M/s Tirupati Cylinders Ltd., New Delhi V. ITO, New Delhi

CO 300/DEL/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9830 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 25-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 18-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: AMIT GOEL
• Keywords: Reopening of assessment
• Section: 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H NEW DELHI BEFORE SHRI H.S.SIDHU, J. M. AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO.3477/DEL/2011 ASSESSMENT YEAR : 2003-04 ITO, WARD 16(3) VS. TIRUPATI CYLINDERS LTD. ROOM NO.143, D 14, 2 ND FLOOR, PREET VIHAR C.R.BLDG. NEW DELHI 110 092 NEW DELHI C.O.NO. 300/DEL/2011 (IN ITA 3477/DEL/2011) AY: 2003-04 TIRUPATI CYLIDNERS LTD. VS. ITO, WARD 16(3) NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY:- SHRI AMIT GOEL, C.A. DEPARTMENT BY:- SH. SAMEER SHARMA, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF LD.CIT(APPEALS)-XIX, NEW DELHI DT. 21.4.2011 PERTAI NING TO THE ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS. 1. 'THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW B Y DELETING ADDITION OF RS. 50,00,000/- MADE U/S 68 ON ACCOUNT OF UNEXPLAINED RECEIPTS OF SHARE APPLICATION MONEY AND SHARE PREMIUM AND OF RS.75,00 0/- ON ACCOUNT OF COMMISSION PAYMENT TO THE ACCOMMODATION ENTRY PROVI DERS, IGNORING THAT: (I) THE ASSESSEE FAILED TO FURNISH THE CONFIRMATIO NS, BANK STATEMENTS AND BALANCE SHEETS OF THE SHARE APPLICANTS DURING THE A SSESSMENT PROCEEDINGS DESPITE ARNPLE OPPORTUNITY. ITA 3477/DEL/2011 C.O. 300/DEL/2011(IN ITA 3477/DEL/11) AY 2003-04 TIRUPATI CYLIDNERS LTD. PAGE 2 OF 5 (II) NOTICES U/S 133(6) SENT BY THE AO TO THE SHAR E APPLICANTS AT THEIR ADDRESSES PROVIDED BY THE ASSESSEE WERE RECEIVED B ACK UNSERVED. (III) IT IS NOT ACCEPTABLE THAT THE ASSESSEE WAS NO T IN TOUCH WITH THE SHARE APPLICANTS WHO HAD ADVANCED SUCH HUGE SUMS OF SHAR E APPLICATION MONEY AND SHARE PREMIUM TO IT AND WAS NOT AWARE OF THEI R CURRENT ADDRESSES. (IV) THE ASSESSEE DID NOT PRODUCE BEFORE THE AO AND THE SHARE APPLICANTS FOR CROSS VERIFICATIONS DESPITE ADEQUATE OPPORTUNITY. (V) OUT OF THE AMOUNT OF RS. 50,00,000/- SHARE PRE MIUM CONSTITUTED RS. 40,00,000/- ALTHOUGH NO PRUDENT BUSINESSMAN WOULD LOGICALLY PAY SUCH PREMIUM ON THE SHARES OF THE ASSESSEE COMPANY WHICH WAS FILING RETURN DECLARING NIL INCOME. (VI) THE DOCUMENTS SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEED INGS DO NOT ESTABLISH THE :CREDITWORTHINESS OF THE SHARE APPLICANTS. (VII) THE ENQUIRIES BY THE INVESTIGATION WING OF TH E DEPARTMENT HAVE CLEARLY ESTABLISHED THE SHARE APPLICANTS TO BE ACCOMMODATIO N ENTRY PROVIDERS. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY ALTER ADD OR FOREGONE ANY GROUND(S) OF APPEAL AT ANY TIM E BEFORE OR DURING THE HEARING OF APPEAL. 1.1. THE C.O. HAS BEEN FILED ON THE FOLLOWING GROUND. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW , THE CIT(APPEAL) ERRED IN NOT HOLDING THAT NOTICE U/S 148 ISSUED IN THIS CASE WAS ILLEGAL, VOID, WITHOUT JURISDICTION AND BARRED BY LIMITATION AND ACCORDING LY ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE WAS LIABLE TO BE QUASHED. 2. WE FIRST TAKE UP THE JURISDICTIONAL ISSUE RAISED BY THE ASSESSEE IN THE CROSS OBJECTION. 2.1. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE RE OPENING OF THE NOTICE ISSUED U/S 148 OF THE ACT ON THE GROUND THAT THE A PPROVAL CONTEMPLATED UNDER S.151(2) WAS NOT COMPLIED WITH. HE ARGUED TH AT FROM THE AOS ORDER, IT IS CLEAR THAT PRIOR APPROVAL OF THE LD.CIT-VI, N EW DELHI WAS TAKEN AND WHEREAS THE APPROVAL SHOULD HAVE BEEN OBTAINED FROM THE JCIT AS PER THE ACT AND NOT FROM THE CIT. HE FURTHER SUBMITTED THA T ON IDENTICAL FACTS IN ITA 3477/DEL/2011 C.O. 300/DEL/2011(IN ITA 3477/DEL/11) AY 2003-04 TIRUPATI CYLIDNERS LTD. PAGE 3 OF 5 THE ASSESSEES OWN CASE FOR THE AY 2000-01 TO 2002- 03 THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL V IDE ORDER DT. 28.6.2000. 2.2 . THE LD.D.R. SUBMITTED THAT THE ACIT HAS ALSO AFFI XED HIS SIGNATURE IN THE APPROVAL AND HENCE THERE IS NO DEFECT. HE CONT ESTED THE CONTENTIONS OF THE ASSESSEE. 3. AFTER HEARING RIVAL SUBMISSIONS, WE FIND THAT THE DELHI H BENCH OF THE TRIBUNAL ON THE SAME SET OF FACTS HAD FOLLOWED THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT AND QUASH THE REOPENING O F THE ASSESSMENT AS THE SAME WAS NOT IN ACCORDANCE WITH LAW. THE TRIBUNAL HAD ON IDENTICAL FACTS IN ITA NOS. 1 730/DEL/2012 TO 1732/DEL/2012 FOR AYS 2000-01 TO 2002-03 HAD HELD A S FOLLOWS. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS O F BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE PHOTOCOP Y OF THE REASONS RECORDED FOR AY 2000-01 IS PLACED AT PAGE 15 OF THE ASSESSEE 'S PAPER BOOK. A COPY OF THE SAME IS BEING ENCLOSED AS ANNEXURE-1 TO THIS OR DER. ADMITTEDLY, IN OTHER TWO YEARS, I.E. AY 2001-02 & 2002-03 ALSO, THE FACT S ARE IDENTICAL AND SIMILAR APPROVALS HAVE BEEN TAKEN. COPIES OF THE SAME ARE P LACED AT PAGES 10 AND 46 RESPECTIVELY IN VOLUME-2 OF THE ASSESSEE'S PAPER BOOK. HOWEVER, FOR THE SAKE OF BREVITY, THE SAME ARE NOT APPENDED HEREWIT H. FROM THE ABOVE, IT IS EVIDENT THAT FIRST THE ASSESSING OFFICER HAS RECORD ED THE REASONS FOR REOPENING OF ASSESSMENT. THEREAFTER, THE ADDITIONAL CIT SIMPL Y SIGNED THE SAME AND FORWARDED TO THE CIT. THE CIT EXAMINED THE ABOVE RE CORDING OF REASONS AND THEN MENTIONED 'APPROVAL IS ACCORDED FOR REOPENING ASSESSMENT OF SH. VIPIN KHANNA FOR A. Y. 2001-02'. 6. THAT SUB-SECTION (2) OF SECTION 251 READS AS UN DER:- '(2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB -SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER , WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS S ATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FI T CASE FOR THE ISSUE OF SUCH NOTICE. ITA 3477/DEL/2011 C.O. 300/DEL/2011(IN ITA 3477/DEL/11) AY 2003-04 TIRUPATI CYLIDNERS LTD. PAGE 4 OF 5 [EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR THE CHIEF COMMISS IONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SEC TION 148, NEED NOT ISSUE SUCH NOTICE HIMSELF]. ' 7. THUS, AS PER PROVISO TO SECTION 151(2), APP ROVAL OF JOINT COMMISSIONER IS REQUIRED. WE FIND THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SPL'S SIDD HARTHA LTD. (SUPRA), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- 'HELD, THAT UNDER SECTION 151 OF THE ACT; IT WAS ON LY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROV AL FOR ISSUE OF NOTICE UNDER SECTION 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIONER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF INCO ME-TAX. THIS WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 2928. THE NOTICE WAS NOT VALID. ' 8. IN OUR OPINION, THE RATIO OF THE ABOVE DECI SION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. NO CONTRARY DECISION ON THESE FACTS HAS BEEN BROUGHT T O OUR KNOWLEDGE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF HON'BLE JURISDICTIONAL HIGH COURT, HOLD THAT THE ASSESSMENT REOPENED WITH THE APPROVAL OF COMMISSIONER OF INCOME-TAX, WHEREAS THE STATUTE REQ UIRED THE APPROVAL OF THE JOINT COMMISSIONER OF INCOME-TAX, IS NOT VALID. WE, THEREFORE, QUASH THE REOPENING OF ASSESSMENT FOR THESE THREE YEARS UNDER CONSIDERATION. SINCE THE REOPENING OF ASSESSMENT ITSELF HAS BEEN QUASHED. TH E CONSEQUENTIAL ASSESSMENT ORDERS PASSED FOR THE ABOVE THREE YEARS ARE ALSO QUASHED. 9. AS WE HAVE ALREADY QUASHED THE ASSESSMENT OR DERS. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE AGAINST TH E ADDITIONS MADE BY THE ASSESSING OFFICER NEED NO ADJUDICATION. 4. IN THE CASE ON HAND WE FIND THAT THE LD. CI T HAS GRANTED APPROVAL AND LD. JCIT HAS NOT GRANTED THE NECESSARY APPROVAL . HENCE CONSISTENT WITH THE VIEW TAKEN THEREIN, WE QUASH THE REOPENING OF T HE ASSESSMENT AS BAD IN LAW. IN THE RESULT, THE C.O. OF THE ASSESSEE IS AL LOWED. SINCE WE HAVE ALLOWED THE C.O. OF THE ASSESSEE, CON SISTENT WITH THE VIEW TAKEN THEREIN, WE DISMISS THE REVENUES APPEAL. ITA 3477/DEL/2011 C.O. 300/DEL/2011(IN ITA 3477/DEL/11) AY 2003-04 TIRUPATI CYLIDNERS LTD. PAGE 5 OF 5 5 . IN THE RESULT, BOTH THE REVENUES APPEAL IS DISM ISSED AND THE ASSESSEES CROSS OBJECTION IS ALLOWED AND THE ASSES SMENT IS QUASHED AS BAD IN LAW. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2014. SD/- SD/- (H.S. SIDHU) ( J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 30 TH SEPTEMBER, 2014 *MANGA COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR