CIT vs. DALMIA BROS PVT LTD

Two issues are raised by the Revenue in this appeal in the case of Dalmia Brothers Private Limited, which pertains to the assessment year 2006-07. .

The first issue, which pertains to the disallowance of salary expenses, the findings recorded by the Commissioner of Income Tax (Appeals) [CIT(A)] and Income Tax Appellate Tribunal [ITAT] are to the effect that salaries were paid to different employees and full details, i.e. their names, addresses, qualifications and nature of duties were furnished. The salaries were reasonable and commensurate with the qualifications and work done by each employee. They have referred to the length of service. The findings recorded by the CIT(A) and . ITA 298/2012 page 1 of 5 . . ITAT are the findings of fact. It is noticed that in the previous years, similar adhoc lump sum disallowances were made by the Assessing Officer, but were deleted in the appellate proceedings. One such order has been upheld by the High Court in ITA No. 1340/2009. In the said appeal the same question was raised but the appeal of the Revenue was dismissed vide order dated 16.12.2011. .

The second issue raised by the Revenue relates to bogus share application money from three companies, namely, M/s Carissa Investment Private Limited of Rs.45,50,000/-, M/s Lovely Investment Private Limited of Rs.20,00,000/- and M/s Altar Investment Private Limited of Rs.4,75,000/-. The findings recorded by the Assessing Officer are cryptic. He did not conduct any investigation and verification. The entire discussion in the assessment order is confined to one small paragraph which for the sake of convenience, is reproduced:- . ?The assessee during the course of assessment proceedings was asked to furnish ledger account of these parties, duly confirmed and their Balance Sheet as on 31/03/2006. However, neither of the details was furnished by the assessee. The assessee only furnished the unsigned ledger account of these companies of in-between period i.e. of a particular day/days. The said accounts are running accounts and nowhere it is mentioned that any share application money has been given by the said parties to the assessee company. As the assessee has not able to prove the genuineness of . ITA 298/2012 page 2 of 5 . the transaction and creditworthiness of the parties. Accordingly, the said cash credits in the books of the assessee is treated as unexplained and is added to the income of the assessee as per the provision of section 68 of the Income Tax Act. As the assessee has deliberately furnished inaccurate particulars of its income on this issue, in order to conceal his income and evade the tax, the penalty proceedings under section 271 read with section 274 of the Income tax act is initiated against the assessee on this issue.? . . .

The CIT(A) dealt with the said question in depth and has referred to various documents and papers which were filed by the assessee. Evidence/material relied upon has been reproduced in the form of a chart, which is again for the sake of convenience is reproduced as under:- . Sr. No. . Name . Address . Amount . Mode of Payment . Evidences furnished by the appellant. . . . 1. . M/s Carissa Investment Private Limited . 6/40, Chittranjan Park, New Delhi-110019 . . . 4,45,000/- Cheque No. 538550 dated 16.04.2005 and Rs.25,50,000/- vide cheque no. 504989, dated 26.05.2005 drawn on Centurion Bank, New Delhi 110060 .

The CIT(A) had also called for the remand report from the Assessing Officer who did not conduct any further investigation/verification or record statements. In the remand report, it was stated that the assessment order was passed on the basis of the information received from the investigation unit/wing. No further material or evidence to controvert the assessee was placed on record. The assessee had filed an affidavit of one Tarun Goel stating that the respondent/assessee had not arranged for bogus/accommodation entries as stated by the Assessing Officer. . ITA 298/2012 page 4 of 5 .

The ITAT in these circumstances has affirmed the order of the CIT(A). .

Before us, neither the investigation report nor the statements or documents have been filed by the Revenue. .

In this case Reveue cannot succeed as they have failed to conduct necessary inquiries and investigations which were required and mandatory when documents were placed on record by the assessee. On said issue, in view of the findings of fact recorded above, no question of law arises. .

The appeal is dismissed. . . . . . SANJIV KHANNA, J. . . . . . R.V.EASWAR, J. . MAY 16, 2012 . AK . . . . . . . . . . . . . . . . . . . . . . . . . . . ITA 298/2012 page 5 of 5 . . . $ 31 .