M/s M.S. Associates, New Delhi V. Deputy Commissioner of Income-tax, New Delhi

ITA 4364/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6341 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Reopening of assessment; Depreciation; Business expenditure; Search and seizure; Tangible material; Difference of opinion; Accommodation entries; Assessment record; Retraction; Reason to believe; Change of opinion; Borrowed satisfaction; TDS
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO.4364/DEL/2015 ASSESSMENT YEAR: 2005-06 M/S. M.S. ASSOCIATES, 267, MASJID MOTH, UDAY PARK, 2 ND FLOOR, NEW DELHI. V. DCIT, CENTRAL CIRCLE-4, NEW DELHI. TAN/PAN: AABFM 1714A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. SINGHVI & SHRI SATYAJEET GOEL, CA RESPONDENT BY: SHRI SURENDER PAL, SR.D.R. DATE OF HEARING: 25 02 2019 DATE OF PRONOUNCEMENT: 30 04 2019 O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 18.03.2015, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXX, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.147/143(3) FOR THE ASSESSMENT YEAR 2005-06. IN VARIOUS GROUNDS OF APPE AL, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.2,20 ,56,180/- IN RESPECT OF CLAIM OF BUSINESS EXPENSES AND DISALL OWANCE OF DEPRECIATION OF RS.23,67,390/-. 2. BESIDES THIS, THE ASSESSEE HAS ALSO RAISED ADDIT IONAL GROUND CHALLENGING THE VALIDITY OF PROCEEDINGS U/S. 147/148 WHICH READS AS UNDER: I.T.A. NO.4364/DEL/2015 2 1(I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VALIDITY OF NOTI CE U/S 148 EVEN THOUGH THE SAME IS WITHOUT JURISDICTION AND BAD IN LAW. (II) THAT ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3) AND REOPENING BEING AFTER EXPIRY OF FOUR YEARS, AS PER FIRST PROV ISO TO SECTION 147 THE NOTICE U/S 148 IS TIME BARRED AND INVALID IN AB SENCE OF ANY FAILURE ON PART OF THE ASSESSEE IN DISCLOSING FULL AND TRUE PARTICULARS OF INCOME. (III) THAT IN ANY CASE, THE COMPLETE DETAILS RELATI NG TO CLAIM OF EXPENSES HAVING ALREADY BEEN FURNISHED DURING ORIGI NAL ASSESSMENT, THE REOPENING U/S 147 IS MERELY ON THE BASIS OF CHANGE OF OPINION AND RE-APPRAISAL OF MATERIAL ALRE ADY ON RECORD. 2. THAT REASONS BEING MERELY ON THE BASIS OF INFORM ATION FROM INVESTIGATION WING AND THERE BEING NO INDEPENDENT A PPLICATION OF MIND, THE NOTICE U/S. 148 HAS BEEN ISSUED MECHANICA LLY AND ON ILLEGAL AND ARBITRARY BASIS. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF (ONLINE) STATE LOTTERY TICKETS AND WERE SOLD THROUGH DISTRIBUTOR OF NAGALA ND AND MEGHALAYA. THE ASSESSEE HAS FILED ITS RETURN OF INC OME ON 31.10.2005 DECLARING INCOME OF RS.2,69,18,960/- DUL Y ACCOMPANIED WITH TAX AUDIT REPORT U/S.44AB. THE SAI D RETURN WAS DULY PROCESSED U/S.143(1) ON 26.09.2006. THEREA FTER, ASSESSEES CASE WAS SELECTED FOR COMPULSORY SCRUTIN Y VIDE NOTICE DATED 02.06.2006 ISSUED U/S. 143(2). AFTER D ETAILED SCRUTINY OF BOOKS OF ACCOUNT AND EXAMINING THE NATU RE OF ENTRIES INCLUDING THE EXPENSES GIVEN DEBITED TO THE PROFIT & LOSS ACCOUNT, ASSESSMENT WAS COMPLETED AFTER MAKING I.T.A. NO.4364/DEL/2015 3 DISALLOWANCES OF CERTAIN EXPENSES LIKE, TELEPHONE, TOUR AND TRAVEL, CAR RUNNING, ETC.; AND AS AGAINST THE RETUR N OF INCOME OF RS.2,69,18,960/-, ASSESSMENT WAS COMPLETED ON AN INCOME OF RS.2,74,29,210/-. NOW AFTER THE EXPIRY OF MORE T HAN FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, THE ASSESSMENT WAS SOUGHT TO BE REOPENED BY ISSUANCE OF NOTICE U/S.148 DATED 31.10.2011 AFTER RECORDING THE FOLLOW ING REASONS. REASONS FOR REOPENING THE CASE U/S 147 READ WITH SE CTION 148 OF THE INCOME-TAX ACT. 1961 ASSESSEE FIRM FILED ITS RETURN OF INCOME FOR THE A. Y. 2005-06 ON 31/10/2005 DECLARING TOTAL TAXABLE INCOME AT RS. 2, 69,18,960/. ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 1 9/12/2007 AT RS. 2,74,29,210/. INFORMATION HAS BEEN RECEIVED FROM THE INVESTIGATIO N WING OF THE DEPARTMENT THAT A SEARCH & SEIZURE OPERATION WAS CO NDUCTED IN THE S.K. GUPTA GROUP OF CASES ON 12-12-2006. DURING THE COURSE OF SEARCH & SEIZURE PROCEEDINGS, IT WAS FOUND THAT SH S.K. GU PTA, A CHARTERED ACCOUNTANT BY PROFESSION WAS RUNNING A NUMBER OF CO MPANIES AND WAS ALSO OPERATING NUMEROUS BANK ACCOUNTS EITHER BY HIMSELF OR IN THE NAME OF HIS RELATIVES AND CLOSE ASSOCIATES. THR OUGH NUMEROUS COMPANIES STARTED BY HIM, HE WAS FOUND INDULGING IN ISSUING ACCOMMODATION BILLS OF EXPENSES AND PROVIDING ACCOM MODATION ENTRIES OF SHARE CAPITAL ETC. DURING THE SEARCH & S EIZURE PROCEEDINGS, NO EVIDENCE OF CARRYING OUT OF ANY REAL BUSINESS AC TIVITY BY - THESE COMPANIES/ CONCERNS COULD BE FOUND. THE INVESTIGATI ON WING ALSO RECORDED ON OATH STATEMENT OF SH. S.K. GUPTA WHEREI N HE CATEGORICALLY ADMITTED TO ONLY PROVIDING ACCOMMODATIONS BILLS AT A COMMISSION. HE CATEGORICALLY STATED THAT THE COMPANIES/ CONCERNS R UN BY HIM WERE I.T.A. NO.4364/DEL/2015 4 NEITHER HAVING ANY INFRASTRUCTURE NOR COMPETENCE FO R PROVIDING ANY PROFESSIONAL / CONSULTANCY SERVICES- IT HAS ALSO BE EN INFORMED THAT FROM THE FOLLOWING COMPANIES/ CONCERNS SPAWNED BY S H. S. K GUPTA FOR PROVIDING ACCOMMODATION ENTRIES IN VARIOUS FORM S, THE ASSESSEE FIRM M/S M.S. ASSOCIATES OBTAINED ACCOMMODATION ENT RIES OF VARIOUS EXPENSES DURING THE FINANCIAL YEAR 2004-05. M/S BOLNI EXIM INDIA LTD. WEB ADVERTISING CHARG ES M/S PG TRAVELS HINDUSTAN COM (P) LTD. WEB ADVERT ISING CHARGES M/S ERA ADVERTISING MARKETING CO. (P) LTD . BANNER AND POSTERS M/S POWER GOLD ELECTRICIAN SYSTEMS (P) LT D. PURSE PURCHASED FANCY EAR RINGS, SCENERIES WATCH AND DIAR IES M/S CELCEL TECHNOLOGIES (P) LTD. SERVER AND LAPT OP EXAMINATION OF THE ASSESSMENT RECORDS FOR THE A.Y. 2005-06 REVEALED THAT IN THE P&L ACCOUNT, THE ASSESSEE HAS DEBITED TOTAL EXPENDITURE OF RS. 2,22,45,306/- UNDER THE HEAD ADVERTISEMENT AND RESULT PUBLICITY EXPENSES. FROM THE DETAILS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 06-12-2007, IT IS NOTICED THAT THE ASSESSEE FIRM HAS CLAIMED THE FOLLOWING EXPENDITURE THROUGH THE MEANS OF ACCOMMODATION BILLS OBTAINED FROM M/S BOLNI EXIM INDIA LTD; M/S. BOLNI EXIM INDIA LTD., BILL NO. & DATE AMOUNT (RS.) 2004-05/06/41, 15-06-2004 1491435 2004-05/09/59, 15-09-2004 1491435 2004-05/12/72, 15-12-2004 1491435 2004-05/03/86, 15-03-2005 1491435 5965740 SIMILARLY, FOLLOWING CLAIM OF EXPENDITURE WAS MADE CLAIMED BY WAY OF ACCOMMODATION BILLS OBTAINED FROM M/S PG TRAVELS HINDUSTAN COM (P) LTD. , . BILL NO. & DATE AMOUNT (RS.) 2004-05/06/39,24-06-2004 1140810 2004-05/09/60,24-09-2004 1140810 2004-05/12/76, 24-12-2004 1140810 2004-05/03/89, 15-03-2005 1140810 4563240 THE FOLLOWING ACCOMMODATION BILL OBTAINED FROM ANOT HER CONCERN OF SH S.K GUPTA NAMELY, M S ERA ADVERTISING & MARKETING CO. (P) LTD. WERE A LSO CLAIMED AS ADVERTISEMENT AND RESULT PUBLICITY EXPENSES. I.T.A. NO.4364/DEL/2015 5 BILL NO. & DATE AMOUNT (RS.) 2004-05/06/29 15-06-2004 177 5880 2004-05/09/75,22-09-2004 1750880 2004-05/12/89,22-12-2004 1 673630 2004-05/03/105,14-03-2005 1770630 6971020 THUS, TOTAL CLAIM OF EXPENDITURE MADE IN THE RETURN OF INCOME THROUGH ACCOMMODATION BILLS UNDER THE HEAD ADVERTISEMENT AN D RESULT PUBLICITY EXPENSES COMES TO RS. 1,75,00,000/- SALES PROMOTIONS EXPENSES- THE TOTAL CLAIM OF EXPENDITURE OF RS.51,2 9,680/ IN RESPECT OF SALES PROMOTION EXPENSES INCLUDED THE FOLLOWING ACCOMMODATION BILLS OBTAINED FROM VARIOUS CONCERNS OF SH S.K. GUPTA. M/S. POWER GOLD ELECTRICIAN SYSTEMS (P) LTD. BILL NO. & DATE AMOUNT (RS.) PGES/2004-05/10/73, 15-10-2004 1077500 PGES/2004-05/11/85, 08-11-2004 515000 PGES/2004-05/11/86, 15-11-2004 544350 PGES/2004-05/10/93, 15-12-2004 417500 2090850 M/S CELCEL TECHNOLOGIES (P) LTD. BILL NO. & DATE AMOUNT PGS/2004-05/10/67, 25-10-2004 749830 PGS/2004-05/11/72, 05-11-2004 533770 PGS/2004-05/01/92, 12-01-2005 317050 PGS/2004-05/03/03, 07-03-2005 864680 2465330 THUS, IN THE RETURN OF INCOME TOTAL CLAIM OF RS.45, 56,180/- UNDER THE HEAD SALES PROMOTION EXPENSES HAS BEEN MADE THROUGH ACCOMMODAT ION BILLS OBTAINED FROM THE CONCERNS RUN BY SH. S.K. GUPTA. ADDITION TO THE FIXED ASSETS- THE ASSESSEE FIRM HAS ALSO DECLARED TO HAVE INCURRED A TOTAL EXPENDITURE OF RS. 74,60,772/ ON A CQUISITION OF FIXED ASSETS DURING THE F.Y.2004-05. FROM THE DETAIL FILED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS NOTICED THAT THE FOLL OWING ACCOMMODATION BILLS WERE OBTAINED FROM THE CONCERNS OF SH. S.K. GUPTA I N RESPECT OF PURCHASE OF COMPUTERS AND CLAIM OF DEPRECIATION @ 60% WAS ALSO MADE IN THE RETURN OF INCOME. M/S CELCEL. TECHNOLOGIES (P) LTD. I.T.A. NO.4364/DEL/2015 6 BILL NO. & DATE AMOUNT (RS.) PGS/2004-05/08/6J, 22-08-2004 2017800 PGS/2004-05/09/67, 05-09-2004 1008900 PGS/2004-05/09/73; 25-09-2004 918950 3945650 CLAIM OF DEPRECIATION @ 60% IN RESPECT OF THE ABOVE COMES TO RS. 23,67,390/-. ON THE FACTS MENTIONED ABOVE, I HAVE REASON TO BELI EVE THAT THE INCOME TO THE TUNE OF RS. 2,44,23,570/- HAS ESCAPED ASSESSMENT FO R THE A.Y. 2005-06 FOR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT WITHIN THE MEANI NG OF SECTION 147 OF THE INCOME-TAX ACT, 1961. THEREFORE, I PROPOSE TO REASS ESS AFORESAID INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAVE ESCAPED ASSESSMENT. ISSUE NOTICE U/S.148 OF THE INCOME TAX ACT, 1961. 4. AFTER ASSESSEES PARTICIPATION IN THE PROCEEDING S U/S.148 THE REASONS RECORDED WERE PROVIDED. ASSESSEE THEN RAISED DETAILED OBJECTIONS BEFORE THE ASSESSING OFFICER AN D ALSO REQUESTED THAT THE ASSESSING OFFICER TO PROVIDE THE COPY OF STATEMENT OF SHRI S.K. GUPTA IN RELATION TO ALLEGED ACCOMMODATION ENTRIES RECEIVED BY THE ASSESSEE FIRM AND ALSO THE MATERIAL IN SUPPORT OF ADVERSE INFERENCE IN RES PECT OF VARIOUS PARTIES REFERRED TO IN THE REASONS RECORDE D. HOWEVER, THE LD. ASSESSING OFFICER REJECTED THE ASSESSEES O BJECTION WHICH HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER FROM PAGES 3 TO 8. BASED ON THE AFORESAID INFORMATION AS INCORPORATED IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS PROCEEDED TO MAKE A DISALLOWANCE OF RS.2,20,56, 180/- AND ALSO DISALLOWANCE OF DEPRECIATION IN RESPECT OF PURCHASE OF COMPUTERS OF RS.23,67,390/- I.T.A. NO.4364/DEL/2015 7 5. BEFORE THE LD. CIT (A), ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U/S.148 MAINLY ON THE GROUNDS THAT; FIRSTLY, IN THE CASE OF THE ASSESSEE, ASSESSMENT WA S COMPLETED U/S. 143(3) AND THERE WAS NO FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE TRULLY AND FULLY A LL MATERIAL FACTS, THEREFORE, IN VIEW OF PROVISO TO SECTION 147, REOPENING OF ASSESSMENT COMPLETED U/S.143(3) CANNOT BE REOPENED AFTER THE PERIOD OF FOUR YEARS F ROM THE END OF RELEVANT ASSESSMENT YEAR. IN SUPPORT VAR IOUS DECISIONS WERE ALSO RELIED UPON. SECONDLY, THE COPY OF STATEMENT OF SHRI S.K. GUPTA IN SUPPORT OF ALLEGATION OF THE ACCOMMODATION ENTRY WA S NEVER PROVIDED BY THE ASSESSING OFFICER DURING THE ENTIRE RE-ASSESSMENT PROCEEDINGS DESPITE SEVERAL REQUESTS AND ALSO NO OPPORTUNITY WAS GIVEN FOR CROSS-EXAMINATION . 6. LD. CIT (A) REJECTED THE ASSESSEES CONTENTION O N THE GROUND THAT THOUGH ALL THE NECESSARY DETAILS/DOCUME NTS WERE FILED BEFORE THE ASSESSING OFFICER, HOWEVER ALL THE SE DOCUMENTS ARE MAINLY PAPER TRAILS WHICH CANNOT BE A CCEPTED IN LIGHT OF INFORMATION RECEIVED, AS WHEREVER ACCOM MODATION ENTRIES ARE ARRANGED ALL DOCUMENTARY EVIDENCES ARE PREPARED IN ORDER TO JUSTIFY THE EXPENSES. EVEN SHRI S.K. GUP TA DURING HIS STATEMENT HAS CATEGORICALLY ADMITTED FOR PROVID ING ACCOMMODATION ENTRIES WHICH WERE NOT GENUINE THIS CONSTITUTES MATERIAL FOR REOPENING AND THEREFORE, A CTION TAKEN BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSME NT IS FULLY JUSTIFIED. ON MERITS ALSO, HE HAS CONFIRMED THE ADDI TION. I.T.A. NO.4364/DEL/2015 8 7. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER HAS SPECIFICALLY RAISED QUERI ES WITH REGARD TO EACH AND EVERY EXPENDITURE INCURRED AND I N RESPONSE TO WHICH ASSESSEE HAS SUBMITTED THE ENTIRE DETAILS, SPECIFICALLY WITH REGARD TO ADVERTISEMENT, SALES PR OMOTION, ETC. ALONG WITH BILL AND VOUCHERS AND THE NAME OF THE PA RTIES. IN SUPPORT, HE DREW OUR ATTENTION TO THE LETTER DATED 06.12.2007 FILED BY THE ASSESSEE IN RESPONSE TO THE QUERY RAIS ED BY THE ASSESSING OFFICER IN THE COURSE OF ORIGINAL ASSESSM ENT PROCEEDINGS. APART FROM THAT, ASSESSEE HAS ALSO FUR NISHED ALL THE AGREEMENTS WITH THE PARTIES DURING THE COURSE O F ASSESSMENT PROCEEDINGS. FURTHER, ALL THE PAYMENTS W ERE MADE THROUGH ACCOUNT PAYEE CHEQUES AFTER DEDUCTING TDS. IT WAS AFTER EXAMINING ALL THESE DETAILS, ASSESSING OF FICER HAS PASSED THE ASSESSMENT ORDER U/S. 143(3) VIDE ORDER DATED 19.12.2007. NOW ON THE BASIS OF SEARCH CARRIED OUT IN SHRI S.K. GUPTAS CASE ON 12.12.2006 AND BASED ON INFORM ATION OF THE INVESTIGATION WING, ASSESSEES CASE HAS BEEN SO UGHT TO BE REOPENED ON THE GROUND THAT SOME OF THE COMPANIES O F SHRI S.K. GUPTA HAS PROVIDED ACCOMMODATION ENTRIES WITH REGARD TO VARIOUS EXPENSES. HE SUBMITTED THAT EVEN FROM TH E COPIES OF THE STATEMENT OF SHRI S.K. GUPTA WHICH WAS PROVI DED DURING THE COURSE OF APPELLATE PROCEEDINGS, IT CAN BE SEEN THAT NOTHING IS BORNE OUT FROM THE SAID STATEMENT AND FU RTHER BOTH ASSESSING OFFICER AND LD. CIT (A) HAVE REFERRED TO TWO DIFFERENT STATEMENTS AND IN BOTH THE STATEMENTS THERE IS NO R EFERENCE OF THE ASSESSEE AT ALL. IT IS A MATTER OF RECORD THAT IN THE CASE OF SHRI S.K. GUPTA THERE WAS A RETRACTION OF HIS STATE MENT TAKEN I.T.A. NO.4364/DEL/2015 9 DURING THE COURSE OF SEARCH WHICH HAS BEEN NOTED BY THE TRIBUNAL ALSO IN THE CASE OF SHRI S.K. GUPTA. IN FA CT, IN ONE OF HIS AFFIDAVIT FILED BEFORE THE AUTHORITIES BELOW HE HAS ADMITTED THAT HE WAS ALSO DOING REGULAR BUSINESS FROM HIS CO MPANIES AND NOT ALL THE ENTRIES ARE IN THE NATURE OF ACCOMM ODATION. THE ENTIRE STATEMENT WAS GENERAL IN NATURE AND ALSO THERE WAS CERTAIN CONTRADICTION IN HIS STATEMENTS. HE FUR THER SUBMITTED THAT, PRECISELY IN SAME SET OF MATTER IN THE CASE OF SUBBA MICROSYSTEM LTD. VS. ADD. CIT, RANGE 9, NEW D ELHI IN ITA NO.05/DEL/2011, ASSESSMENT YEAR 2005-06 DATE D 25.11.2011 , THIS TRIBUNAL HAS DELETED THE SAID ADDITION AFTER DETAILED REASONING. THUS, SUCH A REOPENING IS BAD I N LAW. 8. ON THE OTHER HAND, LEARNED DEPARTMENT REPRESENTA TIVE SUBMITTED THAT DURING THE COURSE OF SEARCH IN THE C ASE OF SHRI S.K. GUPTA STATEMENT WAS RECORDED ON 13.12.2006 AND ON 27.12.2006. HIS RETRACTION WAS ONLY BY WAY OF AN AF FIDAVIT AND THEREAFTER, AGAIN SURVEY WAS CONDUCTED U/S.133A AND SECOND SET OF STATEMENTS WERE RECORDED IN THE YEAR 2007-08 . IN ALL HIS STATEMENTS, HE HAS CATEGORICALLY ADMITTED THAT HE W AS PROVIDING ACCOMMODATION ENTRIES AND ANY RETRACTION BY WAY OF AFFIDAVIT CANNOT BE HELD TO BE VALID. IN SUPPORT , HE HAS STRONGLY RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD., REPORTED IN (2012) 342 ITR 169 (DEL.). HE FURTHER RELIED UPON THREE JUDGMENTS, (I) PHOOL CHAND BAJRANG LAL VS . ITO, (1993) 203 ITR 456 (SC), (II) ITO VS. PURUSHOTTAM D AS BANGUR, (1997) 224 ITR 362 (III) SONIA GANDHI VS. ACIT, (2018) 257 TAXMAN 515 (DEL). I.T.A. NO.4364/DEL/2015 10 9. IN REJOINDER, LEARNED COUNSEL SUBMITTED THAT HER E IN THIS CASE ASSESSING OFFICER HAS REFERRED TO STATEMENT OF 2006, WHEREAS THE LD. CIT (A) IS REFERRING TO SOME DIFFER ENT STATEMENT OF SHRI S.K. GUPTA. HERE THE MAIN ISSUE IS OF APPLI CABILITY OF PROVISO TO SECTION 147. WHAT HAS TO BE BEEN SEEN IS WHETHE R THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND HERE IN THIS CASE ALL THE RELEVANT FACTS AND MATERIAL RELATING TO VARIOUS EXP ENSES WERE FILED BEFORE THE ASSESSING OFFICER DURING THE COURS E OF ORIGINAL ASSESSMENT PROCEEDINGS AND ALSO ASSESSEE HAS DULY D EDUCTED THE TDS AND DEPOSITED THE SAME. SIMPLY BASED ON INFORMATION WHICH WAS ALREADY THERE PRIOR TO THE CO NCLUSION OF THE ASSESSMENT REOPENING CANNOT BE JUSTIFIED, WHEN FIRSTLY, NO MATERIAL WAS GIVEN TO THE ASSESSEE AFTER IT HAS PAR TICIPATED IN THE RE-ASSESSMENT PROCEEDINGS; AND SECONDLY, NOWHER E IN THE ASSESSMENT RECORD OR ANY OTHER MATERIAL FOUND, IT C AN BE INFERRED THAT EITHER ASSESSEE HAS BEEN FOUND TO BE BENEFICIARY OR THERE IS ANY MENTION OF ASSESSEE ANYWHERE. IN FA CT, IT IS A MATTER OF RECORD THAT SHRI S.K. GUPTA HAS ADMITTED THAT HE HAS ALSO CARRYING OUT CERTAIN GENUINE ACTIVITY ALSO . THUS, IT CANNOT BE HELD THAT THERE WAS ANY FAILURE ON THE PA RT OF THE ASSESSEE. HE HAS ALSO RELIED UPON CATENA OF JUDGMEN TS WHICH ARE AS UNDER: 1. PEETHAMBRA BUILDCON LTD. V. ITO (ITA NO. 637/D/ 18) (DEL IT AT) 2. SABH INFRASTRUCTURE LTD. V. ACIT (WPC 1357/2016) (25.09.17) (DEL) 3. SABHARWAL PROPERTIES INDUSTRIES P. LTD. V. ITO [ 2016] 382 ITR 547 (DEL) 4. MADHUKAR KHOSLA V. ACIT [2014] 367 ITR 165 (DEL) 5. CIT V. MULTUPLEX TRADING & INDUSTRIAL CO. LTD.[2 015] 378 ITR 351 (DEL) I.T.A. NO.4364/DEL/2015 11 6. ACIT V. ICICI SECURITIES PRIMARY DEALERSHIP LTD. [2012] 348 ITR 299 (SC) 52 - 53 7. MEADOW INFRADEVELOPERS P. LTD. V ITO [2018] 93 T AXMANN.COM 397 (DEL) 8. CIT V. S. KHADER KHAN SON [2013] 352 ITR 480 (SC ) 9. MS/.ANDAMAN TIMBER INDUSTRIES V. CCE (SC) 10. BHARTI INFRATEL LTD. V. DCIT [2019] 101 TAXMANN .COM 285 (DELHI) 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS W ELL AS MATERIAL REFERRED TO BEFORE US QUA THE ISSUE OF REOPENING U/S.148. HERE, IN THIS CASE, AS STATED ABOVE THE OR IGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) AFTER DETAILED SCRUTINY VIDE ORDER DATED 19.12.2007. AS IT TRANSPIRES FROM THE RECORD, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, LD . ASSESSING OFFICER HAS DULY REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS OF ALL THE EXPENSES INCURRED AND DEBITE D TO THE P&L ACCOUNT INCLUDING ADVERTISEMENT AND PUBLICITY EXPEN SES, SALES PROMOTION EXPENSES, ETC. IN RESPONSE, THE ASS ESSEE HAD FILED RELEVANT BILLS, COPY OF ACCOUNTS AND THE DETA ILS. THE RELEVANT DETAILS IN THIS REGARD PRODUCED BEFORE THE ASSESSING OFFICER WAS AS UNDER: M.S. ASSOCIATES DETAILS OF ADVERTISEMENT & RESULT PUBLICITY EXPENSE S DURING THE YEAR 2004-2005. BILL NO. BILL DATE PAID TO WHOM AMOUNT 404038 22.04.04 CENSER ADVERTISING (P) LTD. 25,600.00 403110 01.04.04 CENSER ADVERTISING (P) LTD. 3,036.00 2004 - 2005/06/29 15.06.04 ERA ADVERTISING & MARKETING COMPANY PVT. LTD. 1,775,880.00 2004 - 15.06.04 BOLNI EXIM INDIA LTD. 1,491,435.00 I.T.A. NO.4364/DEL/2015 12 2005/06/41 2004 - 2005/06/36 22.06.04 TRUMP & GATES 1,133,500.00 2004 - 2005/06/39 24.06.04 PG TRAVELS HINDUSTAN. COM PVT. LTD. 1,140,810.00 2004 - 2005/06/59 15.09.04 BOLNI EXIM INDIA LTD. 1,491,435.00 2004 - 2005/06/75 22.09.04 ERA ADVERTISING & MARKETING COMPANY PVT. LTD. 1,750,880.00 2004 - 2005/09/60 24.09.04 PG TRAVELS HINDUST. COM PVT. LTD. 1,140,810.00 2004 - 2005/SEPT/59 22.09.04 TRUMP & GATES 1,133,500.00 108 01.11.04 TARUN ADVERTISING AGENCY 32,000.00 186 14.12.04 BISHT PACK - N - PRINT 40,000.00 2004 - 2005/12/72 15.12.04 BOLNI EXIM INDIA LTD. 1,491,435.00 2004 - 2005/DECE/72 22.12.04 TRUMP & GATES 1,133,835.00 2004 - 2005/12/89 22.12.04 ERA ADVERTISING & MARKETING COMPANY PVT. LTD. 1,673,630.00 2004 - 2005/12/76 24.12.04 PG TRAVELS HINDUSTAN. COM PVT. LTD. 1,140,810.00 140 14.12.04 CREATIVE ART 40,000.00 007 13.12.04 MITALI GRAPHIX 70,000.00 2004 - 2005/03/105 14.03.05 ERA ADVERTISING & MARKETING COMPANY PVT. LTD. 1,770,6 30.00 2004 - 2005/MAR/93 11.03.05 TRUMP & GATES 1,133,835.00 2004 - 2005/03/86 15.03.05 BOLNI EXIM INDIA LTD. 1,491,435.00 2004 - 2005/03/89 15.03.05 PG TRAVELS HINDUSTAN.COM PVT. LTD. 22,245,306.00 AFTER EXAMINING THE AFORESAID DETAILS, ASSESSING O FFICER HAS ACCEPTED MOST OF THE EXPENSES BARRING MAKING CE RTAIN DISALLOWANCE OF VARIOUS OTHER EXPENSES LIKE, TELEPH ONE, TOUR AND TRAVEL, CAR RUNNING, DEPRECIATION ETC. I.T.A. NO.4364/DEL/2015 13 11. NOW AFTER THE EXPIRY OF MORE THAN FOUR YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE ASSESSEES CASE HAS BEEN SOUGHT TO BE REOPENED U/S.147 ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF DEPARTMENT, WHEREIN THERE IS A MENTION ABOUT SEARCH AND SEIZURE ACTION CONDUCTED IN THE CASE OF SHRI S.K. G UPTA GROUP OF CASES ON 12.12.2006 AND DURING THE COURSE OF SEA RCH IT WAS FOUND THAT HE WAS PROVIDING ACCOMMODATION ENTRIES I N VARIOUS FORMS AND SOME OF THE COMPANIES BELONGING T O HIM AS NOTED IN THE REASONS RECORDED WERE PROVIDING ACCOMM ODATION ENTRIES FOR VARIOUS EXPENSES. CERTAIN BILL NUMBERS AND DATES HAVE ALSO BEEN MENTIONED WHICH PERTAINS TO THE BILL S SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ORIG INAL ASSESSMENT PROCEEDINGS. SINCE SOME OF THE BILLS PER TAIN TO THESE COMPANIES BELONGING TO SHRI S.K. GUPTA, THERE FORE, FROM THIS IT HAS BEEN INFERRED BY THE AO THAT ASSESSEE H AS TAKEN ACCOMMODATION ENTRY BY WAY OF BILLS FOR EXPENSES FR OM THESE COMPANIES RELATING TO ADVERTISEMENT, PUBLICITY AND SALES PROMOTION EXPENSES. FIRST OF ALL, THE NATURE OF MAT ERIAL RECEIVED BY THE ASSESSING OFFICER FROM THE INVESTIG ATION WING HAS NEITHER BEEN MENTIONED IN THE REASONS RECORDED NOR IN THE ASSESSMENT ORDER. IF CERTAIN INFORMATION HAS BE EN RECEIVED FROM THE INVESTIGATION WING, THEN CERTAINLY IT DOES CONSTITUTE A RELEVANT MATERIAL TO ENTERTAIN PRIMA FACIE REASO N TO BELIEVE U/S 147. HOWEVER, AFTER RECEIVING SUCH INFORMATION, IT IS THE ASSESSING OFFICER WHO HAS TO INDEPENDENTLY APPLY HI S MIND ON THE MATERIAL SO AS TO ESTABLISH LIVE LINK NEXUS BET WEEN THE INFORMATION AND MATERIAL COMING TO HIM WITH THE ASS ESSMENT RECORDS. HE CANNOT HAVE BORROWED SATISFACTION FROM SOME I.T.A. NO.4364/DEL/2015 14 OTHER AUTHORITY BASED ON LETTER, HE HAS TO FIRST OF ALL SEE, WHETHER AT THE TIME OF RECORDING THE REASONS, HE HA S THE REQUISITE MATERIAL ALONGWITH THE INFORMATION SO AS TO DRAW ANY PRIMA FACIE INFERENCE THAT ASSESSEE HAS FAILED TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS. NEITHER IN THE REASO NS RECORDED NOR IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REFERRED TO ANY MATERIAL OR DOCUMENT RECEIVED FROM THE INVESTIGATION WING ALONGWITH THE LETTER AS TO WHETH ER SHRI S.K. GUPTA IN HIS STATEMENT HAS STATED THAT HE HAS PROVI DED ACCOMMODATION ENTRIES TO THE ASSESSEE OR TO SOMEONE ELSE FROM THESE COMPANIES. AGAIN IN THE ASSESSMENT ORDER , THE SAME CONTENT OF BILLS WHICH WERE APPEARING IN THE E ARLIER ASSESSMENT RECORDS HAS BEEN REPRODUCED AND ASKED TH E ASSESSEE TO PROVE THE GENUINENESS OF THE CLAIM. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS EXP LAINED ALL THE DETAILS ALONG WITH BOOKS OF ACCOUNT. IF ASS ESSING OFFICER IS DISBELIEVING THE EARLIER SCRUTINY ASSESS MENT AND VIEW TAKEN BY ASSESSING OFFICER BY HEAVILY RELYING UPON THE STATEMENT OF SHRI S.K. GUPTA, THEN HE SHOULD HAVE H IMSELF PERUSED THE STATEMENT AND THE MATERIAL TO COME TO A PRIMA FACIE BELIEF BEFORE RECORDING HIS REASONS. THE ASSE SSEE AFTER RECEIVING THE COPY OF REASONS RECORDED HAD SPECIF ICALLY ASKED THE ASSESSING OFFICER TO PROVIDE THE COPY OF STATEM ENT OF SHRI S.K. GUPTA ABOUT THE ALLEGED ACCOMMODATION ENTRY AN D ALSO THE MATERIAL IN SUPPORT OF WHICH ADVERSE INFERENCE IS BEING SOUGHT TO BE DRAWN. HOWEVER, NO SUCH MATERIAL WAS E VER CONFRONTED TO THE ASSESSEE BY HIM EITHER AT THE TIM E OF RECORDING THE REASONS OR DURING THE COURSE OF ENTIR E RE- ASSESSMENT PROCEEDINGS. THIS LEADS TO A STRONG INFE RENCE I.T.A. NO.4364/DEL/2015 15 ASSESSING OFFICER DID NOT HAD EVEN THE STATEMENT AN D THE MATERIAL FROM THE INVESTIGATION WING AT THE TIME OF RECORDING THE REASONS ON THE BASIS OF WHICH ASSESSING OFFICER IS SEEKING TO REOPEN THE ASSESSMENT. IT HAS BEEN BROUGHT ON RE CORD BEFORE US BY THE LEARNED COUNSEL THAT ASSESSEE EVEN SOUGHT FOR INFORMATION UNDER THE RTI ACT FILED BEFORE THE DEPARTMENT TO SUPPLY; I) THE COPY OF INFORMATION ALONG WITH MA TERIAL RECEIVED FROM INVESTIGATION WING AS REFERRED IN THE REASONS; II) COPY OF FORWARDING LETTER THROUGH WHICH ABOVE INFOR MATION WAS FORWARDED TO THE ASSESSING OFFICER; AND III) CO PY OF APPROVAL U/S.151. HOWEVER, AS INFORMED BY HIM NO SU CH INFORMATION HAS BEEN PROVIDED TILL DATE. EVEN WHEN THIS ISSUE WAS CHALLENGED BEFORE THE LD. CIT (A), THE STATEMEN T WHICH HAS BEEN PROVIDED, IS THE STATEMENT RECORDED ON 20.11.2 007 WHICH IS ENTIRELY DIFFERENT FROM THE ONE AS RECORDE D IN THE REASONS. THE ASSESSING OFFICER HAS REFERRED TO INFO RMATION RECEIVED DURING THE COURSE OF SEARCH IN THE CASE OF SHRI S.K. GUPTA ON 12.12.2006. EVEN FROM A BARE PERUSAL OF TH E STATEMENT OF SHRI S.K. GUPTA RECORDED ON 20.11.2007 , IT IS SEEN THAT HE HAS NEITHER MENTIONED ABOUT ANY OF THE COMPANY LISTED IN THE REASON RECORDED NOR THERE IS ANY RE FERENCE OF ANY MATERIAL THAT HE WAS PROVIDING ACCOMMODATION EN TRIES FOR THE EXPENDITURE. IN FACT THE LIST OF COMPANIES WHIC H HE HAS STATED TO HAVE BEEN PROVIDING ACCOMMODATION ENTRIES WERE ENTIRELY DIFFERENT AND NONE OF THE COMPANIES IS FIG URING IN THAT STATEMENT. 12. IT IS A TRITE LAW THAT, IN A CASE WHERE ASSE SSMENT HAS BEEN COMPLETED U/S. 143(3) AND MORE THAN FOUR YEARS HAS LAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR , THEN I.T.A. NO.4364/DEL/2015 16 ASSESSING OFFICER HAS TO BRING ON RECORD A TANGIBLE MATERIAL TO SHOW THAT PRIMA FACIE THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. IF THE SAME EXPENDITURE CLAIMED HAS BEEN ALLOWED BY THE AS SESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PR OCEEDINGS, THEN IT WAS ALL THE MORE INCUMBENT UPON THE ASSESSI NG OFFICER TO BRING ON RECORD THAT THESE EXPENSES WERE ACTUALLY BOGUS AND FOR THAT HE SHOULD HAVE THE RELEVANT MATE RIAL WITH HIM INCLUDING THE STATEMENT OF SHRI S.K. GUPTA THAT THESE COMPANIES HAD PROVIDED ACCOMMODATION ENTRY TO THE ASSESSEE. SIMPLY BASED ON AN INFORMATION OF THE INV ESTIGATION WING WITHOUT ANY MATERIAL OR STATEMENT WITH THE ASS ESSING OFFICER, IT IS VERY DIFFICULT TO FATHOM THAT ASSESS ING OFFICER HAS INDEPENDENTLY APPLIED HIS MIND ON SUCH MATERIAL SO AS TO REACH TO A PRIMA FACIE BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ASSESSING OFFICER HAS TO SE E THE LIVE LINK NEXUS BETWEEN THE MATERIALS GATHERED OR BROUGH T ON RECORD WHICH COULD PRIMA FACIE SHOW THAT ASSESSEES CLAIM WAS BOGUS. NO DOUBT THE ASSESSING OFFICER HAS TO EN TERTAIN ONLY PRIMA FACIE REASON TO BELIEVE AND NOT CONCLUSIVE FINDING BEFORE ISSUING NOTICE U/S.148, BUT SUCH PRIMA FACIE BELIEVE HAS TO BE BASED ON MATERIAL BEFORE HIM AND NOT MERE LY BLINDLY RELYING UPON INFORMATION FROM INVESTIGATION WING. I F SUCH AN INFORMATION IS DULY CORROBORATED WITH THE MATERIAL FOUND AND OR THE STATEMENT SPECIFICALLY REFERRING TO THE ASSE SSEE AS A BENEFICIARY OF THE ACCOMMODATION ENTRY OR THERE IS ANY REFERENCE TO ANY OF THE COMPANIES THROUGH WHICH ASS ESSEE HAS TRANSACTED, THEN IT CAN BE REASONABLY PRESUME T HAT ASSESSING OFFICER HAD SOME PRIMA FACIE REASON TO BELIEVE THAT I.T.A. NO.4364/DEL/2015 17 INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IF A BELIEF IS SIMPLY BASED ON AN INFORMATION DE HORS ANY MATERIAL, THEN IT CANNOT CLOTHE THE ASSESSING OFFICER WITH THE JUR ISDICTION TO REOPEN A COMPLETED ASSESSMENT U/S 143(3) OR U/S 147 . 13. AS STATED ABOVE, IN THE REASON RECORDED, T HERE IS MENTION ABOUT INFORMATION FROM THE INVESTIGATION WI NG STATING THAT SHRI S.K. GUPTA HAS CATEGORICALLY ADMI TTED PROVIDING ACCOMMODATION BILLS AT A COMMISSION. BUT HERE IN THIS CASE, AS BROUGHT ON RECORD THE ASSESSING OFFIC ER WITHOUT EXAMINING THE STATEMENT OR ANY MATERIAL SENT BY THE INVESTIGATION WING HAS NOT ONLY SOUGHT TO REOPEN TH E ASSESSMENT BUT HAS ALSO DISBELIEVED THE FINDING OF THE EARLIER ASSESSMENT ORDERS SIMPLY BASED ON LETTER FROM THE INVESTIGATION WING. FOR REOPENING THE ASSESSMENT CO MPLETED U/S. 143(3), THE CONDITIONS OF PROVISO TO SECTION 147 HAS TO BE STRICTLY MET AS THE ONUS IS HEAVILY UPON THE ASSESS ING OFFICER TO SHOW THAT THAT EARLIER DISCLOSURE MADE BY THE AS SESSEE WHICH HAS BEEN DULY EXAMINED BY THE ASSESSING OFFIC ER IS NOT CORRECT, BECAUSE THE ASSESSEES DISCLOSURE WAS ERRO NEOUS AND THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS. HERE, THE ASSESSING O FFICER IN THE REASONS HAS FAILED TO PRIMA FACIE ESTABLISH THAT THERE WAS SOME KIND OF A FAILURE ON THE PART OF THE ASSESSEE FOR DISCLOSING ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THUS, WE ARE OF THE OPINION THAT THE AFORESAID REAS ON DOES NOT CLOTHE THE ASSESSING OFFICER TO ACQUIRE JURISDICTION U/S.147 TO REOPEN THE COMPLETED ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR IN VIEW OF THE PROVISO TO SECTION 147. ACCORDINGLY, THE ENTIRE PROCEEDING INITIATED I.T.A. NO.4364/DEL/2015 18 U/S 147 IS QUASHED. CONSEQUENTLY THE ASSESSMENT OR DER IS HELD AS VOID-AB-INITIO. 14. IN VIEW OF OUR AFORESAID FINDING THE ADDITIO NS ON MERITS HAVE BECOME PURELY ACADEMIC AND SAME IS DISMISSED A S INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2019. SD/- SD/- [L.P. SAHU] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH APRIL, 2019 PKK: