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Income Tax Appellate Tribunal, DELHI BENCH, ‘SMC-1’: NEW DELHI
Before: SHRI R.K. PANDA
ORDER This appeal filed by the assessee is directed against the order dated 18.10.2018 of the Ld. CIT(A)-4, New Delhi relating to Assessment Year 2008-09.
None appeared on behalf of the assessee despite service of notice through RPAD. A perusal of the record shows that this case was getting adjourned from time to time due to non-appearance of the assessee. It is observed that every time the notice issue through RPAD was returned back un-served by the postal authority with the remark ‘no such farm at this address’. Even the letter issued by the registry fixing the appeal for hearing today i.e. 17.11.2021 was also returned unserved by the postal authority with remark ‘no such farm at this address’. Therefore, I deem it proper to decide this appeal on the basis of material available on record and after hearing the ld. DR.
Facts of the case, in brief, are that the assessee is a company and filed its return of income on 30.06.2008, declaring loss of Rs.1,140/-. On the basis of information received from Investigation Wing of the Income Tax Department that the assessee has received share application money from the companies floated by Shri Taurn Goyal, who is an entry operator and that the assessee has received accommodation entry of Rs.20 lakhs as share application money, the case of the assessee was reopened after recording reasons and after obtaining necessary approval from the Ld. PCIT. Accordingly, notice u/s 148 of the Act was issued. However, there was no compliance to the said notice from the side of the assessee.
Subsequently, the assessee filed a letter requesting the Assessing Officer to treat the original return filed as return of income in response to notice u/s 148 of the Act.
During the course of assessment proceedings, the Assessing Officer asked the assessee to substantiate the share application money of Rs.20 lakhs obtained by him from the following companies:-
I. M/s Taurus Iron & Steel Company Pvt. Ltd. Rs.10,00,000/- II. M/s Thar Steels Pvt. Ltd. Rs.10,00,000/- 5. Since, the assessee failed to discharge the onus cast on it by proving the identity and creditworthiness of the investor companies and the genuineness of the transaction, the Assessing Officer made addition of Rs.20 lakhs to the total income of the assessee.
Similarly, the Assessing Officer made addition of Rs.7,50,000/- u/s 68 of the Act in respect of two loan amounts i.e. Rs.3,50,000/- claimed to have been received from one Shri Achee Lal Chauhan and Rs.4,00,000/- from one Shri Moorli Das on the ground that the assessee failed to discharge the onus cast on it by proving the identity and creditworthiness of the loan creditors and the genuineness of the transaction.
The Assessing Officer also made the addition of Rs.55,000/- u/s 69C of the Act being the expenditure incurred for obtaining the above accommodation entries. The Assessing Officer, accordingly, determined the taxable income of the assessee at Rs.28,03,860/-
In appeal, the Ld. CIT(A) upheld the action of the Assessing Officer.
Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:-
“New Legal ground numbered as ground no 1 1. That the initiation of reassessment proceedings u/s 147 of the I.T. Act, 1961 as well as the resultant order of reassessment flowing there from dated 14.03.2016 passed by the Id. AO Ward-ll(3), New Delhi u/s 143(3)/144 r.w.s. 147 of the Act for AY 2008-09 is illegal and is bad in law for want of requisite jurisdiction, as the mandatory requirements to assume jurisdiction did not exist or have not been complied with apart from being contrary to the principles of Natural Justice and consequently, the same is liable to be annulled, more so in view of the latest judgement of the hon'ble SMC Bench of the IT AT Delhi in Neelkanth Plywood Pvt. Ltd. Vs. ITO Ward-18(l), New Delhi in ITA No.-6702/Del/2018 wherein the ITAT, after considering various decisions of the jurisdictional high court, declared the reassessment proceedings illegal and void under similar facts and circumstances. New Legal ground numbered as ground no 2 2. That the reasons were recorded mechanically on the basis of general observations of the Investigation Wing of the Department without even verification of the original assessment records of the appellant and the reasons recorded do not show any application of mind nor the same show any belief independently arrived at, which is the basic pre requisite for issuing notice u/s 148 of the Act. New Legal ground numbered as ground no 3 3. That the reasons have been recorded on the basis of borrowed satisfaction and there is no live link or nexus between the information so received and formation of belief by the Assessing Officer for escapement of income. New Legal ground numbered as ground no 4 4. That on the facts and in the circumstances of the case, where the notice u/s 148 of the Act for A.Y. 2008-09 was issued on 25.03.2015 and the notice did not accompany the copy of reasons recorded for re-opening the assessment as required u/s 148(2) of the Act, in view of the ratios laid down by the Hon'ble Delhi High Court, in the case of Haryana Acrylic Manufacturing Co. Ltd. v. Commissioner of Income-tax 308 ITR 38(para 24), the assumption of the jurisdiction by the Id AO was wrong. New Legal ground numbered as ground no 5 5. That the order of reassessment passed on merits, in the absence of material on the basis of which reassessment was initiated having been not confronted to the appellant, is contrary to the principle of natural justice, illegal, without jurisdiction and therefore, liable to be annulled. New Legal ground numbered as ground no 6 6. That on the facts and in the circumstances of the case, the addition of Rs.2,.00,000/- made by the Id. AO is otherwise also, untenable in the eye of law having been made without providing opportunity to cross examine the material or persons, despite specific request made in this behalf, on the basis of which or whose statements, if any, the allegations have been made against the assessee company and without following the principles of natural justice. Existing ground no 1 renumbered as ground no 7 7. That on the facts and on the circumstances of the case, in his order dated 18.10.2018, the Id CIT (A)-4, New Delhi was wrong in holding the addition of Rs.20,00,000/- made by the Id AO, Ward-II(3),New Delhi by treating the share application money received by the company as unexplained income u/s 68 of the Income Tax Act,1961.
Existing ground no 2 renumbered as ground no 8 8. That on the facts and on the circumstances of the case, the Id CIT (A)-4, New Delhi was wrong in holding the addition aggregating to Rs. 7,50,000/- made by the Id AO, Ward- ll(3),New Delhi by treating the unsecured loans received by the company as unexplained income u/s 68 of the Income Tax Act,1961. Existing ground no 3 renumbered as ground no 9 9. That on the facts and on the circumstances of the case, the Ld CIT(A)-4, New Delhi was wrong in holding the addition of Rs. 55,000/- made by the Id AO, Ward- 11 (3),New Delhi by computing @2% of Rs 27,50,000/- (Share Application Money Rs 20,00,000/- and Unsecured Loans Rs 7,50,000/-) as unexplained expenditure u/s 69C of the 'Act' incurred for obtaining the alleged accommodation entries. Existing ground no 4 renumbered as ground no 10 10. That the appellant craves leave of this hon'ble court to add, amend, alter or withdraw any ground at the time of hearing.”
I have heard the Ld. DR and perused the records. It is an admitted fact that the assessee, during the course of assessment proceedings, has failed to discharge the onus cast on it by proving the identity and creditworthiness of the share applicants and the genuineness of the transaction to the extent of Rs.20 lakhs received from the two companies, the details of which are given at para 4 of this order. Similarly, the assessee also failed to discharge the onus cast on it by proving the identity and creditworthiness of the two loan creditors and the genuineness of the transaction from whom the assessee obtained loan of Rs. 7,50,000/-, the details of which are given at para 6 of this order. I do not find any infirmity in the order of the Ld. CIT(A) in upholding the addition made by the Assessing Officer u/s 68 of the Act totalling Rs.27,50,000/- and the amount of commission incurred for obtaining such accommodation entries of Rs.55,000/-. I have gone through the order of the Ld. CIT(A) and find that the Ld. CIT(A) in a very detailed order has given justifiable reasons while upholding the additions made by the Assessing Officer. There is nothing on record to take a contrary view than the view taken by the Ld. CIT(A) while upholding the validity of reassessment and sustaining the addition on merit. I, therefore, uphold the order of the Ld. CIT(A). The grounds raised by the assessee are dismissed.
In the result, the appeal filed by the assessee is dismissed.
The Order was pronounced in the open court at the time of hearing itself i.e. on 17.11.2021.