Income Tax Appellate Tribunal - Delhi
M/S. Finesse Traders India Pvt. Ltd.,, ... vs Ito, New Delhi on 4 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "B", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No. 600/DEL/2012
A.Y. 2003-04
ITO, WARD 11(2), VS. M/S FINESSE TRADERS INDIA PVT LTD.
ROOM NO. 321, E-131, GREATER KAILASH-II,
C.R. BUILDING, NEW DELHI - 110 048
NEW DELHI (PAN: AAACF6789J)
(APPELLANT) (RESPONDENT)
AND
C.O. NO. 265/DEL/2012
(IN ITA NO. 600/DEL/2012)
A.Y. 2003-04
M/S FINESSE TRADERS INDIA PVT LTD. VS. ITO, WARD 11(2),
E-131, GREATER KAILASH-II, NEW DELHI
NEW DELHI - 110 048
(PAN: AAACF6789J)
(APPELLANT) (RESPONDENT)
Department by : Ms. Ashina Neb, Sr. DR
Assessee by : None
ORDER
PER H.S. SIDHU, JM :
This appeal by the Revenue and Cross Objection by the Assessee and both are directed against the Order of the Ld. Commissioner of Income Tax (Appeals)-XIII, New Delhi dated 1 13.12.2011 pertaining to Assessment Year 2003-04. Since the issues involved in this appeal and cross objection are inter-connected, hence, the same are disposed of by this common order for the sake of convenience, by first dealing with Revenue's Appeal.
2. The grounds raised in the Revenue's Appeal read as under:-
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the proceeding u/s. 148 of the I.T. Act as invalidly initiated.
2. The Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 50 lacs under section 68 of the I.T. Act on account of accommodation entries taken in the form of share capital.
3. The CIT(A) has erred on facts and in law in ignoring the findings u/s. 68 recorded by the AO in the assessment order with respect to the creditworthiness and identity of creditors and genuineness of the transactions.
4. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.
3. The grounds raised in the Assessee's Cross Objection read as under:-
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1. That the Ld. CIT(A) erred in not holding that the reassessment proceedings are not sustainable for the reason being a 'change of opinion' because the statement of Mr. Mahesh Garg relied upon by the AO was already available with the Department even at the time of processing of the return u/s. 143(1) and the AO had ample occasion to examine the same and the order is contrary to binding judgement of the jurisdictional High Court in 329 ITR 110
2. That the Ld. CIT(A) having held that the proceedings u/s. 148 have been invalidly initiated by the AO erred in not annulling the assessment order and further erred in not holding that any subsequent grounds of appeal were infructutous and need not be adjudicated upon.
4. Facts narrated by the revenue authorities are not disputed here, hence, the same are not repeated for the sake of brevity.
5. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal.
6. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. It is noted from the order sheet that on 15.9.2016; 20.12.2016 the case was earlier adjourned on the written 3 request of the assessee's counsel. It is also noted that the notice for hearing has been returned back with the remarks that "No such company at such address". Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal as well as Cross Objection exparte qua assessee, after hearing the Ld. DR and perusing the records.
7. We have heard the Ld. DR and perused the records, especially the order of the Ld. CIT(A). On going through the findings of the Ld.CIT(A) made in the impugned order as well as the finding of the Assessing Officer made in the assessment order, we find that assessee filed return of income of Rs. 1,07,090/- on 28.11.2003 and the same was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) on 24.3.2004. Subsequently the case was reopened by issue of notice under section 148 of the Act dated 15.3.2010 after recording the reasons and in response to the notice, assessee submitted its letter dated 22.3.2010 and stated that the return already filed on 28.1.2003 may be treated as filed in response to notice u/s. 148 of the Act. Thereafter notice u/s. 143(2)/142(1) were issued to the assessee. The assessee, in order to establish the genuineness of the share application money filed certain documents to establish the identity of the share applicant companies and to show that the source of money emanated from the bank accounts of the companies etc. The AO completed the assessment u/s. 143(3)/147 of 4 the Act by relying on the investigations carried out by the Directorate of Investigation. In the assessment order dated 16.12.2010 passed u/s. 143(3) of the Act, the AO made addition of Rs. 50 lacs being share application money received from the various companies and treated the same as undisclosed income of the assessee by holding that assessee was asked to submit complete bank statement for the relevant previous year and after perusing the same, it is proved that the assessee had taken accommodation entries from the said concerns in the form of share capital during the year under consideration. We further note that the assessee has filed in this regard Certificate of Investment, copy of acknowledgement of their ITRs etc and all these documents are prepared in a similar styled manner as to use the same at all the time to come and also the confirmations from the parties should be latest and definite. We further note that under the provisions of section 68 of the Act, where any sum is found credited in the books of an assessee, maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by his is not, satisfactory and assessee could not prove the identity of the creditor, capacity of the creditor to advance money and the genuineness of the transaction. It is also noted that no explanation of the genuineness of the transactions further confirms that the transaction was not at all genuine and in spite of the repeated adjournments, the assessee has not proved the creditworthiness or financial strength of the share applicants. It is also noted that AO asked the assessee to give the present status of share 5 allotted to the five companies vide order sheet entry dated 18.10.2010, but assessee has not stated anything in this regard. Accordingly, AO held that the assessee has not discharged its onus cast upon it under the provisions of section 68 of the Act, an addition of Rs. 50,00,000/- was made on account of unexplained cash credits under section 68 of the Act and assessed the income of the assessee at Rs. 51,07,086/-. However, on the other hand, Ld. CIT(A) has allowed the appeal of the assessee on legal aspect as well as on merits by relying upon the various case laws. We find that AO asked the assessee to give the present status of share allotted to the five companies vide order sheet entry dated 18.10.2010, but assessee has not stated anything in this regard and took adjournments and in the absence of relevant evidence as asked by the AO, as a result thereof, the AO did not verify the documents furnished by the Assessee and also not done the independent inquiry and verification properly. We further find that Ld. CIT(A) has completely ignored this finding of the AO and simply relying upon the various case laws deleted the addition. Ld. CIT(A) also unable to justify the genuineness of the transactions and creditworthiness or financial strength of the share applicants and even ignored the AO's version recorded on the note sheet dated 18.10.2010, which goes to the root of the matter and is very much essential while considering the case of the assessee, which has not been done by both the authorities. Therefore, in the interest of justice, we think it proper to set aside the issue in dispute to the file of the AO to decide the same afresh, after making independent inquiry and 6 verification, as deem fit. However, the Assessee is also directed to submit all the necessary documents, as asked by the AO during the assessment proceedings and fully cooperate with the AO and did not take any unnecessary adjournment. Accordingly, the issues in dispute are set aside to the file of the AO with the aforesaid directions. In the result, the Revenue's Appeal is allowed for statistical purposes. ASSESSEE'S CROSS OBJECTION
8. As regards, Assessee's Cross Objection is concerned, since we have already set aside the issues involved in the Revenue's Appeals, the grounds taken by the Assessee in the Cross Objection also stands remitted to the file of the AO to decide the same afresh, as per law, after giving adequate opportunity of being heard to the assessee.
9. In the result, the Appeal filed by the Revenue as well as Cross Objection filed by the Assessee stand allowed for statistical purposes.
Order pronounced on 04/01/2018.
Sd/- Sd/-
(T.S. KAPOOR) (H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date:04/01/2018
"SRBHATNAGAR"
Copy forwarded to:-
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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