M/s SKM Export Industries Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1334/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6387 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KULDEEP SHARMA
• Keywords: Reopening of assessment; Accommodation entries; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SH. G.D. AGRAWAL V.P. AND SH. C.M. GARG, J.M ITA NO. 1334 /DEL/201 3 ASSTT. YEAR: 200 5 - 06 APPELLANT BY : SH. KUL D E EP SHARMA, CA RESPONDENT BY : SMT. RASHMITA JHA, SR. DR DATE OF FINAL HEARING : 17 .02.2016 DATE OF PRONOUNCEMENT : 09. 0 3 .2016 ORDER PER C.M. GARG, JM THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF THE COMMISSIONER OF THE INCOME TAX (APPEALS) XI, NEW DELHI ORDER DATED 28.12.2012 PASSED IN FIRST APPEAL NO. 219/10 - 11 FOR AY 200 5 - 06 . 2 WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CARE FULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. THE LD S R . DR AGREED TO THE SUBMISSION OF THE LD ASSESSEE S REPRESENTATIVE (AR) THAT THE LEGAL GROUND NO1 AND 2 CHALLENGING THE VALIDITY OF SKM EXPORT INDUSTRIES PVT. LTD. 1/8B, ASAF ALI ROAD, NEW DELHI - 110062 VS ITO WARD 8 (4) NEW DELHI APPELLANT RESPONDENT PAN NO. AABCS1918D 2 REOPENING AND ISSUANCE OF NOTICE U/S 147/148 OF THE INCOME TAX ACT 1961 (FOR SHO RT THE ACT) WHICH READ AS UNDER: 1. THE LD CIT (APPEALS) XI WAS WRONG IN ACCEPTING THE ORDER PASSED BY ASSESSING OFFICER, WHICH ON FACTS AND CIRCUMSTANCES OF THE CASE WAS BAD BOTH IN EYES OF LAW AND ON THE FACTS. 2. THE LD C IT (APPEALS) XI IS NOT JUSTIFY IN HOLDING THE ORDER OF ASSESSING OFFICER FOR INITIATION OF PROCEEDINGS U/S 147 READ WITH SECTION 148, IGNORING THE FACTS THAT SAME WAS BAD IN LAW ON THE CONDITION AND PROCEDURES PRESCRIBED UNDER THE STATUE HAVE NOT BEEN SAT ISFIED. 2. THE LD AR POINTED OUT THAT IN THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS THE AO HAS MERELY AFTER MENTIONING THAT AS PER INFORMATION RECEIVED FROM THE INVESTIGATION BEING THE ASSESSEE HAS INTRODUCED UNACCOUNTED MONEY IN ITS BOOKS OF AC COUNTS THROUGH ACCOMMODATION ENTRY FROM VARIOUS PARTIES ON DIFFERENT DATES FOR TOTAL AMOUNT OF RS. 25 LAC AS PER ENCLOSURES AND THEN THE AO PROCEEDED TO HOLD THAT HE HAS REASONS TO BELIEVE THAT THE TAXABLE OF RS. 25 LAC HAS ESCAPED ASSESSMENT WITHIN THE ME ANING OF SECTION 147 OF THE ACT. THE LD AR VEHEMENTLY POINTED OUT THAT THERE IS NO ENCLOSURE TO THE REASONS RECORDED AS MENTIONED THEREIN, THERE IS NO MENTION OF DATE ON WHICH THE REASONS WERE RECORDED, THERE IS NO MENTIONING OF NATURE OF ENTRIES AND TRANS ACTIONS WHICH WERE ALLEGED TO HAVE BEEN UNDERTAKEN BY THE ASSESSEE FOR TAKING SO CALL ACCOMMODATION ENTRIES AND THIS SHOWS THE CASUAL APPROACH OF THE AO IN PROCEEDING TO INVOKE DRACONIAN PROVISIONS OF SECTION 147/148 OF THE ACT. THE LD AR STRENUOUSLY POINT ED THAT THE AO INVOKED 3 POWERS OF REOPENING OF ASSESSMENT WITHOUT ANY BASIS IN A MECHANICAL MANNER WITHOUT APPLICATION OF MIND THEREFORE THE PROCEEDINGS AS WELL AS NOTICE U/S 147/148 OF THE ACT AND ALL SUBSEQUENT PROCEEDING SHOULD BE QUASHED. 3. REPLYING TO THE ABOVE THE LD DR SUPPORTED THE ACTION OF THE AO AND SUBMITTED THAT THERE WAS SUFFICIENT MATERIAL BEFORE THE AO TO FORM A BELIEVE THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES OF RS. 25 LAC FROM THE ENTRY PROVIDERS TO INTRODUCE ITS OWN MONEY IN TH E GARB OF ACCOMMODATION ENTRIES. HOWEVER, THE LD DR COULD NOT CONTROVERT THESE CONTENTIONS OF THE LD AR THAT IN THE REASONS RECORDED THERE IS A MENTIONING OF ENCLOSURES CONSISTING OF DETAILS OF ALLEGED ENTRY PROVIDERS AND TRANSACTIONS BUT THERE IS NO SUCH ENCLOSURE WAS PROVIDED TO THE ASSESSEE ALONG WITH COPY OF THE REASONS RECORDED AND IN THE REASONS RECORDED THERE IS NO MENTIONING OF DATE. 4. ON CAREFUL OF ABOVE SUBMISSION FIRSTLY WE OBSERVED THAT THE AO RECORDED FOLLOWING REASONS FOR INITIATION OF PROC EEDINGS U/S 147 OF THE ACT AND ISSUANCE OF NOTICE DATED 25.03.2010 U/S 148 OF THE ACT. REASONS FOR ISSUING NOTICE U/S 148 - REG. M/S SKM EXPORT (I) (P) LTD. AY 2005 - 06 4 INFORMATION RECEIVED FROM THE OFFICE OF THE ADDL. DIT(INV.)_IV, NEW DELHI REVEALED THAT M/S SKM EXPORT (I) PVT. LTD. HAS INTRODUCED UNACCOUNTED MONEY IN ITS BOOKS OF ACCOUNT DURING F.Y. 2004 - 05 THROUGH ACCOMMODATION ENTRY FROM VARIOUS PARTIES ON DIFFERENT DATES FOR TOTAL AMOUNT OF RS. 25.00 LAC AS PER ENCLOSURES. IN VIEW OF THE ABOVE, I HAVE REASONS TO BELIEVE THAT TAXABLE INCOME TO THE TUNE OF RS. 25.00 LAC HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961 . SD/ - ITO, WARD 8(4), N. DELHI. 5. ON CAREFUL CONSIDERATION OF ABOVE NOTED REASONS RECORDED BY T HE AO FOR INVOKING PROVISION OF SECTION 147OF THE ACT AND FOR ISSUING NOTICE U/S 148 OF THE ACT IT IS VIVID THAT THE AO HAS MENTIONED THAT AS PER INFORMATION OF INVESTIGATION BEING THE ASSESSEE HAS INTRODUCED UNACCOUNTED MONEY IN ITS BOOKS OF ACCOUNT DURIN G THE RELEVANT PERIOD THROUGH ACCOMMODATION ENTRIES FROM VARIOUS PARTIES ON DIFFERENT DATES FOR TOTAL AMOUNT OF RS. 25 LAC AS PER ENCLOSURES BUT WE ARE UNABLE TO SEE ANY SUCH ENCLOSURE WITH THE REASONS RECORDED AND ON SPECIFIC QUERY FROM THE BENCH THE LD A R COULD NOT SHOW US ANY SUCH ENCLOSURE WHICH COULD BE ACCEPTED AT ENCLOSURE TO THE REASONS RECORDED TO SUPPORT REASONS TO BELIEVE FOR THE AO THAT THE ASSESSEE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. IT IS ALSO PERTINENT TO NOTE THAT IN THE REASONS RECORDED THERE IS NO MENTIONING ABOUT THE MODE OF TRANSACTION BY WHICH THE ASSESSEE ALLEGED TO HAVE INTRODUCED ITS OWN UNACCOUNTED MONEY BY WAY OF ACCOMMODATION ENTRIES AND THAT S TOO THERE IS NO MENTIONING OF DATE ON WHICH SAID REASON S WERE RECORDED WHICH 5 SHOWS CASUAL APPROACH OF THE AO AND WE HAVE HESITATION TO HOLD THAT THE AO INITIATED REASSESSMENT PROCEEDINGS AND ISSUED NOTICE U/S 148 OF THE ACT IN A CASUAL MECHANICAL MANNER WITHOUT APPLICATION OF MIND AND AS PER FACTS RECORDED IN THE REASONS THERE WAS NO BASIS FOR THE AO TO FORM A BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT FOR AY 2005 - 06 AND THUS THE SAME CANNOT BE HELD AS VOID ASSUMPTION OF JURISDICTION TO REOPEN ASSESSMENT AND TO ISSUE NOTICE U/S 147/148 OF T HE ACT. OUR CONCLUSION ALSO GETS SUPPORT BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF DCIT VS. G & G PHARMA INDIA LTD DATED 8.10.2015 PASSED IN ITA NO. 545/2015 . 6 THUS , ON THE BASIS OF FORGOING DISCUSSION WE REACH T O THE LOGICAL CONCLUSION THAT THE AO HAS NO VALID JURISDICTION TO INVOKE POWERS OF SECTION 147 OF THE ACT AND FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT SHOWING HIS INTENTION TO REOPENING OF ASSESSMENT AND ALL PROCEEDINGS ARE VOID ABINITIO AND BAD IN LAW WH ICH CANNOT HELD AS SUSTAINABLE AND THE SAME DESERVE TO BE QUASHED AND HENCE WE QUASH THE SAME. CONSEQUENTLY , INITIATION OF PROCEEDINGS & NOTICE U/S 148 OF THE ACT AND ALL SUBSEQUENT PROCEEDINGS IN SUBSEQUENT THERETO ARE QUASHED. ACCORDINGLY, GROUND NO. 1 & 2 OF THE ASSESSEE ARE ALLOWED. 6 7 . SINCE BY EARLIER PART OF THIS ORDER WE HAVE QUASHED ENTIRE PROCEEDINGS AND NOTICE U/S 147/148 OF THE ACT BEING BAD IN LAW AND VOID AB INITIO THEREFORE OTHER GROUNDS ON MERITS BECOMES ACADEMIC AND INFRUCTUOUS AND WE D ISMISS THE SAME AS HAVING BECOME INFRUCTUOUS WITHOUT ANY ADJUDICATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL GROUNDS. ORDER PRONOUNCED IN THE OPEN COURT ON 09.03.2016. SD/ - SD/ - (G. D. AGRAWAL) (C.M GARG) VICE PRESIDENT JUDICIAL MEMBER DATE: 09 . 03.2016 *RES. DESKTOP COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT (APPEALS) 5 . DR: ITAT