Ajay Sharma, New Delhi V. DCIT, Ghaziabad

ITA 3554/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6031 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Assessee Lawyers: KAPIL GOYAL
• Keywords: Principle of natural justice; Accommodation entries; Assessment record; Set aside
• Section: 133A; 153A; 143(2); 13; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES A : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA.NO.3554/DEL./2015 ASSESSMENT YEAR 2010-2011 SHRI AJAY SHARMA, GHAZIABAD. PAN CDSPS1356 C/O. M/S. O.P. SAPRA & ASSOCIATES, C-763, NEW FRIENDS COLONY, NEW DELHI 110 025. VS. THE DCIT, CENTRAL CIRCLE, INCOME TAX OFFICE, 3 RD FLOOR, CGO COMPLEX-1, HAPUR ROAD, GHAZIABAD. U.P. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI KAPIL GOYAL, ADVOCATE FOR REVENUE : SHRI SANJAY GOEL, CIT - D.R. DATE OF HEARING : 06 .0 2 .20 20 DATE OF PRONOUNCEMENT : 14 .0 2 .20 20 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), GHAZIABAD, DATED 31.03.2015, FOR THE A.Y. 2010-2011. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 WAS CONDUCTED IN THE CASE OF SH. PANKAJ 2 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. SHARMA AND SHRI AJAY SHARMA [ASSESSEE]. IT WAS INFORMED THAT CASH WAS GOING TO BE WITHDRAWN FROM A/C NO. XXX2277 OF M/S. A.K TRADERS WITH HDFC BANK, AMBEDKAR ROAD, GHAZIABAD, THE SOURCE OF WHICH IS NOT EXPLAINED IN THE HANDS OF ASSESSEE, THE PROPRIETOR OF M/S. A.K. TRADERS. WHEN THE TEAM VISITED THE BANK PREMISES, IT WAS FOUND THAT AN AMOUNT OF RS.2,78,00,000/- WAS ALREADY GOT TRANSFERRED TO A/C NO.XXX6097 WITH PUNJAB NATIONAL BANK, GHAZIABAD STANDING IN THE NAME OF M/S. TUSHAR BUILDING MATERIAL SUPPLIER IN GAUTAM BUDH NAGAR. THE BANK AUTHORITIES WERE REQUESTED TO PUT BALANCE OF RS.1,78,35,905/- STANDING TO CREDIT IN A/C NO.XXX2277 OF M/S. A.K TRADERS UNDER RESTRAINT. MEANWHILE, THE TEAM IMMEDIATELY VISITED PUNJAB NATIONAL BANK AND IT WAS FOUND THAT BY THAT TIME THE ENTIRE AMOUNT OF RS,2,78,00,000/- HAD BEEN WITHDRAWN IN CASH. THE BANK PREMISES OF HDFC BANK, AMBEDKAR ROAD, GHAZIABAD IN THE CASE OF BANK A/C NO.XXXX2277 OF M/S. A.K TRADERS WAS SEARCHED ON 11.10.2010 AND BALANCE STANDING TO CREDIT WAS SEIZED. DURING EXAMINATION, ASSESSEE STATED THAT HE DOES NOT KNOW ABOUT THE SOURCE OF AMOUNTS CREDITED 3 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. TO ABOVE ACCOUNT AND DESTINATION OF THE AMOUNTS DEBITED AS THE ENTIRE AFFAIRS WERE BEING LOOKED AFTER BY SHRI PANKAJ SHARMA, HIS BROTHER-IN-LAW AT GHAZIABAD. ACCORDINGLY, SURVEY UNDER SECTION 133A OF THE I.T. ACT WAS CONDUCTED AT 12, NAVYUG MARKET, GHAZIABAD AND SHOP NO. 3, HARISH CHAND KA BAGH, CHHAPARAULA POLICE CHOWKI, NEAR DHARAMKANTA, GAUTAM BUDH NAGAR. THE PREMISES 12, NAVYUG MARKET, GHAZIABAD WAS FOUND TO BE OFFICE OF SHRI MANOJ KUMAR JAIN, PROPRIETOR OF M/S. RISHAV TRADING CO. AND NO BUSINESS ACTIVITIES WERE FOUND TO BE CARRIED ON AT THE PREMISES. SUBSEQUENTLY, ON 13.10.2010, RESIDENCE OF ASSESSEE WAS ALSO COVERED UNDER SEARCH. HIS STATEMENT WAS RECORDED IN WHICH HE HAS STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE GARB OF SUPPLY OF STEEL AND BUILDING MATERIAL IN THE NAME OF VARIOUS CONCERNS AND M/S. A.K. TRADERS IS ONE OF THEM. FURTHER DETAILS ARE NOTED WITH REGARD TO OPERATION OF THE BANK ACCOUNT AND VARIOUS CONCERNS AND FURTHER INVESTIGATION CARRIED-OUT. THE LIST OF BENEFICIARIES AND THE NAME OF THE FIRM WHO HAD GIVEN ACCOMMODATION ENTRIES ARE MENTIONED IN THE DETAILS IN THE 4 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. ASSESSMENT ORDER. THE A.O. NOTED THAT NO BOOKS OF ACCOUNT HAVE BEEN MAINTAINED BY ASSESSEE AND ASSESSEE IS CHARGED COMMISSION OF PROVIDING ACCOMMODATION ENTRIES. THE A.O. ISSUED NOTICE UNDER SECTION 153A OF THE I.T. ACT FOR THE A.YS. 2005-2006 TO 2010-2011 ON 18.09.2012. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.56,000/- FROM SALARY ON 14.03.2013. THE A.O, THEREAFTER, NOTED THE DETAILS OF THE BANK DEPOSIT IN THE CASE OF ASSESSEE AND FOUND TOTAL DEPOSITS IN THE CASE OF ASSESSEE OF RS.22,93,89,143/- AND APPLIED 3% AS COMMISSION AND MADE ADDITION OF RS.68,81,674/-. THE A.O. ALSO MADE PROTECTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE OF RS.22,93,89,143/- AND COMPUTED THE INCOME AT RS.23,63,26,817/- VIDE ASSESSMENT ORDER DATED 31.03.2013 UNDER SECTION 153A/143(3) OF THE I.T. ACT, 1961. 3. THE ASSESSEE CHALLENGED BOTH THE ADDITIONS BEFORE THE LD. CIT(A) AS WELL AS RAISED SEVERAL OTHER GROUNDS OF APPEALS. THE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE AND AS REGARDS THE PROTECTIVE ASSESSMENT, THE LD. CIT(A) CONVERTED THE PROTECTIVE ASSESSMENT OF 5 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. RS.22,93,89,143/- AS SUBSTANTIVE ADDITION. FURTHER, THE ADDITION OF COMMISSION WAS ALSO CONFIRMED AND APPEAL OF THE ASSESSEE WERE DISMISSED. 4. THE ASSESSEE IN THE PRESENT APPEAL HAS RAISED SEVERAL GROUNDS OF APPEALS STATING THEREIN THAT ASSESSMENT ORDER IS BARRED BY LIMITATION, PRINCIPLES OF NATURAL JUSTICE HAVE BEEN VIOLATED, NO VALID NOTICE UNDER SECTION 143(2) HAD BEEN ISSUED, PROTECTIVE ASSESSMENT HAS BEEN WRONGLY CONVERTED INTO SUBSTANTIVE ADDITION AS WELL AS BOTH THE ADDITIONS ON MERIT OF RS.68,81,674/- AS COMMISSION AND RS.22,93,89,143/- ON ACCOUNT OF BANK DEPOSIT OF SUBSTANTIVE BASIS IS WHOLLY INCORRECT. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 6. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL AS UNDER : THAT THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER AND LD. CIT(A) DESERVES TO BE QUASHED FOR 6 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. WANT OF STATUTORY APPROVAL MANDATED UNDER THE PROVISIONS OF SECTION 153D OF THE I.T. ACT. 6.1. LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT SINCE APPROVAL UNDER SECTION 153D HAVE NOT BEEN OBTAINED IN THE PRESENT CASE, THEREFORE, ASSESSMENT ORDER DESERVES TO BE QUASHED BEING VOID ABINITIO. 7. ON THE OTHER HAND, LD. D.R. SUBMITTED THAT A.O. AT THE END OF THE ASSESSMENT ORDER HAS MENTIONED THAT ORDER IS PASSED AFTER PRIOR APPROVAL OF LEARNED ADDL. CIT, CENTRAL RANGE, MEERUT, VIDE APPROVAL DATED 28.03.2013. THE LD. D.R, THEREFORE, SUBMITTED THAT PRIOR APPROVAL IS TAKEN IN THIS MATTER. THE LD. D.R, HOWEVER, SUBMITTED THAT SUCH APPROVAL UNDER SECTION 153D IS NOT AVAILABLE ON RECORD. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT ADDITIONAL GROUND IS LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER AND EFFECTS THE LEGALITY AND VALIDITY OF THE ASSESSMENT ORDER UNDER SECTION 153A FOR WANT OF APPROVAL UNDER SECTION 153D OF THE I.T. ACT AND NO FURTHER 7 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. FACTS HAVE TO BE ADJUDICATED UPON AFRESH, THEREFORE, THE ADDITIONAL GROUND SHALL HAVE TO BE ADMITTED FOR DISPOSAL OF THE APPEAL. WE RELY UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LTD., VS., CIT [1998] 229 ITR 383 (SC). CONSIDERING THE MATERIAL ON RECORD IN THE LIGHT OF ABOVE JUDGMENT AND STATEMENT OF THE LD. D.R, WE ADMIT THE ADDITIONAL GROUND OF APPEAL FOR DISPOSAL OF THE APPEAL. 8.1. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO LETTER DATED 09.10.2019 [PB-10] OF ITO, WARD-1(5), GHAZIABAD TO DCIT, CC, GHAZIABAD IN WHICH HE HAS INTIMATED AFTER PERUSAL OF THE CASE RECORD THAT APPROVAL OF THE ADDL. CIT, CENTRAL RANGE, MEERUT DATED 28.03.2013 PRIOR TO PASSING OF THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE IS NOT AVAILABLE AS WELL AS RECEIPT IS NOT AVAILABLE. HE HAS REFERRED TO LETTER DATED 13.09.2019 [PB-8] OF DCIT, CC, GHAZIABAD TO ITO, WARD-1(5), GHAZIABAD INTIMATING HIM THAT COPY OF THE APPROVAL LETTER DATED 28.03.2013 IN THE CASE OF THE ASSESSEE MAY ALSO BE OBTAINED FROM THE ASSESSMENT RECORDS. HE HAS REFERRED TO LETTER DATED 8 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. 13.09.2019 {PB-7} BY ITO, WARD-1(5), GHAZIABAD TO DCIT, CC, GHAZIABAD REQUIRING HIM TO PROVIDE COPY OF THE APPROVAL DATED 28.03.2013 OF ADDL. CIT, CENTRAL RANGE UNDER SECTION 153D OF THE I.T. ACT AS THE SAME HAS TO BE SUBMITTED TO THE CIT-D.R. A-BENCH, ITAT, NEW DELHI. HE HAS REFERRED TO PB-5 WHICH IS RTI INFORMATION BY INCOME TAX DEPARTMENT THROUGH ITO, WARD-1(5), GHAZIABAD DATED 30.10.2019 INTIMATING THE ASSESSEE THAT APPROVAL OF ADDL. CIT, CENTRAL RANGE, MEERUT WAS ACCORDED ON 28.03.2013. DOCUMENTARY EVIDENCES IN THIS REGARD IS NOT AVAILABLE IN THIS OFFICE. PB-3 IS LETTER DATED 31.10.2019 OF ITO, WARD- 1(5), GHAZIABAD TO CIT-D.R-1, A-BENCH, ITAT, NEW DELHI, INTIMATING HIM THAT APPROVAL DATED 28.03.2019 OF ADDL. CIT, CENTRAL RANGE UNDER SECTION 153D IN THE CASE OF THE ASSESSEE COULD NOT BE TRACED-OUT FROM THE RECORD. LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO ORDER SHEET OF THE A.O. AND SUBMITTED THAT THOUGH THE A.O. HAS MENTIONED 28.03.2013 IS THE DATE OF APPROVAL UNDER SECTION 153D IN THE ASSESSMENT ORDER, BUT, THE ORDER SHEET WOULD NOT SHOW IF A.O. HAS SENT ANY PROPOSAL FOR APPROVAL UNDER SECTION 9 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. 153D TO THE ADDL. CIT, CENTRAL RANGE, MEERUT. HE HAS, THEREFORE, SUBMITTED THAT SINCE NO APPROVAL UNDER SECTION 153D HAVE BEEN OBTAINED IN THE MATTER PRIOR TO PASSING OF THE ASSESSMENT ORDER, THEREFORE, ASSESSMENT ORDER PASSED UNDER SECTION 153A IS VOID ABINITIO, NULL AND VOID AND IS LIABLE TO BE QUASHED. 8.2. ON THE OTHER HAND, LD. D.R. SUBMITTED THAT SINCE A.O. HAS MENTIONED IN THE ASSESSMENT ORDER THAT PRIOR APPROVAL OF ADDL. CIT, CENTRAL RANGE, MEERUT HAVE BEEN OBTAINED VIDE LETTER DATED 28.03.2013, THEREFORE, A.O. MUST HAVE TAKEN THE APPROVAL. THE LD. D.R, HOWEVER, ADMITTED THAT SUCH APPROVAL IS NOT AVAILABLE ON RECORD OF THE REVENUE DEPARTMENT. 8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 153D OF THE I.T. ACT, 1961, PROVIDES AS UNDER : NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RESPECT OF EACH ASSESSMENT 10 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. YEAR REFERRED TO IN CLAUSE (B) OF SECTION 153A OR THE ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB- SECTION (1) OF SECTION 153B, EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER. PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY WHERE THE ASSESSMENT OR REASSESSMENT ORDER, AS THE CASE MAYBE, IS REQUIRED TO BE PASSED BY THE ASSESSING OFFICER WITH THE PRIOR APPROVAL OF THE COMMISSIONER UNDER SUB-SECTION (12) OF SECTION 144BA. 8.4. ACCORDING TO THIS SECTION, NO ORDER OF ASSESSMENT UNDER SECTION 153A COULD BE PASSED BY THE A.O. BELOW THE RANK OF JCIT EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER. IN THE PRESENT CASE, THE ASSESSMENT ORDER HAVE BEEN PASSED BY THE DCIT, CC, GHAZIABAD. THUS, THE A.O. IS BELOW THE RANK OF JCIT, THEREFORE, BEFORE PASSING THE ORDER UNDER SECTION 153A OF THE I.T. ACT UNDER APPEAL, THE A.O. SHALL HAVE TO OBTAIN PRIOR APPROVAL OF THE JCIT. IT IS THE CONDITION PRECEDENT BEFORE PASSING THE ASSESSMENT ORDER 11 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. UNDER SECTION 153A OF THE I.T. ACT. LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE ORDER SHEET OF THE A.O. WHICH DOES NOT MENTION IF A.O. HAS SENT ANY PROPOSAL TO THE JCIT/ADDL. CIT FOR OBTAINING PRIOR APPROVAL BEFORE PASSING THE IMPUGNED ASSESSMENT ORDER. LEARNED COUNSEL FOR THE ASSESSEE FILED SEVERAL LETTERS OBTAINED UNDER RTI AND OTHERS WHICH CLEARLY PROVE THAT THE APPROVAL UNDER SECTION 153D OF THE I.T. ACT IS NOT AVAILABLE TO THE A.O. OR THE OFFICER WHO HAS PROVIDED INFORMATION UNDER RTI ACT. EVEN NO SUCH APPROVAL WAS FOUND IN THE ASSESSMENT RECORD. THE ITO, WARD-1(5), GHAZIABAD, ALSO INTIMATED THE LD. CIT-D.R. THAT SUCH APPROVAL OF ADDL. CIT DATED 28.03.2019 UNDER SECTION 153D COULD NOT BE TRACED-OUT FROM THE RECORD OF THE ASSESSEE AVAILABLE PRESENTLY WITH THIS OFFICE AND ASSESSEE HAS ALSO INTIMATED THE SAME FACT UNDER RTI ACT. THE LD. CIT-D.R. DURING THE COURSE OF ARGUMENTS HAS ALSO ADMITTED THAT APPROVAL UNDER SECTION 153D OF THE I.T. ACT DATED 28.03.2013 IS NOT AVAILABLE FOR INSPECTION OF THE BENCH. THESE FACTS, THEREFORE, CLEARLY PROVE THAT NO PRIOR APPROVAL UNDER SECTION 153D BY JCIT/ADDL. CIT BEFORE PASSING THE 12 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. IMPUGNED ASSESSMENT ORDER HAVE BEEN OBTAINED. THEREFORE, A.O. WAS NOT COMPETENT TO PASS THE ASSESSMENT ORDER UNDER SECTION 153A OF THE I.T. ACT, 1961. THE ASSUMPTION OF JURISDICTION OF THE DCIT, CC, GHAZIABAD TO PASS THE IMPUGNED APPELLATE ORDER IS THUS VITIATED. THE ENTIRE ASSESSMENT ORDER UNDER SECTION 153A IS NULL AND VOID AND IS LIABLE TO BE QUASHED. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE AND QUASH THE ENTIRE IMPUGNED APPELLATE ORDERS. RESULTANTLY, ALL THE ADDITIONS STAND DELETED. ADDITIONAL GROUND OF APPEAL OF ASSESSEE IS ALLOWED. IN VIEW OF THE ABOVE FINDINGS ON THE ADDITIONAL GROUND, WE DO NOT PROPOSE TO DECIDE THE OTHER GROUNDS ON MERITS WHICH ARE LEFT WITH ACADEMIC DISCUSSION ONLY. APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (R.K. PANDA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 14 TH FEBRUARY, 2020 VBP/- 13 ITA.NO.3554/DEL./2015 SHRI AJAY SHARMA, GHAZIABAD. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT A BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.