CHARAN KAMAL SINGH, NEW DELHI V. ACIT, CIRCLE- 56(1), NEW DELHI

ITA 4662/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2855 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 18-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Assessee Lawyers: RAJESH ARORA
• Keywords: Bogus Share capital
• Section: 69C; 143(3); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 4662/DEL/2017 A.Y. : 2012-13 MR. CHARAN KAMAL SINGH, B-10, NAVEEN SHAHDARA, NEW DELHI 110 032 (PAN: AATPS2742N) VS. ACIT, CIRCLE - 56(1), , NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. RAJESH ARORA, CA DEPARTMENT BY : SH. V.K. JIWANI, SR. DR ORDER ORDER ORDER ORDER THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORD ER OF THE LD. CIT(A)-19, NEW DELHI DATED 23.5.2017 AND PERTAINS TO ASSESSMEN T YEAR 2012-13. 2. THE GROUNDS RAISED READ AS UNDER:- 1.THE AO HAS ERRED IN LAW AND FACTS OF THE CASE IN RE OPENING THE CASE UNDER SECTION 148 OF THE ACT WITHOUT RECORDING VALID REASONS WITH THE APPROPRIATE APPROVAL AND WITHOUT PROVIDING THE COPY OF THE SAME TO THE APPELLANT WITH NOTICE WHICH IS COMPLETELY UNJUS TIFIED, UNCALLED FOR AND BAD IN LAW. 2. THE LD. CIT(A) AND THE AO HAS ERRED IN LAW AND FAC TS OF THE CASE BY MAKING ADDITION ON ACCOUNT OF UNEXPLAINED EXPEND ITURE U/S. 69C OF THE ACT AMOUNTING TO RS. 30,01,500/- ON THE BASIS OF ALLEGED 2 MATERIAL SEIZED FROM THE INSTITUTION AND THE STATEM ENT OF INVESTIGATION WING HAVING NO CORROBORATION WITH THE ALLEGATION WH ICH IS HIGHLY ARBITRARY, UNJUSTIFIED, UNCALLED FOR AND BAD IN LAW . 3. THE AO HAS ERRED IN LAW BY NOT DISCHARGING HIS ON US TO DEMONSTRATE THE PAYMENT OF ALLEGED CAPITATION FEES AND THE LD. CIT(A) HAS ERRED IN APPROVING THE SAME WHICH IS HIGHLY U NJUSTIFIED, UNCALLED FOR AND BAD IN LAW. 4. THE LD. CIT(A) HAS ERRED IN REJECTING THE SUBMISSI ON OF ASSESSEE ON THE BASIS OF PRESUMPTIONS AND CONJECTURES WHICH IS HIGHLY ARBITRARY, UNJUSTIFIED, UNCALLED FOR AND BAD IN LAW. 5. THE ASSESSEE CRAVE TO HAVE THE RIGHT TO ADD, AMEN D OR MODIFY THE GROUNDS OF APPEAL. 3. THE ASSESSES HAS ALSO FILED THE FOLLOWING ADDITIONAL GROUN DS OF APPEAL. 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN ASSE SSING THE APPELLANT UNDER SECTION 153C OF THE INCOME TAX ACT, 1961 WITHOUT SATISFYING THE SUBSTANTIVE AND PROCEDURAL REQUIREMENTS UNDER SECTION 153C OF THE INCOME TAX ACT. 2. WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEAL, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 WITH THE APPROVAL OF THE ADDITIONAL CIT, R ANGE- III, NEW DELHI VIDE HIS LETTER F.NO. ADDL. CIT(CR)-I II/2010- 11/816 DATED 27.12.2010. 3 3. WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEAL, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITIONS WHICH WERE NOT BASED ON THE INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH. 4. THE ASSESSEES A.R. HAS ALSO FILED THE FOLLOWING ADDIT IONAL GROUND AND STATED THAT THE BELOW MENTIONED ADDITIONAL GROUND DE SERVE TO BE ADMITTED IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE NTPC VS. CIT REPORTED IN 229 ITR 383. NOTHWITHSTANDING TO GROUND NO.1 AND GROUND NO. 2 RAISED BY THE APPELLANT, THE AO HAS ERRED IN LAW AND FACTS OF THE CASE IN MAKING ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (THE ACT) WITHOUT APPRECIATING THAT ASSESSMENT COULD HAVE BEEN MADE ONLY UNDER SECTION 153C OF THE ACT BASED UPON DOCUMENTS / INFORMATION FOUND DURING THE COURSE OF SEARCH. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSME NT IN THIS CASE WAS MADE U/S. 147/143(2) OF THE INCOME TAX ACT, 1961 AT A TOTAL INCOM E OF RS. 31,73,415/-. THE CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEI VED FROM INVESTIGATION WING THAT THE ASSESSEE HAD ADMITTED HIS SON TO THE SANTO SH GROUP OF INSTITUTIONS AND BESIDES THE PAYMENT OF FEES, HE HAD ALSO PAID RS. 3 0,01,500/- AS DONATION / 4 CAPITATION FEES TO THE COLLEGE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE ADMITTED THE PAYMENT OF FEES FOR THE ADMIS SION OF HIS SON BUT DENIED PAYING ANY CAPITATION FEES. THE AO BASED OF STATEME NT OF THE CHAIRMAN OF THE TRUST DR. P. MAHALINGAM AND ALSO THE EVIDENCE FOUND DURING THE COURSE SEARCH MADE THE ADDITION OF RS. 30,01,500/- U/S. 69C OF THE ACT AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 31,73,415/- VIDE ASSES SMENT ORDER. AGGRIEVED WITH THE ASSESSMENT ORDER, ASSESSEE APP EALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 23.5.2017 HAS DIS MISSED THE APPEAL OF THE ASSESSEE BY CONFIRMING THE ACTION OF THE AO. 6. AGGRIEVED WITH THE LD. CIT(A)S ORDER, ASSESSEE AP PEALED BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSE SSEE STATED THAT THE LEGAL ADDITIONAL GROUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF DATED 08.8.2017 OF THE ITAT, SMC, DELHI BENCH PASSED I N ITA NOS. 1500- 1501/DEL/2017 (AY 2007-08) IN THE CASE OF SUSHIL GAUR VS. ITO & SHELLY AGARWAL VS. ITO, HENCE, HE REQUESTED TO RESPECTFULLY FOLLOW T HE SAME AND APPEAL OF THE ASSESSEE MAY BE ALLOWED. 8. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW AND HAS TRIED TO JUSTIFY THE ACTION OF THE ASSESSING OF FICER IN INITIATING REOPENING PROCEEDINGS. HOWEVER, HE OPPOSED TO ADMIT THE ADDI TIONAL LEGAL GROUND. HE RELIED UPON THE FOLLOWING CASES LAWS ON THE ADDITIO N AS WELL AS ON REOPENING. 5 (ON THE ADDITION) (ON THE ADDITION) (ON THE ADDITION) (ON THE ADDITION) BHAGIRAH AGGARWAL VS. CIT DELHI HIGH COURT (2013) 31 TAXMANN.COM 274. CIT VS. KUWER FIBRES PVT. LTD. DELHI HIGH COURT (2 016) 2017- TIOL-30-HC-DEL-IT (ON THE REOPENING) (ON THE REOPENING) (ON THE REOPENING) (ON THE REOPENING) YOGENDRA KUMAR GUPTA. VS. ITO HONBLE SUPREME COURT (2014) 51 TAXMANN.COM 383 ANKIT FINANCIAL SERVICES LTD. VS. DCIT HONBLE GUJA RAT HIGH COURT (2017) 78 TAXMANN.COM 58 (GUJARAT) 9. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. ON THE ADMISSION OF ADDITIONAL GROUND IS CONCERNED, I FIND THAT THE ADD ITIONAL GROUND RAISED BY THE ASSESSEE IS LEGAL IN NATURE AND IS SQUARELY COVERED BY THE VARIOUS DECISIONS OF THE COORDINATE BENCHES OF THE ITAT AS WELL AS DECISION OF THE HONBLE DELHI HIGH COURT, HENCE, I AM OF THE CONSIDER ED VIEW THAT ON THE ANVIL OF THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF NTPC LIMITED 229 ITR 383 (SUPRA), THE ADDITIONAL GR OUND RAISED BY THE ASSESSEE IS PURELY LEGAL GROUND AND DO NOT REQUIRE FRE SH FACTS WHICH IS TO BE INVESTIGATED AND GOES TO THE ROOT OF THE MATTER. IN THE INTEREST OF JUSTICE, I ADMIT THE AFORESAID ADDITIONAL GROUND RAISED BY THE ASSESSEE, IN VIEW OF 6 THE CASE LAW OF NTPC LIMITED (SUPRA) AND PROCEED TO DE CIDE THE LEGAL ADDITIONAL GROUND. 10. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE IMPUGNED ORDER AND THE CASE LAWS CITED BY BOTH THE PARTIES. I FIND THAT LD THE CASE LAWS CITED BY THE LD. DR ARE ON DIFFERENT FACTS OF THE CASE I.E. RELATING TO LOAN TRANSACTION AND BOGUS SHARE APPLICATION THROUGH ACC OMMODATION ENTRIES. BUT I FIND THAT THE ADDITIONAL GROUND, AS AFORESAID IS SQUARE LY COVERED BY THE DECISION DATED 08.8.2017 OF THE ITAT, SMC, DELHI BENCH PASSED IN ITA NO S. 1500-1501/DEL/2017 (AY 2007-08) IN THE CASE OF SUSHIL GAUR VS. ITO & SHEL LY AGARWAL VS. ITO, WHICH WAS EXACTLY ON THE SIMILAR AND IDENTICAL CIRCUMSTAN CES WHEREIN THE TRIBUNAL HAS QUASHED THE REASSESSMENT BY HOLDING AS UNDER:- 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE PAPER BOOK. ON HAVING GONE THROUGH THE DECISIONS CITED ABOVE ESPE CIALLY THE DECISION OF AMRITSAR BENCH IN THE CASE OF ITO VS. ARU N KUMAR KAPOOR (SUPRA), I FIND THAT IN THAT CASE AS IN THE P RESENT CASE BEFORE ME, REASSESSMENT WAS INITIATED ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN SEARCH OF THIRD PAR TY AND THE VALIDITY OF THE SAME WAS CHALLENGED BY THE ASSESSEE BEFORE THE 7 LEARNED CIT(APPEALS) AND THE LEARNED CIT(APPEALS) VITI ATED THE PROCEEDINGS. THE SAME WAS QUESTIONED BY THE REVENUE BEFORE THE ITAT AND THE ITAT AFTER DISCUSSING THE CASES OF TH E PARTIES AND THE RELEVANT PROVISIONS IN DETAILS HAS COME TO THE CONCLUSION THAT IN THE ABOVE SITUATION, PROVISIONS OF SEC. 153 C WERE APPLICABLE WHICH EXCLUDES THE APPLICATION OF SECTIO NS 147 AND 148 OF THE ACT. THE ITAT HELD THE NOTICE ISSUED UNDER S EC. 148 AND PROCEEDINGS UNDER SEC. 147 AS ILLEGAL AND VOID A B INITIO. IT WAS HELD THAT ASSESSING OFFICER HAVING NOT FOLLOWED PROCEDURE UNDER SEC. 153C, REASSESSMENT ORDER WAS RIGHTLY QUA SHED BY THE LEARNED CIT(APPEALS). I ALSO DRAW MY SUPPORT FROM THE ITAT, NEW DELHI DECISION IN THE CASE OF RAJAT SHUBRA CHAT TERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DATED 20.5.2016, WHEREIN THE REASSESSMENT WAS QUASHED ON THE SIMILAR FACTS AND CIRCUMSTANCES BY FOLLOWING THE ITAT, AMRITSAR DECISI ON IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR (SUPRA). IN THE PRES ENT CASE BEFORE ME, IT IS AN ADMITTED FACT, AS ALSO EVIDENT FROM THE REASONS RECORDED AND THE ASSESSMENT ORDER THAT THE INITIATION OF REOPENING PROCEEDINGS WAS MADE BY THE ASSESSING OFF ICER ON 8 THE BASIS OF INFORMATION AVAILABLE WITH THE AO. I THUS RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE ITAT, AMRITSAR IN THE CASE OF ACIT VS. ARUN KAPUR - 140 TTJ 249 VS. (AMRITSAR) AND THE ITAT, DELHI DECISION IN THE CA SE OF RAJAT SHUBRA CHATTERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/ 2015 DATED 20.5.2016 HOLD THAT PROVISIONS OF SEC. 153C OF THE ACT WERE APPLICABLE IN THE PRESENT CASE FOR FRAMING THE ASSESSMENT, IF ANY, WHICH EXCLUDES THE APPLICATION OF SEC. 147 O F THE ~ HENCE, NOTICE ISSUED UNDER SEC. 148 OF THE ACT AND ASSESSME NT FRAMED IN FURTHERANCE THERETO UNDER SEC. 147 READ WITH SEC TION 143(3) OF THE ACT ARE VOID AB INITIO. HENCE, THE REASSESSME NT IN QUESTION IS ACCORDINGLY QUASHED. SINCE I HAVE ALREADY QUASHE D THE REASSESSMENT, THERE IS NO NEED TO ADJUDICATE OTHER GROUNDS. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE DIFF ERENT ASSESSEES STAND ALLOWED IN THE AFORESAID MANNER. 11. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPLAINED ABOVE AND RESPECTFULLY FOLLOWING THE AFORESAID PREC EDENTS, I QUASH THE 9 REASSESSMENT IN QUESTION. SINCE I HAVE ALREADY QUA SHED THE REASSESSMENT, THERE IS NO NEED TO ADJUDICATE OTHER GROUNDS ON MERITS. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED ON 21/03/2018. S SS SD DD D/ // /- -- - [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE:- 21/03/2018 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES