M/s. Styric Chem (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 163/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0409 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-01-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 12-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI
• Assessee Lawyers: ASHWANI TANEJA; CHAYA MAHESHWARI
• Keywords: Bogus Share capital; Principle of natural justice; Accommodation entries; Onus to prove; Reason to believe
• Section: 143(3); 142(1); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH G NEW DELHI, BENCH G NEW DELHI, BENCH G NEW DELHI, BENCH G BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER AND SHRI K. D. RANJAN, ACCOUTANT MEMBER ITA NO. 163 /DEL/2010 (ASSESSMENT YEAR 2001-02) M/S. STYRIC CHEM (P) LTD., VS. ACIT, CIRCLE 9(1), C/O M/S. R. R. A. TAXINDIA, NEW DELHI D-28, SOUTH EXTN PART I, NEW DELHI 110 049 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAECS2262H APPELLANT BY: SHRI ASHWANI TANEJA ADV & MS. CHAYA MAHESHWARI, RESPONDENT BY: BANITA DEVI, DR ORDER ORDER ORDER ORDER PER K. D. PER K. D. PER K. D. PER K. D. RANJAN, AM: RANJAN, AM: RANJAN, AM: RANJAN, AM: 1. THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT Y EAR 2001-02 ARISES OUT OF THE ORDER OF LD .CIT(A) XII, NEW DELH I. 2. THE FIRST ISSUE FOR CONSIDERATION RELATES TO ASS UMPTION OF JURISDICTION U/S 147 OF THE ACT. THE RELEVANT GROU NDS OF APPEAL ARE REPRODUCED AS UNDER: 1) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD .CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. A.O. IN ASSUMING JURISDICTION U/S 147 THAT TOO WITHOUT COMPLYING WITH MANDATORY CONDITIONS AS ENVI SAGED UNDER SECTION 147 TO 151 MORE SO WHEN JURISDICTION WAS ASSUMED BY LD. A.O. WHO WAS NOT HAVING JURISDICTION OVER THE ASSESSEE. 2) THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER T HE IMPUGNED ASSESSMENT ORDER IS ILLEGAL AND BEYOND JUR ISDICTION IN AS MUCH AS THE SAME HAS BEEN PASSED BEYOND LIMIT ATION AS PRESCRIBED UNDER THE ACT AS THE ORIGINAL ASSESSMENT ORDER HAS BEEN FRAMED U/S 143(3) AND THE NOTICE U/S 148 HAS B EEN ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THERE WAS NO FAILURE O N THE PART I.T.A. NO. 163/DEL/2010 2 OF THE ASSESSEE IN DISCLOSING MATERIAL FACTS AND NO SUCH FINDING HAS BEEN RECODED BY LD. A.O. IN THE REASONS RECORDED. 3. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT T HE ASSESSEE IS ASSESSED BY THE A.O. CIRCLE 9(1), NEW DELHI. IN TH IS CASE, ORIGINAL ASSESSMENT WAS MADE U/S 143(2) VIDE ORDER-DATED 16. 03.2004. SUBSEQUENTLY, AN INFORMATION WAS RECEIVED THAT ASSE SSEE WAS BASICALLY HAD ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL FROM 3 PARTIES AMOUNTING TO ` 11.50 LACS. ACCORDIN GLY, NOTICE U/S 148 WAS ISSUED BY INCOME TAX OFFICER WARD 1(1), FAR IDABAD ON 28.03.2008. IN RESPONSE TO THE NOTICE ISSUED IT WA S SUBMITTED BY THE ASSESSEE THAT ASSESSEE WAS ASSESSED WITH I.T.O. WARD 9(1), NEW DELHI AND RETURN FOR THE ASSESSMENT YEAR 2001-02 WA S FILED ON 30 TH OCTOBER 2001 VIDE RECEIPT NO.1440. IT WAS ALSO INT IMATED THAT THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT . HOWEVER, SINCE THE NOTICE WAS ISSUED U/S 148 IT WAS STATED B Y THE ASSESSEE THAT ORIGINAL RETURN FILED MIGHT BE TREATED AS RETU RN FILED IN PURSUANCE TO THE NOTICE U/S 148 OF THE ACT. SUBSEQ UENTLY, THE FILE WAS TRANSFERRED TO A.O. CIRCLE 9(1) NEW DELHI, WHO ISSUED NOTICE U/S 143(2) OR U/S 142(1) OF THE ACT. THE A.O. COMPLETE D THE ASSESSMENT MAKING ADDITION OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. ON APPEAL, CIT(A) UPHELD THE ADDITION BY OBSERVING AS UNDER: DURING THE COURSE OF APPELLATE PROCEEDINGS, IT HAS BEEN VERIFIED FORM RECORD THAT DUE PROCEDURE WERE FOLLOW ED FOR REOPENING THE CASE. AS IS EVIDENT FORM THE REPRODU CTION OF A.O.S ORDERS ABOVE, THE AUTHORIZED REPRESENTATIVE HAD REQUESTED THAT RETURN FILED ON 30.10.2001 MAY BE TR EATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148, HENCE C HALLENGING THE JURISDICTION ON THIS STAGE IS IN FRUCTUOUS BECA USE THE A.O. HAD VALID JURISDICTION AND FOLLOWED ALL LAID PROCED URE FOR ISSUING NOTICE U/S 148, AFTER RECEIVING SPECIFIC IN FORMATION REGARDING AMOUNT/DATE/BANK ETC. HE HAD REASON TO BELIEVE OF INCOME ESCAPING ASSESSMENT BASED ON SPECIFIC INF ORMATION, HENCE ARS RELIANCE ON CIT VS PRADEEP KUMAR GUPTA 3 03 ITR 95 (DEL.) IS NOT ACCEPTED. AR HAS PLEADED THAT, NO ADVERSE MATERIAL WAS CONFRONTED TO THE ASSESSEE NOR WAS ANY OPPORTUNITY OF CROSS-EXAMINATION NEVER I.T.A. NO. 163/DEL/2010 3 GIVEN TO THE ASSESSEE. THUS, THE ADDITION HAS BEEN MADE AND ASSESSMENT ORDER HAS BEEN PASSED IN THE VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND THERE FORE THE SAME NEED TO BE STRUCK DOWN FOR THIS REASON ITSELF. THIS CONTENTION OF THE AR CANNOT BE ACCEPTED, BECAU SE THE A.O. WISHED TO CONFIRM THE GENUINENESS OF THE SHARE CAPITAL APPLICANT AND THE ONUS TO PROVE THE GENUINENESS, ID ENTITY AND CAPABILITY OF THE SHARE APPLICANT LIES WITH THE ASS ESSEE. A.O. DID NOT RELY UPON HOSTILE WITNESS, HENCE ONUS WAS N OT ON THE A.O. TO GIVE AN OPPORTUNITY TO CROSS EXAMINE BUT WA S ON THE ASSESSEE TO ESTABLISH THE GENUINENESS AND IDENTITY AND CAPACITY OF THE SHARE APPLICANT. RELIANCE IS BEING PLACED ON THE CASE OF DCIT VS SMT . PHOOLWATI DEVI (2009) 314 ITR (AT) 0001 RELEVANT PA RT OF WHICH IS REPRODUCED AS FOLLOWS: CASH CREDITS-BURDEN OF PROOF-DOCUMENTARY EVIDENCE PRODUCED BY ASSESSEE PRIMA FACIE SUPPORTS CLAIM- APPLICATION OF TEST OF HUMAN PROBABILITIES AND SURROUNDING CIRCUMSTANCES-DOCUMENTARY EVIDENCE CANNOT BE ACCEPTED-ADDITION JUSTIFIED I. T. ACT, 19 61 S.68 SECTION 68 OF THE I. T. ACT, 1961, REFERS TO AMOUNT S CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BU T IT IS NOT EXHAUSTIVE OF THE ADDITIONS THAT CAN BE MADE BY THE A.O. WHERE IT IS SEEN THAT THE ASSESSEE IS IN RECE IPT OF MONIES, THEN NOTWITHSTANDING THAT HE DOES NOT MAINT AIN BOOKS OF ACCOUNT IN WHICH SUCH MONIES ARE RECORDED, IT IS HIS BURDEN, WHEN CALLED UPON, TO POINT OUT THE N ATURE AND SOURCE OF THE MONEY AND IF HIS EXPLANATION IN T HIS BEHALF IS NOT FOUND SATISFACTORY IT IS OPEN TO THE A.O. TO ADD THE SAME AS HIS INCOME. FOR THIS PURPOSE, IT I S NOT NECESSARY FOR THE A.O. REPLY ON SECTION 68 OF THE A CT. SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THE GENU INENESS, CAPABILITY AND IDENTITY OF THE SHARE APPLICANT EITH ER DURING ASSESSMENT OR DURING APPELLATE PROCEEDINGS THE SAID DISALLOWANCE IS CONFIRMED. 4. BEFORE US, LD. D.R. SUBMITTED THAT THE ASSESSEE WAS REGULARLY ASSESSED AT DELHI WHEREAS NOTICE U/S 148 WAS ISSUED BY I.T.O. WARD 1(1), FARIDABAD. THEREFORE, THE NOTICE WAS ISSUED BY THE OFFICER WHO WAS NOT HAVING JURISDICTION OVER THE CASE OF THE AS SESSEE. THE A.O. HAS NOT ISSUED FRESH NOTICE ON RECEIPT OF FILE FORM I.T.O. FARIDABAD. I.T.A. NO. 163/DEL/2010 4 THEREFORE, ASSESSMENT MADE IS BAD IN LAW IN VIEW OF HT DECISION OF ITAT IN THE CASE OF MS. CHETNA KUKREJA IN I.T.A. NO . 2141/DEL/2009 AND C.O. NO.212/DEL/2009. ON THE OTHER HAND LD. SR . DR SUPPORTED THE ORDER OF THE A.O. 5. WE HAVE HEARD BOTH THE PARTIES. IN THIS CASE, T HE FACTS OF THE CASE ARE NOT DISPUTED. IN THE CASE OF MS. CHETNA K UKREJA, ITAT DELHI BENCH B HELD AS UNDER: 5. WE HAVE HEAD BOTH THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISP UTE ABOUT THE FACT THAT NOTICE U/S 148 WAS ISSUED BY THE A.O. WARD 1(5), FARIDABAD WHEREAS THE ASSESSEE WAS ASSESSED TO TAX AT DELHI. SUBSEQUENTLY, WHEN THIS FACT WAS BROUGHT TO THE NOT ICE OF THE A.O. AT FARIDABAD, THE CASE OF THE ASSESSEE WAS TRA NSFERRED TO THE A.O. HAVING JURISDICTION OVER THE CASE OF THE A SSESSEE. THE ACIT, CIRCLE 23(1), NEW DELHI DID NOT ISSUE FRE SH NOTICE U/S 148 BUT PROCEEDED TO COMPLETE THE ASSESSMENT ON THE BASIS OF NOTICE ISSUED BY THE A.O. FARIDABAD. THEREFORE, THE ORDER PASSED BY THE ACIT, CIRCLE 23(1), NEW DELHI IS BAD IN LAW. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DEC ISION OF ITAT DELHI BENCH F IN THE CASE OF RANJEET SINGH VS ACI T (SUPRA) WHEREIN ON IDENTICAL FACTS, THE ASSESSMENT FRAMED W AS HELD TO BE BAD IN LAW. THE ASSESSEES CASE IS ALSO COVERED BY THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS ANJALI DUA (SUPRA). IN THAT CASE, THE JURISDICTION OVER THE ASSESSEE WAS TRANSFERRED FROM LUDHIANA TO DELHI AND THEREAFTER, THE ASSESSEE FILED THE RETURN FOR THE A SSESSMENT YEAR 1997-98 ONWARDS AT DELHI. THE A.O. AT LUDHIAN A HAD NO JURISDICTION TO ISSUE NOTICE DATED 28.03.2003 TO TH E ASSESSEE U/S 148 FOR THE ASSESSMENT YEAR 1996-97. UNDER THE SE CIRCUMSTANCES, THE TRIBUNAL CAME TO THE CONCLUSION THAT THE A.O. AT LUDHIANA ISSUED NOTICE U/S148 FOR THE ASSES SMENT YEAR 1996-97. THE DECISION OF ITAT WAS UPHELD BY THE HO N'BLE HIGH COURT OF DELHI. SINCE THE ISSUE IS COVERED BY THE DECISIONS REFERRED TO ABOVE IN FAVOUR OF THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE ORDER PASSED BY THE A.O . ON THE BASIS OF ASSESSMENTS REOPENED BY ISSUE OF NOTICE U/ S 148 BY THE A.O. AT FARIDABAD IS BAD IN LAW. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD. CIT(A ) CANCELING THE ASSESSMENT. 6. SINCE THE ISSUE IS SQUARELY COVERED BY THE DECIS ION OF ITAT IN THE CASE OF MS. CHETNA KUKREJA. AS THE FACTS OF TH E CASE BEFORE US ARE IDENTICAL WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) IS NOT I.T.A. NO. 163/DEL/2010 5 JUSTIFIED IN CONFIRMING THE ASSESSMENT ON ASSUMPTIO N OF JURISDICTION. WE, THEREFORE, CANCEL THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER. SINCE WE HAVE ANNULLED THE ASSESSMENT, WE DO NOT FEEL IT PROPER TO DEAL WITH THE ISSUES RELATING TO SHARE CA PITAL OF ` 11.50 LACS. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. 8. PRONOUNCED IN THE OPEN COURT ON 18 TH FEB., 2011. SD./- SD./- (A. D. JAIN) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH FEB., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI