M/s. BRV Developers Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 1825/DEL/2015

• Counselvise Citation: 182520114 RSA 2015
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 09-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: AMIT GOEL
• Keywords: Reopening of assessment; Unexplained cash credit; Difference of opinion; Onus to prove; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 1 8 2 5 /DEL/2015 AY: 200 5 - 06 BRV DEVELOPERS PVT.LTD. VS. ITO, WARD 14(4) (EARLIER KNOWN AS PROMINENT NEW DELHI INSURANCE BROKERS P.LTD.) C 52, VIVEK VIHAR DELHI 110 095 PAN: AADCP 3196 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT GOEL, C.A. RESPONDENT BY : SH. T.VASANTHAN, SR.D.R. ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER DT. 22.01.2015 OF LD.CIT(A) - 7 , DELHI FOR ASSESSMENT YEAR 200 5 - 06 . 2. FACTS IN BRIEF: - THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS. 2,040/ - ON 25.10.2005. THE AO RECORDED REASONS FOR REOPENING AND ISSUED NOTICE U/S 148 OF THE INCOME TAX ACT 1961 (THE ACT ) ON 28.3.2012. HE COMPLETED THE ASSESSMENT ON 1.3.2013 DETERMINING THE TOTAL INCOME AT RS.14,12 ,04 0/ - AFTER ADDING CASH CREDITS OF RS.1 LAKH AND UNEXPLAINED CASH CREDITS BEING SHARE APPLICATION MONEY OF RS.13,10,000/ - . 3. AGGRIEVED THE ASSESSEE CA RRIED THE MATTER IN APPEAL WITHOUT SUCCESS. FURTHER AGGRIEVED THE ASSESSEE IS BEFORE ME ON THE FOLLOWING GROUNDS. ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN ISSUING NOTICE U/S 148 OF INCOME TAX ACT 1961. THE NOTICE U/S 148 ISSUED IN THIS CASE IS ILLEGAL, VOID WITHOUT JURISDICTION AND BARRED BY LIMITATION AND ACCORDINGLY THE ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE IS LIABLE TO BE QUASHED. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) SHOULD HAVE HELD THE REASSESSMENT PROCEEDINGS AS ILLEGAL, VOID WITHOUT JURISDICTION AND BARRED BY LIMITATION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFI CER OF SHARE APPLICATION MONEY/SHARE CAPITAL OF RS. 14,10,000 / - AS ALLEGED UNEXPLAINED CASH CREDIT U/S 68 OF INCOME TAX ACT 1961. THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE AND COMMISSIONER OF INCOME TAX (APPEAL) SHOULD HAVE DELETED THE SAME. 3. THE ALLEGED REASONS GIVEN BY ASSESSING OFFICER AND CIT(A) FOR MAKING CONFIRMING THE ADDITIONS OF RS.14,10,000 / - ARE ERRONEOUS, BOTH ON FACTS AND IN LAW AND, THEREFORE, THE ADDITIONS OF RS.14,10,000 / - MADE BY THE ASSESSING OFFICER AND CONFIRMED B Y CIT(A) ARE LIABLE TO BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY OR DELETE ONE OR MORE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. THE AFORESAID GROUNDS OF APPEAL ARE WITHOUT PREJUDICE OF EACH OTHER. 4. I HAVE HEARD SH.T.VASANTHA, LD.SR.D.R. ON BEHALF OF THE REVENUE AND SHRI AMIT GOEL, THE LD.COUNSEL FOR THE ASSESSEE . ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, MATERIAL PLACED ON RECORD, ORDERS OF LOWER AUTHORITIES, CASE LAWS CITED, I HOLD AS FOLLOWS. 5. THE LD.COUNSEL FOR THE ASSESSEE MR. AMIT GOEL S UBMITTED THAT THE REOPENING IS BAD IN LAW FOR THE FOLLOWING REASONS. ( I ) THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO TO THE INFORMATION RECEIVED BY HIM FROM THE INVESTIGATION WING; ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 3 ( II ) THE ASSESSMENT IS BARRED BY LIMITATION FOR THE REASON THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND AS FOUR YEARS HAVE ELAPSED SINCE THE END OF THE A.Y. 2005 - 06. ( III ) THAT THE ASSES SMENT IS BASED ON CHANGE OF OPINION AND HENCE BAD IN LAW. HE RELIED ON CERTAIN CASE LAWS, WHICH I WOULD BE REFERRING TO DURING THE COURSE OF MY FINDING. 5.1. ON MERITS HE SUBMITTED THAT, THE ASSESSEE HAS FURNISHED ALL NECESSARY DOCUMENTS SUCH AS PROOF OF IDENTITY OF CREDITORS, CAPACITY OF THE CREDITORS TO ADVANCE THE MONEY AND GENUINENESS OF THE TRANSACTION. HE SUBMITTED THAT MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE DIRECTORS, THE FIRST APPELLATE AUTHORITY HAD COME TO A CONCLUSION THAT THE CREDI T WORTHINESS OF SUCH CREDITORS WAS NOT PROVED. HE SUBMITTED THAT THE ASSESSEE HAD DONE ALL THAT IS POSSIBLE WITHIN HIS POWER AND THAT THE ADDITION IS BAD IN LAW. 6. THE LD.SR.D.R. SHRI T.VASANTHAN, ON THE OTHER HAND, CONTROVERTED THE SUBMISSIONS OF THE ASSESSEE AND SUBMITTED THAT THE REASONS OF THE REOPENING DEMONSTRATE CLEAR APPLICATION OF MIND BY THE A.O. HE RELIED ON THE DECISION OF THE HON BLE SUPREME COURT REPORTED IN 236 ITR 34 (S.C.) RAYMOND WOOLLEN MILLS LTD. VS. ITO & OTHERS AND SUBMITTED THAT SUFFICIENCY OF MATERIAL CANNOT BE CONSIDERED. 6.1. ON MERITS HE RELIED ON THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE NOT ONLY THE CREDIT WORTHINESS BUT ALSO THE GENUINENESS OF THE TRANSACTION. HE RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF NAVODAYA CASTLE P.LTD. VS. CIT REPORTED IN 367 ITR 306 (DEL) AND SUBMITTED THAT THE S.L.P. FILED BY THE ASSESSEE AGAINST THIS JUDGEMENT WAS DISMISSED BY THE HON BLE SUPREME COURT ON 16.1.2015. ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 4 7. IN REPLY THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO RECORD OF FACT MADE BY THE A.O. IN THE REASONS RECORDED THAT THE ABOVE ENTRY IS AN ACCOMMODATION ENTRY. HE FURTHER SUBMITTED THAT THE WHEN THE INFORMATION SUPPOSED TO HAVE BEEN RECEIVED F ROM THE DIRECTOR (INVESTIGATION) IS REGARDING RS.1 LAKH ONLY, THE A.O. MADE AN ADDITION OF RS.13,10,000/ - WITHOUT REASON. 8. I HAVE HEARD THE RIVAL CONTENTIONS. ON A CAREFUL CONSIDERATION OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AND CAS E LAWS CITED, I HOLD AS FOLLOWS. 8.1. THE REASONS FOR REOPENING ARE AS FOLLOWS. INFORMATION HAS BEEN RECEIVED FROM THE D IRECTORATE OF INCOME TAX(IN V ESTIGATION) OF THE INCOME TAX DEPARTMENT THAT THE ABOVE NAMED ASSESSEE IS A BENE F ICIAR Y OF AC C OMMODATION ENTR Y RECEIVED FROM AN ESTABLISHED ' ENTRY - OPERATOR IDE N TIFIED BY THE INVESTIGATION WING DURING THE PERIOD R E L E V ANT TO A . Y . 2005 - 06 . A COMPREHENSIVE INVESTIGATION WAS CARRIED OUT B Y THE IN V ESTIGATION WING F O R I DENTI F ICATION O F ENTRY OPERATORS ENGAGED IN TH E BUSINESS OF MONEY LAUNDERING FOR THE BENEFICIARIES AND ON THE BASIS OF INVESTIGATION C A RRIED OUT AND EVIDENCES COLLECTED, A REPORT HAS BEEN FORWARDED IN WHICH THE ASSESSEE COMPANY IS FOUN D TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPER ATOR(S) AS PER THE FOLLOWING SPECIFIC DETAILS OF TRANSACTION(S) : - NAME OF THE BENEFICIARY BANK ACCOUNT NO. DATE OF TRANSACTION (ENTRY) AMOUNT (RS.) INSTRUMENT NO. BY WHICH ENTRY TAKEN ENTRY OPERATOR S DETAILS BANK DETAILS OF ENTRY OPERATOR PROMINENT INSURANCE BROKERS P.LTD. CA 343 17.6.2004 RS.1,00,000/ - 201,927 M/S S&S INVESTMENTS A/C NO.856 I AM SATISFIED THAT THE ASSESSEE . COMPANY HAS RECEIVED BOGUS ACCOMMODAT I ON ENTRY T O THE TUNE OF RS. 1,00,000/ - IN THE PERIOD RELEVANT TO A . Y. 2 005 - 06. THEREFORE, THE ASSESSEE HAS DELIBERATELY FURNISHED WRO N G FACTS AT THE TIME OF FILING OF RETURN, THE DETAILS OF WHICH ARE MENTIONED ABOVE. ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 5 IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT AMOUNT OF RS.1,00,000/ - HAS ES C APED FROM THE ASSESSMENT FOR AS STT . YEAR 2005 - 06 WHICH WAS CHARGEABLE TO TAX. I AM ALSO SATISFIED THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULL MATERIA L FAC T S NECESSARY FOR THE ASSESSMENT FOR ABOVE ASSESSMENT YEAR, THE INCOME CHARGEABLE TO TAX TO T HE TUNE OF RS.1,00,000/ - HAS ESCAPED ASSESSMENT WITH THE MEANING OF SECTION 147 OF THE E INCOME TAX A CT , 1961 . SINCE, FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR , AND SCRUTINY ASSESSMENT WAS C O MPLETED U/S 143(3) ON 13 - 07 - 2007 IN THIS CASE FOR THE SAID ASSESSMENT YEAR, THE REASONS REC O R D ED ABOVE FOR THE PURPOSE OF REOPENING OF ASSESSMENT ARE PUT UP FOR KIND SATISFACTION OF LD. COMMISSIONER OF INCOME TAX, DELHI - V , . NEW DELHI IN TERMS OF THE PROVISO TO SECTION 151(1) OF THE INCOME TAX ACT' 1961 . 8.2. A PERUSAL OF THE REASONS FOR REOPENING DEMONSTRATE THAT THERE IS NO APPLICATION OF MIND BY THE A.O. TO THE MATERIAL/INFORMATION RECEIVED FROM THE DIRECTOR (INVESTIGATIONS). WITHOUT SUCH INDEPENDENT APPLICATION OF MIND, IT IS NOT POSSIBLE FOR THE A.O. TO COME TO A CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. THUS, RESPECTFULLY FOLLOWING THE PROPOSITIONS OF LAW LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. G & G PHARMA INDIA LTD. (SUPRA) I HOLD THAT THE REOPENING IS BAD IN LAW. 9. THE LD.COUNSEL FOR THE ASSESSEE HAD IN RESPONSE TO THE QUESTIONNAIRE ISSUED TO THE ASSESSEE ON 12. 4. 2007 DURING ORIGINAL ASSESSMENT PROCEEDINGS GAVE DETAILS OF ALL THE SHARE APPLICATION MONEY RECEIVED. 9.1. PARA 5 OF TH AT QUESTIONNAIRE READS AS FOLLOWS. 5. DETAILS OF SHARE CAPITAL OF RS.24.60 LAKHS ALONG WITH NAME AND ADDRESSES OF THE PARTIES WHO HAVE INVESTED IN THE SHARE CAPITAL, WHETHER ASSESSED TO TAX OR NOT , IF YES FURNISH EVIDENCE I.E. LAST RETURN FILED AND CIRCLE/WARD NO., DATE OF DEPOSIT OF SHARE CAPITAL, MODE OF PAYMENT WITH DETAILS , A MOUNT APPLIED FOR QUANTITY AND RATE, HOW MUCH APPLIED FOR, HOW MUCH PREMIUM RECEIVED, AMOUNT, ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 6 STATUS OF BALANCE, DETAILS OF BANK ACCOUNT IN WHICH SHARE CAPITAL AND PREMIUM DEPOSITED. 9.2. ON 4.5.2007, THE ASSESSEE HAD GIVEN A DETAILED REPLY. COMPLETE DETAILS OF SUBSCRIPTION OF SHARE CAPITAL WAS FURNISHED. FURTHER DETAILS WERE FILED ON 6.6.2007. 9. 3 . AFTER CONSIDERING THE INFORMATION AND THE EVIDENCES FILED BY THE ASSESSEE, THE AO COMPLETED THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT BY ACCEPTING THE SHARE APPLICATION MONEY RECEIVED W AS GENUINE. REOPENING WAS MADE BEYOND 4 YEARS THOUGH THERE IS NO FAILURE ON THE PAR T OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS REQUIRED FOR THE ASSESSMENT. THIS IS BAD IN LAW AS HELD BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF LUPIN LTD. VS. ACIT(LTU), MUMBAI (2014) 46 TAXMANN.COM 39 6 (BOM). AT PARA 8 OF THE J DUGEMENT THE HON BLE COURT HAS HELD AS FOLLOWS. 8. IT IS TRUE THAT THE REASONS FOR INITIATING THE RE - ASSESSMENT PROCEEDINGS DOES IN FACT STATE THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. HOWEVER, MERELY MAKING THIS BALD ASSERTION IS NOT ENOUGH. IT IS NOW WELL SETTLED THAT THE REASONS WHICH ARE RECORDED BY THE ASSESSING OFFICER FOR RE - OPENING THE ASSESSMENT, ARE THE ONLY REASONS WHICH CAN BE CONSIDERED. NO SUBSTITUTION O R DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS ARE THE MANIFESTATION OF THE MIND OF THE ASSESSING OFFICER AND THEREFORE, SHOULD BE SELF - EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. THE REASONS PROVIDE THE LINK BETWEEN THE CONCLUSION AND THE EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EVIDENCE SO THAT IN THE EVENT OF A CHALLENGE, THE ASSESSING OFFICER MUST BE ABLE TO JUSTIFY THE SAME BASED ON THE MATERIAL AVAILABLE ON RECORD. HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRU LY NECESSARY FOR ASSESSMENT FOR THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THAT VITAL LINK BETWEEN THE REASONS AND THE EVIDENCE. THIS VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY RE - OPENING OF A CONCLUDED ASSESSMENT. ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 7 9.4 . EVEN OTHERWISE THE ASSESSEE IN TH IS CASE HAS FURNISHED ALL INFORMATION IN RESPECT OF SHAREHOLDERS AND THERE IS NO INVESTIGATION WHATSOEVER MADE BY THE AO AND THE ADDITION IS MADE SOLELY BECAUSE THE AO HAD NOT ACCEPTED THE EVIDENCES FILED BY THE ASSESSEE, THAT TOO ON A CHANGE OF OPINION . IN MY VIEW THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF THAT LAY ON HIM BY FURNISHING ALL DOCUMENTS AND EVIDENCES IN SUPPORT OF HIS CLAIM AND THE ONUS HAS SHIFTED TO THE A.O. WHO HAS FAILED TO DISCHARGE THE SAME. FOR THIS PROPOSITION THAT UNDER SUCH FACTS AND CIRCUMSTANCES NO ADDITION CAN BE MADE THE ASSESSEE HAS RIGHTLY RELIED ON THE FOLLOWING DECISIONS. CIT VS. GANGESHWARI METAL P.LTD. (2013) 30 TAXMANN.COM328 (DEL) CIT VS. FAIR FINVEST LTD. (2013) 357 ITR 146 (DEL.) 9. 5 . THE A.O. DOES NOT HAVE THE POWER TO REVIEW HIS OWN ORDER U/S 147 OF THE ACT AS HELD BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JINDAL PHOTO FILMS LTD. VS. DCIT (1998) 234 ITR 170 . 9. 6 . FOR ALL T HESE REASONS THE AP PEAL OF THE ASSESSEE IS ALLOWED ON THE GROUND THAT THE REOPENING IS BAD IN LAW AND ALSO ON THE GROUND THAT THE ADDITION MADE U/S 68 OF THE ACT CANNOT BE SUSTAINED. 10 . IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER ,2015. SD/ - (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: THE 17 TH DECEMBER, 2015 *MANGA ITA NO. 1825/DEL/2015 A.Y. 2005 - 06 BRV DEVELOPERS P.LTD. 8 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR