M/s Singhal Strips Ltd., New Delhi V. DCIT, New Delhi

CO 28/DEL/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5300 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-11-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 03-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SANKAR
• Keywords: Unexplained cash credit; Unexplained expenditure; Opportunity of cross examination; Period of limitation; Retrospective amendment; Accommodation entries; Assessment record; Onus to prove; Time period of passing order; Reason to believe
• Section: 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1972/DEL/2009 ASSESSMENT YEAR : 2000-01 DCIT, CIRCLE 8 (1), ROOM NO.163, CR BUILDING, NEW DELHI. VS. M/S SINGHAL STRIPS LTD., ROOM NO.5, NARAINA LOHA MANDI, NEW DELHI. PAN : AAACS0344J C.O. NO.28/DEL/2010 (ITA NO.1972/DEL/2009) ASSESSMENT YEAR : 2000-01 M/S SINGHAL STRIPS LTD., ROOM NO.5, NARAINA LOHA MANDI, NEW DELHI. PAN : AAACS0344J VS. DCIT, CIRCLE 8 (1), ROOM NO.163, CR BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK BANSAL, CA REVENUE BY : SHRI PEEYUSH SANKAR, DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJE CTIONS BY THE ASSESSEE. BOTH ARE DIRECTED AGAINST THE ORDER OF TH E CIT (A) DATED 20 TH FEBRUARY, 2009 FOR ASSESSMENT YEAR 2000-01. GROUNDS OF APPEAL AND GROUNDS OF CROSS OBJECTIONS READ AS UNDER:- ITA NO.1972/DEL/2009 2 GROUNDS OF APPEAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF ` 16,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDITS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF ` 8,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION FOR OBTAINING ACCOMMODATION ENTRY. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD O R FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. GROUNDS OF CROSS OBJECTIONS 1. THAT CIT (APPEALS) HAS ERRED IN LAW AND FACTS OF T HE CASE IN HOLDING THAT NOTICE ISSUED UNDER SECTION 148 WAS A VALID NOTICE. 2. THE RETURN OF INCOME DECLARING LOSS OF ` 26,94,965 /- WAS FILED ON 29 TH NOVEMBER, 2000 ALONG WITH THE COPY OF AUDITED STATE MENTS OF ACCOUNTS WHICH WAS PROCESSED ON 28 TH FEBRUARY, 2001. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S 148 DATE D 23 RD MARCH, 2007 WHICH WAS SENT BY REGISTERED POST AND THE R EASONS RECORDED WERE AS UNDER:- 19-3-2007 REASONS FOR ISSUE OF NOTICE U/S 148 IN THE CASE OF M/S SINGHAL STRIPS LTD. 440/1, BHOLA NATH NAGAR, SHAHDARA, DELHI A.Y. 2000-01. RETURN DECLARING LOSS OF RS.26,94,965/- FOR A.Y. 200 0-01 WAS FILED ON 29-11-2000 AND THE SAME WAS PROCESSED U /S 143 (1) ON 28.2.2001. INFORMATION HAS BEEN RECEIVED FROM DIT (INV.) THAT M/S SINGHAL STRIPS LTD. 440/1, BHOLA NATH NAGAR, SHAHDARA, DELHI HAS BEEN A BENEFICIARY OF ACCOMMODATION ENTRIES BEING PRO VIDED BY CERTAIN ENTRY OPERATORS. ON THE BASIS OF THE INFORMATION CHART ITA NO.1972/DEL/2009 3 FORWARDED BY THE DIT (INV.), NEW DELHI IT IS SEEN THAT THE ASSESSEE IS INVOLVED IN THE FOLLOWING BOGUS TRANSACTIO NS DETAILED IN THE CHART FORWARDED BY THE DIT (INV.), NEW DELHI. BENEFICIARYS NAME SINGHAL STRIPS LTD. BENEFICIARY BANK NAME BANK OF BARODA BENEFICIARY BANK BRANCH VIKAS MARG, SHAKARPUR VALUE OF ENTRY TAKEN RS.4,00,000/- INSTRUMENT NO. BY WHICH ENTRY TAKEN 447133 DATE ON WHICH ENTRY TAKEN 12.5.1999 NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT PARIVARTAN CAPITAL & FINANCIAL SERVICES (P) LTD. BANK OF ENTRY GIVEN BANK CORPORATION BANK, KAMLA NAGAR ACCOUNT NO. ENTRY GIVING ACCOUNT 3317 I HAVE THEREFORE REASON TO BELIEVE THAT AN AM OUNT OF RS.4,00,000/- HAS ESCAPED ASSESSMENT WITHIN THE MEANIN G OF SECTION 147 (B) OF THE IT ACT, 1961. SINCE THE ASSESSMENT HAS BEEN COMPLETED U/S 143 (1) A ND 4 YEARS HAVE SINCE BEEN ELAPSED, THE ASSESSMENT RECOR D IS BEING SUBMITTED FOR KIND PERUSAL AND APPROVAL OF THE A DDL. CIT, RANGE-8, NEW DELHI AS PER SECTION 151 (2) OF THE IT A CT, 1961 FOR ISSUANCE OF NOTICE U/S 148 OF THE INCOME-TAX ACT. SD/- (KUSUM GUPTA) DY. COMMISSIONER OF INCOME-TAX, CIRCLE 8(1), NEW DELHI. ADDL. CIT, RANGE-8, NEW DELHI. I AGREE. MAY ISSUE NOTICE U/S 148. SD/- 23.04.2007 (SUBRAT MISHRA) 3. VIDE LETTER DATED 9 TH AUGUST, 2007, THE ASSESSEE STATED THAT THE RETURN ORIGINALLY FILED U/S 139 (1) MAY KINDLY BE TR EATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 AND ALSO REQUESTED FOR SUPP LY OF COPY OF REASONS RECORDED WHICH WAS PROVIDED TO THE ASSESSEE VIDE O RDER SHEET ENTRY DATED 9 TH AUGUST, 2007 TO THE COUNSEL OF THE ASSESSEE. THE ASSESSING OFFICER ISSUED NOTICE U/S 142 (1) REQUIRING THE ASSESSEE TO ITA NO.1972/DEL/2009 4 EXPLAIN VARIOUS QUERIES RAISED IN THE SAID NOTICE AND T HE PROCEEDINGS WERE ADJOURNED FROM TIME TO TIME. THE ASSESSEE OBJECTE D TO THE ISSUANCE OF NOTICE U/S 148 AND THOSE OBJECTIONS WERE REJ ECTED VIDE LETTER NO.1059 DATED 20 TH DECEMBER, 2007 DELIVERED TO SHRI DEEPAK BANSAL AND THE ASSESSEE WAS REQUIRED TO FURNISH THE COMPLE TE DETAILS. THE ASSESSEE SUBMITTED LETTER DATED 21 ST DECEMBER, 2007, BUT DID NOT FILE ANY DETAILS SHOWING THAT DURING THE YEAR THE ASSESSE E COMPANY HAD MADE ADDITION OF ` 16 LAC TO THE SHARE CAPITAL. IT WAS SUBMITTED THAT THE THEN CA AND AUDITOR OF THE ASSESSEE COMPANY HA S LEFT THE AUDIT OF THE COMPANY AND THE INFORMATION REQUIRED W AS WITH HIM ONLY WHICH COULD NOT BE RECEIVED BY THE ASSESSEE. FROM THESE SUBMISSIONS OF THE ASSESSEE, LD. ASSESSING OFFICER OBSERVED THAT THEY AR E SURPRISING. FROM THE LIST OF SHAREHOLDERS HE OBSERVED THAT AS ON 31 ST MARCH, 2005, THE NAME OF M/S PARIVARTAN CAPITAL AND FINANCIAL SER VICES PVT. LTD. IS EXISTING ASSESSEE AND IT WAS SUBMITTED BY THE REPRESENTATIV E OF THE ASSESSEE THAT THERE WAS NO CHANGE IN THE SHAREHOLDERS FROM ASSESSMENT YEAR 2000-01 TILL DATE. THEREFORE, THE ASSESSIN G OFFICER OBSERVED THAT IT WAS CLEAR THAT THE ASSESSEE DOES NOT WANT TO FILE THE REQUIRED CONFIRMATIONS, DETAILS AND EVIDENCE OF THE A LLEGED SHAREHOLDERS FROM WHOM THE ASSESSEE CLAIMS TO HAVE RECEIVE D A CAPITAL OF ` 16 LACS DURING THE YEAR. THEREFORE, OB SERVING THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS TO PROVE THE GEN UINENESS OF INCREASE IN THE CAPITAL. THUS, HE TREATED THE SUM OF ` 16 LAC AS UNEXPLAINED CASH CREDIT AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO ADDED FURTHER AMOUNT O F 0.5% ON ACCOUNT OF UNEXPLAINED EXPENDITURE FOR ARRANGING TH E ACCOMMODATION ENTRY. IN THIS MANNER, THE ASSESSMENT CAME TO BE FRAMED AT A NET LOSS OF ` 10,86,965/- IN PLACE OF RETURNED LOSS OF ` 26,94 ,965/-. 4. IN THE FIRST APPEAL FILED BEFORE THE CIT (A), THE VALIDITY OF RE- ASSESSMENT PROCEEDINGS WERE CHALLENGED ON THE GROUND INTER ALIA THAT ITA NO.1972/DEL/2009 5 AS PER STATUTORY REQUIREMENT, THE ASSESSING OFFICER WAS RE QUIRED TO OBTAIN THE PERMISSION OF ADDITIONAL CIT BEFORE ISSUING NOTICE U/S 148 AND THE LIMITATION PERIOD FOR OBTAINING SUCH PERMISSIO N WAS UPTO 31 ST MARCH, 2007 AND THE SAID PERMISSION APPEARS TO HAVE BEE N OBTAINED ONLY ON 23 RD APRIL, 2007 AS IT WAS CLEAR FROM THE SIGNATURE OF SHR I SUBRAT MISHRA, ADDL. CIT, RANGE-8, NEW DELHI WHO, AF TER HIS SIGNATURE HAS PUT THE DATE AS 23 RD APRIL, 2007. ON MERITS, IT WAS CONTENDED THAT THE ASSESSING OFFICER DID NOT GIVE THE OPPORTUNITY TO T HE ASSESSEE TO CROSS EXAMINE THE INFORMATION BASED UPON WHICH THE RE- ASSESSMENT PROCEEDINGS WERE INITIATED. IT WAS ALSO SUBMITTED THAT THE REASONS SPEAKS OF ONLY AN AMOUNT OF ` 4 LAC RECEIVED BY THE A SSESSEE FROM M/S PARIVARTAN CAPITAL AND FINANCIAL SERVICES PVT LTD., HENCE, THE ADDITION OF ` 16 LAC WAS CONTRARY TO THE RECORD AND COULD NOT BE VALIDLY MADE. FOR RAISING THE PROPOSITION THAT IN THE ABSENCE OF OPP ORTUNITY FOR CROSS EXAMINATION, THE ASSESSMENT WILL BE INVALID, THE ASSESSEE H AD RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VIJAY GUPTA, 303 ITR 95. 5. SO FAR AS IT RELATES TO THE CONTENTION OF THE ASSESSEE REGARDING INVALIDITY OF RE-ASSESSMENT PROCEEDINGS, LD. CIT (A) HAS OBSERVED THAT THE DATE BY ADDL. CIT WAS INADVERTENTLY MENTIONED AS 23 RD APRIL, 2007 INSTEAD OF 23 RD MARCH, 2007 AND, THEREFORE, SIMPLY ON THAT BASIS NOT ICE COULD NOT BE HELD TO BE ILLEGAL. HE ALSO OBSERVED TH AT AS IN THE REASON RECORDED ITSELF NOT ONLY THE NAME OF THE PARTY, BUT THE DATE OF TRANSACTION, INSTRUMENT NO. AND THE BANK ACCOUNT THRO UGH WHICH THE TRANSACTION WAS MADE WERE MENTIONED AND, AT THE TIME OF ISSUE OF NOTICE U/S 148 ONLY PRIMA FACIE BELIEF WAS TO BE FORM ED BY THE ASSESSING OFFICER AND IT WAS NOT REQUIRED TO CONCLUSIVELY PROVE THE ESCAPEMENT, THE PROCEEDINGS WERE VALIDLY INITIATED U/ S 148. THE RELEVANT OBSERVATIONS OF CIT (A) ON THIS ISSUE ARE AS UND ER:- ITA NO.1972/DEL/2009 6 2.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE ON BEHALF OF THE APPELLANT. FROM THE COPY OF REASONS REC ORDED WHICH IS FILED BY THE APPELLANT, IT IS SEEN THAT THE A.O. HAD RECORDED REASONS ON 19.3.07. THE DATE OF SANCTION BY ADDL CIT RANGE-9 IS MENTIONED AS 23.4.07 BELOW THE REASONS REC ORDED BY THE A.O. HOWEVER, IT IS NOTED FROM THE COPY OF LETTER DA TED 20.12.07 WRITTEN BY THE A.O. TO THE APPELLANT THAT AFTER SER VICE OF NOTICE U/S 148 THE APPELLANT HAD AUTHORIZED ON 17.4. 07 SHRI V.K. TULSYAN CA TO REPRESENT IN THE SAID PROCEEDINGS. IT IS THEREFORE CLEAR THAT THE NOTICE WAS ISSUED BY THE A.O. ON 23.3.07 WHEN THE SANCTION OF ADDL. CIT WAS RECEIVED. THE MEN TIONING OF THAT DATE AS 23.4.07 INSTEAD OF 23.3.07 IS AN INADVERTEN TLY ERROR. IF THE A.O. WAS TO ISSUE NOTICE WITHOUT OBTAINING SANCTION , THE NOTICE COULD HAVE BEEN ISSUED ONLY ON 19.3.07 WHEN TH E REASONS WERE RECORDED. HOWEVER IT WAS ACTUALLY ISSUED AFTER O BTAINING THE SANCTION FROM ADDL CIT IN WHICH HOWEVER DATE WAS INADVERTENTLY MENTIONED AS 23.4.07 INSTEAD OF 23.3.07. THEREFORE, SIMPLY ON THIS BASIS NOTICE CANNOT HELD TO B E ILLEGAL. IT IS FOUND THAT THE A.O. HAD RECEIVED SOME SPECIFIC I NFORMATION FROM THE DIT (INV.) ON THE BASIS OF WHICH REASONS WER E RECORDED HAVE BEEN REPRODUCED IN THE ASSESSMENT ORDER ITSELF. N OT ONLY THE NAME OF THE PARTY, BUT DATE OF TRANSACTION, INSTRUMENT N O. AND THE BANK ACCOUNT THOUGH WHICH THE TRANSACTION WAS MAD E ARE MENTIONED. AT THE TIME OF ISSUE OF NOTICE U/S 148 ONLY PRIMA FACIE BELIEF IS TO BE FORMED BY THE A.O. AND E SCAPEMENT IS NOT TO BE CONCLUSIVELY PROVED. IN THIS CASE ORIGINALLY NO SCRUTINY ASSESSMENT WAS MADE AND THE RETURN WAS SIMPLY PROCESSE D U/S 143 (1). THEREFORE THERE WAS NO OCCASION TO VERIFY TH E CONTENTS OF RETURN. AS REGARDS THE OTHER CONTENTION OF NOT CONFRO NTING THE INFORMATION OR MATERIAL, OR NON PRODUCTION OF PARTY FO R CROSS EXAMINATION, THE SAME IS NOT BE DONE AT THE TIME OF RECOR DING OF REASONS. THESE ARGUMENTS CAN BE CONSIDERED WHILE DE CIDING THE MERITS ABOUT THE ADDITIONS MADE. THEREFORE THE NOTICE U/ S 148 AND THE SUBSEQUENT ASSESSMENT ARE HELD TO BE VALID. 6. ON MERITS, CIT (A), REFERRING TO THE CONTENTIONS R AISED BY THE ASSESSEE BEFORE HIM, HAS CONCLUDED THAT THE ADDITION COU LD NOT BE MADE FIRSTLY ON ACCOUNT OF NON-GRANT OF OPPORTUNITY OF CROSS EXAMINATION BY THE ASSESSEE AND, SECONDLY, ON THE GROUND THAT INFORMATION AVAILABLE WAS WITH RESPECT TO A SUM OF ` 4 LAC. FOR HOLDING THAT ASSESSMENT WILL BE INVALID IN THE ABSENCE OF OPPORT UNITY TO CROSS EXAMINE THE ADVERSE MATERIAL, LD. CIT (A) HAS RELIED UPON THE AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF VIJAY GUPTA (SUPRA). FOR THE SAKE OF COMPLETENESS THE RELEVANT OBSERVATIONS OF CIT (A) ON THIS ISSUE ARE REPRODUCED BEL OW:- ITA NO.1972/DEL/2009 7 3.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E ON BEHALF OF THE APPELLANT. I HAVE ALSO SEEN THE RELEVAN T PART OF THE DECISION IN THE CASE OF VIJAYA GUPTA 303 ITR 95 HON. DELHI HIGH COURT IN WHICH IT IS HELD THAT THE CONCERNED PARTY HAS TO BE PRODUCED FOR CROSS EXAMINATION IF SO DEMANDED BY THE ASSESSEE. IT IS NOTED THAT IN 147 PROCEEDINGS THE PRIMARY ONUS TO P ROVIDE NECESSARY INFORMATION OR MATERIAL TO PROVE THE ESCAPEME NT OF INCOME IS ON THE A.O. HOWEVER, THE A.O., ALTHOUGH REL IED ON THE INFORMATION RECEIVED FROM THE OFFICE OF DIT (INV.), DID NOT CONFRONT THE APPELLANT WITH ANY MATERIAL OR EVIDENCE TO S HOW THAT THE SHARE CAPITAL RECEIVED BY IT WAS IN THE NATURE OF ACCOMMODATION ENTRY. THE APPELLANT COMPANY HA SPECIFI CALLY REQUESTED AND DEMANDED FROM THE A.O. TO CONFRONT THE REL EVANT MATERIAL AND PRODUCE THE PARTY FOR CROSS EXAMINATION TO SUPPORT THE ALLEGATION. THE A.O. DID NOT BRING ON RECORD ANY MATERIAL TO SHOW THAT THE AMOUNT RECEIVED WAS IN THE FORM OF ACCOMMODATION ENTRY AND HENCE IT IS CLEAR THAT THE A.O. H AS FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS. MOREOVER, THE A.O. HAS NOWHERE JUSTIFIED THE REASON FOR MAKING A DDITION OF RS.16 LAC, THOUGH THE INFORMATION WAS RECEIVED ONLY FO R RS.4 LACS. IN VIEW OF THIS ADDITION OF RS.16 LACS WAS NOT JUSTIFIED AND HENCE IT IS DELETED. SINCE THE ADDITION ITSELF HAS BEE N DELETED THERE IS NO JUSTIFICATION FOR THE ADDITION OF ALLEGED CO MMISSION OF RS.8,000 WHICH IS ALSO DELETED. 7. IN THE APPEAL FILED BY THE REVENUE, THE DELETION OF ADDITION IS CONTESTED AND IN THE CROSS OBJECTION FILED BY THE ASSESSEE THE ORDER OF CIT (A) UPHOLDING THE VALIDITY OF NOTICE U/S 148 IS A SSAILED. 8. AS THE ASSESSEE IS CHALLENGING THE VALIDITY OF RE-ASSESSM ENT PROCEEDINGS, THAT BEING LEGAL ISSUE IS REQUIRED TO BE F IRST DECIDED. THEREFORE, LD. AR WAS HEARD ON THE CROSS OBJECTIONS. L D. AR HAS PRODUCED BEFORE US PHOTO COPY OF REASONS RECORDED BY T HE ASSESSING OFFICER WHICH HAVE ALREADY BEEN REPRODUCED IN THE ABOVE PART OF THIS ORDER. BELOW THE SAID REASONS, THE ENTRY EXIST AS FOLLO WS:- ADDL. CIT, RANGE-8, NEW DELHI. I AGREE. MAY ISSUE NOTICE U/S 148. SD/- 23.04.2007 (SUBRAT MISHRA) 9. LD. AR PLEADED THAT THE ASSESSING OFFICER HAS ISSUED NO TICE U/S 148 BEFORE THE APPROVAL OF THE ADDL. CIT, AS THE SAID APPROVAL WAS ITA NO.1972/DEL/2009 8 GIVEN ON 23 RD APRIL, 2007. THUS, HE PLEADED THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 148 WAS INVALID AS IT WAS ISSUED W ITHOUT GETTING THE STATUTORY APPROVAL FROM ADDL. CIT. 10. ON THE OTHER HAND, LD. DR, RELYING UPON THE ORD ER OF CIT (A) PLEADED THAT THE ASSESSING OFFICER COULD NOT HAVE ISSUED NOTICE WITHOUT GETTING THE APPROVAL FROM ADDL. CIT AND IT WAS ONLY DUE TO INADVERTENT MISTAKE COMMITTED BY THE ADDL. CIT THE DATE WAS PUT A S 23 RD APRIL, 2007. HE SUBMITTED THAT THIS WAS ONLY A CASE OF MISTAKE AND CIT (A) HAS RIGHTLY BROUGHT OUT THAT FACT ON THE RECORD. IT WAS SUBMITTED THAT THE MISTAKE WAS IN PUTTING THE MONTH ONLY AND THE ASSESSI NG OFFICER ON RECEIPT OF SUCH APPROVAL HAS ISSUED NOTICE ONLY ON 23 RD MARCH, 2007 WHICH WAS SENT TO THE ASSESSEE BY REGISTERED POST. THUS, IT WAS PLEADED BY HIM THAT THE CROSS OBJECTIONS FILED BY THE ASSESSEE SHOULD BE DISMISSED. 11. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IT I S CLEARLY STATED IN THE ASSESSMENT ORDER THAT NOTICE U/S 148 WAS ISSUED BY T HE ASSESSING OFFICER ON 23 RD MARCH, 2007. FROM THE REASONS RECORDED, IT IS CLEAR AND APPARENT THAT THE ASSESSING OFFICER WAS AWARE OF THE PROVISIONS OF THE STATUTE ACCORDING TO WHICH HE WAS REQ UIRED TO SUBMIT THE RECORD FOR THE PERUSAL AND APPROVAL OF ADDL. CIT FOR THE ISSUANCE OF NOTICE U/S 148 AND THIS FACT IS APPARENT FROM THE LAST PARA OF THE REASONS RECORDED WHICH READ AS UNDER:- SINCE THE ASSESSMENT HAS BEEN COMPLETED U/S 143 (1) A ND 4 YEARS HAVE SINCE BEEN ELAPSED, THE ASSESSMENT RECORD IS BEING SUBMITTED FOR KIND PERUSAL AND APPROVAL OF THE ADDL. C IT, RANGE- 8, NEW DELHI AS PER SECTION 151 (2) OF THE IT ACT, 196 1 FOR ISSUANCE OF NOTICE U/S 148 OF THE INCOME-TAX ACT. 12. THE SAID APPROVAL WAS SOUGHT BY THE ASSESSING OFFICER VIDE LETTER DATED 19 TH MARCH, 2007 AND THE NOTICE U/S 148 WAS ISSUED ON 23 RD MARCH, 2007. WITHOUT HAVING THE APPROVAL FROM ADDL . CIT, THE ITA NO.1972/DEL/2009 9 ASSESSING OFFICER COULD NOT HAVE ISSUED THE NOTICE U/S 148 . ACCORDING TO WELL ESTABLISHED PRINCIPLES OF LAW, APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THA T THE APPARENT IS NOT THE REAL AND THAT THE TAXING AUTHORITIES ARE ENT ITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILI TIES AND REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540. THE SAID PROPOSITION WAS FURTHER ENUNCIATED IN THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 (SC). WHERE THE SURROUNDING CIRCUMSTANCES AND HUMAN PROBABIL ITIES POINT OUT TO A DIRECTION THAT THE MONTH MENTIONED BY THE ADDL. CIT WAS WRONG, THEN, THERE WAS NO INFIRMITY IN THE VIEW TAKE N BY THE CIT (A) AS TAKING ACCOUNT OF SURROUNDING CIRCUMSTANCES AND APPLYI NG THE TEST OF HUMAN PROBABILITIES HE HAS RIGHTLY CONCLUDED THAT THE RE WAS A MISTAKE IN WRITING THE MONTH BY THE ADDL. CIT AND THE APPRO VAL WAS GRANTED TO THE ASSESSING OFFICER FOR ISSUANCE OF NOTICE ON 23 RD MARCH, 2007. IN THIS MANNER, WE FIND NO INFIRMITY IN THE FINDINGS RECORDE D BY THE CIT (A) AND WE UPHOLD THE ORDER OF CIT (A) SO AS IT RELATES TO THE VALIDITY OF RE- ASSESSMENT PROCEEDINGS. THE CROSS OBJECTIONS FILED BY THE ASSESSEE FAILS AND ARE DISMISSED. 13. NOW, COMING TO THE MERITS OF THE CASE, THE RELEVA NT OBSERVATIONS OF CIT (A) HAVE ALREADY BEEN REPRODUCED AS APPEARING IN PARA 3.3 OF HIS ORDER. THE MAIN CASE OF CIT (A) IS THAT IN THE ABSENC E OF OPPORTUNITY FOR CROSS EXAMINATION, THE ADDITION MADE WAS INVALID A ND, FOR THIS PURPOSE, THE CIT (A) HAS PLACED RELIANCE ON THE HONB LE DELHI HIGH COURT IN THE CASE OF VIJAY GUPTA (SUPRA). LD. CIT (A ) HAS UPHELD THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS VIDE PARA 2.2 OF H IS ORDER WHICH HAS ALREADY BEEN REPRODUCED IN THE ABOVE PART OF THI S ORDER. THE DECISION IN THE CASE OF VIJAY GUPTA (SUPRA) PERTAINS TO THE VALIDITY OR ITA NO.1972/DEL/2009 10 OTHERWISE OF RE-ASSESSMENT PROCEEDINGS. IF THE VALIDITY OF RE- ASSESSMENT PROCEEDINGS HAVE BEEN UPHELD, THEN, THE QUESTI ON WILL REMAIN ONLY WITH RESPECT TO THE MERITS OF THE ADDITIO N, WHICH, ACCORDING TO LD. CIT (A), HAS BEEN DELETED ON ACCOUNT OF ABSENC E OF OPPORTUNITY OF CROSS EXAMINATION TO BE GIVEN TO THE ASSESSEE. IN THE ABSENCE OF OPPORTUNITY FOR CROSS EXAMINATION, WHETHER ADDITION C AN BE DELETED SIMPLY ON THAT GROUND. THE ANSWER TO THIS QUESTION WAS G IVEN BY THE APEX COURT VIDE RECENT DECISION RENDERED ON 19.11.20 10 IN THE PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) NOS.1736-1737/20 09 IN THE CASE OF INCOME-TAX OFFICER VS. M. PIRAI CHOODI. COPY OF THE SAID ORDER WAS GIVEN TO LD. AR DURING THE COURSE OF HEARING AND ALSO TO LD. DR. THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS FROM THE SAID D ECISION ARE AS UNDER:- HEARD LEARNED COUNSEL ON BOTH SIDES. LEAVE GRANTED. IN THIS CASE, THE HIGH COURT HAS SET ASIDE THE ORDER OF ASSESSMENT ON THE GROUND THAT NO OPPORTUNITY TO CROSS-EXAM INE WAS GRANTED, AS SOUGHT BY THE ASSESSEE. WE ARE OF THE VIEW THAT THE HIGH COURT SHOULD NOT HAVE SET ASIDE THE ENTIRE ASSESSMENT ORDER. AT THE HIGHEST, THE HIGH COURT SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE CONCERNED WITNESS. BE TH AT AS IT MAY, WE ARE OF THE VIE THAT, EVEN ON THIS PARTICULAR ASP ECT, THE ASSESSE COULD HAVE GONE IN APPEAL TO CIT (APPEALS). THE ASSESSEE HAS FAILED TO AVAIL THE STATUTORY REMEDY. IN TH E CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE HIGH COURT SHO ULD NOT HAVE QUASHED THE ASSESSMENT PROCEEDINGS VIDE IMPUGNED ORDER. CONSEQUENTLY, THE IMPUGNED ORDER IS SET ASIDE. LIBERTY IS GRANTED TO THE ASSESSEE TO MOVE CIT (APPEALS). IT IS MA DE CLEAR THAT THE ASSESSEE HEREIN WILL MOVE THE CIT (APPEALS) WI THIN A PERIOD OF SIX WEEKS FROM TODAY. ACCORDINGLY, THESE CI VIL APPEALS STAND DISPOSED OF. 14. THE AFOREMENTIONED DECISION HAS BEEN RENDERED BY HONBLE THREE JUDGES OF HONBLE SUPREME COURT. THEREFORE, T HE POSITION OF LAW WITH RESPECT TO NON-GRANT OF OPPORTUNITY OF CROSS EXAM INATION IS NOW CLEAR THAT ON THAT BASIS ONLY THE ADDITION CANNOT BE DELETED AND ASSESSMENT PROCEEDINGS CANNOT BE QUASHED. ITA NO.1972/DEL/2009 11 15. FURTHER, THE ADDITION HAS BEEN DELETED BY CIT (A ) ON THE GROUND THAT RE-ASSESSMENT PROCEEDINGS WERE INITIATED FOR A SUM O F ` 4 LAC WHEREAS THE ADDITION MADE BY THE ASSESSING OFFICER WAS OF ` 16 LAC. IN THIS REGARD, IT IS OBSERVED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAD ASKED THE ASSESSEE TO FURNISH THE DETAILS OF ADD ITION MADE IN SHARE APPLICATION ACCOUNT AND THE RELEVANT OBSERVATIO NS OF THE ASSESSING OFFICER IN THIS REGARD ARE AS UNDER:- ON 24.5.2007 THE ASSESSEE REQUESTED FOR ADJOURNMENT A ND THE CASE WAS ADJOURNED TO 06.12.2007 AND AGAIN ON 11.12. 2007. ON 12.12.2007 ANOTHER AR SH. DEEPAK BANSAL, CA ATTENDED, FILED POWER OF ATTORNEY VIDE LETTER DATED 12.12.2007 AND OBJEC TED TO THE ISSUE OF NOTICE U/S 148. OBJECTIONS WERE CONSIDER ED AND WERE REJECTED VIDE THIS OFFICE LETTER NO. 1059 DATED 20. 12.2007 DULY GIVEN TO SH. DEEPAK BANSAL AND WAS ASKED TO FUR NISH THE COMPLETE DETAILS. THE ASSESSEE FILED LETTER DATED 21.12 .2007 BUT DID NOT FILE ANY DETAILS SHOWING THAT DURING THE YEAR THE ASSESSEE COMPANY HAS MADE ADDITION OF RS.16,00,000/- TO THE SHARE CAPITAL. HOWEVER, THE THEN CA AND AUDITORS OF THE ASSESSEE COMPANY HAS LEFT THE AUDIT OF THE COMPANY AND THEN INFORMATION REQUIRED WAS WITH HIM ONLY WHICH COULD NO T BE RECEIVED FROM HIS OFFICE. THE ASSESSEES SUBMISSIONS ARE REALLY SURPRISING. FROM THE LIST OF SHAREHOLDERS AS ON 31.3.2005 FILED DURING THE COU RSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2005-06 THE NAME OF M /S PARIVARTAN CAPITAL AND FINANCE PVT. LTD. IS EXISTING ASS ESSEE AND IT HAS BEEN CONFIRMED BY THE AR MR. BANSAL THAT THERE IS NO CHANGE IN THE SHARE HOLDERS FROM ASSESSMENT YEAR 2000 -01 TILL DATE. THEREFORE, IT IS VERY MUCH CLEAR THAT THE ASSESSEE DOES NOT WANT TO FILE THE REQUIRED CONFIRMATIONS, DETAILS AND EVIDENC E OF THESE ALLEGED SHAREHOLDERS FROM WHOM THE ASSESSEE CLAIMS TO HAVE RECEIVED SHARE CAPITAL OF RS.16,00,000/- DURING THE Y EAR. THE ASSESSEE AS SUCH FAILED TO DISCHARGE THE ONUS TO PROVE THE GENUINENESS IN THE INCREASE IN CAPITAL MADE BY RECEIV ING THE FUNDS OF THOSE ALLEGED SHAREHOLDERS. IN VIEW OF ABO VE FACTS THE AMOUNT OF RS.16,00,000/- IS TREATED AS UNEXPLAINED CAS H CREDIT AND IS ADDED TO THE INCOME OF THE ASSESSEE COMPANY. 16. IT CAN BE SEEN FROM THE ABOVE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE ASSESSEE DID NOT FILE EVEN DETAILS REGA RDING THE NAMES AND ADDRESSES OF THE PERSON FROM WHOM IT HAS RECEIVED A SUM OF ` 16 ITA NO.1972/DEL/2009 12 LAC. IT WAS THE DUTY OF THE ASSESSEE TO FURNISH THE COMP LETE DETAILS BEFORE THE ASSESSING OFFICER WHICH HAVE NOT BEEN FURNISH ED TILL DATE. THE REASONS FOR NON-FURNISHING SUCH DETAILS WAS STATED TO BE THAT THE THEN CA AND AUDITOR OF THE ASSESSEE HAD LEFT THE AUDIT OF THE COMPANY AND THE INFORMATION REQUIRED WAS WITH HIM ONLY. THE ASSESSEE CANNOT ESCAPE FURNISHING OF THE DETAILS WHICH ARE EXISTING IN ITS BOOKS OF ACCOUNT AND IN THE ABSENCE OF THE DETAILS, THE ASSESSING OFFICER IS WELL AUTHORIZED TO MAKE THE ADDITION. THEREFORE, THE CI T (A) WAS WRONG IN DELETING THE ADDITION ON THAT ACCOUNT. SO AS IT REL ATES TO THE OBSERVATIONS OF CIT (A) THAT THE REASON FOR INVOKING R E-ASSESSMENT PROCEEDINGS WERE LIMITED TO ` 4 LAC, IT IS OBSERVED TH AT AS PER EXPLANATION 3 TO SECTION 147, THE ASSESSING OFFICER IS W ELL AUTHORIZED TO TAKE INTO ACCOUNT THE AMOUNT WHICH COMES TO HIS NO TICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THIS SEC TION AND THE SAID EXPLANATION HAS BEEN INSERTED ON THE STATUTE BY TH E FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.0 4.1989. THE SAID EXPLANATION READ AS UNDER:- EXPLANATION 3 FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS O R REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQU ENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SECTION (2 ) OF SECTION 148. 17. THEREFORE, ALSO LD. CIT (A) WAS WRONG IN DELETING THE ADDITION ON THE GROUND THAT THE ENTIRE SUM OF ` 16 LAC ADDED BY THE ASSESSING OFFICER WAS NOT SUBJECT MATTER OF INITIATION OF RE-ASSE SSMENT PROCEEDINGS. 18. IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT THE CIT (A) WAS NOT RIGHT IN DELETING THE ADDITIONS ON THE GROUNDS ON WHI CH SUCH ADDITIONS HAVE BEEN DELETED. HOWEVER, KEEPING IN VIEW THE IN TEREST OF JUSTICE, AS PROPER DETAILS ARE NOT PLACED ON RECORD, WE ARE OF T HE OPINION THAT THE ITA NO.1972/DEL/2009 13 MATTER SHOULD BE RESTORED BACK TO THE FILE OF ASSESSING O FFICER TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO PLACE ALL THE DETAILS ON RECORD AND TO PROVE THE GENUINENESS OF SHARE APPLICATION MONEY SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERA TION. THE ASSESSING OFFICER WILL GRANT ADEQUATE OPPORTUNITY TO TH E ASSESSEE IN THIS REGARD AND AFTER GRANTING SUCH OPPORTUNITY HE WI LL RE-ADJUDICATE THE ISSUE OF ADDITION IN THE LIGHT OF THE MATERIAL PL ACED BEFORE HIM. THE ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION WILL B E ON THE ASSESSEE WHICH WILL BE DISCHARGED BY IT IN ACCORDANCE WI TH THE LAW. WE DIRECT ACCORDINGLY. THE ADDITION ON ACCOUNT OF COM MISSION WILL BE CONSEQUENTIAL TO THE PARENT ADDITION. 19. IN THE RESULT, THE CROSS OBJECTIONS FILED BY THE ASSE SSEE ARE DISMISSED AND THE APPEAL FILED BY THE DEPARTMENT IS ALL OWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.20 10. SD/- SD/- [A.K. GARODIA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.11.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES