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Income Tax Appellate Tribunal, DELHI BENCHES : “H” NEW DELHI
Before: SHRI INTURI RAMA RAO & SHRI SUDHANSHU SRIVASTAVA
PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER This assessee’s appeal is directed against the order dated 8.10.2012 passed by the Ld. CIT(A) -19, New Delhi. The brief facts of the case as borne out from the records are that information was received from Director of Income Tax(Investigation), New Delhi in respect of beneficiaries who have taken accommodation entries in the form of gifts, share application, loans etc. Perusal of this information revealed that there were entries in the books of accounts of the assessee in its accounts maintained with ANZ Grindlays Bank and Standard Chartered Bank from M/s. Arpit Sales Corpn. and Mr. Vishal Aggarwal. The total
M/s. Topchem (India) vs. ITO amount of the entries worked out to Rs. 5 lacs taken in the month of February, 2002. On the basis of this information / details, the AO recorded reasons and belief for escaped income and after obtaining prior approval from the concerned authority issued notice u/s 148 of the Act. In compliance to the said notice, the assessee submitted that the original return filed vide acknowledgment No. 1975 dated 31.10.2002 may be considered as return filed in response to the notice u/s 148 of the Act. It is also seen from the records that assessment u/s 143(3) of the Act for the year under consideration was completed vide order dated 30.11.2004 in which the returned income of the assesee was accepted.
During the course of proceedings u/s 148 of the Act, summons u/s 131 of the Act were issued to Smt. Manju Aggarwal, Prop M/s. Arpit Sales and Shri Vishal Aggarwal for their personal deposition. However only letters of confirmation were received by post but neither Smt. Manju Aggarwal nor Shri Vishal Aggarwal deposed before the AO. It is in this background that the AO held that the assessee had failed to discharge the onus placed on him by the Act and accordingly a sum of Rs. 5 lacs was added back to the income of the assess u/s 68 of the Act. In the appeal before the Ld. CIT(A), the assessee raised as many as 12 grounds of appeal. However the Ld. CIT(A) relying on various case laws including that of the Hon’ble Delhi High Court in CIT vs. Nova Promoters & Finlease (P) Ltd. 342 ITR 169 (Del.) dismissed the appeal of the assessee and confirmed the addition of Rs. 5 lacs u/s 68 of the Income Tax Act.
3. In the appeal before us, the Ld. AR for the assessee has reiterated that the original assessment of the assessee was completed u/s 143(3) of the Act on M/s. Topchem (India) vs. ITO 30.11.2004. He submitted that the assessee had submitted details of share application money copies of confirmation ITRs and balance sheets of the persons making investments of share application money during the year at the time of original assessment proceedings itself. He drew our attention to pages 69 to 86 of the paper book filed by the assesee in support of his claim. He drew our attention to pages 69 to 72 which are copies of the order sheet and questionnaire of the AO requiring details of share application money received during the year. Pages 73 to 86 are copies of various documents submitted before the AO in response to his questionnaire regarding share application money received during the year. It is the AR’s contention that the receipts of Rs. 5 lacs were duly examined by the AO by making specific inquiries and verifying various documents and evidences filed during the course of assessment proceedings u/s 143(3). The Ld. AR further submitted that the assessment order was passed after examination of the evidences by the AO and as such there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment and that the AO had accepted the assesse’s claim after due deliberation. Ld. AO further submitted that subsequent issuance of notice u/s 148 has been issued after change of opinion formed earlier and these additions have been made without disproving the claim of the assessee and without adducing anything which would implicate the assessee negatively.
Ld. DR on the other hand supported the action of the AO and that of the Ld. CIT (A).
We have gone through the facts of the case and the material available before us and it is undisputed that the assessment was reopened on the basis of M/s. Topchem (India) vs. ITO information received from the investigation wing of the Department about the existence of accommodation entry providers and their modus operandi and the assessee’s name has also figured in the list of beneficiaries. Although the assessee had filed documents relating to the transactions at the time of original assessment proceedings, it is again an undisputed fact that the persons who were summoned u/s 131 of the Act to depose before the AO failed to do so. The Ld. AR had nothing to say as to why the persons could not present themselves before the AO. The fact that the share application money had been received through account payee cheques is, at best, neutral. Section 68 permits the AO to add the credit appearing in the books of accounts of the assessee if the latter offers no explanation regarding the nature and source of credit or if the explanation offered by him is not satisfactory.
The failure on the part of the assessee in producing the share applicants for deposition before the AO lends credence to the theory that the monies emanated from the coffers of the assessee company. Reliance is placed on the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Nova Promoters and Finlease (P) Ltd. (supra) wherein the Hon’ble Delhi High Court has held that where sums were shown as share application moneys and information had been received from investigation wing about the assessee being a beneficiary of accommodation entries, failure on the part of the share applicants to respond to summons would absolve the AO from the duty of proving that the monies emanated from the coffers of the assessee. On the facts of the case and respectfully following the judgment of the Hon’ble Delhi
M/s. Topchem (India) vs. ITO High Court in CIT vs Nova Promoters and Finlease (P) Ltd. (supra), we find no reason to interfere with the order of the Ld. CIT(A) and we uphold the same.
In the result the appeal of the assessee is dismissed.