Shri Shyam Sunder Infrastructure (P) Ltd. Vs ITO (ITAT Delhi)
Conclusion: Since assessee produced sufficient documentary evidences before AO to prove the identity of the Investor Companies, their creditworthiness and genuineness of the transaction and no evidence had been brought on record by AO to disprove the same, hence addition made under section 68 was deleted.
Held: AO had issued notice under section 148 after recording the reasons that assessee had been beneficiary of accommodation entries being provided by certain entry operators and received unexplained credits in its bank account during the assessment year under appeal. AO asked assessee to give details of the shareholders from whom share application was received during assessment year under appeal. Assessee submitted before AO that it had received share capital/premium money totaling to Rs.98 lakhs from 14 parties. Assessee furnished share application form, affidavit, copy of the return of income and copy of the bank account of all the share applicants. However, the summons issued under section 131 returned un-served. Assessee was asked to produce the Principal Officers of the share applicants, however, assessee failed to produce the same. AO therefore, made addition of Rs.98 lakhs under section 68 and also made addition of Rs.1,96,000/- on account of commission paid by assessee @ 2%. AO completed the assessment under section 144/147. It was held that assessee produced sufficient documentary evidences before AO to prove ingredients of Section 68. The Investors had directly confirmed making investment in assessee company in reply to the notice under section 133(6) at the appellate stage. Therefore, assessee had discharged its initial onus to prove the identity of the Investor Companies, their creditworthiness and genuineness of the transaction. No evidence had been brought on record by AO if assessee paid any commission to any person of RS.1,96,000/-. Therefore, there was no justification to make both the additions against the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-XI, New Delhi, Dated 31.01.2013, for the A.Y. 2003-2004.
2. We have heard the Learned Representatives of both the parties and perused the material on record.
3. Briefly the facts of the case are that in this case original return of income was filed on 30.05.2003 declaring income of Rs.14,156/-. Subsequently, notice under section 148 was issued on 22.03.2010 after recording the reasons that assessee has been beneficiary of accommodation entries being provided by certain entry operators and received unexplained credits in its bank account during the assessment year under appeal. The assessee was requested to file return of income under section 148 of the I.T. Act. In response to the same, the assessee filed letter Dated 04.2010 that original return filed on 30.05.2003 may be treated as return filed in response to notice issued under section 148 of the I.T. Act. The assessee asked for copy of the reasons recorded under section 148 of the I.T. Act which have been supplied. The A.O. asked the assessee to give details of the shareholders from whom share application was received during assessment year under appeal. The assessee submitted before A.O. that it has received share capital/premium money totalling to Rs.98 lakhs from 14 parties mentioned at Pages 1 and 2 of the assessment order. The assessee furnished share application form, affidavit, copy of the return of income and copy of the bank account of all the share applicants. However, the summons issued under section 131 of the I.T. Act returned un-served. The assessee was asked to produce the Principal Officers of the share applicants, however, assessee failed to produce the same. The A.O, therefore, made addition of Rs.98 lakhs under section 68 of the I.T. Act, 1961. The A.O. also made addition of Rs.1,96,000/- on account of commission paid by assessee @ 2%. The A.O. completed the assessment under section 144/147 of the I.T. Act, 1961, Dated 30.12.2010.
3.1 The assessee challenged the reopening of the assessment as well as additions on merit before the CIT(A), however, the appeal of assessee has been dismissed vide impugned Order.
4. The assessee filed the present appeal in which 04 issues were raised e., (1) Jurisdiction of the A.O. to pass the re-assessment order; (2) Re-assessment proceedings under section 147/148 of the I.T. Act to be void abinitio; (3) Addition of Rs.98 lakhs on account of share capital / share application money under section 68 of the I.T. Act and (4) Addition of Rs.1,96,000/- on account of Commission on different grounds of appeal.
4.1 The appeal was initially heard with regard to the jurisdiction of the A.O. and the appeal was decided by the ITAT, Delhi Bench vide Order Dated 22.11.2013. The gist of the details are mentioned in this Order of the Tribunal in which it is briefly noted that assessee was incorporated as M/s. Shalom Exim (P) Ltd., which was later on changed to Mamram Developers Ltd., and PAN was also changed. The intimation about name change was given to the A.O. and request was also made to the Ld. CIT to transfer the record to the concerned A.O. It was also noted in the Order that ultimately name was also changed to Shri Shyam Sunder Infrastructure (P) Ltd., [Present Assessee]. The Tribunal considering the change in name of assessee, PAN and jurisdiction of the different Assessing Officer’s held that the assessment order passed by the A.O. is without jurisdiction and not sustainable in the eye of Law and the assessment order was quashed vide Order Dated 22.11.2013. The other remaining grounds in the appeal were not decided.
4.2 The Revenue challenged the Order of the Tribunal Dated 11.2013 before the Hon’ble Delhi High Court in Income Tax Appeal.No. 236/2014. The Hon’ble Delhi High Court considering the issue in the light of Section 124(3)(a) of the I.T. Act held that the conditions of Section has been overlooked by the ITAT, therefore, the Order of the Tribunal was set aside and issue was answered in favour of the Revenue. The matter was remitted for consideration on merits of the appeal before ITAT vide Judgment Dated 04.02.2015.
4.3 The assessee being dissatisfied with the Judgment of Hon’ble Delhi High Court preferred SLP against the Judgment of the Hon’ble Delhi High Court Dated 02.2015 in which notice was issued. Ultimately, the assessee filed an I.A.No.31031/2021 in Civil Appeal No.5105/2015 and submitted before the Hon’ble Supreme Court that assessee does not want to proceed with this appeal. The appeal of assessee was accordingly dismissed as withdrawn vide Order Dated 09.04.2021. Copy of the Judgment is placed on record by the Learned Counsel for the Assessee.
4.4 In the background of the above facts, Learned Representatives of both the parties submitted that the appeal of the assessee may be decided on merits barring the issue of jurisdiction of the O. which has already been decided by the Hon’ble Delhi High Court.
4.5 Considering the above facts, it is clear that the issues which are to be decided now are mainly two i.e., (1) Challenge to the re-assessment proceedings under section 147/148 of the I.T. Act and (2) Addition of Rs.98 lakhs under section 68 of the I.T. Act with addition of Rs.1.96 lakhs on account of Commission. We proceed to decide both the issues as under :
ISSUE No.1 – [Challenge to re-assessment proceedings under section 147/148 of the I.T. Act, 1961] :
5. The assessee raised several grounds before the CIT(A) to challenge the reopening of the assessment under section 148 of the I.T. Act. The assessee submitted that notice4 issued under section 148 is illegal and void abinitio and that there were no reason to believe that the petitioner’s income has escaped assessment which is must for assuming lawful jurisdiction under section 148 of the
I.T. Act, 1961 and that reopening is barred before A.O. has not himself formed any belief as to the escapement of income, but, has merely acted upon the direction of the Investigation Wing. Notice under section 148 have been issued on general statement and is vague and as such reopening of the assessment is illegal and unjustified and is liable to be quashed. The Ld. CIT(A), however, decided that when A.O. has reason to believe that income has escaped assessment, therefore, initiation of re-assessment proceedings is valid. The Ld. CIT(A), accordingly, dismissed this ground of appeal of assessee.
5.1 The assessee on Ground 6 has raised the following ground :
“6. The CIT(A) erred in law and on facts by not considering that the reasons to belief recorded by the ITO, Ward-8(1), New Delhi were not bonafide as the same had many infirmities and were just stereotyped without application of mind.”
5.2 Learned Counsel for the Assessee referred to the reasons recorded for reopening of the assessment Dated 03.2010 copy of which is filed at PB-1/page-18 which reads as under :
“17.03.2010 : Reasons for issue of notice u/s 148 in the case of M/s. Shalom Exim Pvt. Ltd., New Delhi A.Y. 2003-04.
Information has been received from DIT (Inv.) New Delhi that M/s. Shalomi Exim Pvt. Ltd., New Delhi has been beneficiary of accommodation entries being provided by certain entry operators. On the basis of the information chart forwarded by the DIT (Inv.), New Delhi it is seen that the assessee is involved in the following bogus transactions detailed in the chart forwarded by the DIT (Inv.) New Delhi.
