DCIT, New Delhi V. M/s. Shubham Chemicals & Sovents Ltd., New Delhi

ITA 5387/DEL/2015

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5890 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 31-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASPAL SINGH SETHI
• Assessee Lawyers: MITHUN SHETE
• Section: 147; 148; 10; 139; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No.5387 /DEL/2015 Assessment Year 2007-08 Deputy Commissioner of Income Tax, Circle-23(1), New Delhi. v. M/s. Shubham Chemicals & Sovents Ltd. GI-3, G.T. Karnal Road, Azadpur, New Delhi TAN/PAN: AAFCS2969C (Appellant) (Respondent) Appellant by: Shri Jaspal Singh Sethi, Adv. Respondent by: Shri Mithun Shete, Sr.D.R. Date of hearing: 14 03 2022 Date of pronouncement: 29 03 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The c apt io ne d ap p eal ha s be en f i le d at th e i ns ta nc e o f the Re ven ue a gai ns t t he or der of t he Co mmi s si on er of Inc o me Ta x (Ap pe al s) -V III , Ne w De lh i [ ‘CI T( A)’ in sh or t], dat ed 12. 06 .2 01 5 ari si ng f ro m t he a sse ss me nt or der da ted 31 .0 7. 20 14 p as sed b y th e As ses si ng Of f ic er, un de r Se cti on 1 4 3(3 ) r. w Se cti on 14 7 of th e Inc o me Ta x Ac t, 19 61 (t he A ct) c on ce r nin g A Y 2 00 7- 08 . 2. Bri ef l y s ta ted , th e ass es se e f iled ret ur n of inco me f or As ses s me nt Y ea r 2 00 7-0 8 o n 3 1. 10. 2 00 7 de cl ari ng to tal inc o me at Rs .6 5,3 5, 51 0/ -. T he c as e w as s el ect ed f or sc ru ti n y a n d t he ass es s men t w as c a rri ed ou t un de r S e cti on 14 3( 3) v ide ord er da ted 29. 12 .2 00 9. T he re a f ter, a n oti ce u nd e r Sec ti on 1 48 of t he Ac t wa s iss ue d on 28 .0 3. 20 14 see ki ng t o re o p en the co mp le ted a sse ss me nt . I.T.A. No. 5387/DEL/2015 2 The re as se ss me nt ord er wa s c on se qu ent l y f i na liz ed af t er mak in g add it io ns /d is all ow a nce s a mo un ti ng t o R s. 3, 54, 99 ,6 19/- ow in g t o une xp la in ed c as h c red it s. T he r ea ss es s ment or der was t hu s f ra me d det er mi ni ng t he re a sse ss ed i nc o me a t Rs .4, 27 ,5 7, 57 1/ -. 3. The as se ss ee c ha ll eng ed th e re as se ss me nt b ef or e th e C IT( A) on bo th c ou nt s, n a me l y, va li dit y of ju ri sd ict io n assu me d u nd er Sec ti on 14 8 of th e Act as wel l a s me ri ts of ad di ti on s s o ma de i n th e rea ss es s men t pr oce edi ng s. T he C IT (A ) f ound me ri t in t he ple a of the ass es se e o n j uri sd i cti on al def ec t a ll eg ed b y t he asse ss ee as wel l a s mer it s of t he ad dit i on. Th e C IT (A ) c o nse qu en tl y a llow ed the ap pe al of th e as ses se e on b oth c ou nt s. 4. Ag gri ev ed b y t he a f ores ai d o rd er of t he CI T( A) , t he Re ven ue has f i le d a ppe al be f ore t he Tri bu na l. The gr ou nd s of a p pea l r ai sed b y th e Re ve nu e r ea d a s un de r: “ 1 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e , t h e l d . C I T ( A ) h a s e r r e d i n h o l d i n g t h a t t h e A s s e s s i n g O f f ic e r h a s w r o n g l y a s s u m e d t h e j u r i s d i c t i o n o v e r t h e a s s e s s e e u n d e r S ec t i o n 1 4 8 o f t h e A c t . 2 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a se , t h e l d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e a d d i t i o n o f R s . 3 , 5 4 , 9 9 , 6 91 / - m a d e b y t h e A s s e s s i n g O f f i c e r u n d e r S e c t i o n 6 8 o f t h e I T A c t . ” 5. As n ot ed ea rli er , t he C IT (A ) h as gra nte d r eli ef bo th o n th e poi nt of ju ri sd ict i on as w el l as meri t. T he re le va nt op er at iv e par ag ra ph of t he C I T( A) is r epr od uc ed as un de r: 3 . I h a v e c o n s i d e r e d t h e a s s e s s m e n t o r d e r , w r i t t e n s u b m i s s i o n f i l e d b y t h e L d . A R o f t h e a p p e l l a n t a n d a l s o p e r u s e d t h e d o c u m e n t s p l a c e d i n t h e p a p e r b o o k . I n t h i s c a s e t h e r e g u l a r a s s e s s m e n t w a s c o m p l e t e d o n 2 9 - 1 2 - 2 0 0 9 u / s . 1 4 3 ( 3 ) . D u r i n g t h e o r ig i n a l I.T.A. No. 5387/DEL/2015 3 a s s e s s m e n t p r o c e e d i n g , L d . A s s e s s i n g O f f i c e r e n q u i re d t h e c o r r e c t n e s s o f G P d e c l a r e d b y t h e a p p e l l a n t . T o v e ri f y t h e c o r r e c t n e s s o f G P , t h e p u r c h a s e s a n d s a l e s w e r e e x am i n e d . F r o m t h e r e c o r d s i t a p p e a r s t h a t d e t a i l s o f t h e p a r t i e s w i t h w h o m t h e p u r c h a s e s a b o v e R s . 2 l a c s a n d t h e p a r t i e s t o w h o m sa l e s a b o v e R s , 5 0 l a c s m a d e w e r e f u r n i s h e d a n d e x a m i n e d . A f t e r e x a m i n a t i o n , L d , A s s e s s i n g O f f i c e r h a s g i v e n t h e f i n d i n g t h a t t he r e i s n o f a l l i n t h e G P a n d t h e t r a d i n g r e s u l t s a r e a c c e p t e d , o n p a ge 2 o f t h e o r i g i n a l a s s e s s m e n t o r d e r . L a t e r o n L d . A O r e c e i v e d t h e i n f o r m a t i o n f r o m t h e D D I ( I n v . ) - I , F a r i d a b a d t h a t M/ s S S B S a l e s C o r p o r a t i o n , M / s R K T r a d i n g C o . ( P r o p R a m K i s h a n ) , M / s G l o b a l T r a d i n g C o r p o r a t i o n a n d M / s N a t We s t T r a d e L i n k s ( pr o p . T a k e C h a n d S h a r m a ) c l a i m e d t o h a v e b e e n d o i n g b u s i n e s s . H o w e v e r , n o s u c h b u s i n e s s i s f o u n d e x i s t i n g a t t h e i r a d d r e s s e s . T h e s e c o n c e r n s a r e o p e r a t i n g 1 2 b a n k a c c o u n t s a n d i t a p p e a r s t h a t t h e y a r e i s s u i n g b o g u s b i l l i n g o f s t e e l . ; O n t h e b a s i s o f t hi s i n f o r m a t i o n , D D I T ( I n v . ) h a s a d v i s e d a s u n d e r ; " T h e A O i s a d v i s e d t o c h e c k t h e c o p y o f a c c o u n t o f a s s e s s e e w i t h a l l t h e s e f i r m s a n d e x a m i n e t h e m f r o m t h i s a n g l e t ha t t h e s e a r e i n t h e n a t u r e o f a c c o m m o d a t i o n e n t r i e s a n d t a k e n e ce s s a r y a c t i o n a s p e r p r o v i s i o n s o f I . T . A c t , 1 9 6 1 . C o p i e s o f b a n k a c c o u n t , s t a t e m e n t o f a s s e s s e s a r e h e r e b y e n c l o s e d .” F r o m t h i s i n f o r m a t i o n i t i s v e r y c l e a r t h a t t h e r e wa s n o d e f i n i t e i n f o r m a t i o n a b o u t t h e i s s u a n c e o f b o g u s e n t r i e s t o t h e a p p e l l a n t . T h e i n f o r m a t i o n w a s o n l y a s u s p i c i o n a n d L d . A s s e s si n g O f f i c e r w a s a d v i s e d t o m a k e p r o p e r e n q u i r i e s . Wi t h o u t m a k i ng a n y e n q u i r i e s , L d . A s s e s s i n g O f f i c e r t r e a t e d t h i s i n f o rm a t i o n a s a r e a s o n f o r r e o p e n i n g t h e c a s e u / s 1 4 7 o f t h e I T A c t, T h e r e l e v a n t l e t t e r o f t h e D D I T ( I n v . ) - I , F a r i d a b a d w a s r e p r o d u ce d o n p a g e 2 o f t h e a s s e s s m e n t o r d e r . I a g r e e w i t h t h e a r g u m e n t s o f t h e L d . A R o f t h e a p p e l l a n t t h a t t h e r e w a s n o m a t e r i a l o n r e c o r d t o s h o w t h a t a p p e l l a n t h a s n o t d i s c l o s e d f u l l y a n d t r u l y a l l m a te r i a l f a c t s i n t h e I.T.A. No. 5387/DEL/2015 4 r e t u r n f i l e d b y i t o r d u r i n g t h e o r i g i n a l a s s e s s m e nt p r o c e e d i n g s . B e f o r e r e o p e n i n g t h e c a s e , L d . A O h a s n o t e n q u i r e d t h e f a c t s w h i c h w a s c o m m u n i c a t e d b y t h e D D I T ( I n v . ) , F a r i d a b ad . F r o m t h e r e c o r d s i t i s a l s o c l e a r t h a t L d . A s s e s s i n g O f f i c e r h a s n o t s c r u t i n i z e d t h e o r i g i n a l r e c o r d s b e f o r e r e c o r d i n g th e r e a s o n s . F r o m t h e r e c o r d s i t i s c l e a r t h a t D D I T (I n v . ) h a s gi v e n i n f o r m a t i o n f o r t r a n s a c t i o n s w o r t h o f R s . 1 , 0 2 , 5 0 , 0 0 0 / - w h i c h i s a p p e a r i n g i n t h e H D F C B a n k A c c o u n t . H o w e v e r , t h e t o t a l t r a n s a c t io n w i t h t h e N a t We s t T r a d e L i n k s w a s t o t h e t u n e o f R s . 3 , 6 4 , 9 9 ,6 9 1 / - . O n t h i s a m o u n t o f s a l e s , a p p e l l a n t h a s n o t r e c e i v e d t h e a m ou n t o f R s . 1 0 l a c s w h i c h w a s o u t s t a n d i n g o n t h e l a s t d a y o f t h e fi n a n c i a l y e a r o f t h i s a s s e s s m e n t y e a r . T h i s i n f o r m a t i o n c l e a r l y i n d ic a t e s t h a t L d . A s s e s s i n g O f f i c e r h a s p r o c e e d e d o n t h e b a s i s o f l e tt e r r e c e i v e d f r o m t h e D D I T ( I n v . ) - I , F a r i d a b a d . S i n c e t h e s a l e s a n d p u r c h a s e s w e r e a l r e a d y i n v e s t i g a t e d d u r i n g t h e o r i g i n a l a s s e ss m e n t p r o c e e d i n g s , o n t h e b a s i s o f s a m e i n f o r m a t i o n , t h e a s s e s s m e n t c a n n o t b e r e o p e n e d a g a i n . R e s p e c t f u l l y f o l l o w i n g t he d e c i s i o n o f t h e H o n ' b l e S u p r e m e C o u r t i n t h e c a s e o f I T O v . L a xm i M e w a l D a s s r e p o r t e d i n 1 0 3 I T R 4 3 7 , I h o l d t h a t t h e i n f o rm a t i o n a v a i l a b l e w i t h t h e a s s e s s i n g o f f i c e r w a s a m e r e s u sp i c i o n . O n t h e b a s i s o f t h a t i n f o r m a t i o n , n o b e l i e f c a n b e f o r m e d . S i n c e t h e o r i g i n a l a s s e s s m e n t w a s c o m p l e t e d u / s 1 4 3 ( 3 ) a n d r eo p e n i n g w a s m a d e a f t e r 4 y e a r s , i t w a s n e c e s s a r y o n t h e p a r t o f t h e L d . A s s e s s i n g O f f i c e r t o s h o w t h a t t a x h a s e s c a p e d b y re a s o n s o f f a i l u r e o n t h e p a r t o f t h e a s s e s s e e t o m a k e a r e t u rn u / s 1 3 9 o r t o d i s c l o s e f u l l y a n d t r u l y a l l m a t e r i a l f a c t s n e c e s s ar y f o r t h e a s s e s s m e n t , f o r t h a t a s s e s s m e n t y e a r I n t h i s c a s e , t h e r e w a s n o f a i l u r e o n t h e p a r t o f t h e a p p e l l a n t . I n v i e w o f t he s e f a c t s , I f i n d t h a t L d . A s s e s s i n g O f f i c e r h a s w r o n g l y a s s u m e d t h e j u r i s d i c t i o n u / s 1 4 7 o f t h e I T A c t . I n v i e w o f t h e s e f a c t s , t h e g r o u n d s o f a p p e a l N o , 2 , 3 & 4 a r e a l l o w e d . ( i i ) R e g a r d i n g t h e m e r i t s , I h a v e c o n s i d e r e d t h e i ss u e . T h e s a l e s I.T.A. No. 5387/DEL/2015 5 a n d p u r c h a s e s w e r e v e r i f i e d a t t h e t i m e o f o r i g i n a l a s s e s s m e n t p r o c e e d i n g s a n d t r a d i n g r e s u l t s w e r e a c c e p t e d . T h e e x a c t t u r n o v e r s h o w n a g a i n s t M / s N a t We s t T r a d e L i n k s i s R s . 3 , 6 4 , 99 , 6 9 1 / - w h i c h i s d e c l a r e d i n t h e r e t u r n . A g a i n L d . A s s e s s i n g O f f ic e r h a s t r e a t e d t h a t t h i s s a l e s i s b o g u s a n d f u r t h e r a d d e d R s . 3 , 5 4 ,9 9 , 6 9 1 / - a s a n a m o u n t o f c h e q u e r e c e i v e d f r o m t h a t p a r t y u / s 6 8 o f t h e I T A c t . T h e L d . A s s e s s i n g O f f i c e r h a s m a d e t h e d o u b l e a d d i ti o n . O n e t i m e h e h a s a c c e p t e d t h e t u r n o v e r i n t h e t r a d i n g r e s u l t s a n d a g a i n a d d e d p a r t o f t h e t u r n o v e r e x c l u d i n g o n l y R s . 1 0 l a cs w h i c h w a s n o t r e c e i v e d b y t h e a p p e l l a n t a n d w a s r e f l e c t e d a s o u t s t a n d i n g f r o m M / s N a t We s t T r a d e L i n k s . A f t e r c o n s i d e r i n g t hi s i s s u e , I f i n d t h a t t h e a m o u n t c a n n o t b e a d d e d u / s 6 8 o f t h e I . T . A c t . I f t h e s a l e s i s b o g u s , t h e n t h e g o o d s w i l l r e f l e c t i n t h e c l o s i ng s t o c k . L d . A s s e s s i n g O f f i c e r w a s n o t a b l e t o p o i n t o u t a n y d i sc r e p a n c y i n t h e p u r c h a s e s . I f t h e p u r c h a s e s a r e a c c e p t e d a s c o r r e c t, h o w L d . A s s e s s i n g O f f i c e r c a n p r e s u m e t h a t t h e r e w a s n o s a le s . I n v i e w o f t h e s e f a c t s , I f i n d t h a t L d . A s s e s s i n g O f f i c e r h a s n o t a p p r e c i a t e d t h e f u l l f a c t s a n d w r o n g l y m a d e t h e a d d i t i o n o f R s .3 , 5 4 , 9 9 , 6 9 0 / - . I n v i e w o f t h e d i s c u s s i o n , t h e a d d i t i o n m a d e b y t h e L d . A s s e s s i n g O f f i c e r i s d e l e t e d . G r o u n d N o . 5 i s a l l o w e d . 4 . I n t h e r e s u l t , a p p e a l i s t r e a t e d a s a l l o w e d . ” 6. Si nce t he Re ven u e has cha ll en ge d the l ega l q ues ti on o n cor re ct nes s of us ur pat io n of jur is di ct i on b y th e Asses si n g Of f ice r t o reo pe n t he c o mpl e ted as se ss me nt i n the in st ant ca se, it wou ld be per ti ne nt to a dd re ss th e af ore sa id q ue st ion a t th e o ut se t. 7. W it h r ef er enc e t o j uri sd ic ti on is su e, L d. DR f o r t he Re ve nue , at t he o ut set , s ub mit te d t ha t t he A sse ss in g Of f icer h as rig ht l y ass u med ju ri sd ict io n to ma ke re as ses s me nt b y i ss ui ng no tic e u nd er Sec ti on 14 8 of the Act on t he ba sis of tan gi ble ma ter ia l/ i nf or mat io n rec ei ve d f ro m D ep ut y Di rec to r of In co me T ax ( In v.) -I , Far ida ba d I.T.A. No. 5387/DEL/2015 6 vid e let te r dat ed 0 7 .03 .2 01 4 ba se d o n t he ou tc o me of in qu iri es in t he mat te r of th e as se s see b as ed u po n t hr ee ST R No .1 00 00 1 44 77 da te d 20. 07 .2 01 0 in th e ca se of Gl ob al Tr ade C or po rat i on. It w as su b mitt ed th at t he Ass es si ng Of f icer act ed u po n s uch pri m a fa ci e inf or ma ti on r ec ei ve d f ro m ot he r wi ng of the De par t men t and he nc e suc h ac tio n wa s wi thi n th e a ut ho ri t y of la w. It w as th us su b mit te d tha t t he inf o r mat io n r ece iv ed we re re lev an t a nd ne ed n ot be pi n- poi nt a cc ur ate o r c o mple te i n al l re sp ect a t th e stage of iss ua nc e of not ic e. I t w as t hu s su b mitt ed th at t he CI T( A) mis dire cte d hi mse lf in law a nd o n f ac ts in wr on gl y h o ld in g t ha t the A ss es si ng Of f ice r lac ke d jur is di ct io n un der S ec ti on 1 47 of th e Ac t. 8. Per c on tr a, l d. c o un sel f or t he a ss e sse e su b mit te d th a t the As ses si ng Of f ic er had w ro ng l y a ss u med th e ju ris di ctio n f or mak in g rea ss es s men t b y i ss uin g n oti ce u nd er S ect io n 14 8 of the A ct wi th ou t aut ho ri t y of law . It was f u rt her su b mit ted th at o n t he f ac e of it, th e vit al in gre di en ts of Sec ti on 14 7/ 14 8 a re n ot f u lf ill ed in the in st an t cas e t o ena bl e t he As ses si ng Of f ice r t o e xer ci se juri sd ic t ion a nd to pro ce ed wi th r ea ss e ss me nt p ro ce edi n gs . Ld . c ou ns el f or th e as se ss ee f urth er s ub mi tt ed tha t t he a ss es s men t ha s b een re open ed w it ho ut mee ti ng th e re q uir e me nt s of 1 s t pr ov i so t o S ec ti on 14 7 of the Ac t. Ld. co un se l ne xt sub mi tt ed t ha t the as ses s me nt w as e arl ie r co mpl et ed u nd er S ect io n 14 3( 3) a nd t he n oti ce f or rea ss ess me nt has bee n i ss ue d af ter f o ur ye a rs f ro m t he e nd of th e r el ev ant As ses s me nt Yea r 2 00 7- 08 . T hu s, t he As se ss in g O f f icer w as e nt itle d to e xe rc ise jur is di ct io n u nd er Sec ti on 1 47 of t he Ac t on l y u po n f ul f ill men t of add it io na l c on di ti o ns i mpo se d un de r 1 s t p ro vi so to S ec t ion 1 47 of the A ct . It w as al le ged t ha t th e As se ss ing Of f icer ha d is s ued n ot ic e un der Sec ti on 14 7/ 14 8 of the Act wi tho ut me eti ng the ma nda to r y req ui re me nt s of 1 s t pro vi so t o Sec ti on 14 7 of the A ct . I t was f ur th er con te nd ed t hat o ri gin al a ss es s ment w as ma de af te r pr op er in qu ir y. I.T.A. No. 5387/DEL/2015 7 The L d. co un se l e s sen ti al l y re lie d up on it s a rg u ments ma de bef or e the C IT (A ) a s re cor ded i n the f ir st ap p ell at e o rd er an d th e pr oc es s of rea so ni ng ad op ted b y t he CI T( A) wh il e di sl od gi ng the as su mp tio n of jur is di ct io n u nd er Sec ti on 14 7 of t he Act . W e s ha ll de al w it h t he arg u men ts of t he ass es se e a t a p pro p ria te pl ac e i n the suc ce ed in g par ag ra ph s. 9. The le ga l i ss ue on val id it y of a ss u mpt ion of j uri sd ic ti on un der Sec ti on 1 47/ 14 8 o n t he co nt ou rs of f actu al ma tr ix is de alt w it h her eu nd er . 9.1 The rea so ns rec ord ed un der Se cti on 14 8(2 ) t o wards esc ap e men t of in co me gi vi ng t he c au s e f or i ss ua nce of n oti ce u nd er Sec ti on 1 48 (1 ) is t h e f ound at io n f or de ter mi na ti on of th e j uri sd ic ti on iss ue . Ac co rd in gl y, th e re as on s so re co rde d b y t he A ss es si ng Of f ice r rep ro du ce d her eu nd er: Re a so n s f o r r e o p e n i n g t h e a s se s sm e n t p r o c e e d i n g s i n t h e c a se o f M/ s S h u b h a m Ch e m i c a l s & S o l v e n t s L t d , f o r A. Y . 2 0 0 7- 0 8 u / s 1 4 8 o f t h e In c o m e T a x Ac t , 1 9 6 1 . D . D . I . T (I n v . )- I F a r i d a b a d v i d e l e t t e r d a t e d 0 7 / 0 3 /2 0 1 4 i s su e d t h o u g h F . No . D D I T / (I n v . )- I / F B D / 2 0 1 3 - 1 4 / 4 2 3 5 h a s i n fo rm e d a s u n d e r; “ A n i n f o r m a t i o n wa s r e c e i v e d f r o m F I U i n t h e S T R N o. 1 0 0 0 0 1 4 4 7 7 d a t e d 2 0 . 0 7 . 2 0 1 0 i n t h e c a s e o f G l o b a l Tra d e Co r p o ra t i o n h a v i n g P A N No . A S C L P S 3 5 9 3 J h a v i n g t w o A/ c 1 0 2 5 0 5 0 0 8 1 7 a n d 6 3 0 3 0 5 5 0 0 1 8 0 . I n t h e a c c o u n t f u n d s a re re c e i v e d b y c a sh d e p o si t s , R T G S a n d c l e a ri n g a n d d e b i t a rc mo s t l y b y c a s h wi t h d r a w a l d u ri n g E D D . C u st o m e r r e p o rt e d t o b e t r a de r o f st e e l p l a n t a n d l u b ri c a n t s. A l t h o u g h b u s i n e s s o f s t e e l p ro d u c t s i n v o l v e s ra r e c a s h u sa g e t h e v a l u e o f n o n - c a s h d e p o si t i o n a nd n a t u r e o f I.T.A. No. 5387/DEL/2015 8 t r a n sa c t i o n s i n c u r r e d a p p e a r t o b e u n u su a l i n re l a ti o n t o wh a t wo u l d b e e x p e c t e d f ro m n o r m a l a c t i v i t y o f t h e c u st om e r . S i m i l a r i n f o r m a t i o n wa s r e c e i v e d o n 2 0 . 0 4 . 2 0 1 1 i n th e S T R No . 1 0 0 0 0 3 0 1 6 4 d a t e d 2 0 . 0 4 . 2 0 1 1 . I n t h i s S T R a l so t h e fo l l o w i n g f i r m s a p p e a r e d . T h e i r d e t a i l s a r e a s u n d e r: - Sr. No. Name o f the Company Address A/c No. 1 Global Trade Corporation IC/70, Back side of Bata Petrol Pump, NIT, Faridabad 10250500817 630305500180 2. R. K. Trading IC/70, Back side of Bata Petrol Pump, NIT Faridabad 630305011259 3. SSB Sales Corporation IC/70, side of Bata Petrol Pump, NIT, Faridabad 630305011253 A s p e r S T R r e p o rt i n g S S B s a l e s C o rp o r a t i o n i s p r o p ri e t o r s h i p c o n c e r n a n d S h . R a m K i sh a n i s i t s p r o p ri e t o r . A n o t he r f i r m l i n k e d t o S h . R a m Ki sh a n i s M / s R . K. T r a d i n g C o . O n e n q u i r y i t h a s b e e n f o u n d t h a t a d d r e ss o f I - C/ 7 0, N H - 1 , i s l o c a t e d b e h i n d B a t a P e t ro l p u m p i n t h e st r e e t a d j o in i n g I n d i a n O v e rs e a s B a n k , m a i n m a rk e t p f NM - 1 (B a c k si d e ) a n d th e p r e m i s e i s b e i n g u s e d b y S h . B a r e n d e r M a n o e h a f o r h i s b u si n e s s o f sc r e e n p r i n t i n g i n t h e n a m e a n d st y l e M / s I n t e r I n d i a i . e . t h e se c o n c e r n s a r e n o t d o i n g a n y b u si n e s s a t t h e g i v e n a d d r e s s. A s p e r F 1 U - I ND re p o rt i n g r e c e i v e d v i d e a b o v e S T R t h e f i rm M / s S S B S a l e s Co r p o ra t i o n , M / s R . K . T r a d i n g Co . , (P ro p . R a m Ki sh an ) a n d M / s G l o b a l T ra d e C o r p o r a t i o n , M / s Na t w e st T a rd e L i n k s (P r o p . T e k Ch a n d S h a r m a ) c l a i m e d t o h a v e b e e n d o i n g b u si n e s s. H o w e v e r, n o su c h b u s i n e s s i s f o u n d e x i st i n g a t t h i s a d d r e s s. T he se c o n c e rn s a re o p e r a t i n g 1 2 b a n k s a c c o u n t s i n d i f f e r e n t b a n k s o f Fa ri d a b a d a n d D e l h i . I t a p p e a r s t o b e c a s e o f b o g u s b i l l i n g o f S te e l . I.T.A. No. 5387/DEL/2015 9 T h e a s s e s s e e wa s a s k e d t o f u rn i sh t h e r e q u i si t e i n fo rm a t i o n , b u t n o re s p o n s e wa s re c e i v e d f r o m t h e a ss e s s e e a t t h e ab o v e a d d r e ss e s a s t h e s e a re m e re l y p a p e r c o m p a n i e s. L e t t e r s we r e is su e d t o t h e b r a n c h m a n a g e r o f v a ri o u s b a n k s . B a n k st a t e m e n t s wer e re c e i v e d a n d p l a c e d o n re c o rd . I n h i s b u s i n e ss o f p ro v i d i n g a c c o m m o d a t i o n e n t ri e s, M / s. G l o b a l T r a d e Co r p o r a t i o n h a s b e n e f i t ed m a n y c o m p a n i e s/ e n t i t i e s a n d t h u s h e l p e d i n e v a si o n o f t ax e s i n m a n y c a se s . O n g o i n g t h r o u g h t h e b a n k s t a t e m e n t i t i s f o u n d t h at o n e o f t h e b e n e f i c i a ry o f a c c o m m o d a t i o n e n t ri e s g i v e n b y t h e ab o v e m e n t i o n e d c o n c e r n s i . e . S h u b h a m Ch e m i c a l s a n d S o l v e n t s a n d S il v e r T u l i p B u i l d w e l l P v t . L t d . l i e i n y o u r j u r i s d i c t i o n . C o p y o f b a n d s t a t e m e n t i s b e i n g e n c l o se d f o r y o u r p e r u s a l . I t i s c l e a r t h at y o u r a s s e s s e e h a s t a k e n a c c o m m o d a t i o n e n t ri e s a n d e v a d e d t a x . T h e e sti m a t e d a m o u n t i s R s . 1 . 0 7 c ro re s i n b o t h t h e c a se s f o r F . Y . 2 0 0 6 -0 7 . S o , t h e A O i s a d v i s e d t o c h e c k t h e c o p y o f a c c o u n t o f a s s e s s e s wi t h a l l t h e s e f i rm s a n d e x a m i n e t h e m f r o m t h i s a n gl e t h a t t h e se a r e i n t h e n a t u r e o f a c c o m m o d a t i o n e n t ri e s a n d t a k e n e ce s sa r y a c t i o n a s p e r p r o v i s i o n s o f I n c o m e T a x A c t , 1 9 6 1 . Co p i e s o f ba n k a c c o u n t st a t e m e n t o f a s se s s e e a r e h e rb y e n c l o se d . A s p e r t h e e n c l o se d c o p y b a n k s t a t e m e n t , t h o u g h w h ic h e n t ri e s h a v e b e e n t a k e n b y M / s S h u b h a m Ch e m i c a l s a n d S o l v e nt s P v t . L t d . re f l e c t e d i n t h e b a n k s t a t e m e n t o f Ne t w e st T ra d e L in k s A c c o u n t No . 0 4 8 3 2 3 2 0 0 0 0 0 8 8 o f H D F C B a n k L t d . d u r i n g t h e F . Y . 2 0 0 6 - 0 7 re l e v a n t t o A . Y . 2 0 0 7 - 0 8 i s a s u n d e r, D a t e d P a r t i c u l a r s C h e q u e A c c e p t e d 0 5 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0 . 0 0 1 7 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 4 0 0 , 0 0 0. 0 0 1 7 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 1 8 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 I.T.A. No. 5387/DEL/2015 10 1 9 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 2 2 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 2 3 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 2 4 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 3 0 0 , 0 0 0. 0 0 2 5 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 3 5 0 , 0 0 0. 0 0 2 5 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 6 5 0 , 0 0 0. 0 0 2 7 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 4 5 0 , 0 0 0. 0 0 3 1 . 0 1 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 0 5 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 4 0 0 , 0 0 0. 0 0 0 5 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 4 0 0 , 0 0 0. 0 0 0 6 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 4 0 0 , 0 0 0. 0 0 0 7 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 0 8 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 4 0 0 , 0 0 0. 0 0 0 9 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 6 0 0 , 0 0 0. 0 0 1 2 . 0 2 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 5 0 0 , 0 0 0. 0 0 2 6 . 0 3 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 6 0 0 , 0 0 0. 0 0 2 6 . 0 3 . 2 0 0 7 S h u b h a m C h e m c i a l s a n d S o l v e n t s L t d . 8 0 0 , 0 0 0 . 0 0 T o t a l 1 , 0 2 , 5 0 , 0 0 0 . 0 0 L o o k i n g t o t h e F r e q u e n c y a n d p a t t e r n o f t ra n sf e r s fro m t h e a b o v e a c c o u n t , I h a v e r e a s o n t o b e l i e v e t h a t a su m a g g r e g a t e o f R s . 1 , 0 2 , 5 0 , 0 0 0 h a s b e e n a c c e p t e d b y M / s S h u b h a m c h e m i ca l s a n d S o l v e n t s L t d . , a s a c c o m m o d a t i o n e n t ri e s . I t i s se e n t h a t sc ru t i n y a s s e ss m e n t u / s 1 4 3 ( 3 ) w a s c o m p l e t e d i n t h i s c a s e f or A Y 2 0 0 7 - 0 8 o n 2 9 . 1 2 . 2 0 0 9 . A l t h o u g h t h e a s s e s s e e h a d f u r n i sh e d t h e d e t a i l s re l a t i n g t o i n t ro d u c t i o n o f s h a re c a p i t a l , s h a r e p r e m i u m , s ha r e a p p l i c a t i o n m o n e y o r/ a n d u n s e c u re d l o a n s b u t t h e d e t a i l s f u r n i sh e d b y t h e a s s e ss e e i n t h i s re g a rd w e re n o t c o m p l e t e & s u f f i c ie n t e n o u g h t o c o n c l u d e t h a t t h e se r e c e i p t s we r e t a k e n b y wa y o f ac c o m m o d a t i o n e n t ri e s. T h e t r u e n a t u r e o f t r a n sa c t i o n s i n t h i s r eg a r d h a s b e e n re v e a l e d o n l y a f t e r t h e f i n d i n g s o f t h e d o c u m e n t s co m p r i si n g t h e n e w i n f o r m a t i o n w h i c h p o i n t s t o e sc a p e m e n t o f i n c o me i n t h e I.T.A. No. 5387/DEL/2015 11 re l e v a n t a s se s sm e n t y e a r . I n v i e w o f t h e a b o v e d i s c u s s e d f a c t s a n d t h e sp e c i fi c i n f o rm a t i o n a s m e n t i o n e d a b o v e , 1 h a v e re a so n s t o b e l i e v e t h a t i n c o m e o f R s. 1 , 0 2 , 5 0 , 0 0 0 / - w h i c h sh o u l d h a v e b e e n c h a rg e a b l e t o t a x h a s e s c a p e d a s s e ss m e n t f o r A Y 2 0 0 7 - 0 8 . I s su e No t i c e u / s . 1 4 8 o f t h e I n c o m e T a x A c t , 1 9 6 1 . No t i c e u / s. 1 4 8 i s b e i n g i s su e d a f t e r req u i s i t e a p p r o v a l o f Co m m i ss i o n e r o f I n c o m e T a x / A d d l . Co m m i s si o n e r o f I nc o m e T a x a s p e r t h e p r o v i s i o n s o f S e c t i o n 1 5 1 o f I T A c t . 9.2 Bef or e we lo ok in t o r eas on s so re co rd ed, it w ill b e p er ti n ent to not ic e t hat th e in s tan t c ase pe rt ain s to A ss es s men t Y ea r 20 07 -0 8 wh ere t he a ss es s me nt o rde r w as e arl ie r f ra med un de r Se ct ion 14 3( 3) vid e o rd er d at ed 29 t h D ece mb er , 2 00 9. He nce , t he e mb ar go pla ce d b y the f i rs t p ro vi so t o er st wh il e p ro vi s ion s of Se cti on 1 47 is al so app li ca bl e in ad dit i on t o mai n pr ov is i on of S ec tio n 1 47 of the Act . On a b ar e re ad in g of the r ea so ns rec or de d an d th e inf or ma ti on rec ei ve d b y t he A s ses si ng Of f icer a s rep ro du ce d in t he ass es s men t ord er , i t is o ste ns ib le th at th e inf or ma t ion s o pr ov ide d b y th e DD IT (In v. ) g oes to sh ow t ha t ce rt ai n t ran sa ct io ns t hr oug h ba nk in g cha nn el ha s b ee n car ri ed ou t b y t he ass es se e w it h Gl oba l T ra de Co rp ora ti on , R. K. Tra di ng, SS B S a les Co rp ora ti on a nd N at we st Tra di ng L in ks . N ot ice ab l y, th e inf or m ati on s up pl ie d b y t he D DI T is mer el y a dv is or y i n na tu re w he re b y the As se ssi ng O f ficer wa s adv is ed t o che ck t he co p y of acc ou nt of t he a sse ss ee w i th al l the se f ir ms an d e xa mi ne the m f ro m an an gl e as to wh et he r t he ent ri es ar e in t he n at ure of acco mmo d ati on ent ri es w it h su ch p ar tie s an d ch ec k nec es sa r y act io n a s a co ns eq ue nc e th er eof . I n a se nse , t he As ses si ng Of f icer w as a dv is ed t o ma ke p ro pe r in qu iri es i nt o such hu ge l y sus pi ci ou s en tr ies . How ev er, t he A ss ess in g Of f icer i n r esp on se t o suc h i nf or ma ti on d ate d 0 7. 03 .2 01 4 i ss ued no ti ce un der S ect io n 1 48 I.T.A. No. 5387/DEL/2015 12 on 2 8. 03 .2 01 4 w it ho ut a n y int er mi tt ent in qu ir y to as c ert ai n th e pro pr ie t y of f acts e me rg in g f ro m s uch inf o r mat io n and t o ma ke pri m a fa cie op in io n of esc ap e men t o f charg ea bl e in co me o n s uch pur po rt ed l y s us pic i ou s t ra ns act io ns . 9.3 In th is ba ck dr op , wh ere a n i nq ui r y was w ar ra nted as per t he inf or ma ti on rec ei v ed f ro m t he ot he r wi ng, th e A ss ess ing Of f ice r cou ld n ot ha ve i ps o fa ct o hol d th e ‘re a so ns to b eli ev e’ c o nte mp la te d un der Se ct io n 1 47 of the A ct wi th out co min g to so me def ini te pr im a fac ie f in di ng to wa rds e sc ap e men t in dep en de nt l y. Th e inf or mat io n f ro m t he DD IT (In v .) t o t he A ss es si ng Of f icer wh ich is f u l cru m f ro m hol di ng ‘ re as on to bel ie ve ’, la ck ed c o nvi ct io n an d is in t he re al m of sus pi ci on al on e a n d t hu s c ou ld n ot h ave be en a ut o mati cal l y ac te d up on f or dr as ti c ac tio n u nd er Se ct io n 14 7 w ith o ut asc er tai ni ng th e f acts . T he A ss es si ng Of f icer a pp are ntl y h a s p ro ce ede d o n do tte d lin es ba se d on un c orr ob or at ed in qu ir y f ro m th e D DI T (I nv. ). S uch act io n of t he As se ssi ng Of f ice r d oes not co mp l y th e j u ris di ct io nal par a met er, i .e. , r ea so n t o b el ie ve co nt e mpla te d i n th e mai n p ro vi si on of Sec ti on 14 7 of t he A ct . T he As se ss ing Of f icer has p ro cee de d t o rec or d r eas on s o n h yp ot he si s v is ua liz ed b y t he DD IT (I n v.) to wa rd s exi st en ce of a cco mmo d at io n e nt ri es wi th ou t ma ki ng an y ef f ort to dis cu ss a n y mat er i al ex ce pt f or re pr od uct io n of the i n ves ti ga ti on rep or t at t he st ag e of invo ki ng j ur isd ic ti on u nd er S e cti on 1 47 . Par ad ox ic al l y, t he inf or ma ti on d is se m ina te d to A ss es si ng Of f icer is cor re ct or ot her w ise is no t k no w n t o e ven s up pli er of t he inf or ma ti on wi th c ert ai nt y an d a n i n qui r y on th e f act s ava il ab le, wer e su gg es te d t o t he us er of i nf or ma t ion . 9.4 Nee dl es s to sa y, th e e xp re ss io n ‘re as on to b el iev e’ is f unda me nt al a nd pr e-e mi ne nt pre mi se of jur is dic ti on an d thu s c an no t be b yp a ss ed . T he inf or ma ti on pr ov id ed b y t he DD IT does i nv ok e I.T.A. No. 5387/DEL/2015 13 rea so n t o su spe ct a nd di sq uie t. Ne ve rt hel es s, wh er e t he i nf or mat io n is pl ag ue d b y d ou bt an d su sp ic io n, it w as in cu mb en t up on As ses si ng Of f icer t o co nd uc t so me min i mu m inq uir y po st t he rece ip t of inf or ma ti on t o c o me to an y as se rt ive b eli ef adv er se t o A s ses se e. The As ses si ng Of f ice r, in str uc te d i n l aw , c oul d no t h ave f or me d t he ‘re as on t o be li ev e’ of es cap e men t in th e ab se nc e of cred ib le inf or ma ti on . T he “ bel ief ” i n t he i ns ta nt c as e is mere l y a sha do w i n the ab se nce of su ch e le me nta r y in q uir y. Th e f or mat io n of be lief bas ed on u nv ou che d i nf or mat io n t hu s can no t be dee med to be le git un der the cir cu m sta nc es a nd co ns equ en tl y, t he a ss u mpti on of jur is di ct io n can no t be re gar de d as a well co nsi de red exe rc is e of po wer s i n te r ms of mai n pr ov is io n of Sec ti on 1 47 of th e Ac t. T he abs tr ac t b el ief of As ses si ng Of f ic er, in ou r vi ew , has b een r ig ht l y str uc k d ow n b y th e CI T( A). H enc e, w e de cl in e t o i nterf e re wit h t he act io n of th e C IT ( A) i n h ol di ng suc h not ic e u nd er Sec ti o n 14 8 t o b e no nes t on t he co nt o urs of Se cti on 1 47 of th e Ac t. 9.5 Del in ea ti ng f ur th er , we n o w ad ve rt t o th e re qu ir e men t of 1 s t pro vi so to Se cti on 147 of the Ac t. The in st ant ca se has be en reo pe ne d af ter f ou r ye a rs f ro m th e e nd of the r el evant ass es s men t ye a r wh ere t he as s ess me nt w as ea rl ie r f ra med u nd er Se c tio n 14 3( 3) of the A ct . C on se que nt l y, th e re as o ns s o re co rd ed mu st p as s th e exa mp l y b ur de n p l ace d up on As se ss in g Of f ice r b y th e 1 s t pr ov is o t o Sec ti on 1 47 of th e Ac t i n a dd it io n t o t he co nd it io n s ti pul at ed in mai n pr ov isi on s of Se ct io n 1 47 of t h e A ct. T he in stan t cas e b ei ng cov er ed b y 1 s t pr ov iso to Se cti o n 14 7 cou ld be reo pe ne d onl y w he n twi n co nd iti on s c o -ex is t n a mel y, (i ) th e A ss es si ng Of f icer ho ld s rea so ns to be li ev e ab out th e e sc ap e me nt of cha rg ea bl e in co me (wh ic h is n ot f ou n d to be s at isf i ed a s del ib er ate d in t h e pre ce di ng par ag ra ph ); ( ii) th e esc ape me nt is d ue to f ail ur e on the par t of th e ass es se e to di sc lo s e f ull y an d t rul y a ll mat eri al fac ts . A s a l ogi ca l I.T.A. No. 5387/DEL/2015 14 cor ol la r y, t he b ur d en is o n t he A ss es sin g Of f icer to f or m a p ri ma fac ie op in io n t ha t the co nd it io ns e mb edd ed in f irs t pr oviso i s a ls o f ound sc ru pu lo us l y s ati sf ie d w he n the sa me is ch al leng ed . T he all eg at io n of th e As ses si ng Of f icer on t he f a ilu re of ass es se e i s the ref o re a f ir st st ep to en ab le to t h e A ss es si ng Of f ice r t o i nv ok e pro vi so . No ti ci abl y, the r ea so n rec or ded b y th e As se ss i ng Of f ice r doe s n ot e ven a ll e ge an y s uch f ai lu r e in ex pr es s ter ms . It is not kn ow n wh at f ac t gi vin g p erc ep ti on of acc o mmo da ti on e nt rie s ha s no t bee n f ul l y di sc lo se d. I t i s f ur th er no t kn ow n a s t o w hi ch f act h as no t bee n t ru l y d is cl os e d wh ic h t he A ss es see wa s f oun d pri v y t o. Th e As ses si ng Of f ice r a ppe ar s t o h av e d ra wn ad ver se infe ren ce w hi ch is not i nte ll ig ib le i n t he ab se nce of an y b as ic in qu i ry on th e inf or ma ti on in t he pec ul ia r f act s of th e pr es en t case . T h e st ri ng ent con di ti on s of 1 s t pr ovi so to S ec ti on 1 4 7 is t hu s n ot s at isf i ed. He nce see n f ro m an y a n gl e, we do n ot se e an y e rr or pe r se in th e p ro ces s of rea so ni ng a do pt ed b y t he C IT (A ) to u ph old the ple a of the as se ss ee to war ds l ac k of ju ri sdi ct io n. 10. He nce , Gr ou nd n o. 1 of th e a pp ea l of Re ven ue i s di s mis s ed. 11. As q uo te d in th e pre ce di ng p ar ag ra p h, t he C IT (A) h as als o f ound to tal lac k of mer it i n t he i mp ug ned ad dit io ns. T he CI T( A) h as ob ser ve d t ha t the t ran sa ct io ns wi th N atw es t Tra de Lin k to th e t un e of Rs. 3,5 4, 99 ,6 91 / - wer e of f ere d a s par t of the t urno ver /s al e, wh ere as th e a dd it i on ha s b ee n mad e un de r S ec tio n 68 of th e A ct wit ho ut r ed uci ng the c orr es po nd in g sa le s. Su ch a n act of t he As ses si ng Of f icer t ant a mou nt t o d ou bl e ad dit io n; one un d er th e h ead ‘tu rn ov er ’ an d o th er u nd er S ec ti on 6 8 of the Ac t. Suc h cou rs e of act io n i s ma nif e stl y u ns us ta in abl e an d c an no t b e coun t ena nc ed in law . W i th ou t r ei ter ati ng ea ch o bs er va tio ns of t he CIT( A ), we f i nd so un d rat io na le i n the d isc ou rs e ad opt ed b y t he f irs t appe al o n I.T.A. No. 5387/DEL/2015 15 mer it s in f a vo ur of th e as ses se e b y th e C IT (A ). W e t hu s de cl in e t o int erf er e. 12. He nce , Gr ou nd n o. 2 of ap pe al of t he Re ven ue i s di s mis s ed. 13. In th e res ul t, t he ap pea l of th e Re ve nu e is d ismi ss ed . Order pronounced in the open Court on 29/03/2022. Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29/03/2022 Prabhat