ITO, New Delhi V. M/s Mundra Credit & Investment P Ltd., New Delhi

ITA 903/DEL/2011

• Counselvise Citation: 90320114 RSA 2011
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 10-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 17-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: H K BATRA
• Keywords: Unexplained cash credit; Accommodation entries
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 903(DEL)/2011 ASSESSMENT YEAR: 2002-03 INCOME-TAX OFFICER, M/S MU NDRA CREDIT & INVESTMENT WARD 5(4), NEW DELHI. VS. (P) LTD., 4 10-412, 18/12, WEA KAROL BAGH, NEW DELHI. PAN: AAACM8117D (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI R.S. NEGI, SR. DR RESPONDENT BY: SH RI H.K. BATRA, C.A. DATE OF HEARING : 10.10.2011 DATE OF PRONOUNCEMENT: 14.10.2011. ORDER PER K.G. BANSAL : AM THE ONLY SUBSTANTIVE GROUND TAKEN IN THIS CASE I S THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS. 13.30 LAKH MADE U/S 68 AS UNEXPLAINED CREDIT AND RS. 6,650/- AS UNAC COUNTED CASH EXPENDED FOR OBTAINING ACCOMMODATION ENTRY OF THE AFORE SAID AMOUNT. 2. THE FACTS ARE THAT THE ASSESSEE HAD FILED IT S RETURN ON 07.10.2002 DECLARING NIL INCOME. THE RETURN WAS PROCESSED U/ S 143(1) ON 30.01.2007. THEREAFTER, THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT DEALING WITH ENQUIRIES CONDUCTED BY IT IN ACCOMMODATION ITA NO. 903(DEL)/2011 2 ENTRIES GIVEN TO VARIOUS ASSESSEES BY VARIOUS ENTRY-OPERATORS. THE ASSESSEE HAD ALSO SHOWN RECEIPT OF THREE AMOUNTS AGGREGATING TO RS. 13,30,000/- FROM M/S MKM FINSEC (P) LTD., WHICH W ERE STATED TO BE IN THE NATURE OF ACCOMMODATION ENTRY. BASED UPON THI S INFORMATION, NOTICE U/S 148 WAS ISSUED, AND THE ASSESSMENT PROCEE DINGS WERE INITIATED. THE CASE OF THE ASSESSEE WAS THAT IT RECEIVED SAL E PROCEEDS FROM THE AFORESAID CONCERN IN RESPECT OF SALE OF SHARES OF ASSAM ENTRADE LTD. (ASSAM FOR SHORT) AND SARASWATI INTERNATIONAL L TD. (SARASWATI FOR SHORT). THE AO, HOWEVER, DID NOT ACCEPT THIS EXPLANATION ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO BRING ON RECORD THE BROKERS NOTE FROM MKM FINSEC (P) LTD. ACCORDINGLY, IT WAS HE LD THAT THE AFORESAID ENTRIES WERE IN THE NATURE OF ACCOMMODATION ENTR IES. THEREFORE, AN AMOUNT OF RS. 13,30,000/- WAS ADDED TO THE INCOM E U/S 68 OF THE ACT. ANOTHER AMOUNT OF RS. 6,650/- WAS ALSO ADDED ON ACCOUNT OF THE COMMISSION PAID TO MKM FINSEC (P) LTD. FOR OBTAI NING ACCOMMODATION ENTRIES. 3. THE LD. CIT(APPEALS) UPHELD THE ACTION REGAR DING ISSUE OF NOTICE U/S 148 BY SAYING THAT THERE WAS PRIMA FACIE E VIDENCE BEFORE THE AO TO COME TO THE CONCLUSION THAT THE INCOME HAD ESCAPED ASSESSMENT. HOWEVER, ITA NO. 903(DEL)/2011 3 IN REGARD TO THE ADDITION, HE CONSIDERED THE EX PLANATION OF THE ASSESSEE THAT THE SHARES WERE PURCHASED IN PAST, SHOWN I N THE ACCOUNT, THE SHARES WERE SOLD PERIODICALLY AND ALL THE SHARES OF S ARASWATI ACQUIRED EARLIER WERE SOLD IN THIS YEAR. THUS, THERE WAS NOTHING IN THE TRANSACTIONS TO SHOW THAT THE RECEIPT OF SALE PROCEEDS WAS IN T HE NATURE OF ACCOMMODATION ENTRIES. THUS, BOTH THE ADDITIONS WERE DELETED. 4. BEFORE US, THE LD. DR REFERRED TO THE FINDINGS OF THE AO AND THE LD. CIT(APPEALS). IT IS SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO BRING ANY EVIDENCE ON RECORD REGARDING SALE OF SHARES. E VEN THE BROKERS NOTE HAS NOT BEEN PLACED ON RECORD. THEREFORE, IT CANNOT BE SAID THAT THE MONEY CREDITED IN THE BOOKS REPRESENTS THE SALE PROCEED S. IN ABSENCE OF ANY OTHER EXPLANATION, THE NATURE AND SOURCE OF THE MONEY STANDS UNEXPLAINED AND THE PROVISION CONTAINED IN SECTION 68 IS APPLICAB LE. 4.1 ON THE OTHER HAND, THE LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE SHARES WERE ACQUIRED IN PAST. 3500 SHARES OF ASSAM WERE SOLD IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 1998-99 AND 4500 SHARES IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2001-02. IN THIS YEAR, 2200 SHARES WERE SOLD AND THE BALANCE NUMBER OF SHARES ARE SHOWN IN THE BALANCE- ITA NO. 903(DEL)/2011 4 SHEET OF THIS YEAR. SIMILARLY, 80,000 SHARES OF SARASWATI WERE PURCHASED IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2000-01, ALL OF WHICH WERE SOLD IN THIS YEAR FOR A SUM OF RS. 8.00 LA KH. THESE FACTS ARE ASCERTAINABLE FROM PAGE NOS. 63 AND 88 OF THE PA PER BOOK. THEREFORE, IT IS ARGUED THAT THE TRANSACTIONS CANNOT BE SAID TO BE IN THE NATURE OF ACCOMMODATION ENTRIES. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE DETAILS PLACED IN THE PAPER BOO K SHOW THAT THE SHARES OF THE TWO COMPANIES WERE PURCHASED IN EARLIER YEAR S. THE SHARES OF ASSAM WERE SOLD PERIODICALLY AND 2200 SHARES OF THIS COMPANY WERE SOLD IN THIS YEAR. THE SHARES OF SARASWATI WERE SOLD IN ONE G O IN THIS YEAR. THE CASE OF THE ASSESSEE IS THAT THE PURCHASES AND SALES HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT. THESE BOOKS HAVE BEEN MAINTA INED IN ACCORDANCE WITH THE PROVISIONS OF COMPANIES ACT. THE ONLY OBJECTIO N OF THE AO IS THAT THE ASSESSEE HAD FAILED TO PRODUCE BROKERS NOTE FRO M MKM FINSEC (P) LTD., A COMPANY WHICH HAS INDULGED IN FURNISHING ACCO MMODATION ENTRIES OF VARIOUS KINDS TO A LARGE NUMBER OF PERSONS. A CCORDING TO US, THIS FAILURE DOES NOT DISPLACE THE ENTRIES MADE IN THE BOOKS OF ACCOUNT. AS A MATTER OF FACT, SHARES OF ASSAM WERE SOLD IN EARLIE R YEAR ALSO BUT NO SUCH ITA NO. 903(DEL)/2011 5 ACTION WAS TAKEN BY THE REVENUE. THEREFORE, IN A BSENCE OF ANY FIRM EVIDENCE ON RECORD CONTRARY TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT, THE BALANCE OF CONVENIENCE IS IN FAVOUR OF HOLDING THAT THE ENTRIES REPRESENT SALE PROCEEDS OF 2200 SHARES OF ASSAM AND 800 00 SHARES OF SARASWATI. 6. IN THE RESULT, THE APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA 14/10/2011 COPY OF THE ORDER FORWARDED TO:- M/S MUNDRA CREDIT & INVESTMENT (P) LTD. NEW DELH I. ITO, WARD 5(4), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.