ITA No.2027/Del/2012
Asstt.Year: 2001-02
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES `C' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER
ITA NO. 2027/DEL/2012
ASSTT.YEAR: 2001-02
DCIT, vs International Credits Ltd.,
Circle-11(1), 4, Community Centre,
Room No.12, East of Kailash,
C.R. Building, New Delhi-110065
New Delhi. (PAN: AAACI2990L)
(Appellant) (Respondent)
Appellant by: Shri Satpal Singh, Sr.DR
Respondent by: Shri Suneel Agarwal, CA
O R D E R
PER CHANDRAMOHAN GARG, J.M.
This appeal of the Revenue has been directed against the order of the
CIT(A)-XV, New Delhi dated 07.02.2012 in Appeal No.712/08-09 for AY
2001-02.
2. The sole ground raised by the revenue reads as under:-
"On the facts and circumstances of the case and in law, the ld.
CIT(A) has erred in deleting the addition of Rs.25,50,150/-
made on account of accommodation entries received by the
assessee, The appellant craves leave to add, alter or amend any
ground of appeal raised above at the time of hearing."
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ITA No.2027/Del/2012
Asstt.Year: 2001-02
3. The brief facts of the case read as under:-
"The Assessee filed its return of income on 30.10.2001
declaring a loss of Rs.Rs.2,04,15,948.00. Thereafter, a notice
u/s 142(1) dt. 26.09.08 was issued by the department informing
that it intended to add toassessee's income a sum of RS.
25,50,150.00 pertaining to the amount of business advances
received by the assessee from M/s. Ankur Marketing Limited
since the above party had admitted before the Investigation
Wing that they were involved in providing accommodation
entries only.
The assessee filed information & explanations through their
A.R. vide their letters dt. 21/11/08, 26/11/08 & 28/11/08
wherein the contentions of the department were vehemently
refuted. The department was informed that of the above amount
of Rs. 25,50,150.00, one amount of Rs.1,50,150.00 was never
received by the assessee. The remaining amounts totaling to Rs.
24,00,000.00 were trade advances which were duly returned by
the assessee in the financial year 2002- 2003. Statement of
accounts duly confirmed by the party showing receipt of
advances in the year 2001-02 & their return in the year 2002-
03 were also filed in original The department was further
requested to allow the assessee an opportunity to cross examine
the Party. A copy of the statement made by the Party was also
demanded from the A.O.
The learned DCIT did not take any cognizance of the assessee's
pleas/demands & added the entire sum of Rs. 25,50,150.00 to
the assessee's income."
4. Being aggrieved by the action and addition made by the AO, the assessee
pre-fixed an appeal which was allowed deleting the impugned addition. Now
the aggrieved revenue is before this Tribunal with the sole ground as reproduced
hereinabove.
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Asstt.Year: 2001-02
5. We have heard arguments of both the sides and carefully perused the
relevant material placed on record before us. Ld. DR submitted that the AO
noted that the assessee had received an amount of Rs.25,50,150/- from M/s
Ankur Marketing Ltd. and since the same party had admitted before the
investigation wing of the department that they were involved in providing
accommodation entries, hence, the AO rightly made addition to the income of
the assessee in this regard. The DR further contended that the CIT(A) deleted
the addition without having any basis and justified reason, hence, the impugned
order may set aside by restoring that of the AO.
6. On careful consideration of above submissions, at the outset, from bare
reading of the order of the AO, we note that the AO made addition with
following conclusion:-
"3. The assessee has submitted that the assessment
cannot be re-opened on the basis of information available
from DIT(Inv.). The assessee's objection is considered but the
same is not acceptable because in the instant case, detailed
investigation has been carried out by the Investigation Wing.
The persons who have given the entries have accepted that
they are merely the entry providers which are being provided
after receipt of cash from the parties who need entries. The
assessee's submissions are, therefore, not acceptable in view
of the factual position that the parties who have given the entry
have admitted in no uncertain terms that they are merely the
entry providers. Hence, the same is disallowed and added to
the total income. Penalty proceedings u/s 271(1)(c) of the I.T.
Act are initiated for furnishing inaccurate particulars of
income."
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ITA No.2027/Del/2012
Asstt.Year: 2001-02
7. We further observe that the CIT(A) deleted the addition with following
observations:-
"6.4 Even on merits from the perusal of the assessment
order, I find that AO has not given any material to the
appellant to present the arguments and the assessment is
concluded without affording an opportunity or cross
examining the third party whose statement is used against the
appellant. Hence, the basic principle of natural justice has not
been adhered to while completing the assessment.
6.5 I also find from the records available that the appellant
has stated that they received a sum of Rs.24,50,000 (instead of
Rs.25,50,150) from Ankur Marketing Ltd. as business advance
and the same is received through banking channels and the
confirmation of the party giving the advances were duly filed
and the said party is a regular income tax payee also. In these
circumstances, the AO has not brought anything on record to
prove that the identity and creditworthiness and genuineness
of the transaction is not proved.
AO has just blindly relied on the information of the
Investigation Wing without bringing any evidence or
confronting these evidence to the appellant. Even AO has also
not brought any material on record which can prove that this
money of Rs.25,50,150 was appellant's own undisclosed
income, before making an addition under Section 68 of the
Act.
6.6 The AO in his Assessment Order has not brought any
material on records to show that the confirmation filed by the
investor companies were not genuine. It is also seen that no
enquiry was conducted to examine the contents of the
information filed by the appellant.
6.7 In a recent judgment dated 30/01/2009 Hon'ble Delhi
High Court in the case of CIT vs. Gangour Investment Ltd.
(Income Tax Act No. 34/2007) has held that Revenue can make
addition under Section 68 of the Act only if the assessee is
unable to explain the credits appearing in its books of
accounts. In the said case the appellant has duly explained the
said credit entries in the form of various documentary
evidences. The said documentary evidence contained details,
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Asstt.Year: 2001-02
which set out not only the identity of the subscribers, but also
gave information, with respect to their address, as well as,
PAN, Assessment particulars etc. Based on these facts, the
Hon'ble Delhi Court dismissed the appeal of revenue.
6.8 Hon'ble Delhi High Court in the case of CIT vs. Pradeep
Gupta 207 CTR 115, which has also been relied upon by the
Delhi ITAT in the recent judgment in the case of Babita Gupta
ITA No. 2897/06, wherein it is held that in the facts of the case
before us it may be seen that from the very beginning Ld AO
had shifted entire burden upon the assessee and no material
was brought by him to prove his allegation that the impugned
amount represented assessee company's undisclosed income.
Therefore, on this ground alone the entire addition deserves to
be deleted and may kindly be held so.
6.9 In view of the factual position as well as the judicial
pronouncement on the subject, discussed above, I am of the
considered view that the appellant has discharged the initial
onus of establishing the bona-fides of the transactions and the
AO was not justified in ignoring various evidences provided to
him by the appellant. Nothing adverse has been brought on
record by the AO to establish that the amount of Rs. 25,50,150
received by the appellant from the said parties represents its
own undisclosed income. Hence, the addition made by the AO
deserves to be deleted."
8. In view of above noted assessment order, we note that the AO did not
bother to adjudicate the explanation of the assessee and simply noted that when
the entry provider has accepted that they provided accommodation entries after
receipt of cash from the parties who need entries and the AO further held that,
therefore, the submissions of the assessee are not acceptable in view of
admission of entry providers.
9. On appeal, the CIT(A) followed the decision of Hon'ble Jurisdictional
High Court in the case of CIT vs Pradeep Gupta (supra) and order of the ITAT
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ITA No.2027/Del/2012
Asstt.Year: 2001-02
Delhi in the case of Babita Gupta (supra) and held that the AO had shifted entire
burden upon the assessee and no material was brought by him to prove his
allegation that impugned amount actually represent undisclosed income of the
assessee. Ld. DR vehemently contended that the assessee was not provided due
opportunity to cross examine the so-called entry providers and their statement
recorded on the back of the assessee cannot be a reasonable and valid basis for
making addition to the income of the assessee. At this juncture, we respectfully
take guidance from the decision of Hon'ble High Court of Delhi in the case of
CIT vs Pradeep Kumar Gupta (supra) wherein speaking for Hon'ble
Jurisdictional High Court, their lordships in para 5 (at page 118) has held thus:-
"5. This is where the failure of the Revenue to produce
Shri Anand Prakash for cross-examination by the assessees,
assumes fatal consequences. Reassessment proceedings have
been initiated after several years of the acceptance of the
return under s. 143(1) of the IT Act. The assessees have
themselves relied on the banking transactions between
themselves and Shri Anand Prakash; secondly on bills issued
by them to Shri Anand Prakash, and on the unassailed
payment of rent to Shri Mool Chand. It is true that the
assessees' failure to produce Shri Kishan Chand had the
consequences of not proving that the said person was tilling
the land on their behalf. This failure cannot inexorably lead to
the conclusion that no agricultural income had been generated
by the assessees. Such an inference can only be drawn from
the statement of Shri Anand Prakash to the effect that the
transactions between him and the assessees were bogus
Therefore, it was mandatory for the Revenue to produce Shri
Anand Prakash for cross-examination by the assesses on their
specific demand in this regard. The facts on which the decision
to invoke s. 147/148 is predicated may in some cases be
sufficient both for decision to carry out a reassessment as well
to justify or sustain the fresh assessment. However, there may
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Asstt.Year: 2001-02
well be instances where the former reopening may pass muster
in the light of some facts, but those facts by themselves may
turn out to be insufficient to preserve the assessment itself.
Once ss. 147 and 148 are resorted to, the AO must first
discharge the burden of showing that income has escaped
assessment. It is only thereafter that the assessee has to
provide all the answers. We find no reason why the initial
burden of proof should not rest on the AO even where the
assessment has gone through under s. 143(1) of the Act. The
Tribunal has, therefore, arrived at the correct conclusion."
10. Under factual matrix of the case, as noted above, we reach to a logical
conclusion that the present case is squarely covered in favour of the assessee by
the decision of Hon'ble High Court of Delhi in the case of CIT vs Pradeep
Kumar Gupta (supra). Hence, we are unable to see any ambiguity, perversity or
any other valid reason to interfere with the impugned order and we uphold the
same. Accordingly, sole ground of the Revenue being devoid of merits is
dismissed.
11. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 28.11.2014.
Sd/- Sd/-
(G.D. AGRAWAL) (CHANDRAMOHAN GARG)
VICE PRESIDENT JUDICIAL MEMBER
DT. 28th NOVEMBER, 2014
`GS'
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ITA No.2027/Del/2012
Asstt.Year: 2001-02
Copy forwarded to:-
1. Appellant
2. Respondent
3. C.I.T.(A)
4. C.I.T.
5. DR
By Order
Asstt.Registrar
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