AAA Power Projects Pvt Ltd, New Delhi V. ITO WARD - 1(1), New Delhi

ITA 8921/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5738 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 147; 68; 148; 69C; 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. NARENDER KUMAR CHOUDHARY, JUDICIAL MEMBER ITA No. 8921/Del/2019 (Assessment Year : 2011-12) AAA Power Projects Pvt. Ltd., J1/62, Khirki Extn., Malviya Nagar, New Delhi - 110019 PAN No. AAICA 6469 L Vs. ITO Ward – 1(1) New Delhi (APPELLANT) (RESPONDENT) Assessee by --None-- Revenue by Shri Kanav Bali, Sr. D.R. Date of hearing: 19.09.2022 Date of Pronouncement: 19.09.2022 ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the assessee is directed against the order dated 12.09.2019 passed by the Commissioner of Income Tax (Appeals)-I, New Delhi relating to Assessment Year 2011-12. 2. Brief facts of the case as culled out from the material on record are as under :- 3. Assessee is a company. AO has noted that it had received information that assessee had purchased immovable property 2 amounting to Rs.1,13,86,760/- during the F.Y. 2010-11 & had failed to file the return of income for A.Y. 2011-12. Accordingly, the case of the assessee was reopened u/s 147 of the Act and notice u/s 148 of the Act dated 31.03.2018 was issued and served on the assessee. Notices u/s 142(1) were also issued by AO. AO has noted that assessee filed the return of income in response to notice u/s 148 on 18.09.2018 declaring Nil income. AO has noted that notices u/s 143(2)/142(1) of the Act were issued to the assessee and assessee was asked to furnish the full details of paid up share capital/share application money during the year along with the other details as noted in the notice. AO noted that assessee did not file the full details called for by the AO but only filed the name and addresses of the share applicant. To verify the identity, creditworthiness and genuineness of the parties from whom assessee had claimed to have received the share application money, information u/s 133(6) of the Act was called from the share applicants. AO at page 4 of the order has noted party-wise status of the notices issued. The sum and substance of the same is that in some cases the notices were received back un-served and the cases where the notices were served, no information were filed by the respective parties. AO has also noted that thereafter, assessee was issued a final show-cause notice wherein the assessee was asked to explain the nature and source of the transactions with respect to the identity, creditworthiness and genuineness of the share application money, and to produce the directors of the company who have subscribed to the share capital of assessee. AO noted that 3 assessee did not produce the directors, nor filed the required details called for by the AO. AO, thereafter, for reasons noted in the assessment order concluded that the funds received on account of share capital cannot be accepted as genuine transactions of raising share capital and by merely complete the paper trail it cannot be said that assessee has discharged its onus to prove genuineness of transactions. AO, thereafter, by relying on the decision of Hon’ble Delhi High Court in the case of CIT vs. N.R. Portfolio Private Ltd. in ITA No.134/2012 and other decisions cited in his order concluded that assessee had not discharged the onus cast on it to prove the genuineness of the transaction more so, as all the notices issued to the parties calling for information were returned unserved. AO, therefore, held the amount of share application money of Rs.1,02,00,000/- received by the assessee to be as unexplained and made its addition u/s 68 of the Act. 4. AO, thereafter, noted that since the assessee had arranged accommodation entries to the tune of Rs.1,02,00,000/- in the form of share application money and considering the fact that entry provider receive commission from the beneficiaries @ 2% of the total sum of entry so provided, he held the commission @ 2% of Rs.2,04,000/- to have been paid by assessee to get the accommodation entries and accordingly worked out the amount of Rs.2,04,000/- being undisclosed expenditure u/s 69C of the Act and made its addition. 4 5. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), assessee inter alia challenged the initiation of proceedings u/s 148 of the Act and on merits challenged the addition made by AO. 6. On the issue of initiation of proceedings u/s 148 of the Act, CIT(A) at para 7.2 of his order after considering the submissions of the assessee has inter alia noted that AO had not acted mechanically before recording the reasons to believe of escapement of income and that AO had applied his mind by considering all the information before him. He has further noted that AO had taken the approval of higher authorities as required u/s 151 of the Act before issuing notice u/s 148 of the Act and has not acted under the borrowed belief or under any direction. He has further noted that the reasons recorded by the AO were based upon specific information. He, thereafter, concluded that AO had validly assumed jurisdiction u/s 148 of the Act by recording the reasons to believe in accordance with the provisions of the Act u/s 147 of the Act and therefore, held reopening to be valid. 7. On the merits of the additions, Learned CIT(A) after considering the various decisions cited in his order has given a finding that assessee was required to explain nature and source of transaction with respect to the identity, creditworthiness and genuineness of the transaction for share application money of Rs.1,02,00,000/- received by the assessee and was asked to 5 produce the directors of the company who had subscribed to the share application money but assessee had failed to prove the identity and creditworthiness of the subscribing companies and the genuineness of the transactions. He accordingly, upheld the addition made on account of share application money and also the addition u/s 69C of the Act, being undisclosed expenditure for arranging the accommodation entry for share application money. 8. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds: 1. The Ld. CIT(A) has erred in law and on facts to uphold the initiation of proceedings u/s 148 disregarding the fact that the copy of reasons recorded for the reopening of the assessment were not provided to the appellant and they had no opportunity to raise their objections to the notice issued by the AO. 2. The Ld. CIT(A) has erred in law and on facts by confirming the addition of Rs.1,02,00,000/- u/s 68 of the Act on account of alleged unexplained share application money received, without taking into consideration the documents filed by the appellant and the absence of any material from the AO to raise any doubt on the veracity and the genuineness of the documents so filed. 3. The Ld. CIT(A) has erred in law as well as in facts by confirming the addition of Rs.2,04,000/- on account of alleged commission paid on receipt of share application money. 4. The Ld. CIT(A) has erred in law as well as in facts by confirming the above additions disregarding the documentary evidences filed by the appellant and by merely relying on the fact that the directors of the share applicant company could not be produced assuming a burden on the appellant which is not conceived under the law. 6 5. The Ld. CIT(A) has erred in law and on facts in confirming the additions made by the AO despite the appellant having fully discharged the onus cast on them under the law. 6. Any other ground, the assessee may raise during the course of appellate proceedings. 9. The case file reveals that the case was listed for hearing on 13 th June 2022 but due to the none appearance of the assessee, the case was adjourned to 19 th September 2022. While adjourning the hearing to 19 th September 2022, the Registry was directed to issue notice through RPAD. The notice of hearing for 19 th September 2022 sent through Registered post was returned undelivered by postal authorities with the remarks that “no such person”. Assessee was duty bound to inform the change in its address if any but has failed to do so. Further, it has not placed on record any change in its address. In such a situation, we, therefore, proceed to dispose of the appeal ex parte qua the assessee and after hearing the Learned DR. 10. Before us, Learned DR took us to the findings of AO and CIT(A) and supported the order of lower authorities. 11. We have heard the Learned DR and perused the material available on record. In the present appeal assessee is challenging the validity of the assessment framed u/s 147/148 of the Act and on merits the additions made u/s 68 & 69C of the Act. We find that CIT(A) by well reasoned order and after considering the various decisions cited in his order and for reasons given in his 7 order has held the reopening of the assessment u/s 148 to be in accordance with law. As far as addition on merits is concerned, he has given a finding that assessee has not discharged the onus of proving the creditworthiness of the companies who had invested in the assessee company, the genuineness of the transaction nor the assessee could produce the directors of the investing companies before the authorities. Before us, assessee has not placed any material on record to controvert the findings of lower authorities. In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of assessee are dismissed. 12. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 19.09.2022 Sd/- Sd/- (NARENDER KUMAR CHOUDHARY) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 19.09.2022 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI