M/s. Delhi Extrusion Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA NO. 975 &CO 110/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 975/DEL/2010 A.Y. : 2001-02 INCOME TAX OFFICER 10(1) NEW DELHI ROOM NO. 199 C.R. BUILDING NEW DELHI 110 002 VS. M/S DELHI EXTRUSION PVT. LTD. A-173 EKTA ENCLAVE PEERAGARHI NEW DELHI (PAN : AAACD8752B) AND CROSS OBJECTION NO. 110/DEL/2010 (IN ITA NO. 975/DEL/2010) A.Y. 2001-02 M/S DELHI EXTRUSION PVT. LTD. A-173 EKTA ENCLAVE PEERAGARHI NEW DELHI (PAN : AAACD8752B) VS. INCOME TAX OFFICER 10(1) NEW DELHI ROOM NO. 199 C.R. BUILDING NEW DELHI 110 002 ASSESSEE BY: SH. GAUTAM JAIN DEPARTMENT BY : SH. H.K. LAL SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) DATED 28.1.2010 PERTAINING TO ASSESSMENT YEAR 2001-0 2 ITA NO. 975 &CO 110/DEL/2010 2 REVENUES APPEAL (ITA REVENUES APPEAL (ITA REVENUES APPEAL (ITA REVENUES APPEAL (ITA NO. 975) NO. 975) NO. 975) NO. 975) 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) HAS ERRED IN DELEING THE ADDITION MADE BY THE ASSESSING OFFICER OF ` 12 50 000/- U/S 68 OF THE IT ACT. 3. IN THIS CASE ASSESSMENT WAS REOPENED UPON RECEIPT OF INFORMATION FROM THE DIT(INV.) REGARDING THE ACCOMMOD ATION ENTRIES. FOLLOWING CREDIT ENTRIES WERE FOUND REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE. VALUE OF ENTRY TAKEN NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT 3 00 000 CHINTAPURNI CREDITS AND LEASING P LTD 2 00 000 PARTICULAR MANAGE FINLEASE P LTD. 2 00 000 SEKHAWATI FINANCE P LTD. 2 50 000 KULDEEP TEXTILES P LTD. 3 00 000 TRANSPAN FINANCIAL SERVICES LTD. 3.1 ASSESSING OFFICER NOTED THAT IT IS A FACT THAT ASSESSEE RECEIVED THESE AMOUNTS TOTALING TO ` 12 50 000/- THROUGH C HEQUES. ASSESSING OFFICER EXAMINED THE BANK ACCOUNT OF THESE CONCERNS AND FOIUND THAT CASH WAS DEPOSITED IN THESE ACCOUNTS PRIOR TO ISSUA NCE OF CHEQUES TO THE ASSESSEE. ASSESSING OFFICER PROCEEDED TO ANAL YSE THE CASE LAWS ON THE ISSUE AND WAS OF THE OPINION THAT ASSESSEE C OMPANY HAD USED DUBIOUS MEANS FOR TAX EVASION. HE HELD THAT ADDIT ION OF ` 12 50 000/- WAS WARRANTED U/S 68 OF THE IT ACT. 4. ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSAILING BOTH THE JURISDICTION A FOR REO PENING AS WELL AS THE MERITS OF THE CASE. ITA NO. 975 &CO 110/DEL/2010 3 5. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ACTION BY THE ASSESSING OFFICER U/S 147/148 OF THE IT ACT IS FULLY JUSTIFIED. UPON MERITS LD. COMMISS IONER OF INCOME TAX (APPEALS) REFERRED THE SUBMISSIONS MADE BY THE ASSE SSEE IN THIS REGARD AND HE REFERRED TO THE FOLLOWING SUBMISSIONS OF THE ASSESSEE. THIS PERTAINS TO THE COPY OF THE APPLICATION OF S HARE COPY OF CONFIRMATION COPY OF PAN AND COPY OF ACKNOWLEDGEME NT OF INCOME TAX RETURN FILED BY THE ASSESSEE. LD. COMMISSIONE R OF INCOME TAX (APPEALS) CONSIDERING THE ABOVE OBSERVED THAT AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE HE NOTED THA T ASSESSING OFFICER HAD MADE THE ADDITION PRIMARILY ON THE BASIS OF THE E NQUIRIES CONDUCTED BY THE INVESTIGATION WING AS WELL AS ENQU IRIES CONDUCTED BY HIM THROUGH ISSUE OF NOTICES U/S 131 TO THE COMPANIES . LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSE RVED THAT FROM THE ASSESSMENT ORDER IT IS ALSO SEEN THAT THE ASSE SSING OFFICER HAS NOT DENIED THAT THESE COMPANIES HAVE OBTAINED PANS F ROM THE DEPARTMENT AND ARE FILING THEIR INCOME TAX RETURNS. HE REFERRED TO THE FACT THAT DURING THE APPELLATE PROCEEDINGS ASSESSEE HAS FURTHER EMPHASIZED THAT WITH REGARD TO ALL FIVE COMPANIES FR OM WHOM THE AMOUNT WAS RECEIVED VARIOUS DETAILS PERTAINING TO THESE PARTIES TO ESTABLISH THE IDENTITY CREDITWORTHINESS AND GENUIN ENESS OF THE ITA NO. 975 &CO 110/DEL/2010 4 TRANSACTION HAD ALREADY BEEN SUBMITTED BEFORE THE ASSESSING OFFICER WHICH INCLUDED PAN CONFIRMATIONS COPY OF IT RETURN S DETAIL OF BANK ACCOUNTS AFFIDAVIT OF DIRECTORS ETC. LD. COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER REFERRED THE SEVERAL CASE LAWS ON THIS ISSUE INCLUDING THAT OF HONBLE APEX COURT DECISION DELIVERED IN THE CASE OF C.I.T. VS. LOVELY EXPORTS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FINALLY CONCLUDED BY REFERRING AS UNDER:- ALSO HONBLE BOMBAY HIGH COURT IN THE CASE OF C.I.T . VS. M/S CREATIVE WORLD TELEFILMS LTD. (EARLIER KNOWN AS LINK INTERNATIONAL SERVICES PVT. LTD.) DATED 12.10.2009 IN ITA NO. 2182 OF 2009 IT HAS HELD AS UNDER:- 2. THE QUESTION SOUGHT TO BE RAISED IN THE APPEAL WAS ALSO RAISED BEFORE THE TRIBUNAL AND THE TRIBUNAL WA S PLEASED TO FOLLOW THE JUDGEMENT OF THE APEX COURT I N THE CASE OF C.I.T. VS. LOVELY EXPORTS (P) LTD. REPO RTED IN [2008] 216 CTR 195 (SC) WHEREIN THE APEX COURT OBSERVED THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE APPELLANT COMPANY FROM ALLEGED BOGUS SHARE HOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. IN THE CASE IN HAND IT IS NOT DISPUTED THAT THE APPELLANT HAD GIVEN THE DETAILS O F NAME AND ADDRESS OF THE SHARE HOLDER THEIR PAN/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER NAME OF THE BANK. IT WAS EXPECTED ON THE PART OF THE ITA NO. 975 &CO 110/DEL/2010 5 ASSESSING OFFICER TO MAKE PROPER INVESTIGATION AND REACH THE SHARE HOLDERS. THE ASSESSING OFFICER DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WITH AN ENDORSEMENT NOT TRACEABLE. IN OUR CONSIDERED VIEW THE ASSESSING OFFICER OUGHT TO HAVE FOUND THEIR DETAILS THROUGH PAN CARDS BANK ACCOUNT DETAILS OR FROM THEIR BANKERS S O AS TO REACH THE SHARE HOLDERS SINCE ALL THE RELEVANT MATERIAL DETAILS AND PARTICULARS WERE GIVEN BY THE APPELLANT TO THE ASSESSING OFFICER. IN THE ABOVE CIRCUMSTANCES THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAULTED. NO SUBSTANTIAL QUESTION OF LAW IS INVO LVED IN THE APPEAL. IN THE RESULT THE APPEAL IS DISMIS SED IN LIMNI WITH NO ORDER AS TO COSTS. HENCE IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMEN TS DISCUSSED ABOVE THE ADDITIONS OF ` 12 50 000/- MAD E BY THE ASSESSING OFFICER IS NOT JUSTIFIED BECAUSE THE APP ELLANT HAD DISCHARGED PRIMA FACIE THE BURDEN OF PROOF AND ASSES SING OFFICER CANNOT SUMMARILY REJECT ALL THE DOCUMENTS WITH OUT DEEPER INVESTIGATION WHICH BRING UP SPECIFIC ADVERS E MATERIAL. HENCE THE ADDITION OF ` 12 50 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL RECE IVED FROM THE FIVE COMPANIES IS DELETED. ACCORDINGLY THIS G ROUND OF APPEAL IS ALLOWED. 6. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BE FORE US ON THE MERITS OF THE CASE AND ASSESSEE VIDE CROSS OBJECTION HAS ASSAILED THE ITA NO. 975 &CO 110/DEL/2010 6 CONFIRMATION OF JURISDICTION OF THE ASSESSING OFFICE R BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR REOPENING. 7. AS REGARDS THE MERITS OF THE CASE WE FIND OURSE LVES IN AGREEMENT WITH THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) THAT ASSESSEE HAS SUBMITTED THE NECESSARY DETAILS TO SUPP LY INFORMATION REGARDING THE IDENTITY OF THE VARIOUS SHARE APPLICA NTS COMPANIES. THIS INCLUDED COPY OF APPLICATION OF SHARES COPY OF CON FIRMATION COPY OF PAN COPY OF AFFIDAVIT FROM DIRECTORS AND COPY OF ACKN OWLEDGEMENT OF RETURN OF INCOME. IN THESE CIRCUMSTANCES WE AGRE E WITH THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT IDENTITY O F THESE SHARE APPLICANTS IS ESTABLISHED. THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS 216 CTR 195 I S RELEVANT ON THIS ISSUE. THE HONBLE APEX COURT HAS HELD THAT IF T HE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR IN DIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 8. IN VIEW OF THE AFORESAID DISCUSSION AND PRECEDEN T WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON MERITS OF THE CASE. ACCORDINGLY WE U PHOLD THE SAME. ITA NO. 975 &CO 110/DEL/2010 7 9. IN THE RESULT THIS APPEAL BY THE REVENUE STANDS DISMISSED. 10. AS REGARDS THE CROSS OBJECTION FILED BY THE ASS ESSEE WE FIND THAT SINCE WE HAVE ALLOWED THE APPEAL ON MERITS OF THE CA SE LD. COUNSEL OF THE ASSESSEE DID NOT PRESS FOR THE CROSS OBJECTION . ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 11. IN THE RESULT REVENUES APPEAL BEING ITA NO. 975/DEL/2010 IS DISMISSED AND THE ASSESSEES CROSS OBJECTION NO. 110 /DEL/2010 IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/02/2011 U PON CONCLUSION OF HEARING. SD/- SD/- [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 07/02/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES