Neeta Gupta, New Delhi V. ITO, New Delhi

ITA 239/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1778 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Assessment Year: 2002-2003
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Gift; Accommodation entries; Reason to believe
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - I , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 2 39 /DEL/201 3 AY: 20 0 2 - 03 NEETA GUPTA VS. ITO, WARD 33(4) 75/5571, REGHAR PURA NEW DELHI KAROL BAGH NEW DELHI 110 048 PAN: AAKPG 1073 D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C.YADAV, ADV. RESPONDENT BY : SH. T.VASANTHAN, SR. D.R. ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS) - XXVI DATED 31.10.2012 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 2002 - 03. 2. THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT THE REASONS RECORDED DEMONSTRATE THAT THE ASSESSING OFFICER (AO) HAS NOT APPLIED HIS MIND INDEPENDENTLY TO THE MATERIAL R EFERRED TO BY HIM WHILE RECORDING REASONS FOR REOPENING. IT WAS SUBMITTED THAT WITHOUT FORMING A PRIMA FACIE PINION, ON THE BASIS OF SUCH MATERIAL, IT IS NOT CORRECT ON THE PART OF THE A.O. TO RECORD REASONS AND REOPEN THE ASSESSMENTS. 3. AFTER HEARING RI VAL CONTENTIONS I HOLD AS FOLLOWS. 4. THE REASONS FOR REOPENING RECORDED BY THE A.O. ARE AS FOLLOWS. INFORMATION IS RECEIVED FROM THE DIT(INV.) UNIT - V, NEW DELHI, VIDE LETTER NO. DD(INV.)/1318 02 - 03 - 2006 THAT THE ASSESSEE IS BENEFICIARY OF ACCOMMODATION ENTRY WHICH HAS ESCAPED ASSESSMENT THE DETAILS IS AS UNDER. ITA NO. 239/DEL/2013 A.Y. 2002 - 03 NEETA GUPTA 2 NAME AND ADDRESS OF THE BENEFICIARY VALUE OF ENTRY TAKEN RS. CHEQUE NO. AND BANK DATE NAME OF THE ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT MS.NEETU GUPTA 75/557 REGHARPURA K BAGH N.DEL RS.5,00,000/ - SBP DARYAGANJ 11.05.2001 CHINTPURNI THE ASSESSEE HAS TAKEN THE ABOVE ACCOMMODATION ENTRY IN THE FORM OF GIFTS SHARE TRANSACTION ETC. WHICH HAS ESCAPED ASSESSMENT. THEREFORE THE CASE IS BEING KREOPENED U/S 148 OF THE ACT ACCORDINGLY NOTICE IS BEING ISSUED. 4.1. THE HON BLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. G & G PHARMA INDIA LTD. IN ITA NO. 545/2015 VIDE ORDER DT. 8.10.2015 AT PARA 12 AND 13 HELD AS FOLLOWS. 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10 FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE O F INVESTIGATION, THE AO STATED: I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS, INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE P ROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT ITA NO. 239/DEL/2013 A.Y. 2002 - 03 NEETA GUPTA 3 IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES . IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SU FFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE P RESENT CASE. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DURING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS IS IN THE NATURE OF A POST MORTEM EXERCISE AFTER TH E EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO T HE REOPENING WILL NOT RESCUE AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY . 4.2. APPLYING THE PROPOSITIONS LAID DOWN IN THIS CASE, TO THE FACTS OF THE CASE ON HAND, I HOLD T HAT THE REOPENING IS BAD IN LAW AS THE A.O. IN THIS CASE HAS NOT APPLI ED HIS MIND TO THE INFORMATION RECEIVED FROM DDI (INV.) SO AS TO HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. 5. IN THE RESULT ASSESSEE S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER ,2015. SD/ - (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: THE 30 TH NOV. , 2015 *MANGA ITA NO. 239/DEL/2013 A.Y. 2002 - 03 NEETA GUPTA 4 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR