUINENESS AND CREDITWORTHINESS OF THE PERSONS GIVING SHARE APPLICATION MONEY TO THE ASSES SEE IS NOT PROVED AND THE ASSESSEE FAILED TO DISCHARGE ITS ONU S OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE PERSON WHO CLAIMED TO BE THE SHARE HOLDER OF THE ASSESSEE COM PANY. THE ASSESSEE HAS COMPLETELY FAILED IN DISCHARGING ITS O NUS OF GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINE SS OF THE ENTITIES FROM WHERE THE CREDITS HAVE BEEN APPEARING IN THE BOOKS OF ASSESSEE. HENCE, THE AO HAS RIGHTLY MADE T HE 4 ADDITION OF RS. 2.90 CRORES U/S. 68 OF THE ACT AS UN EXPLAINED CREDITS IN THE BOOKS OF ASSESSEE. IN VIEW OF ABOVE, S HE REQUESTED TO ALLOW THE APPEAL OF THE REVENUE. 5. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE RELI ED UPON THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND STAT ED THAT LD. CIT(A) HAS PASSED WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE NOTE THAT THE ASSESSEE HAS SUBMITTED ALL THE DESIRED INFORMATION IN RESPE CT OF INVESTOR COMPANY BEFORE THE LOWER AUTHORITIES VIZ. ANNUAL R EPORT AND AUDITED BALANCE SHEET; BANK STATEMENTS- INDUSIND B ANK AND DEVELOPMENT COMMERCIAL BANK; BANK STATEMENT AND BAN K LEDGER A/C OF APPELLANT SHOWING THE TRANSACTIONS WI TH INVESTOR COMPANY; BOOKS OF ACCOUNTS AND LEDGER ACCOUNTS OF BHAGWATI DEALERS PVT. LTD. SHOWING THE TRANSACTIONS W ITH ASSESSEE COMPANY; ANNEXURE D, H AND CHART SHOWING COMPLETE DETAILS OF SHAREHOLDERS; AMOUNT INVESTED A ND THE SOURCE OF SOURCE OF FUND; THIS CONTAINS ALL THE APP LICABLE INFORMATION AS DESIRED BY AO; SHARE APPLICATION F ORMS; 5 CONFIRMATION LETTER; AFFIDAVIT FOR INVESTMENT IN AP PELLANT COMPANY; MEMORANDUM & ARTICLES OF ASSOCIATION OF IN VESTOR COMPANY; SHARE HOLDER REGISTER; INCOME TAX RETURN; PRODUCED DIRECTOR OF THE COMPANY FOR PERSONAL DEPOS ITION AND CONFIRMATION FOR THE INVESTMENT IN SHARE APPLICATIO N OF THE APPELLANT COMPANY; EVIDENCES TO PROVE SOURCE OF SOU RCE (SOURCE OF BHAGWATI DEALERS PVT. LTD.) [BDPL]. THE FO LLOWING DOCUMENTS WERE SUBMITTED IN SUPPORT: A. SHARE ALLOTMENT ADVICE TO BDPL INVESTORS B. SHARE APPLICATION FORM FROM BDPL INVESTORS C. BANK STATEMENT OF BDPL INVESTORS D. ITR V OF BDPL INVESTORS E. MOA OF BDPL INVESTORS 6.1 WE FIND THAT IN THE ABOVE CITED INFORMATION NE ITHER ANY ANOMALY WAS FOUND BY THE LD. CIT(A) NOR POINTED OUT BY THE AO. WE NOTE THAT THE AO HAS MADE A GENERAL DISCUSSIO NS IN HIS ASSESSMENT ORDER DESCRIBING WHAT ALL A TYPICAL ENTR Y OPERATOR DOCS, WITHOUT GOING INTO THE FACTS OF THE ASSESSEE' S CASE. THE AO HIMSELF, WHILE ACKNOWLEDGING THE SUBMISSIONS OF V ARIOUS 6 DOCUMENTS AS PROOF OF ITS IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTION IN HIS ASSESSMENT OR DER ITSELF, HAS CONTRADICTED THE SAME WHILE MAKING HIS GROUNDS FOR MAKING THE ADDITIONS. THE CONTENTION OF THE ASSESSEE IS THAT EVEN THE DIRECTOR OF THE INVESTOR COMPANY WAS PRODU CED BY THE ASSESSEE AND HIS STATEMENT WAS RECORDED BY HIM ONLY. IN THE STATEMENT HE COULD NOT EXTRACT ANYTHING FROM TH E DIRECTOR THAT COULD PROVE THAT THE INVESTMENT MADE BY HIS CO MPANY IS BOGUS INVESTMENT IN ASSESSEE COMPANY. ON THE CONTRA RY THE DIRECTOR PRODUCED ALL THE EVIDENCES TO PROVE HIS ID ENTITY IN THE FORM OF MORE THAN TWO IDENTITY PROOFS, AUDITED BALAN CE SHEETS WITH HIGH NET WORTH, THE VARIOUS DOCUMENTS TO SUPPO RT SOURCE OF SOURCE AND CONFIRMATION OF HIS INVESTMENTS. THU S, THE ASSESSEE HAS PRODUCED AND PROVED THE IDENTITY, GENU INENESS AND CREDITWORTHINESS OF THE INVESTORS AND ASSESSEE HAS DISCHARGED THE ONUS LIES ON HIM. IN VIEW OF THE AB OVE, IT IS ESTABLISHED THAT ASSESSEE HAS DISCHARGED ITS ONUS A ND HAS PROVED IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS AND THUS THE ADDITION OF RS 2,90,00,000 /- AS MADE BY THE A.O. U/S. 68 OF THE INCOME TAX ACT 1961 WAS R IGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY 7 INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAID ACTION OF THE LD. CIT(A) AND REJECT THE GROUNDS RAISED BY TH E REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED ORDER PRONOUNCED ON 16/12/2019. SD/- SD/- [DR. B.R.R. KUMAR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 16/12/2019 SRB COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES