ITO, New Delhi V. M/s. Mavrick Sweet and Foods Ltd., New Delhi

ITA 2942/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2979 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 30-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DEEPAK OTWAL
• Keywords: Reopening of assessment; Unexplained cash credit; Accommodation entries; Reassessment proceedings
• Section: 147; 68; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2942/DEL/2014 (ASSESSMENT YEAR: 2004 - 05 ) ITO, WARD - 6(3), NEW DELHI VS. MAVRICK SWEET AND FOODS LTD, M/S. D. OSTWAL & ASSOCIATES, CA, 303 - 304, DAKHA CHAMBERS, 2008, HS NALWA STREET NO. 38, KAROL BAGH, NEW DELHI PAN:AAACG4663N (APPELLANT) (RESPONDENT) REVENUE BY : SH. RAJESH KUMAR, SR. DR ASSESSEE BY: SH. DEEPAK OTWAL, CA DATE OF HEARING 30/05 / 2017 DATE OF PRONOUNCEMENT 31 / 05 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 01 THIS APPEAL IS FILED BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IX, NEW DELHI DATED 25/02/2014 WHERE REASSESSMENT PROCEEDINGS INITIATED BY THE LD. ASSESSING OFFICER WAS QUASHED. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT( A) ERRED IN HOLDING THAT THE ENTIRE REASSESSMENT PROCEEDING IS TREATED AS BAD IN LAW ENTIRETY ON THE SUBMISSION OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE REASSESSMENT PROCEEDING WAS INITIATED BY THE AO AFTER RECORDING HIS SATISFACTION AND AFTE R OBTAINING STATUTORY APPROVAL FROM THE ADDL.CIT ? 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ENTIRE REASSESSMENT PROCEEDING IS TREATED AS BAD IN LAW AS THE A.O. FAILED TO PROVIDE COPY OF REASON S RECORDED TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO MAKE ANY COMPLIANCE OF THE STATUTORY NOTICES AND FAILED TO RAISE ANY OBJECTION REGARDING THE NON - RECEIPT OF REASONS BEFORE COMPLETION OF ASSESSMENT ? 4. WHETHER IN THE FA CTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE ORDER OF THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 42,90,0007 - MADE U/S 68 BY THE AO AS UNEXPLAINED CASH CREDIT, BY COMPLETELY IGNORING THE FINDINGS GIVEN BY THE HON'BLE DELHI HIGH COURT IN CASES L IKE CIT V. NOVA PROMOTERS 342 ITR 169, CIT V. NR PORTFOLIO [2013] 29 TAXMANN.COM 291 (DELHI), CIT V. N. TARIKA PAGE 2 OF 4 PROPERTIES (ITA NO.2080/2010, DATED 28.11.2013) ETC. WHEREIN THE HON'BLE DELHI HIGH COURT HAS CLEARLY HELD THAT THE ONUS IS ON THE ASSESSEE TO ES TABLISH IDENTITY & CREDITWORTHINESS OF SHARE APPLICATION CREDITORS AND GENUINENESS OF TRANSACTIONS ? 5. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.85,800/ - MADE BY THE AO ON ACCOUNT OF C OMMISSION EXPENSES FOR OBTAINING ACCOMMODATION ENTRIES, WITHOUT APPRECIATING THE DETAILED FINDINGS GIVEN BY THE AO? 02 THE BRIEF FACTS OF THE CASES THAT ASSESSEE IS A COMPANY FILED ITS RETURN OF INCOME ON 01/09/2004 SHOWING INCOME OF RS. 1 689/ . SUBSEQUENTL Y ON RECEIPT OF INFORMATION FROM THE INVESTIGATION WING THAT COMPANY HAS RECEIVED ACCOMMODATION ENTRIES OF RS. 42.90 LAKHS THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 28 03 2011. ON 27 TH OF APRIL 2011, ASSESSEE SUBMITTED LATER DATED 18/04/2011 TO THE ASSESSING OFFICER STATING THAT RETURN FILED BY THE COMPANY ON 01/09/2004 MAY PLEASE BE TREATED AS COMPLIANCE TO THE NOTICE AND FURTHER REQUESTED TO PROVIDE THE REASONS RECORDED FOR ISSUANCE O F NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961. THE LD. ASSESSING OFFICER DID NOT PROVIDE THE REASONS TO THE ASSESSEE BUT CONCLUDED THE ASSESSMENT BY PASSING AN ORDER UNDER SECTION 14 FOR READY WITH SECTION 147 OF THE ACT ON 18/11/2011 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 4 377490/ AGAINST RETURNED INCOME OF RS. 1 689/ . AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. 1 ST APPELLATE AUTHORITY WHO BY ORDER DATED 25/02/2014 HELD AT PARA NU MBER 5.3.3 THAT THE LORD ASSESSING OFFICER DID NOT RECORDED THE REASONS PROPERLY, APPROVAL WAS NOT TAKEN WITH PROPER SATISFACTION NOTE FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX AND REASONS FOR OPENING WAS NOT COMMUNICATED TO THE ASSESSEE DESPITE ASSES SEE GIVING A LETTER TO THE ASSESSING OFFICER REQUESTING THE SAME. IN ADDITION, THEREAFTER HE QUASHED THE REASSESSMENT PROCEEDINGS. THEREFORE, AGAINST THE ORDER OF THE LD. CIT (A) REVENUE IS IN APPEAL BEFORE US. 03 THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTL Y SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE FOR THE REASONS OF REOPENING MADE NO REQUEST AND THEREFORE, THE LD. CIT (A) WAS INCORRECT IN QUASHING THE REOPENING PROCEEDINGS. 04 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THE COPY OF THE LETTER SUBMITTED ON 18/04/2011 WHEREIN THE CLAIM OF THE ASSESSEE THAT REASONS RECORDED WERE ASKED FOR AND WHICH WERE NOT PROVIDED. HE FURTHER REFERRED TO PARA NO. 3 OF THE ORDER OF THE LD. CIT (A) WHEREIN THE FACT OF SUBMISSION OF THE LETTER WA S RECORDED. HE THEREFORE SUBMITTED THAT NOT PROVIDING THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT MAKES ASSESSMENT FATAL AND MAKES THE ORDER PASSED PAGE 3 OF 4 BY THE LD. ASSESSING OFFICER ILLEGAL. HE REFERRED TO THE ORDER OF THE LD. CIT (A) AT PAGE NO. 13 TO 15 WHEREIN THE FINDINGS ARE GIVEN. 05 WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITY. IT IS AN ESTABLISHED FACT THAT THE ASSESSING OFFICER HAS REOPENED ASSESSMENT OF THE ASSESSEE BY IS SUE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 28 TH OF MARCH 2011. THE LETTER DATED 18/04/2011 WHICH WAS SUBMITTED ON 27/04/2011 CERTIFIED COPY OF SUCH LETTER WAS PROVIDED BY THE LD. AUTHORIZED REPRESENTATIVE DURING THE COURSE OF ASSESSMENT PROCE EDINGS SHOWS THAT ASSESSEE HAS REQUESTED THE ASSESSING OFFICER FORCE PROVIDING THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. THE HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFT (INDIA) LTD VERSUS IT OH (2003) 259 ITR 19 (SC) HAS LAID DOWN GUIDELINE S FOR REOPENED ASSESSMENT. ACCORDING TO WHICH THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. IN THE PRESENT CASE, THE REVENUE THAT THERE IS NO SUCH REQUEST MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, WHEREAS THE LD. AUTH ORIZED REPRESENTATIVE VEHEMENTLY SUBMITTED AN ACKNOWLEDGED COPY OF THE LETTER WHEREIN REQUEST FOR COPIES OF THE REASONS RECORDED WAS MADE CONTESTS IT. FOR PASSING AN ORDER UNDER SECTION 147 RECORDING OF REASONS U/S. 148 AND COMMUNICATION THEREOF TO PARTY C ONCERN IS MANDATORY AS HELD BY HONOURABLE COURTS IN GUJARAT FLUOROCHEMICALS LTD V. DCIT (2008) 15 DTR (GUJ.) 1, NANDLAL TEJMAL KOTHARI V. INSPECTING ACIT (1998) 230 ITR 943 (SC). HOWEVER IF ASSESSEE DOES NOT ASK FOR S. 147 REASONS AND OBJECT TO REOPENIN G, ITAT CANNOT REMAND TO AO AND GIVE ASSESSEE ANOTHER OPPORTUNITY AS HELD BY HONOURABLE DELHI HIGH COURT IN CIT V. SAFETAG INTERNATIONAL INDIA PVT. LTD. IN THE CASE OF CIT V. VIDESH SANCHAR NIGAM LTD. (2012) 340 ITR 66 (BOM.) THE TRIBUNAL FOLLOWING THE JUDGMENT OF BOMBAY HIGH COURT IN CIT V. FOMENTO RESORTS AND HOTELS LTD. ITA NO 71 OF 2006 DATED 27TH NOVEMBER, 2006, HAS HELD THAT THOUGH THE REOPENING OF ASSESSMENT WAS WITHIN THREE YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, SINCE THE REASONS RECORD ED FOR REOPENING OF THE ASSESSMENT WERE NOT FURNISHED TO THE ASSESSEE TILL DATE THE COMPLETION OF ASSESSMENT, THE REASSESSMENT ORDER CANNOT BE UPHELD, MOREOVER, SPECIAL LEAVE PETITION FILED BY REVENUE AGAINST THE DECISION OF THIS COURT IN THE CASE OF CIT V . FOMENTO RESORTS AND HOTELS LTD., HAS BEEN DISMISSED BY APEX COURT, VIDE ORDER DATED JULY 16, 2007. COORDINATE BENCHES FOLLOWED THE ABOVE DECISIONS AND QUASHED THE REASSESSMENT PROCEEDINGS IN THE FOLLOWING CASES : I. TATA INTERNATIONAL LTD. V. DY. CIT (2012 ) 52 SOT 465 (MUM.) II. TELCO DADAJEE DHAKJEE LTD. V. DCIT (MUM.) (TM) PAGE 4 OF 4 III. MULLER & PHILIPS (INDIA) LTD. V. ITO (MUM.)(TRIB.); WWW.ITATONLINE.ORG IV. JEEVANLAL JAIN ITA NO. 910/M/2014 DT 13 - 1 - 2016, BENCH J; (MUM.) (TRIB.) 06 HOWEVER, IN VIEW OF CONTRASTING CLAIMS MADE BY THE PARTIES ABOUT FILING OF THE LETTER DATED 18/4/2011 BY THE ASSESSEE BEFORE LD AO, BOTH THE PARTIES AGREED THAT IF THAT IS FOUND TO HAVE BEEN FILED BY THE ASSESSEE BEFORE AO THEN REASSESSMENT PROCEEDINGS MAY BE QUASHED AND FOR SUCH VERIFICATION THE MATTER MAY BE SET ASIDE TO THE FILE OF THE LD AO. HENCE, WE SET ASIDE THE MATTER TO THE FILE OF LD AO IF IN CASE THE ABOVE LETTER IS FOUND TO HAVE BEEN FILED BEFORE THE LD AO THEN REASSESSMENT PROCEEDINGS SHALL STAND QUASHED. IN THE RESULT APP EAL OF THE REVENUE IS DECIDED ON GROUND NO. 2 AND 3 OF THE APPEAL AS ABOVE. 07 AS WE HAVE NOT DECIDED GROUND NO. 4 AND 5 OF THE APPEAL OF THE REVENUE AND IN CASE IF THE ABOVE STATED LETTER WAS NOT FOUND TO HAVE BEEN FILED BY THE ASSESSEE BEFORE THE LD. ASSESS ING OFFICER THEN REVENUE MAY APPROACH THIS TRIBUNAL FOR DISPOSING OF REMAINING GROUNDS OF APPEAL. HOWEVER, AT PRESENT WE DISMISS THE ABOVE GROUNDS OF APPEAL NO. 4 AND 5 AS WE HAVE ALREADY DECIDED THE ISSUE AGAINST THE REVENUE IN GROUND NO. 2 AND 3 OF THE A BOVE APPEAL. 08 IN THE RESULT APPEAL FILED BY THE REVENUE IS ALLOWED WITH ABOVE DIRECTION FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 3 1 / 05 / 2017 . - S D / - - S D / - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 / 05 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI