Westland Developers Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4984/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7306 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATIQ AHMED SENIOR
• Assessee Lawyers: V S RASTOGI
• Keywords: Accommodation entries; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI I.C. SUDHIR SHRI I.C. SUDHIR SHRI I.C. SUDHIR SHRI I.C. SUDHIR, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 4984/DEL/2013 4984/DEL/2013 4984/DEL/2013 4984/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2004 2004 2004 2004 - -- - 05 0505 05 M/S WESTLAND DEVELOPERS M/S WESTLAND DEVELOPERS M/S WESTLAND DEVELOPERS M/S WESTLAND DEVELOPERS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., M MM M- -- -11, MIDDLE CIRCLE, 11, MIDDLE CIRCLE, 11, MIDDLE CIRCLE, 11, MIDDLE CIRCLE, CO COCO CONNAUGHT CIRCUS, NNAUGHT CIRCUS, NNAUGHT CIRCUS, NNAUGHT CIRCUS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACW1093J. PAN : AAACW1093J. PAN : AAACW1093J. PAN : AAACW1093J. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -23, 23, 23, 23, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S. RASTOGI, ADVOCATE. RESPONDENT BY : SHRI ATIQ AHMED , SENIOR DR. DATE OF HEARING : 21.06.2016 21.06.2016 21.06.2016 21.06.2016 DATE OF PRONOUNCEMENT : 28.06.2016 28.06.2016 28.06.2016 28.06.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2004-05 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXXIII , NEW DELHI DATED 7 TH JUNE, 2013. 2. GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL READ A S UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS)-XX XIII, NEW DELHI ERRED IN REJECTING APPELLANTS CONTENTION THAT ASSESSMENT ORDER MADE BY ASSESSING OFFICER WAS BAD IN LAW AND VOID AB-INITIO. 2. THAT WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIO NER OF INCOME TAX (APPEALS)-XXXIII NEW DELHI ERRED IN UPHO LDING THE ASSUMPTION OF JURISDICTION U/S 147 BY THE ASSES SING OFFICER AND IN MAKING THE ASSESSMENTS IN PURSUANCE THEREOF. ITA-4984/DEL/2013 2 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT IN THE CASE OF USG BUILDWELL PVT.LTD. VIDE ITA NO.4517 /DEL/2013, ORDER DATED 15 TH FEBRUARY, 2016. HE REFERRED TO THE REASONS RECORD ED NOTED AT PAGE 2 OF THE ASSESSMENT ORDER IN THE CASE OF PR ESENT ASSESSEE AND ALSO REFERRED TO REASONS RECORDED IN THE CASE OF US G BUILDWELL PVT.LTD. WHICH ARE REPRODUCED IN PARAGRAPH 9 OF THE ITATS O RDER AND POINTED OUT THAT BOTH THE REASONS RECORDED ARE SAME IN VERB ATIM. HE, THEREFORE, SUBMITTED THAT THE DECISION OF ITAT IN T HE CASE OF USG BUILDWELL PVT.LTD. WOULD BE SQUARELY APPLICABLE. 4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER OF THE ITAT IN THE CASE OF USG BUILDWELL PVT. LTD. (SUPRA) AND THE ASSESSMENT ORDER IN THE CASE UNDER APPEAL BEFORE US , WE FIND THE CONTENTION OF THE LEARNED COUNSEL TO BE CORRECT. T HE REASONS RECORDED IN THE CASE OF THE ASSESSEE ARE IDENTICAL TO THE RE ASONS RECORDED BY THE ASSESSING OFFICER IN THE CASE OF USG BUILDWELL PVT. LTD. IN BOTH THE CASES, ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF SOME OPINION RECEIVED FROM ACIT, CENTRAL CIRCLE-19 ON THE BASIS OF SURVEY OPERATIONS CONDUCTED IN THE CASE OF S.K. GUPTA GROUP. PARAGRA PH 2 OF THE REASONS RECORDED BOTH IN THE CASE OF THE ASSESSEE UNDER APP EAL BEFORE US AND USG BUILDWELL PVT.LTD. IS IN VERBATIM THE SAME. PA RAGRAPH 3 & 4 ARE ALSO ALMOST SAME EXCEPT THE MODIFICATION IN THE AMO UNT OF CHEQUE RECEIVED BY THE ASSESSEE UNDER APPEAL BEFORE US AND THE CHEQUE RECEIVED BY USG BUILDWELL PVT.LTD. BUT, IN SUBSTAN CE, THE REASONS RECORDED IN BOTH THESE CASES ARE IDENTICAL. THEREFO RE, WE AGREE WITH THE LEARNED COUNSEL THAT THE DECISION OF ITAT IN TH E CASE OF USG BUILDWELL PVT.LTD. WOULD BE SQUARELY APPLICABLE. I N THE ABOVE CASE, THE ITAT HELD THAT REOPENING U/S 147 IS NOT VALID. THE RELEVANT FINDING OF THE ITAT READS AS UNDER:- ITA-4984/DEL/2013 3 10. THE VERY PERUSAL OF THE REASONS, IT IS APPAREN T THAT THESE WERE BASED ON THE INFORMATION RECEIVED FROM A CIT, CENTRAL CIRCLE-19, NEW DELHI AFTER NARRATION OF WHI CH, THE ASSESSING OFFICER HAS SIMPLY RECORDED THAT SHE HAS REASON TO BELIEVE THAT AMOUNT/INCOME OF RS.20 LACS HAS ESC APED ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 FOR FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE INCOME-TAX ACT, 1961. N OTICE UNDER SEC. 148 OF THE ACT HAS ACCORDINGLY BEEN ISSU ED BY THE ASSESSING OFFICER. IN THE ABOVE CITED DECISION S OF THE HONBLE HIGH COURT, IT HAS BEEN OBSERVED BY THE HON BLE HIGH COURT THAT SUCH TYPE OF CONCLUSION IS UNHELPFU L IN UNDERSTANDING WHETHER THE ASSESSING OFFICER HAD APP LIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTI CULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIAL WERE. HONBLE HIGH COURT HAS OBSERVED FURTHER THAT ONCE T HE DATE ON WHICH THE SO-CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE ASSESSING OFFICER, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VE RY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESS EE WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN , WHICH WAS FILED ON 14.11.2004 AND WAS PROCESSED UND ER SEC. 143(3) OF THE ACT. IT WAS HELD THAT WITHOUT F ORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO HAVE SIMP LY CONCLUDED, IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. THE BASIC REQUIREMENT IS THAT THE ASSESSING OFFICER MUST APPLY HIS MIND TO THE MA TERIAL IN ORDER TO FORM REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. SUCH BASIC REQUIREMENT WHILE RECORDING THE REASONS FOR INITIAT ION OF PROCEEDINGS UNDER SEC. 147 OF THE ACT IS MISSING IN THE PRESENT CASE BEFORE US. AS IT IS EVIDENT IN THE RE ASONS RECORDED, REPRODUCED HEREINABOVE, THE ASSESSING OFF ICER HAS SIMPLY RECORDED THE INFORMATION RECEIVED FROM H ER COLLEAGUE AND WITHOUT MAKING ANY EXERCISE OF HER MI ND ON THOSE INFORMATION TO FORM HER OWN REASONS TO BELIEV E FOR THE ESCAPED ASSESSMENT OF RS.20 LACS, HAS ISSUED NO TICE UNDER SEC. 148 OF THE ACT. WE THUS RESPECTFULLY FO LLOWING THE RATIOS LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. G&G PHARMA INDIA LT D. (SUPRA) HOLD THAT THE REASONS TO BELIEVE RECORDED B Y THE ASSESSING OFFICER IN THE PRESENT CASE TO INITIATE T HE PROCEEDINGS UNDER SEC. 147 OF THE ACT WITHOUT APPLI CATION OF HER OWN MIND ON THE INFORMATION RECEIVED WERE NO T AS PER THE REQUIREMENT OF THE PROVISIONS OF THE LAW LA ID DOWN ITA-4984/DEL/2013 4 UNDER SEC. 147 OF THE ACT, HENCE, THE INITIATION OF THE PROCEEDINGS WAS NOT VALID AND NOR THE ASSESSMENT MA DE IN FURTHERANCE TO THE SAID INITIATION OF THE PROCEEDIN GS. THE ASSESSMENT FRAMED UNDER SEC. 147 READ WITH 143(3) O F THE ACT IN THE PRESENT CASE IN QUESTION IS THUS HELD AS VOID-AB- INITIO. THE GROUND NOS.1 AND 2 ARE ACCORDINGLY ALL OWED. 5. SINCE THE FACTS IN THE CASE OF THE ASSESSEE ARE IDENTICAL, WE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITAT I N THE CASE OF USG BUILDWELL PVT.LTD., HOLD THE REOPENING OF ASSESSMEN T IN THE CASE OF THE ASSESSEE UNDER APPEAL BEFORE US TO BE INVALID. ACC ORDINGLY, THE NOTICE ISSUED U/S 148 OF THE ACT IS QUASHED AND THE CONSEQ UENTIAL ASSESSMENT ORDER PASSED IN PURSUANCE THERETO IS ALSO QUASHED. 6. ONCE THE ASSESSMENT ORDER ITSELF HAS BEEN QUASHE D, THE OTHER GROUNDS RAISED BY THE ASSESSEE WHICH ARE AGAINST TH E MERIT OF THE ADDITION SUSTAINED BY THE LEARNED CIT(A) DO NOT SUR VIVE FOR ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 28.06.2016 . SD/- SD/- (I.C. SUDHIR (I.C. SUDHIR (I.C. SUDHIR (I.C. SUDHIR ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S WESTLAND DEVELOPERS PVT.LT M/S WESTLAND DEVELOPERS PVT.LT M/S WESTLAND DEVELOPERS PVT.LT M/S WESTLAND DEVELOPERS PVT.LTD., D.,D., D., M MM M- -- -11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, 11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. RESPONDENT : ASSISTANT COMMISSIONER OF INCOME TA X, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -23, NEW DELHI 23, NEW DELHI 23, NEW DELHI 23, NEW DELHI 110 001. 110 001. 110 001. 110 001. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR