Sh. Sunil Kumar Gumber, New Delhi V. ITO, New Delhi

ITA 2325/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97904 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 09-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: A K SRIVASTAVA
• Keywords: Business income; Reason to believe
• Section: 68; 148; 44AD

Judgement Text

1 ITA NO.2325/DEL.2014 IN THE INCOME TAX APELALTE TRIBUNAL (DELHI BENCH SMC-2, NEW DELHI) BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER ITA NO.2325/DEL/2014 ASSESSMENT YEAR: 2003-04 MR. SUNIL KUMAR GUMBER VS. ASSESSING OFFICER, A-166, PREET VIHAR, WARD 36(3), NEW DELHI-110 092 NEW DELHI GIR/PAN: AAOPG8747J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A. K. SRIVASTAVA, CA RESPONDENT BY : SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING : 09.11.2015 DATE OF PRONOUNCEMENT : ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- XXVII, NEW DELHI, DATED 23.01.2014. 2. GROUND NO.1 RELATES TO THE VALIDITY OF THE ASSES SMENT AS WELL AS THE ISSUANCE OF NOTICE U/S 148 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT . 3. THE FACTS RELATING TO THIS GROUND ARE THAT THE A SSESSEE FILED RETURN OF INCOME ON 31.03.2003 DECLARING AN INCOME OF RS.3,17 ,690/- IN WHICH, THE BUSINESS INCOME OF RS.74,368/- WHICH INCLUDES RS.47 ,408/- COMPUTED U/S 44AD FROM JOB WORK / CONTRACT AS CONTRACT VALUE OF RS.5,92,600/- AND THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBS EQUENTLY, THE A.O. RECEIVED THE INFORMATION THAT THE ASSESSEE HAS REC EIVED ACCOMMODATION ENTRY THROUGH CHEQUE ON 27.04.2002 OUT OF WHICH RS.5 LACS WAS RECEIVED FROM SMT. KIRAN KAPOOR AND RS.5 LACS FROM SHRI RAKESH CH AWLA. ACCORDINGLY, 2 ITA NO.2325/DEL.2014 THE A.O. REOPENED THE ASSESSMENT WHICH WAS COMPLETE D ON 29.12.2010 IN WHICH A SUM OF RS.10 LACS WAS ADDED U/S 68 OF THE A CT. 4. WHEN THE MATTER WENT BEFORE LD. CIT(A), LD. CIT( A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. I HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. I NOTED THAT IN THIS CASE, UNDER PARA 12 OF THE ASSES SMENT ORDER, THE A.O. STATES THAT THE CASE WAS REOPENED BY ISSUING NOTICE U/S 14 8 DATED 31.03.2009. BUT FROM THE REASONS RECORDED WHICH ARE APPEARING AT PA GE 17 OF THE PAPER BOOK, IT IS APPARENT THAT THE REASONS HAVE BEEN RECORDED ON 26.03.2010 AS PER THE PROVISIONS OF SECTION 148(2). THE REASON TO BELI EVE HAS TO BE RECORDED PRIOR TO THE ISSUANCE OF NOTICE U/S 148. FROM THE ASSESS MENT ORDER, IT APPEARS THAT THE REASONS HAVE BEEN RECORDED SUBSEQUENT TO ISSUAN CE OF NOTICE BY THE A.O. NOTICE U/S 148 HAS TO PRECEDE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. THE ASSESSMENT ORDER HAS BEEN PASSED ON 29.12.2010 AND THIS ORDER HAS NOT BEEN RECTIFIED, THEREFORE, IT MAY BE CLAIMED THAT THERE MAY BE A MISTAKE IN MENTIONING THE DATE OF NOTICE ISSUED U/S 148 OF THE ACT. ON THIS BASIS ITSELF, I DO NOT HAVE ANY OTHER ALTERNATIVE E XCEPT TO QUASH THE ASSESSMENT PASSED IN CONSEQUENCE OF HT NOTICE ISSUE D U/S 148. 6. FOR THE OTHER PLEA OF THE LD. A.R. THAT THE REAS ONS RECORDED ARE NOT BONA FIDE AND FOR THIS IT PLACED RELIANCE ON THE DE CISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS SFIL STOCK BROKING LTD. 233 CTR DEL.69. I AM OF THE VIEW THAT THIS DECISION WILL NOT ASSIST THE ASSESSEE AS IN THIS CASE, AS PER THE REASONS RECORDED IN THE 1 ST PARAGRAPH SPECIFIED THE MATERIAL WHICH HAS BEEN RECEIVED BY THE A.O. FROM THE INVESTIGATIO N WING AND IN THE 2 ND PARAGRAPH, THE A.O. HAS CLEARLY FORMED BELIEF ON TH E BASIS OF THAT MATERIAL THAT A SUM OF RS.10 LACS HAS ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE REASONS RECORDED IN THE CASE OF ASSESSEE ARE EN UMERATED AS UNDER: NAME & ADDRESS OF THE ASSESSEE: SHRI SUNIL KUMAR G UMBER, 3 ITA NO.2325/DEL.2014 62, KAILASH APARTMENT, PATPARGANJ, DELHI-110092 A.Y. 2002-04 AN INFORMATION CONTAINED IN CD FROM INVESTIGATION W ING OF THE INCOME TAX DEPARTMENT, DELHI HAS BEEN RECEIVED THROUGH CIT, DE LHI-XII, NEW DELHI VIDE OFFICE LETTER F. NO. CIT-XIII/06-07/1616 DT. 0 8.03.2007 AND SUBSEQUENT FORWARDING LETTER OF ADDL. CIT, RANGE 36, NEW DEL HI VIDE F. NO. ADDL. CIT RANGE-36/2006-07/1124 DT. 14.03.2007 THAT SH./SMT./ M/S. SUNIL KUMAR GUMBER HAS TAKEN THE FOLLOWING ACCOMMODATION ENTRY (IES) DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2003-04: AMOUNT OF ENTRY TAKEN RS. DATE OF ENTRY DETAILS OF ASSESSEES BANK A/C IN WHICH ENTRY CREDITED DETAILS OF PERSON OF INSTRUMENT THROUGH WHICH ENTRY TAKEN 5,00,000/- 27.04.2002 ABN AMRO BANK, BARAKHAMBA ROAD, KIRAN KAPOOR A/C NO.6909 SBP DG THROUGH INSTRUMENT NO. NIL RAKESH CHAWLA A/C NO.6916 SBP DT THROUGH INSTRUMENT NO. NIL. AS PER INFORMATION THE AFORESAID TRANSACTION(S) WAS /WERE NOTHING BUT THE ACCOMMODATION ENTRY(IES) TAKEN BY THE ABOVE ASSESES EE FOR WHICH HE/SHE MUST HAVE GIVEN HIS/HER UNACCOUNTED MONEY AND HAS A LSO PAID A CERTAIN AMOUNT OF COMMISSION FOR OBTAINING THE ABOVE ENTRY( IES). THEREFORE, ON THE BASIS OF THE FACTS NARRATED ABOVE , I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE AMOUNTING TO RS.10, 00,000/- (TEN LAKH) AND A CERTAIN AMOUNT OF COMMISSION PAID ON THAT HAS ESC APED ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR WHICH THE ASSESSMENT OF T HE ASSESSEE NEEDS TO BE REOPENED AS PER PROVISION (5) OF SECTION147/148 OF THE INCOME TAX ACT 1961. DATED: 26/0./2010 TRUE COPY SD./- SD./- ITO, WARAD-36(3), NEW DELHI 25.05.2010 7. IN THE CASE OF SFIL STOCK BROKING LTD (SUPRA), I NOTED THAT THE A.O. HAS NOT FRAMED ANY REASON BUT IN THE 1 ST PARAGRAPH BY REFERRING TO THE INFORMATION RECEIVED FROM THE DDIT, HE STATED THAT HE HAS BEEN DIRECTED BY THE ADDL. CIT, RANGE VIII, TO INITIATE THE PROCEEDI NGS U/S 148 AND ACCORDINGLY, ON THE BASIS OF DIRECTIONS, HE ISSUED THE NOTICE FOR REOPENING OF THE ASSESSMENT. FOR THE REASONS RECORDED IN THAT C ASE, DENOTES NON APPLICATION OF MIND BY THE A.O. THE A.O. HAS NOT G IVEN ANY INDEPENDENT 4 ITA NO.2325/DEL.2014 FINDING. THEREFORE THE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS SFIL STOCK BROKING LTD. WHICH WAS VEHEMENTL Y RELIED UPON, WILL NOT HELP THE ASSESSEE AND ACCORDINGLY, I DISMISS TH IS PLEA TAKEN BY THE LD. A.R. 8. FOR INITIATION OF THE PROCEEDINGS U/S 147, THE A .O. MUST HAVE THE REASON THAT BELIEF MUST BE BASED ON THE MATERIAL WH ICH MUST BE RELEVANT TO THE ASSESSEE. THE TRIBUNAL CANNOT LOOK INTO THE SU FFICIENCY OF REASONS. IT IS NOT DENIED THAT BOTH THE CHEQUES WHICH WERE SHOWN I N THE INFORMATION, HAVE NOT BEEN RECEIVED BY THE ASSESSEE. 9. GROUNDS NO.2 & 3 RELATE TO THE EXTENT OF ADDITIO N OF RS.10 LACS. 10. I HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CO NSIDERED THE SAME ALONG WITH THE ORDERS OF TAX AUTHORITIES BELOW AND NOTED THAT IN THIS CASE, IT IS AN UNDISPUTED FACT THAT A SUM OF RS.10 LACS; RS.5 LACS FORM SMT. KIRAN KAPOOR AND RS.5 LACS FROM SHRI RAKESH CHAWLA WERE RECEIVED BY THE ASSESSEE AND ADDED BY THE A.O. U/S 68 OF THE ACT IN THE INCOME O F THE ASSESSEE. THE ASSESSMENT HAS BEEN COMPLETED BY PROCESSING THE RET URN U/S 143(1) WHICH WAS REOPENED U/S 147. SUBSEQUENTLY, A SUM OF RS.10 LACS WAS ADDED U/S 68 OF THE ACT. I NOTED THAT THE BUSINESS OF THE ASSES SEE IS CIVIL CONTRACTORS AND IN THE ASSESSMENT YEAR ENDED 31.03.2002, THE ASSESSEE HAS SHOWN GROSS VALUE OF CONTRACT AT RS.10.52 LACS WHICH INCLUDES RS.5.52 LA CS CONTRACT CARRIED FOR SMT. KIRAN KAPOOR AND RS.5 LACS CONTRACT CARRIED FO R SHIR RAKESH CHAWLA OUT OF THE AFORESAID WORK EXECUTION, RS.5 LACS IN EACH CASE WAS SHOWN AS RECEIVABLES, WHICH WAS SUBSEQUENTLY RECEIVED BY THE ASSESSEE THROUGH CHEQUES IN APRIL 2002 WHICH WAS PRESUMED TO BE ACCO MMODATION ENTRY BY THE REVENUE. THE ASSESSEE HAS ESTIMATED PROFITS U/ S 44AD @ 8% ON SUM OF RS.10.52 LACS. ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 HAS NOT BEEN REOPENED. THE MONEY STANDS DEBITED AS DUE FROM SMT . KRISHNA KAPOOR AND SHRI RAKESH CHAWLA IN THE ASSESSMENT YEAR 2002-03 A ND FOR WHICH ASSESSEE 5 ITA NO.2325/DEL.2014 HAS DULY ACCOUNTED FOR AS BUSINESS RECEIPT. AGAINS T THE SAID RECEIPT TO THE EXTENT OF THIS AMOUNT WAS DUE FROM THESE PARTIES, H AVE BEEN RECEIVED DURING THE YEAR. IN VIEW OF THESE FACTS, WHEN THE ASSESSM ENT FOR THE ASSESSMENT YEAR 2002-03 HAS DULY BEEN COMPLETED AND THE INCOME U/S 44AD IN RESPECT OF CONTRACT FROM SMT. KRISHNA KAPOOR AND SHRI RAKESH C HAWLA WAS ACCEPTED IN MY OPINION, THE AMOUNT RECEIVED DURING THE IMPUGNED ASSESSMENT YEAR AGAINST THESE CONTRACT RECEIVED CANNOT BE REGARDED TO BE THE CASH CREDIT. IT IS A PAYMENT RECEIVED BY THE ASSESSEE AS CONSIDERATION FOR HT WORK AS EXECUTED BY THE ASSESSEE IN THE EARLIER YEAR. THEREFORE, IN MY OPINION, NO ADDITION U/S 68 OF THE ACT CAN BE MADE AS IT BEING A TRADING REC EIPT. 11. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E IS ALLOWED. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH NOV., 2015. SD./- (P.K. BANSAL) ACCOUNTANT MEMBER DATE: 09 TH NOV., 2015 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), NEW DELHI 5. THE DR, ITAT, NEW DELHI TRUE COPY BY ORDER (ITAT, NEW DELHI)