ITO, New Delhi V. M/s. Esdigi Investment P. Ltd., New Delhi

ITA 872/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6716 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-10-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Keywords: Accommodation entries
• Section: 133(6); 143(1); 205; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 872/DEL/10 ASSTT. YEAR 2001-02 ITO, WARD-11 (2), ROOM NO. 321, C.R. BUILDING, NEW DELHI. VS. ESDIGI INVESTMENT P. LTD., 46, 2 ND FLOOR, MANDAKINI, NRI COMPLEX, GREATER KAILASH -IV, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MANISH GUPTA, SR. DR RESPONDENT BY: SHRI PRAMOD JAIN, CA ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 16.12.2006 PASSED FOR ASSTT. YEAR 2001-02. T HE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NA TURE. IN BRIEF THE GRIEVANCE OF REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 10 LAC WHICH WAS ADDED BY THE AO BY DISBELIEVING T HE ITA NO. 872/DEL/10 ASSTT. YEAR 2001-02 2 CONTENTION OF ASSESSEE THAT THIS AMOUNT WAS RECEIVE D AS SHARE APPLICATION MONEY FROM TWO ENTITIES. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.10.2001 DECLARING A LOSS OF ` 1,49,575/-. THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. THE AO RECEIVED A N INFORMATION THAT ONE SHRI MAHESH GARG HAS DISCLOSED THAT HE WAS IN T HE BUSINESS OF PROVIDING ENTRIES TO THE ASSESSEES ON COMMISSION BA SIS. THE ASSESSEE HAS RECEIVED A SUM OF ` 5 LACS VIDE CHEQUE NO. 33804 ON 29.1.2000 FROM M/S. TECHNOCOM ASSOCIATES PRIVATE LTD. AND ` 5 LAC VIDE CHEQUE NO. 33755 ON 30 TH JANUARY, 2001 FROM M/S. SOBER ASSOCIATES. THE ASSESSEE HAS FILED COMPLETE DETAILS DISCLOSING IDEN TITY OF THE SHARE APPLICANTS, THEIR BALANCE SHEET DEMONSTRATING CREDI TWORTHINESS AND THEIR PERMANENT ACCOUNT NUMBER ETC. BUT THE AO DID NOT AC CEPT THOSE CONTENTIONS ON THE GROUND THAT THE SHRI MAHESH GARG IN HIS STATEMENT RECORDED BY ADI ON 22.9.2003 DISCLOSED THAT M/S. TE CHNOCOM ASSOCIATES P. LTD. AND M/S. SOBER ASSOCIATES WERE FLOATED BY HIM FOR USING TO GIVE ACCOMMODATION ENTRIES. THE AO MADE TH E ADDITION OF ` 10 LACS. 3. DISSATISFIED WITH THE ACTION OF AO ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE LD. CIT(A). IT FILED WRITTEN STATEMEN T WHICH HAS BEEN REPRODUCED BY LD. CIT(A) AND THE SAME READ AS UNDE R :- ITA NO. 872/DEL/10 ASSTT. YEAR 2001-02 3 3. THE APPELLANT BEFORE ME SUBMITTED AS BELOW :- WITH REFERENCE TO YOUR SHOW CAUSE NOTICE NO. LETTE R DATED 17/11/2008 WE ARE HEREWITH SUBMITTING THE FOLLOWING DETAILS, INFORMATION AND EXPLANATION FOR YOUR KIND PERUSAL ; 1. POWER OF ATTORNEY IN FAVOUR OF M/S SUNIL MEHTA & CO., CHARTERED ACCOUNTANTS. 2. THE COMPANY HAS RECEIVED RS. 10,00,000/- (RS. TE N LACS ONLY) FROM TWO PARTIES TOWARDS SHARE APPLICATION MONEY AN D THE SAME HAVE BEEN CREDITED TO SHARE APPLICATION MONEY. THE DETAILS ARE AS UNDER :- 1. SOBER ASSOCIATES PVT. LTD. A-261,SHASTRI NAGAR, DELHI 110 052. PAN AAACA3182J RS. 5,00,000/- VIDE CH. NO. 033755 DTD. 30/01/2001, DRAWN ON INNOVATIVE CO-OPERATIVE URBAN BANK LTD., ASHOK VIHAR NEW DELHI 110 052. 2. TECHNOCOM ASSOCIATES PRIVATE LIMITED 205, DELHI CHAMBER, DELHI GATE NEW DELHI PAN AAACT0787E RS. 5,00,000/- VIDE CH. NO.033804 DTD. 25/01/2001, DRAWN ON INNOVATIVE CO-OPERATIVE URBAN BANK LTD., ASHOK VIHAR NEW DELHI- 110 052. 3. REGARDING GENUINENESS AND CREDIT-WORTHINESS OF THE TRANSACTIONS THE FOLLOWING DOCUMENTS ARE ENCLOSED HEREWITH; (I) IDENTITY: THE IDENTITY OF THE COMPANY IS FOUND ON THE BASIS OF THE CERTIFICATE OF INCORPORATION AND FURTHER MORE THE PERMANENT ACCOUNT NO. CAN ALSO BE HELPFUL FOR PROVIDING THE IDENTITY. THE BANK ACCOUNT IS ALSO A PROOF OF IDENTITY OF THE COMPANY. THEREFORE COPY OF CERTIFICATE OF INCORPORATION, PERMANENT ACCOUNT NUMBER IS ENCLOSED IN ANNEXURE 1 AS PROOF OF IDENTITY. ITA NO. 872/DEL/10 ASSTT. YEAR 2001-02 4 (II) CREDITWORTHINESS:REGARDING CREDITWORTHINESS OF THE COMPANY, COPY OF THE BALANCE SHEET IS ENCLOSED IN ANNEXURE II. THE BALANCE SHEET OF M/S SOBER ASSOCIATES PVT. LTD. SHOWS NET WORTH OF RS. 45.98 LACS AS AT 31 ST MARCH, 2001 OUT OF WHICH THE COMPANY HAS INVESTED RS. 5,00,000/- IN OUR COMPANY. THE BALANCE SHEET OF M/S. TECHNOCOM ASSOCIATES PRIVATE LIMITED SHOWN NET WORTH OF RS. 46.40 LACS AS AT 31 ST MARCH, 2001 OUT OF WHICH THE COMPANY HAS INVESTED RS. 5,00,000/- IN OUR COMPANY. (III) GENUINENESS OF THE TRANSACTION: REGARDING GENUINENESS OF THE ABOVE TRANSACTION, WE SUBMIT THE FOLLOWING DETAILS EXPLANATIONS: A) THE ABOVE TRANSACTION HAS BEEN DONE THROUGH THE BANK. B) FURTHER COPIES OF THE CHEQUES RECEIVED FROM THE PARTIES ARE ENCLOSED FOR THE GENUINENESS OF THE TRANSACTION. THESE CHEQUES HAVE BEEN DEPOSITED IN THE BANK OF RAJASTHAN LIMITED, CURRRENT ACCOUNT NO. 1002483 BRANCH AT KAILASH COLONY MARKET, NEW DELHI 110 048. ANNEXURE III 4. REGARDING GENUINENESS AND CREDIT- WORTHINESS OF THE TRANSACTIONS THE FOLLOWING DOCUME NTS ARE ENCLOSED HEREWITH : A) REGARDING SHARE APPLICATION MONEY OF RS. 5,00,000/- RECEIVED FROM M/S. SOBER ASSOCIATES PVT. LTD. IN ANNEXURE III. 1. COPY OF SHARE APPLICATION FORM DULY SIGNED BY TH E DIRECTOR ON BEHALF OF M/S. SOBER ASSOCIATES (P) LTD . 2. COPY OF BOARD RESOLUTION OF SOBER ASSOCIATES (P) LTD. DULY SIGNED BY ANOTHER DIRECTOR AUTHORIZING MR. R.S . SINGAL, DIRECTOR OF THE COMPANY TO APPLY FOR EQUITY SHARES OF OUR COMPANY. 3. COPY OF AFFIDAVIT OF SOBER ASSOCIATES (P) LTD. F OR INVESTMENT. ITA NO. 872/DEL/10 ASSTT. YEAR 2001-02 5 4. COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF AS AT 31/03/2002 IN WHICH FIGURES OF 2001 ARE ALSO AVAILABLE. 5. COPY OF INTIMATION U/S 143(1) (A) OF M/S SOBER ASSOCIATES (P) LTD. FOR THE ASSESSMENT YEAR 1999-20 00 AND 2000-01. 6. COPY OF MEMORANDUM OF ARTICLES OF ASSOCIATION INCLUDING CERTIFICATE OF INCORPORATION. 7. FORM NO.18 FOR SITUATION OF REGISTERED OFFICE OF ROC 8. FORM NO. 32 REGARDING APPOINTMENT OF DIRECTOR OF ROC B) REGARDING SHARE APPLICATION OF RS. 5,00,000/- RE CEIVED FROM M/S. TECHNOCOM ASSOCIATES (P) LTD., NEW DELHI IN ANNEXURE II. 1. COPY OF SHARE APPLICATION FORM DULY SIGNED BY TH E DIRECTOR ON BEHALF OF THE COMPANY M/S. TECHNOCOM ASSOCIATES (P) LTD. 2. COPY OF BOARD RESOLUTION DULY SIGNED BY ANOTHER DIRECTOR AUTHORIZING SHRI R.S. SINGAL, DIRECTOR OF THE COMPA NY TO APPLY FOR EQUITY SHARES OF OUR COMPANY. 3. COPY OF AFFIDAVIT OF M/S. TECHNOCOM ASSOCIATES (P) LTD. FOR THE INVESTMENT. 4. COPY OF INTIMATION U/S 143 (1)(A) OF M/S. TECHNO COM ASSOCIATES (P) LTD. FOR THE ASSESSMENT YEAR 1999-20 00 AND 2000-2001. 5. COPY OF ASSESSMENT ORDER OF THE PARTY FOR THE ASSESSMENT YEAR 1993-94 6. COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOU NT OF AS AT 31/03/2002 IN WHICH FIGURES OF 2001 ARE ALSO AVA ILABLE. 7. COPY OF MEMORANDUM OF ARTICLES OF ASSOCIATION. 8. FORM NO. 18 FOR SITUATION OF REGISTERED OFFICE O F ROC. 9. FORM NO. 32 REGARDING APPOINTMENT OF DIRECTOR O F ROC. ITA NO. 872/DEL/10 ASSTT. YEAR 2001-02 6 HOWEVER SINCE BOTH THE SHAREHOLDERS ARE NOT THE PRE SENT SHAREHOLDERS OF THE COMPANY AS THEY HAVE SOLD OUT THEIR SHARE HOLDING T O OTHER PERSONS, WE ARE UNABLE TO PRESENT THE PERSONS. HOWEVER, YOU MAY DIR ECTLY SENT THE NOTICES TO THEM U/S 133(6) OR 131 FOR CROSS VERIFICATION AND E XAMINATION. 5. THE COPY OF BANK ACCOUNTS OF THE ABOVE SAID PART IES ARE NOT WITH US. HOWEVER YOUR HONOR HAS THE DETAILS OF THE BANK ACCO UNT OF THE ABOVE PARTIES AND YOU MAY ASK TO THE BANKERS OF THE PARTIES TO FU RNISH THE BANK STATEMENT. 4. LD. CIT (A) HAS GONE INTO ALL THESE DETAILS AND DELETED THE ADDITION. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HAV E GONE THROUGH THE RECORD CAREFULLY. IF WE EXAMINE THE DETAILS SUB MITTED BY THE ASSESSEE AND EXTRACTED SUPRA IN THE LIGHT OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DWARKADHISH INVESTMENT RENDERED IN ITA NO. 911/2010, ON 2 ND AUGUST, 2010 THEN IT WILL REVEAL THAT NO INTERFERE NCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). THE H ONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING REPORTED IN 299 ITR 268 AS WELL AS IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. 205 ITR 98 HAS HELD THAT IN THE CASE OF SHARE APPLICATION, IF IDENTITY OF THE SHARE APPLICANT IS PROVED THEN NO ADDITION IN THE HANDS OF THE ASSESSEE CAN B E MADE U/S 68 OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF C IT VS. DWARKADHISH INVESTMENT HAS CONSIDERED ALL THESE DECISIONS AND T HEREAFTER DISMISSED THE APPEAL OF REVENUE. IN THE PRESENT CASE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTION. LD. CIT(A) ITA NO. 872/DEL/10 ASSTT. YEAR 2001-02 7 HAS RIGHTLY CONSIDERED ALL THESE ASPECTS AND DELETE D THE ADDITION. THERE IS NO MERIT IN THIS APPEAL OF REVENUE HENCE IT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.11.2010. SD/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26.11.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT