D.C.I.T., Circle-6(1), Kolkata, Kolkata V. M/s Guiness Securities Pvt. Ltd., Kolkata

ITA 2292/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4515 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: M D SHAH LD
• Keywords: Reason to believe
• Section: 147; 68

Judgement Text

1 ITA NO. 2107 & 2292/KOL/2016 GUINESS PORTFOLIO MANAGEMENT SERVICES PVT. LTD., AY 2004-05 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 2107/KOL/2016 ASSESSMENT YEAR: 2004-05 INCOME-TAX OFFICER, WD-5(1), KOLKATA VS. GUINESS PO RTFOLIO MANAGEMENT SERVICES PVT. LTD. (PAN:AAHCS6911Q) APPELLANT RESPONDENT & I.T.A. NO. 2292/KOL/2016 ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6(1), KOLKATA VS. GUINESS SECURITIES PVT. LTD. (PAN:AAACG9843L) APPELLANT RESPONDENT DATE OF HEARING 31.07.2018 DATE OF PRONOUNCEMENT 08.08.2018 FOR THE APPELLANT SHRI A. BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT SHRI M. D. SHAH, LD. AR ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-8, KOLKATA DATED 09.08.2016 AND 21.09.2016 F OR AY 2004-05 RESPECTIVELY AGAINST THE AFORESAID ASSESSEE COMPANIES. SINCE GROUNDS AR E IDENTICAL AND FACTS ARE COMMON, WE DISPOSE OF BOTH THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN BOTH THESE APPEALS, THE REVENUE HAS CHALLENGE D THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION MADE U/S. 68 OF THE INCOME-TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NO. 2107 & 2292/KOL/2016 GUINESS PORTFOLIO MANAGEMENT SERVICES PVT. LTD., AY 2004-05 3. AT THE OUTSET ITSELF WE NOTE THAT THE LD. CIT(A) HAS FOLLOWED THE ORDER PASSED IN RESPECT TO M/S. GUINESS PORTFOLIO MANAGEMENT SERVICES PVT. LTD . TO GIVE RELIEF TO M/S. GUINESS SELCURITIES PVT. LTD . THEREFORE, WE TAKE UP THE APPEAL OF THE REVENUE IN RESPECT TO M/S. GUINESS PORTFOLIO MANAGEMENT SERVICES PVT. LTD . (ITA NO. 2107/KOL/2016) AS THE LEAD CASE TO DECIDE THE APPEAL OF BOTH CASES. 4. BRIEF FACTS OF THE CASE AS NOTED BY THE AO AT PA GE 1 PARA 2 OF HIS ORDER FOR REOPENING U/S. 147 OF THE ACT IN HIS OWN WORDS ARE AS UNDER: 2. IN COURSE OF ASSESSMENT PROCEEDINGS FOR THE FY 2004-05 AND FY 2005-06 RELEVANT TO ASSESSMENT YEAR 2005-06 AND 2006-07 RESPECTIVELY OF M/S. GUINESS COMMODITIES PVT. LTD., 10, CANNING STREET, 3 RD FLOOR, KOLKATA-1 (PAN-AAACG9869L), IT HAS BEEN EST ABLISHED THAT M/S. JUGGON PURSAD BAIJNATH (IN SHORT JPB) IS A NON-EXIS TENCE AND FLAG ENTITY IN THE SHARE MARKET (OFF MARKET). IT HAS NO OFFICE, IT HAS NO ADDRESS, IT HAS NO WHEREABOUTS. HENCE, THE TRANSACTION WITH JPB IS NOTHING BUT A BOGUS OR ENTRY TRANSACTIO N TO CHANNELIZED UNACCOUNTED MONEY. SINCE THIS ASSESSEE HAD MADE SEVERAL TRANSACTIONS W ITH JPB IN THIS FY 2003-04 RELEVANT TO THE AY 2004-05, THERE WAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 5. THEREAFTER THE AO REOPENED THE ASSESSMENT AND DU RING RE-ASSESSMENT PROCEEDING THE AO NOTED THAT THE ASSESSEE HAD RECEIVED RS.75,50,00 0/- FROM M/S. JUGGAN PRASAD BAIJNATH (IN SHORT JPB) AND BASED ON HIS FINDING IN THE OTHE R ASSESSEES CASE [M/S. GUINESS COMMODITIES PVT. LTD.] THAT THE SAID JPB IS A BOGUS ENTITY (SHARE-BROKER) MADE THE ADDITION OF RS.75,50,000/- WHICH THE ASSESSEE RECEIVED FROM JPB IN THIS ASSESSMENT YEAR TO THE INCOME OF THE ASSESSEE COMPANY. AGGRIEVED THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DELETE THE SAME. AGGR IEVED, THE REVENUE IS BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS CAREFULLY. WE NOTE THAT THE FOUNDATION ON WHICH THE ENTIRE EXERCISE FOR REOPENI NG AND CONSEQUENT REASSESSMENT ORDER WAS BASED ON THE FACT THE AO DISCOVERED ON AN ASSES SMENT OF AN ANOTHER ASSESSEE COMPANY M/S. GUINESS COMMODITIES PVT. LTD. THAT M/S. JPB WAS NON-EXISTENT, BOGUS SHARE BROKER . WE NOTE LATER, WHEN THE CASE OF M/S. GUINESS COMMOD ITIES PVT. LTD. REACHED THIS TRIBUNAL IN ITA NO. 520 & 521 OF 2010 IT WAS HELD THAT M/S. JPB CANNOT BE SAID TO BE NON-EXISTING SHARE-BROKER AND THE SAID ASSESSMENT ORDER WAS SET ASIDE BACK TO AO FOR DE NOVO 3 ITA NO. 2107 & 2292/KOL/2016 GUINESS PORTFOLIO MANAGEMENT SERVICES PVT. LTD., AY 2004-05 ASSESSMENT. IN THE SET ASIDE PROCEEDINGS, [2 ROUND ] WE NOTE THAT THE AO VIDE ORDER DATED 3.03.2013 ACCEPTED THE FACT THAT M/S. JPB IS AN EXI STING ENTITY AND THE TRANSACTION WITH THE SAID SHARE-BROKER BY THAT ASSESSEE COMPANY WAS GENU INE AND CONSEQUENTLY MADE NO ADDITION IN THAT CASE. 7. SO WE NOTE THAT AO IN M/S. GUINESS COMMODITIES P VT. LTD. HAS ACCEPTED THE GENUINENESS OF M/S. JPB AS A SHARE BROKER. 8. WE NOTE THAT THE REOPENING IN BOTH THE ASSESSEE S CASE BEFORE US WAS REOPENED BY THE AO ON THE GROUND THAT M/S. JPB IS A NON-EXISTING S HARE-BROKER AND ADDITION WAS SLAPPED ON THEM BASED ON THE RECEIPT OF SUMS FROM M/S. JPB. 9. WE NOTE THAT THE ENTIRE EXERCISE OF REOPENING AN D REASSESSMENT IN THE CASE OF ASSESSEES BEFORE US WAS BASED ON THE FINDING MADE B Y THE AO IN THE INITIAL ROUND OF ASSESSMENT MADE IN THE CASE OF M/S. GUINESS COMMODI TIES PVT. LTD. THAT M/S. JPB WAS A BOGUS ENTITY. NOW THAT THE AO DURING THE SECOND RO UND OF DE-NOVO ASSESSMENT OF M/S. GUINESS COMMODITIES PVT. LTD. HAS HIMSELF ACCEPTED THE FACT THAT M/S. JPB WAS AN EXISTING GENUINE STOCK BROKER, IN SUCH A SCENARIO, THE FOUNDATION ON WHICH THE REOPENING AND CONSEQUENT REASSESSMENT/ADDITION NOW DOES NOT E XIST IN BOTH THE ASSESSEES CASE. THEREFORE, THE CASE OF ASSESSEE IS SQUARELY COVERED BY THE LEGAL MAXIM SUBLATO FUNDAMENTO CREDIT OPUS MEANING IN CASE FOUNDATION IS REMOVED, THE SUPER- STRUCTURE FALLS. IN BADRINATH VS. TAMILNADU AIR 2000 SC 3243 , THE HONBLE SUPREME COURT HELD THAT ONCE THE BASIS OF PROCEEDINGS IS GONE, ALL CON SEQUENTIAL ORDER/ACTS WOULD FALL ON THE GROUND AUTOMATICALLY WHICH IS APPLICABLE TO JUDICIA L/QUASI JUDICIAL PROCEEDINGS. 10. IN THE LIGHT OF THE AFORESAID FACTS, THE LD. CI T(A)S ACTION AFTER APPRECIATING THE AFORESAID FACTS HAS RIGHTLY ORDERED THE DELETION OF THE ADDITION WHICH WARRANTS NO INTERFERENCE FROM OUR PART. WE ALSO NOTE IT IS NOT THE CASE OF THE REVENUE THAT M/S. JPB IS A NON-EXISTENT/BOGUS BROKER, WHICH FACT HAS NOT BEEN AGITATED IN THE GROUNDS RAISED BEFORE US 4 ITA NO. 2107 & 2292/KOL/2016 GUINESS PORTFOLIO MANAGEMENT SERVICES PVT. LTD., AY 2004-05 IN THE PRESENT APPEALS NOR THE LD. DR COULD CONTROV ERT THIS FACTUAL ASPECT, SO THE APPEALS PREFERRED BY THE REVENUE HAVE NO MERITS. SO, THE O RDER IMPUGNED ORDERS BEFORE US ARE CONFIRMED AND, THEREFORE, BOTH THE APPEALS OF REVEN UE ARE DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08/08/201 8 SD/- SD/- (J. SUDHAKAR REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH AUGUST, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ITO, WD-5(1)/DCIT. CIR-6(1), KOLKATA. 2 RESPONDENT I) M/S. GUINESS PORTFOLIO MANAGEMENT SE RVICES PVT. LTD., II) M/S. GUINESS SECURITIES PV T. LTD., 10, CANNING ST., KOL-700001 3 4 5 CIT(A)- 8, KOLKATA (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY