ITO, New Delhi V. M/s. Excellent Town Planners P. Ltd., New Delhi

ITA 871/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61679 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-05-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Question of law; Accommodation entries
• Section: 260A; 68; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT A ND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A .NO. 871/DEL/2010 ASSTT. YEAR: 2003-04 INCOME TAX OFFICER, VS. M/S. EXCELLANCE TOWN PLANNER P. WARD 11(2), LTD., G-7, IIND FLOOR, CON. PLACE, NEW DELHI. NEW DELHI-01 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VIKAS SURYAVANSHI, SR.DR RESPONDENT: SHRI SALIL AGGARWAL, ADVOCATE ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LEARNED CIT(APAPEALS) DATED 23.12.2009, PASSED FOR THE ASSESSMENT YEAR 20 03-04. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITATS RULES, THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF T HE GRIEVANCE OF REVENUE IS THAT LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.70,000 00/- WHICH WAS ADDED BY THE ASSESSING OFFICER WITH THE AID OF SECTION -68 OF TH E IT ACT 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 25.11.2003, DECLARING A LOSS OF RS.1,64,320/-. THE RETURN WAS PROCESSED U/S 143 (1) OF THE IT ACT. ACCORDING TO THE ASSESSING OFFICER THE INVE STIGATION WING OF IT DEPARTMENT OF GHAZIABAD, HAD TRANSMITTED INFORMATION TO HIM THAT CERTAIN PERSONS WERE INVOLVED IN PROVIDING ACCOMMODATIONS ENTRIES ON RECEIPT OF COMM ISSION. THE INFORMATION SUGGEST THAT ASSESSEE IS ONE OF THE BENEFICIARY OF THE ACCO MMODATION ENTRIES. HE RECORDED REASONS I.T.A .NO. 871/DEL/2012 2 AND REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 1 48 OF THE IT ACT. AS PER THE ASSESSING OFFICER, THE DIRECTOR OF INVESTIGATION, G HAZIABAD, COLLECTED INFORMATION THAT SHRI SANJAY MOHAN AGGARWAL IS A PERSON WHO IS PROVI DING ACCOMMODATION ENTRIES. THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES AMOUNTI NG TO RS.70,00000/- FROM THREE COMPANIES CONTROLLED BY SHRI SANJAY MOHAN AGGARWAL, THESE COMPANIES ARE M/S ANKUR DISTRIBUTOR P. LTD, M/S GOYAL TEXTILE INDUSTRIES P. LTD AND M/S RICHI RICH OVERSEA P.LTD. THE ASSESSEE RECEIVED A SUM OF RS.40,00000/-, RS.20 ,00000/- AND RS.10,00000/- FROM THE ABOVE COMPANIES RESPECTIVELY. 3. THE LD ASSESSING OFFICER HAS CONFRONTED THE ASSE SSEE AS TO EXPLAIN THE CREDIT OF RS.70,00000/- IN ITS BOOKS OF ACCOUNTS. IN RESPONSE TO THE QUERY OF ASSESSING OFFICER IT WAS CONTENDED BY THE ASSESSEE THAT IT HAD RECEIVED SHARE APPLICATION MONEY FROM THESE COMPANIES FOR ALLOTMENT OF SHARES OF THE ASSESSEE C OMPANY. IN SUPPORT OF ITS CONTENTION THE ASSESSEE HAS FILED FOLLOWING DOCUMENTARY EVIDEN CE :- A. COPY OF LEDGER ACCOUNT FOR AMOUNT RECEIVED AND PAID BACK. B. COPY OF BANK STATEMENT FOR AMOUNT RECEIVED AND PAID BACK TO THE PARTY. C. COPY OF SHARE APPLICATION MONEY. D. COPY OF BALANCE SHEET AS AT 31.03.2003. E. COPY OF ITR FOR THE AY 2003-04. F. COPY OF AFFIDAVIT. THE LD ASSESSING OFFICER WITHOUT CONDUCTING ANY INQ UIRY OBSERVED THAT CONTENTIONS OF THE ASSESSEE ARE NOT ACCEPTABLE HIS OBSERVATIONS AR E WORTH TO NOTE, THEY READ AS UNDER: THE ASSESSEE COMPANYS CONTENTIONS ARE NOT TENABLE ON FACTS PREVAILING AS PER RECORD. THE TRAIL OF CHEQUES ISSUED TO THE CAS H DEPOSIT IN THE BANK ACCOUNT OF M/S MAHAAN ENTERPRISES LTD HAD BEEN CLEA RLY ESTABLISHED FROM THE COPY OF BANK STATEMENTS FURNISHED. I.T.A .NO. 871/DEL/2012 3 THERE IS A SYSTEMATIC PLAN IN WHICH THE CASH IS GIV EN TO THE ENTRY PROVIDER WHO IN TURN ISSUES THE CHEQUE OF EQUAL AMOUNT. IT I S A NOTORIOUS PRACTICE WHICH HAS BEEN RESORTED TO BY VARIOUS CONCERNS. THE MONEY IS RECEIVED IN THE FORM OF SHARE APPLICATION MONEY/SHARE CAPITAL/U NSECURED LOANS. THE UNACCOUNTED MONEY IS GIVEN TO THE ENTRY OPERATOR WH O IS TURN ISSUES THE CHEQUE TO THE BENEFICIARY. IN LIE OF ISSUING THE CH EQUES THE ENTRY OPERATOR CHARGES SOME COMMISSION WITH A CERTAIN PERCENTAGE O F THE AMOUNT SOUGHT TO BE LEGITIMIZED IN THE GARB OF CHEQUES RECEIVED A S SHARE APPLICATION MONEY/SHARE CAPITAL/UNSECURED LOANS ETC. 4. AFTER MAKING ABOVE OBSERVATIONS LD ASSESSING OFF ICER DISCUSSED THE GENERAL ASPECT OF THE MODUS OPERANDI OF THE ENTRY OPERATORS AND THEREAFTER MADE THE ADDITION OF RS.70,00000/-. 5. IN THE COMPUTATION, LD ASSESSING OFFICER HAS MA DE AN ARITHMETICAL ERROR BY MAKING A MENTION OF RS.20,00000/- IN STEAD OF RS.70 ,00000/- THIS ERROR HAS BEEN RECTIFIED IN A SUBSEQUENT ORDER DATED 27.01.2009, PASSED U/S 154 OF THE IT ACT. 6. DISSATISFIED WITH THE ADDITION ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT (APPEAL) IT CHALLENGED THE REOPENING OF ASSESSM ENT AND THE ADDITIONS ON MERIT LD FIRST APPELLATE AUTHORITY HAS UPHELD THE REOPENING OF ASSESSMENT, BUT DELETED THE ADDITIONS ON MERIT. THE ASSESSEE HAS RELIED UPON JU DGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S M/S STELLAR INVESTMENT LTD. REPORTED IN 192 ITR PAGE 287, IT ALSO RELIED UPON JUDGMENT OF THE HONBLE SUPREME COURT I N THE CASE OF CIT VS. ORISSA CORPORATION REPORTED IN 159 ITR 78, IT ALSO RELIED UPON JUDGMENT OF HONBLE SUPREME I.T.A .NO. 871/DEL/2012 4 COURT IN THE CASE OF CIT VS. LOVELY EXPORT AND JUDG MENT OF HONBLE DELHI HIGH COURT IN THE CASE OF M/S DEVINE LEASING AND FINANCE LTD REPO RTED IN 299 ITR 268. ON THE STRENGTH OF ALL THESE DECISIONS, LD FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION. 7. THE LD DR WHILE IMPUGNING THE ORDER OF LD CIT ( A) SUBMITTED THAT THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF NOVA PROMOTORS REPORTED IN 342 ITR PAGE 169. ON THE OTHER HAND LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT AFTER TH E NOVA PROMOTORS THE HONBLE DELHI HIGH COURT HAS UPHELD THE DELETION IN THE CASE OF G OYAL SONS GOLDEN ESTATE P.LTD VIDE ORDER DATED APRIL 11, 2012. THE FACTS OF THE ASSESS EES CASE ARE IDENTICAL TO THIS CASE. THE FACTS IN THE CASE OF NOVA PROMOTORS ARE DISTINGUISH ABLE. HE POINTED OUT THAT IN THE PRESENT CASE ASSESSING OFFICER WAS ONLY POSSESSING INFORMAT ION TRANSMITTED BY THE INVESTIGATING WING. THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDEN CE I.E. COPY OF THE INCOME TAX RETURN OF THE SHARE APPLICANT, CONFIRMATION, BANK S TATEMENT ETC. THE ASSESSING OFFICER DID NOT CONDUCT ANY INQUIRY, HE HAS NOT ASKED THE ASSES SEE TO PRODUCE THE SHARE APPLICANT HE HAS NOT ISSUED ANY SUMMONS TO THE SHARE APPLICANT, HE SIMPLY OBSERVED, THAT CONTENTIONS OF THE ASSESSEE ARE NOT TENABLE. 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE IT ACT 1961 PROVIDES T HAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAIN FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTO RY, THE SUM SO CREDITED, MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THUS IN ORDER TO DEMONSTRATE THE SOURCE OF THE CREDIT, APPEARING, IN THE BOOKS AN ASSESSEE IS REQUIRED TO I.T.A .NO. 871/DEL/2012 5 ESTABLISH THE IDENTITY OF THE CREDITOR, HIS CREDITW ORTHINESS AND GENUINENESS OF THE TRANSACTION. IF ALL THESE 3 INGREDIENTS ARE PROVED BY AN ASSESSEE THEN HIS EXPLANATION ABOUT THE SOURCE OF THE CREDITS APPEARING IN THE BOOKS OF ACCOUNTS COULD BE FOUND SATISFACTORY. IN THE PRESENT CASE WHEN ASSESSING OFFICER CONFRONT ED THE ASSESSEE WITH REGARD TO SUM OF RS.70,00000/- RECEIVED FROM 3 COMPANIES. THE ASSESS EE HAS SUBMITTED THE DETAILS EXTRACTED IN PARAGRAPH -3 OF THE PRESENT ORDER. IN A WAY ASSESSEE HAS DISCHARGED ITS ONUS PUT UPON IT BY SECTION 68 OF THE IT ACT. ONCE THE A SSESSEE HAS SUBMITTED BASIC DOCUMENTS AND OFFERED AN EXPLANATION, THEN IT IS THE DUTY OF THE ASSESSING OFFICER TO VERIFY THOSE DOCUMENTS AND THEREAFTER POINT OUT AS TO HOW THE EV IDENCE SUBMITTED BY THE ASSESSEE IS NOT RELIABLE. THE ASSESSING OFFICER DID NOT ASSIGN ANY REASON AS TO WHY THE EXPLANATION OF THE ASSESSEE IS NOT TENABLE. HE SIMPLY OBSERVED THA T EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE. HE FAIL TO GIVE REASONS, AS TO WHY IT I S NOT ACCEPTABLE. HE HAS NOT DISCLOSED WHAT IS THE NATURE OF INFORMATION SUPPLIED BY THE I NVESTIGATING WING, HOW THAT INFORMATION HAS AN ANY NEXUS WITH THE ASSESSEE OR I TS SHARE APPLICANTS. THE ASSESSING OFFICER HAS NOT CALLED FOR SH. SANJAY MOHAN AGGARWA L FOR CROSS-EXAMINATION, EVEN HE HAS NOT SUPPLIED TO HIS STATEMENT TO THE ASSESSEE W HICH WAS RECORDED FROM THE BACK OF THE ASSESSEE. THE ASSESSING OFFICER HAS MERELY MADE GEN ERAL OBSERVATION POINTING OUT THE MODUS OPERANDI OF THE ENTRY OPERATORS. 9 LD FIRST APPELLATE AUTHORITY HAS LOOKED INTO ALL THESE ASPECTS AND THERE AFTER DELETED THE ADDITION. A SIMILAR ADDITION WAS DELETE D IN THE CASE OF GOYAL SONS, GOYAL ESTATE WHICH HAS BEEN UPHELD BY THE HONBLE DELHI H IGH COURT ALSO. THE BRIEF ORDER OF HONBLE DELHI HIGH COURT DATED 11.04.2012, READ AS UNDER: I.T.A .NO. 871/DEL/2012 6 CORAM: HONBLE MR. JUSTICE SANJIV KHANNA HONBLE MR. JUSTICE R.V. EASWAR ORDER 11.04.2012. THE REVENUE BY THIS APPEAL UNDER SECTION 260A OF TH E IT ACT, 1961 (?ACT?, FOR SHORT) IMPUGNS THE ORDER DATED 05.08.2011 PASSED BY THE IN COME TAX APPELLATE TRIBUNAL (?TRIBUNAL?, FOR SHORT) IN THE CASE OF GOEL ESTATE SONS PVT. LTD. IN RELATION TO ASSESSMENT YEAR 2006-07. 2. LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT T HE ORDER PASSED BY THE TRIBUNAL IS PERVERSE AND IN FACT ONE SHRI S.H.MALLICK HAD GIVEN A STATEMENT, WHICH IS RE-PRODUCED IN THE ASSESSMENT ORDER SAYING THAT HE HAD PROVIDED ACCOMMODATION ENTRIES AND THE SAID STATEMENT CONCLUSIVELY PROVES THAT SHARE MONEY OF 30,00,000/- ALLEGEDLY RECEIVED BY THE RESPONDENT-ASSESSEE FROM 5 COMPANIE S ARE SHAM AND BOGUS TRANSACTIONS. 3. WE HAVE EXAMINED THE SAID CONTENTION AND FIND TH AT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMA TION LETTERS FROM THE COMPANIES, THEIR PAN NUMBER, COPY OF BANK STATEMENTS, AFFIDAVI TS AND BALANCE SHEET. THEREAFTER THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRO DUCE THE SAID DIRECTORS/PARTIES. ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM. T HE ASSESSING OFFICER DID NOT CONSEQUENT THERETO CONDUCT ANY INQUIRY AND CLOSED T HE PROCEEDINGS. THIS IS A CASE WHERE THE ASSESSING OFFICER HAS FAILED TO CONDUCT N ECESSARY INQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPECIALLY AFTER THE A FFIDAVIT/CONFIRMATION ALONG WITH THE BANK STATEMENTS ETC. WERE FILED. IN CASE THE ASSESS ING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVESTIGATION PROBABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NO N-VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS, THE FACTUAL FINDING S RECORDED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED OR DER PASSED CANNOT BE TREATED AND REGARDED AS PERVERSE. THE APPEAL IS DISMISSED A S NO SUBSTANTIAL QUESTION OF LAW ARISES. I.T.A .NO. 871/DEL/2012 7 10. THE LD DR AT THE TIME OF HEARING RELIED UPON TH E JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTORS, IT WAS POINTED OUT TO US BY THE LD COUNSEL FOR THE ASSESSEE THAT THE JUDGMENT IN THE CASE OF GOYAL SON S GOLDEN ESTATE PVT. LTD. IS SUBSEQUENT TO THE JUDGMENT OF NOVA PROMOTORS. IN TH AT CASE, THE ASSESSING OFFICER HAD ISSUED SUMMONS TO THE SHARE APPLICANTS WHICH WERE R ETURNED UNSERVED. THE ASSESSEE DID NOT PRODUCE THE SHARE APPLICANTS HOWEVER, SUBSEQUEN TLY, FILED THEIR AFFIDAVITS. THEY SUGGEST THAT AN INQUIRY MADE BY THE ASSESSING OFFIC ER IN THE CASE OF NOVA PROMOTORS ABOUT THE ANTECEDENTS OF THE SHARE APPLICANTS BUT I N THE PRESENT CASE, NO INQUIRY WAS MADE BY THE ASSESSING OFFICER. HE SIMPLY TREATED THE INF ORMATION COLLECTED BY THE INVESTIGATING WING AS A GOSPEL TRUTH. TO OUR MIND THAT INFORMATIO N COULD BE SUFFICIENT FOR STARTING INVESTIGATION TO THAT CANNOT BE A SUBSTITUTION OF A LL SORT OF EVIDENCE. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES AND THE ORDER OF LD CIT (A) IN THE LIGHT OF HONBLE DELHI HIGH COURTS DECISION REFERRED ABOVE, WE DO NOT FIN D ANY FORCE IN THE CONTENTIONS OF LD DR AND WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CIT (A). 11. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 25/05/2012. SD/- SD/- ( G.D.AGRAWAL ) ( RAJ PAL YADAV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 25/05/2012 *AK VERMA* I.T.A .NO. 871/DEL/2012 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR