ACIT, Sangrur V. M/s Krishna Krishna Jewellers and Investment (P) Ltd., Sangrur

ITA 697/CHANDI/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1305 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-07-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDER KANTA
• Assessee Lawyers: N K GARG
• Keywords: Accommodation entries
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 697/CHD/2016 ASSESSMENT YEAR: 2007-08 THE ACIT, VS. M/S KRISHNA KRISHNA JEWELLERS AND CIRCLE, INVESTMENT (P) LTD, RAILWAY ROAD, SANGRUR SANGRUR PAN NO. AABCK2483P C.O. NO.26/CHD/2016 (IN ITA NO. 697/CHD/2016) ASSESSMENT YEAR: 2007-08 M/S KRISHNA KRISHNA JEWELLERS AND VS. THE ACIT, CI RCLE, INVESTMENT (P) LTD, RAILWAY ROAD, SANGRUR SANGRUR PAN NO. AABCK2483P (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.CHANDERKANTA, SR.DR RESPONDENT BY : SH. N.K. GARG, ADVOCATE AND SH. VIBHOR GARG, ADVOCATE DATE OF HEARING : 16.07.2018 DATE OF PRONOUNCEMENT : 07.09.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE CAPTIONED APPEAL PREFERRED BY THE REVENUE AND C ROSS OBJECTIONS BY THE ASSESSEE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (A), PATIALA [HEREINAFTER REFERRED TO A S CIT(A)] DATED 04.03.2016 . 2 ITA NOS.697/CHD/2016 & C.O.26/CHD/2016- KRAISHNA KARISHNA JEAWELLERS AND INVESTMENT (P) LTD ., 2. THE REVENUE IN THIS APPEAL HAS TAKEN THE FOLLOWI NG GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,10,00,000 /- ON ACCOUNT OF INTRODUCTION OF SHARE APPLICATION / SHA RE CAPITAL BY THE PERSONS/ENTITIES, AS GENUINENESS OF THESE TRANSACTIONS WAS NOT ESTABLISHED BY THE ASSESSEE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.5,50,000/-MADE ON ACCOUNT OF COMMISSION PAID TO MIDDLEMEN FOR GETTING ACCOMMODATION ENTRIES/BOGUS SHARE CAPITAL. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN FOLLOWING THE HON'BLE ITAT 'S DECISION DATED 22.06.2012 IN THE CASE OF ACIT VS. K ISCO CASTING PVT. LTD. IN ITA NO.685/CHD/2011 FOR THE A. Y. 2006-07 FOR DELETING THE ADDITION, PARTICULARLY WHE N THE DEPARTMENT IS ALREADY IN APPEAL BEFORE THE HON'BLE HIGH COURT AGAINST THE SAID DECISION, WHICH IS PENDING F OR ADJUDICATION. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN NOT FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOV A PROMOTERS & FINLEASE PVT. LTD. REPORTED AT 342 ITR 369. 5. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET AS IDE AND THAT OF THE ASSESSING OFFICER RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DI SPOSED OF. 3. THE ASSESSEE HAS ALSO FILED THE FOLLOWING CROSS OBJECTIONS:- 1. THAT THE LD. APPELLATE AUTHORITY HAS WRONGLY AND ILLEGALLY CONFIRMED THE ACTION OF THE LD. ASSESSING OFFICER IN INITIATING THE PROCEEDINGS U/S 147/148 WITHOUT ANY REASONS TO BELIEVE, WITHOUT ANY RELEVAN T MATERIAL AND MERELY BASED UPON CONJECTURE, GUESS, SURMISES, ASSUMPTION AND PRESUMPTION. 3 ITA NOS.697/CHD/2016 & C.O.26/CHD/2016- KRAISHNA KARISHNA JEAWELLERS AND INVESTMENT (P) LTD ., 2. THAT THE RESPONDENT CRAVES PERMISSION TO ELUCIDA TE, AMEND, LATER ADD OR DELETE ANY GROUND OF CROSS OBJECTION AT THE TIME OF HEARING. 3. IT IS THEREFORE, PRAYED THAT THE CROSS OBJECTION S MAY KINDLY BE ACCEPTED AND THE ASSESSMENT MAY KINDLY BE CANCELLED / SET ASIDE OR ANY OTHER RELIEF TO WHICH THE RESPLENDENT MAY BE FOUND ENTITLED MAY KINDLY BE GRANTED. 4. SINCE THE ASSESSEE IN HIS CROSS OBJECTIONS HAS R AISED THE LEGAL ISSUE REGARDING VALIDITY OF THE REOPENING OF THE ASSESSME NT, HENCE, AT THE REQUEST OF BOTH THE PARTIES, THE LEGAL ISSUE HAS BE EN TAKEN FIRST FOR ADJUDICATION. 5. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE REOPENING OF THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS MADE BY THE ASSESSING OFFICER BY RECORDING THAT THE INCOME OF THE ASSESSEE FOR TH E YEAR UNDER CONSIDERATION HAD ESCAPED ASSESSMENT. THE REASONS R ECORDED BY THE ASSESSING OFFICER ARE REPRODUCED AS UNDER:- RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 WAS FILED ON 31.10.2017 DECLARING TOTAL INCOME OF R S. 17.72,7800/- AND THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. AS PER INFORMATION AVAILABLE, A SEARCH WAS CONDUCTE D IN THE CASE OF SHRI SURINDER KUMAR JAIN, GROUP OF CASES (ENTRY OPERATOR).THE ASSESSEE M/S KRISHNA AND KRISHNA JEWELLERS & INVESTMENTS PVT LTD.,) HAS TAKE N ACCOMMODATION ENTRIES AMOUNTING TO RS. 1,10,000/- FROM SHRI SURINDER KUMAR JAIN GROUP IN FY 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08. 4 ITA NOS.697/CHD/2016 & C.O.26/CHD/2016- KRAISHNA KARISHNA JEAWELLERS AND INVESTMENT (P) LTD ., KEEPING IN VIEW ALL THE ABOVE FACTS I HAVE REASON T O BELIEVE THAT THE INCOME CHARGEABLE TO TAX TO THE EX TENT OF RS. 1,10,000/- HAVE ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2007-08 WITHIN THE MEANING OF EXPLANATION 2(B) OF SECTION 147 OF THE INCOME-TAX A CT, 1961. PROCEEDINGS U/S 147 READ WITH EXPLANATION 2 (B) OF THE INCOME-TAX ACT, 1961 ARE PROPOSED TO BE IMITATE D. APPROVAL AS REQUIRED UNDER PROVISO TO SECTION 151(2 ) OF THE INCOME-TAX ACT, 1961 TO ISSUE THE NOTICE U/S 148 FOR THE ASSESSMENT YEAR 2007-08 IS SOUGHT. 4. THE LD. COUNSEL FOR THE ASSESSEE POINTING OUT TO THE ABOVE REASONS RECORDED BY THE ASSESSING OFFICER HAS SUBMITTED THA T THERE WAS NO MATERIAL AVAILABLE WITH THE ASSESSING OFFICER EIT HER FROM THE RECORD OF THE CASE OR FROM ANY INFORMATION RECEIVED FROM INVE STIGATION WING OR OTHERWISE TO POINT OUT THAT THE ASSESSEE HAD TAKEN ALLEGED ACCOMMODATION ENTRIES FROM SHRI SURINDER KUMAR JAIN FOR THE YEAR UNDER CONSIDERATION. THE ONLY INFORMATION BEFORE THE ASS ESSING OFFICER WAS THAT SEARCH WAS CONDUCTED IN THE CASE OF SHRI SURID NER KUMAR JAIN GROUP. THE LD. COUNSEL FOR THE ASSESSEE HAS REFERRED TO T HE CASE RECORD TO SHOW THAT EVEN DURING OR AFTER THE ASSESSMENT, WHAT TO S AY BEFORE THE REOPENING OF THE ASSESSMENT, THE ASSESSING OFFICER COULD NOT GATHER ANY EVIDENCE TO LINK THE COMPANIES WHO HAD INVESTED IN THE ASSESSEES COMPANY WITH SHRI SURINDER KUMAR JAIN. EVEN, THERE IS NO REFERENCE IN THE REASONS RECORDED BY THE ASSESSING OFFICER TO TH E NAME OF ANY COMPANY WHO ALLEGEDLY PROVIDED ACCOMMODATION ENTRIE S TO THE ASSESSEE COMPANY. THERE IS NO REFERENCE TO THE NATURE OF TRA NSACTION WHETHER IT 5 ITA NOS.697/CHD/2016 & C.O.26/CHD/2016- KRAISHNA KARISHNA JEAWELLERS AND INVESTMENT (P) LTD ., WAS A LOAN TRANSACTION, SHARE APPLICATION AMOUNT, G IFT AMOUNT OR ANY SALE AND PURCHASE TRANSACTION. THE REASONS RECORDED BY T HE ASSESSING OFFICER ARE VAGUE AND DID NOT POINT OUT TO ANY MATERIAL OR INFORMATION IN HIS POSSESSION ON THE BASIS OF WHICH HE COULD FORM THE BELIEF THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE ASSESSING OFFICER IN THIS CASE HAS REOPENED THE ASSESSMENT MERELY ON ASSUMPTION AN D PRESUMPTION BASIS AND WITHOUT ANY INFORMATION ABOUT THE NATURE OF TRANSACTION, THE NAME OF THE COMPANIES WITH WHOM THE ASSESSEE DEALT WITH OR ANY OTHER BASIS THAT THE SAID TRANSACTION WAS BOGUS. THERE WA S ABSOLUTELY NO REASON WITH THE ASSESSING OFFICER TO FORM BELIEF TH AT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. IN VIEW OF THIS, THE REOPENING OF THE ASSESSMENT IN THIS CASE CANNOT BE HELD LEGALLY VALI D AND THE SAME IS ACCORDINGLY SET ASIDE. THE CROSS OBJECTION OF THE A SSESSEE IS HEREBY ALLOWED. 5. EVEN ON THE MERITS OF THE APPEAL OF REVENUE, AS DISCUSSED ABOVE, THE LD. CIT(A) WHILE DISMISSING THE APPEAL OF THE R EVENUE HAS CATEGORICALLY HELD THAT SHRI S.K.JAIN AND SHRI V.K. JAIN IN THEIR ASSESSMENT PROCEEDINGS HAVE SPECIFICALLY DENIED HAV ING PROVIDED ANY ACCOMMODATION ENTRIES TO ANY COMPANY. THAT THE NAM E OF THE ASSESSEE OR THE COMPANIES WHO HAD INVESTED / PURCHASED SHARE S OF THESE COMPANIES HAD NOT EVER CROPPED UP DURING THE ASSESS MENT PROCEEDINGS OF SHRI S.K.JAIN AND SHRI V.K.JAIN. FURTHER, THE ASSES SING OFFICER COULD NOT LINK THOSE COMPANIES WITH SURIDNER KUMAR JAIN GROU P COMPANIES. THE LD. CIT(A) HAS FURTHER GIVEN A CATEGORICAL FINDINGS THAT THE SIX COMPANIES FROM WHOM THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY WERE STILL ACTIVE COMPANIES DULY REGISTERED UNDER I NDIAN COMPANIES ACT 6 ITA NOS.697/CHD/2016 & C.O.26/CHD/2016- KRAISHNA KARISHNA JEAWELLERS AND INVESTMENT (P) LTD ., AND EVEN FILING INCOME TAX RETURNS AND THESE COMPA NIES WERE HAVING LARGE HUGE PAID UP SHARE CAPITAL AND RESERVES AT TH E TIME OF INVESTMENT. THAT THERE WAS NO MATERIAL AVAILABLE TO THE ASSESSI NG OFFICER TO HOLD THAT THE TRANSACTIONS ENTERED BY THESE COMPANIES WI TH THE ASSESSEE COMPANY WERE BOGUS. THAT THE ASSESSING OFFICER DESP ITE HAVING MADE ENQUIRIES FAILED TO BRING ON RECORD ANY SPECIFIC MA TERIAL EITHER LINKING THOSE SIX COMPANIES WITH JAIN GROUP COMPANIES OR TO SHOW THAT THESE COMPANIES WERE PAPER COMPANIES. THERE WAS NO SPECIF IC MATERIAL OR ORAL STATEMENTS POINTING OUT THAT ANY MONEY HAD BEEN PAI D BY THE ASSESSEE TO THE INVESTOR AGAINST THE CHEQUES RECEIVED. THE LD. CIT(A), THEREFORE, HAS GIVEN A FACTUAL FINDING THAT THERE WAS NO MATERIAL AVAILABLE BEFORE THE ASSESSING OFFICER TO HOLD THAT THE TRANSACTIONS ENT ERED INTO BY THE ASSESSEE COMPANY WERE BOGUS OR THAT THE SAME WERE A CCOMMODATION ENTRIES. 6. AFTER CONSIDERING THE ORAL ARGUMENTS OF THE LD. REPRESENTATIVES OF THE PARTIES AS WELL AS GOING THROUGH THE WRITTEN A RGUMENTS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ABOVE FACTUAL FINDINGS OF THE CIT(A) ON MERITS AS WELL. THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED WHEREAS THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.2018 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07.09.2018 RKK 7 ITA NOS.697/CHD/2016 & C.O.26/CHD/2016- KRAISHNA KARISHNA JEAWELLERS AND INVESTMENT (P) LTD ., COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR