DCIT, New Delhi v. M/s IKM Investor Services Ltd., New Delhi

ITA 199/DEL/2011 | 2003-2004
Pronouncement Date: 08-07-2011 | Result: Dismissed

Appeal Details

RSA Number 19920114 RSA 2011
Assessee PAN AAACI2174G
Bench Delhi
Appeal Number ITA 199/DEL/2011
Duration Of Justice 5 month(s) 26 day(s)
Appellant DCIT, New Delhi
Respondent M/s IKM Investor Services Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 08-07-2011
Date Of Final Hearing 04-07-2011
Next Hearing Date 04-07-2011
Assessment Year 2003-2004
Appeal Filed On 13-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NO.199/DEL/2011 ASSESSMENT YEAR : 2003-04 DY. COMMISSIONER OF INCOME TAX CIRCLE 11(1) NEW DELHI. VS. M/S IKM INVESTOR SERVICES LTD. A-14/3 JAMNA BHAWAN ASAF ALI ROAD NEW DELHI 110 002. PAN : AAACI2174G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATISH AGGARWAL CA REVENUE BY : SHRI ROHIT GARG SR. DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECTE D AGAINST THE ORDER PASSED BY THE CIT (A) DATED 1 ST OCTOBER 2010 FOR ASSESSMENT YEAR 2003-04. THE GROUNDS OF APPEAL READ AS UNDER:- 1. ORDER OF LD. CIT (A) IS WRONG PERVERSE ILLEGA L AND AGAINST THE PROVISIONS OF LAW LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.11 15 000 /- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE AND PURCH ASE OF SHARES AS SEBI REGISTERED BROKER. THE SHARES ARE TRANSACT ED ON BEHALF ITA NO.199/DEL/2011 2 OF SELF AND ALSO ON BEHALF OF THE CLIENT BOTH AS STOCK- IN-TRADE AND INVESTMENT. THE RETURN OF INCOME WAS FILED AT AN INC OME OF ` 84 23 760/- ON 2 ND DECEMBER 2003 AND ASSESSMENT INITIALLY WAS FRAMED VIDE ORDER DATED 20 TH JANUARY 2006 PASSED U/S 143 (3) OF THE INCOME-TAX ACT 1961 AT AN INCOME OF ` 86 47 140/- IN WHICH SOFTWARE EXPENSES WERE DISALLOWED AND AFTER GRANT OF DEPRECIATI ON THEREON NET ADDITION OF ` 2 23 380/- WAS MADE. 3. LATER ON NOTICE U/S 148 WAS ISSUED ON 31 ST MARCH 2008 ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING IN WHICH THE ASSESSEE WAS REPORTED TO HAVE RECEIVED A CONSOLIDATED SUM OF ` 11 15 000/- FROM ONE PARTY NAMELY M/S MAN SINGH GU PTA & COMPANY (MSGC) ON VARIOUS DATES WHICH ARE LISTED AT PAGE 2 PA RA 2 OF THE ASSESSMENT ORDER. THE SAID AMOUNT WAS ADDED TO THE INCOM E OF THE ASSESSEE AND THUS THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT A SUM OF ` 97 62 140/- VIDE THE IMPUGNED ASSESSMENT ORDER DATED 29 TH OCTOBER 2008 PASSED U/S 143 (3) READ WITH SECTION 147 OF THE ACT. THOUGH THE ASSESSING OFFICER HAS SUMMARILY REJECTED THE E XPLANATION OF THE ASSESSEE AND HAS NOT NOTED THE CONTENTS OF THAT B UT IN THE STATEMENT OF FACTS FILED BEFORE THE CIT (A) IT HAS BEE N SUBMITTED BY THE ASSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT THE SAID AMOUNT WAS IN THE NATURE OF TR ADE ADVANCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS COPY OF ACCOU NTS OF THE ASSESSEE IN THE BOOKS OF MSGC AND VICE VERSA WERE FILED A ND THE ASSESSEE HAD EXPLAINED THAT IN ADDITION TO RECEIPTS OF P AYMENTS AS REFERRED IN THE NOTICE HAD MADE THE TRANSACTIONS FOR MAKING PAYMENT TO IT AND HAD ALSO MADE TRANSACTIONS OF SALE AND PURCHA SE WITH THE SAID CONCERN IN THE NORMAL COURSE OF TRADE. 4. BEFORE CIT (A) IT WAS SUBMITTED THAT AT THE ASSESSMENT STAGE THE ASSESSEE HAD FILED LETTER DATED 16 TH OCTOBER 2008 WHEREWITH THE ITA NO.199/DEL/2011 3 CONFIRMED COPIES OF ACCOUNTS OF MSGC WITH THE ASSESSEE WH ICH RAN INTO THREE PAGES COVERING ABOUT 150 ENTRIES WAS FILED. TH E ASSESSING OFFICER IN HIS WISDOM HAS IDENTIFIED 11 OUT OF SUCH ENT RIES AND HAS HELD THAT SUCH ENTRIES ARE ACCOMMODATION ENTRIES AND HAS INV OKED THE PROVISIONS OF SECTION 68. IT WAS SUBMITTED THAT ALL THE ENTRIES ARE RELATED TO TRADE DEALING AND ARE CONDUCTED IN THE N ORMAL COURSE OF BUSINESS. THERE WERE SEVERAL ENTRIES OF CHEQUES RECEIVED DURING THE RELEVANT PERIOD BUT ON THE BASIS OF BORROWED INFORM ATION THE ASSESSING OFFICER HAS SELECTIVELY TAKEN 11 OUT OF SUCH EN TRIES AND ADDED THE SAME. THE CLOSING BALANCE AS ON 31 ST MARCH 2003 WAS ONLY A SUM OF ` 19 189/- AND THIS FACT SHOWS THAT THE AMOUNT RECEIVED FROM THE PARTY INCLUDING THE AMOUNT ADDED BY THE LD. ASSESSI NG OFFICER WAS APPROPRIATED AGAINST TRADE TRANSACTIONS AND THEREFORE THERE WAS NO QUESTION OF TERMING THEM AS ACCOMMODATION ENTRY. LD. CIT (A) HAS REFERRED TO THE IDENTICAL ISSUE RAISED BY THE ASSESSEE IN THE APPEAL FOR ASSESSMENT YEAR 2002-03 WHEREIN HE HAS RECORDED HIS FINDI NG THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH MSGC ARE C LEARLY REGULAR BUSINESS TRANSACTIONS MADE BY THE ASSESSEE IN THE CA PACITY OF A BROKER. ALL THE FORMALITIES AS PROVIDED IN SEBI GU IDELINES HAVE BEEN DULY FOLLOWED INASMUCH AS THE AMOUNT WAS TAKEN THROUGH CHEQUE AND THE SAME WAS DEPOSITED WITH A NATIONALIZED BANK UNDER LIEN OF SEBI. THE APPELLANT HAD ACTED ON BEHALF OF THE CUSTOMER AS A BROKER AND TRANSACTION IS LIKE ANY OTHER TRANSACTION BEING HELD I N THE DERIVATIVE MARKET. THE AMOUNT WAS ALSO REPAID THROUGH BANK ACCO UNT TO THE SAID PARTY AGAIN AS PER THE GUIDELINES GIVEN BY THE SEBI. THEREFORE THE TRANSACTIONS CANNOT BE TREATED AS TRANSACTIONS RELATING TO UNEXPLAINED CASH CREDIT U/S 68 WHICH HAS NO APPLICATION TO THE FAC TS OF THE CASE. 5. LEARNED CIT (A) FURTHER OBSERVED THAT THE ASSESSEE HA S ALSO FILED BEFORE THE ASSESSING OFFICER COPIES OF ACCOUNTS OF MSGC W ITH THE ASSESSEE RUNNING ABUT 150 ENTRIES. ACCORDING TO THE ASSESSE E ALL ITA NO.199/DEL/2011 4 THESE ENTRIES ARE REGULAR BUSINESS TRANSACTIONS AND THE ASSE SSING OFFICER HAS IDENTIFIED ONLY 11 TRANSACTIONS ON RANDOM BASIS. THE RECORD REVEALS THAT THERE IS AN OPENING BALANCE OF ` 4 41 22 2/- AS ON 1 ST APRIL 2002 AND THE CLOSING BALANCE OF ` 19 189/- AS ON 29 TH MARCH 2003. THE AMOUNT RECEIVED FROM THE PARTY AS REVEALED FROM THE STATEMENT OF THE ASSESSEE IS REGULAR BUSINESS TRANSACTIONS AND THEREFORE THESE TRANSACTIONS WOULD NOT ATTRACT SECTION 68 OF THE ACT AS THE ASSESSING OFFICER COULD NOT DISPROVE THE IDENTITY CREDIT WORT HINESS AND GENUINENESS OF TRANSACTION. ALL THESE TRANSACTIONS WERE ROUTED THROUGH BANK ACCOUNTS AND IT IS NOT THE CASE OF THE ASSE SSING OFFICER THAT THE PARTY DOES NOT HAVE ANY CREDIT WORTHINESS TO ADVANCE THE FUNDS AND IN THIS MANNER LD. CIT (A) HAS DELETED THE ADDITION. THE REVENUE IS AGGRIEVED HENCE IN APPEAL. 6. LD. DR RELYING UPON THE ASSESSMENT ORDER PLEADED THA T THE ASSESSING OFFICER HAS ADDED THIS AMOUNT ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIGATION WING. THESE ENTRIES WERE IN THE NATURE OF ACCOMMODATION ENTRIES AND THEREFORE THOSE WERE RIGHTLY ADDED BY THE ASSESSING OFFICER IN THE INCOME OF THE ASSESSE E. HE SUBMITTED THAT LEARNED CIT (A) HAS WRONGLY DELETED TH E SAME. 7. ON THE OTHER HAND RELYING UPON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND CIT (A) AND ALSO T HE FINDINGS RECORDED BY THE LEARNED CIT (A) IT WAS THE CASE OF LE ARNED AR THAT THE ADDITION HAS RIGHTLY BEEN DELETED AND THE ORDER OF THE CIT (A) SHOULD BE UPHELD. HE HAS SUBMITTED BEFORE US THE COPY OF ACCOUN T OF MSGC IN ITS BOOKS OF ACCOUNT AND A COPY WAS ALSO GIVEN TO LD. DR. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. FROM THE COPY OF ACC OUNTS FILED BY THE ASSESSEE IT IS SEEN THAT THE ASSESSEE HAS REGULARLY ENTERED I NTO ITA NO.199/DEL/2011 5 TRANSACTIONS WITH M/S MSGC AND THOSE TRANSACTIONS ARE ON DAY-TO-DAY BASIS. ALL THE ENTRIES HAVE BEEN SHOWN TO BE RECEIVED THROUGH CHEQUES. WE HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSM ENT ORDER. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER SIMPL Y ON THE BASIS OF A REPORT OF THE INVESTIGATION WING. THE ASSESSIN G OFFICER HAS NOT CARRIED OUT ANY NEW INQUIRIES WITH REGARD TO THE TRANSACTIONS MENTIONED BY HIM IN PARA 2 OF THE ASSESSMENT ORDER OF W HICH THE ADDITION HAS BEEN MADE TO THE INCOME OF THE ASSESSEE. I T IS A CASE WHERE THE ASSESSING OFFICER HAS ACCEPTED ALL OTHER TRANSA CTIONS DONE BY THE ASSESSEE IN THAT ACCOUNT EXCEPT 11 ENTRIES. IF IT IS SO THEN IT CAN BE SAID THAT HE HAS ACCEPTED THE IDENTITY OF THE PARTY. THE CREDIT WORTHINESS CANNOT BE DOUBTED AS THERE ARE OTHER TRANSAC TIONS IN THE SAID ACCOUNT RUNNING INTO LACS OF RUPEES WHICH HAVE NO T BEEN DOUBTED BY THE ASSESSING OFFICER. THE PAYMENTS HAVE BEEN RECEIV ED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES AND NO MATERIAL H AS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUGGEST THA T THOSE 11 ENTRIES WERE REALLY ACCOMMODATION ENTRIES. THE ASSESSEE HAD ALSO FILED CONFIRMED COPY OF THE ACCOUNT OF THE SAID PART Y. IN THIS VIEW OF THE SITUATION WE FIND NO FAULT IN THE FINDINGS RECOR DED BY THE LEARNED CIT (A) VIDE WHICH THE IMPUGNED ADDITION HAS BEEN DE LETED. WE DECLINE TO INTERFERE. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 08.07.20 11. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 08.07.2011. DK ITA NO.199/DEL/2011 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES