M/s NST Builders Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1242/DEL/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7801 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 01-03-2016
• Assessment Year: misc
• Appeal Filed On: 19-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAN KANT GARG
• Assessee Lawyers: SANJEEV BINDAL
• Keywords: Reopening of assessment; Principle of natural justice; Accommodation entries
• Section: 147; 131; 68; 148; 144

Judgement Text

1 ITA NO. 1242/DEL/2010 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.-1242/DEL/2010 (ASSESSM ENT YEAR-2001-02) NST BUILDERS PVT. LTD. C-196, SECOND FLOOR, FRONT PORTION, JHILMIL NEW DELHI AAACN3117E (APPELLANT) VS ITO WARD 13(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. SANJEEV BINDAL, CA RESPONDENT BY SH. RAMAN KANT GARG, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 01/02/2010 PASSED BY CIT (A) NEW DELHI. FACTS IN BRIEF: 2. THE ASSESSEE IS A COMPANY AND IT FILED ITS RETUR N OF INCOME ON 30.04.2002 DECLARING NIL INCOME. THE SAME WAS PROCE SSED UNDER DATE OF HEARING 01.03.2016 DATE OF PRONOUNCEMENT 20.05.2016 2 ITA NO. 1242/DEL/2010 SECTION 143(1) ON 16.01.2003. THE ASSESSING OFFICER RECEIVED INFORMATION FROM INVESTIGATION WING OF THE DEPARTME NT. HE RECORDED REASONS FOR RE-OPENING OF ASSESSMENT AND ISSUED NOT ICE UNDER SECTION 148 ON 25.03.2008. 3. IN RESPONSE, THE ASSESSEE, THROUGH M/S. VINOD KU MAR BINDAL & CO., CHARTERED ACCOUNTANT FILED A LETTER DATED 29 .03.2008 SIGNED BY MS. VIDHI GOEL, REQUESTING THAT THE RETURN OF IN COME FILED EARLIER, BE TREATED AS A RETURN FILED IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148. THE ASSESSING OFFICER VIDE LETTER DATE D 18.09.2008 STATED THAT NO COGNIZANCE CAN BE TAKEN OF THIS LETT ER FILED BY THE CA FIRM AS NO POWER OF ATTORNEY HAVE BEEN FILED. THE A SSESSEE DO NOT RESPOND. THE ASSESSING OFFICER ISSUED ONE MORE LETT ER ON 14.11.2008 PROPOSING TO PROCEED EX-PARTE UNDER SECT ION 144 OF THE ACT. IN THIS LETTER HE MENTIONED AS TO WHY NOTICE U NDER SECTION 143(2) HAS NOT BEEN ISSUED. HE SUO MOTO ISSUED THE COPY OF REASONS FOR RE-OPENING TO ASSESSEE AND ALSO SOUGHT CERTAIN DETAILS WHICH ARE POINTS 1 TO 5 AT PAGE 3 OF THE ASSESSMENT ORDER. HE ALSO ASKED ASSESSEE TO FILE RETURN OF INCOME AND COLLECT NOTIC E UNDER SECTION 143(2) OF THE ACT. 4. IN THIS LETTER THE ASSESSEE WAS ASKED TO PROVE T HE GENUINENESS OF THE CREDITS IN THE BOOK ALONG WITH THE CREDITWOR THINESS AND IDENTITY OF THE CREDITORS. 5. MS. VIDHI GOEL APPEARED ON 26.11.2008 AND FILED A LETTER ALONG WITH POWER OF ATTORNEY. THIS LETTER DATED 26.11.200 8 WAS TREATED AS A RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONS E TO NOTICE UNDER 3 ITA NO. 1242/DEL/2010 SECTION 148 OF THE ACT. MS. VIDHI GOEL SUBMITTED TH AT REASONS FOR RE-OPENING WAS NOT PROVIDED. THE ASSESSING OFFICER RECORDS THAT ON THIS DATE, REASONS FOR RE-OPENING FOR ASSESSMENT WA S HANDED OVER TO ASSESSEE AND THAT A NOTICE UNDER SECTION 143(2) WAS SERVED ON ASSESSEE. 6. MS. VIDHI GOEL AGAIN APPEARED ON 28.11.2008 AND REQUESTED FOR COPY OF THE REPORT OF INVESTIGATION WING AND TH E MATERIAL ON THE BASIS OF WHICH CASE WAS RE-OPENED. SOME EXPLANATION ON SHARE APPLICATION MONEY RECEIVED FROM M/S. SEHGAL TELEVIS ION PVT. LTD. OF RS. 7,50,000/- WAS GIVEN. THE ASSESSING OFFICER RE CORDS THAT THE ASSESSEE COMPANY RECEIVED SHARE APPLICATION MONEY I N APRIL, 2000 AND THERE WAS NO ALLOTMENT OF SHARE, NOR PAYMENT OF INTEREST. CERTAIN COMMENTS WERE MADE ON ADDRESS OF THE COMPAN Y. THE ASSESSEE WAS ASKED TO PRODUCE THE DIRECTOR OF M/S. SEHGAL TELEVISION PVT. LTD. 7. MS. VIDHI GOEL APPEARED ON 05.12.2008 AND SUBMIT TED THAT THEY CANNOT PRODUCE DIRECTORS AND REQUESTED THE ASS ESSING OFFICER TO ISSUE SUMMONS UNDER SECTION 131 TO THOSE DIRECTO RS OF THE COMPANY. AFTER COUPLE OF HEARING THE ASSESSING OFFI CER MADE ADDITION UNDER SECTION 68 OF THE ACT OF RS. 7,50,00 0/- BEING SHARE APPLICATION MONEY RECEIVED FROM M/S. SEHGAL TELEVIS ION PVT. LTD. AND RS. 2,50,000/-FROM M/S DATABASE COMPUTERS PVT. LTD. HE FURTHER ADDED AN AMOUNT OF RS. 25,000/- AS COMMISSI ON PAID FOR THESE ACCOMMODATION ENTRIES @ 2.5% OF RS. 10,00,000 /-. 4 ITA NO. 1242/DEL/2010 8. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL. BEFORE THE FIRST APPELLATE AUTHORITY THE RE-OPENING OF THE ASSESSMENT UNDER SECTION 148 WAS NOT CHALLENGED. THE ADDITIONS WERE CHALLENGED ON MERITS AND ALSO ON THE GROUND THAT THEY ARE OUTSIDE THE SCOPE OF SECTION 148. IT WAS SPECIFICALLY PLEADED THAT ASSES SING OFFICER HAS NOT CONFRONTED THE ASSESSEE WITH A COPY OF THE REPO RT OF THE INVESTIGATION WING ALONG WITH EVIDENCES GATHERED BY THEM AND THUS, THE PRINCIPLES OF NATURAL JUSTICE WAS VIOLATED. 9. THE CIT (A) CONFIRMED ADDITION PARTLY. HE HELD T HAT THE AMOUNT RECEIVED FROM M/S. SEHGAL TELEVISION PVT. LTD. IS A LOAN AND NOT SHARE APPLICATION MONEY AS CLAIMED BY THE ASSESSEE. THE CIT(A) HELD THAT LINE OF DECISIONS APPLICABLE TO ADDITION UNDER SECTION 68 RELATABLE TO SHARE APPLICATION MONEY CANNOT BE APPL IED. AS NO CONFIRMATION LETTER FIELD BY THE ASSESSEE, THE ADDI TION WAS CONFIRMED. AS REGARDS THE AMOUNT OF RS.2,50,000/- R ECEIVED FROM M/S. DATABASE COMPUTERS PVT. LTD. THE ADDITION WAS CONFIRMED AS NO DOCUMENTARY EVIDENCE WAS FILED BY ASSESSEE. 10. REGARDING ADDITION OF RS. 25,000/- AS COMMISSIO N PAID, THE CIT(A) DELETED THE SAME AS WITHOUT EVIDENCE. 11. AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLL OWING GROUNDS: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION FOR SHARE APPLICATION MONEY MADE BY TH E ASSESSING OFFICER RELYING ON SOME REPORT/ INFORMATION RECEIVE D FROM INVESTIGATION WING BUT WITHOUT CONFRONTING THE SAME TO THE ASSESSEE THOUGH SPECIFICALLY ASKED FOR BY THE ASSES SEE VIDE ITS 5 ITA NO. 1242/DEL/2010 LETTER DATED 27/11/08. THUS THE ADDITION SO CONFIRM ED IGNORING THE PRINCIPLES OF NATURAL JUSTICE SHOULD BE DELETED . 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 10,00,000/- U/S 68 FOR THE AMOU NT RECEIVED AS SHARE APPLICATION MONEY IGNORING THE EVIDENCES P LACED ON RECORD AND IGNORING THE JUDGMENTS OF THE HONBLE AP EX COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD. (2008) 2 16 CTR (SC) 195 AND ALSO IN CIT VS DIVINE LEASING & FINANCE LTD 2008- TIOL-118-SC-IT. THEREFORE THE ADDITION SO MADE SHOU LD BE DELETED. 3. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUT E, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 12. THE ASSESSEE HAS FILED AN APPLICATION FOR ADMIT TING AN ADDITIONAL GROUNDS WHICH READS AS FOLLOWS: 1. THE RE-ASSESSMENT PROCEEDINGS INITIATED U/S 147 /148 OF THE ACT SHOULD BE HELD INVALID FOR WANT OF JURISDIC TION AS THE PRE- CONDITIONS FOR INITIATION OF THE SAID PROCEEDINGS A S STIPULATED IN SECTION 147 OF THE ACT WERE NOT SATISFIED; AND WHER EAS THE REASONS TO BELIEVE RECORDED WERE SCANTY & VAGUE A ND ALSO BASED ON NON-SPECIFIC INFORMATION. 13. WE FIRST TAKE UP THE ISSUE OF ADMISSION OF THE ADDITIONAL GROUND. 14. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT T HIS IS PURELY A LEGAL GROUND WHICH DOES NOT REQUIRE INVESTIGATION I NTO FRESH FACTS. ALL THE FACTS ARE ON RECORD. IN VIEW OF THE DECISIO N OF NATIONAL 6 ITA NO. 1242/DEL/2010 THERMAL POWER COMPANY LTD. VS. CIT (1998) 229 ITR 3 83 (SC), WE ADMIT THIS ADDITIONAL GROUND OF APPEAL. 15. AFTER CONSIDERING RIVAL SUBMISSION AS THIS GROU ND HAS NOT BEEN CONSIDERED BY THE CIT(A) WE DEEM IT FIT TO SET ASID E THIS ISSUE OF VALIDITY OF RE-OPENING TO THE FIRST APPELLATE AUTHO RITY FOR ADJUDICATION. 16. IN RESULT, APPEAL IS ALLOWED FOR STATISTICAL PU RPOSE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 20 TH OF MAY, 2016. SD/- SD/- (J. SUDHAKAR REDDY) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 /05/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 01/03/2016 PS 7 ITA NO. 1242/DEL/2010 2. DRAFT PLACED BEFORE AUTHOR 02/03/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 2 0 .05.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 0 .05.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.