M/s Futuristic Properties Pvt. Ltd,, New Delhi v. ITO, New Delhi

ITA 691/DEL/2010 | 2002-2003
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 69120114 RSA 2010
Bench Delhi
Appeal Number ITA 691/DEL/2010
Duration Of Justice 1 year(s) 1 month(s) 9 day(s)
Appellant M/s Futuristic Properties Pvt. Ltd,, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 25-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year 2002-2003
Appeal Filed On 15-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH B NEW DELHI BENCH B NEW DELHI BENCH B NEW DELHI BENCH B BEFORE SHRI R. P. TOLANI JUDICIAL MEMBER AND SHRI K. D. RANJAN ACCOUTANT MEMBER ITA NO. 691 /DEL/2010 (ASSESSMENT YEAR 2002-03) M/S. FUTURISTIC PROPERTIES PVT. LTD. VS. CIT(A) X III 7A/1 RAJPURA ROAD CIVIL LINES NEW DELHI NEW DELHI (APPELLANTS) (RESPONDENTS) PAN / GIR NO.AAACF2050L APPELLANT BY: SHRI VIRENDER PRATAP CA RESPONDENT BY: SHRI K RAVI RAMA CHANDRAN SR. DR ORDER ORDER ORDER ORDER PER K. D. RANJAN AM: PER K. D. RANJAN AM: PER K. D. RANJAN AM: PER K. D. RANJAN AM: 1. THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT Y EAR 2002-03 ARISES OUT OF THE ORDER OF LD. CIT(A) XIII NEW DEL HI. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER: 1) THAT THE LD .CIT(A) HA ERRED BOTH IN LAW AND FA CTS OF THE CASE IN DECIDING THE APPEAL EX-PARTE WITHOUT APPREC IATING THAT THE FIRSTS NOTICE DATED 10.06.2009 WAS RETURNED BY THE POSTAL AUTHORITIES BUT WHEN A PHONE WAS RECEIVED FORM THE DEPARTMENT WE HAD DULY APPEARED. THE SECOND NOTICE WAS NEVER RECEIVED MAY BE FOR THE REASON THAT WE WERE NEW TO THE POSTAL AUTHORITIES. ALL THE MORE THERE CANNOT BE ANY INTENTION TO AVOI D THE NOTICE AS THE ORDER OF THE LD .CIT(A) WAS DULY SERVED AND RECEIVED BY THE APPELLANT. 2) THAT THE LD .CIT(A) HAS ERRED BOTH IN LAW AND FACTS OF TH4E CASE IN NOT DECIDING THE ISSUE THAT U/S 147 TH E PROCEEDINGS ARE OPEN ONLY QUO ITEMS OF UNDER STATE MENTS. 3) THAT THE LD. CIT(A) HAS ALSO NOT APPRECIATED TH AT THE STATEMENT ON THE BASIS OF WHICH THE INFORMATION WAS GIVEN ONLY OF GENERAL NATURE. 4) THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND F ACTS OF THE CASE THAT IT IS WELL SETTLED THAT UNDER NO CIRCUMST ANCES \THE SALE OF SHARES CAN BE TREATED AS INCOME OF THE COMP ANY. 5) THAT THE CIT(A) HAS ERRED BOTH IN LAW AND FACTS OF THE CASE IN IGNORING THE FACTS THAT THE APPELLANT WAS N EVER I.T.A. NO. 691/DEL/2010 2 CONFRONTED WITH THE STATEMENT OF THE SAID COMPANY PURCHASING THE SHARES. 6) THAT THE LD. CIT(A) HAS NOT APPRECIATED THAT TH E ACTUAL BENEFICING IS NOT THE COMPANY BUT THE PERSON WHO HA D MADE THE PAYMENT. IT IS THEREFORE PRAYED THE APPEAL MAY KINDLY BE ACCEPTED. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO CONF IRMATION OF THE ADDITION WITHOUT PROVIDING ADEQUATE OPPORTUNITY TO EXAMINE THE STATEMENT GIVEN BY ENTRY OPERATORS. THE FACTS OF T HE CASE STATED IN BRIEF ARE THAT THE ASSESSEE FIELD RETURN OF INCOME DECLARING LOSS OF ` 15 966/-. THE A.O. RECEIVED INFORMATION FROM INVES TIGATION WING OF THE DEPARTMENT THAT ASSESSEE HAD RECEIVED ACCOMMODA TION ENTRY OF ` 2 LACS VIDE CHEQUE NO. 621934 DATED 30.12.2001 FROM KALINGA FINLEASE LTD. THE A.O. ISSUED NOTICE U/S 148 IN RE SPONSE TO WHICH SHRI MUKESH KUMAR DABAR CA APPEARED FROM TIME TO TI ME AND FILED THE DETAILS. 3. THE A.O. CONDUCTED INQUIRY AND COLLECTED VARIOUS BANK DETAILS. ON PERUSAL OF BANK STATEMENT THE A.O. FOUND THAT T HE ASSESSEE HAD RECEIVED ` 2 LACS FROM M/S. KALINGA FINLEASE P. LTD . FROM THE BANK STATEMENT OF M/S. KALINGA FINLEASE PVT. LTD. CORPOR ATION BANK KAROL BAGH NEW DELHI IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF ` 2 LACS ON 30.12.2001 VIDE CHEQUE NO.621 934. THEREFORE THE ASSESSEE WAS ASKED TO PRODUCE THE DI RECTOR OF M/S. KALINGA FINLEASE PVT. LTD. HOWEVER THE DIRECTOR OF M/S. KALINGA FINLEASE P. LTD. WAS NOT PRODUCED. SUMMON U/S 131 WAS ISSUED TO THE DIRECTOR OF M/S. KALINGA FINLEASE P. LTD. FURTH ER REMAINED UNCOMPLIED WITH. THE ASSESSEE FILED CERTAIN DOCUME NTS IN THE FORM OF CONFIRMATION LETTER FROM THE PARTIES CONCERNED A LONG WITH PAN AND ADDRESSES DATE AND NUMBER OF INSTRUMENT VIDE W HICH TRANSACTION TOOK PLACE AND DETAILS OF INVESTMENT MA DE BY THEM. THE A.O. ISSUED NOTICE U/S 133(6) TO THE CONCERNED PARTIES I.E. M/S. KALINGA FINLEASE P. LTD. AND ANOTHER PARTY M/S. PER FORMANCE TRADING AND INVESTMENT P. LTD. WHICH HAVE NOT CONFIRMED TH E TRANSACTION. I.T.A. NO. 691/DEL/2010 3 THE ASSESSEE WAS THEREFORE ISSUED SHOW CAUSE NOTI CE AS TO WHY THESE AMOUNTS SHOULD NOT BE ADDED AS INCOME. THE A SSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE FILED PHOTOCOPY OF THE BALANCE SHEET AND P AND L ACCOUNT ALONG WITH INCOME TAX ORD ER FOR THE ASSESSMENT YEAR 2002-03. AS REGARDS THE CONFIRMATI ON IN RESPECT OF M/S. PERFORMANCE TRADING AND INVESTMENT CO. THE AS SESSEE GAVE ADDRESS OF THE COMPANY AS AVAILABLE ON SITE OF REGI STRAR OF COMPANIES. IT WAS ALSO SUBMITTED THAT IN CASE THE SAID COMPANY DID NOT EXIST ON THE ABOVE ADDRESS REASONABLE TIME SHOU LD BE GIVEN TO THE ASSESSEE TO CONTACT THE PERSON. A PHOTOCOPY OF THE BALANCE SHEET AND P AND L ACCOUNT AND ACKNOWLEDGEMENT OF IN COME TAX RETURN FOR THE ASSESSMENT YEAR 2002-03 WAS FILED. 4. THE A.O. FURTHER NOTED THAT M/S. PERFORMANCE TRA DING AND INVESTMENT LTD. WAS IN THE LIST OF ENTRY OPERATORS. THE DIRECTOR OF M/S. PERFORMANCE TRADING AND INVESTMENT LTD. SHRI T RILOK CHAND WHO BELONG TO A GROUP OF ENTRY OPERATORS CALLED MR. MAH ESH GARG GROUP THE PERSON FORM WHOM THE ASSESSEE HAS RECEIVED ACCO MMODATION ENTRY WAS WORKING FOR MR. MAHESH GARG. THE STATEME NT OF MR. MAHESH GARG WAS RECORDED BY INVESTIGATION WING THRI CE AND THE AFFIDAVIT WAS ALSO GIVEN BY SHRI MAHESH GARG STATIN G THAT HE WAS INVOLVED IN ACTIVITIES OF ENTRY PROVIDERS. SHRI MA HESH GARG IN HIS STATEMENT HAS CONFIRMED THAT HE HAD RECEIVED CASH F ROM THE PARTIES AND ASSESSEE HAD GIVEN CHEQUE OR DEMAND DRAFT FROM THE ACCOUNTS AFTER DEPOSITING THE CASH IN THE BANK. SHRI MAHESH GARG GAVE A LIST OF SEVERAL PERSONS WHO WERE WORKING FOR HIM. SHRI MAHESH GARG IN HIS STATEMENTS RECORDED BY INVESTIGATION WING HAD R EPORTEDLY CONFIRMED THAT HE WAS INVOLVED IN ENTRY PROVIDING B USINESS. SINCE THE ASSESSEE HAD NOT PROVED THE IDENTITY/CREDITWORT HINESS AND GENUINENESS OF TRANSACTION THE A.O. RELYING ON VAR IOUS DECISIONS HELD THAT DEPOSITS MADE IN THE GARB OF SHARE APPLIC ATION MONEY WAS TO BE ADDED AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT. HE THEREFORE ADDED AN AMOUNT OF ` 2 LACS ALLEGED TO H AVE BEEN I.T.A. NO. 691/DEL/2010 4 RECEIVED FROM M/S. KALINGA FINLEASE P. LTD. AND ` 2 LACS FROM M/S. PERFORMANCE TRADING AND INVESTMENTS P. LTD. 5. ON APPEAL BEFORE CIT(A) NONE ATTENDED ON BEHALF OF THE ASSESSEE. LD. CIT(A) NOTED THAT NOTICES ISSUED TO T HE ASSESSEE HAVE COME BACK WITH THE POSTAL REMARKS IS NAAM KI KOI C OMPANY NAHI HAI. HE THEREFORE OBSERVED THAT ASSESSEE IS INTE NTIONALLY AVOIDING TO RECEIVE THE NOTICE FROM THE POSTAL AUTHORITIES. THE LD. A.R. OF THE ASSESSEE FILED HIS POWER OF ATTORNEY AND SOUGHT ADJ OURNMENT VIDE LETTER DATED 7.7.2009 I.E. THE DATE OF HEARING. TH E CASE WAS ADJOURNED TO 27.07.2009 ON WHICH DATE NOBODY APPEAR ED. THE LD. CIT(A) ISSUED ANOTHER NOTICE ON 26 TH OCT. 2009 FIXING THE CASE FOR HEARING ON 9.11.2009. THIS NOTICE ALSO CAME BACK W ITH THE POSTAL REMARKS LEFT. LD. CIT(A) THEREFORE CONCLUDED TH AT ENOUGH OPPORTUNITIES WERE PROVIDED BUT NEITHER ANYBODY ATT ENDED NOR WAS ANY SUBMISSIONS MADE BY THE ASSESSEE TO SUBSTANTIAT E ITS CLAIM. HE THEREFORE CONCLUDED THAT THE A.O. WAS JUSTIFIE D IN MAKING THE ADDITION. 6. BEFORE US LD. A.R. SUBMITTED THAT THE A.O. HAD MADE ADDITION WITHOUT GIVING OPPORTUNITY OF EXAMINING THE STATEME NT. THEREFORE THE ASSESSMENT MADE BY THE A.O. IS BAD IN LAW. ON THE OTHER HAND LD. SR. DR SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE A.O. HAD REOPENE D THE ASSESSMENT U/S 147 ON THE BASIS OF INFORMATION RECE IVED FROM INVESTIGATION WING THAT THE ASSESSEE HAD RECEIVED A CCOMMODATION ENTRY FOR ` 2 LACS FROM M/S. KALINGA FINLEASE P. L TD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBTAINED THE BANK STATEMENT AND ALSO FOUND ANOTHER AMOUNT OF ` 2 LACS RECEIVED FORM M/S. PERFORMANCE TRADING AND INVESTMENTS LTD. WHICH WAS ALSO INVOLVED IN PROVIDING ACCOMMODATION ENTRY. DURING THE COURSE OF I.T.A. NO. 691/DEL/2010 5 ASSESSMENT PROCEEDINGS THE ASSESSEE DID NOT PROVE THE IDENTITY AND CREDITWORTHINESS AND GENUINENESS OF TRANSACTION BY PRODUCING THE DIRECTOR OF KALINGA FINLEASE P. LTD. BOTH THE P ARTIES NAMELY M/S. KALINGA FINLEASE P. LTD. AND M/S. PERFORMANCE TRADI NG AND INVESTMENTS LTD. HAVE NOT CONFIRMED THE TRANSACTION . THE A.O. HAD DRAWN STRENGTH FROM THE STATEMENT OF SHRI MAHESH GA RG WHO HAD CONFIRMED TO HAVE PROVIDED ACCOMMODATION ENTRIES TO THE VARIOUS PERSONS. U/S 68 THE ASSESSEE HAD TO PROVE THE IDEN TITY OF CREDITORS THE CREDITWORTHINESS OF CREDITOR AND GENUINENESS OF TRANSACTION. IN THE CASE BEFORE US THE ASSESSEE HAD NOT DISCHARGED ITS ONUS. HON'BLE HIGH COURT OF DELHI AFTER REFERRING TO VARI OUS DECISIONS SUCH AS : CIT VS SOFIA FINANCE LTD. 205 ITR 98; CIT VS D IVINE LEASING AND FINANCE LTD. 299 ITR 268; CIT VS DOLFIN COMPACQ LT D. 283 ITR 190; CIT VS LOVELY EXPORTS PVT. LTD. 216 CTR 195 (S.C.) HELD THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE . IN ORDER TO DISCHARGE THIS BURDEN THE ASSESSEE IS REQUIRED TO PROVE: (A) IDENTITY OF SHAREHOLDERS; (B) GENUINENESS OF TRANSACTION AND (C) CREDITWORTHINESS OF SHAREHOLDERS. IN THE CASE OF VIJAY POWER GENERATORS LTD. I.T.A. NO. 214/2007 NEITHER THE ID ENTITY WAS ESTABLISHED NOR THEIR CAPACITY TO INVEST WAS PRODUC ED. ALL THE PERSONS WERE AGRICULTURISTS AND HAD NOT PROVED A SI NGLE DOCUMENT TO SUPPORT THEIR VERSION. UNDER THESE CIRCUMSTANCE S HON'BLE HIGH COURT OF DELHI HAS HELD THAT ONLY WHEN THE THREE IN GREDIENTS I.E. IDENTITY OF THE INVESTOR; THEIR CREDITWORTHINESS; A ND THE GENUINENESS OF TRANSACTION WERE ESTABLISHED PRIMA FACIE THE DE PARTMENT CAN BE REQUIRED TO UNDERTAKE FURTHER EXERCISE. IN THE CAS E BEFORE US THE ASSESSEE HAS INTRODUCED ` 2 LACS FROM KALINGA FINLE ASE PVT. LTD. AND ` 2 LACS FROM M/S. PERFORMANCE TRADING AND INVESTME NTS PVT. LTD. THE TRANSACTIONS HAVE NOT BEEN CONFIRMED BY THESE P ARTIES. MOREOVER THE ENTRY PROVIDER SHRI MAHESH GARG IN HI S STATEMENT HAD ADMITTED THAT HE WAS PROVIDING ACCOMMODATION ENTRIE S THROUGH HIS PERSONS IN THE NAME OF VARIOUS CONCERNS. THE ASSES SE HAD NOT I.T.A. NO. 691/DEL/2010 6 PRODUCED THE DIRECTORS OF THE COMPANIES. IN THE AB SENCE OF PROOF OF IDENTITY THE GENUINENESS OF TRANSACTION AND CAPACI TY TO INVEST THE ONUS CAST ON THE ASSESSEE TO DISCHARGE INITIAL ONUS HAS NOT BEEN DISCHARGED. THEREFORE THE LD .CIT(A) WAS JUSTIFIE D IN UPHOLDING THE ADDITION. ACCORDINGLY WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER PASSED BY LD. CIT(A). 8. WE WOULD LIKE TO FURTHER MENTION THAT THE ASSESS EE NEITHER BEFORE CIT(A) NOR BEFORE US HAS CHALLENGED THE REO PENING OF THE ASSESSMENT U/S 147. HOWEVER A GROUND HAS BEEN TAK EN THAT WHEN PROCEEDINGS ARE INITIATED U/S 147 THE PROCEEDINGS ARE OPEN ONLY QUA ITEM OF UNDERSTATEMENT. WE ARE UNABLE TO AGR EE WITH THIS CONTENTION OF THE ASSESSEE AS THE A.O. IS EMPOWERED TO ASSESS THE INCOME WHICH HAS ESCAPED ASSESSMENT AND COMES TO HI S NOTICE WHILE COMPLETING THE ASSESSMENT U/S 147 OF THE ACT. AS PER THE PROVISIONS OF SECTION 147 THE ASSESSMENT OR REASS ESSMENT OF ESCAPED INCOME WILL NOT BE RESTRICTED TO THE INCOME FOR WHICH ACTION U/S 147 WAS TAKEN BUT ALSO TO OTHER INCOME WHICH ES CAPED ASSESSMENT AND COMES TO HIS NOTICE WHILE ASSESSING THE ESCAPED INCOME. THEREFORE THIS CONTENTION OF THE ASSESSEE DESERVES TO BE REJECTED. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS D ISMISSED. 10. PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH 2011. SD./- SD./- (R. P. TOLANI) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:25 TH MAR. 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR ITAT NEW DELHI