M/s. Shakti Foam (P) Ltd., New Delhi V. ITO, New Delhi

ITA 790/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86494 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-01-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: ASHWANI TANEJA; ABHISHEK K ANAND
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Principle of natural justice; Accommodation entries
• Section: 69C; 143(3); 142(1); 147; 68; 148

Judgement Text

ITA NO. 790/ DEL/ 2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. N O. 790/DEL/2013 A.Y. : 2003 - 04 M/S SHAKTI FOAM (P) LTD., C/O M/S RRA TAXINDIA D - 28 SOUTH EXTENSION, PART - I, NEW DELHI (PANAAGCS4748A) VS. INCOME TAX OFFICER, WARD 8(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI TANEJA, ADV. & SH. ABHISHEK K. ANAND, ADV. DEPARTMENT BY : SH. GAURAV DUDEJA, SR. DR DATE OF HEARING : 13 - 01 - 201 5 DATE OF ORDER : 13 - 01 - 201 5 ORDER PER H.S. SIDHU : J M THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 21 / 12 /20 12 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - XI NEW DELHI ON THE FOLLOWING GROUNDS: - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LD. AO IN FRAMING THE IMPUGNED ASSESSMENT ORDER WITHOUT ASSUMING JURISDICTION AS PER LAW ITA NO. 790/ DEL/ 2013 2 AND WITHOUT COMPLYING WITH MANDATORY AS ENVISAGED U/S. 147 TO 151 OF THE INCOME TAX ACT, 1961. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LD. AO IN MA KING ADDITION OF RS. 2,50,000/ - ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM SH. ROOP KISHORE GUPTA U/S. 68 OF THE I.T. ACT, 1961 AND HAS FURTHER IN MAKING ADDITION OF 1250/ - ON ACCOUNT OF ALLEGED COMMISSION PAID U/S. 69C OF THE ACT. 3. THAT IN A NY CASE AND IN ANY VIEW OF THE MATER, ACTION OF THE LD. CIT(A) IN CONFIRMING THE ACTION THE AO IN MAKING THE IMPUGNED ADDITION AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS CONTRARY TO LAW AND FACTS, VOID AB INITIO, BEYOND JURISDICTION, AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCORRECT FACTS AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF H EARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME DECLARING LOSS OF RS. 2,58,620/ - WAS FILED ON 17.11.2003. THE RETURN WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 ON 27.2.2014. INFORMATION WAS RECEIVED BY THE AO FROM THE INVESTIGATION WING, NEW DELHI THAT CERTAIN PERSONS CALLED ENTRY OPERATORS WERE PROVIDING ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES AFTER RECEIVING CASH ITA NO. 790/ DEL/ 2013 3 FROM THEM AND ISSUING THE CHEQUE OF SOME AMOUNT IN THE GUISE OF SHARE CAPITAL, SHARE APPLICATION MONEY, LOANS GIFTS ETC. SH. ROOP KISHORE GUPTA WAS ONE SUCH ENTRY PROVIDER AND HE WAS CONTROLLING VARIOUS COMPANIES AND THEIR BANK ACCOUNTS DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE RECEIVED CHEQUES OF RS. 2,50,000/ - FROM SH. ROOP KISHORE GUPTA IN THE SHAPE OF SHARE AP PLICATION MONEY. NOTICE U/S. 148 WAS THEREFORE, ISSUED BY THE AO TO THE ASSESSEE ON 22.3.2010 AFTER RECORDING THE REASONS IN WRITING. THE ASSESSEE COMPANY VIDE LETTER DATED 31.8.2010 REQUESTED TO TREAT THE RETURN OF INCOME FILED ON 17.11.2003 AS THE RETUR N FILED IN RESPONSE TO NOTICE U/S. 148 OF THE I.T. ACT, 1961. SUBSEQUENTLY, NOTICE U/S. 143(2) AND 142(1) ALONGWITH QUESTIONNAIRES WERE ISSUED TO THE ASSESSEE ON 18.8.2010 AND IN RESPONSE THERETO THE ASSESSEE S COUNSEL ATTENDED THE HEARING BEFORE TH E AO FROM TIME TO TIME AND THEREAFTER T HE AO COMPLETED THE ASSESSMENT U/S 143(3) /147 OF THE INCOME TAX ACT, 1961 O N 27 / 10 /20 10 BY OBSERVING AS UNDER: - THAT THE ASSESSEE HAS RECEIVED CHEQUES OF RS. 2,50,000/ - FROM THE ENTRY OPERATORS. IT IS PRACTICE I N THE TRADE, SOME COMMISSION AROUND TO 1 PERCENT, HAS TO BE PAID BY THE BENEFICIARIES TO THE FACILITATORS OF ACCOMMODATION ENTRY. IT IS PRESUMED THAT A COMMISSION OF PERCENT MUST HAVE BEEN PAID FOR GETTING ENTRIES IN THIS CASE. SINCE THE ASSESSEE H AS FAILED TO DISCHARGE ITS ONUS IN PROVING THE IDENTITY AND CREDITWORTHINESS OF THE ALLEGED SHARE APPLICATION AND GENUINENESS OF TRANSACTIONS HELD WITH THEM, ADDITIONS OF RS. 2,50,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 AND COMMISSION PAID THER EON @1/2% I.E. RS. 1,250/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C, ARE BEING MADE. ITA NO. 790/ DEL/ 2013 4 3 . AGAINST THE ORDER OF THE AO DATED 27 / 10 /20 10 ASSESSEE FILED AN APPEAL BEFORE THE ID. FIRST APPELLATE AUTHORITY , WHO VIDE IMPUGNED ORDER DATED 21 / 12 /20 12 DISM ISSED THE A PPEAL OF THE ASSESSEE. NOW THE ASSESSEE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE US. 4. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT THE ASSESSING OFFICER AS WELL AS LD. CIT(A) HAS NOT GIVEN ADEQUATE OPPORTUNITY FOR SUBSTANTIATING THE CLAIM OF THE ASSESSEE, IN SPITE OF FACT THAT ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDE NCE WITH THE AO. HE FURTHER SUBMITTED THAT THE AO HAS MADE THE ADDITION IN DISPUTE IS CONTRARY TO THE FACTS AND LAW. HE FURTHER SUBMITTED THAT THE AO HAD MADE THE ADDITION EVEN WITHOUT PROVIDING ANY ADVERSE MATERIAL USED AGAINST THE ASSESSEE AND WITHOUT PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. THEREFORE, HE REQUESTED THAT ISSUE IN DISPUTE MAY BE SET ASIDE TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE AN ADEQUATE OPPORTUNITY TO THE ASSESSEE T O SUBSTANTIATE ITS CLAIM BEFORE HIM AND CONSIDER THE ISSUE AFRESH INCLUDING THE LEGAL ISSUES, IN ACCORDANCE WITH LAW. 5. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESP ECIALLY THE PAPER BOOK SUBMITTED BY THE ASSESSEE WHICH IS CONTAINING PAGES 1 TO 99 HAVING THE DETAILS OF COPY OF REASONS RECORDED; COPY OF ASSESSEE S REPLY; COPY OF BALANCE SHEET, P&L A/C AND COMPUTATION; QUESTIONNAIRE ISSUED BY THE DEPARTMENT; REPLY OF TH E ASSESEE AND OTHER DETAILS; AND COPY OF WRITTEN SUBMISSION AND SUPPLEMENTARY SUBMISSIONS IN SUPPORT OF HIS AFORESAID CLAIM. WE ARE NOT COMMENTING UPON THE MERIT OF THE CASE AND OF THE CONSIDERED VIEW THAT THE ADDITION IN DISPUTE HAS BEEN MADE BY THE AO IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, AS ARGUED BY THE LD. COUNSEL OF THE ASSESSEE . WE ARE ALSO OF ITA NO. 790/ DEL/ 2013 5 THE VIEW THAT THE AO HAS MADE THE ADDITION WITHOUT APPRECIATING THE EVIDENCE FILED BY THE LD. COUNSEL OF THE ASSESEE AND THE PAPER BOOK AS MENT IONED ABOVE IS REQUIRED THOROUGH EXAMINATION AT THE LEVEL OF THE AO AND SECONDLY THE ADVERSE MATERIAL USED AGAINST THE ASSESSEE SHOULD BE PROVIDED TO THE ASSESSEE TO REBUT HIS CONTENTION FOR THE SAME. WE FIND THAT ASSESEE HAS RAISED LEGAL ISSUES BY WAY OF GROUNDS ABOVE, WHICH ALSO REQUIRED FRESH ADJUDICATION AT THE LEVEL OF THE ASSESSING OFFICER. WE HOLD AND DIRECT ACCORDINGLY. HOWEVER, ASSESSEE IS AT LIBERTY TO RAISE ALL ISSUES LEGAL AND FACTUAL BEFORE THE AO TO SUBSTANTIATE ITS CLAIM. 7 . IN THE RES ULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13.1.2015, UPON CONCLUSION OF HEARING. S D / - S D / - [ B.C. MEENA ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 13 / 1 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 790/ DEL/ 2013 6