JISL Irrigation Pvt.Ltd., Hyd, Hyderabad V. ITO, Ward-2(1), Hyderabad, Hyderabad

ITA 207/HYD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6014 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-03-2015
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S K PODDAR
• Keywords: Reopening of assessment; Accommodation entries
• Section: 143(3); 153A; 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 207/HYD/2015 ASSESSMENT YEAR: 2006-07 M/S. JISL IRRIGATION PRIVATE LIMITED, HYDERABAD [PAN: AAACJ8763G] VS INCOME TAX OFFICER, WARD-2(1), RANGE-2, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S.K. PODDAR, AR FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEARING : 20-03-2017 DATE OF PRONOUNCEMENT : 31-03-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDERABAD D ATED 15-12-2014. THE ISSUES IN THIS APPEAL ARE WITH REFE RENCE TO REOPENING OF ASSESSMENT AND ADDITION OF RS. 45 LAKHS BEING THE SHARE CAPITAL RECEIVED. 2. BRIEFLY STATED, ASSESSEE IS IN THE BUSINESS OF MANU FACTURING IRRIGATION RELATED PRODUCTS AND HAS FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF NIL. THE SAME WAS ACCEPTED U/S. 143(1) OF THE INCOME TAX ACT [ACT] ON 05-07-2007. SUBSEQUENTLY , ASSESSING OFFICER (AO) HAS RECEIVED COMMUNICATION FR OM DIT(INVESTIGATION)-II, NEW DELHI THAT SHRI VIRENDER KUM AR JAIN AND I.T.A. NO. 207/HYD/2015 M/S. JISL IRRIGATION PRIVATE LIMITED :- 2 - : SURENDER KUMAR JAIN AND KIRAN KUMAR JAIN, WHO WERE SEARCHED AS A PART OF JAIN GROUP OF COMPANIES HAVE PROVIDED ACCOMMODATION ENTRIES FROM VARIOUS PAPER AND DUMMY CO MPANIES OF JAIN GROUP IN LIEU OF CASH. SINCE ASSESSEE-COM PANY RECEIVED SHARE CAPITAL FROM THE SAID GROUP, THEY ARE TO BE CONSI DERED IN THE HANDS OF ASSESSEE. THE AO ACCORDINGLY RECORDED THE SATISFACTION AND REOPENED THE ASSESSMENT BY ISSUANCE OF NOTICES U/S . 148 IN MARCH, 2013. ASSESSEE REPLIED TO THE AO THAT RETURN O RIGINALLY FILED ON 30-11-2006 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. IT SEEMS THE AO HAS NOT ONLY COMMUNI CATED THE REASONS FOR REOPENING BUT ALSO FURNISHED THE COPY OF THE COMMUNICATION RECEIVED FROM DELHI. ASSESSEE IN THE C OURSE OF ASSESSMENT PROCEEDINGS SEEMS TO HAVE FILED CERTAIN OBJ ECTIONS FOR REOPENING THE ASSESSMENT. AO MADE ENQUIRIES WITH REFE RENCE TO THE INVESTMENTS MADE BY THREE COMPANIES OF JAIN GROUP, M/S. STELLAR INVESTMENTS LTD.,( RS. 10 LAKHS), M/S. WORLDLINK TELECOM LTD., (RS. 10 LAKHS) AND M/S. HILLRIDGE INVESTMENTS LTD., (RS. 25 LAKHS). INITIALLY, WHEN NOTICES U/S. 133(6) WERE SE NT, THEY WERE RETURNED UNSERVED/UNCLAIMED. THEREAFTER, ASSESSEE I SSUED FRESH ADDRESSES AND AO AGAIN SENT NOTICES TO THE ABOVE PARTIES . SINCE THERE WAS NO REPLY RECEIVED BY THE TIME THE ASSESSMENT W AS COMPLETED, THE AO WAS OF THE OPINION THAT THE INVESTMENTS ARE NOT MADE BY THE SAID COMPANIES WHICH REMAIN UNEXPLAINED. HE ALSO DOWNLOADED THE BALANCE SHEETS OF M/S. STELLAR INVESTMEN TS LTD., IN WHICH INVESTMENT WAS SHOWN AT NIL. THE OTHER TWO COMPA NIES HAVE SHOWN MORE INVESTMENTS, THE DETAILS OF WHICH ARE NOT AVAILABLE. THEREFORE AO COULD NOT VERIFY THAT INVESTME NTS IN ASSESSEE-COMPANY WERE ALSO INCLUDED IN THE ABOVE AMO UNT OF INVESTMENTS AS SHOWN IN THE BALANCE SHEET. SINCE THE INVESTOR I.T.A. NO. 207/HYD/2015 M/S. JISL IRRIGATION PRIVATE LIMITED :- 3 - : COMPANIES SHIED AWAY FROM APPEARING AND PRODUCING R EQUIRED INFORMATION, THE DETAILED TRANSACTIONS OF ASSESSEE, THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS , AO WAS OF THE OPINION THAT THESE ENTRIES SHOWN BY ASSESSEE ARE NOT GENUINE AND ACCORDINGLY THE ENTIRE AMOUNT OF RS. 45 LAKHS WAS BRO UGHT TO TAX. 3. BEFORE THE LD.CIT(A), ASSESSEE CONTESTED THE REOPE NING OF ASSESSMENT, INCLUDING THE OBJECTION THAT AO DID NOT FO LLOW THE PROCEDURE U/S. 151 IN TAKING APPROVALS. LD.CIT(A) H OWEVER, GAVE A FINDING THAT ON EXAMINATION OF RECORD, IT WAS NOTICED T HAT AO HAS FOLLOWED PROPER PROCEDURE AND ACCORDINGLY THE SAID G ROUND WAS REJECTED. WITH REFERENCE TO REOPENING, SINCE THE INFO RMATION HAS BEEN RECEIVED FROM INVESTIGATION UNIT IN DELHI, AND SI NCE NO SCRUTINY ASSESSMENT WAS COMPLETED EARLIER IN THE ASSE SSEES CASE FOR THIS ASSESSMENT YEAR, INVOKING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JAVERI S TOCK BROKERS P. LTD VS. CIT [291 ITR 500], HE REJECTED THE CONTENTIONS ON THE ISSUE OF REOPENING U/S. 147. 4. COMING TO THE MERITS, EVEN THOUGH ASSESSEE CONTENDED THAT THOSE COMPANIES HAVE REPLIED AND WERE RECEIVED BY TH E AO SUBSEQUENT TO THE COMPLETION OF ASSESSMENT , LD.CIT(A) E XTRACTED THE ORDER OF ASSESSMENT AND RELYING ON VARIOUS LEGAL PRINCIPLES CONFIRMED THE ORDER OF AO. ASSESSEE IS AGGRIEVED. 5. LD. COUNSEL REFERRING TO THE ISSUE OF REOPENING S UBMITTED THAT REOPENING WAS BASED ON SUSPICION AND SURMISES AND N OWHERE THE ASSESSEE-COMPANY WAS CLEARLY STATED IN THE STATEMENT OF SHRI JAIN. HE RELIED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE I.T.A. NO. 207/HYD/2015 M/S. JISL IRRIGATION PRIVATE LIMITED :- 4 - : OF CIT VS. VINIYAS FINANCE & INVESTMENT (P) LTD., FOR THE PROPOSITION THAT THE ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF SUSPICION ALONE. LD. COUNSEL ALSO QUESTIONED THE REOPENING AFTER FOUR YEARS WHEN THERE IS NO FRESH INFORMATION A ND SUBMITTED THAT IN THE CASE OF OTHER THREE COMPANIES, WHO ARE THE IN VESTORS, THE AO ACCEPTED THE INCOMES RETURNED AND THERE WERE NO ASSESSMENTS EITHER U/S. 153A OR U/S. 153C IN THOSE CAS ES. LD. COUNSEL VEHEMENTLY ARGUED THAT REOPENING IS BAD IN LAW . 6. COMING TO THE ISSUE OF MERITS, IT WAS SUBMITTED THAT DEPARTMENT HAS ACCEPTED THE INCOMES RETURNED BY THOSE COMPANIES, THEIR BALANCE SHEET AND THOSE COMPANIES ALS O SENT CONFIRMATION LETTERS TO THE AO, BUT WERE RECEIVED BY HIM AFTER THE COMPLETION OF ASSESSMENT ON 19-02-2014. IT WAS SUBMITTE D THAT LD.CIT(A) DID NOT EXAMINE THE MERITS BUT DECIDED THE ISS UE ON LEGAL PRINCIPLES ONLY. HE HAS NO OBJECTION IF MATTER IS SEN T BACK TO THE AO FOR EXAMINATION OF THE FACTS. 7. LD.DR WHILE SUPPORTING THE ORDERS OF THE AO AND CIT (A) SUBMITTED THAT REOPENING IS PROPER AND ON MERITS, AO DID NOT RECEIVE ANY CONFIRMATION BY THE TIME ASSESSMENT WAS CO MPLETED, INSPITE OF DUE OPPORTUNITY GIVEN. 8. I HAVE CONSIDERED THE ISSUE AND PERUSED THE DOCUME NTS PLACED ON RECORD. AS FAR AS REOPENING IS CONCERNED , THERE IS NO ASSESSMENT U/S. 143(3) THEREFORE, THE PROVISO TO SECTI ON 147 THAT THERE SHOULD BE FAILURE ON THE PART OF ASSESSEE IN FUR NISHING NECESSARY INFORMATION DOES NOT APPLY. AS PERUSED FRO M THE ASSESSMENT ORDER AND ALSO FROM THE ORDER OF THE CIT(A ), IT IS I.T.A. NO. 207/HYD/2015 M/S. JISL IRRIGATION PRIVATE LIMITED :- 5 - : EVIDENT THAT AO HAS RECEIVED INFORMATION FROM DIT-II, D ELHI REGARDING THE ACCOMMODATION ENTRIES AND THAT INFORMATION IS THE BASIS FOR REOPENING. CIT ALSO GAVE A FINDING THAT PR OPER PROCEDURE AS PER SECTION 151 WAS ALSO FOLLOWED BY THE AO, EVEN THOUGH WITHOUT GIVING THE SPECIFIC DETAILS OF DATE OF PROPOSA L AND ACCEPTANCE BY THE SENIOR AUTHORITY. NOTHING WAS BROUGH T ON RECORD TO COUNTER THE FINDINGS OF THE AO AND CIT(A), E XCEPT STATING THAT REOPENING WAS BASED ON SUSPICIOUS NATURE OF INF ORMATION. NEITHER THE REASONS FOR REOPENING NOR THE STATEMENTS PRO VIDED TO ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS WERE PLACED ON RECORD. EVEN THE COPY OF THE OBJECTIONS STATED TO HAVE B EEN FILED BEFORE THE AO WERE NOT PLACED ON RECORD. IN THE ABSEN CE OF ANY CONTRARY EVIDENCE, THE FINDINGS OF THE AO AND CIT(A) CANNOT BE DISTURBED. IN VIEW OF THAT, I AM OF THE OPINION THAT TH ERE IS NO MERIT IN THE GROUNDS RAISED WITH REFERENCE TO THE REOPE NING OF ASSESSMENT AND NOT FOLLOWING THE PROCEDURE U/S. 151. IN THE ABSENCE OF ANY EVIDENCE PLACED BY ASSESSEE ON RECOR D, THE FINDINGS GIVEN BY THE AO AND CIT(A) IN THE ASSESSMENT ORDER A ND APPELLATE ORDER ARE UPHELD. THE GROUNDS PERTAINING TO REOPENIN G ARE ACCORDINGLY REJECTED. 9. COMING TO THE MERITS OF ADDITION OF RS. 45 LAKHS, ASSESSEE DID FILE NOT ONLY THE COPIES OF THE CONFIRMATIONS RECE IVED FROM THE ABOVE SAID THREE COMPANIES BUT ALSO THE STATEMENTS OF BA NKS THROUGH WHICH THE FUNDS HAVE BEEN TRANSFERRED/RECEIVE D. NOT ONLY THAT THE COPIES OF THE ASSESSMENT ORDERS COMPLETED IN TH OSE CASES WERE ALSO PLACED ON RECORD INDICATING THAT PRIMA-FACIE ASSESSEE HAS DISCHARGED HIS ONUS. HOWEVER, AS SUBMITTED, THE AO WA S NOT IN RECEIPT OF SUCH CONFIRMATIONS FROM THE SAID THREE PARTIE S, BEFORE HE I.T.A. NO. 207/HYD/2015 M/S. JISL IRRIGATION PRIVATE LIMITED :- 6 - : COMPLETED THE ASSESSMENT ON 19-02-2014. LD.CIT(A) WITH OUT EXAMINING THE FACTS, CONFIRMED THE ADDITION ON LEGAL PR INCIPLES. THEREFORE, I AM OF THE OPINION THAT AO SHOULD EXAMINE WHETHER THOSE COMPANIES HAVE INVESTED IN ASSESSEE-COMPANY. IN ORDER TO DO SO, THE ORDER OF THE AO TO THAT EXTENT IS SET ASIDE A ND ISSUE OF EXAMINING THE SHARE CAPITAL RECEIVED TO AN EXTENT OF RS . 45 LAKHS IS RESTORED TO THE FILE OF AO, TO EXAMINE THE FACTS AND TO DECIDE BASED ON FACTS AND LAW ON THE ISSUE. NEEDLESS TO SAY , THE ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY TO SUPPORT ITS CONTENTI ONS. WITH THESE DIRECTIONS, THE GROUNDS PERTAINING TO ADDITION O F RS. 45 LAKHS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MARCH, 2017 TNMM I.T.A. NO. 207/HYD/2015 M/S. JISL IRRIGATION PRIVATE LIMITED :- 7 - : COPY TO : 1. M/S. JISL IRRIGATION PRIVATE LIMITED, B-7, ELECT RONIC COMPLEX, KUSHAIGUDA, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-2(1), RANGE-2, HYDE RABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-2, HYDERABAD . 4. THE COMMISSIONER OF INCOME TAX-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.