ITO, NEW DELHI vs. M/S. CAPITAL TOWN PLANNERS PVT. LTD., NEW DELHI

This appeal is filed by the revenue against the order of the learned Commissioner of Income-tax (Appeals)-V, New Delhi dated 01.08.2013, wherein the learned Commissioner of Income-tax (Appeals) has deleted the addition made by the AO amounting to Rs.3517500/- on account of undisclosed income. Brief facts of the case is that the assessee is a private limited company who 2. filed its return of income showing NIL income on 30.11.2005. Subsequently notice 148 of the Act was issued on 28.03.2008 in view of report received by the assessee from Investigation Wing. Based on that addition of Rs.35 lacs is made on account of Rs.20 lacs from M/s. Ankur Distributors Pvt. Ltd. and Rs.15 lacs from M/s. Goel Textile Industries Pvt. Ltd. Against this order the assessee preferred an appeal before the learned Commissioner of Income-tax (Appeals), who upheld the reopening of the assessment and on the merit the addition was deleted against this revenue is in appeal contesting the deletion of addition of merit by CIT(A).

Against this the ld AR of the assessee submitted that the issue is fully covered in favour of the assessee by decision of ITAT in the case of Excellent Town Planners P. Ltd. in wherein the same party were involved and therefore the issue is squarely covered in favour of the assessee. He took us through fact of that case stated in Para No.2 of that decision and also took us the findings of the co-ordinate bench at Page 4 of that order from Para 8 to 10. We have carefully considered the rival contentions on the identical facts and 5. circumstances coordinate bench has deleted the addition with respect to the same parties namely M/s. Ankur Distributors Pvt. Ltd. and M/s. Goel Textile Industries Pvt. Ltd. for the same assessment year i.e. 2003-04. The co-ordinate Bench has dealt with this issue as under:- “8. We have duly considered the rival contentions and gone through the record carefully. Section 68 of the IT Act 1961 provides that where any sum is found credited in the books of an assessee maintain for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited, may be charged to income tax as the income of the assessee of that previous year. Thus in order to demonstrate the source of the credit, appearing, in the books an assessee is required to establish the identity of the creditor, his creditworthiness and genuineness of the transaction. If all these 3 ingredients are proved by an assessee then his explanation about the source of the credits appearing in the books of accounts could be found satisfactory. In the present case when Assessing Officer confronted the assessee with regard to sum of Rs.70,00000/- received from 3 companies. The assessee has submitted the details extracted in paragraph -3 of the present order. In a way assessee has discharged its onus put upon it by Section 68 of the IT Act. Once the assessee has submitted basic documents and offered an explanation, then it is the duty of the Assessing Officer to verify those documents and thereafter point out as to how the evidence submitted by the assessee is not reliable. The Assessing Officer did not assign any reason as to why the explanation of the assessee is not tenable. He simply observed that explanation of the assessee is not acceptable. He fail to give reasons, as to why it is not acceptable. He has not disclosed what is the nature of information supplied by the Investigating Wing, How that information has an any nexus with the assessee or its share applicants. The Assessing Officer has not called for Sh. Sanjay Mohan Aggarwal for cross-examination, even he has not supplied to his statement to the Assessee which was recorded from the back of the assessee. The Page 3 of 4 Assessing Officer has merely made general observation pointing out the modus operandi of the entry operators. 9 Ld First Appellate Authority has looked into all these aspects and there after deleted the addition. A similar addition was deleted in the case of Goyal Sons, Goyal Estate which has been upheld by the Hon‟ble Delhi High Court also. The brief order of Hon‟ble Delhi High Court dated 11.04.2012, read as under: “CORAM: HON‟BLE MR. JUSTICE SANJIV KHANNA HON‟BLE MR. JUSTICE R.V. EASWAR ORDER 11.04.2012. The Revenue by this appeal under Section 260A of the IT Act, 1961 (?Act?, for short) impugns the order dated 05.08.2011 passed by the Income Tax Appellate Tribunal (?Tribunal?, for short) in the case of Goel Estate Sons Pvt. Ltd. In relation to assessment year 2006-07.

Learned counsel for the appellant submits that the order passed by the Tribunal is perverse and in fact one Shri S.H.Mallick had given a statement, which is re-produced in the assessment order saying that he had provided accommodation entries and the said statement conclusively proves that share money of „30,00,000/- allegedly received by the respondent-assessee from 5 companies are sham and bogus transactions.

We have examined the said contention and find that the assessee during the course of assessment proceedings has filed confirmation letters from the companies, their PAN number, copy of bank statements, affidavits and balance sheet. Thereafter the Assessing Officer had asked the assessee to produce the said Directors/Parties. Assessee expressed its inability to produce them. The Assessing Officer did not consequent thereto conduct any inquiry and closed the proceedings. This is a case where the Assessing Officer has failed to conduct necessary inquiry, verification and deal with the matter in depth specially after the affidavit/confirmation along with the bank statements etc. were filed. In case the Assessing Officer had conducted the said enquiries and investigation probably the challenge made by the Revenue would be justified. In the absence of these inquiries and non-verification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The impugned order passed cannot be treated and regarded as perverse. The appeal is dismissed as no substantial question of law arises”.

The Ld DR at the time of hearing relied upon the judgment of Hon‟ble Delhi High Court in the case of Nova Promotors, it was pointed out to us by the Ld Counsel for the Assessee that the judgment in the case of Goyal Sons Golden Estate Pvt. Ltd. is subsequent to the judgment of Nova Promotors. In that case, the Assessing Officer had issued summons to the share applicants which were returned unserved. The assessee did not produce the share applicants however, subsequently, filed their affidavits. They suggest that an inquiry made by the Assessing Officer in the case of Nova Promotors about the antecedents of the share