Shiv Shakti Handicrafts P.Ltd, New Delhi V. ITO, Ward-23(2), New Delhi

ITA 7350/DEL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5075 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 20-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Unexplained cash credit; Search and seizure; Initiation of penalty proceedings; Bogus
• Section: 68; 271(1)(c); 143(3); 250; 153C

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 7350/DEL/2018 A.Y.: 2015-16 SHIV SHAKTI HANDICRAFTS PVT. LTD. VS. ITO, WARD 2 3(2), 206, HANS BHAWAN, NEW DELHI 1, BSZ MARG, NEW DELHI 110 002 (PAN: AABCS4784R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. MUKUL GUPTA, CA DEPARTMENT BY : SH. AMRIT LAL, SR. DR. O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 25.09.2018 OF THE LD. CIT(A)-8, NEW DELHI PERTA INING TO ASSESSMENT YEAR 2015-16 ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 1,00,000/- ON ACCOUNT OF SHARE CAPITAL AS THE SAID SHARE CAPITAL WAS ISSUE D IN FY 2000-01 AND IS BONAFIDE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 10,00,000/- ON ACCOUN T OF TREATING THE LOANS AND ADVANCES GIVEN AS NOT GENUINE HOWEVER THE SAID LOANS AND ADVANCES WERE GIVEN IN FY 2011-12 AND IS BONAFIDE. ADDITION U/S 6 8 WITHOUT ANY CREDIT IN THE YEAR UNDER CONSIDERATION IS BAD IN LAW. PAGE 2 OF 6 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE IMPUGNED ORDER OF THE AO WHICH IS CONTRARY TO LAW, PASSED WITHOUT APPLICATION OF MIND AND WITHOUT COMPLYING WITH THE PROCEDURE AND RULES, IS AGAINST EQUITY AND JUSTICE AND FACTS OF THE ASSESSEE AND MATERIAL ON RECORD. 4. THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING ASSESSMENT WRONGLY DONE U/S. 143(3) AS ASSESSMENT SHOULD HAVE BEEN DONE U/S. 153C AS SATISFACTION NOT E OF DCIT CENTRAL CIRCLE NOIDA DATED 10.10.2017 WAS RECEIVED. 5. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW BY NOT ADJUDICATING GROUND OF INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) WITHOUT ANY MATERIAL ON RECORD. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILE D ITS RETURN OF INCOME ON 22.09.2015 DECLARING LOSS OF RS. 9,305/-. ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS COMPLETED BY THE AO ON 31.12.2017 DETERMINING ASSESSMENT INCOME AT RS. 10, 90,695/- BY MAKING DISALLOWANCE OF RS. 11,00,000/- ON ACCOUNT O F UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT. AGAINST THE AS SESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE H IS IMPUGNED ORDER DATED 25.09.2018, DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST THE IMPUGNED ORDER DATED 25.09.2018 OF THE LD . CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. PAGE 3 OF 6 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT LD. CIT(A) IS WRONG IN UPHOLDING THE ADDITION OF RS. 1,00,000/- ON ACCOUNT OF SHARE CAPITAL AS THE SAID SHARE CAPITA L WAS ISSUED IN FY 2000-01 AND IS BONAFIDE. IT WAS FURTHER SUBMITTED THA T LD. CIT(A) HAS ALSO WRONGLY UPHELD THE ADDITION OF RS. 10,00,000/- ON ACCOUNT OF TREATING THE LOANS AND ADVANCES GIVEN AS NOT GENUIN E HOWEVER THE SAID LOANS AND ADVANCES WERE GIVEN IN FY 2011-12 AN D IS BONAFIDE. HENCE, THE ADDITION U/S 68 WITHOUT ANY CREDIT IN THE YEAR UNDER CONSIDERATION IS BAD IN LAW. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) HAS ERRED IN UPHOLDING THE IMPUGNED ORDER OF THE AO WHI CH IS CONTRARY TO LAW, PASSED WITHOUT APPLICATION OF MIND A ND WITHOUT COMPLYING WITH THE PROCEDURE AND RULES, IS AGAINST EQ UITY AND JUSTICE AND FACTS OF THE ASSESSEE AND MATERIAL ON RECORD. I T WAS THE FURTHER SUBMISSION THAT LD. CIT(A) HAS ERRED IN LAW IN UPHOL DING ASSESSMENT WRONGLY DONE U/S. 143(3) OF THE ACT AS ASSESSMENT SH OULD HAVE BEEN DONE U/S. 153C OF THE ACT AS SATISFACTION NOTE OF D CIT CENTRAL CIRCLE NOIDA DATED 10.10.2017 WAS RECEIVED. IN VIEW OF ABOV E, HE REQUESTED TO DELETE THE ADDITION AND ALLOW THE APPEAL OF THE ASSESSEE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF TH E AUTHORITIES BELOW AND STATED THAT LD. CIT(A) HAS PASSED A WELL RE ASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART. HE RELIED UPON VARIOUS CASE LAWS AND FILED THE SAME IN THE FORM OF W RITTEN SUBMISSIONS. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES ESPECIALLY THE PAPER BOOK FILE D BY THE LD. COUNSEL FOR THE ASSESSEE ALONGWITH THE WRITTEN SUBMIS SIONS OF LD. DR. I NOTE THAT IN THIS CASE THE SERIOUS FRAUD INVES TIGATION OFFICE PAGE 4 OF 6 (SFIO) CONDUCTED INVESTIGATION INTO THE AFFAIRS OF V ARIOUS COMPANIES CONTROLLED BY SH. SURINDER KUMAR JAIN AND SH. VIRENDER KU MAR JAIN. ON THE BASIS OF SUCH INVESTIGATIONS THE SFIO FILED COMPLAINT UNDER SECTION 120B, 420, 468, 477A OF THE INDIAN PENAL COD E AGAINST 31 PERSONS INCLUDING THE ABOVE MENTIONED PERSONS, STAT UTORY AUDITORS, MEDIATORS AND COMPANIES. THE SFIO ALSO FOUND THAT 34 CHARTERED ACCOUNTANTS WERE ACTING AS MEDIATOR FOR PROVIDING ACCO MMODATION ENTRIES TO 559 BENEFICIARIES. THE SAID INFORMATION WAS SHARED WITH THE INCOME TAX DEPARTMENT. SEARCH AND SEIZURE OPERATIONS C ARRIED OUT IN THE CASE OF THE SL WORLD GROUP OF COMPANIES ON 11/11/ 2014 WHICH REVEALED THAT THE SAID COMPANIES WERE ENGAGED IN GENE RATION OF CASH IN THE REAL ESTATE AND OTHER BUSINESS AND SEVERAL COMP ANIES OF THE GROUP, HAVING SHARE PREMIUM ACCOUNT WORTH SEVERAL CRORES , WERE FUNDING THEIR BOGUS CAPITAL ACCOUNT AS WELL AS UNSEC URED LOANS FROM NON-EXISTING BOGUS COMPANIES / CONCERNS IN KOLKATA, DELHI AND MUZAFFARNAGAR AS WELL AS PROVIDING ACCOMMODATION ENTRI ES TO THE GROUP COMPANIES. IN THE PROCESS, 'OUT OF BOOK' CASH G ENERATED WAS BEING INFUSED IN THESE GROUP COMPANIES, WHICH IN TURN , WAS BEING USED TO PROVIDE UNSECURED LOANS TO OTHER GROUP COMPANIE S PROVIDE UNSECURED LOANS TO OTHER GROUP COMPANIES. SEARCH AND S EIZURE OPERATIONS CONDUCTED ON A 11/11/2014 AT THE PREMISES OF SUN WORLD DEVELOPERS PRIVATE LIMITED AND SUN WORLD CITY PRIVATE LIM ITED; BAHADUR SHAH ZAFAR MARG, NEW DELHI LEAD TO SEIZURE OF I NCRIMINATING DOCUMENTS RELATING TO Y K GUPTA GROUP OF COMPANIES WH ICH SHOWED. ONE SUCH DOCUMENT I.E. PAGE 250 OF LP - 16 OF PARTY TW - 11 SHOWED DETAILS OF UNSECURED LOAN AND SHARE PREMIUM ETC. TH E NAME OF THE ASSESSEE APPEARED AT SERIAL NO. 18 WHICH SHOWED SHARE CAPITAL OF PAGE 5 OF 6 RS. 1 LAKH AND LOAN OF RS. 10,87,365. I FURTHER FIND THAT AO OBSERVED THAT THE ASSESSEE COMPANY IS JUST PAPER COMPANY ENG AGED IN PROVIDING OF ACCOMMODATION ENTRY. THERE IS LYING UNSE CURED LOAN GIVEN OF RS. 10 LAC ON WHICH COMPANY NOT EARNING ANY INTEREST BECAUSE P&L ACCOUNT OF ITS ALMOST BLANK EXCEPT DEBIT ING OTHER EXPENSE OF RS. 9305/-. IN THE PREVIOUS YEAR THERE WA S NO BUSINESS AND AS ON 31.3.2014 JUST SHOWN OTHER INCOME OF RS. 6 40/- AS AGAINST NIL THIS YEAR. THEREFORE, AO HELD THAT THE SHARE CAP ITAL OF RS. 1 LAC AND LONG TERM AND ADVANCES GIVEN OF RS. 10 LAC AS NO T GENUINE AS ASSESSEE COULD NOT FILE ANY SUPPORTING DOCUMENTS AS EVIDENCE IN SUPPORT OF THESE SUMS, HENCE, HE TREATED THE SHARE C APITAL AND LONG TERM LOAN AND ADVANCES AS UNACCOUNTED MONEY OF THE A SSESSEE U/S. 68 OF THE ACT. I FURTHER FIND THAT DURING THE APPELLA TE PROCEEDINGS THE ASSESSEE ENCLOSED PHOTOCOPY OF LETTER DATED 13/12/20 17 WHICH WAS CLAIMED TO HAVE BEEN FILED BEFORE THE ASSESSING OFFI CER. HOWEVER, THE LETTER OF THE AR OF THE ASSESSEE ENCLOSING THE ABOVE MENTIONED LETTER WAS UNSIGNED. THE DOCUMENTS FILED WERE STATED TO BE THE AUDITED BALANCE SHEET; MEMORANDUM OF ASSOCIATION OF THE COMP ANY; NAMES OF THE SHAREHOLDERS; BANK DETAILS OF THE YEAR UNDER CON SIDERATION OF BANK OF INDIA, BAHADUR SHAH ZAFAR MARG, NEW DELHI SH OWING THREE TRANSACTIONS DURING THE YEAR UNDER REFERENCE; LEDGER ACCO UNT OF AUDIT FEE PAYABLE, AUDIT' FEES,' BANK CHARGES, PAYMENT TO IMAGE DRESSES PRIVATE LIMITED ETC. THE DOCUMENTS FILED BY THE ASSESS EE DO NOT SATISFY THE REQUIREMENT OF LAW AS PER SECTION 68 OF THE ACT AS NO EVIDENCE HAS BEEN SUBMITTED REGARDING THE IDENTITY, CREDITWORTHINESS ETC. OF THE SHAREHOLDERS OR THE GENUINENESS PAYMENT T O IMAGE DRESSES PRIVATE LIMITED. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE PAGE 6 OF 6 EXCEPT COMPUTER GENERATED LEDGER ACCOUNT IN SUPPORT OF IT'S CONTENTION. NO BANK DETAILS, DOCUMENTS EVIDENCING T HE IDENTITY AND THE CREDITWORTHINESS OF THE SHARE HOLDERS, IDENTITY O F IMAGE DRESSES PRIVATE LIMITED ETC HAVE BEEN SUBMITTED EITHER DURING TH E COURSE OF APPELLATE OR ASSESSMENT PROCEEDINGS. THEREFORE, IN VI EW OF THE ABOVE IT WAS RIGHTLY HELD BY THE LD. CIT(A) THAT THE ASSESS EE HAS NOT BEEN ABLE TO SUBMIT ANY EVIDENCE IN SUPPORT OF HIS CONTEN TION THAT THE ADDITION MADE BY THE AO WAS INCORRECT. IN VIEW OF THE SAME THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED. KEEPIN G IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPLAINED ABO VE AND THE ORDERS PASSED BY THE REVENUE AUTHORITIES, IN MY CONSI DERED VIEW, THE ADDITION WAS RIGHTLY MADE BY THE AO AND CONFIRMED B Y THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE. THEREFO RE, I UPHOLD THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON 06-11-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:06/11/2019 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES