DCIT Circle 15 (1), V. Reliance Polycrete Ltd,

ITA 244/DEL/2007

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0038 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 23-04-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 15-01-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Unexplained cash credit; Business income; Opportunity of being heard; Additional evidence; Reason to believe; Reassessment proceedings
• Section: 147; 68; 145; 148; 144

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI G .C. GUPTA , HON BLE VICE PRESIDENT AND SHRI I NTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 244/DEL/2007 ASSESSMENT YEAR 1999 - 2000 DCIT, CIRCLE 15(1), VS. M/S RELIANCE POLYCRETE LTD. ROOM NO.412, 1504, WAZIR NAGAR, KOTLA CR BLDG., I.P. ESTATE, N. MUBARAKPUR, OPP., DEFENCE DELHI. COLONY, NEW DELHI (PAN AAACR 4589 A ) ( APPELLANT) (RESPONDENT) DATE OF HEARING : 23 .0 4 .2015 DATE OF PRONOUNCEME NT : 06 . 0 5 .2015 APPELLANT BY : SHRI VIKRAM SAHAY, SR. DR RESPONDENT BY : NONE ORDER PER SHRI I NTURI RAMA RAO , A M : 1. THIS IS AN APPEAL FILED BY THE REVENUE FOR THE AY 1999 - 2000 IMPUGNING THE ORDER OF THE CIT(A) - XVIII, NEW DELHI RAISING TH E FOLLOWING GROUNDS: - 1. LD. CIT(A) HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN QUASHING THE REASSESSMENT PROCEEDINGS BY HOLDING THAT THE PROCEEDING ARE INVALID AND NOT IN ACCORDANCE WITH THE STATUTORY PROVISIONS AS PER SECTION 147 . 2. LD. CIT(A) HAS ERRED IN LAW AND IN ENTERTAINING FRESH EVIDENCE WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THOSE EVIDENCES. IT A NO. 244 /DEL /20 07 2 3. LD. CIT(A) HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITIO N OF RS.26,00,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT. 4. LD. CIT(A) HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.29,94,850/ - ON ACCOUNT OF EXPENSES INCURRED OUT OF UNEXPLAINED C ASH CREDIT. 5. LD. CIT(A) HAS ERRED IN LAW AND IN HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING PROVISIONS OF SECTION 145 OF THE ACT. 6. LD. CIT(A) HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.4,75,975/ - MADE ON ACCOUNT OF NET PROFIT RATIO OF 2.5%. 7. THE APPELLANT CRAVES TO BE ALLOWED TO AMEND, DELETE OR ADD ANY OTHER GROUNDS OF APPEAL DURING THE COURSE OF HEARING OF THIS APPEAL. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT - AS SESSEE COMPANY HAD FILED THE RETURN OF INCOME FOR THE AY 1999 - 2000 ON 31.12.1999 DECLARING A LOSS OF RS.1,84,500/ - . THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE I.T. ACT ON 16.06.2000 . SUBSEQUENTLY, BASED ON THE STRENGTH OF INFORMATION RECEIVED FRO M ANOTHER ASSESSING OFFICER NAMELY ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 14(1), NEW DELHI THAT THE ASSESSEE COMPANY INVESTED A SUM OF RS.26,00,000/ - IN CASH IN THE FORM OF SHARE APPLICATION MONEY FOR PURCHASE OF SHARES OF M/S. P.P.C. BUSINESS & PRO DUCTS (P) LTD. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1999 - 2000 ISSUED NOTICE U/S 148 OF THE ACT . SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED AFTER MAKING THE FOLLOWING ADDITION: - IT A NO. 244 /DEL /20 07 3 TOTAL BUSINESS INCOME I) NET INCOME ON TOTAL TURNOVER OF RS.1,90,39,041 AS DISCUSSED IN THE BODY OF ORDER 4,75,975 II) UNEXPLAINED CASH CREDIT U/S 68 INTRODUCED IN THE COMPANY AS DISCUSSED IN THE BODY OF ORDER 26,00,000 III) UNEXPLAINED CASH CREDIT U/S 68 INTRODUCED IN THE COMPANY A S DISCUSSED INM THE BODY OF ORDER 29,94,850 NET INCOME 60,70,825 BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE ASSESSEE COMPANY PREFERRED AN APPEAL BEFORE THE CIT(A) WHO VIDE ORDER DATED 06.10.2007 IN APPEAL NO.61/05 - 06 ALLOWE D THE APPEAL OF THE ASSESSEE COMPANY BOTH ON THE PRELIMINARY ISSUE RELATING TO REOPENING OF THE ASSESSMENT AND AS WELL AS ON MERITS OF THE ADDITION. BEING AGGRIEVED , THE REVENUE HAD COME UP PRESENT APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THE REASSESSMENT PROCEEDING TO BE IN VALID , IN AS MUCH AS THE ORIGINAL ASSESSMENT WAS MADE ONLY U/S 143(1) OF THE ACT. HE ALSO PLACED RELIANCE ON THE RATIO OF THE HON BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD. REPORTED IN 291 ITR 500 (SC). HE FURTHER ARGUED THAT THE CIT(A) ADMITTED THE ADDITIONAL EVIDENCE WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING OFFICER IN UTTER DISREGARD OF PROVISIONS OF RULE 46A OF THE IT RULES, 1962. 3 . NO ONE WAS PRESENT ON BEHALF OF THE RESPONDENT - ASSESSEE. IT IS SEEN FROM THE RECORD , THE NOTICE COULD NOT BE SERVED ON THE ASSESSEE COMPANY DESPITE BEST OF EFFORTS OF THE DEPARTMENT AND HENCE WE PROCEED TO PASS THE EX - PARTE ORDER ON IT A NO. 244 /DEL /20 07 4 MER ITS. AT THE FIRST INSTANCE, WE SHALL DEAL WITH PRELIMINARY ISSUE ON THE VALIDITY OF REOPENING PROCEEDINGS, THE LD. CIT(A) HAD HELD THE REOPENING ASSESSMENT INVALID AS ACCORDING TO HIM THERE WAS NO REASON TO BELIEVE THAT INCOME CHARGEABLE TAX AS ESCAPED ASS ESSMENT . THE LD. CIT(A) FURTHER HELD THAT THE REASON TO BELIEVE CANNOT BE EQUATED WITH REASON TO SUSPECT AND PLACING RELIANCE ON THE DECISIONS OF THE HON BLE SUPREME COURT IN THE CASES OF BAJRANJ LAL VS. ITO REPORTED IN (1993) 203 ITR 456 (SC) AND LAKHMAN I MEWAL DAS REPORTED IN (1976) 103 ITR 437 (SC) HELD THE REASSESSMENT PROCEEDING S WERE INVALID. AFTER CONSIDERING THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) MISDIRECTED HIMSELF IN PLACING RELIANCE IN DECISIONS MENTI ONED SUPRA. IN THE PRESENT CASE, THE ASSESSING OFFICER RECEIVED INFORMATION FROM ANOTHER ASSESSING OFFICER THAT THE ASSESSEE COMPANY INVESTED IN CASH IN THE FORM OF SHARE APPLICATION MONEY OF RS.26,00,000/. THIS INFORMATION IN OUR CONSIDERED VIEW GAVE THE ASSESSING OFFICER REASON TO BELIEVE THAT INCOME CHARGEABLE TAX HAD ESCAPED ASSESSMENT. THE INVESTMENT IN THE CASH FORM FOR SHARE APPLICATION MONEY CERTAINLY FORMS BELIEF THAT INCOME ESCAPED ASSESSMENT. IN THIS KIND OF TRANSACTION IT IS THE DUTY OF ASSESSI NG OFFICER TO GIVE A FINDING IN WHOSE HAND SUCH SUM IS TAXABLE. NOW IT IS SETTLED LAW THAT IN CASE WHERE IT APPEARS TO THE ASSESSING OFFICER THAT CERTAIN INCOME HAS BEEN RECEIVED DURING THE RELEVANT ASSESSMENT YEAR BUT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND, PRIMA FACIE, IT APPEARS THAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR B OR BY BOTH TOGETHER, IT WOULD BE OPEN TO THE RELEVANT INCOME TAX IT A NO. 244 /DEL /20 07 5 AUTHORITIES TO DETERMINE THE SAID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A AND B [CHHOTOLAL HARIDAS VS. M.D. KARNIK, (1961) 43 ITR 387, 392 (SC); SIDH GOPAL GAJANAD VS. ITO, (1969) 73 ITR 226, 233 (ALL); R. DALMIA VS. UNION OF INDIA, (1972) 84 ITR 616 (DEL)]. IT IS ALSO EQUALLY SETTLED LAW THAT AT THE TIME OF ISSUANCE OF REASSESSMENT NOTICE, IS NOT MANDATORY THAT THE ASSESSING OFFICER SHOULD COME TO A CONCLUSIVE FINDING THAT INCOME HAS ESCAPED ASSESSMENT AND, THEREFORE, WE HOLD THAT THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE REASSESSMENT PROCEEDING INVALID. NOW, WE SHALL DEAL WITH THE MERITS OF THE ADDITION . THE LD. CIT(A) DURING THE COURSE OF PROCEEDINGS BEFORE HIM HAD ACCEPTED THE ADDITIONAL EVIDENCE IN THE FORM OF MOU WITH M/S. MAHAVIR TRADE LINKS PRIVATE LTD. AND CONFIRMATION FROM THEM. WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER , THIS OFFENDS THE PROVISIONS OF RULE 46A OF THE IT RULES, 1962 WHICH IS REPRODUCED BELOW: (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB - RULE (1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS) [ OR, AS THE CASE MAY BE, THE COM MISSIONER (APPEALS) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS) [ OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB - RULE (1) UNLESS THE [ASSESSING OF FICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS - EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED B Y THE APPELLANT. IT A NO. 244 /DEL /20 07 6 4 . FROM THE PERUSAL OF THE CIT(A) S ORDER WE DO NOT FIND ANY THING AS TO THE PRAYER MADE BY THE ASSESSEE COMPANY FOR ADMISSION OF ADDITIONAL EVIDENCE. THE REASSESSMENT WAS MADE U/S 144 OF THE ACT. IT IMPLIES THAT THE ASSESSMENT WAS MAD E FOR NON COOPERATION, NON PRODUCTION EVIDENCE BEFORE THE ASSESSING OFFICER. IF THE CIT(A) GRANT RELIEF, OBVIOUSLY IT MEANS THAT THE ASSESSEE HAD FILED SOME ADDITIONAL EVIDENCE IN REBUTTAL OF THE ASSESSMENT ORDER. BUT, IT APPEARS FROM THE ORDER OF THE CIT( A) THAT HE HAD NOT GIVEN THE ASSESSING OFFICER REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS - EXAMINE THE WITNESS PRODUCED BY THE ASSESSEE COMPANY (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDIT IONAL EVIDENCE PRODUCED BY THE ASSESSEE. AS PER THE MANDATE OF RULE 46A OF THE INCOME TAX RULES, 1962. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION THAT THE APPEAL SHALL BE REHEARD AND THE ASSESSING OFFICER SHALL BE GIV EN REASONABLE OPPORTUNITY AS PER PROVISIONS OF CLAUSE(3) OF RULE 46A OF THE RULES, 1962 AND DISPOSE OF THE MATTER ACCORDINGLY. 5 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. TH E ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 TH MAY , 201 5 . SD/ - SD/ - ( G.C. GUPTA ) ( I NTURI RAMA RAO ) V ICE PRESIDENT ACCOUNTANT MEMBER DATED: 0 6 TH MAY , 201 5 . AKS/ - DCOM IT A NO. 244 /DEL /20 07 7 COPY FORWARDED TO 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST . REGISTRAR, ITAT, NEW DELHI