M/s Star Finvest (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 2081/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1331 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 21-10-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 18-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: V MOHAN C AS
• Keywords: Reopening of assessment; Depreciation; Assessment record; Reason to believe
• Section: 143(3); 142(1); 251; 208; 147; 68; 148; 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI RAJPAL YADAV, JM AND SHRI R.C.SHARMA, A M ITA NO.2081/DEL/2009 ASSESSMENT YEAR : 2000-01 M/S STAR FINVEST (P) LTD., 311, ARUNACHAL BUILDING, 19, BARAKHAMBA ROAD, NEW DELHI 110 001. PAN NO.AAFCS0581E. VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE-9(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED JAIN AND SHRI V.MOHAN, CAS. RESPONDENT BY : SHRI N.K.CHAND, DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 19.1.2009 FOR AY 2000-01, IN THE MATTER OF ORDER PA SSED U/S 143(3)/147 OF THE IT ACT. 2. THE ASSESSEE HAS TAKEN GROUND WITH REGARD TO VAL IDITY OF REOPENING AS WELL AS MERIT OF THE ADDITION MADE U/S 68 OF THE IT ACT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. IN THIS CASE, SCRUTINY ASSESSMENT WAS COMPLETED U/S 143(3) ON 10. 12.2002. THEREAFTER ON THE BASIS OF INFORMATION RECEIVED FROM ADDITIONAL DIREC TOR OF INVESTIGATION, THE ASSESSMENT WAS REOPENED U/S 148 ON 23.3.2007 BY REC ORDING THE REASONS FOR REOPENING WHICH READ AS UNDER:- REASONS FOR ISSUE OF NOTICE U/S 148 IN THE CASE OF M/S STAR FINVEST PVT.LTD. 311, ARUNACHAL BUILDING, C.PLACE, NEW DELHI ITA-2081/D/2009 2 ASSTT.YEAR 2000-01 ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 10/12/2002 AT AN INCOME OF RS.4102685/-. INFORMATION HAS BEEN RECEIVED FROM THE ITO, WARD 6( 1), NEW DELHI VIDE HIS LETTER NO.495 DATED 20/3/2006 THAT D URING THE COURSE OF SURVEY OPERATION AT THE OFFICE PREMISES OF SHRI SANJAY RASTOGI AT 210, VAKIL CHAMBER, A-115, SHAKARPUR, DELHI IT WAS FOUND THAT SHRI RASTOGI AND HIS ASSOCIATES HAD A NUMBER OF COMPANIE S AND WERE ENGAGED IN THE BUSINESS OF GIVING BOGUS/ACCOMMODATI ON ENTRIES. M/S STAR FINVEST PVT.LTD. RECEIVED RS.375448/- DURI NG THE FINANCIAL YEAR 1999-2000. I HAVE THEREFORE, REASON TO BELIEVE THAT AN AMOUNT OF RS.375448/- HAS ESCAPED ASSESSMENT WITHIN THE MEANI NG OF SECTION 147(B) OF THE IT ACT, 1961. SINCE THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) AND 4 YEARS HAVE SINCE ELAPSED, THE ASSESSMENT RECORD IS BEING SUBMITTED FOR KIND PERUSAL AND APPROVAL OF THE COMMISSIONER O F INCOME-TAX, DELHI-III, NEW DELHI AS PER SECTION 151(1) OF THE I T ACT, 1961 FOR ISSUANCE OF NOTICE U/S 148 OF THE I.T.ACT. 4. CONTENTION OF THE LEARNED AR WAS THAT SCRUTINY A SSESSMENT WAS COMPLETED U/S 143(3) AND THE ASSESSMENT WAS REOPENED AFTER EX PIRY OF MORE THAN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E. 2 001-02 OF THE IT ACT, THEREFORE AS PER PROVISO TO SECTION 147, NO REOPENING CAN BE MADE UNLESS THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO FURNISH FULL AND TRU E DISCLOSURE. OUR ATTENTION WAS INVITED TO THE REASONS RECORDED BY THE AO AS NARRAT ED ABOVE AND IT WAS CONTENDED THAT THERE IS NO WHISPER OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS RELEVANT FOR THE A SSESSMENT. IN SUPPORT OF THE PROPOSITION THAT IN CASE OF REOPENING AFTER FOUR YE ARS, THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS SHOULD BE PART OF REASONS RECORDED, LEARNED AR RELIED ON THE PROPOSITION LAID DOWN IN THE CASE OF TANNA BUILDERS (P) LTD. 283 ITR 448, K.C.P. LTD. 146 ITR 284, GARDEN SILK MILLS LTD. 222 ITR 27 AND ORIENT BEVERAGES LTD. 208 I TR 509. ITA-2081/D/2009 3 5. ON THE OTHER HAND, CONTENTION OF THE LEARNED DR WAS THAT ON AN ENQUIRY, THE INVESTIGATION WING OF INCOME-TAX DEPARTMENT HAD FOU ND THAT ONE MR.SANJAY RASTOGI WHO HAD FLOUTED TWO COMPANIES WERE MAINLY I N THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY, THEREFORE THE AMOUNT RECEIVED FROM THESE COMPANIES BEING IN THE NATURE OF ACCOMMODATION ENTRY WERE NOT DISCL OSED BY THE ASSESSEE AND THE SAME HAS ESCAPED ASSESSMENT, THEREFORE REOPENING WA S VALID, EVEN AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SHARE BROKING. ITS SCRU TINY ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR 2000-01 WAS COMPLETED U/S 143(3) ON 10.12.2002. ON 23.3.2007, THE ASSESSMENT WAS REOPENED AFTER RECORDING THE REA SONS AS STATED HEREINABOVE. IN THE COURSE OF REASSESSMENT, THE AO FOUND THAT ASSES SEE HAS RECEIVED CHEQUE OF RS.3.75 LAKHS FROM M/S M.S.LEASING (P) LTD. THE AS SESSEE HAS FILED COPY OF BANK ACCOUNT FOR THE PERIOD AND ALSO AFFIDAVIT FROM SHRI SANJAY RASTOGI, DIRECTOR OF THE COMPANY. ON THE BASIS OF REPORT OF INVESTIGATION W ING, THE AO HELD THAT THE AMOUNT RECEIVED BY CHEQUE WAS IN THE NATURE OF ACCO MMODATION ENTRY, THEREFORE ADDED THE SAME U/S 68 OF THE IT ACT. 7. IT IS UNDISPUTED FACT THAT ASSESSMENT HAS BEEN REOP ENED AFTER EXPIRY OF MORE THAN FOUR YEARS FROM THE END OF THE RELEVANT ASSESS MENT YEAR, THEREFORE FOR THE PURPOSE OF REOPENING FIRST PROVISO TO SECTION 147 W ILL COME INTO OPERATION. THE FIRST PROVISO TO SECTION 147 READS AS UNDER:- PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER T HE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ITA-2081/D/2009 4 ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, FOR THAT ASSESSMENT YEAR. 8. IT IS CRYSTAL CLEAR FROM THE PLAIN READING OF TH E ABOVE PROVISO THAT WHERE AN ASSESSMENT U/S 143(3) HAS BEEN MADE, NO ACTION CAN BE TAKEN UNDER SECTION 147 AFTER THE EXPIRY OF 4 YEARS FROM THE END OF RELEVAN T ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF ASSESSEE TO MA KE THE RETURN U/S 139 OR IN RESPONSE TO NOTICE ISSUED U/S 142(1) AND 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR TH AT ASSESSMENT YEAR. IN VIEW OF THE ABOVE CLEAR MANDATE OF THE PROVISO ASSESSMENT C OMPLETED U/S 143(3) CANNOT BE REOPENED UNLESS THERE IS A FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. HERE, THE PERTINENT QUES TION TO BE DECIDED BY US IS THAT WHETHER IN THE REASONS RECORDED FOR REOPENING THE A SSESSMENT, A.O. HAS ALLEGED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS. THE REASONS SO RECODED ARE REPRODU CED AT PARA 3 HEREINABOVE. 9. IT IS QUITE CLEAR FROM THE REASONS SO RECORDED F OR REOPENING THAT NOWHERE THE A.O. HAS ALLEGED THAT THERE WAS A FAILURE ON THE PA RT OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. HON'BLE HIGH C OURT IN THE CASE OF MC DELRNOTTA INTERNATIONAL INC. VS. ADDL. CIT REPORTED AT 259 IT R 138 HELD THAT WHERE ASSESSMENT IS FRAMED U/S 143(3) AND THE NOTICE ISSU ED U/S 148 AFTER EXPIRY OF FOUR YEARS, DID NOT SUGGEST ANY FAILURE OR OMISSION ON T HE PART OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE, REOPENING OF ASSESSMENT I S NOT VALID. 10. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF S HETH BROTHERS VS JCIT (2001) 251 ITR 270 (GUJ) HAS OBSERVED THAT: ITA-2081/D/2009 5 AS THE ASSESSMENT WAS SOUGHT TO BE REOPENED AFTER A PERIOD OF FOUR YEARS AND THERE WAS ADMITTEDLY NO OMISSION OR FAILU RE ON THE PART OF THE PETITIONER, THE AO, I.E., THE RESPONDENT, COULD NOT ASSUME JURISDICTION UNDER SECTION 147. 11. HON'BLE BOMBAY HIGH COURT IN THE CASE OF ICICI BANK LTD. V DCIT & ANR. (2004) 188 CTR (BOM) 380 OBSERVED THAT CONCLUDED AS SESSMENT CAN BE REOPENED BEYOND A PERIOD OF FOUR YEARS ONLY IF THERE IS A FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE PURPOSE OF ASSESSMENT. IT WAS FURTHER OBSERVED THAT HAVING FURNISHED ALL M ATERIAL FACTS, EVEN IF THE ASSESSEE ERRONEOUSLY CLAIMS HIGHER DEPRECIATION, IT WILL NOT BE A CASE OF FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. ALSO IF THE LEG AL INFERENCE DRAWN FROM THE MATERIAL FACTS IS ERRONEOUS, IT CANNOT BE SAID THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE. 12. THE CALCUTTA HIGH COURT IN THE CASE OF JAYASHRE E TEA INDUSTRIES LTD. 245 ITR 567 OBSERVED THAT THE NOTICE UNDER SECTION 148 AFTER EXPIRY OF 4 YEARS WAS BAD IN LAW AS THE DEPARTMENT FAILED TO PROVE THAT THE A SSESSEE DO NOT DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSME NT. 13. IN THE INSTANT CASE, UNDISPUTEDLY, IT IS NOT TH E ALLEGATION OF THE DEPARTMENT THAT THE RETURN OF INCOME WAS NOT FILED BY THE ASSE SSEE UNDER SECTION 139 OR IN RESPONSE TO NOTICE UNDER SECTION 142(1) OR 148 NOR THERE IS ANY ALLEGATION THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. ASSESSMENT WAS COMPLE TED U/S 143(3) AND THE NOTICE FOR REOPENING U/S 148 WAS ISSUED LONG AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. REASONS RECORDED FOR REOP ENING AND THE NOTICE ISSUED U/S 148 DID NOT ALLEGE ANY FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN VI EW OF THESE UNDISPUTED FACTS AND APPLYING THE PROPOSITION OF LAW AS DISCUSSED HEREIN ABOVE WITH RESPECT TO FIRST ITA-2081/D/2009 6 PROVISO TO SECTION 147, WE ARE INCLINED TO REVERSE THE FINDINGS OF LOWER AUTHORITIES ON THIS LEGAL ISSUE. 14. AS WE HAVE ALREADY DECIDED THE LEGAL ISSUE OF R EOPENING, WE HAVE NOT GONE FURTHER IN THE MERITS OF THE ADDITION. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2009. SD/- SD/- (RAJPAL YADAV) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.10.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR