M/s. Laureate Educational Society, New Delhi V. ITO, New Delhi

ITA 1945/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69709 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .1945/DEL/2012 1945/DEL/2012 1945/DEL/2012 1945/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004- -- -05 0505 05 M/S LAUREATE EDUCATIONAL M/S LAUREATE EDUCATIONAL M/S LAUREATE EDUCATIONAL M/S LAUREATE EDUCATIONAL SOCIETY, SOCIETY, SOCIETY, SOCIETY, LU LULU LU- -- -16, PITAM PURA, 16, PITAM PURA, 16, PITAM PURA, 16, PITAM PURA, NEW NEW NEW NEW DELHI DELHI DELHI DELHI 110 088. 110 088. 110 088. 110 088. PAN : PAN : PAN : PAN : AAATL3689G. AAATL3689G. AAATL3689G. AAATL3689G. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, TRUST WARD TRUST WARD TRUST WARD TRUST WARD- -- -IV, IV,IV, IV, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL AGARWAL, ADVOCATE AND SHRI SHAILESH GUPTA, CA. RESPONDENT BY : SHRI S.N. BHATIA, DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D DD D.AGRAWAL, .AGRAWAL, .AGRAWAL, .AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXI, NEW DELHI DATED 23 RD FEBRUARY, 2012 FOR THE AY 2004-05. 2. GROUND NOS.2 TO 5 OF THE ASSESSEES APPEAL ARE AGAINST THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE INCOME- TAX ACT, 1961. 3. AT THE TIME OF HEARING BEFORE US, THE LEARNED COU NSEL FOR THE ASSESSEE REFERRED TO THE REASONS RECORDED FOR REOPENING O F ASSESSMENT WHICH IS AT PAGE 16 OF THE ASSESSEES PAPER BOOK AND SUBMI TTED THAT IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH C OURT IN THE CASE OF SIGNATURE HOTELS P.LTD. VS. ITO [2011] 338 ITR 0051 AND CIT VS. INSECTICIDES (INDIA) LTD. [2013] 357 ITR 330 (DELHI ), THE ABOVE ITA-1945/DEL/2012 2 REASONS RECORDED CANNOT BE SAID TO BE VALID REASONS FOR REOPENING OF ASSESSMENT. HE STATED THAT THE REASONS ARE VAGUE AND BASE D UPON NO MATERIAL AND SIMPLY ON THE BASIS OF SOME PRESUMPTION OF THE INVESTIGATION WING. HE, THEREFORE, SUBMITTED THAT TH E REOPENING OF ASSESSMENT SHOULD BE QUASHED. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF AUTHORITIES BELOW AND HE STATED THAT THE ASSESSING OFFICE R RECEIVED DEFINITE INFORMATION FROM THE DIRECTOR OF INCOME TA X (INVESTIGATION), NEW DELHI VIDE LETTER DATED 2 ND MARCH, 2006 AND THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF SUCH SPECIFIC AND DEFIN ITE INFORMATION. THEREFORE, THE REOPENING OF ASSESSMENT SHOULD BE UPHELD. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE REASON S RECORDED FOR INITIATING PROCEEDINGS UNDER SECTION 147 READ AS UNDE R:- REASON RECORDED FOR INITIATING PROCEEDINGS U/S 147 RE AD WITH SECTION 148 OF THE I.T. ACT IN THE CASE OF M/S L AUREATE EDUCATIONAL SOCIETY, A.Y. 2004-05. INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME TA X (INVESTIGATION), NEW DELHI VIDE HIS LETTER DATED 2.03 .2006 THAT M/S LAUREATE EDUCATIONAL SOCIETY HAS RECEIVED TH E FOLLOWING AMOUNTS IN ITS BANK A/C WITH UNITED BANK OF INDIA, PITAMPURA DURING THE PERIOD 01.04.2003 TO 31.03.200 4 RELEVANT TO THE ASSTT. YEAR 2004-05. DATE AMOUNT CHEQUE NO. NAME OF ENTRY PROVIDER BANK OF ENTRY PROVIDER 31.3.2003 50000 - RIGHT CHOICE CONSTRUT. SBBJ, NRR 31.3.2003 50000 - SPARROW MARKET PVT. SBBJ, NRR 31.07.2003 50000 - SRS VIJAY SALES SBBJ, NRR ITA-1945/DEL/2012 3 AS PER INFORMATION, THE AMOUNTS MENTIONED ABOVE ARE ONLY THE ACCOMMODATION ENTRIES RECEIVED BY THE ASSESSEE. THE AMOUNT OF RS.1,50,000/- IS NOT THE INCOME OF THE ASSESSEE FROM PROPERTY HELD UNDER TRUST NOR IN T HE NATURE OF VOLUNTARY CONTRIBUTIONS BUT INCOME OF THE ASSESSEE FROM UN-DISCLOSED SOURCES. I HAVE THEREFORE, REASON TO BELIEVE THAT INCOME OF RS.1,50,000/- CHARGE ABLE TO TAX FOR THE A.Y. 2004-05 HAS ESCAPED ASSESSMENT FOR TH E REASON, MENTIONED ABOVE. IT IS PROPOSED TO INITIATED PROCEEDINGS U/S 147 OF THE I.T. ACT, 1961. IF APPROVED, NOTICE U/S 148 OF THE I.T. ACT, 1961 WI LL BE ISSUED. 6. LET US EXAMINE THE VALIDITY OF ABOVE REASONS RECORD ED IN THE LIGHT OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT. IN THE CASE OF SIGNATURE HOTELS P.LTD. (SUPRA), HON'BLE JURISDICTIONA L HIGH COURT HELD AS UNDER:- HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGAT ION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN T HE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREME NTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVID ENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WH ICH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP CAPITAL OF RS.90 LAKHS AND WAS INCORPO RATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANEN T ACCOUNT NUMBER IN SEPTEMBER, 2001. THUS, IT COULD N OT BE ITA-1945/DEL/2012 4 HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO BE QUA SHED. 7. SIMILAR VIEW IS REITERATED BY THEIR LORDSHIPS IN T HE SUBSEQUENT DECISION IN THE CASE OF INSECTICIDES (INDIA) LTD. (SUPRA ), WHEREIN IT WAS HELD AS UNDER:- THE INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFFICER H AD INITIATED PROCEEDINGS UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961, WAS VAGUE AND UNCERTAIN AND CO ULD NOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERI AL ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORME D A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THE NOTICE OF REASSESSMENT WAS NOT VALID AND WAS LIABLE TO BE QUASHED. 8. IF THE REASONS RECORDED IN THE CASE OF THE ASSESSEE ARE TESTED IN THE LIGHT OF ABOVE OBSERVATION OF HON'BLE JURISDICTIO NAL HIGH COURT, WE FIND THAT THE REASONS DID NOT SATISFY THE REQUIREMENT O F SECTION 147. IN THE REASONS RECORDED, THE ASSESSING OFFICER SIMPLY MENTION ED THAT INFORMATION WAS RECEIVED FROM DIRECTOR OF INCOME TAX (INVESTIGATION) THAT THE ASSESSEE HAS RECEIVED THE SUM OF ` 1,50,000/-. HOWEVER, ON WHAT BASIS THE INFERENCE IS DRAWN THAT THE ABOVE AMOUN T RECEIVED IS ACCOMMODATION ENTRY RECEIVED BY THE ASSESSEE HAS NEITHER BEEN MENTIONED IN THE ASSESSMENT ORDER NOR THE LETTER OF DIT (INVESTIGATION) IS ANNEXED TO SUCH REASONS RECORDED. IN THE ASSESSMENT OR DER, THE ASSESSING OFFICER HAS REPRODUCED THE STATEMENT OF ONE SHR I MAHESH GARG AND IT IS CLAIMED THAT SHRI MAHESH GARG IS THE EN TRY PROVIDER AND THE CONCERNS FROM WHOM THE CHEQUE IS RECEIVED BY THE ASSESSEE IS BELONGING TO MAHESH KUMAR. HOWEVER, NO BASIS FOR SUCH INFERENCE IS GIVEN. MOREOVER, IN THE STATEMENT, EVEN MAHESH GARG DID NOT MENTION ANYWHERE THAT HE PROVIDED ACCOMMODATION ENTRY TO TH E ASSESSEE WHICH IS AN EDUCATIONAL SOCIETY. IN VIEW OF THE ABOV E, WE, RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF HON'BLE JURISDICTIONA L HIGH COURT, HOLD ITA-1945/DEL/2012 5 THAT THE INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS UNDER SECTION 147 WAS VAGUE AND UNCERTAIN AND, THEREFORE, THE ABOVE DECISIONS OF HON'BLE JURISDICTION AL HIGH COURT WOULD BE SQUARELY APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE QUASH THE NOTICE ISSUED UNDER SECTION 147 OF THE ACT AND CONSEQUENTLY, THE ASSESSMENT ORDER PASSED IN PURSUANCE THER ETO IS ALSO QUASHED. 9. ONCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHED, THE ADDITIONS WHICH ARE DISPUTED BY THE ASSESSEE IN FURTHER G ROUNDS OF APPEAL DO NOT SURVIVE AND, THEREFORE, NO ADJUDICATIO N OF THE REMAINING GROUNDS IS REQUIRED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2013. SD/- SD/- ( (( (ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 31.12.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S LAUREATE EDUCATIONAL M/S LAUREATE EDUCATIONAL M/S LAUREATE EDUCATIONAL M/S LAUREATE EDUCATIONAL SOCIETY, SOCIETY, SOCIETY, SOCIETY, LU LULU LU- -- -16, PITAM PURA, 16, PITAM PURA, 16, PITAM PURA, 16, PITAM PURA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 088. 110 088. 110 088. 110 088. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, TRUST WARD TRUST WARD TRUST WARD TRUST WARD- -- -IV, NEW DELHI. IV, NEW DELHI. IV, NEW DELHI. IV, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR