DCIT, New Delhi V. M/s. MVR Consultants Pvt. Ltd., Delhi

ITA 4167/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4799 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 28-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUDEOUN NEHAR
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 133(6); 147; 131; 68; 148

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH E , NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 4167/DEL./2014 ASSESSMENT YEAR: 2005 - 06 D.C.I.T., CIRCLE 6(1), NEW DELHI. (APPELLANT) VS. MVR CONSULTANTS PVT. LTD., NOW KNOWN AS M/S. MVR SHARE TRADING PVT. LTD., 17, NETAJI SUBHASH MARG, DARYAGANJ, DELHI. PAN - AAACM1401A (RESPONDENT) APPELLANT BY MS. GUDEOUN NEHAR, SR. DR RESPONDENT BY SH. SALIL KAPOOR, ADVOCATE ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - IX, NEW DELHI DATED 27.05.2014 FOR THE ASSESSMENT YEAR 2005 - 06 ON THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 2. THAT THE LD. CIT(A) ERRED IN QUASHING THE PROCEEDINGS INITIATED U/S. 147 OF THE ACT BY GROSSLY IGNORING THE EXPLANATION 1 TO THE SECTION 147 OF THE I.T. ACT. 3. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S. 68 AMOUNTING TO RS.99 LACS WITHOUT APPRECIATING THE FACT THAT THE DATE OF HEARING 03.08.2017 DATE OF PRONOUNCEMENT 22 .08.2017 ITA NO. 4167/DEL./2014 2 ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS BY PROVING THE CREDITWORTHINESS & GENUINENESS OF THE CREDITORS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.10.2005 DECLARING A LOSS OF RS.2,86,590/ - . THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) ON 28.12.2007 ACCEPTING THE LOSS DECLARED BY ASSESSEE. SUBSEQUENTLY, ON THE BASIS OF SOME INFORMATION FROM DIT (INV.) REGARDING RECEIPT OF RS.5,00,000/ - AS ACCOMMODATION ENTRY BY THE ASSESSEE, THE ASSESSMENT WAS REOPENED U/S. 147 AND REASSESSMENT WAS COMPLETED MAKING ADDITION OF RS.99,00,000/ - AS UNEXPLAINED SHARE APPLICATION MONEY U/S. 68, THEREBY ASSESSING THE TOTAL INCOME AT RS.96,13,410/ - VIDE ORDER DATED 15.03.2013 . THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND SEVERAL CASE LAWS, HELD THE RE - ASSESSMENT PROCEEDINGS AS INVALID AND ACCORDINGLY, DELETED THE AD DITION . 3. THE LEARNED DR SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN QUASHING THE REASSESSMENT ORDER, IGNORING THE EXPLANATION 1 TO SECTION 147 OF THE ACT AND IN DELETING THE ADDITION MADE U/S. 68 OF THE ACT WITHOUT APPRECIATING THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS AND GENUINENESS OF THE CREDITORS. ITA NO. 4167/DEL./2014 3 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUPPORTED THE FINDINGS REACHED BY HIM IN T HE IMPUGNED ORDER. HE, HOWEVER, SUPPORTED THE IMPUGNED ORDER, ON FURTHER PLEA THAT THE REASONS RECORDED AS MENTIONED IN THE ASSESSMENT ORDER AND THOSE SUPPLIED TO THE ASSESSEE, ARE DIFFERENT, IN AS MUCH AS, IN THE REASONS SUPPLIED TO THE ASSESSEE, THERE IS NO ALLEGATION THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 5. WE H AVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIR E MATERIAL AVAILABLE ON RECORD AND WE FIND NO JUSTIFICATION TO INTERFERE WITH THE CONCLUSIONS REACHED BY THE LD. CIT(A). THE LEARNED CIT(A) HAS MADE A WELL REASONED ORDER ON THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS, OBSERVING AS UNDER : 4.3 SUBMISSION OF THE APPELLANT AND THE FACTS ON RECORD ARE CONSIDERED. THE APPELLANT CHALLENGED THE VALIDITY OF THE ASSESSMENT BASICALLY ON TWO GROUNDS. I. THE CHEQUE OF RS.5,00,000/ - FROM M/S TULIP ENGINEERING PVT. LTD. AS GIVEN IN THE INTIMATION OF THE INVESTIGATION WING ON, THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED, IS ACTUALLY CREDITED IN THE BANK ACCOUNT OF THE APPELLANT ON 31.03.2004. IN SUPPORT OF THIS CONTENTION1, THE APPELLANT SUBMITTED THE RELEVANT BANK STATEMENT AND THE BALANCE SHEET. ACCORDINGLY, THE RELEVANT A.Y. FOR THE INTIMATION IS 2004 - 05 AND ISSUE OF NOTICE U/S 143(3) DATED 26.03.2012 IS BEYOND TIME LIMIT PRESCRIBED U/S 151. II. THE SHARE APPLICATION MONEY RECEIVED AMOUNTING TO RS.1,11,50,0007 - IS RELATED TO EARLIER PERIOD. OUT OF THIS RS.80,00,000 / - IS AN OPENING BALANCE AS ON 01.04.2003 AND THE BALANCE AMOUNT WAS RECEIVED IN MARCH 2004. THESE AMOUNTS WERE ALREADY VERIFIED AND ASSESSED U/S 143(3) BY ITO WARD - 6(1), NEW DELHI VIDE HIS ORDER DATED 28.12.2007 AFTER ISSUE OF NOTICE U/S 133(6) TO ALL THE ITA NO. 4167/DEL./2014 4 CREDITORS. THUS, THE REASSESSMENT OF THE SAME AMOUNT OF SHARE APPLICATION MONEY IS A CHANGE OF OPINION AND NOT JUSTIFIED. 4.3.1 ALTHOUGH, THE ISSUE OF APPLICABLE TIME LIMIT FOR RE OPENING THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED WAS RAISED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO DID NOT DEALT WITH THE ISSUE IN THE ASSESSMENT ORDER. HOWEVER, IN THE ORDER DATED 12.11.2012, THE AO REJECTED THE OBJECT ION RAISED BY THE APPELLANT ON THE GROUND THAT AS PER EXPLANATION - I TO SECTION 147, THE PRODUCTION OF BOOKS OF ACCOUNT AND MATERIAL EVIDENCE IN THE EARLIER ASSESSMENT DOES NOT AMOUNT TO DISCLOSURE WITHIN THE MEANING OF PROVISO TO SECTION 147. 4.3.2 THE AO REOPENED THE ASSESSMENT ON THE BASIS OF INTIMATION RECEIVED FROM THE INVESTIGATION WING, NEW DELHI. BUT WITHOUT MAKING FURTHER INQUIRY, NOTICE U/S 148 WAS ISSUED. THE AO DID NOT EVEN BOTHER TO CALL FOR THE STATEMENT OF RELEVANT BANK ACCOUNT AND VERIFY T HE FACT THAT THE RELEVANT CHEQUE OF RS. 5,00,000 / - RECEIVED FROM M/S TULIP ENGINEERING PVT. LTD. WAS CREDITED IN THE BANK ACCOUNT OF THE APPELLANT FROM 31.03.2004 AND NOT 02.04.2004. APART FROM THE EXCEEDING THE TIME LIMIT PRESCRIBED BY LAW REGARDING REOPE NING OF THE ASSESSMENT AS CHALLENGED BY THE APPELLANT, THE REOPENING IS BAD IN LAW AS THE VERY BASIS OF INFORMATION ON WHICH THE REASON FOR REOPENING ARE RECORDED IS FACTUALLY INCORRECT. ASSESSMENT DONE IN THE SIMILAR FACTS AND CIRCUMSTANCES WITHOUT MAKING ANY INQUIRY BY THE AO HAS BEEN QUASHED BY HIGHER JUDICIAL AUTHORITIES. 4.3.3 IN THE CASE OF CIT VS. FAIR FINVEST LTD. (2013 ) 357 ITR 146 (DELHI), IT IS HELD THAT 'DISMISSING THE APPEAL, THAT THE ASSESSEE HAD FILED DOCUMENTS INCLUDING CERTIFIED COPIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION, AFFIDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE REGISTRAR OF COMPANIES BY SUCH APPLICANTS, CONFIRMATIONS BY THE APPLICANT FOR COMPANY'S SHARES, CERTIFICATES BY THE AUDITORS, ETC . UNFORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND THE STATEMENT OF M. THE LEAST THAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MA TTER BY, IF NECESSARY, INVOKING HIS POWERS UNDER SECTION 131 THE SHARE APPLICANTS OR DIRECTORS. NO EFFORT WAS MADE IN THAT REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF THE ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND THE STATEMENTS OF M THAT THE INCOME SOUGHT TO BE ADDED FELL WITHIN THE DESCRIPTION OF SECTION 68 OF THE INCOME - TAX ACT, 1961. THEREFORE, THE APPELLATE AUTHORITIES WERE R IGHT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER'. 4 3.4 IT IS UNCONTROVERTED FACT THAT, IN THE SCRUTINY ASSESSMENT THE AO HAD THOROUGHLY AND FULLY SCRUTINIZED THE ASSESSEE'S CLAIM OF ADDITION IN THE SHARE CAPITAL/SHARE APPLICATION MONEY DURING THE RELEVANT YEAR. BY NO STRETCH OF IMAGINATION IT CAN BE STATED THAT THE ISSUE WAS NOT AT LARGE BEFORE THE AO IN THE ORIGINAL SCRUTINY ASSESSMENT. ANY RE - EXAMINATION OF SUCH A QUESTION AT THIS STAGE WOULD ONLY AMOUNT TO CHANGE OF ITA NO. 4167/DEL./2014 5 OPINION. REMEDY OF RE - OP ENING THE ASSESSMENT, THEREFORE WAS SIMPLY NOT AVAILABLE. IN THE DECISION OF SC IN CASE OF GIT V. KELVINATOR OF INDIA LTD (2010) 320 ITR 561 THE APEX COURT OBSERVED THAT ONE MUST KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO R EASSESS. THE AO HAS NO POWER TO REVIEW . H E HAS THE POWER TO REASSESS. THE CONCEPT OF CHANGE OF OPINION IS AN INBUILT TEST TO CHECK ABUSE OF POWER BY THE AO. THEREFORE, IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSMENT DONE U/S 147 OF THE A CT IS FOUND TO BE INVALID AND LIABLE TO BE QUASHED. ACCORDINGLY, THE GROUNDS OF APPEAL ARE ALLOWED. 6. THE LEARNED DR COULD NOT BE ABLE TO DISLODGE THE FINDINGS REACHED BY THE LD. CIT(A) BY ADDUCING ANY CONTRARY MATERIAL ON RECORD. IT IS NOTABLE THAT THE LD. CIT(A) HAS CATEGORICALLY MENTIONED IN THE IMPUGNED ORDER THAT THE PERSONS TO WHOM SHARES WERE ALLOTTED HAD BEEN VERIFIED BY THE AO AFTER ISSUING NOTICES U/S. 133(6) AND AFTER CONSIDERING ALL DOCUMENTARY EVIDENCES, ACCEPTED THE AMOUNT AS GENUINE IN THE ORIGINAL ASSESSMENT PROCEEDINGS. VIEWED FROM THIS ANGLE, THE LD. CIT(A) FOUND THE RE - ASSESSMENT PROCEEDINGS BASED ON CHANGE OF OPINION AND AFTER RELYING ON THE DECISION OF HON BLE SUPREME COURT IN CIT VS. KELVINATOR O F INDIA LTD. (SUPRA) QUASHED THE ASSESSMENT MADE U/S. 147 OF THE ACT. NO CONTRARY MATERIAL IS PLACED ON RECORD ON BEHALF OF THE REVENUE TO DISTURB THE IMPUGNED ORDER. AS FAR AS THE PLEA REGARDING DIFFERENCE BETWEEN THE REASONS SUPPLIED TO THE ASSESSEE AND THAT THOSE MENTIONED IN THE ASSESSMENT ORDER, IS CONCERNED, WE FIND THAT THE COPY OF REASONS ALLEGEDLY SUPPLIED TO THE ASSESSEE, AS PLACED BEFORE US IN THE PAPER BOOK, DO NOT CONTAIN SIGNATURE OF ANY OF THE AUTHORITIES ISSUING THE SAME. ITA NO. 4167/DEL./2014 6 THEREFORE, THE PLEA OF THE ASSESSEE IS NOT CONSIDERABLE WITHOUT VERIFYING THE SAME AT THE STAGE OF LOWER AUTHORITIES. MOREOVER, NO SUCH PLEA WAS RAISED BEFORE THE FIRST APPELLATE AUTHORITY NOR IS THERE ANY FINDING THEREON . WE, THEREFORE, ARE NOT INCLINED TO ENTERTAIN THIS PL EA IN THE PECULIAR FACTS AND CIRCUMSTANCE OF THE CASE. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE IMPUGNED ORDER. ACCORDINGLY, THE APPEAL OF THE REVENUE DESERVES TO FAIL. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.08.2017 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.08.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI