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AAA Paper Marketing Ltd. 12/22, 2nd Floor, East Patel Nagar New Delhi Vs. ITO Ward 1(1), New Delhi
June, 27th 2014
                 DELHI BENCH: `SMC' NEW DELHI
                  I.T.A .No. 1336 /Del/2013(AY-2003-04)

        AAA Paper Marketing Ltd.                          ITO
        12/22, 2nd Floor, East Patel                      Ward 1(1),
        Nagar                                vs
        New Delhi                                           New Delhi

        (APPELLANT)                                 (RESPONDENT)

                      Appellant by  Shri Rajesh Jain, CA.
                      Respondent by Sh. Amal Garg, Sr. D.R.

         This appeal has been filed by Assessee against the order of Ld.
CIT(A) IV, New Delhi dated 20th December, 2012 for A. Y 2003-04.

2.      Brief facts of the case are that the assessee filed return declaring loss of
Rs. 85,332/-. Subsequently Assessing Officer received information from the
DIT (Investigation), New Delhi that the assessee company had accepted
following accommodation entries from the persons who had no
creditworthiness and were providing entries to the parties who wish to
convert their income earned from other sources and not declared to the
department, by making cash payments to those persons and in turn to show
the entries received from such parties either as share application, loan,
commission, etc. as per their requirements.

Value of entry taken Date on which entry Name of account holder of entry
(Rs.)                    taken                    giving account
                                        2                  ITA No. 1336/Del/13

      1,14,980             29.10.2002        MKM Finsec Pvt. Ltd.

3.      Accordingly, notice u/s 148 was issued and after considering the
statement given by Shri Mahesh Batra and Ors. the addition of Rs.
1,14,980/- was made. Before Ld. CIT(A) it was submitted that the amount
received was on account of sale and purchase of shares from MKM Finsac
Pvt. Ltd. in the assessment year 2002-03. Ld. CIT(A) pointed out that the
assessee was asked for the bills and vouchers for sale and purchase of
shares. The same were not submitted on the ground that they were
destroyed. He pointed out that in profit and loss account for assessment year
2002-03 there was no sale but there was other income of Rs. 2,07,106/-. Ld.
Commissioner of Income Tax (Appeals) observed as under :-

         "On perusal of the Profit & Loss Account for the A.Y.
         2002-03 submitted by the assessee, I find that there was no
         sale in that year as the complainant has shown the sale at
         nil. However, it has shown the other income of Rs.
         2,07,106/-. It was claimed that the amount receivable from
         MKM Finsec Pvt. Ltd. was out of miscellaneous income as
         on 31.03.2002. However, the appellant could nto submit
         any detail whatsoever either before the Assessing Officer
         or before the undersigned as to what was the nature of the
         transaction or its genuineness that income of Rs.
         1,14,980/- was receivable from MKM Finsec Pvt. Ltd. It is
         interesting to note that as per the Profit & Loss A/c of AY
         2002-03 (F.Y.2001-02), the appellant was having loss of
         Rs. 9,792/-. Thus, the claim of the appellant that it has
         offered the income of Rs. 1,14,980/- and paid tax is not
         correct as Profit & Loss A/c reveals net loss of Rs. 9,792/-.
         Similarly, in the year under consideration, the assessee has
         filed return of income showing loss of Rs. 85,332/- and
         thus no tax has been paid in this year either."
                                     3                    ITA No. 1336/Del/13

4.   Accordingly, Ld. CIT(A) confirmed the AOs action. Being aggrieved
with the order of Ld. CIT(A) the assessee is before me and has taken
following grounds of appeal :-

      "1. That the Ld. CIT (A) has erred in law and on facts in
      confirming the reopening the assessment by the Assessing
      Officer by invoking the provisions of section 147 when the same
      are not applicable on the facts of the case.

      2. That the Ld. CIT(A) has erred in law and on facts in
      sustaining the reopening of assessment which could not have
      been re-opened u/s 147/148 as the reasons recorded by the
      Assessing Officer do not established any satisfaction on his part
      that any income belonging to the appellant has escaped
      3. That the Ld. CIT (A) has erred in law and on facts in
      sustaining the addition of Rs. 1,14,980/- by invoking the
      provisions of Section 68 and treating the same as share
      application money.
      4.    That the Ld. CIT (A) has erred in law and on facts in
      sustaining the addition of Rs. 1,14,980/- by treating the amount
      received from debtor as the income of the appellant.
      5. That the impugned appellate order is arbitrary, illegal, bad
      in law and in violation of rudimentary principles of
      contemporary jurisprudence.

      6.     That the Appellant craves leave to add/alter any/all
      grounds of appeal before or at the time of hearing of the

5.    Ld. Counsel for the assessee referred to page 21 of the paper book
wherein the details of indirect incomes for financial year 2001-02 are
contained to demonstrate that miscellaneous income of Rs. 1,16,705/- was
shown which included income on account of sale and shares through MKM
Finsac Pvt. Ltd. He, further, referred to page 22 of paper book where in the
                                       4                    ITA No. 1336/Del/13

details of sundry debtors for financial year 2001-02 are contained in which
the sum of Rs. 1,14,980/- as due from MKM Finsac Pvt. Ltd. is there. Ld.
Counsel submitted that this sum was realized in financial year 2002-03 on
29.10.2002 and therefore, this receipt could not be added in assessment year

6.          I have considered the submissions of both the parties and have
perused the record of the case. As far as the ground nos. 1-2 are concerned,
the same are in regard to validity of reopening the assessment. I find that
reopening has been done on the basis of specific information in possession
of Assessing Officer from DIT investigation, New Delhi and, therefore,
Assessing Officer had prima facie reason to believe that income had escaped
assessment. Accordingly, ground no. 1 and 2 are dismissed. As far as ground
no. 3-4 are concerned, the main plea of the assessee is that sale of shares
through MKM Finsac Pvt. Ltd. took place in financial year 2001-02 and not
in financial year 2002-03 only debtor was realized in Assessment Year
2002-03. Accordingly, the claim is that since income pertains to assessment
year 2002-03 and not to assessment year 2003-04, therefore, addition could
not be made in assessment year 2003-04. I find that Ld. CIT(A) was
primarily swayed by the consideration that assessee had returned loss of Rs.
9,792/- but the details as furnished by assessee particularly the details of
sundry debtors, needs to be examined. If assessee's claim is found to be
correct then no addition is called for in current assessment year.

8.     In view of the above observations I set aside the order of Ld. CIT(A)
and restore the matter back to the file of Assessing Officer for verification of
assessee's claim of realization of amount due from MKM Finsac Pvt. Ltd. as
on 31st March, 2002 on 29th October, 2002.
                                     5                    ITA No. 1336/Del/13

9.      In the result the assessee's appeal is partly allowed for statistical
purposes in terms of aforementioned observations.
The order is pronounced in the open court on 23rd June, 2014.

                                      ACCOUNTANT MEMBER

Dated: 23/06/2014
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)

                                                    AR, ITAT
                                                    NEW DELHI
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