MAJOR METALS LTD, NAVI MUMBAI V. DCIT CC 20, MUMBAI

ITA 2191/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0720 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 09-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR LD DR
• Assessee Lawyers: MANI JAIN LD
• Keywords: Gift; Tangible material; Accommodation entries; Reassessment proceedings
• Section: 143(3); 147; 131; 68; 148; 132

Judgement Text

ITA NO.2191/MUM/2015 MAJOR METALS LIMITED ASSESSMENT YEAR 2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.2191/MUM/2015 ( ASSESSMENT YEAR: 2007-08) MAJOR METALS LIMITED 607 JK CHAMBERS, SECTOR 17, VASHI, NAVI MUMBAI MUMBAI 400 705 VS. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-20, MUMBAI 400 020 ! PAN/GIR NO. AABCM-5595-J ( ' APPELLANT ) : ( #$ ' RESPONDENT ) ASSESSEE BY : MANI JAIN ,LD. AR REVENUE BY : ARUN KUMAR, LD. DR % & DATE OF HEARING : 09/05/2017 '() & / DATE OF PRONOUNCEMENT : 12/05/2017 ITA NO.2191/MUM/2015 MAJOR METALS LIMITED ASSESSMENT YEAR 2007-08 2 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1 THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT Y EAR [AY] 2007- 08 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-39 [CIT(A)], MUMBAI DATED 07/01/2015 QUA REASSESSMENT ON LEGAL GROUNDS AS WELL AS ON MERITS WHICH WE TAKE UP IN SUBSEQUENT PARAGRAPHS. SINCE, LEGAL ISSUE GOES TO THE ROOT OF THE MATTER, WE TAKE UP THE SAME FIRST. 2. BRIEFLY STATED THE ASSESSE, BEING RESIDENT CORPORATE ASSESSE , WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 VIDE ASSESSING OFFICER [AO] OR DER DATED 25/03/2013 AT RS.1,40,52,170/- AFTER DISALLOWANCE O F RS.55.00 LACS U/S 68 ON ACCOUNT OF SHARE APPLICATION MONEY AS AGAINST RETURNED INCOME OF RS.80,57,330/- FILED BY ASSESSEE ON 29/09/2007 WHI CH WAS ORIGINALLY ASSESSED U/S 143(3) AT RS.85,52,170/-. THE ASSESSE WAS ENGAGED IN THE BUSINESS OF IMPORT AND TRADING ACTIVITIES OF VA RIOUS KINDS OF NON- FERROUS METALS. THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 DATED 08/02/2012 WHICH WAS DULY SERVED ON THE A SSESSEE. AS PER THE REASONS RECORDED, THE REOPENING WAS TRIGGERED P URSUANT TO SEARCH OPERATION CONDUCTED U/S 132 ON 26/04/2007 ON A PERS ON NAMELY GIRIRAJ VIJAYVARGIYA [G.V.] WHO ADMITTED TO HAVING PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF GIFTS, LOANS AND SHARE APPLI CATION MONEY FROM FINANCIAL YEAR 1999-2000 TO 2005-06 IN EXCHANGE OF CASH AGAINST COMMISSION OF 2-3.5%. DURING THE ASSESSMENT PROCEED INGS OF G.V., A STATEMENT FROM THE DIRECTOR OF THE ASSESSEE COMPANY NAMELY VIKAS ITA NO.2191/MUM/2015 MAJOR METALS LIMITED ASSESSMENT YEAR 2007-08 3 BERLIA WAS RECORDED U/S 131 WHO CLAIMED THE TRANSACTIONS TO BE GENUINE AS AGAINST ACCOMMODATION ENTRIES ADMITTED BY G.V. C ONSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUANCE OF TH E SAID NOTICE AND FINALLY RESULTED INTO IMPUGNED ADDITIONS OF RS.55.0 0 LACS. THE SAME, ON MERITS, WAS CONFIRMED BY LD. CIT(A) WHICH IS AN EX-PARTE ORDER AS THE ASSESSEE FAILED TO ATTEND THE PROCEEDINGS THEREIN. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, THE LD. COUNSEL FOR ASSESSEE [AR] HAS ASSAILED THE REOPENING ON LEGAL GROUND BY STATING THAT THE REOPE NING HAS BEEN DONE MERELY ON THE BASIS OF THE STATEMENT OF A THIRD PAR TY WHERE THE SAID PARTY ADMITTED TO HAVE ENTERED INTO ACCOMMODATION ENTRIES BY WAY OF SHARE APPLICATION MONEY WITH THE ASSESSEE IN SHARP CONTRAST TO THE FACT THA T THE ASSESSEE NEVER RECEIVED ANY SHARE APPLICATION MONEY FROM THE SAID PARTY / GROUP IN THE IMPUGNED AY AND THEREFORE, THE VERY BASIS OF REOPENING STOOD VITIATED AND REFLECTS NON-APPLICATI ON OF MIND ON THE PART OF THE AO. OUR ATTENTION IS ALSO DRAWN TO THE FACT THAT ON SIMILAR FACTS AND CIRCUMSTANCES, REOPENING HAS BEEN QUASHED BY THE TR IBUNAL IN ASSESSEES OWN CASE FOR AY 2003-04, 2004-05, 2005-0 6 & 2006-2007, THE COPIES OF WHICH HAVE BEEN PLACED BEFORE US. 4. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE REOPENING HAS BEEN DONE WITHIN A PERIOD OF FOUR YEA RS FROM COMPLETION OF RELEVANT AY AND THEREFORE, ONLY ONE CONDITION VI Z. REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT WAS REQUIRED TO BE FULFILLED BY THE AO TO INITIATE REASSESSMENT WHICH APPARENTLY HA S BEEN FULFILLED AND THEREFORE, THE REOPENING WAS PERFECTLY VALID. OUR A TTENTION HAS BEEN DRAWN TO THE FACT THAT THE THIRD PARTY CATEGORICALL Y ADMITTED TO HAVING ITA NO.2191/MUM/2015 MAJOR METALS LIMITED ASSESSMENT YEAR 2007-08 4 PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF SHARE APPLICATION MONEY IN EXCHANGE OF CASH, WHICH IN ITSELF, WAS SUFFICIEN T TO REOPEN THE ASSESSMENT AT THAT STAGE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE CONDITION OF REOPENING IS CONCERNED, WE ARE IN AGREEMENT WITH THE LD. DR THAT SINCE REOPENING WAS WITHIN FOUR YEARS FROM END OF RELEVANT AY, ONLY ONE CONDITIONS VIZ. REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT WAS REQUIRED TO BE FULFILLED BY THE AO AND NOTHING MORE. HOWEVER, IT IS ALSO WELL SETTL ED PRINCIPLE THAT THE AO MUST BE IN POSSESSION OF SOME TANGIBLE MATERIAL SO AS TO JUSTIFY THE REOPENING AND THAT MATERIAL SHOULD LEAD TO FORMATIO N OF BELIEF ON THE PART OF THE AO THAT CERTAIN INCOME HAS ESCAPED ASSESSMEN T AND ALSO THE MATERIAL SHOULD HAVE LIVE LINK WITH THE FORMATION O F THE BELIEF, WHICH IN OUR OPINION IS MISSING IN THE INSTANT CASE. UPON PERUSA L OF POINT NO. 3 OF THE SAID REASONS, AS PLACED IN THE PAPER-BOOK, WHEREIN IT IS STATED THAT:- 3. DURING THE COURSE ASSESSMENT PROCEEDINGS IN THE CASE SHRI GIRIRAJ, IT WAS FOUND THAT FROM F.Y.1999-2000 TO 20 05-06 HE HAD GIVEN ACCOMMODATION ENTRIES TOTALING TO (EMPHASIS BEING SUPPLIED BY US) WE FIND THAT THE REASONS CLEARLY REFERRED TO PERIOD FROM FY 1999-2000 TO 2005-06 DURING WHICH THE ASSESSEE IS ALLEGED TO HAV E RECEIVED THE ACCOMMODATION ENTRIES WHEREAS WE ARE DEALING WITH A Y 2007-08 AND THEREFORE, THE SAME REFLECTS NON-APPLICATION OF MIN D ON THE PART OF AO. WE ALSO NOTE THAT TRIBUNAL IN ITA NO. 6744-45/MUM/2 012 ORDER DATED 17/05/2016 FOR AY 2005-06, 2006-07 & ITA NO. 6742-4 3/MUM/2012 ITA NO.2191/MUM/2015 MAJOR METALS LIMITED ASSESSMENT YEAR 2007-08 5 ORDER DATED 13/05/2016 FOR AY 2003-04, 2004-05 HAS ALREADY QUASHED THE REASSESSMENT PROCEEDINGS FOR THOSE YEARS ON TEC HNICAL GROUNDS BY QUASHING THE ASSESSMENT ORDER UPON NOTING THAT THER E WAS NO NEXUS BETWEEN THE APPLICATION MONEY RECEIVED BY THE ASSES SEE AND ALLEGED ACCOMMODATION ENTRIES PROVIDED BY G.V. AND HIS GROU P. ACCORDINGLY, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASI DE THE ORDER OF LOWER AUTHORITIES ON THE LEGAL ISSUE AND HOLD THAT THE RE OPENING WAS NOT VALID. 6. SINCE WE HAVE ALREADY HELD THE REOPENING BAD IN LAW, WE SEE NO REASON TO DELVE INTO THE MERITS OF THE CASE ANY FUR THER. 7. RESULTANTLY, THE ASSESSEES APPEAL STAND ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MAY, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *% MUMBAI; DATED : 12.05.2017 SR.PS:- THIRUMALESH ITA NO.2191/MUM/2015 MAJOR METALS LIMITED ASSESSMENT YEAR 2007-08 6 COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. + / THE CIT(A) 4. + / CIT CONCERNED 5. , #&- - ) *% / DR, ITAT, MUMBAI 6. . /% GUARD FILE ! / BY ORDER, !' # (DY./ASSTT. REGISTRAR) *% / ITAT, MUMBAI