Subject:- section 153C but has not challenged the merits of the addition, he reopened it.
Referred Sections: Section 147 to 151 of the Act. Section 143(3) of the Act Section 147 to 151 of the I.T. Act 1961. Section 68 of Income Tax Act Section 226(3) of the Act
Referred Cases / Judgments Balakrishna Hiralal Wani vs. ITO (2010) 321 ITR 519 Techspan India (P) Ltd & Anr vs. ITO (2006) 283 ITR 212 CIT Vs. Wellworth Construction Udyog CIT Vs. Gangeshwari Metal (P.) Ltd. CIT Vs. Divine Leasing & Finance Ltd. CIT vs. Mis. Pondy Metal & Rolling Mills (P) Ltd. (SLP CIT vs. Mis General Exports Credits Ltd.
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G": NEW DELHI
BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 6206 to 6208/Del/2015
(Assessment Year: 2007-08 to 2009-10)
DCIT, Vs. Green Mark Infra Ltd,
Central Circle-18, 5/5761, Dev Nagar, Karol
Room No. 102, ARA Centre, E- Bagh, Near Yes Bank ATM,
2, Jhandewalan Extn, New Delhi New Delhi
Pan: AAACJ3650Q
(Appellant) (Respondent)
CO No. 398 to 400/Del/2015
(In ITA No. 6206 to 6208/Del/2015
(Assessment Year: 2007-08 to 2009-10)
DCIT, Vs. Green Mark Infra Ltd,
Central Circle-18, 5/5761, Dev Nagar, Karol
Room No. 102, ARA Centre, E- Bagh, Near Yes Bank ATM,
2, Jhandewalan Extn, New Delhi New Delhi
Pan: AAACJ3650Q
(Appellant) (Respondent)
Assessee by : Shri S. S. Rana, CIT DR
Revenue by: None
Date of Hearing 25/09/2018
Date of pronouncement 26/10/2018
ORDER
PER PRASHANT MAHARISHI, A. M.
1. These are the three appeals filed by the revenue for three different
assessment years in case of M/s. Green Mark Infra Ltd (assessee) for AY
2007-08, 2008-09 and 2009-10, wherein, the ld CIT(A) vide order dated
28.09.2015 for the all these Assessment Years deleted the addition of Rs.
39532500/-, Rs. 68531671/- and Rs. 121033910/- made by the ld AO for
respective years u/s 68 as unexplained deposits. The ld CIT(A) further
deleted the addition made by the ld Assessing Officer @10% of profit on
investments for these years have also been deleted. Therefore, revenue
is aggrieved and has filed these appeals.
Page | 1
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
2. The assessee has also filed cross objections challenging the reopening of
the assessment for all these three years by filing the cross objections.
3. The revenue has raised the following grounds of appeal for the
Assessment Year 2007-08:-
"(i) That the commissioner of Income Tax (Appeals) has erred in law
and on facts of the case in deleting Rs. 3,95,32,500/-which was
added to the income of the assessee on account of as unexplained
deposits.
(ii) That the commissioner of Income Tax (Appeals) has erred in law
and on facts of the case in deleting Rs. 15,35,000/- which was
added to the income of the assessee on account of as unexplained
liabilities.
(iii) That the commissioner of Income Tax(Appeal) has erred in law and
on facts in relying on the submissions filed by the assessee which
were inadequate, incomplete, not genuine, not reliable and already
rejected by AO during the assessment stage.
(iv) (a) The order of the CIT(Appeals) is erroneous and not tenable in
law and on facts."
4. The assessee has raised the following grounds in cross objection for the
Assessment Year 2007-08:-
"1. That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in confirming the action of Ld.
AO in framing impugned reassessment order and that too without
assuming jurisdiction as per law and without complying the
mandatory conditions of section 147 to 151 of the Act.
2. T hat in any case and in any view of the matter, action of Ld.
CIT(A) in confirming the action of Ld. AO in framing impugned
reassessment order u/s 147/143(3) is beyond jurisdiction, bad in
law and against the facts and circumstances of the case.
3. In any view of the matter and in any case, impugned assessment
order could not have been passed under the law, more so when
original assessment was annulled."
5. The revenue has raised the following grounds of appeal for the
Assessment Year 2008-09:-
"(i) That the commissioner of Income Tax (Appeals) has erred in law
and on facts of the case in deleting Rs. 6,85,31,671/-which was
Page | 2
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
added to the income of the assessee on account of as unexplained
deposits.
(ii) That the commissioner of Income Tax (Appeals) has erred in law
and on facts of the case in deleting Rs. 4,35,320/- which was added
to the income of the assessee on account of as unexplained
liabilities.
(iii) That the commissioner of Income Tax(Appeal) has erred in law and
on facts in relying on the submissions filed by the assessee which
were inadequate, incomplete, not genuine, not reliable and already
rejected by AO during the assessment stage.
(iv) (a) The order of the CIT(Appeals) is erroneous and not tenable in
law and on facts."
6. The assessee has raised the following grounds in cross objection for the
Assessment Year 2008-09:-
"1. That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in confirming the action of Ld.
AO in framing impugned reassessment order and that too without
assuming jurisdiction as per law and without complying the
mandatory conditions of section 147 to 151 of the Act.
2. T hat in any case and in any view of the matter, action of Ld.
CIT(A) in confirming the action of Ld. AO in framing impugned
reassessment order u/s 147/143(3) is beyond jurisdiction, bad in
law and against the facts and circumstances of the case.
3. In any view of the matter and in any case, impugned assessment
order could not have been passed under the law, more so when
original assessment was annulled."
7. The revenue has raised the following grounds of appeal for the
Assessment Year 2009-10:-
"(i) That the commissioner of Income Tax (Appeals) has erred in law
and on facts of the case in deleting Rs. 12,10,33,910/-which was
added to the income of the assessee on account of as unexplained
deposits.
(ii) That the commissioner of Income Tax (Appeals) has erred in law
and on facts of the case in deleting Rs. 3,10,500/- which was added
to the income of the assessee on account of as unexplained profit
on sale investment.
(iii) That the commissioner of Income Tax(Appeal) has erred in law and
on facts of the case in not discussing the issue of unexplained profit
on sale investment raised by the AO in his assessment order on
Page | 3
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
basis of which addition of Rs. 3,10,500/- was added to the income
of the assessee.
(iv) That the commissioner of Income Tax (appeal) has erred in law and
on facts in relying on the submissions filed by the assessee which
were inadequate, incomplete, not genuine, not reliable and already
rejected by AO during the assessment stage.
(v) (a) The order of the CIT(Appeals) is erroneous and not tenable in
law and on facts."
8. The assessee has raised the following grounds in cross objection for the
Assessment Year 2009-10:-
"1. That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in confirming the action of Ld.
AO in framing impugned reassessment order and that too without
assuming jurisdiction as per law and without complying the
mandatory conditions of section 147 to 151 of the Act.
2. T hat in any case and in any view of the matter, action of Ld.
CIT(A) in confirming the action of Ld. AO in framing impugned
reassessment order u/s 147/143(3) is beyond jurisdiction, bad in
law and against the facts and circumstances of the case.
3. In any view of the matter and in any case, impugned assessment
order could not have been passed under the law, more so when
original assessment was annulled."
9. We briefly state the facts for AY 2007-08. The assessee is a company who
filed its return of income on 17.03.2008 declaring income of Rs. 5130/-.
The assessment u/s 143(3) was made on an income of Rs. 41107800/-
wherein, protective addition of Rs. 39332500/- was made on account of
unexplained deposits and Rs. 1535000/- was made on account of
unexplained liabilities. The assessee preferred an application u/s 264
before the ld CIT(A) who passed an order on 20.03.2014. According to
that order the assessment order u/s 153C of the Act were cancelled as
there was no proper assumption of jurisdiction. Hence, the assessment
was held to be null and void. Consequently, reopening u/s 147 of the Act
was initiated after obtaining approval of ld CIT u/s 151 of the Act. The ld
Assessing Officer recorded the satisfaction that the assessee has merely
challenged the application of section 153C but has not challenged the
merits of the addition, he reopened it. He further noted that assessee is
Page | 4
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
one of the intermediary companies used by Shri Asheem Gupta, who is an
providing accommodation entry provider and who has admitted the fact
of accommodation entries. He further recorded that there was
unexplained deposit of Rs. 39332500/- in the bank accounts for which
there is no explanation available hence, they are to be treated as escaped
income in the hands of the assessee. Notice u/s 148 of the Act was issued
on 27.03.2014 and served on 28.03.2014. The reasons were provided to
the assessee and assessee submitted that the original return filed may be
treated as return in response to notice u/s 148 of the Act. Mr. Asheem
Gupta who is an accommodation entry provider himself appeared during
the course of assessment proceedings. The ld AO dealt with the issue vide
para No. 4.1 to 8 as under:-
"4.1 The assessee company is engaged in providing
accommodation entries to the companies which are in need of the
accommodation entries. It is worthwhile to mention here that in his
statement recorded on oath u/s 133(d) on 26.03.2010 Shri Aseem
Kumar Gupta has admitted that he is director in eight such
companies which are engaged in providing the accommodation
entries; namely M/s Jiwan Realtors Ltd, M/s. Ganpati Fincap
Services Pvt Ltd., M/s SAM Portfolio Pvt. Ltd., Moderate Credit
Corporations Pvt. Ltd., M/s Chotti Leasing & Finance Pvt. Ltd., M/s
S.G. Portfolio Pvt. Ltd., M/s Sushre Securities Pvt. Ltd and M/s
Shrey Infradevelopers Pvt. Ltd. The assessee company is one of
them.
5. During the course of assessment proceedings the company
has furnished the copy profit & loss account, balance sheet and
schedules forming parts of balance sheet only. But no books of
account was produced for examination inspite of the repeated
requests. Vide reply dated 15.12.2014 it has been contended that
"once an amount has been added to the income of one assessee in
the chain of transactions, no further addition on the same can be
made in the hands 6f subsequent assessee in the-chain. Since cash
deposit has been taxed in the hands of Mr. Manoj Kumar and Mr.
Virender Ram by way of Substantive Addition, the taxed amount,
when transferred to another company should be treated as
explained credit. The transfer/introduction of this amount should
also be treated as explained." Alongwith explanation the order
passed in the case of Shri Manoj Kumar by the Commissioner of
Income Tax, Appeal-XXXII, New Delhi has been filed.
Page | 5
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
6. I have thoroughly considered the reply furnished, appellate
order passed and the other papers furnished by the company. But
find no force because of the fact that in the case of shri Manoj
Kumar addition was made protectively which was the right step as
the accommodation entries were provided by by Shri Manoj Kumar
who works with Shri Aseem Kumar Gupta or on his behalf as has
been admitted by Shri Aseem Kumar Gupta himself in his statement
recorded in the case of Shri Manoj Kumar vide question No. 5. On
this point the assessee has mis-presented the facts as assessment
in case of Shri Manoj Kumar was protectively made whereas the
assessee has claimed that it was made substantively. Also 1st
appeal has been dismissed by the Ld. CIT(A) in the case of Shri
Manoj Kumar. But here the addition will be made substantially as
the assessee company has reflected the transactions in its books' of
account as receipt but failed to explain/justify the nature and
source of the deposit of the amounts.
Unexplained deposits
7. During the course of assessment proceeding assessee has
furnished bank reconciliation statement which tallied at Rs.
3,03,87,500/- whereas as per bank statement total deposit reflects
at Rs. 3,95,32,500/-. Thus, it is seen that the reconciliation
statement furnished by the assessee do not tally with that of bank
statement. This fact leads to the impression that the accounts
submitted by the assessee company is fabricated one and cannot
be relied upon. The assessee was required to explain the nature
and source of the deposits reflecting in the bank account with
necessary documentary evidences to prove the identity, capacity
and genuineness of the parties from whom the money was receipt
and deposited in the bank. But assessee failed to give an iota of
evidence in the matter. Therefore, I hold that these deposits are
unexplained money of the company and as such the same will
added towards income of the company. This addition will cover the
unexplained cash credit found/reflected in the financial statement.
Unexplained other current liabilities:-
8. Further, on perusal of the balance sheet it is found that in
schedule-VI the assessee has shown an amount of Rs.15,35,000/-
under the head other current liabilities. The assessee was required
to explain the nature and source of this liability but inspite of the
repeated request assessee failed to establish the identity and
genuineness of the persons and purpose. Therefore, this liabilities
to the tune of Rs. 15,35,000/- is being disallowed to be added as
income of the company."
Page | 6
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
10. Consequently the order u/s 147 read with section 143(3) of the Act was
passed on 02.03.2015, wherein, the total income of the assessee was
assessed at Rs. 41072610/- against the returned income of Rs. 5110/-.
The assessee preferred appeal before the ld CIT(A) challenging the
reopening proceedings as well as the quantum addition. Before the ld
CIT(A) Shri Asheem Gupta, CA appeared.
11. The ld CIT(A) decided the issue of the reopening of the assessment vide
para No. 5 an 6 of the appellate order as under:-
"5. Ground no. 1 is against that Id assessing officer without
appreciating the correct facts of the case is not justified in law and
facts and circumstances of the case in reopening the assessments
under section 147 of the I.T. Act, without complying with the
provision of section 147 to 151 of the I.T. Act.
5.1 The Appellant during the course of appeal proceedings
submitted as
"Ground no. 1 of appeal relates that the Ld A.O. without
appreciating the correct facts of the case is not justified in law
and circumstances of the case in reopening of assessment U/s
147 of the I.T. Act without complying the provisions of section
147 to 151 of the I.T. Act 1961.
A.O. has stated in his impugned order that After recording
reasons proceedings u/s 147 were taken in hand after receipt
of the approval of the Commissioner of Income Tax, Central-
11, New Delhi accorded on 26.03.2014 u/s 151. While
submitting the proposal for approval for initiation of
proceeding u/s 147 the A.O. recorded his satisfaction that
income chargeable to tax has escaped the assessment as
under:
"The assessment of the year under consideration was made
u/s 143(3) r.w.s. 153C on 27.12.2011 at a total income of Rs.
4,11,07,800/- as against returned income of Rs. 5,130/.
Aggrieved by the above order, the assessee filed revision
application u/s 264 of the Income Tax Act, 1961 before CIT
Central-II, New Delhi. The assessee challenged assumption of
jurisdiction U/s 153C on the grounds, that the satisfaction
arrived by the A.O. is not based on documents from the
premises of other person in whom action u/s 132 is initiated.
The CIT, New Delhi annulled the assessment order on the
ground of incorrect assumption of Jurisdiction U/s 153C,
Page | 7
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
the Ld. CIT (Central)-l 1, has not adjudicated the
ground on which the additions were made. Though, the
assessee challenged the additions but no submissions were
filed before the (Central)-11, New Delhi as to why additions
be deleted. In view of the fact, whereas no n is made by the
assessee in respect of the merits on which additions were
made, it shows that the assessee had nothing to say on these
grounds. "
With regard to above ground it is most humbly submitted that
reasons to form the belief that the income had escaped
assessment by the A.O. are not proper and erroneous. The
assessee disclosed all the material facts truly during the
assessment made U/s 143(3) r.w.s. 153C of the I.T. Act
1961. The assessment made U/s 143(3) r.w.s. 153C was
quashed by the CIT Central - II ,New Delhi on the fact that
the AO had no jurisdiction U/s 153C . The A.O stated in the
reasons for opening re-assessment U/s 147 that the assessee
challenged assumption of jurisdiction U/s 153C on the
grounds, that the satisfaction arrived by the A.O. is not based
on documents from the premises of other person in whom
action u/s 132 is initiated, whereas it is evident enough from
the order passed by the CIT Central -II that the assessee has
challenged the assessment proceedings U/s 143(3) r.w.s.
153C on various grounds of principles of natural justice,
equity and fair play, tempering of assessment records by the
assessing officer.
A.O. has no fresh tangible material other than the assessment
proceedings held U/s 143(3) r.w.s. 153C which were quashed
on the technical and factual grounds by the CIT Central-II.
Importance of fresh intangible material for re-assessment U/s
147 of the I.T. Act 1961 has been emphasized by Bombay
High Cout in the case of CIT. V/s Ambitabh Bachan whereby it
was held that Reopening in the absence of "fresh tangible
material" is invalid . For AY 2002-03, the assessee filed a ROI
declaring income of Rs. 14.99 crores. A revised ROI was then
filed claiming 30% adhoc expenses (Rs. 6.31 crores) and
offering income of Rs. 8.11 crores. When the AO asked the
assessee to substantiate the expenses, he withdrew the
claim. The AO passed a s. 143(3) assessment determining the
income at Rs.56.41 crores. The AO then issued notice under
section 148 notice (within 4 years) to reopen the assessment
on the ground that the claim for expenses (which was
withdrawn) had to be assessed as "unexplained expenditure"
u/s 69. The CIT (A) & Tribunal struck down the reassessment
order on the ground that the material on the basis of which
Page | 8
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
the assessment was sought to be reopened was always
available at the time of the original proceeding and there was
no new material. On appeal by the department to the High
Court, HELD dismissing the appeal. The reopening on the
basis that the said adhoc expenditure constituted
"unexplained expenditure" u/s 69 was based on the same
material. There was no fresh tangible material before the AO
to reach a reasonable belief that the income liable to tax has
escaped assessment. It is a settled position of law that review
under the garb of reassessment is not permissible.
Honble Delhi high court in the case of CIT v. Kamdhenu Steel
& Alloys Ltd. (2012) 248 CTR 33 (Delhi)fHigh Court) has held
that reassessment merely on the basis of investigation wing
and the notice issued after the expiry of four years from the
end of the relevant assessment year by the assessing officer
merely acting mechanically on the information supplied by the
Investigation wing about the accommodation entries provided
by the assessee to certain entities without applying his own
mind was led to be not justified.
In the case of Balakrishna Hiralal Wani vs. ITO (2010) 321
ITR 519 (Bom. It was held that there was no tangible material
before the Assessing Officer to form the belief that the income
had escaped assessment and therefore, reopening of
assessment under section 147 was not valid.
In the case of NYK Line (India) Ltd. v. Dy. CIT (2012)
Bombay High Court has held that where the assessee had
made full and true disclosure and also there was a note by
the auditor in his audit report, reopening of assessment
beyond the period of four years was held to be not valid
notwithstanding the fact that for subsequent assessment year
a similar addition had be made by the assessing officer.
Assessment cannot be reopened on the basis of a mere
change of opinion. There should be some tangible material
with the assessing officer to come to the conclusion that there
is an escapement of income. A mere change of opinion on the
part of the assessing officer in the course of assessment for a
subsequent year cannot justify the reopening of an
assessment.
Honble Delhi high court in the case ofTechspan India (P) Ltd
& Anr vs. ITO (2006) 283 ITR 212 (Del) has held that an asst,
order passed after detailed discussion cannot be reopened
within a period of 4 years unless the AO has reason to believe
that there is to some inherent defect in the assessment.
Page | 9
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
The A.O. stated in his impugned order that the "after
recording reasons proceedings u/s 147 were taken in hand
after receipt of the approval of the Commissioner of Income
Tax, Central-II, New Delhi accorded on 26.03.2014 u/s 15 1"
whereas it is humbly and respectfully submitted to your
goodself that as per section 151 of I.T. Act 1961 the A.O. can
initiate proceedings after taking approval for JC and CIT both.
Briefly description of section 151 of the I.T. Act 1961 is as
follows:
Section 151 of the I.T. Act 1961 - Sanctions for issue of
notice U/sl48
Upto 4 years from the Beyond 4 years but
end of the relevant up to 6 years from
assessment year the end of the
relevant AY
In cases subject to By an AO not below the 1 )Same approval,
scrutiny by way of rank of AC/DC . Any AO And
assessment u/sl43(3) or below the rank of AC/DC 2)Notice can be
147 will require prior approval issued only after
of the JO before issuing obtaining the prior
the notice approval of CCIT or
CIT
In other cases By any AO By an AO not below
the rank of JC .
Any officer below
the rank of JC can
issue the notice
with the prior
approval of JC
In the light of the above judicial decisions and
provisions of the section 151 of the I. T. Act 1961, it is
vehemently contended that the reasons recorded by the
A.O. for the belief that income has escaped assessment
and approval taken U/s 151 on 26.03.2014 for the issue
of notice u/s 148 are void and consequential
assessment proceedings are void-ab-intio.
Finding
6. The legality of this ground is not questioned as I find no
consideration in this ground hence, reject this ground of appeal."
12. On the issue of the merits of the addition, the ld CIT(A) deleted the same
vide para No. 9 to 12 of the order as under:-
Page | 10
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
"9. Ground no. 3 of appeal is addition of Rs. 3,95,32,500/- under
section 68 of the I.T. Act on account of alleged unexplained other
deposits in the bank statements of the appellant company.
9.1 The Ld. AO has made addition and the view of the AO is as
follows:
"The assessee during the Appellate proceedings, submitted
the submissions as follows:
Ground no. 3 of appeal relates to the addition of Rs.
3,95,32,500/- U/s 68 on account of Unexplained Deposits.
The appellant submits that the additions have been made by
the Ld AO without application of mind and without making the
proper verifications. The Ld AO without appreciating the
correct facts of the case has simply copied paste the
assessment order passed U/s 143(3) rws 153C on
27/12/2011 whereby the same has been annulled by the CIT
Central-II in the order passed U/s 264 of the act on
20.03.2014.
The Ld AO in his assessment order stated that "During the
course of assessment proceedings the company has furnished
the copy of profit loss account, balance sheet and schedules
forming parts of balance sheet only. But no books of account
was produced for examination inspite of the repeated
requests" whereas the assessee company has provided the
books of accounts for A. Y. 2007-2008 in form tally data as
maintained by the company vide reply dated 30/10/2014
same can be verified from the submissions filed by the
assessee company.
9.2 Adverse observations of Ld. A.O. are met as under:-
"1. The Ld AO stated in his order stated that "Notice u/s 148
dated 27.03.2014 was issued and duly served on 28.03.2014.
The assessee vide application dated 09.04.2014 requested for
copy of reasons alongwith approval for initiation of proceeding
which was provided to it. In reply to the notice u/s 148 issued
assessee has given in writing that original return filed may
kindly be treated as filed in reply to the notice u/s 148.
In reply thereof Shri Aseem Gupta F.C.A. appeared from time
to time with whom case discussed. During the course of
assessment proceeding assessee has furnish bank
reconciliation statement which shows credit entry of
Rs.3,03,87,500/-. Whereas as per bank statement total
deposit reflects Rs. 3,95,32,500/-. Thus it is seen that the
reconciliation statement filed by the assessee do not tally with
Page | 11
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
that of bank statements. This fact leads to the impression
that the accounts submitted by the assessee company is
fabricated one and cannot be relied upon. " The Id Ao has
failed to appreciate the fact that the asseessee company has
vide its reply dated 05/12/2014 has provided the Ld AO the
summary and detailed narrations of all debit and credit
entries of bank accounts .The summary of detailed bank
narrations submitted to the Ld Ao totaled to 3,95,23,500/-
and detailed narration sheet totaled to 3,03,87,500/-. The Ld
Ao never pursued the summary and detailed narrations filed
with him and passed the order in hurry without making
further inquiry and verifying the correct facts of the case and
failed to appreciate the fact the difference between the bank
statements total and bank narration sheet total is because of
cheque returned amounting to Rs.91,45,000/- which is clearly
mentioned in the bank narrations summary sheet submitted
along with the detailed narration sheet and no opportunity of
being heard was provided to the assessee before making the
voluminous additions.
The Ld. A.O. has stated in his impugned order the "The
assessee was required to explain the nature and source of the
deposits reflecting in the bank account with necessary
documentary evidences to prove the Identity, capacity and
genuineness of the parties from whom the money was receipt
and deposited in the bank but the assessee failed to give an
iota of evidences, therefore, the sum of Rs.3,95,32,500/- is
treated as unexplained deposit and will be added towards
income of the company. This addition will cover the
unexplained cash credit found/ reflected in the financial
statement as well as other possible leakages." In reply, it is
submitted that the allegations made by Ld. A.O. are not
correct which is clearly evident from the submissions made by
the assessee to the A.O. on various dates. Where the
assessee has provided all the documents called for along with
confirmations and PAN number, address and other details of
the parties from whom the credit in bank accounts has been
received by the assessee during the year. All the persons/
parties from whom the assessee has received credits in bank
are being assessed to tax and PAN and other details were
being provide to the Ld. A.O. but no acceptance of same was
made by the Ld. A.O.
According to Section 68 of Income Tax Act 1961, where any
sum is found credited in the books of an assessee maintained
for any previous year, and the assessee offers no explanation
about the nature and source of the same or the explanation
Page | 12
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
offered by him is not satisfactory in the opinion of A.O., the
sum so credited may be charged to income tax as the income
of the assessee of that previous year.
The basic precondition for the Section 68 is that the assessee
should file a valid confirmation. Valid confirmation has no
specific format but it must contain name, complete address of
the lender. It is better if PAN of the lender is also obtained as,
if no PAN given then ambit of doubt is far more for the AO.
With the confirmation the AO must insist on some identity
proof like copy of driving license, copy of passport, copy of
ration card or election ID card etc.
The confirmation so filed must indicate complete details of
transactions (like mode- cash or cheque, with number date of
cheque with bank details). The AO have right to demand the
copy of bank account of the lender evidencing such
transactions and the same needs to be filed. In case
transaction is in cash then AO must demand cash flow
statement of the lender, preferably containing details of
opening balance and its source thereof.
As far as the creditworthiness or financial strength of the
creditor/subscriber is concerned, that can be proved by
producing the bank statement of the creditors/subscribers
showing that it had sufficient balance in its accounts to enable
it to subscribe to the share capital. Once these documents are
produced, the assessee would have satisfactorily discharged
the onus cast upon him. Thereafter, it is for the Assessing
Officer to scrutinize the same and in case he nurtures any
doubt about the veracity of these documents, to probe the
matter further. However, to discredit the documents produced
by the assessee on the aforesaid aspects, there has to be
some cogent reasons and materials for the Assessing Officer
and he cannot go into the realm of suspicion. Thus element of
credit worthiness and satisfaction of AO thereafter is
subjective and requires more efforts/ inquiry on the part of
the AO to give a finding in the order that lender is not credit
worthy.
If AO observe some cash deposit before issue of cheque then
some ,,nexus must be established between the cash deposit
and the lendee. A mere observation that cheque is issued
after few days of cash deposit and additions made on this
count will not sustain in the appellate stage. Honble Gujarat
HC has even held in 208 Taxman 35 that even if there is cash
Page | 13
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
deposit before the cheque is issued same cannot be held has
income of lendee if lender is income tax assessee.
In Orient Trading Co. Ltd. v. Commissioner of Income-tax
(1963) 49 ITR 723 (Bom.), one of the questions referred
to the Bombay High Court was whether there was any
material before the Tribunal to hold that a sum standing in
the books of the assessee to the credit of a third party
belonged to the assessee. The Bombay High Court discussed
the nature and significance of cash credits in such cases and
observed as follows:
"When cash credits appear in the accounts of an assessee,
whether in his own name or in the name of third parties, the
Income-tax Officer is entitled to satisfy himself as to the true
nature and source of the amounts entered therein, and if
after investigation or inquiry he is satisfied that there is no
satisfactory explanation as to the said entries, he would
be entitled to regard them as representing the undisclosed
income of the assessee. When these credit entries stand in
the name of the assessee himself, the burden is undoubtedly
on him to prove satisfactorily the nature and source of these
entries and to show that they do not constitute a part of his
business income liable to tax. When, however, entries stand,
not in the assessees own name, but in the name of third
parties, there has been some divergence of opinion expressed
as to the question of the burden of proof. The Income-tax
Officers rejection not of the explanation of the assessee, but
of the explanation regarding the source of income of the
depositors, cannot by itself lead to any inference regarding
the non-genuine or fictitious character of the entries in the
assessees books of account."
It has been held under noted judicial decision that additions
cannot be made U/s 68 if the assessee has provided
confirmation, Pan, Address and bank statements of the
persons from whom the credit in the bank accounts of the
assessee has received.
a) It has been held in the case of Shri Suresh Chandra
(Indl.) v. DCIT (ITAT Lucknow) Appeal No:ITA No.
184/LKW/2010, ITA No. 185/LKW/2010, ITA No.
239/LKW/2010 that furnishing of Name, Address, PAN and
Bank Statements are Sufficient compliance u/ s 68.
b) In the case of CIT Vs. Wellworth Construction Udyog
Ltd., (Delhi High Court) the apex court has decided that once
Page | 14
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
assessee has proved identity and creditworthiness of the
share applicants , addition U/s 68 cannot be sustained.
c) In the case of CIT Vs. Gangeshwari Metal (P.) Ltd.
(Delhi High Court) the apex court has decided that no
addition U/s 68 if assessee proves the genuineness of
transactions.
Income-Cash credit-Share application money- If the share
application money is received by the assessee company from
alleged bogus shareholders, whose names are given to the
AO, then the Department is free to proceed to reopen their
individual assessments in accordance with law, but it cannot
be regarded as undisclosed income of assessee company It is
respectfully submitted that SLP filed by the department has
been dismissed by Supreme Court by passing a speaking
order in the following 5 cases:
1. "CIT Vs. Divine Leasing & Finance Ltd. (SLP No. CC
37512008 arising out of ITA No. 53/2005 of the High Court of
Delhi at New Delhi)
2. CIT (Kolkata) vs Mis Shipra Retailers (P) Ltd. (SLP no.
CC 45112008 arising out of ITA no. 576/ 04 of the High Court
of Calcutta)
3. CIT vs Mis. Lovely Exports (P) Ltd. (SLP no. CC
11993107 arising out of/TA no 953/ 06 of the High Court of
Delhi at New Delhi), 172 Taxman 44 (Mag)
4. CIT vs. Mis. Pondy Metal & Rolling Mills (P) Ltd. (SLP
No. CC 12860107 arising out of 788/ 06ofthe High Court of
Delhi at New Delhi)
5. CIT vs. Mis General Exports Credits Ltd. (SLP
No.21349107* arising out of ITA 880/2006 of the High Court
of Delhi at New Delhi.)
"Upon hearing counsel the Court made the following order:
Delay condoned, Can the amount of share money be regarded
as undisclosed income under Section 68 of Income Tax Act,
1961? We find no merit in this Special Leave Petition for the
simple reason Ravnet Solutions (P) Ltd. A.Y.2007-08 Appeal
No. 233/09-10 that if the share application money is received
by the assessee company from alleged bogus shareholders,
whose names are given to the AO, then the department is
free to proceed to re-open their individual assessments in
accordance with law. Hence, we find no infirmity with the
Page | 15
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
impugned judgment. Subject to the above, Special Leave
Petition is dismissed. "
Bhav Shakti Steel Mines Pvt. Ltd., vs. CIT (High Court of
Delhi) -16.12.2008-
"Since the Commissioner of Income Tax (A) has not only
found that the identity of each of the share holders/ creditor
stood established, but has also examined the fact that each of
them were income tax assessees and had disclosed the share
application money or amount paid in their accounts which
were duly reflected in their income tax return as well as in
their balance sheets. In these circumstances we see merit in
what the learned counsel for the appellant has submitted and
we feel that the Tribunal was unjustified in coming to the
conclusion that the CIT(A) had not considered the matter in
the right perspective. Consequently we decide the question in
favour of the assessee and set aside the order passed by the
Tribunal."
CIT Vs. Tarun Auto(P) Ltd. in ITA 889/2010, Date of Order
19-07-2010 held as under:-
Both the commissioner and ITAT have found that the
assessee had filed copies of share applications, share
certificate, confirmations/ affidavits and income tax return
acknowledgements. The PAN number of the investor had also
been furnished to the assessing officer. Both the authorities
below have also held that if the share application money had
been received by the assessee from alleged bogus
shareholders, then the Revenue was free to open the alleged
shareholders assessment in accordance with law. "
IT vs Dwarkadhish Investment (P) Ltd. in ITA 91112010, Date
of order 02-08- 2010 held as under:-
"In any matter, the onus of proof is not a static one. Though
in Section 68 proceedings, the initial burden of proof lies on
the assessee yet once he proves the identity of the
creditors/share applicants by either furnishing their PAN
number or income tax assessment number and shows the
genuineness of transaction 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 applicants could not be found at
the address given, it would not give the Revenue the right to
invoke Section 68.... Moreover, it is settled law that the
assessee need not to prove the "source of source ... 12.
Though we were initially inclined to impose costs yet we are
Page | 16
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
of the opinion that ends of justice would be met by giving a
direction to the Revenue to be more careful before filing
appeals in a routine manner. In our view, appeal should not
be filed in matters where either no question of law arises or
the issue of law is a settled one. We give this direction
because the ,judicial capital in terms of manpower and
resources is extremely limited.... "
ITO V/s M/s Jay Iron & Steel Ltd. in ITA 30/2010, Date of
order13-08-2010 held as under:-
Apart from this one lapse on the part of the assessee that it
failed to produce the director, it has filed all other necessary
evidences for explaining share application money received by
it. On the other hand, the only circumstance narrated by the
assessing officer is that he received information exhibiting the
involvement of these share applicants in providing
accommodation entry but he failed to disclose the nature of
that information and how it is related to the assessee. His
observations are just general in nature without specifying any
material. With such type of general information, he cannot
treat the share application received by the assessee as bogus
in a sweeping way. "
In the case of CIT v. Kamdhenu Steel & Allioys Ltd. (2012) 68
DTR 38 / 248 CTR 33/ 206 Taxman 254 Hon'ble High
Court held that :-
Once the assessee produces adequate evidence which prima
facie discharge the burden of proving identity,
creditworthiness of the shareholders and genuineness of
transaction, in facts of such a case if the Revenue authorities
want to discard these evidences as 'created evidences' the
Revenue should make through probe so as to nail the
assessee under section 68 of the I.T. Act.
In the case of CIT .u. Bhaval Synthetics (2013) 35
taxmann.com 83 Hon'ble Rajasthan High Court dismissed the
appeal of the department following the decision of the
Hon'ble. Supreme Court in the case of CIT Steller Investment
Ltd.[2001J 251 ITR 263 (SC). In this case Hon'ble High Court
observed that AO made an addition u/s. 68 of the Act,
treating an amount of Rs.58.40 lakhs, received by assessee
on account of share application money, as unexplained share
capital on the ground that the assessee failed to furnish
confirmation from the allottees / shareholders. The CIT(A)
and the Tribunal deleted the addition. On appeal filed by the
department, the High Court dismissed the departmental
Page | 17
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
appeal following the decision of the Supreme Court as
mentioned in supra.
Onus is on assessee to discharge that cash creditor is a man
of means - The onus is on the assessee to discharge the onus
that the cash creditor is a man of means to allow the cash
credit. There should be identification of the creditor and he
should be a person of means. When the cash creditor is an
income-tax assessee, it cannot be said that he is not a man of
means - Kamal Motors v. CIT [2003] 131 Taxman 155 (Raj).
It has been held by Pune ITAT [2012] 19 taxmann.com 190
(PUNE -ITAT) that unless accounts are rejected for express
reasons, and corroborated by conclusive evidence, any
decision on estimation of income is unsustainable in law.
Supreme Court in Mehta Parikh & Co. vs. CIT (1956) 30 ITR
181 (SC). It was pointed out that where the assessees
account were accepted as genuine, it is ordinarily not possible
to show that the credits therein do not come from the sources
attributed for them.
To say that the borrowing has not come from the accounted
source of the lender may not be sufficient in itself to reach a
presumption as it was held in the case of CIT vs. Metachem
Industries (2000) 245 ITR 160 (MP) that there is no further
responsibility to show, that it has come from the accounted
source of the lender.
In the light of the above judgments it is submitted that the
assessee has made submissions to the Ld. A.O. of the bank
transactions in the below format:
S.No. Date Particulars Cheque Withdrawals Deposits Narration Address Pan Remarks
no. No. if any
The Ld. A.O. has not considered the submissions neither he
considered the confirmations provided from various parties from
whom the assessee received credits in banks during the normal
course of business. The Ld. A.O. has not even issued any summon
U/s 131 to present before him in order to check the genuineness of
the transactions neither he issued any 133(6) for demand of
information to place reliance on the submissions made by the
assessee. The Ld. A.O. has passed the impugned order in a hurry
on 02.03.2015 without issuing to a show cause notice to the
assessee and providing the assessee a final opportunity of being
heard and making the assessment in a haphazard manner and
Page | 18
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
making genuine hardship on the assessee by assessing an income
which is not real in any manner.
If the Ld AO has any doubt about the credit entries, he should have
asked for further clarification from the appellant or confirmation
from concerned parties. But the Ld Ao has passed the order on
02/03/2015 without issuing a show cause notice to the assessee for
the addition made. The Ld AO has not even considered the
confirmations and other evidences provided by the assessee
company and simply copied paste the assessment order passed U/s
153C which was annulled by the CIT Central-II in the order U/s 264
of the Act. Probably whole of the above additions are already made
in the hands of Mr. Manoj Kumar and Mr. Virender Ram by ACIT-
CC 09 and confirmed by CIT Appeals.As once additions have been
confirmed in the hands of one assessee same additions cannot
sustained in hands of another assessee giving effect to double
taxation which is against the law of natural justice and should be
deleted.
In the light of above judicial decisions and provisions of section 68
of the I.T. Act 1961 it is vehemently contended and prayed to your
kind honor that the reassessment proceedings made are against the
principles of natural justice , equity and fair play and is bad in law
and hereby should be quashed.
As it is evident from the above records that the asessee has always
provide the requisite information as and when required. If the Ld
AO has any doubt about the credit entries, he should have asked
for further clarification from the appellant or confirmation from
concerned parties. The Ld AO has not even considered the
confirmations and other evidences provided by the assessee
company and simply copied paste the assessment order passed U/s
153C which was annulled by the CIT Central-II in the order U/s 264
of the Act.
Finding
10. I have considered the facts of the case, written submissions
of the appellant and the findings of the Assessing Officer. I find that
the appellant had filed complete details of credit and debit entries
of its bank account and also the details of loans paid and interest
earned there from giving the name of the party, principal amount of
loan, interest earned thereon during the year, tax deducted at
source on the interest income, net interest due / received and the
balance interest receivable. On perusal of the details of credit
entries filed by the appellant during the course of assessment
proceedings, I find that clear narration was given against the credit
entries. If the Assessing Officer had any doubt about the credit
Page | 19
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
entries, he could have asked for further clarification from the
appellant or confirmation from the concerned party. On perusal of
the detail of the credit entries, such an action of the Assessing
Officer was not at all justified. Accordingly, the addition of Rs.
3,95,32,500/- made by the Assessing Officer is deleted. Ground
raised in appeal is allowed.
11.Ground no. 4 of appeal relates that Ld A.O. without appreciating
the correct facts of the case and giving proper opportunity of being
heard is not justified in law and facts and circumstances of the case
in making addition of Rs. 15,35,000/- on account of unexplained
current liabilities. The Ld. Ao. Has stated in his impugned order that
"on perusal of balance sheet it is found that in schedule -VI the
assessee has shown an amount of Rs. 15,35,000/- under the head
current liabilities. The assessee was required to explain the nature
and source of this liability but in spite of the repeated request
assessee failed to establish the identity and genuiness of pesrons
and purpose. Therefore, the liabilities to the tune of Rs. 15,35,000/-
is being disallowed to be added as income of the company."
11.1That the Assessing Officer, erred in law and fact of the case in
making assessment on the issue of other liabilities, as reflected in
the Balance Sheet of the assesse, without considering the fact and
submission available on record and also without providing sufficient
and reasonable opportunity to the assessee. The amount of Rs.
15,35,000/- is the amount received by the assessee from Shrey
Infradevelopers Private Limited (Rs. 14,00,000/-) and Sam Portfolio
Private Limited ( received Rs.3,35,000/- returned back
Rs.2,00,000/- during the year) which is clearly mentioned in the
summary sheet and detailed narration sheet of the bank entries
submitted by the assessee. The Ld A.O. has erred in considering the
fact that once all the additions for the amount received by the
assessee in its bank accounts has been added to the income of the
assessee than how the amount of liabilities and other additions can
be made causing double taxation on the same amount over and
over again which is unfair, unjust and bad in law.
11.2 In this regard it is most humbly submit that as
demonstrated above the assessment order was finalized without
providing any reasonable opportunity to the assessee and without
appreciating facts and submission available on records. The books
of accounts including Bank book has nowhere being rejected by the
Assessing Officer. It has been held by Pune ITAT [2012] 19
taxmann.com 190 (PUNE -ITAT) that unless accounts are rejected
for express reasons, and corroborated by conclusive evidence, any
decision on estimation of income is unsustainable in law. The
protective assessment has been made by the Assessing Officer,
without disclosing the case where sustentative assessment has
Page | 20
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
been made. It has been held in the case of Smt. Farzana Farooq
Desai vs. Dy. CIT (2002) 74 TTJ 507 (Ahd.) that there cannot be a
protective assessment. The Assessing Officer while making the
additions, has not placed on record any supporting evidence to
substantiate his contention. Thus the addition has been made by
the Assessing Officer, is un-justified, illegal and bad-in-law.
11.3 Prayer In the light of the submission made above it is most
respectfully and humbly prayed before your kind honor, that as the
above amount has been added by the A.O. two times while making
the voluminous and unfair additions should be deleted.
11.4 It is evident from the above that, the Ld. AO has not
considered the financial statements and submission available on
record and also without providing sufficient and reasonable
opportunity to the assessee.
Finding
12. I have considered the facts of the case, written submissions of
the appellant and the findings of the Assessing Officer. I find that
the appellant had filed complete details of credit and debit entries
of its bank account and also the details of loans paid and interest
earned there from, giving the name of Y the party, principal amount
of loan, interest earned thereon during the year, tax deducted at
source on the interest income, net interest due / received and the
balance interest receivable. On perusal of the details of credit
entries filed by the appellant during the course of assessment
proceedings, IJind that clear narration was given against the credit
entries. If the Assessing Officer had any doubt about the credit
entries, he could have asked for further clarification from the
appellant or confirmation from the concerned party. On perusal of
the detail of the credit entries, such an action of the Assessing
Officer was not at all justified. In view of the above facts and
considering the evidence on record, I see no justification for the
Assessing Officer in holding that the above transactions remained
unexplained and making the impugned addition. Accordingly, the
addition of Rs. 15,35,000/- made by the Assessing Officer is
deleted. Ground raised in appeal is allowed."
13. Therefore, the revenue is aggrieved with the order of the ld CIT(A) where
the addition is deleted and assessee has filed cross objection on the issue
of reopening.
14. Coming to the appeal of the revenue where ground No. 1 and 2 are with
respect to the addition of Rs. 393532500/- and Rs. 1535000/- the ld CIT
Page | 21
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
DR vehemently submitted that it is responsibility of the person who
deposits money in his bank account to show that from whom the money
is received and his identity, creditworthiness and genuineness of the
transaction is required to be proved by the assessee. He stated that
assessee has failed to show that from whom the money has been
received and whose money is deposited in the bank account. Unless,
assessee shows that, addition in the hands of the assessee cannot be
deleted. He submitted that merely filing the detail without confirmation of
the parties, assessee cannot get away with the addition. He further stated
that initial onus u/s 68 of the Act lies upon the assessee. If the AO is not
satisfied with the same then only he is required to make further enquiry
and then only the onus shifts on the ld Assessing Officer. In the present
case the assessee has not discharged the initial onus therefore, the ld
CIT(A) has wrongly deleted the addition. He vehemently referred to para
No. 10 of the order and stated that the whole addition has been deleted
without any application of mind by the ld CIT(A). He further referred to
para No. 11 of the order with respect to the addition of Rs. 1535000/-
and stated that the addition is deleted by the ld CIT(A) without
independently applying her mind but simply copying the finding of para
No. 10 in para No. 12 and deleted the addition. He was of the view that
unless the assessee shows the necessary ingredients u/s 68 he cannot
get away with the addition. He further stated that Shri Asheem Gupta as
stated by the ld AO in assessment order is the accommodation entry
provider who appeared before the ld CIT(A) also. Even before the ld
CIT(A) no information was provided. He further submitted that the ld
CIT(A) has held that the details of loan given to the parties is provided by
the assessee along with the details of interest received and the principal
amount. He stated that in case of entry operator the loans outstanding in
the books of the appellant company is the real beneficiary of the
accommodation entry and tax can be recovered from them u/s 226(3) of
the Act and further the ld CIT(A) even did not care to even know that
Page | 22
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
what is the commission charged by the entry operator assessee by
providing accommodation entries. He therefore, submitted that the ld
CIT(A) has deleted the addition without applying the law to the facts of
the case.
15. The ld DR relied upon the following decisions:-
i. PCIT Vs. Paramount Communication (P) Ltd (2017-TIOL-253-
HON'BLE SUPREME COURT IT)
ii. PCIT Vs. Paramount Communication (P) Ltd (2017) 79
taxmann.com 409 (Delhi) 392 ITR 444.
iii. Aradhna Estate P Ltd Vs. DCIT (2018) 91 taxmann.com 119
iv. Pushpak Bullion P Ltd s. DCIT 85 taxmann.com 84
v. Ankit Financial Services Ltd Vs. DCIT 78 taxmann.com 58
vi. Aaspas Multimedia Ltd Vs. DCIT 83 taxmann.com 82
vii. Ankit Agrochem P Ltd Vs. JCIT (2018) 89 taxmann.com 45
16. He further referred the decision of the Hon'ble Delhi High Court in case of
Shri CIT Vs. DK Garg in 404 ITR 757 to state that each debit and credit is
required to be explained by the assessee. He further referred to decision
of the Hon'ble Delhi High Court in case of Seema Jain Vs. ACIT 406 ITR
411 wherein, taxation of credit as income of assessee is justified. In view
of this he submitted that the order passed by the ld CIT(A) required to be
vacated.
17. He further referred to the decision of the Shri Raj Kumar Chawla Vs ACIT,
New Delhi dated 26.09.2018 wherein, the issue with respect to the
accommodation entry by Mr Asheem Gupta was discussed. He referred to
para No. 11 of that order and stated that in the present case there is no
opportunity of cross examination of Shri Asheem Kumar Gupta is required
Shri Asheem Kumar Gupta himself appeared before the ld CIT(A) and at
no stage he refuted his own statement. Further, before the Assessing
Officer assessee has not uttered a word about the cross examination.
Page | 23
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
18. He further referred to the decision of the coordinate bench in ITA No.
2973/Del/2014 dated 30.01.2018 wherein, the assessee himself have
confessed a surrender of Rs. 55 lakhs on account of accommodation entry
received from Shri Asheem Kumar Gupta and further the penalty of Rs.
1699500/- was confirmed. He therefore, submitted that now there is no
doubt that Mr. Asheem Kumar Gupta is bogus accommodation entry
provider and unless he gives the names of beneficiary of the appellant
company the addition cannot be deleted in the hands of the company.
19. On the issue of reopening of the assessment in the cross objection of the
assessee he relied upon the orders of the ld CIT(A) wherein, the
reopening is upheld.
20. Despite notice none appeared on behalf of the assessee and therefore,
the issue is decided on the merits of the case as per information available
on record.
21. We have carefully considered the rival contentions and also perused the
orders of the lower authorities. The brief facts of the case shows that
assessee company is part of one of the companies operated by Shri
Asheem Kumar Gupta for providing accommodation entries. During the
course of survey, statement u/s 133A of the Act was recorded of Mr.
Asheem Kumar Gupta who is director in 8 companies which was engaged
in providing accommodation entries as under:-
a) M/s Jiwan Realtors Ltd,
b) M/s. Ganpati Fincap Services Pvt Ltd.,
c) M/s SAM Portfolio Pvt. Ltd.,
d) Moderate Credit Corporations Pvt. Ltd.,
e) M/s Chotti Leasing & Finance Pvt. Ltd.,
f) M/s S.G. Portfolio Pvt. Ltd.,
g) M/s Sushre Securities Pvt. Ltd and
h) M/s Shrey Infradevelopers Pvt. Ltd.
Page | 24
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
22. On the basis of the above information the assessment of the assessee
was reopened u/s 147 of the Act . Earlier in 153C assessment the
additions were made in the hands of the assessee on protective basis and
on substantive basis was made in the hands of Mr. Manoj Kumar who
worked with Shri Asheem Gupta, a Chartered Accountant who was
engaged in providing accommodation entries. The protective addition was
made on account of misrepresentation made by Shri Asheem Kumar
Gupta in his statement recorded vide question No. 5 during the course of
survey. He mis-represented the fact that assessment in case of Shri
Manoj Kumar has been assessed on this income on substantive basis
whereas, in fact he was assessed on protective basis. The assessee has
claimed before the ld CIT(A) with respect to the reopening of the
assessment that the provision to section 147 to 151 of the Act are not
complied with, however, no arguments were raised before the ld CIT(A)
with evidences. However, it was argued that there was no fresh tangible
material for reopening of the assessment was available with the ld AO but
in fact the statement of Shri Asheem Kumar Gupta who is a director of
the company that he has made the statement that he is providing
accommodation entry is a tangible material for reopening of the
assessment. It is the statement of the director of assessee company
which was never retracted and in fact by arguing before lower authorities.
So in turn, it was his tacit approval of his statement. Hon'ble Bombay
High Court in Pebbal Investment and Finance Ltd Vs. ITO has held that
statement u/s 133A of the Act can be used for the purpose of making an
assessment in the hands of the assessee. Further, when Shri Asheem
Kumar Gupta has never retracted his statement, as he appeared before
the ld CIT(A), to state that his statement was incorrect. The reasons were
provided to the assessee however, no objections were raised before the
ld Assessing Officer. With respect to the sanction of the issue of the
notice also no infirmity was shown before the ld CIT(A). In view of this,
we do not find any infirmity in the order of the ld CIT(A) in confirming the
Page | 25
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
reopening of the assessment made by the ld AO. In view of this the cross
objection filed by the assessee is dismissed.
23. On the issue of the merits of the addition, it is apparent that assessee has
merely submitted the summary and narrations of the debit and credit
entries of the bank, however, it was not shown that from whom the
assessee has received the above sum and to whom it has been paid along
with the purposes. The ld AO emphatically stated that the assessee has
failed to provide explanation with respect to the nature and source of the
deposits reflected in the bank account. There is no evidence that assessee
has submitted confirmation of those parties. Even before the ld CIT(A) it
was not rebutted that assessee is not an accommodation entry provider.
Further, in absence of preliminary discharge of initial onus by the
assessee of the sums credited in the books, of the assessee, the ld AO is
not duty bound to issue any summons u/s 131 of the Act. It is also
apparent that when assessee has not provided the complete details of the
persons from whom the sums were received, it is not correct to say that
the ld AO should have issued summons to those parties. The ld CIT(A)
has deleted the addition for the reason that assessee filed details of credit
and debit entries of the bank account and also the loans paid. The ld
CIT(A) has blindfoldedly accepted the explanation of the assessee without
giving any credence to the fact of the case that assessee company is an
accommodation entry provider and unless the real beneficiaries are
named by it, it cannot escape the taxation of the sum credited in its
books of account. Further, in case of accommodation entry provided by
the assessee, nature of such accommodation entries were also not shown
before lower authorities by assessee. As assessee's director has
confessed that assessee company is providing accommodation entries,
then, CIT(A) even did not care to verify that who are the beneficiaries
and what is the amount of commission received by assessee from the
beneficiaries from providing accommodation entries. Without even calling
for all these details, the ld CIT(A) has deleted the addition. In view of
Page | 26
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
this, we reverse the finding of the ld CIT(A) and confirm the order of the
ld Assessing Officer with respect to the addition of Rs. 39532500/- for
Assessment Year 2007-08. Accordingly, appeal of the ld Assessing Officer
and its ground Nos. 1 is allowed accordingly.
24. With respect to ground No. 2 the ld AO noted that assessee has shown
current liabilities of Rs. 1535000/- but has not given the confirmation of
those parties. The assessee submitted before the ld CIT(A) that it
received sum of Rs. 14 lakhs from Shreys Infradevelopers Pvt. Ltd and
San Portfolio Pvt Ltd of Rs. 135000/-, however, no confirmation was
provided of these parties. In view of this the addition has been made by
the ld AO. The ld CIT(A) deleted the addition without even asking for the
confirmation. We find that unless the assessee submits the confirmation
of these parties the addition cannot be deleted. In view of this we reverse
the finding of the ld CIT(A) and restore the order of the ld AO. Ground
No. 2 of the appeal of the revenue is allowed.
25. In view of our above finding we allow ITA No. 6206/Del/2015 filed by the
AO and dismiss the Cross objection No. 398/Del/2015 filed by the
assessee.
26. The facts of the case for AY 2008-09 and 2009-10 are similar except that
for Assessment Year 2008-09 the ld Assessing Officer made the addition
of Rs. 68531671/- on account of unexplained deposit and Rs. 435320/-
on account of unexplained profit on sale of investments. For Assessment
Year 2009-10 the addition is made on account of unexplained deposit of
Rs. 121033910/- and on account of unexplained profit on sale of shares
of Rs. 310500/-. For Assessment Year 2009-10 the ld Assessing Officer
over and above the unexplained deposit found that the assessee company
has shown investment amounting to Rs. 35.05 lakhs however, no profit or
loss on sale of investment was shown and therefore, the ld Assessing
Officer made addition of 10% of the sale price. Similarly, for Assessment
Year 2008-09 the ld Assessing Officer noted that investment of Rs.
4353208/- were shown, however no profit and loss thereon has disclosed
Page | 27
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
hence, 10% addition has been made. The ld CIT(A) for both the years
deleted the addition. before the ld CIT(A) reopening for both the years
were challenged which were upheld whereas on the quantum the addition
was deleted and therefore, both the parties are in appeal before us.
27. The assessee in CO for both the years challenged the reopnieng which
has been dealt with by us in case of the assessee for Assessment Year
2007-08. In that year we have upheld the action of the AO in reopening
the assessment and therefore, for the similar reasons we dismiss both the
cross objection for both the years filed by the assessee.
28. The revenue has challenged the deletion of the addition by the ld CIT(A)
on account of unexplained deposits. We have already confirmed the order
of the ld Assessing Officer reversing the order of the ld CIT(A) for
Assessment Year 2007-08. For the similar reasons we also confirmed the
addition on account of unexplained deposit for Assessment Year 2008-09
and 2009-10 in the hands of the assessee. Accordingly, ground No. 1 of
the appeal for Assessment Year 2008-09 and 2009-10 of the ld AO is
allowed.
29. Ground No. 2 of the appeal for both the years is on account of estimated
profit on sale of investment by the assessee. The above addition has been
made by the ld Assessing Officer purely on the basis of surmises and
conjectures and without making any enquiry whether the assessee has
sold the investment at profit or at losses. There were no evidences also
mentioned by the ld Assessing Officer for making the above addition.
further, the addition is on estimate basis. Though the ld CIT(A) has
deleted the addition with which he do not agreed, however, for the
reasons given by us above we direct the ld Assessing Officer to delete the
addition of Rs. 435320/- and Rs. 310500/- for AY 2008-09 and 2009-10.
Accordingly, ground No. 2 of the appeal of the revenue for both the years
is dismissed.
Page | 28
DCIT Vs Green Mark Infra Ltd,
ITA No. 6206 to 6208/Del/2015 & CO No. 398 to 400/Del/2015
(Assessment Year: 2007-08 to 2009-10)
30. Accordingly, appeal of the revenue for AY 2008-09 and 2009-10 are
partly allowed and CO filed by the assessee for both the years are
dismissed.
31. Now it is evident that assessee is an entry operator and providing
accommodation entries, so it is also clear that this company will have
very scarce resource for payment of taxes therefore, the ld AO may
invoke provisions of section 226(3) of the Act and recover taxes from
those beneficiaries, in case assessee company's assets are not enough for
payment of taxes.
32. Accordingly, all the six appeals pertaining to the above assessee are
disposed off by this common order.
Order pronounced in the open court on 26/10/2018.
-Sd/- -Sd/-
(KULDIP SINGH) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:26/10/2018
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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