ITO, New Delhi V. M/s Ojasvi Trade Investment & Finance Ltd., New Delhi

ITA 4681/DEL/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1832 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-12-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 27-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Accommodation entries; Competent authority; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 4681 /DEL /20 1 0 ASSESSMENT YEAR : 20 0 1 - 0 2 THE I.T . O VS. OJASVI TRADE INVESTMENT & FINANCE WARD 13(4) LTD., 303 - NAMDHARI CHAMBER N EW DELHI 954 - D - B GUPTA, RPAD KAROL BAGH NEW DELHI PAN : AAACO 1058P CO NO. 375 /DEL/201 0 [A/O ITA NO. 4 68 1 /DEL /20 1 0 ] ASSESSMENT YEAR: 200 1 - 0 2 OJASVI TRADE INVESTMENT & FINANCE VS. THE I.T.O. LTD., 303 - NAMDHARI CHAMBER WARD 13 (4) 954 - D - B GUPTA, RPAD KAROL BAGH NEW DELHI NEW DELHI PAN : AAACO 1058P [APPELLANT] [RESPONDENT] DATE OF HEARING : 08 . 1 2 . 2015 DATE OF PRONOUNCEMENT : 28 . 12 .2015 A SSESSEE BY : SHRI PRATAP GUPTA, CA DEPARTME NT BY : SHRI P. DAM KANUNJNA, SR. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - XV III , NEW DELHI, DATED 2 0 / 0 8 /20 1 0 FOR A.Y 200 1 - 0 2 . 2 ITA NO. 4681 /DEL/201 0 CO NO. 37 5/DEL/20 10 2 2. AT THE VERY OUTSET OF THE OPENING OF THE ARGUMENTS, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. G & G PHARMA INDIA LTD ORDER DATED 08.10.2015 AND C ONTENDED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE HIGH COURT WHEREIN THEIR LORDSHIPS HELD THAT THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAV E REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. IT WAS FURTHER HELD THAT THE BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYZING MATERIALS PRODUCED SUBSEQUENT TO THE REO P ENING WILL NOT RESCUE INHERENTLY DEFECTIVE REOPENING ORDER FORM INVALIDITY. UPHOLDING THE ORDER OF THE ITAT, THE HON'BLE HIGH COURT DISMISSED THE APPEAL FILED BY THE REVENUE. THE LD. AR HAS FURNISHED A COPY OF THE DECISION [SUPRA] WHICH IS PLACED ON RECORD. 3. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 3 ITA NO. 4681 /DEL/201 0 CO NO. 37 5/DEL/20 10 3 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE HON'BLE HIGH COURT IN THE CASE OF G. & G. PHARMA INDIA LTD [S UPRA] HAS GIVEN A FINDING AT PARA 12 OF ITS ORDER WHICH IS REPRODUCED AS BELOW: IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERME D AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRO DUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SI NCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY 4 ITA NO. 4681 /DEL/201 0 CO NO. 37 5/DEL/20 10 4 CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATIO N ENTRIES'. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REA SONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE . FROM A BARE PERUSAL OF PARA 12 OF THE DECISION OF THE HON'BLE HIGH COURT IT IS AMPLY CLEAR THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE ABO VE DECISION OF THE HON'BLE HIGH COURT [SUPRA] IN FAVOUR OF THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE HOLD THAT THE APPEAL OF THE REVENUE HAS NOW BECOME INFRUCTUOUS. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE REVENUE AS HAVING BECOME INFRUCTUOUS. 5. IN VIEW OF THE FOREGOING DISCUSSION AND CONCLUSION ARRIVED AT IN DISMISSING THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE SUCCEEDS. 6. EVEN OTHERWISE ALSO, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED BY THE RECENT CBDT INST RUCTION NO. 21/2015 D ATED 10.12.2015, REVISING THE MONETARY LIMIT OF RS.10 LA KH S FOR NOT 5 ITA NO. 4681 /DEL/201 0 CO NO. 37 5/DEL/20 10 5 FILING THE APPEAL BEFORE THE TRIBUNAL IN TERMS OF SECTION 268A(1) OF THE INCOME - TAX ACT. THE CIRCULAR HAS PROVIDED THAT NO DEPARTMENTAL APPEAL SHALL BE FILED BEFORE THE 1TAT WHEREIN THE TAX EFFECT INVOLVED IS LESS THAN RS.10 LAKHS. FURTHER, IN PARA 10 OF THE CIRCULAR, IT IS PROVIDED THAT THIS INSTRUCTION WOULD APPLY RETROSPECTIVELY AND THE PENDING APPEALS BELOW THE SPECIFIED TAX LIMIT OF RS.10 LAKH S MAY BE WITHDRAWN/NOT PRESSED. 7 . THE L D . CIT - DR APPEARING ON BEHALF OF THE REVENUE BEFORE US, AT THE OUTSET, SUBMITTED THAT APPEAL CAN BE WITHDRAWN ONLY AFTER GETTING THE APPROVAL OF COMPETENT AUTHORITY. HE FUR THER REFERRED TO PARA 7 OF THE C IRCULAR TO SUBMIT THAT DISMISSAL OF APPEAL, HOWEVER, IN ANY CASE, ON ACCOUNT OF LOW TAX EFFECT SHOULD NOT BE CONSIDERED AS A PRECEDENCE IN THE MATTERS OF SUBSEQUENT YEARS WHERE THE TAX EFFECT IS ABOVE THE MONETARY LIMIT PRES CRIBED BY THIS CIRCULAR AND THE ISSUE SHOULD BE DECIDED ON MERITS. 8 . THE LEARNED COUNSEL FOR THE ASSESSEE, ON T HE OTHER HAND, STATED THAT THE C IRCULAR IS SQUARELY APPLICABLE TO THE PRESENT APPEAL OF THE REVENUE. HE REQUESTED FOR WITHDRAWAL OF THE CROSS OBJECTION OF THE ASSESSEE. 6 ITA NO. 4681 /DEL/201 0 CO NO. 37 5/DEL/20 10 6 9 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT PRIMA FACIE, THE TAX EFFECT INVOLVED IN TH IS APPEAL BY THE REVENUE IS BELOW RS. 10.00 LA KHS AND, THEREFORE, WE DEEM IT PROPER TO DISMISS THE APPEAL PARTICULARLY BECAUSE THE PENDING APPEAL I S COVERED BY C IRCULAR IN VIEW OF PARA 10 OF THE CIRCULAR. HOWEVER, WE MAY CLARIFY THAT IF ON RECEIPT OF THIS ORDER, THE ASSESSING OFFICER FINDS THAT THE TAX E FFECT IS ABOVE RS.10 LA KHS OR IN ANY OTHER MANNER, THE C IRCULAR IS NOT APPLICABLE IN VIEW OF EXCEPTIONS CULLED OUT IN THE C IRCULAR, HE WILL BE AT LIBERTY TO FILE MISCELLANEOUS APPLICATION FOR RECALLING OF THIS ORDER WHICH THE TRIBUNAL WILL CONSIDER IN ACCO RDANCE WITH LAW. WE FURTHER FIND CONSIDERABLE FORCE IN THE CONTENTION OF THE CIT/DR THAT THIS ORDER CANNOT BE CONSIDERED AS AN ACCEPTANCE BY THE REVENUE ON THE ISSUE INVOLVED IN TH I S APPEAL AND WILL NOT BE AN ESTOPPEL FOR THE REVENUE TO TAKE UP THE ISSUE, INVOLVED IN THESE APPEALS, BEFORE ITAT ON MERITS IF THE TAX EFFECT IN THO SE YEARS IS MORE THAN RS.10 LAKHS . 10 . KEEPING IN VIEW THE ABOVE CIRCULAR AND THE PROVISIONS OF SECTION 268A OF THE INCOME - TAX ACT, 1961 AND WITHOUT GOING INTO MERITS OF THE CASE, WE DISMISS THE INSTANT APPEAL FILED BY THE REVENUE AS TAX EFFECT IN THE APPEAL IS LESS THAN RS.10 LA KHS . 7 ITA NO. 4681 /DEL/201 0 CO NO. 37 5/DEL/20 10 7 11 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE STAND S ALLOWED . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 8 . 12 .2015 . S D / - S D / - ( G.D. AGRAWAL ) (C.M. GARG) VICE - PRESIDENT JUDICIAL MEMBER DATED: 2 8 T H DECEMBER , 2015 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI