Stanchart Holdings Pvt. Ltd.,, New Delhi v. ITO, New Delhi

ITA 3386/DEL/2009 | 2001-2002
Pronouncement Date: 25-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 338620114 RSA 2009
Assessee PAN AAHCS6342K
Bench Delhi
Appeal Number ITA 3386/DEL/2009
Duration Of Justice 2 year(s) 3 month(s) 26 day(s)
Appellant Stanchart Holdings Pvt. Ltd.,, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 25-11-2011
Date Of Final Hearing 15-11-2011
Next Hearing Date 15-11-2011
Assessment Year 2001-2002
Appeal Filed On 30-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SMT. DIVA SINGH & AND SHRI K.G. BANSAL ITA NO. 3386(DEL)/2009 ASSESSMENT YEAR: 2001-02 STANCHART HOLDINGS PVT. LTD. INCOME-TAX OFFICER T-1/87 MANGOLPURI INDL. AREA VS. WA RD 9(2) NEW DELHI. PHASE-I NEW DELHI. PAN: AAHCS6342K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT GOEL C. A. RESPONDENT BY : M S. S. MOHANTY D.R. DATE OF HEA RING : 15.11.2011 DATE OF PRO NOUNCEMENT : 25.11.2011 ORDER PER K.G. BANSAL IN THIS APPEAL THE ASSESSEE HAS TAKEN FIVE GRO UNDS. GROUND NO. 1 IS AGAINST THE VALIDITY OF NOTICE U/S 148. GROUND N OS. 2 3 AND 4 ARE AGAINST ADDITION OF RS. 7 03 500/- TO THE TOTAL INCOME RETU RNED BY THE ASSESSEE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT A SUM OF RS. 7 00 420/- WAS RECEIVED BY THE ASSESSEE ON 27.11.2000 FROM MAHES H GARG FROM HIS BANK ACCOUNT MAINTAINED WITH STATE BANK OF PATIALA D ARYA GANJ DELHI WHICH IS IN THE NATURE OF AN ACCOMMODATION ENTRY. IT WAS INFORMED THAT HIS ITA NO. 3386(DEL)/2009 2 STATEMENT WAS RECORDED UNDER THE PROVISIONS OF S ECTION 131 ON 10.09.2003 AND 22.09.2003 IN WHICH IT WAS STATE D THAT HE FLOATED SEVERAL COMPANIES WHICH DID NOT CARRY OUT ANY REAL BUSINE SS. THESE COMPANIES PROVIDED ACCOMMODATION ENTRIES IN LIEU OF COMMIS SION. ALTHOUGH THERE WERE OTHER ASSOCIATES ALSO IN RUNNING THESE COM PANIES THEY WORKED UNDER HIS DIRECTIONS. ON THE BASIS OF THE AFORESAID INF ORMATION THE AO CAME TO THE CONCLUSION THAT INCOME OF RS. 7 00 420/- ESCAP ED ASSESSMENT. THEREFORE A NOTICE U/S 148 OF THE ACT WAS ISSU ED AFTER OBTAINING APPROVAL OF THE COMMISSIONER OF INCOME-TAX. THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE ENTRY WAS THAT IT DOES NOT KNOW MAHESH GARG AND IT DID NOT HAVE ANY TRANSACTION WITH HIM. T HE AO FOUND THE EXPLANATION TO BE FALSE AS ON OBTAINING INFORMA TION FROM THE BANK IT WAS FOUND THAT A DEMAND DRAFT OF RS. 7.00 LAKH WAS I SSUED TO SHRI MAHESH GARG FAVOURING THE ASSESSEE. THIS FACT WAS BRO UGHT TO THE NOTICE OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE H AD RECEIVED THE AFORESAID AMOUNT FROM JRD STOCK BROKERS PVT. LTD. THROUGH WHICH IT HAD SOLD THE SHARES OF PARNAMI HABITAT DEVELOPERS PVT. LTD. (PARNAMI FOR SHORT). THE ASSESSEE HAD PURCHASED THE SHARES THROUGH TH E SAME BROKER ABOUT A YEAR AGO. ACCORDING TO THE AO THE ASSESSEE CO ULD NOT PRODUCE EVIDENCE OF PURCHASE OF SHARES. THEREFORE THE AMOUNT OF RS. 7.00 LAKH WAS ADDED TO ITA NO. 3386(DEL)/2009 3 THE TOTAL INCOME OF THE ASSESSEE. A FURTHER SUM OF RS. 3 500/- WAS ADDED AS COMMISSION PAID TO MAHESH GARG FOR PROCUR ING THE ENTRY. 2.1 THE ASSESSEE OBJECTED TO ISSUANCE OF NOTICE U/S 148 AS WELL AS THE ADDITION OF RS. 7 03 500/- TO THE TOTAL INCOME BEF ORE THE FIRST APPELLATE AUTHORITY. IT WAS SUBMITTED THAT THE AMOUNT OF RS. 7.00 LAKH WAS RECEIVED FROM JRD STOCK BROKERS PVT. LTD. THIS EXPLANATIO N WAS NOT ACCEPTED BECAUSE THE BROKER WAS NOT TRACEABLE AND THE AM OUNT WAS LINKED TO M/S KANODIA AGENCY PROPRIETOR MAHESH GARG. THE BANK HAD CONFIRMED THAT THE PAY ORDER WAS ISSUED IN FAVOUR OF THE ASSESS EE BY DEBIT TO THE ACCOUNT OF M/S KANODIA AGENCY. THIS FACT HAD ALSO BEEN CONFIRMED BY MAHESH GARG IN STATEMENT ON OATH. THEREFORE THE AD DITION WAS UPHELD. IT WAS ALSO HELD THAT THE INFORMATION RECEIVED FROM IN VESTIGATION WING CONSTITUTED SUFFICIENT BASIS TO HAVE REASON TO BELIEVE THAT INCOME CHARGED TO TAX HAD ESCAPED ASSESSMENT. ACCORDINGLY TH E APPEAL WAS DISMISSED. 3. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE R EFERRED TO THE FINDINGS OF THE AO AND THE LD. CIT(APPEALS) WHICH HAVE BEEN SU MMARIZED BY US. HE DREW OUR ATTENTION TOWARDS THE STATEMENT OF INCO ME FOR THIS YEAR IN WHICH CAPITAL GAINS HAD BEEN COMPUTED AT RS. 9 94 377/- IN RESPECT OF SALE OF ITA NO. 3386(DEL)/2009 4 SHARES. THE SALE CONSIDERATION HAS BEEN SHOWN A T RS. 10 47 834/- AND COST OF ACQUISITION HAS BEEN SHOWN AT RS. 53 456/- . THE GAIN HAS BEEN SHOWN AS LONG-TERM CAPITAL GAIN CHARGEABLE TO TAX AT SPECIAL RATE OF 10%. FURTHER OUR ATTENTION HAS BEEN DRAWN TOWARDS T HE COPY OF CONFIRMED ACCOUNT IN THE BOOKS OF JRD STOCK BROKERS PVT. L TD. THIS ACCOUNT SHOWS A CREDIT OF RS. 10 47 834/- ON 09.07.2000 BY WAY O F SALE BILL NO. 20024/115. THERE ARE TWO DEBITS OF RS. 2 74 780/ - AND RS. 7.00 LAKH ON 27.11.2000 BY WAY OF PAY ORDER RECEIVED DRAWN O N BANK OF PUNJAB LTD. AND STATE BANK OF PATIALA RESPECTIVELY. IT IS FURTHER SUBMITTED THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) DUR ING THE COURSE OF WHICH A NOTICE U/S 142(1) WAS ISSUED ON 03.01.2003 I NTER-ALIA SEEKING DETAILS OF PURCHASE AND SALE OF SHARES WITH EVIDENCE AN D DETAILS OF COMPUTATION OF GAINS. THESE QUESTIONS WERE REPLIED ON 20. 01.2003 AND IT WAS SUBMITTED THAT 9700 SHARES OF PARNAMI WERE PURC HASED ON 02.06.1999 FOR A SUM OF RS. 56 351/- AND 9200 SHARES OF THIS C OMPANY WERE SOLD ON 05.09.2000 FOR RS. 10 47 834/- LEADING TO LONG-T ERM CAPITAL GAIN OF RS. 9 94 377/-. IN LETTER DATED 26.02.2003 PHOTOC OPIES OF THE SHARES PURCHASED EARLIER WERE ENCLOSED WHICH CLEARLY SHOW THAT THE SHARES HAD BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE ON 05.07.1999. THUS THE CASE OF THE ASSESSEE IS THAT IT HAD PURCHASED SHARES A PART OF WHICH WAS SOLD IN ITA NO. 3386(DEL)/2009 5 THIS YEAR AND THE SUM OF RS. 7.00 LAKH RECEIV ED FROM JRD STOCK BROKERS PVT. LTD. WAS A PART OF THE SALE CONSID ERATION THE WHOLE OF WHICH HAD BEEN SHOWN IN THE ORIGINAL RETURN FOR COMPUTAT ION OF CAPITAL GAINS. 3.1 IN REPLY THE LD. DR SUBMITTED THAT A SPECIFI C INFORMATION HAD BEEN RECEIVED AND THE CONTENTS OF STATEMENT OF MAHESH GARG WERE ALSO COMMUNICATED TO THE AO. THEREFORE THE AO WAS WITH IN HIS RIGHT TO REOPEN THE ASSESSMENT AS PRIMA FACIE THERE WAS REASO N TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT BECAUSE OF THE ACCOMMODA TION ENTRY. IT IS ALSO HER CASE THAT THE TRANSACTIONS HAVE BEEN MANI PULATED TO SHOW UNEXPLAINED CREDITS AS CAPITAL GAINS WITH A VI EW TO REDUCE THE INCIDENCE OF TAXATION. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND S UBMISSIONS MADE BEFORE US. THE FACTS ARE THAT ASSESSMENT U/S 14 3(3) HAD BEEN COMPLETED IN THIS CASE EARLIER. IN THE COURSE OF ASSESSMEN T PROCEEDINGS THE ASSESSEE HAD DECLARED CAPITAL GAINS ON SALE OF SHARES OF PARNAMI. THE SUM OF RS. 7.00 LAKH WAS PART OF OVERALL SALE CONSIDERATIO N OF RS.10 47 834/-. THE MATTER WAS EXAMINED BY THE AO IN THE ORIGINAL AS SESSMENT PROCEEDINGS. THEREAFTER INFORMATION WAS RECEIVED THAT RS. 7. 00 LAKH WAS MERELY AN ITA NO. 3386(DEL)/2009 6 ACCOMMODATION ENTRY. THIS AMOUNT IS PART OF THE SALE CONSIDERATION DECLARED IN THE ORIGINAL RETURN. THE EVIDENCE RE GARDING PURCHASE OF SHARES IS ON RECORD. IN THE LIGHT OF THESE FACTS TWO QUESTIONS ARISE BEFORE US- (I) WHERE THE AO WAS JUSTIFIED IN REOPENING TH E ASSESSMENT; AND (II) WHETHER HE WAS JUSTIFIED IN MAKING THE ADDITION OF RS. 7 03 500/- TO THE TOTAL INCOME OF THE ASSESSEE? 4.1 IN THE CASE OF DULI CHAND SINGHANIA VS. ACIT (2004) 136 TAXMAN 725 ( P&H) THE ASSESSMENT HAD BEEN COMPL ETED EARLIER U/S 143(3). THEREAFTER THE AO ISSUED A NOTICE U/S 148 ON THE GROUND THAT THE ASSESSEE WRONGLY CLAIMED DEDUCTION U/S 80-O ON GROSS FOREIGN RECEIPTS; WHEREAS THE DEDUCTION IS AVAILABLE ON NET FOREIGN INCOME. THE COURT CAME TO THE CONCLUSION THAT PROVISO TO SECTION 147 COME S INTO PLAY AND IT HAS TO BE SHOWN THAT INCOME ESCAPED DUE TO FAILURE OF T HE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL FACTS MATERIAL TO THE ASSESS MENT. THE CLAIM OF DEDUCTION OF GROSS FOREIGN RECEIPTS DOES NOT LEAD TO ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH HAD BEEN DISCLOSED. THE FACTS OF THIS CASE ARE DIS TINGUISHABLE AS THE CASE MERELY INVOLVED INTERPRETATION OF SECTION 80-O AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY A ND FULLY ALL MATERIAL FACTS ITA NO. 3386(DEL)/2009 7 WHEREAS IN THE INSTANT CASE THE INFORMATION RECE IVED BY THE AO CASTS DOUBT ON GENUINENESS OF RS. 7.00 LAKH BEING SAL E PROCEEDS OF SHARES. IT WAS THE STAND OF THE ASSESSEE THAT THE AMOUNT RE PRESENTS SALE PROCEEDS WHEREAS THE ENQUIRIES BY THE INVESTIGATION WIN G SHOWED THAT IT WAS IN THE NATURE OF ACCOMMODATION ENTRY. FURTHER IN TH E CASE OF HARYANA ACRYLIC MANUFACTURING CO. LTD. VS. CIT WP(C) 4074 /2007 DATED 03.11.2008 (DEL) IT HAS BEEN MENTIONED THAT THERE IS NO WHISPER THAT THE ASSESSEE FAILED TO FURNISH ALL MATERIAL FACTS FUL LY AND TRULY AND BECAUSE OF THIS FAILURE THE INCOME ESCAPED ASSESSMENT. AC CORDINGLY IT HAS BEEN HELD THAT THE AO DID NOT HAVE JURISDICTION U/S 147 TO REOPEN THE ASSESSMENT. IN THE CASE OF ITO VS. MEWALAL DWA RKA PRASAD (1989) 176 ITR 529 THE INCOME-TAX OFFICER HAD ACCEPTED G ENUINENESS OF THREE CREDITS IN THE ORIGINAL ASSESSMENT AFTER MAKING E NQUIRIES. THEREAFTER A NOTICE U/S 148 WAS ISSUED. IN WRIT PETITION THE HONBLE HIGH COURT HELD THAT THE NOTICE WAS WITHIN JURISDICTION IN RESPECT OF ONE CASH CREDIT BUT NOT IN RESPECT OF TWO CASH CREDITS. THE HONB LE SUPREME COURT CAME TO THE CONCLUSION THAT THE PROVISION CONTAINED IN SECTION 147(A) DID NOT COME INTO OPERATION AS ESCAPEMENT OF INCOME HAD NOT R ESULTED FROM FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE PRIMARY FACT S HAD BEEN DISCLOSED ITA NO. 3386(DEL)/2009 8 BEFORE THE INCOME-TAX OFFICER IN THE COURSE OF REG ULAR ASSESSMENT AND THUS THE NOTICE WAS BAD IN LAW. THE FACTS OF THIS CA SE ARE ALSO DISTINGUISHABLE BECAUSE SUBSEQUENT ENQUIRY BY THE INVESTIGATION WING SHOWED THAT THE ENTRY OF RS. 7.00 LAKH WAS MERELY AN ACCOMMODATIO N ENTRY RECEIVED FROM HABITUAL SUPPLIER OF ACCOMMODATION ENTRIES. THUS ON A PRIMA FACIE BASIS THE FACTS DISCLOSED BY THE ASSESSEE COULD BE SAID TO BE PARTLY INCORRECT. ON THE OTHER HAND THE LD. DR RELIED O N THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF A.G.R. INVESTME NTS LTD. VS. ADDITIONAL CIT & ANOTHER (2011) 333 ITR 146. THE COURT MENTIONED THAT THE AO HAD TAKEN NOTE OF THE FACT THAT TRANSACTIONS I NVOLVING RS. 27 LAKH CONSTITUTED FRESH INFORMATION IN RESPECT OF THE A SSESSEE AS A BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PROVIDED TO IT RE PRESENTING UNDISCLOSED INCOME. HE ALSO ADVERTED TO THE CONCEPT OF TRUE AND FULL DISCLOSURE. THERE WAS SPECIFIC INFORMATION FROM THE INVESTI GATION WING. THUS IT IS NEITHER A CHANGE OF OPINION NOR IT CONVEYS THAT A PARTICULAR INTERPRETATION OF A SPECIFIC PROVISION HAS BEEN DONE IN A P ARTICULAR MANNER IN THE ORIGINAL ASSESSMENT WHICH IS SOUGHT TO BE REVISED NOW. THEREFORE THE WRIT PETITION WAS DISMISSED IN SO FAR AS IT CHA LLENGED NOTICE U/S 148. WE ARE OF THE VIEW THAT NATURE OF INFORMATION AND THE SOURCE OF INFORMATION IN THE TWO CASES ARE SIMILAR AND SAME. NO DOUBT THE ASSESSEE HAD SHOWN ITA NO. 3386(DEL)/2009 9 THE TRANSACTIONS HOWEVER THE DISCLOSURE DID N OT AMOUNT TO TRUE AND FULL DISCLOSURE WHEN SEEN ON A PRIMA FACIE BASIS. AC CORDINGLY IT IS HELD THAT THE AO WAS RIGHT IN REOPENING THE ASSESSMENT. 4.2 COMING TO THE MERITS THE FACTS REMAINS THAT THE AO RELIED ON THE FINDINGS OF THE INVESTIGATION WING. NO INDEPEN DENT INVESTIGATION HAS BEEN MADE IN ASSESSMENT PROCEEDINGS. MAHESH GARG HA S NOT BEEN EXAMINED BY THE AO TO ESTABLISH WHETHER THE TRANSACTION WAS IN THE NATURE OF ACCOMMODATION ENTRY OR NOT. EVEN HIS STATEMENT F URNISHED TO THE INVESTIGATION WING HAS NOT BEEN BROUGHT ON RECOR D SO AS TO EVALUATE ITS TRUTHFULNESS OR OTHERWISE. ON THE OTHER HAND THE CASE OF THE ASSESSEE IS THAT SOME SHARES WERE PURCHASED IN EARLIER YE AR A PART OF WHICH HAVE BEEN SOLD IN THIS YEAR. THE TWO AMOUNTS OF RS. 7.00 LAKH AND RS. 2 74 780/- REPRESENT THE SALE PROCEEDS RECEIVED FROM JRD STOCK BROKERS PVT. LTD. THE AMOUNT OF RS. 2 74 780/- HAS BEEN A CCEPTED AS GENUINE SALE PROCEEDS. THE OTHER AMOUNT OF RS. 7.00 LAKH IS TAKEN AS ACCOMMODATION ENTRY. EVEN IN RESPECT OF THIS RECEIPT THE CORR ESPONDING CAPITAL GAIN OFFERED FOR TAXATION HAS NOT BEEN DEDUCTED. THE REFORE ON THE BALANCE OF PROBABILITIES THE AO HAS NOT DISPLACED THE ASSE SSEES SUBMISSION THAT THE WHOLE OF THE AMOUNT REPRESENTS SALE PROCEEDS OF SHARES. IN VIEW THEREOF ITA NO. 3386(DEL)/2009 10 THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED O N MERITS. ACCORDINGLY IT IS HELD THAT THE LD. CIT(APPEALS) ERRED IN UPH OLDING THE FINDING IN THIS BEHALF. 5. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. SD/- SD/- (DIVA SINGH) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. STANCHART HOLDINGS PVT. LTD. NEW DELHI. 2. ITO WARD 9(2) NEW DELHI. 3. CIT 4. CIT(A) 5. THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR.