Hindustan Grease Manufacturing Co. Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2581/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3501 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Reopening of assessment; Opportunity of being heard; Accommodation entries
• Section: 143(3); 147; 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO. 2581/DEL/2011 ASSESSMENT YEAR: 2002-03 HINDUSTAN GREASE MANUFACTURING CO. P. LTD., VS. ITO, 31-B, MADAN PARK, WARD-12(4), ROHTAK ROAD, ROOM NO. 331, NEW DELHI. C.R. BLDG., AABFH9372B NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ROHIT GARG, CA RESPONDENT BY : SH. SALIL MISHRA, SR. DR ORDER PER C.L. SETHI, J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 28.03.2011 PASSED BY THE LD. CIT(A) IN THE MATTER O F ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 147/14 4 OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2002-03. ITA NO. 2581/D/2011 2 2. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALL ENGED THE AOS ACTION IN ASSUMING JURISDICTION U/S 147 OF THE ACT TO REOPEN THE CASE. IN THIS REGARD, THE ASSESSEE HAS TAKEN GROUND NO. 3 WHICH READ AS UNDER: 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF THE AO TO ASSUME JURISDICTION U/S 147 TO REOPEN THE CASE. 3. IN THIS CASE, THE ASSESSEE FILED ITS ORIGINAL RE TURN OF INCOME ON 28.10.2002 DECLARING TOTAL INCOME AT RS. 34,944/-. SUBSEQUENTLY, THE AO ISSUED NOTICE U/S 148 DATED 27.03.2009. IN REPLY TO THE NOTICE ISSUED U/S 148 OF THE ACT, THE ASSESSEE SUBMITTED A LETTER, WHICH WAS RECEIVED BY THE AO ON 16.04.2009, STATING THAT THE RETURN OF INCOME ALREADY FURNISHED U/S 139 MAY BE TREATED AS HAVING BEEN FUR NISHED IN PURSUANCE OF NOTICE U/S 148 UNDER PROTEST. THEREAF TER, THE AO ISSUED NOTICE U/S 143(2) DATED 10.07.2009 FIXING TH E HEARING ON 23.07.2009. THE HEARING WAS FURTHER FIXED ON 04 .08.2009, 12.08.2009, 11.09.2009, 30.11.2009 AND ON 2.12.2009 . ON 2.12.2009, ASSESSEES AUTHORIZED REPRESENTATIVE SH. J.C. AGGARWAL APPEARED BEFORE THE AO AND FILED A LETTER DATED 01.12.2009 ASKING FOR DROPPING OF PROCEEDINGS. THE ASSESSEE ITA NO. 2581/D/2011 3 ALSO FILED SOME DETAILS ON THAT DATE. THE CASE WAS THEN ADJOURNED TO 07.12.2009. IN THE ASSESSMENT ORDER, THE AO STATED THAT ON 07.12.2009 NOBODY ATTENDED NOR ANY ADJOURNMENT WAS SOUGHT. THE AO, THEREFORE, COMPLET ED THE ASSESSMENT U/S 144/147 OF THE ACT ON 10.12.2009 DET ERMINING ASSESSEES TOTAL INCOME AT RS. 29,55,480/-. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LD. CIT(A). 5. AMONGST VARIOUS GROUNDS, THE ASSESSEE HAD ALSO T AKEN A GROUND BEFORE THE LD. CIT(A) THAT THE AO HAS ERRE D IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ASSUM ING JURISDICTION U/S 147 TO REOPEN THE CASE VIDE GROUND NO. 4. 6. THIS GROUND NO. 4 RAISED BEFORE LD. CIT(A) HAS B EEN DISPOSED OF BY THE LD. CIT(A) VIDE PARA 4.1 OF HIS ORDER, WHICH READS AS UNDER: - 4.1 GROUND NO. 4 CHALLENGES THE REOPENING OF ASSTT. U/S 147. THE APPELLANT HAS NOT FILED ANY EVIDENCE TO SHOW THAT HE HAD CHALLENGED THE REOPENING OF ASSESSMENT. FURTHER, IT IS CLEAR FROM THE FACTS DISCUSSED IN ITA NO. 2581/D/2011 4 THE ASSTT. ORDER THAT THE AO HAD RECEIVED SPECIFIC INFORMATION FROM THE INVESTIGATION WING REGARDING RECEIPT OF ACCOMMODATION ENTRIES BY THE APPELLANT FROM A GROUP OF PERSONS, WHO WERE FOUND TO HAVE BEEN ENGAGED IN SUCH A RACKET. IN THE ASSTT. ORDER, THE AO HAS POINTED OUT THAT ENTRY OPERATORS RUNNING THE COMPANIES SHOWN AS SHARE APPLICANTS HAVE ADMITTED TO PROVIDING BOGUS ACCOMMODATION ENTRIES. THEY HAVE SPECIFICALLY NAMED THE COMPANIES SHOWN BY THE APPELLANT TO BE THEIR SHARE APPLICANTS, AS COMPANIES RUN BY THEM FOR THE PURPOSE OF GIVING BOGUS ACCOMMODATION ENTRIES. THERE IS NOTHING TO SUGGEST THAT THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE AO, OR THAT HE ONLY MECHANICALLY FOLLOWED ANY DIRECTIONS, FROM ANY OTHER AUTHORITY. IN VIEW OF THESE FACTS, THE APPELLANTS ARGUMENTS ARE NOT ACCEPTABLE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 8. IT IS AN ADMITTED POSITION, AS STATED BY THE AO IN HIS ASSESSMENT ORDER ITSELF, THAT ON 2.12.2009 SHRI J.C . AGGARWAL ATTENDED AND FILED A LETTER DATED 01.12.2009 ASKING FOR ITA NO. 2581/D/2011 5 DROPPING OF PROCEEDINGS. IT IS ALSO CLEAR THAT IN PURSUANCE TO NOTICE U/S 148 OF THE ACT, THE ASSESSEE STATED BEFO RE THE AO THAT RETURN OF INCOME ALREADY FURNISHED U/S 139 MAY BE TREATED AS HAVING BEEN FURNISHED IN PURSUANCE OF NOTICE U/S 148 UNDER PROTEST. FROM ASSESSMENT ORDER, IT IS ALSO CLEAR THAT ON 04.08.2009 SH. J.C. AGGARWAL, CHARTERED ACCOUNTANT APPEARED BEFORE THE AO AND SOUGHT COPY OF REASONS O F REOPENING OF THE CASE, AND, THEREAFTER, ON 04.09.20 09 SH. J.C. AGGARWAL, CHARTERED ACCOUNTANT APPEARED AND HAD FIL ED HIS POWER OF ATTORNEY. ON THAT DAY, A COPY OF REASONS AS TO REOPENING OF THE CASE WAS HANDED OVER TO HIM AND TH E CASE WAS THEN ADJOURNED TO 11.09.2009. THEREAFTER, ON 0 2.12.2009 ASSESSEE FILED ITS OBJECTION VIDE LETTER DATED 01.1 2.2009 REQUESTING FOR DROPPING OF PROCEEDINGS. THE MATTER WAS THEN ADJOURNED TO 07.12.2009 ON WHICH DATE NOBODY HAD AP PEARED BEFORE THE AO AS STATED BY THE AO. THE AO THEN COM PLETED THE ASSESSMENT U/S 144/147 OF THE ACT ON 10.12.2009 . IN OTHER WORDS, THE AO COMPLETED THE ASSESSMENT ON 10.12.2009 WITHOUT FIRST DISPOSING THE ASSESSEES O BJECTION AGAINST REOPENING OF THE ASSESSMENT FILED BEFORE HI M VIDE LETTER DATED 01.12.2009. WHEN ASSESSEE FILED AN OB JECTION VIDE LETTER DATED 01.12.2009 AND REQUESTED FOR DROP PING OF THE ITA NO. 2581/D/2011 6 PROCEEDINGS, THE AO SHOULD HAVE FIRST DISPOSED OF T HIS OBJECTION OF THE ASSESSEE AND THEN SHOULD HAVE PROC EEDED WITH THE ASSESSMENT PROCEEDINGS. IN THE PRESENT CA SE, THE ASSESSEES OBJECTION FILED ON 2.12.2009 HAS NOT BEE N DISPOSED OF BEFORE PROCEEDING WITH THE ASSESSMENT. THE AO HAS HELD HIS ACTION IN REOPENING OF THE ASSESSMENT TO BE JUSTIFIED BY PASSING AN ORDER IN THE ASSESSMENT ORD ER ITSELF, AND NOT BEFORE PROCEEDING WITH THE ASSESSMENT PROCE EDINGS TO COMPLETE THE ASSESSMENT EITHER U/S 143(3) OR 144 OF THE ACT. IN THIS CONNECTION, A REFERENCE MAY BE MADE T O A DECISION OF HONBLE SUPREME COURT IN THE CASE OF GK N DRIVESHAFTS (INDIA) LTD. VS. ITO (2003) 259 ITR 19 (SC). IN THIS CASE, THE HONBLE SUPREME COURT HAS HELD THAT WHEN A NOTICE U/S 148 OF THE INCOME TAX ACT, 1961, IS ISSU ED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE THE RETURN AND, IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING THE N OTICES. THE AO IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE AO IS BOUND TO DISPOSE O F THE OBJECTIONS BY PASSING A SPEAKING ORDER BEFORE PROCE EDING WITH THE ASSESSMENTS. ITA NO. 2581/D/2011 7 9. IN THE PRESENT CASE BEFORE US, THE ASSESSEE MADE COMPLIANCE TO THE NOTICE U/S 148 OF THE ACT BY STAT ING THAT THE RETURN FILED U/S 139 MAY BE TREATED TO BE A RETURN FILED IN PURSUANCE TO THE NOTICE U/S 148 OF THE ACT. THE AS SESSEE THEN REQUESTED THE AO TO FURNISH REASONS FOR ISSUIN G THE NOTICE U/S 148 OF THE ACT. THE AO THEN FURNISH THE REASONS TO THE ASSESSEE. ASSESSEE THEN FILED HIS OBJECTION ON 2.12.2009. HOWEVER, THIS OBJECTION WAS NOT DISPOSED OF BY PASS ING A SPEAKING ORDER BEFORE PROCEEDING WITH THE ASSESSMEN T BY THE AO. IN THE PRESENT CASE, THE AO DIRECTLY PROCEEDED TO COMPLETE THE ASSESSMENT U/S 144 OF THE ACT BEFORE D ISPOSING THE OBJECTIONS FILED BY THE ASSESSEE. WE ARE, THER EFORE, OF THE VIEW THAT THE AO HAS COMMITTED IRREGULARITIES IN NO T DISPOSING THE ASSESSEES OBJECTION BEFORE PROCEEDING WITH THE ASSESSMENT. WE, THEREFORE, RESTORE THE MATTER BACK TO THE FILE OF AO FOR HIS FRESH ADJUDICATION. THE AO SHALL FIR ST DISPOSE OF THE OBJECTIONS FILED BY THE ASSESSEE BY PASSING A S PEAKING AND REASONED ORDER AND THEN IF HE FINDS THAT THE NO TICE U/S 148 HAS BEEN VALIDLY ISSUED, HE SHALL PROCEED WITH THE ASSESSMENT PROCEEDINGS BY ISSUING NOTICE OF HEARING TO THE ASS ESSEE. THE ASSESSEE SHALL BE ENTITLED TO FURNISH AND FILE ANY SUCH EVIDENCES OR DOCUMENTS IN SUPPORT OF ITS CASE. THE AO SHALL ITA NO. 2581/D/2011 8 PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THE MATTER SHALL REMAIN VIDE OPEN BEFORE THE AO FOR HIS FRESH ADJUDICATION REGARDING DISPOSING OF T HE OBJECTION AS WELL AS PASSING THE FRESH ASSESSMENT ORDER AS PE R LAW. WE ORDER ACCORDINGLY. 10. SINCE THE VERY ASSESSMENT HAS BEEN SET ASIDE AN D RESTORED BACK TO THE FILE OF THE AO FOR HIS FRESH A DJUDICATION, THE VARIOUS OTHER GROUNDS TAKEN BY THE ASSESSEE NEE D NOT BE ADJUDICATED AS THEY HAVE BECOME REDUNDANT AT THIS S TAGE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOWED FOR A STATISTICAL PURPOSE. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2011 IMMEDIATELY AFTER THE HEARING OF THIS ORDER. SD/- SD/- (K.G. BANSAL) (C.L . SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: *KAVITA ITA NO. 2581/D/2011 9 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR