M/s. Mangalalaxmi Industries Pvt. Ltd., Ahmedabad V. The Dy. CIT Central Circle-1(2), Ahmedabad

CO 34/AHD/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 4846 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B P SHRIVASTAVA
• Keywords: Accommodation entries; Capital Gains
• Section: 143(3); 292BB; 143(2); 64; 147; 68; 148

Judgement Text

ITA NO.1558/AHD/2017 & C.O. NO.34/AHD/2018 AY: 2010-11 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD BEFORE SHRI A.D. JAIN, VICE PRESIDENT AND WASEEM AHMED, ACCOUNTANT MEMBER ITA NO.1558/AHD/2017 ASSESSMENT YEAR: 2010-11 & C.O. NO.34/AHD/2018 (IN ITA NO.1558/AHD/2017) ASSESSMENT YEAR: 2010-11 DY. COMMISSIONER OF INCOME TAX, VS. M/S. MANGALALAX MI INDUSTRIES CENTRAL CIRCLE 1(2), AHMEDABAD. PVT. LTD., 7/2, SECOND FLOOR, ABHISHREE CORPORATION, ISKON AMBLI ROAD, AHMEDABAD. [PAN AAFCM 9596 B] (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI B.P. SHRIVASTAVA, SR. D.R . RESPONDENT BY : SHRI SAKAR SHARMA, A.R. DATE OF HEARING : 18.06.2019 DATE OF PRONOUNCEMENT : 20.06.2019 O R D E R PER A.D. JAIN, VICE PRESIDENT: THESE ARE DEPARTMENTS APPEAL AND ASSESSEES CROSS OBJECTION AGAINST LEARNED CIT(A)S ORDER DATED 28.03.2017, PASSED FOR THE ASS ESSMENT YEAR 2010-11. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE DEPARTME NT IN ITS APPEAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN QUASHING THE AS SESSMENT ORDER PASSED UNDER SECTION 147 OF THE ACT. 3. CROSS OBJECTIONS FILED BY THE ASSESSEE ARE AS UN DER :- 1) ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (APPEALS) ERRED IN UPHOLDING THE REOPENING OF THE A SSESSMENT UNDER SECTION 147 OF THE I.T. ACT, 1961. ACCORDINGLY, YO UR RESPONDENT-CROSS OBJECTOR PRAYS THAT NOTICE ISSUED UNDER SECTION 148 OF THE ACT MY PLEASE BE QUASHED/CANCELLED AND BE HELD TO BE VOID- AB-INITIO. 2) WITHOUT PREJUDICE, THE LD. AO HAS ERRED IN LAW A ND ON FACTS IN MAKING ADDITION UNDER SECTION 68 OF THE ACT MERELY RELYING ON THE CONFESSIONAL STATEMENT OF THE THIRD PARTIES (WHOSE CROSS EXAMINATION WAS DEMANDED BY THE APPELLANT BUT WAS NOT ALLOWED) OVERLOOKING THE FACT THAT THE APPELLANT HAS DISCHARGED ITS ONUS OF ESTABLISHING THE IDENTIFY AND THE CREDITWORTHINESS OF THE PAYER AND THE GENUINENESS OF ITA NO.1558/AHD/2017 & C.O. NO.34/AHD/2018 AY: 2010-11 PAGE 2 OF 5 THE TRANSACTION. ACCORDINGLY, YOUR RESPONDENT-CROS S OBJECTOR PRAYS THAT, IN ANY CASE, IT MAY PLEASE BE HELD THAT THE A DDITION MADE U/S 68 OF THE ACT IS NOT SUSTAINABLE AND DESERVES TO BE DE LETED. 3. WITHOUT PREJUDICE, THE LD. AO HAS ERRED IN LAW A ND ON FACTS IN LEVYING THE INTEREST U/S 234BOF THE ACT IN VIEW OF THE NATU RE OF ADDITION MADE. ACCORDINGLY, YOUR RESPONDENT-CROSS OBJECTOR PRAYS T HAT IT MAY BE HELD SO NOW. 4. APROPOS THE DEPARTMENTS APPEAL, THE RELEVANT FA CTS ARE THAT SEARCH IN THE CASE OF SHRI SHIRISH C SHAH WAS CONDUCTED IN MUMBAI. IT WA S FOUND THAT SHRI SHIRISH C SHAH WAS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS SPECULAT ION PROFIT, LOSS, CAPITAL GAINS, SHARE APPLICATION MONEY, ETC. FOR MANY YEARS. SHRI SHIRI SH C SHAH ADMITTED THAT HE WAS ENGAGED IN GIVING BOGUS ENTRIES OF TRANSACTIONS. THE ASSES SEE TOOK ACCOMMODATION ENTRIES FROM PRABHAV INDUSTRIES LIMITED WHICH WAS CONTROLLED BY SHRI SHIRISH CHANDRAKANT SHAH SINCE 2009. THE ASSESSING OFFICER HELD, VIDE ORDER DATED 04.03.2016, PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM PRABHAV INDUST RIES LIMITED, BEING MANAGED AND CONTROLLED BY SHRI SHIRISH C SHAH UNDER THE GAMUT O F SHARE CAPITAL, WAS UNEXPLAINED INCOME OF THE ASSESSEE. THE PAYMENT OF RS.2 CRORES, RECEI VED AS SUCH IN THE BOOKS OF THE ASSESSEE WERE THUS NOT FOUND TO BE GENUINE TRANSACT IONS, AS, ACCORDING TO THE ASSESSING OFFICER, ALL THE COMPANIES WERE MERE PAPER/SHELL CO MPANIES HAVING NO BUSINESS ACTIVITIES AND THE FUNDS RECEIVED IN THEIR ACCOUNTS WERE ALSO LAYERING OF FUNDS. THEREFORE, THE AMOUNT OF RS.2 CRORES, CLAIMED BY THE ASSESSEE AS HAVING B EEN RECEIVED FROM PRABHAV INDUSTRIES LIMITED, WAS TREATED BY THE ASSESSING OFFICER, AS U NEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED CIT (A) HELD THAT THE ASSESSING OFFICER HAD NOT ISSUED AND SERVED ANY MANDATORY NOTICE IN T HE CASE OF THE ASSESSEE BEFORE PROCEEDING TO COMPLETE THE REASSESSMENT UNDER SECTI ON 148 OF THE ACT. THIS BRINGS THE DEPARTMENT IN APPEAL BEFORE US. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDE D THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) HAS ERRED IN LAW AND/OR ON FACTS IN QUASHING THE ASSESSMENT ORDER PASSED UNDER SECTION 147 OF THE ACT. 7. PER CONTRA, LEARNED COUNSEL FOR THE ASSESSEE PLA CED STRONG RELIANCE ON THE IMPUGNED ORDER. 8. HEARD. THE ASSESSING OFFICER, IN THE FIRST PARA GRAPH OF HIS ORDER, IN THIS REGARD, HAS OBSERVED THAT ..NOTICE UNDER SECTION 143(2) OF THE ACT HAS BEEN ISSUED AND DULY SERVED UPON THE ASSESSEE. 9. THE ASSESSEE RAISED THE FOLLOWING GROUND NO.3 IN ITS APPEAL BEFORE THE CIT(A) : ITA NO.1558/AHD/2017 & C.O. NO.34/AHD/2018 AY: 2010-11 PAGE 3 OF 5 3. THE LD. ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN FRAMING THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 47 OF THE ACT WITHOUT ISSUING THE LEGALLY VALID MANDATORY NOTICE U/S 143(2) OF THE AC T. ACCORDINGLY, YOUR APPELLANT PRAYS THAT THE CONSEQUENT ASSESSMENT FRAMED VIDE AS SESSMENT ORDER DATED 04.03.2016 MAY PLEASE BE CANCELLED AS NON-EST. 10. IN ITS STATEMENT OF FACTS BEFORE THE LEARNED CI T(A), AT PARAGRAPH NO.17, THE ASSESSEE STATED THAT : THE MANDATORY NOTICE U/S 143(2) OF THE ACT HAS NOT BEEN ISSUED EITHER BY ITO, WARD-2(1)(4), AHMEDABAD OR BY DCIT, CENTRAL CI RCLE-1(2), AHMEDABAD. THE APPELLANT PARTICIPATED IN THE PROCEEDINGS SUBJECT T O LEGALITY OF THE PROCEEDINGS. 11. BEFORE THE LEARNED CIT(A), ASSESSEES SUBMISSIO NS (AT PARAGRAPH NOS.6 AND 6.1 OF THE IMPUGNED ORDER) WERE AS UNDER :- 6. THE SECOND GROUND OF APPEAL IS RELATED TO VALID ITY OF THE ASSESSMENT ORDER. THE AR OF THE APPELLANT SUBMITTED THAT STAT UTORY NOTICE U/S 143(2) WAS NOT ISSUED AND SERVED UPON THE APPELLANT. THEREFOR E, IN ABSENCE OF ISSUANCE AND SERVICE OF NOTICE U/S 143(2), THE ASSESSMENT FR AMED SUFFERED FROM LACK OF JURISDICTION AND IT WAS NULL AND VOID. HE RELIED ON THE FOLLOWING DECISIONS:- PANORAMA BUILDERS PVT. LTD. (2014) 45 TAXMANN.COM 1 59 (GUJ) MAHI VALLEY HOTELS & RESORTS (2006) 287 ITR 360 (GU J) SHRI JAI SHIV SHANKAR TRADERS (P) LTD (2015) 64 TAX MANN.COM 220 (DELHI) ALIGARH AUTO CENTRE (AGRA ITAT)(2013) 34 TAXMANN.CO M 211 (AGRA TRIB) SUKHINI P. MODI (2014) 52 TAXMANN.COM 50 (UJ) GITSONS ENGINEERING CO. (2015) 53 TAXMANN.COM 108 ( MADRAS) HOTEL BLUE MOON 321 ITR 362 (SC) 6.1 HE FURTHER SUBMITTED THAT EVEN SECTION 292BB CA NNOT SAVE THE SITUATION IN THE CASE OF THE APPELLANT AS SECTION 2 92BB READS AS UNDER :- PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE COMPLETIO N OF SUCH ASSESSMENT OR REASSESSMENT. 12. LEARNED CIT(A), IN THE APPELLATE PROCEEDINGS, S O AS TO ASCERTAIN THE CORRECT FACTUAL POSITION IN THIS REGARD, REQUESTED THE ASSESSING O FFICER TO CLARIFY THE CORRECT STATE OF AFFAIRS AFTER VERIFICATION OF THE CASE RECORDS. 13. THE FOLLOWING ARE THE LD. CIT(A)S FINDINGS QUA THIS ISSUE:- 8. THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD FURNIS HED REPORT DATED 28.03.2017 OF THE ITO, WARD-2(1)(4), AHMEDABAD IN O RIGINAL AS THE CASE WAS ITA NO.1558/AHD/2017 & C.O. NO.34/AHD/2018 AY: 2010-11 PAGE 4 OF 5 REOPENED BY THE ITO IN HIS WARD AND THEREAFTER, IT WAS CENTRALISED WITH THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD. IT WAS MENTI ONED IN THE REPORT THAT SHRI PRAVIN DODIA, INSPECTOR OF YOUR CHARGE AND SH RI SANJEEV, TAX ASSISTANT, HAVE BEEN DEPUTED FOR VERIFICATION O F DISPATCH ENTRY OF NOTICE UNDER SECTION 143(2) OF THE ACT FOR THE PERI OD FROM 01.04.2015 TO 27.11.2015 DISPATCH REGISTER IN THE CASE OF MANG ALALAXMI INDUSTRIES P. LTD. FOR A.Y. 2010-11. BUT NO SUCH ENTRY HAS BE EN FOUND IN THE REGISTER OF THIS OFFICE. THE COPY OF RELEVANT PAGE S OF DISPATCH REGISTER IS BEING ENCLOSED HEREWITH FOR YOUR READY REFERENCE . 8.1 THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD ALSO P RODUCED CASE RECORDS OF THE ASSESSEE AND IT WAS OBSERVED THAT NO EVIDENCE OF THE NOTICE UNDER SECTION 143(2) WAS AVAILABLE ON THE RECORD. HE ONLY MENTIONED THAT THE THEN ASSESSING OFFICER MENTIONED IN THE ASSESSMENT ORDER THAT NOTICE U/S 143(2) WAS ISSUED AND DULY SERVED UPON THE ASSESSEE . IT SEEMS FROM THE CONTENT OF THE REPORT AND THE CASE RECORDS THAT NOT ICE U/S 143(2) WAS NOT ISSUED AND SERVED UPON THE ASSESSEE WITHIN THE PRES CRIBED TIME. 14. IT WAS IN VIEW OF THE ABOVE, THAT THE LEARNED C IT(A) HELD THE ASSESSMENT PROCEEDINGS TO BE INVALID. 15. BEFORE US, NO MATERIAL CONTRARY TO THE LEARNED CIT(A)S FINDINGS, AS CONTAINED IN PARAGRAPH NOS.8 AND 8.1 OF HIS ORDER, HAS BEEN BROU GHT ON RECORD. ASSESSEE HAD SPECIFICALLY SUBMITTED BEFORE THE LD. CIT(A) THAT N O NOTICE UNDER SECTION 143(2) OF THE ACT HAD BEEN ISSUED TO IT, EITHER BY THE ITO, WAD-2(1)(4), AHMEDABAD, OR BY THE DCIT, CENTRAL CIRCLE- (1)(2), AHMEDABAD. THE CASE HAD BEEN REOPE NED BY THE ITO, WARD-2(1)(4), AHMEDABAD. LATER, IT WAS CENTRALISED WITH THE ACIT CENTRAL CIRCLE-1(2), AHMEDABAD. THE ITO, WARD-2(1)(4), AHMEDABAD, WHO HAD REOPENED THE CASE, FURNISHED REPORT DATED 28.03.2017, BEFORE THE LD. CIT(A). IN SUCH REPORT, IT WAS CATEGORICALLY STATED THAT SHRI PRAVIN DODIA, INSPECTOR AND SANJEEV, TAX ASSISTANT, HAD BE EN DEPUTED FOR VERIFICATION OF DESPATCH ENTRY OF NOTICE UNDER SECTION 143(2) OF THE ACT, FO R THE PERIOD FROM 01.04.2015 TO 27.11.2015, IN THE DESPATCH REGISTER, IN THE CASE OF THE ASSESS EE, M/S MANGALALAXMI INDUSTRIES P. LTD., FOR ASSESSMENT YEAR 2010-11, I.E., THE YEAR UNDER C ONSIDERATION, BUT NO SUCH ENTRY HAD BEEN FOUND. THE RELEVANT PAGES OF THE DESPATCH REGISTER WERE ENCLOSED ALONG WITH THE REPORT, 16. THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD, WITH WHOM THE CASE HAD BEEN CENTRALISED, PRODUCED THE CASE RECORDS BEFORE THE L D. CIT(A). ON PERUSAL OF THE RECORDS, LD. CIT(A) FOUND THAT NO EVIDENCE OF NOTICE UNDER SECTI ON 143(2) OF THE ACT WAS AVAILABLE THEREIN. LD. CIT(A) THUS OBSERVED THAT NOTICE UND ER SECTION 143(2)OF THE ACT WAS NOT ISSUED AND SERVED ON THE ASSESSEE WITHIN THE PRESCRIBED TI ME. 17. THE ABOVE FACTUAL FINDINGS OF THE LD. CIT(A), S O ARRIVED AT BY HIM ON THE BASIS OF REPORT DATED 28.03.2017, FURNISHED BY THE ITO, WARD -2(1)(4), AHMEDABAD, INCLUDING THE RELEVANT PAGES OF THE DESPATCH REGISTER AND THE CAS E RECORDS, AS PRODUCED BY THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD, REMAIN UNHINGED BEF ORE US. NO MATERIAL HAS BEEN BROUGHT ITA NO.1558/AHD/2017 & C.O. NO.34/AHD/2018 AY: 2010-11 PAGE 5 OF 5 BY THE DEPARTMENT TO SHOW THAT THESE FINDINGS OF TH E LEARNED CIT(A) ARE INCORRECT. IT HAS NOT EVEN BEEN ALLEGED THAT SUCH FINDINGS OF THE LEARNED CIT(A) ARE WRONG AND NOT AS PER RECORD. THE JURISDICTIONAL HIGH COURT OF GUJARAT, WHILE DEC IDING THE CASE OF SUKHINI P. MODI, 52 TAXMANN.COM 50 (GUJ), REFERRED TO THE CASES OF BLU E MOON, 321 ITR 362 (SC) AND MAHI VALLEY HOTELS & RESORTS, 287 ITR 360 (GUJ) AND HEL D THAT THE CIT(A) AND THE TRIBUNAL HAD FOUND THAT THE PROCEDURE PRESCRIBED FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT HAD NOT BEEN FOLLOWED AT ALL; THAT THIS REALM OF TH E FACT WAS NOT DISPUTED BY THE REVENUE; THAT THEREFORE, ASSUMPTION OF JURISDICTION FOR ISSU ANCE OF NOTICE AND THE REOPENING ITSELF WOULD NOT BE SUSTAINABLE; AND THAT IN THE ABSENCE OF FULF ILMENT OF MANDATORY REQUIREMENT OF ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT, BOTH THE AUTHORITIES HAD RIGHTLY AND VALIDLY HELD AGAINST THE REVENUE AND IN FAVOUR OF THE ASSES SEE. 18. THESE DECISIONS HAVE RIGHTLY BEEN FOLLOWED BY T HE LEARNED CIT(A) IN HOLDING THE REASSESSMENT TO BE INVALID. NO CONTRA DECISION HAS BEEN BROUGHT TO OUR NOTICE. 19. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO ERR OR IN THE IMPUGNED ORDER AND THE SAME IS HEREBY CONFIRMED. THE GRIEVANCE OF THE DEPARTME NT IS FOUND TO BE SHORN OF MERIT AND IT IS REJECTED. THE DEPARTMENTS APPEAL IS ACCORDINGLY D ISMISSED. 20. SINCE THE APPEAL OF THE DEPARTMENT HAS BEEN DIS MISSED, THE CROSS OBJECTIONS ARE RENDERED INFRUCTUOUS. THEY ARE DISMISSED AS INFRUC TUOUS. 21. IN THE RESULT, DEPARTMENTS APPEAL IS DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JUNE, 2019. SD/- SD/- WASEEM AHMED A.D. JAIN (ACCOUNTANT MEMBER) (VICE PRESIDENT) AHMEDABAD, THE 20 TH DAY OF JUNE, 2019 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD