M/s. Light Carts Pvt. Ltd., Meerut V. ITO, Meerut

ITA 5346/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1835 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI
• Keywords: Period of limitation; Tangible material; Reason to believe
• Section: 143(3); 147; 68; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH D NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5346/DEL./2014 ASSTT. YEAR : 2005 - 06 LIGHT CARTS PVT. LTD., VS. INCOME - TAX OFFICER, CHANDER NAGAR, DELHI ROAD, WARD 1(4), MEERUT. MEERUT. [PAN: AAACL4037B]. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN, C.A. RESPONDENT BY : MS. RICHA RASTOGI, SR.DR DATE O F HEARING : 14.10.2015 DATE OF PRONOUNCEMENT : 10 .12.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21.08.2014 OF LD. CIT(A), MEERUT FOR THE ASSESSMENT YEAR 2005 - 06, CHALLENGING T HE SUSTENANCE OF RE - ASSESSMENT PROCEEDINGS INITIATED U/S. 147 OF THE IT ACT AND CONSEQUENTIAL ADDITION MADE BY AO. THE GROUNDS RAISED BY THE ASSESSEE ARE ARGUMENTATIVE, BUT ALL OF THEM ASSAIL THE VALIDITY OF RE - ASSESSMENT ORDER AND CONSEQUENTIAL ADDITION U/S. 68 OF THE ACT. ITA NO. 5346/DEL./2014 2 2. BRIEFLY STATED, THE RELEVANT FACTS ATTENDING TO THIS APPEAL, ARE THAT THE ORIGINAL ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 28.12.2007 AT AN INCOME OF RS.64,930/ - . SU B SEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM DIT(INV.) - II, NEW DELHI VIDE LETTER DATED 26.03.2012 , PRO CEEDINGS U/S. 147/148 WERE INITIATED BY ISSUING NOTICE U/S. 148 ON 27.03.2012 . ON THE BASIS OF ABOVE INFORMATION, THE AO RECORDED FOLLOWING REASONS FOR INITIATING PROCEEDINGS U/S. 147/148 : ON PERUSAL OF RECORDS SHOWS THAT THE ASSESSEE M/S. LIGHT CARTS PVT. LTD. ENTERED INTO A TRANSACTION AT RS.62 LACS WITH SH.SURENDRA KUMAR JAIN GROUP OF CASES ON WHICH SEARCH ACTION U/S. 132 OF THE IT ACT WAS CONDUCTED BY THE INVESTIGATION WING, NEW DELHI AND IT WAS ALSO CONVEYED BY THEDI(INV.) - II, NEW DELHI VIDE LETTER DT. 26.03.2012 THAT SH. SURENDRA KUMAR JAIN GOUP OF CASES IS ACCOMMODATION ENTRY OPERATOR & ONLY ACCOMMODATION ENTRY HAS BEEN PROVIDED TO M/S. LIGHT CARTS PVT. LTD. & NO ACTUAL TRANSACTION HAS TAKEN PLACE. AS THE AMOUNT IS CREDITED IN THE BOOKS OF A/CS O F M/S. LIGHT CARTS PVT. LTD., MEERUT AND THE COMPANY M/S. LIGHT CARTS PVT. LTD. HAS NO BUSINESS TRANSACTION WITH SH. SURENDRA KUMAR JAIN GROUP OF CASES BEFORE OR AFTER THE TRANSACTION TOOK PLACE AND NO INTEREST/DIVIDEND IS PAID TO SH. SURENDRA KUMAR JAIN. CONSIDERING THE REPORTED ACTIVITIES OF SH. SURENDRA KUMAR JAIN GROUP OF CASES & LOOKING TO THE FACTS OF THE CASE IT IS ESTABLISHED THAT INTRODUCTION OF AMOUNT AT RS.62 LAKHS IS UNACCOUNTED MONEY AND ROTATED THROUGH SH. S.K. JAIN GROUP OF NEW DELHI. I HAV E, THEREFORE, REASON TO BELIEVE THAT AMOUNT TO THE TUNE OF RS.62 LAKHS HAS ESCAPED ASSESSMENT IN THE HAND OF M/S. LIGHT CARTS PVT. LTD. MEERUT & REQUIRES TO BE REASSESSED ACCORDINGLY. 3. IN RESPONSE TO DETAILED QUESTIONNAIRE ISSUED BY THE AO, THE ASSESSEE ADMITTED TO HAVE RECEIVED AND ACCOUNTED FOR RS.48,00,000/ - AS SHARE CAPITAL ITA NO. 5346/DEL./2014 3 FOR ISSUANCE OF 960 EQUITY SHARES OF RS.1000/ - EACH AT A PREMIUM OF RS.9000/ - . THE SAID AMOUNT WAS RECEIVED AS 50% OF THE TOTAL AMOUNT AS CALLED UP MONEY. IT WAS ALSO EXPLAINED THAT REMAINING AMOUNT OF RS.14,00,000/ - DID NOT PERTAIN TO THE ASSESSEE AND HE DID NOT ADMIT ITS RECEIPTS FROM THE COMPANY, M/S. STELLER INVESTMENT LTD., THE SHARE APPLICANTS. DETAILED EXPL ANATIONS WERE ALSO FURNISHED BY THE ASSESSEE, BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SAME AND THEREFORE, MADE AN ADDITION OF RS.62 LAKHS U/S. 68 OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE VIDE ORDER DATED 22.03.2013 U/S. 143(3)/147 OF THE ACT. THE APPEAL FILED BY ASSESSEE AGAINST THIS RE - ASSESSMENT ORDER, WAS DISMISSED BY THE LD. CIT(A), HENCE, THIS APPEAL BY THE ASSESSEE BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL S AVAILABLE ON RECORD. 5. AT THE OUT SET, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE RE - ASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE ARE VOID AB INITI O AND ARE LIABLE TO BE QUASHED. IT WAS SUBMITTED THAT THE NOTICE U/S. 148 OF THE ACT FOR INITIATION OF PROCEEDINGS U/S. 147, WAS ISSUED ON 27.03.2012, WHICH IS BEYOND THE PERIOD OF LIMITATION OF FOUR YEARS. IT WAS ALSO SUBMITTED THAT ALL THE MATERIAL FACTS, NECESSARY FOR ASSESSMENT WERE PLACED BEFORE THE AO AT THE TIME ITA NO. 5346/DEL./2014 4 OF ORIGINAL ASSESSMENT PROCEEDINGS PERTAINING TO THE TRANSAC TION OF SHARE APPLICATION MONEY, WHICH STOOD ACCEPTED BY AO PASSING THE ORIGINAL ASSESSMENT ORDER. EVEN THE REASONS RECORDED NOWHERE MENTION THAT ANY INCOME CHARGEABLE TO TAX WAS ESCAPED FROM ASSESSMENT DUE TO FAILURE/OMISSION ON THE PART OF ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE, ON THIS LEGAL GROUND ITSELF, THE RE - ASSESSMENT PROCEEDINGS ARE LIABLE TO BE QUASHED BEING VOID AB INITIO IN VIEW OF PROVISO TO SECTION 147 OF THE ACT. RELIANCE IS PLACED ON THE SERIES OF DECISIONS OF HON BLE DELHI HIGH COURT AND OTHER HIGH COURTS, SOME OF WHICH ARE RENDERED IN THE FOLLOWING CASES : (I). CIT VS. VINIYAS FINANCE & INVESTMENT (P) LTD. 357 ITR 646(DEL.) (II) CIT VS. SUREN INTERNATIONAL (P) LTD., 357 ITR 24 (DEL.) (III). ATMA RAM PROPERTIES (P) LTD. VS. DCIT, 343 ITR 141 (DEL.) (IV). HARYANA ACRYLIC MANUFACTURING COMPANY VS. CIT, 308 ITR 38 (DEL.) (V). TITANOR COMPONENTS LTD. VS. ACIT, 343 ITR 183 (BOM) . ON THIS ISSUE, THE LD. DR RELIED UPON THE ORDER OF THE AU THORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD AND WE FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE. IT IS BORN OUT ON RECORD THAT I N THE INSTANT CASE, PROCEEDINGS U/S 147 OF THE ACT W ERE INITIATED BY THE L D. AO AFTER EXPIRY OF FOUR ITA NO. 5346/DEL./2014 5 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR , PERHAPS RESORTING TO THE PROVISO TO SECTION 147 OF THE ACT WHICH STIPULATES FOR AS UNDER: PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS A NY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR IN ORDER TO RESORT TO THIS PROVISO, THE ASSESSING OFFICER IS LEGALLY REQUIRED TO RECORD A SATISFACTION THAT A PARTICULAR INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. A PERUSAL OF THE REASONS RECORDED REVEALS THAT IN THE REASONS RECORDED, THERE IS NO WHISPER OF ANY ALLE GATION THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND THAT BECAUSE OF THIS FAILURE THERE HAS BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THEREFORE, IN OUR CONSIDERED OPINION, MERELY HAVING A RE ASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IS NOT SUFFICE TO REOPEN ASSESSMENT BEYOND THE STIPULATED PERIOD OF FOUR YEARS , UNLESS IT IS ALLEGED AND PROVED THAT A PARTICULAR INCOME HAS ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. . THEREFORE, LAYING OUR ITA NO. 5346/DEL./2014 6 HANDS ON CATENA OF DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE, MENTIONED ABOVE, THE RE - ASSESSMENT PROCEEDINGS INITIATED AFTER FOUR YEARS FROM THE END OF A SSESSMENT YEAR CANNOT BE SAID TO BE VALID. BESIDES, THERE IS NO REBUTTAL FROM THE SIDE OF REVENUE OF THE ASSESSEE S CONTENTION THAT THE SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY OF RS.48,00,000/ - RECEIVED FROM THE SHAREHOLDERS WAS DULY DISCLOSED IN TH E RETURN OF INCOME AND BOOKS OF ACCOUNT WHICH WERE DULY EXAMINED BY THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. THE BALANCE SHEET OF ASSESSEE PLACED BEFORE US AT PAGE 6 OF THE PAPER BOOK CLEARLY SHOWS THE RECEIPT OF RS.48,00,000/ - AS SHARE CAPIT AL MONEY FOR 960 EQUITY SHARES OF RS.1000/ - EACH RS. 500/ - PER SHARE CALLED AND PAID UP. THE ASSESSEE HAD SHOWN TOTAL R ECEIPTS IN ITS HANDS AT RS.51.30 LACS WHICH CONSISTS OF RS.48 LACS AS SHARE CAPITAL, RS.1.5 LACS AS RENT, RS.91,608 AS INTEREST AND RS. 86,215 AS SALE OF AGRICULTURAL PRODUCE, WHICH ALL STOOD ACCEPTED BY THE AO U/S. 143(3) OF THE ACT. THE LD. DR FAILED TO ADDUCE ANY TANGIBLE MATERIAL TO SHOW THAT A SUM OF RS.62 LACS REPRESENTED UNACCOUNTED MONEY ROTATED THROUGH SHRI SURENDER KUMAR JAIN GRO UP OF CASES . THEREFORE, MERE INFORMATION CONVEYED BY DIT DOES NOT CONSTITUTE TO BE A TANGIBLE MATERIAL TO RE - ASSESS THE ASSESSEE COMPANY WITHOUT ANY INDEPENDENT ENQUIRY OR APPLICATION OF MIND. IN PRESENCE OF ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINI ON THAT THE ACTION INITIATED AGAINST THE ASSESSEE U/S. 147 IS ITA NO. 5346/DEL./2014 7 NOT LEGAL LY VALID AND IS LIABLE TO BE QUASHED. ONCE, THE RE - ASSESSMENT PROCEEDINGS ARE HELD AS VOID ON THIS LEGAL ASPECT, WE NEED NOT TO ENTER INTO THE MERITS OF ADDITION MADE U/S. 68 OF THE ACT IN THE PRESENT CASE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.2015 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10.12.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. R EGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI