Rajni Construction, V. DCIT, New Delhi

MA 83/DEL/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6913 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2002-2003
• Appeal Filed On: 08-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K AGARWAL
• Assessee Lawyers: Y KAKKAR
• Keywords: Unexplained cash credit; Bogus Share capital
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO.4085/DEL/10 ) ASSTT. YR: 2001-02 ACIT CIR. 5(1), VS. M/S K & S SECURITIES PVT. L TD., NEW DELHI. C-633, NEW FRIENDS COLONY, NEW DELHI. PAN/GIR NO. AAACK1251G AND C.O. NO. 338/DEL/10 ITA NO.4085/DEL/10 ) ASSTT. YR: 2001-02 ACIT CIR. 5(1), VS. M/S K & S SECURITIES PVT. L TD., NEW DELHI. C-633, NEW FRIENDS COLONY, NEW DELHI. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. Y. KAKKAR DR RESPONDENT BY: SHRI S.K. AGARWAL ADV. O R D E R PER R.P. TOLANI, J.M : THE REVENUE IS IN APPEAL AND THE ASSESSEE HAS FILED CROSS-OBJECTION AGAINST CIT(A)S ORDER DATED 30-6-2010 RELATING TO A.Y. 2001-02. BOTH THE MATTERS WERE TAKEN UP TOGETHER AND ARE BEING DISPOS ED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN REVENUES APPEAL FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONE OUS & CONTRARY TO FACTS & LAW. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 10,00,000/- MADE BY THE AO U/S 68 O F THE I.T. ACT BEING THE BOGUS SHARE APPLICATION MONEY. 2.1. THE LD. CIT(APPEALS) IGNORED THE FACTS THAT TH E ASSESSEE ADOPTED THE COLOURABLE DEVICE TO HIDE THE INTRODUCT ION OF ITS OWN MONEY I.E. ACCEPTED THE THIRD PARTY ACCOMMODATION ENTRY PROVIDERS CHEQUE IN THE GARB OF SHARE APPLICABLE MONEY. 3. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET C ONTENDS THAT THE REVENUES GROUND IS MISCONCEIVED INASMUCH AS THERE IS NO ISSUE AT ALL ABOUT THE SHARE APPLICATION MONEY. THE ASSESSEE IS A REGI STERED SHARE BROKER AND M/S MAFICO LEASING & CONSULTANTS PVT. LTD. IS ASSES SEES SUB BROKER. THERE BEING NO ISSUE OF SHARE APPLICATION, REVENUES GROU ND IS DEFECTIVE. LEARNED DR CONCEDES AND CONTENDS THAT GROUND NO. 2 SHALL BE READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 10,00,000/- MADE BY THE AO U/S 68 OF THE I.T. A CT. 3.1. BOTH THE PARTIES REQUESTED THAT THE MATTER MAY BE PROCEEDED WITH. AS MENTIONED ABOVE ASSESSEE IS A SHARE BROKER AND M/S MAFICO LEASING & CONSULTANTS PVT. LTD. IS SUB AGENT. ASSESSEE MAINTA INS A RUNNING ACCOUNT OF SUB-BROKER, WHICH IS PAGES AT PAGES 62 TO 78 OF THE PAPER BOOK. THE ENTRY AGAINST M/S MAFICO LEASING & CONSULTANTS PVT. LTD. IS PLACED AT PAGE 79 ONWARDS. AO ADDED THE AMOUNT AS AN UNEXPLAINED CASH CREDIT. THE CIT(A), 3 HOWEVER, AFTER CALLING THE REMAND REPORT DELETED TH E ADDITION BY HOLDING THAT IT WAS AN ACCOMMODATION ENTRY ARRANGEMENT AND ADDIT ION IF ANY CANNOT BE MADE IN THE HANDS OF THE ASSESSEE BY FOLLOWING OBSE RVATIONS: 3.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE ON BEHALF OF THE APPELLANT COMPANY, THE FINDINGS RECOR DED BY THE LD. AO, REMAND REPORT SUBMITTED IN THE COURSE OF AP PELLATE PROCEEDINGS AND DETAILED REPLIES FILED BY THE LD. C OUNSEL FOR THE ASSESSEE COMPANY. ON CONSIDERATION, I FIND THAT TH E LD. AO HA CONSPICUOUSLY ESCAPED TAKING COGNIZANCE OF THE FACT THAT THE AMOUNT OF RS. 10 LACS WAS RECEIVED BY THE APPELLANT COMPANY IN THE ACCOUNT OF M/S MAFICO LEASING AND CONSULTANT S PVT. LTD. AND THE SAME WAS DULY RECORDED IN THE BOOKS OF ACCO UNT. THE FACT THAT THE AMOUNT OF RS. 10 LACS WAS RECEIVED BY M/S MAFICO LEASING & CONSULTANTS PVT. LTD. AND NOT BY THE APPE LLANT COMPANY FROM M/S GANGA INFIN PVT. LTD. IS CLEARLY DEMONSTRATED BY THE FACT THAT DUE CONFIRMATIONS SUP PORTED BY DETAILED COPIES OF ACCOUNTS WERE FILED BY M/S MAFIC O LEASING & CONSULTANTS PVT. LTD. AND THE SAME WERE MADE AVAILA BLE TO THE AO VIDE APPELLANTS LETTER DATED 03-10-2008. HOWEVE R, UNFORTUNATELY, THE AO WAS SO OBSESSED BY THE THEORY OF ACCOMMODATION ENTRY THAT HE DID NOT APPLY HIS MIND AS TO WHO WAS THE PERSON WHO ARRANGED THIS ACCOMMODATION ENTR Y. THE CONCLUSION DRAWN BY THE AO THAT FOR OBTAINING THE C HEQUE OF RS. 10 LACS, THE BENEFICIARY HAD PAID THE EQUIVALEN T AMOUNT IN CASH TOGETHER WITH COMMISSION TO THE ENTRY PROVIDER , ITSELF GOES AGAINST HIS OWN FINDINGS, AS IT WAS NOT THE APPELLA NT COMPANY WHO WAS IN CONTACT WITH M/S GANGA INFIN PVT. LTD., RATHER THE AMOUNT IN QUESTION HAD COME FROM M/S MAFICO LEASING & CONSULTANTS PVT. LTD. IN THESE CIRCUMSTANCES, I AM OF THE CONSIDERED OPINION THAT THE ADDITION WAS TO BE MADE IN THE HANDS OF M/S MAFICO LEASING & CONSULTANTS PVT. LTD. AND NOT IN THE HAND OF THE APPELLANT COMPANY. THEREFORE, SI NCE THE AMOUNT IN QUESTION AHS BEEN WRONGLY SUBJECTED TO TA X IN THE HANDS OF A PERSON WHO HAD NO DIRECT CONNECTION/ CON TRACT WITH M/S GANGA INFIN PVT. LTD, THE ADDITION OF RS. 10 LA CS MADE IN THE CASE OF THE APPELLANT COMPANY IS BEING DIRECTED TO BE DELETED. 4 4. LEARNED DR SUPPORTED THE ORDER OF AO. 5. LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND VEHEMENTLY ARGUES THAT AO MADE THE ADDITION BY ERRONEOUSLY HOLDING TH AT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF PROVING IDENTITY, G ENUINENESS OF TRANSACTION AND CAPACITY OF THE CREDITOR. ALL THE REQUIRED DOCU MENTS HAVING BEEN FILED ALONG WITH CONFIRMATIONS, THERE WAS NO JUSTIFICATIO N IN MAKING THE ADDITION. OUT OF MORE THAN HUNDREDS ENTRIES WITH M/S MAFICO LEASING & CONSULTANTS PVT. LTD., ONLY ONE ENTRY OF RS. 10 LACS HAS BEEN P ICKED AND USED. AO HAS OTHERWISE ACCEPTED THE GENUINENESS OF THE PARTY AND GENUINENESS OF OTHER TRANSACTIONS AS WELL AS THE FINANCIAL CAPACITY OF M /S MAFICO LEASING & CONSULTANTS PVT. LTD.. THIS HAVING BEEN ACCEPTED BY AO, THERE IS NO JUSTIFICATION IN SINGLING OUT ONE ENTRY FOR ADDITIO N U/S 68. CIT(A) HAS RIGHTLY APPRECIATED THE MATTER AND AFTER CALLING A REMAND R EPORT, ADDITION HAS BEEN DELETED. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE ENTIRE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENT OF LEARNED COUNSEL. M/S MAFICO LEASING & CONSULTANTS PVT. LTD. HAS NUMBER O F TRANSACTIONS WITH ASSESSEE. COPY OF ACCOUNTS WITH CONFIRMATORY HAS BE EN FILED. ONLY ONE ENTRY HAS BEEN PICKED UP BY AO QUESTIONING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS WHEREAS IN RESPECT OF NUMBER OF EN TRIES OF THE SAID PARTY, 5 THE TRANSACTIONS HAVE BEEN ACCEPTED. IN OUR VIEW, A O WAS NOT JUSTIFIED IN MAKING ADDITION AND THE CIT(A) HAS RIGHTLY APPRECIA TED THE FACTS AND EVIDENCES IN DELETING THE ADDITION. WE UPHOLD THE S AME. REVENUES APPEAL IS DISMISSED. 6.1. AT THE HEARING, LEARNED COUNSEL DID NOT PRESS THE CROSS OBJECTION AND THE SAME STANDS DISMISSED ACCORDINGLY. 7. IN THE RESULT, REVENUES APPEAL AS WELL AS ASSES SEES CROSS-OBJECTION STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08-08-2011. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08-08-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 6