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Nova Power Pvt. Ltd., 8A/8, WEA Karol Bagh, Delhi - 110005 Vs. ITO, Ward 13(3), New Delhi
August, 13th 2014
          IN THE INCOME TAX APPELLATE TRIBUNAL
               (DELHI BENCH `F ', NEW DELHI)

        BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND
            SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
                       I.T.A. No.4055 /Del/2009
                       Assessment year : 2004-05
Nova Power Pvt. Ltd.,              Vs.         ITO, Ward 13(3),
8A/8, WEA Karol Bagh,                          New Delhi
Delhi - 110005
GIR / PAN:AAACN3792K
                       I.T.A. No.4056 /Del/2009
                       Assessment year : 2004-05
Nova Portfolio P. Ltd.             Vs.         ITO, Ward 13(3),
8A/8, WEA Karol Bagh,                          New Delhi
Delhi - 110005
GIR / PAN:AAACN0366P

          (Appellants)                      (Respondents)

                  Appellant by :      Shri A. K. Srivastava, CA
                  Respondent by :     Shri Manoj Kumar Chopra, Sr. DR

                                      ORDER

PER T.S. KAPOOR, AM:

      These two appeals are filed by two different assessees against separate
orders of Ld. CIT(A) both dated 30.07.2009. Similar issues are involved in
both these appeals and therefore, the same were heard together and for the
sake of convenience, a common and consolidated order is being passed. The
                                      2            ITA Nos.4055,4056/Del/2009







assessees have taken grounds of appeals challenging the legality of
reassessment as well have challenged the additions on merits.
2.    The brief facts involving these cases are that the cases of the assessees
were reopened u/s 147 / 148 of the Act on the basis of information from
Investigation Wing of the Department that the assessees had accepted
accommodation entries from entry providers.        As per records, information
available with the Investigation wing was in respect of entry of Rs.7.50 lacs
received by the assessee in the case of I.T.A.No. 4055/Del/2009 whereas in
I.T.A.No. 4056/Del/2009, the information with the department was
regarding receipt of an amount of Rs.5 lacs. However, during the course of
assessment proceedings, the Assessing Officer observed certain credits on
various dates in the bank accounts of the assessees which as per the
Assessing Officer were not explained by the assessees, therefore, Assessing
Officer further made an addition of Rs.12.50 lacs and Rs.23.50 lacs in
I.T.A.No. 4055/Del/2009 and in I.T.A.No. 4056/Del/2009 respectively.
Aggrieved, the assessee filed appeals before Ld. CIT(A) and challenged the
additions both legally and on merits. However, Ld. CIT(A) upheld the
additions made by the Assessing Officer and rejected the legal grounds
raised by the assessees by recording findings in respect of each ground.
Aggrieved, the asessees are in appeal before us.
3.    At the outset Ld. A.R. first took up the appeal in I.T.A.No.
4056/Del/2009. The Ld. A.R. did not make any specific arguments on legal
grounds and straightaway took up the merits of the case. We were taken to
paper book page 7 and our attention was invited to a copy of balance sheet
                                       3          ITA Nos.4055,4056/Del/2009




with specific reference to share capital as reflected as on 31.03.2003 and
31.03.2004 and it was submitted that there was no change in the share
capital in these two years and the assessee had not obtained any
accommodation entry as alleged by the department in the notice for
reopening of the case and in this respect, our attention was invited to paper
book page 13 wherein copy of reasons recorded was placed. Ld. A.R. also
invited our attention to the contents of the letter and submitted that no capital
was raised by the assessee during the year under consideration as is apparent
from the copy of balance sheet as placed at paper book page 7 and,
therefore, addition u/s 68 could not have been made. Ld. A.R. further took
us to paper book page 22 where a copy of letter dated 23.10.2007 written by
Assessing Officer to the assessee was placed and submitted that the
allegation of the Assessing Officer that assessee had filed details of parties
from whom share capital was received, is wrong as no share capital was
received by the assessee.     Highlighting the facts of the case, Ld. A.R.
submitted that the assessee had sold certain shares of some companies in
which it had made investment in the earlier years and the amounts were
received on account of sale proceeds of such shares. Therefore, the amounts
received represent consideration from sale of assets already owned by the
assessee and, therefore, Section 68 was not applicable. In this respect Ld.
A.R. took us to paper book page 27 where a copy of confirmation letter from
M/s. J K Securities Pvt. Ltd. was placed. Ld. A.R. further took us to paper
book page 35 and invited our attention to Schedule `C' reflecting
investments of the company of the assessee as on 31.03.2001. Ld. A.R.
                                      4         ITA Nos.4055,4056/Del/2009




submitted that 35000 equity shares of M/s. Kaushal Shah Shares &
Securities Ltd. were purchased by the assessee during the year ended
31.03.2001 and which were sold by the assessee during the year under
consideration and in support of his arguments, assessee took us to paper
book page 9, where the investment as on 31.03.2003 amounting to Rs.13.75
lacs was reflected as `nil' as on 31.03.2004. Ld. A.R. further submitted that
besides sale of these shares, the assessee had also sold shares worth Rs.10
lacs of M/s. Siddhi Shares and Securities P. Ltd. and shares worth Rs.5 lacs
of M/s. V V S Financial Services Pvt. Ltd. and, therefore, a total amount of
Rs.28.75 lacs was received on account of shares, sold during the year under
consideration and the amounts deposited in the bank account of the assessee
in fact were sale proceeds of these investments. He further submitted that
money received on account of sale of assets of the assessee can never be said
to be cash credit entry and, therefore, addition u/s 68 was not justified. Ld.
A.R. submitted that in I.T.A.No. 4055/Del/2009, similar additions were
made which were also on account of sale of shares acquired by the assessee
during earlier years and there was no issue of fresh share capital as alleged
by the Department. To support his argument, Ld. A.R. took us to paper
book page 26 where a copy of bank account of the assessee was placed. Ld.
A.R. submitted that the deposits in the bank account represent sale of
investments owned by the assessee in the earlier years. To support his
argument, Ld. A.R. took us to page 10 where a copy of balance sheet of the
assessee company was placed.        Our specific attention was invited to
Schedule `B' relating to investments and with reference to paper book page
                                         5          ITA Nos.4055,4056/Del/2009







26, it was submitted that the money deposited through cheques in the bank
account represents sale of investment in M/s. Ajit Mittal and Associates,
Delhi International Infotech Ltd., Mittal Maxpack Ltd. etc.
4.    Ld. D.R. on the other hand invited our attention to Ld. CIT(A)'s
findings in respect to legal grounds and submitted that Ld. CIT(A) had dealt
with each and every argument of the assessee and has rightly arrived at the
conclusion for reopening of the cases.       As regards the argument of Ld. A.R.
on merits, Ld. D.R. submitted that the entries obtained by the assessee
represent entry from entries providers only as the companies from whom the
money has been received, has been found to be engaged in entry providing
business. He further submitted that despite various opportunities given to
the assessee, the assessee had not provided any proper explanation for the
entries in their books of accounts.
5.    We have heard rival parties and have gone through the material placed
on record. The Ld. A.R. has not made any specific arguments on legal
grounds & therefore, we treat his arguments before Ld. CIT(A) as the
arguments before us also. The legal grounds taken by the assessee has been
dealt with by Ld. CIT(A) and he has rejected the arguments of the assessee
and has held reopening of the cases as valid. We find that Ld. CIT(A)'s
findings in respect of legal objections raised by the assessee are correct and
we are in agreement with his findings. Therefore, legal grounds taken by the
assessee in both these appeals are dismissed.
6.    As regards the grounds on merits, we find force in the arguments of
Ld. A.R. that the amounts received by the assessee were on account of sale
                                      6         ITA Nos.4055,4056/Del/2009




of investments made by the assessee which were acquired by it during the
earlier years. The argument of Ld. A.R. is strengthened from the entries of
investments in the balance sheets of the assessee companies wherein the
deposits in bank seem to be directly correlated with the sale of investment in
various companies. However a few of the documents substantiating the sale
of shares were not before the Assessing Officer, therefore, in the interest of
justice, we remit back the appeals to the office of the Assessing Officer who
would re-adjudicate on the issue of merits of the cases. The Assessing
Officer will examine the balance sheets of the assessee companies to arrive
at the conclusion as to whether the amounts received by the assessee
companies were on account of sale of investments or not. The Assessing
Officer will also be at liberty to ask the assessee for any other relevant
document in order to arrive at the conclusion. Needless to say that the
assessee will be given a reasonable opportunity of being heard.
7.    In view of above, both the appeals filed by the assessees are partly
allowed for statistical purposes.
8.    Order pronounced in the open court on 08th Aug., 2014


      Sd./-                                               Sd./-
 (I. C. SUDHIR)                                    (T.S. KAPOOR)
JUDICIAL MEMBER                               ACCOUNTANT MEMBER
Date: 08th Aug., 2014

Sp
                                 7       ITA Nos.4055,4056/Del/2009




Copy forwarded to:-
   1. The appellant
   2. The respondent
   3. The CIT
   4. The CIT (A)-, New Delhi.
   5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
True copy.
                                                    By Order


                                                 (ITAT, New Delhi).

 
 
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