Vinod Maheshwari, Modinagar V. ITO, Ghaziabad

ITA 1498/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7279 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 31-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-3 : NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.1498/DEL/2015 ASSESSMENT YEAR : 2008-09 VINOD MAHESHWARI, C/O N. JAIN MAHESHWARI & ASSOCIATES, OPP. POLICE STATION, UPPER BAZAR, MODINAGAR. PAN: ABNPM2509E VS. ITO, WARD -1(5), GHAZIABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE DEPARTMENT BY : SHRI ANIL SHARMA, SR. DR DATE OF HEARING : 31.08.2016 DATE OF PRONOUNCEMENT : 09.09.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A) DATED 06.01.2015 FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS:- ITA NO.1498/DEL/2015 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LEARNED CIT (APPEAL) ERRED IN NOT QUASHING THE INSTANT REOPENING MADE IN VIOLATION OF JURISDICTIONAL CONDITIONS STIP ULATED UNDER THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LEARNED CIT (APPEAL) ERRED IN SUSTAINING THE AD DITION OF RS.31,94,750/- AS ALLEGED UNEXPLAINED DEPOSITS WITH OUT APPRECIATING THE MATERIAL ON RECORDS INCLUDING DETAILED WRITTEN SUBMISSIONS FILED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING AND ALL THE AB OVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. AFTER HEARING THE RIVAL CONTENTIONS, I FIND THAT THE AO ASSUMED JURISDICTION BY ISSUING NOTICE U/S 148 FOR REOPENIN G THE ASSESSMENT. HE HAS RECORDED TWO SEPARATE REASONS FOR TWO SEPARATE BANK ACCOUNTS AS FOLLOWS:- REASONS TO ISSUE NOTICE UNDER SECTION 148 12.03.2013 ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE H AS DEPOSITED CASH OF RS.1601750/- IN FINANCIAL YEAR 2007-08 IN HIS SAVIN G BANK ACCOUNT VERIFICATION LETTER F.NO.AIR/ITO-(5)GZB/2012-13/DAT ED 31.01.2013 WAS ISSUED. THE FURNISH HIS REPLY WITHIN 15 DAYS OF TH E RECEIPT OF THE LETTER THE ASSESSEE HAS DEPOSITED CASH WORTH RS.160175500/ - IN HIS SAVING BANK ACCOUNT AND HAS NOT RESPONDED TO THE VERIFICATION L ETTER ISSUED FROM THIS OFFICE. I HAVE REASON TO BELIEVE THAT THE AMOUNT O F RS.1601750/- DEPOSITED IN CASH IN THE SAVING BANK ACCOUNT IS ESC APED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. ISSUE NOTICE UNDER SECTION 148 FOR THE AY 2008-09. ITA NO.1498/DEL/2015 3 SD/- (ANIL KUMAR SHARMA) INCOME TAX OFFICER WARD-1(5), GHAZIABAD. REASONS TO ISSUE NOTICE UNDER SECTION 148 12.03.2013 ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE H AS DEPOSITED CASH OF RS.1593000/- IN FINANCIAL YEAR 2007-08 IN HIS SAVIN G BANK ACCOUNT VERIFICATION LETTER F.NO.AIR/ITO-(5)GZB/2012-13/DAT ED 31.01.2013 WAS ISSUED. THE FURNISH HIS REPLY WITHIN 15 DAYS OF TH E RECEIPT OF THE LETTER THE ASSESSEE HAS DEPOSITED CASH WORTH RS.1593000/- IN HIS SAVING BANK ACCOUNT AND HAS NOT RESPONDED TO THE VERIFICATION L ETTER ISSUED FROM THIS OFFICE. I HAVE REASON TO BELIEVE THAT THE AMOUNT O F RS.1593000/- DEPOSITED IN CASH IN THE SAVING BANK ACCOUNT IS ESC APED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. ISSUE NOTICE UNDER SECTION 148 FOR THE AY 2008-09. SD/- (ANIL KUMAR SHARMA) INCOME TAX OFFICER WARD-1(5), GHAZIABAD. 3. IN THIS CASE, TWO SEPARATE REASONS HAVE BEEN REC ORDED FOR REOPENING. THIS ITSELF SHOWS NON-APPLICATION OF MI ND. THUS, I HAVE TO NECESSARILY CONCLUDE THAT THE REASONS WERE RECORDED WITHOUT APPLICATION OF MIND. THEREFORE, ON THIS GROUND ITSELF, THE REOP ENING OF ASSESSMENT HAS TO BE HELD BAD IN LAW BY FOLLOWING THE JUDGEMEN TS OF THE ITA NO.1498/DEL/2015 4 JURISDICTIONAL HIGH COURT IN THE CASE SIGNATURE HOTELS PVT. LTD. VS. ITO 328 ITR 51 (DEL) WHEREIN IT WAS HELD THAT NOTICE ISSUED BASED ON A R EPORT FROM INVESTIGATION WING IS INVALID WHERE THE AO DOE S NOT EXAMINE THE EVIDENCE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE PRINCIPAL COMMISSIONER OF INCOME TAX VS. G & G PHARMA INDIA L TD. IN ITA NO. 545/2015 VIDE ORDER DT. 8.10.2015 AT PARA 12 AND 13 HELD AS FOLLOWS. 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR EN TRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10 F EBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES , WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATIO N, THE AO STATED: I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE C OMPANY HAS, INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES. THE ABOVE CONCLUSION IS UNH ELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO TH E MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ITA NO. 3602/DEL/2010 C.O. NO. 276/DEL/2010 A.Y. 2000-2001 M/S BAWA FLOAT GLAS S LIMITED 3 ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WO ULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TEND ERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND W AS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATI ON ENTRIES. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW E XPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCU SSED HEREINBEFORE, THE ITA NO.1498/DEL/2015 5 BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND T O THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DU RING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS I S IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASI S THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HA S TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BE LIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCU E AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY . 4. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE ORDER OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE BIR BAHADUR SINGH SIJWALI VS. ITO (2015) 68 SOT 197 URO (DEL) TO THE PROPOSITION THAT MERE DEPOSIT IN BANK CANNOT LEAD TO THE CONCLUSION, OR EVEN INFE RENCE, THAT INCOME HAS ESCAPED ASSESSMENT. 5. RESPECTFULLY FOLLOWING THE JUDGEMENTS OF THE HON BLE JURISDICTIONAL HIGH COURT AND THE DECISION OF THE TRIBUNAL IN THE CASES CITED ABOVE AS THE ASSESSMENT IS BAD IN LAW, I QUAS H THE SAME. ITA NO.1498/DEL/2015 6 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.20 16. SD/- [J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED, 09 TH SEPTEMBER, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.