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SFS Infinite Ltd., 3406, 3rd Floor, DB Gupta Road, Karol Bagh, New Delhi-110005. Vs ITO, Ward-8(1), New Delhi
March, 16th 2015
                     DELHI BENCH: `G' NEW DELHI


                          I.T.A .No.-4998/Del/2011
                      (ASSESSMENT YEAR- 2002-03)

     SFS Infinite Ltd.,                       vs ITO,
     3406, 3rd Floor, DB Gupta Road,             Ward-8(1),
     Karol Bagh, New Delhi-110005.               New Delhi
     (APPELLANT)                                  (RESPONDENT)

                   Appellant by  Sh. Sanjay Mehra, FCA
                   Respondent by Sh. B.R.R.Kumar, Sr. DR

                           Date of Hearing               11.03.2015
                        Date of Pronouncement              .03.2015


      This is an appeal filed by the assessee against the order dated 14.07.2011 of
CIT(A)-XI, New Delhi pertaining to 2002-03 assessment year on the following
      1.      "The assessing officer erred on facts and in law, in initiating
      proceedings U/s 147 of the Income Tax Act 1961, without satisfying the basic
      conditions, by initiating the proceedings U/s 147 solely on the basis of
      information from higher authorities, without mentioning the nature of
      evidence available and without confronting the assessee with evidence in the
      shape of third party evidence/ statements to be used against him.
      2.      The authorities below have erred both on facts and in law in invoking
      and confirming application of Section 68 of the Income-tax Act, to account
      payee cheque transactions duly confirmed by the remitter of funds through
      Statement on Oath given before the Assessing Officer, without assigning any
      reasons thereof.
      3.      On the facts and in the circumstances of the case, the Ld. CIT appeal
      has erred in proceeding on the erroneous presumption that the appellant
      company has received money from a subscriber to the capital whereas it is
      money received on account of sale proceeds of client shares and consequently
      relying on case laws which have no application whatsoever in the facts of the
      present case.
      4.      The authorities below have erred both on facts and in law in making
      and confirming additions under Section 68 of the Income Tax Act, on account
                                           2                           I.T.A .No.-4998/Del/2011

      of third party funds received by a share broker which have been subsequently
      remitted to the clients and accounted for by them in their receipts and offered
      for tax, leading to double taxation of the same receipt.
      5.      On the facts and in the circumstances of the case, the Ld. CIT appeal
      has erred in conforming the levy of interest U/s 234 S, in contravention of the
      provisions of the income Tax At.
      The applicant address for leave to add, alter, modify and withdraw any of the
      grounds either before or at the time of hearing."

2.    In the present appeal, the Registry has pointed out a delay of 50 days. Ld.
AR addressing the same invited attention to the condonation of delay petition dated
03.12.2012 filed on record submitted that the delay of 50 days occurred on account
of the inadvertent mistake of the employee Mr. Omesh Sharma who was entrusted
with the filing of the appeal. The delay it was submitted is purely unintentional and
is caused by reasons beyond the control of the assessee and as soon as the mistake
was noticed the assessee has made good the error of the employee. It was submitted
that an affidavit of Sh. Omesh Sharma to this effect had been filed alongwith Paper
Book. The Ld. Sr. DR had no objection if the delay is condoned. In the light of the
submissions of the parties and considering the reasons given by the assessee in
regard to the delay of 50 days, we condone the delay.                    The said order was
pronounced in the open Court.
3.    The Ld. AR in the context of the issues addressed in the present appeal
submitted that the assessee has placed in its Paper Book additional supporting
document which are placed at pages 2 to 26 and since these evidences go to the root
of the matter, the same may be admitted and considered for granting necessary
relief. The record shows that on 07.07.2014 the department was directed to produce
the assessment records. The Ld. Sr. DR in response thereto said that the same have
not been obtained accordingly it was his submission that the issue may be restored
to the AO however with the caveat that the additional evidence may not be
commented upon and the issue may be left open for the AO to consider the
evidences.   The record shows that originally a return declaring an income of
Rs.28,938/- was filed by the assessee which was re-opened on the basis of the
information from the Directorate of Investigation alleging that the assessee was a
                                           3                           I.T.A .No.-4998/Del/2011

beneficiary of a sum of Rs4,50,000/- allegedly received from M/s MKM Finsec Pvt.
Ltd. in November 2001 through cheques drawn at Karnal Bank Ltd, Karol Bagh,
New Delhi. Addition of the said amount was made by the AO vide his order u/s
143(3)/147 on the following reasoning:-
      "It was submitted by the assessee that receipt of Rs.4,50,000/- from M/s
      MKM Finsec Pvt. Ltd. was in respect of sale of shares. However, no
      evidence of sale of shares, by way of invoice/bill etc was produced on the
      plea that these books (vouchers) etc. were not required to be kept. However
      as per section 44AA read with Rule 6F the assessee was required to keep
      those books vouchers etc once the notice u/s 148 was issued to it for financial
      year 2001-02. The mere fact that no evidence was produced in support of the
      claim of sale of shares, this plea of the assessee falls flat. However, the
      assessee produced one, SH. Prem Chand Bhatra, one of the Directors of m/s
      MKM Finsec Pvt. Ltd. whose statement was recorded u/s 131 of the Income
      tax Act, 1961. He has admitted that the assessee was paid a sum of about
      Rs.4,60,000/- for sale of shares but no current evidence in support of sale of
      shares was filed. It is not known asto which shares were sold and whether or
      not the shares were ever owned by the assessee, no such evidence has been
      filed. It is merely an assertion not supported by any evidence at all. The
      explanation filed by the assessee is therefore not satisfactory and is hereby
      rejected. I hold that no satisfactory explanation in support of a credit of
      Rs.4,50,000/- has been filed and hence treat is as unexplained and bring it to
      tax as income of the assessee u/s 68 of the Income Tax Act, 1961."

4.    The said action was confirmed in appeal by the CIT(A). However in the light
of the submissions of the parties before the Bench considering the material on
record the additional evidence placed by the assessee in its Paper Book at pages 2
to 26 is admitted and the impugned order is set aside and the issue is restored back
to the file of the AO with the direction to pass a speaking order in accordance with
law after giving the assessee a reasonable opportunity of being heard. The said
order was pronounced in the open Court in the present of the parties.
5.    In the result the appeal of the assessee is allowed for statistical purposes.
      The order is pronounced in the open court on 13th of March 2015.

      Sd/-                                                                  Sd/-
(G.D.AGRAWAL)                                                          (DIVA SINGH)
VICE PRESIDENT                                                    JUDICIAL MEMBER

Dated: 13/03/2015
*Amit Kumar*
                     4       I.T.A .No.-4998/Del/2011

Copy forwarded to:
1.   Appellant
2.   Respondent
3.   CIT
4.   CIT(Appeals)
5.   DR: ITAT
                         ASSISTANT REGISTRAR
                               ITAT NEW DELHI
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