M/s Nicky Construction Pvt. Ltd., New Delhi V. ITO, New Delhi

MA 483/DEL/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6391 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2001-2002
• Appeal Filed On: 27-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Reasonable cause; Accommodation entries
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : FRIDAY : NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER M.A NO. 483/DEL/2010 (ITA NO.3858/DEL/09) ASSESSMENT YEAR : 2001-02 NICKY CONSTRUCTION PVT. LTD., M-75, GREATER KAILASH, PART-1, NEW DELHI. PAN : AAACN2117Q VS. ITO, WARD 13 (2), ROOM NO.338, CR BLDG., NEW DELHI. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI VED JAIN, CA (POWER OF ATTORNEY NOT FILED) RESPONDENT BY : SHRI A.K. MONGA, SR. DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: VIDE MISCELLANEOUS APPLICATION FILED AS ABOVE, THE ASSE SSEE HAS SOUGHT RECALL OF AN EX PARTE ORDER PASSED BY THE TRIBU NAL DATED 19 TH MARCH, 2010 IN ITA NO.3858/DEL/2009. 2. THE DEPARTMENT IN THE AFOREMENTIONED APPEAL WAS A GGRIEVED BY THE DELETION OF A SUM OF ` 28 LAC AND ` 70,000/- AND , HENCE, FILED THE APPEAL AGAINST THE ORDER OF THE CIT (A). THE NOTIC E OF HEARING OF THE AFOREMENTIONED APPEAL ON 3 RD FEBRUARY, 2010 WAS DULY SERVED ON THE ASSESSEE. HOWEVER, ON THE FIXED DATE OF HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. IT IS IN THIS MANNER, THE SAID AP PEAL WAS HEARD ON 3 RD FEBRUARY, 2010 AFTER RECORDING THE FACTS IN PARA 2 THAT NOTICE OF MA NO.483/DEL/2010 2 HEARING WAS SENT TO THE ASSESSEE AND IT HAS BEEN SERVED AS P ER ACKNOWLEDGEMENT PLACED ON RECORD. THE ORDER HAS BEE N PASSED ON MERITS AFTER CONSIDERING THE MATERIAL AVAILABLE ON RE CORD. 3. IT WAS NOTICED THAT THE ASSESSEE HAD ISSUED 11200 EQUIT Y SHARES OF FACE VALUE OF `100 @ ` 250 PER SHARE AND, THUS, A PREMIUM OF ` 150 PER SHARE WAS CHARGED. THE APPLICATIONS OF ` 5 LAC EA CH WERE RECEIVED FROM THE FIVE PARTIES LISTED IN PARA 4 OF THE AFOREME NTIONED ORDER. IT WAS THE ALLEGATION OF THE ASSESSING OFFICER THAT THE SHAR E APPLICATION MONEY BELONGED TO PRADEEP KUMAR JINDAL GROUP OF ENT RY OPERATORS. THE SAID SHRI PRADEEP KUMAR JINDAL HAD GIVEN A SWORN STATEMENT UNDER SECTION 131 BEFORE THE ADDL. DIRECTOR OF INCOME-TAX (INV.), UNIT-I, NEW DELHI WHICH WAS RECORDED ON 15 TH APRIL, 2004 IN WHICH HE HAD ADMITTED THAT THE COMPANIES THROUGH WHOM THE SHARE APPLICATION MONEY WAS PAID WERE NOT CARRYING ON ACTUAL BUSINESS ACTIVITY AND NO BOOKS OF ACCOUNTS WERE MAINTAINED. HE ALSO ADMITTED THAT THRO UGH THE MEDIUM OF ALL THESE COMPANIES, HE IS ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES. THE DEPOSITS IN THE BANK ACCOU NTS FROM WHERE THE SHARE APPLICATION MONEY WAS PAID, ACTUALLY BELONGED TO THE PERSON APPROACHING THEM FOR TAKING ACCOMMODATION ENT RIES. THOSE BANK ACCOUNTS EXISTING IN THEIR NAMES HAVE BEEN USED ON LY AS A CONDUIT FOR THE PURPOSE OF ARRANGING ACCOMMODATION E NTRIES FOR OTHERS IN THE GARB OF SHARE CAPITAL. TO EXAMINE THESE FACTS, THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 ON 7 TH AUGUST, 2008 TO THE PRINCIPAL OFFICERS OF THOSE COMPANIES REQUESTING THEM TO APPEAR P ERSONALLY ON 18 TH AUGUST, 2008. THE POSITION OF SENDING SUMMONS, ETC. WA S ALSO TABULATED AND ARE DESCRIBED IN PARA 7 OF THE ORDER. THE ASSESSEE WAS PROVIDED WITH ALL THE INFORMATION COLLECTED BY THE ASSESSING OFFICER ALONG WITH THE COPY OF SWORN STATEMENT OF SHRI PRADEE P KUMAR JINDAL. MA NO.483/DEL/2010 3 4. IT WAS NOTICED BY THE ASSESSING OFFICER THAT WITHIN A SHORT SPAN OF PERIOD, THE SHARES SOLD WERE ALSO BOUGHT BACK BY THE PR OMOTER DIRECTORS OF THE ASSESSEE COMPANY @ ` 100 PER SHARE AND T HESE PARTICULARS WERE ALSO DESCRIBED BY THE ASSESSING OFFICER I N THE ASSESSMENT ORDER IN A CHART AND, IN THESE CIRCUMSTANCES, T HE ASSESSING OFFICER HAD COME TO THE CONCLUSION THAT THE INVESTOR S WHO HAD PURCHASED THOSE SHARES AT A HUGE PREMIUM HAD SHORTLY TRA NSFERRED TO THE PROMOTERS AT A PRICE MUCH BELOW THE ISSUE PRICE IT SELF AND, THUS, THE ASSESSING OFFICER HAD ARRIVED AT A CONCLUSION THAT T HERE WAS A DESIGN BEHIND THE TRANSACTION. 5. THE CIT (A), WITHOUT CONSIDERING THE FACTS STATED B Y THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING ISSUE OF SHARES AT PREMIUM AND BOUGHT BACK BY THE DIRECTORS OF THE ASSESSEE COMPANY HAD SIMPLY DELETED THE ADDITION. ALL THESE FACTS HAVE BEEN NOTED BY THE TRIBUNAL IN ITS ORDER DATED 19 TH OCTOBER, 2010 AND THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE CIT (A) HAS FAILED TO TAKE NOTE OF THE FACTS THAT SHARES WERE ISSUED AT A HIGH PREMIUM AND IN T HE VERY BEGINNING OF THE NEXT FINANCIAL YEAR THEY WERE BOUG HT BACK BY THE DIRECTORS OF THE COMPANY AT A MERE SUM OF ` 100 PER SH ARE AGAINST THE ALLOTTED AMOUNT OF ` 250 PER SHARE. THE TRIBUNAL AL SO NOTICED THAT THE ASSESSING OFFICER HAD MATERIAL ON RECORD ON THE BASIS OF WHICH IT COULD BE SAID THAT THE SHARE APPLICANTS WERE ADOPTING A MODU S OPERANDI TO CARRY OUT THE BUSINESS OF ACCOMMODATION ENTRIES. HOWEV ER, KEEPING IN VIEW THE INTEREST OF JUSTICE AND TO PROVIDE THE ASSESSEE ONE MORE OPPORTUNITY TO PRODUCE THE SO-CALLED SHARE APPLICANTS, THE ISSUE WAS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH A DI RECTION TO PROVIDE THE ASSESSEE A REASONABLE OPPORTUNITY IN THIS REGARD AND TO RE- ADJUDICATE THE SAME AS PER PROVISIONS OF LAW. IN THIS M ANNER, THE AFOREMENTIONED APPEAL WAS DISPOSED OF BY ALLOWING THE APPEAL FILED BY THE REVENUE FOR STATISTICAL PURPOSES. MA NO.483/DEL/2010 4 6. AGAINST THE AFOREMENTIONED ORDER OF THE TRIBUNAL, IT IS THE CASE OF LEARNED AR THAT HE WAS PREVENTED BY REASONABLE CAUSE F ROM APPEARING ON THE FIXED DATE OF HEARING. IN THE APPLICATION A S WELL AS IN THE AFFIDAVIT FILED BY LEARNED AR IT HAS BEEN MENTIONED THAT HE WAS ENGAGED BY THE ASSESSEE COMPANY TO APPEAR AND ARGUE THE APPEAL AND HE HAD DULY PREPARED THE CASE ALONG WITH THE EVI DENCES AND PAPER BOOK WHICH WERE TO BE FILED BEFORE THE TRIBUNAL. T HE APPLICANT, ON RECEIPT OF NOTICE OF HEARING OF APPEAL, HAD SENT THE SAME TO THE OFFICE OF LEARNED AR THROUGH FAX AND AS PER NOTICE RECEIVED THROUGH FAX BY HIS OFFICE, THE DATE WAS NOTED AS 29 TH MARCH, 2010 AND ON 29 TH MARCH, 2010 IT CAME TO HIS NOTICE THAT THE APPEAL HAS ALREAD Y BEEN HEARD EX PARTE. UPON INQUIRY, IT CAME TO HIS NOTICE THAT NOT ICE RECEIVED BY FAX WAS NOT CLEAR AND THE DATE OF HEARING WAS NOTED FOR 2 9 TH MARCH, 2010 WAS NOT CORRECT AND BECAUSE OF THE INCORRECT NOTING O F 29 TH MARCH, 2010, THERE WAS NON-APPEARANCE ON BEHALF OF THE ASSESSEE ON THE FIXED DATE OF HEARING AND HE HAS ACCEPTED THAT DUE T O HIS ERROR IN READING THE FAX MESSAGE, THERE WAS A DEFAULT OF NON-AP PEARANCE AND THAT DEFAULT WAS ABSOLUTELY UNINTENTIONAL. 7. HOWEVER, DURING THE COURSE OF HEARING OF THIS MISC. APPLICATION, IT WAS NOTICED THAT THERE WAS NO POWER OF ATTORNEY EXISTI NG ON THE RECORD IN FAVOUR OF LD. AR. EVEN FOR HEARING OF MISC. APPL ICATION NO POWER OF ATTORNEY HAS BEEN FILED. THUS, LEARNED COUNSEL ALSO DO ES NOT HAVE POWER OF ATTORNEY WHILE REPRESENTING THE MISC. APPLIC ATION. THE FACTS STATED IN THE APPLICATION AS WELL AS IN THE AFFIDAVIT ARE ALSO NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE TO SHOW THAT ON WHAT DATE SUCH FAX WAS RECEIVED AND HOW THE SAID DATE COULD BE R EAD AS 29 TH MARCH, 2010. THE FIXED DATE OF HEARING WAS 3 RD FEBRUARY, 2010 WHICH IN NO WAY CAN BE READ AS 29 TH MARCH, 2010. MA NO.483/DEL/2010 5 8. DURING THE COURSE OF HEARING LEARNED AR REFERRED TO RULE 25 OF THE INCOME-TAX APPELLATE RULES, THE PROVISO OF WHICH DESCRIBE THAT WHERE AN APPEAL HAS BEEN HEARD EX PARTE FOR THE DEFA ULT OF RESPONDENT AND THE RESPONDENT APPEARS AFTERWARDS AND SATISFIES THE TRIBUNAL THAT THERE WAS SUFFICIENT CAUSE FOR HIS NON-APPEARANCE WHEN THE APPEAL WAS CALLED FOR HEARING, THE TRIBUNAL SHALL MAKE AN ORDER SETTING ASIDE THE EX PARTE ORDER AND RESTORING THE APPEAL. READING FR OM THE SAID PROVISO, IT WAS SUBMITTED BY HIM THAT THERE WAS SUFFICIE NT CAUSE FOR NON-APPEARANCE WHEN THE APPEAL WAS CALLED FOR HEARIN G, THEREFORE, THE EX PARTE ORDER SHOULD BE RECALLED. 9. WE HAVE CAREFULLY GONE THROUGH THESE SUBMISSIONS OF L EARNED AR. ACCORDING TO THE PROVISO, THERE SHOULD BE A SATISF ACTION OF THE TRIBUNAL THAT THERE WAS SUFFICIENT CAUSE FOR NON-APPEA RANCE OF THE RESPONDENT. NO MATERIAL WHATSOEVER HAS BEEN PRODUCED BEFORE US TO SUBSTANTIATE THE CONTENTS EITHER OF THE APPLICATION OR OF THE AFFIDAVIT WHICH IS THE PRIMARY REQUIREMENT TO ARRIVE AT ANY SAT ISFACTION AS MENTIONED IN PROVISO TO RULE 25. IT HAS ALREADY BEEN MENTIONED THAT LEARNED AR DOES NOT PRODUCE ANY POWER OF ATTORNEY TI LL EVEN THE DATE OF HEARING OF PRESENT MISC. APPLICATION. 10. MOREOVER, WHAT HAS BEEN DONE BY THE TRIBUNAL IS T HAT THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF ASSESSING OFFICER A FTER RECORDING A FINDING THAT LEARNED CIT (A) HAS WRONGLY DELETED THE ADDITION AND THE ASSESSING OFFICER HAS BEEN DIRECTED TO GIVE A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEN TO RE-ADJUDICATE THE M ATTER IN ACCORDANCE WITH THE LAW. IN ANY CASE, THE ASSESSEE WILL BE HAVING AMPLE OPPORTUNITY TO REPRESENT ITS CASE FIRST BEFORE TH E ASSESSING OFFICER AND THEN BEFORE CIT (A) AND SO ON AND, IN TH IS MANNER, NO PREJUDICE HAS BEEN DONE TO THE ASSESSEE WHEN THE TRIBUNA L HAS PASSED MA NO.483/DEL/2010 6 A DETAILED ORDER GIVING REASONS FOR RESTORING THE APPE AL TO THE FILE OF THE ASSESSING OFFICER. 11. IN VIEW OF THE ABOVE DISCUSSION, THE MISC. APPLICAT ION FILED BY THE LEARNED AR IS DISMISSED. 12. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.04.20 11. SD/- SD/- [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED, 21.04.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES