IN INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH C NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA No. 3136/Del./2013 Asstt. Year : 2004-05 Income-tax Officer, vs. Goldy Traders Pvt. Ltd., Ward 12(2), New Delhi. 109, Rectangle One, D-4, District Centre, Saket, New Delhi. (PAN: AAACG 2816M) (Appellant) (Respondent) Appellant by : Sh. Amrit Lal, Sr. DR Respondent by : S/Sh. Ved Jain & Ashish Goel, C.As. & Sh. Pranjal Srivastave, Adv. & Date of hearing : 07.09.2016 Date of pronouncement : 20.09.2016 ORDER Per L.P. Sahu, Accountant Member: This is appeal by Revenue against order of ld. CIT(A)-XV, New Delhi dated 26.02.2013 for assessment year 2004-05 on following grounds : 1. On facts and in circumstance of case, Ld CIT(A) erred in quashing re-assessment order as bad in law despite fact that reassessment proceedings were initiated on basis of credible and tangible information received from investigation wing of Department. In similar circumstance, Hon'ble Delhi High Court in various recent judicial pronouncements has upheld validity of initiation of reassessment proceedings on basis of information received from investigation wing regarding accommodation entry providers. 2 ITA No.3136/Del./2013 2. On facts and in circumstances of case Ld. CIT(A) has erred in not appreciating that there is no requirement under law that reasons for reopening should be provided to assessee within six years from end of assessment year sought to be reopened. 3. On facts and in circumstances of case Hon'ble CIT(A) has erred in holding reassessment proceedings bad in law on ground that reasons for reopening of assessment was given to assessee after 5 months from date of notice, despite fact that reasons were provided well within period of limitation. 4. On facts and in circumstances of case, Ld CIT(A) erred in deleting addition of Rs. 65,05,590/- u/s 68 of Act despite settled position of law that onus is on assessee to establish identity, creditworthiness and genuineness of transaction as assessee could not even furnish Name and complete addresses of investors, their confirmation, copy of bank accounts and I. T. Particulars of cash creditors. 2. brief facts of case are that assessee filed its return of income on 31.10.2004 declaring income of Rs.84,000/-. return was processed u/s. 143(1) of IT Act. Subsequently, on basis of information received by AO from office of DIT(Inv.) New Delhi, case of assessee was reopened u/s. 147 read with section 148 of Act. information so received was about companies who were involved in providing/taking accommodation entries for unaccounted money. said information report was also accompanied by detailed list of cases showing name, date of entry taken/given and amount involved etc. In said list name of assessee was also found appearing, which led Assessing Officer to observe that assessee company was one of beneficiaries who has taken accommodation entry from parties for its 3 ITA No.3136/Del./2013 own unaccounted money. Accordingly, AO issued notice u/s. 148 on 25.03.2011 after recording following reasons : "As per information received from office of DIT(Inv.), New Delhi, assessee company has taken following accommodation entry totaling to Rs.65.06,590/- : Value of entry taken Date of entry From whom taken Rs. 10,01,015 19.04.2003 M/s. K.R. Fincap Pvt. Ltd. (A/c 24622, SBBJ, New Rohtak Road, Delhi) Rs.15,01,515 19.04.2003 M/s Sekhawati Finance Pvt. Ltd. (A/c No. 24685, SBBJ New Rohtak Road, Delhi) Rs.7,00,715 28.04.2003 M/s Nikhil Builder Promoter (A/c No. 24664, SBBJ, New Rohtak Road, Delhi) Rs.8,00,815 28.04.2003 M/s Nikhil Builder Promoter (A/c No. 24664, SBBJ, New Rohtak Road, Delhi) Rs.10,01,015 01.05.2003 M/s Basant Agencies Pvt. Ltd. (A/c No. 24645, SBBJ, New Rohtak Road, Delhi) Rs.15,01,515 01.05.2003 M/s M/s. Kuldeep Textiles (P) Ltd. (A/c No. 24624, SBBJ, New Rohtak Road, Delhi) said amount has been credited into assessee's bank account by way of transfer entries. On investigation made by investigation wing it has been found that assessee is beneficiary of taking aforesaid accommodation entries. I have also perused various materials and report from Investigation Wing and on that basis if is evident that assessee company has introduced its own unaccounted money in its bank by way of accommodation entries, therefore, I have reason to believe that income amounting to at least Rs. 65,06,590/- has escaped assessment. In response, assessee submitted its reply on 23.08.2011, thereby furnishing requisite details like Names & Address, PAN, photocopies of cheques and amounts etc. and further vide subsequent letters, assessee stated that blind acceptance of information furnished by DIT(Inv.) cannot form reason to believe by AO regarding escapement of income unless proper verification/investigation is made by AO himself to discard details and evidences furnished by assessee. AO after considering replies of 4 ITA No.3136/Del./2013 assessee and relying on impugned information, concluded that assessee, being one of beneficiaries, was engaged in activities of taking accommodation entries to route through its own unaccounted money into business without giving any taxes, as supporting evidences laid by assessee do not prove creditworthiness of creditors. He, accordingly, made addition of Rs.65,06,590/- to total income of assessee. assessee carried matter to ld. CIT(A) and challenged assessment order u/s. 147 both on validity of order as well as on merits. ld. CIT(A) quashed order of AO on legal ground and also deleted addition on merits. Being aggrieved, Revenue is in appeal before Tribunal. 3. During course of hearing, ld. DR, relying upon order of AO, submitted that extensive enquiries were made by DIT (Inv.), New Delhi where various companies were providing accommodation entries of share capital, gifts etc. to different beneficiaries in lieu of cash received by them. assessee was also found to be one of such beneficiaries taking accommodation entries from such bogus companies simply to route through its own unaccounted money. creditworthiness of creditors and genuineness of transactions could not be proved, which was initial onus to be discharged by assessee u/s. 68 of Act. Therefore, ld. CIT(A) was not justified in deleting addition made by Assessing Officer in reassessment proceedings u/s. 147 of Act. 5 ITA No.3136/Del./2013 4. In his rival submissions, ld. AR of assessee submitted that AO has failed to apply his own mind or to make any independent enquiry before forming belief that any income has escaped assessment. AO has simply adhered to general information received from DIT(Inv.). Except this general information there was no material in possession of AO to form such belief of escapement of income nor any such material was confronted to assessee. It was submitted that respondent had filed confirmatory letters, PAN details, Copy of ITR, Copy of share application form, complete names and address of share applicants, photocopies of cheques through which payments were received from share applicants, which go to discharge initial onus laid on assessee u/s. 68 of Act and AO failed to point out any defect therein nor made any enquiry to belie same. AO had no material to presume that money received by assessee travelled from coffers of assessee. Accordingly, AO has recorded vague reasons based on general information in mechanical manner without applying his mind to general information received from DIT(Inv.) which vitiate proceedings u/s. 147/148 of Act. Reliance is placed, inter alia, on following decisions : (i). ITO vs. M/s. Softline Creations Pvt. Ltd. (ITA No. 744/Del./2012 dt. 10.02.2016 (ITAT Delhi). (ii). CIT vs. Softline Creations Pvt. Ltd. (ITA No. 504/2016 dated 31.08.2016)(Delhi High Court) 6 ITA No.3136/Del./2013 (iii). CIT vs. M/s. Rakam Money Matters Pvt. Ltd. (ITA No. 778 of 2015 dated 13.10.15) (Delhi H.C.) (iv). CIT vs. Vrindavan farms (P) Ltd. (ITA No. 71, 72, 85/D/2015 dated 12.08.15) (v). CIT vs. Nova Promotors and Finlease P. Ltd., 342 ITR 169 (Del.) It was also submitted that notice u/s. 148 was issued on 25.03.2011, but reasons recorded for reopening case were communicated only on 19.08.2011, which is beyond statutory period of limitation as contemplated u/s. 149 of Act. AO has wrongly rejected objection of assessee relying on decision of Hon ble Apex Court in case of GKN Driveshafts (India) Ltd vs. ITO 259 ITR 19 (SC). In this regard, reliance was placed on decision of jurisdictional High Court in case of Haryana Acrylic Mfg. Co. vs. CIT, 308 ITR 38 (Del.) wherein above decision of Apex Court was distinguished by Hon ble jurisdictional High Court. 5. We have considered submissions of both parties and have gone through entire materials available on record. On perusal of reasons recorded, as reproduced above, and also findings recorded by ld. CIT(A), we do not find any material on record to discard observations of ld. CIT(A) that there was no independent material in possession of AO to form belief of escapement of income on part of assessee. Even nature of transactions are not mentioned in said reasons recorded. AO has also 7 ITA No.3136/Del./2013 failed to make any independent enquiry to verify information received from DIT(Inv.). Per contra, assessee had furnished cogent evidences in form of ITRs, photocopies of cheques received from share applicants, PAN details, complete names and addresses of creditors, copies of share application forms etc. to discharge initial onus laid on assessee u/s. 68 of Act. However, AO has failed to conduct any enquiry whatsoever either to verify information received from Investigation Wing or to discard evidences placed by assessee before him. Therefore, it being case of complete lack of enquiry and non-application of mind, in our considered opinion, evidences or material produced by assessee cannot be thrown out without any inquiry and thus reasons recorded are not sufficient to form belief of escapement of income. contention of assessee is that all above companies are registered with Registrar of companies and are regular income tax assessees and transactions have been undertaken through account payee cheques. All details and documents relating to all above mentioned share holders were furnished , which have not been adversely commented by Assessing Officer. Also, Revenue has brought no evidence or material on record to prove that impugned share application money emanated from coffers of assessee/respondent. perusal of impugned order further reveals, that issue of limitation raised by assessee has also been decided in favour of assessee relying on decision of Hon ble jurisdictional High Court in case 8 ITA No.3136/Del./2013 of Haryana Acrylic Mfg. Co. (supra) wherein it is observed by Hon ble Court that expression within reasonable period of time as used by Supreme Court in GKN Driveshafts (India) Ltd. (supra) cannot be stretched to such extent that it extends even beyond six years stipulated in section 149. No contrary decision is brought on record by Revenue. Therefore, laying our hands on catena of decisions, relied upon by assessee before us, we do not find any justification to interfere with order of ld. CIT(A) either on legal aspect of case or on merits of addition. We, accordingly, find no merit in appeal of Revenue and same deserves to be dismissed. 6. In result, appeal of Revenue is dismissed. Order pronounced in open court on 20.09.2016. Sd/- Sd/- (H.S. SIDHU) (L.P. SAHU) Judicial Member Accountant Member Dated : 20.09.2016 aks/- Copy of order forwarded to: (1) appellant (2) respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant. Registrar Income Tax Appellate Tribunal Delhi Benches, New Delhi Income-tax Officer, Ward 12(2), New Delhi v. Goldy Traders Pvt. Ltd