ACIT, Haridwar V. M/s Sumo Steels Pvt. Ltd., Kotdwar

ITA 1162/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91084 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Opportunity of being heard; Accommodation entries; Assessment record; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY: JUDICIAL MEMBER ITA NO. 1162/DEL/2013 A.Y. 2004-05 ACIT, CIRCLE HARDWAR. VS. SUMO STEELS PVT. LTD., E-45/50, UPSIDC, INDUSTRIAL AREA, JASODHARPUR, KOTDWAR. PAN: AAGCS 1824 H ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI P. DAM KANUNJNA RESPONDENT BY : SHRI ANIL JAIN ADV. DATE OF HEARING : 22-05-2015 DATE OF ORDER : 29-05-2015. O R D E R PER S.V. MEHROTRA, A.M:- THIS APPEAL, FILED BY THE REVENUE, IS DIRECTED AGA INST CIT(A)S ORDER DATED 31-12-2012 PERTAINING TO AY 2004-05. 2. BRIEF FACTS OF THE CASE ARE THAT PROCEEDINGS U/S 147 WERE INITIATED AGAINST THE ASSESSEE BY ITO, WARD 9(3), NEW DELHI ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF DIT(INV.), NEW DELHI ABOUT ENTRY OPER ATORS AND THEIR BENEFICIARIES. THE AO HAS OBSERVED THAT THE PROCEEDINGS WERE INITI ATED AS A RESULT OF TRANSFER OF CASE RECORDS AND PROCEEDINGS U/S 147 BY THE ITO WAR D 9(3), NEW DELHI. THE MAIN REASON FOR PROCEEDINGS U/S 147 WAS THAT ASSESSEE HA D RECEIVED RS. 20,00,000/- BY 2 ITA NO. 1162/DEL/2013 SUMO STEELS PVT. LTD. WAY OF ACCOMMODATION ENTRIES FROM M/S S.J. CAPITALS LTD. THE AO, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS MADE ADDITIO N OF RS. 20,00,000/-. 2.1. LD. CIT(A) QUASHED THE ASSESSMENT BY HOLDING T HAT THE PROCEEDINGS INITIATED BY ITO U/S 147 WERE INVALID AND ALSO ON MERITS. 2.2. BEING AGGRIEVED, THE DEPARTMENT IS IN APPEAL B EFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. WHETHER LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN HOLDING THAT ITO WARD-9(3), NEW DELHI DID NOT HAVE JURISDICTION IN THE CASE OF THE ASSESSEE IN INITIAT ING REASSESSMENT PROCEEDINGS U/S 147. 2. WHETHER LD. CIT(A) HAS ERRED IN LAW IN NOT GIVIN G THE ASSESSING OFFICER AN OPPORTUNITY OF BEING HEARD AND IN RELYING ON SUBMISSION OF THE ASSESSEE ONLY. 3. WHETHER LD. CIT(A) HAS ERRED IN LAW IN HOLDING T HE ASSESSMENT PROCEEDINGS INVALID AND THE ASSESSMENT V OID. 4. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AN D THAT OF THE AO BE RESTORED. 3. LD. CIT(A) OBSERVED THAT THE ASSESSEE WAS ENGAGE D IN THE BUSINESS OF MANUFACTURING OF MS INGOTS AND HAD ALSO SHOWN INCO ME FROM SHARE TRADING IN THE PAST. THE ITO WARD 9(3), NEW DELHI, ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF DIT(INV.), NEW DELHI THAT ASSESSEE HAD RE CEIVED ACCOMMODATION ENTRIES AMOUNTING TO RS. 20,00,000/- FROM M/S S.J. CAPITAL S LTD., INITIATED PROCEEDINGS U/S 147 OF THE I.T. ACT. THE ASSESSMENT WAS MADE EVENTU ALLY BY THE ACIT, CIRCLE, HARDWAR. HE HAS OBSERVED THAT THE NOTICE U/S 148 OF THE I.T. ACT WAS ISSUED BY THE ITO, WARD 9(3), NEW DELHI, PRESUMABLY BECAUSE ASSES SEES PAN WAS LINKED WITH 3 ITA NO. 1162/DEL/2013 SUMO STEELS PVT. LTD. HIM AND THE ADDRESS AS PER HIS RECORD WAS B-85/A, M ANSAROVAR GARDEN, NEW DELHI. THE ASSESSEE ON RECEIPT OF NOTICE DATED 28-3 -2011, WROTE A LETTER TO THE AO MENTIONING THAT THE JURISDICTION OVER THE CASE LAY WITH THE AO WITH WHOM THE ORIGINAL RETURN HAD BEEN FURNISHED ON 30-10-2004 AN D ASSESSMENT U/S 143(3) HAD BEEN MADE ON 20-12-2006. THE ITO DID NOT DEAL WITH THE ASSESSEES OBJECTION BUT TRANSFERRED THE ASSESSMENT RECORDS TO ACIT, CIRCLE HARDWAR VIDE HIS LETTER NO. ITO/ WARD 9(3)/TRANSFER OF RECORDS/2011-12/50 DATED 12- 8-2011, MENTIONING CLEARLY THEREIN THAT JURISDICTION OVER THE CASE LAY WITH AC IT, CIRCLE HARDWAR. ACIT CONTINUED THE PROCEEDINGS AND MADE THE ASSESSMENT. IN THE BACKGROUND OF THESE FACTS THE LD. CIT(A) OBSERVED THAT THE ITO WARD 9(3 ) NEW DELHI WAS DUTY BOUND TO PASS THE INFORMATION TO THE APPROPRIATE AO WHO C OULD POSSIBLY INITIATE THE SAME ACTION AFTER FOLLOWING THE PROCEDURE ESTABLISHED BY LAW. INSTEAD OF DOING THAT, HE MERELY PASSED ON THE PROCEEDINGS INITIATED BY HIM T O THE ACIT, HARDWAR EVEN THOUGH HE CLEARLY ACKNOWLEDGED THAT THE JURISDICTIO N LAY WITH THE LATTER. HE FURTHER OBSERVED THAT IF THE AO ACTUALLY DID NOT HAVE JURIS DICTION OVER THE CASE, THE NOTICE ISSUED BY HIM TO THE ASSESSEE, EVEN UNDER THE UNDER STANDABLE IMPRESSION, COULD NOT BE CALLED A VALID NOTICE. HE, ACCORDINGLY, HELD THA T THE PROCEEDING INITIATED U/S 148 WAS INVALID. 4. ON MERITS, LD. CIT(A) OBSERVED AS UNDER: THE AO, ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF THE DIT(LNV.) NEW DELHI, HELD THAT THE ASSESSEE HAD REC EIVED AN AMOUNT OF RS.20 LAKH FROM S.J.CAPITAL LTD. BY WAY OF ACCOMMOD ATION ENTRY AND TREATED THE SAME AS THE ASSESSEE'S UNDISCLOSED INCO ME. IT WAS CLARIFIED BY THE ASSESSEE THAT - IT HAD DONE NO TRANSACTION WITH THAT CONCERN DURING THE PREVIOUS YEAR. - SHARE TRANSACTIONS HAD BEEN' DONE DURING THE PREVIO US YEAR RELATING TO AY 2003-04 AND THE CORRESPONDING INCOME HAD ALSO BE EN OFFERED TO TAX IN AY. 2003-04 ONLY. 4 ITA NO. 1162/DEL/2013 SUMO STEELS PVT. LTD. - THE AMOUNT RECEIVED DURING THE PREVIOUS YEAR UNDER CONSIDERATION WAS THE AMOUNT RECEIVABLE AT THE END OF THE PREVIOU S YEAR RELATING TO A Y 2003-04. - THE AMOUNT RECEIVED DURING THE PREVIOUS YEAR UNDER CONSIDERATION WAS RS.10 LAKH ONLY; NOT RS.20 LAKH. THE RELEVANT DOCUMENTARY EVIDENCE TO SUBSTANTIATE T HIS CONTENTION IS CLAIMED TO HAVE BEEN FURNISHED BEFORE THE AO. THE A O DID NOT DEAL WITH THIS ASPECT OF THE MATTER SATISFACTORILY. HE ONLY M ENTIONED THAT ACCOMMODATION ENTRIES ARE MADE IN SUCH A WAY THAT T HEY APPEAR VERY GENUINE BUT THEY DID NOT STAND THE TEST OF INVESTIG ATION. HE ALSO MENTIONED THAT S.J. CAPITAL LTD. WAS NOT FOUND AT THE GIVEN A DDRESS AND THE ASSESSEE COULD NOT FURNISH CONFIRMATION FROM THE SAID COMPAN Y IN RESPECT OF ITS ALLEGED TRANSACTION WITH THE LATTER. 2.1 IT IS LIKELY THAT THE AMOUNT RECEIVED BY THE AS SESSEE FROM S.J. CAPITAL LTD. WAS NOT SALE PROCEED OF SHARE BUT ACCOMMODATIO N ENTRY. BUT THAT, BY ITSELF, DOES NOT MEAN THAT AN AMOUNT OF RS.20 LAKH MAY BE TAXED AS THE ASSESSEE'S UNDISCLOSED INCOME FOR THE PREVIOUS YEAR UNDER CONSIDERATION. FIRSTLY, THE ASSESSEE'S CONTENTION THAT THE AMOUNT RECEIVED WAS ONLY RS.1 0 LAKH AND NOT RS.20 LAKH HAS NOT BEEN CONTROVERTED. SECONDLY, ITS CONTENTION THAT THE AMOUNT HAD ALREADY BEEN OFFERED TO TAX IN AY. 2003-04 HAS ALSO NOT BEEN CONTROVERTED. IN VIEW OF THIS, PR IMA FACIE THERE WAS NO JUSTIFICATION FOR TREATING THE AMOUNT OF RS. 20,00, 000/- AS THE ASSESSEE'S UNEXPLAINED INCOME FOR THE PREVIOUS YEAR UNDER CONS IDERATION. THUS, THE ADDITION IS NOT JUSTIFIED EVEN ON MERITS. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES. FACTS ARE NOT DISPUTED. THE DEPARTMENT HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO CONTROVERT THE FINDINGS RECORDED BY LD. CIT(A). WE ARE IN AGREEMEN T WITH THE FINDINGS OF LD. CIT(A) THAT ITO HAVING JURISDICTION OVER THE ASSESS EE ONLY COULD ISSUE NOTICE U/S 148 AND NONE ELSE. ONCE THE ASSESSEE BROUGHT TO THE NOTICE OF ITO WARD 9(3), NEWDELHI THAT THE JURISDICTION LAY WITH ACIT CIRCLE HARDWAR WITH WHICH ITO WARD 9(3), NEW DELHI WAS FULLY SATISFIED, THEN HE W AS REQUIRED TO PASS ON ENTIRE INFORMATION RECEIVED BY HIM TO THE APPROPRIATE AO W HO COULD INITIATE PROCEEDINGS 5 ITA NO. 1162/DEL/2013 SUMO STEELS PVT. LTD. U/S 148 IF THE LAW SO PERMITS. WE, ACCORDINGLY, UPH OLD THE ORDER OF LD. CIT(A) ON THIS COUNT. 5.1. ON MERITS ALSO WE FIND THAT THE FINDINGS OF LD . CIT(A) ARE NOT CONTROVERTED TO THE EXTENT THAT THE ASSESSEE HAD OFFERED THIS AMOUN T IN AY 2003-04. THEREFORE, WE CONFIRM THE FINDINGS OF LD. CIT(A) ON THIS ISSUE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29-05-2015. SD/- SD/- (A.T. VARKEY) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29-05-2015. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR