Santosh Devi Agarwal , Howrah V. ITO, Ward - 46(1) , Kolkata

ITA 2371/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2266 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 15-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CIT SR DR R
• Assessee Lawyers: RAM AWATAR DHOOT
• Keywords: Reopening of assessment; Search and seizure; Accommodation entries; Reason to believe
• Section: 250; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER] I.T.A. NO. 2371/KOL/2018 ASSESSMENT YEAR: 2010-11 SANTOSH DEVI AGARWAL............APPELLANT 10, FLAT NO. 302 MOHINI APARTMENT DR. ABANI DUTTA ROAD 3 RD FLOOR SALKIA WEST BENGAL 711 106 [PAN : AFHPA 7605 P] INCOME TAX OFFICER, WARD-46(1), KOLKATA.........................................................RESPONDENT APPEARANCES BY: SHRI RAM AWATAR DHOOT, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOUDHURY, ADDL. CIT SR. D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JUNE 13 TH , 2019 DATE OF PRONOUNCING THE ORDER : JUNE 21 ST , 2019 O R D E R PER J. SUDHAKAR REDDY :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 14, KOLKATA, (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 11/09/2018, FOR THE ASSESSMENT YEAR 2010-11. 2. AFTER HEARING RIVAL CONTENTIONS, I FIND THAT THE ASSESSMENT IN THIS CASE WERE REOPENED U/S 147 OF THE ACT, BY RECORDING THE FOLLOWING REASONS:- AN INFORMATION REGARDING SYSTEMATIC EVASIONS OF TAXES BY CLIENTS/MEMBERS OF THE NMCE DURING THE DIFFERENT FINANCIAL YEARS BY MISUSE OF THE NMCE PLATFORM PERTAINING TO F.Y. 2009- 10 THROUGH BOGUS COMMODITY TRADING HAVE BEEN RECEIVED DDIT (INV.) UNIT-3(1), KOLKATA. BASED ON THE FORWARD MARKET COMMISSION (FMC) REPORT THAT CLIENTS/MEMBERS OF NMCE WERE FOUND TO BE INVOLVED IN CREATING ARTIFICIAL VOLUME SUSPECTED EVASION OF INCOME TAX BY MISUSE OF NMCE PLATFORM. DEPARTMENTAL DATABASE WAS ALSO CHECKED TO IDENTIFY THE NATURE OF COMPANIES/ENTITIES AND IT WAS FOUND THAT AVENUE DEALERS PVT. LTD. IS FOUND TO BE SHELL COMPANIES WHICH ARE MANAGE AND CONTROLLED BY THE VARIOUS KOLKATA BASED ENTRY OPERATOR LIKE SHRI DEVESH UPADHYAY. STATEMENT OF SRI DEVESH UPADHYAY IN RESPECT OF AVENUE DEALERS PVT. LTD. HAS ALSO BEEN RECORDED. DURING THE VARIOUS SEARCH AND SEIZURE OPERATIONS, INVESTIGATION/ENQUIRY CARRIED OUT BY THE DIRECTORATE, THE ENTRY OPERATORS ACCEPTED THAT THOSE 2 I.T.A. NO. 2371/KOL/2018 ASSESSMENT YEAR: 2010-11 SANTOSH DEVI AGARWAL COMPANIES ARE SHELL/PAPER COMPANIES WHICH ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN VARIOUS FORMS TO THE BENEFICIARIES. HOWEVER, FROM THE INFORMATION IN POSSESSION WITH THE DEPARTMENT, IT CAME TO NOTICE THAT THE ASSESSEE, SANTOSH DEVI AGARWAL IS ONE OF THE BENEFICIARIES WHO HAVE TAKEN BOGUS PROFIT DURING THE F.Y. 2009-10, TRADING WAS DONE THROUGH SUSPENDED/PENALIZED BROKERS/MEMBERS MOST OF THE CLIENT ARE FOUND TO BE SHELL/DUMMY ENTITIES AND THE STATEMENT OF ENTRY OPERATORS/INDIVIDUAL IN WHICH THEY HAVE ACCEPTED THAT THE LOSS WHICH WAS BOOKED WAS BOGUS LOSS/PROFIT TO FACILITATE ACCOMMODATION BOGUS LOSS/PROFIT TO THE BENEFICIARIES. 2.1. A PERUSAL OF THESE REASONS DEMONSTRATE THAT THE REOPENING WAS DONE ON THE GROUND THAT THE ASSESSEE HAS TAKEN BOGUS PROFITS IN TRANSACTIONS WITH NMCE. THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ON ACCOUNT OF COMMODITY PROFITS SAID TO HAVE BEEN DERIVED FROM TRANSACTIONS ON NMCE PLATFORM TO SUB-BROKER MAHABIR SNYTHETICS. THE ISSUE IS AS TO WHETHER ANY OTHER ADDITION/S CAN BE MADE. NO ADDITION HAS BEEN MADE ON THE BASIS OF THE REASONS RECORDED IN THE REOPENING OF ASSESSMENTS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. REPORTED IN [2011] 331 ITR 236 (BOMBAY) HELD AS FOLLOWS:- SECTION 147 OF THE INCOME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - NON- DISCLOSURE OF PRIMARY FACTS - ASSESSMENT YEARS 1994-95 AND 1995-96 - WHETHER AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENT AND CANNOT BE CONSTRUED TO OVERRIDE IT OR TO RENDER SUBSTANCE AND CORE NUGATORY - HELD, YES - WHETHER AFTER INSERTION OF EXPLANATION 3 TO SECTION 147 BY FINANCE (NO. 2) ACT, 2009, WITH EFFECT FROM 1-4-1989, SECTION 147 HAS AN EFFECT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING COURSE OF PROCEEDINGS - HELD, YES - WHETHER, HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTS CONTENTION OF ASSESSEE AND HOLDS THAT INCOME, FOR WHICH HE HAD INITIALLY FORMED A REASON TO BELIEVE THAT IT HAD ESCAPED ASSESSMENT, HAS, AS A MATTER OF FACT, NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM TO INDEPENDENTLY ASSESS SOME OTHER INCOME; IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER SECTION 148 WOULD BE NECESSARY, LEGALITY OF WHICH WOULD BE TESTED IN EVENT OF A CHALLENGE BY ASSESSEE - HELD, YES 3. APPLYING THE RATIO OF DECISION CITED ABOVE TO THE FACTS OF THE CASE ON HAND, I HOLD THAT THE REOPENING HAS TO FAIL AND NO OTHER ADDITION CAN BE MADE FOR ANY OTHER REASON, WHEN THE ASSESSING OFFICER FAILS TO MADE AN ADDITION BASED ON THE REASONS RECORDED. ON THIS SOLE GROUND, THIS APPEAL OF THE ASSESSEE SUCCEEDS. 3.1. BE IT AS IT MAY, THE ASSESSEE HAS OFFERED TO TAX COMMODITY INCOME FROM MCX OF RS.1,08,865/-. THE CONTRACT NOTES AND OTHER DOCUMENTS HAVE BEEN FILED. WHEN THE ASSESSEE HAS ALREADY OFFERED THE SAME TO TAX, THE ASSESSING OFFICER HAS ERRED IN BRINGING TO TAX, THE SAME ONCE AGAIN. MOREOVER, THE IMPUGNED ASSESSMENT YEAR IS 3 I.T.A. NO. 2371/KOL/2018 ASSESSMENT YEAR: 2010-11 SANTOSH DEVI AGARWAL 2010-11. THE ASSESSING OFFICER SOUGHT TO BRING THIS AMOUNT TO TAX U/S 115BBE OF THE ACT. THIS SECTION HAS BEEN INSERTED W.E.F. 01/04/2013. THUS, THE ORDER OF THE ASSESSING OFFICER FAILS ON THIS GROUND ALSO. 4. IN VIEW OF THE ABOVE DISCUSSION, I DELETE THE ADDITION IN QUESTION AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 21 ST DAY OF JUNE, 2019. SD/- [ J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 21.06.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. SANTOSH DEVI AGARWAL 10, FLAT NO. 302 MOHINI APARTMENT DR. ABANI DUTTA ROAD 3 RD FLOOR SALKIA WEST BENGAL 711 106 2. INCOME TAX OFFICER, WARD-46(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES