ITO, New Delhi v. M/s. Sunrise Developers (P) Ltd., New Delhi

ITA 755/DEL/2012 | 2003-2004
Pronouncement Date: 12-11-2014 | Result: Dismissed

Appeal Details

RSA Number 75520114 RSA 2012
Assessee PAN AAACS2010H
Bench Delhi
Appeal Number ITA 755/DEL/2012
Duration Of Justice 2 year(s) 8 month(s) 28 day(s)
Appellant ITO, New Delhi
Respondent M/s. Sunrise Developers (P) Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 12-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 12-11-2014
Date Of Final Hearing 29-10-2014
Next Hearing Date 29-10-2014
Assessment Year 2003-2004
Appeal Filed On 14-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI H. S. SIDHU JUDICIAL MEMBER AND SHRI T.S. KAPOOR ACCOUNTANT MEMBER I.T.A. NO. 755/DEL/2012 ASSESSMENT YEAR : 2003-04 ITO WARD 9(3) VS. M/S. SUNRISE DEVELOPERS P. LT D. NEW DELHI C-106 ABC COMPLEX VEER SAVARKAR BLOCK SHAKARPUR NEW DELHI-110 09220 GIR / PAN:AAACS2010H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRR KUMAR SR. DR RESPONDENT BY : SHRI PRAMOD JAIN ADV. ORDER PER T.S. KAPOOR AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 30.11.2011. THE REVENUE HAS CHALLENGE D THE ORDER OF LD. CIT(A) ON TWO GROUNDS. FIRSTLY ON THE BASIS THAT LD. CIT(A) HAS WRONGLY QUASHED THE PROCEEDINGS U/S 147 OF THE ACT AND ON MERITS IT HAS CHALLENGED THAT LD. CIT(A) HAS WRONGLY DELETED THE ADDITION OF RS.20 LACS MADE BY THE A.O. ON ACCOUNT OF ACCOMMODATION E NTRY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF ASSESSEE WAS REOPENED U/S 148 OF THE ACT AND IT WAS REOPENED TO EXAMINE THE GENUINENESS OF TRANSACTION OF RS.20 LACS WHICH THE REVENUE AUTHORITIES DOUBTED THAT THE ENTRY WAS FROM ENTRY OPERATORS. T HE ALLEGED ACCOMMODATION ENTRIES WERE FROM M/S. SHYAM FABRICS AND M/S. JAGAT ENTERPRISES. DURING ASSESSMENT PROCEEDINGS THE AS SESSEE DID NOT ATTEND THE PROCEEDINGS AND THEREFORE A.O. AFTER NARRATIN G THE MODUS OPERANDI ITA NO.755/DEL/2012 2 OF ENTRY OPERATORS AND ON THE BASIS OF INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT MADE THE ADDITION OF RS.20 LACS. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND MADE VA RIOUS SUBMISSIONS REGARDING QUASHING OF REOPENING PROCEEDINGS AND ALS O FILED VARIOUS SUBMISSIONS ON MERITS OF THE CASE. LD. CIT(A) RELI ED UPON VARIOUS CASE LAWS AND HELD THE ASSESSMENT PROCEEDINGS TO BE INVA LID AND QUASHED THE SAME. HE ALSO DECIDED THE ISSUE ON MERIT AND DELET ED THE ADDITIONS BY HOLDING AS UNDER: ALTHOUGH THE PROCEEDINGS HAVE BEEN QUASHED BUT ASS ESSEE CASE IS STRONG ON MERITS FOR THE FOLLOWING REASONS. AO IN H IS REMAND REPORT HAS ACCEPTED THE IDENTITY AND CREDITWORTHINE SS OF THE PAYERS. HE HAS ALSO ACCEPTED THE CONFIRMATIONS SALE BILLS FOR SHARES AFFIDAVITS ETC. FILED BY THE APPELLANT. HE HAS ALS O ACCEPTED THAT THE PURCHASE OF SHARES WAS MADE THROUGH ALLOTMENT. HIS ONLY OBJECTION IS THAT THE PAYER DEPOSITED CASH IN THEIR BANK A/C AND THEN MADE THE PAYMENT FOR PURCHASE OF SHARES. WHEREAS THE AP PELLANT OVERWHELMINGLY HAS STATED AND SUBSTANTIATED THAT RS . 20 00 0001- WAS RECEIVED FOR SALE OF INVESTMENTS AND SUPPORTED IT BY SALE BILLS COPY OF A/C DULY CONFIRMED CONFIRMATION FROM THE P URCHASER AFFIDAVIT FROM THE PURCHASER STILL THE AO TREATED THIS AS UNEXPLAINED IN HIS REMAND REPORT.' ASSESSEE IS AN ARTIFICIAL JUDICIAL PERSON (COMPANY) AND IT CANNOT OF ITS OWN HAVE ANY UNACCOUNTED CASH. THE AO FAILED TO NOTE THAT ALL THE PAYMENTS WERE RECEIVED THROUGH A/C PAYEE CROSSE D CHEQUES THROUGH PROPER BANKING CHANNELS. AO COULD NOT APPRE CIATE THAT WHEN PURCHASED INVESTMENTS ARE SOLD AND THE PAYMENT S REALIZED FOR THE SAME HOW CAN THERE BE ANY ACCOMMODATION ENTRY. WHEN THE PURCHASE ARE GENUINE HOW ITS SALE BE DOUBTED WHEN ALL DOCUMENTS PROVE THE SAME. THE AO DID NOT BRING ANY MATERIAL T O PROVE THAT THE PAYMENTS RECEIVED BY THE APPELLANT FOR SALE OF INVESTMENTS ACTUALLY EMANATED FROM THE COFFERS OF THE APPELLANT - COMPANY SO AS TO ENABLE IT TO BE TREATED AS UNDISCLOSED INCOME OF THE APPELLANT- COMPANY. ASSESSEE'S CASE IS ALSO SUPPORTED BY THE FOLLOWING CASE LAWS:- ITA NO.755/DEL/2012 3 COMMISSIONER OF INCOME TAX-IV VS M/S DWARKADHISH CA PITAL (P) LTD. DELHI HIGH COURT ITA 0.9/1/2010. IN ANY MATTER THE ONUS OF PROOF IS NOT A STATIC ON E. THOUGH IN SECTION 68 PROCEEDINGS THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CRE DITORS/SHARE APPLICATION BY EITHER FURNISHING THEIR PAN NUMBER O R INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRAN SACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLI CATION COULD NOT BE FOUND AT THE ADDRESS GIVEN IT WOULD NOT GIVE TH E REVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWIT HAL TO TRACE ANY PERSON. MOREOVER IT IS SETTLED LAW THAT THE AS SESSEE NEED NOT TO PROVE THE' SOURCE OF SOURCE '. WE ALSO FIND THAT IN THE CASE OF THE RESPONDENT ASS ESSEE ITSELF A DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INC OME TAX VS DWARIKADHISH INVESTMENT (P) LTD. (2008) 176 TAXMAN 321 (DELHI) HAD DEALT WITH A SIMILAR ISSUE WITH REGARD TO THE A SSESSMENT YEAR 1997-98. THE RELEVANT PORTION OF THE ORDER PASSED BY THE DIVISION BENCH IN THE SAID JUDGEMENT IS REPRODUCED HEREINBEL OW:- '3 ..... THE ASSESSING OFFICER REQUIRED THE ASSESSE E TO FURNISH DETAILS AND DOCUMENTS. THE ASSESSEE PRODUCED COPIES OF SALE AND PURCHASE BILLS OF THE SHARE BROKERS THROUGH WHOM TH E TRANSACTIONS TOOK PLACE AND PHOTOCOPIES OF CONFIRMATIONS OF PERS ONS WHO HAD CONTRIBUTED THE FRESH SHARE APPLICATION MONEY. THE ASSESSEE FURNISHED THE PA (GIR) NUMBERS OF THE APPLICATION THE DETAILS OF THE CHEQUE NUMBER AND DATES. THE ASSESSES CONTENDED THAT LETTERS SENT TO THE SHAREHOLDERS HAD NOT BEEN RESPONDED TO. I. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO F URNISH BANK STATEMENT TO SUBSTANTIATE THE MONEY AVAILABILITY WI TH THE ASSESSEE AND ALSO TO PROVE THE GENUINENESS OF THE TRANSACTIO NS. THIS NOT HAVING BEEN DONE THE ASSESSING OFFICER GOT ENQUIRI ES MADE THROUGH ON INCOME TAX INSPECTOR WHO FOUND THAT NONE OF THE APPLICATION WERE FOUND TO EXIST AT THE ADDRESS GIVE N IN THE CONFIRMATIONS. HOWEVER THE REPORT OF THE INCOME TA X INSPECTOR WAS FURNISHED TO THE ASSESSEE ON 22ND FEBRUARY 2000 AND THE ITA NO.755/DEL/2012 4 ASSESSMENT ORDER WAS PASSED ON THE VERY NEXT DAY T HAT IS 23RD FEBRUARY 2000 GIVING THE ASSESSES NO TIME TO RESPON D. 2. BEFORE THE CITCA) THE ASSESSES FURNISHED ADDITIO NAL EVIDENCE COPIES OF WHICH WERE SENT BY THE CITCA) T O THE ASSESSING OFFICER FOR COMMENTS. DESPITE REMINDERS NO RESPONS E WAS RECEIVED FROM THE ASSESSING OFFICER BY THE CITCA) O N THE ADDITIONAL EVIDENCE. THE CITCA) THEN ADMITTED THE A DDITIONAL EVIDENCE. AFTER EXAMINING THE ENTIRE RECORD THE CI TCA) DELETED THE ADDITION ON ACCOUNT OF THE UNEXPLAINED SHARE AP PLICATION MONEY FOR. 3. IN THE APPEAL BY THE REVENUE THE TRIBUNAL FOUND THAT THE FACTS OF THE CASE WERE NO DIFFERENT FROM THOSE IN T HE CASE OF THE GROUP COMPANY OF THE PRESENT ASSESSEE NAMELY M/S DW ARIKADHISH FINANCIAL SERVICES. IN THE SAID CASE THE TRIBUNAL H AD DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F UNEXPLAINED SHARE APPLICATION MONEY. THE SAID DECISION WAS UPHE LD BY THIS COURT IN ITS ORDER IN CIT VS DWARKADHISH FINANCIAL SERVICES {2005} 148 TAXMAN 54. 4. THAT APART THE TRIBUNAL AGAIN EXAMINED THE DOCU MENTS GIVING THE DETAILS OF EACH OF THE APPLICATION. IT N OTED THAT? THE ABOVE DOCUMENTS WERE AVAILABLE ON THE FILE OF THE A O? ACCORDINGLY IT DISMISSED THE REVENUE'S APPEALS. LEARNED COUNSEL FOR THE REVENUE SOUGHT TO DISTINGUISH THIS COURTS DECISION IN THE CASE OF THE GROUP COMPANY OF THE ASSESSEE ON THE GROUND THA T THE FACTS THERE WERE DIFFERENT. HOWEVER WE FIND THAT THE FIN DINGS OF THE CIT(A) AS EXTRACTED HEREINABOVE ARE SUFFICIENT TO S HOW THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE NOT JU STIFIED. THE REASONING AND CONCLUSIONS ARRIVED AT CONCURRENTLY B Y THE CIT(A) AND THE TRIBUNAL SUFFER FROM NO PERVERSITY AND ARE CONSISTENT WITH THE LAW AS EXPLAINED BY THIS COURT IN COMMISSIONER OF INCOME TAX VS DIVINE LEASING AND FINANCE LTD. (ITA NO. 53/2005 DECIDED ON 16TH NOVEMBER 2006) REPORTED IN (2007) 207 CTR (DE L) 38 AND IN PARTICULAR PARA 16 WHICH READS THUS: 'IN THIS ANALYSIS A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SEC TION 68 OF THE I T ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDITORS/SUBSCRIBER; (2) THE GENUINENESS OF THE TR ANSACTION ITA NO.755/DEL/2012 5 NAMELY WHETHER IT HAS BEEN TRANSMITTED THROUGH BANK ING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITORS/SUBSCRIBER; (4) IF RELEVA NT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDER S REGISTER SHARED APPLICATION FORMS SHARE TRANSFER REGISTER E TC. IT WOULD CONSTITUTE TABLE PROOF OR ACCEPTABLE EXPLANATION B Y THE ASSESSEE; (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWIN G AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITORS/SUBSCRIBER FAI LS OR NEGLECTS TO RESPOND TO ITS NOTICES; (6)THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITORS/SUBSCRIBER DENIES OR REPUDIATES THE T RANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE AO TAKE SUCH REPUDIA TION AT FACE VALUE AND CONSTRUE IT WITHOUT MORE AGAINST THE AS SESSEE; (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITORS/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION.' 9 WE ARE OF THE VIEW THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THESE APPEALS ACCORDINGLY THESE APPEALS ARE DIS MISSED.' 10 WE ARE ALSO INFORMED THAT A SPECIAL LEAVE PETIT ION AGAINST THE AFORESAID DIVISION BENCH JUDGEMENT IN THE CASE OF THE RESPONDENT ASSESSEE HAS BEEN DISMISSED BY THE SUPRE ME COURT. ACCORDINGLY WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THE PRESENT CASES AS THE MATTER IS FULLY COVERED BY THE JUDGEMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA ) AS WELL AS DIVISION BENCH JUDGEMENT OF THIS COURT IN THE CASE OF THE RESPONDED ASSESSEE ITSELF. HENCE IN VIEW OF THE ABOVE FACTS ADDITION OF RS 20 00 000/- MADE BY THE ASSESSING OFFICER IS HEREBY DELETED. GROUND O. 6 & 7: FROM THE FACTS ABOVE THESE GROUNDS ARE NOT BEING ADJUDICATED. 3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4. LD. D.R. ARGUED THAT THE ENTRIES WERE OBTAINED A S ACCOMMODATION ENTRIES FROM ENTRY OPERATORS AS HELD BY INVESTIGATI ON DEPARTMENT AND THEREFORE THESE WERE RIGHTLY ADDED BY THE A.O. WH EREAS LD. A.R. SUBMITTED THAT THE AMOUNT RECEIVED BY THE ASSESSEE WERE ON ACCOUNT OF ITA NO.755/DEL/2012 6 SALE OF SHARES WHICH WERE ALLOTTED TO IT EARLIER. IT WAS SUBMITTED THAT THE ASSESSEE HAD INVESTED THE AMOUNT FOR PURCHASE OF SH ARES OF M/S. SOUTH EAST IMPEX PVT. LTD. WHICH WERE SOLD IN THE YEAR OF PURCHASE ITSELF FOR SALE CONSIDERATION OF RS.20 LACS. IT WAS FURTHER S UBMITTED THAT INVESTMENT WAS MADE THROUGH CHEQUE AND ALSO SALE CONSIDERATION WAS RECEIVED THROUGH CHEQUE AND IN THIS RESPECT IT WAS SUBMITTED THAT 25 000 EQUITY SHARES OF M/S. SOUTH EAST IMPEX PVT. LTD. WERE ALLO TTED AND ALLOTMENT LETTER WAS PLACED AT PAPER BOOK PAGES 53-54 OF THE PAPER BOOK. LD. A.R. FURTHER INVITED OUR ATTENTION TO PAPER BOOK PAGES 5 0-51 WHEREIN AN AFFIDAVIT OF PROPRIETOR OF M/S. SHYAM FABRICS WAS P LACED WHEREIN IT HAS BEEN THAT HE HAD PURCHASED 9667 SHARES OF M/S. SOUT H EAST IMPEX PVT. LTD. FROM THE ASSESSEE FOR A TOTAL CONSIDERATION OF RS.14.50 LACS. IN THE ABOVE AFFIDAVIT PAN OF M/S. SHYAM FABRICS WAS ALSO MENTIONED. SIMILARLY LD. A.R. TOOK US TO PAPER BOOK PAGES 48- 49 WHERE THE SAME PERSON AS PROPRIETOR OF JAGAT ENTERPRISES HAS STATE D THAT HE HAD PURCHASED 3667 EQUITY SHARES OF M/S. SOUTH EAST IMPEX PVT. LT D. FROM THE ASSESSEE FOR A TOTAL CONSIDERATION OF RS.5.50 LACS. 5. WE HAVE HARD RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT LD. CIT(A) AFTER OB TAINING REMAND REPORT FROM A.O. HAS DECIDED IN FAVOUR OF THE ASSESSEE. . 6. WE FIND THAT THE FACTS IN THIS CASE ARE THAT ASS ESSEE HAD RECEIVED MONEY ON ACCOUNT OF SALE OF SHARES AND NOT ON ACCOU NT OF RECEIPT AS FRESH SHARE APPLICATION MONEY. THE ONUS TO PROVE IN THE CASE THE SALE OF AN ASSET BY ASSESSEE IS LESS STRINGENT THAN THE ONUS W HICH IS CASTED UPON THE ASSESSEE IN THE CASE OF RECEIPT OF SHARE APPLICATIO N MONEY. LD. CIT(A) ITA NO.755/DEL/2012 7 ALSO CLEARLY HELD THAT IT WAS NOT A CASE OF SHARE A PPLICATION MONEY AND RATHER IT WAS A CASE OF SALE OF SHARES WHICH FINDIN G WAS ALSO NOT COUNTERED BY THE LD. D.R. THEREFORE WE ARE IN AGREEMENT WIT H THE FINDING OF LD. CIT(A) ON MERITS. SINCE WE HAD DECIDED THE APPEAL ON MERITS THE LEGAL GROUND TAKEN BY THE REVENUE HAS BECOME INFRUCTUOUS. 7. IN VIEW OF ABOVE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH NOV. 2014. SD./- SD./- ( H. S. SIDHU) (T.S. KAPO OR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 12.11. 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER (ITAT NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER