Som Datt Breweries Ltd., New Delhi V. ITO, New Delhi

ITA 79/DEL/2011

• Counselvise Citation: 7920114 RSA 2011
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-10-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: O P SAPRAADV
• Keywords: Reopening of assessment; Question of law; Accommodation entries
• Section: 234B; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO. 79/DEL/2011 ASSESSMENT YEAR: 2002-03 SOM DATT BREWERIES LTD., C/O O.P. SAPRA & ASSOCIATES, ADVOCATES, C-763, NEW FRIENDS COLONY, NEW DELHI. PAN NO. AAGCS4257A VS. ITO, WARD 19(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI O.P. SAPRA,ADV. RESPONDENT BY: SH. SATPAL SINGH, SR. DR O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A) DATED 30/09/2010 FOR A.Y. 2002-03. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY HAD FILED RETURN OF INCOME DECLARING LOSS OF RS. (-) 6,700/-. THE A SSESSING OFFICER OBSERVED THAT IN THIS CASE INFORMATION WAS RECEIVED FROM INV ESTIGATION WING THAT ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 16,50,000/- DURING THE PREVIOUS YEAR 2001-02, IN THE FORM OF CHEQUES/DDS AS ACCOMM ODATION ENTRIES FROM VARIOUS ENTITIES CREATED BY ONE MAHESH GARG AND USE D BY THEM IN THE BUSINESS OF ACCOMMODATION ENTRIES. THE AO HAS OBSE RVED THAT THE ITA NO. 79/D/2011 2 STATEMENT OF SHRI MAHESH GARG WAS RECORDED ON 22 ND SEPTEMBER, 2003 IN WHICH HE ADMITTED THAT HE HAD CREATED THESE ENTITIE S FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES. SHRI MAHESH GARG ALSO ADMITTED THAT HE HAD OPENED MANY BANK ACCOUNTS IN THE NAMES OF VARIO US COMPANIES/FIRMS AND INDIVIDUALS FOR THE PURPOSE OF PROVIDING ACCOMM ODATION ENTRIES. HE ALSO ADMITTED THAT THESE ENTITIES DID NOT CARRY OUT NORM AL BUSINESS ACTIVITY. HE FURTHER ADMITTED AS UNDER: - I MADE SOME PEOPLE AS DIRECTORS TO SO MANY COMPAN IES, THEY ARE DIRECTORS FOR NAMESAKE, THEY USED TO PUT T HE SIGNATURE ON THE BLANK CHEQUE BOOK. 3. THE ASSESSING OFFICER, THEREFORE, ISSUED REASSES SMENT NOTICE IN REGARD TO ESCAPEMENT OF INCOME TO THE TUNE OF RS. 16,50,00 0/-. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, HE MADE AN ADDITION OF RS. 21,60,750/-. 4. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL READ AS UNDER: - 1. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND UNDER THE LAW IN HOLDING THAT REOPENING OF THE CASE US/ 147/1 48 WAS JUSTIFIED. IN FACT, REOPENING OF THE CASE U/S 147 AND CONSEQUENTLY ISSUE OF NOTICE U/S 148 WAS WHOLLY ILLEGAL. 2. THAT WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE L D. CIT(A) HAS ALSO ERRED ON FACTS AND UNDER THE LAW IN CONFIRMING THE ADDITION OF RS. 21,50,000/- ON ACCOU NT ITA NO. 79/D/2011 3 OF CASH CREDITS U/S 68 OF I.T. ACT WHICH PERTAINED TO SHARE CAPITAL RECEIVED BY THE APPELLANT CO. AS FOLL OWS: I) RS. 6,50,000/- FROM SH. DINANATH LUHARIWAL SPINNING & WEAVING MILLS LTD. II) RS. 5,00,000/- FROM IME INTERNATIONAL III) RS. 5,00,000/- FROM IME INTERNATIONAL IV) RS. 5,00,000/- FROM M/S REENA PLASTICS PIPES P. LTD. 3. THAT THE LD. CIT(A) HAS ALSO ERRED ON FACTS AND UND ER THE LAW IN CONFIRMING THE ADDITION OF RS. 10,750/- ON ACCOUNT OF ALLEGED COMMISSION PAID @ 0.5% ON THE ABOVE CASH CREDIT OF RS. 21,50,000/-. VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS WHILE MAKING/CONFIRMING THE ABOVE ADDITIONS ARE EITHER INCORRECT OR ARE UNTENAB LE. THE LD. CIT(A) HAD EITHER IGNORED OR HAD NOT GIVEN DUE WEIGHT TO THE SUBMISSIONS MADE BEFORE HIM. 4. THAT THE LEVY OF INTEREST U/S 234B AT RS. 69,910/- AND U/S 234C AT RS. 7,61,306/- IS ARBITRARY, UNJUST, IL LEGAL AND AT ANY RATE, VERY EXCESSIVE. 5. BEFORE LD. CIT(A), THE ASSESSEE HAD CHALLENGED T HE REOPENING OF THE CASE U/S 147 AND HAD ALSO ASSAILED THE ASSESSMENT O RDER ON MERITS. LD. CIT(A) UPHELD THE REOPENING AND ALSO THE ADDITION M ADE BY AO ON MERITS. 6. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DEC ISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NEELKANTH TRAVELS PVT. LT D. VIDE ITA NO. ITA NO. 79/D/2011 4 1984/2010 DATED 15/12/2010 AND SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES, THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF AO. HE, THEREFORE, SUBMITTED THAT IN LINE WITH THE DIRECTIO NS GIVEN BY HONBLE DELHI HIGH COURT THE MATTER MAY BE RESTORED BACK TO THE F ILE OF AO IN ORDER TO ALLOW THE ASSESSEE AND OPPORTUNITY TO CROSS EXAMINE THE P ERSONS ON WHOSE TESTIMONY THE ADDITION HAS BEEN MADE. 7. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE DID NOT PRESS GROUND NO. 1 AND, THEREFORE, LD. CIT(A)S ORDER IS UPHELD IN REGARD TO REOPENING OF ASSESSMENT. ON MERITS, WE FIND THAT HONBLE DELHI HIGH COURT HAS UPHELD THE TRIBUNALS DECISION REMITTING THE MA TTER BACK TO THE FILE OF AO FOR FRESH CONSIDERATION BECAUSE AO HAD NOT PROVIDED ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS ON WHOSE T ESTIMONY THE ADDITION HAD BEEN MADE. WE FIND THAT HONBLE DELHI HIGH COU RT HAS, INTER-ALIA, OBSERVED AS UNDER: - THE CIT(A) HOWEVER, DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. ACCORDING TO THE CIT(A), THE RE QUISITE DOCUMENTS IN THE FORM OF PAN NUMBER, BANK ACCOUNTS AND PARTICULARS OF ALL THESE PRIVATE LIMITED COMPAN IES WERE GIVEN AND, THEREFORE, THE ASSESSEE HAD DISCHAR GED ITS BURDEN. THE CIT(A) HAS RELIED UPON THE JUDGMEN T OF THE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXP ORTS (P) LTD., 216 CTR (SC) 195 WHILE REVERSING THE ORDE R OF THE AO. THE MATTER WAS TAKEN UP IN AN APPEAL BY TH E ITA NO. 79/D/2011 5 REVENUE FEELING AGGRIEVED BY THE ORDER OF THE CIT(A ). THE TRIBUNAL HAS REVERSED THE ORDER OF THE CIT(A) A ND REMITTED THE CASE BACK TO THE AO FOR FRESH CONSIDER ATION. COMMENTING UPON THE ORDER OF THE CIT(A), THE TRIBUN AL HAS INTER-ALIA, OBSERVED THAT CIT(A) HAS NOT CONTRO VERTED THE DETAILED FINDINGS RECORDED BY THE AO WITH REGAR D TO EACH AND EVERY SHAREHOLDER, NOR HAS ANY FURTHER ENQ UIRY WAS MADE BY THE CIT(A) TO ESTABLISH THE IDENTITY OF THE SHAREHOLDERS. IT IS FURTHER OBSERVED THAT THE JUDGM ENT OF LOVELY EXPORTS (SUPRA) WOULD BE APPLICABLE WHEN AT LEAST IDENTITY OF THE SHAREHOLDERS HAS BEEN ESTABLISHED. IN THE PRESENT CASE THE STATEMENTS WERE RECORDED BY THE INVESTIGATING WING IN RESPECT OF THE PROMOTERS/DIRE CTORS OF THE COMPANIES INVOLVED IN ACCOMMODATION ENTRIES. COPIES OF THESE STATEMENTS WERE ALSO SUPPLIED TO TH E ASSESSEE TO CONTROVERT THE SAME. THE ITAT WAS OF T HE VIEW THAT WHEN THE IDENTITY ITSELF WAS NOT BEING PR OVED, MERE FILING OF CONFIRMATION WITHOUT VERIFYING THE CORRECTNESS OF THE SIGNATURE THEREIN WOULD NOT SERV E ANY PURPOSE. AT THE SAME TIME, THE TRIBUNAL HAS OPINED THAT BEFORE MAKING ANY ADDITION ON THE BASIS OF THE STAT EMENTS RECORDED BY THE INVESTIGATION WING FROM THE ALLEGED ACCOMMODATION ENTRY PROVIDERS, IT WAS THE DUTY OF T HE ASSESSING OFFICER TO ALLOW THE ASSESEE AN OPPORTUNI TY TO CROSS EXAMINE THOSE PERSONS. IT IS, UNDER THESE CIRCUMSTANCES, THAT THE MATTER IS SENT BACK TO THE AO FOR DECIDING AFRESH AFTER GIVING DUE OPPORTUNITY OF CRO SS EXAMINATION TO THE ASSESSEE IN THIS REGARD. HAVING REGARD TO THE AFORESAID FACTS, WE ARE OF THE VIEW T HAT THE ITA NO. 79/D/2011 6 APPROACH OF THE ITAT IN THESE CIRCUMSTANCES IS QUIT E REASONABLE AND EQUITABLE TO BOTH THE PARTIES. WE D O NOT FIND THAT ANY SUBSTANTIAL QUESTION OF LAW ARISES FO R CONSIDERATION IN THIS APPEAL. THE ASSESSEE WOULD B E GIVEN AN OPPORTUNITY BY THE AO AND THEREFORE, IT CA NNOT SAY THAT IT HAS BEEN PREJUDICED BY THE ORDER OF THE ITAT IN ANY MANNER. WE ACCORDINGLY, DISMISS THIS APPEAL . 8. IN THE PRESENT CASE ALSO, WE FIND THAT THE AO HA S PRIMARILY RELIED UPON THE SUBMISSION OF MAHESH GARG AND SHRI PRADEEP KUMA R JINDAL BUT NO OPPORTUNITY WAS PROVIDED TO ASSESSEE TO CROSS EXAMI NE THEM. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELH I HIGH COURT, WE RESTORE THE MATTER TO THE FILE OF AO TO ALLOW THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THOSE PERSONS ON WHOSE TESTIMONY THE ADDITI ON HAS BEEN MADE AND TO DECIDE THE ISSUE AFRESH ON MERITS ACCORDINGL Y. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07/12/2012 SD/- SD/- (R.K. GUPTA) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 07/12/12 *KAVITA ITA NO. 79/D/2011 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR