S.K. EMBROIDERY PVT. LTD. vs. COMMISSIONER OF INCOME TAX-III

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 437/2013 . S.K. EMBROIDERY PVT. LTD. ..... Appellant . Through: Ms.Rashmi Chopra, Advocate . . . versus . COMMISSIONER OF INCOME TAX-III ..... Respondent . Through: Mr.Amol Sinha, Advocate . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE SANJEEV SACHDEVA . O R D E R . 24.09.2013 . CM No.14057/2013 (for exemption) . Exemption allowed, subject to all just exceptions. . CM No. 14058/2013 (for condonation of delay) . There is delay of 56 days in re-filing of the appeal. . It is stated that the appeal was filed within time but was returned under office objections. Refiling took time as copy of the order of the Income Tax Appellate Tribunal had got misplaced. . For the reasons stated in the application, the delay in re-filing the appeal is condoned. . The application stands disposed of. . ITA 437/2013 . Appellant assessee has preferred this appeal relating to assessment year 2000-01 impugning the order of the Tribunal on two grounds. Firstly, the conditions for initiation of re-assessment proceedings were not satisfied and secondly, addition of Rs.13.5 lacs made by invoking Section 69A of the Income Tax Act, 1961 is not justified on facts and in law. . On the first contention, it is suffice to notice that this contention was not pressed during arguments. There is a good ground for not pressing the said contention. The appellant was not subjected to regular assessment under Section 143(3) of the Act and the return income was processed under Section 143(1). Subsequently, information was . received from the Investigating Wing that the appellant was one of the beneficiaries of accommodation entries provided by Teem Metals P. Ltd. and Changia Steels P. Ltd. . It is a matter of record that the appellant did received cheques of Rs.5 lacs and Rs.6 lacs dated 16.3.2000 and 24.3.2000 respectively, from Teem Metals Private Limited and a cheque of Rs.2.50 lacs from Changia Steels Private Limited dated 25.3.2000. The said cheques were duly encashed. . On the question of merits, we find that the Tribunal has recorded several findings of fact. The Tribunal has noticed that the appellant herein accepts that they had received Rs.13.50 lacs as stated above but no entry was passed in the books of accounts inspite of encashment of the cheques. The stand taken by the appellant was that this payment of Rs.13.50 lacs was refund by issue of cheques of Rs.6 lacs, 5 lacs and 2.5 lacs dated 28.3.2000, 31.3.2000 and 30.3.2000 respectively. Thus, as per the appellant, the entries were squared up during the financial year itself, and therefore not reflected in the balance sheet etc. However, it is noticed that the said cheques were encashed by the parties after a substantial time of about one year on 21.3.2001, 26.3.2001 and 5.10.2001, respectively. Thus the Tribunal came to the conclusion that substantial amount of money remained in the books of the company for a period of one year. The appellant had squared up the entry to show as if there was no transaction but, in fact, the money remained with the company. Regarding refund also no entry was made in the books. Learned counsel for the appellant could not explain how the cheques issued could be encashed after one year. The delay in encashment is not explained. It was further noticed that the claim of the assessee appellant was that the said money was received as share application money. However, no application forms were furnished. There was no written agreement between the parties. There were no trading transactions between the parties. Assessee could not produce any confirmation letter from Teem Metals Private Limited and Changia Steels Private Limited. The appellant is a limited company and before entering into any transactions with third persons of such nature, they and the appellant would and should have taken necessary precaution and ascertained the nature, goodwill and business aptitude of the parties concerned. . Keeping in view the aforesaid facts, we do not think the order of the Tribunal requires interference. . The appeal is, accordingly, dismissed. . . . . . SANJIV KHANNA, J . . . . . SANJEEV SACHDEVA, J . SEPTEMBER 24, 2013/sv . . . $ 6 .