Kalinga Conduits & Electricables P.Ltd, New Delhi V. ITO, Ward-14(1), New Delhi

ITA 9350/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2795 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Revision of order; Accommodation entries; Tax effect; Onus to prove; Reassessment proceedings; Set aside
• Section: 69C; 234B; 133(6); 68; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1 NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.9350/DEL/2019 ASSESSMENT YEAR : 2010-11 KALINGA CONDUITS & ELECTRICABLES P. LTD. H.NO.81-B, ROAD NO.41, PUNJABI BAGH, NEW DELHI VS. ITO WARD 14 (1) NEW DELHI PAN NO. AACCK5284H (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJEEV SABHARWAL, FCA DEPARTMENT BY : SH. R.K. GUPTA, SR. DR DATE OF HEARING : 10-06-2021 DATE OF PRONOUNCEMENT : 10-06-2021 O R D E R PER O.P.KANT, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 30/09/2019 PASSED BY THE LD. CIT(APPEALS)-5, NEW DE LHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2010-11 RAISING FOLLOWING GROUNDS: GROUND NO. GROUNDS OF APPEAL TAX EFFECT 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) - 5, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DETERMINATION OF TOTAL INCOME OF THE APPELLANT COMPANY AT RS. 40,85,940/- AS AGAINST DECLARED INCOME OF RS. 5,940/- IN AN ORDER OF ASSESSMENT 28.11.2017 PASSED UNDER SECTION 263/147/143(3) OF THE ACT. 2 THAT THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN AGGREGATE ADDITIO N OF RS. 40,00,000/- REPRESENTING SUMS RECEIVED FROM THE FOLLOWING SHARE HOLDERS AS SHARE CAPITAL AND ERRONEOUSLY HELD AS UNEXPLAINED CASH CREDITS UN DER SECTION 68 OF T HE ACT: SR. NO. NAME OF THE SHAREHOLDER AMOUNT (IN RS.) I) M/S VICTORY SOFTWARE (P) LTD. 1 0,00,000 10,00,000 II) M/S ZENITH AUTOMOTIVE (P) LTD. 10,00,000 III) M/S HUMTUM MARKETING (P) LTD. 10,00,000 TOTAL 40,00,000 2.1 THAT WHILE SUSTAINING THE AFORESAID ADDITION THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS COMPLETELY OVERLOOKED THAT THERE WAS NO ADVERSE MATERIAL BROUGHT ON RECORD BY THE LEARNED ASSESSING OFFICER TO ASSUME THAT CREDITS BY WAY OF SHARE CAPITAL REPRESEN TS UNEXPLAINED CASH CREDIT IN TERMS OF SECTION 68 OF THE ACT. LINKED TO GROUND NO. 2 2.2 THAT WHILE SUSTAINING THE AFORESAID ADDITION THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT APPELLANT HAS DULY DISCHARGED BURDEN OF PROOF IN TERMS OF SECTION 68 O F THE ACT. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT THE SHAREHOLDERS WERE CORPORATE ENT ITIES, DULY ASSESSED TO TAX AND HAD SUBSCRIBED TO SHARE-CAPITAL THROUGH BAN KING CHANNELS AND SUPPORTED BY NECESSARY DOCUMENTS AND THEREFORE ONCE SUCH SHAREHOLDERS WERE IDENTIFIABLE COMPANIES, SHARE CAPITAL RECEIVED COULD NOT IN LAW OR ON FACT BE BROUGHT TO TAX U/S 68 OF THE ACT. 2.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS F AILED TO APPRECIATE THAT ALLEGED NON- COMPLIANCE TO NOTICE U/S 133(6) OF THE ACT BY SUBSCRIBER TO SHARE CAPITAL CANNOT BE MADE A BASIS TO DRAW ADVERSE INFERENCE AGAINST APPELLANT. 2.5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT THE INSPECTORS REPORT IS NOT VALID EVIDENCE AND CANNOT BE RELIED TO DRAW AN ADVERSE INFERENCE AGAINST APPELLA NT. 2.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT THE LEARNED ASSESSING OFFICER HAS PROCEEDED TO MAKE THE ADDITION OF RS. 40,00,000/- REPRESENTING SHARE CAPITAL ON THE BASIS OF ALLEGED EVIDENCE GATHERED IN THE COURSE OF SEARCH OF ONE SH RI S. K. JAIN WHICH ARE NEITHER CONFRONTED TO APPELLANT DURING ASSESSMENT P ROCEEDINGS NOR APPELLANT IS BEING PROVIDED ANY OPPORTUNITY OF CROSS- EXAMINATION OF PERSONS ALLEGED TO BE ACCOMMODATION ENTRY PROVIDERS; EVEN NO NEXUS IS ESTABLISHED OF SUCH ENTRY PROVIDERS WITH SUBSCRIBERS OF SHARE CAPITAL I N THE APPELLANT COMPANY. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING AN ADDITION OF RS. 80 ,000/- ON ACCOUNT OF ALLEGED COMMISSION PAID TO THE ENTRY PROVIDER IN CA SH FOR OBTAINING ACCOMMODATION ENTRIES AND HELD AS UNEXPLAINED EXPEN DITURE U/S 69C OF THE ACT. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT AN APPEAL AGAINST AN ORDER PASSED O N 23.03.2017 U/S 263 OF THE ACT IS BEING PENDING BEFORE HONBLE INCOME TAX APPELLATE TRIBUNAL AND THEREFORE ACTION OF DISMISSAL OF APPEAL AGAINST IMPUGNED ORDER DATED 28.11.2017 PASSED U/S 148 OF THE ACT PASSED IN CONS EQUENCE THEREOF, IS PREMATURE AND THUS UNTENABLE. 5 THAT BOTH THE AUTHORITIES BELOW HAVE FRAMED THE IMP UGNED ORDER WITHOUT GRANTING SUFFICIENT PROPER OPPORTUNITY TO THE APPELLANT COMPANY AND THEREFORE THE SAME ARE CONTRARY TO PRINCIPLE OF NAT URAL JUSTICE AND HENCE VITIATED. 6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF INTEREST U/S 234B OF THE ACT , U/S 234B OF THE ACT, U/S 234C OF THE ACT AND U/S 234D O F THE ACT WHICH ARE NOT LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE CONSEQUENTIAL IN NATURE APPELLANT COMPANY. PRAYER IT IS THEREFORE, PRAYED THAT, IT BE HELD THAT ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) DESERVES TO BE QUASHED AS SUCH. IT BE FUR THER HELD THAT ADDITIONS MADE AND SUSTAINED BY THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) ALON GWITH INTEREST LEVIED BE DELETED AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 3. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED ON TH E DIRECTION OF THE COMMISSIONER OF INCOME-TAX, ISSUED UNDER SECTIO N 263 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), HOWEVER TH E INCOME-TAX APPELLATE TRIBUNAL ( IN SHORT THE TRIBUNAL) HAS S ET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX AND THEREFORE THE IMPUGNED ASSESSMENT ORDER IS RENDERED INFRUCTUOUS AND THUS A PPEAL IS RENDERED INFRUCTUOUS. 4. THE LD. DR COULD NOT CONTROVERT THE SUBMISSION O F THE LEARNED COUNSEL OF THE ASSESSEE. 5. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON RECORD . IN THIS CASE, THE ASSESSING OFFICER HAD PASSED ASSESSMENT ORDER U NDER SECTION 147/143(3) OF THE ACT ON 20/02/2015 AT THE RETURNED INCOME OF RS.5940/-. THE SAID ASSESSMENT ORDER WAS SET ASIDE BY THE LD. PRINCIPAL COMMISSIONER OF INCOME-TAX , DELHI-5, DEL HI ( IN SHORT THE PCIT ) VIDE HIS ORDER DATED 23/03/2017 UNDER SECTIO N 263 OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO REASSESS THE INCOME AS PER THE DIRECTIONS GIVEN IN SAID ORDER UNDER SECTION 26 3 OF THE ACT. IN COMPLIANCE TO THE DIRECTION OF THE PCIT, THE ASSESS ING OFFICER PASSED THE IMPUGNED ASSESSMENT ORDER ON 20/11/2017 AFTER MAKING ADDITION OF 40, 80,000 TO THE RETURNED INCOME. ON FURTHER APPEAL, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AND SUSTAINED THE ADDITIONS MADE BY THE ASSESSING OFFIC ER. 6. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE H AS REFERRED TO THE ORDER OF THE TRIBUNAL IN ITA NO. 3287/DEL/2017 IN THE CASE OF THE ASSESSEE ITSELF, IN THE APPEAL WHICH WAS PREFER RED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PCIT PASSED U NDER SECTION 263 OF THE ACT. THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE PCIT OBSERVING AS UNDER: 24. SO FAR AS THE DECISION RELIED ON BY LD. DR IN THE CASE OF DENIEL MERCHANTS (P) LTD. (SUPRA) IS CONCERNED, THE LD. DR COULD NOT CONTROVERT THE SUBMISSION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT NO ENQUIRY WAS CONDUCTED IN T HE SAID CASE WHEREAS IN THE CASE OF THE ASSESSEE ENQUI RIES WERE DULY CONDUCTED DURING THE REASSESSMENT PROCEEDINGS. THEREFORE, THE DECISION RELIED ON BY L D. DR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, TH E VARIOUS OTHER DECISIONS RELIED ON BY ID. DR ARE ALSO DISTIN GUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . WE FIND FROM A PERUSAL OF THE PAPER BOOK THAT THE ASSESSEE DURING THE COURSE OF REASSESSMENT PROCEEDING HAD FILED THE REQUISITE DETAILS AS CALLED FOR BY THE AO AND THE A SSESSING OFFICER AFTER CONSIDERING THE SAME COMPLETED THE ASSESSMENT WHICH IS IN CONSONANCE WITH THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXP ORTS PREVAILING AT THAT TIME. THEREFORE, IN VIEW OF OUR DISCUSSION IN THE PRECEDING PARAGRAPHS THE ORDER OF THE AO IN THE INSTANT CASE CANNOT BE HELD AS ERRONEOUS. SINCE FOR INVOKING JURISDICTION U/S, 263 THE TWIN CONDITIONS I.E. ORDER MUST BE ERRONEOUS AND THE ORDER MUST BE PREJUDICIAL TO THE INTEREST OF REVENUE MUST BE SATISFIED AND SINCE, WE HAVE HELD THAT THE ORDER CANNOT BE HELD TO BE ERRONEOUS SINCE THE VIEW OF THE AO IN ACCEPTING THE SHARE CAPITAL I S A PLAUSIBLE VIEW, THEREFORE, THE TWIN CONDITIONS ARE NOT SATISFIED. THEREFORE, THE LD. PCFI M OUR OPINION CO ULD NOT HAVE INVOKED JURISDICTION U/S. 263 OF THE IT ACT. W E, THEREFORE, SET ASIDE THE ORDER OF THE POT PASSED U/ S. 263 OF THE IT ACT AND THE GROUNDS RAISED BY THE ASSESSE D ARE ALLOWED. 7. WE FIND THAT THE ORDER OF THE PCIT UNDER SECTION 263 HAS BEEN SET ASIDE BY THE TRIBUNAL AND THEREFORE THE ASSESSM ENT ORDER DATED 28/11/2017 PASSED IN COMPLIANCE TO THE ORDER UNDER SECTION 263 OF THE ACT, HAS BEEN RENDERED INFRUCTUOUS. ONCE THE SA ID ASSESSMENT ORDER IS RENDERED INFRUCTUOUS, THE SUBSEQUENT PROCE EDINGS AGAINST THE SAID ORDER ARE ALSO RENDERED INFRUCTUOUS. IN VI EW OF THE FACTS, THE PRESENT APPEAL BEFORE US IS ALSO RENDERED INFRU CTUOUS AND ACCORDINGLY, WE DISMISS THE SAME. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.06.2021. SD/- SD/- (KUL BHARAT) (O.P KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10.06.2021 *NEHA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 22.06.2021 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER