ITO, New Delhi V. M/s. Whizzkid Finlease (P) Ltd., New Delhi

ITA 74/DEL/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98102 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 26-11-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 09-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HEMANT CHAUDHARY
• Keywords: Unexplained cash credit; Accommodation entries; Non compliance; Reason to believe
• Section: 142(1); 147; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH H NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 74/DEL./2009 ASSTT. YEAR : 2000 - 01 INCOME - TAX OFFICER, VS. M/S. WHIZZKID FIN LEASE (P) LTD., WARD 18(3), NEW DELHI. 263, VASANT ENCLAVE, NEW DELHI. [PAN: AAACW1161D] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TARUN KUMAR, C.A. RESPONDENT BY : SHRI HEMANT CHAUDHARY, SR. DR DATE OF HEARING : 16.11.2015 DATE OF PRONOUNCEMENT : 11 .12.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 14.10.2010 OF LD. CIT(A) - XXI, NEW DELHI FOR THE ASSESSMENT YEAR 2000 - 01 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.10 LACS ADDED BY THE AO TREATING THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDITS. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.23 LACS ADDED BY THE AO, TREATING THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDITS. ITA NO. 74/DEL./2009 2 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN ALLOWING RELIEF BY WRONGLY RELYING ON THE ORDER OF THE HON BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. WHEN THE FACTUM OF ADVANCING SHARE APPLICATION MONEY ITSELF WAS NOT ESTABLISHED. IN THIS CONNECTION RELIANCE IS P LACED IN THE CASE OF DIVINE LEASING AND FINANCE LTD. RENDERED BY DELHI HIGH COURT AND APPROVED BY THE HON BLE SUPREME COURT. 2. THE BRIEF FACTS OF THE CASE , AS NARRATED IN THE ASSESSMENT ORDER, ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 01.12.2 000, WHICH WAS PROCESSED U/S. 143(1) ON 20.02.2002 ACCEPTING THE INCOME RETURNED AT NIL . SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT THAT M/S. WHIZZKID FINLEASE (P) LTD. HAD TAKEN ACCOMMODATION ENTRIES TO THE TUNE OF RS.10 LACS DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2000 - 01. ON THE BASIS OF THIS INFORMATION, THE ASSESSING OFFICER PROCEEDED TO INITIATE RE ASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) AFTER RECORDING TH E FOLLOWING REASONS : RETURN OF INCOME DECLARING AN INCOME OF RS. NIL WAS FILED ON 01.12.2000 VIDE RECEIPT NO. 99 FOR ASSESSMENT YEAR 2000 - 01. INFORMATION HAS BEEN RECEIVED THAT THE COMPANY HAD TAKEN ACCOMMODATION ENTRIES FROM PRECISION AGENCIES PVT. LTD. WORTH RS.1,00,000/ - D URING THE YEAR UNDER CONSIDERATION I.E. F.Y. 1999 - 2000 AND CREDITED IN THE ASSESSEE S BANK ACCOUNT MAINTAINED WITH ABN AMRO BANK, NEW DELHI. INFORMATION RECEIVED FROM INVESTIGATION WING IS BASED ON CREDIBLE EVIDENCE AND THEREFORE, I HAVE REASON TO BELIEV E THAT INCOME TO THE EXTENT OF RS.10,00,000/ - AS STATED ABOVE HAS ESCAPED ASSESSMENT. ITA NO. 74/DEL./2009 3 ACCORDINGLY, NOTICE U/S. 148 OF THE INCOME TAX ACT IS ISSUED FOR THE ASSESSMENT YEAR 2000 - 01. 3. IN RESPONSE TO NOTICE DATED 01.12.2006 ISSUED U/S. 148 OF THE ACT, THE ASSESSEE VIDE LETTER DATED 07.03.2007 SUBMITTED TO TREAT THE ORIGINAL RETURN FOR THE PURPOSE OF SECTION 148/147 OF THE ACT. THEREAFTER, THE NOTICES ISSUED U/S. 143(2) AND 142(1) ISSUED TO THE ASSESSEE REMAINED UN - COMPLIED WITH. ON FINAL OPPORTUNITY GIVEN TO THE ASSESSEE FOR 24.11.2007, THE AR OF THE ASSESSEE ATTENDED AND SOUGHT COPY OF REASONS RECORDED, WHICH WERE SUPPLIED TO HIM GIVING DATE FOR 10.12.2007, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE ON THAT DATE . SINCE THE CASE WAS GOING TO BE TIME BARRED ON 31.12.2007, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT U/S. 144 OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO EXAMINED THE BANK STATEMENT GIVEN BY STATE BANK OF INDIA OF THE COMPANY, M/S. PRECISION AGENCIES (P) LTD. FROM WHOM THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES AND ALSO THE BANK STATEMENT OF ASSESSEE COMPANY GIVEN BY ABN AMRO BANK. THE AO FOUND THAT TWO CHEQUES OF RS.5 LACS EACH WERE DEPOSITED IN THE ACCOUNT OF PR ECISION AGENCIES PVT. LTD. ON 23.02.2000 AND A CHEQUE OF RS.10 LACS WAS CLEARED ON THE SAME DAY. SIMILARLY, RS.10 LACS WERE FOUND DEPOSITED IN THE BANK ACCOUNT OF ASSESSEE BY WAY OF CHEQUE ON 23.02.2000 ITSELF. ITA NO. 74/DEL./2009 4 KEEPING IN VIEW THE FREQUENCY OF DEPOSITS/WIT HDRAWALS AT SHORT INTERVALS AND LOW BALANCES IN THE ACCOUNT , THE AO INFERRED THAT M/S. PRECISION AGENCIES WAS BEING USED FOR ROUTING ACCOMMODATION ENTRIES . IT WAS ALSO OBSERVED THAT THE DIRECTOR OF THE COMPANY SH. PRADEEP KUMAR JINDAL WAS NOT FOUND AT THE GIVEN ADDRESS WHEN HE WAS SUMMONED U/S. 131. THE AO, THEREFORE, ADDED A SUM OF RS.10 LACS TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT. 5. BESIDES, ON EXAMINATION OF BALANCE SHEET OF ASSESSEE, THE AO FOUND THAT THERE HAS BEEN INCREASE IN THE SHARE APPLICATION MONEY TO THE TUNE OF RS.33 LACS INCLUDING RS.10 LACS ALREADY ADDED. FOR WANT OF ANY EXPLANATION REGARDING REST OF THE SHARE APPLICATION MONEY OF RS.23 LACS, THE AO ALSO ADDED THE SAME TO THE INCOME OF ASSESSEE AS UNEXPLAINED CASH CREDITS IN THE BOOKS OF ASSESSEE. 6. THE ASSESSEE CHALLENGED THE ABOVE ADDITIONS IN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE DOCUMENTARY EVIDENCES PLACED BY ASSESSEE BEFORE HIM , EXPLANATIONS OF THE ASSESSEE , REMAND REPORT SOUGHT FROM THE AO AND RELYING UPON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. , DELETED BOTH THE ADDITIONS VIDE IMPUGNED ORDER. AGGRIEVED BY THIS ORDER, THE REVENUE HAS COME UP IN THIS APPEAL BEFORE US. ITA NO. 74/DEL./2009 5 7. WE HAVE HEARD THE RIVAL SUBMISS IONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE BEFORE US. 8. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS DESPITE THE FACT THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY, BUT NEITHER EVIDENCES WERE PLACED NOR ANY NOTICE WA S COMPLIED WITH. THEREFORE, THE DELETION OF ADDITION ON THE BASIS OF EVIDENCES PLACED BEFORE HIM IS NOT JUSTIFIED. THE LD. AR, ON THE OTHER HAND, RELIED UPON THE IMPUGNED ORDER OF LD. CIT(A). 9. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AV AILABLE ON RECORD, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LD. CIT(A) . THE CONTENTION OF THE ASSESSEE HAS BEEN THAT OUT OF VARIOUS NOTICES SENT AT DIFFERENT ADDRESS, ONLY ONE NOTICE WAS RECEIVED IN TIME; THAT THERE WAS HARDLY ANY B USINESS IN THE COMPANY DURING THE RELEVANT PERIOD AND NONE OF THE DIRECTORS WERE PRESENT IN DELHI. THE AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS INITIALLY AND LATER IN ABSENCE OF INFORMATION COULD NOT APPEAR BEFORE THE AO IN TIME ; THAT THE DIRECTORS WERE UNDER THE IMPRESSION THAT THE C.A. OF ASSESSEE IS TAKING CARE OF THE MATTER AND THAT ON COLLECTING THE DETAILS, THE C.A. APPEARED BEFORE THE AO ON 13.12.2007 AND APOLOGIZED FOR DELAY AND ITA NO. 74/DEL./2009 6 NON COMPLIANCE . HE ALSO ASSURED FULL CO - OPERATION FOR COMPLETION OF ASSESSMENT, BUT THE AO REFUSED TO ENTERTAIN HIM AND TO TAKE ON RECORDS THE DETAILS. IT WAS ALSO SUBMITTED THAT THEREFORE, THE ASSESSEE FILED FOLLOWING DETAILS AND EVIDENCES BEFORE THE FIRST APPELLATE AUTHORITY IN SUPPORT OF ITS CASE: (I). DETAILS OF SHAR E APPLICATION MONEY OF RS.33 LAKHS RECEIVED DURING THE YEAR. (II). SHARE APPLICATION FORMS AS RECEIVED FROM THE SUBSCRIBERS ALONG WITH COPIES OF RESOLUTIONS FOR INVESTMENT AND CONFIRMATIONS. (III). COPY OF RETURN OF ALLOTMENT FILED WITH ROC (FORM 2) FOR ALLOTMENT OF SHARES TO M/S. PRECISION AGENCIES (P) LTD., BAMBSL SECURITIES LTD., MUNIR KHAN AND M/S. GOVERDHAN FINANCIAL SERVICES LTD. (IV) COPY OF ACKNOWLEDGEMENT OF FILING OF INCOME TAX RETURN FOR A.Y. 1999 - 2000 ALONG WITH THEIR BALANCE SHEET AS AT 31 .03.2000 AND 31.03.1999 OF M/S. PRECISION AGENCIES (P) LTD. (V). COPY OF CERTIFICATE OF INCORPORATION OF M/S. PRECESION AGENCIES (P) LTD. ALONGWITH COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION. (VI). DETAILS AND INFORMATION GIVEN VIDE LETTER DATED 13 .12.2007 AS REQUIRED BY AO VIDE LETTER DATED 08.10.2007. 10. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE LD. CIT(A) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER AND THE AO HAS NOT MADE ANY COMMENTS EITHER ON THE AUTHENTICITY OF THE DOCUMENTARY EVIDENCE OR THEIR ITA NO. 74/DEL./2009 7 VERACITY NOR HAS THE AO DOUBTED THE SAME. IT IS A LSO BORN OUT FROM THE ASSESSMENT ORDER ITSELF THAT ALL THE TRANSACTIONS OF SHARE APPLICATION MONEY EITHER THROUGH BANK ACCOUNT OF SHARE APPLICANTS OR THROUGH THE ACCOUNT OF ASSESSEE ARE BY WAY OF CHEQUES. THE AO HAS ALSO NOT MADE ANY PROPER ENQUIRY AS TO T HE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. PER CONTRA THE ASSESSEE HAS SUBMITTED ABUNDANT EVIDENCES TO FULFILL THE CONDITIONS ENVISAGED U/S. 68 OF THE ACT. IN PRESENCE OF THESE FACTS, THE LD. CIT(A) APPEARS TO HAVE COMMITTED NO ERROR WHILE DELETING THE ADDITION AFTER PLACING RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. A PERUSAL OF THE REMAND REPORT ALSO SHOWS THAT THE AO HAS MADE A REMARK IN THE REMAND REPORT THAT TH E ASSESSEE HAS FILED COPY OF ACKNOWLEDGEMENT OF FILING OF IT RETURN OF M/S. PRECISION AGENCIES , WHICH GO TO PROVE THE IDENTITY ETC. OF THE SHARE APPLICANT. THE AO HAS ALSO NOT BOTHERED TO COLLECT INFORMATION AS TO THE SOURCE OF RS.10 LACS FOUND DEPOSITED B Y WAY OF CHEQUE IN THE BANK ACCOUNT OF M/S. PRECISION AGENCIES. EXCEPT INFORMATION FROM DIT, THE AO HAS FAILED TO MAKE ANY INDEPENDENT ENQUIRY TO FORM THE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT OF AO NOWHERE REVEALS ANY ENQUIRY OR INVESTIGATION REGARDING THE SHARE APPLICATION MONEY OF BALANCE AMOUNT OF RS.23 LACS ADDED BY THE AO. F OR WANT OF ANY REBUTTAL FROM THE SIDE ITA NO. 74/DEL./2009 8 OF REVENUE ON THE DOCUMENTARY EVIDENCES FILED BY ASSESSEE I N ITS SUPPORT, WE , THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LD. CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE, BEING DEVOID OF MERITS, IS LIABLE TO BE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2015 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.12.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI