M/S Bharti Telecom Finance Ltd. Qutab Ambience H v. Assistant Commissioner Of Income Tax Company Circle 2(1) New Delhi

*HIGH COURT OF DELHI : NEW DELHI + ITA No.931 of 2006 Judgment reserved on: April 25, 2007 %2007 Judgment delivered on: April 30, M/s Bharti Telecom Finance Ltd.Qutab AmbienceH-5/12, Mehrauli RoadNew Delhi...Appellant ThroughMr. Y.K. Kapur, Adv. Versus Assistant Commissioner of Income TaxCompany Circle 2(1)New Delhi ...RespondentThrough Mrs. P.L. Bansal, Adv. Coram: HON'BLE THE CHIEF JUSTICEHON'BLE MR. JUSTICE MADAN B. LOKUR 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported in the Digest?Yes MADAN B. LOKUR, J. The assessee is aggrieved by an order dated 27th January, 2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'D', ITA No.931/2006 Page 1 of 7 2.The accounts of the assessee showed a credit balance of Rs.80 lakhs in the name of Ms. Devina Mehra. According to the assessee,this was an advance received for the purchase of shares. The AssessingOfficer asked for a confirmation to be filed and the assessee filed aconfirmation from M/s First Global Finance Pvt. Ltd. but not from Ms.Devina Mehra. The Assessing Officer then asked Ms. Devina Mehra toconfirm the transaction but she did not respond. 3.On these facts, the Assessing Officer asked the assessee toshow cause why the amount be not added to its income since thetransaction did not appear to be genuine. The assessee did not respondbut a letter was received by the Assessing Officer from M/s Khanna &Co. claiming to be the Chartered Accountant of Ms. Devina Mehra inwhich it was stated that she had given a loan to the assessee on behalf ofM/s First Global Finance Pvt. Ltd. in which she was a Director. Sincethe letter sent by the Chartered Accountant did not have any authorityfrom Ms. Devina Mehra, the Assessing Officer took no note of it andadded the amount of Rs. 80 lakhs to the income of the assessee being an ITA No.931/2006 Page 2 of 7 4.It would be noticed that according to the assessee, it was anadvance received by the assessee towards purchase of shares from Ms.Devina Mehra while according to M/s. First Global Finance Pvt. Ltd.and the Chartered Accountant of Ms. Devina Mehra the amount was aloan given by M/s First Global Finance Pvt. Ltd. to the assessee. 5.Feeling aggrieved by the assessment order, the assessee filedan appeal and the Commissioner of Income Tax (Appeals) [CIT (A)]who remanded the matter to the file of the Assessing Officer to examinewhether the amount in fact pertains to Ms. Devina Mehra or to M/s FirstGlobal Finance Pvt. Ltd. Feeling aggrieved by the assessment order, the assessee filed 6.The Assessing Officer took up the issue again on remand andthis time the material placed by the assessee was to the effect that M/sFirst Global Finance Pvt. Ltd. had authorized Ms. Devina Mehra, one ofits Directors to advance the amount to the assessee by way of a loan.This transaction was confirmed by Ms. Devina Mehra also. However,quite strangely, it transpired that the assessee actually received theamount by way of three demand drafts, of which two demand drafts ITA No.931/2006 Page 3 of 7 were issued by Ms/ Growell Capital services Pvt. Ltd. for a total of Rs.39 lakhs. In view of these varying versions on record, the AssessingOfficer was not satisfied about the genuineness of the transaction and,therefore, concluded that the amount of Rs. 80 lakhs credited in theaccounts of the assessee was the unexplained income of the assessee. 7. On appeal by the assessee, the CIT (A) concluded that in the ITA No.931/2006 Page 3 of 7 were issued by Ms/ Growell Capital services Pvt. Ltd. for a total of Rs.39 lakhs. In view of these varying versions on record, the AssessingOfficer was not satisfied about the genuineness of the transaction and,therefore, concluded that the amount of Rs. 80 lakhs credited in theaccounts of the assessee was the unexplained income of the assessee. 7. On appeal by the assessee, the CIT (A) concluded that in the absence of a clear cut explanation with regard to the source of Rs. 80lakhs, the nature of the transaction between the assessee, M/s FirstGlobal Finance Pvt. Ltd. and Ms. Devina Mehra and the failure of theassessee to show the genuineness of the transaction, the addition of Rs.80 lakhs was quite justified. 8.The assessee then preferred a further appeal before theTribunal but that appeal was dismissed with the result that the assesseehas approached us under Section 260A of the Income Tax Act, 1961 (theAct) for framing a substantial question of law arising out of the order ofthe Tribunal. 9.Having heard learned counsel for the assessee, we find that ITA No.931/2006 Page 4 of 7 there are several versions that have been given to explain the amount ofRs. 80 lakhs in the hands of the assessee. The amount was initially saidto be an advance received by the assessee from Ms.Devina Mehra forpurchase of shares, then it was said to be a loan given by M/s FirstGlobal Finance Pvt. Ltd., then it was said that Ms. Devina Mehra wasauthorized by M/s First Global Finance Pvt. Ltd. to advance the amountto the assessee and finally, it appears that two of the three demand draftswere not even issued by M/s First Global Finance Pvt. Ltd. or by Ms.Devina Mehra but by a third party, namely, M/s Growell CapitalServices Pvt. Ltd. 10.In view of the shifting stands and the varying explanationsgiven for the source of Rs. 80 lakhs in the account of the assessee, theauthorities under the Act took the view (and were fully justified in doingso) in not accepting the nature of the transaction or the source of thefunds or for that matter the genuineness of the transaction itself. 11.The Tribunal has also noted that the assessee's case was thatthe amount was received from M/s First Global Finance Pvt. Ltd. butthat the Accountant of the assessee had wrongly shown that the amount The Tribunal has also noted that the assessee's case was that ITA No.931/2006 Page 5 of 7 was received from Ms. Devina Mehra. The Tribunal noted that even thisexplanation is contradictory and unsubstantiated because subsequentrepayment of the amount was not made to M/s First Global Finance Pvt.Ltd. but to Ms. Devina Mehra who had herself stated that the amountwas given to the assessee by M/s First Global Finance Pvt. Ltd.. 12.The explanations for the amount are riddled with seriousdoubts. All the authorities under the Act have found against the assesseein view of the discrepancies. There are concurrent findings given by allthe authorities below. 13.We are of the opinion that the facts of the case reveal that thedecision taken by the authorities under the Act cannot be faulted with.No substantial question of law arises for our consideration. 14.The appeal is dismissed. Madan B. Lokur, J April 30, 2007 V.B. Gupta, J ITA No.931/2006 Page 6 of 7 ncg Certified that the correctedcopy of the judgment hasbeen transmitted in the mainServer. ITA No.931/2006 Page 7 of 7