ITO, New Delhi v. M/s. J.P. Overseas Pvt. Ltd., New Delhi

ITA 4867/DEL/2009 | 2002-2003
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 486720114 RSA 2009
Assessee PAN AAACJ2250L
Bench Delhi
Appeal Number ITA 4867/DEL/2009
Duration Of Justice 1 year(s) 9 month(s) 1 day(s)
Appellant ITO, New Delhi
Respondent M/s. J.P. Overseas Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 30-09-2011
Date Of Final Hearing 26-09-2011
Next Hearing Date 26-09-2011
Assessment Year 2002-2003
Appeal Filed On 29-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI D BENC H BEFORE SHRI C.L. SETHI JM & SHRI A.N. PAHUJA AM ITA NO.4867/DEL/2009 ITA NO.4867/DEL/2009 ITA NO.4867/DEL/2009 ITA NO.4867/DEL/2009 WITH WITH WITH WITH CO NO.309/DEL/2011 CO NO.309/DEL/2011 CO NO.309/DEL/2011 CO NO.309/DEL/2011 ASSESSMENT YEAR:2002-03 INCOME TAX OFFICER COMPANY WARD 4(1) ROOM NO.418 CR BUILDING IP ESTATE NEW DELHI V/S V/S V/S V/S. M/S J.P. OVERSEAS (P) LTD 176 EA INDERPURI NEW DELHI-110012 [PAN:AAACJ 2250 L] [PAN:AAACJ 2250 L] [PAN:AAACJ 2250 L] [PAN:AAACJ 2250 L] (APPELLANT) (RESPONDENT) & ASSESSEE BY SHRI RAJESH K.KHIWANI AR REVENUE BY MS. Y. KAKKAR DR DATE OF HEARING 26-09-2011 DATE OF PRONOUNCEMENT 30-09-2011 O R D E R O R D E R O R D E R O R D E R A.N.PAHUJA: A.N.PAHUJA: A.N.PAHUJA: A.N.PAHUJA:- -- - THIS APPEAL FILED ON 29.12.2009 BY THE REVENUE AND CORRESPONDING CROSS- OBJECTION [CO] FILED ON 2.9.2011 BY THE ASSESSEE AGAINST AN ORDER DATED 22.10.2009 OF THE LEARNED CIT (A)-VII NEW DELHI RAISE THE FOLLOWING GROUNDS:- I.T.A. NO.4867/D/2009[REVENUE] I.T.A. NO.4867/D/2009[REVENUE] I.T.A. NO.4867/D/2009[REVENUE] I.T.A. NO.4867/D/2009[REVENUE] 1 THE ORDER OF THE CIT(A) IS ERRONEOUS & CONTRARY TO FACTS AND LAW. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF `21 16 898/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND `52 922/- ON ACCOUNT OF COMMISSION PAID FOR OBTAINING ACCOMMODATION ENTRIES.. ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 2 2.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. C.O. NO.309/D/2011[ASSESSEE] C.O. NO.309/D/2011[ASSESSEE] C.O. NO.309/D/2011[ASSESSEE] C.O. NO.309/D/2011[ASSESSEE] 1. THAT THE GROUNDS OF APPEAL RAISED BY THE ASSESSING OFFICER ARE MISCONCEIVED AND INCORRECT. 2. THAT THE LEARNED CIT(A) HAS LEGALLY ERRED IN UPHO LDING THE VALIDITY OF INITIATION OF PROCEEDING U/S 148 AND THE ASSESSMENT ORDER FRAMED THEREUNDER. THE ASSESSMENT ORDER FRAMED ON ILLEGAL INITIATION OF PROCEEDINGS NEEDS TO BE QUASHED AS THE LIMITATION IS BAD IN LAW. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AMEND ANY GROUNDS RAISED ABOVE AT THE TIME OF HEARING. 2. ADVERTING FIRST TO GROUND NOS. 2 AND 2.1 IN THE A PPEAL OF THE REVENUE FACTS IN BRIEF AS PER RELEVANT ORDERS ARE T HAT RETURN DECLARING NIL INCOME FILED ON 31 ST OCTOBER 2002 BY THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT 1961 (HERE INAFTER REFERRED TO AS THE ACT) .THEREAFTER IN CONSEQUENCE OF INFOR MATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT IN REL ATION TO TRANSACTIONS MADE BY THE ASSESSEE WITH M/S MKM FINSEC.P LTD . ASSESSMENT WAS REOPENED U/S 147 OF THE ACT WITH THE ISSUE O F A NOTICE DATED 17.12.2007 U/S 148 OF THE ACT AFTER DULY RECO RDING THE REASONS IN WRITING. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED A LETTER DATED 25 TH AUGUST 2008 RAISING CERTAIN OBJECTIONS BESIDES SEEKING A COPY OF REASONS RECORDED WHILE SUBMITTING THAT RETURN FILED ORIGINALLY MAY TREATED AS RETURN IN RESPONSE TO THE SAID NOTICE U/ S 148 OF THE ACT. ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 3 THE ASSESSING OFFICER [A.O. IN SHORT] DISPOSED OF THE OBJE CTIONS RAISED BY THE ASSESSEE ON 05.11.2008 AND ALSO SUPPLIED A COPY OF THE REASONS RECORDED FOR INITIATING PROCEEDINGS U/S 147 OF THE AC T. DURING THE COURSE OF REASSESSMENT PROCEEDINGS THE ASSESSEE RAISED CERTAI N FURTHER OBJECTIONS WHICH WERE DISPOSED OF BY THE AO V IDE LETTER DATED 8 TH DECEMBER 2008. INTER ALIA A COPY OF STATEMENT OF SHRI MAHESH BATRA DIRECTOR OF M/S MKM FINANCE (P) LTD. RECORDED ON OATH BY ADDL. DIT(INV.) WAS ALSO SUPPLIED TO THE ASSESSEE. IN HIS STATEME NT SHRI MAHESH BATRA ADMITTED THAT M/S MKM FINANCE (P) LTD. W AS NOT DOING ANY REAL BUSINESS AND WAS PROVIDING ONLY ACCOMMODATION ENTRIES. AFTER CONSIDERING THE REPLY OF THE ASSESSEE IN THE LIGHT OF AFORESAID STATEMENT OF SHRI BATRA AND CONSIDERING COPY OF BANK STATEMENT OF M/S MKM FINANCE (P) LTD. FROM WHOM ACCOMMODATION ENTRIE S WERE RECEIVED BY THE ASSESSEE THE AO ADDED AN AMOUNT OF `21 16 898/- TO THE INCOME OF THE ASSESSEE BY WAY OF UNEXPLAINED CASH CR EDIT IN TERMS OF PROVISIONS OF SECTION 68 OF THE ACT BESIDES DISALLOWIN G AN AMOUNT OF ` 52 922/- TOWARDS COMMISSION PAID TO THE ENTRY OPERA TORS. 3. ON APPEAL THE LEARNED CIT(A) AFTER HAVING A RE MAND REPORT FROM THE AO ALLOWED THE CLAIM OF THE ASSESSEE IN THE FOLLOW ING TERMS:- 4.1 4.1 4.1 4.1 I HAVE CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT AND THE FACTS ON RECORD. IT IS OBSERVED THAT THE AO BASED HIS ARGUMENT ONLY ON THE BASIS OF INFORMATION FROM THE OF FICE OF THE DIT (INVESTIGATION) NEW DELHI. HE HAS ENTIREL Y RELIED UPON SUCH INFORMATION FOR REACHING SUCH CONCLUSION. TH E ABOVE INFORMATION MAY BE A SUFFICIENT GROUND TO INIT IATE REASSESSMENT PROCEEDINGS OF A CASE BUT TO MAKE AN ADDITION THE AO HAS TO ESTABLISH THE FACT OF FRAUDULEN T NATURE OF SUCH TRANSACTION. PURELY ON SURMISES AND CONJECTURES NO TRANSACTION CAN BE HELD AS BOGUS UNLESS TH E SAME IS PROVED ON THE BASIS OF SOUND REASONING AND EVIDENCE ON THE PART OF THE AO BEFORE MAKING THE AD DITION. WHEN THE ASSESSEE HAS FURNISHED ALL NECESSARY PROOF IN ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 4 SUPPORT OF ITS CLAIM IT IS ALL THE MORE NECESSARY TO RE BUT SUCH EVIDENCE WITH COGENT AND CREDIBLE EVIDENCE ON T HE PART OF AO BEFORE MAKING THE ADDITION. IT IS TRUE TH AT THE SAID AMOUNT OF RS.21 16 899/- HAS BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION BY THE APPELLANT FROM M KM FINSEC PVT. LTD. AS ALSO MENTIONED IN THE ASSESSMENT ORDER . HOWEVER THE PERUSAL OF THE BALANCE-SHEET AS ON 31-3-2 002 AND 31-03-2001 REVEALS THAT NO NEW MONEY HAS BEEN INTRODUCED DURING THE YEAR UNDER CONSIDERATION. RATH ER THE SAID AMOUNT HAS BEEN REFLECTED IN THE LIST OF SUNDRY DEBTORS IN THE BALANCE-SHEET AS AT 31-03-2001. THE PER USAL OF THE ACCOUNTS OF THE APPELLANT COMPANY DOES NOT LEA VE ANY ROOM FOR DOUBT THAT THE SAID AMOUNT WAS NOTHING B UT THE SALE PROCEEDS OF THE SHARES WHICH HAVE ALREADY BEEN SHOWN BY THE APPELLANT IN THE PROFIT & LOSS ACCOUNT FOR A. Y.2001-02. WHEN THE SALE PROCEEDS OF THE SHARES HAVE ALREADY BEEN SHOWN BY THE APPELLANT AND THE SAME HAS ALSO BEEN OFFERED AS INCOME IT CAN NOT BE BROUGHT TO TAX AGAIN IN A.Y. 2002-03 WHICH IS UNDER APPEAL. IT IS AL SO OBSERVED THAT THERE HAS NEITHER BEEN FRESH LOAN NOR FR ESH SHARE CAPITAL INTRODUCED IN THE ACCOUNTS OF THE APPEL LANT COMPANY DURING THE YEAR UNDER CONSIDERATION. 4.2 4.2 4.2 4.2 IN THE PRESENT CASE DURING THE COURSE OF REASSESSMENT PROCEEDINGS THE COPY OF STATEMENT OF SHRI MAHESH BATR A WAS HANDED OVER BY THE LD. A.O. TO THE ASSESSEE BUT HE HAS FAILED TO ADHERE TO THE CATEGORICAL REQUEST OF AP PELLANT TO PRODUCE SHRI MAHESH BATRA FOR HIS CROSS- EXAMINATIO N. IT IS SETTLED PROPOSITION OF LAW THAT THE INFORMATION GAT HERED BEHIND THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST HIM UNLESS UNTIL AN OPPORTUNITY OF REBUTTING THE SAME IS GIVEN TO THE ASSESSEE. IT IS AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. RELIANCE IS PLACED ON THE DECISION OF HORI'BL E SUPREME COURT IN CASE OF PRAKASH CHAND NAHTA V. UNION OF INDIA L2001] 247 ITR 274 IN SUPPORT OF THE PROPOSITIO N THAT CROSS-EXAMINATION OF THE WITNESS IS MUST BEFORE THE DEPARTMENT RELIES ON THE STATEMENT OF THE WITNESS FOR MAKING ADDITION. RELIANCE IS ALSO PLACED ON THE DECISI ON OF ALLAHABAD HIGH COURT IN THE CASE OF NATHU RAM PREMCH AND V. CIT [1963] 49 ITR 561 WHEREIN THE HONBLE COURT EXPLAINED THAT IT WAS THE DUTY OF THE ASSESSING OFFICER TO ENFORCE THE ATTENDANCE OF A WITNESS IF HIS WITNESS IS MATERIAL IN EXERCISE OF HIS POWERS UNDER ORDER 16 R. 10 OF CPC AND WHERE THE OFFICER DOES NOT DO SO NO INFERENC E CAN BE DRAWN AGAINST THE ASSESSEE. RELIANCE IS PLACED ON THE ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 5 DECISION OF THE JURISDICTIONAL HIGH COURT I.E. DELHI HIGH COURT IN COMMISSIONER OF INCOME-TAX VS. PRADEEP KUMAR GUPTA AND VIJAY GUPTA(2008) 303 ITR 95(DELHI) WHERE IN IT WAS HELD THAT THE REOPENING OF ASSESSMENT IS NOT PERMISSIBLE ON MERE ADVERSE STATEMENTS FROM OTHERS. SUCH STATEMENT BY ITSELF DOES NOT CONSTITUTE INFORMATION UNLESS THE ASSESSING OFFICER HAS MADE ENQUIRIES THEREON AND INFERRED UNDERSTATEMENT OF INCOME. I AM THEREFORE INCLINED TO AGREE WITH THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT TO THE EFFECT THAT STATEMENT RECORDED BEHI ND BACK OF THE ASSESSEE WITHOUT BEING SUBJECTED TO CROSS- EXAMINATION CANNOT BE FULLY ADMITTED AS EVIDENCE AGA INST THE ASSESSEE. 4.3 SINCE THE ADDITION HAS BEEN MADE AS UNEXPLAINED CASH CREDIT IT IS CONSIDERED NECESSARY TO EXAMINE THE C ASE IN THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE AC T. UNDER SECTION 68 OF THE ACT IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT & THE APPELLANT OFFERS NO EXPLANATION ABOUT THE NATURE & SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY IN THE OPINION OF THE ASSESSING OFFICER THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR. THEREFORE WHAT HAS TO BE ENQUIRED INTO BY THE ASSESSING OFFICER IS THE NATURE & SOURCE OF THE SUM OR DEPOSIT. IF THE EXPLANATION WITH REGARD TO NATURE & SOURCE IS NOT FOUND SATISFACTORY ONLY THEN THE AMOUNT SO CREDITED MAY BE TREATED AS INCOME. IT HAS BE EN HELD BY THE VARIOUS HIGH COURTS THAT THE ASSESSEE HAS TO PROVE THREE CONDITIONS (I) IDENTITY OF THE CREDITOR (II) CAPACITY OF SUCH CREDITOR TO ADVANCE MONEY & (III) GENUINENESS OF THE TRANSACTION. IF ALL THE AFORESAID CONDITIONS ARE PROVED THE BURDEN SHIFTS ON THE REVENUE TO PROVE THAT THE AMOUNT BELONGED TO THE ASSESSEE. IT HAS ALSO BEEN HELD BY THE VARIOUS HIGH COURTS THAT THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF SOURCE OR THE ORIGIN OF DEPOSIT. REFERENCE MAY ALSO BE MADE TO THE DECISION OF THE APEX COURT IN THE CASES OF CIT VS. ORISSA CORPN. (P) LTD. (1986) 159 ITR 78 (SC) & KISHAN CHAND CHELLARAM VS. CIT 125 ITR 713 (SC). IN THIS REGARD IT IS IMPORTANT TO TAKE NOTE OF THE JUDGMENT IN THE CASE O F KISHAN CHAND CHELLARAM (SUPRA) HOLDING THAT THE BURD EN IS ON THE DEPARTMENT TO SHOW THAT THE MONEY BELONGED TO THE ASSESSEE BY BRINGING PROPER EVIDENCE ON RECORD & THE ASSESSEE COULD NOT BE EXPECTED TO PUT EVIDENCE TO HELP THE DEPARTMENT TO DISCHARGE THE BURDEN THAT LAY UPON IT. THE ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 6 EVIDENCE IF ANY GATHERED BEHIND THE BACK OF THE A SSESSEE CANNOT BE USED AGAINST HIM WITHOUT CONFRONTING HIM WI TH IT. THERE IS NO EVIDENCE ON THE BASIS OF WHICH ASSESSING OFFICER WOULD COME TO A FINDING THAT SUM CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. 4.4 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE STATED ABOVE IT IS HELD THAT THE ADDITION OF RS.21 16 898/- CAN NOT BE SUSTAINED AND ACCORDINGLY THE SAME IS DIRECTED TO B E DELETED. AS THE ADDITION ON ACCOUNT OF ACCOMMODATION ENTRY HAS BEEN DELETED THE CONSEQUENTIAL ADDITION ON ACCOUNT OF COMMISSION OF RS.52 922/-FOR OBTAINING THE SAID ACCOMMODATION ENTRIES IS ALSO DIRECTED TO BE DELETED. AS A RESULT GROUND NOS. 5 6 7 8 AND 9 ARE ALLOWED. 4. THE REVENUE IS IN NOW APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPPOR TED THE ASSESSMENT ORDER. ON THE OTHER HAND THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO PAGE 45 125 A ND 238 OF THE PAPER BOOK CONTENDED THAT THE AMOUNT OF `21 16 898/ - HAVING BEEN REFLECTED AS INCOME IN THE PRECEDING ASSESSMENT YEAR TH E AO WAS NOT JUSTIFIED IN ADDING THE AMOUNT IN THE YEAR UNDER CON SIDERATION U/S 68 OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE. INDISPUTABLY THE AMOUNT OF `21 16 898/- W AS REFLECTED AS INCOME OF THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR ON ACCOUNT OF PURCHASE AND SALE OF SHARES. THE LEARNED CIT(A) FOU ND ON PERUSAL OF BALANCE SHEETS AS ON 31 ST MARCH 2001 & 31 ST MARCH 2002 THAT THE AMOUNT OF `21 16 898/- WAS REFLECTED AS SUNDRY DEBTORS AS ON 31 ST MARCH 2001 AND NO NEW MONEY WAS INTRODUCED BY THE A SSESSEE IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY THE LEARNED CIT(A) CONCLUDED THAT WHEN SALE PROCEEDS OF SHARES HAVING ALREADY BEEN SHOWN BY THE ASSESSEE AND OFFERED TO TAX AS INCOME IN THE ASSESSMENT YEAR 2001- 02 THESE COULD NOT BE BROUGHT TO TAX AGAIN IN THE Y EAR UNDER ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 7 CONSIDERATION. WE DO NOT FIND ANY INFIRMITY IN THIS A PPROACH OF THE LD. CIT(A). IN VIEW THEREOF ESPECIALLY WHEN NO NEW AFRE SH LOAN OR FRESH SHARE CAPITAL HAS BEEN INTRODUCED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION WHILE THE REVENUE HAVE NOT PLACED BEFO RE US ANY MATERIAL CONTROVERTING THE AFORESAID FINDINGS RECOR DED BY THE LEARNED CIT(A) SO AS TO UNABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE. THEREFORE GROUND NOS. 2 AND 2.1 IN THE APPEAL ARE DISMISSED. 3. GROUND NO.1 IN THE APPEAL BEING GENERAL IN NATUR E NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE US ON THIS GROUND D OES NOT REQUIRE SEPARATE ADJUDICATION WHILE NO ADDITIONAL GR OUND HAS BEEN RAISED BEFORE US IN TERMS OF GROUND NO.3 IN THE APPEAL OF THE REVENUE AND THE GROUNDS RAISED IN THE CO HAVING NOT BEEN PRESSE D BEFORE US BY THE LEARNED AR ON BEHALF OF THE ASSESSEE ACCORDINGLY ALL THESE GROUNDS ARE DISMISSED. 4. IN RESULT BOTH THE APPEAL OF THE REVENUE AND THE CORRESPONDING CO BY THE ASSESSEE ARE DISMISSED. SD/- SD/- (C.L. SETHI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. INCOME TAX OFFICER COMPANY WARD 4(1) ROOM NO.4 18 CR BUILDING IP ESTATE NEW DELHI 2. M/S J.P. OVERSEAS PVT. LTD. EA-176 INDER PURI NEW DELHI- 12. 3. CIT(A)-VII NEW DELHI 4. CIT CONCERNED. 5. DR ITAT D BENCH NEW DELHI 6. GUARD FILE. ORDER PRONOUNCED IN OPEN COURT ITA NO. 4867/DEL./2009 & CO NO.309/DEL./2011 8 BY ORDER DEPUTY/ // /ASSTT.REGISTRAR ITAT DELHI