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Income Tax Appellate Tribunal, DELHI ‘D’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI KULDIP SINGH
This appeal by the Revenue and is preferred against the order of the Commissioner of Income Tax [Appeals] –VIII, New Delhi dated 30/04/2015 pertaining to assessment year 2006-07.
2. The grievance of the assessee is that the ld. CIT(A) erred in not treating the share application money received by the assessee as its own concealed income introduced in the garb of share application money.
Briefly stated, the facts of the case are that assessment u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] was framed vide order 28.03.2014. Assessment was reopened on the basis of information received from the DIT [INV], New Delhi that during the F.Y. 2005-06, the assessee company was the beneficiary of accommodation entries as follows:
SI Amount Cheque No. & Concern from which received Date No. 1 Rs. 5,00,000/- 46081, 10.01.2006 M/s Sam Portfolio Pvt. Ltd. Rs. 5,00,000/- 700738, 24.10.2005 M/s Chotti Leasing & Finance Pvt. Ltd. 2 3 Rs. 4,00,000/- 604606, 12.12.2005 M/s Chotti Leasing & Finance Pvt. Ltd. 4 Rs. 4,00,000/- 604607, 12.12.2005 M/s Chotti Leasing & Finance Pvt. Ltd. 5 Rs. 5,00,000/- 604619, 05.01.2006 M/s Chotti Leasing & Finance Pvt. Ltd. 6 Rs. 5,00,000/- 604621, 10.01.2006 M/s Chotti Leasing & Finance Pvt. Ltd. 7 Rs. 5,00,000/- 604622, 12.01.2006 M/s Chotti Leasing & Finance Pvt. Ltd.
Taking a leaf out of the aforesaid information, the Assessing Officer issued a show cause notice to the assessee to file details of share application money received during the year under consideration and confirmation from the parties who have given share application money. The assessee filed details of share application money received during the year.
On perusal of these details, the Assessing Officer observed that the parties who have given share application money, were appearing in the list of entry provider companies given by Shri Aseem Gupta in his statement during search/survey/assessment proceedings. The names of the companies are as follows:
M/s Sam Portfolio Pvt. Ltd.
M/s Sushre Securities Pvt. Ltd. 3. M/s KMC Portfolio Pvt. Ltd. 4. M/s Chotti Leasing & Finance Pvt. Ltd. 5. M/s Ravnet Solutions Pvt. Ltd.
The Assessing Officer issued summons u/s 131 of the Act to these companies seeking personal deposition of the principal officers of these companies. However, no compliance was made.
7. The assessee was informed that none of the principal officers complied with the summons issued u/s 131 of the Act. Accordingly, the assessee was asked to produce the principal officers. On 28.03.2014, the assessee produced the Director of M/s Chotti Leasing & Finance Pvt. Ltd, M/s Sam Portfolio Pvt Ltd, M/s KMC Portfolio Pvt Ltd and M/s Sushree Securities Pvt. Ltd.
The Assessing Officer recorded the statement of Shri Aseem Gupta, Director of M/s Sushre Securities Pvt Ltd, Shri Wasim Mirza, Director of Chotti Leasing & Finance Pvt Ltd and M/s KMC Portfolio Pvt Ltd. The Director of Ravnet Solutions Pvt Ltd could not be produced and the assessee sought more time to produce him.
Shri Aseem Gupta and Shri Wasim Mirza, in their statements stated that their companies have not provided accommodation entries but they entered into genuine transactions with the assessee company.
The Assessing Officer rubbished the statement as tutored statements and observed that Shri Aseem Gupta himself admitted on oath during the course of survey/search/assessment proceedings that he was indulged in the business of providing accommodation entries.
Drawing support from the information from the INV Wing and contradictory statement of Shri Aseem Gupta, the Assessing Officer came to the conclusion that the share application money given by the aforesaid five companies was nothing but unaccounted money of the assessee and, accordingly, made addition of Rs. 90 lakhs u/s 68 of the Act.
The assessee carried the matter before the ld. CIT(A) and vehemently stated that the assessee has discharged the initial onus cast upon it by provisions of section 68 of the Act, in as much, as the identity of the subscriber was established, the genuineness of the transactions have been proved and the capacity has also been established.
After considering the facts and submissions, the ld. CIT(A) observed that the assessee has filed the following documents:
i) copy of bank statement of the account in which money was received; ii) confirmation; iii) copy of bank statement; iv) acknowledgement of return of income; v) audited balance sheet of the case; vi) annual return of the company.
The ld. CIT(A) further observed that both Shri Aseem Gupta and Shri Wasim Mirza have denied having given hawala entries to the appellant. The ld. CIT(A) further observed that this is the first year of the appellant company which has not started any business activities. Therefore, it cannot be presumed that some income was generated by the company which was routed through hawala entry again in the hands of the company. The ld. CIT(A) was convinced that the assessee has discharged its initial onus and deleted the addition.
Aggrieved by this, the Revenue is before us.
The ld. DR strongly supported the findings of the Assessing Officer and read the relevant portion of the assessment order. It is the say of the ld. DR that the documents which were relied upon by the ld. CIT(A) do not find any mention in the assessment order and, therefore, the matter should be sent back to the file of the Assessing Officer for reconsideration.
On merits, the ld. DR relied upon the decision of the Hon'ble Delhi High Court in the case of Nova Promoters and Finlease Ltd 342 ITR 169.
Per contra, the ld. counsel for the assessee vehemently stated that the assessee has successfully discharged the onus and, therefore, once the onus is shifted to the Revenue, it is incumbent upon the Assessing Officer to bring some cogent material evidence on record to demonstrate that the share application money is nothing but the unaccounted money of the assessee. The ld. counsel for the assessee heavily relied upon the decision of the Hon'ble Delhi High Court in the case of Oriental International Company Pvt. Ltd 401 ITR 83.
Having heard the rival contentions, we have carefully perused the orders of the authorities below. There is no dispute that the information received from the office of the DIT [INV], New Delhi triggered the proceedings and the Assessing Officer, taking a leaf out of the said INV report, proceeded to verify the transactions entered into by the assessee with the five companies mentioned elsewhere. Three is also no dispute that all the transactions have been done through banking channel, duly recorded in the books of account of the assessee. When the assessee was asked to furnish details of share application money, the assessee not only filed confirmations but also copy of bank statement, report of income and copy of bank statement in which money was received. It is not the case of the Revenue that cash was found to be deposited in the accounts of five companies prior to subscribing the shares of the appellant company. It is also not the case of the Revenue that the assessee has produced cheques from the five companies by giving cash. No doubt there is a contradiction in the statement of Shri Waseem Gupta, but that alone cannot be a deciding factor once the corroborative evidences in the form of bank statements have been filed by the assessee. The Assessing Officer did not make any effort to examine the bank statement furnished by the assessee.
The Hon'ble Delhi High Court in the case of Oriental International Company Pvt. [supra] had the occasion to consider the following facts:
“The assessee claimed that some amount was received as share application money from various parties. The Assessing Officer was of the opinion that such large amounts of share application money needed to be probed further and, therefore, required the assessee to furnish particulars, which it did. The assessee provided details relating to the share application money provided by each of the entities, confirmation letters, board resolutions from each company, permanent account number details, copies of the memorandum and articles of association, Forms 18 and 32 and audited financial statements for the years 2004, 2005 and 2006, copies of pay orders which were used for the share application money, affidavits of directors and share investors were also furnished. The Assessing Officer considered the statement given by the directors of the share investing companies and was not satisfied with the materials furnished and held that the assessee had not discharged the onus of proving the genuineness of the identity of the applicants, the genuineness of the trans- actions or the creditworthiness of the investors. The Commissioner (Appeals). Held that the assessee had discharged the onus to prove the identity of the concerned share applicants and the Assessing Officer given by the directors. The Tribunal confirmed this.”
And held as under:
“The lone circumstance of a director disowning the document itself could not have constituted fresh material to reject the documentary evidence. The existence of the company as an income-tax assessee and that it had furnished audited accounts was not in dispute. Furthermore, its bank details too were furnished to the Assessing Officer. If the Assessing Officer were to conduct his task diligently, he ought to have at last sought the material by way of bank statements, etc., to discern whether in fact the amounts were infused into the shareholder’s account in cash at any pout of time or that the amounts were such as to be beyond their means. The Assessing Officer failed to do so. The Tribunal rightly set aside the addition made under section 68 of the Income-tax Act, 1961.”
In another judgment, the Hon'ble jurisdictional High Court of Delhi in the case of Fair Finvest 357 ITR 146 has held as under:
“ The assessee had filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the directors, Form 2 filed with the Registrar of Companies by such applicants, confirmations by the applicant for company's shares, certificates by the auditors, etc. Unfortunately, the Assessing Officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of M. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the Assessing Officer merely concluded on the basis of the enquiry report, which collected certain facts and the statements of M that the income sought to be added fell within the description of section 68 of the Income-tax Act, 1961. Therefore, the appellate authorities were right in deleting the addition made by the Assessing Officer.”
In this judgment, the Hon'ble High Court has considered the decision given by it in the case of Nova Promoters Ltd [supra] and distinguished it on facts.
The Hon'ble Supreme Court in the case of Gauri Prasad Bagaria and Others Vs. CIT 42 ITR 112 held that where the assessee's statement is believed, there is obviously material on which the finding is based; and to seek for other material was tantamount to saying that a statement made by an assessee in not material on which a finding can be given. The Hon'ble High Court further opined that the Tribunal having believed the assessee's statement, there was an end of the matter in so far as that fact was concerned, and if the finding was based upon a statement which was good material on which it could be based, no question of law really arose.
As mentioned elsewhere, the ld. DR vehemently stated that since there was no whisper of the documents in the assessment order, the matter should be restored to the file of the Assessing Officer.
On the peculiar facts of the case in hand, we do not find it fit it restore this issue to the file of the AO to decide the issue afresh as it would amount to giving second innings to the AO when sufficient material was available before him on record. For this proposition, we draw support from the decision of the Hon'ble Gujarat High Court in the case of Rajesh Babubhai Damania vs Commissioner Of Income-Tax order dated 28 June, 2000 reported in 251 ITR 541 [Guj] wherein it has been held as under:
“The Tribunal totally overlooked the assessment of evidence done by the Commissioner of Income-tax (Appeals) and dealt with the matter as if it was entertaining an appeal against the order of the Assessing Officer. There was no question of giving "one more innings" to the Assessing Officer. The appeals are not to be decided for giving "one more innings", to the lower authorities. In the appellate jurisdiction the appellate court has to consider whether there is justification for upsetting the order against which the appeal is filed. In this case, where the assessee had repeatedly produced the 13 creditors before the Income-tax Officer and had filed affidavits in support of the credit entries and also filed confirmations and given names and addresses of the concerned parties as well as proved repayment of the amounts by account payee cheques and done all that was within his power to prove the genuineness of the loans, the finding arrived at by the appellate authority on the basis of such reliable material could not have been so cursorily dealt with by the Tribunal for the purpose of giving "one more innings" to the Assessing Officer. It was the duty of the Tribunal to ascertain the reasons which were given by the Commissioner of Income-tax (Appeals) in whose order the order of the Assessing Officer had merged and not to base its decision merely on "a bit of negligence" of the Assessing Officer in not cross-examining the parties who were produced before him four to five times. In our opinion, the Tribunal has reached the conclusion which cannot reasonably be reached by anyone, and there is no warrant for restoring the matter to the Assessing Officer on such specious grounds as are given by the Tribunal.
We, therefore, hold that the Tribunal committed an error of law in restoring the matter to the Assessing Officer in the background of the facts on which no such conclusion could have been reached by any reasonable approach. The questions referred to us are accordingly answered in favour of the assessee and against the Revenue. The reference stands disposed of accordingly.”
Considering the facts in totality, in the light of judicial decisions discussed hereinabove, we do not find any error or infirmity in the findings of the ld. CIT(A).
In the result, the appeal filed by the Revenue is dismissed.