THE INCOME TAX APPELLATE TRIBUNAL IN
(DELHI BENCH "C" NEW DELHI)
BEFORE SHRI R.S.SYAL, ACCOUNTANT MEMBER
AND
SHRI C.M.GARG, JUDICIAL MEMBER
ITA NO. 3320/DEL/2011
(Assessment Year: 2002-03)
ITO, Vs. Gopi Pvt. Ltd.
Coy, 18, Rajasthan Udyog Nagar
Ward-12(2), Room No. 337, GTK Road
C.R. Building New Delhi
New Delhi PAN : AAACG0949F
(Applicant) (Respondent)
ASSESSEE BY : Sh T. Vaganthan, Sr. DR
REVENUE BY : Sh. Dinesh Chandra, ADV.
Date of hearing : 17.03.2015
Date of pronouncement : 26 .03.2015
ORDER
PER C.M.GARG, JUDICIAL MEMBER :
This appeal has been preferred by the Revenue against the
order of the Commissioner of Income Tax (Appeals) XXVI New
Delhi dated 19.4.2011 in appeal no. 297/2009-10 for AY 2002-03.
2 ITA NO. 3320/ Del/2011
2. The revenue has raised following grounds in this appeal :-
1. On the facts and circumstances of the case the CIT(A)
has erred in deleting the addition of Rs. 20,02,2000/- on
account of unexplained credits u/s 68 of the I.T.Act. Ignoring
the following fate :-
(v) All companies from whom the assessee received share
application money are providers of accommodation entries.
(vi) All companies (accommodation entries providers) first
deposited cash of the same amount in their bank accounts
and then issued cheques to the assessee.
(vii) In their statements the accommodation entries
providers have categorically stated that when they provided
cheques in lieu of cash to the assessee, they also signed
same paper, which were handed over to these beneficiaries
and these paper might be confirmation deeds or gifts etc.
(viii) The accommodation entires providers have given
statements under oath to the income Tax authorities that they
are entry providers and have received cash from
beneficiaries before issuing cheques.
2. On the facts and circumstances of the case, the CIT(A)
has failed to appreciate that facts of this case are clearly
distinguishable from that of Lovely Exports and therefore, the
judgment of the Apex Court is not applicable to the facts of
this case."
3. Briefly stated the facts of this appeal are that the assessee filed
return of income on 29.10.2002 declaring the income of Rs. 55,703/-
and assessment was framed u/s 143(1) of the Income Tax Act, 1961
(for short the Act) on 9.1.2003. Subsequently, proceedings u/s
147/148 of the act were initiated against the assessee in the wake of
specific information received from the Investigation Wing of the
department vide DIT ( Investigation), New Delhi, letter no. 1322 and
3 ITA NO. 3320/ Del/2011
letter no. 1536 dated 5.2.2007, wherein it was reported to the AO that
the assessee company was a beneficiary of accommodation entries
which had generalized its unaccounted money in the garb of share
application money in lieu of cash paid by the beneficiary to the entries
providers. The AO opened the assessment and finalized re-
assessment order by making addition of Rs. 20,02,000/- u/s 68 of the
Act. The aggrieved assessee preferred an appeal before CIT(A) it was
allowed by passing of the impugned order and entire addition was
deleted by following the decision of Hon'ble Supreme Court in the case
of CIT Vs. Lovely Exports Pvt. Ltd. 2008, 216 CTR 195 (SC). Now the
aggrieved revenue is before this Tribunal in this 2nd appeal with the
grounds as reproduced hereinbefore.
4. The Ld. Departmental Representative (DR) submitted that the
CIT(A) has erred in deleting the addition made by the AO on account
of unexplained credits u/s 68 of the Act by the including certain glaring
facts that all companies from whom the assessee received share
application money are accommodation entry providers and as per
Modus Oprendi adopted by them, the entry providers deposited cash
of the same amount in their bank accounts and then issued cheque to
the assessee and at the same time they also signed same papers
4 ITA NO. 3320/ Del/2011
which were handed over to the beneficiaries and these papers were
confirmation deeds and other fabricated documents to support the
bogus transaction. The Ld. DR, further, contended that before the
investigation wing the accommodation entry providers have given
statements under oath that they are entry providers and have received
cash from the beneficiaries before issuing cheques. The Ld. DR
strenuously contended that the First Appellate Authority has failed to
appreciate that the present case is clearly distinguishable from the
facts of the case of Lovely Exports Pvt. Ltd. (Supra) and therefore this
judgment of Hon'ble apex Court is not applicable to the present case.
The Ld. DR finally submitted that the impugned order may be set aside
by restoring that of the AO.
5. The Ld. DR also placed reliance on the decision of Hon'ble High
Court of Delhi in the case of CIT Vs. Empire buildtac Pvt. Ltd. dated
27.1.2014 in ITA No. 493/2013.
6. The Ld. Counsel of the assessee replied that the assessing
officer opened the assessment on the fake information of Investigation
Wing. The Ld. Counse, further, pointed out that the assessee
submitted before the AO that the assessee has not received any share
application money from Sh. Nitin Kumar and M/s Acoot India Pvt. Ltd.
5 ITA NO. 3320/ Del/2011
and the assessee received share application money from M/s Blizm
Metal Pvt. Ltd. Rs. 2,00,000/- and M/s Amba Alloys Pvt. Ltd. Rs.
4,00,000/- to account payee cheque. Ld. Counsel also pointed out that
the assessee filed written submissions letter dated 13.09.2009 before
AO, wherein the assessee expressed its inability to filed current IT
particulars and to present these parties and persons. The Ld. Counsel
further pointed out that the AO did not exercise powers available to
him u/s 131 & 133(6) of the act. The Ld. Counsel vehemently
contended that the AO was not right in discarding the confirmations
and other relevant evidence filed by the assessee and in simply relying
on statements of alleged entry providers which were recorded on the
back of assessee. The Ld. Counsel supporting the impugned order
submitted that the CIT(A) rectified all the mistakes committed by the
AO and properly considered relevant evidence of the assessee which
clearly show that the transactions were genuine and the assessing
officer without examining the same simply proceeded to reject the
explanation and evidence of the assessee. The Ld. Counsel finally
submitted that the CIT(A) was quite justified in following the decision of
Hon'ble Supreme Court in the case of CIT Vs. Lovely Export Pvt. Ltd.
6 ITA NO. 3320/ Del/2011
(supra) and the case of present assessee is squarely covered vide this
decision and hence impugned order may kindly be upheld.
7. On careful consideration and above submissions and available
material placed on record, we note that during the assessment
proceedings the assessee pointed out that the assessee has not
received any share application money from Shri Nitin Kumar and M/s
Acoot India Pvt. Ltd. appearing in serial no. 3 and 5 in the double given
in the reasons recorded by the AO. The assessee further, clarified that
instead of above two entities the assessee actually received share
application money from M/s Bliz Pvt. Ltd. and M/s Amba Pvt. Ltd. From
last para at page 3 , we also note that the assessee expressed his
inability to file current IT particulars and to present directors or officers
of alleged entities in person. Thereafter the assessing officer
proceeded to exercise powers available to him u/s 133(6) of the act
which act and received copies of the bank accounts which revealed
that all the applicants were deposited cash of same amount of which
cheque was given to the assessee company. Further, AO doubted the
genuineness and creditworthiness of the amount credits and held that
confirmation filed by the assessee does not prove genuineness and
creditworthiness of the shareholders. At the same time, the AO relied
7 ITA NO. 3320/ Del/2011
on the statements of the entry providers recorded by the Investigation
Wing of the department and went on to held that the assessee got the
confirmation from these entry providers at the time of receiving credits
of the share application money and in fact no real transaction were
took place.
8. From the operative part of the impugned order, we note that the
CIT(A) granted relief by following decision of Hon'ble Apex Court Vs.
CIT(A) Vs. Lovely Export Pvt. Ltd. (supra) by holding as under :
"5.1 It is observed that the Assessing Officer has made
the addition u/s 68 of the Act on account of share capital as
above, primarily in view of the information received from the
office of the DIT (Inv.), New Delhi, that the assessee
company was a beneficiary of accommodation entries, based
ont eh statement of certain person that he was involved in the
business of providing accommodation entries. This, however,
cannot be taken as a sufficient ground for making such
addition in the absence of any further evidence brought on
record.
5.2. The appellant on the other hand has furnished all the
relevant details in this regard during the course of the
assessment proceedings as well as in the appellate
proceedings, which have been placed on record.
5.3. At the outset, it has been submitted that the order has
been passed by the Assessing Officer without bringing any
material on record in support of his contention. The
Assessing Officer has not conducted any enquiry from his
own side to verify the transactions stated in the report of
Investigation Wing, either from the books of account of the
assessee or from the subscribers. Therefore, he has failed to
discharge the statutory duty cast upon him as laid down by
higher judicial authorities for examining the issue u/s 68 of
the Act. On the other hand, the assessee has discharged its
8 ITA NO. 3320/ Del/2011
onus fully as cast by section 68 of the Act, with respect to
identity of subscribers, genuineness of the transactions and
creditworthiness of the subscribers to share capital, by
disclosing all the material facts truly and correctly and
produced/ filed the following details during the course of the
assessment proceedings with respect to its subscribers to
share capital :-
- Name and address of subscribers as registered with the
company along with complete detail of investments.
- Changed address as available with Registrar of Companies.
- Certificate of incorporation along with copy of Memorandum
of Association
- Permanent Account no. along with copy of return of income
- Confirmation / affidavit.
- Copy of Resolution passed by the subscriber company
authorizing its director to invest in shares of the assessee
company
- Share Application Form
- Detail of Shares along with copy of Share Certificates
- Status as per ROC Record
- Copy of bank statement with credit entry of amount
received.
It is further submitted that all the investing companies were
incorporated many years back."
In view of observations of the AO as well as CIT(A) we clearly note
that the AO noted that the assessee expressed its inability to
produce copies of IT Return and director or of Officer of the
company which provided or contributed share application money
and the CIT(A) in para 5.2 at page 16 observes that the assessee
has furnished all the relevant details during the course of
assessment proceedings and granted relief by relying of decision of
Hon'ble Apex Court in the case of Lovely Exports (Supra). Hence,
9 ITA NO. 3320/ Del/2011
we are unable to satisfy ourselves as to whether the assessee
discharged its onus before AO to prove the identity of the third party
or contributor which made payment, its creditworthyness and
genuineness of the transaction on casted upon the assessee to
escape from addition u/s 68 of the Act to presume that the onus is
thus shifted to the Revenue to controvered explanation and
supporting evidence and material filed by the assessee while
discharging its onus as required as per ratio of the recent decision
dated 19.02.2015 of Hon'ble High Court of Delhi in the case of CIT
Vs. M/s Jasampark Advertising and Marketing (P) Ltd. in ITA No.
525/2014.
Therefore, in view of contrary observations of the Authorities
below we are inclined to hold that the authorities below have not
adjudicated the issue as per provisions of the Act and as per ratio of
the decision of Hon'ble Supreme Court in case of Lovely Exports
(supra) and decision of Hon'ble High Court of Delhi in the case of
M/s Jansampark (Supra), hence, sole issue require verification and
examination atht end of the AO. Therefore, the sole issue is restored
to the file of the AO for proper of adjudication after affording due
opportunity of hearing for the assessee and without being prejudiced
10 ITA NO. 3320/ Del/2011
from earlier orders and by following provisions of the Act and the
ratio of the decisions on this issue including ratio of the decision as
respectfully noted above. Therefore, ground no. 1 & 2 of the
Revenue are deemed to be allowed for statistical purposes.
In the result, appeal of the Revenue is deemed to be allowed as
indicated above.
Order pronounced in open court on 26th March, 2015.
Sd/- Sd/-
(R.S.SYAL) (C.M.Garg)
Accountant Member Judicial Member
Dated 26th March, 2015
B.Rukhaiyar
Copy forwarded to
1. APPELLANT
2. RESPONDENT
3. CIT
4. CIT (A)
5. CIT (ITAT), New Delhi.
By order
AR, ITAT
New Delhi
11 ITA NO. 3320/ Del/2011
Sl. Description Date
No.
1. Date of dictation by the Author 19-25.03. 2015
2. Draft placed before the Dictating 25.03.2015
Member
3. Draft placed before the Second
Member
4. Draft approved by the Second
Member
5. Date of approved order comes to
the Sr. PS
6. Date of pronouncement of order
7. Date of file sent to the Bench
Clerk
8. Date on which file goes to the
Head Clerk
9. Date of dispatch of order
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