Ingrain Securities (P) Ltd., New Delhi V. ITO, New Delhi

ITA 2474/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65220 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 22-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: S C SINGHAL
• Keywords: Principle of natural justice; Peak credit; Period of limitation; Additional evidence; Accommodation entries; Time period of passing order
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI I.C. SUDHIR , JM & SHRI A.N. PAHUJA, AM ITA NO.2474/DEL/2012 ASSESSMENT YEAR : 2003-04 INGRAIN SECURITIES (P) LTD., 1/561, G.T. ROAD, SHAHDARA, NEW DELHI-32 V/S . INCOME-TAX OFFICER, WARD-11(4), NEW DELHI [PAN :AAA CI 1511 R] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S.C. SINGHAL, AR REVENUE BY SHRI SATPAL SINGH, DR DATE OF HEARING 24.7.2012 &01-08-2012 DATE OF PRONOUNCEMENT 01-08-2012 O R D E R AN PAHUJA:- THIS APPEAL FILED ON 22-05-2012 BY THE ASSESSEE AGA INST AN ORDER DATED 27-02-2012 OF THE LD. CIT(A)-XV, NEW DELHI, R AISES THE FOLLOWING GROUNDS:- 1. THE LEARNED INCOME-TAX OFFICER HAS MECHANICALLY WITHOUT APPLICATION OF HIS MIND HAS ISSUED NOTICE U /S 148 SIMPLY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATIO N WING. THE REASONS RECORDED SHOW LACK OF APPLICATION OF MIND B Y THE INCOME- TAX OFFICER. THE APPROVAL BEFORE ISSUE OF NOTICE U /S 148 IS MISSING ON THE NOTICE RECEIVED. THE INITIATION AND NOTICE U/S 148 BE HELD INVALID AND BAD IN LAW. 2. BELIEF MUST FOLLOW INVESTIGATION AND NOT VICE VE RSA. ON PAGE 6 OF ASSESSMENT ORDER, ANY SIGN OF ENQUIRY OR INVESTIGATION IS MISSING WHICH HAS BEEN DONE ONLY AFTER ISSUE OF NOTICE U/S 148. THIS IS NOT CORRECT IN LAW AND RESULTS IN HOLDING T HE NOTICE INVALID. 3. REASONS RECORDED WERE NOT SENT WITH THE NOTICE U/S 148 DATED 15.3.2010. AS PER ASSESSMENT ORDER A DMITTEDLY THEY WERE PROVIDED ON 22.10.2010. IN VIEW ITAT DELHI AN D DELHI HIGH ITA NO.2474/D/2012 2 COURT, NOTICE SENT IN THE END OF LIMITATION PERIOD MUST BE ACCOMPANIED WITH REASONS RECORDED OTHERWISE, THE NO TICE WILL BE INVALID. 4. INSPITE OF SPECIFIC REQUEST BEFORE THE INCOME-TA X OFFICER IN LETTER DATED 16.3.2010 (POINT 4), NO EVI DENCE ETC. WITH INCOME-TAX OFFICER WAS EVER SHOWN TO ASSESSEE. RAT HER BANK A/C STATEMENTS COLLECTED DIRECTLY BY THE ASSESSING OFFI CER LATER ON WERE ALSO NOT GIVEN TO THE ASSESSEE. PRINCIPLES OF NATU RAL JUSTICE DO NOT PERMIT IT. INFORMATION GATHERED DIRECTLY BY INCOME -TAX OFFICER LATER ON WERE ALSO NOT GIVEN TO THE ASSESSEE. PRINCIPLES OF NATURAL JUSTICE DO NOT PERMIT IT. INFORMATIFON GATHERED DI RECTLY BY INCOME- TAX OFFICER AND USED AGAINST THE ASSESSEE AND NOT D ISCLOSED TO HIM, IS NOT ALLOWED TO BE USED. 5. AS PER A SUPREME COURT DECISION, OBJECTION TO NOTICE MUST BE DISPOSED OF FIRST AND ONLY THEREAFTE R ASSESSMENT CAN BE PROCEEDED. THE OBJECTIONS DATED 16.3.2010 WERE DISPOSED OF BY INCOME-TAX OFFICER ON 22.10.2010 AND NOTICE U/S 143(2) IS DATED 15.9.2010. THUS IT IS BAD IN LAW AND THE NOTICE IS INVALID. NO SUBSEQUENT SUCH NOTICE HAS BEEN ISSUED IN THIS CAS E. VALID ISSUANCE OF NOTICE IS A NECESSARY PRECONDITION FOR REASSESSMENT WHICH IS MISSING. 6. IN CASE OF EXPARTE ASSESSMENT ORDER AND CIT(A) ORDER, THE ITAT CAN ACCEPT THE ADDITIONAL EVIDENCES AND DECIDE THE CASE ON MERITS. PERMISSION BE KINDLY GRANTED FOR S UBMISSION OF ADDITIONAL EVIDENCES. 7. ALMOST ALL THE TRANSACTIONS ARE WITH LIMITED COMPANIES LISTED IN ASSESSMENT ORDER AND THEIR BANK A/C OBTAINED DIRECTLY BY INCOME-TAX OFFICER CONFIRM CHEQUE TRANS ACTION IN EACH CASE. FOLLOWING SUPREME COURT DECISION, THE ADDITI ON IN THIS CASE IS UNCALLED FOR. FURTHER PROVIDING SOURCE OF SOURC E IS NOT THE OBLIGATION OF THE APPELLANT. THE ONUS LAID BY LAW ON ASSESSEE HAS BEEN DISCHARGED. 8. FORMULA OF PEAK CREDIT COULD HAVE BEEN APPLIED A S EACH TRANSACTION IS ONE AFTER THE OTHER AND NOT SIM ULTANEOUSLY. MAXIMUM AMOUNT ROTATED IS ` ` 5 LAKH. 9. INCOME-TAX OFFICER HIMSELF HAS TREATED APPELLANT AS ENTRY OPERATOR AND WORKED OUT 0.25% INCOME AS CO MMISSION FOR PROVIDING ACCOMMODATION ENTRIES. FOLLOWING ITAT SP ECIAL BENCH, DELHI TOTAL AMOUNT OF TRANSACTIONS AT ` ` 80,52,000/- NEED BE ADDED AND ONLY 0.25% THEREOF BE TREATED AS INCOME. ITA NO.2474/D/2012 3 10. THE COMMISSION @0.25% IS WITHOUT ANY PAST HISTORY OF THE CASE, ARBITRARY AND PURELY ON GUESS WORK. NO COMPARABLE CASE HAS BEEN CITED AND THE SAME IS DEN IED. NO OPPORTUNITY WAS GIVEN. 11. THE HEARING BEFORE EARLIER CIT(A) WAS ATTENDED AND WRITTEN SUBMISSIONS WERE FILED AND THE HEARING WAS COMPLETED. THE NEW CIT(A) AS PER ORDER GAVE TWO NOTICES. AS N O NOTICES COULD BE SERVED ON THE APPELLANT THE HEARING COULD NOT BE ATTENDED AND CIT(A) WITHOUT ENSURING SERVICE OF NOTICE, PASSED A N EXPARTE ORDER. THE CIT(A) FILE CARRIES ALL INFORMATION AND NO COMM ENT IS THERE ON FACTS AND MERITS OF THE CASE. THE LIMITATION PERIO D PROBLEM IS CLEAR FROM INCOME-TAX OFFICER FILE. INCOME-TAX OFFICER S ENT INITIALLY ASSESSMENT ORDER OF SOME OTHER PARTY IN ENVELOP ADD RESSED TO THE APPELLANT. ON WRITTEN APPLICATION, THE CORRECT ORD ER WAS PROVIDED BY THE INCOME-TAX OFFICER AND THEN THE APPEAL WAS FILE D WITHIN GIVEN TIME. 12. THE APPELLANT DENIES LEVY OF INTEREST WITHOUT C LEAR FINDING IN ASSESSMENT ORDER AND ALTERNATIVELY IT BE REDUCED IN THE LIGHT OF RELIEF GRANTED. 2. ADVERTING FIRST TO GROUND NO.11 IN THE APPEAL, FACTS IN BRIEF, AS PER RELEVANT ORDERS THAT RETURN DECLARING LOSS OF ` ` 9,86,415/- FILED ON 13.09.2004 BY THE ASSESSEE, WAS PROCESSED ON 28.09.2004 U/S 143(1 ) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). SUBSEQU ENTLY, ON A REPORT RECEIVED FROM DIT(INVESTIGATION)-I, NEW DELHI THAT THE ASSES SEE OBTAINED ACCOMMODATION ENTRIES OF ` 82,52,000/-FROM VARIOUS PERSONS AS DETAILED ON PAGE 1 TO 6 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER (A.O. IN SH ORT), AFTER RECORDING REASONS IN WRITING, REOPENED THE ASSESSMENT WITH THE ISSUE OF A NOTICE U/S 147 OF THE ACT ON 15.3.2010. IN RESPONSE, THE ASSESSEE REPLIED VI DE LETTER RECEIVED BY THE AO ON 21.4.2010 THAT RETURN ALREADY FILED ON 13 TH SEPTEMBER, 2004 MAY BE TREATED AS RETURN IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT . INTER ALIA, THE ASSESSEE SOUGHT A COPY OF REASONS RECORDED. THE AO OBSERVED THAT A COPY OF REASONS HAD ALREADY BEEN SUPPLIED BEFORE ISSUING NOTICE U/ S 148 OF THE ACT. THE OBJECTIONS RAISED BY THE ASSESSEE WERE DISPOSED OF VIDE ORDER DATED 22.10.2010. SINCE THE ASSESSEE DID NOT SUBMIT DETAILS SOUGHT BY THE AO IN A QUESTIONNAIRE ITA NO.2474/D/2012 4 NOR FURNISHED CONFIRMATION OF THE PARTIES FROM WHOM SHARE CAPITAL/SHARE APPLICATION MONEY WAS RECEIVED, THE AO ADDED THE AM OUNT OF ` ` 80,52,000/- U/S 68 OF THE ACT BESIDES COMMISSION OF ` ` 20,130/- +12,000/- IN OBTAINING THE AFORESAID ACCOMMODATION ENTRIES. 3. ON APPEAL, DESPITE SEEKING ADJOURNMENTS IN PUR SUANCE TO NOTICE DATED 27 TH JUNE, 2011, 13 TH OCTOBER, 2011 AND 01.12.2011, NONE APPEARED ON BEHALF OF THE ASSESSEE ON 6.1.2012. ACCORDINGLY, T HE LD. CIT(A) WITHOUT GOING INTO THE MERITS OF THE ISSUE, DISMISSED THE APPEAL OF THE ASSESSEE, BEING NOT MAINTAINABLE, IN THE FOLLOWING TERMS:- 5. FROM THE PERUSAL OF FORM NO.35 AND THE OTHER D OCUMENTS ATTACHED, WHILE FILING THE APPEAL WITH THIS OFFICE, THIS APPEAL IS AGAINST THE ASSESSING OFFICERS ORDER DATED 30.11.2 010, WHEREAS THE APPEAL (AS PER FORM NO.35) IS FILED ON 17.02.20 11. THE RECORDS SHOW THAT ASSESSMENT ORDER AND NOTICE OF DEMAND WER E DISPATCHED TO THE APPELLANT BY SPEED POST ON 13.12.2010, HEN CE AS PER PROVISIONS OF SECTION 249(2), THE APPEAL IS FILED L ATE AND IS ALSO NOT ACCOMPANIED BY ANY APPLICATION FOR CONDONATION OF DELAY, AS A RESULT, THE APPEAL IS NOT MAINTAINABLE. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD.AR ON BEHALF OF T HE ASSESSEE SUBMITTED THAT NONE OF THE NOTICES WERE SERVED UPON THE ASSESSEE A ND THE LD CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL IN LIMINE. TO A QUERY BY THE BENCH, THE LD. AR DID NOT REPLY AS TO WHY THE ASSESSEE DID NOT APPEAR BEFORE THE LD. CIT(A)DESPITE SEEKING ADJOURNMENTS, AS MENTIONED IN THE IMPUGNED ORDER. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A) . TO A QUERY BY THE BENCH, THE LD. DR ADMITTED THAT ASSESSMENT ORDER WAS DISPATCHE D TO THE ASSESSEE THROUGH SPEED POST ON 13.01.2011 AND NOT ON 13 TH DECEMBER, 2010 AS MENTIONED BY THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. THE ASSESSEE MENTIONED IN ITS GROUNDS OF APPEAL NO. 11 THAT THE HEARING BEFORE THE ITA NO.2474/D/2012 5 EARLIER CIT(A) WAS ATTENDED, WRITTEN SUBMISSIONS WE RE FILED AND THE HEARING WAS COMPLETED. THE NEW CIT(A) ISSUED TWO NOTICES. AS NO NOTICE COULD BE SERVED ON THE ASSESSEE THE HEARING COULD NOT BE ATTENDED A ND LD. CIT(A) WITHOUT ENSURING SERVICE OF NOTICE, PASSED AN EXPARTE ORDER . IT IS ALSO MENTIONED IN THE GROUND THAT THE AO INITIALLY SENT ASSESSMENT ORDER OF SOME OTHER PARTY IN ENVELOP ADDRESSED TO THE ASSESSEE AND ON WRITTEN APPLICATIO N, THE CORRECT ORDER WAS PROVIDED BY THE AO AND ACCORDINGLY, APPEAL WAS FILE D WITHIN TIME BEFORE THE LD. CIT(A). THE LD. AR APPEARING BEFORE US DID NOT REPL Y AS TO WHO APPEARED BEFORE THE LD. CIT(A) ON 23.8.2011 & 4.11.2011,SEEKING ADJ OURNMENTS AND ON 6.9.11,WHO FILED ABRIDGED GROUNDS OF APPEAL. THE AP PROACH OF THE ASSESSEE IN SEEKING ADJOURNMENTS ON ONE PRETEXT OR THE OTHER BE FORE THE LOWER AUTHORITIES IS NOT IN ACCORDANCE WITH LAW AND APPARENTLY, THE ASSE SSEE DID NOT CO-OPERATE WITH THE LD. CIT(A) IN DETERMINING CORRECT INCOME OF TH E ASSESSEE. WE MAY CLARIFY THAT WE ARE NOT CONDONING THE DEFAULT ON THE PART OF THE ASSESSEE. THE APPEAL IN THIS CASE WAS FILED BEFORE THE LD. CIT(A) ON 17.02.2011, CLAIMING THAT ASSESSMENT ORDER WAS SERVED UPON THE ASSESSEE ON 19.01.2011. T HE LD. CIT(A) HAS NOT RECORDED ANY SPECIFIC FINDINGS AS TO WHEN THE ASSES SMENT ORDER WAS SERVED UPON THE ASSESSEE WHILE THE LD. DR ADMITTED BEFORE US THAT ASSESSMENT ORDER WAS DISPATCHED ONLY ON 13.01.2011 AND NOT ON 13.12. 2010 AS OBSERVED BY THE LD. CIT(A). IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE LD. CIT(A) DID NOT RECORD HAS SPECIFIC FINDINGS ON THE DATE OF SERVICE OF TH E ASSESSMENT ORDER WHILE THE ASSESSEE CLAIMED BEFORE HIM THAT ORDER WAS SERVED ONLY ON 19.1.2011,WE HAVE NO ALTERNATIVE BUT TO VACATE THE FINDINGS OF LD. CI T(A) AND ACCORDINGLY, RESTORE THE MATTER TO HIS FILE WITH THE DIRECTIONS TO RE-ADJUDI CATE THE ISSUES IN ACCORDANCE WITH LAW AFTER ASCERTAINING THE CORRECT DATE OF SERVIC E OF ASSESSMENT ORDER ON THE ASSESSEE AND OF COURSE AFTER ALLOWING SUFFICIENT O PPORTUNITY TO BOTH THE PARTIES. WITH THESE DIRECTIONS GROUND NO.11 IN THE APPEAL IS DISPOSED OF. AS A COROLLARY, REMAINING GROUNDS RAISED BY THE ASSESSEE DO NOT SUR VIVE FOR OUR ADJUDICATION AT THIS STAGE. 6. NO OTHER ARGUMENT OR SUBMISSION WAS MADE BEF ORE US. ITA NO.2474/D/2012 6 7. IN RESULT, APPEAL IS ALLOWED BUT FOR STATISTIC AL PURPOSES. SD/- SD /- (I.C. SUDHIR) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1 ASSESSEE 2. INCOME-TAX OFFICER, WARD-11(4),NEW DEL HI 3. CIT CONCERNED. 4. CIT(A)-XV, NEW DELHI 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT