ITO, New Delhi V. M/s. Randeep Investment Pvt. Ltd., New Delhi

ITA 2453/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4100 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-08-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Gift; Accommodation entries; Reassessment proceedings
• Section: 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 2453 /DEL/ 2014 ASSESSMENT YEAR: 2004 - 05 INCOME TAX OFFICER, WARD - 15(2), NEW DELHI VS. M/S. RANDEEP INVESTMENT PVT. LTD., 202, MOHAN PLACE, LOCAL SHOPPING COMPLEX, C - BLOCK, SARASWATI VIHAR, NEW DELHI GIR/PAN : AACCR0988D (APPELLANT) (RESPONDENT) APPELLANT BY SH. F.R. MEENA, SR.DR RESPONDENT BY SH. SANDEEP SAPRA, ADV. DATE OF HEARING 11.08.2016 DATE OF PRONOUNCEMENT 16.08.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST THE ORDER DATED 01/01/2014 OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - XVIII, NEW DELHI FOR ASSESSMENT YEAR 2004 - 05 RAISING THE FOLLOWING GROUNDS: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 45,00,000/ - MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT IGNORING THE FACT THAT AS PER THE INFORMATION RECE IVED FROM THE INVESTIGATION WING OF THE DEPARTMENT, THE SAID ENTITIES ARE 2 ITA NO. 2453/DEL/2014 AY: 2004 - 05 DOING NO BUSINESS EXCEPT TO PROVIDE ACCOMMODATION ENTRIES ON COMMISSION BASIS. II. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 2. AT THE OUTSET, THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IN THE IMPUGNED ORDER , THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ALLOWED THE LEGAL GROUND OF THE ASSESSEE CHALLENGING THE JURISDICTION IN INITIATING THE REASSESSMENT PROCEEDINGS IN CASE OF THE ASSESSEE AND DID NOT ADJUDICATE ON MERITS, WHEREAS THE REVENUE IN ITS APPEAL HAS AGITATED ONLY THE DELETION OF THE ADDITION AND NEITHER TAKEN GROUND CHALLENGING THE LEGAL GROUND ALLOWED TO THE ASSES SEE, NOR AMENDED THE GROUNDS TILL DATE AND THUS THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE. 3. LEARNED S ENIOR DEPARTMENTAL R EPRESENTATIVE , ON THE OTHER HAND , RELIED ON THE ORDER OF THE ASSESSING OFFICER BUT COUL D NOT CONTROVERT THE FACT THAT R EVENUE HA S NOT CHALLENGED THE REASSESSMENT PROCEEDINGS HELD AS VOID AND NOT IN ACCORDANCE TO LAW , BY THE LEARNED COMMISSIONER OF INCOME - TAX( APPEALS). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF THE ASSES SEE THE REASSESSMENT PROCEE DINGS UNDER SECTION 147 OF THE INCOME TAX - ACT, 1961 (IN SHORT THE ACT ) WERE COMPLETED ON 23/12/2011 , MAKING ADDITION OF RS. 45 LAKH UNDER SECTION 68 OF THE ACT. AGGRIEVED, THE ASSESSEE CHALLENGED THE REASSESSMENT AS WITHOUT JUR ISDICTION BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . IT WAS CONTENDED BY THE ASSESSEE THAT 3 ITA NO. 2453/DEL/2014 AY: 2004 - 05 IN THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT , IT WAS MENTIONED THAT THE ASSESSEE HAD TAKEN ACC OMMODATION ENTRIES OF RS. 11,61, 425/ - FROM TWO PARTIES , NAMELY , M /S PRAKASH PUNEET COMM & CO. (RS. 7,10,750/ - ) AND M/S VENUS ENTERPRISE (RS. 4,50,675/ - ), HOWEVER , THE ASSESSEE DID NOT RECEIVE ANY MONEY DURING THE YEAR UNDER CONSIDERATION FROM THESE PARTIES AND , THEREFORE , THE REASSESSMENT PROCEEDING INITIATED AG AINST THE ASSESSEE WERE ILLEGAL . FURTHER , THE ASSESSEE SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) THAT IN THE REASSESSMENT COMPLETED, ADDITION OF RS. 45 LAKH HAS BEEN MADE IN RESPECT OF FOLLOW ING PARTIES: (I) SINO CREDIT & LEASING PVT. LTD. RS. 14,00,000 (II) CHAMP FINVEST PVT. LTD. RS. 4,75,000 (III) OMNI FARMS PVT. LTD. RS. 14,00,000 (IV) VASUDEVA FARMS PVT. LTD. RS. 12,25,000 TOTAL RS. 45,00,000 5. T HE ASSESSEE SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) THAT THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ON ACCOUNT OF THE ALLEGED ACCOMMODATION ENTRIES RECEIVED FROM THE PARTIES AS ALLEGED IN THE REASONS RECORDED AND , THEREFORE , THE ASSESSING OFFICER DID NOT CONTINUE TO POSSESS THE JURISDICTION TO TAX ANY OTHER INCOME, WHICH CAME TO THE NOTICE SUBSEQUENTLY IN THE COURSE OF REASSESSMENT PROCEEDIN G. IN SUPPORT OF THE CONTENTION, THE ASSESSEE RELIED ON THE DECISION OF HON BLE J URISDICTIONAL HIG H COURT IN THE CASE OF 4 ITA NO. 2453/DEL/2014 AY: 2004 - 05 RANBAXY L ABORATORIES LTD . REPORTED IN 336 ITR 136 AND DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. J ET AIRWAYS(I) LTD . REPORTED IN 331 ITR 236. IN VIEW OF THE SUBMISSIONS OF THE ASSESSEE, THE LEAR NED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS DECIDED THE ISSUE OF JURISDICTION IN REASSESSMENT FROM PARA S 5.5 TO 5.8 OF THE IMPUGNED ORDER. THE RELEVANT PARAGRAPHS ARE REPRODUCED AS UNDER: 5.5 IN THIS REGARD, I HAVE PERUSED ALL 4 JUDGEMENTS AND I FIND THA T OUT OF 4 JUDGMENTS RELIED UPON BY THE APPELLANT, 2 JUDGEMENTS BELONGS TO JURISDICTIONAL HIGH COURT I.E. HON'BLE DELHI HIGH COURT AND IT HAS ALSO BEEN SUBMITTED BY THE LD. AR OF THE APPELLANT THAT NO OTHER HIGH COURT HAS GIVEN CONTRARY JUDGEMENT ON THE IS SUE THAT NO ADDITION HAS BEEN MADE ON THE BASIS OF REASONS RECORDED BY AO. IN THIS REGARD, FACTUAL POSITION OF THE MATTER HAS BEEN DISCUSSED BY DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD., WHEREIN WHILE DECIDING THE ISSUE IN RELEVANT PARAGRAP H NO. 20, HON'BLE DELHI HIGH COURT HAS OBSERVED AS UNDER: - THE VERY BASIS OF INITIATION OF PROCEEDINGS FOR WHICH REASONS TO BELIEVE WERE RECORDED WERE INCOME ESCAPING ASSESSMENT IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., BUT THE SAME HAVI NG NOT BEEN DONE, THE ASSESSING OFFICER PROCEEDED TO REDUCE THE CLAIM OF DEDUCTION U/S 80 HH AND 80 - 1 WHICH AS PER OUR DISCUSSION WAS NOT PERMISSIBLE. HAD THE ASSESSING OFFICER PROCEEDED TO MAKE DISALLOWANCE IN RESPECT OF THE ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., THEN IN VIEW OF OUR DISCUSSION AS ABOVE, HE WOULD HAVE BEEN JUSTIFIED AS PER EXPLANATION 3 TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTIONS 80HH AND 80 - 1 AS WELL. IN VIEW OF OUR ABOVE DISCUSSIONS, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OFFICER HAD THE JURISDICTION TO REASSESS ISSUES OTHER THAN THE ISSUES IN RESPECT OF WHICH PROCEEDINGS ARE INITIATED BUT HE WAS NOT SO JUSTIFIED WHEN THE REASONS FOR THE INITIATION OF THOSE 5 ITA NO. 2453/DEL/2014 AY: 2004 - 05 PROCEEDINGS CEASED TO SURVIVE. CONSEQUENTLY, WE ANSWER TH E FIRST PART OF QUESTION IN THE AFFIRMATIVE IN FAVOUR OF THE REVENUE AND THE SECOND PART OF THE QUESTION AGAINST THE REVENUE. 5.6 FROM THE ABOVE READING OF THE JUDGEMENT OF HON'BLE HIGH COURT, IT IS APPARENT THAT THERE ARE 2 SITUATIONS AS UNDER: - (I) AO CAN MAKE ADDITIONS ON THE BASIS OF REASONS RECORDED, THEREAFTER HE CAN MADE FURTHER ADDITIONS. THUS, THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE REVENUE. (II) AO CANNOT MAKE THE ADDITION IF NO ADDITION HAS BEEN MADE ON THE ISSUE OF REOPENING. THUS , THIS ISSUE HAS BEEN DECIDED AGAINST THE REVENUE. 5.7 IN THE INSTANT CASE FALLS UNDER THE SECOND CATEGORY, WHEREIN NO ADDITION HAS BEEN MADE ON THE BASIS OF REOPENING HAS BEEN MADE AS IS APPARENT FROM ABOVE DISCUSSION. I HAVE CONSIDERED ALL THE CASE LAW S AND RELEVANT MATERIALS PROVIDED BY LD. AR OF THE APPELLANT IN THIS REGARD. I FOUND THAT AO HAS REOPENED THE ASSESSMENT BY OBSERVING THAT THERE ARE 3 ENTRIES, 2 ENTRIES OF PRAKASH PUNEET COMPANY AMOUNTING TO RS. 7,10,750/ - AND 1 ENTRY FROM M/S. VENUS ENTE RPRISES OF RS. 4,50,675/ - AGGREGATING TO RS. 11,61,425/ - . HOWEVER, WHILE CONCLUDING THE ASSESSMENT, HE HAS MADE ADDITION OF RS. 45 LACS UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 PERTAINING TO FOLLOWING 4 PARTIES: - (I) SINO CREDIT & LEASING PVT. LTD. RS . 14,00,000 (II) CHAMP FINVEST PVT. LTD. RS. 4,75,000 (III) OMNI FARMS PVT. LTD. RS. 14,00,000 (IV) VASUDEVA FARMS PVT. LTD. RS. 12,25,000 TOTAL RS. 45,00,000 5.8 IN THIS REGARD, LD. AR OF THE APPELLANT HAS PUT HIS RELIANCE ON THE JUDGEMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD. VS. CIT VS. 336 ITR 136, WHEREIN HON'BLE DELHI HIGH COURT HAS ADDRESSED SIMILAR ISSUE IN PARA 20 OF THE ORDER WHICH HAS ALREADY BEEN 6 ITA NO. 2453/DEL/2014 AY: 2004 - 05 DISCUSSED IN EARLIER PARAGRAPHS. SIMILARLY, HIS RELIANCE ON OTHER JUDGEMENTS VIZ. IN CASE OF CIT VS. JET AIRWAYS 331 ITR 236 (BOM); CIT VS. SHRI RAM SINGH 306 ITR 343 (RAJ); AND SOFTWARE CONSULTANTS 341 ITR 240 (DEL) ALSO SUPPORTS THE CASE. IN THE INSTANT CASE, AO HAS REOPENED THE ASSESSMENT PERTAINING TO 3 ENTR IES TOTALLING TO RS. 11,61,425/ - WHICH HAS BEEN FOUND TO BE AS EXPLAINED BY HIM BUT HE HAS MADE ADDITION OF RS. 45 LACS ON 4 OTHER ENTRIES. IN VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES AS DISCUSSED ABOVE, ACTION O F ASSESSING OFFICER MAKING ADDITION ON THIS ACCOUNT IS FOUND TO BE MISCONCEIVED. GROUND OF APPEAL NO. 1 IS ALLOWED IN FAVOUR OF THE APPELLANT. 6. T HEREAFTER , THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ALLOWED THE GROUND OF APPEAL OF THE ASSESSEE C HALLENGING THE ADDITION ON MERIT , HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITIONS , OTHER THAN GROUNDS TAKEN IN 148 PROCEEDINGS , AND THEREFORE HE DID NOT ADJUD ICATE ON MERIT OF THE ADDITION OF RS. 45 LAKH. 7. IT IS EVIDENT THAT IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS HELD THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OTHER THAN THE GROUNDS TAKEN IN REASONS RECORDED IN PROCEEDINGS UNDER SECTION 147 OF THE ACT , THUS , THE REASSESSMENT PROCEEDING HAS BEEN HELD AS INVALID . W E FIND FROM THE GROUNDS OF APPEAL TAKEN BY THE R EVENUE IN FORM NO. 36 THAT THE INVALIDITY OF REASSESSMENT PROCEEDINGS HAS NOT BEEN CHALLENGED BY THE R EVEN UE BEFORE THE TRIBUNAL AND THE R EVENUE HAS ONL Y AGITATED THE ADDITION OF ON MERIT. WE FIND THAT THE APPEAL WAS FILED BY THE R EVENUE ON 21 ST OF APRIL 2014, HOWEVER , TILL DATE , NEITHER THE R EVENUE HAS AMENDED THE GROUNDS OF APPEAL , NOR ANY REQUEST MADE BEFORE 7 ITA NO. 2453/DEL/2014 AY: 2004 - 05 US DURING THE HEARING . IN SUCH CIRCUMSTANCES , IN OUR OPINION , THE APPEAL OF THE R EVENUE IS NOT MAINTAINABLE, AND HENCE REJECTED. 8. IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 6 T H AUGUST , 2016 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 T H AUGUST , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI