ITO, New Delhi V. M/s. Hepta Developers Pvt. Limited, New Delhi

ITA 3608/DEL/2014

• Counselvise Citation: 360820114 RSA 2014
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Unexplained cash credit; Additional evidence; Accommodation entries; Reason to believe
• Section: 143(3); 142(1); 131; 68; 148

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 360 8 /DEL/201 4 A.Y. : 200 4 - 0 5 INCOME TAX OFFICER, VS. HEPTA DEVELOPERS PVT. LIMITED, WARD 12(3), 813 - A, VIKAS DEEP BUILDING, NEW DELHI DISTRICT CENTER, LAXMI NAGAR, DELHI 110092 (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR ASSESSEE BY NONE PRESENT DATE OF HEARING : 06 - 07 - 2015 DATE OF ORDER : 0 8 - 07 - 2015 PER H.S. SIDHU, JM: - O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XV, NEW DELHI DATED 26 . 3 .201 4 PERTAINING TO ASSESSMENT YEAR 200 4 - 0 5. 2. T HE GROUNDS OF APPEAL READ AS UNDER: - I) THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED ON FACTS AND IN LAW IN ADMITTING ADDITIONAL EVIDENCE AS THE ASSESSEE DID NOT HAVE ANY SUFFICIENT CAUSE THAT PREVENTED HIM TO FILE REQUISITE DETAILS BEFORE THE A O. 2 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THE INITIATION OF PROCEEDINGS U/S. 148 AS VOID AB INITIO AS THE NOTICE U/S. 148 WAS NOT SERVED UPON THE ASSESSEE. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING UNDER THE CIRCUMST ANCES, THE ACTION OF THE AO OF MAKING BEST JUDGMENT ASSESSMENT U/S. 144, IN RESPECT OF WHICH NO MATERIAL WAS GATHERED BY THE AO IS NOT SUSTAINABLE. 4. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 18.10.2004, WHICH WAS PROCESSED U/S. 143(1). SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE DIT INVESTIGATION WING, NEW DELHI THAT THE ASSESSEE S COMPANY NAME FIGURES IN THE LIST OF CERTAIN PERSONS, WHO HAVE ALLEGED TO HAVE RECEIVED BOGUS ACCOMMODATION ENTR I ES . THE INFORMATION SPECIFICALLY MENTIONED THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 12 LAKHS FROM M/S STEERING SECURITIES FINANCE LTD. COMPRISING OF 2 CHEQUES OF RS. 6 LAKHS EACH ISSUED FROM STATE BANK OF HYDERABAD DATED 9.2.2004 AND 12.3.2004, RESPECTIVELY. THE AO THEREAFTER, RECORDED THE REASONS TO BELIEVE THAT THE INCOME HAD ESCAPED A SSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE IN MAKING TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS. NOTICE U/S. 148 WAS ISSUED ON 25.3.2011 BY SPEED POST. THE SAME WAS RETURNED WITH THE REMARKS NO SUCH OFFICE . AFTER THAT LETTERS WERE 3 ISSUED WITH THE STATUTORY NOTICES ON 13.6.2011, 8.7.2011, 8.9.2011, 19.10.2011, 18.11.2011 AND 30.11.2011. FINALLY, A FINAL SHOW CAUSE NOTICE DATED 7.11.2012 WAS ISSUED AND A NOTICE U/S. 142(1) WAS AFFIXED ON THE PREMISES OF ASSESSEE COMPANY AT THE SAME A DDRESS. NO EVIDENCE IN SUPPORT OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PERSON WHO HAS GIVEN CREDIT TO THE ASSESSEE HAS BEEN GIVEN TO THE AO AND AO HELD THAT RS. 12 LACS IS UNEXPLAINED CASH CREDIT MADE U/S. 68 OF THE I.T. ACT IN THE CASE OF A SSESSEE VIDE ASSESSMENT ORDER DATED 22.2.2011 U/S. 144/147 OF THE I.T. ACT. 4. AGGRIEV E D WITH THE AFORESAID ORDER DATED 2 2 .1 2 .2011, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 26 . 3 .2014 HAS STATISTICALLY ALLOWED THE APPEAL OF THE ASSESSEE . 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. IN THIS CASE THE NOTICE WAS SENT TO THE ASSESSEE FOR HEARING BY REGD. AD POST FOR TODAY I.E. 08.07.2015 AT THE ADDRESS MENTIONED IN FORM NO. 36 VIDE COLUMN N O. 10, BUT NOBODY APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. IN MY CONSIDERED OPINION, NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN ON THE SAME ADDRESS. THEREFORE, I AM OF THE CONSIDERED VIEW THAT TH E CASE MAY BE DECIDED EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR . 7. LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 8 . I HAVE HEARD THE LD. DR AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. I FIND THAT THE ASSESSMENT WAS 4 REOPENED BY THE AO BASED ON A SPECIFIC AND COGENT INFORMATION RECEIVED FROM THE INVESTIGATION WING, IN WHICH BASED ON AN EXTENSIVE ENQUIRY, THE INVEST IGATION WING HAD FOUND OUT THAT THERE WERE CERTAIN PERSONS, WHO HAD, ON EXCHANGE OF CASH, RECEIVED ACCOMMODATION ENTRIES IN THE FORM OF CHEQUES FROM VARIOUS PERSONS, WHO ADMITTED BEFORE THE INVESTIGATION WING THAT SUCH ENTRIES WERE BOGUS. THE A SSESSEE 'S NA ME FIGURES IN THE LIST OF SUCH PERSONS ALONG WITH SPECIFIC DETAILS OF THE AMOUNT RECEIVED, CHEQUE NUMBER, NAME OF THE BANK AND THE NAME OF THE CREDITOR. EVIDENTLY, IN THE CASE OF A SSESSEE , NO SCRUTINY ASSESSMENT U/S 143(3) HAD TAKEN PLACE, THEREFORE, WHETH ER SUCH CREDITS SHOWN IN THE BALANCE SHEET WERE IN THE NATURE OF INCOME OR NOT, COULD NOT HAVE BEEN FOUND OUT, MERELY ON PERUSAL OF THE RETURN OF INCOME. IN VIEW OF THIS, I HOLD THAT THE REASON TO BELIEVE OF THE A O THAT INCOME HAD ESCAPED ASSESSMENT WAS ON COGENT GROUNDS IN VIEW OF THE SPECIFIC DETAILS OF TRANSACTION PROVIDED BY THE INVESTIGATION WING. UNDER THE CIRCUMSTANCES, ISSUE OF NOTICE U/S 148, WHICH IS THE STATUTORY PROCEDURE FOR ENABLING THE LD. A O TO VERIFY WHETHER SUCH INFORMATION WAS CORRECT OR NOT, WAS RIGHTLY ISSUED BY THE A O . HOWEVER, MERELY BECAUSE NOTICE U/S 148 WAS ISSUED DOES NOT MEAN THAT THE INFORMATION FROM THE INVESTIGATION WING WAS A GOSPEL TRUTH, AND IF ON VERIFICATION, THE A O FINDS THAT NO INCOME CAN BE HELD TO HAVE ESCAPED IN THE H ANDS OF THE A SSESSEE , NO ADDITION IN RESPECT OF SUCH INFORMATION CAN BE MADE TO THE APPELLANT'S INCOME. THEREFORE, LD. CIT(A) HAS RIGHTLY HELD THAT THE ISSUE OF NOTICE U/S 148 WAS GOOD IN LAW AND THE A O HAS FOLLOWED THE GUIDELINES PRESCRIBED BY THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER (2003) 259 ITR 19 BY MAKING NOTE OF SATISFACTION ON COGENT GROUNDS BEFORE ISSUING THE NOTICE U/S 148. 5 8 . 1 I ALSO FIND THAT T HERE IS NO DISPUTE THAT NOTICE U/S 148 AND ANY OTHER NOTICES ISSUED SUBSEQUENTLY BY THE A O , COULD NOT HAVE BEEN SERVED UPON THE A SSESSEE AS ALL OF THEM WERE SENT AT AN ADDRESS, WHICH WAS NEITHER SHOWN IN THE RETURN OF INCOME FOR THE CURRENT YEAR OR S UBSEQUENT YEARS, BUT WERE ALL SENT TO AN ADDRESS, WHICH PERTAINED TO EARLIER YEARS. I FIND THAT THE A SSESSEE HAD FILED THE RETURN OF INCOME FOR THE YEAR IN QUESTION OF 18.10.2004, IN WHICH THE ADDRESS WAS SHOWN C - 441, GALI NO. 5, ASHOK NAGAR, SHAHDRA, DELH I - 93. THE SAID RETURN ALSO SHOWS THE ADDRESS OF THE DIRECTORS. THE A SSESSEE HAS FILED RETURN OF INCOME FROM THE SAME ADDRESS IN THE SUBSEQUENT ASSESSMENT YEARS ALSO TILL AS LATE AS THE ASSESSMENT YEAR 2009 - 10. THE A SSESSEE CHANGED THE ADDRESS SUBSEQUENTLY TO H.NO. 5 OO, GALI NO. 3, CHANDER LOK, MANDOLI ROAD, SHAHDRA, DELHI - 93 W.E.F. 1.10.2010 IN RESPECT OF WHICH DUE INTIMATION WAS MADE TO REGISTRAR OF COMPANY AND TO THE INCOME TAX DEPARTMENT IN THE RETURN OF INCOME FOR AY 2010 - 11, WHICH WAS AVAILABLE WITH TH E AO AT THE TIME OF ISSUING NOTICE U/S 148 ON 25.03.2011. THE SAME ADDRESS IS SHOWN IN THE RETURN OF INCOME FOR AY 2012 - 13 ALSO. IN BOTH THESE RETURNS THE NAMES AND ADDRESS OF THE D IRECTORS HAVE BEEN CLEARLY GIVEN. UNDER THE CIRCUMSTANCES, IT IS EVIDENT TH AT THE NOTICE U/S 148 WHICH OUGHT TO HAVE BEEN ISSUED ON OR BEFORE THE EXPIRY OF 6 YEARS FROM THE END OF ASSESSMENT YEAR WAS ISSUED BEFORE 31.3.2011. HOWEVER, THOUGH THE NOTICE WAS ISSUED ON 25.03.2011, THE SAME WAS ISSUED AT A WRONG ADDRESS AND THEREFORE, EVIDENTLY COULD NOT BE SERVED UPON THE A SSESSEE , IN ANY PRUDENCE. ON CAREFUL PERUSAL OF THE RECORDS OF THE A SSESSEE , I FIND THAT THE AO HAD ISSUED NOTICE AT 55, ROYAL PALACE, 1ST FLOOR, VIKAS MARG, DELHI, WHICH WAS THE ADDRESS ORIGINALLY GIVEN TO THE BAN KERS, WHICH WAS OBTAINED BY THE AO. HOWEVER, IN THE RETURN OF INCOME, THE A SSESSEE HAD GIVEN 6 CORRECT ADDRESS, AT WHICH OTHER NOTICES WERE SERVED IN THE PAST. THE A SSESSEE HAD GIVEN THE COPY OF SUMMON U/S 131 ISSUED TO THE DIRECTOR OF THE A SSESSEE COMPANY, SH. PANKAJ GARG ON 21.8.2007, WHICH WAS ISSUED AND SERVED AT THE GIVEN ADDRESS AT C - 441, GALI NO. 5, ASHOK NAGAR, SHAHDRA. THE PENALTY PROCEEDING U/S 271(1)(C) FOR AY 2001 - 02 WERE ALSO CONCLUDED BY ISSUE OF NOTICE AT THE SAME ADDRESS, I.E. C - 441, GALI NO. 5, ASHOK NAGAR, SHAHDRA AND THE APPELLATE PROCEEDING FOR AY 2002 - 03, WHICH WERE CONCLUDED ON 21.06.2005 ALSO REFLECTS THE A SSESSEES 'S ADDRESS AT ASHOK NAGAR ONLY. UNDER THE CIRCUMSTANCES, IT IS EVIDENT THAT THE NOTICE U/S 148 AND SUBSEQUENT NOTICES, ISSUE D BY THE A O COULD NEVER HAVE BEEN SERVED UPON THE A SSESSEE AS THE SAME WAS ISSUED AT A WRONG ADDRESS, DUE TO THE MISTAKE ATTRIBUTABLE TO THE ASSESSING OFFICER, IN MAKING DUE DILIGENCE OF ISSUING THE NOTICE AT THE CORRECT ADDRESS GIVEN IN THE RETURN OF INCO ME ITSELF. THE LATEST ADDRESS OF THE A SSESSEE WAS ALSO AVAILABLE WITH THE AO AS RETURN OF INCOME FOR ASSESSMENT YEAR 2010 - 11 AND 11 - 12 ALSO SHOW THE LATEST ADDRESS AT H.NO.500, GALI NO. 3, CHANDER LOK, MANDOLI ROAD, SHAHDRA. 8.2 I FURTHER FIND THAT THE A O IN THE REMAND REPORT HAS REPEATED THE FACTS OF THE CASE AND RATHER STRENGTHENED THE ARGUMENTS OF THE A SSESSEE THAT NOTICE WAS ISSUED AT THE WRONG ADDRESS AT 55, ROYAL PALACE, 1ST FLOOR, VIKAS MARG, DELHI, WHICH WAS THE ADDRESS IN EARLIER YEARS MUCH BEFOR E THE A SSESSEE HAD FILED THE RETURN OF INCOME FOR THE CURRENT YEAR ON 18.10.2004. UNDER THE CIRCUMSTANCES, AS THE NOTICE U/S 148 WHICH IS FOUNDATION OF THE REASSESSMENT PROCEEDING, WAS NOT SERVED UPON THE A SSESSEE , THE WHOLE PROCEEDINGS ARE HELD AS VOID - AB - INITIO. UNDER THE CIRCUMSTANCES, THE ACTION OF THE AO OF MAKING BEST JUDGMENT ASSESSMENT U/S 144, IN RESPECT OF WHICH EVIDENTLY NO MATERIAL WAS GATHERED BY THE AO, IS NOT SUSTAINABLE. IN VIEW OF THIS, THE 7 ADDITIONS MADE BY THE AO ARE NOT SUSTAINABLE , HENC E, THE SAME WAS RIGHTLY DELETED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), HENCE, I UPHOLD THE IMPUGNED ORDER OF LD. CIT(A). 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 /7/201 5 . SD/ - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 08 /7/201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 8