Appeal Details
Counselvise Citation
550920114 RSA 2012
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 7 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-06-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
E
Next Hearing Date
24-03-2015
Assessment Year
2003-2004
Appeal Filed On
01-11-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SH. G. C. GUPTA , VICE PRESIDENT AND SH. N. K. SAINI, AM ITA NO. 5509/DEL/2012 : ASSTT. YEAR : 2003 - 04 M/S MINDA INDUSTRIES LTD. B064/1, WAZIRPUR INDUSTRIAL AREA , DELHI - 110052 VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 6(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA A CM1152C ASSESSEE BY : SH. PRADEEP DINODIA & R.K. KAPOOR, CAS REVENUE BY : SH. P. DAM KANUNJN A , SR. DR DATE OF HEARING : 2 4 .0 3 .2015 DATE OF PRONOUNCEMENT : 19 .06 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 25.07.2012 OF LD. CIT(A) - IX, NEW DELHI. 2 . F OLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : GENERAL 1. 0 THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) - IX, NEW DELHI HAS ERRED IN UPHOLDING THE REASSESSMENT ORDER DATED 26 TH NOVEMBER 2010 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIR CLE - 6(1), NEW DELHI UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ( THE ACT ) ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 2 REOPENING OF ASSESSMENT IS BAD IN LAW 2.0 THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE IN U PHOLDING THE ACTION OF THE AO FOR REOPENING THE ASSESSMENT U/S 147/148 OF THE INCOME TAX ACT. THE ASSESSMENT ORDER PASSED U/S 143(3)/147 IS BAD IN LAW. 3.0 THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REJECTING THE CONTENTIONS OF THE APPELLANT THA T AO S JURISDICTION U/S 147 WITHOUT RECORDING THE VALID REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT & WITHOUT COMPLYING THE MANDATORY REQUIREMENTS IN REGARD TO SECTION 147/148 OF THE INCOME TAX ACT. 4 . 0 THAT THE REOPENING U/S 147 BEYOND 4 YEARS IS BAD IN LAW ESPECIALLY WHEN ORIGINAL ASSESSMENT WAS MADE U/S 143(3) AND THE TRANSACTIONS OF LOANS WERE QUERIED AND ANSWERED. THE REASSESSMENT IS BASED ON CHANGE OF OPINION & IS BAD IN LAW. 5.0 THE REOPENING U/S 147 WAS BASED ON HEARSAY, SURMISES & ASSUM PTIONS & AO HAD NO MATERIAL TO FORM AN INDEPENDENT VIEW ABOUT THE ALLEGED ESCAPEMENT OF INCOME. 6 . 0 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW IN REJECTING THE APPELLANT S CONTENTIONS THAT THE AMOUNT OF RS. 25,00,000/ - HAS BEEN RECEIVED ON ACCOUNT O F LOANS/ICD S FROM THE PARTIES AND THE SAME HAD BEEN REPAID ALONG WITH INTEREST IN SUBSEQUENT YEARS. ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 3 7.0 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE IN UPHOLDING THE DISALLOWANCE OF RS. 25, 00,000/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 68 OF THE INCOME TAX ACT ON CONJECTURES AND SURMISES. 8.0 THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE APPELLANT S CASE IN HOLDING THAT THE AMOUNT OF RS. 25,00,000/ - ON ACCOUNT OF UNEXP LAINED INVESTMENT U/S 68 IS ERRONEOUS, UNTENABLE AND IS PRAYED TO BE QUASHED. 9.0 THE LD. CIT(A) RELIANCE ON THE JUDGMENT OF M/S NOVA PROMOTERS (342 ITR 169) & (BEUTEX INDIA PVT. LTD. VS CIT IN ITA NO. 465 OF 2011) IS COMPLETELY ERRONEOUS, UNJUSTIFIED AND OUT OF CONTEXT AS MUCH AS IN THOSE CASE SHARE APPLICATION MONEY WAS INVOLVED WHEREAS IN THE CASE OF THE APPELLANT ADMITTEDLY THAT THESE WERE LOANS TRANSACTION WHICH HAD BEEN PAID SUBSEQUENTLY. 10.0 THAT THE LD. CIT(A) ERRED IN LAW IN HOLDING THAT THE APP ELLANT FAILED TO JUSTIFY THE LOAN TRANSACTIONS WHICH WERE UNDERTAKEN FOR ITS BONAFIDE AND BUSINESS NEEDS. 11.0 THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT WERE NOT ATTRACTED ON THE FACTS OF THE APPELLANTS CAS E. 12.0 THAT THE ORDER PASSED BY THE CIT(A)/AO IS BAD IN LAW. ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 4 13.0 THAT EACH GROUND IS INDEPENDENT OF AND WITHOUT PREJUDICE TO THE OTHER GROUNDS RAISED HEREIN. 3. GROUND NOS. 2 TO 5 ARE LEGAL GROUND WHICH RELATES TO THE REOPENING OF THE ASSESSMENT U/S 1 47 R.W.S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). AT THE FIRST INSTANCE THE AFORESAID LEGAL GROUND S WERE ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. 4. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE FURNISHED THE RETURN OF INCOME ON 28.11.2003 DECLARING AN INCOME OF RS. 4,17,61,259/ - . THE ASSESSMENT HOWEVER WAS FRAMED ON 30.03.2006 U/S 143(3) OF THE ACT AT AN INCOME OF RS. 4,28,28,277/ - . AGAINST THE SAID ORDER, T HE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE RELIEF AND THEREAFTER THE AO BY GIVING EFFECT TO THE APPELLATE ORDER ASSESSED THE INCOME BY PASSING THE ORDER U/S 250 OF THE ACT AT RS. 4,28,28,277/ - ON 21.07.2010. IN THE MEAN TIME THE ASSESSEE RECORDED THE REASON FOR REOPENING THE ASSESSMENT AND ISSUED THE NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON 29.0 3 .2010 . THE AO RECORDED THE FOLLOWING REASONS FOR REOPENING THE ASSESSMENT: ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE I T ACT, 1961, AT RS. 4,28,28,277, AS AGAINST R ETURNED INCOME OF RS. 4,17,61,259. INVESTIGATIONS WERE CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT ON CERTAIN PERSONS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO BENEFICIARIES OF THEIR SERVICES, IN ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 5 RETURN OF COMMISSION. IT HAS BEEN REVEALED TH AT MANY PERSONS WERE USING SERVICES OF ACCOMMODATION ENTRY OPERATORS TO CHANNELIZE THEIR OWN UNACCOUNTED MONEY IN THEIR REGULAR BOOKS OF ACCOUNTS BY ROUTING THE SAME THROUGH THE ACCOUNTS OF ACCOMMODATION ENTRY PROVIDERS. 2. THE MODUS OPERANDI OF THESE ENT RY PROVIDERS AND BENEFICIARIES OF THEIR SERVICES, WAS DETECTED AS UNDER: 2.1 ENTRIES WERE BEING BROADLY TAKEN FOR TWO PURPOSES: A) TO PLOUGH BACK UNACCOUNTED BLACK MONEY FOR THE PURPOSE OF BUSINESS OR FOR PERSONAL NEEDS SUCH AS PURCHASE OF ASSETS ETC., I N THE FORM OF GIFTS, SHARE APPLICATION MONEY, LOANS ETC. B) TO INFLATE EXPENSES IN THE TRADING AND PROFIT AND LOSS ACCOUNT SO AS TO REDUCE THE REAL PROFITS AND THEREBY PAY LESS TAXES. 2.2 THE ASSESSEES WHO HAD UNACCOUNTED MONEY (CALLED AS ENTRY TAKERS OR BENEFICIARIES) AND WANTED TO INTRODUCE THE SAME IN THE BOOKS OF ACCOUNTS WITHOUT PAYING TAX, APPROACHED ANOTHER PERSON (CALLED AS ENTRY OPERATOR) AND HANDED OVER THE CASH (PLUS COMMISSION) AND HAD TAKEN CHEQUES/DDS/POS. THE CASH WAS BEING DEPOSITED BY THE ENTRY OPERATOR IN A BANK ACCOUNT EITHER IN HIS OWN NAME OR IN THE NAME OF RELATIVE/FRIENDS OR OTHER PERSON HIRED BY HIM, FOR THE PURPOSE OF OPENING BANK ACCOUNT. IN MOST OF THESE BANK ACCOUNTS THE INTRODUCER WAS THE MAIN ENTRY OPERATOR AND THE CASH DEPOSI T SLIPS AND OTHER INSTRUMENTS WERE FILLED BY HIM. THE OTHER PERSONS (IN WHOSE NAME THE A/C IS OPENED) ONLY USED TO SIGN THE BLANK CHEQUE BOOK AND HAND OVER THE SAME TO THE MAIN ENTRY OPERATOR. THE ENTRY OPERATOR THEN USED TO ISSUE CHEQUES/DDS/P O S IN THE NA ME OF THE BENEFICIARY FROM THE SAME ACCOUNT (IN WHICH THE CASH IS ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 6 DEPOSITED) OR ANOTHER ACCOUNT IN WHICH FUNDS WERE TRANSFERRED THROUGH CLEARING IN TWO OR MORE STAGES. THE BENEFICIARY IN TURN DEPOSITED THESE INSTRUMENTS IN HIS BANK ACCOUNTS AND THUS HIS UN ACCOUNTED MONEY IS INTRODUCED TO HIS REGULAR BOOKS OF ACCOUNT IN THE FORM OF GIFT, SHARE APPLICATION MONEY, LOAN ETC. THROUGH BANKING CHANNELS. 2.3 THE OPERATORS GAVE THE ACCOUNT HOLDERS AMOUNTS RANGING FROM RS. 1000 TO 2000 PER MONTH. THESE ACCOUNT HOLDE RS WERE MASONS, PLUMBERS, ELECTRICIANS, PEONS, DRIVERS ETC., WHOSE EARNINGS ARE NOT SUFFICIENT FOR A LIVING. THEY EARNED NORMALLY RS. 3 TO 5 THOUSAND PER MONTH IN THEIR NORMAL WORK AND BY WORKING FOR THE ENTRY OPERATORS EARNED EXTRA INCOME OF RS. 2 TO 4 TH OUSAND PER MONTH. THEIR SIGNATURES WERE TAKEN ON BLANK GIFT DEEDS, CHEQUE BOOKS, SHARE APPLICATION MONEY ETC. IN FACT THESE PERSONS SIGNED ALL TYPES OF PAPERS THEY WERE ASKED TO SIGN. THEY WERE MADE DIRECTORS OF COMPANIES, PARTNERS OF FIRMS AND PROPRIETOR OF DIFFERENT CONCERNS SOLELY FOR OPERATION OF THESE ACCOUNTS. ACTUALLY, MANY OF THEM WERE NOT EVEN AWARE OF THE TAX IMPLICATIONS ETC. THEIR ONLY CONCERN WAS WITH THE FEW THOUSAND RUPEES GIVEN TO THEM BY THE ENTRY OPERATORS. 3. SUMMING UP, THE REPORT AS A RESULT OF THESE EXTENSIVE ENQUIRIES CARRIED OUT BY THE D.I.T (INV.), NEW DELHI HAS ESTABLISHED THE NON - GENUINENESS OF TRANSACTIONS, WHETHER SHOWN BY BENEFICIARIES AS INFLOW OF SHARE CAPITAL OR RECEIPT OF GIFTS OR CONSIDERATION FOR SALE - PURCHASE. THE CREDIT WORTHINESS OF THE PERSONS/PERSONS CONTROLLING THE CONCERNS WHO HAVE GIVEN THESE CREDIT ENTRIES/SHARE CAPITAL/GIFT/SALE CONSIDERATION HAS ALSO NOT BEEN ESTABLISHED AS THEY HAVE BEEN FOUND TO BE MEN OF NO MEANS. 4. AS PER THE INFORMATION RECEIVED FROM THE I NVESTIGATION WING, NEW DELHI, THE ASSESSEE HAD TAKEN BOGUS ENTRIES FROM VARIOUS PARTIES AMOUNTING TO RS. 25,00,000. AS PER THE FINDINGS OF THE ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 7 INVESTIGATION WING THE PARTIES WHO HAVE TRANSFERRED FUNDS TO THE ACCOUNT OF THE ASSESSEE ARE INVOLVED IN GIVING B OGUS ENTRIES. THE PERSONS INVOLVED IN THESE BOGUS TRANSACTIONS ARE: - BENEFICIARY S BANK/ACCOUNT NO. VALUE OF ENTRY TAKEN INSTRUMENT NO. BY WHICH ENTRY TAKEN/DATE NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT BANK FROM WHICH ENTRY GIVEN/ACCOUNT NO. OF EN TRY GIVING ACCOUNT CANARA BANK, KAMLA NAGAR 500000 184330/25.10.2002 KOHINOOR OIL MILLS LTD. KVB, KAROL BAGH/CA2991 CANARA BANK, KAMLA NAGAR 500000 184332/29.10.2002 KOHINOOR OIL MILLS LTD. KVB, KAROL BAGH/CA2991 CANARA BANK, KAMLA NAGAR 500000 184334/0 9.11.2002 KOHINOOR OIL MILLS LTD. KVB, KAROL BAGH/CA2991 CANARA BANK, KAMLA NAGAR 500000 585840/20.11.2002 SHIMMER MARKETING PVT. LTD FEDERAL BANK, KAROL BAGH/596 CANARA BANK, KAMLA NAGAR 500000 724823/21.11.2002 ARIES PISCES FINSEC SERVICES PVT. LTD. VI JAYA BANK, RAMNAGAR/2150 ALL THE ENTRIES WERE TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE MAINTAINED AT CANARA BANK, KAMLA NAGAR, NEW DELHI. 5. THE ASSESSEE RAISED THE OBJECTION AGAINST THE REOPENING AND SUBMITTED TO THE AO AS UNDER: WE HAVE RECEIVED REASONS FOR ISSUE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2003 - 04. AS PER YOUR LETTER IT IS ALLEGED THAT THE COMPANY HAS RECEIVED THE ACCOMMODATION ENTRY FROM THE FOLLOWING PARTIES DURING THE ASSESSMENT YEAR 2003 - 04. S. NO. NAME OF THE PARTY VALUE OF ENTRY INSTRUMENT NO. DATE 1. KOHINOOR OIL MILLS LTD. 500000 184330 25.10.2002 2. KOHINOOR OIL MILLS LTD. 500000 184332 29.10.2002 3. KOHINOOR OIL MILLS LTD. 500000 184334 09.11.2002 4. SHIMMER MARKETING PVT. LTD. 500000 5858 40 20.11.2002 5. ARIES PISCES FINSEC SERVICES PVT. LTD. 500000 724823 21.11.2002 ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 8 WE HAVE CHECKED OUR RECORDS AND FOUND THAT COMPANY HAS RECEIVED THE UNSECURED LOANS FROM THE ABOVE PARTIES. IN THIS SUPPORT WE ARE ATTACHING THE COPY OF CONFIRMATION OF A CCOUNTS DULY SIGNED BY THE AUTHORIZED PERSON OF ABOVE PARTIES ALONGWITH THE PAN DETAILS AS ANNEXURE 1 OF THIS REPLY. THE COPY OF BALANCE SHEET AND PROFIT & LOSS A/C ARE BEING ARRANGED FOR RELATED PERIOD WHICH SHOW THE LOANS AND ADVANCE GIVEN BY THE ABOVE PARTIES TO US/OTHERS AND WILL BE PRODUCED IN THE NEXT DATE OF HEARING. WE ARE ALSO ATTACHING THE COPY OF ANNEXURE H OF THE TAX AUDIT REPORT OF MINDA INDUSTRIES LIMITED WHICH SHOWS THE PARTICULARS OF EACH LOAN OF RS. 20000 OR MORE DURING THE YEAR ENDED 3 1.03.2003 AS ANNEXURE 2 OF THIS REPLY. HOWEVER, COMPANY HAD REPAID THE ABOVE SAID LOANS IN THE SUBSEQUENT YEARS IN 2003 - 04, 2004 - 05. THE DETAILS OF REPAYMENT OF ABOVE LOANS ALONGWITH INTEREST ARE AS UNDER: S. NO. NAME OF THE PARTY VALUE OF ENTRY INSTRUME NT NO. DATE 1. KOHINOOR OIL MILLS LTD. 500000 443056 18.12.2004 2. KOHINOOR OIL MILLS LTD. 1000000 443168 20.12.2004 3. KOHINOOR OIL MILLS LTD. 102923 443240 30.12.2004 4. SHIMMER MARKETING PVT. LTD. 516927* 892609 04.08.2004 5. ARIES PISCES FINSEC SE RVICES PVT. LTD. 531405* 468190 03.12.2003 * REPAYMENT AMOUNT INCLUDES THE INTEREST ALSO. THE BANK STATEMENT AND FULL AND FINAL CONFIRMATION OF ACCOUNTS DULY SIGNED BY THE AUTHORIZED PERSON OF ABOVE PARTIES FOR REPAYMENT OF ABOVE LOANS IS ALSO ATTACHED HEREWITH AS ANNEXURE 3 OF THIS REPLY. ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 9 PLEASE ALSO NOTE THAT NECESSARY TAX HAS BEEN DEDUCTED AT SOURCE ON INTEREST PAID ON THE ABOVE UNSECURED LOANS AND TIMELY DEPOSIT IN GOVT. ACCOUNT. LET ME KNOW IF ANYTHING MORE REQUIRED IN THIS REGARDING WE SHALL BE GLAD TO FURNISH THE SAME. IN CONTINUATION OF OUR REPLY DATED 26.10.2010, WE ARE SUBMITTING FOLLOWING INFORMATION IN RESPECT OF AFORESAID SUBJECT MATTER. A. KOHINOOR OIL MILLS LTD . I. THE COPY OF AFFIDAVIT FROM DIRECTOR OF KOHINOOR OIL MILLS LTD. FOR GRANTING LOAN TO US IN FINANCIAL YEAR 2002 - 03. II. THE COPY OF ITR ACKNOWLEDGEMENT FOR ASSESSMENT YEAR 2003 - 04. III. THE COPY OF BALANCE SHEET ALONGWITH P & L A/C FOR RELEVANT FINANCIAL YEAR. B. SHIMMER MARKETING PVT. LTD. I. THE COPY OF AFFIDAVIT FROM DIRECTOR OF SHIMMER MARKET ING PVT. LTD. FOR GRANTING LOAN TO US IN FINANCIAL YEAR 2002 - 03. II. THE COPY OF ITR ACKNOWLEDGEMENT FOR ASSESSMENT YEAR 2003 - 04. III. THE COPY OF BALANCE SHEET ALONGWITH P & L A/C FOR RELEVANT FINANCIAL YEAR. LET ME KNOW IF MORE INFORMATION REQUIRED IN THIS REGAR D WE SHALL BE GLAD TO FURNISH THE SAME. HOWEVER, THE AO DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND MADE THE ADDITION OF RS. 25,00,000/ - ON ACCOUNT OF CASH CREDIT. ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 10 6 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FU RNISHED THE WRITTEN SUBMISSION WHICH ARE INCORPORATED BY THE LD. CIT(A) IN PARA 4 OF THE IMPUGNED ORDER AND ARE REPRODUCED VERBATIM AS UNDER: BASED ON THE AFORESAID REOPENING OF THE AO AND THE CORRESPONDING FACTS NARRATED BY THE ASSESSEE, THE FIRST ISSUE WHICH THE ASSESSEE HAS RAISED VIDE GROUND NO. 2 AND 3 OF ITS GROUNDS OF APPEAL BEFORE YOUR HONOUR IS - WHETHER THE REOPENING DONE BY THE AO IS AS PER PROVISIONS OF LAW ESPECIALLY WHEN ORIGINAL ASSESSMENT HAD BEEN COMPLETED ULS.143(3) OF THE I. T. ACT AND THE INFORMATION ABOUT THESE ENTRIES OF LOANS HAD BEEN ENQUIRED INTO AND EXPLAINED AT THE STAGE (IF ORIGINAL ASSESSMENT AND THE AO WAS SATISFIED ABOUT THE GENUINENESS OF THESE LOAN TRANSACTIONS. QUESTION THAT NEEDS AN ANSWER IS AS TO WHAT IS THE SPECIFIC IN FORMATION WHICH WAS NOT DISCLOSED BY THE ASSESSEE AND WHETHER THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR THE COMPUTATION OF INCOME? ANOTHER QUESTION THAT WOULD NEED TO BE DECIDED, IS THAT IS IT NOT A CASE OF MERE CHANGE OF OPINION BY THE AO ON THE SAME SET OF FACTS? RELEVANT FACTS ARE: - 1) THAT ASSESSEE HAD OBTAINED LOANS/ICDS FROM NOT ONLY THESE THREE PARTIES BUT ALSO 40 - 45 OTHER PARTIES AS WELL. 2) THAT THE FACTUM OF OBTAINING LOANS FROM ALL THE PART IES HAD BEEN GIVEN IN THE TAX AUDIT REPORT DULY FILED WITH THE RETURN AS EARLY AS IN 2003. 3) THAT THE ASSESSMENT IS COMPLETED UNDER SCRUTINY U/S 143 (3) OF THE 1. T. ACT. ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 11 4) THAT DETAILED ENQUIRY WITHIN THE MEANING AND SCOPE OF SECTION 68 IS MADE DURING ORI GINAL ASSESSMENT PROCEEDINGS AND ALL THE LOANS/ICDS ARE ACCEPTED TO SATISFY THE INGREDIENTS OF SECTION 68 OF THE I. T. ACT AND ASSESSMENT IS COMPLETED U/S 143(3) OF THE I. T. ACT. IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSEE IS ENGAGED ILL THE BUSINESS OF MANUFACTURING AUTOMOBILE PARTS AS ALREADY CLARIFIED AND IT REQUIRES REGULAR FLOW OF FUNDS FOR RUNNING ITS BUSINESS OPERATIONS. THESE FUNDS ARE ARRANGED AMONGST OTHER SOURCES, BY MAKING BORROWING IN THE SHAPE OF LOAN FROM BANKS, INTER - CORPORATE DEPOSITS , FIXED DEPOSITS ETC. DURING THE YEAR, THE ASSESSEE HAD OBTAINED INTER - CORPORATE DEPOSIT FRONT ABOUT 50 COMPANIES TOTALING TO RS.5.12 CRORES, AS WERE DULY REPORTED IN ANNEXURE 'H' OF THE TAX AUDIT REPORT, A COPY OF WHICH IS BEING FILED BEFORE YOUR HONOUR. ALL THESE COMPANIES ARE MAINLY UN - RELATED CONCERNS. THE NAME OF THREE COMPANIES IDENTIFIED BY THE AO AS ENTRY PROVIDERS IS ALSO INCLUDED IN THE LIST OF 50 ENTITIES. THESE LOANS ARE GENERALLY REPAYABLE ON DEMAND AND ARE REPAID FRONT TIME TO TIME AS PER THE MUTUAL UNDERSTANDING WITH PARTIES ALONG WITH INTEREST. THE LOAN OF RS.25 LAKHS WAS ARRANGED FRONT THESE THREE PARTIES DURING THE YEAR UNDER CONSIDERATION AND HAS BEEN REPORTED AS SUCH IN THE TAX AUDIT REPORT. FURTHER THE AMOUNT OF LOAN WAS ALSO REPAID ALON G WITH INTEREST AFTER MAKING TDS IN THE SUBSEQUENT YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ISSUED A SPECIFIC QUESTIONNAIRE BEING QUESTIONNAIRE DATED 4.4.2005 UNDER WHICH HE HAD REQUIRED THE ASSESSEE TO FILE CONFIRMAT ION FOR THE INCREASE IN UNSECURED LOANS, COPY OF WHICH IS ENCLOSED. THE ASSESSEE, IN RESPONSE TO THIS QUESTIONNAIRE VIDE ITS LETTER DATED 9.12.2005 FILED COMPLETE DETAILS OF LOAN OBTAINED DURING THE YEAR ALONG WITH COPY OF INCOME - TAX RETURN, COPY OF BALA NCE ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 12 SHEET OF EACH CREDITORS AND ALL SUCH OTHER INFORMATION, AS WAS REQUIRED BY THE AO. THE AO BEING SATISFIED HAD ACCEPTED THESE TRANSACTIONS OF OBTAINING LOANS FRONT ALL THE PARTIES AS PER TAX AUDIT REPORT, AS GENUINE AS THE ASSESSEE HAD ALWAYS BELIEVED I T TO BE SO. THEREAFTER, THE LOANS FROM THESE PARTIES WERE REPAID IN SUBSEQUENT PERIODS I.E. ASSESSMENT YEAR 2004 - 05 AND 2005 - 06. THEREAFTER ASSESSEE HAD NO DEALINGS/BUSINESS RELATIONS OF OBTAINING ICD FROM THESE PARTIES. UNDER THESE CIRCUMSTANCES, FIRSTL Y IT IS NEEDS TO BE DECIDED, AS TO WHETHER THE REOPENING OF THE ASSESSMENT PERTAINING TO ASSESSMENT YEAR 2003 - 04 AFTER THE EXPIRY OF FOUR YEARS, CAN BE SAID TO BE ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR THE PURPOSE OF COMPUTATION OF INCOME. ADMITTEDLY, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 29 TH MARCH 2010 AS NOTED BY THE AO IN THE ASSESSMENT ORDER ITSELF WHICH WAS BEYOND THE STATUTORY LIMIT PROVIDED TO ISSUE THE NOTICE AS PER THE PROVISO TO SECTION 147 . THE AO HAS MADE GENERAL ALLEGATION ABOUT THE INVESTIGATION MADE BY THE INVESTIGATION WING OF THE TAX DEPARTMENT. WHEN WERE THESE INVESTIGATIONS DONE: THE PERSONS WHO WERE INVESTIGATED: AND WHETHER THERE IS A SPECIFIC CHARGE BY THESE ALLEGED ENTRY OPERATO RS AGAINST THE ASSESSEE, IS NOT COMING CLEAR FROM THE ASSESSMENT ORDER OR FROM THE REASONS RECORDED BY THE AO. THE REASONS RECORDED BY THE AO CAME A SHOCK TO THE ASSESSEE, AS ALREADY CLARIFIED BY THE ASSESSEE, IT OBTAINED ALL THE LOANS IN THE NORMAL COURSE OF ARRANGING FUNDS BY WAY OF ICDS AND THE ASSESSEE HAS NO INKLING AS TO WHETHER HE WAS DEALING IN ANY MANNER WITH THE ALLEGED ENTRY OPERATORS BECAUSE THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WERE OF UNSECURED LOANS/ICDS AND NOT SHARE CAPITAL OR GIFTS O R SALE - PURCHASE TRANSACTIONS, AS IS CLAIMED TO HAVE BEEN FOUND BY THE INVESTIGATION AGENCY AS PER PARA 3 OF THE ORDER OF THE AO. ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 13 THE AO BELIEVED THE GENERAL OBSERVATIONS/FINDINGS OF THE INVESTIGATION WING OF THE DEPARTMENT AND PRESUMED THAT THE TRANSACTI ONS WITH THE ASSESSEE ARE BOGUS, IGNORING THE FACTS THAT ALL THE TRANSACTIONS WERE OF LOANS WHICH WERE OBTAINED THROUGH NORMAL BANKING CHANNELS AND WERE REPAID ALONG WITH INTEREST AFTER TDS ETC. THOUGH BANKING CHANNEL. IF THE TRANSACTIONS WERE BOGUS AS ALL EGED BY THE AO, THEN WHERE WAS THE NEED TO REPAY, THAT TOO WITH INTEREST? INCIDENTALLY, THE COST OF INTEREST ON THESE LOANS HAS BEEN ALLOWED AS EXPENDITURE NOT ONLY IN THIS YEAR BUT ALSO IN SUBSEQUENT YEAR. THE FACT THAT THESE LOANS HAVE BEEN REPAID SUBSEQ UENTLY IS ALSO NOT DISPUTED BY THE AO. UNDER THESE CIRCUMSTANCES, THE CONCLUSION DRAWN BY THE AO, BASED ON SOME GENERAL FINDINGS OF ANOTHER WING OF THE DEPARTMENT HAS NO BEARING ON THE GENUINE TRANSACTIONS OF LOAN UNDERTAKEN BY THE ASSESSEE, IT IS RESPECTF ULLY SUBMITTED. IT IS RESPECTFULLY SUBMITTED THAT ON ACCOUNT OF THE FACTS NARRATED ABOVE, AS THE TRANSACTIONS OF OBTAINING LOAN HAVING BEEN INCLUDED IN THE TAX AUDIT REPORT, THE CONFIRMATION OF LOANS HAVING BEEN FILED AT THE ORIGINAL ASSESSMENT STAGE BY WAY OF INCOME - TAX RETURNS AND BALANCE SHEETS OF THE CREDITORS. IT CANNOT HE HELD THAT THE ASSESSEE WAS, IN ANY WAY, INVOLVED IN OBTAINING BOGUS ENTRIES FOR THE AMOUNT OF RS.25 LAKHS, ESPECIALLY WHEN SEEN IN THE LIGHT OF THE FACT THAT TOTAL AMOUNT DURING TH E YEAR AS INTER - CORPORATE LOAN/ICDS IS MORE THAN 5 CRORES AND THE TOTAL LOAN FROM THESE THREE ALLEGED ENTRY OPERATORS, IS JUST 5% OF THE TOTAL LOAN AMOUNT RECEIVED BY THE ASSESSEE. IT IS RESPECTFULLY SUBMITTED THAT THE REOPENING DONE WITHOUT EVEN AN ALLE GATION THAT THE ASSESSEE HAS FAILED IN ITS STATUTORY OBLIGATION TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR THE COMPUTATION OF INCOME CANNOT BE HELD TO BE VALID IN LAW AND NEEDS TO BE CANCELLED ON THIS PRIMARY GROUND ONLY. THERE IS NOT EVE N AN ALLEGATION IN THE REASONS THAT ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 14 ASSESSEE HAS FAILED TO DISCLOSE FULLY & TRULY ALL MATERIAL FACTS FOR THE COMPUTATION OF ITS INCOME. 7 . THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: (I) CIT VS. BHAJI LAVJI, 79 ITR 582; ITO VS. LAKHMANI MEWAL DAS, 10 3 ITR 437 (SC); (II) CIT VS. MOTOR & GENERAL FINANCE LTD., (2009) 184 TAXMAN 465 (DEL). (III) CIT VS. KELVINATOR OF INDIA LTD., 256 ITR 1 (DELHI - FB) (IV) CIT VS. GOETZE (INDIA) LTD., (2010) 321 ITR (DEL) 431 (V) CIT VS. CHAKIAT AGENCIES PVT. LTD. (2009) 314 ITR 200 (MADR AS) (VI) CARTINI INDIA LTD. VS. ADDL. CIT (2009) 314 ITR 275 (BOM.) (VII) ASTEROIDS TRADING AND INVESTMENTS P. LTD. VS. DCIT, (2009) 308 ITR 190. (VIII) CIT VS. EICHER LTD. (2007) 294 ITR 310 (DEL) (IX) CARLTON OVERSEAS (P) LTD. VS. ITO, (2010) 188 TAXMAN 11 (DEL) (X) SATNAM OV ERSEAS LTD. VS. ADDL. CIT (2010) 188 TAXMAN 172 (DEL) (XI) L EGATO SYSTEMS (INDIA) PVT. LTD. VS. DCIT (2010) 187 TAXMAN (DEL) 294 (XII) DIWAKAR ENGINEERS LTD. VS. ITO (2010) 187 TAXMAN (DEL) 327 (XIII) JAL HOTELS CO. LTD. VS. ASS. DIT (2009) 184 TAXMAN (DEL) 1 (XIV) CIT VS. IN DIAN FARMERS FERTILIZERS CO - OPERATIVE LTD. (2008) 171 TAXMAN 379 (DEL). (XV) NATIONAL DAIRY DEVELOPMENT BOARD VS. DCIT (2011) 242 CTR (GUJ) 302 ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 15 (XVI) COMMERCIAL CO - OPERATIVE BANK LTD. VS. ITO (2011) 336 ITR 196 (GUJ) (XVII) CIT VS. SIMBHAOLI SUGAR MILLS LTD. (2011) 333 I TR 470 (DELHI) (XVIII) CIT VS. FORAMER FRANCE (2003) 264 ITR 566 (SC) (XIX) MIHIR TEXTILE LTD. VS. JT. CIT 210 TAX LR 417 (GUJ) 8 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT A PROPER NOTE AND REASONS FOR REOPENING THE PROCEEDINGS U/ S 148 OF THE ACT WERE RECORDED BY THE AO AND THE LD. CIT DELHI - II, NEW DELHI GRANTED PERMISSION ON 19.03.2010. HE FURTHER OBSERVED THAT SECTION 147 OF THE ACT ENABLES THE AO TO REOPEN AN ASSESSMENT AFTER EXPIRY OF 4 YEARS, IF THE AO HAS REASON TO BELIEVE T HAT REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, AN INCOME ASSESSABLE TO TAX ESCAPED ASSESSMENT. HE FURTHER OBSERVED THAT EXPLANATION 1 TO PROVISO OF SECTION 147 CLARIFIE S THAT THE PRODUCTION BEFORE THE AO OF BOOKS OF ACCOUNTS AND OTHER EVIDENCE DOES NOT EXONERATE THE ASSESSEE FROM THE DUTY TO MAKE FULL AND TRUE DISCLOSURE, IF SOME MATERIAL NECESSARY FOR ASSESSMENT LAY EMBEDDED IN BOOKS OF ACCOUNTS OR OTHER EVIDENCE WHICH THE AO COULD HAVE UNCOVERED WITH DUE DILIGENCE BUT DID NOT. THEN, PRODUCTION OF ACCOUNT BOOKS OR OTHER EVIDENCE WILL NOT TANTAMOUNT TO FULL AND TRUE DISCLOSURE OF MATERIAL FACTS. THE LD. CIT(A) REFERRED TO THE PROVISIONS CONTAINED IN EXPLANATION 1 BELOW PR OVISO TO SECTION 147 OF THE ACT AND OBSERVED THAT THE AO SHOULD HAVE MATERIAL ON THE BASIS OF ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 16 WHICH HE COULD FORM A BONAFIDE BELIEF THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. THE LD. CIT(A) MADE THE REFERENCE TO THE FOLLOWING CASE LAWS: JOHRI LAL (HUF) VS CIT (1973) 38 ITR 439 (SC) ITO VS LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) CIT VS TSPLP CHIDAMBARAM CHETTIAR (1971) ITR 467 (SC) HA HANJI & CO. VS ITO (1979) 120 ITR 593 (CAL.) SHEO SINGH VS AAC (1971) 82 ITR (SC) S RI KRISHNA (P) LTD. VS ITO (1966) 221 ITR 538 (SC) RAYMOND WOOLLEN MILLS LTD. VS ITO (1999) 236 ITR 34 (SC) S. NARAYANAPPA VS CIT (1967) 63 ITR 219 (SC) GANGA SARAN & SONS (P) LTD. VS ITO (1981) 130 ITR 1 (SC) PHOOL CHAND BAJRANG LAL VS ITO (1993 ) 203 ITR 456 AT 477 (SC) 9 . THE LD. CIT(A) OBSERVED THAT WHEREAS THE REASON TO BELIEVE CANNOT BE EQUATED WITH THE REASON TO SUSPECT. IT IS EQUALLY NOT NECESSARY THAT THERE SHOULD BE AMPLE EVIDENCE ON RECORD TO ESTABLISH THE ACTUAL ESCAPEMENT OF INCOME SO AS TO FORM A REASONABLE BELIEF THAT THE INCOME OF THE A SSESSEE HAS ESCAPED ASSESSMENT AND THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN SUSPICION AND BELIEF AND BETWEEN BELIEF AND CONCLUSIVE FINDING BASED ON EVIDENCE. THE LD. CIT(A) OBSERVED THAT I N THE PRESENT CASE, THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT STATING THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES. THE LD. CIT(A) FURTHER OBSERVED THAT THE HON BL E SUPREME COURT IN VARIOUS DECISIONS HAD SPECIFICALLY LAID DOWN THAT POWER TO REOPEN ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 17 ASSESSMENT BY THE AO WAS SUBJECT TO CONDITION THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND IN THIS CASE THE EVIDENCE/MATERIALS WERE COLLECTED DURIN G VERIFICATION BY INVESTIGATION WING OF THE DEPARTMENT WHICH CLEARLY SUGGESTED THAT THERE WAS DIRECT NEXUS BETWEEN THESE MATERIALS AND BELIEF OF THE AO. HE FURTHER OBSERVED THAT HAD THERE BEEN NO INVESTIGATION/VERIFICATION, THESE EVIDENCES AND INFORMATION COULD HAVE NEVER COME INTO THE POSSESSION OF THE AO. THE LD. CIT(A) WAS OF THE VIEW THAT THE AO HAD NOT COMMITTED ANY ERROR WHILE ISSUING THE NOTICE U/S 147/148 OF THE ACT AND WAS JUSTIFIED IN FORMING BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSME NT FOR THE YEAR UNDER CONSIDERATION AND THERE WAS NO CHANGE OF OPINION, I N THE INSTANCE CASE . A CCORDINGLY REOPENING OF ASSESSMENT U/S 148 OF THE ACT WAS UPHELD. 10 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AO FRAMED ORIGINAL A SSESSMENT U/S 143(3) OF THE ACT ON 30.03.2006 AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES AT THE ORIGINAL STAGE AND THAT THE AO ISSUED THE NOTICE U/S 148 OF THE ACT ON 2 9.03.2010 AFTER 4 YEARS OF COMPLETION OF THE ORIGINAL ASSESSMENT. IT WAS FURTHER SUBMITTED THAT THE AO REOPENED THE ASSESSMENT ON THE GROUND THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY OR FULLY MATERIAL FACTS NECESSARY FOR COMPUTAT ION OF INCOME. IT WAS POINTED OUT THAT AT THE ORIGINAL ASSESSMENT STAGE , THE AO RAISED A SPECIFIC QUERY WITH ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 18 REGARD TO THE CONFIRMATION OF THE SE UNSECURED LOAN S (A REFERENCE WAS MADE TO PAGE NO. 101 OF THE ASSESSEE S PAPER BOOK) AND THE SAME WAS RESPONDED WITH SIMI LAR DETAILS (A REFERENCE WAS MADE TO PAGE NO. 102 OF THE ASSESSEE S PAPER BOOK ) . IT WAS STATED THAT IN THE REASONS FOR REOPENING THE AO STATED THAT INFORMATION WAS R ECEIVED FROM THE INVESTIGATION W I NG THAT THE ASSESSEE OBTAINED BOGUS ENTRIES OF RS . 25,00,000/ - FROM 3 PARTIES . IT WAS FURTHER STATED THAT THE ASSESSEE CLARIFIED THAT THOSE AM O UNTS WERE NOT ACCOMMODATION ENTRIES , BUT REPRESENTED THE IN TER - CORPORATE LOAN S OBTAINED BY THE ASSESSEE , WHICH HAD BEEN REPAID IN SUBSEQUENT YEAR THROUGH NORMAL B ANKING CHANNEL ALONGWITH INTEREST AFTER MAKING TDS AS PER THE PROVISIONS OF LAW. IT WAS CONTENDED THAT THE ASSESSEE SUBMITTED THE DETAILS OF REPAYMENT OF LOAN I.E. CHEQUE NO S., DATES ON WHICH THE LOANS WERE REPAID AND THIS FACT WAS NOTED BY THE AO AT PAGE NO. 3 OF THE ASSESSMENT ORDER. IT WAS ALSO CONTENDED THAT THE ASSESSEE FILED THE DETAILS , SUCH AS AFFIDAVITS FROM THE DIRECTORS OF THE LE NDING COMPANIES AS WELL AS COPIES OF ACKNOWLEDGMENT OF INCOME - TAX RETURN ETC. AND THE DETAILS PERTAINING TO THE LOANS T RANSACTIONS WERE GIVEN IN ANNEXURE H OF TAX AUDIT REPORT WHEREIN NAMES, ADDRESSES, PAN, WARD NOS. ETC. OF ALL THE PERSONS FROM WHOM LOANS EXCEEDING RS. 20,000/ - WERE OBTAINED OR REPAID DURING THE YEAR. IT WAS STATED THAT THE REOPENING OF THE COMPLETED AS SESSMENT U/S 147/148 OF THE ACT WAS A CHANGE OF OPINION , BECAUSE THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS WHICH WERE ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 19 NECESSARY FOR THE PURPOSE OF COMPUTATION OF THE ASSESSEE S INCOME. THEREFORE, THE RE OPENING MADE BY TH E AO U/S 147 R.W.S. 148 OF THE A CT WAS NOT VALID THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO. 11 . THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: (I) CIT VS. KELVINATOR OF INDIA LTD., 256 ITR 1 (DELHI - F B) (II) CIT VS. GOETZE (INDIA) LTD., (2010) 321 ITR (DEL) 431 (III) CIT VS. CHAKIAT AGENCIES PVT. LTD. (2009) 314 ITR 200 (MADRAS) (IV) CARTINI INDIA LTD. VS. ADDL. CIT (2009) 314 ITR 275 (BOM.) (V) ASTEROIDS TRADING AND INVESTMENTS P. LTD. VS. DCIT, (2009) 308 ITR 190. (VI) CIT VS. EICHER LTD. (2007) 294 ITR 310 (DEL) (VII) CARLTON OVERSEAS (P) LTD. VS. ITO, (2010) 188 TAXMAN 11 (DEL) (VIII) SATNAM OVERSEAS LTD. VS. ADDL. CIT (2010) 188 TAXMAN 172 (DEL) (IX) L EGATO SYSTEMS (INDIA) PVT. LTD. VS. DCIT (2010) 187 TAXMAN (DEL) 294 (X) DIWAKAR ENGI NEERS LTD. VS. ITO (2010) 187 TAXMAN (DEL) 327 (XI) JAL HOTELS CO. LTD. VS. ASS. DIT (2009) 184 TAXMAN (DEL) 1 (XII) UCO BANK LTD. VS. CIT 237 ITR 889 (SC) (XIII) CIT VS. INDIAN FARMERS FERTILIZERS CO - OPERATIVE LTD. (2008) 171 TAXMAN 379 (DEL). ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 20 (XIV) NATIONAL DAIRY DEVELOPMENT BOARD VS. DCIT (2011) 242 CTR (GUJ) 302 (XV) COMMERCIAL CO - OPERATIVE BANK LTD. VS. ITO (2011) 336 ITR 196 (GUJ) (XVI) CIT VS. SIMBHAOLI SUGAR MILLS LTD. (2011) 333 ITR 470 (DELHI) (XVII) CIT VS. FORAMER FRANCE (2003) 264 ITR 566 (SC) (XVIII) MIHIR TEXTILE LTD. VS. JT. CIT 210 TAX LR 417 (GUJ) 12 . THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THERE WAS NO NAME OF THE ASSESSEE IN THE GENERAL REPORT OF THE INVESTIGATION WING, THEREFORE, THE REOPENING ON THE BASIS OF INVESTIGATION WING WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS PRIYANKA SHIP BREAKING CO. PVT. LTD. 211 TAXMAN 20 (DEL). 13 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE CASE WAS REOPENED AFTER RECORDING THE REASON AND AS THERE WAS ESCAPEMENT OF INCOME , T HE REASSESSMENT PROCEEDINGS WERE RIGHTLY INITIATED BY THE AO AND CONFIRMED BY THE LD. CIT(A). THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS NOVA PROMOTERS AND FINLEASE (P) LTD. (2012) 342 ITR 169 (DEL). 14 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADM ITTED FACT THAT THE ORIGINAL ASSESSMENT IN ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 21 ASSESSEE S CASE WAS COMPLETED U/S 143(3) OF THE ACT ON 30.03.2006 AND THE ASSESSMENT WAS FRAMED AT AN INCOME OF RS. 4,28,28,277/ - AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES. THEREAFTER , ON THE BASIS OF INFORMATI ON RECEIVED BY THE AO FROM INVESTIGATION WING THAT THE ASSESSEE WAS ENGAGED IN RECEIVING THE BOGUS ENTRIES , THE ASSESSMENT WAS REOPENED. THE AO IDENTIFIED 3 PARTIES AND ISSUED SUMMONS U/S 131 OF THE ACT WHICH RETURNED BACK WITH THE REMARKS OF THE POSTAL AU THORITY LEFT WITHOUT ADDRESS . THE AO MADE THE ADDITION OF RS. 25,00,000/ - BY OBSERVING THAT THAT THE LOANS RECEIVED IN THE SAID AMOUNT BY THE ASSESSEE WERE ON ACCOUNT OF BOGUS ENTRIES. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE REASSESSMENT PRO CEEDINGS WERE INITIATED BY THE AO ONLY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING AND NO INDEPENDENT INQUIRY WAS MADE BY THE AO. IT IS ALSO NOTICED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE AO , VIDE NOTICE U/S 142( 1) OF THE ACT DATED 04.04.2005 ASKED THE DETAILS AND CONFIRMATION FOR INCREASE IN UNSECURED LOAN AS IS EVIDENT FROM PAGE NO. 101 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF THE SAID NOTICE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE VIDE LETTER DAT ED 09.12.2005 FURNISHED THE LIST OF INTER - CORPORATE LOAN ALONGWITH COPY OF RETURN OF INCOME AND FINANCIAL STATEMENT. THEREFORE, IT CANNOT BE SAID THAT THE AO DID NOT MAKE THE INQUIRIES RELATING TO THE LOANS OR THE ASSESSEE DID NOT FURNISH THE REQUISITE DET A ILS OF THE LOANS . IN THE PRESENT CASE, THE AO AFTER EXAMINING THE AFORESAID DETAILS FRAMED THE ASSESSMENT U/S 143(3) OF THE ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 22 A CT V IDE ORDER DATED 30.03.2006, THEREFORE, THE REOPENING ON THE BASIS OF THE SAME ISSUE WHICH WAS EXAMINED IN THE COURSE OF ORIGIN AL ASSESSMENT WAS A CHANGE OF OPINION. ON A SIMILAR ISSUE THE HON BLE DELHI HIGH COURT FULL BENCH IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. 256 ITR 1 HELD AS UNDER: THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, B Y THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, AND SUBSEQUENTLY AMENDED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989, WITH EFFECT FROM APRIL 1, 1989, AS ALSO OF SECTIONS 148 TO 152 HAVE BEEN ELABORATED IN CIRCULAR NO. 549, DATED OCTOBER 31, 1989. A PERUSAL O F CLAUSE 7.2 OF THE SAID CIRCULAR MAKES IT CLEAR THAT THE AMENDMENTS HA D BEEN CARRIED OUT ONLY WITH A VIEW TO ALLAY FEARS THAT THE OMISSION OF THE EXPRESSION REASON TO BELIEVE FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPE N PAST ASSESSMENTS ON A MERE CHANGE OF OPINION. IT IS, THEREFORE, EVIDENT THAT EVEN ACCORDING TO THE CENTRAL BOARD OF DIRECT TAXES A MERE CHANGE OF OPINION CANNOT FORM THE BASIS FOR REOPENING A COMPLETED ASSESSMENT. A STATUTE CONFERRING AN ARBITRARY POWE R MAY BE HELD TO BE ULTRA VIRES ARTICLE 14 OF THE CONSTITUTION OF INDIA. IF TWO INTERPRETATIONS ARE POSSIBLE, THE INTERPRETATION WHICH UPHOLDS CONSTITUTIONALITY SHOULD BE FAVOURED. IN THE EVENT IT IS HELD THAT BY REASON OF SECTION 147 THE INCOME - TAX OFFICE R MAY EXERCISE HIS JURISDICTION FOR INITIATING A PROCEEDING FOR REASSESSMENT ONLY UPON A MERE CHANGE OF OPINION, THE SAME MAY BE HELD TO BE UNCONSTITUTIONAL. AN ORDER OF ASSESSMENT CAN BE PASSED EITHER IN TERMS OF SUB - SECTION (1) OF SECTION 143 OR SUB - SECTION (3) OF SECTION 143. WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF THE ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 23 SUB - SECTION (3) OF SECTION 143 A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUMPTION CAN ALSO BE R AISED TO THE EFFECT THAT IN TERMS OF CLAUSE (E) OF SECTION 114 OF THE INDIAN EVIDENCE ACT, 1872, JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD THAT AN ORDER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSEL F CONFER JURISDICTION UPON THE ASSESSING OFFICER TO REOPEN THE PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN WRONG. HENCE, IT IS CLEAR THAT SECTI ON 147 OF THE ACT DOES NOT POSTULATE CONFERMENT OF POWER UPON THE ASSESSING OFFICER TO INITIATE REASSESSMENT PROCEEDINGS UPON A MERE CHANGE OF OPINION. THE AFORESAID ORDER HAS BEEN AFFIRMED BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. 320 ITR 561 . 15. IN THE PRESENT CASE, ALSO THE AO WHILE FRAMING THE ORIGINAL ASSESSMENT , SPECIFICALLY , ASKED THE ASSESSEE TO FURNISH THE DETAILS OF THE UNSECURED LOANS AND THE ASSESSEE GAVE THE DETAILS BY DISCLOSING THE NAME OF THE PERSONS FRO M WHOM LOANS WERE RECEIVED AND ALSO FURNISHED THEIR PAN NOS. ALONGWITH THE REQUISITE DETAILS IN THE FORM OF AFFIDAVIT FROM THE DIRECTORS OF THE LENDING COMPANIES , BALANCE SHEET & PROFIT & LOSS A/C OF THOSE COMPANIES AS WELL AS COPIES OF ACKNOWLEDGMENT OF INCOME TAX RETURN ETC. TO DEMONSTRATE THE CREDITWORTHINESS, BONAFIDE AND GENUINENESS OF THE TRANSACTION S . THE ASSESSEE ALSO DISCLOSED THE NAME S , ADDRESS ES , PAN, WARD NO S . ETC. OF ALL THE PERSONS FROM WHOM LOANS EXCEED ING RS. 20 ,000/ - WERE OBTAINED AND REPA ID DURING THE YEAR , IN THE ITA NOS. 5509 /DEL /2012 MINDA INDUSTRIES LTD. 24 ANNEXURE H ATTACHED TO THE TAX AUDIT REPORT WHICH WAS FURNISHED TO THE AO WHO AFTER MAKING THE PROPER INQUIRY AND BEING SATISFIED DID NOT MAKE ANY ADDITION IN THE ORIGINAL ASSESSMENT. THEREFORE, THE NOTICE ISSUED U/S 148 OF THE ACT SUBSEQUENTLY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT WAS ON ACCOUNT OF CHANGE OF OPINION AND AS SUCH THE REOPENING U/S 147 OF THE ACT WAS NOT VALID , THEREFORE, THE SUBSEQUENT REASSESSMENT FRAMED ON THAT BASIS WAS INVALID. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND THE ORIGINAL ASSESSMENT FRAMED BY THE AO IS RESTORED. 16 . SINCE WE HAVE DECIDED THE LEGAL ISSUES IN FAVOUR OF THE ASSESSEE AND THE REOPENING IS HELD AS INVALID, TH ER EFORE, NO FINDINGS IS GIVEN O N THE OTHER GROUNDS WHICH ARE ON MERIT. 17 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRON OUNCED IN THE COURT ON 19 /06 /2015 ) SD/ - SD/ - (G. C. GUPTA ) (N. K. SAINI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 19 /06 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR
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