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Income Tax Appellate Tribunal, DELHI BENCH “1-2, SMC”: NEW DELHI
Before: MS SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. These are the two appeals of the two different assessee of same group having common address and common grounds of appeal involving identical facts; therefore both these appeals are disposed of by this common order. In both these appeals there is a common addition u/s 68 of the income tax Act on account of share capital issued to various companies allegedly managed by the accommodation entry provider Mr. Praveen Jain confirmed by the ld CIT (A).
2. Del/ 2019 for AY 2008-09 is filed by Thar properties Pvt Ltd against the order of the ld CIT (A)-9, New Delhi dated 20.12.2018, Page | 1 wherein, the appeal filed by the assessee was dismissed confirming the action of reopening of the assessment as well as the addition of Rs. 15 lakhs as income of the assessee from undisclosed source u/s 68 of the Act.
Brief facts of the case shows that the assessee is a company. It filed its return of income on 30.09.2008 at Rs. 433/-. The Additional Director of Income Tax, New Delhi on 10.03.2014 forwarded a letter sharing of information of beneficiaries of accommodation entries provided by Shri Praveen Kumar Jain. Therefore, after obtaining necessary permission notice u/s 148 was issued on 18.09.2014. The assessee on 16.10.2014 requested that original return filed may be accepted. The copies of the reasons were also supplied to the assessee on 16.10.2014.
The ld AO noticed that the assessee has obtained share application money of Rs. 5 lakhs from Alka Diamond Industries Ltd and Rs. 10 lakhs from Kush Hindustan Entertainment Ltd. The ld AO asked the assessee to prove the necessary ingredients such as Identity, creditworthiness and genuineness of the transaction. In response to that the assessee submitted that Mr. Praveen Kumar Jain who has given the statement based on which the case of the assessee is reopened has already retracted the said statement as per affidavit dated 25.04.2014, therefore earlier statement is no longer valid. The ld AO noted that these are the companies managed by Mr. Praveen Kumar Jain. Perusal of the bank statement of these companies did not show any actual business transactions. Therefore, the ld AO asked the assessee to show the identity and creditworthiness of these parties. The assessee was also asked to produce the directors of that company. The assessee submitted that on 09.03.2016 the director of share applicant company has sought an adjournment and they have assured the assessee that they will depose before the ld AO, if proper time is given. However, none appeared till the date of passing order (from 9.3.2016 to 14.03.2016). consequently on 14.03.2016, the ld AO made an addition of Rs. 15 lacs u/s 68 by passing an order u/s 147 read with section 143(3) of the Act. The assessee preferred appeal before the ld CIT (A) who also dismissed it Page | 2 upholding the action u/s 147 of the act. on merits, He held that on the basis of information submitted by the assessee the creditworthiness and genuineness of the parties were not proved. Now the assessee has filed this appeal.
At the time of hearing the assessee submitted an adjournment letter through its Chartered Accountant that he was continuously in outstation for professional assignment and therefore he could not prepare, Therefore, matter may be adjourned for 20 days.
The ld DR submitted the details of several judicial precedents stating that addition has rightly been made. It was submitted that issue is squarely covered now by decision of Honourable supreme court in case of NRA Iron & Steel.
We have carefully considered request of assessee for adjournment. In this case addition has been made solely on the basis of the fact that the assessee on 09.03.2016 could not present the directors of the applicant companies. The assessee was called to produce them by letter of AO dated 04.03.2016 asking the assessee to produce them on 09.03.2016 and the ld AO passed an order on 14.03.2016. Even the directors of the share applicant company has stated by the assessee himself are ready to depose before the ld AO but they wanted some time. The ld CIT (A) did not deal with this aspect of the matter. Even before the ld CIT (A) there is no opportunity given to the assessee to produce the directors. Even the ld CIT (A) did not comment on this issue. The whole proceedings before the ld CIT (A) were only on the several judicial precedents for and against the assessee. In fact assessee was asked to produce the directors of the applicant companies only on 4/3/2016 to present them on 9/3/2016. The assessee is seeking further time to produce them, but there is now whisper on order about that. If the only issue of the revenue is that assessee failed to produce the directors of the applicant company, it is stated by the assessee that directors of applicant company has agreed to depose before ld AO but not on 9/3/2016 , as some time is requested. In view of this we therefore, reject the adjournment application of the assessee and in the interest of justice, we give one more opportunity to Page | 3