NANDINI SINGLA,ROHTAK V. ITO, WARD- 3, ROHTAK

MA 46/DEL/2022

AI Insights

The case involves Salasar Polypack Private Limited, which appealed against the order of the CIT(A) confirming the additions made by the AO in the assessment year 2006-07. The additions pertained to undisclosed income and unexplained financial transactions, including share capital and premium received, which were suspected to be accommodation entries. The Tribunal's decision was based on the lack of credible evidence from the appellant to substantiate the genuineness of the transactions. The Tribunal also dismissed the appellant's claims of violation of natural justice and improper application of mind by the AO and CIT(A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314229 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: Set aside; Additional evidence; Corroborative evidences; Depreciation; Unexplained investment; Income from undisclosed sources; Principle of natural justice; Accommodation entries
• Section: 147; 148; 142(1); 271(1)(c); 68

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 4377/DEL/2019 Assessment Year: 2006-07 Salasar Polypack Private Limited. AM-190, Ist Floor, Shalimar Bagh, New Delhi- 1100 88 PAN No. AAICS7887C Vs. Income Tax Officer, Ward 22(2), New Delhi (Appellant) (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The appeal filed by the appellant/assessee is against order dated 30.03.2019 passed by Learned Commissioner of Income- Tax(Appeals)-22, New Delhi (hereinafter referred as ‘Ld. CIT(A)’) under Sections 144/147 of the Income-Tax Act, 1961 (hereinafter referred as “the Act”) arising out of assessment order dated 13.02.2014 of the Income Tax Officer, Ward-7(2), New Assessee by: N o n e Department by: Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing: 03.03.2025 Date of pronouncement: 07.05.2025 ITA No.4377/Del/2019 2 Delhi (hereinafter referred as ‘Ld. A.O.’) for the assessment year 2006-07. 2. Brief facts of the case are that an information was received from DIT (Investigations), New Delhi to the effect that the assessee company had obtained accommodation entry from the concerns floated by Sh. Aseem Kumar Gupta Group for providing accommodation entries. The details of accommodation entries obtained by the assessee company as per the information received, is as under:- Date Accommodation entry obtained from amount 4.6.2005 M/S Chotti Leasing & Fin. Pvt. Ltd 2,50,000/- 7.7.2005 M/S Chotti Leasing & Fin. Pvt. Ltd 1,50,000/- 3. Under such process, notice under Section 148 dated 21.3.2013 of the Act was issued and served upon the assessee by speed post after recording the reasons and obtaining the approval of Additional CIT Range-7, New Delhi. No compliance was made ITA No.4377/Del/2019 3 to the notice issued under Section 148 till 23.8.2013. Therefore, on 23.8.2013, a questionnaire along with a notice under Section 142(1) of the Act was issued calling the preliminary details such as copy of the audited P&L a/c, balance sheet, copy of bank statement etc. for compliance on 4.9.2013. A show cause notice to this effect for penalty under Section 271(1)(b) of the Act was issued vide this office letter dated 5.9.2013 re-fixing the case for hearing for 17.9.2013. However, on 6.9.2013, Sh. SK. Goel, Advocate attended and filed a letter seeking adjournment stating that the return filed originally on 25.11.2006 may be treated as return filed in response to notice u/s 148. On the request of Sh.S.K. Goel, the hearing was adjourned to 12.9.2013 to file POA, copy of annual accounts. Sh. SK. Goel, Advocate filed copy of the annual accounts on 13.9.2013 on the basis of which an exhaustive questionnaire dated 16.9.2013 calling details/documents on various issues for compliance on 3.10.2013, was issued. None attended on 3.10.2013 and no details were filed on 3.10.2013. No compliance was made till 28.11.2013. Ultimately, on 28.11.2013, a show cause notice for ex parte assessment was issued along with fresh notices under Sections 143(2) and 142(1) of the Act for compliance on ITA No.4377/Del/2019 4 05.12.2013 impressing upon the assessee company that in case no compliance is made with this show cause notice also, ex parte assessment shall be made. On 6.12.2013, Sh. SK. Goel, Advocate He requested for some time to file the details as asked for by this office. The hearing was adjourned to 12.12.2013 on his request. None attended on 12.12.2013 nor any details were filed. Sh. SK. Goel, assessee's Learned Authorised Representative attended on 20.12.2013 but again no details were filed. On the request of the Learned Authorised Representative of the assessee company, the hearing was adjourned to 27. 12.2013. On the date fixed for hearing, no compliance was made and till date no compliance has been made. The assessee did not respond even when issued notices for penalty under Section 271(1)(b) of the Act. Under these circumstances, Ld. AO passed ex parte assessment order dated 13.02.2014 making additions of Rs.2,66,915/- for income from business as discussed above (para 4.4), Rs.13,05,677/- for unexplained trade creditors (para 4.1.(a), Rs.4,08,000/- for share application money, Rs.1,14,120/- for advance from customers ( para 4.1.(c), Rs.18,75,000/- for share premium (para 4.2), Rs.6,40,000/- for unverified unsecured loans (para 4.3), Rs.1,33,994/- for unexplained cash in hand (para 4.5) and ITA No.4377/Del/2019 5 Rs.17,78,583/- for undisclosed investment in fixed assets (para 4.6). 4. Against Assessment order dated 13.12.2014, the appellant/assessee preferred appeal before the Ld. CIT(A) which was partly allowed vide order 30.;03.2019. Additions of Rs.4,08,000/-, Rs.10,50,000/- and Rs.17,78,583/- were upheld and other additions were set aside. 5. Being aggrieved, the appellant/assessee preferred present appeal with following grounds: “1. That the Ld. AO erred in law and on facts in initiating the proceedings and framing the assessment u/s 147 and the Ld. CIT (A) erred in confirming the action of Ld. AO in the facts and circumstances of the case. 2. That the Ld. AO erred in law and on facts in making and Ld. CIT(A) erred in law and on facts in confirming the addition of Rs. 4,08,000/-being subscription to share capital received by the assessee at Rs. 4,00,000/- & alleged commission Rs. 8000/- u/s 68 in the facts and circumstances of the case. That the assessee had duly discharged its onus of satisfying the conditions of section 68. 3. That the Ld. AO erred in law and on facts in making and Ld. CIT(A) erred in law and on facts in confirming the addition of Rs. 1050000/- and further enhancing the same by Rs. 210000/- u/s 68 in the facts and circumstances of the case. That the assessee had duly discharged its onus of satisfying the conditions of section 68 with regard to share capital and premium received by it. ITA No.4377/Del/2019 6 4. That the Ld. AO and Ld. CIT (A) erred in law and on facts in not following the cannons of natural justice. Submissions made by the appellant were rejected without making proper enquiries and without properly appreciating the evidence furnished by the appellant. The Ld. AO and Ld. CIT (A) have passed the orders without proper application of mind. 5. That the Ld. CIT (A) erred in law and on facts in disallowing Rs.287232/- being the depreciation allowable on fixed assets of Rs. 1778583/- in the facts and circumstances of the case. That the Ld. AO and Ld. CIT (A) did not properly appreciate the facts and circumstances and the Ld. CIT(A) failed to consider copies of the bills produced before him. That the Ld. CIT (A) at the most could have directed the AO to verify the bills. No show cause was issued by Ld. CIT (A) for making additional (enhanced) disallowance. 6. The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal and amend, alter or add any other ground of appeal.” 6. At the time of hearing, none appeared on behalf of the appellant/assessee. 7. Learned Authorised Representative for Revenue relied on order of Ld. CIT(A). 8. Ground no.2 is regarding challenge to the confirmation of addition of Rs.4,08,000/- for subscription to share capital received by assessee under Section 68 of the Act. Ld. CIT(A) in para nos. 8.14 and 8.15 observed as under: “8.14 In view of the facts and circumstances borne out of the assessment order and legal precedents as discussed ITA No.4377/Del/2019 7 above, I am of the view that documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that amount received by the appellant company as share capital are arranged transactions to introduce its unaccounted income through entry providers with the sole motive to account for the undisclosed income. Accordingly, in view of the above discussion and judicial precedents, it is held that AO was justified in making addition of Rs.4,00,000/- as income of the assessee from undisclosed sources u/s 68 of the Act. 8.15 Since arranging such accommodation entry necessarily entails payment of commission to entry providers, the AO's action in quantifying and adding such de unexplained investment towards procurement of such accommodation entries at Rs.8,000/- is also upheld for the reasons discussed in the assessment order. Accordingly, entire addition amounting to Rs.4,08,000/- is confirmed. The grounds of appeal are dismissed.” 9. In absence of any evidence in support of ground of appeal no.2, findings of Ld. CIT(A) deserve to be upheld. The ground of appeal no.2 is dismissed. 10. Through ground no.3, confirmation of addition of Rs.10,50,000/- and further enhanced by Rs.2,10,000/- has been assailed. Ld. CIT(A) held in para nos. 10.2 and 10.3 has observed as under: “10.2 I have examined the submission of the Ld. AR. As evident from the table given in the earlier para that the appellant has received share capital of Rs.12,60,000/-from two companies and three individuals. This constitute ITA No.4377/Del/2019 8 Rs.2,10,000/- in the form of equity and Rs. 10,50,000/- in the form of premium from these parties. I have examined the documents submitted in the appellate proceeding does not support the case of the appellant. The company which has given share capital to the appellant company, it is obvious from the analysis of their financial statements, are dummy companies having substantial share capital & reserve created by manipulations with the sole motive of providing entries. Bank statements of these companies clearly show, that huge amount of money is transferred to these concerns only to be immediately transferred to the bank accounts of the beneficiaries. So far as three individual are concerned, the documents submitted does not establish the creditworthiness of these individuals. As discussed while deciding ground no. 2 to 4, the legal principles laid down in a number of decisions has been elaborately dealt. It is settled law that furnishing mere documentary evidences are not sufficient to establish the genuineness of the transaction. In the case of these individuals it can be said that creditworthiness was not proved. There copy of return does not inspire confidence. 10.3 In view of the aforesaid discussion and also the discussion on the legal principles laid down for compliance of parameters for section 68 of the Act as dealt by me while deciding ground no. 2 to 4 in the above paras, I am of the view that the appellant has failed to satisfy the conditions attached for section 68 of the Act. Therefore, the addition of Rs.10,50,000/- made on account of premium received is confirmed and further the addition made by the AO is enhanced by the amount of Rs.2,10,000/- received from these parties as equity share capital. Consequently the appellant's income is further enhanced by Rs.2,10,000/- Ground No. 5 is Dismissed. As the AO has initiated penalty proceeding u/s 271(1)(c) on this addition, therefore, in view of the provision of section 275(1A) no separate penalty is initiated and the penalty for enhanced amount would merged with the penalty initiated by the AO. The AO is directed to considered the enhanced amount of addition while levying penalty u/s 271(1)(c) of the Act.” ITA No.4377/Del/2019 9 11. There is no evidence in support of ground of appeal no.3. So, findings of Ld. CIT(A) deserve to be upheld. The ground of appeal no.3 is dismissed. 12. Ground no.5 is regarding challenge to disallowing Rs.2,87,232/- for depreciation on fixed assets of Rs.17,78,583/-. Ld. CIT(A) in para no.14.1 observed as under: “14.1 The AO has made addition in absence of documentary evidences. The Ld. AR has not submitted copy of the bills at the time of assessment proceeding and even along with the application for admission of additional evidences u/r 46A. The case was remanded twice before AO. The Ld. AR never tried to submit these evidences before AO. Now at the time of final hearing at appellate stage, the AR is producing copy of the bills. I am of the view that it is not prerogative of appellant/Ld. AR to get his assessment done at any stage the proceeding under Income Tax Act cannot be undertaking at the whims and fancies of appellant. The Ld. AR got several opportunities for to submit these details. The AO had made addition of entire addition to fixed assets, However, the correct way is to disallow the depreciation of income claimed on these additions to fixed assets. Therefore, the depreciation claimed on the addition to fixed asset is disallowed. AO is directed to recomputed the disallowance. Hence, the ground of appeal is partly allowed.” 13. In absence of any supporting evidence of ground of appeal no.5, findings of Ld. CIT(A) deserve to be upheld. The ground of appeal no.5 is dismissed. ITA No.4377/Del/2019 10 14. Grounds of appeal nos. 1, 4 and 6 being consequential in nature, are dismissed. 15. In the result, the appeal of the appellant/assessee is dismissed. Order pronounced in the open court on 07/05/2025. Sd/- (M. BALAGANESH) Sd/- (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 07/05/2025 Mohan Lal Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT PASSISTANT REGISTRAR ITAT, New Delhi "