Infrasoft Technologies Ltd., Mumbai V. DCIT, New Delhi

ITA 1342/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3477 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Reopening of assessment; Search and seizure; Opportunity of being heard; Set aside
• Section: 14A; 115JB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AN D SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1341/DEL./2016, A.Y. 2006-07 ITA NO. 1342/DEL./2016, A.Y. 2010-11 INFRASOFT TECHNOLOGIES LTD. VS. DCIT UNIT NO. 86 & 87, SDF-III, CIRCLE-11(1), SEEPZ, SEZ, ANDHERI (EAST) C.R.BUILDING, MUMBAI I.P.ESTATE PAN : AAACB2817R NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VIJAY MEHTA, CA REVENUE BY : SHRI S.S.RANA, CIT(DR) DATE OF HEARING : 26.11.2019 DATE OF ORDER : 29.11.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT INFRASOFT TECHNOLOGIES LTD., MUM BAI (HEREINAFTER REFERRED TO AS 'THE ASSESSEE) BY FILI NG THE AFORESAID APPEALS, SOUGHT TO SET ASIDE THE IMPUGNED ORDERS D ATED 31/12/2015 PASSED BY LD. COMMISSIONER OF INCOME TAX(APPEALS)-4 , NEW DELHI QUA THE ASSESSMENT YEAR 2006-07 & 2010-11 RE SPECTIVELY ON THE GROUNDS INTER ALIA THAT : ITA NO. 1341, 1342/DEL./2016 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT (A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL EXPARTE WITHOUT GIVING SUFFICIENT OPPORTUNITY. 2. THAT IN ANY CASE THE NOTICE U/S 148 IS VOID AB INI TIO AND BAD IN LAW ON THE ACCOUNT OF A) NOTICE BEING SERVED BEYOND THE PERIOD OF LIMITATIO N; B) SANCTION U/S 151 IS POST FACTO AFTER THE ISSUE OF NOTICE U/S 148; C) THE REOPENING OF THE ASSESSMENT U/S 148 IS MERELY ON THE BASIS OF INFORMATION FROM INVESTIGATION DEPARTMENT WITHOUT ANY MATERIAL OR REASONABLE NEXUS WITH THE APPELLANT; D) THE EXPENSES HAVING BEING VERIFIED IN ORIGINAL ASSESSMENT DATED 27.11.2.009 MADE U/S 143(3), THE REOPENING OF ASSESSMENT U/S 147 IS A MERE CHANGE IN OPINION ON APPRAISAL OF THE SAME FACTS; E) THAT THE REASSESSMENT HAS BEEN FRAMED WITHOUT GIVI NG A SHOW CAUSE NOTICE AND WITHOUT DISPOSING OFF THE OBJ ECTIONS DATED 26 TH APRIL 2013 AND 21'ST MARCH 2014. 3. THAT THE FINDING THAT THE EXPENSES OF RS. 12,59,47 0 ARE BOGUS IS ERRONEOUS AND CONTRARY TO THE MATERIAL ON RECORD . 4. THAT THE APPELLANT CRAVES FOR LEAVE TO RESERVE TO I TSELF THE RIGHT TO ADD, ALTER OR MODIFY ANY OF THE GROUNDS OF APPEA L MENTIONED ABOVE AT TIME OF HEARING ITA NO. 1342/DEL/2016 (A.Y. 2010-11) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT (A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL EXPARTE WITHOUT GIVING SUFFICIENT OPPORTUNITY. RE: SECTION 10A 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F ASSESSING OFFICER IN DISALLOWING THE CLAIM OF THE APPELLANT C OMPANY U/S 10A OF THE INCOME TAX ACT. 3. THAT ON THE BASIS OF MATERIAL ON RECORD, THE LEARN ED CIT(A) OUGHT TO HAVE HELD THAT A NEW UNDERTAKING EL IGIBLE FOR SECTION 10A BENEFITS WAS SET UP IN ASSESSMENT YEAR 2000-2001. RE: SECTION 14A 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E ASSESSING OFFICER IN DISALLOWING RS.14,72,652 U/S 14A OF THE ACT UNDER NORMAL PROVISIONS AS WELL AS PROVISIONS OF SECTION 115JB OF THE ACT. 5. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTER, MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AT THE TIME OF HEARING. ITA NO. 1341, 1342/DEL./2016 3 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF INFORMAT ION RECEIVED FROM DCIT, CENTRAL CIRCLE-43, MUMBAI ON 22.03.2011 REGAR DING SH. PARAG MEHTA AND ORS. AND M/S. WASHINGTON SOFTWARE L TD. AND SEARCH AND SEIZURE OPERATION IT HAS COME ON RECORD THAT M/S. WASHINGTON SOFTWARE LTD. AND ITS RELATED GROUP OF C ASES WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND ARE IN THE BUSINESS OF PROVIDING BOGUS BILLS FOR SOFTWARE AND HAS BEEN CON TINUING THIS BUSINESS FOR MANY YEARS. DURING THE SEARCH PROCEEDI NGS, STATEMENT OF SH. SANJAY D. SONAWANI WAS RECORDED WHO HAS STAT ED THAT M/S. WASHINGON SOFTWARE LTD. HAD NOT MADE ANY SALE NOR RAISED ANY INVOICE UPON THE COMPANY LISTED IN REPLY TO QUESTIO N 10, AND THE COMPANY HAS STOPPED ITS PRODUCTION SINCE F.Y. 2003- 04 AND AS SUCH SOFTWARE EXPENSES TO THE TUNE OF RS. 12,59,470/- DE BITED TO THE ASSESSEE COMPANY FOR AY 2006-07 WERE BOGUS EXPENSES . CONSEQUENTLY, AO DISALLOWANCE OF RS. 12,59,470/- FO R A.Y. 2006- 07 BEING BOGUS IN NATURE AND MADE ADDITION THEREOF TO THE TOTAL INCOME OF THE ASSESSEE. ASSESSING OFFICER MADE DISALLOWANCE OF RS. 48,18,93 3/- ON ACCOUNT OF DEDUCTIONS CLAIMED BY THE ASSESSEE U/S 1 0A OF THE INCOME TAX ACT FOR AY 2010-11 ON THE GROUND THAT THE SAME IS ITA NO. 1341, 1342/DEL./2016 4 NOT BONAFIDE OR GENUINE. AO FURTHER MADE DISALLOWAN CE OF RS. 14,72,652/- BY INVOKING PROVISIONS CONTAINED U/S 14 A OF THE ACT FOR AY 2010-11. 4. ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) BY WAY OF FILING THE APPEAL WHO HAS DISMISSED BOTH THE APPEAL S EX PARTE WITHOUT GOING INTO MERITS OF THE CASE. FEELING AGGR IEVED THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 5. WE HAVE HEARD THE LD. DR, GONE THROUGH THE DOCUM ENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHOR ITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CAS E. 6. BARE PERUSAL OF THE IMPUGNED ORDERS PASSED BY LD . CIT(A) GO TO PROVE THAT BOTH THE APPEALS HAVE BEEN DISMISS ED EX PARTE FOR NON-PROSECUTION BY THE ASSESSEE. THE LD. CIT(A) REC ORDED IN PARA 2 OF THE IMPUGNED ORDERS THAT THE CASE WAS FIXED FO R 03.08.2015, 20/08/2015 AND 27/08/2015 AND THEN 14.09.2015 BUT D UE TO NON- APPEARANCE OF THE ASSESSEE, THE APPEALS WERE DISMIS SED. IMPUGNED ORDERS ARE SALIENT IF NOTICES WHEREVER SENT TO ASSE SSEE FOR THE DATE FIXED OR NOTICES WERE EVER SERVED UPON THE ASSESSEE . EVEN OTHERWISE THE CIT(A) IS REQUIRED TO DISPOSE OF THE APPEAL ON MERITS EVEN IF THE ASSESSEE HAS NOT COME FORWARD TO PURSUE THE CASE. LD. ITA NO. 1341, 1342/DEL./2016 5 AR FOR THE ASSESSEE MADE A REQUEST FOR ONE OPPORTUN ITY TO SUBSTANTIATE ITS CLAIM. 7. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERE D VIEW THAT TO DECIDE THE ISSUES IN CONTROVERSY ONCE FOR ALL BO TH THE CASES ARE REQUIRED TO BE SET ASIDE TO THE CIT(A) TO DECIDE AF RESH AFTER PROVIDING OPPORTUNITY OF BEING HEARD. CONSEQUENTLY APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH NOVEMBER, 2019. SD/- SD/- (R.K.PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER D ATED : 29 TH /11/ 2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-4, NEW DELHI. 5. CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI DATE OF DICTATION 28.11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE ITA NO. 1341, 1342/DEL./2016 6 SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER