M/s Aggregate Finance & Investment Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4398/DEL/2009

• Counselvise Citation: 439820114 RSA 2009
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 17-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: R C RAI
• Keywords: Gift; Accommodation entries; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.4398/DEL/2009 ASSESSMENT YEAR : 1999-2000 AGGREGATE FINANCE & INVESTMENT PVT. LTD., 1117/12, 3 RD FLOOR, NAIWALA, KAROL BAGH, NEW DELHI. PAN : AAACA6428R VS. ITO, WARD 1 (2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.C. RAI, CA REVENUE BY : MS ANUSHA KHURANA, SR.DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1999-2000 AGAINST THE ORDER DATED 14.09.2009 PASSED BY THE LD. CIT(A)-IV, NEW DELHI. THE REVISED GROUNDS OF APPEAL FILED ARE AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN UPHOLDING THE RE-OPENING OF THE CASE, WHICH IS OTHERWISE BAD IN LAW AND NOT TENABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF LOSS ON SALE OF SHARES AMOUNTING TO RS.2,59,650/- IN SPITE OF FACT THAT REASON & ISSUE FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS CEASED TO SURVIVE. ITA NO.4398/DEL/2009 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) GROSSLY ERRED IN UPHOLDING THE ACTION OF LD. ASSESSING OFFICE R IN TREATING THE LOSS ON SALE OF SHARES AS CAPITAL LOSS WHICH IS O THERWISE BUSINESS LOSS AND ALLOWABLE UNDER LAW. THESE ACTION OF HONBLE COMMISSIONER OF INCOME TAX ( APPEALS)- IV, NEW DELHI, AND LD. ASSESSING OFFICER BEING ARBI TRARY, UNJUST, ILLEGAL AND INVALID IN LAW LIABLE TO QUASHED AND IT I S PRAYED TO YOUR HONOUR THAT THEY PLEASE BE QUASHED AND/OR ANY OTHE R RELIEF JUST DEEM FIT AND PROPER PLEASE BE DIRECTED. 2. APROPOS GROUND NO.1, THE LEARNED COUNSEL SAYS THAT N O ADDITION WAS MADE ON THE REASONS RECORDED; THAT ACCORDINGLY, T HE REASONS CEASE TO EXIST, AS HELD IN RANBAXY LABORATORIES LTD. VS. CIT, 336 ITR 136 (DEL) AND ONCE THE REASONS RECORDED FOR REOPENIN G CEASE TO EXIST, THERE REMAINS NO REASON TO REOPEN THE COMPLETED ASSESSMEN T. 3. PER CONTRA , THE LD. DR SUBMITS THAT EVEN IF NO ADDITION HAS BEEN MADE ON REASONS RECORDED, THE REOPENING OF THE COMPL ETED ASSESSMENT ON THE BASIS OF THE REASONS RECORDED IS VALID. IN SUPPORT OF THIS CONTENTION, THE LEARNED DR HAS SOUGHT TO PLACE R ELIANCE ON THE FOLLOWING CASE LAWS:- I) ITO VS. M.V. BALAJI (2011) 007 ITR (TRIB) 795 (CHE NNAI) II) CIT VS. SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) III) CIT VS. N. KRISHNAN 233 ITR 646 (KER) IV) V. JAGANMOHAN RAO VS. CIT 75 ITR 373 (SC) V) CIT VS. STANDARD MOTOR PRODUCTS OF INDIA LTD. 142 I TR 877 (MAD) VI) CIT VS. B. NAGI REDDI 144 ITR 62 (MAD) VII) CIT VS. RAM KISHAN LEELA 295 ITR 525 (RAJ) VIII) ACIT VS. ASIAN EXIM INTERNATIONAL 113 TTJ 427 (ASR.) ITA NO.4398/DEL/2009 3 4. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND HAV E CONSIDERED THE MATERIAL ON RECORD WITH REGARD THERET O. THE REASONS RECORDED FOR REOPENING THE COMPLETED ASSESSMENT ARE AS F OLLOWS:- REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 OF THE IT ACT, 1961. THE DIRECTORATE OF INVESTIGATION-I, NEW DELHI, VIDE I TS OFFICE LETTER NO.1320 DATED 02.03.2006 HAD SENT A REPORT IN CASE OF BENEFICIARIES AND OPERATORS OF ACCOMMODATION ENTRIES I N DELHI. THE LETTER WAS ACCOMPANIED WITH A DETAILED REPORT. A PE RUSAL OF THE REPORT SHOWS THAT M/S AGGREGATE FINANCE AND INVESTME NT PVT. LTD. WHO IS ASSESSED TO TAX WITH THE UNDERSIGNED, HA S BEEN AN ENTRY PROVIDER UNDER A GROUP MANAGED BY SH. P.N. JHA/SH. VIPULAV BHARATI. THESE ACCOMMODATION ENTRIES HAVE BEE N PROVIDED ON A LARGE SCALE AND THE ASSESSEE COMPANY H AS BEEN PROVIDING THESE ENTRIES THROUGH NEARLY SEVERAL BANK AC COUNTS OPERATED IN DELHI. THESE ENTRIES HAVE BEEN PROVIDED BY THE ASSESSEE DURING THE FINANCIAL YEAR RELEVANT TO THE A.Y. 1999- 2000. THE VALUE OF THESE ENTRIES RUNS INTO SEVERAL LA CS OF RUPEES. 2. IN VIEW OF THE ABOVE CREDIBLE INFORMATION RECEIVE D FROM THE DIT (INV.), I HAVE REASONS TO BELIEVE THAT THE AMOUN T AND ITS TRANSACTIONS I.E., THE ENTRIES PROVIDED BY THE ASSESSEE MORE THAN ONE LAC RUPEES, WHICH IS CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT, AS PER THE PROVISIONS OF SECTION 147 (A), (B) & (C) OF THE INCOME TAX ACT, 1961. 3. I AM THEREFORE SATISFIED THAT THE SAID INCOME HAS ESC APED ASSESSMENT, AND ACCORDINGLY AFTER RECORDING THE ABOVE SAID REASONS AS LAID DOWN UNDER THE PROVISIONS OF SECTION 148(2) OF THE INCOME TAX ACT, PROPOSE TO ISSUE A NOTICE TO THE ABOV E MENTIONED ASSESSEE U/S 148(1) OF THE IT ACT, 1961. 4. THE PROPOSAL IS FORWARDED FOR YOUR KIND CONSIDER ATION AND NECESSARY APPROVAL IN VIEW OF THE FACT THAT :- (I) THE ASSESSMENT YEAR INVOLVED IS A.Y. 99-00. IN VIEW OF THIS, SINCE 4 YEARS HAS ELAPSED, BUT NOT MORE THAN 6 YEARS, THE PROPOSAL IS FORWARDED AS LAID DOWN UNDER THE PROVISIONS OF SECTION 149(1)(B) OF THE IT ACT, 1961. (II) KIND APPROVAL FOR ISSUE OF NOTICE U/S 148(I) IS SOUG HT AS PER THE PROCEDURE LAID DOWN UNDER THE PROVISIONS OF SECTION 151, READ WITH SUB SECTION (1) & (2) OF THE I NCOME TAX ACT, 1961. ITA NO.4398/DEL/2009 4 5. IN THE COMPUTATION OF INCOME CONTAINED IN THE OR DER PASSED BY THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER HAS RECORDED AS FOLLOWS:- WITH THE ABOVE REMARKS TOTAL INCOME IS COMPUTED AS UNDE R:- LOSS AS PER PROFIT AND LOSS A/C RS. 3,349 ADD LOSS ON SALE OF LONG TERM INVESTMENTS NOT ALLOWED AS DISCUSSED ABOVE RS.2,59,650 NET TAXABLE INCOME RS.2,56,301 ROUNDED OFF TO RS.2,56,300 6. IT THUS REMAINS AN UNDISPUTED FACT THAT NO ADDITI ON HAS BEEN MADE ON THE REASONS RECORDED FOR REOPENING THE COMPLE TED ASSESSMENT. NOW, WHAT IS TO BE SEEN IS AS TO WHETHER, AS CONTENDED BY THE ASSESSEE, SINCE NO ADDITION HAS BEEN MADE ON THE R EASONS RECORDED, NO REASONS FOR REOPENING THE COMPLETED ASSESSM ENT SURVIVE AND, CONSEQUENTLY, THE COMPLETED ASSESSMENT COULD NOT H AVE BEEN REOPENED, OR WHETHER IN SPITE OF NO ADDITION HAVING BEEN MADE QUA THE REASONS RECORDED, THOSE REASONS STILL SURVIVE AND THE REO PENING ON THE BASIS OF THOSE REASONS IS IN ORDER, AS MAINTAINED BY THE D EPARTMENT. 7. IN RANBAXY LABORATORIES (SUPRA) IT HAS BEEN HELD, INTER ALIA, AS FOLLOWS:- THE VERY BASIS OF INITIATION OF PROCEEDINGS FOR WHIC H REASONS TO BELIEVE WERE RECORDED WAS INCOME ESCAPING ASSESSMEN T IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC ., BUT WHILE THESE ITEMS WERE NOT DISTURBED, THE ASSESSING OFFICER P ROCEEDED TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTIONS 80HH AN D 80-I WHICH WAS NOT PERMISSIBLE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OFFICER HAD THE JURISDICTION TO REASSE SS ISSUES OTHER THAN THE ISSUES IN RESPECT OF WHICH PROCEEDINGS W ERE INITIATED BUT HE WAS NOT JUSTIFIED WHEN THE REASONS FOR THE INITIATION OF THOSE PROCEEDINGS CEASED TO SURVIVE. ITA NO.4398/DEL/2009 5 8. THUS, THE RATIO OF RANBAXY LABORATORIES (SUPRA) I S THAT WHERE THE REASONS FOR INITIATION OF REOPENING PROCEEDINGS C EASE TO SURVIVE, THE ASSESSING OFFICER IS NOT JUSTIFIED TO RE-ASSESS ISSUES OTHER THAN THE ISSUES IN RESPECT OF WHICH THE REOPENING PROCEEDINGS WER E INITIATED. 9. SUN ENGINEERING WORKS (SUPRA) AND JAGANMOHAN RA O (SUPRA), BOTH RENDERED BY THE HONBLE SUPREME COURT, IT IS SEE N, HAVE BEEN CONSIDERED IN RANBAXY LABORATORIES (SUPRA). 10. WHEREAS RANBAXY LABORATORIES (SUPRA) HAS BEEN REN DERED BY THE HONBLE JURISDICTIONAL HIGH COURT, THE REST OF TH E CASES RELIED ON BY THE LD. DR ARE FROM OTHER HIGH COURTS. NOW, ONCE TH E JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE , THESE CASE LAWS ARE NOT REQUIRED TO BE GONE INTO, THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT BEING BINDING ON US. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED, AS INDICATED ABOVE. THE ORDER PRONOUNCED IN THE OPEN COURT ON 01.08.20 12. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 01.08.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR, ITAT, DELHI BENCHES