Asit Kumar Patra, Serampur V. I.T.O.,Ward-23(3), Hooghly

ITA 2206/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4951 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 26-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTA KHANRA
• Keywords: Reopening of assessment; Accommodation entries; Competent authority
• Section: 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT (KZ)] I.T.A. NO. 2206/KOL/2019 ASSESSMENT YEAR: 2011-12 ASIT KUMAR PATRA.................................................................................APPELLANT C/O. S.N. GHOSH & ASSOCIATES, ADVOCATES, SEBEN BROTHERS, BUROSHIBTALA, CHINSURAH, HOOGHLY 712 105. [PAN: AJGPP 9385 A] VS ITO, WARD 23(3), HOOGHLY...............................RESPONDENT AAYAKAR BHAWAN, G.T. ROAD, KHADINA MORE, CHINSURAH, HOOGHLY 712 101. APPEARANCES BY: SHRI SOMNATH GHOSH, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI JAYANTA KHANRA, JCIT, SR. DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JANUARY 14, 2020 DATE OF PRONOUNCING THE ORDER : FEBRUARY 21, 2020 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 6, KOLKATA DATED 31.07.2019. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ORIGINALLY ON 27.12.2011 DECLARING A TOTAL INCOME OF RS. 1,57,350/-. THE SAID RETURN WAS INITIALLY PROCESSED BY THE AO U/S 143(1) OF THE INCOME TAX ACT, 1961. THE ASSESSMENT, HOWEVER, WAS SUBSEQUENTLY REOPENED BY HIM ON THE BASIS OF INFORMATION RECEIVED FROM DDIT(INV.) UNIT 2(2), KOLKATA REGARDING THE SUBSTANTIAL DEPOSITS FOUND TO BE MADE IN THE UNDISCLOSED BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH ICICI BANK IN THE NAME OF HIS PROPRIETORY CONCERN M/S. KALPANA TRADING. ACCORDINGLY, A NOTICE U/S 148 WAS ISSUED BY THE AO AFTER RECORDING THE REASONS. THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME IN RESPONSE TO THE SAID NOTICE ISSUED BY THE AO U/S 148. THEREAFTER, THE 2 I.T.A. NO. 2206/KOL/2019 ASSESSMENT YEAR: 2011-12 ASIT KUMAR PATRA AO COMPLETED THE ASSESSMENT U/S 143(3)/147 OF THE ACT VIDE AN ORDER 26.12.2017 WHEREIN HE TREATED THE ENTRIES FOUND TO BE REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE WITH ICICI BANK AS ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE AS ENTRY OPERATORS TO THE BENEFICIARIES IN LIEU OF COMMISSION. HE ACCORDINGLY DETERMINED THE INCOME OF THE ASSESSEE FROM THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AS COMMISSION @ 1% ON THE TOTAL DEPOSITS OF RS. 21,20,25,590/- AND MADE AN ADDITION OF RS. 21,20,256/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3)/147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHALLENGING THE VALIDITY OF THE SAID ASSESSMENT MADE BY THE AO AS WELL AS DISPUTING THE ADDITION OF RS. 21,20,256/- MADE ON ACCOUNT OF COMMISSION FROM THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) DID NOT FIND MERIT IN THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE AO U/S 143(3)/147 OF THE ACT AND REJECTING THE SAME, HE UPHELD THE VALIDITY OF THE SAID ASSESSMENT. AS REGARDS THE ADDITION MADE BY THE AO OF RS. 21,20,256/- ON ACCOUNT OF INCOME EARNED BY THE ASSESSEE BY WAY OF COMMISSION FROM THE ACCOMMODATION ENTRIES PROVIDED, THE LD. CIT(A) HELD THAT THE ESTIMATION OF SUCH INCOME AS MADE BY THE AO BY APPLYING THE COMMISSION RATE OF 1% WAS ON THE HIGHER SIDE. BY RELYING ON CERTAIN DECISIONS OF THE TRIBUNAL AS DISCUSSED IN HIS IMPUGNED ORDER, THE LD. CIT(A) FOUND IT FAIR AND REASONABLE TO ESTIMATE THE COMMISSION INCOME OF THE ASSESSEE FROM THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES BY APPLYING THE RATE 3 I.T.A. NO. 2206/KOL/2019 ASSESSMENT YEAR: 2011-12 ASIT KUMAR PATRA OF 0.5% AND ACCORDING THE ADDITION OF RS. 21,20,256/- MADE BY THE AO ON THIS ISSUE WAS RESTRICTED BY HIM TO RS. 10,60,128/-. STILL AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN SUPPORT OF THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE AO U/S 143(3)/147 OF THE ACT, THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED MY ATTENTION TO THE COPY OF APPROVAL GIVEN BY THE LD. PR. CIT -8, KOLKATA PLACED AT PAGE 55 AND 56 OF THE PAPER BOOK AND POINTED OUT THAT MERELY A SINGLE WORD YES WAS USED BY THE LD. PR. CIT WHILE ACCORDING HIS APPROVAL. HE HAS CONTENDED THAT THE APPROVAL THUS WAS GIVEN BY THE LD. PR. CIT IN A MECHANICAL MANNER AND THERE WAS NO PROPER SATISFACTION RECORDED BY HIM AS REQUIRED BY THE RELEVANT PROVISIONS OF SECTION 151. HE HAS SUBMITTED THAT A SIMILAR APPROVAL IN A MECHANICAL MANNER BY USING A SINGLE WORD YES WAS GIVEN BY THE CONCERNED LD. PR. CIT IN ASSESSEES OWN CASE FOR REOPENING OF ASSESSMENT FOR A.Y. 2010-11 AND THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER DATED JANUARY 8, 2020 PASSED IN ITA NO. 1053/KOL/2019 HELD THE REOPENING OF ASSESSMENT TO BE BAD IN LAW ON THE GROUND THAT THE APPROVAL FOR REOPENING OF ASSESSMENT GIVEN BY THE LD. PR. CIT IN A MECHANICAL MANNER WITHOUT APPLICATION OF MIND DID NOT MEET THE STATUTORY REQUIREMENT OF SECTION 151 OF THE ACT. HE HAS PLACED ON RECORD A COPY OF THE SAID ORDER OF THE TRIBUNAL AND PERUSAL OF THE SAME SHOWS THAT A SIMILAR ISSUE INVOLVED IN IDENTICAL FACTS HAS BEEN DECIDED BY THE COORDINATE BENCH OF THIS 4 I.T.A. NO. 2206/KOL/2019 ASSESSMENT YEAR: 2011-12 ASIT KUMAR PATRA TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH NO. 6 TO 8 OF THE ORDER WHICH READ AS UNDER: 6. ON THE LEGAL ISSUES I FIND THAT THE RE-OPENING IS BAD IN LAW FOR THE REASONS THAT THE PR. CIT-8, KOLKATAS APPROVAL FOR RE-OPENING HAS SIMPLY USED ONE WORD (YES). THIS TAKES ME TO A CONCLUSION THAT THE APPROVAL GIVEN IN FORM FOR RECORDING REASONS IN ITNS-10 AT COLUMN 14 WAS A MECHANICAL APPROVAL. NO PROPER SATISFACTION IS RECORDED BY THE PR. CIT-8, KOLKATA. THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. N.C. CABLES LTD. [2017] 391 ITR 11 (DELHI) DTD. 11.01.2017 AT PARA 11 STATES AS FOLLOWS: 11. SECTION 151 OF THE ACT CLEARLY STIPULATES THAT THE CIT (A), WHO IS THE COMPETENT AUTHORITY TO AUTHORIZE THE REASSESSMENT NOTICE, HAS TO APPLY HIS MIND AND FORM AN OPINION. THE MERE APPENDING OF THE EXPRESSION 'APPROVED' SAYS NOTHING. IT IS NOT AS IF THE CIT (A) HAS TO RECORD ELABORATE REASONS FOR AGREEING WITH THE NOTING PUT UP. AT THE SAME TIME, SATISFACTION HAS TO BE RECORDED OF THE GIVEN CASE WHICH CAN BE REFLECTED IN THE BRIEFEST POSSIBLE MANNER. IN THE PRESENT CASE, THE EXERCISE APPEARS TO HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHICH IS THE RATIONALE FOR THE SAFEGUARD OF AN APPROVAL BY A HIGHER RANKING OFFICER. FOR THESE REASONS, THE COURT IS SATISFIED THAT THE FINDINGS BY THE ITAT CANNOT BE DISTURBED. 7. THE HONBLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJPAL VS. S.P. CHALIHA [1971] 79 ITR 603 (SC) HAS HELD AS FOLLOWS: WE ARE ALSO OF THE OPINION THAT THE COMMISSIONER HAS MECHANICALLY ACCORDED PERMISSION. HE DID NOT HIMSELF RECORD THAT HE WAS SATISFIED THAT THIS WAS A FIT CASE FOR THE ISSUE OF A NOTICE UNDER SECTION 148. TO QUESTION NO. 8 IN THE REPORT WHICH READS 'WHETHER THE COMMISSIONER IS SATISFIED THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148', HE JUST NOTED THE WORD 'YES' AND AFFIXED HIS SIGNATURE THEREUNDER. WE ARE OF THE OPINION THAT IF ONLY HE HAD READ THE REPORT CAREFULLY, HE COULD NEVER HAVE COME TO THE CONCLUSION ON THE MATERIAL BEFORE HIM THAT THIS IS A FIT CASE TO ISSUE NOTICE UNDER SECTION 148. THE IMPORTANT SAFEGUARDS PROVIDED IN SECTIONS 147 AND 151 WERE LIGHTLY TREATED BY THE INCOME-TAX OFFICER AS WELL AS BY THE COMMISSIONER. BOTH OF THEM APPEAR TO HAVE TAKEN THE DUTY IMPOSED ON THEM UNDER THESE PROVISIONS AS OF LITTLE IMPORTANCE. THEY HAVE SUBSTITUTED THE FORM FOR THE SUBSTANCE. 8. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THIS CASE LAWS TO THE FACTS OF THE CASE, I HAVE TO HOLD THAT APPROVAL FOR RE-OPENING OF THE ASSESSMENT WAS GIVEN BY PR. CIT IN A MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND AND DOES NOT MEET THE STATUTORY REQUIREMENT OF SECTION 151 OF THE ACT. THUS RE-OPENING OF ASSESSMENT IS BAD IN LAW. 5 I.T.A. NO. 2206/KOL/2019 ASSESSMENT YEAR: 2011-12 ASIT KUMAR PATRA 5. THE PRELIMINARY LEGAL ISSUE INVOLVED IN THIS CASE THUS IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR A.Y. 2010-11 AND EVEN THE LD. DR HAS NOT BEEN ABLE TO DISPUTE THIS POSITION. I ACCORDINGLY, FOLLOW THE ORDER OF THE TRIBUNAL DATED JANUARY 8, 2020 (SUPRA) PASSED IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2010-11 DECIDING A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE AND CANCEL THE ASSESSMENT MADE BY THE AO U/S 143(3)/147 OF THE ACT BY TREATING THE SAME AS INVALID ON THE GROUND THAT THE REOPENING OF THE ASSESSMENT ITSELF BY THE AO WAS BAD IN LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2020. SD/- (P.M. JAGTAP) VICE PRESIDENT DATED: 21/02/2020 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. ASIT KUMAR PATRA, C/O. S.N. GHOSH & ASSOCIATES, ADVOCATES, SEBEN BROTHERS LODGE, BUROSHIBTALA, CHINSURAH, HOOGHLY 712 105. 2. ITO, WARD 23(3), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA