ACIT, Muzaffarnagar V. M/s Barnala Steel Industries Ltd., Muzaffarnagar

ITA 5544/DEL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69594 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-07-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 08-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: ANKIT GUPTA S
• Keywords: Unexplained cash credit; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 43B; 143(3); 147; 68; 148; 139

Judgement Text

ITA NO.5544/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.5544/DEL/2010 ASSESSMENT YEAR : 2004-05 ACIT, CIRCLE-2, MUZAFFARNAGAR. VS. BARNALA STEEL INDUSTRIES LTD., MEERUT ROAD, MUZAFFARNAGAR. PAN : AABCB2772Q ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI SALIL KAPOOR & SHRI ANKIT GUPTA, ADVOCATES DEPARTMENT BY : S HRI BHIM SINGH, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2004-05 AG AINST THE ORDER DATED 16.09.2010, PASSED BY THE CIT (A), MUZAFF ARNAGAR, TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.10,00, 000/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SEC TION 68 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING FULL FACTS OF THE CASE. F URTHER IN THIS CASE WHEN IDENTITY OF THE SHARE APPLICANTS HAS BEEN AMP LY DISPROVED AS NO SUCH SHARE APPLICANTS EVER EXISTED AT THE GIVEN ADDRESS, THE ORDER OF THE HONBLE SUPREME COURT AS REPORTED IN CIT VS. LOVELY ITA NO.5544/DEL/2010 2 EXPORTS (P) LTD., TAXMAN VOL.172 PAGE-44 (2008) (SUPR A) AS QUOTED BY CIT (A) FOR ALLOWING THIS APPEAL, IS NOT APPLICABLE I N THIS CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E CIT (A) HAS ERRED IN LAW BY DELETING THE DISALLOWANCE OF RS.3 ,69,972/- MADE BY THE A.O. ON ACCOUNT OF SHORT TERM CAPITAL LOSS WITHOUT APP RECIATING FULL FACTS OF THE CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E CIT (A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.96,06 5/- MADE BY THE A.O. ON ACCOUNT OF UNPAID LIABILITY UNDER SECTION 43B WITHOUT APPRECIATING FULL FACT OF THE CASE. 2. THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 27 O F THE ITAT RULES, WHICH READS AS FOLLOWS:- SUB: APPLICATION UNDER RULE 27. SIR, IN THE ABOVE NOTED APPEAL WHICH IS FILED BY THE REVE NUE, THE RESPONDENT DESIRE TO SUPPORT THE ORDER OF THE CIT (A) B Y WAY OF FOLLOWING GROUNDS:- 1. THAT THE NOTICE U/S 148 R.W.S. 147 ISSUED BY THE A.O. I S ILLEGAL, BARRED BY LIMITATION AND WITHOUT JURISDICTION. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. HAS ERRED IN PASSING THE ORDER UNDER SECTION 147 AND THE SAID ORDER ILLEGAL AND BAD IN LAW. 3. THAT THE PROCEEDINGS U/S 147/148 HAS BEEN INITIATED ON WRONG FACTS AND THEREFORE THE RE-ASSESSMENT PROCEEDINGS WERE INVALID, UNJUSTIFIED AND NOT MAINTAINABLE IN THE FACTS AND CIRC UMSTANCES. ENTIRE PROCEEDINGS ARE INFRUCTUOUS. 4. THAT THE NOTICE U/S 148 AND THE REASSESSMENT ORDER PASSE D ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. THE NOTI CE HAS BEEN ISSUED WITHOUT ANY APPLICATION OF MIND AND IN A MECHANICAL MA NNER. THERE IS NO INCOME WHICH HAS ESCAPED ASSESSMENT. THE RESPONDENT DESIRE TO SUPPORT THE ORDER OF CIT (A) ON THE ABOVE MENTIONED GROUND AS PER THE PROVISION OF RULE 27 OF APPELLATE TRIBUNAL RULES 1963. ITA NO.5544/DEL/2010 3 THANKING YOU, YOURS FAITHFULLY, SD/- RESPONDENT (FOR M/S BARNALA STEELS INDUSTRIES PVT. LTD.) DATE: 17.08.2011/13.06.2011 PLACE: NEW DELHI. 3. IN SUPPORT OF THE AFORESAID APPLICATION, THE LD. C OUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE NOTICE ISSUED TO THE ASSESSEE U/S 14 8 READ WITH SECTION 147 OF THE IT ACT IS BARRED BY LIMITATION AN D, AS SUCH, ALL PROCEEDINGS PURSUANT THERETO ARE ILLEGAL; THAT THE NOTICE U/S 147 READ WITH SECTION 143 (3) OF THE ACT WAS ISSUED ON 28.07.2009, I.E., AFTER THE E XPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WHICH IS ASSESSMEN T YEAR 2004-05; THAT SUCH ISSUANCE OF NOTICE IS AGAINST THE PROVISO TO SE CTION 147 OF THE ACT, WHICH REQUIRES THAT WHERE AN ASSESSMENT U/S 143(3) OF TH E ACT OR U/S 147 OF THE ACT HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN U/S 147 OF THE ACT AFTER THE EXPIRY OF FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY 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 U/S 139 OR IN RESPONSE TO A NOTICE U/S 142 (1) OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR; THAT THE NOTICE W AS ISSUED TO THE ASSESSEE DESPITE THE FACT THAT THE ASSESSEE HAD DULY DISCLOSE D BEFORE THE ASSESSING OFFICER FULLY AND TRULY ALL MATERIAL FACTS NEC ESSARY FOR ITS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR; THAT IT WAS ME RELY AS A CHANGE OF OPINION THAT THE ASSESSMENT EARLIER COMPLETED U/S 143 (3) OF THE ACT, VIDE ORDER DATED 12.09.2008, WAS SOUGHT TO BE RE OPENED, WHICH IS IMPERMISSIBLE IN LAW; THAT DURING THE YEAR THE ASSESSEE C OMPANY RECEIVED SHARE APPLICATION MONEY OF ` 5 LAC FROM M/S MAPLE SAL ES PVT. LTD., BY DRAFT NO.544065 AND THAT OF ` 5 LAC FROM RGS MARKETING PV T. LTD., BY DRAFT NO.544066; THAT THESE DETAILS WERE FULLY DISCLOSED BY T HE ASSESSEE BEFORE THE ITA NO.5544/DEL/2010 4 ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS, A S REQUIRED BY THE ASSESSING OFFICER, ALONG WITH REPLY DATED 25.10.2006; T HAT IT WAS AFTER HAVING GONE THROUGH THE DETAILS SO FILED AND BEING SATISFIED W ITH THEM, THAT THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT, ACCEPTING THE SHARE APPLICATION MONEY AS GENUINE; THAT SPECIFIC DETAILS W ERE ASKED FOR BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDING S, IT WAS IN RESPONSE TO WHICH THAT THE ASSESSEE HAD FILED ALL THE DET AILS, I.E., COPIES OF ACCOUNT ALONG WITH DRAFT DETAILS, PAN NO. AND IT RET URNS; THAT THESE DETAILS WERE FOUND GENUINE BY THE ASSESSING OFFICER EVEN IN THE FACE OF THE INFORMATION FROM THE INVESTIGATION WING OF THE DEPAR TMENT, AS AVAILABLE WITH THE ASSESSING OFFICER; AND THAT FROM THIS, IT IS AMPLY CL EAR THAT IT WAS A MERE CHANGE OF OPINION THAT PROMPTED THE ASSESSING OFFICER T O REOPEN THE COMPLETED ASSESSMENT, WHICH IS NOT PERMITTED UNDER THE L AW. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLO WING CASE LAWS:- I) CIT VS. KELVINATOR INDIA LTD., 256 ITR 1 (FB) (DEL ); II) CIT VS. KELVINATOR INDIA LTD. & ANR., 320 ITR 561 (SC); III) HARYANA ACRYLIC PVT. LTD. VS. CIT, 308 ITR 38 (DEL ); AND IV) ITO, I-WARD, HUNDI CIRCLE, CALCUTTA & ORS. VS. MADNA NI ENGINEERING WORKS LTD., 118 ITR 1 (SC). 4. THE LD. DR, ON THE OTHER HAND, HAS OPPOSED THE APPLIC ATION FILED BY THE ASSESSEE. IT HAS BEEN CONTENDED THAT THE LD. CIT (A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE. HOWEVER, THE ASSESSEE HAS CHOSEN NOT TO FILE ANY CROSS OBJECTION IN THE APPEAL FILED BY THE DEPARTMENT ; AND THAT AS PER RULE 27 OF THE ITAT RULES, THE RESPONDENT MAY SUPPORT AN O RDER ON ANY ISSUE DECIDED AGAINST HIM. RELIANCE HAS BEEN PLACED ON CIT -IV VS. JAMNADAS VIRJI SHARES & STOCK BROKERS (P) LTD., 21 TAXMANN.COM 27 ( BOM) (COPY IS PLACED ON RECORD). THE LD. DR HAS CONTENDED THAT SPECIFIC M ATERIAL HAD BEEN RECEIVED BY THE ASSESSING OFFICER FROM THE INVESTIGATION WING OF THE DEPARTMENT AFTER THE COMPLETION OF THE ASSESSMENT U/S 1 43 (3) OF THE ACT. ITA NO.5544/DEL/2010 5 AND AS SUCH, THE ASSESSING OFFICER, ON THE BASIS OF SUCH IN FORMATION, WAS DEFINITELY ENTITLED TO REOPEN THE COMPLETED ASSESSMENT. RELIANCE HAS BEEN PLACED ON RAYMOND WOOLEN MILLS VS. ITO AND ORS., 236 ITR 34 (SC) AND RAJESH ZAVERI, 251 ITR 500(SC). 5. WE HAVE HEARD THE PARTIES ON THIS ISSUE. THE LD. CIT (A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE, HOLDING AS FOLLOWS:- THE GROUND OF A.OS ACTION OF REOPENING THE PROCEE DINGS U/S 147 OF THE ACT IS FULLY VALID AND PROPER . THE A.O. HAD VITAL INFORMATION FROM A RESPONSIBLE AUTHORITY. THE NATURE OF INFORMATION WAS VERY IMPORTANT, GIVING CLEAR-CUT INDICATION OF TAX EVASIVE ACCOMMODATIO N ENTRIES BEING USED BY A SYNDICATE OF PERSONS AND GROUPS; THE ASSES SEE BEING A MAJOR BENEFICIARY. THUS THE A.O. WAS NOT ONLY WITHIN HIS RIG HTS, BUT RATHER DUTY BOUND TO REOPEN THE CASE U/S 147 OF THE ACT. THUS GROUND OF APPEAL NO.2 IS DISMISSED. 6. THE FIRST ISSUE IS AS TO WHETHER THE APPLICATION FILED BY THE ASSESSEE U/S 27 OF THE ACT IS MAINTAINABLE IN FACE OF THE FACT TH AT THE ASSESSEE DID NOT PREFER ANY APPEAL OR CROSS OBJECTION AGAINST THE CIT ( A)S ORDER. RULE 27 OF THE ITAT RULES READS AS FOLLOWS:- RULE 27 RESPONDENT MAY SUPPORT ORDER ON GROUNDS DE CIDED AGAINST HIM THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED , MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECID ED AGAINST HIM. 7. A BARE READING OF RULE 27 OF THE ITAT RULES, 1963 SHO WS THAT EVEN IF THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ORDER I MPUGNED IN THE APPEAL FILED BY THE DEPARTMENT, THE ASSESSEE IS ENTITLE D, UNDER THE SAID RULE TO SUPPORT THE CIT (A)S ORDER ON ANY OF THE GROUNDS D ECIDED AGAINST HIM. NOW, THE ASSESSEES CHALLENGE TO THE REOPENING OF THE CO MPLETED ASSESSMENT WAS DECIDED BY THE LD. CIT (A) AGAINST THE ASSE SSEE, AS NOTED ABOVE. THEREFORE, UNDER RULE 27 OF THE ITAT RULES, T HE ASSESSEE IS ENTITLED ITA NO.5544/DEL/2010 6 TO RAKE UP THIS ISSUE AT THIS STAGE BEFORE US. IN JAMNA DAS VIRJI (SUPRA), THE CIT (A) HAD ALLOWED THE ASSESSEES APPEAL IN PART, DELET ING THE DISALLOWANCE TO THE EXTENT OF ` 13.73 LACS AND CONFIRMING THE DIS ALLOWANCE TO THE EXTENT OF ` 14.96 LACS. BEFORE THE TRIBUNAL, THE ASSESSEES APPE AL WAS WITHDRAWN, PERHAPS BECAUSE IT WAS BARRED BY LIMITATION. ON AN A PPLICATION FILED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES, THE TRIBUNAL S ET ASIDE THE CIT (A)S ORDER IN ITS ENTIRETY. THE HONBLE HIGH COURT H ELD THAT ONCE THE APPEAL HAD BEEN WITHDRAWN, IT IS ONLY OPEN TO THE ASSESSEE TO SU PPORT THE CIT (A)S ORDER ON ANY OF THE GROUNDS DECIDED AGAINST HIM AND SO , THE ASSESSEE WAS ENTITLED TO URGE THAT THE DELETION OF THE DISALLOWAN CE TO THE EXTENT OF ` 13.73 LACS BY THE CIT (A) WAS CORRECT AND PROPER, BUT THE A SSESSEE WOULD NOT BE ENTITLED TO AVAIL THE BENEFIT OF RULE 27 OF THE ITA T RULES SO FAR AS REGARDS THE ACTION OF THE LD. CIT (A) IN CONFIRMING THE DISALLOW ANCE OF ` 14.96 LACS. 8. THE FACTS DISCUSSED ABOVE SHOW THAT THE DECISION IN THE C ASE OF JAMNADAS VIRJI (SUPRA) IS OF NO AVAIL TO THE DEPART MENT. IN FACT, THIS DECISION REITERATES THE POSITION AS SET OUT IN RULE 27 O F THE ITAT RULES, WHICH IS THAT AN ORDER APPEALED AGAINST MAY BE SUPPORTED BY THE RESPONDENT, DESPITE NO APPEAL THEREAGAINST HAVING BEEN FILED BY T HE RESPONDENT, ON ANY OF THE GROUNDS DECIDED AGAINST HIM. 9. FURTHER, AS NOTED IN JAMNADAS VIRJI (SUPRA) ITSELF, I N D.R. BAMASI VS. CIT, 83 ITR 223 (BOM), IT HAD BEEN LONG BACK SETTLE D THAT THE RESPONDENT IN AN APPEAL IS UNDOUBTEDLY ENTITLED TO SUPPORT THE DECR EE WHICH IS IN HIS FAVOUR ON ANY GROUNDS WHICH ARE AVAILABLE TO HIM, EV EN IF THE DECISION OF THE LOWER COURT IN HIS FAVOUR MAY NOT HAVE RAISED THOSE GR OUNDS AND THAT THE POWERS OF THE TRIBUNAL ARE SIMILAR TO THOSE OF AN APPE LLATE COURT UNDER ORDER XLI RULE 22 OF THE CPC. 10. IN ITO VS. SMT. GURINDER KAUR, 102 ITD 189 (DEL), IT HAS ALSO BEEN HELD, NOTICING HUKUMCHAND MILLS VS. CIT, 63 ITR 232 (SC), THAT EVEN DE ITA NO.5544/DEL/2010 7 HORSE RULE 27 OF THE ITAT RULES, IT IS OPEN TO THE RESP ONDENT IN AN APPEAL BEFORE THE TRIBUNAL TO RAISE A NEW GROUND IN DEFENCE OF THE ORDER APPEALED AGAINST AND THAT EVEN ASSUMING THAT RULE 27 IS NOT STRI CTLY APPLICABLE THE TRIBUNAL HAS INHERENT POWERS U/S 254 (1) OF THE ACT TO ENTERTAIN THE ARGUMENT OF THE RESPONDENT WHICH AMOUNTED TO A NEW G ROUND; THAT RULE 27 IS NOT EXHAUSTIVE OF THE POWERS OF THE TRIBUNAL; AND T HAT IT IS MERELY NOT PROCEDURAL IN CHARACTER AND DOES NOT, IN ANY WAY, CI RCUMSCRIBE OR CONTROL THE POWERS OF THE TRIBUNAL UNDER THE ACT. SMT. GURI NDER KAUR (SUPRA) HAS ELABORATELY DEALT WITH THE ISSUE, GOING INTO VARIOUS C ASE LAWS. 11. BESIDES, IN KELVINATOR INDIA (SUPRA), THE HONBLE SU PREME COURT HAS OBSERVED THAT THE ASSESSING OFFICER HAS POWER TO REOPEN A N ASSESSMENT, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE C ONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT AND THAT THE REASONS RECORDED FOR THE REOPENING MUST HAVE A LIVE LINK WITH THE FORMAT ION OF THE BELIEF OF ESCAPEMENT OF INCOME. IN THE PRESENT CASE, AS DISCUSSED H EREINABOVE, THERE WAS NO TANGIBLE MATERIAL WITH THE ASSESSING OFFICER TO C ONCLUDE THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. ALSO, THE REASON S RECORDED DO NOT HAVE ANY LINK, MUCH LESS ANY LIVE LINK WITH THE F ORMATION OF BELIEF OF ESCAPEMENT OF INCOME. THE REOPENING OF THE COMPLETED ASSESSMENT, IN VIEW OF THE FULL DISCLOSURE OF THE MATERIAL FACTS RELEVANT TO THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 2004-05, WAS NOTHING OTHER THA N A MERE CHANGE OF OPINION, WHICH IS IMPERMISSIBLE IN LAW. 12. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPLICATION FILED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES IS, BY ALL MEANS, MAIN TAINABLE. 13. NOW, SO FAR AS REGARDS THE MERITS OF THE CONTENTS OF THE APPLICATION FILED BY THE ASSESSEE, THE LEGAL POSITION AS PER THE PROV ISO TO SECTION 147 OF THE ACT IS THAT WHERE AN ASSESSMENT U/S 143 (3) HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN U/S 14 7 AFTER THE EXPIRY ITA NO.5544/DEL/2010 8 OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YE AR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUC H ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESS EE, INTER ALIA, TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FO R HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. 14. IN THE PRESENT CASE, AS PER THE RECORD, THE ASSESSEE COMP ANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND TRADE OF M S TOR, BARS, SARIA, ETC. IT FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05, THE RELEVANT YEAR DECLARING A LOSS OF ` 4,37,126/-. THE ASSESSMENT WA S COMPLETED VIDE AN ORDER PASSED U/S 143 (3) OF THE ACT ON 12.09.2008 AT AN ASSESSED INCOME OF ` 60,01,200/-. A COPY OF THE SAID ORDER HAS BEEN PLAC ED AT PAGES 42-46 OF THE ASSESSEES PAPER BOOK (APB, FOR SHORT). THE NOTICE U/S 147 OF THE ACT WAS ISSUED ON 28.07.2009. A COPY THEREOF IS AT APB 47. THE REASONS RECORDED FOR SUCH ACTION ARE DATED 07.07.2009 (APB 4 8). THUS, EVIDENTLY, THE NOTICE U/S 147 OF THE ACT WAS ISSUED AFTER THE EXP IRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2004-05. NOW, THIS COULD BE DONE, AS PER THE PROVISO TO SECTION 147, IF THERE HAD BEEN FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR ITS ASSESSMENT, FOR ASSESSMENT YEAR 2004-05. THE QUESTION IS AS T O WHETHER THERE WAS, IN FACT, ANY SUCH FAILURE ON THE PART OF T HE ASSESSEE. 15. DURING ASSESSMENT YEAR 2004-05, THE ASSESSEE COMPANY HAD RE CEIVED SHARE APPLICATION MONEY OF ` 5 LACS EACH FROM M/S MAPL E SALES PVT. LTD. AND RGS MARKETING PVT. LTD. IN THE ORIGINAL ASSESSMENT, THE ASSESSEE RELATED BEFORE THE ASSESSING OFFICER THAT THESE AMOUNTS HAD BEE N RECEIVED THROUGH DRAFT NOS.544065 (APB 98) AND 544066 (APB 102), RESPE CTIVELY. THE ASSESSEE, ON THE ASSESSING OFFICERS QUERY, FILED REPLY DATE D 25.10.2006 (APB 92-104) BEFORE THE ASSESSING OFFICER. THIS REPLY WA S ACCOMPANIED BY COPIES OF THE SAID DRAFTS, LIST OF SHAREHOLDERS AND OTHER EVIDENCE. IT WAS THEREAFTER, THAT THE SCRUTINY ASSESSMENT ORDER DATED 12 .09.2008 WAS ITA NO.5544/DEL/2010 9 PASSED. THE DEPARTMENT HAS NOT REBUTTED THE ASSESSEE HAVIN G FILED THE SAID REPLY ALONG WITH THE ACCOMPANYING EVIDENCE BEFORE T HE ASSESSING OFFICER. 16. THE REASONS RECORDED FOR THE REOPENING OF THE COMPLET ED ASSESSMENT ARE AS FOLLOWS:- REASONS FOR ISSUING NOTICE U/S 148 OF IT ACT, 1961. THE ASSESSEE FILED RETURN OF INCOME ON 4.9.2001 DE CLARING LOSS OF RS.4,37,126/-. THE ASSESSMENT WAS COMPLETED U/S 143(3 ) OF THE IT ACT, 1961 ON 22.12.2007 AT A TOTAL INCOME OF RS.60,01,203/- . ON THE BASIS OF INFORMATION IN POSSESSION OF THE DEPARTMENT AS RECE IVED FROM THE DIRECTORATE OF INCOME TAX (INV.)-I, NEW DELHI IT IS NO TICED THAT THE ASSESSEE HAS TAKEN THE FOLLOWING ACCOMMODATION ENTRY/EN TRIES THE DETAILS OF WHICH ARE AS UNDER:- 1. S.NO. --- 2. BENEFICIARY NAME M/S BARNALA STEEL INDUSTRIES LTD., MEERUT ROAD, M. NAGAR. 3. BENEFICIARY BANK NAME SBI M. NAGAR 4. BENEFICIARY BANK BRANCH RAILWAY ROAD, M. NAGAR 5. VALUE OF ENTRY RS.5,01,250/ - + 5,01,250/ - 6. INSTRUMENT NUMBER BY WHICH ENTRY RECEIVED DRAFT NO.544065 & 544066 ISSUED BY JAI LUXMI COOPERATIVE BANK LTD. 7. DATE ON WHICH ENTRY RECEIVED 4.12.2003 8. NAME OF A/C HOLDER OF ENTRY GIVING ACCOUNT DEEPAK GUPTA 9. ENTRY OPERATORS BANK NAME JAILAXMI COOP. BANK 10. ENTRY OPERATORS BANK BRANCH FATEH PURI DELHI 11. ACCOUNT NO. OF ENTRY GIVING ACCOUNT 15942 ON GOING THROUGH THE BANK ACCOUNT OF THE ASSESSEE IT HA S BEEN REVEALED THAT THE AMOUNT OF THIS ENTRY HAS BEEN CREDITED, BUT THE ASSESSEE HAS NOT REFLECTED THEM EITHER IN THE FORM OF LOAN/DEPOSIT OR AS ANY ADVANCE IN THE NAME OF SHRI DEEPAK GUPTA, IN THE B ALANCE SHEET. ENQUIRIES MADE BY INSPECTOR REVEAL THAT SHRI DEEPAK G UPTA IS NOT AVAILABLE AT THE ADDRESS GIVEN IN THE BANK ACCOUNT I.E. 1756 NAI BASTI NAYA BAZAR, DELHI. DURING THE ASSESSMENT PROCEEDING C OMPLETED ON 22.12.2007, WHEN THE ASSESSEE COMPANY WAS CONFRONTED IN RESPECT OF THESE ENTRIES, THE ASSESSEE CO. VIDE LETTER DATED 20.12. 2006 STATED ITA NO.5544/DEL/2010 10 1. THAT THE ASSESSEE IS TOTALLY UNABLE TO UNDERSTAND THE NATURE OF THE ENTRIES OF RS.5,01,250/- AND RS.5,01,250/- AS ALL EGED TO HAVE BEEN RECEIVED ON 4.12.2003 BY THE ASSESSEE. 2. THAT THE ASSESSEE HAS EXAMINED AND INVESTIGATED ITS ENTIRE BOOKS OF ACCOUNT AND HAS NOT FOUND ANY SUCH ENTRY IN TH E ACCOUNT BOOKS, SINCE THESE ENTRIES ARE NOT AT ALL TRACEABLE IN BOOKS OF ACCOUNTS, ON THE BASIS OF INFORMATION AS PROVIDED BY YOUR GOOD SELF. NO SUCH AMOUNT HAS BEEN CREDITED IN THE BOOKS AS COMPANY HAS N OT RECEIVED THE SAME FROM SHRI DEEPAK GUPTA AS ALLEGED. AS THE ASSESSEE CO. HAS FAILED TO DISCLOSE TRULY THE NA TURE AND SOURCE REGARDING THESE ENTRIES, I HAVE REASON TO BELIEVE THAT TH E AFORESAID ACCOMMODATION ENTRY/ENTRIES AMOUNTING TO RS.10,02,500/- REPRESENTS THE INCOME OF THE ASSESSEE WHICH HAS ESCAPED ASSESSME NT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE ASS ESSMENT YEAR 2004-05 FOR WHICH ACTION U/S 147 OF THE IT ACT, 1961 I S REQUIRED AND ACCORDINGLY NOTICE U/S 148 OF THE IT ACT, 1961 IS ISSU ED FOR THE ASSESSMENT YEAR 2004-05. DATED, 17.07.2009 SD/- (S.R. KAUSHIK) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-2, MUZAFFARNAGAR. 17. THE AFORESAID REASONS DO NOT LAY OUT ANY FAILURE ON T HE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ANY MATERIAL FACT NE CESSARY FOR ITS ASSESSMENT FOR ASSESSMENT YEAR 2004-05. AND FOR DOING SO, T HE PROVISO TO SECTION 147 COMES INTO PLAY. ONCE THE ASSESSEE HAD DULY DISCLOSED ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FULLY AND TRUL Y BEFORE THE ASSESSING OFFICER IN THE SCRUTINY ASSESSMENT PROCEEDINGS, FOR ASSESSMENT YEAR 2004-05, NO ACTION OUGHT TO HAVE BEEN TAKEN U/ S 147 OF THE ACT, AS ENVISAGED BY THE PROVISO TO SECTION 147. PERTINENTLY, THE OPERATIVE WORD IN THE SAID PROVISO IS SHALL, MAKING IT OBLIGATORY ON TH E ASSESSING OFFICER TO DEFINITELY NOT TAKE ANY SUCH ACTION, ALL MATERIAL F ACTS NECESSARY FOR THE ITA NO.5544/DEL/2010 11 ASSESSMENT HAVING BEEN FULLY AND TRULY DISCLOSED BY THE A SSESSEE IN THE SCRUTINY ASSESSMENT PROCEEDINGS. 18. IN THE FACE OF THE PROVISO TO SECTION 147 OF THE ACT , THERE IS NO MERIT IN THE CONTENTION OF THE DEPARTMENT, AS ALSO HELD BY THE LD. CIT (A), THAT SINCE THE ASSESSING OFFICER HAD VITAL INFORMATION FROM THE IN VESTIGATION WING OF THE DEPARTMENT, THE ASSESSING OFFICER WAS DUTY BOUND TO REOPEN THE CASE U/S 147 OF THE ACT. RAYMONDS WOOLLEN MILLS (SUPRA) IS NOT AT ALL APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREIN, IT WAS HELD THAT IN DETERMINING WHETHER COMMENCEMENT OF RE-ASSESSMENT PROCEEDINGS WAS VAL ID, IT HAS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MAT ERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD RE-OPEN THE CASE AND THAT THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSID ERED AT THIS STAGE. THE ISSUE OF COMING INTO PLAY OF THE PROVISIONS OF THE SECT ION 147 OF THE ACT WAS NOT UP FOR CONSIDERATION BEFORE THE HONBLE SUPREME COURT IN THAT CASE. 19. RAJESH ZAVERI (SUPRA) WAS CONCERNED WITH AN ASSESSMENT C OMPLETED U/S 143 (1) OF THE ACT, WHICH IS NOT THE CASE HEREIN. THEREFORE, RAJESH ZAVERI (SUPRA) ALSO DOES NOT AID THE CASE OF THE DEPAR TMENT. 20. IN VIEW OF THE ABOVE, THE APPLICATION FILED BY THE ASSESSEE IS ALLOWED AND AS SUCH, THE ORDER PASSED BY THE LD. CIT (A) IS MAIN TAINED. THIS BEING SO, THE GROUNDS RAISED BY THE DEPARTMENT ARE NOT REQU IRED TO BE GONE INTO. 21. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED AND THE APPLICATION FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 05.12.201 3. SD/- SD/- [ G.D. AGRAWAL ] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 05 TH DECEMBER, 2013. ITA NO.5544/DEL/2010 12 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.