Pure Plast Ltd., New Delhi V. Pr. CIT, New Delhi

ITA 1838/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97161 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHAND; VIKRAM SAHAY
• Keywords: Reopening of assessment; Application of stay; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 133A; 147; 68; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 1838 /DEL/201 5 ASSESSMENT YEAR: 2006 - 07 PURE PLAST LTD., A - 100/2, VS. PR. CIT, DELHI - 07 WAZIRPUR, INDUSTRIAL AREA NEW DELHI NEW DELHI (PAN: AAACP8144R ) (APPELLANT) (RESPONDENT) AND S.A. NO. 380/DEL/2015 (IN ITA NO. 1838/DEL/2015) ASSESSMENT YEAR: 2006 - 07 PURE PLAST LTD., A - 100/2, VS. PR. CIT, DELHI - 07 WAZIRPUR, INDUSTRIAL AREA NEW DELHI NEW DELHI (PAN: AAACP8144R ) (APPLICANT) (RESPONDENT) APPELLANT BY : SH. C.S. ANAND, ADV. RESPONDENT BY : SH. RAMESH CHAND, CIT - DR & SH. VIKRAM SAHAY, SR. DR DATE OF HEARING: 11.08.2015 DATE OF PRONOUNCEMENT: 04.09.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX - VII, NEW DELHI, DATED. 12.03.2015 PASSED FOR THE ASSESSMENT YEAR 2006 - 07, UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 . THE ASSESSEE HAS ALSO FILED STAY APPLICATION NO. 380/DEL/2015 IN ITA NO. 1838/DEL/2015, SEEKING STAY OF THE ASSESSMENT PROCEEDING S . THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 2 1) THAT THE ID. PR. CIT, DELHI - D7, NEW DELHI HAS WRONGLY ASSUMED JURISDICTION TO INITIATE PROCEEDINGS U/S 263. 2) THAT THE ORDER PASSED U/S 263 BY THE ID. PR. CIT, DELHI - D7, NEW DELHI, IS BAD ON VARIOUS FACTUAL & LEGAL GROUNDS. THE OBSERVATIONS OF THE ID. PR. CIT, DELHI - 07, NEW DELHI ARE EITHER FACTUALLY INCORRECT OR LEGALLY UNTENABLE . 3) THAT THE ID. PR. CIT, DELHI - D7, NEW DELHI HAD ERRED IN INITIATING PROCEEDINGS U /S 263 ON THE BASIS OF INCORRECT FACTS. THE OBSERVATIONS OF THE ID. PR. CIT, DELHI - 07, NEW DELHI ARE EITHER FACTUALLY INCORRECT OR LEGALLY UNTENABLE. 4) THAT THE ID. PR. CIT, DELHI - D7, NEW DELHI, IS INCORRECT IN HOLDING THAT THE ORDER PASSED BY THE AO IS ER RONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE. THE OBSERVATIONS OF THE ID. PR. CIT, DELHI - 07, NEW DELHI ARE EITHER FACTUALLY INCORRECT OR LEGALLY UNTENABLE. 5) THAT ON THE FACTS/CIRCUMSTANCES OF THE CASE AND UNDER THE LAW, ID. PR. CIT, DELHI - D 7, NEW DELHI HAS ERRED IN SENDING THE MATTER BACK TO THE FILE OF THE ID. A.O., WITH THE REMARKS 'THE MATTER IS REFERRED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE FACTS, VERIFICATION OF CLAIM OF THE ASSESSEE IN THE LIGHT OF POSITION OF LAW ENUN CIATED ABOVE AND TO PASS AN APPROPRIATE ORDER AFTER GIVING DUE OPPORTUNITIES TO THE ASSESSEE'. THE OBSERVATIONS OF THE ID. PR. CIT, DELHI - 07, NEW DELHI ARE EITHER FACTUALLY INCORRECT OR LEGALLY UNTENABLE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE APPELLANT IS A COMPANY. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07 WAS FILED , DECLARING TOTAL INCOME OF RS. 37,502/ - . THE RETURN WAS NOT SELECTED FOR SCRUTINY ASSESSMENT. SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOT ICE DATED 29 TH MARCH, 2012 UNDER SECTION 148 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) . THE REASSESSMENT NOTICE WAS ISSUED BASED ON THE STRENGTH OF THE INFORMATION FOUND CONSEQUENT UPON THE SURVEY OPERATION UNDER SECTION 133A OF THE ACT IN THE CASE OF SH. ASEEM KUMAR GUPTA AND HIS GROUP. AS PER THE SAID INFORMATION, THE APPELLANT WAS ANOTHER BENEFICIARY OF ACCOMMODATION ENTRY TO THE EXTENT OF RS. 4 LAKHS RECEIVED VIDE CHEQUE NO. 3 797383 DRAWN ON ABN AMRO BANK ON 3 RD FEBRUARY, 2 006 ISSUED BY M/S MODERA TE CREDIT CORPORATION LTD. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ARE AS FOLLOWS: REASONS FOR RE - OPENING THE CASE IN THE CASE OF M/S PURE PLAST LTD., A.Y. - 2006 - 07 INFORMATION HAS BEEN RECEIVED THAT A SURVEY OPERATION U /S 133A WAS CONDUCTED BY DEPARTMENT IN THE CASE OF SH ASEEM KUMAR GUPTA AND HIS GROUP AT VARIOUS RESIDENTIAL AND BUSINESS PREMISES. WHEN CONFRONTED WITH THE EVIDENCES GATHERED, SHRI ASEEM KUMAR GUPTA ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES TO SEVER AL BENEFICIARIES WITH THE HELP OF SEVERAL BANK ACCOUNTS OPENED IN THE NAME OF SEVERAL PROPRIETARY CONCERNS AND COMPANIES IN WHICH EITHER HE HIMSELF, OR HIS EMPLOYEES, WERE DIRECTOR OR PROPRIETOR. THE GENERAL MODUS OPERANDI OF SH ASEEM KUMAR GUPTA WAS TO ACCEPT CASH FROM THE BENEFICIARIES. THE CASE WAS DEPOSITED IN THE BANK ACCOUNTS AND CHEQUES WERE THEN ISSUED TO THE BENEFICIARIES. IN ORDER TO DISGUISE HIS TRANSACTIONS AS GENUINE, SHRI ASEEM KUMAR GUPTA HAS BEEN FOLLOWING 'LAYERING' OF ACCOUNTS, WHEREBY C ASH WAS INTRODUCED IN VARIOUS BANK ACCOUNTS IN THE NAMES OF PROPRIETARY CONCERNS OF HIS EMPLOYEES AND BENEFICIARIES WERE ISSUED CHEQUES FROM ONE OF HIS INTERMEDIARY COMPANY AFTER ROUTING THE FUNDS AMONG SEVERAL INTERMEDIARIES. THE ABOVE NAMED ASSESSEE WA S FOUND TO BE A BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM SH ASEEM KUMAR GUPTA/CONCERNS OPERATED BY HIM DURING THE PERIOD RELEVANT TO A.Y, 2006 - 07 AS PER THE FOLLOWING SPECIFIC DETAILS : - NAME OF THE ACTUAL BENEFICIARY AMOUNT (RS.) CHEQUE NUMBER DATE OF TRANSACTION BANK DETAIL MEDIATORY PURE PLAST LTD. 400,000 797383 03.02.2006 ABN AMRO BANK C.P., NEW DELHI MODERATE CREDIT CORP. LTD. IN VIEW OF THE ABOVE FACTS AND THE FACTS AVAILABLE FROM THE RECORD, I HAVE REASON TO BELIEVE THAT THE ASSESSEE'S INCOME AMOUNTING TO RS. 4,00,000/ - WHICH WAS CHARGEABLE TO TAX, HAS ESCAPED FROM THE ASSESSMENT FOR ASSTT. YEAR 2006 - 07. I AM ALSO SATISFIED TH AT IT WAS ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR 4 ABOVE ASSESSMENT YEAR, THAT THE INCOME CHARGEABLE TO TAX TO THE TUNE OF RS.4,00,000/ - HAS ESCAPED ASSESSMENT WIT H THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. SINCE, FOUR YEARS HAS BEEN EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, AND NO SCRUTINY ASSESSMENT WAS COMPLETED U/S 143(3) IN THIS CASE FOR THE SAID ASSESSMENT YEAR, THE REASONS RECORDED ABOVE FOR THE PURPOSE OR REOPENING OF ASSESSMENT ARE PUT UP FOR KIND SATISFACTION OR LD. ADDL. COMMISSIONER OF INCOME TAX. RANGE - 14, NEW DELHI IN TERMS OF THE PROVISO TO SECTION 151(2) OF THE INCOME TAX ACT, 1961. 2.1 THE REASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, WARD 14(4), NEW DELHI ON 27.12.2012 UNDER SECTION 143 (3) R.W.S. 147 OF THE ACT AT A TOTAL INCOME OF RS. 1,01,300/ - WITHOUT MAKING ANY ADDITION O N ITEM FOR WHICH REASONS WERE RECORDED FOR RE - OPENING ASSESSMENT. SUBSEQUENTLY, THE LD. CIT(A) HAD ISSUED A SHOW CAUSE NOTICE DT. 6 TH JANUARY, 2015 UNDER SECTION 263 OF THE ACT CALLING UPON THE APPELLANT TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER PASSED CANNOT BE SET ASIDE AS THE ASSESSING OFFICER HAD FAILED TO EXAMINE THE GENUINENESS O F THE SHARE APPLICATION MONEY RECEIVED OF RS. 43 LAKHS. IN RESPONSE TO THIS SHOW CAUSE, THE APPELLANT HAD SUBMITTED THAT THE VERY SAME ISSUE WAS EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF FRAMING OF THE REASSESSMENT AND THE DETAILS SUCH AS, NAMES, AD DRESS, CONFIRMATION OF THE PARTIES FROM WHOM THE SHARE APPLICATION MONEY WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION WERE FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF REASSESSMENT PROCEEDINGS. LD. CIT(A) BRUSHING ASIDE THIS EXPLANATION REND ERED BY THE APPELLANT HAD PASSED AN ORDER UNDER SECTION 263 OF THE ACT, DT. 12 MARCH, 2015, SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH 5 EXAMINATION OF THE ISSUE OF RECEIPT OF SHARE APPLICATION MONEY . BEING AGGRIEVED, THE APPELLA NT IS BEFORE US WITH THE PRESENT APPEAL. 3. THE LD. COUNSEL FOR THE APPELLANT MADE A VEHEMENT ARGUMENT THAT THE ISSUE OF RECEIPT OF SHARE APPLICATION MONEY WAS EXAMINED BY THE ASSESSING OFFICER AND AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE SUCH AS THE CONFIRMATION LETTERS FROM THE SHARE APPLICANTS ETC., THE ASSESSING OFFICER HAD COME TO CONCLUSION THAT THE RECEIPT OF SHARE APPLICATION MONEY WAS A GENUINE TRANSACTION AND THEREFORE, CHOSE NOT TO MAKE ANY ADDITION UNDER SECTION 68 OF THE ACT. THERE FORE, HE SUBMITTED THAT THE LD. COMMISSIONER IN EXERCISE OF POWER UNDER SECTION 263 CANNOT SUBSTITUTE HIS OPINION IN THE PLACE OF THAT OF THE ASSESSING OFFICER , IN SUPPORT OF HIS CONTENTION THE VERY SAME ISSUE WAS EXAMINED BY THE ASSESSING OFFICER . HE DRAW N OUR ATTENTION TO THE QUESTIONNAIRE DT. 2 ND JULY, 2012 ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF REASSESSMENT PROCEE DINGS WHEREIN VIDE QUERY NO S . 18 TO 20, FOLLOWING QUESTIONS WERE RAISED: 18. PLEASE FURNISH A CHART OF OPENING BALANCE OF SHARE APPLICATION MONEY RECEIVED DURING THE YEAR PAID BACK DURING THE YEAR AND CLOSING BALANCE. 19. DETAILS OF SHARE APPLICATION MONEY INTRODUCED DURING THE YEAR WITH NAMES/ADDRESSES/PROOFS OF IDENTITY/WARD - CIRCLE/PAN NO./CONFIRMATIONS OF SUBSCRIBERS. GIV E A CHART OF OPENING BALANCE OF SHARE APPLICATION MONEY, RECEIVED DURING THE YEAR, PAID BACK DURING THE YEAR AND CLOSING BALANCE. 20. DETAILS OF SHARE CAPITAL/SHARE APPLICATION MONEY/SHARE PREMIUM RECEIVED DURING THE YEAR WITH NAMES/ADDRESSES/PROOFS OF ID ENTITY/WARD - CIRCLE/PAN/CONFIRMATIONS OF SUBSCRIBERS. 6 4. HE ALSO DRAWN OUR ATTENTION TO PAGE NO. B - 1 OF THE PAPER BOOK WHEREIN , IN RESPONSE TO THE QUERIES RAISED VIDE QUERY NOS. 18 TO 20, THE REPLY WAS FILED BY THE ASSESSEE . 5. ON THE OTHER HAND, THE LD . CIT - DR PLACED RELIANCE ON THE ORDER OF CIT PASSED UNDER SECTION 263 OF THE ACT. 6. WE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. IN THIS APPEAL, WE WERE CALLED UPON TO ADJUDICATE WHETHER THE CIT HAD VALIDLY EXERCISED HIS POWER OF R EVISION VESTED UNDER THE PROVI SIONS OF SECTION 263 OF THE ACT OR NOT. FROM THE REASONS RECORDED FOR ISSUING OF NOTICE UNDER SECTION 148 OF THE ACT, IT IS CLEAR THAT THE NOTICE WAS ISSUED TO ASSESS THE AMOUNT OF RS. 4 LAKHS RECEIVED FROM M/S MODERATE CREDIT CORPORATION LTD. IN THE FORM OF SHARE APPLICATION MONEY AS IT IS B ELIEVED TO HAVE BEEN ACCOMMODATION ENTRIES RECEIVED FROM ONE SH. ASIM KUMAR GUPTA. AF TER CONSIDERING THE MATERIAL ON RECORD MADE AVAILABLE DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, TH IS ITEM WAS NOT ADDED BY THE ASSESSING OFFICER WHILE FRAMING THE REASSESSMENT ORDER. THEN THE QUESTION THAT CROPS UP FOR OUR CONSIDERATION IS WHETHER THE CIT IN EXERCISE OF HIS POWERS VESTED UNDER SECTION 263 OF THE ACT , CAN REVISE THAT REASSESSMENT ORDER WITH THE INTENTION OF BRINGING INTO THE TAX SOME OTHER ITEMS WHICH DO NOT FORM PART OF THE REASONS RECORDED AT THE TIME OF ISSUING NOTICE UNDER SECTION 148. THE IDENTICAL ISSUE HAD COME UP BEFORE THE HON BLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. SOFTWARE CONSULTANTS, [2012] 21 TAXMANN.COM 155 (DEL): 341 ITR 240 , WHEREIN THE HON BLE JURISDICTIONAL HIGH COURT AFTER CONSIDERING THE 7 RATIO LAID DOWN BY THE HON BLE HIGH COURT IN THE CASE OF RANBAXY LABORATORY LTD. [2 011] 336 ITR 136 (DEL.) ; AND THE HON BLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD., [2011] 331 ITR 236 (BOM.) ; AND THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SHRI RAM SINGH, [2008] 306 ITR 343 (RAJ.) , HELD THAT WH EN NO ADDITION WAS MADE REGARDING THE ITEM IN RESPECT OF WHICH REASONS WERE RECORDED FOR REOPENING OF THE ASSESSMENT , THE COMMISSIONER COULD NOT EXERCIS E HIS JURISDICTION UNDER SECTION 263 OF THE ACT IN ORDER TO BRING TO TAX OTHER ITEMS OF ADDITIONS. THE HON BLE JURISDICTIONAL HIGH COURT HELD AS FOLLOWS VIDE PAR A NO. 14 OF THE SAID DECISION: 14. FOR EXERCISE OF POWER UNDER SECTION 263 OF THE ACT, IT IS MANDATORY THAT THE ORDER PASSED BY THE ASSESSING OFFICER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION FOR THE REASONS RECORDED AT THE TIME OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THIS POSITION IS NOT DISPUTED AND DISTURBED BY THE COMMISSIONER OF INCOME - TAX I N HIS ORDER UNDER SECTION 263 OF THE ACT. SEQUITUR IS THAT THE ASSESSING OFFICER COULD NOT HAVE MADE AN ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 147/148. ACCORDINGLY, THE ASSESSMENT ORDER IS NOT ERRONEOUS. THUS, THE COMMISSIONER OF INCOME - TAX COULD NOT HAVE EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT. 7 . RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE CASE, WE HOLD THAT IN THE PRESENT CASE ALSO THE COMMISSIONER OF INCOME TAX IS NOT JUSTIFIE D IN EXERCISING THE POWER UNDER SECTION 263 OF THE ACT. HENCE, WE QUASH THE ORDER PASSED BY THE PR. COMMISSIONER OF INCOME TAX - VII, NEW DELHI, UNDER SECTION 263 OF THE ACT. HENCE, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN FULL. 8 8 . SINCE WE HAVE ALRE ADY ALLOWED THE APPEAL OF THE ASSESSEE ON MERIT AS ABOVE , THE STAY APPLICATION NO. 380/DEL/2015 FILED IN ITA NO. 1838/DEL/2015 HAS BECOME INFRUCTUOU S . 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER , 2015. S D / - S D / - ( I.C. SUDHIR ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 T H SEPTEMBER , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI