M/s. N G Constructions, Delhi V. ACIT, New Delhi

ITA 1668/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6492 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUNEEL
• Keywords: Reopening of assessment; Accommodation entries; Competent authority; Reassessment proceedings
• Section: 143(3); 133(6); 143(1); 64; 147; 148; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BENCH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1668/DEL/2016 [ASSESSMENT YEAR: 2006-07] M/S N.G. CONSTRUCTIONS, VS. ACIT, CIRCLE-62(1), 501, MANGALAM PARADISE, NEW DELHI PLOT NO. 8, MANGALAM PLACE, SECTOR-3, ROHINI, DELHI 110 085 (PAN: AAAFN6072B) [APPELLANT] [RESPONDENT] ASSESSEE BY : SHRI RANJAN CHOPRA, CA REVENUE BY : SH. RAJAT KUMAR KUNEEL, SR. DR. ORDER PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX [APPEALS]-20, NE W DELHI DATED 27.01.2016 PERTAINING TO ASSESSMENT YEAR 2006 -07. 2. THE ASSESSEE IN ITS VARIOUS GROUNDS OF APPEAL HA S CHALLENGED THE VALIDITY OF PROCEEDINGS U/S. 147 OF THE I.T. ACT, 1961 AND ALSO CHALLENGED THE ORDER OF THE LD. CIT(A ) IN CONFIRMING THE ADDITION OF RS.8,50,000/- U/S. 68 OF THE I.T. ACT, 1961. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 30.10.2006 DECLARING INCOME AT RS. 1,41,65,491/-. THE AO PROCESSED THE RETURN OF INC OME U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) . LATER, AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT AT AN INCOME OF RS. 1,45,97,580/- ON 26.5.2008. AGAIN ON THE INF ORMATION RECEIVED FROM THE JOINT DIRECTOR OF INCOME TAX (INV .)(OSD), UNIT-1, NEW DELHI ON 02.5.2012 WHEREIN IT WAS STATE D THAT DURING THE COURSE OF SEARCH/SURVEY OF M/S RS BANSAL & ASSOCIATES CERTAIN INCRIMINATING DOCUMENTS ARE FOUN D AND SEIZED / IMPOUNDED AND ON PERUSAL OF DOCUMENTS, THE AO FOUND THAT M/S NG CONSTRUCTION (PAN AAAFN6072B) HAD TAKEN ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOAN . ON RECEIPT OF THIS LETTER, A PROPOSAL FOR REOPENING OF ASSESSMENT U/S. 147 OF THE ACT WAS SENT TO LD. CIT-XII, NEW DE LHI AND AO ISSUED NOTICE U/S. 148 OF THE I.T. ACT. AO ALSO PR OVIDED THE REASONS RECORDED TO THE ASSESSEE. IN RESPONSE TO TH E NOTICE, THE AR OF THE ASSESSEE APPEARED AND DISCUSSED THE M ATTER WITH THE AO AND FILED THE REQUISITE DETAILS WHICH WAS EX AMINED BY THE AO AND WHO DID NOT AGREE WITH THE CONTENTION RA ISED BY THE ASSESSEE AND DOCUMENTARY EVIDENCES FILED BY THE ASS ESSEE. AO ALSO ISSUED NOTICE U/S. 133(6) OF THE ACT TO THE LO AN HOLDER FOR PROVING THE GENUINENESS OF THE TRANSACTION IN DISPU TE WHICH REMAINED UNVERIFIED AND FINALLY THE AO COMPLETED T HE ASSESSMENT OF THE ASSESSEE BY MAKING THE ADDITION O F RS. 8,50,000/- TO THE INCOME OF THE ASSESEE AND A SSESSED THE INCOME AT RS. 1,54,46,580/- U/S. 147/143(3) OF THE ACT, VIDE 3 ORDER DATED 31.01.2013. AGAINST THE ASSESSMENT ORD ER DATED 31.01.2013, ASSESSEE APPEALED BEFORE THE LD. CIT(A) , WHO VIDE HIS IMPUGNED ORDER DATED 27.01.2016 HAS DISMISSED T HE APPEAL ON LEGAL AS WELL AS ON MERIT. AGGRIEVED WITH THE IM PUGNED ORDER DATED 27.01.2016, ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PA GE NO. 7 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH T O THE REMARKS OF THE CIT WHEREIN HE HAD SIMPLY MENTIONE D I AM SATISFIED WITH THE REASONS RECORDED BY THE AO FOR R EOPENING THE AY 2006-07 U/S. 147. ALSO REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. M/ S N.C. CABLES LIMITED REPORTED IN 391 ITR 11 AND THE DECIS ION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT V S. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (2015) 64 TAXMANN.COM 313 (SC) ARISING OUT OF THE ORDER OF TH E HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. S. GOENKA LI ME AND CHEMICALS LIMITED REPORTED IN (2015) 56 TAXMAN.COM 390 INCLUDING THE DECISION OF THE ITAT, SMC BENCH, NEW DELHI IN THE CASE OF BLUE CHIP DEVELOPERS (P) LTD. VS. ITO IN IT A NO. 1061/DEL/2019 (AY 2009-10) VIDE ORDER DATED 02.12.2 019 AND ITAT, SMC BENCH, NEW DELHI IN THE CASE OF UMESH KUM AR TYAGI VS. ITO IN ITA NO. 2978/DEL/2019 (AY 2010-11) VIDE ORDER DATED 22.11.2019 AND SMC BENCH, NEW DELHI DECISION DATED 07.10.2019 IN THE CASE OF MUKESH CHAND GARG. VS. I TO DECIDED IN ITA NO. 794/DEL/2009 (AY 2009-10) AND VA RIOUS OTHER DECISIONS FILED IN THE PAPER BOOK, HE SUBMITT ED THAT THE 4 COURTS HAVE HELD THAT THE REOPENING IS NOT SUSTAINA BLE WHERE APPROVAL/SANCTION GIVEN BY THE AUTHORITY IS WITHOUT RECORDING SATISFACTION. REFERRING TO VARIOUS OTHER DECISION H E SUBMITTED THAT THE ASSESSING OFFICER, NOT HAVING JURISDICTION OVER THE ASSESSEE, CANNOT ISSUE NOTICE U/S. 148 OF THE I.T. ACT, 1961. THE ASSESSING OFFICER IN THE INSTANT CASE HAS NOT A PPLIED HIS MIND AND INITIATED ACTION U/S. 147 OF THE ACT ON TH E BASIS OF THE REPORT OF THE INVESTIGATION WING. THEREFORE, THE R EASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER IS N OT USTAINABLE. 5. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE H AD ESTABLISHED THE IDENTITY OF THE LOAN CREDITOR BY PR ODUCING THE ITRS AND PAN DETAILS AND THE TRANSACTION WAS THROUG H REGULAR BANKING CHANNEL BY WAY OF ACCOUNT PAYEE CHEQUES AND WERE PAID BACK THROUGH ACCOUNT PAYEE CHEQUES ONLY; BOTH THE LOAN CREDITORS HAVE CONFIRMED OF HAVING ADVANCED THE M ONEY AND THE REFLECTED IN THEIR BANK ACCOUNTS. HOWEVER, BO TH THE LOAN CREDITORS ARE INCOME TAX ASSESSES AND THEREFORE, NO DOUBT CAN BE RAISED ABOUT THEIR CREDITWORTHINESS. HENCE, THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS CAST ON IT AND ADDI TION MADE U/S. 68 OF THE ACT CANNOT BE MADE IN THE HANDS OF THE ASSESSEE IF THE INGREDIENTS OF THE SAID ACTION ARE NOT ATTRACTED AND ACCORDINGLY THE ADDITION IN DISPUTE MAY BE DELE TED. 6. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT(A). 5 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITI ES BELOW. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THAT AO, ON THE BASIS OF REPORT OF THE INV ESTIGATION WING OF THE DEPARTMENT, REOPENED THE ASSESSMENT AND MADE THE ADDITION OF RS. 8,50,000/- AS UNEXPLAINED INCOM E OF THE ASSESSEE WHICH HAS BEEN UPHELD BY THE LD. CIT(A). I T IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT REOPENING WAS MADE IN THE MECHANICAL MANNER WITHOUT APPLICATI ON OF MIND BY THE ASSESSING OFFICER AND ON BORROWED SATIS FACTION. FURTHER THE APPROVING AUTHORITIES HAVE ALSO GIVEN T HE APPROVAL IN A MECHANICAL MANNER. 7.1 ON PERUSAL OF PAGE NO. 6-7 OF THE PAPER BOOK, W HICH IS A COPY OF PROFORMA FOR APPROVAL TO ISSUE OF NOTICE U /S. 148, COPY OF WHICH IS PLACED AT PAGE NO. 7 OF THE PAPER BOOK SHOWS THAT THE LD. CIT WHILE GIVING APPROVAL SIMPLY MENTIONED I AM SATISFIED WITH THE REASONS RECORDED BY THE AO FOR R EOPENING THE AY 2006-07 U/S. 147. SIMILARLY, AS PER COLUMN NO. 12 AT PAGE NO. 6 OF THE PAPER BOOK, THE ACIT, CIRCLE 88(1 ), NEW DELHI HAS SIMPLY MENTIONED FOR THE REASONS RECORDED BY THE AO, I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT, 1961. 7.2 THE HONBLE SUPREME COURT OF INDIA IN THE CAS E OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (2015) 64 TAXMANN.COM 313 (SC) ARISING OUT OF ORDER OF HONBL E HIGH COURT OF MADHYA PRADESH IN CIT VS. S. GOYANKA LIME & 6 CHEMICALS LTD. (2015) 56 TAXMANN.COM 390 (MP) HAS H ELD AS UNDER:- SECTION 151, READ WITH SECTION 148 OF INCOME TAX ACT, 1961 INCOME ESCAPING ASSESSMENT SANCTION FOR ISSUE OF NOTICE (RECORDING OF SATISFACTION) H IGH COURT BY IMPUGNED ORDER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER SECTION 148, REOPENING OF ASSESSMENT WAS INVALID WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED HELD, YES (IN FAVOUR OF THE ASSESSEE). 7.3 THE HONBLE HIGH COURT OF DELHI IN THE CASE O F PCIT VS. NC CABLES (SUPRA) HAS HELD AS UNDER:- 11. SECTION 151 OF THE ACT CLEARLY STIPULATES THAT THE CIT(A), WHO IS THE COMPETENT AUTHORITY TO AUTHORIZE THE REASSESSMENT NOTICE, HAS TO APPLY HIS MIND AND FORM AN OPINION. THE MERE APPENDING OF THE EXPRESSION APPROVED SAYS NOTHING. IT IS NOT AS IF THE CIT(A) HAS TO RECORD ELABORATE REASONS FOR AGREEING WITH THE NOTING PUT UP. AT THE SAME TIME, SATISFACT ION HAS TO BE RECORDED IF THE GIVEN CASE WHICH CAN BE REFLECTED IN THE BRIEFEST POSSIBLE MANNER. IN THE PRESENT CASE, THE EXERCISE APPEARS TO HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHIC H IS THE RATIONALE FOR THE SAFEGUARD OF AN APPROVAL BY A HIGHER RANKING OFFICER. FOR THESE REASONS, THE COUR T IS SATISFIED THAT THE FINDINGS BY THE ITAT CANNOT BE DISTURBED. 7.4 SINCE IN THE INSTANT CASE ALSO BOTH THE APPROVI NG AUTHORITIES HAVE GIVEN THE APPROVAL IN A MECHANICAL MANNER, THEREFORE, IN LIGHT OF THE RATIOS AS LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA AND THE HONBLE DELHI HIGH C OURT IN THE 7 DECISIONS CITED ABOVE AND THE OTHER DECISIONS FILED IN THE SHAPE OF PAPER BOOK AT PAGE NO. 1-36, THE REASSESSMENT PR OCEEDINGS IN OUR OPINION ARE NOT IN ACCORDANCE WITH LAW. THER EFORE, THE SAME IS LIABLE TO BE QUASHED. WE, THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUND CHALLENGING THE VALIDITY OF REASS ESSMENT PROCEEDINGS, THE ADDITION ON MERIT IS NOT BEING ADJ UDICATED BEING ACADEMIC IN NATURE. THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. THE ORDER PRONOUNCED ON 11.02.2020. SD/- SD/- [PRASHANT MAHARISHI ] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:11-02-2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) ASSTT. REGISTRAR, 5. DR ITAT, NEW DELHI