M/s. Civitech Housing India (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 1293/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6478 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 06-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice; Period of limitation; Validity of assessment; Accommodation entries; Time period of passing order; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 147; 68; 148; 132; 139

Judgement Text

ITA NO.1293/DEL/2013 ASSESSMENT YEAR: 2006 - 07 CIVITECH HOUSING INDIA P LTD VS. DCIT, INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SMT DIVA SINGH , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1293/DEL/2013 (ASSESSMENT YEAR: 2006 - 07 ) CIVITECH HOUSING INDIA P LTD, 65, SHRESTHA VIHAR, NEW DELHI 110092 PAN:AABCC1465B VS. DCIT, CENTRAL CIRCLE - 3, ROOM NO. 356, 3 RD FLOOR, E - 2, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJAY KUMAR, CA REVENUE BY: SH. ANIL KUMAR SHARMA, SR. DR DATE OF HEARING 20/09/ 2016 DATE OF PRONOUNCEMENT 16 / 12 /2016 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - II, NEW DELHI DATED 16.01.2013 FOR ASSESSMENT YEAR 2006 - 07, WHEREIN THE ORDER DATED 2012.2010 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 BY THE LD AO I.E. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NEW DELHI WAS CONFIRMED. 2. THE MAIN GROUND OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT (A) THERE WAS SUFFICIENT MATERIAL WITH THE ASSESSING OFFICER IN THE FORM OF REPORT OF INVESTIGATION WING, SO AS TO RECORD 'REASON TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT; AND (B) AS THE ASSESSING OFFICER HAS DISCUSSED THE OBJECTIONS OF THE APPELLANT IN THE ASSESSMENT ORDER, THEREFORE, THERE IS NO VIOLATION OF THE DIRECTIVES OF THE APEX COURT AND INITIATION AS WELL AS COMPLETION OF REASSESSMENT PROCEEDING IS V ALID. PAGE 2 OF 6 ITA NO.1293/DEL/2013 ASSESSMENT YEAR: 2006 - 07 CIVITECH HOUSING INDIA P LTD VS. DCIT, 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT VARIATION MADE TO THE RETURNED INCOME WITHOUT ISSUING VALID NOTICE UNDER SECTION 143(2) IS IN ORDER AND CORRECT. 3. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT TRANSFER OF JURISDICTION UNDER SECTION 127 IS VALID AND THEREBY ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER, CENTRAL CIRCLE - 3, NEW DELHI IS NOT VITIATED. 4. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 50,00,000 UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL ISSUED TO TWO COMPANIES NAMELY GEEFCEE FINANCE LTD. RS. 35 LAKHS AND ADONIS FINANCIAL SERVICES (P) LTD. RS. 15 LAKHS, 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PR INCIPLES OF NATURAL JUSTICE. 3. THE GROUND NO. 1 IS AGAINST INITIATION OF REASSESSMENT PROCEEDINGS, GROUND NO. 2 IS AGAINST NON ISSUANCE OF VALID NOTICE U/S 143(2) , GROUND NO. 3 IS AGAINST THE ASSUMPTION OF JURISDICTION U/S 127 AND GROUND NO. 4 IS AGAINST CONFIRMATION OF ADDITION OF RS. 50 LAKHS U/S 68 OF THE ACT WITH RESPECT TO SHARE CAPITAL ISSUE D TO TWO COMPANIES . 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITIES . IT SALES CONSTRUCTED FLATS AND OPEN PLOTS. FOR THE YEAR UNDER CONSIDERATION IT FILED ITS RETURN OF INCOME U/S 139(1) OF THE ACT WHICH WAS SUBJECT TO ASSESSMENT U/S 143(3) VID E ORDER DATED 26 DECEMBER 2008. SUBSEQUENTLY O N RECEIPT OF REPORT FROM THE OFFICE OF INCOME TAX (INVESTIGATION) WING , NEW DELHI ABOUT ACCOMMODATION ENTRIES GIVEN BY ENTRY OPERATORS PURSUANT TO SEARCH U/S 132 OF THE ACT AT THE OFFICE OF ONE CHARTERED AC COUNTANT SHRI TARUN GOEL ON 15 TH SEPTEMBER 2008 THE CASE OF THE ASSESSEE WAS REOPENED. DURING THE COURSE OF ENQUIRIES, IT WAS FOUND THAT , FROM TWO COMPANIES OPERATED BY SHRI TARUN GOEL WHO IS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES ASSESSEE COMPANY HAS CREDITED RS 50 LAKHS BY ISSUE OF SHARE CAPITAL. THEREFORE A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 11.05.2009 TO THE ASSESSEE WHICH WAS REPLIED VIDE LETTER DATED 11.06.2009 REQUESTING TO CONSIDER THE O RIGINAL RETURN FILED U/S 13 9(1) OF THE ACT AS RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. A SSESSEE REQUESTED FOR THE REASONS RECORDED ON 07.12.2010 WHIC H WAS PROVIDED TO THE ASSESSEE AND OBJECTION TO THOSE REASONS WERE ALSO FILED. THEREAFTER NOTICE U/S 142(1) WERE ISSUED ON 1 6.09.2009 AND 26.08.2010 WERE ISSUED BY T LD AO . FURTHER THE ORDER U/S 127(2) WAS PASSED AND THE CASE WAS TRANSFERRED TO THE PRESENT ASSESSING OFFICER AND THEREFORE NOTICE U/S 143(2) WAS ISSUED ON 22.11.2010 . THE ASSESSEE SUBMITTED VIDE LETTER DATED 13 .12.2010 AND 20.12.2010 WHEREIN IT CONTESTED THE PROPOSED ADDITION ON MERIT AS WELL AS ON PAGE 3 OF 6 ITA NO.1293/DEL/2013 ASSESSMENT YEAR: 2006 - 07 CIVITECH HOUSING INDIA P LTD VS. DCIT, JURISDICTION. HOWEVER, THE LD AO MADE AN ADDITION U/S 68 OF UNEXPLAINED INVESTMENT IN THE GARB OF SHARE CAPITAL ISSUED AT A PREMIUM OF RS. 50 LAKHS. CONSEQUENTLY, TO TAL INCOME DISCLOSED IN THE RETURN OF INCOME OF RS. 5499860/ - WAS ASSED U/S 143(3) READ WITH SECTION 147 VIDE ORDER DATED 20.12.2010 AT RS. 10499860/ - . 5. THE ABOVE ASSESSMENT WAS CHALLENGED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY ON THE MERIT AS WELL AS ON THE JURISDICTION. THE LD CIT(A) CONFIRMED THE ACTION OF THE LD AO IN ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT. ON THE ISSUE OF NOT ISSUING VALID NOTICE U/S 143(2) OF THE ACT, HE HELD THAT APPELLANT WAS PUT ON NOTICE WHICH IS EVIDENT FROM THE LETTER DATED 30 SEPTEMBER 2009 OF THE AR OF THE APPELLANT. ON T RANSFER OF JURISDICTION U/S 127 HE HELD THAT FIRSTLY, IT IS NOT APPEALABLE AND CONSEQUENTLY NO OPPORTUNITY IS REQUIRED TO BE GIVEN WHE N THE CASE IS TRANSFERR ED WITHIN SAME CITY FROM ONE OFFICER TO ANOTHER. ON THE MERITS OF THE ADDITION HE CONFIRMED THE SAME HOLDING THAT THE ASSESSEE HAS NEVER ASKED FOR THE CROSS EXAMINATION OF MR. TARUN GOEL AND FURTHER THE ASSESSEE HAS FAILED TO DISCHARGE ITS BURDEN WITH RE SPECT TO THE INVESTMENT MADE BY TWO COMPANIES IN THE SHARE CAPITAL OF THE ASSESSEE B ECAUSE MERE FILING OF CONFIRMATION AND OTHER RELEVANT DETAILS CANNOT BE A STAMP OF GENUINENESS OF THE TRANSACTION. THEREFORE, AGGRIEVED BY THE ORDER OF THE LD FIRST APPEL LATE AUTHORITY THE ASSESSEE HAS PREFERRED APPEAL BEFORE US. 6. ON GROUND NO .2 OF THE APPEAL, LD AR SUBMITTED EXTENSIVE ARGUMENTS. THE FIRST CONTEN TION OF THE ASSESSEE WAS THAT NOTICE U/S 143(2) OF THE ACT WAS NOT ISSUED TO THE ASSESSEE WITHIN THE STIPULATED PERIOD OF TIME. HE SUBMITTED THAT THE LD AO ISSUED NOTICE U/S 143(2) OF THE ACT ON 22.11.2010 WHICH IS BEYOND PRESCRIBED TIME. HE REFERRED TO PAGE NO. 215 OF HIS PAPER BOOK WHICH IS LETTER DATED 20 TH DECEMBER 20 10 DEALING WITH OBJECTIONS TO THE TRANSFER OF JURI SDICTION AND ISSUE OF NOTICE U/S 143(2) VIDE PARA NO. 7 OF THAT LETTER HE SUBMITTED THAT THE NOTICE U/S 143(2) WAS REQUIRED TO BE ISSUED AND SERVED UPON THE ASSESSEE UP TO 30 TH SEPTEMBER 2010 AND PRESENT N OTICE WAS ISSUED ON 22.11.2010 , THEREFORE IS BARRED BY LIMITATION. HE FURTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF HON'BLE DELHI HIGH COURT IN THE CASE OF ALPINE ELECTRONICS ASIA PTE LTD VS. DIRECTOR GENER AL OF INCOME - TAX AND OTHERS 341 ITR 247 (DEL) AND FURTHER IN THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF PR. CIT VS. SHRI JAY SHIV SHANKAR TRADERS PVT. LTD 383 ITR 448. HE, THEREFORE, SUBMITTED THAT FAILURE TO ISSUE NOTICE U/S 143(2) IN ACCORDANCE WITH THE LAW INVALIDATED THE PAGE 4 OF 6 ITA NO.1293/DEL/2013 ASSESSMENT YEAR: 2006 - 07 CIVITECH HOUSING INDIA P LTD VS. DCIT, ORDER OF REASSESSMENT. ON THE ISSUE OF REOPENING, IT WAS SUBMITTED THAT THE REASONS RECORDED ARE MERELY SUSPICION EXPRESSED AND ALL THE DETAILS WERE AVAILABLE WITH THE LD AO AT THE TIME OF PASSING ORIGINAL ASSESSMENT . 7. THE LD DR RELIED UPON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE LD FIRST APPELLATE AUTHORITY HAS CONSIDERED THE OBJECTION OF THE ASSESSEE AND HAS CORRECTLY UPHELD THE ACTION OF THE LD AO ON LEGAL GROUNDS AS WELL AS ON THE MERITS. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES DEALING WITH THE VARIOUS ISSUES ON MERITS OF THE CASE AND LEGAL ASPECTS. NOW WE COME TO THE ONLY ARGUMENT RAISED BEFORE US THAT NO NOTICE UNDER SECTION 143 ( 2 ) WAS ISSUED WITHIN THE LIMITATION PERIOD , T HEREFORE, ANY VARIATION MADE TO THE RETURNED INCOME IS WITHOUT JURISDICTION. IN THE PRESENT CASE ADMITTEDLY, THE FIRST NOTICE WAS ISSUED UNDER SECTION 143 (2) OF THE ACT ON 22/11/2010. THIS FACT HAS BEEN OBJECT ED TO BY ASSESSEE BEFORE THE LD. ASSESSING OFFICER BY FILING AN OBJECTION VIDE LETTER DATED 20/12/2010. HOWEVER, THE LD .ASSESSING OFFICER HAS PASSED ORDER WITHOUT DISPOSING OFF THIS OBJECTION OF THE ASSESSEE. ON APPEAL BEFORE THE LD. 1 ST APPELLATE AUTHORI TY, THE ARGUMENT OF THE ASSESSEE WAS DISMISSED HOLDING THAT THERE IS NO VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE, AS ASSESSEE WAS PUT TO NOTICE OF PENDING ASSESSMENT PROCEEDINGS UNDER SECTION 148 OF THE INCOME TAX ACT. THEREFORE IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS FILED LETTER TO TREAT THE RETURN OF INCOME FILED BY IT UNDER SECTION 139 ( 1 ) OF THE INCOME TAX ACT, AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. THEREFORE ACCORD ING TO THE PROVISIONS OF SECTION 143 (2) OF THE ACT MANDATORY NOTICE SHOULD HAVE BEEN ISSUED TO THE ASSESSEE BY 30/09/2010 THAT IS WITHIN 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME WAS FILED. IN THE IMPUGNED CASE THE NOTICE UNDER SECTION 143 (2) WAS ISSUED ONLY ON 22/11/2010. HOWEVER, THE LD. 1 ST APPELLATE AUTHORITY HAS BRUSHED ASIDE THIS ISSUE HOLDING THAT ASSESSEE WAS AWARE THAT REASSESSMENT PROCEEDINGS ARE GOING ON IN THE CASE OF THE ASSESSEE. SECTION 143(2) OF THE INCOME - TAX ACT, 1961, IS ALSO APPLICABLE TO PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT. THE PROVISI ONS OF SECTION 148 OF THE ACT GRANTS LIBERTY TO THE REVENUE TO SERVE NOTICE UNDER SECTION 143(2) OF THE ACT BEFORE PASSING THE ASSESSMENT ORDER FOR RETURN S FURNISHED. IN RESPECT OF RETURNS FILED PURSUANT TO NOTICE UNDER SECTION 148 OF THE ACT, IT IS MANDATORY TO SERVE NOTICE UNDER SECTION 143(2) OF THE ACT, WITHIN THE STIPULATED TIME LIMIT. SECTION 292BB INCORPORATES THE PRINCIPLE OF ESTOPPEL. IT STIPULATES THAT AN ASSESSEE, WHO HAS PAGE 5 OF 6 ITA NO.1293/DEL/2013 ASSESSMENT YEAR: 2006 - 07 CIVITECH HOUSING INDIA P LTD VS. DCIT, APPEARED IN ANY PROCEEDING AND COOPERATED IN ANY ENQUIRY RELATING TO ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO BE SERVED WITH ANY NOTICE WHICH WAS REQUIRED TO BE SERVED AND WOULD BE PRECLUDED FROM OBJECTING THAT THE NOTICE WA S NOT SERVED UPON HIM OR WAS SERVED UPON HIM IN AN IMPROPER MANNER OR WAS NOT SERVED UPON HIM IN TIME. HOWEVER, THE PROVISO STATES THAT THE PRINCIPLE OF ESTOPPEL INCORPORATED IN THE MAIN SECTION WOULD NOT APPLY, IF THE ASSESSEE HAS RAISED OBJECTION IN REPL Y TO THE NOTICE BEFORE COMPLETION OF ASSESSMENT OR REASSESSMENT. IN THE PRESENT CASE THE ASSESSEE HAS OBJECTED TO THE FACT THAT NO NOTICE UNDER SECTION 143 (2) WAS NOT SERVED ON THE ASSESSEE IN TIME. THEREFORE, THE PRINCIPLE OF ESTOPPEL LAID DOWN UNDER SEC TION 292BB DOES NOT APPLY TO THE FACTS OF THE PRESENT CASE. FURTHERMORE, THE LD. 1 ST APPELLATE AUTHORITY HAS BRUSHED ASIDE THIS ARGUMENT OF THE ASSESSEE STATING THAT THERE IS NO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. WE ARE OF THE VIEW THAT IT IS NOT THE QUESTION OF THE VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, BUT NON - ISSUE OF A VALID NOTICE SHAKE S THE FOUNDATION OF THE ASSESSMENT PROCEEDINGS ITSELF. THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF ALPINE ELECTRICALS ASIA PTE LTD VERSUS DIRECTOR GENERAL OF INCOME TAX AND OTHERS (341 ITR 247) ALSO COVERS THE CASE OF THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THAT THE LD. 1 ST APPELLATE AUTHORITY HAS NOT DECIDED THIS ISSUE IN RIGHT PERSPECTIVE. THOUGH IN THIS PAPER BOOK THE ASSESSEE HAS PLACED NOTICE ISSUED UNDER SECTION 143 (2) OF THE ACT DATED 22 11 2010 ISSUED BY THE D EPUTY COMMISS IONER OF I NCOME T AX, CENTRAL CIRCLE 3 DELHI. ON THIS NOTICE , THE ASSESSEE HAS SUBMITTED THAT IT IS ISSUED BEYOND THE PRESCRIBED TIME LIMIT. HOWEVER, THE FACTS OF THE CASE ARE THAT THAT THE ORIGINAL NOTICE UNDER SECTION 142(1) WAS ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3 (1), NEW DELHI ON 16/09/2009 AND ALSO ON 26 TH OF AUGUST 2010. THEREFORE IT IS NOT AVAILABLE FROM THE INFORMATION AVAILABLE BEFORE US THAT WHETHER ANY NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT WAS ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3 (1), NEW DELHI. THEREFOR E, FOR THE TWIN REASONS THAT (I) THE LD. 1 ST APPELLATE AUTHORITY HAS NOT DEALT WITH THIS ISSUE IN RIGHT PERSPECTIVE AND (II) NO INFORMATION IS AVAILABLE BEFORE US WHETHER ANY NOTICE UNDER SECTION 143 (2) WAS ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3 (1), NEW DELHI , WE SET ASIDE THE GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE TO THE FILE OF THE LD. 1 ST APPELLATE AUTHORITY WITH THE DIRECTION TO DECIDE THE ISSUE OF VALIDITY OF ASSESSMENT PROCEEDINGS VIS - A VIS ISSUE OF VALID NOTICE UNDER SECTION 143 PAGE 6 OF 6 ITA NO.1293/DEL/2013 ASSESSMENT YEAR: 2006 - 07 CIVITECH HOUSING INDIA P LTD VS. DCIT, (2) OF THE INCOME TAX ACT . IN THE RESULT, GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED WITH ABOVE DIRECTION. 9. AS THE ASSESSEE HAS ARGUED GROUND NO. 2 OF THE APPEAL BEFORE US AND HAS NOT ADVANCED ANY ARGUMENTS ON GROUND NO. 1, 3 AND 4 OF THE APPEAL AND FURTHER GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE GOES TO THE FOUNDATION OF THE ASSESSMENT, WE DO NOT ADJUDICATE GROUND NO. 1, 3 AND 4 OF THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 1 6 / 12 /2016. - S D / - - S D / - ( DIVA SINGH ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 12 /2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI