T V Today Network Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 5617/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3651 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Principle of natural justice; Opportunity of cross examination; Corroborative evidences; Accommodation entries; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 194C; 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 6253/DEL/2013 (ASSESSMENT YEAR: 2004-05) S C H LEICHER INDIA LTD. C/O M/S RRA TAXINDIA D-28, SOUTH EXTENSION, PART-I NEW DELHI VS. DCIT CENTRAL CIRCLE-09, NEW DELHI PAN : AAACM1960G (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH KUPTA, SH. SOMIL AGGARWAL, ADVS. RESPONDENT BY : SH. N. K. BANSAL, SR.DR DATE OF HEARING : 21.03.2017 DATE OF PRONOUNCEMENT : 24.03.2017 O R D E R PER BEENA A. PILLAI, J.M : 1. THE PRESENT APPEAL HAS BEEN PREFERRED BY ASSESSEE AGAINST ORDER, DATED 30.09.2013 PASSED BY LD. CIT(A )-XXXII FOR ASSESSMENT YEAR 2004-05 ON FOLLOWING GROUNDS OF APPEAL: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF LD. AO IN FRAMING THE IMPUGNED ORDER U/S 147/143(3) AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT COMPLYING WITH MANDATORY CONDITIONS AS ENVISAGED U/S 147 TO 151 OF INCOME TAX ACT, 1961 AND IMPUGNED ORDER HAS BEEN PASSED THAT TOO WITHOUT RECORDING VALID REASONS AND WITHOUT OBTAINING VALID SANCTION AS PER LAW. 2 ITA NO. 6253/DEL/2013 (AY 2004-05) 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD . AO IN FRAMING THE IMPUGNED ASSESSMENT U/S 147/143(3) IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS.52,50,000/- ON ACCOUNT OF PURCHASES OF PGSM SOFTWARE MODULE FROM M/S B.T. TECHNET LTD. BY TREATING THE SAME AS NON-GENUINE AND THAT TOO WITHOUT INDEPENDENT APPLICATION OF MIND AND BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT PROVIDING OPPORTUNITY OF CROSS EXAMINATION. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, IMPUGNED DISALLOWANCE AND IMPUGNED ASSESSMENT ORDER ARE BAD IN LAW, ILLEGAL, UNJUSTIFIED, CONTRAR Y TO FACTS & LAW AND BASED UPON RECORDING OF INCORRECT FACTS AND FINDING, WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THE SAME DESERVES TO BE QUASHED. 5. THAT THE APPELLANT CRAVES TO LEAVE TO ADD, MODI FY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 01.11.2004 DECLARING TOTAL INCOME OF RS.18,91,694/- . ASSESSING OFFICER FRAMED ASSESSMENT UNDER SECTION 1 43(3) ON 22.12.2006 AND ASSESSED TOTAL INCOME AT RS.25,99,30 0/- IN HANDS OF ASSESSEE. AGGRIEVED BY ASSESSMENT ORDER, A SSESSEE PREFERRED APPEAL BEFORE LD. CIT(A), WHO REDUCED THE ASSESSED INCOME TO RS. 19, 91, 990/-. 3 ITA NO. 6253/DEL/2013 (AY 2004-05) IN THE MEANTIME A SEARCH AND SEIZURE ACTION TOOK PL ACE AT S.K. GUPTA GROUP. LD. AO RECORDS THAT DURING THE COURSE OF SEARCH AT 231, GULMOHAR ENCLAVE, ONE OF THE PREMISE S OF SH. SK GUPTA, LARGE NUMBER OF INCRIMINATING DOCUMENTS W ERE FOUND. THESE DOCUMENTS INCLUDED SALE BILLS ISSUED B Y M/S BT TECHNET LTD., ONE OF THE COMPANIES OF SH. S.K. GUPT A, TO WHOM ASSESSEE HAD TRANSACTION FOR PURCHASE OF PGSM SOFTWARE WORTH RS.52,50,000/- DURING YEAR UNDER CONSIDERATION. IT HAS BEEN OBSERVED BY LD. AO THAT SUCH BILLS OF SALES OF PGSM SOFTWARE TO ASSESSEE WERE FOUND PE RTAINING TO YEAR UNDER CONSIDERATION FROM SEARCHED PREMISES. ACCORDINGLY, JURISDICTION OVER THE CASE WAS TRANSFE RRED TO CIRCLE. IT HAS BEEN RECORDED BY LD. AO THAT WHILE C ONCLUDING ASSESSMENT PROCEEDINGS OF M/S BT TECHNET LTD., IT W AS PROVED ON THE BASIS OF CONFESSIONAL STATEMENT OF SH. S.K. GUPTA HUSBAND OF SMT. SAROJA GUPTA, WHO WAS DIRECTOR OF M /S BT TECHNET LTD., THAT NO BUSINESS ACTIVITY OTHER THAN ACCOMMODATION ENTRY BUSINESS WAS BEING CARRIED OUT BY M/S BT TECHNET LTD. ASSESSING OFFICER THEREFORE, CAME T O CONCLUSION THAT THERE WERE REASONS TO BELIEVE THAT INCOME, TO THAT EXTENT HAS ESCAPED ASSESSMENT AND ACCORDINGLY ASSESSMENT WAS REOPENED IN ASSESSEES CASE BY ISSUI NG NOTICE UNDER SECTION 147, WITH NOTICE UNDER SECTION 148 OF THE ACT ON 27.01.2009. LD. AO RECORDED REASONS OF REOPENING WH ICH HAS BEEN REPRODUCED HEREUNDER: THIS IS THE CASE OF A COMPANY WHO FILLED ITS RETURN OF INCOME FOR ASSTT. YEAR 2004-05 AT A FIGUR E OF 4 ITA NO. 6253/DEL/2013 (AY 2004-05) RS.18,91,694/- ON 01-11-04. THE SAME WAS PROCESSED AT THE RETURNED INCOME U/S 143(1) (A) ON 14-03-2005 . LATER ON THE CASE WAS PICKED UP FOR SCRUTINY & THE CASE WAS ASSESSED U/S 143(3) OF LT ACT 1961 ON 22- 12-2006 AT A FIGURE OF RS. 25,99,300/-. THE ASSESSED INCOME HAS BEEN REDUCED TORS.19,91,990/-AFTER GIVING APPEAL EFFECT TO THE ORDER OF THE LD. CIT (A), WHO PASSED THE ORDER ON 19-08-2007. DURING THE COURSE OF SEARCH & SEIZURE ACTION IN S.K GUPTA GROUP OF CASES IT HAS BEEN REVEALED THAT SHRI GUPTA, A CHARTERED ACCOUNTANT BY PROFESSION , I S RUNNING/CONTROLLING A NUMBER OF COMPANIES AND IS OPERATING A NUMBER OF BANKS ACCOUNTS EITHER BY HIMSELF OR IN THE NAME OF HIS RELATIVES AND CLOSE ASSOCIATES. SHRI S.K GUPTA THROUGH THE COMPANIES CONTROLLED BY HIM WAS FOUND TO BE ENGAGED IN THE BUSINESS OF ISSUING ACCOMMODATION BILLS ON COMMISSION BASIS AND ALSO ISSUING ENTRIES FOR SHARE CAPITAL. NO EVIDENCE WAS FOUND DURING THE SEARCH TH AT ANY SUBSTANTIAL BUSINESS ACTIVITY WAS BEING CARRIED ON THROUGH THESE COMPANIES. .IN FACT, A LARGE NUMBERS OF BILLS ISSUED TO VARIOUS COMPANIES WERE FOUND AND SEIZED FROM THE PREMISES OF SHRI GUPTA AND MOST OF THEM WERE FOR PROVIDING PROFESSIONAL/CONSULTANCY SERVICES. IT IS PERTINENT TO MENTION HERE THAT SHRI GUPTA IN HIS STATEMENTS RECORDED ON OATH U/S 132/131 OF THE I.T ACT HAD ADMITTED THAT HE WAS JUST ISSUING ACCOMMODATION BILLS TO VARIOUS COMPANIES. IT WAS AL SO ADMITTED BY HIM THAT HIS COMPANIES WERE NEITHER HAVING THE NECESSARY COMPETENCE NOR THE INFRASTRUCTURE TO PROVIDE SUCH PROFESSIONAL/CONSULTANCY SERVICES .DURING THE COURS E OF SEARCH AT 231 GULMOHAR ENCLAVE, ONE OF THE PREMISES OF SHRI S.K GUPTA, VARIOUS INCRIMINATING DOCUMENTS HAVE BEEN FOUND. THESE DOCUMENTS ALSO INCLUDE THE SALES BILLS ISSUED BY M/S BT TECHNET LT D, ONE OF THE GROUP COMPANIES OF SHRI SK GUPTA, TO THE ASSESSEE COMPANY I.E. M/S SCHLEICHER INDIA LTD., TH E DETAILS OF WHICH ARE AS UNDER:- 5 ITA NO. 6253/DEL/2013 (AY 2004-05) ANNEXURE PAGE NO BILL ISSUED GIVEN TO PARTICULARS INVOICE NO/BILL NO DATED AMOUNT A-2I 74 BT TECHNET LTD SCHLEICHER INDIA LTD PGSM SOFTWARE MODULE 2003- 04/06/GL/08 4/7/03 1,83,600/- A-21 73 BT TECHNET LTD SCHLEICHER INDIA LTD PGSM SOFTWARE MODULE 2003- 04/06/GL/08 4/7703 1,83,600/ - DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF M/S BT TECHNET LTD, STATEMENTS OF SHRI S.K GUPTA, DIRECTOR AND MAIN PERSON OF THE GROUP WERE RECORDED . BASED ON THESE STATEMENTS AS WELL AS OTHER EVIDENCE S BROUGHT ON RECORDS, FOLLOWING INFERENCES WERE DRAWN IN SAID CASE I. IT IS PROVED BEYOND DOUBT ON THE BASIS OF DOCUMENTARY EVIDENCES, CONFESSIONAL STATEMENT OF SHRI. S.K GUPTA, THE MAIN PERSON CONTROLLING THE ST ATE OF AFFAIRS OF THE ASSESSEE, HUSBAND OF SMT. SAROJ GUPTA, DIRECTOR OF THE ASSESSEE COMPANY AND RESULTS OF THE ASSESSMENT THAT ASSESSEE IS ENGAGED IN THE ACCOMMODATION ENTRY BUSINESS AND NOT DOING ANY GENUINE SALE & PURCHASE AS CLAIMED IN THE FINAL ACCOUNT STATEMENTS ANNEXED WITH RETURN OF INCOME. II. SINCE ASSESSEE HAS FAILED TO PRODUCE ANY REGULAR BOOKS OF ACCOUNT, SALE & PURCHASE EXPENSES VOUCHERS, THE BOOK RESULTS SHOWN BY THE ASSESSEE AR E LIABLE TO BE REJECTED BY WAKING RECOURSE TO PROVISI ONS OF SECTION 145 (3) OF IT ACT 1961. III. THE ASSESSEE HAS NOT BEEN SUCCESSFUL IN ESTABLISHING THAT ANY GENUINE BUSINESS ACTIVITY WAS BEING CARRIED OUT OTHER THAN THE ACCOMMODATION ENTR Y BUSINESS. NO PHYSICAL EVIDENCE OF SUPPORTING INFRASTRUCTURE WAS FOUND BY THE INVESTIGATION WING AT 6 ITA NO. 6253/DEL/2013 (AY 2004-05) THE TIME OF SEARCH NOR THE SAME HAS BEEN ADDUCED BEFORE THE UNDERSIGNED. IV. THE ASSESSEE HAS NOT PRODUCED ANY CONFIRMATIONS FROM THE DEBTORS AND CREDITORS TO WHO M BILLS HAVE BEEN ISSUED AND BILLS HAVE BEEN PROCURED . V. THE ASSESSEE FAILED TO PROVIDE DOCUMENTARY EVIDENCES IN THE FORM OF RENT DEEDS/RECEIPTS AND OT HER EXPENSES VOUCHERS AND BILLS, WHICH COULD ESTABLISH THE GENUINE CREDENTIALS OF THE ASSESSEE AS A GENUIN E SOFTWARE DESIGN & DEVELOPMENT AND OTHER JT RELATED SERVICES PROVIDER TO THE GENUINE CUSTOMERS. EVEN TH E BIG CORPORATES LIKE RELIANCE INDUSTRIES LTD, NUT, HC L GROUP, FIITJEE, MOTHERSONS SUMI INNOVATIVE & DESIGN LTD, ASL INSURANCE BROKERS PVT LTD, ACCORD INSURANCE, ALLIANZE SECURITIES, LINK ENGINEER LTD PASHUPATI FABRICS ETC, WHO THEMSELVES ARE HAVING THEIR OWN INFRASTRUCTURES FOR IT RELATED REQUIREMEN TS, HAVE APPROACHED THE ASSESSEE AS WELL AS ITS OTHER RELATED GROUP COMPANIES FOR GETTING ACCOMMODATION BILLS. BUT SURPRISINGLY NONE OF THEM HAD ANY CORROBORATIVE EVIDENCE OTHER THAN THE SALE BILLS OR IN SOME CASES A GENERAL AGREEMENT, WITHOUT ANY SUPPORTING EVIDENCES OF SOFTWARE DEVELOPMENT. EVEN ASSESSEE HAD NO SUPPORTING DOCUMENTS OF PURCHASE OR OUTSOURCING, WHERE FROM IT COULD ISSUE SALE BILL S TO THESE CORPORATE OR OTHER DESIROUS COMPANIES/CONCERNS. (I) THE ASSESSEE HAS FAILED TO CORRELATE ITS SURRENDER INCOME, IN DIFFERENT ASSESSMENT YEARS, WI TH THE ACTUAL DEFICIENCIES OF THE BUSINESS RELEVANT TO ACCOMMODATION ENTRY BUSINESS ON ACCOUNT OF PROVIDING ACCOMMODATION SALE BILLS, EXPENSES BILLS IN THE FORM OF JOB WORK CHARGES, ADVERTISEMENT CHARGES , WEB DESIGNING CHARGES AND PROVIDING INVESTMENT ENTRIES. (II) THE ASSESSEE HAS INFACT INDULGED IN ACCOMMODATION ENTRIES BUSINESS AND HAS NOT DONE ANY GENUINE BUSINESS. SO THE INCOME OF THE ASSESSEE FROM THE ACCOMMODATION ENTRY BUSINESS, IS COMPUTED @ 2%, NET RATE ON SALE TURNOVER AND INVESTMENT 7 ITA NO. 6253/DEL/2013 (AY 2004-05) TURNOVER IN VIEW OF THE ASSESSEE'S STATEMENT COUPLE D WITH PREVALENT MARKET CONDITION FOR SUCH ENTRIES. N O FURTHER TO BE ALLOWED, AS THIS IS THE NET RATE. IN VIEW OF THE ABOVE FINDINGS IN THE CASE OF M/S BT TECHNET LTD IT IS CLEAR THAT THE ASSESSEE IS NOT MADE ANY GENUINE EXPENSE IN THE SO CALLED PURCHASE OF PGSM SOFTWARE MODULE AND RATHER TOOK ACCOMMODATION BILLS TO THE TUNE OF RS.1,05,00,000/- .BY DOING SO THE ASSESSEE HAS INFLATED ITS EXPENSES , SO AS TO REDUCE ITS INCOME. AS SUCH 1 HAVE REASONS T O BELIEVE THAT THIS INCOME OF RS. 1,05,00,000/- HAS ESCAPED ASSESSMENT, SO IN ORDER TO BRING THE SAME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO THE NOTICE SUBSEQUENTLY, PROCEEDINGS ARE INITIATED UNDE R SECTION 147/148 OF IT ACT 1961. 3. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS REQUIRED TO JUSTIFY TRANSACTION WITH EVIDENCES LIKE AGREEMENT FOR GETTING SOFTWARE FROM M/S BT TECHNET LTD., NEED OF SOFTWARE AND DETAILS OF APPLICATIONS OF SOFTWARE FO R ASSESSEES BUSINESS. ASSESSEE WAS ALSO ASKED TO GIVE NAMES AND ADDRESSES OF ALL THE PERSONS FROM ASSESSEES SIDE A S WELL AS M/S BT TECHNET WHO WERE ASSOCIATED WITH PURCHASE/DEVELOPMENT AND INSTALLATION OF SAID SOFTW ARE FROM CONCEPTUAL STAGE TILL STAGE OF MAKING FINAL PAYMENT . IT HAS BEEN ALLEGED BY LD. AO THAT, AS ASSESSEE DID NOT PR OVIDE ANY EVIDENCE WHICH COULD PROVE THAT ASSESSEE HAD IN FAC T MADE GENUINE PURCHASES, AND HAD NOT TAKEN ANY ACCOMMODAT ION ENTRY FROM M/S BT TECHNET LTD., LD. AO MADE ADDITIO N OF RS.52,50,000/-, WHICH WAS CLAIMED AS EXPENDITURE BY ASSESSEE. 8 ITA NO. 6253/DEL/2013 (AY 2004-05) 4. AGGRIEVED BY ASSESSMENT ORDER PASSED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). ASSESSEE CHA LLENGED JURISDICTION OF LD. AO IN INVOKING PROVISIONS OF SE CTION 147, ON THE GROUND THAT ALLEGED SEIZED MATERIALS WERE FROM THIRD PARTY I.E SH. SK GUPTA AND THAT NOTICE ISSUED UNDER SECTI ON 148 WAS BAD IN LAW AND WITHOUT APPLICATION OF MIND. ASS ESSEE ALSO CHALLENGED ADDITION ON MERITS ON VARIOUS COUNTS. 5. LD. CIT(A) UPHELD VALIDITY OF REASSESSMENT PROCEED INGS AND ALSO CONFIRMED ADDITION MADE BY LD. AO. 6. AGGRIEVED BY ORDER PASSED BY LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. 7. LD. COUNSEL SUBMITTED THAT ASSESSEE IS ENGAGED IN BUSINESS OF INSTALLING, MAINTAINING, PROCURING, BUY ING, SELLING AND LETTING ON HIRE, IMPORTING, EXPORTING OR OTHERW ISE DEAL IN SYSTEM AND APPLICATION SOFTWARE OF ALL AND ANY KIND , AS COMPUTER HARDWARE AND ACCESSORIES, COMMUNICATION, P ROCESS CONTROL AND OFFICE AUTOMATION AND HIGH-END SECURITY EQUIPMENTS. IT HAS BEEN SUBMITTED THAT, CORE BUSINE SS IS OF BUILDING DEFENCE INFRASTRUCTURE FOR GOVERNMENT OF I NDIA. HE SUBMITTED THAT IT WAS AT INSTANCE OF MINISTRY OF HO ME AFFAIRS, GOVERNMENT OF INDIA THAT ASSESSEE HAD SUPPLIED COM PLETE LAPTOP-BASED 16 CHANNELS PGSM INTERCEPTOR SYSTEM. 8. LD. COUNSEL SUBMITTED THAT ORIGINAL ASSESSMENT FOR YEAR UNDER CONSIDERATION WAS COMPLETED ON 22.12.2006 UND ER SECTION 143(3) OF THE ACT. THEREAFTER, ASSESSMENT W AS REOPENED VIDE NOTICE UNDER SECTION 147 OF THE ACT, DATED 9 ITA NO. 6253/DEL/2013 (AY 2004-05) 27.01.2009. LD. COUNSEL CHALLENGED REASSESSMENT PROCEEDINGS ON 3 COUNTS: I) IT HAS BEEN SUBMITTED THAT ASSESSEE HAS NOT BEEN SERVED WITH NOTICE UNDER SECTION 143(2) OF THE ACT WHICH IS EVIDENT FROM REPLY RECEIVED IN LIEU OF RTI APPLICATION, DATED 27.01.2014 AND THAT ASSESSING OFFICER HAS NOT DISCHARGED ITS ONUS OF ESTABLISHING THAT INCOME HAS ESCAPED ASSESSMENT BY WAY OF MATERIALS ON RECORD. HE PLACED RELIANCE UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DCIT VS SOCIETY OF WORLD WIDE INTER BAN, FINANCIAL TELECOMMUNICATION REPORTED IN 323 ITR 249 AND DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. SRI JAI SHIV SHANKAR TRADERS PVT.LTD., REPORTED IN 383 ITR 448; II) IT HAS BEEN SUBMITTED THAT THE REASONS FOR REOPENING IS BASED ON BORROWED SATISFACTION AS THERE IS NEITHER MATERIAL IN POSSESSION OF ASSESSIN G OFFICER NOR THERE IS ANY INDEPENDENT APPLICATION OF MIND. IT HAS BEEN SUBMITTED THAT ASSESSMENT HAS BEEN REOPENED MERELY ON THE STATEMENT OF SH. S.K. GUPTA. LD. COUNSEL PLACED HIS RELIANCE UPON DECISION OF THIS TRIBUNAL, AMRITSAR BENCH, IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR REPORTED IN 140 TTJ 249; III) IT IS SUBMITTED BY LD. COUNSEL THAT REOPENING CANNOT BE PERMITTED ON THE BASIS OF DOCUMENTS 10 ITA NO. 6253/DEL/2013 (AY 2004-05) FOUND DURING THE COURSE OF SEARCH. HE SUBMITTED THAT IF THE ACTION UNDER SECTION 147 IS PERMITTED O N THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH , THEN PROVISIONS OF SECTION 153 WOULD BE REDUNDANT. HE PLACED RELIANCE UPON THE DECISION OF (LUCKNOW DECISION). HE PLACED RELIANCE ON THE DECISION OF TH IS TRIBUNAL, LUCKNOW BENCH IN CASE OF JYOTI PAT RAM VS ITO REPORTED IN 92 ITD 423. 9. LD. COUNSEL SUBMITTED THAT IN REASONS RECORDED ASSESSING OFFICER HAS RELIED UPON TWO ALLEGED SALE BILLS, ISSUED BY M/S BT TECHNET LTD., TO ASSESSEE BEING ANNEXURE-A 21 FOR PURCHASE OF PGSM SOFTWARE MODUL E FOR AN AMOUNT OF RS.1,83,600/-. WHEREAS ASSESSEE HAD ACTUALLY PURCHASED SAID SOFTWARE BY WAY OF INVOICE DATED 20.12.2003, AMOUNTING TO RS.52,50,000/-, ON WHICH T DS UNDER SECTION 194C AT THE RATE OF 2.1% WAS ALSO DEB ITED. 10. LD. COUNSEL FURTHER SUBMITTED THAT ENTIRE REASSESSMENT PROCEEDINGS HAS BEEN NEITHER VALIDLY I NITIATED NOR CONCLUDED THEREFORE, NEEDS TO BE QUASHED. 11. PER CONTRA LD. DR SUBMITTED THAT ASSESSEE HAS NOT FILED ANY RETURN IN RESPONSE TO NOTICE ISSUED UNDER SECTION 147 OF THE ACT. HE SUBMITTED THAT ASSESSEE HAS NOT FILED EVEN A LETTER FOR TREATING ORIGINAL RETURNS FILED I N LIEU OF NOTICE ISSUED UNDER SECTION 147 OF THE ACT. HE SUBM ITTED THAT NOTICE ISSUED IS WITHIN THE PERIOD OF 4 YEARS AND ASSESSING OFFICER WAS COMPETENT ENOUGH TO ISSUE SUC H 11 ITA NO. 6253/DEL/2013 (AY 2004-05) NOTICE. LD. DR SUBMITTED THAT ON PERUSAL OF REPLY D ATED 27.02.2014, ISSUED BY ASSESSING OFFICER IN RESPONSE TO RTI APPLICATION, IT CANNOT BE SAID THAT NO NOTICE UNDER SECTION 143(2) HAS BEEN ISSUED AS REASSESSMENT PROCEEDINGS ARE MAINTAINED IN A SUPPORT FILE BY ASSESSING OFFICER. HE FURTHER SUBMITTED THAT LD. AO HAS NOT EXPRESSED SUCH NOTICE TO BE NOT ISSUED. HE THUS ARGUED THAT ASSESSING OFFICER H AS RIGHTLY ASSUMED JURISDICTION IN REOPENING ASSESSMEN T IN CASE OF ASSESSEE BEFORE US. LD. DR PLACED RELIANCE UPON ORDERS PASSED BY AUTHORITIES BELOW. 12. IN REPLY TO SUBMISSIONS OF LD. DR, LD. COUNSEL SUBMITTED THAT ASSESSEE FILED RETURNS IN RESPONSE T O NOTICE UNDER SECTION 147. LD. COUNSEL PLACED RELIANCE UPON LETTER DATED 27.11.2009 PLACED AT PAGE 100 OF PAPER BOOK, WHEREIN DETAILS IN RESPECT OF PURCHASE OF SOFTWARE FROM BT TECHNET, ALONG WITH AUDITED REPORT AND ACKNOWLEDGEM ENT OF RETURN FOR ASSESSMENT YEAR UNDER CONSIDERATION HAS BEEN SUBMITTED TO HAVE BEEN TENDERED. HE FURTHER ARGUED THAT, EVEN IF IT IS ASSUMED THAT NO RETURN IN RESPONSE TO NOTICE UNDER SECTION 147 HAS BEEN FILED, THEN ASSESSING OF FICER COULD NOT HAVE COMPLETED RE ASSESSMENT. HE SUBMITTE D THAT MERELY BECAUSE IN THE REASSESSMENT ORDER, THERE IS NO MENTION REGARDING FILING OF RETURNS IN LIEU OF NOTI CE UNDER SECTION 147, IT CANNOT BE ASSUMED THAT NO RETURNS H AVE BEEN FILED BY ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 147 OF THE ACT. 12 ITA NO. 6253/DEL/2013 (AY 2004-05) 13. WE HAVE PRODUCED THE SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US AND JUDGMENTS RELIED UPON BY LD. COUNSEL. 14. ADMITTEDLY IN THE PRESENT CASE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF SEARCH AND SEIZURE AC TION AT THE PREMISES OF SK GUPTA GROUP COMPANIES. AT THIS JUNCTURE, WE AGREE WITH SUBMISSIONS MADE BY LD. COU NSEL THAT ON RECEIPT OF INFORMATION RECEIVED ON THE BASI S OF SEARCH AND SEIZURE OPERATION, ASSESSING OFFICER SHO ULD HAVE FOLLOWED PROCEDURE UNDER SECTION 153C, INSTEAD OF REOPENING THE ASSESSMENT U/S 147. FURTHER IT IS OBS ERVED THAT THE REOPENING HAS BEEN DONE ON THE BASIS OF RE ASONS RECORDED ON INCORRECT FACTS. THAT BEING SO THE REAS ONS ARE IN FACT NO REASONS AT ALL. THIS VIEW FIND SUPPORT F ROM THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT I N THE CASE OF CIT VERSUS ATLAS CYCLES INDUSTRIES REPORTED IN 180 ITR 319. ON THESE COUNTS ITSELF NOTICE ISSUED UNDER SECTION 147 OF THE ACT INITIATING REASSESSMENT WOULD NOT ST AND THE TEST OF LAW. 15. FURTHER ON MERITS, MATERIAL BASED ON WHICH ASSESSMENT HAS BEEN REOPENED ARE TWO INVOICES, AMOU NTING TO RS.1,83,000/- ISSUED BY M/S BT TECHNET LTD, WHER EAS ASSESSEE HAS PURCHASED FROM M/S BT TECHNET LTD., PG SM SOFTWARE MODULE VIDE INVOICE DATED 20/12/2003. THE SAID INVOICE HAS BEEN PLACED AT PAGE 127 OF PAPER BOOK. ON PERUSAL OF PAGE 129 OF PAPER BOOK IT APPEARS THAT M INISTRY OF HOME AFFAIRS, GOVERNMENT OF INDIA REQUIRED SUPPL Y OF 13 ITA NO. 6253/DEL/2013 (AY 2004-05) COMPLETE LAPTOP-BASED 16 CHANNELS PGSM INTERCEPTOR SYSTEM AND THE PURCHASE ORDERS INCLUDING THE TERMS AND CONDITIONS WERE CALLED FOR FROM ASSESSEE. FURTHER, AT PAGE 130133 OF PAPER BOOK MINISTRY OF HOME AFFAIRS, GOVERNMENT OF INDIA HAS INTIMATED SPECIFICATIONS RE QUIRED IN THE INTERCEPTOR SYSTEM. AT PAGE 134 OF THE PAPER BOOK CUSTOMS DUTY EXEMPTION CERTIFICATE HAS BEEN PLACED, WHICH DEPICTS GOODS BEING PURCHASED BY MINISTRY OF HOME AFFAIRS FROM ASSESSEE, WHICH IS FOLLOWED BY BILL OF ENTRY AT PAGE 135 OF THE PAPER BOOK. IT HAS BEEN FURTHER SUB MITTED THAT ASSESSEE HAS NOT ENTERED INTO ANY OTHER TRANSA CTION WITH BT TECHNET LTD. ON PERUSAL OF THE BOOKS OF ACC OUNTS IT IS OBSERVED THAT ASSESSEE HAD ONLY ONE TRANSACTION OF VALUE AMOUNTING TO RS.52,50,000/- MADE WITH M/S BT TECHNE T LTD. 16. ON PERUSAL OF ORDERS OF AUTHORITIES BELOW IT IS OBSERVED THAT ASSESSING OFFICER HAS RELIED HEAVILY ON THE STATEMENT OF SH. SK GUPTA REGARDING THE RECEIPT OF ACCOMMODATION ENTRIES BY ASSESSEE, BASED ON WHICH EXPENDITURE CLAIMED BY ASSESSEE AMOUNTING TO RS.52,50,000/- HAS BEEN ADDED TO INCOME OF ASSESSEE . IT HAS BEEN CONTENDED BY LD. COUNSEL THAT ASSESSING OF FICER HAD AT NO TIME HAS CONFRONTED WITH THE STATEMENT OF SH. SK GUPTA OR ANY OTHER MEMBER OF HIS GROUP INCLUDING HI S WIFE MRS. SAROJA GUPTA. FURTHER IT IS PERTINENT TO NOTE AT THIS JUNCTURE THAT LD. AO DISALLOWED EXPENDITURE CLAIMED BY ASSESSEE AMOUNTING TO RS. 52,50,000/-, HOWEVER HAS NOT 14 ITA NO. 6253/DEL/2013 (AY 2004-05) MADE ANY ADDITION IN RESPECT INVOICES MENTIONED IN REASONS RECORDED. 17. IN OUR OPINION ASSESSING OFFICER COULD HAVE CONFIRMED PURCHASE OF SOFTWARE PROVIDED BY M/S BT TECHNET LTD., FROM MINISTRY OF HOME AFFAIRS WHO WAS BUYER. LD. COUNSEL PLACED HIS RELIANCE UPON A CHART REPROD UCED AT PAGE 27 OF ORDER OF LD. CIT(A) WHEREIN ALL THE PURC HASES FROM M/S BT TECHNET LTD., HAS BEEN LISTED. IT IS SU BMITTED THAT EXCEPT FOR ALLEGED PGSM SOFTWARE MODULE, REST OF PURCHASES HAS NOT BEEN DISPUTED BY THE AUTHORITIES BELOW. 18. FURTHER AT PARA 2.1 OF ASSESSMENT ORDER ASSESSING OFFICER HIMSELF MENTIONS THAT PURPORTED TRANSACTION FOR PURCHASE OF PGSM SOFTWARE MODULE FROM M/S BT TECHNE T LTD., WAS PROVIDED VIDE BILL DATED 25.05.2004. IN O UR CONSIDERED OPINION, THIS CANNOT BE CORRECT AS ACTUA L INVOICE IS DATED 28.12.2003 A COPY OF WHICH IS PLACED IN PA PER BOOK. IF WE GO BY BILL DATED 25.05.2004 AS OBSERVED BY LD.AO, ALLEGED TRANSACTION WOULD FALL IN THE PREVIO US YEAR RELEVANT TO ASSESSMENT YEAR 2005-06 AND NOT IN THE YEAR UNDER CONSIDERATION. 19. IT APPEARS THAT ASSESSING OFFICER HAS PROCEEDED WI TH PRECONCEIVED NOTION BY BLINDLY ACCEPTING STATEMENT OF SH. SK GUPTA AND ENTIRE FINDING IS BASED ON MERE SURMIS ES AND CONJUNCTURES WITHOUT ANY APPLICATION OF MIND. AT TH IS JUNCTURE IT IS PERTINENT TO OBSERVE THAT REASONS RE CORDED ARE BASED ON INFERENCES OF LD. AO WITHOUT THERE BEING A NY 15 ITA NO. 6253/DEL/2013 (AY 2004-05) MATERIALS ON RECORD TO SUPPORT SUCH INFERENCES. IN VIEW OF ABOVE DISCUSSIONS ADDITION MADE BY LD.AO STANDS DEL ETED. ACCORDINGLY GROUNDS RAISED BY ASSESSEE ON LEGAL AS WELL AS ON MERITS STANDS ALLOWED. IN RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH, 2017. SD/- SD/- (R. K.PANDA) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 24.03.2017 @M!T