COMMISSIONER OF INCOME TAX vs. KHUSHAGRA REAL ESTATE PVT LTD

* HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 26th May, 2010

ITA 498/2010

The Commissioner of Income Tax-II

… Appellant

Through: Mr.Sanjeev Sabharwal, Adv.

versus

Khushagra Real Estate P. Ltd.

… Respondent

Through: None

CORAM:

HON'BLE THE CHIEF JUSTICE

HON'BLE MR. JUSTICE MADAN B. LOKUR 1. Whether reporters of the local papers be allowed to see the judgment? Yes 2. To be referred to the Reporter or not?

No 3. Whether the judgment should be reported in the Digest?

DIPAK MISRA, CJ

This is an appeal under Section 260A of the Income Tax Act, 1961 (for short „the Act‟) by the Revenue challenging the propriety of the order dated 17th July, 2009 passed by the Income Tax Appellate Tribunal Delhi Bench (for short „the Tribunal‟) in ITA No.1505(Del)/2007 which pertains to Assessment Year 2000-01. 2. The factual matrix as is exposited are the assessment proceeding for the Assessment Year 2001-02 was completed by the Assessing Officer. Thereafter, the Assessing Officer taking approval of the Additional CIT, Range 5, New Delhi had reopened the assessment. Though the Assessee 2010:DHC:2940-DB

initially challenged the reopening of assessment, yet the same was not pressed before the Tribunal and hence, we will not dwell upon the same. 3. The Assessing Officer took note of certain transactions and came to hold that though the identity of the creditors was established, yet the creditworthiness of the subscribers and the genuineness of the transactions were not proved. He was also of the view that the source of the creditors was also not proved. Being of this view, the Assessing Officer assessed the Assessee and issued a notice of demand and further initiated a penalty proceeding under Section 271(1)(c) of the Act. 4. Being dissatisfied with the said order, the Assessee preferred an appeal before the CIT(A) and the Appellate Authority affirmed the order passed by the Assessing Officer. 5. Being dissatisfied with the said order, the assessee moved the Tribunal in appeal. The Tribunal has held as under: “2.2 We have considered the facts of the case and rival submissions. The details of share application money of Rs.26.57 lakh, received by the assessee in this year, are mentioned at page 2 of the assessment order. These details are reproduced below:-

Sl.No. Name of the company Figures as at 31.3.1999 Figures as at 31.3.2000 1. Himalayan Production & Estate P. Ltd.

500000/- 2. G.K. Consultants Ltd.

500000/- 3. Sasa Foods Pvt. Ltd.

500000/- 4. Cosmos Compu-Tracs Pvt. Ltd.

150000/- 5. Cosmos Financial Services P. Ltd.

500000/- 2010:DHC:2940-DB

500000/- Share application money 7000/- 7000/-

2.3. It is an admitted fact that confirmations from these parties have been filed and the money has been received through banking channel. The applicants are limited companies. In such a situation, the decision of Hon‟ble Supreme Court in the case of Lovely Exports (P) Ltd. (supra) is applicable. Respectfully following this decision, it is held that there was no justification for addition of Rs.26.50 lakh, made by the AO and sustained by the learned CIT(Appeals) u/s 68 of the Act. Thus, ground no.2 is allowed. In view thereof, it is not necessary to decide ground nos.3 and 4, which are in the nature of arguments based upon pre-existing decisions, for the reason that the facts of the case are covered by the latest decision of Hon‟ble Supreme Court mentioned above.”

CHIEF JUSTICE

MADAN B. LOKUR, J MAY 26, 2010 nm

2010:DHC:2940-DB