M/s Cosmos Infra Enguneering (India) Ltd., Delhi V. DCIT, Ludhiana

ITA 778/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5080 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Loose papers
• Section: 234B; 147; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 778/CHD/2016 ASSESSMENT YEAR: 2009-10 M/S COSMOS INFRA ENGINEERING VS. THE DCIT, CENT RAL CIRCLE-1, (INDIA) LTD., DELHI LUDHIANA PAN NO. AAACC0017C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUDHIR SEHGAL RESPONDENT BY : SH. RAVI SARANGAL DATE OF HEARING : 22.06.2017 DATE OF PRONOUNCEMENT : 05.07.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-5 [HE REINAFTER REFERRED TO AS CIT(A)], LUDHIANA DATED 15.03.2016. THE ASSESS EE HAS TAKEN TWO GROUNDS OF APPEAL. FIRST GROUND IS IN RESPECT OF C ONFIRMATION OF ADDITION OF RS. 40 LACS ON THE BASIS OF AN ENTRY FOUND IN THE B OOKS OF THIRD PARTY NAMELY SHRI MAHESH MEHTA, MADE BY THE ASSESSING OFF ICER. THE SECOND IS 2 AGAINST THE LEVY OF INTEREST U/S 234, 234B & 234D, WHICH IS CONSEQUENTIAL IN NATURE. 2. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT DURING THE SEARCH ACTION ON 30.6.2009, CARRIED OUT IN THE CASE OF MAHESH MEHTA, A HAND WRITTEN BAHI WAS FOUND AT HIS RESID ENCE IN WHICH UNACCOUNTED CASH TRANSACTIONS WERE RECORDED. IN TH E SAID BAHI, THERE WAS AN ACCOUNT OF COSMOS WHICH REVEALED THAT THE SAID C OMPANY (COSMOS) HAS GIVEN AN AMOUNT OF RS. 40 LACS BY WAY OF TWO CHEQUE S AMOUNTING TO RS. 30 LACS AND RS. 10 LACS RESPECTIVELY TO ONE OF THE ENT ITY OF MAHESH MEHTA GROUP. HOWEVER, THESE CHEQUES WERE RECEIVED BACK ON 2.4.2008 AND 3.4.2008 RESPECTIVELY AFTER MAKING CASH PAYMENT IN LIEU OF SAID CHEQUES AMOUNT. THE CONCERNED ASSESSING OFFICER IN THE CASE OF M/S MAHESH MEHTA GROUP OBSERVED THAT IT APPEARED THAT BOTH THE PARTI ES HAD MADE SOME UNACCOUNTED TRANSACTIONS. THE ASSESSING OFFICER OF M/S MAHESH GUPTA GROUP ACCORDINGLY REQUESTED THE ASSESSING OFFICER O F THE ASSESSEE TO TAKE NECESSARY ACTION AGAINST THE ASSESSEE AS PER LAW. O N INTIMATION RECEIVED IN THIS RESPECT, THE ASSESSING OFFICER OF THE ASSESSEE REOPENED THE ASSESSMENT AGAINST THE ASSESSEE. DURING THE REOPENED ASSESSMEN T PROCEEDINGS U/S 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT ENTERED INTO ANY SUCH TR ANSACTIONS WITH M/S MAHESH MEHTA GROUP. THAT EVEN IN THE OWN CASE OF TH E ASSESSEE, A SEARCH ACTION HAS BEEN CONDUCTED IN THE MONTH OF FEBRUARY 2008 AND AGAIN IN AUGUST 2008 AND DURING SEARCH NO INCRIMINATING DOCU MENTS WERE FOUND SHOWING ANY TRANSACTIONS OF SUCH NATURE OF THE ASSE SSEE COMPANY WITH THE AFORESAID M/S MAHESH MEHTA GROUP. THAT WITHOUT PRE JUDICE TO ABOVE, IT WAS STATED THAT A SURRENDER OF RS. 2.5 CRORES HAD B EEN MADE BY THE ASSESSEE 3 AT THE TIME OF SEARCH AND THAT AMOUNT IN QUESTION O THERWISE WOULD COVER THE ALLEGED TRANSACTIONS ALSO. HOWEVER, THE ASSESS ING OFFICER DID NOT AGREE WITH THE ABOVE CONTENTION OF THE ASSESSEE AND OBSER VED THAT THE TRANSACTION IN QUESTION WAS NOT COVERED IN THE SURRENDERED AMOU NT OF RS. 2.5 CRORES. HE, ACCORDINGLY MADE ADDITION OF RS. 40 LACS INTO T HE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE AS SESSEE AGITATED BEFORE THE CIT(A) THE REOPENING OF THE ASSESSMENT AS WELL AS THE ADDITION MADE ON MERITS.. THE ASSESSEE SUBMITTED THAT THE ALLEGED EN TRY FOUND IN THE CASE OF M/S MAHESH MEHTA GROUP DID NOT BELONG TO THE ASSESS EE AND THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE HAS DONE ANY ALLEGED TRANSACTION WITH THE M/S MAHESH MEHTA GROUP. LD. CIT(A) WAS HOWEVER, NOT CON CEIVED WITH THE SUBMISSION OF THE ASSESSEE AND CONFIRMED THE ADDITI ON SO MADE BY THE ASSESSING OFFICER. BEING AGGRIEVED BY THE ABOVE ORD ER OF THE CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. AT PAGE 6 OF THE IMPUGNED ORDER OF THE CIT (A), THE SCANNED COPY OF THE ALLEGED ENTRY HAS BEEN REPRODUCED. THE LD. A R OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE NAME OF THE PARTY WHIC H IS WRITTEN AS COSMOS. THE LD. COUNSEL HAS STATED THAT THE WORD COSMOS CANNOT IPSO FACTO BE INTERPRETED TO REPRESENT THE NAME OF THE A SSESSEE WHICH IS M/S COSMOS INFRA ENGINEERING LTD. THERE MAY BE ANY PAR TY, COMPANY OR FIRM 4 WITH THE INITIAL NAME COSMOS AND IT DOES NOT SHOW IN ANY MANNER THAT THE SAID ENTITY BELONGS TO THE ASSESSEE COMPANY ONLY. F URTHER, THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE HAS INVOLVED INTO ANY TRANSACTION WITH ANY ENTITY OF M/S MAHESH MEHTA GROUP. THE ENTIRE ADDITI ON HAS BEEN MADE ON ASSUMPTION AND PRESUMPTION BASIS. 5. WE FIND FORCE IN THE ABOVE CONTENTION RAISED BY THE LD. AUTHORISED REPRESENTATIVE (HEREINAFTER REFERRED TO AS AR) OF THE ASSESSEE. FURTHER, IT CAN BE NOTED THAT THE LD. CIT(A) IN PARA 3.2 OF THE IMPUGNED ORDER HAS MADE AN OBSERVATION THAT IT WAS NOT ON RECORD THAT AS TO WHAT WAS THE VERSION OF M/S MAHESH MEHTA GROUP ABOUT THIS ENTRY RECORDED IN THE BAHI FOUND AT HIS RESIDENCE. UNDER SUCH CIRCUMSTANCES W HEN EVEN THE THIRD PARTY FROM WHOSE PREMISES THE ALLEGED DOCUMENTS WE RE FOUND HAS NOT CONFIRMED THAT THE SAID ENTRY BELONG TO THE ASSESS EE, THERE WAS NO QUESTION OF ANY ASSUMPTION OR BELIEF THAT THE ENTRY BELONGED TO THE ASSESSEE. MOREOVER, ANY ENTRY FOUND ON LOOSE PAPERS IN THE PR EMISES OF THE THIRD PARTY WITHOUT ANY CORROBORATIVE EVIDENCE, CANNOT BE MADE BASIS FOR ADDITION IN THE CASE OF THE ASSESSEE. DURING THE CO URSE OF SEARCH AT THE PREMISES OF THE ASSESSEE, NO INCRIMINATING MATERIAL RELATING TO THE ABOVE STATED ENTRY HAD BEEN FOUND. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES TO MAKE ADDITION IN THE CASE OF THE ASSESSEE ON THE BASIS OF AN ENTRY FOUND IN THE BAH I OF THIRD PARTY FROM WHICH NEITHER IT CAN BE DEFINITELY SAID THAT THE NA ME WRITTEN THEREIN WAS THAT OF THE ASSESSEE NOR ANY OTHER EVIDENCE RELATIN G TO THE ABOVE TRANSACTION HAS BEEN FOUND. IN VIEW OF THIS, THE AD DITION MADE BY THE LOWER 5 AUTHORITIES ON THIS ISSUE IS NOT SUSTAINABLE UNDER THE EYES OF LAW AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 6. IN GROUND NO.2, THE ASSESSEE HAS AGITATED THE LE VY OF CONSEQUENTIAL INTEREST. SINCE THE IMPUGNED ADDITION HAS BEEN DELE TED, THE CONSEQUENTIAL LEVY OF INTEREST IS ALSO SET ASIDE. ORDER PRONOUNCED IN THE OPEN COURT ON 05.07.2017. . SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 5 TH JULY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR