DCIT, Faridabad V. M/s. VSB Investment Pvt. Ltd., Faridabad

ITA 468/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3099 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: CROSS OBJECTOR DR RAKESH GUPTA
• Keywords: Bogus Share capital; Accommodation entries; Reason to believe
• Section: 14A; 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.NO.468/DEL./2016 ASSESSMENT YEAR 2007-2008 DCIT, CIRCLE-II, BLOCK-B, CGO COMPLEX, NH-IV, FARIDABAD. VS. M/S. VSB INVESTMENT PVT. LTD., B-400, 3 RD FLOOR, NEHRU GROUND, NIT, FARIDABAD. PAN AABCV7492B (APPELLANT) (RESPONDENT) C.O.NO.139/DEL./2016 ARISING OUT OF ITA.NO.468/DEL./2016 - ASSESSMENT YEAR 2007-2008 M/S. VSB INVESTMENT PVT. LTD., B-400, 3 RD FLOOR, NEHRU GROUND, NIT, FARIDABAD. PAN AABCV7492B VS. DCIT, CIRCLE-II, BLOCK-B, CGO COMPLEX, NH-IV, FARIDABAD. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MS. ASHIMA NEB, SR. D.R. FOR CROSS OBJECTOR : DR. RAKESH GUPTA, ADVOCATE DATE OF HEARING : 05.12.2017 DATE OF PRONOUNCEMENT : 08.12.2017 ORDER PER BHAVNESH SAINI, J.M. THE DEPARTMENTAL APPEAL AS WELL AS CROSS-OBJECTIO N BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), FARIDABAD, DATED 2011.2015 FOR THE A.Y. 2007-2008. 2 ITA.NO.468/DEL./2016 & CO.NO.139/DEL./2016 M/S. VSB INVESTMENT PVT. LTD., FARIDABAD. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASS ESSEE FILED RETURN OF INCOME UNDER SECTION 139(1) OF THE I.T. A CT ON 30 TH OCTOBER, 2007 DECLARING NIL INCOME. A DETAILED INFORMATION R EGARDING ACCOMMODATION ENTRIES PROVIDED BY M/S. BASANT MARKE TING (P) LTD., AND M/S. EMPIRE COMMERCIAL CO. (P) LTD., TO VARIOUS BENEFICIARY COMPANIES WAS RECEIVED FROM THE OFFICE OF THE COMMI SSIONER OF INCOME TAX (CENTRAL), KOLKATA WITH REGARD TO CBI IN VESTIGATION IN THE CASE OF SHRI ARUN DALMIA, SHRI HARSH DALMIA AND THE IR DUMMY COMPANIES. THE RELEVANT EXTRACT OF THE INFORMATION RECEIVED FROM CIT (CENTRAL), KOLKATA IS REPRODUCED IN THE ASSESSMENT ORDER. THE LIST WAS APPENDED TO THE SAID LETTER CONTAINS THE NAMES OF T HE BENEFICIARIES OF THE ACCOMMODATION ENTRIES RECEIVED FROM THE DUMMY C OMPANIES. IN THE SAID LIST NAME OF THE ASSESSEE WAS MENTIONED WH O HAS OBTAINED ACCOMMODATION ENTRIES IN DIFFERENT YEARS INCLUDING A.Y. 2007-08 UNDER APPEAL AMOUNTING TO RS.2,07,85,000. THE A.O. ON THE BASIS OF THE ABOVE INFORMATION, REOPENED THE ASSESSMENT HAVI NG REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT TO THE EXTENT OF RS.2,07,85,000 IN THE HANDS OF ASSESSEE F OR A.Y. 2007-08 UNDER APPEAL. NOTICE UNDER SECTION 148 WAS ISSUED A ND THE ASSESSEE 3 ITA.NO.468/DEL./2016 & CO.NO.139/DEL./2016 M/S. VSB INVESTMENT PVT. LTD., FARIDABAD. SUBMITTED THAT THE RETURN ALREADY FILED ORIGINALLY MAY BE TREATED AS RETURN HAVING FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE I.T. ACT. THE A.O. CALLED FOR THE EXPLANATION OF AS SESSEE. THE ASSESSEE SPECIFICALLY SUBMITTED BEFORE A.O. THAT ASSESSEE-CO MPANY DID NOT HAVE ANY TRANSACTION INCLUDING PURCHASE AND SALE OF SHARES ETC., WITH M/S. BASANT MARKETING (P) LTD., HOWEVER, THE OPENIN G CREDIT BALANCE WAS OUTSTANDING AT THE END OF THE YEAR WITHOUT ANY TRANSACTION. CONFIRMATION COPY OF THE ACCOUNT OF THE SAID PARTY WAS FILED BEFORE A.O. FOR VERIFICATION. THE A.O. ALSO ISSUED NOTICE UNDER SECTION 133(6) TO THE CONCERNED PARTY IN ORDER TO VERIFY THE FACT STATED BY THE ASSESSEE. THE REPLY WAS RECEIVED IN WHICH IT WAS IN TIMATED BY THE CONCERNED PARTY THAT WE HAVE NOT ENTERED INTO ANY TRANSACTION WITH M/S. VSB INVESTMENT PRIVATE LIMITED DURING F.Y. 200 6-2007. THE A.O. THEREFORE, NOTED THAT AS PER THE REPLY AND COP Y OF THE ACCOUNT FILED BEFORE HIM, OPENING AND CLOSING BALANCE OF RS .2,07,85,000 HAVE BEEN SHOWN WITHOUT ANY TRANSACTION DURING THE F.Y. 2006-07. THEREFORE, SUBMISSION OF THE ASSESSEE WAS ACCEPTED. THE A.O. HOWEVER, PROCEEDED TO EXAMINE THE ISSUE OF DISALLOW ANCE UNDER SECTION 14A OF THE I.T. ACT AND MADE THE ADDITION O F RS.40,51,979. 4 ITA.NO.468/DEL./2016 & CO.NO.139/DEL./2016 M/S. VSB INVESTMENT PVT. LTD., FARIDABAD. 3. THE ASSESSEE CHALLENGED THE REOPENING OF THE AS SESSMENT AS WELL AS ADDITION MADE UNDER SECTION 14A BEFORE T HE LD. CIT(A). IT WAS SUBMITTED THAT THE ASSESSMENT HAS BEEN REOPENED ON THE REASON THAT ASSESSEE OBTAINED ACCOMMODATION ENTRIES IN ASS ESSMENT YEAR UNDER APPEAL AMOUNTING TO RS.2,07,85,000, HOWEVER, NO SUCH TRANSACTION HAS BEEN CONDUCTED IN ASSESSMENT YEAR U NDER APPEAL. THEREFORE, REASONS ARE RECORDED ON INCORRECT FACTS. THEREFORE, THERE WERE NO JUSTIFICATION TO REOPEN THE ASSESSMENT. THE ASSESSEE RELIED UPON VARIOUS DECISIONS INCLUDING THE DECISION OF TH E HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. ATLAS CYCLE INDUSTRIES 180 ITR 319. THE LD. CIT(A) ACCEPTED THE EXPLANATIO N OF ASSESSEE BECAUSE IT WAS APPARENT THAT CASE WAS REOPENED BY T HE A.O. ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY, BUT NO AD DITION HAVE BEEN MADE ON ACCOUNT OF THE SAME IN ASSESSMENT ORDER. TH E A.O. MADE ADDITION ON ACCOUNT OF DISALLOWANCE UNDER SECTION 1 4A OF THE I.T. ACT. THE LD. CIT(A) FOLLOWING VARIOUS DECISIONS OF THE H IGH COURT HELD THAT IF THERE IS NO ADDITION IN RESPECT OF THE REASONS R ECORDED, NO OTHER ADDITION CAN BE MADE. THE LD. CIT(A) ACCORDINGLY, H ELD THAT ASSESSMENT FRAMED BY THE A.O. IS VOID BECAUSE A.O. DID NOT HAVE 5 ITA.NO.468/DEL./2016 & CO.NO.139/DEL./2016 M/S. VSB INVESTMENT PVT. LTD., FARIDABAD. JURISDICTION TO MAKE ADDITIONS/DISALLOWANCES TO THE RETURNED INCOME OF THE ASSESSEE. ONCE THE REASONS ON WHICH CASE WAS REOPENED UNDER SECTION 147 CEASED TO EXIST AS ADMITTED BY THE A.O, REOPENING OF THE ASSESSMENT IS BAD IN LAW. THE APPEAL OF THE ASSESSE E WAS ACCORDINGLY ALLOWED. THE LD. CIT(A) DID NOT DECIDE THE ISSUE OF DISALLOWANCE UNDER SECTION 14A OF THE I.T. ACT. THE APPEAL OF THE ASSE SSEE IS ACCORDINGLY ALLOWED. 4. AFTER HEARING THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE L D. CIT(A). IT IS AN ADMITTED FACT THAT REOPENING OF THE ASSESSMENT WAS MADE IN THIS CASE BECAUSE AS PER INFORMATION RECEIVED FROM CIT (CENTR AL), KOLKATA THROUGH CBI THAT ASSESSEE RECEIVED ACCOMMODATION EN TRY FROM M/S. BASANT MARKETING (P) LTD., FOR A SUM OF RS.2,07,85, 000 IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE DENIED TO HAVE RECE IVED ANY SUCH ACCOMMODATION ENTRY IN ASSESSMENT YEAR UNDER APPEAL WHICH WAS ALSO CONFIRMED BY THE CONCERNED PARTY. THE CONTENTI ON OF THE ASSESSEE HAS BEEN ACCEPTED BY THE A.O. COPY OF THE REASONS ARE ALSO FILED ON RECORD. IT WAS, THEREFORE, CLEAR THAT A.O. RECORDED INCORRECT AND NON-EXISTING REASONS FOR REOPENING OF THE ASSES SMENT. THEREFORE, 6 ITA.NO.468/DEL./2016 & CO.NO.139/DEL./2016 M/S. VSB INVESTMENT PVT. LTD., FARIDABAD. ON THE FACE OF IT, THE REOPENING OF THE ASSESSMENT IS VOID AND BAD IN LAW. THE CASE OF THE ASSESSEE IS SQUARELY COVERED B Y THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ATLAS CYCLE INDUSTRIES (SUPRA). THE LD. CIT(A), THEREFORE, RIGH TLY FOLLOWED VARIOUS DECISIONS OF THE HIGH COURT AND THE TRIBUNAL FOR TH E PURPOSE OF QUASHING THE RE-ASSESSMENT ORDER. NO INFIRMITY HAVE BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(A). THEREFORE, DEPA RTMENTAL APPEAL STANDS DISMISSED. 5. IN THE RESULT, APPEAL OF THE DEPARTMENT DISMISS ED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CROSS OBJECTION IS FILED MAINLY IN SUPPORT OF THE O RDER OF THE LD. CIT(A). THEREFORE, THE CROSS OBJECTION IS DISMISSED. 7. IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE DISMISSED. 8. TO SUM-UP, APPEAL OF THE DEPARTMENT AND CROSS O BJECTION OF THE ASSESSEE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 08 TH DECEMBER, 2017 VBP/- 7 ITA.NO.468/DEL./2016 & CO.NO.139/DEL./2016 M/S. VSB INVESTMENT PVT. LTD., FARIDABAD. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT B BENCH, DELHI 6. GUARD FILE. //BY ORDER// ASST. REGISTRAR : ITAT DELHI BENCHES DELHI.