M/s. Intercity Finvest Pvt. Ltd., New Delhi v. ITO, New Delhi

CO 370/DEL/2010 | 2003-2004
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 37020123 RSA 2010
Assessee PAN AAACI5067J
Bench Delhi
Appeal Number CO 370/DEL/2010
Duration Of Justice 8 month(s) 9 day(s)
Appellant M/s. Intercity Finvest Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Cross Objection
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 22-07-2011
Date Of Final Hearing 13-07-2011
Next Hearing Date 13-07-2011
Assessment Year 2003-2004
Appeal Filed On 12-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 3131(DEL)/2010 ASSESSMENT YEAR: 2001-02 & ITA NO. 2348(DEL)/2010 ASSESSMENT YEAR: 2003-04 INCOME-TAX OFFICER INTERC ITY FINVEST PVT. LTD. WARD 11(4) NEW DELHI. VS. 18 BHERA ENC LAVE PASCHIM VIHAR NEW DELHI. PAN-AAACI5067J C.O. NO. 369(DEL)/2010 (ARISING OUT OF ITA NO. 3131(DEL)/2010) ASSESSMENT YEAR: 2001-02 & C.O. NO. 370(DEL)/2010 (ARISING OUT OF ITA NO. 2348(DEL)/2010) ASSESSMENT YEAR: 2003-04 INTERCITY FINVEST PVT. LTD. INCOM E-TAX OFFICER PASCHIM VIHAR NEW DELHI. VS. WARD 11(4) NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ROHIT GARG SR. DR ASSESSEE BY : SHRI ASHWANI TANEJA & SHRI TARUN ADVOCATES ORDER PER K.G. BANSAL : AM THESE APPEALS OF THE REVENUE FOR TWO YEARS AND CROSS OBJECTIONS OF THE ASSESSEE WERE ARGUED IN A CONSOLIDATED MANN ER BY THE LD. SR. DR AND ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 2 THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE W E THINK IT FIT TO PASS A CONSOLIDATED ORDER. ASSESSMENT YEAR: 2001-02 2. THE FACTS FOR THIS YEAR ARE THAT THE RETURN WAS FILED ON 31.10.2001 DECLARING TOTAL INCOME OF RS. 2 340/-. THE RETURN WAS PROCESSED U/S 143(1)(A) OF THE INCOME-TAX ACT 1961 ON 20.5.20 02. SUBSEQUENTLY INFORMATION WAS RECEIVED FROM THE DIRECTORATE OF INCOME-TAX (INVESTIGATION) NEW DELHI THAT THE ASSESSEE RE CEIVED FIVE BOGUS ACCOMMODATION ENTRIES FROM M/S BATRA INVESTMENTS AGGREGATING TO RS. 20.00 LAKH. THE CHEQUE NUMBERS AND THE DETAILS O F THE BANK OF M/S BATRA INVESTMENTS WERE FURNISHED. THE DETAILS REGARDI NG RECEIPT AND CREDIT IN THE ASSESSEES BANK ACCOUNT WERE ALSO FURNISHED . BASED UPON THIS INFORMATION THE PROCEEDINGS OF ASSESSMENT WERE INITIATED FOR WHICH REASONS WERE RECORDED U/S 147 AND NOTICE WA S ISSUED U/S 148 OF THE ACT. THE ASSESSEE INFORMED THAT THE ORIGINAL RE TURN MAY BE TAKEN AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. ON T HE REQUEST OF THE ASSESSEE THE REASONS WERE ALSO SUPPLIED HOWEVER IT DID N OT FILE ANY OBJECTION WITHIN THE TIME ALLOWED BY THE AO. THE ASSESSEE WAS ALSO REQUIRED TO EXPLAIN THE GENUINENESS OF CREDITS IN ITS BANK ACCOUNT. INFORMATION WAS ALSO CALLED FOR FROM THE BANKERS OF M/S BATRA IN VESTMENTS AND THE ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 3 ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE HAD SOLD SHARES THROUGH M/S BATRA INVESTMENTS. THE CHEQUES WERE RECEIVED AS SALE PROCEEDS. THEREFORE IT WAS ARGUED THAT THE PROVISION CONTA INED IN SECTION 68 IS NOT APPLICABLE. IN RESPECT OF THE SALES CONFIRMATIO N LETTER WAS ALSO FILED FROM M/S BATRA INVESTMENTS. THE AO FOUND FROM THE BAN K STATEMENT OF M/S BATRA INVESTMENTS THAT THE CHEQUES WERE CLEARED BY DISCOUNTING. ACCORDING TO THE AO THIS IS THE STANDARD MODUS- OPERANDI OF FURNISHING BOGUS ACCOMMODATION ENTRIES RESORTED TO BY VAR IOUS ENTRY-OPERATORS. IN VIEW THEREOF THE EXPLANATION OF THE ASSESSEE WA S NOT ACCEPTED AND THE AMOUNT OF RS. 20.00 LAKH WAS ADDED TO ITS TOTAL INCOME U/S 68 OF THE ACT. IT WAS ALSO ESTIMATED THAT THE ASSESSEE PAID COM MISSION OF RS. 5 000/- FOR OBTAINING ACCOMMODATION ENTRIES. THIS AMOUNT W AS ALSO ADDED TO THE TOTAL INCOME. 3. AGGRIEVED BY THE AFORESAID ORDER THE ASSESSE E FILED APPEAL BEFORE THE CIT(APPEALS)-XII NEW DELHI. IN THIS APPEAL THE ASSESSMENT ORDER WAS CHALLENGED BOTH ON THE GROUND OF ASSUMPTION O F JURISDICTION U/S 147 AND MERITS. THE LD. CIT(APPEALS) UPHELD THE LEG ALITY OF THE NOTICE U/S 148 BUT DELETED THE ADDITION BY RETURNING A FINDIN G THAT EVIDENCE AND ARGUMENTS PROVIDED BY THE ASSESSEE SUBSTANTIAT E THAT THE MONIES WERE ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 4 RECEIVED AS SALE CONSIDERATION OF SHARES. AG GRIEVED BY THIS ORDER BOTH THE REVENUE AND THE ASSESSEE ARE BEFORE US. THE REVENUE HAS CHALLENGED THE ORDER ON MERITS WHILE THE ASSESSEE HAS CHA LLENGED THE FINDINGS IN RESPECT OF ASSUMPTION OF JURISDICTION U/S 147. 4. THE CASE OF THE LD. COUNSEL BEFORE US IS THAT T HE ASSESSEE HAD SUBSCRIBED TO SHARES IN THIS YEAR AND THE SHARES W ERE SOLD WITHIN A SHORT PERIOD OF ABOUT ONE MONTH. THESE TRANSACTIONS DI D NOT LEAD TO ANY PROFIT OR LOSS. IT WAS FAIRLY SUBMITTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE PROPRIETOR OF M/S BATRA INVESTMENTS HOWEVER THAT DOES NOT LEAD TO ANY ADVERSE INFERENCE IN CASE OF THE AS SESSEE. THE REASON IS THAT THE ASSESSEE HAD SUBSCRIBED TO SHARES IN THE F IRST INSTANCE AND AMOUNT FOR SUBSCRIPTION WAS PAID THROUGH ITS BANK ACCOUNT. O N ALLOTMENT OF SHARES THE SAME WERE SOLD THROUGH M/S BATRA INVESTMENTS WH ICH IS A BROKER. CONFIRMATION IN THIS REGARD HAD BEEN FILED. TH US THE MONEY WAS RECEIVED AS SALE CONSIDERATION AND NOT BY WAY OF ANY LOAN ETC. EVEN IF THE CREDIT IN THE BOOKS OF THE ASSESSEE FOR SALE CONSIDERATION IS COVERED UNDER THE PROVISIONS OF SECTION 68 THE FACT RE MAINS THAT THERE WAS PRECEDING DEBIT OF EQUIVALENT AMOUNT IN ITS BOOK S OF ACCOUNT. NO OBJECTION HAS BEEN RAISED REGARDING PAYMENT OF MO NEY BY THE ASSESSEE FOR ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 5 SUBSCRIPTION OF SHARES. THEREFORE NO ADDITION C OULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE. 4.1 IN REPLY THE LD. DR RELIED ON THE ASSESSM ENT ORDER AND IN PARTICULAR MENTIONED THAT THE ASSESSEE HAS BEEN UNABLE TO PRODUCE THE PROPRIETOR OF M/S BATRA INVESTMENTS FOR SUBSTANTIA TING THE CREDITS IN ITS BOOKS OF ACCOUNT. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IT IS SEEN THAT THE ASSESSEE HAD FI LED THE CONFIRMED ACCOUNT FROM ITS BOOKS OF ACCOUNT SHOWING TRANSACTIONS WITH M/S BATRA INVESTMENTS. THE ACCOUNT SHOWS THAT 30000 SHARES OF SUPERIOR INDUSTRIES WERE SOLD @ RS. 50/- PER SHARE FOR A CONSIDERAT ION OF RS. 15.00 LAKH ON 05.03.2001. FURTHER 5000 SHARES OF M/S SURJEE T HIRE PURCHASE (P) LTD. WERE SOLD @ RS. 100/- PER SHARE FOR A TOTAL CON SIDERATION OF RS. 5.00 LAKH ON 31.3.2001. THE ASSESSEE RECEIVED FIVE SUMS OF RS. 8.00 LAKH RS. 2.00 LAKH RS. 2 50 000/- RS. 5.00 LAKH AND RS. 2 50.00 0/- ON 9.3.2001 12.3.2001 15.3.2001 16.3.2001 AND 31.3.2001 RES PECTIVELY. THE CORRESPONDING SALE BILLS HAVE ALSO BEEN PLACED I N THE PAPER BOOK. FURTHER IT IS SEEN THAT SHARES OF SUPERIOR INDUSTRIES LTD. WERE ALLOTTED TO THE ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 6 ASSESSEE ON 01.09.2000 AT RS. 50/- PER SHARE CO NSISTING OF FACE VALUE OF RS. 10/- AND PREMIUM OF RS. 40/-. THE DISTINCTIVE NUMBERS OF THESE SHARES HAVE BEEN PLACED ON RECORD. FURTHER THE SHARE C ERTIFICATES WERE RECEIVED ON 8.9.2000. SIMILAR INFORMATION IN RESPECT OF S URJEET HIRE PURCHASE (P) LTD. WAS ALSO PLACED BEFORE THE AO. THE AO HAS NOT DISPUTED THAT PURCHASE CONSIDERATION OF THESE SHARES WAS NOT AC COUNTED FOR BY THE ASSESSEE. THESE VERY SHARES WERE SOLD THROUGH M/S BATRA INVESTMENTS. IN SUCH CIRCUMSTANCES THE SALE PROCEEDS RECEIVED BY THE ASSESSEE CANNOT BE TERMED AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. THEREFORE WE ARE OF THE VIEW THAT THE LD. CIT(APPEALS) WAS RIGHT IN DE LETING THE ADDITION. 6. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE CROSS OBJECTION. ASSESSMENT YEAR: 2003-04 7. THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS FOR ASSESSMENT YEAR 2001-02. THE ONLY DIFFERENCE IS THAT THE ENTRI ES ARE IN RESPECT OF CHEQUES RECEIVED FROM MKM FINSEC (P) LTD. THERE WER E CERTAIN TRANSACTIONS UNDERTAKEN BY THE ASSESSEE THROUGH THE AFORESAI D COMPANY IN RESPECT OF WHICH THE DELIVERY WAS NEITHER TAKEN NOR GIVEN. THE TRANSACTIONS WERE ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 7 SETTLED BY RECEIVING THE DIFFERENCE BY WAY OF THR EE CHEQUES DATED 21.3.2003 25.2.2003 AND 28.2.2003 OF RS. 4 59 98 9/- RS. 4 99 929/- AND RS. 4 99 750/-. THESE TRANSACTIONS WERE IN THE NATURE OF SPECULATIVE TRANSACTIONS THE PROFITS FROM WHICH WERE CREDIT ED TO PROFIT AND LOSS ACCOUNT. THE LD. CIT(APPEALS) HAS RETURNED A FIN DING THAT THESE TRANSACTIONS FORM PART OF PROFIT AND LOSS ACCOUN T AND THE AMOUNT RECEIVED FROM MKM FINSEC (P) LTD. IS INCLUDED IN THE OVERAL L PROFIT OF RS. 24 99 715/- ON PURCHASE AND SALE OF SHARES. THER EFORE THERE IS NO QUESTION OF APPLICABILITY OF SECTION 68. SINCE THE AMOUNT WAS ALREADY DECLARED AS PROFIT BY THE ASSESSEE THE ADDITION OF RS. 14 5 9 668/- MADE BY THE AO WAS DELETED BY HIM. 8. BEFORE US THE CASE OF THE LD. COUNSEL IS THAT NO ADDITION WAS REQUIRED TO BE MADE AS THE AMOUNT HAS ALREADY BEEN INCLUDED IN THE PROFIT AND LOSS ACCOUNT. THE LD. DR COULD NOT DISPLACE T HE FINDING OF THE LD. CIT(APPEALS) BEFORE US. IN THESE CIRCUMSTANCES WE AGREE WITH THE LD. CIT(APPEALS) THAT THE SAME AMOUNT COULD NOT HAVE BEEN INCLUDED TWICE IN THE TOTAL INCOME OF THE ASSESSEE. THEREFORE WE H AVE NO REASON WHATSOEVER FOR INTERFERING WITH THE ORDER OF THE CIT(APPEALS) . ITA NOS. 3131&2348(DEL)/2010& CO NOS. 369 & 370(DEL)/2010 8 9. AS IN ASSESSMENT YEAR 2001-02 THE LD. COUNSE L DID NOT PRESS HIS CROSS OBJECTION REGARDING ASSUMPTION OF JURISDICTI ON U/S 147. 10. IN THE RESULT THE APPEALS OF THE REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 JULY 2011. SD/- SD/- (C.L. SETHI)) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 22.07.2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- M/S INTERCITY FINVEST PVT. LTD. NEW DELHI. ITO WARD 11(4) NEW DELHI. CIT CIT(APPEALS) THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR.