Manak Buiders & Estates (P) Ltd., New Delhi V. ITO, New Delhi

ITA 3597/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77681 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 24-04-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 05-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SEMA
• Keywords: Reopening of assessment; Share purchase agreement; Reason to believe
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI: JUDICIAL MEMBER AND SHRI SHAMIM YAHYA : ACCOUNTANT MEMBER ITA NO. 3597/DEL/2013 ASSTT. YR: 2003-04 MANAK BUILDERS & ESTATES (P) LTD., VS. INCOME-TAX O FFICER, A-74, GYANDEEP APARTMENTS, WARD 6(2), NEW DELHI. MAYUR VIHAR, PHASE-I, NEW DELHI. PAN: AAACM 2464 M ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI K. SAMPATH ADV. RESPONDENT BY : SHRI G.S. SEMA SR. DR DATE OF HEARING: 24-04-2014 DATE OF ORDER: 25-04-2014. O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL AGAINST ORDER DATED 6-5 -2013 PASSED BY THE LD. CIT(A)-IX, NEW DELHI IN APPEAL NO. 90/07-08 PERTAIN ING TO A.Y. 2003-04. FOLLOWING GROUNDS ARE RAISED: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE AUTHORITIES BELOW ERRED IN:- 1. INITIATING PROCEEDINGS U/S 147 OF THE INCOME-TAX ACT EVEN THOUGH THERE WAS NO REASON TO BELIEVE THAT INCOME H AS ESCAPED ASSESSMENT; 2. TREATING THE SHARE APPLICATION MONEY RECEIVED IN A SUM OF RS. 5 LACS AS UNEXPLAINED AND MAKING AN ADDITION OF THE AMOUNT TO THE RETURNED INCOME. 2. APROPOS FIRST GROUND, LD. COUNSEL FOR THE ASSESS EE CONTENDS THAT FOR INVOKING JURISDICTION U/S 147 THE AO OUGHT TO HAVE SPECIFIC INFORMATION AND VALID REASONS TO BELIEVE THAT THE INCOME HAS ESCAPE D ASSESSMENT. THUS, THE ITA 3597/DEL/2013 MANAK BUILDERS & ESTATES (P) LTD. 2 BELIEF IS TO BE MADE ON THE BASIS OF CORRECT INFORM ATION AND NOT ON HEARSAY AND WRONG INFORMATION. IN THE ASSESSEES CASE LD. AO I SSUED NOTICE U/S 148 ON THE BASIS THAT THE ASSESSEE HAD GIVEN AN AMOUNT OF RS. 5 LACS IN CASH TO THE ALLEGED ENTRY OPERATOR M/S VPS VALVES TUBES & TUBES PVT. LT D., WHICH WAS GIVEN BACK TO ASSESSEE BY WAY OF CHEQUE AS SHARE APPLICATION M ONEY. WHEREAS IT HAS BEEN ADMITTED BY AO THAT THE AMOUNT WAS NOT GIVEN BY AS SESSEE IN CASH TO THE SAID M/S VPS VALVES TUBES & TUBES PVT. LTD., BUT IT WAS BY CHEQUE. THUS, THIS PART OF THE RECORDING OF REASONS IS TOTALLY WRONG. 2.1. BESIDES, AO HAD NO VALID INFORMATION IN HIS P OSSESSION FOR WHICH LD. COUNSEL REFERRED TO PARA 4.4 OF LD. CIT(A)S ORDER, WHICH IS AS UNDER: 4.4. THE APPELLANT HAS POINTED OUT THAT IN HIS COM MUNICATION THE AO HAS REFERRED TO INFORMATION HAVING BEEN REC EIVED IN THE CASE OF ONE M/S MANORATH SECURITIES PVT. LTD. AND N OT IN THE CASE OF M/S MANAK BUILDERS. WHILE THIS CONTENTION I S FOUND TO BE TRUE IT IS RELEVANT TO POINT OUT THAT ALL FURTHE R DETAILS REGARDING THE DATE OF THE ENTRY BANK ACCOUNT, INSTR UMENT NO. AND NAME OF THE ENTRY GIVING PARTY, ACCOUNT NO. OF THIS PARTY, BENEFICIARY BANK ETC. ALL MATCH UP WITH THE ENTRY G IVEN TO MANAK BUILDERS. ALL CIRCUMSTANCES AND RELATED INFOR MATION RELATES TO MANAK BUILDERS, THEREFORE, THE AO CORRE CTLY APPLIED HIS MIND AND INTERPRETED THAT THE INFORMATION RELAT ES TO MANAK BUILDERS AND NOT M/S MANORATH SECURITIES PVT. LTD. 2.3. FROM THE OBSERVATIONS OF CIT(A) IT IS CLEAR TH AT INVESTIGATION INFORMATION WAS TO THE EFFECT THAT THE SHARE APPLIC ATION MONEY WAS RECEIVED BY ONE M/S MANORATH SECURITIES PVT. LTD., AND NOT T HE ASSESSEE I.E. MANAK BUILDERS. THUS, THE INFORMATION IN PASSION OF THE ASSESSING OFFICER WAS QUA ONE ENTITY M/S MANORATH SECURITIES PVT. LTD AND NOT THE ASSESSEE. THUS, THERE BEING NO VALID INFORMATION AGAINST THE ASSESSEE, TH E ASSESSING OFFICER COULD NOT HAVE RECORDED THESE REASONS TO BELIEVE THAT INC OME HAD ESCAPED ASSESSMENT IN ASSESSEES CASE. IT IS VEHEMENTLY ARG UED THAT ON BOTH THE COUNTS THE REASONS RECORDED BY THE ASSESSING OFFICE R ARE BASELESS, HEARSAY ITA 3597/DEL/2013 MANAK BUILDERS & ESTATES (P) LTD. 3 AND ARE NOT BACKED BY ANY VALID INFORMATION. THERE FORE, THE PROCEEDINGS ARE BAD IN LAW. LD. CIT(A) WITHOUT ADDRESSING TO THIS I SSUE HAS SUMMARILY UPHELD THE IMPUGNED REOPENING OF ASSESSMENT. 2.4. ON MERITS IT IS PLEADED THAT THE ASSESSEE HAS FILED ALL THE RELEVANT INFORMATION QUA THIS SHARE APPLICATION AMOUNT OF RS . 5 LACS IN THE FORM OF CONFIRMATION, BANK A/CS. THE STATEMENT OF MR. RAJAN JASSAL DOES NOT SAY THAT HE HAD ADVANCED ANY ACCOMMODATION ENTRY TO ASSESSEE , THE SAME IS ONLY TO THE EFFECT THAT HE OPERATES M/S VPS VALVES & TUBES P. LTD. OUR ATTENTION IS INVITED TO PAPER BOOK PAGES WHERE PAN, ASSESSMENT D ETAILS AND CONFIRMATIONS OF SHARE APPLICATION MONEY PROVIDED BY VPS VALVES & TUBES P. LTD., HAS BEEN FURNISHED THE SHARE CERTIFICATES ISSUED BY THE ASSESSEE ALONG WITH THE P&L A/CS, BALANCE-SHEET, AUDITORS C ERTIFICATE IN THE CASE OF VPS VALVES & TUBES P. LTD. IS ALSO ENCLOSED. RELI ANCE IS PLACED ON HONBLE DELHI HIGH COURT JUDGMENTS IN THE CASES OF CIT VS. GANGESHWARI METAL (P) LTD. 214 TAXMAN 423 (DEL.); AND CIT VS. G OEL SONS GOLDEN ESTATE PVT. LTD. (ITA NO. 212/2012 ORDER DATED 11-0 4-2012), FOR THE PROPOSITION THAT WHEN ASSESSEE HAS DISCHARGED PRIMA RY ONUS BY FURNISHING EVIDENCE ABOUT IDENTITY, GENUINENESS AND CREDIT WOR THINESS OF SHARE APPLICANT ON WHICH NO FURTHER INQUIRY HAS BEEN COND UCTED BY ASSESSING OFFICER, THE BURDEN CAST ON THE ASSESSEE U/S 68 IS DISCHARGED. 3. LD. DR ON THE FIRST ISSUE OF JURISDICTION RELIED ON THE ORDER OF CIT(A). APROPOS MERITS IT IS PLEADED THAT THOUGH ASSESSEE S UBMITTED NEW ADDRESS OF VPS VALVES & TUBES PVT. LTD. BUT THE NOTICES U/S 13 3(6) CAME BACK UNSERVED. THEREFORE, IT CANNOT BE IMPLIED THAT ASSE SSING OFFICER TOOK NO FURTHER ACTION, HENCE THE ASSESSEES APPEAL DESERVE S TO BE DISMISSED. 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. APROPOS VALIDITY OF REOPENIN G OF ASSESSMENT AND THE REASONS RECORDED, WE FIND MERIT IN THE ARGUMENT OF LD. COUNSEL IN AS MUCH AS THE AO'S REASONS FOR REOPENING ARE NOT CORRECT ON T WO COUNTS ITA 3597/DEL/2013 MANAK BUILDERS & ESTATES (P) LTD. 4 (I) ASSESSEE HAD NOT GIVEN ANY CASH TO VPS VALVES & TUB ES P. LTD.; AND (II) AS FACTUALLY FOUND BY LD. CIT(A) THE INVESTIGATION INFORMATION IN POSSESSION WAS QUA ONE M/S MANORATH SECURITIES P VT. LTD AND NOT THE ASSESSEE. 4.1. THEREFORE, ASSESSING OFFICER HAD NO INFORMATIO N FROM INVESTIGATION WING AGAINST THE ASSESSEE. ON BOTH THE COUNTS THE A CTION OF REOPENING THE ASSESSMENT IS NOT TENABLE. THE REASONS RECORDED BEI NG NOT BASED ON CORRECT AND VALID INFORMATION, PERTAINING TO ASSESSEE THE R EOPENING IS QUASHED. 4.2. SINCE WE HAVE QUASHED THE REOPENING, THERE IS NO NEED TO GO INTO THE MERITS OF THE CASE. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 25-04-2014. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25-04-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 3597/DEL/2013 MANAK BUILDERS & ESTATES (P) LTD. 5