ACIT CIRCLE, KARNAL V. MAHESH TIMBER PVT. LTD., KARNAL

ITA 1330/DEL/2020

AI Insights

The case involves twin appeals by the Assistant Commissioner of Income Tax (ACIT), Circle-Karnal, Haryana against Mahesh Industries Pvt. Ltd. and Mahesh Timber Pvt. Ltd. for the assessment year 2011-12. The appeals were against the orders of the CIT(A), Karnal, which were based on proceedings under section 143(3)/147 of the Income Tax Act, 1961. The core issue was the validity of the reopening of the assessment by the Assessing Officer, who alleged that the assessees received funds from a source involved in bogus sales. However, the Assessing Officer did not make any additions based on this reopening, leading to the Tribunal's decision to quash the reopening.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40619 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-11-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 30-06-2020
• Other Referred Cases: Ranbaxy Laboratory Vs. CIT (2011) 336 ITR 136 (Del), CIT Vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHOUDHARY
• Assessee Lawyers: RANO JAIN
• Keywords: Reason to believe; Bogus

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.1329/Del/2020 Assessment Year: 2011-12 ACIT, Circle-Karnal, Haryana Vs. Mahesh Industries Pvt. Ltd., Timber Market, Sadar Bazar, Karnal, Haryana PAN :AAFCM3302F (Appellant) (Respondent) With ITA No.1330/Del/2020 Assessment Year: 2011-12 ACIT, Circle – Karnal, Haryana Vs. M/s. Mahesh Timber Pvt. Ltd., Timber Market, Sadar Bazar, Karnal, Haryana PAN :AACCM5526G (Appellant) (Respondent) With C.O. No.19/Del/2021 [Arising out of ITA No.1329/Del/2020] Assessment Year: 2011-12 Mahesh Industries Pvt. Ltd., Timber Market, Sadar Bazar, Karnal, Haryana Vs. ACIT, Circle-Karnal, Haryana PAN :AAFCM3302F (Appellant) (Respondent) With C.O. No.20/Del/2021 [Arising out of ITA No.1330/Del/2020] Assessment Year: 2011-12 ITA Nos.1329 & 1330/Del/2020 & C.O. Nos.19 & 20/Del/2021 2 | P a g e M/s. Mahesh Timber Pvt. Ltd., Timber Market, Sadar Bazar, Karnal, Haryana Vs. ACIT, Circle – Karnal, Haryana PAN :AACCM5526G (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM These Revenue’s twin appeals and assessees’ cross objections therein i.e. ITA No.1329 & 1330/Del/2020 and C.O. No.19 & 20/Del/2021, for assessment year 2011-12, arise against the CIT(A), Karnal’s separate orders, both dated 12.03.2020, passed in case no. IT/448/E/KNL/2018-19 and IT/442/KNL/2018-19, respectively, involving proceedings under section 143(3)/147 of the Income Tax Act, 1961 (in short “the Act”). 2. We are informed during the course of hearing that both these Revenue’s appeals as well as assessees’ as many cross objections therein are based on identical set of facts. We thus take up the Assessee by Ms. Rano Jain, Adv. Ms. Mansi Jain, CA Sh. Pranshu Singhal, CA Department by Ms. Jaya Choudhary, CIT(DR) Date of hearing 26.11.2024 Date of pronouncement 02.12.2024 ITA Nos.1329 & 1330/Del/2020 & C.O. Nos.19 & 20/Del/2021 3 | P a g e Revenue’s former appeal ITA No.1329/Del/2020 in case of M/s. ACIT Vs. Mahesh Industries Pvt. Ltd. as the ‘lead’ case. 3. It is noticed from a perusal of this “lead” file, and more particularly, from the assessment order dated 30th December, 2018; that the Assessing Officer had in fact set into motion his section 148/147 reopening jurisdiction after recording the sole reason to believe that the assessee had received funds amounting to Rs.2,95,00,000/- from Sh. Raman Kumar, who had transferred funds to various entities, which represented its bogus sales. As against this, the department could hardly dispute the clinching fact that the learned Assessing Officer’s said assessment proceeded to disallow the corresponding expenditure booked against the said bogus sales; coming to Rs.17,20,36,471/- only. Meaning thereby, that the learned Assessing Officer had not made any addition qua the foregoing sole reason of reopening (supra) and therefore, such a course of action adopted by departmental authorities is not sustainable in law as per Ranbaxy Laboratory Vs. CIT (2011) 336 ITR 136 (Del) and CIT Vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.). 4. We accordingly conclude that the impugned reopening deserves to be quashed in these peculiar facts and circumstances. ITA Nos.1329 & 1330/Del/2020 & C.O. Nos.19 & 20/Del/2021 4 | P a g e Ordered accordingly. This Revenue’s lead appeal ITA No. 1329/Del/2020 fails and the assessee M/s. Mahesh Industries Pvt. Ltd.’s cross objection 19/Del/2021 is accepted in very terms. 5. Same order to follow in the Revenue’s remaining appeal ITA No.1330/Del/2020 and latter assessee’s C.O. No. 20/Del/2021 therein since involving identical facts. 6. All other pleadings herein in these four cases stand rendered academic. 7. To sum up, these Revenue’s twin appeals ITA Nos.1329 & 1330/Del/2020 are dismissed and assessees’ cross objections C.O. Nos. 19 & 20/Del/2021 are allowed in above terms. A copy of this order be placed in respective case files. Order pronounced in the open court on 2nd December, 2024 Sd/- Sd/- (M. BALAGANESH) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 2nd December, 2024. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "