ACIT, New Delhi V. M/s Tarun International Ltd., New Delhi

ITA 5136/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97842 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Assessee Lawyers: AMIT GOEL
• Keywords: Accommodation entries; Competent authority
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO S . 5136/DEL/2012 : ASSTT. YEAR : 2009 - 10 ASSTT. COMMISSIONER OF IN COME TAX, CIRCLE - 16(1), NEW DELHI VS M/S TARUN INTERNATIONAL LTD., 5037, EXCELSIOR CINEMA, STREET SIRIKIWALAN, CHANDNI CHOWK, DELHI - 110006 (APPELLANT) (RESPONDENT) PAN NO. AAACT2713N ASSESSEE BY : SH. AMIT GOE L, CA REVENUE BY : SH . J. P. CHANDRAKAR , SR. DR DATE OF HEARING : 03.09 .2015 DATE OF PRONOUNCEMENT : 05 .11 .2015 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 23.07.2012 OF CIT(A) - XIX, NEW DELHI. 2. THE ON LY GROUNDS RAISED IN THIS APPEAL READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN QUASHING THE REOPENING THE ASSESSMENT AND HOLDING THE ASSESSMENT TO BE NULL AND VOID. HE FAILED TO APPRECIATE TH AT WHEN ADDL. CIT RECORDS HIS SATISFACTION THEN ONLY HE FORWARDS THE PROPOSAL TO THE CIT JUST BECAUSE THE CIT HAS ALSO GIVEN HIS APPROVAL IT DOES NOT BECOME ILLEGAL. ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 2 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETE D U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 26.02.2005 AT AN INCOME OF RS. 25,42,690/ - . LATER ON, THE CASE WAS REOPENED AFTER RECORDING THE FOLLOWING REASONS: IN THIS RETURN WAS FILED ON DATED 01.11.2004 AT RETURN INC OME OF RS. 25,42,694/ - , THE SAME WAS PROCESSED ON 26.02.2006. IT HAS COME TO THE NOTICE THAT CERTAIN INVESTIGATION WERE CARRIED OUT BY THE DIRECTORATE OF INVESTIGATION, NEW DELHI IN RESPECT OF THE BOGUS ACCOMMODATION ENTRIES PROVIDED BY CERTAIN INDIVIDUAL/ COMPANIES. THE NAME OF THE ASSESSEE I.E. M/S TARUN INTERNATIONAL LTD. AS ONE OF THE BENEFICIARIES OF THESE ALLEGED BOGUS TRANSACTIONS AS PER INFORMATION GIVEN BY THE DIT(INV.), NEW DELHI AFTER MAKING THE NECESSARY ENQUIRIES. IT HAS BEEN REVEALED THAT THE F OLLOWING ENTRIES HAVE BEEN RECEIVED BY THE ASSESSEE DURING THE F.Y. 2003 - 04 RELEVANT TO A.Y. 2004 - 05. BENEFICIARY NAME BENEFICI ARY BANK, NAME AND BRANCH VALUE OF ENTRY TAKEN INSTRUME NT NO. BY WHICH ENTRY TAKEN DATE ON WHICH ENTRY TAKEN NAME OF ACCOUNT HOL DER OF ENTRY GIVEN BANK NAME & BRANCH FROM WHICH ENTRY GIVEN A/C NUMBER OF ENTRY GIVING A/C M/S TARUN INTERNATIONAL LTD. - 10,01,000 3508 12.03.2004 SBBJ NRR 24360 M/S TARUN INTERNATIONAL LTD. - 10,01,000 3530 12.03.2004 SBBJ NRR 24360 M/S TARUN INTERNA TIONAL LTD. - 10,01, 015 24704 12.03.2004 SBBJ NRR 24360 ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 3 THE SAID AMOUNT HAS BEEN CREDITED INTO ASSESSEE S BANK ACCOUNT. INVESTMENT MADE BY THE INVESTIGATION WING, NEW DELHI HAS FOUND THAT THE ASSESSEE IS A BENEFICIARY OF TAKING AFORESAID ACCOMMODATION E NTRIES. I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING, AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK A/C BY WAY OF ABOVE ACCOMMODATION ENTRIES. THE AO FRAMED THE ASSESSMENT AT AN INCOME OF RS. 55,45,710/ - BY MAKING THE ADDITIONS OF RS. 30,03,015/ - U/S 68 OF THE ACT. 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE REOPENING BY SUBMITTING THAT THE NOTICE U/S 148 OF THE ACT W AS ISSUED BEYOND FOUR YEARS AND THE PERMISSION BEFORE ISSUING THE NOTICE WAS NOT OBTAINED FROM THE PRESCRIBED/C OMPETENT AUTHORITY IN TERMS OF S ECTION 151 OF THE ACT. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS SPL S SIDDHARTHA LTD. (2012) 345 ITR 223. 5 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE QUASHED THE ASSESSMENT BY OBSERVING AT PAGE NOS. 6 TO 8 OF THE IMPUGNED ORDER AS UNDER: I HAVE CALLED FOR THE RECORD AND VERIFIED. THE AO HAS OBTAINED THE APPROVAL OF CIT. THE FOLLOWING ARE THE RELEVANT COLUMNS IN THE REPORT SUBMITTED TO THE CIT: ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 4 FROM FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S 148 AND FOR OBTAINING THE APPROVAL OF COMMISSIONER OF INCOME TAX, DELHI - VI, NEW DELHI 1. NAME & ADDRESS OF THE ASSESSEE : M/S TARUN INTERNATIONAL LTD. , 5037, EXCELSIOR CINEMA, STREET SIRIKIWALAN, CHANDNI CHOK, DELHI. 2. PAN/GIR : AAACT2713N 3. STATUS COMPANY 4. WARD/CIRCLE CIRCLE - 16(1), NEW DEHI 5. ASSESSMENT YEAR IN RESPECT OF WHICH IT IS PROPOSED TO ISSUE NOTICE U/S 148 : 2004 - 05 6. THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT : RS.60,00,000/ - 7. WHETHER THE PROVISIONS OF SEC. 147 ARE APPLICABLE : YES 8. WHETHER THE ASSESSMENT IS PROPOSED TO BE MADE FOR FIRST TIME. : NOT KNO WN AS THE RECORD IS NOT READILY AVAILABLE (A) WHETHER ANY VOLUNTARY RETURN HAD BEEN ALREADY BEEN FILED : YES (B) IF SO THE DATE OF FILING OF THE SAID RETURN. : RETURN FILED ON 30/11/2004 .. DATED: 25.03.2011 SD/ - XX XX (JEETENDER KUMAR) D Y. COMMISSIONER OF INCOME TAX, CIRCLE - 16(1), NEW DELHI 12. WHETHER THE CIT SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR ISSUE OF A NOTICE U/S 148. YES I AM SATISFIED THAT THIS IS A FIT CASE FOR ISSUE OF NOTICE U/S 148. DATED: 29.03.2011 SD/ - XX XX (V.K. BAKSHI) CIT, DELHI - VI, NEW DELHI AS SEEN FROM THE RECORD THERE IS NO EVIDENCE TO SHOW THAT THERE WAS SCRUTINY ASSESSMENT U/S 143(3) EITHER ON 26.02.2005 OR ON 26.02.2006 AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER IN THE APPELLANT S CASE FOR THE IMPUGNED ASSESSMENT YEAR EARLIER TO ISSUE OF NOTICE U/S 148 ON 30.03.3011. THE RETURN WAS ONLY ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 5 PROCESSED U/S 143(1) ON 26.02.2005 AS SEEN FROM THE RECORD. HENCE, SINCE NOTICE WAS ISSUED BEYOND 4 YEARS FROM THE END OF ASST. YEAR, TH E AO SHOULD HAVE OBTAINED THE PERMISSION OF JOINT/ADDITIONAL COMMISSIONER OF INCOME TAX IN TERMS OF SECTION 151. IN THIS CASE, THE PERMISSION WAS OBTAINED FROM COMMISSIONER OF INCOME TAX IN CONTRAVENTION TO THE PROVISIONS OF SECTION 151 OF THE ACT. THE MAI N CONTENTION OF THE AR, IN SUCH A CASE, IS THAT THE REASSESSMENT SHOULD BE HELD INVALID. THE PROVISIONS OF SECTION 151 ARE AS UNDER: 151. SANCTION FOR ISSUE OF NOTICE. (1) IN A CASE WHERE 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 OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER, UNLESS THE JOINT COMMISSION IS SATISFIED ON THE REASONS RECORDED B Y 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 OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISF IED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, 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 THE 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 ISSUE OF SUCH NOTIC E. ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 6 ON SIMILAR FACTUAL MATRIX, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS SPL S SIDDARTHA LTD., (SUPRA) HAS UPHELD THE CANCELLATION OF THE ASSESSMENT. THE HEAD NOTES IN THE SAID CASE READS AS UNDER: WHEN A STATUTE REQUIRES A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER, SECTION 116 OF THE INCOME - TAX ACT, 1961, DEFINES THE INCOME - TAX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWER GIVEN TO THEM IN SPECIFIED CIRCUMSTANCES. IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. HELD, THAT UNDER SECTION 151 OF THE ACT, IT WAS ONLY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROVAL FOR ISSUE OF NOTICE UNDER SECTION 148. THE APPROVAL WAS NOT GRANTED BY THE JOINT COMMISSIONER. INSTEAD, IT WAS TAKEN FROM THE COMMISSIONER OF INCOME - TAX. T HIS WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 292B. THE NOTICE WAS NOT VALID. THE AO HAD OBTAINED THE PERMISSION OF CIT AS SEEN FROM THE RECORD. THE AO, ADMITTEDLY, WAS NOT SURE AS TO WHETHER A SCRUTINY ASSESSMENT WAS PASSED IN THIS CASE OR NOT AS SEE N FROM THE REPORT SENT TO THE CIT FOR HIS PERMISSION/SANCTION. AS SEEN FROM THE RECORD THERE IS NO ORDER U/S 143(3) IN THE APPELLANT S CASE FOR THE IMPUGNED ASSESSMENT YEAR. AFTER CAREFUL CONSIDERATION OF THE FACTS AND DECISION OF JURISDICTIONAL ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 7 HIGH COURT AS MENTIONED ABOVE, THE REOPENING IS NOT IN ACCORDANCE WITH THE PROVISIONS AND IS LIABLE TO BE QUASHED. IN VIEW OF THE ABOVE DISCUSSION, THE REASSESSMENT IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND ACCORDINGLY, THE REASSESSMENT IS HELD TO BE N ULL AND VOID. 6 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AO AND FURTHER SUBMITTED THAT THE ASSESSEE DID NOT DISCLOSE THE TRUE INCOME AND OBTAINED BOGUS ACCOMMODATION ENTRY PROVIDED BY CERTAIN INDIVIDUAL/COMPANIE S. THEREFORE, THE AO RIGHTLY MADE THE ADDITION AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE IMPUGNED ORDER AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE RE LIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS SPL S SIDDHARTHA LTD. (2012) 345 ITR 223 (DEL) DSJ COMMUNICATION LTD. VS DCIT (2014) 222 TAXMAN 129 (BOM) GHANSHYAM K. KHABRANI VS ACIT (2012) 346 ITR 443 (BOM) SUNINT INVESTMENT & TECHNOLOGIES (P) LTD. VS ACIT (2012) 54 SOT 126 (DEL ITAT) ITO VS TIRUPATI CYLINDERS LTD. (DEL. ITAT ORDER DATED 28.09.2013) ITO VS TIRUPATI CYLINDERS LTD. (DEL. ITAT ORDER DATED 30.09.2014 GAJINDER SINGH CHHABRA VS ITO (2014) 50 TAXMANN.COM 312 (DEL. TRIB) ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 8 JAI PRAKASH AHUJA V S ITO (2014) 48 TAXMANN.COM 86 (LUCKNOW TRIB.) 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, ADMITTEDLY THE AO WAS NOT SURE AS TO WHETHER SCRUTINY ASSESSMENT WAS PASSED IN THIS CASE OR NOT WHICH IS CLEAR FROM HIS REPORT FURNISHED TO THE LD. CIT(A) FOR OBTAINING HIS PERMISSION/SANCTION. THE LD. CIT(A) ON PERUSING THE RECORD FOUND THAT NO ORDER U/S 143(3) OF THE ACT WAS PASSED IN THE ASSESSEE S CASE FOR THE YEAR UNDER C ONSIDERATION AND THEREAFTER, HE QUASHED THE ASSESSMENT BY FOLLOWING THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SPL S SIDDHARTHA LTD. (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: SECTION 116 ALSO DEFINES THE INCOME - T AX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIED CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE ARROGATED BY OTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF THE OTHER AUTHORITY. I T IS TRITE THAT WHEN A STATUTE REQUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHAL L BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME OTHER MANNER. ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 9 THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WORDS UPON A DE FINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORIZED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER SATISFA CTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE INDEPENDENT AND NOT BORROWED OR DICTATE D SATISFACTION. LAW IN THIS REGARD IS NOW WELL - SETTLED. THE APEX COURT IN THE CASE OF ANIRUDHSINHJI KARANSINH J I JADEJA VS STATE OF GUJARAT (1995) 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT AC CORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. THEREFORE, THE TRIBUNAL HAS RIGHTLY DECIDED THE L EGAL ASPECT, KEEPING IN VIEW WELL - ESTABLISHED PRINCIPLES OF LAW LAID DOWN IN CATENA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. 9 . IN THE PRESENT CASE ALSO THE AO HAD NOT TAKEN THE PERMISSION FROM THE JOINT/ADDITIONAL COMMISSIONER IN TERMS OF SECT ION 151 (2) OF THE ACT. THEREFORE, REASSESSMENT FRAMED WITHOUT PROPER PERMISSION FROM THE COMPETENT AUTHORITY WAS RIGHTLY QUASHED BY THE LD. CIT(A). WE DO NOT SEE ANY INFIRMITY IN THE IMPUGNED ORDER, ACCORDINGLY DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DE PARTMENT. ITA NO S. 5136 /DEL /201 2 TARUN INTERNATIONAL LTD. 10 1 0 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DI S MISSED. ( ORDER PRON OUNCED IN THE COURT ON 05 /11 /2015 ) SD/ - SD/ - (BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: 05 /11 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR