Tushar Packaging (P) Ltd., New Delhi V. ITO, New Delhi

ITA 2923/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86881 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: SUMIT GOE L
• Keywords: Opportunity of being heard; Accommodation entries; Competent authority
• Section: 143(3); 234B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH H NEW DELHI BEFORE : SHRI H.S. SIDHU , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2923/DEL./2013 ASSTT. YEAR : 2003 - 04 TUSHAR PACKAGING (P) LTD., VS. INCOME - TAX OFFICER, 4630/18 - B, ANSARI ROAD, WARD 16(4), NEW DELHI. DARYAGANJ, NEW DELHI. [PAN:AAACT2453P] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJ KUMAR, CA & SH. SUMIT GOEL, CA RESPONDENT BY : SH. S.K. JA IN, SR. DR DATE OF HEARING : 09.02.2016 DATE OF PRONOUNCEMENT : 04 .03.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - XIX, NEW DELHI FOR THE ASSESSMENT YEAR 2003 - 04 ON THE FOLLOWING GROUNDS : 1. THAT IN THE ABSENCE OF PRIOR APPROVAL AND SATISFACTION FROM JT. COMMISSIONER OF INCOME TAX (JCIT) U/S. 151(2), THE NOTICE ISSUED U/S. 148 IS WITHOUT JURISDICTION. UNDER THE FACTS, APPROVAL FROM CIT VI, NEW DELHI IS INVALID AND NO NEST IN VIEW OF CIT VS. SPL S SIDDHARTHA LTD. 345 ITR 223 (DEL). 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, INITIATION OF PROCEEDINGS U/S. 147 / 148 ARE WITHOUT JURISDICTION, UNWARRANTED, UNJUSTIFIED AND ITA NO. 2923/DEL./2013 2 ILLEGAL AND ALSO THE NECESSARY PRECONDITIONS FOR IN ITIATION OF THESE PROCEEDINGS REMAINS UNFULFILLED. 3.1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. AO FURTHER SERIOUSLY ERRED IN LAW AND ON MERITS IN MAKING ADDITION OF RS.13,50,000/ - U/S. 68 OF THE I.T. ACT, BY HOLDING THE RECEIPTS FROM THE FOLLOWIN G PARTIES AS ACCOMMODATION ENTRIES. S.NO. NAME AMOUNT (RS.) 1. PERFORMANCE TRADING & INVESTMENT 100000 2. RAHUL FINLEASE (P) LTD. 100000 3. ROYAL CREDITS (P) LTD. 100000 4. SHREE CUPTESHWAR MKT (P) LTD. 100000 5. SRS VIJAY SALES (P) LTD. 150000 6. B.I.C. CONSULTANTS (P) LTD. 200000 7. K.R. FINCAP (P) LTD. 200000 8. KUBERCO SALES (P) LTD. 100000 9. PAWAN KUMAR CHANGIA 100000 10. RAKESH CHAWLA 100000 11. SANTOSH KUMAR CHAUDHARY 100000 TOTAL 1350000 3.2. THAT WITHOUT CONFRONTING WITH THE ADVERSE MATERIAL COLLECTED ON THE BACK OF THE ASSESSEE AND USED AGAINST THE ASSESSEE AND IN THE ABSENCE OF ANY OPPORTUNITY BEING GIVEN TO REBUT THE SAID ALLEGED MATERIALS INCLUDING ANY STATEMENT, IF ANY, THE ADVERSE FINDIN GS OF THE LD. AO CANNOT BE SUSTAINED IN LAW. 3.3. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT(A) ERRED IN LAW AS WELL AS ON MERITS IN DIRECTING TO PRODUCE THE SHARE APPLICANTS BEFORE THE AO. 4. THAT THE LD. AO FURTHER ERRED IN ASSUMING THE UNDISCLOS ED COMMISSION EXPENSES OF RS.1,35,000/ - @ 10% OF RS.13,50,000/ - AND IN CONSEQUENTLY MAKING ADDITION FOR THE SAME WITHOUT ANY BASIS, LOGIC AND MATERIAL BEFORE HIM. ITA NO. 2923/DEL./2013 3 5. THAT UNDER THE FACTS AND CIRCUMSTANCES, NO INTEREST U/S. 234B SHOULD HAVE BEEN CHARGED. WITHOUT PREJUDICE, IN ANY CASE, THE INTEREST CALCULATIONS ARE ERRONEOUS AND EXCESSIVE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL LOSS OF RS.2,38,700/ - . IT WAS PROCESSED U/S. 143(1). ON THE BASIS OF INF ORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT, NOTICE U/S. 148 WAS ISSUED ON 31.03.2010. IN RESPONSE, THE ASSESSEE FILED OBJECTION 22.11.2010 WHICH WERE DISPOSED OF BY THE AO AND COMMUNICATED TO THE ASSESSEE. THE ASSESSEE, WAS, THEREFORE, REQ UIRED TO FILE THE RETURN OF INCOME ALONG WITH OTHER DETAILS. AS PER INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT, THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES FROM THE FOLLOWING PARTIES DURING THE YEAR : S.NO. NAME AMOUNT (RS.) 1. PERFORMANCE TRADING & INVESTMENT 03.12.2002 24600 100000 2. RAHUL FINLEASE (P) LTD. 03.12.2002 24619 100000 3. ROYAL CREDITS (P) LTD. 03.12.2002 50078 100000 4. SHREE CUPTESHWAR MKT (P) LTD. 03.12.2002 50099 100000 5. SRS VIJAY SALES (P) LTD. 03.12.2002 24626 150000 6. B.I.C. CONSULTANTS (P) LTD. 07.12.2002 50088 200000 7. K.R. FINCAP (P) LTD. 07.12.2002 24622 200000 8. KUBERCO SALES (P) LTD. 07.12.2002 24606 100000 9. PAWAN KUMAR CHANGIA 07.12.2002 6944 100000 10. RAKESH CHAWLA 07.12.2002 24601 100000 11. SANTOSH KUMAR CHAUDHARY 07.12.2002 6182 100000 TOTAL 1350000 ACCORDINGLY, THE CASE WAS REOPENED AND REASSESSMENT WAS MADE U/S. 143(3) READ WITH SECTION 147 OF THE ACT. SINCE THE ASSESSEE FAILED TO SUBMIT REQUISITE ITA NO. 2923/DEL./2013 4 EVIDENCE/INFORMATION TO SUBSTANTIATE THE ABOVE CLAIM, HENCE, THE LD. AO BEING DISSATISFIED BY THE REPLY OF ASSESSEE, MADE ADDITION OF RS.13,50,000/ - U/S. 68 AND ALSO ADDED 1% COMMISSION EXPENSE ON THE ABOVE AMOUNT. AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE AO. THE ASSESSEE, THEREFORE, IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE , AT THE OUTSET , CONTENDED WITH REFERENCE TO GROU ND NO. 1 THAT IN THE ABSENCE OF PRIOR APPROVAL AND SATISFACTION FROM JT. COMMISSIONER OF INCOME TAX (JCIT) U/S. 151(2), THE NOTICE ISSUED U/S. 148 IS WITHOUT JURISDICTION . IT WAS SUBMITTED THAT THE APPROVAL U/S. 151 WAS TAKEN FROM CIT - VI, NEW DELHI AS ADMI TTED BY THE AO AS WELL AS MENTIONED IN THE NOTICE U/S. 148 DATED 31.03.2010. IT WAS SUBMITTED THAT AS PER SECTION 151(2), WHERE THE NOTICE HAS BEEN ISSUED BY A OFFICER BELOW THE RANK OF JT. CIT, THE APPROVAL HAS TO BE OBTAINED FOR THE SAME FROM THE JT. CIT . IT WAS SUBMITTED THAT THE NOTICE WAS ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR. IT WAS FURTHER SUBMITTED THAT IN THE INSTANT CASE, NOTICE WAS ISSUED BY THE INCOME - TAX OFFICER, HENCE, THE APPROVAL WAS TO BE OBTAINED FROM JCIT AND N OT FROM THE COMMISSIONER. IT WAS FURTHER SUBMITTED THAT THIS ISSUE WAS ALSO RAISED BEFORE THE LD. CIT(A) VIDE GROUND NO. 6 BEFORE HIM WHICH WAS REJECTED BY THE LD.CIT(A) IN A CASUAL MANNER. THEREFORE, WHERE APPROVAL OF NOTICE U/S. 148 IS REQUIRED FROM JT. CIT AND IF TAKEN FROM CIT, MAKES THE ISSUANCE OF NOTICE U/S. 148 AS WITHOUT JURISDICTION, INVALID AND UNSUSTAINABLE AND SO ALSO THE CONSEQUENTIAL ASSESSMENT ORDER. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS : ITA NO. 2923/DEL./2013 5 (I). TRAK LEATHER (P) LTD. (ITA NO. 2664/D/2013 (ITAT DELHI DT. 19.12.13) (II). CIT VS. SPL S SIDDHARTHA LTD., 345 ITR 223 (DEL.) (III). ITO VS. ARYAN MANAGEMENT SERVICES (P) LTD. (ITA NO. 2986/DEL./2009 ORDER DT. 31.07.13 - ITAT DELHI BENCH A ) (IV). CIT VS. SUMAN WAMAN CHOUDHARI 321 I TR 495 (BOM.) (V). SUMAN WAMAN CHOUDHARI (SUPRA) - SLP NO. NO. 6757/2009 OF DEPTT. STANDS DISMISSED BY HON BLE SC VIDE ORDER DATED 16.03.2009. (VI). GHANSHYAM K. KHABRANI VS. ACIT & ORS. 346 ITR 443 (BOM). 4. THE LEARNED DR, ON THE OTHER HAND, RELYIN G UPON THE ORDERS OF THE AUTHORITIES BELOW SUBMITTED THAT PROPER APPROVAL WAS SOUGHT BY THE ASSESSING OFFICER BEFORE ISSUANCE OF NOTICE U/S. 148 TO THE ASSESSEE AND THE LD. CIT(A) HAS RIGHTLY DECIDED THIS ISSUE AGAINST THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO CAREFULLY GONE THROUGH THE ORDER OF LD. CIT(A) ON THIS ISSUE AND WE FIND THAT THE LD. CIT(A) HAS NOT CONSIDERED THIS ISSUE IN RIGHT PERSPECTIVE. FROM THE ARGUMENTS OF THE ASSESSEE RAISED BEFORE US AND ALSO BEFORE THE LD. CIT(A), IT IS DISCERNIBLE THAT THE PRIMARY QUESTION WHICH NEEDS ADJUDICATION IS WHETHER THE ASSESSING OFFICER HAS OBTAINED PRIOR SANCTION OF THE COMPETENT AUTHORITY AS CONTEMPLATED U/S. 151(2) OF THE ACT OR NOT FOR ISSUANCE OF NOTICE U/S. 148. IF THE AN SWER TO THIS QUESTION COMES IN AFFIRMATIVE, THEN IT WAS TO BE DECIDED WHETHER THE SATISFACTION RECORDED BY SUCH COMPETENT AUTHORITY WAS IN ITA NO. 2923/DEL./2013 6 ACCORDANCE WITH LAW OR WAS RECORDED WITHOUT APPLICATION OF MIND IN TERMS YES , OR YES, I AM SATISFIED ETC. A PERUS AL OF THE IMPUGNED ORDER SHOWS THAT THE LD. CIT(A) HAS NOT ADDRESSED THE PRIMARY QUESTION PUT FORTH BEFORE US - WHETHER THE AUTHORITY FROM WHOM PRIOR SANCTION WAS OBTAINED IN THE INSTANT CASE WAS COMPETENT TO DO SO OR NOT AS PER LAW FOR ISSUANCE OF NOTICE U/S. 148. THE LD. CIT(A) WAS REQUIRED TO FIRST DECIDE AS TO WHO WHETHER CIT OR JCIT WAS COMPETENT TO GIVE PRIOR APPROVAL FOR NOTICE U/S. 148 AND THEN TO DECIDE THE PROPRIETY OF SUCH APPROVAL . HOWEVER, THE LD. CIT(A) HAS DELVED INTO THE SUBSIDIARY QUESTION LEAVING ASIDE THE PRIMARY QUESTION, NOTED ABOVE. HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SPL S SIDDHARTHA LTD. (SUPRA) HAS HELD AS UNDER : HELD, THAT UNDER SECTION 151 OF THE ACT, IT WAS ONLY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WH O COULD GRANT THE APPROVAL FOR ISSUE OF NOTICE UNDER SECTION 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIONER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF INCOME - TAX. THIS WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 292B. THE NOTICE WAS NOT VALID. THE CONTENTION OF THE ASSESSEE THAT THE PRIOR APPROVAL WAS OBTAINED FROM CIT AND NOT FROM COMPETENT AUTHORITY, I.E., JCIT, NEEDS PROPER EXAMINATION AT THE LEVEL OF LD. CIT(A) , ON WHICH NO FINDINGS HAVE BEEN GIVEN IN THE IMPUGNED ORDER . ACCORDING LY, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE AND THIS LEGAL ISSUE IS RESTORED TO THE FILE OF LD. CIT(A) TO DECIDE THE SAME BY WAY OF SPEAKING ORDER IN ACCORDANCE WITH LAW AND ITS IMPACT ON THE CONSEQUENTIAL REASSESSMENT ORDER IN VIEW OF THE DECISIONS C ITED , AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PUT FORTH THIS ISSUE BEFORE THE LD. CIT(A) ALONG WITH NECESSARY DOCUMENTARY ITA NO. 2923/DEL./2013 7 EVIDENCE IN SUPPORT THEREOF. SINCE THE ABOVE LEGAL ASPECT OF THE CASE HAS B EEN RESTORED TO THE FILE OF LD.CIT(A), WE NEED NOT TO ENTER INTO THE MERITS OF ADDITIONS RAISED BY ASSESSEE IN ITS APPEAL. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.03.2016 . SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.03.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRE SENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI