Atul Kumar Khandelwal, New Delhi V. DCIT, New Delhi

ITA 874/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6827 (ITAT-DELHI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 19-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Principle of natural justice; Opportunity of cross examination; Accommodation entries
• Section: 143(3); 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 874 /DEL/201 6 A.Y. 20 12 - 13 ATUL KUMAR KHANDELWAL, 204, 2 ND FLOOR, VIVEKANANDPURI, NEW DELHI 110 007 (PAN: APJPK4706M) VS. DCIT, CENTRAL CIRCLE - 20,. NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. AJAY WADHWA, ADV. DEPARTMENT BY : SH. AMRIT LAL, SR. DR ORDER ORDER ORDER ORDER PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-27, NEW DELHI DATED 30.12.2015 PERTAINING TO ASSESSMENT YEAR 2012-13 ON T HE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE ID. CIT (A) IS BAD ON FACTS AND IN LAW. 2. THAT THE ID. CIT (A) HAS ERRED IN ADDING A SUM OF RS.37,12,500/- IN THE HANDS OF THE APPELLANT AS COMMISSION INCOME ARISING OUT OF THE CERTAIN UNDISCLO SED ACTIVITIES. ITA NO.874/DEL/2016 2 3. THAT THE ID. CIT (A) HAS ERRED IN CONFIRMING THE ABOVE SAID ADDITION BASED ON SURMISES, PRESUMPTIONS AND CONJECTURES. 4. THAT THE ID. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION BY INCORRECTLY STATING THAT THE APPELLANT DID N OT DENY THE BOGUS TRANSACTIONS BETWEEN VSPL AND ITS 13 SHARE APPLICANT COMPANIES. 5. (A) THAT ID. CIT (A) HAS ERRED IN LAW IN CONFIR MING THE ADDITION PURPORTEDLY ON THE BASIS OF A STATEMENT BY A THIRD PA RTY. (B) THAT NO COPY OF THE STATEMENT OF THE THIRD PARTY WAS GIVEN TO THE APPELLANT. (C) THAT NO RIGHT TO CROSS EXAMINE THE THIRD PARTY WAS GIVEN TO THE APPELLANT. (D) THAT THE ID. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE STATEMENT TAKEN DURING SURVEY DOES NOT HAVE ANY EVIDENTIARY VALUE AND HAS NO CREDIBILITY IN THE EYES OF LAW. (E) THAT THE ID. CIT (A) HAS PASSED THE APPELLATE OR DER WITHOUT APPLICATION OF MIND AS IN THE LAST LINE AT PAGE 12 ITA NO.874/DEL/2016 3 OF HER ORDER, SHE HAS CLEARLY STATED THAT THE ADDITIO N OF RS.24.78 CRORES IS UPHELD AND CONFIRMED. THE APPELL ANT FAILS TO UNDERSTAND THE RELEVANCE OF THIS AMOUNT ESPECIALLY WHEN THE COMMISSION OF RS.37,12,500/- HA S BEEN ADDED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DELETE AND SUBSTITUTE ANY OR ALL THE GROUNDS OF APPE AL BEFORE OR AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A INDIVIDUAL AND IS A CHARTERED ACCOUNTANT IN PRACTICE AND BY QU ALIFICATION AND PROFESSION. THE ASSESSEE FILED ITS RETURN OF INCOME U/S. 139(1) ELECTRONICALLY ON 22.3.2013 DECLARING AN INCOME OF R S. 9,07,636/-. NOTICE U/S. 143(2) & 142(1) OF THE I.T. ACT, 1961 WE RE ISSUED AND THE PROCEEDINGS WERE TAKEN UP, TO WHICH THE ASSESSEE HI MSELF ATTENDED FROM TIME TO TIME AND FILED THE NECESSARY D ETAILS AND DOCUMENTS REQUIRED. THE AO ASSESSED THE TOTAL INCOME OF THE AT AN INCOME OF RS. 46,20,140/- VIDE HIS ORDER DATED 25. 3.2015 U/S. 143(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE ACTION OF THE ASSESSING OFFICER, ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER ITA NO.874/DEL/2016 4 DATED 30.12.2015 DISMISSED THE APPEAL OF THE ASSESSE E BY UPHOLDING THE ASSESSMENT ORDER PASSED BY THE AO. 4. AGAINST THE LD. CIT(A)S ORDER DATED 30.12.2015, NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT ASSESSEE IS A CHARTERED ACCOUNTANT AND PRACTICING A S A C.A. AND FILED ITS RETURN OF INCOME U/S. 139(1) OF THE I.T. ACT, 1961 ELECTRONICALLY ON 22.2.2013 DECLARING INCOME OF RS. 9,07,136/- AFTER ADOPTING THE PRESCRIBED PROCEDURE UNDER THE LAW. THE A O ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT AN INCOME OF RS. 4 6,20,140/-. HE STATED THAT THE AO HAS MADE THE ADDITION ON ACCOUNT OF COMMISSION OUT OF ACCOMMODATION BUSINESS ACTIVITIES AM OUNTING TO RS. 37,12,2500/-. HE FURTHER STATED THAT A SURVEY U /S. 133A OF THE ACT WAS CONDUCTED ON 17.10.2012 AT THE PREMISES OF ONE OF THE CLIENT OF THE ASSESSEE M/S VARRENYAM SECURITIES PVT. LTD. AT ITS REGISTERED OFFICE AT 2442, 1 ST FLOOR, GALI NO. 10, KAROL BAGH, NEW DELHI 110 005. SINCE THE ASSESSEE IS ALSO HAVING HIS OFFICE IN THE SAME PREMISES AND THE SURVEY ON THE ASSESSEE WERE A LSO CONDUCTED BY THE DEPARTMENT. IN PURSUANCE TO THE SEARCH CON DUCTED MR. HIMANSHU VERMA WAS EXAMINED BY THE INVESTIGATING AUT HORITY ON 14.4.2012 AND IN HIS STATEMENT HE ADMITTED THAT VARIOUS C HARTERED ITA NO.874/DEL/2016 5 ACCOUNTANT ACTED AS MIDDLEMEN FOR COMMISSION AND A LIS T OF 13 CHARTERED ACCOUNTANT WAS GIVEN IN WHICH THE NAME OF TH E ASSESSEE WAS APPEARING AGAINST SERIAL NO. 10 ALONGWITH HIS MOBILE NUMBER. ON THE BASIS OF THE STATEMENT OF SH. HIMANSHU VERMA THA T IN THE ABSENCE OF ANY EVIDENCE THE AO MADE THE ADDITION ON AC COUNT OF COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES @ 0.1 5% OF RS. 2.47 CRORES COMPUTED AT RS. 37,12,500/- AND MADE THE ADDITION OIN THE CASE OF THE ASSESSEE. LD. COUNSEL OF THE ASSESSEE FURTHER STATED THAT MERELY ON THE BASIS OF THE STATEMENT OF SH. HIMANSHU VERMA THE ADDITION IN DISPUTE HAS BEEN MADE IN THE HANDS OF THE ASSESSEE WHICH IS CONTRARY TO THE VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT OF INDIA, HONBLE HIGH COURT AND THE TR IBUNALS. HE FURTHER STATED THAT THE REVENUE AUTHORITY HAS NOT PROV IDED ANY STATEMENT OF SH. HIMANSHU VERMA RECORDED DURING SURVE Y TO THE ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINATION HAS BEEN GIVEN TO THE ASSESSEE WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW. IN SUPPORT OF HIS CONTENTION, HE CITED THE DECISION OF THE HON BLE SUPREME COURT OF INDIA IN THE CASE OF KRISHINCHAND CHELLARAM VS. CIT 1980 19 CTR (SC; 360 (1980) 125 ITR 713 (SC); HONBLE RA JASTHAN HIGH COURT IN THE CASE OF CIT VS. AL LALPURIA OM 384 (RAJ ASTHAN); SHALIMAR BUILDCON (P) LTD. VS. MO (2011) 1 ITD 396 ( JP); HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. G IRISH CHAUDHAR ITA NO.874/DEL/2016 6 (2007) 163 TAXMAN 608 (DELHI). IN VIEW OF THE ABOVE , HE STATED THAT THE ADDITION IN DISPUTE MADE BY THE AO AND WRONGL Y CONFIRMED BY THE LD. CIT(A) MAY BE UPHELD WITHOUT ANY BASIS WHIC H DESERVE TO BE DELETED. 6. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THA T THE SAME MAY BE UPHELD AND THE APPEAL OF THE ASSESSEE MAY BE DISMISSED ACCORDINGLY. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE REC ORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES, CASE LAWS CITED BY THE LD. COUNSEL OF THE ASSESSEE. I FIND THAT THE A O ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT AN INCOME OF RS. 46,2 0,140/-. THE AO HAS MADE THE ADDITION ON ACCOUNT OF COMMISSION OUT OF ACCOMMODATION BUSINESS ACTIVITIES AMOUNTING TO RS. 37,1 2,2500/-. A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON 17.10. 2012 AT THE PREMISES OF ONE OF THE CLIENT OF THE ASSESSEE M/S VA RRENYAM SECURITIES PVT. LTD. AT ITS REGISTERED OFFICE AT 2442, 1 ST FLOOR, GALI NO. 10, KAROL BAGH, NEW DELHI 110 005. SINCE THE ASSESSEE IS ALSO HAVING HIS OFFICE IN THE SAME PREMISES AND THE SURVEY ON THE ASSESSEE WERE ALSO CONDUCTED BY THE DEPARTMENT. IN PURSUANCE TO THE SEARCH CONDUCTED MR. HIMANSHU VERMA WAS EXAMIN ED BY THE INVESTIGATING AUTHORITY ON 14.4.2012 AND IN HIS STATEME NT HE ADMITTED THAT VARIOUS CHARTERED ACCOUNTANT ACTED AS MIDD LEMEN FOR COMMISSION AND A LIST OF 13 CHARTERED ACCOUNTANT WAS GIVEN IN WHICH THE NAME OF THE ASSESSEE WAS APPEARING AGAIN ST SERIAL NO. 10 ALONGWITH HIS MOBILE NUMBER. ON THE BASIS OF THE STATEMENT OF ITA NO.874/DEL/2016 7 SH. HIMANSHU VERMA THAT IN THE ABSENCE OF ANY EVIDEN CE THE AO MADE THE ADDITION ON ACCOUNT OF COMMISSION FOR PROV IDING ACCOMMODATION ENTRIES @ 0.15% OF RS. 2.47 CRORES COM PUTED AT RS. 37,12,500/- AND MADE THE ADDITION IN THE CASE OF THE AS SESSEE. I FIND CONSIDERABLE COGENCY IN THE CONTENTION OF THE LD . COUNSEL OF THE ASSESSEE THAT MERELY ON THE BASIS OF THE STATEMENT OF S H. HIMANSHU VERMA THE ADDITION IN DISPUTE HAS BEEN MADE IN THE HA NDS OF THE ASSESSEE WHICH IS CONTRARY TO THE VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT OF INDIA, HONBLE HIGH COURT A ND THE TRIBUNALS. I ALSO FIND THAT REVENUE AUTHORITY HAS NO T PROVIDED ANY STATEMENT OF SH. HIMANSHU VERMA RECORDED DURING SURVE Y TO THE ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINATION HAS BEEN GIVEN TO THE ASSESSEE WHICH IS NOT SUSTAINABLE IN THE EYES OF L AW, IN VIEW OF THE HONBLE SUPREME COURT DECISION IN THE CASE OF KISH INCHAND CHELLARAM VS. CIT (1980) 125 ITR 713 (SC) WHEREIN I T HAS BEEN HELD THAT EVIDENCE COLLECTED AT THE BACK OF THE ASSESSE E HAS TO BE CONFRONTED TO THE ASSESSEE TO GIVE HIM OPPORTUNITY TO R EBUT THE EVIDENCE, OTHERWISE, SAME IS NOT ADMISSIBLE. 8. I FURTHER DRAW MY SUPPORT FROM THE HONBLE SUPREME COURT OF INDIA DECISION IN THE CASE OF ANDAMAN TIMBER INDUSTR IES VS. COMMISSIONER OF CENTRAL EXCISE REPORTED IN (2015) 9 4 CCH 0187 (SC) WHEREIN THE ASSESSEE IS ENTITLED FOR CROSS EXAMI NE THE WITNESS. I NOTE THAT THE HONBLE APEX COURT CONCLUDED T HAT NOT ALLOWING ASSESSEE TO CROSS-EXAMINE, AMOUNTING TO SERI OUS FLAW WHICH MAKE IMPUGNED ORDER NULLITY AND VIOLATION OF P RINCIPLES OF NATURAL JUSTICE. 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND RESPECTFULLY FOLLOWING THE PRECEDENTS OF THE HONBLE SU PREME COURT ITA NO.874/DEL/2016 8 AS AFORESAID, I AM OF THE CONSIDERED OPINION THAT THE ADDITION MADE ON THE BASIS OF THE STATEMENT COLLECTED AT THE BACK OF TH E ASSESSEE AND THE RIGHT OF CROSS EXAMINATION WAS NOT PROVIDED TO HIM, HENCE, I DELETE THE ADDITION IN DISPUTE MADE BY THE AO AND CON FIRMED BY THE LD. CIT(A) AND ACCORDINGLY, ALLOW THE APPEAL OF T HE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 19/10/2016 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