DCIT, New Delhi V. M/s. Satya Prakash & Bros Pvt. Ltd., New Delhi

ITA 513/DEL/2010

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6424 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-02-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 04-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: SB GUPTA
• Keywords: Reopening of assessment; Income from undisclosed sources; Validity of assessment; Accommodation entries; Assessment record; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. N. K. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO. 513/DEL/2010 (ASSESSMENT YEAR 2002-03) A N D CO NO. 197/DEL/2010 (ASSESSMENT YEAR 2002-03) APPELLANT BY : SH. A. K. SHARMA, SR.DR RESPONDENT BY : SH. S. B. GUPTA, FCA DATE OF HEARING : 15.02.2017 DATE OF PRONOUNCEMENT: 23.02.2017 ORDER PER BEENA A. PILLAI, JM: 1. T HE PRESENT APPEAL AND THE CROSS OBJECTION FILED BY REVENUE AND ASSESSEE RESPECTIVELY, ARISES OUT OF OR DERS DATED DCIT CIRCLE-7(1), ROOM NO. 312 C. R. BUILDING, I. P. ESTATE NEW DELHI VS. SATYA PRAKASH & BROS PVT. LTD. A-1, CC COLONY NEW DELHI GIR/PAN: AAHCS1210Q (APPELLANT) (RESPONDENT) SATYA PRAKASH & BROS PVT. LTD. A-1, CC COLONY NEW DELHI GIR/PAN: AAHCS1210Q VS. DCIT CIRCLE-7(1), ROOM NO. 312 C. R. BUILDING, I. P. ESTATE NEW DELHI (APPELLANT) (RESPONDENT) ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 2 OF 9 26.11.2009 PASSED BY LD. CIT(A)-X FOR ASSESSMENT YE AR 2002- 03 ON THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 513/DEL/2010 1. LD. COMMISSIONER OF INCOME TAX (APPEAL) ERRED, I N LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.1,52,00,000/- MADE BY T HE AO AS INCOME FROM UNDISCLOSED SOURCES. 2. THE APPELLANT CRAVES TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. CO NO. 197/DEL/2010 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN REJECTING THE CONTENTION OF THE ASSESSEE THAT ASSESSMENT MADE BY THE AO BY REOPENING U/S 147 IS BAD AND LIABLE TO BE QUASHED AS CONDITIONS AND PROCEDURE PRESCRIBED UNDER SECTION 147 READ WITH SECTION 148 HAVE NOT BEEN COMPLIED WITH. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN REJECTING THE CONTENTION OF THE ASSESSEE THAT THE REASSESSMENT MADE BY AO U/S 147 IS BAD IN LAW AS THE SAME HAS BEEN MADE ON THE BASIS OF REASONS WHIC H ARE VAGUE AND ARE CONTRARY TO THE FACTS OF THE CASE . ' 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE REASSESSMENT ORDER PASSED BY LEARNED A.O IS BAD AND LIABLE TO BE QUASHED AS THE SAME HAS BEEN PASSED ON THE BASIS OF MATERIAL COLLECTED AT THE BACK OF THE ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 3 OF 9 ASSESSEE WITHOUT GIVING HIM AN OPPORTUNITY TO REBUT THE SAME. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE REASSESSMENT ORDER PASSE*} BY LEARNED A.O IS BAD AN D LIABLE TO BE QUASHED AS THE REOPENING U/S 147 HAS BEEN MADE ON THE BASIS OF STATEMENT OF SOME PERSON, RECORDED AT THE BACK OF THE ASSESSEE WITHOUT GIVING HIM AN OPPORTUNITY TO CROSS EXAMINE THE SAME. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME ON 24.02.2003 DECLARING A TOTAL INCOME OF RS.1,22,48,359/-. THE O RIGINAL RETURN FILED BY ASSESSEE WAS PROCESSED UNDER SECTIO N 143(1) ON 09.03.2003. SUBSEQUENTLY ON THE BASIS OF INFORMA TION RECEIVED FROM INVESTIGATION WING, THE CASE OF ASSES SEE WAS REOPENED AS PER THE PROVISIONS OF SECTION 147 ON 09 .04.2007, REQUIRING ASSESSEE TO FILE ITS RETURNS IN VIEW OF N OTICE ISSUED UNDER SECTION 148. 3. THE INFORMATION THAT WAS RECEIVED FROM INVESTIGATI ON WING WAS THAT ASSESSEE WAS INVOLVED IN GIVING AND T AKING ACCOMMODATION ENTRIES AND ASSESSEE HAD RECEIVED ENT RIES WHICH REPRESENT UNACCOUNTED MONEY IN THE HANDS OF ASSESSEE FROM VARIOUS PARTIES. NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO ASSESSEE AND OUR ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF TRANSACTIONS. ASSESSING OF FICER DID ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 4 OF 9 NOT ACCEPT THE ARGUMENTS PUT FORTH BY ASSESSEE BECA USE IT HAS BEEN ADMITTED DURING THE COURSE OF THE STATEMEN T RECORDED BY INVESTIGATION WING THAT, ASSESSEE HAD A CCEPTED THE ADJUSTMENT ENTRIES FROM THE PERSONS WHO ARE INV OLVED IN PROVIDING ENTRIES TO A NUMBER OF PERSONS THEREIN WH ERE CASH IS TAKEN AND CHEQUE OR DRAFT IS GIVEN BY FLOATING D IFFERENT COMPANIES. HE THUS COMPLETED THE ASSESSMENT UNDER S ECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 26.12.20 08 AT A TAXABLE INCOME OF RS.2,74,48,360/-. 4. AGGRIEVED BY ORDER OF LD. AO, ASSESSEE FILED AN AP PEAL BEFORE LD. CIT(A). THE PRIMARY OBJECTION RAISED BY ASSESSEE WAS REGARDING THE JURISDICTION OF ASSESSING OFFICER , AND VALIDITY OF ASSESSMENT UNDER SECTION 148. IT WAS CO NTENTION OF THE ASSESSEE THAT DUE PROCESS OF LAW WAS NOT FOLLOW ED, AS LD. AO BEFORE REOPENING THE ASSESSMENT HAD NOT OBTAINED THE SATISFACTION AS REQUIRED UNDER LAW. LD. CIT(A) HAS RECORDED A FINDING AT PAGE 12 OF HIS ORDER WHICH IS AS UNDER: MOREOVER THE NOTICE ISSUED UNDER SECTION 148 OF TH E I T ACT, 1961 WAS WITHOUT PROPER SANCTION IN TERMS OF T HE PROVISIONS CONTAINED IN THE INCOME TAX ACT, 1961 AN D HENCE LIABLE TO BE QUASHED. HOWEVER WHILE CONCLUDING THE FINDINGS IN RESPECT OF THE VALIDITY OF REASSESSMENT PROCEEDINGS, LD. CIT (A) U PHELD THE INITIATION OF REOPENING OF ASSESSMENT. ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 5 OF 9 5. LD. CIT(A) HOWEVER DELETED THE ADDITION MADE BY ASSESSING OFFICER IN RESPECT OF THE UNDISCLOSED INC OME. 6. AGGRIEVED BY THE ORDER PASSED BY LD. CIT(A), THE R EVENUE AS WELL AS ASSESSEE IS IN APPEAL BEFORE US. THE CRO SS OBJECTION FILED BY THE ASSESSEE IS IN RESPECT OF THE VALIDITY OF REOPENING, WHICH HAS BEEN UPHELD BY LD. CIT(A). PER CONTRA THE APPEAL FILED BY REVENUE DEALS WITH THE ADDITION THAT HAS B EEN DELETED BY LD. CIT(A). AS THE CROSS OBJECTION RAISES THE LE GAL ISSUE REGARDING THE VALIDITY OF THE RE-ASSESSMENT PROCEED INGS, WE ARE INCLINED TO DEAL WITH THE CROSS OBJECTION FIRST . CO NO. 197/DEL/2010 7. AT THE OUTSET LD. AR HAS SUBMITTED THAT THERE IS N O SATISFACTION RECORDED BY JCIT/PR. CIT/CCIT, AS THE CASE MAY BE, AS PER THE MANDATE OF SECTION 151 OF THE ACT. H E SUBMITTED THAT ON ONE BREATH LD. CIT(A) HAS AGREED THAT THERE IS NO PROPER SATISFACTION THAT HAS BEEN RECORDED IN LIEU OF WHICH THE REASSESSMENT PROCEEDING IS LIABLE TO BE Q UASHED, ON THE OTHER BREATH LD. CIT(A) HAS UPHELD THE REOPE NING OF ASSESSMENT. HE SUBMITTED THAT THIS IS A FIT CASE FO R QUASHING OF THE NOTICE ISSUED UNDER SECTION 148 AS IT HAS NO T BEEN ISSUED AS PER LAW. 8. ON THE CONTRARY, LD. DR PLACES RELIANCE UPON THE O RDERS OF THE AUTHORITIES BELOW. ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 6 OF 9 9. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH T HE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 10. IT IS OBSERVED THAT LD. CIT(A) HAS NOT VERIFIED FR OM THE RECORDS REGARDING WHETHER SATISFACTION HAS BEEN REC ORDED OR NOT, AND IF AT ALL SATISFACTION HAS BEEN RECORDED, THEN BY WHOM. SECTION 151 CATEGORIZES 3 DIFFERENT SITUATION S AND THE AUTHORITY WHOSE SATISFACTION NEEDS TO BE RECORDED H AS BEEN SPECIFICALLY MENTIONED THEREIN IN CASES WHERE THE R EOPENING OF ASSESSMENT IS MADE BEYOND 4 YEARS. 11. IN THE FACTS BEFORE US, REOPENING OF THE ASSESSMEN T HAS BEEN ADMITTEDLY MADE BEYOND 4 YEARS. AS THERE IS NO ADJUDICATION ON THIS ISSUE BY LD. CIT(A), WE ARE IN CLINED TO SEND THIS ISSUE BACK TO THE FILES OF LD. CIT(A) TO VERIFY FROM THE RECORDS AS TO WHETHER ANY SATISFACTION HAS BEEN RECORDED, IF YES BY WHOM, AND WHETHER THE SATISFACTION IF AT ALL HAS BEEN RECORDED IS AS PER SECTION 151 OF THE ACT. ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE IN TH E CROSS OBJECTION STANDS ALLOWED FOR STATISTICAL PURP OSES. ITA NOS. 513/DEL/2010 12. THE ONLY ISSUE THAT HAS BEEN RAISED BY REVENUE IS IN RESPECT OF ADDITION BEING DELETED IN RESPECT OF UND ISCLOSED INCOME. 13. LD. DR SUBMITS THAT THE MATERIALS PLACED BEFORE LD . CIT(A) HAS NOT BEEN INVESTIGATED UPON BY LD. AO, AN D ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 7 OF 9 ASSESSEE HAS THEREFORE NOT DISCHARGE THE ONUS UNDER SECTION 68 OF THE ACT. 14. ON THE CONTRARY, LD. DR SUBMITTED THAT ALL THE NECESSARY DETAILS WERE FILED BEFORE THE AUTHORITIES BELOW WHICH ARE APPARENT FROM ASSESSMENT RECORDS. HE SUBM ITTED THAT LD. CIT(A) HAS CONSIDERED THE ADDITION MADE BY LD. AO IN FAVOUR OF ASSESSEE, BASED ON THESE DOCUMENTS. HE PLACED RELIANCE UPON THE ORDER PASSED BY LD. CIT (A). 15. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH T HE SIDES IN THE LIGHT OF DOCUMENTS PLACED ON RECORD. 16. IT IS OBSERVED THAT ASSESSEE HAS BEEN ALLEGED TO H AVE RECEIVED HUGE AMOUNTS BY WAY OF SHARE APPLICATION M ONEY. HOWEVER, NOTICES ISSUED BY ASSESSING OFFICER HAVE N OT BEEN COMPLIED WITH YET. WE ARE, THEREFORE, UNABLE TO ASC ERTAIN THE VERACITY OF THE DOCUMENTS FILED IN THE PAPER BOOK. MERELY BECAUSE ASSESSEE HAS FILED RELEVANT DOCUMENTS, IT D OES NOT DISCHARGE ASSESSEE FROM ONUS OF PROVING GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS. ASSESSEE HAS NOT MADE ANY EFFORTS TO BRING THE PARTIES BEFORE THE AUTHORITIES , TO PROVE THE GENUINENESS OF THE TRANSACTIONS. HE HAS ALSO NOT PR ODUCED ROC RETURNS WHICH COULD PROVE THE SHARES BEING ACTU ALLY ISSUED TO THE SUBSCRIBERS. IN THE ABSENCE OF ALL TH ESE DETAILS WE ARE UNABLE TO ASCERTAIN THAT SHAREHOLDERS HAVE B EEN ESTABLISHED AS PER REQUIREMENT OF HONBLE SUPREME C OURT IN THE CASE OF CIT VS. LOVELY EXPORTS REPORTED IN 299 ITR 268. WE ITA NO 513/DEL/10 & CO NO. 197/DEL/10 (AY2002-03) PAGE 8 OF 9 ARE, THEREFORE, INCLINED TO SET ASIDE THE ADDITION BACK TO THE FILES OF LD. CIT(A) IN ORDER TO ASCERTAIN ALL THE R ELEVANT DOCUMENTS NECESSARY FOR ESTABLISHING THE ALLEGED MO NEY RECEIVED BY THE ASSESSEE TO BE IN THE NATURE OF SHA RE CAPITAL. LD.CIT(A) MAY CALL FOR ALL NECESSARY/RELEVANT DOCUM ENTS AS PER LAW AND GAVE A CATEGORICAL FINDING REGARDING TH E GENUINENESS AND CREDITWORTHINESS OF THE ALLEGED APP LICANTS BEING SHAREHOLDERS. IN THE RESULT APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY ASSESSEE STANDS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2017. SD/- SD/- (N. K. SAINI) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 23.02.2017 @M!T COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI)