M/s. Pee Dee Kapur Stock & Securities Ltd, New Delhi V. DCIT, New Delhi

CO 386/DEL/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6976 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-02-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 02-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 133A; 147; 68; 148

Judgement Text

ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4098/DEL/2009 A.Y. : 2000-2001 ASSTT. COMMISSIONER OF INCOME TAX, CIR. 14(1), ROOM NO. 415, 4 TH FLOOR, CR BUILDING, NEW DELHI VS. M/S PEE DEE KAPUR STOCK & SECURITIES, 801, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI (PAN/GIR NO. : AACCP6213H) AND C.O. NO. 386/DEL/2009 (IN ITA NO. 4098/ DEL/2009) A.Y. 2000-2001 M/S PEE DEE KAPUR STOCK & VS. DCIT, CIR. 14(1), N EW DELHI SECURITIES LIMITED, 802, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI-19 (PAN : AACCP6213H) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI KUMAR, CA DEPARTMENT BY : SH. ROHIT GARG, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) DATED 27.7.2009 AND PERTAIN TO ASSESSMENT YEAR 200 0-01. 2. THE ISSUES RAISED IN THE REVENUES APPEAL READ AS UNDER:- ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 2 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAWS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN DELETING THE ADDITION OF ` 34,00,000/- MADE BY A SSESSING OFFICER U/S. 68 OF THE IT ACT IGNORING THE ADVERSE EVIDENCES INCLUDING FAILURE OF ASSESSEE TO FILE FRESH CONFIRM ATIONS AS WELL AS THE PRODUCE PRINCIPAL OFFICERS OF THE CONCE RNED COMPANIES / PARTIES ETC. (II) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S; WHILE GRANTING RELIEF TO THE ASSESSEE, ERRED IN LAW AS WE LL AS ON FACTS BY RELYING ON THE DECISION OF APEX COURT IN T HE CASE OF C.I.T. VS. DIVINE LEASING & FINANCE LTD. (CC 365/2008 DATED 21.1.2008 AND DECISION OF HONBLE DELHI HIGH COURT I N THE CSE OF C.I.T. VS. PANDY METAL AND ROLLING MILLS PVT. LTD. (ITA NO. 788 / 2006 DATED 19.2.2007). HE HAS FAILED TO APPRECIATE THAT THESE ORDERS CAN NOT BE READ IN ISO LATION FROM THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF M/S INDUS VALLEY PROMOTERS LTD. 2008 (305) ITR 0202 DEL A ND PUNJAB AND HARYANA HIGH COURT IN THE CASE OF M/S BLOW ELL AUTO PVT. LTD. 2008 (219) CTR 0185 P&H (DELIVERED SUBSEQUENT TO THESE DECISION OF APEX COURT AND HON BLE DELHI HIGH COURT), WHEREIN IDENTICAL ADDITIONS HAV E BEEN CONFIRMED. (III) THE APPELLANT CRAVES TO BE ALLOWED TO ADD, DELETE OR AMEND ANY OTHER GROUNDS OF APPEAL. 3.. THE ISSUES RAISED IN THE ASSESSEES CROSS OBJEC TION READ AS UNDER:- ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 3 (I) THAT THE VERY INITIATION OF PROCEEDINGS U/S. 1 47 IS INVALID, NULL AND VOID AB-INITIO, UNLAWFUL, BAD IN LAW AND I N VIOLATION OF SPECIFIC PROVISIONS OF THE ACT, AS THE SAME IS B ARRED BY LIMITATION BY VIRTUE OF PROVISO OF SECTION 147; BEC AUSE THE ACTION U/S. 147 IN THIS CASE, VIDE IMPUGNED NOTICE U /S 148 DATED 22.3.2007, WAS TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE CAPTIONED ASSESSMENT YEAR AND TH E CASE OF RESPONDENT FOR THE CAPTIONED ASSESSMENT YEA R STOOD DULY COMPLETED EARLIER U/S. 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 20.3.2003 AND THERE HAD BEEN NO FAILURE ON THE PART OF THE RESPONDENT IN EITHER MAKI NG RETURN OF INCOME OR IN THE DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR ITS ASSESSMENT AND THEREBY THE I MPUGNED ASSESSMENT ORDER DATED 31.12.2007 PASSED U/S 147/14 3(3) OF THE ACT, FRAMED IN PURSUANCE OF SAID NOTICE U/S. 148, BEING WITHOUT THE AUTHORITY OF LAW, IS LIABLE TO BE QUASHED AT THE VERY THRESHOLD ON THIS GROUND ALONE. (II) WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, THE I MPUGNED ACTION FOR REOPENING OF RESPONDENTS CASE U/S. 147 WAS TAKEN BY THE ASSESSING OFFICER MERELY ON THE BASIS OF INFORMATION REPORTEDLY RECEIVED BY HIM FROM OTHER INC OME TAX AUTHORITY BEING ADDL. DIRECTOR OF INCOME TAX (IN V.), UNIT-III, NEW DELHI AND THE ASSESSING OFFICER NEIT HER MADE ANY INDEPENDENT ENQUIRIES AT HIS OWN IN THE SAID MAT TER NOR APPLIED HIS MIND TO FORM A BELIEF WHETHER ANY INCOME HAD ESCAPED ASSESSMENT IN RESPONDENTS HAND AND, THEREF ORE, REOPENING OF THE ASSESSMENT AND PASSING ASSESSMENT ORDER IN PURSUANCE THEREOF IS INVALID, NULL AND VOI D AB-INITIO, ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 4 UNLAWFUL, BAD IN LAW AND THE IMPUGNED ACTION OF THE ASSESSING OFFICER IS MERELY A CHANGE OF OPINION AT HIS PART, WHICH IS UNTENABLE IN LAW AND IS LIABLE TO BE Q UASHED. 3. THE CROSS OBJECTOR RESERVES HIS RIGHT TO ADD, MOD IFY, ALTER, DELETE, WITHDRAW, AMEND ANY GROUNDS OF CROSS OBJE CTION DURING THE COURSE OF APPELLATE PROCEEDINGS. 4. IN THIS CASE ORIGINAL ASSESSMENT U/S 143(3) WAS PASSED ON 20.3.2003 AT AN INCOME OF ` 42,360/-. LATER ON TH E CASE WAS REOPENED ON THE GROUND THAT AS PER INFORMATION RECEIVED FRO M THE ADDL. DIRECTOR OF INCOME TAX (INV.), NEW DELHI, ASSESSEE HAS TAKE N ACCOMMODATION / BOGUS ENTRIES IN RESPECT OF THE FOLLOWING CAPITALS: - S.NO. NAME OF THE COMPANY BANK NAME, C. A/C NO. CHEQUE NO. AMOUNT 1. M/S MEHRAM EXPORT PVT. LTD. PNB C. A/C NOS. 4266 CHEQUE NO. 766128 ` 10,00,000/- 2. M/S M.S. LEASING PVT. LTD. CORPORATION BANK C. A/C NO. 363 CHEQUE NO. 0234244 ` 10,00,000/- 3. M/S NIMANTRAN LEASING LIMITED CORPORATION BANK C. A/C NO. 1027 CHEQUE NO. 0306429 ` 5,00,000/- 4. M/S NIMANTRAN LEASING LIMITED CORPORATION BANK C.A/C. NO. 1027 CHEQUE NO. 0306431 ` 9,00,000/- TOTAL TOTAL TOTAL TOTAL ` 34,00,000/ ` 34,00,000/ ` 34,00,000/ ` 34,00,000/- -- - 5. DURING THE COURSE OF ASSESSMENT, ASSESSING OFFICER OBSERVED THAT THE CASE WAS COMPLETED U/S 143(3) ON 26.3.2003 AND THE ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 5 ASSESSING OFFICER DID NOT HAVE THE INFORMATION REG ARDING THE SURVEY U/S. 133A ON THE COMPANIES / CONCERNS WHICH GAVE BO GUS CAPITAL ENTRY IN LIEU OF CASH. ASSESSING OFFICER OBSERVED THAT ASSESSEE VIDE ORDER SHEET ENTRY DATED 20.11.2007 WAS ASKED TO FURNI SH FRESH CONFIRMATION FROM THE AFORESAID PARTIES SINCE EARLI ER CONFIRMATIONS FROM THE ROUTINE ASSESSMENT PROCEEDINGS BEFORE SURVE Y U/S. 133A ON THE PERSONS / CONCERNS GIVING BOGUS ACCOMMODATION EN TRIES. DESPITE BEING GIVEN A NUMBER OF OPPORTUNITIES THE ASSESSEE C OMPANY COULD NEITHER PRODUCE PRINCIPAL OFFICERS OF THE CONCERNE D COMPANIES NOT COULD FURNISH EVEN A FRESH CONFIRMATION FROM THE AFOR ESAID COMPANIES. ACCORDINGLY, THE CREDIT ENTRY OF ` 34 LACS IN THE F ORM OF SHARE CAPITAL WAS HELD TO BE UNEXPLAINED BY THE ASSESSING OFFICER . HENCE, THE SAME WAS ADDED U/S. 68 OF THE IT ACT. 6. ASSESSEE APPEALED AGAINST THE ABOVE, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). LD. COMMISSIO NER OF INCOME TAX (APPEALS) OBSERVED THAT SUBSCRIPTION WAS RECEIV ED FROM MENTIONED COMPANIES BY THE ASSESSEE, BY WAY OF CHEQUES AND THE SE COMPANIES ARE DULY REGISTERED WITH ROC. IT WAS ALSO SUBMITT ED THAT THESE COMPANIES WERE HAVING PAN NUMBERS AND ARE REGULAR LY FILING THE RETURN OF INCOME. THE ASSESSMENT PARTICULARS OF TH ESE PARTIES WERE ALSO SUBMITTED BY THE ASSESSEE, BEFORE THE ASSESSIN G OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, TH E ASSESSING OFFICER NEVER TRIED TO VERIFY THE SAID PARTIES. WITH REGARD TO VARIOUS EVIDENCES SUBMITTED BY THE ASSESSEE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. ASSESSING OFFICER DISREGARDED THE S AID EVIDENCES AND HELD THAT IDENTITY AND CREDITWORTHINESS OF THE PART IES AND GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED AND ACCORDIN GLY THE AMOUNT OF ` 34 LACS RECEIVED AS SHARE APPLICATION MONEY FROM T HE SAID NINE ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 6 COMPANIES WAS TREATED AS AN ACCOMMODATION ENTRY. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THE A SSESSING OFFICER IN HIS ASSESSMENT ORDER HAS NOT BROUGHT ANY MATERIAL ON RECORDS, WHICH CAN PROVE THAT THIS MONEY WAS ASSESSEES OWN UNDISC LOSED INCOME. HE HAS SIMPLY RELIED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING A NY CONCRETE EFFORT TO VERIFY THE FACTS STATED THEREIN. LD. CO MMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT HAS BEEN HELD BY THE VARIOUS COURTS THAT ASSESSING OFFICER MUST BRING ON RECORD SOME POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHARE HOLD ERS WERE BENAMIDARS, FICTITIOUS PERSONS OR THAT ANY PART OF T HE SHARE CAPITAL MONEY REPRESENTED THE COMPANIES OWN INCOME FROM UNDISC LOSED INCOME. LD. COMMISSIONER OF INCOME TAX (APPEALS) FUR THER OBSERVED THAT THE FACTS ON THE BASIS OF WHICH THIS CONCLUSI ON WAS DRAWN HAS NEITHER BEEN PROVIDED TO THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS NOR HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS NOT GIVEN THE DETAILS OF IN VESTIGATION DONE BY THE INVESTIGATION WING OR AT HIS OWN END ON THE BAS IS OF WHICH IT WAS HELD THAT THE SHARE APPLICATION MONEY RECEIVED BY T HE ASSESSEE FROM THESE COMPANIES WAS AN ACCOMMODATION ENTRY. THAT ASSESSING OFFICER HAS EVEN NOT PROVIDED THE ASSESSEE WITH AN Y MATERIAL ON THE BASIS OF WHICH IT WAS HELD THAT THE SAID INVESTOR C OMPANIES WERE IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY. LD. CO MMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT IT HAS BEEN HEL D IN PLETHORA OF JUDICIAL PRONOUNCEMENTS THAT IF THE INFORMATION OR T HE SOURCE OF THAT INFORMATION IS COLLECTED AT THE BACK OF THE ASSESSE E AND THE SAME IS NOT CONFRONTED TO THE ASSESSEE OR THE ASSESSEE IS NOT GIVEN REASONABLE OPPORTUNITY TO REBUT THEM, THEN THE SAME C ANNOT BE USED ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 7 AGAINST THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT ASSESSING OFFICER WHILE MAKI NG THE ADDITIONS IN THE PRESENT CASE HAS SOLELY RELIED UPON THE INFORMA TION FORWARDED BY THE ADDL. D.I.T. (INV.), NEW DELHI. IT IS SEEN THA T NEITHER ANY STATEMENT WAS RECORDED BY THE ASSESSING OFFICER HIMSELF, NOR ANY EFFORT WAS MADE BY HIM TO VERIFY THE FACTS CONTAINED THEREIN. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER REFERRED TO THE CATE NA OF CASE LAWS INCLUDING DIVINE LEASING AND FINANCE LTD. 299 ITR 26 8; C.I.T. VS. GUJARAT HEAVY CHEMICALS LTD. 256 ITR 795 (SC) AND HO NBLE APEX COURT DECISION IN THE CASE OF C.I.T. VS. LOVELY EXP ORTS 299 ITR 268 (SC). IT HAS BEEN HELD IN THE CASE OF C.I.T. VS. GANGOUR INVESTMENT LTD IN ITA NO. 34/2007 BY THE HONBLE DELHI HIGH COURT AND THE DECISION IN THE CASE OF C.I.T. VS. VALUE CAPITAL SERVICES P LTD. ( 2008) 307 ITR 334 (DEL) OF THE HONBLE DELHI HIGH COURT. ACCORDINGLY, IN T HE BACKGROUND OF THE AFORESAID DISCUSSION, LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT IN VIEW OF THE FACTUAL POSITION AS W ELL AS THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT, ASSESSEE HAS DISC HARGED THE INITIAL ONUS OF ESTABLISHING THE BONA-FIDES OF THE TRANSACT IONS AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IGNORING V ARIOUS EVIDENCES PROVIDE TO HIM BY THE ASSESSEE. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ESTABLISH TH AT THE AMOUNT OF SHARE APPLICATION MONEY OF ` 34 LACS RECEIVED BY THE ASSESSEE FROM THE SAID PARTIES REPRESENTS ITS OWN UNDISCLOSED INC OME. ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT HE WAS INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE ASSESSEE TO SUBSTANTIATE THAT THE TRANSACTION REGARDING SHARE APPLICATION MONEY RECEIVED BY IT WERE GENUINE TRANSACTIONS AND THE S AME WERE NOT ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 8 ACCOMMODATION ENTRIES. HENCE, LD. COMMISSIONER OF I NCOME TAX (APPEALS) DELETED THE ADDITION OF ` 34 LACS U/S 68 OF THE IT ACT. 7. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENTS RELIED UPON. LD. COUNS EL OF THE ASSESSEE FURTHER ARGUED THAT ASSESSEE HAS SUBMITTED THE NEC ESSARY PARTICULARS AND CONFIRMATIONS AND THE DETAILS WERE SUBMITTED. ASSESSING OFFICER HAS NOT BOTHERED TO MAKE ANY ENQUIRY IN THIS REGARD . HE HAS SIMPLY RELIED UPON THE INFORMATION GIVEN BY THE INVESTIGA TION WING, NEW DELHI. HENCE, HE PLEADED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION. 8.1 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT ASSESSEE HAD SUBMITTED THE CONF IRMATION FOR THE SHARE APPLICATION MONEY RECEIVED. THE AMOUNTS WERE RECEIVED BY CHEQUE AND THESE COMPANIES WERE DULY REGISTERED WIT H ROC. THE COMPANIES WERE HAVING PAN NUMBER AND WERE REGULARLY F ILING THE RETURN OF INCOME. THE ASSESSMENT PARTICULARS OF THESE PARTIES WERE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. HOWEVE R, THE ASSESSING OFFICER NEVER TRIED TO VERIFY THE PARTICULARS FI LED. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER FOUND THAT ASSESSIN G OFFICER IN HIS ASSESSMENT ORDER HAS NOT BROUGHT ANY MATERIAL ON RE CORD WHICH CAN PROVE THAT THIS MONEY WAS ASSESSEES OWN UNDISCLOS ED INCOME. THE ASSESSING OFFICER SIMPLY RELIED UPON THE INFORMATION RECEIVED FROM THE ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 9 INVESTIGATION WING OF THE DEPARTMENT WITHOUT MAKING A NY CONCRETE EFFORT TO VERIFY THE FACTS STATED THEREIN. WE F IND THAT HONBLE APEX COURT IN THE CASE OF C.I.T. VS. LOVELY EXPORTS 216 CTR 195 HAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE AS SESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIV EN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PRO CEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 10. WE FURTHER FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. DWARKADISH INVESTMENT P LTD. HAS C ONSIDERED SIMILAR ISSUE. THE RELEVANT PARAS OF THIS JUDGEMENT OF HONB LE DELHI HIGH COURT I.E. PARA NO. 6, 7 & 8 ARE REPRODUCED HEREIN BELOW:- 6. IN OUR OPINION, AS SECTION 68 OF THE ACT, 1961 HAS BEEN INTERPRETED AS RECENTLY AS 2008 BY A DIVISION BENCH OF THIS COURT IN DIVINE LEASING AND FINANCE LTD. (SUPRA) AFTE R CONSIDERING ALL THE RELEVANT JUDGEMENTS, WE DO NOT HAVE TO RECONSIDER ALL THE JUDGEMENTS REFERRED TO BY MR. SAH NI WHICH ARE PRIOR IN DATE AND TIME TO THE AFORESAID JUDGEMENT. IN FACT, A SPECIAL LEAVE PETITION FILED A GAINST THE SAID DIVISION BENCH JUDGEMENT WAS DISMISSED BY THE SUPREME COURT BY WAY OF SPEAKING ORDER IN C.I.T. VS . LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC). THE SUPREME COUR T IN LOVELY EXPORTS PVT. LTD. (SUPRA) HAS HELD AS UNDER:- ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 10 CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. WE FIND NO MERIT IN THIS SPECIAL LE AVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGEMENT. 7. CONSEQUENTLY, THE DOCTRINE OF MERGER WOULD APPLY AND THE JUDGEMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) WOULD COVER THE FIELD WITH REGARD TO INTERP RETATION OF SECTION 68 OF THE ACT. 8. IN ANY MANNER, THE ONUS OF PROOF IS NOT A STATIC ONE. THOUGH IN SECTION 68 PROCEEDINGS, THE INITIAL BURDE N OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTIT Y OF THE CREDITORS/ SHARE APPLICANTS BY EITHER FURNISHING T HEIR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY / HIS B OOKS ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 11 EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY A NY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVE NUE. JUST BECAUSE THE CREDITORS /SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE R EVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE P OWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE. 11. IN THE BACKGROUND OF THE AFORESAID, THE LD. COM MISSIONER OF INCOME TAX (APPEALS) HAS PASSED A REASONABLE ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. ACCORDINGLY, W E UPHOLD THE SAME. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED. A AA ASSESSEES CROSS OBJECTION: SSESSEES CROSS OBJECTION: SSESSEES CROSS OBJECTION: SSESSEES CROSS OBJECTION:- -- - 12. IN THE CROSS OBJECTION THE ASSESSEE HAS CHALLENG ED THE PROCEEDINGS U/S 147 AS INVALID. THE ASSESSEE SUBMI SSION IN THIS REGARD IS CONTAINED IN THE GROUND OF APPEAL RAISED IN THE CROSS OBJECTION WHICH READ AS UNDER:- (I) THAT THE VERY INITIATION OF PROCEEDINGS U/S. 1 47 IS INVALID, NULL AND VOID AB-INITIO, UNLAWFUL, BAD IN LAW AND I N VIOLATION OF SPECIFIC PROVISIONS OF THE ACT, AS THE SAME IS B ARRED BY LIMITATION BY VIRTUE OF PROVISO OF SECTION 147; BEC AUSE THE ACTION U/S. 147 IN THIS CASE, VIDE IMPUGNED NOTICE U /S 148 DATED 22.3.2007, WAS TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE CAPTIONED ASSESSMENT YEAR AND TH E ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 12 CASE OF RESPONDENT FOR THE CAPTIONED ASSESSMENT YEA R STOOD DULY COMPLETED EARLIER U/S. 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 20.3.2003 AND THERE HAD BEEN NO FAILURE ON THE PART OF THE RESPONDENT IN EITHER MAKI NG RETURN OF INCOME OR IN THE DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR ITS ASSESSMENT AND THEREBY THE I MPUGNED ASSESSMENT ORDER DATED 31.12.2007 PASSED U/S 147/14 3(3) OF THE ACT, FRAMED IN PURSUANCE OF SAID NOTICE U/S. 148, BEING WITHOUT THE AUTHORITY OF LAW, IS LIABLE TO BE QUASHED AT THE VERY THRESHOLD ON THIS GROUND ALONE. (II) WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, THE I MPUGNED ACTION FOR REOPENING OF RESPONDENTS CASE U/S. 147 WAS TAKEN BY THE ASSESSING OFFICER MERELY ON THE BASIS OF INFORMATION REPORTEDLY RECEIVED BY HIM FROM OTHER INC OME TAX AUTHORITY BEING ADDL. DIRECTOR OF INCOME TAX (IN V.), UNIT-III, NEW DELHI AND THE ASSESSING OFFICER NEIT HER MADE ANY INDEPENDENT ENQUIRIES AT HIS OWN IN THE SAID MAT TER NOR APPLIED HIS MIND TO FORM A BELIEF WHETHER ANY INCOME HAD ESCAPED ASSESSMENT IN RESPONDENTS HAND AND, THEREF ORE, REOPENING OF THE ASSESSMENT AND PASSING ASSESSMENT ORDER IN PURSUANCE THEREOF IS INVALID, NULL AND VOI D AB-INITIO, UNLAWFUL, BAD IN LAW AND THE IMPUGNED ACTION OF THE ASSESSING OFFICER IS MERELY A CHANGE OF OPINION AT HIS PART, WHICH IS UNTENABLE IN LAW AND IS LIABLE TO BE Q UASHED. 3. THE CROSS OBJECTOR RESERVES HIS RIGHT TO ADD, MOD IFY, ALTER, DELETE, WITHDRAW, AMEND ANY GROUNDS OF CROSS OBJE CTION DURING THE COURSE OF APPELLATE PROCEEDINGS. ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 13 13. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS CON SIDERED THE ISSUE REGARDING THE CHALLENGE OF JURISDICTION AND H ELD AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE, ORDER OF THE ASSESSING OFFICER AND SUBMISSIONS MADE BY THE LD. A.R. APPEARING ON BEHALF OF THE APPELLANT. THE NOTICE U/S 148 WAS ISSUED IN THE PRESENT CASE ON 22.3.2007. AS P ER THE PROVISIONS OF SECTION 149 OF THE INCOME TAX ACT, THE NOTICE U/S. 148 HAS TO BE ISSUED WITHIN A PERIOD OF FOUR / SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE PRESENT CASE, NOTICE WAS ISSUED WITHIN A PERIOD OF SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HENCE , IT IS SEEN THAT THE NOTICE WAS ISSUED, WELL WITHIN THE TI ME AND THE SAME WAS NOT BARRED BY LIMITATION. REGARDING, THE REASON TO BELIEVE, IT IS SEEN THAT IN THIS CASE THE REASONS TO BELIEVE WAS FORMED BY THE ASSESSING OFFICER ON THE SPECIFIC INFORMATION RECEIVED FROM THE INVES TIGATION WING OF THE DEPARTMENT. THE SAID INFORMATION WAS NO T GENERAL OR VAGUE, AS ALLEGED BY THE APPELLANT, BUT WAS BASIS OF SPECIFIC INFORMATION, PERTAINING TO THE TRANSACTI ONS MADE BY THE APPELLANT. IN THE SAID INFORMATION DATE OF THE CHEQUE, AMOUNT OF CHEQUE AND NAME OF THE PERSON ISSU ING THE CHEQUE, ETC. IN RESPECT OF THE ACCOMMODATION ENT RY RECEIVED BY THE APPELLANT, WERE DULY MENTIONED. T HESE FACTS WERE SUFFICIENT FOR FORMING BELIEF BY THE ASSE SSING OFFICER. ANY SUBSEQUENT INVESTIGATION COULD ONLY BE DONE ONLY AFTER INITIATING THE PROCEEDINGS AS PER THE P ROVISIONS OF THE IT ACT. ON RECEIPT OF THIS INFORMATION FROM T HE ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 14 INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, TH E ASSESSING OFFICER EXAMINED THE FACTS OF THE CASE AN D APPLIED HIS MIND BEFORE INITIATING THE REASSESSMENT PROCEEDINGS. THE CONTENTION OF THE APPELLANT THAT REOPENING WAS DONE ON THE DIRECTION OF THE INVESTIG ATION WING IS NOT TRUE. THE DIRECTORATE OF INVESTIGATION SIMPLY FORWARDED THE INFORMATION WHICH WAS CONTAINING MODUS OPERANDI AND STATEMENTS OF THE PERSONS WHO ARE INVO LVED IN PROVIDING ACCOMMODATION ENTRIES. ON RECEIPT OF THE INFORMATION, THE ASSESSING OFFICER INDEPENDENTL Y ANALYSED THE SAME AND THEREAFTER FORMED THE REASON T O BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT WHICH WA S PUT INTO WRITING IN THE FORM OF REASON TO BELIEVE. THEREFORE, THERE IS NO FORCE IN THE ARGUMENT OF THE APPELLANT THAT REOPENING WAS DONE ON THE BEHEST OF DIRECTORATE OF INVESTIGATION. THE ASSESSING OFFICER HAS FOLLOWED ALL THE PROCEDU RES LAID DOWN IN THE ACT AND RECORDED REASONS WHICH HAD LIVE LINK WITH THE MATERIAL IN POSSESSION. FURTHER, THE APP ELLANT HAS NOT POINTED OUT ANY SPECIFIC INFIRMITY IN THE ACT ION OF THE ASSESSING OFFICER, AS FAR AS REOPENING OF ASSESSME NT AS PER THE PROVISIONS OF SECTION 147 IS CONCERNED. HENCE, IT IS CLEAR THAT THE REASON TO BELIEVE RECORDED BY THE A SSESSING OFFICER, WERE HAVING RATIONAL NEXUS/ RELEVANT TO TH E FACTS OF THE APPELLANT AND THE REOPENING WAS DONE BY THE ASS ESSING OFFICER AS PER THE PROVISIONS OF THE IT ACT. ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 15 THE COPY OF THE REASONS RECORDED BY THE ASSESSING O FFICER WAS PROVIDED TO THE LD. AUTHORISED REPRESENTATIVE OF THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS VIDE LETTER DATED 19.4.2007. THE OBJECTIONS RAISED BY THE APPELLANT TO THE REASSESSMENT PROCEEDINGS, WERE ALS O DISPOSED OFF BY THE ASSESSING OFFICER VIDE HIS ORD ER DATED 13.12.2007. THE REOPENING OF THE ASSESSMENT PROCE EDINGS IS AS PER THE PROVISIONS OF LAW AND THE ASSESSING O FFICER HAS FOLLOWED ALL THE PROCEDURES AND GUIDELINES LAID D OWN BY HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHFATS (INDIA) LTD. VS. INCOME TAX OFFICER (2003) 259 IT R 19 /(2002) 125 TAXMAN 963 (SC) FOR SUPPLYING OF THE RE ASONS RECORDED AND DISPOSING OFF OF THE OBJECTIONS RAISE D BY THE APPELLANT. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE PROCEED INGS U/S. 147 OF THE IT ACT HAVE BEEN VALIDLY INITIATED IN T HE CASE OF THE APPELLANT. THE FACTS OF THE CASE LAWS RELIED UPON BY THE APPELLANT ARE DIFFERENT WITH THAT OF THE APPELLANT S CASE, THEREFORE, THE FINDINGS OF THOSE JUDGEMENTS ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THEREF ORE, GROUND NOS. 1 & 2 OF APPEAL RAISED BY THE APPELLANT ARE D ISMISSED. 14. AGAINST THE ABOVE ORDER ASSESSEE HAS FILED CROS S OBJECTION BEFORE US. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT O F THE MATERIAL PRODUCED AND PRECEDENTS RELIED UPON. 15. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAS GIVEN A FINDING THAT THE NOTICE OF REOPENING WAS ISSUED WELL WITHIN THE TIME AND THE SAME WAS NOT BARRED BY LIMITATION. REGARD ING, THE REASON TO ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 16 BELIEVE, IT IS SEEN THAT IN THIS CASE THE REASONS T O BELIEVE WAS FORMED BY THE ASSESSING OFFICER ON THE SPECIFIC INFORMATIO N RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. THE SAID IN FORMATION WAS NOT GENERAL OR VAGUE, AS ALLEGED BY THE ASSESSEE, BUT WAS BASIS OF SPECIFIC INFORMATION, PERTAINING TO THE TRANSACTIONS MADE BY THE ASSESSEE. IN THE SAID INFORMATION DATE OF THE CHEQUE, AMOUNT OF C HEQUE AND NAME OF THE PERSON ISSUING THE CHEQUE ETC. IN RESPECT OF THE ACCOMMODATION ENTRY RECEIVED BY THE ASSESSEE WERE DULY MENTIONED. THESE FACTS WERE SUFFICIENT FOR FORMING BELIEF BY THE ASSESSING OFFICER. ANY SUBSEQUENT INVESTIGATION COULD ONLY BE DONE ONLY AF TER INITIATING THE PROCEEDINGS. THUS, WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A CORRECT FINDING THAT THE CONT ENTION OF THE ASSESSEE THAT REOPENING WAS DONE ON THE DIRECTION O F THE INVESTIGATION WING IS NOT TRUE. THE DIRECTORATE OF INVESTIGATIO N SIMPLY FORWARDED THE INFORMATION WHICH WAS CONTAINING MODUS OPERANDI A ND STATEMENTS OF THE PERSONS WHO ARE INVOLVED IN PROVIDING ACCOMM ODATION ENTRIES. ON RECEIPT OF THE INFORMATION, THE ASSESSING OFFICER INDEPENDENTLY ANALYSED THE SAME AND THEREAFTER FORMED THE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT WHICH WAS PUT INTO WRI TING IN THE FORM OF REASON TO BELIEVE. THEREFORE, THERE IS NO FORC E IN THE ARGUMENT OF THE ASSESSEE THAT REOPENING WAS DONE ON THE BEHEST OF DIRECTORATE OF INVESTIGATION. THUS, WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A CORRECT FINDING THAT REASSESS MENT IN THIS CASE WAS DONE VALIDLY AND THERE WAS NO INFIRMITY IN THE S AME. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE CROSS OBJECTION FILED BY THE ASSESSEE IS LIABLE TO BE DISMISSED AND ACCORDIN GLY THE SAME IS DISMISSED. ITA NO. 4098/DEL/2009 & CO NO. 386/DEL/2009 17 16. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/3/2012. SD/- SD/- [ [[ [U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 09/3/2012 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES