Pr. Commissioner Of Income Tax Central -2 Newdelhi v. Phonenix Datatech Services Pvt Ltd

$~2 *IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 804/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL -2 NEWDELHI..... Appellant ..... AppellantThrough:Mr. Ashok Manchanda, Advocate. Versus PHONENIX DATATECH SERVICES PVT LTD...... RespondentThrough:Mr. Inder Paul Bansal and Mr. VivekBansal, Advocates. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE NAJMI WAZIRIO R D E R%06.01.2017 1.The learned counsel for the respondent/assessee submits that theassessee has since been amalgamated and is now known as M/s ImperiaStructures Limited, the date of effect of the amalgamation order is01.04.2012. 2.The Revenue is in appeal, under Section 260A of the Income Tax Act,1961 (hereinafter to be referred as ‘the Act’), aggrieved by a decision of theIncome Tax Appellate Tribunal (ITAT). Allowing the assessee’s appeal, it isurged that the ITAT’s reversal of the concurrent findings of the RevenueAuthorities is on a misappreciation of the facts and law. 3.Search and seizure proceedings were conducted in respect of ThaparGroup and Companies and one Mr. B.K. Dhingra, one of its directors. SinceMr.Inder Mohan Thapar is the director/assessee and in respect of which regular proceedings for Assessment Year 2009-10 were pending, an inquirywas made into its accounts, based upon the recoveries made in the course ofsearch. So far as the assessee was concerned, a chart found in the premisesof Mr. B.K. Dhingra, containing 66 names with specific amounts formed thebasis of the Assessment Officer’s (AO) conclusion that undisclosed amountsaggregating over `1.67 crores were added.The assesseee’s appeal waspartly successful in that the Commissioner of Income Tax (Appeals) [CIT(A)], after calling for a remand report, directed the deletion of `27 lakhs. It,therefore, appealed further. 4.After an appreciation of overall circumstances, including the materialspresented before it, the remand report considered by the CIT (A) as well asother materials brought on the record during the course of the appellateproceedings before the CIT (A), the ITAT was of the opinion that theparticulars and details of the cheques etc. reflected in the chart, whichformed the sole basis for addition of `1.67 crores, could not be attributed toit. Tellingly, the ITAT, observed as follows:- “i.Above documents are not seized from the premises of theassessee but at the premises of third party who is neither thedirector nor the shareholder of the company. However neitherthe ld. AO as well as The Ld. CIT (A) has led any evidence thatthough the paper shows the names of the appellant along withtwo other companies but these papers are found from the thirdparty i.e. Shri B K Dhingra and how is he associated with theappellant. Ld. CIT (A) has stated that Shri B K Dhingra is a closeassociate of Shri I M Thapar. Merely an assertion that somebodyis close to one of the director cannot become the close associateof the appellant company itself. Ld. AO has not led any evidencethat Shri Dhingra looks after the affairs of the company in anymanner the evidence of actual transaction of those parties and itis unaccounted income of these companies. ii.On 20.8.2008 search on Thapar Homes Group as well assurvey on the assessee were carried out. Admittedly, during thecourse of search the charts as well as the counterfoils of thechequebooks were found from Shri B K Dhingra. However,during survey no evidences with respect to the projects whetherin existence or not for which the statement is found, whether thecounterfoils of cheques, which were relied up on whether clearedin the bank, account of the appellant were examined. Appellanthas submitted that the there is no such project, assessee receivedno such booking and no such cheques were received in the bankaccount of the assessee. Revenue has not controverted this fact.As the said cheques have not at all been received by the assessee,merely because in the counterfoil of the chequebook of issuingparty, name of the appellant is mentioned, it cannot result in toaddition in the hands of the assessee unless it is cleared in thebank account of the appellant. iii. During assessment the appellant was not confronted with thestatement of the person from whose possession these chart andalso the counterfoils of the cheques of six companies were found.In fact, there is no averment in the order that any such statementis in possession of revenue. iv. Furthermore the name of all the parties in that particularstatement wherein bookings in the name of those parties havebeen shown, appellant has filed confirmation of those partiesstating that they have not booked any such premises and alsoapparently no payment have been made. On these confirmationId. AO has neither issued any summons to those parties norexamined their bank statement about the issue of those chequesand whether these cheques have been cleared or not. Theassessing officer and CIT (A) have brushed aside thoseconfirmations as meaningless. In fact, on examination of thoseconfirmations, reality of the reason for writing counterfoils of thechequebooks in the name of appellant and two other companieswould have been known to revenue. The reason why thosecheques were issued but were never came in to the bank accountsof the appellant and whether they are really handed over to the appellant company is also not known to revenue. It is anuncontrovertedfactsthatthosechequesremainingnon-transacted. Contrary to that appellant has discharged its onus byproducing the confirmation of those parties that they haveneither booked any premises with the appellant company andtherefore have not paid any sum.v. It is the allegation of the revenue that these companies are thebogus companies floated by one Shri B K Dhingra and they areused for capital formation activities. This fact merely remains aconjecture and surmises in absence of any evidences led byrevenue against that person i.e. Shri B K Dhingra and hisconnection with the appellant company. Merely making anassertion that Shri B K Dhingra is entry operator or thecompaniesareformedforcapitalformationremainsunsubstantiated allegation unless there are any evidences suchas assessment orders etc of entry operator or the assessmentorders of those companies operated by him. vi. Further assuming that those companies are the boguscompanies, and then on looking at the chart we found that thereare columns of ‘cash’.If the amounts are the bogus amountintroducedbytheappellantcompanythenwefailedtounderstand that how the cash is also be received from thosecompanies, whereas in general only commission is required to bepaid to the entry provider and no cash is receivable from them. viii. Further, it remains uncontroverted that there was no projectin the name of the appellant in impugned assessment year asthere was no permission also. The facts of the acquisition of landare submitted by the Ld. AR and also stated the status of theproject, which is not controverted. It is highly unlikely that thebuilder who is not the line of the developer for considerable timewould get such kind of bookings. All the counter foil of chequesshowed dates, of March 2008. viii. Further, it remains uncontroverted that there was no projectin the name of the appellant in impugned assessment year asthere was no permission also. The facts of the acquisition of landare submitted by the Ld. AR and also stated the status of theproject, which is not controverted. It is highly unlikely that thebuilder who is not the line of the developer for considerable timewould get such kind of bookings. All the counter foil of chequesshowed dates, of March 2008. viii.Further Ld. CIT (A) drew support from the provision ofsection 292C of the act. That provision applies in case the documents are found from the possession of the person then thepresumption arises against that person. According to us, thereliance on it is unfounded as there are no documents found fromthe possession of the assessee or at the premises of the assessee.It was found from Shri B K Dhingra who has no businessrelationship with the appellant company. ix. Ld CIT (A) has held that details mentioned in the chart arenot projections but actual transactions. This assertion of Ld. CIT(A) is also not supported by evidences because in thosecircumstances the' cheques issued by those companies shouldhave been reflected in the bank statements of the appellantcompanies. It is unassailed that these cheques have never beencredited in the bank account of the appellant company. x. Ld CIT (A) relied on the decision of Honourable Delhi Highcourt in case of CIT V Sonal Constructions 28 taxmann.com 127(del) for calculations shown in the documents. In the present caseas the project is nonexistent, the cheques are not credited in thebank account of the appellant, the confirmation of the partiesthat they have not made any bookings and have not paid any sumtotheappellantcompany,thefactsofthatcasearedistinguishable.” 5.The learned counsel for the Revenue sought to urge that the ITAT’sdecision is erroneous because the AO had investigated and found that theassessees were bogus and the amounts were not found to be genuine. It wasargued that the ITAT was in error in reversing the concurrent factualfindings. 6.This Court is of the opinion that the ITAT is the final fact findingauthority.Unless its appreciation of the circumstances and facts ismanifestly perverse or contrary to the record, the High Court, in exercise ofits appellate powers as the third forum of review, as it were, would be reluctant to interfere with its orders.In the present case, the solitary basisfor addition of over `1.67 crores was the chart recovered from the premisesof Mr. B. K. Dhingra.Whatever be the facial indications, one thing isapparent i.e. that it revealed some amounts were paid by the third parties.The details of cheques and other particulars were reflected in the charts. Ascorrectly observed by the ITAT, the evidentiary value of these charts, as faras the assessee was concerned, could not be conclusive given the fact that itwas neither the searched party nor was a party receiving notice under Section153C of the Act.Under the circumstances, the AO could have added theseamounts only if he had made a searching enquiry into all the circumstances.That the amounts were reflected by way of cheques and these cheques wereentered in the charts is not in dispute.If such is the case, whether thoseamounts were reflected in the assessee’s Bank accounts or not and wereencashed by some other entity was a matter of appropriate enquiries. TheAO’s failure to do so could not have resulted in the assessee being taxed forthose amounts. 7.In view of all these circumstances, we are of the opinion that nosubstantial question of law arises in this case.The appeal is thereforedismissed. S. RAVINDRA BHAT, J. JANUARY 06, 2017sb NAJMI WAZIRI, J.