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2018 (6) TMI 1378
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..... Assistant Commissioner Of Income Tax, Central Circle-18, New Delhi (the Ld. AO) against the order of the Ld. Commissioner Of Income Tax (Appeals) - III, New Delhi dated 16-02- 2012 for Assessment Year 2006 - 07 delivered in appeal preferred by the assessee against the order passed by the Ld. AO u/s 153A read with section 143 (3) of The Income Tax Act 1961 on 31/10/2010. 4. The Ld AO has raised the following grounds of appeal in ITA No. 1907/Del/2012 for the Assessment Year 2006-07:- "1. On the facts and in the circumstances of the case the ld CIT(A) has erred on facts and in law in deleting the addition of Rs. 40,00,000/- made by the Assessing Officer u/s 68 of the Income Tax Act, 1961. 2. On the facts and circumstances of the case, the ld CIT(A) was not justified in holding that the assessee has discharged its onus of substantiating the source of deposit, without appreciating the statements given by the entry operator of providing bogus accommodation entries in lieu of cash and corresponding acceptance of this fact by chairman of the assessee group. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law." 5. Brief facts of....
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....ue accommodation entries. The above company cubic commercial resource Ltd was also found to be one of the companies operated by Mr. S. K. Gupta. It was also noted during the survey that Mr. Gupta was used to maintain „Conduit wise ledger‟ accounts. In the account, details of cash received, cheques issued, commission/ premium paid in respect of the party was also noted. In case of Taneja- Puri group of cases, Mr. A. S. Taneja, Advocate was the conduit. In the accounts with respect to entries given to this group was debited in the name of „ Aneja" or Taneja. As a result of search in the group Mr. Gupta (CA) admitted various companies controlled by him do not have any substantial business activity and were only used to provide accommodation entries, simultaneously with search on Taneja group on 5/1/2009 and survey under section 133A was also conducted on Mr. S K Gupta. During the course of search, statement of Mr. S K Gupta (CA) was recorded on 7/1/2009, the director of this company was also examined with respect to the accommodation entries from Sri S K Gupta . The Director in his statement surrendered sum of Rs. 6.23 crores in question No. 5 of the statement with r....
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....ssued by the appellant to M/s cubic commercial resource Ltd on 9-4-05 as advance against booking of residential plot at Moradabad. Assessee has also submitted advance registration form filed as on 9/4/2005. He further held that the above deposit has been accepted by the assessee through cheque and subsequently it is refunded. He noted that that though the name of company cubic commercial resource private limited figure in the statement of Sh. S. K Gupta recorded on 20/11/2007 wherein he has accepted that M/s cubic commercial resource Ltd has provided accommodation entries to the group companies but the transactions of Rs. 40 Lacs does not form part of the total disclosure of of Rs. 6.23 crores made by the director of the group in his statement recorded on 07/01/2009. He therefore held that merely because M/s cubic commercial resource Ltd figures in the list of accommodation entry providing companies, it would not lead to the conclusion that all the transactions of that company with the appellant group would by necessary implication be as such treated as unexplained cash credit. He further stated that during the course of assessment proceedings neither the cross examination was prov....
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.... Mr. Mukund Rai K Shah 290 ITR 433. 11. With respect to the incriminating document found during the course of search he submitted that there is a statement of Mr. Gupta who provided the accommodation entry, there is a statement of the director of the group who accepted that he has entered into the transaction of buying accommodation entries from Mr. SK Gupta and based on that he surrenders the amount. Further, the company with whom assessee has transacted is also part of the disclosure made by the director. From the same company assessee has accepted the advance against plot deposit. Therefore, he stated that there is a complete nexus between the addition made and the search material gathered by the revenue. 12. The Ld. authorized representative vehemently supported the order of the Ld. CIT(A). He submitted that the assessment year in question is assessment year 2006-07 wherein the original assessment was completed on 31/3/2008. Therefore, according to him, it is „concluded assessment‟. He further stated that before the completion of the assessment under section 143 (3) the statement of Sh. Gupta was available with the revenue. He further stated that in the conclu....
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.... mentioned. He submitted that the party who gave the advance is assessed to income tax and the complete details with respect to the assessee were provided to the assessing officer. The Ld. AO merely based on this information commented that the assessee does not have any worth. He has not carried out any independent enquiry with respect to the above company. He further referred to the decision of the Hon‟ble Supreme Court in case of Orissa Corporation 159 ITR 78 and stated that the Ld. AO should have issued summons to the directors of that company to examine the veracity of the claim made by the assessee. He further referred to the decision of Hon‟ble Supreme Court in case of PADMASUNDARA RAO (DECD.) AND OTHERS VS.STATE OF TAMIL NADU AND OTHERS 255 ITR 1478 page No. 153 to state that the decision cited by the Ld. departmental representative do not apply to the facts of the case. He read the particular para of the decision of the Hon‟ble Supreme Court wherein it is held that "Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always per....
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....mpany operated by Mr. S K Gupta who is alleged to be an entry operator. It is also a fact that during the course of search the director of the group has disclosed a sum of Rs. 6.23 crores because of accommodation entry taken by the group from Mr. Gupta. However we find that while making the addition by the Ld. AO of the above sum there is no mention of any material found during the course of search with respect to the above transaction of Rs. 40 Lacs. It is also not shown that in the disclosure of Rs. 6.23 crores made by the director of the group whether these Rs. 40 Lacs are included or not. If these details do not exist then naturally in the concluded assessment the addition is required to be made only based on incriminating material. With respect to this transaction, we do not find that the Ld. AO has made any reference to the incriminating document. Merely the statement of Mr. SK Gupta cannot be any incriminating document without finding any corroborative material with respect this transaction. The amount of advance received by the assessee was earlier disclosed to the revenue and was not discovered during the course of search. The entries of the advance received by the assesse....
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....nd during the course of search which is incriminating in nature then the provisions of section 153A would be applicable and when the material is found belonging to or pertaining to a different person other then the person searched, provisions u/s 153C can be invoked. It clearly shows that these provisions would be invoked only when there is a search and there is an incriminating material found during the course of that search. Looking at the provisions of section 148 of the income tax act it is also operating in different field and can be invoked in different circumstances. These provisions can be invoked independently if they satisfy the condition of having tangible material coming into the possession of the Ld. assessing officer subsequent to the assessment completed, which shows escapement of income in the hands of the assessee. Therefore it is for the revenue to look into the both the provisions and decide on the facts of each case which provision of the law required to be invoked in that particular circumstances. The our role is only to look whether the provision invoked under either of the section is justified on its own legs. 17. With respect to the argument of the Ld. au....
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....ully following the decision of the Hon‟ble Delhi High Court in Meeta Gutguttia ( Supra) following the decision of the Hon‟ble Delhi High Court in CIT versus Kabul Chawla, we agree with the order of the Ld. CIT - A that there is no incriminating material found during the course of search with respect to this addition. In view of this, we dismiss ground No. 1 and 2 of the appeal of the revenue. 19. In the result ITA number 1907 /del/2012 for assessment year 2006 - 07 filed by the revenue is dismissed. ITA No. 1943/Del/2012 (By Assessee against order of CIT (A) dated 16-02-2012) 20. In the cross appeal, The assessee has raised the following grounds of appeal in ITA No. 1943/Del/2012 for the Assessment Year 2006-07:- "1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining the determination of income at Rs. 62,19,970/- as against returned loss of Rs. 7,72,10,081/- in an order of assessment u/s 153A/143(3) of the Act. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in sustaining a disallowance of Rs.- Zr&22Z2JL&6/- representing expenditu....
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....ion was made by Assessing officer in original proceedings under section 143(3) and as such, addition made in the impugned order was double addition, which should have been deleted as such. 6. That further the learned Commissioner of Income Tax (Appeals) has failed to appreciate that appellant company furnished sufficient details/evidences during the course of assessment proceedings to prove the genuineness of brokerage and interest, which the assessing officer without providing any valid opportunity and, had made the addition on the basis of suspicion and surmises. 7. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining the levy of interest u/s 234B of the Act, which is not leviable on the facts of the appellant company." 21. As during the course of hearing of the above appeal the Ld. authorised representative fairly agreed that as the claim of the assessee is a fresh claim made during the course of search proceedings, which is not emanating out of any undisclosed income or material found during the course of search, therefore, same is not allowable to the assessee in view of the decision of the Hon‟ble Delhi High Court in....
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....ture. 2.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the income has to be computed as per the provisions of the Act and not only on the basis of books of accounts prepared by the appellant company. 2.4 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case. 3. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then the expenditure incurred of Rs. 13,17,52,079/- it may be directed to be allowed in the Assessment Year 2008-09. 4. That further the learned Commissioner of Income Tax (Appeals) ignored the fact that the appellant company furnished sufficient details/ evidences during the course of assessment proceedings to prove the genuineness of brokerage and interest, even than the assessing officer without providing any opportunity what so ever mechanically brushed aside the documents furnished by the appellant company and made an addition on the basis of suspicion and surmises. 5. That the learned Commissioner of Income Tax (Appea....
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....is in appeal before us. 28. The Ld. authorized representative fairly conceded the issue that completed assessments can be disturbed under section 153A of the act only on the basis of incriminating documents found during the course of search. Therefore, he submitted that such additional claim if they are not arising out of the undisclosed income that found during the course of search, they are not allowable. 29. The Ld. departmental representative relied upon the orders of the lower authorities and reiterated the decision of the Hon‟ble Supreme Court as well as the coordinate bench relied upon by the Ld. AO. On merits, also it was claimed the contested that claim of the assessee is not allowable. 30. We have carefully considered the rival contentions and orders of the lower authorities. Provisions of section 153A of the act are only for the benefit of the revenue because those are the provisions relating to assessment of the assessee pursuant to the search. In such assessments, the regular income of the assessee can be disturbed for of upward revision only, if any incriminating material is found during the course of search. We have also given reasons while deciding ap....
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....ve claim stating that provisions of section 153A are for the benefit of the revenue. On appeal before us also in our order in ITA No. 1944/Del/2012, we have confirmed the order of the Ld. AO relying upon the decision of the Hon‟ble Delhi High Court in CIT versus Kabul Chawla (supra). 36. On the above addition, the Ld. assessing officer initiated the penalty proceedings. He held that apart from the legal issues , even on merit the claim of the assessee was not found acceptable as it was noticed that after claiming those expenses in the computation of income, the assessee has not revised its opening balance of the project work in progress of the subsequent assessment year. Thus, the assessee has tried to claim the same expenditure twice, once in the present assessment year by claiming in the computation of income and in the subsequent year based on its books of accounts. Therefore it was stated that by making additional claim of expenses in the return of income filed by the assessee under section 153A, which have already been claimed by the assessee in the original return of income filed for the subsequent assessment year the assessee has tried to claimed by deduction, there....
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....ciples changing method of accounting. It was not acceptable to the Ld. assessing officer and therefore it was rejected. Mere rejection of the claim, which is found untenable, does not lead to penalty for furnishing of inaccurate particulars. Even otherwise the complete details of the expenditure, the accounting policy followed by the assessee, the claim of the assessee in the original assessment proceedings under section 143 (3) of the act were already before the Ld. assessing officer. It was merely a claim that whether the expenditure should be carried on in the project work in progress or allowable as expenditure in the year in which it is incurred in case of the developer. The Ld. departmental representative could not controvert finding of the Ld. CIT - A that the claim of the assessee is legal and based on the method of accounting. On reading the various paragraphs of the order of the Ld. CIT - A wherein he has given reasons for deletion of the penalty, we do not find any infirmity in his order in deleting the penalty. In view of this the order of the Ld. CIT - A is confirmed and appeal of the revenue is dismissed. 41. In the result ITA No. 60/ DEL/2014 filed by the revenue ....
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....e computed as per the provisions of the is Act and not on the basis of books of accounts prepared by the appellant company. 1.5 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case of the appellant company. 2. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then expenditure incurred of Rs. 3,57,79,780/- may be directed to be allowed as part of the cost of project in proportion to sales booked by the appellant company under the percentage of completion method in various assessment years. 3. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining the levy of interest u/s 234A and 234B of the Act, which are not leviable on the facts of the appellant company. It is therefore prayed that, disallowances/additions so made and, sustained along with interest levied may kindly be deleted and, appeal of the appellant company be allowed." 44. The assesee has raised the following grounds of appeal in ITA No. 2177/Del/2013 for the Assessment Year 2008-09:- ....