Lenzing Polypacks Ltd., New Delhi V. ITO, New Delhi

ITA 1832/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3501 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Tangible material; Accommodation entries; Reassessment proceedings
• Section: 133(6); 68; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH G, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1832/DEL/2016 ASSESSMENT YEAR: 2006-07 LENZING POLYPACKS LTD. , 26 SADHNA ENCLAVE, NEW DELHI. PAN- AAACL1675M (APPELLANT) VS. INCOME - TAX OFFICER, WARD 4(3), NEW DELHI (RESPONDENT) APPELLANT BY SH. VED JAIN, ADVOCATE RESPONDENT BY SH. N.K. BANSAL, SR. DR ORDER PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST THE ORDER DATED 28.01.2016, PASSED BY LD. CIT (APPE ALS)-5, DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3)/148 FOR THE A.Y. 2006-07. IN GROUNDS OF APPEAL ASSESSEE HAS RAISED F OLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND THE PROVISIONS OF THE LAW, CIT(A) HAS ERRED IN NOT APPR ECIATING THAT THERE WAS NO APPLICATION OF MIND TO THE ALLEGED INF ORMATION RECEIVED FROM INVESTING WING THAT THE ASSESSEE WAS AMONGST THE DATE OF HEARING 25.09.2019 DATE OF PRONOUNCEMENT 13 .11.2019 ITA NO. 1832/DEL/2016 2 BENEFICIARIES OF THE BOGUS ACCOMMODATION ENTRIES. T HERE WAS NO TANGIBLE MATERIAL TO REOPEN THE ASSESSMENT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND THE PROVISIONS OF THE LAW, THE CIT (A) HAS ERRED IN NOT ACCEPTING THAT FACT THE ASSESSEE HAS FILED THE OBJECTIONS HOWEVER THE OBJECTIONS FILED HAS NOT BEEN DISCHARGED BY THE LD. ASSESSING OFFICER. THE PROCEDURE FOLLOWED DURING THE ASSESSMENT PROCEEDING S ARE AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND HENCE BE QUASHED. THAT THE LD. AO HAS NOT CONSIDERED THE REQUEST FOR PROVIDING THE COPY OF STATEMENT OF MR. S.K. JAIN AND OPPORTUNITY OF CROSS EXAMINE. THE HONBLE CIT (A) HAS CALLED THE ASSESSM ENT RECORDS AND FIND OUT THAT SUCH OBJECTION WAS NO ON RECORDS IN VIEW OF THAT THEY HAVE REJECTED THE APPEAL. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND PROVISIONS OF THE LAW, CIT(A) HAS ERRED IN CONFIRMI NG THE ADDITION OF RS.90,00,000/- UNDER SECTION 68 OF THE ACT AS BO GUS ACCOMMODATION ENTRY. 4. THAT THE APPELLANT CRAVE LEAVE TO ADD, AMEND O R VARY ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. THE FACTS IN BRIEF ARE THAT, ASSESSEE COMPAN Y HAD FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.1,370/-. LA TER ON, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE UNDER SEC TION 148 ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATIO N WING THAT ASSESSEE HAS TAKEN ACCOMMODATION ENTRY OF SHARE CAP ITAL FROM 3 ITA NO. 1832/DEL/2016 3 PARTIES, NAMELY, I) HILLRIDGE INVESTMENT LTD.; II) BRITE INDU. RESSOURCES LTD.; AND III) NISHA HOLDING LTD. FOR SU MS AGGREGATING TO RS. 90 LAKHS. IN RESPONSE TO THE SAME THE ASSESSEE FILED THE RETURN OF INCOME AND ATTENDED THE PROCEEDINGS FROM TIME TO TIME. THE ASSESSING OFFICER HAS OBSERVED THAT IN RESPONSE TO NOTICES U/S 133(6) NO REPLIES WERE RECEIVED. THOUGH ASSESSEE HA D FILED THE CONFIRMATIONS, AND OTHER DOCUMENTS BUT NONE OF THE DIRECTORS OF THESE COMPANIES WERE PRODUCED. ACCORDINGLY, HE COMP LETED THE ASSESSMENT AT AN INCOME OF RS.91,81,370/- AFTER TRE ATING THE SHARE CAPITAL AS UNEXPLAINED CREDIT U/S 68. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSE E FILED APPEAL BEFORE THE CIT(A), WHO VIDE ORDER DATED 28.01.2016 H AS CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN HIS DETAIL O RDER. 4. ON BEHALF OF THE ASSESSEE, LD. AR SUBMITTED T HAT THE ASSESSMENT IN THIS CASE WAS REOPENED BY ISSUE OF NO TICE UNDER SECTION 148. IN RESPONSE THERETO THE ASSESSEE HAS F ILE THE RETURN OF INCOME AND HAS ALSO ASKED FOR THE COPY OF THE REASO NS FOR ISSUE OF NOTICE UNDER SECTION 148. THEREAFTER, THE ASSESSEE HAS FILED OBJECTION TO THE REOPENING OF THE ASSESSMENT. THE A O DID NOT CONSIDER THE OBJECTIONS AND HAS COMPLETED THE ASSES SMENT IGNORING THE SAME. SUCH AN OBJECTION WAS ALSO RAISED BEFORE L D. CIT (A), BUT HE TOO HAS REJECTED THE ASSESSEES CONTENTION ON TH IS ISSUE. HE FURTHER SUBMITTED THAT THIS ISSUE OF NOT DISPOSING OF THE OBJECTION GOES TO THE ROOT OF THE REASSESSMENT PROCEEDING AND THE CONSEQUENT ITA NO. 1832/DEL/2016 4 ASSESSMENT ORDER PASSED BY THE AO. LD. AR FURTHER S UBMITTED THAT THIS ISSUE WAS AGITATED BEFORE THE CIT (A) WHO HAS R EJECTED THIS CONTENTION OF THE ASSESSEE AND ALSO IGNORING VARIOU S EVIDENCES SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS CONTENT ION. THE LD. AR FURTHER SUBMITTED THAT THE ADDITIONS ARE OTHERWISE U NTENABLE IN LAW IN VIEW OF THE VARIOUS EVIDENCES AND DOCUMENTS SUBMI TTED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. HOWEVER, HE CONTENDED THAT MATTER CAN BE RESTORED BACK TO THE FILE OF ASSESSIN G OFFICER TO DECIDE THE OBJECTIONS AND ALSO CONSIDER THE EVIDENCES. 5. IN REPLY THE LD. DR PLACED RELIANCE ON THE O RDER PASSED BY THE AO AND THE CIT (A). HE SUBMITTED THAT THE ASSESSMEN T HAS BEEN RIGHTLY OPENED BY THE AO AFTER FOLLOWING THE DUE PRO CEDURE. THE ASSESSEE HAD ASKED FOR THE COPY OF THE REASONS WHICH WERE SUPPLIED BY THE AO. THE CONTENTION OF THE ASSESSEE THAT OBJE CTION HAS NOT BEEN DISPOSED OF IS NOT CORRECT. FURTHER, HE SUBMIT TED THAT THE ADDITION HAS BEEN CONFIRMED ON MERIT BOTH BY THE CI T (A) AFTER EXAMINATION OF ALL EVIDENCES AND DOCUMENTS SUBMITTE D BY THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDER PASSED BY THE AUTHORITIES BELOW. THE LD. AR HA S RAISED THE ISSUE OF NOT DISPOSING OF THE OBJECTION TO THE REOP ENING OF THE ASSESSMENT BY THE AO. IN THIS REGARD, HE HAS INVITE D OUR ATTENTION TO THE LETTER WHICH WAS SUBMITTED TO THE AO DURING TH E COURSE OF THE ITA NO. 1832/DEL/2016 5 REASSESSMENT PROCEEDINGS AFTER REASONS HAVE BEEN SUPPLIED TO IT. FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT ASSES SING OFFICER HAS NOT DISPOSED OF THE OBJECTIONS. THE CIT (A) TOO HAS CONFIRMED THE ACTION OF THE AO DOUBTING THE FACT THAT ASSESSEE HA S FILED LETTER OBJECTING TO THE REOPENING OF THE ASSESSMENT. ON GO ING THROUGH THE PAPER BOOK, WE FIND THAT ASSESSING OFFICER HAS ISSU ED NOTICE FOR REOPENING OF THE ASSESSMENT. IN COMPLIANCE THERETO THE ASSESSEE FILED THE RETURN AND HAS ALSO ASKED FOR THE REASONS FOR REOPENING OF THE ASSESSMENT. THIS FACT IS NOT BEING DOUBTED BY T HE AO AND THE CIT (A). IF IT IS SO, THEN THE NORMAL PRESUMPTION WI LL BE THAT ASSESSEE HAVING SPECIFICALLY ASKED FOR THE REASONS THE NEXT COURSE OF ACTION WOULD BE TO FILE OBJECTION TO SUCH REASONS. THE CONTENTION OF THE ASSESSEE IS THAT IT HAS FILED OBJECTION TO THE REOPENING OF THE ASSESSMENT. CONSIDERING ALL THESE FACTS AND LOOKING TO THE FACT THAT, THE OBJECTIONS HAVE NOT BEEN DEALT WITH BY THE AO BE FORE PROCEEDING WITH THE REASSESSMENT PROCEEDING, WE ARE OF THE VIEW T HAT THERE IS IRREGULARITY IN FRAMING THE REASSESSMENT. THUS, IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTORE THE ISSUE TO T HE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISS UE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE AND AFTER FOLLOWING THE PROCEDURE MANDA TED BY THE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME-TAX OFFICER AND OTHERS 259 ITR 19 (SC); AND ALSO CONSIDER THE EVIDENCES FILED BY THE ASSESSEE. ITA NO. 1832/DEL/2016 6 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2011. SD/- SD/- (PRASHANT MAHARISHI) (AM IT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH NOV., 2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI