M/s. Bhimsain Investment & Financial Services Ltd., Delhi V. ITO, New Delhi

ITA 1411/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82029 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUOEJA
• Assessee Lawyers: S KRISHNAN
• Keywords: Gift; Opportunity of being heard; Accommodation entries
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 1411/DEL/2013 ASSTT. YR: 2007-08 BHIMSAIN INVESTMENT & FINANCIAL VS. INCOME-TAX OFF ICER, SERVICES LTD., 21, BHERA ENCLAVE, WARD 2(4), NEW DELHI. PASCHIM VIHAR, DELHI. PAN: AAACB 0988 R ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI S. KRISHNAN ADV. & SHRI V. RAJA KUMAR ADV. RESPONDENT BY : SHRI GAURAV PUOEJA DR DATE OF HEARING : 30-10-2014 DATE OF ORDER : _______-11-2014. O R D E R PER S.V. MEHROTRA, A.M:- THIS APPEAL, PREFERRED BY THE ASSESSEE, IS DIRECT ED AGAINST THE ORDER OF CIT(APPEALS)-V, NEW DELHI DATED 12-11-2012 IN APPEA L NO. 208/11-12 FOR A.Y. 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE TH E ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 2,38,442/-, WHICH WAS PROCESSED U/S 143(1). SUBSEQUENTLY, ASSESSMENT U/S 143(3) WAS COMPLETED ON 16-11-2009. NOTICE U/S 148 WAS ISSUED ON 24-3-20 11 AFTER RECORDING FOLLOWING REASONS: M/S BHIMSAIN INVESTMENT & FINANCIAL SERVICES LTD. ASSESSED TO TAX WITH WARD 2(4), NEW DELHI. ENQUIRIES OF INVE STIGATION 2 ITA 1411/DEL/2013 BHIMSAIN INVESTMENT & FINANCIAL SERVICES WING, DELHI OF THE DEPARTMENT HAVE UNEARTHED HUGE ACCOMMODATION ENTRY RACKET BEING OPERATED BY VARIOU S GROUPS OF OPERATORS. THE INVESTIGATION WING HAS COMPLIED A REPORT & DATA OF THE BENEFICIARIES OF SUCH ENTRIES. I HAVE G ONE THROUGH THE REPORT AND DATA SENT BY THE INVESTIGATION WING. THE REPORT CLEARLY INDICATES THAT ACCOMMODATION ENTRIES HAVE B EEN TAKEN TO PLOUGH BACK UNACCOUNTED BLACK MONEY FOR THE PURP OSE OF BUSINESS FOR PERSONAL NEEDS SUCH AS PURCHASE OF ASS ETS ETC. IN THE FORM OF GIFT, SHARE APPLICATION MONEY LOANS ETC . AND EVEN DESCRIBES THE MODUS OPERANDI OF THIS SCAM. THE INVESTIGATION WINGS LIST OF BENEFICIARIES (OF SUCH ACCOMMODATION ENTRIES), GIVES COMPREHENSIVE DETAILS OF BENEFICIARYS NAME, BENEFICIARY BANK NAME, BENEFICI ARYS BANK BRANCH ACCOUNT NO. OF BENEFICIARY IN WHICH ENTRY IS RECEIVED (IN MOST OF TH4 CASES), VALUE OF ENTRY TAKEN ENTRY GIVI NG ACCOUNT, BANK FROM WHICH ENTRY GIVEN, BRANCH OF ENTRY GIVING BANK AND A/C NO. OF ENTRY GIVING ACCOUNT. THIS LIST CONTAINS THE NAME OF M/S BHIMSAIN INVEST MENT & FINANCIAL SERVICES LTD., WHICH HAS TAKEN ENTRIES AM OUNTING TO RS. 17,00,000/- DURING APRIL 2006 TO MARCH 2007 WHI CH ARE AS UNDER:- BENEFICIARYS NAME VALUE OF ENTRY TAKEN FINANCIAL YEAR ASSESSMENT YEAR NAME OF PARTY FROM ENTRY WAS RECEIVE M/S BHIMSAIN INVESTMENT & FINANCIAL SERVICES LTD. 9,00,000 2006-07 2007-08 BUNIYAD CHEMICALS LTD. M/S BHIMSAIN INVESTMENT & FINANCIAL SERVICES LTD. 8,00,000 2006-07 2007-08 TALENT INFO WAY LTD. TOTAL 17,00,000 THUS, THE ASSESSEE HAS PLOUGHED BACK UNACCOUNTED MO NEY OF RS. 17,00,000/- IN ITS BUSINESS THROUGH THE CHANNEL OF ACCOMMODATION ENTRY. THEREFORE, IT IS FAILURE ON THE PART OF THE ASSESSE E TO DISCLOSE FULLY AND TRULY 3 ITA 1411/DEL/2013 BHIMSAIN INVESTMENT & FINANCIAL SERVICES ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08 AND IT APPEARS THAT ASSESSEE HAS NOT PAID T AX ON SUCH AMOUNT. THE UNACCOUNTED MONEY WHICH SHOULD HAVE BEEN CHARGED TO TAX ARE BEING PLOUGHED BACK TO BUSINESS WITHOUT PAYING DUE TAX ON IT. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BELIEVE THAT INCOME TO THE TUNE OF RS. 17,00,000/- OF THE ASSESSEE COMPANY FOR AY 2007-200 8 HAS ESCAPED ASSESSMENT. SINCE THE ASSESSMENT FOR THE YEAR HAS B EEN COMPLETED U/S 143(3) OF ACT THEREFORE IN ACCORDANCE WITH THE PROV ISIONS OF SECTION 151 OF THE IT ACT SANCTION FOR ISSUE OF NOTICE U/S 148 OF THE ACT IS BEING SOUGHT FROM THE ADDL. CIT RANGE 2, NEW DELHI. SD/- (S.M. MEENA) INCOME-TAX OFFICER, WARD2(4), NEW DELHI. 2.1. A COPY OF REASONS RECORDED WAS PROVIDED TO ASS ESSEES COUNSEL AND THEREAFTER THE ASSESSMENT WAS MADE ON THE BASIS OF VARIOUS DOCUMENTS AND CONFIRMATIONS. THE AO CONFRONTED THE ASSESSEE WITH VARIOUS INQUIRIES AND THEREAFTER ASSESSEE COMPANY OFFERED RS. 17 LACS, RE CEIVED FROM M/S BUNIYAD CHEMICALS LTD. AND M/S TALENT INFO WAY LTD. (RS. 9 LACS AND RS. 8 LACS RESPECTIVELY), FOR TAXATION. 2.2. LD. CIT(A) CONFIRMED THE ADDITION, INTER ALIA, OBSERVING THAT THE AMOUNT WAS SURRENDERED DURING ASSESSMENT PROCEEDING S. 2.3. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. O RIGINALLY THE ASSESSEE HAD RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW BY MAKING THE ADDITION OF RS. 17,00,000/- IN THE HANDS OF ASSESSEE VIDE ASSESSMENT ORDER DATED 26/1/22011 AND THE LD C IT(A) HAS ALSO ERRED IN CONFIRMING THE SAID ADDITIONS AND AS SUCH THE SAME MAY PLEASE BE DELETED. 2. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 17,00,000/- ON ACCOUNT OF CASH CREDIT U/S 68 OF THE INCOME TAX ACT, THE AR OF THE ASSESSEE HAS OFFERED THIS SUM FOR TAXATION UNDER DURESS, HENCE THE ADDITION OF THE SU M OF RS. 17,00,000/- MAY PLEASE BE DELETED. 4 ITA 1411/DEL/2013 BHIMSAIN INVESTMENT & FINANCIAL SERVICES 3. THAT THE LD ASSESSING OFFICER HAS ERRED IN INITI ATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT 1961 WHICH IS MISCONCEIVED OF THE FACTS AND IN LAW AND H ENCE LIABLE TO BE FILED. 4. THAT WE CRAVE TO ADD, ALTER, DELETE, MODIFY OR W ITHDRAW ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING. 3. LD. COUNSEL FOR THE ASSESSEE HAS ALSO TAKEN FOLL OWING ADDITIONAL GROUNDS: 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD AO ERRED IN REOPENING THE CASER U/S 148 OF THE ACT IN BARE VIOLATION OF REQUISITE JURISDICTION CONDITIONS MENTIONED U/S 147/148 OF THE ACT. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD AO ERRED IN REOPENING THE CASE U/S 148 OF THE ACT WITHOUT APPRECIATING THE EARLIER ASSESSMENT WAS DUL Y COMPLETED U/S 143(3) OF THE ACT, AFTER APPLYING MIND TO THE I SSUE OF SHARE CAPITAL. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO ERRED IN REOPENING THE CASER U/S 148 OF T HE ACT WITHOUT DISPOSING OUR DETAILED OBJECTIONS TO REASON S RECORDED WHICH NULLIFIES/ VITIATES THE ENTIRE REASSESSMENT A S HELD IN DECISION REPORTED AT 308 ITR PAGE 38 (DELHI HIGH CO URT HARYANA ACRYLIC). 3.1. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ADDITIONAL GROUND, SOUGHT TO BE ADMITTED, BEING PURELY LEGAL GROUNDS I N NATURE, GOING TO THE ROOT OF THE MATTER, MAY BE ADMITTED. THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC 229 ITR 3 83. 4. LD. DR VEHEMENTLY OPPOSED THE ADMISSION OF ADDIT IONAL GROUNDS AND POINTED OUT THAT THE AMOUNT HAD BEEN SURRENDERED BY ASSESSEE. 5 ITA 1411/DEL/2013 BHIMSAIN INVESTMENT & FINANCIAL SERVICES 5. IN REJOINDER, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT UNLESS THE PROCEEDINGS WERE VALIDLY INITIATED, ADDITION COULD NOT BE SUSTAINED. 6. HAVING HEARD BOTH THE PARTIES, WE FIND THAT ASSE SSEE RAISED THE JURISDICTIONAL ISSUE BY WAY OF ADDITIONAL GROUNDS W HICH ARE PURELY LEGAL IN NATURE AND DO NOT REQUIRE ANY FRESH EXAMINATION OF FACTS. WE, THEREFORE, ADMIT THE SAME. FROM THE ORDER OF AO IT IS NOT CLEA R WHETHER ASSESSEE HAD FILED ANY OBJECTION TO THE REASONS RECORDED AS CLAI MED ON 31-10-2011 AND THE SAME WERE DISPOSED OF BY AO OR NOT, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA ) LTD. VS. ITO 259 ITR 19 (SC). ACCORDINGLY, WE RESTORE THIS MATTER TO THE FILE OF AO FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW AFTER A FFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 21-11-2014. SD/- SD/- ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21-11-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR