Manu Credit India Ltd., New Delhi V. ITO, New Delhi

ITA 2242/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77682 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Tangible material; Reason to believe
• Section: 143(3); 68; 148

Judgement Text

1 ITA NO. 2242/DEL /2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE P RESIDENT AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO. 2242/DEL/2013 (ASSESSM ENT YEAR-2003-04) MANU CREDIT INDIA LTD. 278, KATRA PERAN TILAK BAZAR NEW DELHI AAACM6920A (APPELLANT) VS ITO WARD-6 (2) NEW DELHI (RESPONDENT) APPELLANT BY SH. R. S. SINGHVI, CA RESPONDENT BY SH. P. DAM KANUNJNA, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 14/02/2013 PASSED BY THE CIT (A)-IX, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: 1.(I) THAT CIT(A) WAS NOT JUSTIFIED IN CONFIRMING REASSESSMENT U/S 148 WITHOUT APPRECIATING FACTS OF THE CASE, PRO VISIONS OF LAW AND SUBMISSION OF THE APPELLANT. DATE OF HEARING 11.04.2016 DATE OF PRONOUNCEMENT 25.04.2016 2 ITA NO. 2242/DEL /2013 (II) THAT THERE IS NO FACTUAL OR LEGAL BASIS IN ASS UMING JURISDICTION U/S 148 AS THERE IS NO CASE OF ANY INC OME ESCAPING ASSESSMENT OR ANY TANGIBLE MATERIAL AND RECORDING OF SATISFACTION IN THE CONTEXT OF PROVISI ONS OF SECTION 148. 2(I). THAT THE CIT(A) HAS ERRED IN LAW AND ON THE F ACTS OF THE CASE IN CONFIRMING ADDITION U/S 68 OF RS.11,35,000/ - IN RESPECT OF SHARE APPLICATION MONEY EVEN THOUGH ASSE SSEE HAS DISCHARGED THE ONUS AS REQUIRED UNDER THE LAW. (II) THAT THE ASSESSEE HAS PLACED ALL THE RELEVANT DOCUMENTS ON RECORD AND DISCHARGED THE ONUS IN TERMS OF PROVI SIONS OF SECTION 68 AND AS SUCH THERE IS NO BASIS FOR ANY ADDITION UNDER THE LAW. (III) THAT ADDITION IS BASED ON HYPOTHETICAL WITHOU T PROPER APPRECIATION OF FACTS, DOCUMENTS ON RECORD AND OPPO RTUNITY TO THE APPELLANT AND SAME IS NOT SUSTAINABLE UNDER THE LAW. 3. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUS TIFIED ON FACTS AND SAME ARE BAD IN LAW. 3. THE ASSESSEE IS ENGAGED IN PROVIDING FINANCIAL S ERVICES AS A NON-BANKING FINANCE COMPANY. THE RETURN WAS FILED O N 29.04.2003 UNDER SECTION 139(1) DECLARING INCOME OF RS. 40,510 /- ON THE BASIS OF AUDITED ACCOUNTS. THE RETURN WAS ORIGINALLY PROC ESSED U/S. 143(1) VIDE INTIMATION DATED 31.07.2003. SUBSEQUENT LY, ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 148 VID E NOTICE DATED 22.03.2010 ON THE BASIS OF INFORMATION FROM DIT(INV .), NEW DELHI. 4. THE INVESTIGATION WING RECORDED FOLLOWING REASON S: REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT: 3 ITA NO. 2242/DEL /2013 IN THIS CASE, INFORMATION HAS BEEN RECEIVED FROM TH E DIRECTOR OF INCOME- TAX, INVESTIGATION), NEW DELHI THAT THE ASSESSEE HA S RECEIVED AN AMOUNT OF RS.L 1,35,000/- FROM VARIOUS PARTIES AS FOLLOWS: THE ABOVE SAID INSTRUMENTS ARE IN THE NATURE OF ACC OMMODATION ENTRY, WHICH THE ASSESSEE HAS TAKEN AFTER PAYING UNACCOUNT ED CASH TO THE ACCOMMODATION ENTRY GIVER, WHO IS A KNOWN ENTRY OPE RATOR AS PER THE REPORT OF THE INVESTIGATION WING. IN VIEW OF THESE FACTS, THE ALLEGED TRANSACTION IS NOT THE BONAFIDE ONE. THEREFORE, I HAVE REASON TO BELIEVE T HAT AN INCOME OF RS.L1,35,000/- HAS ESCAPED ASSESSMENT IN THE ASSESS MENT YEAR 2003-04 DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT SO FAR AS THIS A MOUNT IS CONCERNED. THEREFORE, THIS CASE IS FIT FOR ISSUING NOTICE U/S 148 OF THE INCOME TAX ACT, 1961. IN THIS CASE THE ASSESSMENT WAS MADE U/S 143( 1), NOT U/S 143(3) OF THE I.T. ACT, 1961. I AM THEREFORE, SATISFIED THAT THE SAID INCOME, ON ACCOUNT OF ACCOMMODATION ENTRY WORTH RS. L1,35,000/- RECEIVED BY THE ASSESSEE HAS ESCAPED ASSESSMENT AND ACCORDINGLY AFTER RECORDING THE ABOVE SAID REASONS AS LAID DOWN UNDER THE PROVISIONS OF SECTION 148(2) OF THE INCOME TAX ACT, 1961 NOTICE U/S 148 IS BEING ISSUED. THE SAME WAS ANNEXED AT PAGE 16 OF THE PAPER BOOK A LONG WITH NOTICE UNDER SECTION 148 DATED 22.03.2010 WHICH WAS AT PAGE 15 OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE. 4 ITA NO. 2242/DEL /2013 5. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY HOLDING THAT THE ASSESSING OFFICER HAD TAKEN PRO-A CTIVE STEPS TO CHECK THE GENUINENESS OF THE TRANSACTIONS. 6. THE LD. AR SUBMITTED THAT THERE WAS NO INDEPENDE NT REASONS RECORDED, AS THE ASSESSING OFFICER PROVIDED THE REA SONS CITING THE INFORMATION PROVIDED BY THE DIRECTOR OF INCOME TAX (INVESTIGATION), NEW DELHI AND RE-OPENED THE ASSESSMENT PROCEEDINGS UNDER THE FALSE BELIEF THAT THE ASSESSEE RECEIVED ACCOMMODATI ON ENTRIES ON THE BASIS OF THE REPORT FROM THE INVESTIGATION WING. TH E LD. AR RELIED UPON THE DECISIONS OF THE ITAT NEW DELHI BENCHES IN CASE OF MEENAKSHI OVERSEAS (P) LTD. VS. ITO (ITA NO. 3148/D EL/2013 DATED 22.03.2016) AS WELL AS JURISDICTION HIGH COURT IN C ASE OF CIT VS. G&G PHARMA (ITA NO.545/2015 DATED 08.10.2015). 7. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS CIT (A) HAS PASSED PROPER AND JUST ORDERS. THE LD. DR R ELIED UPON THE JUDGMENT OF NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169 (DEL). 8. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH T HE PARTIES. THE ASSESSING OFFICER HAS NOT GIVEN ANY SATISFACTIO N OR REASON WHILE ARRIVING AT THE INITIATION OF THE RE-ASSESSMENT U/S 147. A PERUSAL OF THE REASONS MENTIONED HEREINABOVE CLEARLY SUGGEST T HAT THERE IS NO APPLICATION OF MIND. ON CAREFUL CONSIDERATION OF R IVAL SUBMISSIONS OF BOTH THE SIDES, IT IS CLEAR THAT THE ASSESSING O FFICER RECORDED REASONS ON RECEIPT OF CERTAIN INFORMATION RECEIVED FROM DIT (INV.) 5 ITA NO. 2242/DEL /2013 WHICH ARE AVAILABLE AT PAGE 16 OF ASSESSEES PAPER BOOK. AFTER GOING THROUGH THE SAID REASONS RECORDED IT IS SEEN THAT T HE ASSESSING OFFICER ISSUED NOTICE U/S 147/148 OF THE ACT SOLELY ON THE BASIS OF INFORMATION RECEIVED FROM THE DIT (I). THE ASSESSI NG OFFICER SIMPLY MENTIONED FACTUAL DETAILS IN A TABULAR FORM, AND SI MPLY STATES THAT THE INSTRUMENTS ARE IN THE NATURE OF ACCOMMODATION ENTRY WITHOUT ANY FURTHER VERIFICATION, EXAMINATION OR ANY OTHER EXERCISE. IT IS RELEVANT TO NOTE THAT THE ASSESSING OFFICER HAS NOT MENTIONED NATURE OF TRANSACTION WHICH WAS EFFECTED FOR ALLEGE D ACCOMMODATION ENTRY AND EVEN WITHOUT MENTIONING THE DATE OF RECOR DING OF REASONS. THUS, THERE WAS NO REASON TO BELIEVE THAT THE INCOM E HAD ESCAPED ASSESSMENT. THEREFORE, THE RE-ASSESSMENT PROCEEDIN GS ITSELF IS VOID AB INITIO. 9. IN RESULT, THE APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25 TH OF APRIL, 2016. SD/- SD/- (G. D. AGRAWAL) (SUC HITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 25/04/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGIS TRAR 6 ITA NO. 2242/DEL /2013 ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 11/04/2016 PS 2. DRAFT PLACED BEFORE AUTHOR 12/04/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27.04.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 27.04.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.