Prakashchand Automobiles Pvt. Ltd., New Delhi V. ITO, Ward- 20(1), New Delhi

ITA 518/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4016 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR JIWANI
• Keywords: Reopening of assessment; Initiation of penalty proceedings; Accommodation entries; Reason to believe
• Section: 143(3); 147; 131; 148; 68

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 518/DEL/2018 (ASSESSMENT YEAR: 2008 - 09 ) PRAKASHCHAND AUTOMOBILES PVT. LTD, FLAT NO. 5C, GF POCKET B - 6, MAYUR VIHAR, PHASE - III, NEW DELHI PAN: AAECP3194M VS. ITO, WARD - 20(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MUKUL GUPTA, CA REVENUE BY: SHRI VIJAY KUMAR JIWANI, SR. DR DATE OF HEARING 08/08 / 2018 DATE OF PRONOUNCEMENT 0 2 / 11 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 38, NEW DELHI DATED 18.09.2017 FOR THE ASSESSMENT YEAR 2008 - 09, RAISING FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE IMPUGNED ORDER OF THE LEARNED ASSESSING OFFICER WHICH IS CONTRARY TO LAW, PASSED WITHOUT APPLICATION OF MIND AND WITHOUT COMPLYING WITH THE PROCEDURE AND RULES, IS AGAINST EQUITY AND JUSTICE AND FACTS OF THE ASSESSEE AND MATERIAL ON RECORD. 2. THE APPELLANT DENIES HIS LIABILITY TO TAX AS UPHELD BY THE LEARNED CIT (A) AND DETERMINED AND COMPUTED BY THE LEARNED ASSESSING OFFICER AND THE MANNER IN WHICH IT HAS BEEN SO DETERMINED OR COMPUTED. 3. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE VALIDITY OF REASSESSME NT PROCEEDINGS IGNORING THE FACT THAT INITIATION OF THE PROCEEDINGS U/S 148 AND THE CONSEQUENT ORDER U/S 147 ARE BAD IN LAW AS: PRAKASHCHAND AUTOMOBILES PVT. LTD VS. ITO ITA NO. 518/DEL/2018 (ASSESSMENT YEAR: 2008 - 09) PAGE | 2 A. THE INITIATION OF PROCEEDINGS U/S 148 IS CONTRARY TO PROVISIONS OF LAW. B. THE MANDATORY PROCEDURE LAID DOWN IN THE ACT HAS N OT BEEN FOLLOWED. C. THE INFORMATION HAS BEEN COLLECTED BEHIND THE BACK OF THE ASSESSEE AND THE ASSESSEE WAS NEVER CONFRONTED WITH THE SAME NOR AN OPPORTUNITY PROVIDED FOR CROSS - EXAMINATION OF JAIN BROTHERS, COPIES OF THE ORDERS OF JAIN BROTHERS AND THE R ELEVANT SEIZED MATERIAL RELIED UPON HAS NOT BEEN PROVIDED TO THE ASSESSEE. D. THE ASSESSMENT HAS BEEN MADE ON THE BASIS OF CONJECTURE & SURMISES WITHOUT ANY COGENT EVIDENCE. 4. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS.30,00,000/ - U/S.68 ON ACCOUNT OF SHARE CAPITAL, TREATING THE SAME AS AN ACCOMMODATION ENTRY. 5. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS.54,000/ - U/S 68 AS ALLEGED COMMISSION PAID FOR OBTAINING ACCOMMODATION ENTRI ES. 6. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW BY NOT ADJUDICATING GROUND OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) WITHOUT ANY MATERIAL ON RECORD. 2. BRIEF FACTS OF THIS ISSUE INVOLVED IN THIS APPEAL ARE THREE AS UNDER: A. WHETHER REOPENING OF ASSESSMENT U/S 148 IS PROPER, B. WHETHER ADDITION MADE U/S 68 OF RS. 30 LAKHS IS IN ACCORDANCE WITH LAW C. WHETHER THE ADDITION OF RS. 54000/ - U/S 68 ON ACCOUNT OF ALLEGED COMMISSION PAID FOR ACCOMMODATION ENTRIES IS IN ACCORDANCE WITH LAW . D. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING INCOME OF RS. 45290/ - . SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED ON 28.03.2015. ACCORDING TO INFORMATION THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FROM MR. S.K.JAIN AS ESTIMATED INFORMATION RECEIVED FROM DIT. THE ACCOMMODATION ENTRIES IS STATED TO BE AS SHARE CAPITAL ETC. THE LD AO FURTHER NOTED THAT THE RETURN OF INCOME WAS NOT AVAILABLE ON RECORD FILED BY THE ASSESSEE PRAKASHCHAND AUTOMOBILES PVT. LTD VS. ITO ITA NO. 518/DEL/2018 (ASSESSMENT YEAR: 2008 - 09) PAGE | 3 AND THER EFORE, THE LD AO HAD A REASON TO BELIEVE THAT INCOME OF RS. 30 LAKHS AS ESCAPED ASSESSMENT. THE LD AO FURTHER NOTED THAT HE IS SATISFIED THAT THE ASSESSEE HAS NOT DISCLOSED TRULY AND FULLY ALL THE MATERIALS FACTS IN THE RETURN OF INCOME. REASONS FOR REOPEN ING WERE SUPPLIED TO THE ASSESSEE ON 29.06.2015 AND THE ASSESSEE FILED OBJECTION ON 31.07.2015. THE OBJECTIONS WERE DISPOSED OFF ON 11.08.2015. THE ASSESSEE FILED WRIT PETITION BEFORE THE HON'BLE DELHI HIGH COURT AGAINST THAT ORDER AND THE ASSESSEE WITHDRE W THE WRIT PETITION LATER ON. CONSEQUENTLY, ASSESSMENT PROCEEDINGS COMMENCED. THE ASSESSEE WAS ASKED TO PRODUCE THE DIRECTORS OF THE COMPANY WHO APPLIED FOR SHARE OF THE COMPANY. THE ASSESSEE SUBMITTED THAT SHARE CAPITAL HAS BEEN INTRODUCED 8 YEARS AGO AND DIRECTORS COULD NOT BE CONTACTED AND FURTHER THERE IS CHANGE IN THE DIRECTORS OF THE THOSE COMPANIES. THE LD AO ALSO ISSUED SUMMONS U/S 131 OF THE ACT TO THE COMPANY WHO APPLIED FOR SHARE CAPITAL IN THE ASSESSEE COMPANY. NONE APPEARED BEFORE HIM. THEREFOR E, THE LD AO ISSUED A SHOW CAUSE NOTICE STATING THAT THE ASSESSEE HAS NOT FILED THE BANK STATEMENT IN CASE OF OTHER COMPANIES. THE LD AO ASKED THE ASSESSEE TO PRODUCE THE RELEVANT INFORMATION WITH RESPECT TO IDENTITY, GENUINENESS OF THE SHARE CAPITAL. THE ASSESSEE WAS ALSO ASKED THAT WHY THE ADDITION OF RS. 30 LAKHS SHOULD NOT BE MADE IN THE HANDS OF THE COMPANY. BASED ON THIS THE LD AO ISSUED ANOTHER NOTICE ON 07.03.2016. IN THIS NOTICE THE LD AO MENTIONED THE COMPLETE DETAILS ABOUT THE INFORMATION AVAILAB LE ABOUT THOSE SHARE HOLDERS. THE LD AO FURTHER ISSUED THE LIST OF COMPANIES CONTROLLED BY MR. S.K. JAIN AND ALSO EVIDENCE IN THE FORM OF SEIZED MATERIAL SHOWING THE WORKING OF THE COMMISSION. THE LD AO DID NOT FILED ANY SUBMISSION WHICH COULD REBUT THE AN ALYSIS GIVEN BY THE LD AO. HENCE, THE LD AO MADE AND ADDITION OF RS. 30 LAKHS U/S 68 OF THE ACT AND FURTHER MADE AN ADDITION OF COMMISSION @1.8% OF RS. 54000/ - ON THE SAME. CONSEQUENTLY, ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED ON 22.03.2016. PRAKASHCHAND AUTOMOBILES PVT. LTD VS. ITO ITA NO. 518/DEL/2018 (ASSESSMENT YEAR: 2008 - 09) PAGE | 4 4. THE ASSES SEE AGGRIEVED WITH THE ORDER OF THE LD AO PREFERRED APPEAL BEFORE THE LD CIT(A). NONE APPEARED BEFORE THE LD CIT(A) AND THE LD CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE CONFIRMING THE ABOVE ADDITION STATING THAT THIS IS CLEAR CUT CASE OF NON PROSECUTION OF APPEAL AS THE ASSESSEE DID NOT APPEAR BEFORE THE LD CIT(A). SHE ALSO CONFIRMED THE ADDITION CONSEQUENTLY. THEREFORE, NOW IS IN APPEAL BEFORE US. 5. THE LD AR VEHEMENTLY SUBMITTED THAT AS NO NOTICE WAS SERVED TO THE ASSESSEE THEREFORE, THE ASSESSEE COULD N OT APPEAR BEFORE THE LD CIT(A). HE THEREFORE, SUBMITTED THAT AS THE ORDER OF THE LD CIT(A) IS NOT ON THE MERITS OF THE CASE AND FURTHER NO PROPER OPPORTUNITY WAS AVAILABLE AS MENTIONED IN PARA 2 OF THE ORDER OF THE LD CIT(A) THE CASE COULD NOT REPEATED BEF ORE HIM. HE FURTHER SUBMITTED THAT THERE IS CHANGE IN THE ADDRESS OF THE ASSESSEE AS STATED IN THE REVISED FORM NO. 36 FILED BEFORE US. EVEN OTHERWISE HE SUBMITTED THAT REOPENING IS BAD IN LAW AS IT HAS BEEN MADE ON THE BASIS OF INVESTIGATION WINGS REPORT . 6. THE LD DR VEHEMENTLY OBJECTED TO THE ARGUMENT OF THE LD AR AND SUBMITTED THAT NONE APPEARED BEFORE THE LD CIT(A) DESPITE MANY OPPORTUNITIES. HE SUBMITTED THAT ASSESSEE DID NOT APPEAR BEFORE THE LD CIT(A) OR NOR GAVE THE CORRECT ADDRESS. ON MERITS HE SUB MITTED THAT THE ASSESSEE HAS OBTAINED SHARE CAPITAL IN THE FORM OF ACCOMMODATION ENTRY FROM MR. S.K. JAIN AND SAME ARE NOT GENUINE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND NOTED THAT THE ASSESSEE HAS FILED REVISED FORM NO. 36 WHICH SHOWS TH E CORRECT ADDRESS NOW. THE ABOVE ADDRESS IS DIFFERENT FROM THE ORIGINAL ADDRESS SHOWN BY THE ASSESSEE IN FORM NO. 35. THE NOTICE WERE SENT BY THE LD CIT(A) AT THE OLD ADDRESS. WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD HAVE INTIMATED THE CHANGE OF ADDRESS TO THE LD CIT(A) BY FILING REVISED FORM NO. 35 WHICH THE ASSESSEE HAS ADMITTEDLY NOT DONE. FURTHER, WE NOTED THAT THE LD CIT(A) HAS DISPOSED OFF THE APPEAL STATING THAT THE ASSESSEE DOES NOT WANT TO PROSECUTE THE APPEAL. ACCORDING TO US THE LD CIT(A) DOE S NOT HAVE THE POWER TO DISPOSE OFF THE APPEAL OTHER THEN ON THE MERITS. IN PRAKASHCHAND AUTOMOBILES PVT. LTD VS. ITO ITA NO. 518/DEL/2018 (ASSESSMENT YEAR: 2008 - 09) PAGE | 5 VIEW OF THIS WE SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD CIT(A) WITH A DIRECTION TO DISPOSE OFF THE APPEAL ON MERITS. THE ASSESSEE IS ALSO DIRECTED TO MAKE ALL REPRESEN TATION BEFORE THE LD CIT(A). THE LD CIT(A) WILL CONSIDER THE SUBMISSION AND DECIDE THE ISSUE ON MERITS. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 0 2 / 11 / 2018 . - SD/ - - SD/ - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 2 / 11 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI