DCIT, ROHTAK vs. M/S. KLA FOOD (INDIA) LTD., NEW DELHI

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ITA 2849/DEL/2015Status: DisposedITAT Delhi10 August 2016AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found no infirmity in the CIT(A)'s deletion of the addition, agreeing that the AO's addition was based on the premise of accommodation entries without sufficient evidence to the contrary. The assessee had provided assessment orders for the investing companies where nothing adverse was found.

What were the facts?

The Revenue appealed the deletion of an addition of Rs. 35,00,000 made by the Assessing Officer (AO) regarding share application money introduced by the assessee. The AO believed the money came from accommodation entry providers, while the assessee claimed it was loans through banking channels with supporting documents.

What were the issues?

Whether the addition made by the AO on account of share application money was justified, and whether the reopening of assessment under Section 147 was valid.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151,Section 153A,Section 153C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’, NEW DELHI

Before: SHRI J. SUDHAKAR REDDY

The appeal is filed by the Revenue directed against the order of the Ld. Commissioner of Income Tax (Appeals), Rohtak dated 9.3.2015 pertaining to the Assessment Year (A.Y.) 2010-11 on the following grounds.

“1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law and in facts in deleting the addition amounting to Rs.35,00,000/- made by the A.O. following the information received from the DDIT (Inv,.) Unit VI(2), Delhi on the issue that the company had introduced share application money from the accommodation entry providers.

2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law and in facts in deleting the above said addition merely relying on the submission filed by the assesee that all transactions were made through banking channel and all documents were produced by the assessee related to share transactions. Thus, CIT(A) has failed to appreciate the findings of the AO and Investigation Wing.

3. The applicant craves leave to add, amend, alter, modify, delete and or change any of the grounds on or before the date of hearing.” 1.1. The assessee has filed Cross Objection on the following grounds.

“1. The initiation of proceedings u/s 147 of the Act and framing of assessment u/s 147/143(3) of the Act without satisfying the statutory provision contained in the Act were without jurisdiction and therefore be quashed as such.

2. That since there was no tangible and, relevant material on record to allege, assume or even have a prima facie opinion that any income of the appellant has escaped assessment the initiation of proceedings u/s 147 of the Act was not in accordance with law.

3. That notice u/s 148 of the Act even without satisfying the statutory mandate provided in s.151 of the Act was not a valid notice and hence, untenable. It is therefore, prayed that it be held that notice issued u/s 147 of the Act and assessment framed u/s 147/143(3) of the Act were without jurisdiction and therefore, be quashed and Cross Objection of the appellant be allowed.”

2.

No person is present in the Court on behalf of the Revenue. The Revenue has filed an application for adjournment of all the cases which are on board today on the ground that “Sr.D.R. is not available”. I am informed that, for the entire week, the department would be seeking adjournments in 2 all the cases posted before this SMC Bench on the same ground. Under the circumstances, as the Bench cannot be allowed to collapse, I reject some of these applications filed by the Revenue for adjournments and dispose of the case ex parte qua the Revenue on merits.

3.

Heard the Ld.Counsel for the assessee.

4.

The Ld.CIT(A) has at para 4 of the order held as follows. “4. I have examined the submissions made by the assessee and the facts on record. The addition of Rs.35,00,000/- has been made on the issue of investment made by seven companies. The AO has made the addition on the ground that the assessee has not been able to explain the investment as “deep and concrete enquirieis in this regard ahve been made by the DIT (Inv.)- II, New Delhi on the basis of which proceedings u/s 148 were started in the case.” The AO has just stated that the transactions are ‘apparently not genuine.” The appellant had submitted copies of assessment orders of the afore mentioned companies which were assessed u/s 153C/153A of the Income Tax Act, 1961. Nothing adverse was found during assessment. In the absence of any evidence to the contrary in the case of companies who made the investment, the addition of Rs.35 lakhs was uncalled for. I, therefore, delete the same. The addition of Rs.51,04,609/- on account of loss is also deleted. This ground of appeal

is allowed.”

5. I find no infirmity in this finding of the First Appellate Authority. The Assessing Officer has made the addition in question on the premise that, this amount of Rs.35 lakhs was taken to accommodate book entries in the shape of share capital and whereas the actual fact is that these amounts were loans taken by the assessee company.

6. Hence the Revenue’s appeal is dismissed.

7.

The Cross Objection is on the issue of reopening. As I have dismissed the Revenue’s appeal, adjudication of the Cross Objection would be an academic exercise.

8.

In the result the C.O. is dismissed. 9. In the result Revenue’s appeal as well as assessee’s C.O. are dismissed. Order pronounced in the Open Court on 10th August, 2016.

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