M/s. Home Developers Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4957/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4934 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Assessment record; Block assessment; Reassessment proceedings; Set aside
• Section: 143(3); 143(2); 13; 147; 68; 148

Judgement Text

HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER . . /. I.T.A NO.4957/DEL/2015 / ASSESSMENT YEAR:2006-07 M/S HOME DEVELOPERS PVT. LTD. D-22, DEFENCE COLONY, NEW DELHI. VS. ACIT CENTRAL CIRCLE-14, NEW DELHI. PAN NO. AAECM7613E APPELLANT / RESPONDENT /ASSESSEE BY SHRI SALIL AGGARWAL, ADV. SHRI SHAILESH GUPTA, ADV. /REVENUE BY MS. RAKHI VIMAL, SR. DR / DATE OF HEARING: 14.02.2020 /PRONOUNCEMENT ON 2 1 . 0 2 .20 20 /O R D E R PER BHAVNESH SAINI, J.M. 1. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS)-XXVI, NEW DELHI DATED 28.05.2015 FOR A SSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 1) THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIR MING THE REOPENING OF CASE FOR REASSESSMENT U/S 147 OF INCOM E TAX ACT, EVEN WHEN THE SAID REOPENING WAS BARRED BY LAW UNDE R FIRST PROVISO TO SECTION 147 AS THE PERIOD OF 4 YEARS HAD ALREADY ELAPSED. 2) THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN REJECTI NG THE CLAIM OF THE ASSESSEE THAT REOPENING OF THE CASE U/S 147 WAS NOT PERMISSIBLE AS THE CONCERNED ASSESSMENT YEAR 2006-0 7 WAS HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 2 OF 8 PART OF BLOCK ASSESSMENT YEAR AND REASSESSMENT HA D ALREADY TAKEN PLACE U/S 153A. 3) THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION OF RS. 1,66,00,000/- (RUPEES ONE CRORE SIX TY SIS LAKH ONLY) MADE BY THE LD. AO U/S 68 OF INCOME TAX ACT M ERELY ON THE BASIS OF SOME INTERNAL INFORMATION RECEIVED FRO M ADDL. DIRECTOR OF INCOME TAX (INVESTIGATION)-UNIT-VI, NEW DELHI WITHOUT CONFRONTING THE ASSESSEE WITH THE EVIDENCE AND WITHOUT FOLLOWING THE ESTABLISH PROCEDURE OF EVIDEN CE AND COMPLETING THE ASSESSMENT WITH PREDETERMINED MIND S ET WITHOUT GIVING REASONABLE OPPORTUNITY TO ASSESSEE T O CROSS EXAMINE WITNESSES AND REBUTTAL EVIDENCES. 4) THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION OF RS. 83,000/- (RUPEES EIGHTY THREE THOUS AND ONLY) AS COMMISSION. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTI ES AND PERUSED THE MATERIAL ON RECORD. VIDE ORDER DATED 07.10.201 9 ARGUMENTS WERE PARTLY HEARD AND LD. DR WAS DIRECTED TO PRODUCE ASS ESSMENT RECORDS. THE APPEAL WAS, THEREAFTER, ADJOURNED TIME TO TIME AND IS FINALLY HEARD ON 14.02.2020. LD. DR PRODUCED THE ASSESSMENT RECO RD FOR OUR INSPECTION. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT A RETURN DEC LARING AN INCOME OF RS. 1,76,77,222/- WAS FILED BY ASSESSEE ON 17.11 .2006 AND THE CASE WAS ASSESSED U/S 143(3) OF THE ACT AT AN INCOME OF RS. 11,59,39,654/- ON 31.12.2007. THEREAFTER, ON THE BASIS OF INFORMATIO N RECEIVED FROM INVESTIGATION WING WITH REFERENCE TO BENEFICIARY OF ACCOMMODATION HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 3 OF 8 ENTRIES RECEIVED FROM CERTAIN ENTRY OPERATORS IDENT IFIED BY THE INVESTIGATION WING OF THE DEPARTMENT, THE CASE WAS REOPENED BY RECORDING SATISFACTION NOTE AND BY APPLICATION OF P ROVISIONS OF SECTION 147/148 OF THE ACT. THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 22.03.2013. NOTICE U/S 143(2) WAS ALSO ISSUED. TH E REASONS RECORDED FOR REOPENING OF ASSESSMENT WERE FURNISHED TO THE ASSES SEE VIDE LETTER DATED 19.02.2014 WHICH IS REPRODUCED IN THE ASSESSMENT OR DER. THE AO AT THE ASSESSMENT STAGE FOUND THAT ASSESSEE HAS RECEIVED S HARE CAPITAL/SHARE PREMIUM FROM TEN PARTIES. THE AO ISSUED SUMMONS AN D EXAMINED THE ISSUE IN DETAIL. THE AO ULTIMATELY WAS NOT SATISFI ED WITH THE EXPLANATION OF ASSESSEE AND MADE ADDITION OF RS. 1.66 CRORES U/ S 68 OF THE ACT. THE AO ALSO MADE ADDITION OF RS. 83,000/- ON ACCOUNT OF COMMISSION. THE AO FURTHER MADE ADDITION OF RS. 1.54 CRORES U/S 68 OF THE ACT AND PASSED THE ASSESSMENT ORDER U/S 147/148 OF THE ACT DATED 18.03 .2014. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITIONS ON MERITS. THE LD. CIT(A) CONFIRMED THE REOPENING OF THE ASSESSMENT AND CONFIRMED THE ADDITION OF RS. 1.66 CRORES AS WELL A S RS. 83,000/-. HOWEVER, AS REGARDS ADDITION OF RS. 1.54 CRORES, AO WAS DIRECTED TO VERIFY THE FACT FROM THE RECORD WHETHER SURRENDERED AMOUNT WAS REFLECTED IN THE RETURNED INCOME AND, THEREAFTER, D ELETE THE SAME. APPEAL WAS THUS, PARTLY ALLOWED. 4. LD. COUNSEL FOR ASSESSEE AT THE OUTSET, REFERRED TO PB 158 TO 162 WHICH ARE NOTICED U/S 148 OF THE INCOME TAX ACT, LE TTER OF ITO (HQRS) HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 4 OF 8 DATED 21.03.2013 CONVEYING SATISFACTION OF THE CIT AND PERFORMA FOR APPROVAL OF THE COMMISSIONER OF INCOME TAX U/S 151( 2) OF THE ACT AND SUBMITTED THAT THE CIT (CENTRAL)-II, NEW DELHI DID NOT RECORD ANY SATISFACTION BEFORE GRANTING APPROVAL TO REASONS U/ S 147 OF THE ACT AND THERE IS NO SIGNATURE OF THE CIT(CENTRAL)-II, NEW D ELHI. HE HAS SUBMITTED THAT DEPARTMENT WAS DIRECTED TO PRODUCE THE ASSESSM ENT RECORD AND THE RECORD, IF ANY, SATISFACTION HAS BEEN RECORDED BY T HE CIT (CENTRAL). THE DEPARTMENT HAS, HOWEVER, FAILED TO PRODUCE ANY SATI SFACTION OF THE CIT, THEREFORE, REOPENING OF THE ASSESSMENT IS BAD IN LA W. HE HAS SUBMITTED THAT SINCE NO SATISFACTION HAS BEEN PRODUCED ON REC ORD, THEREFORE, ADVERSE INFERENCE MAY BE DRAWN AGAINST THE REVENUE DEPARTMENT AND RELIED UPON JUDGMENT OF THE MADRAS HIGH COURT IN TH E CASE OF CIT VS. KRISHNAVENI AMMAL 158 ITR 826. 5. LD. DR PRODUCED THE ASSESSMENT RECORD WHICH CONTAIN ED THE SAME COPY OF PERFORMA OBTAINING APPROVAL U/S 151, COPY O F WHICH IS FILED AT PAGE 160 TO 162 OF THE PB AND LD. DR SUBMITTED THAT THERE IS NO SIGNATURE ON THE SAME OF CIT (CENTRAL)-II. LD. DR, HOWEVER, REFERRED TO PB 159 WHICH IS LETTER OF ITO (HQRS.) DATED 21.03.2013 IN WHICH THE ITO (HQRS.) HAS CONVEYED TO THE AO THE SATISFACTION OF THE CIT (CENTRAL)-II. SHE HAS, THEREFORE, SUBMITTED THAT THOUGH ORIGINAL SANCTION IS NOT AVAILABLE ON RECORD BUT THIS ITSELF IS SUFFICIENT TO PROVE SATIS FACTION WAS RECORDED AND SIGNED BY THE CIT(CENTRAL)-II, NEW DELHI. LD. DR A LSO PLACED ON RECORD LETTER DATED 11.02.2020 OF ACIT, CENTRAL CIRCLE-14, NEW DELHI IN WHICH IT HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 5 OF 8 IS STATED THAT OLD RECORDS ARE NOT TRACEABLE AS NOW AND EFFORTS ARE STILL BEING MADE TO TRACE THE SAME. THEREFORE, ASSESSEE SHOULD NOT GET BENEFIT OF NON PRODUCTION OF THE RECORD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THIS POI NT. SECTION 151 OF THE ACT AS IS APPLICABLE TO ASSESSMENT YEAR UNDE R APPEAL READS AS UNDER: 151. SANCTION FOR ISSUE OF NOTICE. (1) IN A CASE WHER E AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING O FFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPU TY COMMISSIONER, UNLESS THE JOINT COMMISSIONER IS SATI SFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SA TISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AF ORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB- SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE IS SUE OF SUCH NOTICE. 7. IN THE PRESENT CASE, THE REASSESSMENT ORDER IS P ASSED BY DCIT(CENTRAL CIRCLE)-15, NEW DELHI. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE ORIGINALLY FILED RETURN OF INCOME ON 17.11 .2006 AND CASE WAS ASSESSED U/S 143(3) OF THE ACT. THUS, THE FOUR YEA RS HAVE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR WHEN NOTICE U/S 148 WAS ISSUED ON 22.03.2013. THE PROVISO TO SECTION 151(1) OF TH E ACT, THEREFORE, WILL HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 6 OF 8 APPLY IN THE CASE OF THE ASSESSEE. THE SATISFACTIO N OF CHIEF COMMISSIONER OR COMMISSIONER SHALL HAVE TO BE OBTAINED BEFORE IS SUING A NOTICE U/S 147/148 OF THE ACT. IT IS A CONDITION PRECEDENT AN D SHALL HAVE TO BE FOLLOWED BY THE INCOME TAX AUTHORITIES. IN THE PRE SENT CASE, THE RECORD REVEALED THAT AO(DCIT), CENTRAL CIRCLE-21, NEW DELH I HAS SENT THE PERFORMA FOR OBTAINING APPROVAL OF CIT U/S 151(1) O F THE ACT FOR INITIATING THE PROCEEDINGS U/S 147/148 OF THE ACT IN THE CASE OF THE ASSESSEE AND PARA 13 OF THE PERFORMA (PB 162) READS AS UNDER: 13. WHETHER THE COMMISSIONER IS SATISFIED ON THE R EASONS RECORDED BY THE ITO/AC/THAT IT IS A FIT CASE FOR TH E ISSUE OF A NOTICE U/S 148. BLANK (UNSIGNED) (A D MEHROTRA) COMMISSIONER OF INCOME TAX CENTRAL-II, NEW DELHI 8. IT WOULD, THEREFORE, REVEAL THAT SATISFACTION OF TH E CIT (CC)-II, NEW DELHI IS NOWHERE RECORDED AND SAME IS ALSO UNSIGNED . LD. DR ALSO CONFIRMED THAT ORIGINAL OF THIS PERFORMA IS AVAILAB LE ON RECORD AND IN THE ORIGINAL ALSO NO SATISFACTION OF THE CIT HAS BEEN R ECORDED AND NO SIGNATURE OF THE CIT (CENTRAL)-II, NEW DELHI HAS BE EN APPENDED ON THE SAME. IT IS, THEREFORE, CLEAR THAT NO SANCTION OF THE CIT HAS BEEN OBTAINED U/S 151 OF THE ACT BEFORE ISSUE A NOTICE U /S 148 OF THE ACT. LD. DR, HOWEVER, REFERRED TO THE LETTER DATED 21.03.201 3 OF ITO(HQRS.) OF THE OFFICE OF CIT (CENTRAL)-II, NEW DELHI WHICH IS ADDR ESSED TO THE DCIT (CENTRAL CIRCLE)-21, NEW DELHI IN WHICH THE COMMENT S OF THE CIT HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 7 OF 8 (CENTRAL)-II, NEW DELHI HAVE BEEN CONVEYED TO THE A O WHICH READS AS UNDER: ON THE BASIS OF REASONS RECORDED BY THE AO (CC-21) , I AM SATISFIED THAT THE CASE OF M/S HOME DEVELOPERS PVT. LTD. FOR AY 2006-07 IS FIT FOR ISSUE OF NOTICE U/S 148. 9. IT WOULD ALSO SHOW THAT THIS SANCTION/APPROVAL IS NOT ACCORDED BY THE CIT (CENTRAL)-II, NEW DELHI BECAUSE IT IS A LET TER WRITTEN BY ITO(HQRS.) ON BEHALF OF CIT (CENTRAL)-II, NEW DELHI. SINCE, I T IS MANDATORY TO OBTAIN SANCTION OF COMMISSIONER BEFORE ISSUE A NOTICE U/S 147/148, THEREFORE, HE CANNOT DELEGATE HIS AUTHORITY TO THE ITO (HQRS.) . SUCH ACT SHALL HAVE TO BE PERFORMED BY THE COMMISSIONER ONLY. FURTHER, THIS LETTER IS NOT SUPPORTED BY ANY EVIDENCE OR MATERIAL, IF CIT (CENT RAL)-II, NEW DELHI HAS RECORDED HIS SATISFACTION IN THE PRESENT CASE OR SI GNED THE SATISFACTION AS PER LAW. THEREFORE, THERE IS NO REASON FOR ITO (HQ RS.) TO CONVEY SANCTION OF CIT(CC). THEREFORE, THE CONDITION PRECEDENT FOR OBTAINING SANCTION U/S 151 BEFORE ISSUING A NOTICE U/S 148 HAVE NOT BE EN PROVED AND SATISFIED BY THE REVENUE DEPARTMENT. LD. DR PRODUC ED THE LETTER OF THE AO IN WHICH IT IS CONVEYED THAT SINCE OLD RECORDS A RE NOT TRACEABLE AS OF NOW AND EFFORTS ARE STILL BEING MADE TO TRACE THE S AME. THEREFORE, ASSESSEE SHOULD NOT GET BENEFIT OF THE SAME. THIS APPEAL WAS PARTLY HEARD ON 07.10.2019 AND LD. DR WAS DIRECTED TO PROD UCE ASSESSMENT RECORD. THEREAFTER, THE APPEAL WAS ADJOURNED SIX T IMES. NO RECORD HAS BEEN PRODUCED BEFORE US TO PROVE, IF SANCTION OF CI T U/S 151 HAS BEEN GIVEN AS PER LAW BEFORE ISSUE OF NOTICE U/S 148. S INCE, IT IS A DOCUMENT HOME DEVELOPERS PVT. LTD. VS. ACIT/ I.T.A.NO.4957/D EL/2015/A.Y.2006-07 PAGE 8 OF 8 IN POSSESSION OF THE DEPARTMENT AND DEPARTMENT HAS FAILED TO PRODUCE THE SAME FOR OUR INSPECTION, THEREFORE, WE DRAW ADV ERSE INFERENCE AGAINST THE REVENUE DEPARTMENT AND HOLD THAT NO SAN CTION HAS BEEN ACCORDED U/S 151(1) OF THE ACT BY CIT(CENTRAL)-II, NEW DELHI TO THE AO BEFORE ISSUING NOTICE U/S 148 OF THE ACT. THEREFOR E, ENTIRE REASSESSMENT PROCEEDINGS ARE VITIATED AND ARE LIABLE TO BE QUASH ED. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE REOPENING OF THE ASSESSMENT IN THE MATTER. RESULTA NTLY ALL ADDITIONS STAND DELETED. IN VIEW OF THE ABOVE, WE DO NOT PRO POSE TO DECIDE THE REMAINING QUESTIONS RAISED IN THE PRESENT APPEAL WH ICH ARE LEFT WITH ACADEMIC DISCUSSION ONLY. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST FEBRUARY, 2020 * KAVITA ARORA, SR. P.S. COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, ITAT: DELHI BENCHES-DELHI.