ITO ward 8 (2), V. Shivai Merchant bankers (P) LTd,

ITA 3486/DEL/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3988 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 27-04-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 02-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAREON
• Assessee Lawyers: SSH ASHWANI TANEJA
• Keywords: Reopening of assessment; Unexplained cash credit; Additional evidence; Tangible material; Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3486DEL/2007 ASSESSMENT YEAR : 1999-2000. INCOME-TAX OFFICER, M/S. SHIVANI MERCHANT BANKERS WARD 8(2), NEW DELHI. VS. (P) LTD., 266, BHARAT AP ARTMENTS, SECTOR-13, ROHINI, DELHI-85 AND C.O. NO. 352/DEL/2009 (IN ITA NO. 3486/DEL/07) ASSESSMENT YEAR : 1999-2000. M/S. SHIVANI MERCHANT BANKERS INCOME-TAX OFFICER, (P) LTD., VS. WARD 8(2), NEW DELHI. C/O RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI 110 049 (PAN: AAACS 5991B) (APPELLANTS) (RESPONDENTS) DEPARTMENT BY : SMT. BANITA DEVI NAREON, SR. DR. ASSESSEE BY : S/SH. ASHWANI TANEJA, CA & TARUN KUMAR, ADVOCATE. O R D E R PER SHAMIM YAHYA, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE EMANATE OUT OF ORDERS OF THE COMMISSIONER OF INCOME -TAX (APPEALS) DATED 25.5.2007 AND PERTAIN TO THE ASSESSMENT YEAR 1999-2 000. 2 2. IN ASSESSEES CROSS OBJECTION THE ISSUE RAISED I S THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN ASSUMING JURISDICTION UNDER SECTION 147 OF THE ACT. 3. THE RETURN OF INCOME IN THIS CASE WAS FILED ON 3 1.12.2000 DECLARING TOTAL INCOME OF RS.660/-. SUBSEQUENTLY NOTICE UNDE R SECTION 148 OF THE ACT WAS ISSUE DON 28.3.2006. IN THE REASSESSMENT PROCE EDINGS ASSESSING OFFICER HAS PROCEEDED TO HOLD THAT THE ASSESSEE HAS INTRODU CED AN AMOUNT OF RS.7,00,000/- AS CASH CREDIT AND COULD NOT EXPLAIN THE ABOVE TRANSACTION. HE ADDED THE SAID AMOUNT AS UNEXPLAINED CASH CREDIT UN DER SECTION 68 OF THE INCOME-TAX ACT. IN ITS APPEAL BEFORE THE LEARNED C IT(A) AT THE THRESHOLD THE ASSESSEE AGITATED AGAINST REOPENING OF THE ASSESSME NT. THE LEARNED CIT(A) OBSERVED THAT ORIGINALLY NO SCRUTINY ASSESSMENT WAS MADE. THEREFORE, PROVISO TO SECTION 147 WAS NOT APPLICABLE. HE FURT HER HELD THAT IT WAS FOUND THAT THE ASSESSING OFFICER HAS RECEIVED SOME INTIMA TION FROM THE INVESTIGATION DIRECTORATE INFORMING THAT THE ASSESS EE WAS BENEFICIARY OF SOME ACCOMMODATION ENTRIES AGGREGATING TO RS.7 LACS GIVEN BY ONE MY MONEY SECURITIES. IN THIS BACKGROUND THE LEARNED C IT(A) HELD THAT THE ASSESSEES CONTENTION THAT THE NOTICE AND THE ORDER WAS BAD IN LAW IS NOT CORRECT. BEFORE US THE ASSESSEE HAS FILED CROSS OB JECTION AGAINST THIS ORDER OF 3 THE LEARNED CIT(A) CONFIRMING THE ASSESSING OFFICER S ACTION OF ASSUMPTION OF JURISDICTION UNDER SECTION 147. 4. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED BE FORE US THAT REASONS RECORDED BY THE ITO FOR THE REOPENING OF ASSESSMENT WHICH READ AS UNDER:- IT HAS BEEN NOTICED THAT THE ABOVE COMPANY WAS INV OLVED IN THE BOGUS TRANSACTION OF ENTRY OPERATION/MONEY LAUN DERING. THE ABOVE PARTIES HAS TAKEN CASH PAYMENT FROM THE BENEFICIARIES AGAINST WHICH THE ASSESSEE HAS PROVID ED ENTRY TRANSACTION AS MONEY SECURITY THROUGH CORPORATION B ANK KAMLA NAGAR, DELHI, AS UNDER: DATE AMOUNT ON ACCOUNT OF 25-6-1998 2,00,000 MONEY SECURITIES 27-6-1998 1,50,000 -DO- 23-1-1999 1,50,000 -DO- 30-1-1999 2,00,000 -DO- AS PER RECORDS, THE ASSESSEE COMPANY HAS FILED FOR THE ASSESSMENT YEAR 1999-2000 DECLARING INCOME OF RS.66 0/-. AS PER BALANCE SHEET NO SUCH TRANSACTION IS APPEARED. THERE IS REASONS TO BELIEVE THAT THE ASSESSEE HAS ESCAPED TH E INCOME OF RS.7,00,000/-. HENCE IT IS FIT CASE FOR ISSUING NO TICE U/S 148 OF I.T. ACT. REFERRING TO THE ABOVE SAID REASONS RECORDED THE LE ARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THERE IS NO REFERENCE TO TH E MATERIAL ON WHICH THE REASONS OF THE ASSESSING OFFICER ARE BASED. FURTHE RMORE THE LEARNED COUNSEL CONTENDED THAT ACTUALLY THE ASSESSEE HAS RECEIVED A FORESAID AMOUNTS THROUGH CHEQUES WHILE IN THE REASONS RECORDED QUITE OPPOSIT E HAS BEEN RECORDED THAT THE ASSESSEE HAS TAKEN CASH PAYMENTS AGAINST WHICH THE ASSESSEE HAS 4 PROVIDED ENTRY TRANSACTIONS. FROM THIS THE LEARNED COUNSEL ARGUED THAT THE REOPENING CANNOT BE SUSTAINED AND THE SAME IS LIABL E TO BE QUASHED AS BAD IN LAW. FURTHER, THE LEARNED COUNSEL PLACED RELIANCE UPON CATENA OF CASE LAWS IN THIS REGARD AS UNDER:- 1. ITO VS. TAKSHILA DISTRIBUTORS (P) LTD. IN ITA NO.44 12/DEL/2007; 2. CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC); 3. CIT VS. SMT. JYOTI DEVI, 218 CTR 264 (RAJ.); 4. SHIPRA SRIVASTAVA VS. ACIT, 319 ITR 221; 5. AIPITA MARKETING (P) LTD. VS. ITO, 21 SOT 302 (MUM. ); 6. RAJESH JHAVERI, 291 ITR 500 (SC); 7. BAPA LAL & CO. EXPORTS VS. JT. CIT, 289 ITR 37 (MAD .); 8. ACIT VS. O.P. CHAWLA, 114 ITD 69 (T.M.); & 9. CIT VS. BATRA BHATTA CO., 220 CTR 531. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). 6. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORD. WE FIND THAT THE FIRST ASPECT OF THE LEARNED COUNSEL OF THE ASSE SSEES SUBMISSION IS THAT IN THE REASONS RECORDED THE ASSESSING OFFICER HAS NOT DISCLOSED THE SOURCE OF INFORMATION I.E. FROM WHERE AND FROM WHOM AND WHEN HE GOT THE INFORMATION ON THE BASIS OF WHICH HE HAS FORMED REA SON TO BELIEVE TO REOPEN THE ASSESSMENT FOR THE RELEVANT YEAR. THIS ASPECT OF THE LEARNED COUNSELS SUBMISSION IS CORRECT INASMUCH AS A READING OF THE REASONS RECORDED MAKE IT CLEAR THAT THERE IS NO DISCLOSURE OF THE SOURCE OF INFORMATION IN THE REASONS RECORDED. FURTHERMORE, IN THE REASONS RECORDED, IT HAS BEEN ALLEGED THAT THE 5 ASSESSEE COMPANY WAS INVOLVED IN BOGUS TRANSACTIONS AND HAS TAKEN CASH PAYMENTS. HOWEVER, IN REALITY THE MATTER IS THAT T HE ASSESSEE HAS RECEIVED CHEQUES AND HENCE THERE IS NO QUESTION OF ASSESSEE RECEIVING CASH FOR ISSUING CHEQUES. THUS WE FIND THAT THERE IS CONSIDERABLE C OGENCY IN THE ASSESSEES PLEA THAT REOPENING THIS CASE WAS NOT JUSTIFIED. A S EXPOUNDED BY THE HONBLE APEX COURT IN THE DECISION OF C.I.T. VS. KELVINATOR INDIA 320 ITR 561 REOPENING CAN BE DONE PROVIDED THERE IS TANGIBL E MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF BELIEF. 7. WE FIND THAT ASSESSING OFFICER HAS NOT MENTIONE D THE SOURCE FROM WHICH HE HAD COME TO THE CONCLUSION THAT THERE HAS BEEN ESCAPEMENT OF INCOME. HENCE IT CANNOT BE SAID THAT THERE IS ANY TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER. FURTHERMORE, IN THE REASONS RECORDED, IT IS STATED THAT INFORMATION HAS BEEN RECEIVED THAT ASSESSEE HAS REC EIVED CASH PAYMENTS AND PROVIDED ENTRIES. HOWEVER, IN THE ASSESSMENT ORDER ASSESSING OFFICER HAS OBSERVED THAT FROM THE REASONS RECORDED, HE HAS FOR MED THE BELIEF THAT ASSESSEE HAS GIVEN ENTRY AND OBTAINED CASH IN LIEU THEREOF. HENCE THE REASONS RECORDED AND THE BELIEF FOUND ARE DIAMETRIC ALLY OPPOSITE TO EACH OTHER. THE FACT OF THE CASE WAS THAT THE ASSESSEE MADE PAYMENT THROUGH CHEQUE WHICH WERE DULY RECORDED AND THERE WAS NO E VIDENCE WHATSOEVER OF 6 ASSESSEE HAVING RECEIVED CASH PAYMENTS IN LIEU THER EOF. IN SUCH SITUATION, WE FIND THAT THERE WAS NO LINK WHATSOEVER IN THE REASO NS RECORDED AND FORMATION OF BELIEF BY THE ASSESSING OFFICER. IN THESE CIRC UMSTANCES, WE HOLD THAT THE ASSESSMENT IN THIS CASE IS LIABLE TO BE QUASHED AB INITIO. IN THE RESULT, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS) ON THIS ISSUE AND HOLD THAT THE ASSESSMENT WAS BAD IN LAW . 8. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSE SSEE IS ALLOWED. ITA NO.3486/DEL/2007 (REVENUES APPEAL) 9. IN THIS APPEAL THE FOLLOWING GROUNDS ARE R AISED BY THE REVENUE:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.7,00,00 0/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT BY ADMITTING AN ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A(3) WITHOUT GIVING OPPORTUNITY TO THE A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,500/- MADE ON ACCOUNT OF UNEXPLAINED EXPENSES INCURRED FOR OBTAIN ING ACCOMMODATION ENTRIES. 10. SINCE WE HAVE ALREADY QUASHED THE REASSESSM ENT ON THE CROSS OBJECTION, ADJUDICATION ON MERIT OF THE CASE IS ONL Y OF ACADEMIC INTEREST. HENCE, WE ARE NOT DEALING WITH THE SAME. ACCORDING LY, THIS APPEAL BY THE REVENUE IS TREATED AS INFRUCTUOUS. 7 11. IN THE RESULT, THE ASSESSEES CROSS OBJECT ION IS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T ON 30 TH APRIL, 2010. SD/- SD/- (I.P. BANSAL) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH APRIL, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.