IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `F', NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
&
SHRI J.S. REDDY, ACCOUNTANT MEMBER
ITA No. 235/Del/2013
Assessment Year: 2004-05
Raghupati Leasing & Finance Ltd., vs. ITO,
23, Ishwar Nagar, Mathura Road, Ward 15(1),
New Delhi. New Delhi.
AAACR4318K
(Appellant) (Respondent)
Appellant by : Sh. Anoop Sharma, Adv.
Respondent by : Sh. Shameer Sharma, Sr. DR
ORDER
PER H.S. SIDHU, J.M.
The assessee has filed the present appeal against the impugned
order dated 15.11.2012 passed by the Commissioner of Income Tax
(Appeals)-XVIII, New Delhi for A.Y. 2004-05.
2. The facts relating to the issue in dispute are that the assessee
filed its return of income on 01/11/2004 declaring Nil income which was
processed u/s 143(1) of the I.T. Act, 1961 (hereinafter called the Act). In
this case, the information received from the DIT(Inv.), that during the
course of investigation in the case of Mukesh Gupta group along with its
close confidants Shri Rajan Jassal & Shri Surinder Pal Singh, it was found
that the group had operated multiple accounts in various branches to
plough back unaccounted black money for the purpose of business or for
personal needs such as purchase of assets etc. in the form of gifts, share
application money, loans etc. During the course of investigations by the
DIT(Inv.) it was discovered that the assessee (entry takers or
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 2
beneficiaries) who have unaccounted money and wanted to introduce the
same in the books of accounts without paying tax approached another
person i.e. entry operator and handed over cash (plus commission) and
took cheques/DDs/Pos. The cash was deposited by the entry operator in
a bank account either in his own name or in the name of relative/friends
or other person hired by him for the purpose of opening bank account.
The entry operator thereafter issued cheque/DD/PO in the name of
beneficiary from the same account (in which the cash was deposited) or
another account in which funds were transferred through clearing in two
or more stages. The beneficiary in turn deposited these instruments in
his bank accounts and the money came to his regular books of account in
the form of gift, share application money, loan etc. through banking
channels and the transaction looked genuine.
3. The AO noticed from the list of entries that the assessee M/s
Raghupati Leasing & Finance Ltd. has taken the accommodation entries
amounting to Rs. 30,04,500/- vide instrument no. 51749 dated 24th May,
2003 from entry provider namely SHATTARCHI FIN. & LEASING issued
by bank RATNAKAR KB Branch.
4. In view of the aforesaid report the AO is of the view that assessee
has not disclosed fully and truly all material facts necessary for its
assessment for the assessment year and that a sum of Rs. 30,04,500/-
chargeable to tax has escaped assessment. Accordingly, after recording
the reasons and with the approval of Addl. CIT, notice u/s 148 of the Act
was issued to the assessee on 25th March, 2011 and served upon the
assessee by speed post. A notice u/s 142(1) along with questionnaire
was also issued on 16/09/2011 and served upon the assessee by the
speed post. In response to these notices the Authorized Representative
of the assessee appeared before the AO and filed letter for adjournment
and the case of the assessee was adjourned. Further notice u/s 142(1)
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 3
and notice u/s 143(2) of the Act were issued on 17/10/2011 and served
upon the assessee by speed post. After that the show cause notice for
final opportunity were also issued to the assessee fixing the case for
hearing on 14/11/2011 in response to the same the Authorized
Representative of the assessee were appeared and filed part details and
case was adjourned to 21/11/2011 for filing remaining details. Later on
the case of the assessee was also adjourned for 30/11/2011, 07/12/2011,
12/12/2011 but most of the time assessee remained absent before the
AO.
5. During the course of assessment proceeding the Authorized
Representative of the assessee vide his letter dated 14/11/2011
submitted that the assessee has received Rs. 30 lakhs from M/s
Miraculas Construction P. Ltd. under settlement of a dispute since 1995-
96. The amount was recoverable from him against the leasing charges
due from 1995-96 to 1997-98. Due to this non-payment, the assessee
has to suffer a major finance loss and virtually has to close down this
business from 1997-98.
6. The AO perused the copy of assessment order for the A.Y. 1995-
96 furnished by the AR of the assessee during the course of assessment
proceeding, it is found that M/s Miraculas Construction P. Ltd. was not
working or traceable at that time. He is of the view that for the payments
of Rs. 30 lacs received from it after the span of eight years. The
assessee has stated that when transactions with M/s Miraculas
Construction P. Ltd. took place in the year 1994-95, the party was
available but after the span of two years the party was not available.
Since the payment of Rs. 30 lacs which is given by M/s Shattarchi
Finance & Leasing P. Ltd. to the assessee and the AR of the assessee is
mentioned that assessee has no connection or dealing with M/s
Shattarchi Fin. & Leasing P. Ltd. and this amount is credited in the books
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 4
of account of the assessee. During the course of assessment
proceedings the bank statement of the party M/s Shattarchi Fin. &
Leasing P. Ltd. has been obtained from the bank and this amount of Rs.
30 lacs is reflected in the bank statement.
6.1 The AO considered the submission of the assessee but not
accepted the same because the assessee have no dealing with M/s
Shattarchi Fin. & Leasing P. Ltd. and this amount of Rs. 30 lacs was
recoverable only from M/s Miraculas Construction P. Ltd. against the
leasing charges due from 1995-96 to 1997-98. As M/s Shattarchi Fin. &
Leasing P. Ltd. from whom the assessee has received the amounts have
been subject to certain investigatin by the Investigation Wingh, wherein it
has been found that it is not carrying on any actual business. It has been
found to be engaged in activities of providing accommodation entries.
The person who provides such entry is known as entry operator and the
person/party taking such entry called beneficiary. The AO obtained the
copies of relevant bank account of M/s Shattarchi Fin. & Leasing P. Ltd.
from the banks and form that there is a uniform pattern to the
deposits/withdrawals of the amounts. Invariably the payments out of
accounts are immediately preceded by the deposits of equivalent
amounts in the account either in cash or through cheque/transfer entries.
The AO is of the view that unless the identity and the transactions
represented by the entries in the bank are correlated with the business
activity and the books of accounts of the said entity, the above pattern
and the frequency of deposits and withdrawals at intervals lends further
credence to the fact of account has been used only for the purpose of
providing accommodation entries. The onus lay heavily on the assessee
to substantiate the genuineness of transaction by either providing and
independent third party evidence in support of genuineness of the
transaction and the creditworthiness of M/s Shattarchi Fin. & Leasing P.
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 5
Ltd. by producing the Director of M/s Shattarchi Fin. & Leasing P. Ltd.
with proof of availability of funds with them in their own capacity. But the
assessee nor his Authorized Representative established with the proof of
evidence that the transaction in dispute is relating to the business
activities of the assessee. Therefore, the amount of Rs. 30 lacs received
from M/s Shattarchi Fin. & Leasing P. Ltd. was only a camouflage to
introduce the assessee company on unaccounted money into the
business and this transaction is a bogus transaction and is not relating to
the business activities of the assessee. The AO added Rs. 30 lacs to the
income of the assessee company by passing order dated 16/12/2011 u/s
147/143(3) of the IT Act.
6.2 Aggrieved by the assessment order dated 16/12/2011 assessee
filed an appeal before the ld. First Appellate Authority who vide impugned
order dated 15/11/2012 dismissed the appeal filed by the assessee by
upholding the assessment order dated 16/12/2011. Now the assessee
has filed the present appeal against the impugned order dated
15/11/2012 passed by the CIT(Appeals).
7. At the time of hearing ld. Counsel for the assessee only argued
that the AO has wrongly made the addition of Rs. 30 lacs as undisclosed
income of the assessee without providing sufficient opportunity to the
assessee. He further stated that AO has completed the assessment in a
hurry manner because he is having a very short time with him. Similarly,
ld. First Appellate Authority has also decided the issue in dispute against
the assessee without providing sufficient opportunity to the assessee. He
requested that matter may be set aside to the AO to decide the issues in
dispute afresh under the law after giving opportunity to the assessee.
8. Although the assessee has raised eight grounds of appeal in the
present appeal but at the time of hearing ld. Counsel for the assessee
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 6
only argued ground no. 1 & 2 in which the ld. First Appellate Authority has
confirmed the addition of Rs. 30 lacs u/s 68 of the IT Act and in ground
no. 2 the assessee has challenged the order of the Revenue Authority on
the ground that the alleged undisclosed income actually represented
disputed settlement amount recoverable from M/s Miraculas Construction
P. Ltd. against the leasing charges due from 1995-96 to 1997-98. No
doubt the ld. Counsel for the assessee has also filed a paper book
containing page 1-112 in which he has attached (i) AO order dated
26.03.1998 for A.Y. 1995-96 u/s 143(3); (ii) CIT(A) order dated
31.03.1999 for A.Y. 1995-96 u/s 250; (iii) AO order dated 28.03.2001 for
A.Y. 1995-96 u/s 143(3)/250; (iv) CIT(A) order dated 07.08.2002 for A.Y.
1995-96 u/s 143(3)/250; (v) ITAT order dated 31.08.2006 for A.Y. 1995-
96; (vi) Balance sheet and Computation of Income as on 31.03.2003; (vii)
Balance sheet and Computation of Income as on 31.03.2003; (viii) copy
of account of Miraculous Const. Co. Pvt. Ltd.; (ix) copy of lease
agreement dt. 21/01/1995 with Miraculous Const. Co. P. Ltd.
9. Ld. Counsel for the assessee has not draw our attention towards
the documentary evidence filed by the assessee in the shape of paper
book. He only argued as we have stated above.
10. On the contrary, ld. DR relied upon the impugned order passed by
the ld. First Appellate Authority. He further stated that the assessee has
taken the accommodation entries of Rs. 30,04,500/- from Shattarchi Fin.
& Leasing P. Ltd. with whom the assessee have no business relation.
The AO has also made an enquiry and found that M/s Shattarchi Fin. &
Leasing P. Ltd. is not carrying any actual business. It has been found to
be engaged in activity of providing accommodation entries as stated by
the AO in the assessment order. Ld. DR strongly opposed the request of
ld. Counsel for the assessee for setting aside the issue in dispute to the
AO for sufficient decision because the sufficient opportunity has been
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 7
given by the Revenue Authority to the assessee for substantiating its
claim before them. But assessee has failed to substantiate its claim
before them. Therefore, the present appeal filed by the assessee may be
dismissed.
11. We have heard the both parties and perused the relevant record
available with us. We are of the view that the information in the case of
assessee was received from DIT(Inv.) that the assessee company had
received Rs. 30,04,500/- from Shattarchi Fin. & Leasing P. Ltd. vide
cheque dated 04/05/2003 the case of the assessee was reopened u/s
148 of the IT Act after following due procedure of law and statutory
notices were issued to the assesee to give detailed facts regarding the
above credit entry. In response to the same the assessee submitted that
it had received Rs. 30 lacs from M/s Miraculous Const. Limited under
settlement of dispute with him since 1995-96 the AO perused the copy of
assessment order for A.Y. 1995-96 and found that said company was not
working or traceable at that time. As per assessee company bank
account, the payment reflected and had been received from M/s
Shattarchi Fin. & Leasing P. Ltd. did not have any business dealing with
this party.
12. After going through the order passed by the Revenue Authority,
we are of the view that the assessee was unable to prove the identity,
genuineness and creditworthiness of the party from whom the amount
had been received and could not correlate it to any business activities.
We have also perused the documentary evidence filed by the assessee in
the shape of paper book and we are of the view that assessee has failed
to prove that the draft/cheque of Rs. 30 lacs dated 24/05/2003 received
by the assessee company from M/s Shattarchi Fin. & Leasing P. Ltd. is
recovery of that from M/s Miraculous Const. P. Ltd. The assessee
company has failed to prove the source of Rs. 30 lacs credited in its
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 8
books of account. Therefore, the assessee has failed to substantiate its
claim by filing any documentary evidence before the Revenue Authorities
or even before us. The assessee company has also failed to produce the
Director of M/s Shattarchi Fin. & Leasing Ltd. and M/s Miraculous
Construction P. Ltd. Even assessee has not filed any confirmation or
bank account or balance sheet of M/s Miraculous Const. P. Ltd. for
substantiating its claim before the Revenue Authority.
13. Keeping in view of the facts and circumstances of the present
case, we are of the view that ld. First Appellate Authority has passed a
well reasoned order by citing various decisions rendered by the Hon'ble
Supreme Court of India and the Hon'ble High Courts which are fully
supported the impugned order. Therefore, no interference is called for in
the well reasoned impugned order passed by the ld. First Appellate
Authority. We are of the view that the present case is not fit for setting
aside the issues in dispute to the AO for fresh decision because assessee
has not filed any documentary evidence for substantiating its claim before
the Revenue Authorities as well as before us. Therefore, we uphold the
impugned order dated 15/11/2012 passed by the CIT(A) by dismissing the
appeal filed by the assessee.
14. In the result, the appeal of the assessee is dismissed.
The order is pronounced in the open court on 20/10/2014
Sd/- Sd/-
(J.S. REDDY) (H.S. SIDHU)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 20/10/2014
*Kavita, P.S.
ITA No. 235/D/2013 Raghupati Leasing & Finance Ltd. 9
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
ASSISTANT REGISTRAR
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