M/s Sangrur Agro Ltd., Sangrur V. ACIT, Patiala

ITA 1379/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8369 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO.1379/CHD/2016 (ASSESSMENT YEAR : 2006-07) M/S SANGRUR AGRO LTD., VS. THE A.C.I.T., VILL.B HINDRAN, SANGRUR CIRCLE PATIALA. PAN: AADCS5089H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JASPAL SHARMA RESPONDENT BY : SHRI S.K. MITTAL, DR DATE OF HEARING : 24.01.2017 DATE OF PRONOUNCEMENT : 25.01.2017 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.9.2016 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, LUDHIANA RELATING TO ASSESSMENT YEAR 2006-07. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. THE IMPUGNED ORDER IS BOTH AGAINST FACTS AND ERR ONEOUS IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE ACTION OF THE LD. ASSESSING OFFICER IN HAVING INITIATED RE-ASSESSMENT PROCEEDINGS U/S 147 WHICH ARE ILLEGAL, BAD IN LAW, WITHOUT JURISDICTION AND BASED 2 ON MERE CHANGE OF OPINION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS) HAS ERRED IN HAVING HELD THAT THE AO HAD BONAFIDE REASON TO BELIEVE FORMED ON THE BASIS OF TANGIBLE MATERIAL ON RECORD. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(APPEALS) HAS ERRED IN HAVING CONFIRMED THE ADDITION AMOUNTING TO RS.10,00,000/- MADE BY THE LD.AO U/S 68 OF THE INCOME TAX ACT, ON ACCOUNT OF SHARE APPLICATION MONEY. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AMEN D THE ABOVE GROUNDS OF APPEAL BEFORE THE SAME IS HEARD OR DISPOSED OF. 3. VIDE GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT PROCEEDINGS UNDER SE CTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT). 4. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 13.9.20 05 DECLARING AN INCOME AT RS.11,64,070/-. THEREAFTER INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER F ROM THE OFFICE OF DIRECTOR OF INCOME TAX, NEW DELHI THAT TH E ASSESSEE HAD OBTAINED ACCOMMODATION ENTRY AMOUNTING TO RS.10 LACS FROM SHRI SURENDERA JAIN GROUP OF CASES, DELHI AS WAS FOUND DURING SEARCH CONDUCTED AT THEIR PREMI SE. ON THE BASIS OF SAID INFORMATION, THE ASSESSING OFF ICER ISSUED NOTICE UNDER SECTION 148 OF THE ACT AND RE OPENED 3 THE ASSESSMENT. THE ASSESSING OFFICER FRAMED THE ASSESSMENT BY MAKING ADDITION OF RS.10 LACS ON ACCO UNT OF SHARE APPLICATION MONEY. EARLIER THE ORIGINAL ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER ON 31.1.2013 UNDER SECTION 153A/143(3) OF THE ACT AT A N INCOME OF RS.29,25,570/-. THE SAID ASSESSMENT WAS FRAMED ON THE BASIS OF RETURN OF INCOME FILED IN RE SPONSE TO THE NOTICE ISSUED ON 29.4.2011 UNDER SECTION 153 A OF THE ACT. 5. THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING BEFORE THE LD. CIT (APPEALS), WHO SUSTAIN ED THE VIEW OF THE ASSESSING OFFICER BY OBSERVING THAT THE REASON TO BELIEVE OF THE ASSESSING OFFICER WAS FORMED ON A N INFORMATION WHICH HAD BEEN RECEIVED AFTER COMPLETIO N OF THE ASSESSMENT. RELIANCE WAS PLACED ON THE JUDGMEN T OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS . KELVINATOR OF INDIA LTD. (2002) 256 ITR 1. 6. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS SQUAR ELY COVERED BY THE ORDER DATED 5.1.2017 OF THIS BENCH O F THE TRIBUNAL IN ITA NO.849/CHD/2011 FOR ASSESSMENT YEAR 2008-09 IN THE CASE OF M/S J.M.D. ASTROLOGICAL CONSULTANCY SERVICES PVT. LTD., PANCHKULA VS. CIT, PANCHKULA. COPY OF THE SAID ORDER WAS FURNISHED. IT WAS FURTHER STATED THAT IN THE SAID CASE THE REOPE NING WAS 4 DONE ONLY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING AS IS THE CASE OF THE ASSESSEE, THEREFORE, THE ISSUE IS SQUARELY COVERED. 7. IN THE RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUB MITTED THAT THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY RECORDING THE REASONS BEFORE ISSUING NOTICE UNDER S ECTION 148 OF THE ACT AFTER SATISFYING HIMSELF IN THE MATT ER. THEREFORE, NOTICE ISSUED UNDER SECTION 148 OF THE A CT ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATIO N WING OF THE DEPARTMENT WAS VALID. RELIANCE WAS PLACED O N THE FOLLOWING CASES : I) ITO VS. GURINDER KAUR (ITAT, DEL) 102 ITD 189 II) STERLITE INDUSTRIES (INDIA) LTD. VS. ACIT (MAD) 302 ITR 275 III) AGR INVESTIGATION LTD. VS. ADDL.CIT & ANR. (DEL) 333 ITR 146 IV) SHALIMAR BUILDCON (P() LTD. VS. ITO (ITAT, JAIPUR) 136 TTJ 701 V) RAJAT EXPORT IMPORT INDIA PVT. LIMITED VS. ITO 341 ITR 135 (DEL) HIGH COURT DATED 18/01/2012 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE TRIBU NAL IN THE CASE OF M/S J.M.D. ASTROLOGICAL CONSULTANCY SER VICES PVT. LTD. (SUPRA) WHEREIN THE RELEVANT FINDING HAS BEEN 5 GIVEN WHEREIN BY FOLLOWING THE JUDGMENT OF THE HON' BLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS P . LTD. VS. ITO & ANR. (2011) 338 ITR 51 (DEL) THE RE-ASSES SMENT WAS SET ASIDE AND THE PROCEEDINGS UNDER SECTION 148 OF THE ACT WERE QUASHED. IN THE AFORESAID REFERRED TO CASE OF SIGNATURE HOTELS P. LTD. (SUPRA), THE HON'BLE DELHI HIGH COURT HELD AS UNDER : HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BA SIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME- TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMEN T, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMEN T OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSIN G OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATI ON AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. T HERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP C APITAL OF RS. 90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS, IT COULD NOT BE HEL D TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDING S WERE NOT VALID AND WERE LIABLE TO BE QUASHED. 9. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRE D TO CASE, I AM OF THE VIEW THAT RE-ASSESSMENT PROCEE DINGS 6 INITIATED BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING OF THE INCOME TAX DEPARTMENT AND WITHOUT APPLYING HIS OWN MIND WAS NOT VALID. ACCORDINGLY, THE SAME IS QUASH ED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.01.2017. SD/- (N.K. SAINI) ACCOUNTANT MEMBER DATED : 25 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH