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From the Courts »
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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

Uranium Consultancy Services Pvt. Ltd., Flat No-10, C-1/2, Model Town, Delhi-110009. Vs ITO, Ward-18(2), New Delhi.
April, 17th 2014
                IN THE INCOME TAX APPELLATE TRIBUNAL
                      DELHI BENCH: `H' NEW DELHI

               BEFORE SMT DIVA SINGH, JUDICIAL MEMBER
                                  AND
                 SHRI J.S.REDDY, ACCOUNTANT MEMBER

                           I.T.A .No.-2229/Del/2011
                       (ASSESSMENT YEAR-2006-07)

            Uranium Consultancy Services            vs ITO,
            Pvt. Ltd., Flat No-10, C-1/2,              Ward-18(2),
            Model Town, Delhi-110009.                  New Delhi.
            PAN-AAACU0403E
            (APPELLANT)                                 (RESPONDENT)

                   Appellant by:        Sh.Ved Jain, CA
                   Respondent by:       Sh. Vivek Kumar, Sr. DR

                                         ORDER
PER DIVA SINGH, JM

      This is an appeal filed by the assessee against the order dated 28.02.2012 of
CIT(A)-XXI, New Delhi pertaining to 2006-07 assessment year on the following
grounds:-
      1. On the facts and circumstances of the case, the order passed by learned
         Commissioner of Income Tax (Appeals) CIT(A) is bad in the eye of law and
         on facts.
      2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred
         both on facts and in law in confirming the addition of Rs.1,66,05,000/- as
         unexplained, unverifiable and undisclosed income under Section 68 of the
         Act.
         (ii) That the above said addition has been made in gross violation of the
         principle of natural justice and ignoring the explanation and evidences
         brought on record by the appellant.
         3(i) On the facts and circumstances of the case, the learned CIT(A) has erred
         both on facts and in ignoring the fact that the amount of Rs.1,66,05,000/-
         being the sale proceeds having been included in the income, the same cannot
         be again included under Section 68 of the Act.
         (ii) That the above said addition without rejecting the books of accounts and
         the income computed on the basis thereof is unsustainable in the eye of law.
                                              2                      I.T.A .No.-2229/Del/2011





         4. On the facts and circumstances of the case, the Leaned CIT(A) has erred
         both on facts and in confirming the chargeability of the interest under section
         234B of the Act.
         5. The Appellant craves leave to add, amend or alter any of the grounds of
            appeal."

2.    The hearing in the present appeal took place on two difference dates. On the
first date of hearing the Ld. AR opened his arguments by requesting that issue has
to be restored back to the AO for verification of facts. The specific arguments
taken in support of the said request shall be addressed separately however at the
time of dictation clarification on facts was necessitates for which purposes the
parties were heard again and Ld. AR filed his Synopsis addressing the issues.
3.    Briefly the relevant facts are that the assessee company whose business is
described as "engaged in the business of consultancy" by the AO as per para 1 of
his order filed a return on 26.11.2006 declaring a loss of Rs.2,802/-. The said
return was subjected to scrutiny under CASS and after issuance of notice u/s
143(2) etc. the income of the assessee was assessed at Rs.1,66,02,198/-.
Aggrieved by this the assessee went in appeal before the CIT(A) who confirmed
the action of the AO.
4.    Aggrieved by this the assessee is in appeal before the Tribunal.
5.    In the above background Ld. AR inviting attention to the observation made
by the AO at page 3 of the assessment order, invited further attention to the
material available on record so as to contend that the assessee had to resort to
seeking information under the RTI Act, 2005 from the department which initially
was denied by the Central Public Information Officer and only when the assessee
resorted to filing an appeal against the order of the CPIO that the relevant
information was obtained by the assessee. Addressing the facts on record it was
his submission that on the receipt of the relevant information from the CIC i.e.
Central Information Commission the assessee was finally able to address the
                                          3                   I.T.A .No.-2229/Del/2011


factual inaccuracy namely that on the specific date when the AO records that
"None Attended" infact the assessee was represented and it was not a case of non-
attendance as has been wrongly recorded in the assessment order. The said issue it
was submitted had been brought to the notice of the CIT(A) who takes cognizance
of this fact at pages 18 & 19 of the impugned order but somehow chooses to ignore
the consequence of this factual inaccuracy and instead places reliance upon the
decision of CIC dated 03.07.2009 so as to conclude that sufficient opportunity was
afforded by the AO. Accordingly in these circumstances, it was his humble prayer
that for verification of facts, the issue needs to be restored. On merits it was also
his submission that the inference drawn by the Revenue that the bank accounts
were said to be operated by Sh. Praveen Kumar Maheshwari which in the body of
the assessment order have been recorded as Prem Maheshwari and in remand
proceedings has been recorded as Pawan Maheshwari etc. are inaccurate which
position infact has been accepted by the AO himself who has in her zest & zeal in
order to support the additions made has repeatedly blundered variously not only in
regard to this name but also at times recording the name of the Director as Arvind
Kumar Modi instead of Arvind Kumar Maheshwari. It was his submission that
even if these factual inaccuracies are accepted by the department inferences are
drawn adverse to the assessee ignoring the fact that if at the convenience of the
concerned party, power of attorney is given to a specific person to operate its bank
accounts how can it be said that the transactions are not genuine all these aspects it
was argued have not been looked into by the Revenue. The view it was submitted
on facts has been taken without considering the reply of the assessee. The receipt
of the reply made by the assessee in the DAK before the AO it was submitted has
been accepted by the AO as would be evident from para 7 which is reply to para 11
of the information sought recorded in page 19 of the impugned order and this reply
it was submitted needs to be considered on merit by the AO which has not been
                                          4                   I.T.A .No.-2229/Del/2011


done. Accordingly it was his request that the issue may be restored for verification
on facts.
6.    In reply the Ld. Sr. DR fairly conceded that the name of the person entitled
to operate the account mentioned in the assessment order as "Prem Maheshwari"
has wrongly been mentioned and should have been "Praveen Kumar Maheshwari".
It has further been accepted that the name in the remand proceedings of the
Director as "Arvind Kumar Modi" has wrongly been mentioned and the name
infact should be "Shri Arvind Kumar Maheshwari" however it was his stand that
sufficient opportunity has been given by the AO qua the non-attendance on the
specific date. Referring to the reply given in the CIC, it was stated that it is self-
explanatory that it may have been due to a clerical error however it was his stand
that these parties have been treated as entry operators and the transactions are not
genuine. The request that the issue may be restored though was not opposed.
7.    In reply the Ld. AR invited attention to the material available on record
submitted that the transactions are genuine. The books of accounts are audited.
The assessee has placed before the authorities details of Directors, details of the
bank accounts, bank re-conciliation statement, details of sundry debtors and
expenses incurred, details of purchase of shares, details of month-wise purchases
etc. The confirmations from the parties are available on record. Attention was
invited to the copy of the RTI application dated 03.02.2009, copy of the order of
the RTI in the case of Sh. Arvind Kumar dated 03.07.2009 and 29.07.2009 placed
at pages 56-57 & 58-59 were relied upon; copy of the reply of the concerns whose
transactions have been doubted namely M/s Moral Papers (P) Ltd.; M/s Roop
Yams Pvt. Ltd.; M/s Joy Commercial Pvt. Ltd. etc have all been placed on record.
8.    Subsequent to the date of hearing the case was fixed for clarification
wherein again emphasis was laid on the application filed by the assessee under
the RTI, Copy placed at pages 52-54 of the Paper Book. The reply received from
                                                5                       I.T.A .No.-2229/Del/2011


the Central Information Commission containing its decision, copy placed at pages
56-57 was relied upon. Attention was also invited to pages 58-59 of the paper
which contains the copy of the order dated 29.07.2009 u/s 7 r.w.s 19 of the RTI
Act wherein specific emphasis was laid at para 6 so as to emphasize that it is
acknowledged that as directed by the CIC enquiry was being made in order to fix
the responsibility. Referring to the same it was his argument that the department
may be directed to disclose now the outcome of the enquiry fixing responsibility.
It was his stand that there is sufficient evidences on record to address the aspect
that justice has not been done and not only wrong facts and names have been
carelessly recorded even facts qua the attendance on a specific date could be
addressed only after the assessee was put to the unnecessary hardship of
approaching the authority under the RTI Act and even then too whether any
responsibility has been fixed or not is still not known.
9.    Considering the said request in the light of the above arguments available on
record it may be appropriate to extract the relevant portion of the assessment order
reproduced in the impugned order from pages 3 to 5 as under:-
              "During the assessment proceedings, the letters u/S 133(6) was issued to
      the various parties which remained uncomplied with. The call letter issued to M/s
      Stitch Creations Pvt. Ltd., 69, FF Nehru Commercial Complex, Lawrence Road,
      Amritsar-143001 also remained unattended to/ no details were filed. Another
      notice u/S 133(6) issued to M/s Moral Papers Pvt. Ltd., 55/25, Kalab Devi Road,
      Mumbai- 400002 was received back with postal authorities remarks "No Such
      Company". ITI was deputed to conduct enquiries in the following cases as the
      same were at one address that two of the registered address of M/s Uranium
      Consultancy Services Pvt. Ltd., and its Directors i.e. M/s Joy Commercial, Pvt.
      Ltd. And Meditation Properties Pvt. Ltd., Pragati Foods, Garvit Holdings, C-1/2,
      Model Town, Delhi-110009. ITI has reported that no such company is existed at
      the given address as per local enquiries. This is the residence of Mr. Ajay Kumar.
      In view of the above, ITI was deputed to conduct enquiries of the address
      available on record i.e. (i) C-1/2, Model Town, Delhi. (i) 4353/4C, Ansari Road,
      Daryaganj, Delhi. (ii) 4353/4C, Ansari Road, Daryaganj, Delhi.
      He has reported that none of the above companies is existed at the given
      addresses. Further, notice u/s 133(6) was issued to Oriental Bank of Commerce
      and obtained statement of account. The perusal of statement of account reveals
      that the huge amounts to the tune of Rs. 1. 66 Cr have been shown transferred in
      and out through the bank accounts number 4433, 4592, 4598, 4588 and 15713
                                            6                       I.T.A .No.-2229/Del/2011


maintained in OBC, Daryaganj, New Delhi.
A call letter dated 10.09.2008 was issued to the bank to obtain following details in
respect of above mentioned accounts:
       a)     Name & Address of the party as per record.
       b)     Name & Address of the introducer.
       c)     Bank statement for the period 1.04.2005 to 31.03.2006.
       d)     Copy of Alc opening form.
    Perusal of the statement and documents received from the bank reveal as under:-
S.No.      A/C No.      Name and Address of the Co.                 Name of the Person
                                                                    entitled to operate A/c
1.         4433         Joy Commercial Pvt. Ltd. 4353/4C,           Prem Maheshwari
                        Daryaganj, New Delhi
2.         4598         Room Yams Pvt. Ltd.                         Prem Maheshwari
3.         4592         Moral Papers Pvt. Ltd. 55/25, Ram           Prem Maheshwari
                        Wadi, Kala Badevi Road, Delhi
4.         4588         Rose Alloys Pvt.Ltd. 55/25, Ramwadi,        Prem Maheshwari
                        Bombay
5.         15713        Praven Kumar Maheshwari C-1/2,              Prem Maheshwari
                        Model Town-II, N. Delhi
6.         4432         Uranium Consultancy Services P. Ltd. Prem Maheshwari
                        C-1/2, Model Town-II, N. Delhi
After verifying the above statement, and documents, a summon u/s 131 were
issued to Directors of the company. In response to which counsel filed letter
dated 22.10.08 and could not produce the Directors stating that personal
attendance is not required.
Fresh summons for personal requirements of the directors of the said company
were issued on 23.10.2008 fixing the case on 03.11.2008, none attended. A
summon was also issued to Mr Praveen Kumar Maheshwari. Nobody attended
on this day. On 04.11.2008 A show Cause was issued fixing the case for
12.11.2008. None attended.
The verification of bank statements for the period reveals that the assessee
company used to deposit cheque and issue the same on the same day or within 1
or 2 days. The transaction is normally dealt with account number 4433, 4592,
4598, 4588 and 15713.
The reflection of the statement reveals that there are huge transactions of
amounts received and paid to various parties.                  The frequency of
deposit/withdrawal of cash/cheques in the bank accounts are by way of
transfer/withdrawal of cash/cheques in the bank accounts are by way of
transfer/clearing entries, which are immediately transferred out. In this regard
summons were issued to the Directors of the company. But in response to which
AR attended and filed the papers. The purpose of sending 131 was to obtain
statement of the directors as regard to debit and credit entries of the accounts etc.
In the absence of directors, purpose could not solved. It appears that the
assessee company has nothing to explain regarding transaction made among the
above accounts.
Vide show cause A final opportunity was given to explain deposits of Rs.
1,66,05,000/- as per bank statement The onus lies with him to prove the
genuineness of the deposits/transactions in the bank account.
                                                  7                        I.T.A .No.-2229/Del/2011


      In response to which the assessee changed its counsel and filed a reply. Perusal
      of reply reveals and enables to reach its conclusion so as to complete assessment
      on the basis as under:
      1.      that assessee has not mentioned anything about operational
              address of the company and its directors. Moreover he has not
              narrated any reasons for authorizing Praveen Kumar Maheshwari
              to operate the bank account of all the companies
      2.      Further company has not given any reason for non compliance of
              summons; to. Sh Praveen Kumar Maheshwari and Arvind Kumar
              and Ms. Rukmani Devi
      3.      The perusal of the above reveals that the company is doing
              business with above five companies, merely doing business with
              the other companies
      4.      Perusal of the bank statement of the above companies and its
              transactions reveals that there is jut make-belief affairs.
      5.      Though the assessee has provided confirmation of the transactions
              but mere colouring it does not mean that transaction is genuine.
              Assessee has to provide the evidence that the companies with
              which it is making transaction are in existence. Since the assessee
              has failed to provide any information regarding existence of the
              company and its directors, it is not possible to accept assessee's
              contention.
      6.      M/s Roop Yams Co. has given address of Mumbai whereas in the
              bank account they have mentioned Delh reasons best known to the
              company. Another thing that the department count not understand
              that the company is in so called operation in Mumbai, how come
              they operate bank account in Delhi.
      7.      Mumbai.
              Similarly
              "No such The
              Delhi.      Moral      letters
                               call Papers
                           Company",          Pvt.bank
                                              issued
                                         but its       were
                                                      Ltd.,  55/25  is Kolaba
                                                              received
                                                          account         back maintained
                                                                        being  with
                                                                                Devi remarks
                                                                                       Road,
                                                                                          in
      The assessee has failed to explain about the nature and source of the deposits.
      The value of the deposits is hereby deemed to be the income of the assessee
      company during the financial year. In view of above, 1 am constrained to make
      the additions of deposits amounting to Rs. 1,66,05,000/- as unexplained,
      unverifiable and undisclosed income u/s 68 of the IT Act. "




10.   The record shows that aggrieved by this the assessee came in appeal before
the CIT(A). Before whom based on information sought under the RTI Act, 2005
which was denied to the assessee by the CPIO against                          which the assessee
appealed before the CIC. Detailed written submissions were filed before the
CIT(A) as would be evident at page 6 of para 4.1 of the impugned order. The
record shows that the CIT(A) sought Remand Report from the AO wherein he says
that he has no objection if the nature of the business of the assessee is taken as
engaged in the business of trading in shares, finance and investment etc instead of
                                           8                    I.T.A .No.-2229/Del/2011


consultancy. Accordingly the CIT(A) was requested to decide the issue. A perusal
of the impugned order further shows that the CIT(A) concludes that sufficient
opportunity was afforded to the assessee to offer its explanation on 12.11.2008
was already granted on which date the written submissions were filed at the DAK
counter and in regard to producing the Director, Shri. Praveen Kumar Maheshwari
for verification, it was merely stated that all information is placed on record.
11.   The arguments that Shri Praveen Kumar Maheshwari was an attorney for the
limited purpose of signing of bank account on behalf of the company as requested
to him from the company because the Directors were not available at Delhi was
also offered. The CIT(A) observed that the assessee has also objected that the
bank account is not operated by Sh.Praveeen Kumar Maheshwari. The stand was
found contradictory as it was verified from the Oriental Bank of Commerce,
Daryaganj , New Delhi that the transactions specifically from the bank A/c Nos.-
4432, 4433, 4592, 4598, 4588 and 15713 normally showed that the amounts were
deposited by the cheque and withdrawn by cheque on the same day or within two
or three days.     In these circumstances, it was concluded that the different
transactions appeared to be accommodation entries as such in order to verify it the
CIT(A) held it was considered necessary to examine the Directors on oath who
were not present. The CIT(A) further records that before sending the Remand
Report, the AO had given an opportunity to the assessee to appear however on the
date of hearing i.e 28.09.2010, the adjournment was sent and the case was
adjourned to 08.10.2010 on which date no one was present.                     In these
circumstances, it was concluded that the assessee had nothing further to state. The
said Remand Report was made available to the assessee as per para 4.2 of the
impugned order. In reply it was stated that the assessee has been in business of
trading shares, finance and investment since the very beginning i.e from 1993. The
sale transactions (Routine business transactions) would not have been found to be
                                          9                   I.T.A .No.-2229/Del/2011


not genuine when the opening stock of shares of purchases has been found to be
genuine. Ld. AR through his Synopsis filed in the course of the arguments before
us has invited our attention to paper book page-4 being a copy of the Profit & Loss
A/c. Referring to the same it was urged that the assessee had an opening stock of
Rs.4,54,25,450/- out of which it had made sales of Rs.1,38,20,000/- evidenced by
the P&L A/c and the assessee thereafter had a closing                  stock of the
Rs.3,18,05,450/-. Reverting back to the impugned order it is seen that on behalf of
the assessee it was submitted that the transactions have been confirmed in response
to notice u/s 133(6) by way of various documents specifically alluded to at page 10
para 4.2 of the impugned order. It was further submitted that the AO's letter dated
04.11.2008 referred to in the Remand Report was replied to by letter dated
12.11.2008 which has been ignored by the AO and the information received under
the RTI Act shows that it is available on the assessment records. The certified
copy of the same was stated to be have been enclosed in the earlier submissions
dated 11.12.2009. Accordingly based on the above facts aspersions were cast on
the intention of the AO which came to light according to the assessee only after the
receipt of information under the RTI Act. Similarly it was argued the reply of the
Director in response to notice u/s 131 dated 03.11.2008 was also received under
RTI Act which was also replied upon which again addresses the intention of the
AO. Specific emphasis was laid on letter dated 12.11.2008 delivered at the DAK
counter at page 2 para 6 filed on an earlier date. It was explained that upto the year
under consideration the assessee functioned from the same premises thereafter it
started its activities from C-1/2, Model Town, Delhi which is the residential
address of the Director. The activities of the assessee company it was submitted
are not necessarily known to the world at large and this situation is not peculiar to
the assessee's business only as there are various business entities carrying out their
business activities which are not necessarily known to world at large and would be
                                            10                      I.T.A .No.-2229/Del/2011


known only to the interested persons. In these circumstances to conclude that the
business entity was not carrying out any business activity on the basis of persons
who have no dealing with the business entities is of no relevance or reliance.
Reliance was placed upon the reply of the parties from whom information had been
sought u/s 133(6) who had dealings with assessee's company who have confirmed
the transactions. The transactions were stated to be routed through the banking
channels recorded in the books of accounts with supporting evidence explaining
the presence of Directors. The following extract of page 11 of the impugned order
is reproduced hereunder:-
      "As far as issue for personal presence of the directors is concerned it is
      reiterated that on 12.11.2007 Mr. Arvind Maheshwari, one of the directors of
      the assessee co., went with another AR. Mr. Subhash Garg but neither the AR
      was attended nor the director Mr. Arvind Maheshwari."


12.   It was reiterated that there is no Prem Maheshwari authorized to operate the
bank account and only Sh. Praveen Kumar Maheshwari is authorized to operate the
bank account that arrangement has been done for the convenience of the Directors.
Accordingly the AO's observation that misleading submissions are being made to
divert the authority's attention from major issues are strongly opposed. It was
submitted the assessee has stated and filed only factual and legal submissions with
regard to the objection of the AO in the remand proceedings on the adjourned
dated. It was submitted that the authorized representative of the assessee did
attend but he was not required to submit any material accordingly when the
assessee company was not required to submit any specific information and
whatever information was necessary was already submitted the assessee cannot be
faulted. For ready-reference the said objection at page 12 of the impugned order is
extracted hereunder:-
      "In regard to notice issued to the assessee co. for remand report it is humbly
      submitted that on the adjourned date the AR of the assessee co. attended the
                                             11                      I.T.A .No.-2229/Del/2011


      esteem office of the AO but he was not specified to submit any material or
      information. Under such circumstances the assessee company was not able to
      understand as to what should be submitted. Since all information/material
      were already on the assessment records."

13.   A perusal of page 13 para 4.3 of the impugned order shows that the said
reply of the assessee was forwarded to the AO who submitted his Remand Report
dated 19.12.2010 and the incorrect mentioning of Prem Maheshwari instead of
Praveen Kumar Maheshwari was accepted. Similarly the name Pawan Kumar
Maheshwari wrongly mentioned in earlier Remand Report was accepted as mistake
and requested that it should be read as "Praveen Kumar Maheshwari". The said
reply was also made available to the assessee who further objected that the name
of the Director has been taken by the AO as Arvind Kumar Modi instead of Arvind
Kumar Maheshwari and merely because the operation of the bank account on
behalf of the directors of the company for facilitating smooth functioning does not
make the transaction as non-genuine as it is well supported by the evidences. A
perusal of the impugned order further shows that on the basis of the above, the
CIT(A) concludes on facts as under :-
      4.5.    "I have gone through the findings of the AO in the body of assessment
      order, and in two remand reports, reply of he appellant filed against the
      remand reports as well as various submissions filed from time to time. In this
      case addition has been made u/s 68 of the IT Act by observing that assessee
      has failed to explain about the nature and source of the deposits. The addition
      is mainly based on the fact that frequency of deposit, withdrawal of
      cash/cheques in the bank accounts are by way of transfer/clearing entries
      which are immediately transferred out and OA has also summoned to the
      Directors of the Company.
      However. Directors had not attended before the AO, rather some papers were
      filed by the AR. While concluding the issue the AO has summarized the matter
      where he has arrived at a conclusion by observing certain discrepancies in this
      regard. During the course of appellate proceedings, various details were filed
      from time to time. Furthermore, in the remand report also AO has very
      specifically and categorically discussed the issue about operation of the bank
      account and information has been collected u/s 133(6) of the IT Act that Shri
      Praveen Kumar Maheshwari is operating the bank account. In this regard, AO
      has clarified vide letter dated 9.12.2010 that name of the person is Praveen
      Kumar Maheshwari. The typographical error committed by the AO has also
                                              12                      I.T.A .No.-2229/Del/2011


      been mentioned and copy of summon issued to him is also been attached. So
      observation with regard to mentioning of the name has been clarified by the
      AO. So it is clear that name of the person managing the accounts is Praveen
      Kumar Maheshwari. Opportunity has also been granted to the Ld. AR of the
      appellant in response to which he has pointed out another mistake committed
      by the AO in the remand report in respect of name of Director is actually
      Arvind Kumar Maheshwari and not Arvind Kumar Modi.
      4.6. So after taking into consideration of various details filed by the Id.AR of
      the appellant and rejoinder to the remand report, the issue is that there are
      various bank accounts in the name of M/s. Joy Commercial Pvt. Ltd., Roop
      Yams Pvt.Ltd., Moral Papers Pvt. Ltd., Rose Alloys Pvt. Ltd. are being
      managed and operated by Shri Praveen Kumar Maheshwari which has been
      clarified by the AO in the remand report dated 9.12.2010 about which AR was
      granted opportunity wherein, he has not controverted this fact that Praveen
      Kumar Maheshwari is the person who is the authorized person to operate bank
      account of the company on behalf of Director Shri Arvind Kumar Maheshwari.
      Now this fact is well established, that even in the remand proceedings,
      opportunity was given by hearing dated 10.9.20 I 0 and 8.10.2011, which was
      not attended. So after taking into the observation of the AO in the assessment
      order as well as in the remand report, the matter is crystal clear that there are
      various paper companies whose bank accounts are being managed by Shri
      Praveen Kumar Maheshwari who was been authorized by SHri Arvind Kumar
      Maheshwari. Various opportunities were given during the course of
      assessment proceedings and remand proceedings which has not been complied
      with."


13.1. Reliance was placed by the CIT(A) on the judgement of CIT vs Oasis
Hospitality Pvt. Ltd. 51 DTR 68 (Delhi); and ITO vs. South East Impex (P.) Ltd.
(2010) 41 DTR (Del.) (Trib) 1.
13.2. On the basis of these circumstances he concludes in para 4.8 that from the
conduct of the assessee through the assessment proceedings as well as the remand
proceedings it is apparent that the assessee has not availed of the                       various
opportunities given to it by the AO as such there is a strong case that the affairs are
being managed and are in the nature of accommodation entry and after extracting
certain portions from       the information provided by the AO vide order dated
29.07.2009 u/s 7 of RTI Act, 2005 relying upon the decision of the CIC dated
                                               13                        I.T.A .No.-2229/Del/2011


03.07.2009 the CIT(A) concludes that sufficient opportunity has already been
granted to the assessee as under :-
      "Further reliance is placed on the decision of Hon'ble Central Information
      Commissioner in the case wherein vide para 4 `C' order dated 3.7.2009 the
      Hon'ble CIC has observed as under :-
             "As far as other paras are concerned, they essentially relate to the
             merits of the assessment order passed by the competent authority. As
             per decision of this Commission in Appeal No.-CIC/AT/A/2006/00596
             dated 18/09/2009 (Rakesh Kumar Gupta vs ITAT), it has been held that
             the Appellant cannot take recourse to the RTI Act to challenge a
             judicial/quasi judicial decision and if the Appellant is aggrieved, the
             remedy lies elsewhere. We concur with this decision.
      So in my considered opinion, objection raised vide para 13 of letter dated
      31.1.2009 written by director of company raising query in this regard has
      already been answered. Sufficient opportunity was given to Ld. AR during the
      course of remand proceedings by AO but he did not availed it."


13.3. Vide the culminating paragraph 4.12 he decides the issue against the
assessee which is under challenge in the present proceedings. The same is also
reproduced here under:-
      "4.2. In view of the above judgement of the Hon'ble Delhi High Court as well
      as Hon'ble ITAT, Delhi, it is held that three ingredients of section 68 has not
      been satisfied by the appellant in this regard, i.e, identity of the investor, their
      creditworthiness and genuineness of the transaction. As has been held by the
      AO in the body of assessment order, various opportunities were given but not
      availed. Even during the course of remand proceedings, proper opportunity
      was given which has not been availed. It has also been established by the AO
      that one Shri Praveen Kumar Maheshwari who is authorized signatory was
      found to be managing various bank accounts in the name of various
      companies. This fact has not been controverted by Ld. AR as to why Shri
      Praveen Kumar Maheshwari was working as authorized signatory to operate
      various bank accounts pertaining to different companies."

14.   We have heard the rival submissions and perused the material available on
record. On a careful consideration of the entire factual background of the case we
are of the view that looking at the manner in which the relevant information qua
the assessee's attendance on a specific date before the AO is concerned how the
information has been initially blocked and thereafter made available only as a
                                         14                   I.T.A .No.-2229/Del/2011


result of the appeal before the CIC there can be no two opinions that justice has not
been done. The actions of the AO in mis-recording suppressing and thereafter
obstructing necessary flow of information namely receipt of reply received by a
director does not speak well of the manner in which the proceedings have been
conducted. The carelessness in recording of names of the person empowered to
operate the bank accounts and the carelessness in not recording the correct name of
the Director though accepted in the remand proceedings leaves much to be desired
and at the least completely feels to inspire any confidence in the proceedings
whatsoever. It is seen that the department has stated in its reply dated 29.07.2009
(copy at pages 58-59) of the Paper Book vide para 6 that qua the reply of the
Director sent through speed post vide letter dated 03.11.2008 the same is not
available on record and as per the direction of CIC enquiry was being conducted
and responsibility as deemed fit would be accordingly fixed. We have no reason to
believe that the reply has not been followed up with appropriate action however the
fact remains that in the facts of the present case justice has not been done. The tax
collecting authority is presumed to act fairly and transparently while exercising its
quasi-judicial powers. Recording of facts correctly is the least which is expected
in this exercise. In the facts of the present case though numerous arguments on
facts have been raised by the assessee in regard to statement of unconcerned
persons relied upon in regard to the functioning of the assessee from a specific
place and ignoring the statements of concerned persons furnished in response to
information sough under Section 133(6) or in regard to the legal consequences qua
the genuineness of empowering a specific person to operate the bank accounts on
behalf of the Directors we do not address these as the said issue though argued by
the Ld. AR was not addressed by the Ld. Sr. DR who has only responded to the
request of the Ld. AR seeking the issue may be restored and in this response to
recapitulate Ld. Sr. DR has relying on the impugned order mainly confined himself
                                           15                   I.T.A .No.-2229/Del/2011


to stating that he has no objection if the issue is restored. In the circumstances we
do not think it is appropriate to address these arguments at this stage any view
expressed now would pre-decide the issue wherein both sides have not advanced
their argument. Even otherwise at the opening the Ld. AR has also only confined
himself to the request that the issue be restored for verification on facts. In these
afore-mentioned peculiar facts and circumstances we deem it appropriate to set
aside the impugned order and restore the issue back to the file of the AO directing
him to complete the assessment de-novo. The grounds raised are accordingly
allowed for statistical purposes.
15.    In the result the appeal of the assessee is allowed for statistical purposes.
      The order is pronounced in the open court on 11th of April 2014.

      Sd/-                                                             Sd/-
(J.S.REDDY)                                                        (DIVA SINGH)
ACCOUNTANT MEMBER                                             JUDICIAL MEMBER
Dated:- 11/04/2014
*Amit Kumar*


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

                                                          ASSISTANT REGISTRAR
                                                                ITAT NEW DELHI

 
 
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