M/s. Bhaijee Portfolio Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 10/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1270 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tangible material; Accommodation entries; Competent authority; Reassessment proceedings
• Section: 143(1); 147; 131; 148; 68

Judgement Text

1 ITA NO. 5322/DEL/2015 & C.O NO. 10/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. NO. 5322/DEL/2015 (A.Y 2007 - 08) DCIT CIRCLE - 4(2) NEW DELHI ( APPELLANT) VS BHAIJEE PORTFOLIO PVT. LTD. (NOW KNOWN AS BHAIJEE PORTFOLIO LTD.) AG - 401, SHALIMAR BAGH NEW DELHI AACCB9390H (RESPONDENT) C.O NO. 10/DEL/2016 (A.Y 2007 - 08) BHAIJEE PORTFOLIO PVT. LTD. (NOW KNOWN AS BHAIJEE PORTFOLIO LTD.) AG - 401, SHALIMAR BAGH NEW DELHI AACCB9390H (APPELLANT) VS DCIT CIRCLE - 4(2) NEW DELHI (RESPONDENT) APPELLANT BY SH. N. K. BANSAL, SR. DR RESPONDENT BY SH. R. S. SINGHVI & SH. SATYAJIT GOEL, CA ORDER PER SUCHITRA KAMBLE, JM TH E APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29/05/2015 PASSED BY CIT(A) - II, NEW DE LHI FOR ASSESSMENT YEAR 2007 - 08. 2. THE GROUNDS OF APPEAL ARE AS UNDER : - I . T.A. NO. 5322/DEL/2015 DATE OF HEARING 04.04.2019 DATE OF PRONOUNCEMENT 0 4 . 0 6 .2019 2 ITA NO. 5322/DEL/2015 & C.O NO. 10/DEL/2016 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.70,000,000/ - MADE U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF SHARE CAPITAL. 2. ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS DELETED THE ADDITIONS U/S 68 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE SHAREHOLDERS WHO HAVE INVESTED IN THE COMPANY. 3. ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT SUMMONS U/S 131 ISSUED TO SH. SATISH GUPTA, DIRECTOR OF ASSESSEE COMPANY AND ALSO TO THE SHAREHOLDER, REMAINED UNCOMPLIED WITH. 4. ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) FAILED TO APPRECIATE THAT IN CASE OF SHARE SUBSCRIBER VIZ. VENUS INSEC PVT. LTD. THE ACCOUNTS WERE SIGNED BY MS. RITU SAXENA IN CAPACITY OF DIRECTOR AGAINST WHOM THE DEPARTMENT HAD RECEIVED SPECIFIC INFORMAT ION FROM INVESTIGATION WING AS BEING RECEPTIONIST OF SH. TARUN GOYAL, WHO HAD BEEN PROVED TO BE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. C.O NO. 10/DEL/2016 1. THAT AS PER FACTS AND CIRCUMSTANCES OF THE CASE AND UNDER THE LAW, THE LD.CIT(A) HAS ERRE D IN SUSTAINING THE REOPENING OF THE CASE U/S 147/148 OF THE INCOME TAX ACT, 1961. 2. THAT INITIATION OF REASSESSMENT PROCEEDINGS ARE WITHOUT ANY TANGIBLE MATERIAL AND EVEN WITHOUT APPROVAL OF DESIGNATED AUTHORITY AND AS SUCH REASSESSMENT PROCEEDINGS ARE ILLEGAL AND WITHOUT JURISDICTION . 3 ITA NO. 5322/DEL/2015 & C.O NO. 10/DEL/2016 3. FIRSTLY, WE ARE TAKING UP THE CROSS OBJECTION, AS LD. AR IS CHALLENG ING REOPENING U/S 147/148 OF THE ACT. THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH WAS INCORPORATED ON 30.08.2006 AND THIS IS THE FIRST YEAR OF THE COMPANY. THE COMPANY WAS INCORPORATED FOR CARRYING OUT BROKERAGE ACTIVITIES RELATING TO PURCHASE AND SALE OF SHARES. HOWEVER, THIS BEING THE FIRST YEAR, NO SUCH ACTIVITY WAS CARRIED OUT DURING THE YEAR. THE RETURN OF INCOME ON THE BASIS OF AUDITED ACCO UNTS WAS DULY FILED ON 23.10.2007 AND SAME WAS PROCESSED U/S 143(1) ON 26.08.2008 . A SEARCH/SURVEY OPERATION U/S 132/133 A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED BY INVESTIGATION WING OF INCOME TAX DEPARTMENT ON 15/09/2008 AT THE OFFICE PREMISES OF SHR I TARUN GOEL. VARIOUS INCRIMINATING DOCUMENTS WERE SEIZED AND AMENDED. IN THE PRESENT CASE OF THE ASSESSEE COMPANY , PROCEEDINGS U/S 147/148 WERE INITIATED VIDE NOTICE DATED 26.03.2014 BY RECORDING REASONS AND SATISFACTION THAT INCOME HAS ESCAPED ASSESSMEN T WITHIN THE MEANING OF SECTION 147 OF THE ACT BASED ON THE EVIDENCE CONTAINED IN THE REPORT OF INVESTIGATION WING AND AFTER TAKING NECESSARY APPROVAL FROM THE COMPETENT AUTHORITY. THE ASSESSING OFFICER MADE THE ADDITION U/S 68 IN RESPECT OF SHARE CAPITA L AMOUNTING TO RS. 70,00,000/ - . 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5 . THE LD. AR SUBMITTED THAT T HE REASONS ARE REPRODUCED IN THE ASSESSMENT ORDER, BUT THERE WAS NO MENTION OF DATE WHEN THE SAME WAS RECORDED. DURING THE HEARING, THE ASSESSEE PRODUCED CERTIFIED COPIES OF THE REASONS RECORDED FOR INITIATION OF SECTION 148 PROCEEDINGS , THE SAME BARES APPROVAL OF THE CONCERNED CIT(A) DATED 27/3/2014 WHI CH WAS PROPOSED BY THE DCIT ON 26/3/2014. THE LD. AR ALSO POINTED OUT NOTICE U/S 148 DATED 26/3/2014. THUS, THE LD. AR IS TAKING TECHNICAL GROUND THAT BEFORE THE APPROVAL OF THE CIT HOW NOTICE CAN BE ISSUED BY THE ASSESSING OFFICER . BESIDES THAT IN THE REASONS, THE ASSESSEES NAME HAS BEEN ENTERED AT PAGE 2 OF THE REASONS AND THE REST OF THE CONTENTIONS SET OUT BY THE REVENUE ARE IDENTICAL TO THE OTHER GROUP CASES OF TARUN GOEL 4 ITA NO. 5322/DEL/2015 & C.O NO. 10/DEL/2016 GROUP. THUS, THE LD. AR SUBMITTED THAT THE INITIATION OF REOPENING U/S 148 I S ITSELF BAD IN LAW. 6. THE LD. DR SUBMITTED THAT THE REASONS WERE PROPERLY RECORDED AND THE INITIATION OF REOPENING IS VALID. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE RECORDS , IT CAN BE CLEARLY SEEN THAT THE NOTICE HAS BEEN ISSUED PRIOR TO THE APPROVAL. THUS, REOPENING U/S 148 IS WITHOUT THE APPROVAL OF THE DESIGNATED AUTHORITY AND AS SUCH REASSESSMENT ITSELF IS BAD AND WITHOUT ANY JURISDICTION. THE MANDATORY CONDITIONS OF SECTION 148 HAS NOT AT ALL F OLLOWED BY REVENUE. THEREFORE, THE RE - OPENING ITSELF IS VOID AB INITIO AND DOES NOT SURVIVE. THUS, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. SINCE THE INCEPTION OF THE CHALLENGE OF THE ORDER OF CIT(A) IN REVENUES APPEAL ITSELF IS VOID AB INITI O, THE REVENUES APPEAL IS DISMISSED. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 4 T H JUNE , 2019 . S D / - S D / - (G. D. AGRAWAL) (SUCH ITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 0 4 /0 6 /2019 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 5322/DEL/2015 & C.O NO. 10/DEL/2016 DATE OF DICTATION 04.04.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.04.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK