TMI Blog2014 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to the legal consequences qua the genuineness of empowering a specific person to operate the bank accounts on behalf of the Directors – revenue has relying on the order mainly confined himself to stating that he has no objection if the issue is restored - it is not appropriate to address the arguments at any stage any view expressed now would pre-decide the issue wherein both sides have not advanced their argument - it is appropriate to set aside the order and the matter id remitted back to the AO for fresh adjudication – Decided in favour of Assessee. - ITA No.2229/Del/2011 - - - Dated:- 11-4-2014 - Diva Singh And J S Reddy, JJ. For the Appellant : Sh Ved Jain, CA For the Respondent : Sh Vivek Kumar, Sr DR ORDER:- PER : Diva Singh This is an appeal filed by the assessee against the order dated 28.02.2012 of CIT(A)-XXI, New Delhi pertaining to 2006-07 assessment year on the following grounds:- 1. On the facts and circumstances of the case, the order passed by learned Commissioner of Income Tax (Appeals) CIT(A) is bad in the eye of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RTI Act, 2005 from the department which initially was denied by the Central Public Information Officer and only when the assessee resorted to filing an appeal against the order of the CPIO that the relevant information was obtained by the assessee. Addressing the facts on record it was his submission that on the receipt of the relevant information from the CIC i.e. Central Information Commission the assessee was finally able to address the factual inaccuracy namely that on the specific date when the AO records that None Attended infact the assessee was represented and it was not a case of nonattendance as has been wrongly recorded in the assessment order. The said issue it was submitted had been brought to the notice of the CIT(A) who takes cognizance of this fact at pages 18 19 of the impugned order but somehow chooses to ignore the consequence of this factual inaccuracy and instead places reliance upon the decision of CIC dated 03.07.2009 so as to conclude that sufficient opportunity was afforded by the AO. Accordingly in these circumstances, it was his humble prayer that for verification of facts, the issue needs to be restored. On merits it was also his submission that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply the Ld. AR invited attention to the material available on record submitted that the transactions are genuine. The books of accounts are audited. The assessee has placed before the authorities details of Directors, details of the bank accounts, bank re-conciliation statement, details of sundry debtors and expenses incurred, details of purchase of shares, details of month-wise purchases etc. The confirmations from the parties are available on record. Attention was invited to the copy of the RTI application dated 03.02.2009, copy of the order of the RTI in the case of Sh. Arvind Kumar dated 03.07.2009 and 29.07.2009 placed at pages 56-57 58-59 were relied upon; copy of the reply of the concerns whose transactions have been doubted namely M/s Moral Papers (P) Ltd.; M/s Roop Yams Pvt. Ltd.; M/s Joy Commercial Pvt. Ltd. etc have all been placed on record. 8. Subsequent to the date of hearing the case was fixed for clarification wherein again emphasis was laid on the application filed by the assessee under the RTI, Copy placed at pages 52-54 of the Paper Book. The reply received from the Central Information Commission containing its decision, copy placed at pages 56-57 was relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 133(6) was issued to Oriental Bank of Commerce and obtained statement of account. The perusal of statement of account reveals that the huge amounts to the tune of ₹ 1.66 Cr have been shown transferred in and out through the bank accounts number 4433, 4592, 4598, 4588 and 15713 maintained in OBC, Daryaganj, New Delhi. A call letter dated 10.09.2008 was issued to the bank to obtain following details in respect of above mentioned accounts: a) Name Address of the party as per record. b) Name Address of the introducer. c) Bank statement for the period 1.04.2005 to 31.03.2006. d) Copy of A/c opening form. Perusal of the statement and documents received from the bank reveal as under:- S. No. A/C No. Name and Address of the Co. Name of the Person entitled to operate A/c 1. 4433 Joy Commercial Pvt. Ltd. 4353/4C, Daryaganj, New Delhi Prem Maheshwari 2. 4598 Room Yams Pvt. Ltd. Prem Maheshwari 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions in the bank account. In response to which the assessee changed its counsel and filed a reply. Perusal of reply reveals and enables to reach its conclusion so as to complete assessment on the basis as under: 1. That assessee has not mentioned anything about operational address of the company and its directors. Moreover he has not narrated any reasons for authorizing Praveen Kumar Maheshwari to operate the bank account of all the companies 2. Further company has not given any reason for non compliance of summons; to. Sh Praveen Kumar Maheshwari and Arvind Kumar and Ms. Rukmani Devi. 3. The perusal of the above reveals that the company is doing business with above five companies, merely doing business with the other companies. 4. Perusal of the bank statement of the above companies and its transactions reveals that there is jut make-belief affairs. 5. Though the assessee has provided confirmation of the transactions but mere colouring it does not mean that transaction is genuine. Assessee has to provide the evidence that the companies with which it is making transaction are in existence. Since the assessee has failed to provide any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions specifically from the bank A/c Nos.- 4432, 4433, 4592, 4598, 4588 and 15713 normally showed that the amounts were deposited by the cheque and withdrawn by cheque on the same day or within two or three days. In these circumstances, it was concluded that the different transactions appeared to be accommodation entries as such in order to verify it the CIT(A) held it was considered necessary to examine the Directors on oath who were not present. The CIT(A) further records that before sending the Remand Report, the AO had given an opportunity to the assessee to appear however on the date of hearing i.e 28.09.2010, the adjournment was sent and the case was adjourned to 08.10.2010 on which date no one was present. In these circumstances, it was concluded that the assessee had nothing further to state. The said Remand Report was made available to the assessee as per para 4.2 of the impugned order. In reply it was stated that the assessee has been in business of trading shares, finance and investment since the very beginning i.e from 1993. The sale transactions (Routine business transactions) would not have been found to be not genuine when the opening stock of shares of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance. Reliance was placed upon the reply of the parties from whom information had been sought u/s 133(6) who had dealings with assessee's company who have confirmed the transactions. The transactions were stated to be routed through the banking channels recorded in the books of accounts with supporting evidence explaining the presence of Directors. The following extract of page 11 of the impugned order is reproduced hereunder:- As far as issue for personal presence of the directors is concerned it is reiterated that on 12.11.2007 Mr. Arvind Maheshwari, one of the directors of the assessee co., went with another AR. Mr. Subhash Garg but neither the AR was attended nor the director Mr. Arvind Maheshwari. 12. It was reiterated that there is no Prem Maheshwari authorized to operate the bank account and only Sh. Praveen Kumar Maheshwari is authorized to operate the bank account that arrangement has been done for the convenience of the Directors. Accordingly the AO's observation that misleading submissions are being made to divert the authority's attention from major issues are strongly opposed. It was submitted the assessee has stated and filed only factual an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts are by way of transfer/clearing entries which are immediately transferred out and OA has also summoned to the Directors of the Company. However. Directors had not attended before the AO, rather some papers were filed by the AR. While concluding the issue the AO has summarized the matter where he has arrived at a conclusion by observing certain discrepancies in this regard. During the course of appellate proceedings, various details were filed from time to time. Furthermore, in the remand report also AO has very specifically and categorically discussed the issue about operation of the bank account and information has been collected u/s 133(6) of the IT Act that Shri Praveen Kumar Maheshwari is operating the bank account. In this regard, AO has clarified vide letter dated 9.12.2010 that name of the person is Praveen Kumar Maheshwari. The typographical error committed by the AO has also been mentioned and copy of summon issued to him is also been attached. So observation with regard to mentioning of the name has been clarified by the AO. So it is clear that name of the person managing the accounts is Praveen Kumar Maheshwari. Opportunity has also been granted to the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Hon'ble Central Information Commissioner in the case wherein vide para 4 'C' order dated 3.7.2009 the Hon'ble CIC has observed as under:- As far as other paras are concerned, they essentially relate to the merits of the assessment order passed by the competent authority. As per decision of this Commission in Appeal No.-CIC/AT/A/2006/00596 dated 18/09/2009 (Rakesh Kumar Gupta vs ITAT), it has been held that the Appellant cannot take recourse to the RTI Act to challenge a judicial/quasi judicial decision and if the Appellant is aggrieved, the remedy lies elsewhere. We concur with this decision. So in my considered opinion, objection raised vide para 13 of letter dated 31.1.2009 written by director of company raising query in this regard has already been answered. Sufficient opportunity was given to Ld. AR during the course of remand proceedings by AO but he did not availed it. 13.3. Vide the culminating paragraph 4.12 he decides the issue against the assessee which is under challenge in the present proceedings. The same is also reproduced here under:- 4.2. In view of the above judgement of the Hon'ble Delhi High Court as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustice has not been done. The tax collecting authority is presumed to act fairly and transparently while exercising its quasi-judicial powers. Recording of facts correctly is the least which is expected in this exercise. In the facts of the present case though numerous arguments on facts have been raised by the assessee in regard to statement of unconcerned persons relied upon in regard to the functioning of the assessee from a specific place and ignoring the statements of concerned persons furnished in response to information sough under Section 133(6) or in regard to the legal consequences qua the genuineness of empowering a specific person to operate the bank accounts on behalf of the Directors we do not address these as the said issue though argued by the Ld. AR was not addressed by the Ld. Sr. DR who has only responded to the request of the Ld. AR seeking the issue may be restored and in this response to recapitulate Ld. Sr. DR has relying on the impugned order mainly confined himself to stating that he has no objection if the issue is restored. In the circumstances we do not think it is appropriate to address these arguments at this stage any view expressed now would pre-deci ..... 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