Ordinary Financial Services Pvt. Ltd., New Delhi V. ITO, Ward- 19(2), New Delhi

ITA 97/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7577 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 04-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: E NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI K.N. CHARY, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.97/DEL/2018 ASSESSMENT YEAR: 2013-14 ORDINARY FINANCIAL SERVICES PVT. LTD., 13/34, W.E.A. KAROL BAGH, NEW DELHI VS. ITO, WARD-19(2), NEW DELHI PAN :AAACO6367K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER DATED 07/09/2017 PASSED BY THE LEARNED CIT (APPEALS )-38, DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 201 3-14, RAISING FOLLOWING GROUNDS: 1. THAT THE CIT(A) ERRED IN UPHOLDING ADDITION OF R S.24,22,248/- MADE BY THE ASSESSING OFFICER I.E. 2% OF RS. 12,11, 12,443/- WITHOUT CORRECTLY APPRECIATING THE FACTS OF THE CAS E AND THE SUBMISSION MADE BEFORE CIT(A). 2. THAT THE CIT(A) FAILED TO APPRECIATE THAT THE AL LEGATION MADE BY THE ASSESSING OFFICER THAT THE TRANSACTIONS RELATIN G TO SALE AND APPELLANT BY SH. V.P. GUPTA, ADV. SH. ANUNAV GUPTA, ADV. RESPONDENT BY SH. GAURAV PUNDIR, SR.DR DATE OF HEARING 16.08.2021 DATE F PRONOUNCEMENT 27.08.2021 2 ITA NO.97/DEL/2018 PURCHASE OF SHARES WERE IN THE NATURE OF ACCOMMODAT ION ENTRY IS WITHOUT ANY BASIS AND ANY EVIDENCE AND WAS ONLY HIS HYPOTHETICAL PRESUMPTION. 3. THAT THE CIT(A) FAILED TO APPRECIATE THAT THE F ACTUAL OBSERVATION MADE BY THE ASSESSING OFFICER THAT SHARES PURCHASED WERE SOLD ON THE FOLLOWING DAY AT VERY LOW RATE IN ORDER TO B UY LOSS IS ALSO NOT CORRECT. 4. THAT THE CIT(A)/AO ALSO ERRED IN REFERRING TO DE CISIONS OF SUPREME COURT / PUNJAB & HARYANA HIGH COURT WHICH ARE NOT R ELEVANT TO THE FACTS OF THE CASE. 5. THAT THE ORDERS PASSED BY THE ASSESSING OFFICER AND CIT(A) ARE BAD IN LAW AND THEREFORE, DESERVE TO BE QUASHED. 6. THAT THE APPELLANT COMPANY CRAVES LEAVE TO ALTER , AMEND, VARY AND/OR ADD ANY OF THE GROUNDS OF APPEAL AT ANY TIME HEREIN AFTER. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESSME NT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T THE ACT) WAS COMPLETED BY THE ASSESSING OFFICER ON 21/03/2016 HO LDING THE ASSESSEE AS ENGAGED IN PROVIDING ACCOMMODATION ENTR IES. THE ASSESSING OFFICER ASSESSED INCOME FOR COMMISSION EA RNED AT THE RATE OF 2% ON SALE TRANSACTION OF 12,11,12,443/-. THE LD. CIT(A) UPHELD THE RATE OF THE COMMISSION ASSESSED BY THE A SSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS BEFORE THE TRIB UNAL, RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONF ERENCING FACILITIES AND FILED DOCUMENTS AND CASES RELIED UPO N THROUGH EMAIL. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTE D THAT ASSESSEE IS ONE OF THE MEMBERS OF THE TARUN GOYAL G ROUP, WHEREIN THE TRIBUNAL IN ITA NOS. 6507/2015 & ORS. ( ADONIS FINANCIAL SERVICES PVT. LTD. & ORS.), VIDE ORDER DA TED 23.01.2019, RESTRICTED THE RATE OF THE COMMISSION ON ACCOMMODAT ION ENTRIES AT THE RATE OF 0.50% OR 0.50 PAISE OF THE SALE TRAN SACTION. ACCORDINGLY, HE SUBMITTED THAT IN THE CASE OF THE A SSESSEE ALSO RATE OF THE COMMISSION MAY BE DETERMINED ACCORDINGL Y. 3 ITA NO.97/DEL/2018 4. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT ASSESSING OFFICER HAS INVOKED THE RATE OF 2.25% BAS ED ON THE SEIZED DOCUMENT WHEREAS THE TRIBUNAL HAS APPLIED TH E RATE OF COMMISSIONER ARBITRARILY WITHOUT ANY DOCUMENTARY EV IDENCES. 5. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE. THE ONLY DISPUTE IS REGARDING INVOKING OF RATE OF COMMISSION BY THE ASSESSING OFFICER. BEFORE THE ASS ESSING OFFICER, THE ASSESSEE DULY ADMITTED THAT IT IS A PART OF THE TARUN GOYAL GROUP OF THE COMPANIES AND THIS FACT HAS NOT BEEN DISPUTED EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED D R. THE TRIBUNAL IN ITA NO. 6507/2015 & ORS. (SUPRA), AFTER CONSIDERING THE STATEMENT OF TARUN GOYAL UNDER SECTION 132(4) O F THE ACT, HAS RESTRICTED THE RATE OF THE COMMISSION TO 0.50% OBSE RVING AS UNDER: 8. THERE IS NO DISPUTE THAT THE APPELLANTS WERE EN GAGED IN CLANDESTINE ACTIVITIES IN THE ILLEGAL BUSINESS OF P ROVIDING ACCOMMODATION ENTRIES TO THE BENEFICIARIES. THE BEN EFICIARIES PURCHASED CHEQUES FROM THE APPELLANTS BY PAYING CAS H. WE ARE OF THE CONSIDERED OPINION THAT IN SUCH ILLEGAL ACTIVIT IES, THERE CANNOT, AND SHOULD NOT BE ANY PRECEDENCE. HOWEVER, THE ASSE SSING OFFICER HAS REFERRED TO SOME LOOSE SHEETS ON WHICH THE PERC ENTAGE WAS MENTIONED AT 1.69% TO 2.5%. 9. THE EVIDENTIARY VALUE OF LOOSE SHEETS HAVE BEEN CONSIDERED AT LENGTH BY THE HON'BLE SUPREME COURT IN THE CASE OF CBI VS. V.S. SHUKLA [1998] TAXMANN.COM 2155. 10. IN THE CASE OF V.C. SHUKLA [SUPRA] THE HON'BLE SUPREME COURT HELD AS UNDER: 'A CONSPECTUS OF THE ABOVE DECISIONS MAKES IT EVIDE NT THAT EVEN CORRECT AND AUTHENTIC ENTRIES IN BOOKS OF ACCO UNT CANNOT WITHOUT INDEPENDENT EVIDENCE OF THEIR TRUSTWORTHINE SS, FIX A LIABILITY UPON A PERSON. KEEPING IN VIEW THE ABOVE PRINCIPLES, EVEN IF WE PROCEED ON THE ASSUMPTION THAT THE ENTRI ES MADE IN MR 71/91 ARE CORRECT AND THE ENTRIES IN THE OTHER B OOKS AND LOOSE SHEETS WHICH WE HAVE ALREADY FOUND TO BE NOT ADMISSIBLE IN EVIDENCE UNDER SECTION 34) ARE ADMISS IBLE 4 ITA NO.97/DEL/2018 UNDER SECTION 9 OF THE ACT TO SUPPORT AN INFERENCE ABOUT THE FORMERS' CORRECTNESS STILL THOSE ENTRIES WOULD NOT BE SUFFICIENT TO CHARGE SHRI ADVANI AND SHRI SHUKLA WITH THE ACCU SATIONS LEVELLED AGAINST THEM FOR THERE IS NOT AN IOTA OF I NDEPENDENT EVIDENCE IN SUPPORT THEREOF. IN THAT VIEW OF THE MA TTER WE NEED NOT DISCUSS, DELEVE INTO OR DECIDE UPON THE CONTENT ION RAISED BY MR. ALTAF AHMED IN THIS REGARD. SUFFICE IT TO SA Y THAT THE STATEMENTS OF THE FOR WITNESSES, WHO HAVE ADMITTED RECEIPTS OF THE PAYMENTS AS SHOWN AGAINST THEM IN MR 71/91, CAN AT BEST BE PROOF OF RELIABILITY OF THE ENTRIES SO FAR THEY ARE CONCERNED AND NOT OTHERS. IN OTHER WORDS, THE STATE MENTS OF THE ABOVE WITNESSES CANNOT BE INDEPENDENT EVIDENCE UNDER SECTION 34 AS AGAINST THE ABOVE TWO RESPONDENTS. SO FAR AS SHRI ADVANI IS CONCERNED SECTION 34 WOULD NOT COME IN AID OF THE PROSECUTION FOR ANOTHER REASON ALSO. ACCORDING TO THE PROSECUTION CASE ITSELF HIS NAME FINDS PLACE ONLY I N ONE OF THE LOOSE SHEETS (SHEET NO. 8) AND NOT IN MR 71/91. RES ULTANTLY, IN VIEW OF OUR EARLIER DISCUSSION, SECTION 34 CANNO T AT ALL BE PRESSED INTO SERVICE AGAINST HIM.' 11. SIMILAR VIEW WAS TAKEN BY THE HON'BLE SUPREME C OURT IN THE CASE OF COMMON CAUSE, A REGISTERED SOCIETY VS. UOI 394 ITR 220. 12. IN THE LIGHT OF THE RATIO LAID DOWN BY THE HON' BLE SUPREME COURT [SUPRA], NOTINGS FOUND IN THE LOOSE SHEETS WOULD NO T DO ANY GOOD TO THE REVENUE. THE ASSESSEE HAS CLAIMED 25 PAISE OR 0 .25% ON THE STRENGTH OF THE STATEMENT OF KINGPIN SHRI TARUN GOY AL, WHO IN HIS STATEMENT RECORDED UNDER OATH U/S 132(4) OF THE INC OME TAX ACT, 1961 HAS CATEGORICALLY STATED THAT THE RATE OF COMM ISSION CHARGED ON ACCOMMODATION ENTRIES PROVIDED THROUGH VARIOUS C OMPANIES WAS 0.25%. 13. HOWEVER, THE STATEMENT OF SHRI TARUN GOYAL RECO RDED U/S 132(4) OF THE ACT CAN BE A GOOD PIECE OF EVIDENCE IN THE C ASE OF SHRI TARUN GOYAL ONLY. 14. THE ID. COUNSEL FOR THE ASSESSEE ALSO RELIED HE AVILY ON VARIOUS DECISIONS OF THE CO-ORDINATE BENCH WHEREIN THE TRIB UNAL HAS ADOPTED RATE RANGING FROM 0.15 PAISE TO 0.50 PAISE I.E 0.15 % TO 0.50%. 15. AS MENTIONED ELSEWHERE, IN SUCH ILLEGAL ACTIVIT IES, THERE CANNOT BE ANY PRECEDENCE AND THE RATE VARIES FROM FACTS OF EACH CASE. 16. TO PUT AN END TO THE LITIGATION AND IN THE INTE REST OF JUSTICE AND FAIR PLAY, IN OUR CONSIDERED OPINION, 0.50 PAISE OR 0.50% SHOULD BE TAKEN AS THE REASONABLE RATE OF PROFIT/COMMISSION I N SUCH CLANDESTINE ACTIVITIES. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICERS TO ADOPT 0.50% OR 0.50 PAISE AND COMPUTE THE PROFIT ACCORDINGLY, 5 ITA NO.97/DEL/2018 17. WE ARE OF THE OPINION THAT THERE CANNOT BE ANY PROFIT ELEMENT IN INTRA-GROUP TRANSACTIONS. WE, THEREFORE, DIRECT THE ASSESSING OFFICERS TO CONSIDER THE TRANSACTIONS WITH OUTSIDE PARTIES O NLY AND THEN COMPUTE THE PROFIT. 5.1 THE ASSESSEE BEING A COMPANY OF THE TARUN GOYAL G ROUP OF THE COMPANIES, RESPECTFULLY FOLLOWING THE FINDING O F THE TRIBUNAL (SUPRA), WE RESTRICT THE RATE OF THE COMMISSION ASS ESSED BY THE ASSESSING OFFICER TO 0.50 % OF THE TRANSACTIONS CAR RIED OUT BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. THE GROUN D OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWE D. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2021. SD/- SD/- (K.N. CHARY) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH AUGUST, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI