M/s Bharat Gears Ltd. 1009, Surya Kiran bldg. 19, K.G.Marg, New Delhi vs. DCIT, Central Circle 11 New Delhi
September, 25th 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: "A" NEW DELHI
BEFORE SHRI AD JAIN, JM
AND SHRI J.SUDHAKAR REDDY, A.M.
ITA No: 2751/Del/2011
Assessment Year : - 2002-03
ITO, Ward 2(1), C.R.bldg. vs. M/s Apogee Investments P.Ltd.
New Delhi B 3/226, Paschim Vihar
Assessee by : Shri Manoj Kumar, C.A..
Department by : Shri Pirthi Lal, Sr.D.R.
PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue directed against the order of
Commissioner of Income Tax (Appeals)-V, New Delhi dt. 22.3.2011 pertaining
to Assessment Year 2002-03.
2. The only issue that arises for consideration, is whether the First
Appellate Authority was right in deleting the addition made u/s 68 of the
Income Tax Act, 1961 by the A.O. The facts are brought out at para 2, page 1
of the Ld.CIT(A)'s order which is extracted for ready reference.
"2. The appellant is in the business of financing of vehicles and investment in
other companies. Return of income for the Assessment Year 2002-03 declaring
an income of Rs.38,290.00 was filed on 17.11.2002 which was duly processed
under Section 143(1). Notice under Section 147 was issued on 27.3.2009 on the
basis of information from investigating wing, New Delhi about receipt of
Rs.60,00,000/- alleged to be bogus on account of accommodation entries. As no
response was received in response to the notice under Section 148 nor was there
any response to the notice under Section 142(1), therefore assessment was
completed under Section 144 on 11.12.2009 and thus the Assessing Officer
made an addition of Rs.60,30,000/- on the basis of material available on
3. On appeal the First Appellate Authority upheld the reopening on merits.
The First Appellate Authority observed that the assessee has received share
application money from FIVE Private Limited Companies, which sum was
added u/s 68 as the assessee did not comply with the notices given by the AO.
Before the First Appellate Authority the assessee submitted additional
evidences in the form of PAN no., Board Resolutions, confirmations as well as
Memorandum of Association and Articles of Association on each of these
Private Limited Companies, which have made share application investments in
the assessee company. Copy of ITR/acknowledgement, bank statements,
books of accounts of the parties and share holders register etc. were examined
by the AO in the remand proceedings. No adverse finding was given by the AO.
The AO was of the view, that in view of the report of the Investigation Wing, the
additions should be upheld. The First Appellate Authority deleted the addition
by observing that the AO added the amount primarily because the assessee
failed to produce the concerned persons, whereas the assessee has produced
all relevant documents and the AO had the power to summon the Director
himself, if he doubted the impugned transactions.
4. Aggrieved the Revenue is in appeal before us on the following grounds:-
"1. The Ld.CIT(A) has erred on facts and in law in deleting addition of
Rs.60,30,000/- made under Section 68 of the Income Tax Act, 1961 ignoring
a) the assessee failed to submit necessary details during the course of
assessment proceedings even as several opportunities were allowed to
him. Ld.CIT(A) was not right in entertaining additional evidence during
the appellate proceedings.
b) The assessee failed to discharge his onus to prove necessary ingredients
of s.68 of the Income Tax Act, 1961. "
5. We have heard Mr.PirthiLal, Sr.D.R. on behalf of the Revenue and Sri
Manoj Kumar, the Ld.Counsel for the assessee.
6. On a careful consideration of the facts and circumstances of the case
and on perusal of the material available on record as well as the case laws
cited, we hold as follows.
7. This is a case where the AO passed an order u/s 144 of the Act as the
assessee has not responded to the notices nor furnished any information.
Before the Ld.CIT(A) the assessee produced the following evidences:-
i. PAN number;
ii. Board Resolution;
iii. Confirmation of all the subscribers;
iv. Memorandum of Association and Articles of Association;
v. Copy of ITRs/acknowledgement of the filing of return;
vi. bank statements;
vii. Audited Balance Sheet.
The Ld.CIT(A) admitted these additional evidences and forwarded the same to
the AO for a Remand Report. The AO at that stage has not objected to the
admission of additional evidence. In fact he verified the documents submitted
by the assessee in support of its claim that the subscribers to the share capital
were genuine and has not found anything adverse. The only ground on which
the AO seeks sustenance of addition, is that the Report of the Investigation
Wing summarized in para 3 of AO's order warrants addition. Further it is also
stated by the AO that no Director of share subscriber companies have been
8. The Ld.CIT(A), in our view, was right in coming to a conclusion that the
AO on verification of the documents submitted by the assessee, during remand
proceedings, has neither brought out any direct or inferential evidence to
contradict the contentions of the assessee. Non production of the person, in
our view, cannot be a ground for sustaining the addition, specifically when
overwhelming evidence is furnished by the assessee. The AO had the power to
summon the Directors himself in case of doubt. Coming to the finding of the
Investigation Wing, these are vague and the assessee has not been confronted
with the comments and material of the Investigation Wing.
9. Coming to the legal position, the Jurisdictional High Court in ITA no.
212/2012 judgement dt. 11.4.2012 in the case of Goel Sons Golden Asset
Pvt.Ltd. held as follows:-
"3. We have examined the said contention and find that the assessee during
the course of assessment proceedings has filed confirmation letters from the
companies, their PAN numbers, copy of bank statements, affidavits and balance
sheet. Thereafter the Assessing Officer had asked the assessee to produce the
said Directors/parties. Assessee expressed its inability to produce them. The
Assessing Officer did not consequent thereto conduct any inquiry and closed the
proceedings. This is a case where the Assessing Officer has failed to conduct
necessary inquiry, verification and deal with the matter in depth specially after
the affidavit/confirmation along with the bank statements etc. were filed. In
case the Assessing Officer had conducted the said enquiries and investigation
probably the challenge made by the Revenue would be justified. In the absence
of these inquiries and non-verification of the details at the time of assessment
proceedings, the factual findings recorded by the Assessing Officer were
incomplete and sparse. The impugned order passed cannot be treated and
regarded as perverse. The appeal is dismissed as no substantial question of law
10. The proposition laid down squarely applicable to the facts of the present
case and hence we uphold the order of the First Appellate authority and
dismiss this appeal of the Revenue.
11. In the result the appeal filed by the Revenue is dismissed.
Order pronounced in the Open Court on 21st September, 2012.
(A.D. JAIN) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 21st September, 2012
Copy of the Order forwarded to:
1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File
1. Date of Dictation: 13/09/2012
2. Draft placed before the Author on: 18/09/2012
3. Draft proposed and placed before Second Member on:
4. Draft discussed/approved by the Second Member on:
5. Approved draft came to Sr.P.S. on: 21/09/2012
6. Date of Pronouncement : 21/09/2012
7. File sent to Bench Clerk on : 21/09/2012
8. Date on which file given to Head Clerk on:
9. Date of dispatching the Order on: