M/s. Super Metal Re-Rollers Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 622/DEL/2010 | 2001-2002
Pronouncement Date: 16-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 62220114 RSA 2010
Assessee PAN AAACS1263Q
Bench Delhi
Appeal Number ITA 622/DEL/2010
Duration Of Justice 2 month(s) 5 day(s)
Appellant M/s. Super Metal Re-Rollers Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 16-04-2010
Assessment Year 2001-2002
Appeal Filed On 10-02-2010
Judgment Text
ITA NO. 622/DEL/2010 A.Y. 2001-02 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 622/DEL/2010 A.Y. : 2001-02 M/S SUPER METAL RE-ROLLERS PVT. LTD. VS. INCOME TAX OFFICER 51 SMALL SCALE INDUSTRIAL ESTATE WARD-9(4) NEW DELHI GT KARNAL ROAD DELHI 110 033 (PAN: AAACS1263Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. JAIN CA DEPARTMENT BY : MS. PRATIMA KAUSHIK SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A) DATED 10.9.2009 FOR THE ASSESSMENT YEAR 2001-02. 2. THE FIRST ISSUE RAISED IS THAT ASSESSING OFFIC ER AS WELL AS LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN REOPENI NG THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT 1961. 2.1 THE NEXT ISSUE RAISED IS THAT ASSESSING OFFICE R AS WELL AS LD. COMMISSIONER OF INCOME TAX (APPEALS) ACTED ARBITRARILY IN MAKING AN ADDITION OF RS. 2054296/- U/S 68 OF THE INCOME TAX ACT 1961 AND RS. 41 086/- AS ESTIMATE COMMISSION ON THE ABOVE ADDITION. ITA NO. 622/DEL/2010 A.Y. 2001-02 2 3. THE RETURN OF INCOME IN THIS CASE DECLARING NIL WAS FILED ON 30.10.01 AFTER SET OFF UNABSORBED LOSSES TO THE EXTENT OF RS. 1113 04/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE IT ON 23.2.2004. MEANW HILE INFORMATION WAS RECEIVED FROM THE OFFICE OF THE INVESTIGATION WING THAT THE ASSESSEE COMPANY HAD TAKEN ACCOMMODATION ENTRIES FROM M/S MKM FINSEC PVT . LTD. HAVING AN ACCOUNT WITH THE CORPORATION BANK KAROL BAGH NEW DELHI AM OUNTING TO RS. 1041175/-. ACCORDINGLY NOTICE U/S 148 OF THE IT ACT WAS ISSUE D ON 26.3.2008. THE ASSESSEE SUBMITTED TO THE ASSESSING OFFICER THAT THERE IS N O ESCAPEMENT OF INCOME SINCE THIS AMOUNT HAS BEEN SHOWN AS INCOME FROM SHARE OF TRADING WHICH HAS BEEN DULY REFLECTED AND CREDITED IN THE PROFIT AND LOSS ACCOU NT OF THE ASSESSEE COMPANY. ASSESSING OFFICER OBSERVED THAT THE TRANSACTION WI TH PRESENT COMPANY I.E. M/S MKM FINSEC. PVT. LTD. HAVE BEEN SHOWN BY THE ASSES SEE AND THE ASSESSEE HAS ALREADY BEEN ASSESSED U/S 143(3) BUT HE HELD THAT NOW THE FACTS OF THE CASE HAVE BEEN CHANGED AFTER RECEIVING INFORMATION FROM THE I NVESTIGATION WING THAT TRANSACTIONS OCCURRED BETWEEN THE ASSESSEE COMPANY AND M/S MKM FINSEC. PVT. LTD. WERE NOTHING BUT THE GAME OF ACCOMMODATION EN TRY AND THE ASSESSEE WAS A BENEFICIARY. ON THE MERITS OF THE CASE ASSESSING OFFICER CONCLUDED AS UNDER:- 7. KEEPING IN VIEW OF THE ABOVE FACTS IT HAS BEEN ESTABLISHED THAT RS. 2054296/- (TOTAL PROFIT SHOWN BY THIS COMPANY) TAKEN BY THE ASSESSEE COMPANY FROM M/S MKM FINSEC. PVT. LTD. DURING THE YEAR IS NOTHING BUT AN ACCOMMODATION ENTRY WHI CH WAS TAKEN BY THE ASSESSEE AFTER GIVING CASH TO M/S MKM FINSEC. PVT. LTD. HENCE THE AMOUNT OF RS. 2054296/- IS A DDED BACK TO THE INCOME OF THE ASSESSEE TREATING AS INCOME IN TH E LIGHT OF THE PROVISION OF SECTION 68 OF THE INCOME TAX ACT. AS THE ASSESSEE HAS FAILED TO FURNISH ACCURATE PARTICULARS OF INCOME I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME TO ITA NO. 622/DEL/2010 A.Y. 2001-02 3 THE EXTENT OF RS. 2054296/- PENALTY PROCEEDINGS AR E BEING INITIATED SEPARATELY U/S 271(1)(C) OF THE I.T. ACT. 8. AS PER REPLY GIVEN IN RESPONSE TO THE QUESTION N O. 8 THE DIRECTOR OF THE COMPANY ADMITTED THAT FOR PROVIDING ENTRY THEY USED TO CHARGE A COMMISSION ON THE VALUE OF THE ENT RY PROVIDED. HENCE TAKING THE ENTRY OF RS. 2054296/- ASSESSEE MUST HAVE GIVEN A CERTAIN COMMISSION TO M/S MKM FIN SEC. PVT. LTD. THEREFORE 2% OF THE AMOUNT OF RS. 2054296/- I.E. RS. 41086/- IS ALSO BEING ADDED AS COMMISSION GIVEN FO R TAKING THE ENTRY INCOME FROM UNDISCLOSED SOURCE NOT SHOWN BY THE ASSESSEE COMPANY. AS THE ASSESSEE HAS FAILED TO FUR NISH ACCURATE PARTICULARS OF INCOME AND CONCEALED THE IN COME PENALTY PROCEEDINGS U/S 271(1)(C) ARE BEING INITIAT ED SEPARATELY ON THIS ISSUE ALSO. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) REJECTED THE ASSESSEES AGITATION AGAINST REOPENING BY HOLD ING THAT THE ASSESSEES CONTENTION THAT THERE WAS NO MATERIAL OR INFORMATIO N TO REOPEN THE ASSESSMENT WAS DEVOID OF MERIT. 4.1 AS REGARDS THE MERITS OF THE CASE LD. COMMISSIO NER OF INCOME TAX (APPEALS) NOTED THAT THOUGH THE ASSESSEE HAD STATED THAT THE COPY OF CONTRACT NOTE THAT PURCHASE AND SALE WAS MADE AVAILABLE TO THE ASSESSI NG OFFICER. HOWEVER IN VIEW OF STATEMENT OF MR. MAHESH BATRA THE DIRECTOR OF M/S MKM FINSEC PVT. LTD. RECORDED ON 23.1.2004 THE CLAIM OF THE ASSESSEE IS OF NO VALUE. HENCE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ASSESSING OFFICER S ACTION. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 6. LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE R EOPENING WAS BAD IN AS MUCH AS THE ASSESSEE HAD DULY DISCLOSED THE TRANSAC TION AND REFLECTED THE SAME IN THE PROFIT AND LOSS ACCOUNT AND THE EARLIER ASSESS MENT WAS COMPLETED U/S 143(3). ITA NO. 622/DEL/2010 A.Y. 2001-02 4 UPON CAREFUL CONSIDERATION WE FIND THAT IT IS TRUE THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) AND THE IMPUGNED TRANSACTION WAS RECORDED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT AS INCOME FROM SALE OF SHARE AND THE SAME WAS ASSESSED INTO THE HEAD BUSINESS INCOME. HOWEVER LATER ON INFORMATION WAS RECEIVED FROM THE INVESTIGATION WIN G BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES FROM M/S MKM FINSEC. PVT. LTD. AND ON THIS INFORMATION REOPENING NOTICES WAS ISSUED ON 26.3.2008. WE FIND THAT ASSESSEE HAS DISCLOSED THE SAID ENTRY AS INCO ME FROM SALE OF SHARES AND SHOWN THE SAME IN THE HEAD BUSINESS INCOME. HO WEVER INTIMATION WAS RECEIVED THAT ASSESSEES TRANSACTION WITH M/S MKM F INSEC. PVT. LTD. WERE SHAM AND THE SAME WERE ONLY ACCOMMODATION ENTRY RECEIVED . SUCH RECEIPT OF ACCOMMODATION ENTRIES DO NOT FORM PART OF BUSINES S INCOME AND FALL UNDER THE HEAD UNDISCLOSED INCOME FROM OTHER SOURCES. IN THI S VIEW OF THE MATTER WE FIND THAT ASSESSEES GRIEVANCE IN THIS REGARD IS NOT AT ALL COGENT. THE ASSESSEE HAS CLEARLY MISLEAD THE REVENUE BY CLAIMING A SHAM TRAN SACTION AS BUSINESS TRANSACTIONS. HENCE IN OUR CONSIDERED OPINION THE REOPENING WAS PERFECTLY JUSTIFIED. 6.1 AS REGARDS THE MERIT OF THE CASE WE FIND THAT ASSESSEES TRANSACTIONS WITH M/S MKM FINSEC PVT. LTD. HAS BEEN SHOWN TO HAVE R ESULTED IN A PROFIT FROM SHARE TRANSACTION AMOUNTING TO RS. 2054926/-. IN THIS REG ARD WE NOTE THAT ASSESSEE HAS PURCHASED AND SOLD THE SO CALLED SHARES TO M/S MKM FINCSEC. PVT. LTD. ITSELF. NEITHER THE PAYMENT FOR THE PURCHASE HAS BEEN MADE TO M/S MKM FINSEC PVT. LTD. NOR THE SALE PROCEEDS RECEIVED. THE SHARES HAV E NEITHER BEEN RECEIVED PHYSICALLY NOR SOLD PHYSICALLY I.E. THERE IS NO ACT UAL TRANSFER OF SHARES. THE ENTIRE TRANSACTION IS ONLY APPEARING AS BOOK ENTRIES. IN THIS REGARD ASSESSING OFFICER ITA NO. 622/DEL/2010 A.Y. 2001-02 5 HAS REFERRED TO THE STATEMENT OF MR. MAHESH BATRA O NE OF THE DIRECTORS OF M/S MKM FINSEC. PVT. LTD. WHICH WAS RECORDED U/S 131 OF THE IT ACT. IN THE SAID STATEMENT SHRI MAHESH BATRA HAS CLEARLY STATED THE FOLLOWING :- Q.NO. 8:- PLEASE EXPLAIN THE PROCEDURE OF FOLLOW ED FOR PROVIDING ACCOMMODATION ENTRIES? ANS:- WE USED TO GET CASH RECEIVED FROM CLIENTS EI THER DIRECTLY IN OUR BANK A/CS OR THROUGH OUR ASSOCIATES. AMOUN T DEPOSITED IN THE ASSOCIATES A/CS ARE THEREAFTER TRANSFERRED TO THE MAIN A/C OF MKM FINSEC. PVT. LT D. AND CHEQUES ARE ISSUED TO THE PERSON WHO GIVE CASH AFTE R DEDUCTING THE COMMISSION. 6.2 HE FURTHER STATED THE FOLLOWING:- Q.NO. 10:- IT MEANS THAT NO REAL BUSINESS HAS TAK EN PLACE EXCEPT ACCOMMODATION ENTRIES BUSINESS IN MKM FINSEC. PVT. LTD. AND YOUR OTHER ASSOCIATES BUSINESS. ANS:- YES. 6.3 HENCE IN LIGHT OF THE ABOVE AND FROM THE NATU RE OF TRANSACTION AS RECORDED IN THE BOOKS OF THE ASSESSEE AND THE STATEMENT ON O ATH BY THE DIRECTOR OF MKM FINSEC. PVT. LTD. IT IS CLEAR THAT THE AMOUNT RECE IVED BY THE ASSESSEE FROM M/S MKM FINSEC. PVT. LTD. IS CLEARLY ACCOMMODATION ENT RY. IN THAT VIEW OF THE MATTER THE RECEIPT OF THE ASSESSEE FROM M/S MKM H AS TO BE TREATED AS UNDISCLOSED INCOME FROM OTHER SOURCES AMOUNTING TO RS. 2054296/- IN STEAD OF BUSINESS INCOME AS TAKEN BY THE ASSESSEE IN ITS PR OFIT AND LOSS ACCOUNT. HOWEVER WE NOTE THAT THE SAID AMOUNT HAS ALREADY BEEN SHOW N AS CREDIT IN THE ORIGINAL PROFIT AND LOSS ACCOUNT AND INCLUDED IN THE PROFIT ON SALE OF SHARES. HENCE THE SAID AMOUNT HAS TO BE TAKEN OUT FROM INCOME FROM BU SINESS AND ASSESSED AS UNDISCLOSED INCOME FROM OTHER SOURCES. IN THAT VIEW OF THE MATER THERE WOULD ITA NO. 622/DEL/2010 A.Y. 2001-02 6 NOT BE ANY FURTHER ADDITION OF RS. 2054296/- AS MAD E BY THE ASSESSING OFFICER . HOWEVER THIS MATTER NEEDS TO BE EXAMINED AT THE LE VEL OF THE ASSESSING OFFICER AS TO WHETHER THIS AMOUNT HAS ALREADY BEEN TAKEN I NTO INCOME BY THE ASSESSEE OR NOT. IF THE SAME HAS ALREADY BEEN TAKEN INTO AC COUNT THE SAME ONLY IS TO BE CHANGED FROM BUSINESS INCOME TO UNDISCLOSED INCO ME FROM OTHER SOURCES. 6.4 AS REGARDS THE ADDITION OF @2% AS COMMISSION OF THE AMOUNT OF RS. 2054296/- OF ACCOMMODATION RECEIPT I.E. RS. 410 86/- AS COMMISSION THE ASSESSEE HAS NOT PRODUCED ANYTHING TO REBUT THIS A DDITION. IN VIEW OF THE STATEMENT OF THE DIRECTOR OF M/S MKM FINSEC. PVT. L TD. AND OUR ADJUDICATION IN THE PRECEDING PARAGRAPHS WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE AUTHORITIES BELOW AND HENCE CONFIRMED THE SAME. 7. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16/4/2010. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16/04/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3.CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES