GOLDEN CENTURY FOOD PRODUCTS P.LTD,NEW DELHI vs. ITO, WARD-10(2), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘SMC’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER

ITA No.6137/Del./2019 (ASSESSMENT YEAR : 2011-12) Golden Century Foods Products P. Ltd., vs. ITO, Ward 10 (2), CP – 64, Maurya Enclave, Pitampura, New Delhi. New Delhi – 110 034.

(PAN : AADCG5937A) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 07.11.2022 Date of Order : 17.11.2022 ORDER This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-4, New Delhi for the assessment year 2011-12. 2. The grounds of appeal read as under :-

“1) That the order passed by the Ld. Assessing Officer is not only bad in law but also against the facts of the case. 2) That the notice was void ab initio as the Reasons to Believe does not belong to the assessee.

3) That the Ld. AO had gone ahead with the Assessment without replying on Objection raised and ignoring the Affidavit submitted. 4) That under the facts and circumstances of the case the Ld. A.O. has erred under the law by making assessment on the non-existent ground and improving upon the reasons recorded

2 ITA No.6137/Del./2019 u/s 148 of the Act. It is pertinent to note that where the reasons are factually incorrect, the notice and the assessment thereon need to be vitiated. [Sugar Chand v/s ITO 105 ITR 743 and Govinda V/s ITO 109 ITR 370]. In fact, that the figure of Rs.15,00,000/- as alleged to be main transaction in the report of Investigation wing has been found to be incorrect and no addition made on this ground, the order itself get vitiated.

5) That under the facts and circumstances of the case the Ld. A.O. has erred under the law while making addition amounting to Rs.26,95,000/- being unexplained credit in the books of account despite the fact that the same were duly confirmed and accepted by Ld AO. The assessee relies on the judgement of Ld. High Court of Delhi in case of Ranbaxy Laboratories Ltd V/s CIT [ 60 DTR 77 (2011)], wherein it has been held that where reasons for initiation of proceedings cease to exist/survive, no assessment can be framed u/s 147/148.

6) That under the facts & circumstances of the case the Ld. A.O. has erred under the law while making addition amounting to Rs. 53,900/- being unexplained expenditure which were not subject matter of Notice u/s 148 of the Act.

7) That any other grounds of appeal may be added/deleted or amended at the time of hearing. Therefore, it is prayed that addition of Rs. 27,48,900/- may please be deleted or any other order as deemed fit may please be passed.

8) That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the actions of Ld. Assessing Officer in computing the total income of the appellant at Rs.26,78,310/- u/s 147/143(2) of the Act.”

information that the assessee had taken accommodation entries

amounting to Rs.15,00,000/- from the companies run and controlled by

Himanshu Verma. Accordingly, notice was issued. AO found that

3 ITA No.6137/Del./2019 during the year, the assessee company had not done any business

activities but he noted that the principal business activity was to provide

Cold Storage Services and assessee also filed the copy of the bank

account nos.37773 and 53850 maintained with Punjab National Bank.

Assessee had also given information of unsecured loans. An affidavit of

the Director stating that the assessee company does not have any

transaction with White Collar Management Pvt. Ltd. during FY 2010-11

was also furnished. AO noted that the report of the Investigation Wing

contained the list of beneficiaries in which the name of the assessee

company also appeared that it has received an amount of Rs.15,00,000/-

from White Collar Management Pvt. Ltd. AO issued notice u/s 133 (6) of

the Income-tax Act, 1961 (for short 'the Act') seeking information as to

the transaction with the assessee company, however the notice received

back with the remarks ‘no such person’. During the course of

assessment, Assessee has submitted the confirmation of unsecured loans

from the following persons :-

Name Amount Dimple Goyal 3,50,000/- Bharto Devi 66,000/- Anil Kumar, Jitnendar Kumar 6,01,000/- Vinita Goel 4,50,000/- Suman Goel 4,00,000/- Ritu Singhal 5,70,000/- Ram Goel 2,58,000/- Total 26,95,000/-

4 ITA No.6137/Del./2019 AO issued notice u/s 133 (6) of the Act to these parties. AO observed

that examination of the bank account showed that there was no single

entry of Rs.15,00,000/-. However, assessee has received entries of

different amount from the different persons amounting to Rs.26,95,000/-.

AO came to the opinion that these persons from whom assessee had

received loans are intermediary of transfer of entries. For this hypothesis,

he held that these persons’ ITRs showed income between Rs.2 – 3 lakhs

and persons earning such income cannot give loan ranging to Rs.2 – 5

lakhs. From these aspects, AO gathered that assessee is not only

beneficiary of Rs.15,00,000/- but an amount of Rs.26,95,000/- has been

received by the assessee through entry operators. Hence, he made the

addition of Rs.26,95,000/-.

the ground that reasons to believe did not belong to the assessee and AO

had not given reply to the objections raised and merits were also

challenged. As regards assessee’s plea that reasons do not belong to the

assessee, ld. CIT (A) was of the opinion that the satisfaction note referred

to the investigation wing where accommodation entries has been taken by

M/s. Goyal Grain Merchants Pvt. Ltd. (PAN : AACCG5042R) during AY

2011-12 amounting to Rs.15,00,000/- from one of the Himanshu Group

company i.e. White Collar Management Pvt. Ltd.. However, the name of

5 ITA No.6137/Del./2019 the assessee company was M/s. Golden Century Foods Products Pvt. Ltd.

having PAN AADCG5937A and the loan was not taken from the said

White Collar Management Pvt. Ltd.. Ld. CIT (A) held that though the

assessee is correct that the AO has mentioned M/s. Goyal Grain

Merchants Pvt. Ltd. at the first place as assessee’s name, but when the

AO made the specific reference of the name of the beneficiary entry, he

did mention the correct name of the assessee. Ld. CIT (A) proceeded to

uphold the legality of the reopening. He held that use of different name is

a curable defect. Ld. CIT (A) did not address the assessee’s objection

that assessee’s objections have not been replied or disposed off. He also

rejected assessee’s contention that no addition can be done if the

additions on the reasons for reopening are not sustained. He further

upheld the lack of creditworthiness of the parties which has been noted by

the AO and confirmed the addition of Rs.26,95,000/-. He further upheld

2% commission paid (hypothetical sum) for obtaining the

accommodation entry of Rs.26,95,000/- amounting to Rs.53,900/-.

heard ld. DR for the Revenue and perused the records. None appeared on

behalf of the assessee. Adjournment request has been rejected as for a

quite number of occasions assessee has been seeking adjournments.

6 ITA No.6137/Del./2019 6. Upon careful consideration, firstly I note that in the reasons

recorded, the name of the assessee and person from whom the bogus

accommodation entry was received was M/s. Goyal Grain Merchants Pvt.

Ltd. having PAN : AACCG5042R and Rs.15,00,000/- was said to have

been received from White Collar Management Pvt. Ltd.. While in the

case of the assessee the name of the assessee is Golden Century Food

Products Pvt. Ltd. and after examination of the bank statement, AO has

accepted that there was no entry of Rs.15,00,000/-. However, other small

loans were received by the assessee amounting to Rs.26,95,000/-. This

has been presumed to be encompassing Rs.15,00,000/-. There is no basis

whatsoever for this hypothesis. The name of the party and PAN number

in the information received is totally different that of the assessee.

Hence, by no stretch of imagination, it can be said that it is a curable

defect. In my considered opinion, the defect is fatal. Furthermore,

assessee’s objections have not been disposed off. This is another flaw

which is fatal and the assessment is liable to be quashed on that count.

As regards the merits of addition of Rs.26,95,000/-, the only case of the

Revenue is that these persons have earned small amount so they are not

capable of giving loans of Rs.3 – 5 lakhs. I note that these persons have

given confirmation and no adverse material is available with the

Revenue. There is no presumption that the people having smaller income

7 ITA No.6137/Del./2019 cannot make small savings. Moreover, there is no linkage on record of these persons with White Collar Management Pvt. Ltd., the company

allegedly providing bogus entries. Hence, on merits also, the addition is totally on hypothesis which is not sustainable in law. 7. In the result, this appeal filed by the assessee stands allowed. Order pronounced in the open court on this 17th day of November, 2022.

Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Dated the 17th day of November, 2022/TS