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Income Tax Appellate Tribunal, DELHI BENCH SMC NEW DELHI
Before: SHRI B.P. JAIN
ORDER This appeal of the assessee arises from the order of learned CIT(A), Meerut, vide order dated 02.09.2016 for the assessment year 2010-11.
The assessee has raised the following grounds of appeal. “The CIT(A) has erred in summarily rejecting the plea of the appellant company with respect to following a) That the learned Assessing Officer has erred in making addition u/s.68 of the Income Tax Act, 1961. b) That identity, creditworthiness and genuineness of the transactions have been proved beyond doubt. c) That the several observations as made and inferences drawn are untenable, incorrect, unwarranted.”
3. The brief facts of the case as are emanating from the order of the AO are reproduced hereinbelow: “3. The assessee was required to produce the directors of the two companies, namely, Mls Hum Tum Marketing Pvt. Ltd. & Mls Victory Software Pvt. Ltd., from whom it had made transactions, for statements vide order sheet entry dated 08.10.2014. The assessee has filed copy of account of both the companies, but he failed to produce them for statement. The assessee has also filed copy of bank transaction and copy of ITR-V for A. Y 2010-11 of both the parties. After careful observation of these documents, in the case of M/s. Hum Tum Marketing Pvt. Ltd, return income for A.Y 2010-11 was Nil and in the bank account, there were transfer entries which proving the fact of accommodation entires. In the case of Mls. Victory Software Pvt. Ltd., the return income was only Rs.16, 015/- and having the same kind of transaction which clearly indicates that these were only accommodation entries. But again the assessee was afforded opportunity to produce the depositors. But he failed to produce them and accordingly, summons u/s 131 of the I.T Act, 1961 were issued to Mls Hum Tum Marketing Pvt. Ltd & Mls Victory Software Pvt. Ltd. But both the summons were sent back undelivered. The assessee was communicated regarding the same and was required to show cause as to why the amount credited by them may not be added to the income of the assessee u/s 68 as the assessee failed to prove the creditworthiness, genuineness of transaction and identity of these parties.
4. As the assessee completely failed to produce or furnish the required details of these parties which prove their creditworthiness for amounting to Rs.10, 00, 000/- & Rs.15,00,000/- totaling to Rs.25, 00, 000/-. Even during the search operation made by the office of the director of Income tax (Inv.)-New Delhi, it revealed that both the parties were providing accommodation entries. Even multiple opportunities were afforded to the assessee to prove its claim by producing these parties, namely, Mls Hum Tum Marketing Pvt. Ltd & M/s. Victory Software Pvt. Ltd., but the assessee failed to avail these opportunities and the creditworthiness, genuineness and identity of the depositors remained totally unexplained at the end of the assessee and the same are, therefore, liable to add to be added to the total income of the assessee. Accordingly, the amount of Rs.10,00,000/- & Rs.15,00, 000/- totaling to Rs.25,00,000/- is added u/s. 68 of the I.T. Act, 1961 as unexplained cash credit ....”
4. Learned CIT(A) has confirmed the action of the AO.
5. I have heard the rival contentions and perused the facts of the case. It was brought to my notice by the learned counsel for the assessee, Mr. K. Sampat, Adv., to the order of the AO at pages 1 to 3 that the assessee has filed a copy of confirmation amounting to Rs.25 lakh towards subscription of share capital by two companies, namely, M/s. Hum Tum Marketing Pvt. Ltd. and M/s. Victory Software Pvt. Ltd. from whom the assessee made the transactions. The assessee filed the written submissions and all the documents as required. The assessee straightway was asked to produce directors of the two companies in this regard. Learned counsel for the assessee brought to my notice that the assessee of the said company for the impugned year u/s.153C/153A which are dated 28.03.2013 where the detailed scrutiny has been made of both the companies and no additions have been made on this account. The orders of both the companies are placed on record and no adverse view has been taken about the said companies by the Income Tax Department. On one hand, the Income Tax Department is accepting both the conditions as genuine and there is no question of their creditworthiness or identity, on the other hand, in the case of the assessee these companies are held to be accommodation entries giver. This approach of the department, cannot be accepted, especially, where the assessee has not been asked any questions on the identity, creditworthiness and genuineness of these companies and assessee having produced all the documents with regard to the said companies and no defect having been found out in such circumstances, therefore, the department cannot blow hot and cold in the same breathe. Therefore, the additions so made by the AO and confirmed by the learned CIT(A) is bad in law and is directed to be deleted. Learned counsel for the assessee has relied upon the decision of Hon’ble Delhi High Court in the case of ITO vs. Neelkanth Finbuild Ltd. reported in (2015) 70 SOT 368 (Del). The reliance is also placed in the case of Goel Som Golden State (P) Ltd decided by Hon’ble Delhi High Court in dated 11.04.2012 where the AO did not conduct any inquiry about the assessee to receive share capital from five companies treated as sham and bogus and appeal of the Revenue was dismissed by the Hon’ble Court. In the circumstances and facts of the case all the grounds of the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this day 20th April, 2017