DCIT, New Delhi V. Giri Buildwell (P) Ltd., New Delhi

ITA 1428/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3572 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-02-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L GUPTA ITP
• Assessee Lawyers: AMRIT LAL
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Accommodation entries; Reason to believe
• Section: 147; 68; 148

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH C , NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1428/DEL./2014 ASSESSMENT YEAR: 2001 - 02 DCIT, CIRCLE 12(1), NEW DELHI (APPELLANT) V S.. GIRI BUILDWELL (P) LTD., S - 423, TOP FLOOR, GREATER KAILASH PART - II, NEW DELHI. PAN AABCG 2921Q (RESPONDENT) ASSESSEE BY SH. AMRIT LAL, SR. DR REVENUE BY SH. B.L. GUPTA, ITP ORDER P ER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 27.12.2013 OF LD. CIT(A) - V, NEW DELHI FOR THE ASSESSMENT YEAR 2001 - 02 ON THE FOLLOWING GROUNDS : 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW IN HOLDING THAT REOPENING OF THE ASSESSMENT U/S. 147/148 OF THE ACT WAS BAD IN LAW? 2. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS.24,03,100/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT BY WAY OF ACCOMMODATION ENTRIES? DATE OF HEARING 07.04.2017 DATE OF P RONOUNCEMENT 13 .04.2017 2 ITA NO. 1428/DEL./2014 3. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS.2,30,57,400/ - MADE BY AO ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM THOSE PARTIES WHOSE GENUINENESS AND CREDITWORTHINESS WAS NOT PROVED? 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME FILED BY ASSESSEE ON 29.10.2001 DECLARING TOTAL INCOME OF RS.1,69,735/ - WAS PROCESSED U/S. 143(1) ON 20.06.2002 . THEREAFTER, A NOTICE U/S. 148 WAS ISSUED ON 19.03.2008 AFTER RECORDING THE FOLLOWING REASONS : THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.10.2001 AT THE INCOME OF RS.1,69,740/ - . THE RETURN WAS PROCESSED UNDE R SECTION 143(1) ON 20.06.2002. INFORMATION HAS BEEN RECEIVED FROM DIT, INVESTIGATION - I, SH. P.K. DUBEY BY LETTER NO. 1322 DATED 02.03.2006 THAT THE ABOVE SAID ASSESSEE HAS AVAILED FACILITIES OF AN ENTRY OPERATOR TO INTRODU CE UNACCOUNTED BLACK MONEY BY WAY OF BOGUS ACCOMMODATION ENTRIES. THE DETAILS OF THESE ENTRIES ARE AS UNDER : ADDRESSEE BANK A/C VALUE OF ENTRY INSTRUMENT NO. DATE OF ENTRY TAKEN NAME OF ACCOUNT HOLDER OF ENTRY GIVING A/C BANK ACCOUNT FROM WHICH ENTRY GIVEN NAINITAL BANK 500750 491584 22.07.2000 RAJEEV KR. AGARWAL 3616 SBP DG NAINITAL BANK 500750 493642 - DO - MURARI LAL 14253 JAILAXMI COOP. BANK FATEHPURI, DELHI NAINITAL BANK 400600 652327 18.07.2000 CHARM INVESTMENTS PVT. LTD. 435 FEDRAL KAROL BAGH 3 ITA NO. 1428/DEL./2014 400 4 00 898295 - DO - MJM INVESTMENTS 11176 CD BOI KAROL BAGH 600600 898399 - DO - - DO - - DO - TOTAL 2403100 I HAVE GONE THROUGH THE RELEVANT MATERIAL WHICH INDICATE THAT THE ASSESSEE HAS TAKEN BOGUS ACCOMMODATION ENTRIES TO THE EXTENT OF AT LEAST RS.24,03,100/ - . THESE ENTRIES HAVE BEEN TAKEN IN LIEU OF UNACCOUNTED CASH AND SO THE AFORESAID AMOUNT REPRESENTS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR ITS ASSESSMENT. CONSIDERING THE FACTS OF THE CASE, I HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF AT LEAST RS.24,03,100/ - HAS ESCAPED ASSESSMENT AND THIS IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S. 147 OF THE INCOME TAX ACT, 1961. 3. IN RESPONSE TO NOTICE U/S. 148, THE ASSESSEE SUBMITTED THAT THE RETURN FILED ORIGINALLY ON 29.10.2001 MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICE U/S. 148. THE ASSESSEE FURTHER EXPLAINED THAT THE INFORMATION SO RELIED ON FOR INITIATION OF PROCE EDINGS U/S. 147 IS WRONG AND THE ASSESSEE HAS NEITHER RECEIVED ANY SUCH AMOUNT AS MENTIONED IN THE INFORMATION NOR IS THERE ANY CREDIT ENTRY THEREOF IN ANY BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE. THE AO, HOWEVER, DID NOT ACCEPT THE EXPLANATION OF THE ASSE SSEE AND MADE ADDITION OF RS.24,03,100/ - AS ESCAPED INCOME ON ACCOUNT UNEXPLAINED CASH CREDIT U/S. 68 OF THE IT ACT VIDE REASSESSMENT ORDER DATED 19.12.2008. 4 ITA NO. 1428/DEL./2014 4. APART FROM THE ABOVE, THE ASSESSING OFFICER FURTHER MADE FOLLOWING ADDITIONS : (I). SHARE A PPLICATION MONEY RS.2,30,57,400/ - (II). CESSATION OF LIABILITY RS. 20,50,000/ - (III). UNEXPLAINED INVESTMENTS RS.1,19,00,000/ - (IV). AMOUNT DUE TO SUNDRY CREDITORS RS.2,82,87,108/ - 5. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER IN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY BOTH ON VALIDITY OF PROCEEDINGS U/S. 147/148 OF THE ACT AND ON MERITS OF ADDITIONS. THE LD. CIT(A) AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE HELD THE REASSESSMENT AS INVALID AND ALSO DELETED THE ADDITIONS ON MERITS VIDE IMPUGNED ORDER. AGGRIEVED, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL, CHALLENGING THE ONLY DELETION OF ADDITIONS OF RS.24,03,100/ - MADE ON ACCOUNT UNEXPLAINED CASH CREDITS AND RS.2,30,57,400/ - MADE ON ACCOUNT OF UNEXPLAINED SHA RE APPLICATION MONEY. 6. THE LEARNED DR REITERATING THE CONTENTS OF THE ASSESSMENT ORDER, SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIONS ON MERITS AND TO QUASH THE REASSESSMENT ON LEGAL 5 ITA NO. 1428/DEL./2014 GROUND. IT WAS SUBMITTED THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES OF RS.24,03,100/ - AND FURTHER ADDITION OF RS.2,30,57,400/ - WAS RIGHTLY MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM SUCH PARTIES WHOSE GENUINENESS AND CREDITWORTHINESS WAS NOT PROVED. HE, THEREFORE, URGED FOR RESTORATION OF ASSESSMENT ORDER. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE REASSESSMENT WAS MADE ON THE BASIS OF WRONG INFORMATION, WHICH DID NOT PERTAIN TO THE ASSESSEE AND THE ASSESSING OFFICER HAS NOT VERIFIED THE S AME. HENCE, THE REASON TO BELIEVE FORMED BY THE AO FOR REOPENING THE ASSESSMENT U/S. 147 HAS RIGHTLY BEEN HELD AS INVALID LEADING TO ASSESSMENT ORDER VOID AB INITIO. IT WAS SUBMITTED THAT ONCE THE TRANSACTIONS OF ACCOMMODATION ENTRY AS CONTAINED IN THE ALL EGED INFORMATION WAS NOT PROVED TO PERTAIN TO THE ASSESSEE AND THE ORIGINAL REASON TO BELIEVE ESCAPEMENT OF INCOME STOOD COLLAPSED, THE LD. ASSESSING OFFICER WAS NOT JUSTIFIED TO ACQUIRE JURISDICTION TO ASSESS OTHER INCOMES EVEN AFTER INSERTION OF EXPLANAT ION 3 TO SECTION 147 BY FI N ANCE ACT, 6 ITA NO. 1428/DEL./2014 2009 W.E.F. 01.04.1989. RELIANCE IS PLACED ON THE DECISIONS OF RAJASTHAN HIGH COURT IN CIT VS. SHRI RAM SINGH, 217 CTR 345 AND OF BOMBAY HIGH COURT IN CIT VS. JET AIRWAYS (I) LTD., 195 TAXMAN 117 (BOMBAY) . IT WAS ALSO S UBMITTED THAT THE ASSESSING OFFICER HAVING FAILED TO APPLY INDEPENDENT MIND TO THE INFORMATION, THE BELIEF OF ESCAPEMENT OF INCOME FORMED ON THE BASIS OF SUCH INFORMATION CANNOT BE ENTERTAINED FOR REOPENING OF ASSESSMENT. RELIANCE IS PLACED ON THE DECISION OF ITAT AHMEDABAD BENCH IN MAHADEV TRADINGCO. VS. ITO, 135 ITD 1 (AHD.). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDERS OF THE AUTHORITIES BELOW AND CASE LAWS RELIED UPON AND WE FIND THAT THE IMPUGNED ORDER DOES NOT CALL FOR ANY INTERFERENCE . IT IS NOTABLE THAT THE CONTENTION OF THE ASSESSEE FROM THE BEGINNING HAS BEEN THAT THEY HAVE NOT RECEIVED ANY AMOUNT, WHATSOEVER, FROM THE FOUR PERSONS NAMELY, RAJIV KUMAR AGGARWAL, MURAR I LAL, CHARM INVESTMENTS AND MJM INVESTMENTS, AS MENTIONED IN THE ALLEGED INFORMATION NOTED ABOVE. IT HAS ALSO BEEN SUBMITTED THAT THERE IS NO CREDIT ENTRY IN THE ASSESSEE S BANK ACCOUNT WITH 7 ITA NO. 1428/DEL./2014 NAINITAL BANK, AS MENTIONED IN THE SAID INFORMATION, NOR ANY SUC H ENTRY WAS THERE IN ANY OF THE BOOKS OF ACCOUNT OF ASSESSEE. THE BANK STATEMENT AND BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE AUTHORITIES BELOW. AN AFFIDAVIT TO THIS EFFECT WAS ALSO FURNISHED BEFORE THE LOWER AUTHORITIES. THE LD. ASSESSING OFFICER, HOWEVE R, WHILE REJECTING THE EXPLANATION OF ASSESSEE HAS ONLY STATED THAT THE EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE AND THIS ENTRY REMAINS UNEXPLAINED IN THE HANDS OF ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. THERE IS NO R EBUTTAL OF ASSESSEE S CONTENTION ON THE PART OF REVENUE OR ANY APPLICATION OF MIND BY THE AO TO PROVE THAT THE ALLEGED ACCOMMODATION ENTRIES AS CONTAINED IN THE INFORMATION WERE ACTUALLY RECEIVED BY THE ASSESSEE. THEREFORE, THE REASON TO BELIEVE FORMED BY AO ON THE BASIS OF ALLEGED ACCOMMODATION ENTRIES OF RS.24, 03,100/ - , AS CONTAINED IN THE INFORMATION, STANDS COLLAPSED, HAVING BEEN FORMED WITHOUT ANY MATERIAL ON RECORD AND APPLICATION OF MIND AND ACCORDINGLY, THE ADDITION SO MADE ON THE BASIS OF SUCH UNSUSTAINABLE BELIEF HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A ). THE COORDINATE BENCH OF TRIBUNAL IN THE CASE OF MAHADEV TRADING CO. (SUPRA) HAS HELD THAT WHERE THE ASSESSING OFFICER PROCEEDED 8 ITA NO. 1428/DEL./2014 FOR REOPENING O F ASSESSMENT ON NON - EXISTENT AND FACTUALLY INCORRECT REASONS AND HE DID NOT APPLY INDEPENDENT MIND ON INFORMAT ION RECEIVED FROM DDIT(INV.) PRIOR TO RECORDING OF REASONS, THE REOPENING OF ASSESSMENT IN SUCH A CASE WAS CLEARLY INVALID. IN VIEW OF THIS, WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT ONCE IT IS FOUND THAT THE INCOME, FOR WHICH THE AO HAD INITIALLY FORMED A RE A SON TO BELIEVE THAT IT HAD ESCAPED ASSESSMENT, HAS NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO THE AO TO ASSESS SOME OTHER INCOME AS HELD BY HON BLE BOMBAY HIGH COURT IN CIT VS. JET AIRWAYS (SUPRA). SIMILAR VIEW HAS BEEN TAKEN BY RAJASTHAN HIGH COURT IN CIT VS. SRI RAM SINGH(SUPRA). WITHOUT PREJUDICE TO THE ABOVE, THE ISSUE REGARDING SHARE APPLICATION MONEY HAS ALSO BEEN FOUND PROPERLY DEALT WITH BY THE LD. CIT(A), WHO HAS MADE AN ELABORATE DISCUSSION IN THE IMPUGNED ORDER. IN ABSENCE OF ANY CONT RARY MATERIAL ON RECORD, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE CONCLUSION ARRIVED AT BY THE LD. CIT(A) ON THIS ACCOUNT ALSO. NO GOOD GROUND IS MADE OUT ON BEHALF OF THE REVENUE TO SUPPORT THE ORDER OF THE ASSESSING OFFICER. WE ACCORDINGLY ARE INCLINED TO DISMISS THE PRESENT APPEAL 9 ITA NO. 1428/DEL./2014 OF THE REVENUE AND CONFIRM THE IMPUGNED ORDER ON THE ISSUES INVOLVED IN THIS APPEAL. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.04.2017 . SD/ - SD/ - ( I.C. SUDHIR ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13.04.2017 *AKS * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR , ITAT 5. GUARD FILE ASSISTANT REGISTRAR