Sh. Prikshit Malhotra, New Delhi V. ITO, New Delhi

ITA 783/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0110 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 11-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Reopening of assessment; Gift; Income from undisclosed sources; Accommodation entries
• Section: 147; 148

Judgement Text

1 ITA NO. 783/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER I.T.A .NO.-783/DEL/2014 (ASSESSMENT YEAR-2003-04) PRIKSHIT MALHOTRA C-160. NARAINA INDL. AREA PHASES-1 NEW DELHI ACNPM9903B (APPELLANT) VS ITTO WARD-27 (2) NEW DELHI (RESPONDENT) APPELLANT BY SH. RAKESH KUMAR KHIWANI, FCA RESPONDENT BY SH. ROBIN RAWAL, JCIT ORDER PER S. V. MEHROTRA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) XVIII, NEW DELHI DATED 15/11/2013 IN APPEAL NO. 183/2013-1 4 FOR ASSESSMENT YEAR 2003-04. 2. BRIEF FACTS ARE THAT ASSESSEE HAD FILED HIS RE TURN OF INCOME DECLARING TOTAL INCOME OF RS. 79,758/- WHICH WAS PROCESSED U/S 143( 1) OF THE INCOME TAX ACT. THE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S 1 47 AFTER RECORDING FOLLOWING REASONS:- AN INFORMATION HAS BEEN RECEIVED FROM THE ADIT (I NV.) UNIT-22 (2), NEW DELHI THAT SHRI PARIKSHIT MALHOTRA, PAN NO. ACNPM99 03B HAS RECEIVED ACCOMMODATION ENTRY OF RS. 1,00,000/- ON 2.12.2002F ROM SHIRI HARISH PANWAR, PROP. M/S AMRIT IMPEX (INDIA),WZ 43, KRISHA N PARK, GALI NI-17, DATE OF HEARING 23.06.2015 DATE OF PRONOUNCEMENT 29 .06.2015 2 ITA NO. 783/DEL/2014 NEW DELHI. THE ENTRY PERTAINS TO THE FINANCIAL YEA R 2002-03 RELEVANT TO THE ASSTT. YEAR 2003-04. I HAVE THEREFORE REASON TO BE LIEVE THAT INCOME OF RS. 1 LAC HAS ESCAPED ASSESSMENT AND NOTICE U/S 148 IS RE QUIRED TO BE ISSUED TO THE ASSESSES. 3. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 1 LAKH AFTER OBSERVING AS UNDER:- 4. THE ASSESSEE HAS ALSO REQUIRED THE REASONS TO B ELIEVE FOR REOPENING THE ASSESSMENT AND INSPECTION OF THE RECORD. THE A SSESSEE WAS SUPPLIED THE REASONS TO BELIEVE ON 6/12/2010 AND INSPECTION OF T HE RECORD OF THIS OFFICE ON 14/12/2010. ON 14/12/2010 AFTER INSPECTION, THE AS SESSEE FILED A LETTER DATED 14/12/2010 ON 15/12/2010AND SOUGHT THE COPIES OF MATERIAL ON RECORD ON THE BASIS OF WHICH REASONS TO BELIEVE HAVE BEEN FORMED. AGAIN THE ASSESSEE FILED ANOTHER SUBMISSION VIDE LETTER DATED 20/12/2010 CONFIRMING THE RECEIPT OF AMOUNT OF RS.1,00,000/- FROM SHRI HA RISH PANWAR BY WAY OF CHEQUE DRAWN ON HDFC BANK AND THE SAME REPRESENTED GIFT AND IN SUPPORT FILE COPY OF GIFT DEED AND AFFIDAVIT. SINCE THE DO NOR AND BANK STATEMENT HAS NOT BEEN PRODUCED, THE ASSESSEE NOT PROVED IDENTITY AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE WAS INFORMED VIDE LETTER DATED 23/12/2010 THAT INSPECTION OF FILE WAS ALLOWED TO THE SATISFACTION AS PER ORDER SHEET ENTRY DATED 14/12/2010 AND FURTHER THIS OFFICE HAS NOTHI NG TO PROVIDE AS REQUESTED BY THE COUNSEL OF THE ASSESSEE. 5. THUS THE ALLEGED GIFT RECEIVED AMOUNTING TO RS.1 ,00,000/- FROM SHRI HARISH PANWAR IS NOTHING BUT AN ACCOMMODATION ENTRY TAKEN BY THE ASSESSEE AS NO EVIDENCE IN THE FORM OF GIFT DEED AN D SOURCE THEREOF HAS BEEN PLACED ON RECORD. 6. THE ASSESSEE HAS NOT FURNISHED ORIGINAL DOCUMENT S AND NOT PRODUCED THE DONOR FOR EXAMINATION. THEREFORE, I HOLD THAT THESE ARE THE ACCOMMODATION ENTRIES AND THE CONTENTION OF THE ASS ESSEE THAT THE GIFTS RECEIVED ARE GENUINE TRANSACTIONS CANNOT BE ACCEPTE D. THEREFORE, RS..1,00,000/- IS ADDED TO THE INCOME OF THE ASSESS EE BEING ACCOMMODATION ENTRY RECEIVED FROM SHRI HARISH PANWAR, PROP. AMRIT IMPEX (INDIA ) AS INCOME FROM UNDISCLOSED SOURCES U/ 68 OF THE I. T A CT. 4. BEFORE LD. CIT(A), THE ASSESSEE HAD ASSAILED THE INITIATION OF PROCEEDINGS U/S 148 WHICH WAS UPHELD BY LD. CIT(A). LD. CIT(A) ALSO UPHELD THE ADDITION ON MERITS, MAINLY BECAUSE SHRI HARISH PANWAR, DONOR, COULD NOT BE PRODUCED. 3 ITA NO. 783/DEL/2014 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REASONS RECORDED DO NOT MEET THE REQUIREMENT OF SECTION 148 IN-AS-MUCH AS THE AS SESSING OFFICER HAS NOT GIVEN THE DETAILS OF INFORMATION RECEIVED BY HIM IN THE R EASONS RECORDED AND HAS ALSO NOT POINTED OUT AS TO HOW THE IMPUGNED AMOUNT WAS AN AC COMMODATION ENTRY PARTICULARLY WITHOUT RECORDING A FINDING WITH REFER ENCE TO THE STATEMENT OF HARISH PANWAR THAT A CASH OF THE SAME AMOUNT WAS DEPOSITED IN HARISH PANWARS ACCOUNT FROM WHICH THE DRAFT WAS ISSUED TO THE ASSESSEE. H E FURTHER SUBMITTED THAT IN THE CASE OF TWO OTHER RELATIVES VIZ KAMAL MALHOTRA, AND SHRI ANMOL KRISHAN MALHOTRA. LD. CIT(A) HAS DELETED THE ADDITION. HE FILED BEFOR E ME ORDERS OF LD. CIT(A)IN BOTH THE CASES WHEREIN LD. CIT(A) HAS, INTER ALIA O BSERVED THAT ASSESSEE WAS NOT CONFRONTED WITH THE INVESTIGATION CARRIED OUT BY TH E INVESTIGATION WING OR WAS GIVEN THE OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATION WING TO ARRIVE AT TH E CONCLUSION THAT THE GIFT RECEIVED BY THE ASSESSEE WAS A BOOK ENTRY. HE FURT HER OBSERVED THAT ASSESSING OFFICER HAD NOT SHOWN WHETHER ANY LINK BETWEEN THE OPERATORS AND THE ASSESSEE EXISTED IN THE PRESENT CASE OR NOT. HE, THEREFORE SUBMITTED THAT A CONTRARY VIEW OF LD. CIT()A IS NOT SUSTAINABLE. 6. LD. DR SUBMITTED THAT CONCRETE INFORMATION WAS R ECEIVED BY ASSESSING OFFICER REGARDING ACCOMMODATION ENTRY BEING PROVIDE D TO ASSESSEE BY HARISH PANWAR AND ON THAT BASIS THE REASSESSMENT PROCEEDIN GS WERE INITIATED. HE SUBMITTED THAT AT THE TIME OF RECORDING OF REASONS, THE ASSESSING OFFICER HAS TO SATISFY HIMSELF PRIMA FACE THAT INCOME HAS ESCAPED ASSESSMENT AND HE IS NOT REQUIRED TO RECORD A CONCLUSIVE FINDING IN REGARD TO ESCAPEMENT OF INCOME. 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND HAVE PERUSED THE RECORD OF THE CASE. AS FAR AS ASSESSEES PLEA REG ARDING REOPENING OF ASSESSMENT IS CONCERNED, I AM OF THE OPINION THAT SINCE INFORMAT ION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING ENTRY OF RS. 1 LAKH PR OVIDED TO ASSESSEE THROUGH 4 ITA NO. 783/DEL/2014 ENTRY OPERATOR, THEREFORE, THE ASSESSING OFFICER H AD ACQUIRED REASONABLE BELIEF REGARDING ESCAPEMENT OF INCOME AND, THEREFORE, RIG HTLY ISSUED NOTICE U/S 148. IT IS ONLY AFTER FURTHER ENQUIRY, THE ASSESSING OFFICER H AS TO DECIDE WHETHER ADDITION IS CALLED FOR OR NOT ON ACCOUNT OF ALLEGED ESCAPEMENT OF INCOME. THE ASSESSING OFFICER HAS NO OTHER OPTION BUT TO ISSUE NOTICE U/S 148 UNDER SUCH CIRCUMSTANCES, BECAUSE, AS RIGHTLY POINTED OUT BY LD. DR, AT THE S TAGE OF ISSUING NOTICE THE ASSESSING OFFICER HAS TO ACQUIRE PRIMA FACIE BELIEF ONLY REGARDING ESCAPEMENT OF INCOME. NOW, COMING TO THE MERITS OF THE ADDITION, I FIND THAT IN THE CASE OF OTHER TWO RELATIVES IDENTICAL AMOUNTS WERE RECEIVED FROM THE SAME PERSON VIZ HARISH PANWAR. LD. CIT(A) HAS OBSERVED IN PARA 3 IN THE C ASE OF ANMOL KRISHAN MALHOTRA AS UNDER: 3.1. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE COUNSEL OF THE APPELLANT. IT IS OBSERV ED THAT DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT FILED THE GIFT DEED AND A FFIDAVIT OF SH. HARISH PANWAR. THE ASSESSING OFFICER HAS NOT BROUGHT AN IOTA OF EV IDENCE ON RECORD TO SHOW THAT THERE HAS BEEN ANY DEALING IN CASH WITH HARISH PANW AR AND THE ASSESSEE HAS PAID ANY CASH OUT OF HIS UNDISCLOSED INCOME. THE ASSESS ING OFFICER HAS RELIED ON THE REPORT OF THE INVESTIGATION WING AND HAS NOT MADE A NY INVESTIGATION OF HIS OWN TO EITHER RECORD THE STATEMENT OF THE DONOR OR SUMMON HIM FOR MAKING CROSS VERIFICATION OF THE FACTS. IN THE CASE OF OASIS HO SPITALITIES PVT. LTD. 333 ITR 119 (DELHI)., THERE IS REFERENCE TO INFORMATION RECEIVE D BY THE ASSESSING OFFICER FROM THE INVESTIGATION WING OF THE REVENUE ON THE BASIS OF WHICH IT WAS FOUND THAT SIX INVESTORS BELONG TO MAHESH GARG GROUP WHO WERE NOT CARRYING ON ANY REAL BUSINESS ACTIVITY AND WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THEY WERE ENTRY OPERATORS AND THE ASSESSE E IN THAT CASES WAS ALLEGED TO BE A BENEFICIARY. WHILE DISPOSING OF THESE APPEALS, T HIS COURT OBSERVED: THE ASSESSEES FILED COPIES OF PAN, ACKNOWLEDGEMEN T OF FILING INCOME TAX RETURNS OF THESE COMPANIES, THEIR BANK ACCOUNT STATEMENTS FOR THE RELEVANT PERIOD, I.,E FOR THE PERIOD WHEN THE CHEQUES WERE CLEARED. HOWEVER, THE PARTIE S WERE NOT PRODUCED IN SPITE OF SPECIFIC DIRECTION OF THE AO INSTEAD OF TAKING OPPO RTUNITIES IN THIS BEHALF. SINCE THE SO- CALLED DIRECTORS OF THESE COMPANIES WERE NOT PRODUC ED ON THIS GROUND COUPLED WITH THE OUTCOME OF THE DETAILED INQUIRY MADE BY THE INVESTI GATING WING OF THE DEPARTMENT, THE AO MADE THE ADDITION. THIS ADDITION COULD NOT BE S USTAINED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING PAN NUMBER , BANK ACCOUNT, COPIES OF INCOME TAX RETURNS OF THE SHARE APPLICANTS, ETC. WE ALSO FIND THAT THE ASSESSING OFFICER WAS 5 ITA NO. 783/DEL/2014 INFLUENCED BY THE INFORMATION RECEIVED BY THE INVES TIGATING WING AND ON THAT BASIS GENERALLY MODUS OPERANDI BY SUCH ENTRY OPERATORS IS DISCUSSED IN DETAIL. HOWEVER, WHETHER SUCH MODUS OPERANDI EXISTED IN THE PRESENT CASE OR NOT WAS NOT INVESTIGATED BY THE AO. THE ASSESSEE WAS NOT CONFRONTED WITH THE I NVESTIGATION CARRIED OUT BY THE INVESTIGATING WING OR WAS GIVEN AN OPPORTUNITY TO C ROSS-EXAMINE THE PERSONS WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATION WING. IN THIS CASE, IT APPEARS THAT THE ASSESSING OFFICE R WAS INFLUENCED BY THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WH ICH DISCUSSED THE MODUS OPERANDI BY SUCH ENTRY OPERATORS. HOWEVER, WHETHER SUCH MODUS OPERANDI EXISTED IN THIS CASE OR NOT WAS NOT INVESTIGATED BY THE ASS ESSING OFFICER. THE ASSESSEE WAS NOT CONFRONTED WITH THE INVESTIGATION CARRIED OUT B Y THE INVESTIGATION WING OR WAS GIVEN THE OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATION WING TO ARRIVE AT THE CONCLUSION THAT THE GIFT RECEIVED BY THE ASSESSEE IS A BOOK ENTRY. THE ASSESSING OFFI CER HAS NOT SHOWN WHETHER ANY LINK BETWEEN THE OPERATORS AND THE ASSESSEE EXISTED IN THIS CASE. THE ADDITION OF RS. 1,00,000/- MADE BY THE ASSESSING OFFICER IS, TH EREFORE, DELETED. 7. IN THE PRESENT CASE ALSO, I FIND THAT LD. CIT(A) HAS NOTED THAT AFFIDAVIT WAS FILED BY HARISH PANWAR, BUT HE DID NOT BELIEVE THE SAID AFFIDAVIT BECAUSE THE ASSESSEE COULD NOT PRODUCE SHRI HARISH PANWAR. TH E AFFIDAVIT OF HARISH PANWAR IS CONTAINED AT PAGE 24 OF THE PAPER BOOK AND THE GIFT DEED IS CONTAINED AT PAGE 25 OF THE PAPER BOOK. IN THE AFFIDAVIT HARISH PANWAR HA S GIVEN HIS PAN NO. ALSO ALONG WITH THE BANK ACCOUNT NO. WITH HDFC BANK. THEREFOR E, SUFFICIENT INFORMATION WAS FURNISHED BY HARISH PANWAR IN HIS AFFIDAVIT TO ENAB LE THE ASSESSING OFFICER TO EXAMINE THE DETAILS.. THUS, ASSESSEE HAD DULY DISCH ARGED ITS BURDEN AND MERELY BECAUSE OF CERTAIN CONSTRAINTS, HE WAS NOT IN A PO SITION TO PRODUCE HARISH PANWAR, NO ADVERSE INFERENCE COULD BE DRAWN PARTICULARLY WI THOUT AFFORDING OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE STATEMENT WERE RECO RDED BY THE INVESTIGATION WING TO ARRIVE AT A CONCLUSION THAT THE GIFT RECEIV ED BY THE ASSESSEE WAS A MERE BOOK ENTRY. I, THEREFORE, CONCUR WITH THE FINDING OF LD. CIT(A) RECORDED IN THE CASE OF ANMOL KRISHAN MALHOTRA AND KAMAL KRISHAN MA LHOTRA AND, ACCORDINGLY, ALLOW THE ASSESSEES APPEAL. 6 ITA NO. 783/DEL/2014 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OF JUNE 2015. SD/- (S. V. ME HROTRA) ACCOUNTANT MEMBER DATED:- 29/06/2013 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 23.06.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 24.06.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS .06.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK .06.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 7 ITA NO. 783/DEL/2014