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DCIT, Circle-11(1), Room No.12, C.R. Building, New Delhi. Vs International Credits Ltd., 4, Community Centre, East of Kailash, New Delhi-110065
December, 01st 2014
ITA No.2027/Del/2012
Asstt.Year: 2001-02

                   DELHI BENCHES `C' NEW DELHI


                       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


       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


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."

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


ITA No.2027/Del/2012
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

ITA No.2027/Del/2012
Asstt.Year: 2001-02

7.     We further observe that the CIT(A) deleted the addition with following


              "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
        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,
ITA No.2027/Del/2012
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

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

ITA No.2027/Del/2012
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


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

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


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