ITO, New Delhi V. M/s. Sagar Promoters Pvt. Ltd., New Delhi

ITA 3232/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2892 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-04-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 22-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S KAUSHLENDRA TIWARI
• Keywords: Wrong claim; Accommodation entries; Reassessment proceedings
• Section: 143(3); 147; 131; 68; 148

Judgement Text

1 ITA NO. 3232/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3232/DEL/201 2 ( A.Y 2002-03) ITO WARD-7(2), ROOM NO. 306, C. R. BUILDING NEW DELHI (APPELLANT) VS SAGAR PROMOTERS PVT. LTD. H. NO. 10, POCKET G-20, SECTOR-7, ROHINI NEW DELHI AABCS7928K (RESPONDENT) APPELLANT BY SH. S. KAUSHLENDRA TIWARI, SR. DR RESPONDENT BY NONE ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 21/03/2012 PASSED BY CIT(A)-X, NEW DELHI FOR ASSE SSMENT YEAR 2002-03.. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT INITIATIO N PROCEEDINGS U/S 147 IS ILLEGAL IN THE EYES OF LAW AND IS VOID AB-INITIO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE F ACT THAT WHILE RECORDING SATISFACTION FOR OBTAINING APPROVAL U/S 151 OF THE INCOME TAX ACT, 1961, THE AO HAD CATEGORICALLY MENTIONED THAT SINCE THE I NCOME TAX RETURN OF THE ASSESSEE FOR THE ASSTT. YEAR 2002-03 WAS NOT TRACEA BLE AND AS IT WAS NOT DATE OF HEARING 06.03.2018 DATE OF PRONOUNCEMENT 21.03.2018 2 ITA NO. 3232/DEL/2012 KNOWN AS TO WHETHER THE ASSESSMENT U/S 143(3) OF TH E INCOME TAX ACT, 1961 HAD BEEN MADE IN THE CASE OF THE ASSESSEE OR N OT, THE SANCTION OF THE CIT HAS BEEN SOUGHT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS MISDIRECTED HIMSELF IN RELYING UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SLP'S SIDDHARTHA LTD. WITHOUT APPRECIATING THAT THE FACTS OF THE INSTANT CASE ARE DIFFERENT FROM THE FA CTS IN THE CASE OF SLP'S SIDDHARTHA LTD. 4. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY / ALL OF THE GROUND OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 3. REPORT ON ENQUIRIES MADE BY THE DIRECTORATE OF I NCOME TAX (INVESTIGATION), NEW DELHI INTO ACCOMMODATION ENTRI ES GIVEN BY ENTRY OPERATORS WAS RECEIVED IN THE OFFICE OF CIT, DELHI-1 AND WAS SUBSEQUENTLY CIRCULATED AMONGST THE ASSESSING OFFICER OF DELHI CHARGE VIDE LETTER DATED 13/03/2006. THE THEN ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE ON 24/03/2009. THE ASSESSEE FILED HIS RETURN OF INCOME ON 29/04/2009. ON 14/09/2009, THE AR OF THE ASSESSEE COMPANY ASKED FOR REASONS FOR REOPENING OF THE CASE TO THE ASSESSING OFFICER. ON 17/09/2009, A COPY OF REASONS RECORDED FOR REOPENING WAS GIVEN TO THE ASSESSEE. THE AR CONTESTED THE ASSESSMENT PROCEEDINGS FROM TIME TO T IME AND FILED COPIES OF ALLOTMENT LETTERS, SHARE APPLICATIONS, MEMORANDUM O F THE COMPANIES, BALANCE- SHEETS, CONFIRMATIONS ETC. OF THE COMPANIES. THE AS SESSING OFFICER OBSERVED THAT THERE ARE CERTAIN PARTIES BEING ENTRY OPERATOR S AND HAVE GIVEN ACCOMMODATION ENTRIES AMOUNTING TO RS.3,09,37,275/- TO THE ASSESSEE. ON 26/11/2009, THE ASSESSEE WAS ASKED THROUGH ITS ADVO CATE TO PRODUCE THE SHARE HOLDERS OF THE COMPANY. ON 30/11/2009, SHRI ANIL KUMAR SHARMA DIRECTOR OF M/S PERFORMANCE TRADING AND INVESTIGATI ON AND M/S BRASBNAND FINANCE SERVICES ATTENDED THE ASSESSMENT PROCEEDING S AND ADMITTED THAT THE ENTRIES GIVEN BY COMPANY TO THE ASSESSEE WERE NOT G ENUINE ENTRY. HIS 3 ITA NO. 3232/DEL/2012 CONFESSION WAS RECORDED ON THE ORDER SHEET. HOWEVE R, HE REFUSED TO GIVE HIS STATEMENT RECORDED ON OATH AND VERBALLY STATED THAT HE NEEDS TIME. VIDE LETTER DATED 30/11/2009 FROM ADDL. DIT (INV.) UNIT-I WAS R ECEIVED IN CONNECTION WITH THE SEARCH IN THE CASES OF TODAY HOMES AND INFRASTR UCTURE GROUP. IN THIS LETTER, A LIST OF COMPANIES WAS GIVEN WHICH HAS VER Y CLOSE RELATION WITH THE GROUP AND SOME OF THEM HAVE BEEN INSTRUMENTAL/CONDU IT IN INTRODUCTION OF FUNDS OF HUNDREDS OF CRORES BY WAY OF SHARE CAPITAL /PREMIUM/APPLICATION MONEY/LOANS AND ADVANCES ETC. THE NAME OF THE ASSE SSEE IS ALSO INCLUDED IN THE LIST AT SERIAL NO. 80. THE SUMMONS U/S 131 OF THE INCOME TAX ACT WERE ALSO ISSUED TO THE PRINCIPAL OFFICERS OF THE COMPAN IES ALLEGED TO BE HAVING SHARE CAPITAL IN THE ASSESSEE COMPANY FOR APPEARANC E ON 29/12/2009. HOWEVER, ON GIVEN DATE NONE ATTENDED THE ASSESSMENT PROCEEDINGS NOR RECEIVED ANY WRITTEN REPLY FROM THESE COMPANIES BY THE ASSES SING OFFICER. MOST OF THE SUMMONS RETURN UNSERVED WITH THE REMARKS NO SUCH P ERSONS OR LEFT. THE ASSESSING OFFICER, THEREFORE, ADDED RS.3,09,37,275/ - RECEIVED AS ACCOMMODATION ENTRIES BY ROUTING THROUGH BANK ACCOU NTS OF THE ENTRY PROVIDER COMPANIES TO THE INCOME OF THE ASSESSEE AS INCOME F ROM UNDISCLOSED SOURCES OF THE COMPANY U/S 68 OF THE INCOME TAX ACT, 1961. 4. BEING AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT (A) ERRED IN H OLDING THAT INITIATION PROCEEDINGS U/S 147 IS ILLEGAL IN THE EYES OF LAW A ND IS VOID-AB-INITIO. THE CIT(A) DID NOT APPRECIATE THE FACT THAT WHILE RECOR DING SATISFACTION FOR OBTAINING APPROVAL U/S 151 OF THE INCOME TAX ACT, 1961, THE A SSESSING OFFICER HAD CATEGORICALLY MENTIONED THAT SINCE THE INCOME TAX R ETURN OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 WAS NOT TRACEABLE AND A S IT WAS NOT KNOWN AS TO WHETHER THE ASSESSMENT U/S 143 (3) OF THE ACT WAS M ADE IN THE CASE OF THE ASSESSEE OR NOT. IN-FACT, THE ASSESSING OFFICER HA S NOT SOUGHT SANCTION OF THE CIT. THE LD. DR FURTHER SUBMITTED THAT THE RELIANC E OF THE DECISION OF DELHI 4 ITA NO. 3232/DEL/2012 HIGH COURT IN THE CASE OF SIDHARTH LTD IS NOT PROPE R AS THE SAME IS DISTINGUISHABLE. 6. NONE APPEARED FOR THE ASSESSEE AT THE TIME OF TH E HEARING, THEREFORE, WE ARE TAKING SUBMISSIONS OF THE ASSESSEE BEFORE THE C IT(A) AS THE CONTENTIONS OF THE ASSESSEE HEREIN. 7. WE HAVE HEARD THE LD. DR AND PERUSED ALL THE REC ORDS BEFORE US. THE CIT(A) WHILE DECIDING THE LEGALITY AND VALIDITY OF THE RE-OPENING MADE U/S 147/148 OF THE INCOME TAX ACT HELD THAT THE SANCTIO N IN THE PRESENT CASE WAS NOT AS PER THE PROVISIONS OF THE INCOME TAX ACT. T HEREFORE, THE PROCEEDINGS U/S 147 WAS FOUND VOID-AB-INITIO. THE PROCEEDINGS U/S 148 WAS ALSO QUASHED BY THE CIT(A) AS THERE WAS A MECHANICAL APPROVAL WI THOUT APPLICATION OF MIND BY THE ASSESSING OFFICER AND REOPENING WAS BEYOND F OUR YEARS WITHOUT DISCLOSURE OF TRUE AND FULL PARTICULARS OF INCOME. THUS THE CIT(A) RIGHTLY HELD THAT THE ISSUE WAS NOT ADJUDICATED BY THE ASSESSING OFFICER AT THE TIME OF REOPENING. THE CONTENTION OF THE ASSESSEE BEFORE T HE CIT(A) THAT IT HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 BE LATEDLY ON 3/10/2003 AT NIL INCOME. THE ASSESSEE FURTHER CONTENDED BEFORE THE CIT(A) THAT ALTHOUGH THE ASSESSEE HAD INCURRED A SUM OF RS.1,83,117/- AS EXP ENSE FOR MAINTAINING THE BUSINESS OF THE COMPANY, BUT DID NOT CLAIM THE SAME AS LOSS AS THE RETURN WAS LATE. THE SAID RETURN WAS PROCESSED U/S 143(1) ON 2 0/11/2003. THE CASE OF THE ASSESSEE WAS NEVER PICKED UP UNDER SCRUTINY. T HEREFORE, WHILE REOPENING THE CASE U/S 148 READ WITH SECTION 147 OF THE INCOM E TAX ACT, SANCTION OF ADDL. CIT WAS REQUIRED U/S 151 OF THE INCOME TAX AC T SECTION 151(2) OF THE ACT PROVIDES THAT IN A CASE WHICH WAS NOT SCRUTINSED BY THE ASSESSING OFFICER PREVIOUSLY SANCTION FOR REOPENING THE CASE HAS TO B E ACCORDED BY THE JOINT COMMISSIONER OF INCOME TAX AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND SUCH SANCTION SHOULD B E GRANTED ONLY IF THE JCIT ALSO INCLUDES ADDL. CIT U/S 2(28C) OF THE ACT IS SA TISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FI T CASE FOR ISSUE OF THE NOTICE. 5 ITA NO. 3232/DEL/2012 SINCE THE ASSESSMENT OF JURISDICTION IS CRUCIALLY F OR INITIATING THE REASSESSMENT PROCEEDINGS. THE ACTION OF THE ASSESSING OFFICER I N OBTAINING PRIOR SANCTION OF THE CIT IN PLACE OF JCIT/ADDL. CIT GOES TO THE ROOT OF THE MATTER UNDER REASSESSMENT PROCEEDINGS NOT HAVING BEEN VALIDLY RE OPENED IS VOID-AB-INITIO. THEREFORE, THE ENTIRE RE-ASSESSMENT PROCEEDING IS B AD IN LAW AND SHOULD BE QUASHED. THE ARGUMENT OF THE ASSESSEE BEFORE THE C IT(A) THAT THE REOPENING OF THE CASE WAS BEYOND A PERIOD OF 4 YEARS AND IS BAD IN LAW AS PER FIRST PROVISO TO SECTION 147 (1) SINCE THE ASSESSEE ALREADY MADE A F ULL AND TRUE DISCLOSURE. THE PROCEEDINGS UNDER THE PRESENT CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM DIT(INV.), DELHI, IGNORING THE FACT T HAT IN THIS CASE THE ASSESSEE HAD FILED ORIGINAL RETURN SHOWING LONG TERM CAPITAL GAIN AND THE RETURN WAS PROCESSED U/S 143(1). SUBSEQUENTLY, ON THE BASIS O F THE INFORMATION GIVEN BY THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) T HAT THE ASSESSEE WAS ALLEGEDLY THE BENEFICIARY OF A BOGUS CLAIM OF LONG TERM CAPITAL GAIN SHOWN ON SALE/PURCHASE OF SHARES, A NOTICE U/S 148 OF THE AC T WAS ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE. THE ASSESSING O FFICER REFERRED TO THE INFORMATION AND THE DIRECTIONS AS REASONS ON THE BA SIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE U/S 148. THE CIT (A) HA S REPRODUCED THE REASONS FOR REOPENING IN THE ORDER. FROM THE SAID REASONS, IT I S SEEN THAT THE ASSESSING OFFICER WHILE RECORDING THE REASONS WAS NOT SURE WH ETHER THE ASSESSMENT WAS COMPLETED U/S 143(1) OR 143(3) OF THE INCOME TAX AC T AS ITR FOR 2002-03 WAS NOT TRACEABLE AND HENCE NOT KNOWN TO ASSESSING OFFI CER. DESPITE THE FACT THAT THE ASSESSEE HAS FILED INCOME TAX RETURN FOR ASSESS MENT YEAR 2002-03. THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE ITR RELATING TO ASSESSMENT YEAR 2002-03 IS NOT TRACEABLE AND HENCE IT IS NOT KNOWN WHETHER ASSESSMENT ORDER U/S 143(3) WAS PASSED BY THE THEN A.O. IN PARA 3.1 1, THE CIT HAS ALSO MENTIONED THAT THE ITR FOR ASSESSMENT YEAR 2002-03 WAS RECEIVED IN THE INITIATION AND WAS PROCESSED U/S 143(1) (A). THERE FORE, WHILE RECORDING REASONS FOR REOPENING THE ASSESSING OFFICER WAS NOT CORRECT IN ITS OWN RECORD WHICH IS NOT PERMISSIBLE UNDER THE ACT. THE CIT (A) FURTH ER HAS NOTED THAT THE APPROVAL OF THE CORRECT OATH WAS ALSO NOT TAKEN BY THE ASSESSING OFFICER AS 6 ITA NO. 3232/DEL/2012 REQUIRED U/S 143(3). THUS, THE CIT (A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE. THERE IS NO NEED TO INTERFERE WITH THE F INDINGS OF THE CIT (A). HENCE, THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST MARCH, 2018 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 21/03/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 3232/DEL/2012 DATE 1. DRAFT DICTATED ON 07/03/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 08/03/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 21.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 1 .03.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.