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2015 (5) TMI 984 - ITAT DELHI

2015 (5) TMI 984 - ITAT DELHI - TMI - Addition u/s 68 - unaccounted sale proceeds of shares and unaccounted commission - CIT(A) deleted the addition - Held that:- In the present case, it is noticed that the assessee purchased the shares in earlier years which were shown as investment in the books of accounts and reflected in the “Asset Side” of the “Balance Sheet”, out of those investments the assessee sold certain investments and accounted for the profit / loss and offered the same for taxation .....

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T MEMBER AND SHRI I.C. SUDHIR, JUDICIAL MEMBER Appellant by : Sh. Gaurav Dudeja , Sr. Dr Respondent by : Sh. Ved Jain, CA ORDER Per N.K.Saini, A. M. : These appeals by the department are directed against the order dated 16/09/2009 of CIT(A)- VII New Delhi. 2. First we will deal with the appeal of the department in ITA No. 4325/Del/2009. Following grounds has been raised in this appeal :- 1. The order of the Ld. CIT (Appeals) is erroneous & contrary to facts & law. 2. On the facts and in .....

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vestigation made during assessment proceedings. 3. The applicant craves leave to add, to alter, or amend any grounds of the appeal raised above at the time of hearing. 3. From the above grounds, it would be clear that the grievance of the department relates to the deletion of the addition of ₹ 93,45,000/- made by the AO u/s 68 of the IT Act 1961 (hereinafter referred to as the Act in short) on account of unaccounted sale proceeds of shares and ₹ 1,86,900/- on account of unaccounted c .....

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ssessee stated that the return already filed on 24.10.2003 may be treated as a return filed. The AO noticed that the assessee had received amounts from the following parties through cheques / payee orders totaling to ₹ 93,45,000/-: Name of Party Amount 1. Ishwar Sharma 1,00,000 2. Pramod Kumar 2,90,000 3. Rajesh Kumar Gupta 3,50,000 4. Rohit Rana 1,00,000 5. Baldev Harish Electricals 2,00,000 6. Prosafe Investment Pvt. Ltd. 4,50,000 7. Harjeet Singh 1,50,000 8. Parvati Varshney 2,40,000 9. .....

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u/s 131 of the Act to the above parties for the verification of the identity of the person and the genuineness of the transactions but the summons were received unserved with the remarks of the postal authorities as no such party . The assessee submitted to the AO that there was no increase in the share capital of the assessee and unsecured loans during the year under consideration. The assessee also furnished confirmation, bank statements and copies of the income tax returns of the parties from .....

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ho in turn issued cheques of equal amount and for this service of issuing cheques the entry operator charged some commission. The AO also pointed out that during the enquiries conducted by the Investigation Wing of the department it was concluded that the most of the entry operators were charging commission at the rate of 2 % for giving the accommodation entry. The AO held that the assessee failed to discharge its onus to prove the identity and creditworthiness of the concern parties and genuine .....

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ITO. 148 ITR 154 (S.C.) 6. Being aggrieved the assessee carred the matter to the Ld. CIT(A) and the submissions made as incorporated in para 5 of the impugned order are reproduced verbatim .as under :- The learned ITO is quite descriptive about the introduction of unaccounted money in the shape of share capital and/ or unsecured loans. He has invoked the provisions of sec. 68 and has made an addition of ₹ 93,45,000/-. This money has been received during this year by the assessee from 21 pe .....

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TO has mechanically copied his earlier year order without caring to consider the changed facts of the case in this year. The nature of assessee company s main objects is basically investments and accordingly it has made purchase and sales in shares. Details of all transactions was filed before the ITO. In this, all shares purchased and sold are enlisted with the name of parties, address, cheque no/bank name and amount. These all transactions are duly recorded in the books of accounts. Balance sh .....

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details were filed before the ITO. So, these deposits are neither loan nor share application money as alleged mindlessly by the ITO in his order. Sec 68 is focused on loans and shares capital. It does not include sale proceeds of goods. When opening stock and new acquisition of goods stands accepted and closing stock at the year end is also accepted, the sale proceeds can not be doubted where the payment received is by cheque from tax paying entity. The third party might not appear for confirma .....

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nce as sale of investments and again as income from undisclosed sources. This is not correct/justified. The order of the ITO (para 4 of the order) says that the confirmations, bank statements, copy of the ITRs from all these parties were filed before him. Please find enclosed herewith another set of all those paper which were filed before the ITO. These are enough to treat as proper discharge of onus by the assessee. Kindly note -(a) all are income tax payees (b) all transaction are by a/c payee .....

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tice sent by ITO returned back as the time when transaction took place and date of notice, there is a gap of over 6 years. The opportunity given by the ITO thereafter to the assessee was too small to justify the same. In this assessee s own case for asst. year 2002-03 is appeal no. 124/2007-08 order date 05/01/2009 your honour in similar circumstances or similar evidences have deleted the entire addition made by the ITO. 7. Reliance was placed on the following case laws :- (i) Anis Ahmad and Son .....

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the Ld. CIT(A), the information might have been a sufficient ground to initiate re-assessment proceedings of a case but to make an addition, the AO has to establish the fact of fraudulent nature of such transaction and that purely on surmises and conjectures no transaction could have been held as bogus unless the same was proved on the basis of sound reasoning and evidence on the part of the AO before making the addition. The Ld. CIT(A) further, observed that the assessee furnished all necessary .....

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plied that there had neither been fresh loan nor fresh share capital introduced in the accounts of the assessee company during the year under consideration. the Ld. CIT(A) also pointed out that the accounts of the assessee did not leave any room for doubt that the said amount was nothing but the sale proceeds of the shares which had already been shown by the assessee in the P&L account for the A.Y. 2003-04 and when the profit had already been offered as income, it could not be brought to tax .....

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and if the AO had doubted the impugned transaction after receiving the evidences which had been produced by the assessee in support of its claim it was very much open to the AO to do his independent inquiry and verification but the same had not been done by the AO. The Ld. CIT(A) categorically stated that the assessee had adduced the documentary evidences in support of the transaction in question and that the identity of the purchasers of the shares was established. The Ld. CIT(A) observed that .....

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equally the duty of the AO to have taken steps to verify their assessment records and if necessary to also have them examined by the respective AOs having jurisdiction over them which had not been done. The Ld. CIT(A) accordingly deleted the addition of ₹ 93,45,000/- made by the AO on account of accommodation entry and consequential addition on account of commission amounting to ₹ 1,86,900/- for obtaining the said accommodation entries was also deleted. Now the department is in appea .....

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.2003 was ₹ 1,45,01,800/- and the closing balance as on 31st March, 2003 was ₹ 1,63,78,774.47. and if shares worth ₹ 93,45,000/- have been sold at no loss no profit basis , only the composition of investments will change but opening and closing would remain the same and if there was some gain or loss in sale of shares the same is not reflected in the P&L account. It was also stated that schedule 3 of the audited balance sheet also revealed that in all cases the investment h .....

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as acquisition price, what was sale price, resultant gain/loss, receipt of money on sale in bank account of assessee, whether share transfer forms executing position in ROC records regarding actual holding etc., therefore, the explanation furnished by the assessee did not match with the figures & numbers reflected in the audited balance sheet as such findings of the Ld. CIT(A) were erroneous. He also submitted that the matter may be remanded back to the AO for an in-depth examination of rele .....

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stances, the case was reopened u/s 147 of the Act and the addition made by the AO was deleted bythe I.T.A.T. It was further submitted that the assessee sold the shares which were earlier purchased in different years and duly shown in the balance sheet of the respective years and that the assessee had shown the sale proceeds in the books of accounts, the investments were reduced after making the sales. It was contended that there was no obligation under the law that the assessee was required to p .....

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an 186 (Delhi). It was further, submitted that the issue is also covered by the order of the ITAT, Delhi Bench in the case of ITO vs. Goodwill Cresec Pvt. Ltd. in ITA No. 4151/Del./2010 order dated 25.01.2012. Reliance was also placed on the following cases laws :- 1. CIT vs. Sh. Udit Narain Aggarwal, ITA No. 560 of 2009, dt. 12.12.2012 2. CIT vs. Sudeep Goenka, ITA No. 468 of 2009, dt. 3.01.2013. 3. CIT vs. Anirudh Narain Aggarwal, ITA No. 195 of 2010, dt. 16.01.2013. It was pointed out that th .....

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ected in the Asset Side of the Balance Sheet , out of those investments (copy which is placed at page no. 23 and 24 of the assessee s paper book), the assessee sold certain investments and accounted for the profit / loss and offered the same for taxation. In the present case, the amount in question was neither a loan or the deposit , it was also not on account of share application money, the said amount was on account of sale of investment therefore the provisions of Section 68 of the Act were n .....

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