Smt. Sangeeta Chhabra, Delhi V. ITO, New Delhi

ITA 1853/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3389 (ITAT-DELHI)
• Duration Of Justice: 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Assessee Lawyers: VK SABHARWAL
• Keywords: Rule of consistency; Accommodation entries
• Section: 153A; 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.1853/DEL/2017 ASSESSMENT YEAR 2007-08 SMT. SANGEETA CHHABRA, PROP. M/S. CHHABRA METALS, D-6/12, 1 ST FLOOR, RANA PRATAP BAGH, DELHI. PAN: AEYPC 6682C VS. ITO, WARD-36(5), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE(S) BY : S/SHRI V.K. SABHARWAL, ADV. REVENUE BY : MS. BEDOBANI CHAUDHURI, SR.D.R. / DATE OF HEARING : 19/04/2017 / DATE OF PRONOUNCEMENT: 21/04/2017 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A)- 12, NEW DELHI, VIDE ORDER DATED 17.02.2017 FOR THE ASSESSMENT YEAR 2007- 08. 2. THE ASSESSEE HAS RAISED AS MANY THIRTEEN GROUNDS OF APPEAL. GROUND NO.1 AND 2 ARE WITH THE REGARD TO INITIATION OF RE- ASSESSMENT PROCEEDINGS U/S.147 OF THE ACT AND REST OF THE GROUNDS ARE WITH REGARD TO THE ADDITION ON ACCOUNT OF ALLEGED PURCHASES OF BOGUS MATERIAL AMOU NTING TO RS.39,74,698/- AND PAYMENT OF COMMISSION AMOUNTING TO RS.19,873/-. 3. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, ARGUED THAT THE SEARCH IN THE CASE OF SHRI VAIBHAV JAIN AND NAVNEET JAIN W ERE MADE U/S.132 OF THE ACT WHO HAVE BEEN INDULGING IN PROFITING ACCOMMODAT ION ENTRIES THROUGH THEIR THIRTY SEVEN PAPER ENTRIES AND CHARGING COMMI SSION FROM THE BENEFICIARY ON THE ACCOMMODATION ENTRIES PROVIDED. HE ARGUED THAT ITA NO.1853/DEL/2017 2 PROVISIONS OF SECTION 153C PROVIDES THAT PERSON REL ATING TO WHOM SOME MATERIAL IS FOUND IN SEARCH OF SOME OTHER PERSON IS ALSO BE ASSESSED U/S.153C OF THE ACT AND IN THE PRESENT CASE AS ALLEGED BY TH E AO AND THE LEARNED CIT(A) THAT A SEARCH U/S.132 WAS CONDUCTED ON SHRI VAIBHAV JAIN AND SHRI NAVNEET JAIN THEN ON THE BASIS OF SOME INFORMATION, THE ASSESSMENT U/S.153C SHOULD HAVE BEEN MADE ON THE ASSESSEE BY ISSUING NE CESSARY NOTICES, WHICH IN FACT HAS NOT BEEN DONE BUT THE RE-ASSESSMENT PRO CEEDINGS U/S.147 OF THE ACT WERE INITIATED BY ISSUING NOTICES U/S.148 OF TH E ACT. ACCORDINGLY, LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION OF VARIOUS COURTS OF LAW IN THIS REGARD. 4. MOREOVER, THE LEARNED COUNSEL ALSO ARGUED ON MER IT THAT THE SAME PARTIES HAVE BEEN PROVIDING THE MATERIALS FOR THE A SSESSMENT YEAR 2006-07 IN THE PRECEDING YEAR AS WELL AS IN THE FOLLOWING YEAR AND THEIR COPY OF ACCOUNT AND THE COPY OF ASSESSMENT ARE ON RECORD, AND THERE FORE, RULE OF CONSISTENCY SHOULD BE APPLICABLE IN VIEW OF THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NEO POLY PACK (P) LTD ., DATED 19 TH APRIL, 2000, REPORTED IN (2000) 112 TAXMAN 363 (DELHI). 5. LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THE FINDING OF THE AO WITH RESPECT TO THE REASONS W HICH ARE AT PAGES 1 AND 2 OF THE AOS ORDER ARE REPRODUCED HEREINBELOW: CON SEQUENT UPON RECEIPT OF INFORMATION FROM ADDL . COMMISSIONER OF INCOME TAX, CENTRAL ' RANGE-4, NEW DELHI, THAT SHRI VAIBHAV JAIN & SHRI NAVNEET JAIN HAVE INDULGED IN PROVIDING ACCOMMODATION ENTRIES TH ROUGH THEIR THIRTY SEVEN PAPER ENTITIES AND CHARGING COMMISSION FROM THE BEN EFICIARIES ON THE ACCOMMODATION ENTRIES PROVIDED ASSESSEE BEING ONE S UCH BENEFICIARY AS PER THE INFORMATION RECEIVED , NOTICE U/S 148 WAS ISSUED ON 20.03 . 2014 , WITH THE PRIOR APPROVAL OF THE ERSTWHILE JOINT COMMISSIONER INCOME TAX , RANGE-20 (NOW RANGE 36) , NEW DELHI . THE A . R., OF THE ASSESSEE VIDE LETTER DATED NIL FILED AT DAK ITA NO.1853/DEL/2017 3 COUNTER ON 09.06.2014 STATED THAT THE RETURN OF INC OME FILED 31.10.2007 DEC L AR I NG TAXABLE INCOME OF R5.2 , 72 , 996/ - MAY BE TREATED AS RETURN FIL E D RESPONSE TO NOT I CE U/S 148. THE A.R., OF THE ASSESSEE VIDE LETTER FILED ON 09.072014 RAISED O BJ EC TIONS A GA I NST THE ISSUE OF NOTICE U/S 148 WH I CH WERE DISPOSED OFF VIDE LETTER N O . ITO/WA R D 20(4)/ 2014-15/207 DATED 28 . 07 . 2014 . NOTIC E U/ S 143( 2 ) AND 142 ( 1) WAS I SS U ED O N 28.07 . 2014 . IN COMPLIANCE TO THE NO T ICES IS SUED SHRI A . K . AGG ARWAL, APPEARED AN D FURNISH ED THE DE T A I LS. 2. FACT LEADING THE IN ITI ATION OF PROCEEDING U/S. 148 ARE THAT DURING THE COURSE O F S EARCH AND SEIZURE AND ASSESSMENT PROCEED I NGS U/S 153A FOR THE A . Y. 2005-06 TO 2011- 12, SHRI VA I BHAV JAIN S/O SHRI NAVNEET JA IN HAS G I VEN STATEMENT ON OATH U/S 131 THAT HE HAS GIVEN ACCOMMODATION ENT R I ES THROU G H THIRTY SEVEN PAPER ENTITIES. THE L I ST O F FIRMS G I VIN G ACCOMMODATION ENTRIES AND THE L I ST OF ACCOMMODATION ENTRY RECIPIENTS HAVE BEEN PROV IDED. SHRI VA I BHAV JAIN AND SHRI NAVNEET JAIN HAD ADMITTED TO BE ENGAG ED IN THE BUSINESS OF PROVIDING PAPER/ACCOMMODATION ENTRY WITHOUT ANY DEL IVERY OF GOODS . IT IS ALSO SUBMITTED ON OATH THAT THE SALE BILLS (ACCOMMO DATION/PAPER BILLS) WERE DESTROYED , NO SOONER THE TRANSACTION RELATED TO THE RESPECTIVE BILLS WERE OVER . NO BOOKS OF ACCOUNTS WERE MAINTAINED FOR THE ACCOMM ODATION TRANSACT I ON . IT IS ALSO ADMITTED BY H I M THAT THE RESPECTIVE TRANSACTION OF RECEIPT OF CON SIDERATION IN LIEU OF ACCOMMODATION B I LLS I . E. CHEQUE BY THE BENEFICIARY PAR I T I ES ( TO WHOM THE CASH WAS REPAID BEFORE ENCASHMENT OF CHEQUE) WE RE DULY CREDITED I N BANK STATEMENT OF PAPER CONCERNS. THE ASSESSEE I . E . M/S . CHHABRA METALS IS ONE OF T HE BENEF I C I ARY WHO HAS AVA IL ED ACCOMMODATION ENT RI ES OF RS . 3,29 , 51 , 2101- AS PER THE DETA IL S PRO VI DED BY SHRI VAIBHAV JAIN . 7. THESE IN FACT ARE THE REASONS AND THE LEARNED DR IN FACT COULD NOT BRING THE REASONS OTHERWISE THAN AS REPRODUCED HERE INABOVE, AND THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE ASS ESSMENT PROCEEDINGS IN THE CASE OF VAIBHAV JAIN AND NAVNEET JAIN HAVE BEEN INI TIATED U/S.153C OF THE ACT, AND THEREFORE, IF IN VIEW OF THE DEPARTMENT TH E INFORMATION SO RECEIVED IS CONSIDERED AS A MATERIAL, THE ASSESSMENT IN THE PRESENT CASE SHOULD HAVE BEEN MADE U/S.153C AND ACCORDINGLY PROCEEDED U/S.15 3A TO 153C WHICH SHOULD HAVE BEEN INITIATED IN THE PRESENT CASE BUT THE PROCEEDINGS U/S.147/148 OF THE ACT HAS BEEN INITIATED WHICH IT SELF IS BAD IN LAW AND THE RELIANCE IS PLACED IN THE CASE OF RAJAT SUBHRA CHAT ERJEE, REPORTED IN (2016) 47 CCH 0135 (DEL TRI) AND THE RELEVANT FINDINGS AT PAGES 3 AND 4 OF THE ORDER ARE REPRODUCED HEREINBELOW: 5. THE LEARNED AR SUBMITT E D FURTHER TH A T THE REASONS RECORDED ARE N EI THE R ITA NO.1853/DEL/2017 4 SIGNED NOR IS THER E A N Y DATE ON W HICH THESE W ER E R ECO RD E D. HE CONTENDED THAT THE ACTION T A K E N B Y THE ASSESSING O FFIC E R U NDER SEC. 147 IS ALSO NOT TEN A BLE FOR THE SIMPLE REASON THAT PRO VISIONS OF S EC . 153C O F THE A C T A R E A PPLICABLE IN THIS CASE AND N O T THE PROVISIONS LAID DO W N UNDER SEC. 1 4 7 OF TH E ACT . HE SUBMIT TED TH AT IT IS AN ADMITTED POSITION OF TH E FACT AS IT IS ALSO EV IDENT FROM T H E ASSES SMENT O RD E R THAT TH E A SSESSIN G OFFICER HAS INIT IA T E D R E ASSES S M E NT PR OC E E DINGS IN TH E PRESE NT C AS E O N THE B AS I S OF INF O RMATI O N RECEI V ED B ASED ON T HE MATERI A L FOUND DURING THE COU RSE OF SEARC H FR O M TH E PR E MI SES OF R LH . TH E LEARNED AR CONT E NDED THAT PROVI S IONS O F SEC . 153C PR OVI D ES THAT PERSONS RE L ATING T O WHO M SOME MATERIAL IS FOUND I N SEA RCH OF SOME OTHER P ERSON SHOULD B E ASSE SSED UNDER SEC. 153C O F T H E A CT . THE PRO V ISIONS O F SEC TION 153C ARE NON OBSTANTIVE PRO V I S I O N S A ND SPE C IALL Y E XC LUDE S TH E O P E R ATION OF SEC. 1 47 OF TH E A C T , THEREFO R E , THE ASSESS ING OFF I C ER IN THE PRES E N T CASE HAS ERRED IN INVOKING THE PROV I SIONS OF S E C. 147 , I N STEAD OF 15 3C OF THE A C T . I F ACTION UNDER SEC . 147 IS PERMITTED O N THE BA S IS O F M A TERI A L FOUND I N TH E COURSE OF SEAR C H , THEN TH E PR OV I SI ON ' S OF SEC . 153 W OULD B E RE DUNDAN T . I N THIS REGA RD , HE PLAC E D RELIANCE ON THE FOL L OWING D E C ISI ON S TO S U PPOR T HIS ABOV E C O NT EN T IONS THAT NO ACTION UN DE R SE C . 147 IS PERMISSIBLE ON TH E BASIS OF M A TERIAL FOU N D IN SEARCH: I) ACIT V S . ARU N KA P UR - 140 ITJ 2 49 ( AMR I TSAR ); II ) C ARGO C L EA RING AGENCY VS. JCLT - 30 7 ITR L {GUJ . ); 6 . THE LEARNED SENIOR DR O N T HE OTHER HAND TRIED TO JUSTIFY THE ACTION OF THE ASSESSING OFFICE R IN INITIATING RE O PENING PROC E EDING S. HE SUBMITTED THAT THE ASSESSING OFFICER WAS IN POSSESSION OF SPECIFIC INF ORMATION THAT SWEAT EQUITY SHARES IN THE HANDS OF THE ASSESSEE WAS TAXABLE UND ER SECTION 28(I V ) O F T HE ACT. THE ASSESSING OFFICER HAD RECORDED HIS REAS ONS TO BELIEF ON PERUSAL OF LETTER OF DDIT AND RE C ORDS OF THE ASS ESSEE THA T INCO ME T O THE E X TENT OF RS.Z LACS HAS ESCAPED ASSESSMENT . 7 . ON HA V ING GONE THROUGH TH E DECISIONS C ITED ABOVE ESPECIALLY THE DECISION OF AMRITSAR BENCH IN THE CASE OF ITO V S. ARUN KUMAR KAPOOR (SUPRA) , WE FIND THAT IN THAT CASE AS IN THE P R ESENT CASE BEFORE US, REASSESSMENT WAS INITIATED ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN SEARCH OF THIRD PARTY AND THE VALIDITY OF THE SAME WAS CHALLENGED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS ) A ND THE L E A R NE D CI ' I'( A PPEALS) VITIATED THE PROCEEDINGS. THE SAME WAS QUES TIONED BY THE REVENUE BEFORE THE I TAT AND THE IT AT AFTER D I SCUSS I N G THE CASES OF THE PARTI E S A ND THE RE L E VA N T PRO V I SIO N S I N D E TA I L S HAS C OME TO THE C ONCLUSION THAT IN THE AB O VE S ITUATI O N , PRO V I S I O NS OF S EC . 153 C WERE AP PLI C A B L E WHI CH EXCLUDE S THE APPLICATION OF SE C TI O NS 1 4 7 AND 148 . OF THE ACT . THE ITAT H E LD TH E N O TICE IS SUE D UND E R SEC. 148 AND PROCEEDINGS UND E R SEC. 147 AS ILLEGAL AND VOID AB INITIO. IT WAS H E LD THAT A S SE SSI NG OFFICER HAVING NOT FOLLOWED PROCEDURE UNDER SEC. 15 3C, REASSESSMENT ORDER WAS RIGHTL Y QUA S HED B Y THE LEARNED CIT(APPEALS) . IN THE P R ESENT CASE BEFORE US , IT IS AN ADMITTED F A CT , AS A LSO EVIDENT F R OM THE REASONS RECORDED AND TH E ASSESS MENT ORDER THA T TH E INITIATION OF R EO P E NI NG P RO CEEDIN GS WAS MADE B Y THE ASSESSING OFFICER O N THE BASIS OF INFORMATION RECEI VED F RO M THE D I R EC T O RAT E OF INC OM E -TAX (INV. ) ON THE BAS IS O F SEA R CH & SE IZURE OP E R A TION CONDUCTED AT THE PR E MISES OF R O C K LAND G ROUP OF CA SES AN D ITA NO.1853/DEL/2017 5 T H E D OCU MENTS R ELATED TO THE ASSESSEE FO UND D UR ING TH E COU R SE O F SEARCH W E R E MADE AVA ILABL E TO THE ASSESS I N G OFFICER OF THE PRESENT AS S E SS EE. WE THU S R ESP EC T F ULL Y FOLLO WI NG TH E D E CIS I O N OF C O - O RDINATE BENCH OF TH E IT A T I N TH E CASE OF ACIT V S . ARUN K A PUR - 140 TTJ 24 9 ( A M RI T SA R ) H O L D TH A T PRO V I S I O N S O F S EC. 15 3C O F TH E AC T W ER E APPLICABL E I N TH E PR E S E NT C A SE FOR FRA M IN G TH E ASSESS M E NT , IF A N Y, WHIC H EXC LUD ES TH E A PP LICA TION OF S E C. 147 OF T H E AC T , H E N CE , N OTICE ISS U E D UND E R SEC . 14 8 OF TH E AC T AND ASSESS M E NT FRAM E D I N F URTHERANC E TH E R E T O UND ER SE C. 14 7 R EAD WI TH SE CTI ON 14 3 ( 3) OF TH E ACT ARE VO ID A B INITI O. TH E R EASSESS MENT IN QU E ST I O N IS A C C ORDIN G L Y QU A S H E D. TH E GRO UN D NO.1 I S ACCORDINGL Y A LL OWED. 8 . GROUND NO . 2 TO 5: IN T HE SE G R O UN DS, TH E V ALIDITY OF AD D ITION OF RS .2 1 A C S SUST A IN E D B Y THE L E ARN E D CI T (APPEALS ) MADE UN D E R T HE PRO V I S I O NS OF SECTION 28( I V ) HA S BE E N QU ES T ION E D. THESE G R O UND S DO N O T NEED ANY A D J UDI CAT ION A S TH E SA ME HA V E BECO M E IN FR U CTUO U S AND A CADEMIC IN VIEW OF TH E ABOVE FINDIN G TH A T R EASSESS MENT WA S V OID A B I NIT IO . T H E SE GROUNDS A RE ACCOR DI N G L Y DISPOSED OFF . 7.1 AND ALSO THE DECISION OF SMC BENCH OF ITAT IN I TA NO.99/D/2017 DATED 22.03.2017 WHEREIN THE SAID DECISION HAS BEEN RELIED UPON IN THE CASE OF RAJAT SUBHRA CHATERJEE, REPORTED IN (2016) 47 CC H 0135 (DEL TRI). IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE PROCEEDING S INITIATED U/S.148 OF THE ACT ARE AB INITIO AND ARE DIRECTED TO BE QUASHED. ACCORDINGLY, GROUND S NO.1 AND 2 OF THE ASSESSEE BEING THE LEGAL GROUNDS ARE A LLOWED. 7.2 SINCE THE ASSESSEE SUCCEEDS ON THE LEGAL GROUND S, THEREFORE, THE GROUNDS ON MERIT BECOME INFRUCTUOUS AND ARE OF ACAD EMIC IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 21 ST APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 21/04/2017