Sfs Infinite Ltd., New Delhi vs Assessee

Date of Hearing 11.03.2015 Date of Pronouncement .03.2015

ORDER PER DIVA SINGH, JM

This is an appeal filed by the assessee against the order dated 14.07.2011 of CIT(A)-XI, New Delhi pertaining to 2002-03 assessment year on the following grounds:-

1. "The assessing officer erred on facts and in law, in initiating proceedings U/s 147 of the Income Tax Act 1961, without satisfying the basic conditions, by initiating the proceedings U/s 147 solely on the basis of information from higher authorities, without mentioning the nature of evidence available and without confronting the assessee with evidence in the shape of third party evidence/ statements to be used against him.

2. The authorities below have erred both on facts and in law in invoking and confirming application of Section 68 of the Income-tax Act, to account payee cheque transactions duly confirmed by the remitter of funds through Statement on Oath given before the Assessing Officer, without assigning any reasons thereof.

3. On the facts and in the circumstances of the case, the Ld. CIT appeal has erred in proceeding on the erroneous presumption that the appellant company has received money from a subscriber to the capital whereas it is money received on account of sale proceeds of client shares and consequently relying on case laws which have no application whatsoever in the facts of the present case.

4. The authorities below have erred both on facts and in law in making and confirming additions under Section 68 of the Income Tax Act, on account 2 I.T.A .No.-4998/Del/2011

of third party funds received by a share broker which have been subsequently remitted to the clients and accounted for by them in their receipts and offered for tax, leading to double taxation of the same receipt.

5. On the facts and in the circumstances of the case, the Ld. CIT appeal has erred in conforming the levy of interest U/s 234 S, in contravention of the provisions of the income Tax At.

The applicant address for leave to add, alter, modify and withdraw any of the grounds either before or at the time of hearing."

2. In the present appeal, the Registry has pointed out a delay of 50 days. Ld. AR addressing the same invited attention to the condonation of delay petition dated 03.12.2012 filed on record submitted that the delay of 50 days occurred on account of the inadvertent mistake of the employee Mr. Omesh Sharma who was entrusted with the filing of the appeal. The delay it was submitted is purely unintentional and is caused by reasons beyond the control of the assessee and as soon as the mistake was noticed the assessee has made good the error of the employee. It was submitted that an affidavit of Sh. Omesh Sharma to this effect had been filed alongwith Paper Book. The Ld. Sr. DR had no objection if the delay is condoned. In the light of the submissions of the parties and considering the reasons given by the assessee in regard to the delay of 50 days, we condone the delay. The said order was pronounced in the open Court.

3. The Ld. AR in the context of the issues addressed in the present appeal submitted that the assessee has placed in its Paper Book additional supporting document which are placed at pages 2 to 26 and since these evidences go to the root of the matter, the same may be admitted and considered for granting necessary relief. The record shows that on 07.07.2014 the department was directed to produce the assessment records. The Ld. Sr. DR in response thereto said that the same have not been obtained accordingly it was his submission that the issue may be restored to the AO however with the caveat that the additional evidence may not be commented upon and the issue may be left open for the AO to consider the evidences. The record shows that originally a return declaring an income of Rs.28,938/- was filed by the assessee which was re-opened on the basis of the information from the Directorate of Investigation alleging that the assessee was a 3 I.T.A .No.-4998/Del/2011

beneficiary of a sum of Rs4,50,000/- allegedly received from M/s MKM Finsec Pvt. Ltd. in November 2001 through cheques drawn at Karnal Bank Ltd, Karol Bagh, New Delhi. Addition of the said amount was made by the AO vide his order u/s 143(3)/147 on the following reasoning:-

"It was submitted by the assessee that receipt of Rs.4,50,000/- from M/s MKM Finsec Pvt. Ltd. was in respect of sale of shares. However, no evidence of sale of shares, by way of invoice/bill etc was produced on the plea that these books (vouchers) etc. were not required to be kept. However as per section 44AA read with Rule 6F the assessee was required to keep those books vouchers etc once the notice u/s 148 was issued to it for financial year 2001-02. The mere fact that no evidence was produced in support of the claim of sale of shares, this plea of the assessee falls flat. However, the assessee produced one, SH. Prem Chand Bhatra, one of the Directors of m/s MKM Finsec Pvt. Ltd. whose statement was recorded u/s 131 of the Income tax Act, 1961. He has admitted that the assessee was paid a sum of about Rs.4,60,000/- for sale of shares but no current evidence in support of sale of shares was filed. It is not known asto which shares were sold and whether or not the shares were ever owned by the assessee, no such evidence has been filed. It is merely an assertion not supported by any evidence at all. The explanation filed by the assessee is therefore not satisfactory and is hereby rejected. I hold that no satisfactory explanation in support of a credit of Rs.4,50,000/- has been filed and hence treat is as unexplained and bring it to tax as income of the assessee u/s 68 of the Income Tax Act, 1961."

4. The said action was confirmed in appeal by the CIT(A). However in the light of the submissions of the parties before the Bench considering the material on record the additional evidence placed by the assessee in its Paper Book at pages 2 to 26 is admitted and the impugned order is set aside and the issue is restored back to the file of the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The said order was pronounced in the open Court in the present of the parties.

5. In the result the appeal of the assessee is allowed for statistical purposes.

The order is pronounced in the open court on 13th of March 2015.

Sd/- Sd/- (G.D.AGRAWAL) (DIVA SINGH) VICE PRESIDENT JUDICIAL MEMBER

Dated: 13/03/2015 *Amit Kumar* 4 I.T.A .No.-4998/Del/2011

Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI