IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `D', NEW DELHI
BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER
AND
MS. SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No.6288/DEL/2015
Assessment Year: 2007-08
ACIT KAD Housing Pvt. Ltd.
Central Circle 06, Room Vs 151, Savita Vihar
no.364, Delhi
ARA Centre, Jhadewalan PAN AACCK4705B
Extn., New Delhi
(APPELLANT) (RESPONDENT)
Appellant by Smt. Naina Soin Kapil, Sr. DR
Respondent by Sh. Rajesh Jain, FCA
Cross objection No.180/Del/2017
(ITA No.6288/DEL/2015)
Assessment Year: 2007-08
KAD Housing Pvt. Ltd. ACIT
151, Savita Vihar Central Circle 06, Room
Delhi no.364, ARA Centre,
PAN AACCK4705B Jhadewalan Extn., New
Delhi
(APPELLANT) (RESPONDENT)
Appellant by Sh. Rajesh Jain, FCA
Respondent by Smt. Naina Soin Kapil, Sr. DR
Date of hearing: 01/01/2019
Date of Pronouncement: 02/01/2019
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ORDER
PER N. K. BILLAIYA, AM:
ITA No.6288/Del/2015 and Co.No.180/Del/2017 are appeal
by revenue and cross objection by the assessee directed against
the order of the CIT (A)- XXIV, Delhi dated 11.09.2015 pertaining
to A. Y. 2007-08. The appeal and the cross objection are disposed
of by this common order for the sake of convenience.
2. The grievance of the revenue read :-
1. "The order of Ld. CIT(A) is not correct in law and facts.
2. On the facts and circumstances of the case, the CIT(A) has erred in
quashing the order u/s 147 on the ground that it was mere change of
opinion.
3. On the facts and circumstances of the case, the CIT(A) has erred in
ignoring the fact that fresh evidence in the form of survey report of the
investigation Wing was available for formation of belief that the assessee
has introduced its own money in the form of share application money
through proper companies.
4. On the facts and circumstances of the case, the CIT(A) has erred in
quashing the order u/s 147 and thereby deleting the addition of Rs.1.85
crores on account of unexplained share application money.
5. On the facts and circumstances of the case, the CIT(A) has erred in
quashing order u/s 147 and thereby deleting the addition of Rs.3.33 lacs on
account of unexplained expenditure in form of commission paid to the entry
operators.
6. The appellant craves leave to add, amend any/ all the grounds of appeal
before or during the course of hearing of the appeal."
3. Ground No.1 is of general in nature and needs no separate
adjudication.
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4. Ground No.2 and 3 go to the root of the matter.
5. Briefly stated that facts of the case are that original
assessment was framed u/s 143 (3) of the Act vide order dated
24.12.2009. The search seizure action was conducted in the case
of KM group of cases including the assessee on 27.06.2013.
During the course of pre search investigation it was found that
the assessee had taken accommodation entries in the form of
share premium / share capital.
6. Pursuant to the search the Assessing Officer recorded the
reasons and issued notice u/s 148 of the Act on 27.03.2014. The
reasons so recorded read as under :-
On perusal of the letter No. F. No.DDIT(Inv)/Unit V (1)/2013-14/312 DT: 21.03.20
received from Dy. Director of income Tax (Inv) Unit V(l), New Delhi, regarding
receiving of bogus share capital and share application money by the M/s KAD
Nousil Pvt Ltd during the Financial Year 2006-07.
M/s KAD Housing Pvt Ltd The company has shown to have raised share capital
allotting shares to the following companies apart from the infusion of share capita
from the directors and family members:
S. Name Financial Amount (Rs.)
0. Year
1 M/s Ribbel Manufacturing and Exporters Pvt Ltd 2006-07 15,00,000/-
2 M/s APT Properties Pvt Ltd 2006-07 25,00,000/-
3 M/s Scient Informatics I Pvt Ltd ml 2006-07 17,50,000/-
4 M/s Multitech Semiconductors Pvt Ltd 2006-07 20,00,000/-
5 M/s Brainsoft Info consultants Pvt Ltd 2006-07 2,00,000/-
6 M/s Chardhan Impex Pvt Ltd 2006-07 25,00,000/-
7 M/s Shweta Mehapdi Products Pvt Ltd 2006-07 25,00,000/-
4
8 M/s Tejasvi Investment Pvt Ltd 2006-07 4,00,000/-
Total 1,33,50,000/
The above facts were confronted to Sh Amit Jain, Director in M/s KAD Housing Pvt Ltd and M/s KAJ
Infrastructure Pvt Ltd during the course of search on 27.06.2013 and his statement is reproduced as under:-
S. Name Financial Amount (Rs.)
0. Year
1 M/s Ribbel Manufacturing and Exporters Pvt Ltd 2006-07 15,00,000/-
2 M/s APT Properties Pvt Ltd 2006-07 25,00,000/-
3 M/s Scient Informatics I Pvt Ltd ml 2006-07 17,50,000/-
4 M/s Multitech Semiconductors Pvt Ltd 2006-07 20,00,000/-
5 M/s Brainsoft Info consultants Pvt Ltd 2006-07 2,00,000/-
6 M/s Chardhan Impex Pvt Ltd 2006-07 25,00,000/-
7 M/s Shweta Mehapdi Products Pvt Ltd 2006-07 25,00,000/-
8 M/s Tejasvi Investment Pvt Ltd 2006-07 4,00,000/-
Total 1,33,50,000/
The above facts were confronted to Sh Amit Jain, Director in M/s KAD Housing Pvt. Ltd and M/s KAJ Infrastructure Pvt
Ltd during the course of search on 27.06.2013 and his statement is reproduced as under:-
Q-28: The authorized capital and up capital of KAD Housing Pvt Ltd is Rs.
Crs and Rs. 4.57 Crs respectively. The year wise share application money and premiums
raised in the case of KADHPL are as under-
Financial Share application money pending Premium
Year allotment
2007-08 0 0.76
2008-09 1.3 0.99
2009-10 1.72 9.99
2010-11 15.19 9.99
Please explain from whom the share application money of Rs. 13.47 Crs_
(Rs.15.19 Crs- Rs.1.72 Crs) were raised, how and when same were raised ?
I will furnish the relevant details a week's time.
We are sitting in your office, please check the account of the company M/s. KADHPL for the
Financial Year 2010-11 and furnish the relevant detail. Recording of statement resumed at 5.45
AM on 18.08.2013.
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Q.30 Please state whether M/s. KAD Housing Private Limited has entered into any financial
transaction with M/s. Salwan Developers and Promoters Pvt. Ltd. M/s. Fair `N' Square Exports
Pvt. Ltd. M/s. Ribbel Manufactures and Exports Pvt. Ltd. M/s. APT Properties Pvt Ltd. M/s.
Scient Informatics I Pvt Ltd. M/s. Multitech Semiconductors Pvt. Ltd. M/s. Brainsoft Info
consultants Pvt Ltd. M./s. Chardhan Impex Pvt Ltd if yes, please provide relevant detail.
Ans : As per memory it seems to me that I have heard the name of these companies and M/.s. KAD
Housing Pvt. Ltd. has entered into some financial transactions which I don't remember, I will
furnish the relevant details within a week's time.
Q-32 Please state whether you know the directors of these companies? If Yes, please give their name
and complete address?
Ans : No. I do not know the directors of any of these companies. Therefore, I cannot give the name and
address of any of the directors of any these companies.
Q-33 Please give the complete address of these companies.
Ans : Since the transactions are very old, I will furnish the required details in week's time.
From the above statement, it can be seen that director of the
assessee company has even evasive replies and not able to explain
in what mariner it has got the investments from the afore-
mentioned non- descript companies.
It can be clearly seen that these companies do not have any
financial worth to make vestment in the shares of the companies of
KM group. All the companies who have rested and given share
application money are found to be paper and of non-descript nature
during post search investigations. Mere receipt of money through
banking channels does not justify the creditworthiness and identity
of the investor companies. Assessee could never file any piece of
evidence that it ever interacted with the investor companies after
the allotment of shares and receipt of money from them. No dividend
has ever been paid to these companies. No persons has ever
attended proceedings. In response to the summons issued to them
u/ s 131(1A} of IT Act. As discussed above, most of the investor
companies are controlled by known operator Sh. Mahavir Jain.
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In view of the above, it is evident that assessee has introduced
its own unaccounted money in the form of share capital and
share application money from the no descript./ bogus
companies in its books of accounts.
Therefore, I have the reason to believe that the taxable income
to the extent of Rs.1,33,50,000/- has escaped assessment.
Hence, kindly find enclosed herewith proposal for according for
taking action Under Section 147 of the IT Act for the A. Y. 2007-
08 in the case of M./s. KAD Housing Pvt. Ltd.
7. The assessee was asked to furnish its return of income. The
assessee in response to the notice u/s 148 filed a letter dated
17.06.2014 stating that the return filed u/s 139 may be treated
as compliance to the notice u/s 148 of the Act. Thereafter the
Assessing Officer issued statutory notice u/s 142 (1) and 143 (2)
of the Act alongwith a questionnaire.
8. On perusal of the balancesheet of the assessee, the
Assessing Officer found that the assessee has raised share capital
and / or allotted to the following companies and received
amounts mentioned each:-
S. Name F.Y Amount
No.
M/s. Ribbel Manufacturing and Exporters Private 2006-07 15,00,000/-
1
Limited
2 M/s. APT Properties Private Limited 2006-07 25,00,000/-
3 M/s. Scient Informatics (I) Private Limited 2006-07 40,00,000/-
4 M/s. Multitech Semiconductors Private Limiied 2006-07 20,00,0Cw,
7
5 M/s. Brainsoft Info Consultants Private Limited 2006-07 20,00,000/-
6. M/s Chardham Impex Private Limited 2006-07 25,00,000/-
--?
7 M/s Shweta Mehndi Products Private Limited 2006-07 25,00,000/-
8. M/s Tejasvi Investment Private Limited 2006-07 15,00,000/-
9. During the course of the assessment proceedings
information u/s 133 (6) of the Act was called for from the
companies from whom the assessee claimed to have received
share application money. These companies were requested to
furnish the copies of accounts of loan and advances, to produce
books of accounts, to furnish copies of bank accounts, state
nature of their business and copies of Balance Sheet and P & L
A/c for the year relevant to A. Y. 2007-08. Replies were received
from these companies and the details received are as under :-
Sr. Investor Share Allotted against application Share Application money pending
: NO money of Rs. 10 each for allotment for Rs. 10 each per
share
No. Allotment Total No. Applicati Total
shares on
price per Amount shares price per Amount
share share
1 Brainsoft 20,000 100 20,00.000
Infoconsuitants Private
Limited
Shweta Mehandi 2,50,000 25,00,000
2 10
Products Private
3 Limited
Ribbel 1,50,000 10 15,00,000
Manufacturers &
Exporters Private Limited
4 APT Properties 2,50,000. "10 25,00.000
Private Limited
5 Scient Informatics 1,50,000 10 15,00,000 25,000 100 25,00,000
6 Multitech 2,00,000 10 20,00,000
Semiconductors
8
7 Tejasvi Investments 15000 100 15,00,000
Private Limited
8 Chardham Impex 2,50,000 10 25,00,000
Private Limited
Total 1,25,00,000 60,00000
10. The Assessing Officer examined these details and came to
the conclusion that the amount received by the assessee company
is nothing but it is own unaccounted money introduced in its
books of accounts in the form of share application money and
added the entire amount u/s 68 of the Act as unexplained
credits.
11. The assessee agitated the matter before the CIT(A) strongly
contending that the reassessment is bad in law in as much as in
the original assessment proceedings all the details were filed
before the Assessing Officer which were examined by the
Assessing Officer and there is no failure on the part of the
assessee to disclose fully and truly all material facts.
12. After considering the facts and the submissions and the
reasons recorded by the Assessing Officer for reopening the
assessment the CIT(A) found that the completed assessment has
been reopened after four years and therefore, proviso to section
147 squarely apply. The CIT(A) further observed that in the
assessment order there is no indication of how the income has
escaped assessment by reason of failure on the part of the
assessee fully and truly all material facts necessary for the
assessment. The CIT(A) accordingly deleted the entire addition by
annulling the assessment order framed u/s. 147 of the Act.
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13. Before us the DR vehemently stated that reopening is valid
since in the original assessment proceedings the Assessing Officer
has not examined the facts which were unearthed by a search
and seizure operation. It is the say of the DR that since the
accommodation entries taken by the assessee were not examined
by the Assessing Officer, therefore, the Assessing Officer had new
tangible material evidence for reopening the complete assessment
and therefore the notice issued u/s 148 of the Act is valid in law.
The DR further pointed out that the Assessing Officer has
nowhere mentioned that he has called for the relevant details
examined and found in order. The DR continued stating that a
mention of fact cannot be constituted as verified and examined.
The DR vehemently stated that the CIT(A) has not examined the
issues on merits and as simply analysed the assessment.
14. Per contra the counsel for the assessee reiterated what has
been stated before the CIT(A).
15. We have given a thoughtfully consideration to the orders of
the authorities below. A perusal of the reasons recorded as
mentioned elsewhere clearly shows that there is no allegation in
the reasons recorded that there is failure on the part of the
assessee to disclose fully and truly of material facts necessary for
assessment u/s 147 of the Act, the notice issued u/s 148 of the
Act after a period of four years from end of assessment year in
case where assessment has been framed u/s 147/143 (3) of the
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Act is illegal and invalid and the notice u/s 148 of the Act
deserves to be set aside. Our view is fortified by the decision of
the Hon'ble Delhi High Court in the case of CIT Vs. Viniyas
Finance and Investment (P) Ltd. wherein the Hon'ble High Court
held as under :-
"7. On going through the purported reasons we find that there is no mention of the
respondent-assessee not having made a full and true disclosure of the material facts
necessary for assessment. On the contrary the purported reasons indicate that the
amounts mentioned therein had been shown in the books of accounts as receipts from
the companies mentioned therein. We also note that at serial No.5 of the list of
companies from which amounts have been allegedly received, the name of the
assessee has been shown. This means that the assessee received the received money
from itself, which can hardly be an allegation in this case.
8. For the foregoing reasons we feel that the Tribunal has approached the matter in the
correct perspective and has held the issuance of the notice under Section 148 dated
30.7.2007 to be bad in law and so, too, all the proceedings pursuant thereto. There is
no reason for us to interfere with the impugned order inasmuch as no substantial
question of law arises for our consideration."
16. We find that during the course of the original assessment
proceedings the assessee was specifically asked to discharge its
onus u/s 68 of the Act for any fresh loans taken during the year
and share application money received.
17. We further find that the FFA has also called for a remand
report from the Assessing Officer to submit copies of the reply of
the assessee filed during the course of the original assessment
proceedings and related documents submitted by the assessee.
We find that the following documents were submitted by the
assessee to the Assessing Officer :-
i. Application of shares
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ii. Affidavit
iii. Income Tax returns filed by the share applicants
iv. Audited balance sheet filed by the share applicants
v. Bank statement of the share applicants.
vi. Form-2 filed by the appellant in respect of allotment of
shares to the share applicants.
18. The aforestated details clearly show that during the course
of original assessment proceedings the Assessing Officer had made
elaborate enquiry to examine the share application money in the
light of section 68 of the Act and after satisfying himself he
accepted the same as genuine. Therefore, in our considered
opinion in the light of the proviso to section 147 of the Act there is
no failure on the part of the assessee to disclosed fully and truly
all material facts relating to the assessment.
19. The contention of the DR that the Assessing Officer has not
mentioned anything in his assessment order does not hold any
water because when the Assessing Officer is satisfied with a query
he leaves that query and move on to make additions in respect of
the queries which are not satisfactorily replied.
20. The DR has relied upon various judicial decision in her
written synopsis. We have carefully considered each decision and
find that they are misplaced in as much as in none of the decision
the proviso to section 147 was considered when there is no failure
on the part of the assessee to make true and complete disclosure
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of the decision relate to the information received by the Assessing
Officer in respect of accommodation entries received by the
assessee which were considered as new tangible material to
validate the reopening of the assessment.
21. As mentioned elsewhere in the case in hand the share
application money examined by the Assessing Officer raising a
specific querry which was duly replied by the assessee. Moreover
the documents collected by the Assessing Officer in response to
the notice u/s 133 (6) of the Act are the same documents which
were filed by the assessee during the course of the original
assessment proceedings.
22. Considering the reasons recorded for reopening the
assessment as mentioned elsewhere and considering the facts in
totality in the light of the relevant provisions of the Act we are of
the considered opinion that the notice issued u/s 148 of the Act is
bad in law and therefore the assessment framed u/s 147 of the Act
has been rightly quashed by the CIT(A). No interference is called
for ground No.2 and 3 are dismissed. The other grounds become
otiose.
23. In the result, appeal filed by the revenue is dismissed.
Co. No.180/Del/2017
The cross objection of the assessee is late by 596 days. In
its request for condonation of delay the assessee has filed the
affidavit of the director stating that counsel did not advise the
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assessee to file cross objection after receiving the intimation that
the revenue has filed an appeal against the order of the CIT(A).
24. We find that the reason of delay as cited by the assessee is
flimsy. Moreover, the regular counsel who did not advise the
assessee to file the cross objection has not come up with any
affidavit. Not finding the reasons convincing the delay is not
condoned and the cross objection are accordingly dismissed.
Order pronounced in the open court on 02.01.2019.
Sd/- Sd/-
(SUCHITRA KAMBLE) (N. K. BILLAIYA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*NEHA*
Date:- .01.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 05.12.2018
Date on which the typed draft is placed before the
dictating Member
Date on which the typed draft is placed before the
Other member
Date on which the approved draft comes to the
Sr.PS/PS
Date on which the fair order is placed before the
Dictating Member for Pronouncement
Date on which the fair order comes back to the Sr.
PS/ PS
Date on which the final order is uploaded on the 02.09.2019
website of ITAT
Date on which the file goes to the Bench Clerk
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant Registrar
for signature on the order
Date of dispatch of the Order
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