N.R. INSURANCE & FINANCIAL SERVICES, MUMBAI V. ACIT 23(2), MUMBAI

ITA 3600/MUM/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3617 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 11-06-2015
• Court: TRIBUNAL
• Department Lawyers: CAPT PRASAD S ARYA
• Keywords: Reopening of assessment; Search and seizure; Reason to believe
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 3600 /MUM/ 20 1 5 (ASSESSMENT YEAR 200 7 - 0 8 ) M/S. N.R. INSURANCE & FINANCIAL SERVICES C/O. R.SANGHVI & CO. 104, RIZVI CHAMBERS - 2 JAIN MANDIR MARG BANDRA WEST MUMBAI - 400 050. VS. ACIT - 23(2) (ERSTWHILE ACIT - 15(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAFFN0237R ASSESSEE BY SHRI RAJESH SANGHVI DEPARTMENT BY CAPT.PRASAD S. ARYA DATE OF HEARING 5 . 7 . 201 6 DATE OF PRONOUNCEMENT 5. 7 . 201 6 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 02.03.2015 PASSED BY LEARNED CIT(A) - 17, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LE ARNED CIT(A) IN UPHOLDING THE VALIDITY OF REOPENING OF ASSESSMENT AND ALSO IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 2. THE ASSESSEE IS IN THE BUSINESS OF PROVIDING INSURANCE SERVICES AND LOAN SYNDICATION SERVICES. THE ASSESSEE HAD PAID A SUM OF RS.6.94 LAKHS AS PROFESSIONAL AND TECHNICAL FEES TO A CONCERN NAMED M/S INDRAVARUN SALES AGENCY PRIVATE LIMITED. THE ABOVE SAID CONCERN WAS CONTROLLED BY A CHARTERED ACCOUNTANT NAMED MR. SANDEEP SITANY. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATIONS IN THE HANDS OF MR. SANDEEP SITANY AND IT WAS FOUND THAT HE AND HIS GROUP CONCERNS WERE ISSUING BOGUS BILLS TOWARDS PROVISION OF SERVICES. M/S. N.R. INSURANCE & FINANCIAL SERVICES 2 CONSEQUENT TO THE INFORMATION RECEIVED FROM DDI (INV) ABOUT THE SAME, THE ASSESSMENT OF THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION WAS REOPENED BY THE ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 17. 08. 2009. THE ASSESSING OFFICER ALSO ISSUED A NOTICE UNDER SECTION 143(2) OF THE ACT ON 15.09.2010. 3. THE ASSESSEE FILED A LETTER DA TED 8.10.2010 REQUESTING THE ASSESSING OFFICER TO TREAT THE RETURN OF INCOME FILED BY HIM EARLIER AS THE RETURN FILED IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THE ASSESSEE ALSO OBJECTED TO THE REOPENING OF ASSESSMENT ON VARIOUS GROUND S. ON MERITS THE ASSESSEE PLACED RELIANCE ON THE AGREEMENT ENTERED BY IT WITH M/S INDIAVARUN SALES AGENCY PRIVATE LIMITED. THE ASSESSEE ALSO SUBMITTED THAT THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNELS BY DULY DEDUCTING TAX AT SOURCE. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY ADDED A SUM OF RS.6.94 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. THE LEARNED CIT(A) CONFIRMED THE REOPENING OF ASSESSMENT AND ALSO THE ADDITION MADE BY THE AO TO THE EXTENT OF RS.6.51 LAKHS. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. WITH REGARD TO THE REOPENING OF ASSESSMENT, THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER HAS NOT ISSUED NOTICE UNDER SECTION 143 (2) OF THE ACT AFTER FILING OF RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 143(2) OF THE ACT IS PRIOR TO FILING OF RETURN AND HENCE THE SAME CANNOT BE CONSIDERED AS A VALID NOTICE AS PER THE PROVISIONS OF THE ACT. THE LEARNED AR FURTHER SUBMITTED THAT THE REOPENING HAS BEEN MADE ON THE BASIS OF GENERAL OBSERVATIONS MADE BY MR SANDEEP. THE LEARNED AR SUBMITTED THAT MR SANDEEP HAS NOT SPECIFICALLY IMPLICATED THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ASSESSI NG OFFICER HAS MERELY RELIED ON THE INFORMATION GIVEN BY DDI (INV) WITHOUT FORMING HIS OWN BELIEF ABOUT M/S. N.R. INSURANCE & FINANCIAL SERVICES 3 ESCAPEMENT OF INCOME. ACCORDINGLY THE LEARNED AR SUBMITTED THAT THE REOPENING OF ASSESSMENT IS NOT VALID AND ALSO THE ADDITION HAS BEEN MADE BY THE ASS ESSING OFFICER WITHOUT ESTABLISHING THE BOGUS NATURE OF THE PAYMENT. 5. ON THE CONTRARY, THE LEARNED DR SUBMITTED THAT THE DEPARTMENT HAS CONDUCTED SEARCH IN THE HANDS OF MR SANDEEP SITANI AND HE HAS CONFESSED THAT THE BILLS ISSUED BY HIM AND HIS CONCE RNS WERE ONLY ACCOMMODATION BILLS. ACCORDINGLY THE LEARNED DR SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS SUSTAINABLE. HE ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS REOPENED ASSESSMENT ON PROPER REASONING. THE CONTENTIONS URGED BY LEARN ED AR ON THE ISSUE OF NOTICE UNDER SECTION 143 (2) IS TOO TECHNICAL AND HENCE THE LEARNED CIT(A) HAS REJECTED THE SAME HOLDING SO. 6. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. ADMITTEDLY THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 8TH OCTOBER 2010 AND NOTICE UNDER SECTION 143(2) HAS BEEN ISSUED BY THE ASSESSING OFFICER ON 15 - 09 - 2009, I.E., PRIOR TO FILING OF RETURN OF INCOME. THE PROVISIONS OF INCOME TAX ACT MANDATES ISSUING OF NOTICE UNDER THAT SECTION AFTER FILING OF RETURN OF INC OME. HENCE I FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 143(2) IS NOT IN ACCORDANCE WITH THE MANDATE OF THE PROVISIONS OF THE ACT, MEANING THEREBY IT SHOULD BE CONSTRUED THAT THE IMPUGNED ASS ESSMENT HAS BEEN FRAMED BY THE AO WITHOUT ISSUING NOTICE MANDATED U/S 143(2) OF THE ACT. IN MY VIEW, THE INFORMATION RECEIVED FROM DDI(INV.) WITH REGARD TO THE ACTIVITIES OF GROUP CONCERNS OF MR. SANDEEP SITANI AND THE PAYMENT RECEIVED FROM THE ASSESSEE W OULD CONSTITUTE SUFFICIENT REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME. 7. ON MERITS, I NOTICED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT MAKING ANY ENQUIRY WITH REGARD TO THE PAYMENTS MADE BY THE ASSESSEE M/S. N.R. INSURANCE & FINANCIAL SERVICES 4 TOWARDS PROFESSIONAL FEE. IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT THAT MR SANDEEP SITANI HAS SPECIFICALLY STATED THAT THE BILLS ISSUED BY HIS GROUP COMPANY TO THE ASSESSEE WAS AN ACCOMMODATION BILL. A PERUSAL OF STATEMENT GIVEN BY MR SANDEEP SITANI SHOWS THAT HE HAS GIVEN A GENERAL STATEMENT AND HAS ALSO FURNISHED DETAILS PARTIALLY, OF ACCOMMODATION BILLS ISSUED BY HIM AND HIS GROUP CONCERNS. IT IS NOT A CASE OF THE AO THAT THE SAID PARTIAL LIST CONTAINED THE NAME OF THE ASSESSEE. UNDER THESE SET OF FACTS I AM OF THE VIEW THAT THE IMPUGNED ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER MERELY ON SURMISES CONJECTURES. ACCORDINGLY, I AM OF THE VIEW THAT THE IMPUGNED ADDITION IS LIABLE TO BE DELETED. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) AND DIR ECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 5 .7.2016 SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 5 / 7 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDE R, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS