Income Tax Officer-1(1), Range-1, , Lucknow V. M/s ABC Infrapromoters Pvt. Ltd., Lucknow

ITA 572/LKW/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0333 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 12-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Reason to believe
• Section: 143(3); 195; 147; 68; 148; 6

Judgement Text

I.T.A. NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 INCOME TAX OFFICER-1(1), RANGE-1, LUCKNOW. VS. M/S ABCINFRAPROMOTERS PVT. LTD., 3/98, VIKAS KHAND, GOMTI NAGAR, LUCKNOW. PAN:AAKCA 0807 G (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A), LUCKNOW DATED 07/06/2017 PERTAINING TO ASSE SSMENT YEAR 2013- 2014. IN THIS APPEAL THE REVENUE HAS RAISED THE F OLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) ERRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN ANNULLING THE ASSESSMENT MADE BY ASSESSING OFFICER AS THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDING HAS NOT ONLY EXAMINED THE REASONS FOR ISSUANCES OF NOTICE U /S 148 BUT ALSO OTHER ISSUES DETECTED DURING THE COURSE OF ASS ESSMENT PROCEEDINGS AS PER EXPLANATION 3 TO SECTION 147 OF THE I. T. ACT, 1961. 2. THE LD. C1T(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,75,00,000/- ON ACCOUNT OF UNEX PLAINED APPELLANT BY SHRI C. K. SINGH, D.R. RESPONDENT BY SHRI K. R. RASTOGI, C. A. SHRI SHUBHAM RASTOGI, F.C.A. DATE OF HEARING 26/03/2019 DATE OF PRONOUNCEMENT 29/03/2019 I.T.A. NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 2 SHORT TERM BORROWING FROM THE TWO KOLKATA BASED COM PANIES I.E. M/S SONATA SALES PVT. LTD., AND M/S MATRIBHUMI VINCOM PVT. LTD. AS A.O. HAS MADE ADDITION OF RS.2,75,00,000/- BY NOT MERELY ON THE BASIS OF NUN SERVICE OF QUERY LETTER ISSUED TO LENDERS, BUT ON THE BASIS OF NON-EXISTENCE OF THESE COMPANIES AS PER ENQUIRY OF DDIT(LNV.) KOLKATA. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, LUCKNOW HAS OVERLOOKED THE FACT THAT FIRS TLY ASSESSEE HAD MISLEAD THE ASSESSING OFFICER BY PROVIDING THE DETAILS OF NON-EXISTING ADDRESS OF THE COMPANIES AND THEN PROV IDING THE DETAILS OF ADDRESSES ON 28.03.2016 WHICH WAS NOT VE RIFIABLE AT LAST MOMENT OF ASSESSMENT TIME BARRING DATE, THUS T HE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVING TH E CREDITWORTHINESS AND GENUINENESS OF THE CASH CREDIT 4. THE C1T(A) ERRED IN FACT AND CIRCUMSTANCES OF TH E CASE BY DELETING THE ADDITION OF RS.2,75,00,000/- BY IGN ORING THE FACT THAT THE ASSESSEE HAS INTRODUCED UNEXPLAINED SHORT TERM BORROWINGS TO THE EXTENT OF RS.2,75,00,000/- AND IN SUPPORT OF SUCH CASH CREDIT THE ASSESSEE FAILED TO DISCHARGE T HE ONUS OF PROVING THE CREDITWORTHINESS AND GENUINENESS OF THE CASH CREDIT. 2. THE BRIEF FACTS OF THE CASE ARE THAT A NOTICE U/ S 148 OF THE I.T. ACT WAS ISSUED ON 25/03/2015 WITH THE FOLLOWING REASONS RECORDED FOR REOPENING OF THE ASSESSMENT: DEPARTMENT IS IN POSSESSION OF INFORMATION THAT M/ S ABC INFRAPROMOTERS PRIVATE LIMITED HAS PURCHASED AN IMM OVABLE PROPERTY 23.05.2012 FOR THE TOTAL CONSIDERATION OF RS.25,00,00,000/- (THE CIRCLE VALUE OF THE SAME WAS RS.9,52,80,000/-) AND PAID STAMP DUTY OF RS.1,75,00 ,000/-. THUS, MADE TOTAL INVESTMENT IN PURCHASE OF PROPERTY OF RS.26,75,00,000/-. QUERY LETTER DATED 30.09.2014 WAS ISSUED FOLLOWED B Y REMINDER DATED 09.02.2015. IN RESPONSE TO THIS, ASS ESSEE SUBMITTED THE COPY OF AUDIT REPORT BALANCE SHEET AN D PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. FROM THE PERUSAL OF BALANCE SHEET, IT WAS NOTICED THAT AN AMOUNT OF RS.20,50,00,000/- IS REFLECTED UNDER THE HEAD OTHER -CURRENT I.T.A. NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 3 LIABILITY. THE ASSESSEE FAILS TO EXPLAIN THIS ENTRY . SINCE NO DETAILS OF AMOUNT OF RS.20,50,00,000/- WAS FURNISHE D, HENCE THE AMOUNT COULD NOT BE VERIFIED AND THE SAME IS RE MAINED UNEXPLAINED. I THEREFORE HAVE REASON TO BELIEVE THAT THE INCOME OF RS.20,50,00,000/- HAS ESCAPED THE ASSESSMENT FOR A. Y. 2011- 12 AND IT IS A FIT CASE FOR ISSUANCE OF NOTICE U/S 148 OF THE I.T. ACT, 1961. SD/. 3. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U /S 147 READ WITH SECTION 143(3) ON 30/03/2016 BY MAKING AN ADDITION TO THE TUNE OF RS.2.75 CRORE REPRESENTED BY CASH CREDIT ENTRIES OF RS.1.35 CRORE RECEIVED FROM M/S MATRIBHUMI VINCOM PVT. LTD. AND RS.1.40 CRORE FROM M/S SONATA SALES PVT. LTD. 4. IT WAS ARGUED THAT THE ASSESSEE CARRIED THE MATT ER IN APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION BY OBSERVI NG THAT ASSESSEE FILED WRITTEN SUBMISSIONS ALONG WITH RELEVANT PAPERS AND DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSI NG OFFICER IN SUPPORT OF LEGITIMACY OF RS.20.50 CRORES SHOWN UNDER THE HEAD CURRENT LIABILITIES WHICH WAS THE AMOUNT RECEIVED BY THE ASSESSEE AS INTEREST FREE REFUNDABLE SECURITY DEPOSIT FROM M/S PAARTH INFRABUILD PRIVATE LIMITED FOR ENSURING DEVELOPMENT/CONSTRUCTION OF HOUSING COMPLEX UPON A PIECE OF LAND OWNED BY THE ASSESSEE. THE ASSESSING OFFICER VERIFIED WR ITTEN SUBMISSION, PAPERS AND DOCUMENTS FILED BY THE ASSESSEE AND EXAMINED TH E BOOKS OF ACCOUNT, BILLS & VOUCHERS, DEVELOPERS AGREEMENT EXECUTED WI TH M/S PAARTH INFRABUILD PRIVATE LIMITED DULY REGISTERED ON 11/10/2013 FOR S UBSTANTIATING THE NATURE OF TRANSACTION MADE BETWEEN ASSESSEE AND M/S PAARTH INFRABUILD PRIVATE LIMITED, CONFIRMATORY LETTER OF M/S PAARTH INFRABUI LD PRIVATE LIMITED ALONG WITH COPY OF LEDGER ACCOUNT OF THE ASSESSEE AS REFL ECTED IN THEIR BOOKS OF I.T.A. NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 4 ACCOUNT, ETC. ASSESSING OFFICER WAS COMPLETELY SAT ISFIED WITH THE EXPLANATION/WRITTEN SUBMISSIONS FILED IN RESPECT OF NATURE OF TRANSACTION MADE BETWEEN THE ASSESSEE AND M/S PAARTH INFRABUILD PRIVATE LIMITED WHICH HAS CONSEQUENTLY CORROBORATED SUM OF RS.20.50 CRORE S SHOWN UNDER THE HEAD CURRENT LIABILITIES IN THE AUDITED FINANCIAL S TATEMENT OF THE ASSESSEE AND, THEREFORE, DID NOT DRAW ANY ADVERSE INFERENCE IN THIS RESPECT. NO ADDITION WAS MADE ON ACCOUNT OF THE REASONS RECORDE D FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT, AS THERE WAS N O ANOMALY REGARDING RS.20.50 CRROES SHOWN UNDER THE HEAD OTHER CURRENT LIABILITIES BY VIRTUE OF WHICH THE SAME HAS NOT BEEN DISPUTED DURING THE REA SSESSMENT PROCEEDINGS. 5. HE FURTHER ARGUED THAT THE BASIS, ON WHICH REOPE NING WAS MADE BY THE ASSESSING OFFICER, DOES NOT SURVIVE BECAUSE NO SUCH ADDITION WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, T HEREFORE, REOPENING IN THE PRESENT CASE WAS NOT VALID FOR MAKING ANY OTHER ADDITION. HE PLACED RELIANCE ON THE DECISION OF LUCKNOW BENCH OF THE TR IBUNAL IN THE CASE OF INCOME TAX OFFICER VS. M/S AZAD TOBACCO, LUCKNOW IN ITA NO.551/LKW/2015, DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SHRI RAM SINGH, 217 CTR 345 (RAJ.) AND DECI SION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) L TD., 195 TAXMAN 117 (BOM.). 6. THE LD. D.R. RELIED ON THE ORDER OF THE ASSESSIN G OFFICER WHEREAS THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACTS OF THE CAS E ARE THAT IN THE INSTANT CASE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148(2) OF THE ACT ON 25/3/2015 BY RECORDING FOLLOWING REASONS FOR ESCAPE MENT OF INCOME:- I.T.A. NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 5 SINCE NO DETAILS OF AMOUNT OF RS.20,50,00,000/- WA S FURNISHED, HENCE THE AMOUNT COULD NOT BE VERIFIED AND THE SAME IS REMAINED UNEXPLAINED. I, THEREFORE, HAVE REASON TO BELIEVE THAT THE INCOME OF RS.20,50,00,000/- HAS ESCAPED THE ASS ESSMENT FOR ASSESSMENT YEAR 2011-12 (WRONGLY MENTIONED AS ASSES SMENT YEAR 2011-12 INSTEAD OF ASSESSMENT YEAR 2013-14) AN D IT IS A FIT CASE FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF IN COME-TAX ACT, 1961. 8. IN THE ASSESSMENT MADE UNDER SECTION 147 READ WI TH 143(3) OF THE ACT ON 30/3/2016 NO ADDITION WAS MADE ON THE GROUND ON WHICH REOPENING OF ASSESSMENT WAS MADE BY RECORDING ABOVE QUOTED RE ASONS. ASSESSING OFFICER MADE ADDITION OF RS.2.75 CRORES UNDER SECTI ON 68 OF THE ACT. ON THE ABOVE STATED FACTS, LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE BASIS, ON WHICH REOPENING WAS MADE BY THE ASSESSING OFFICER, DOES NOT SURVIVE BECAUSE NO ADDITION WAS MADE BY THE ASSESSI NG OFFICER IN THE ASSESSMENT ORDER, THEREFORE, REOPENING OF ASSESSMEN T WAS NOT VALID FOR MAKING ADDITION. FOR THIS, HE RELIED ON THE DECISI ON LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS. M/S AZAD TOBACCO, LUCKNOW (SUPRA); DECISION OF HON'BLE RAJASTHAN HIGH COURT I N THE CASE OF CIT VS. SHRI RAM SINGH (SUPRA) AND DECISION OF HON'BLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. (SUPRA). WE FIND T HAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD. ( SUPRA) HAS HELD AS UNDER:- THAT WHEN EXPLN. 3 TO S. 147 WAS INTRODUCED, PARLI AMENT STEPPED IN TO CORRECT WHAT IT REGARDED AS AN INTERP RETATIONAL ERROR IN THE VIEW WHICH WAS TAKEN BY CERTAIN COURTS THAT THE AO HAS TO RESTRICT THE ASSESSMENT OR REASSESSMENT PROC EEDINGS ONLY TO THE ISSUES IN RESPECT OF WHICH REASONS WERE RECORDED FOR REOPENING THE ASSESSMENT, HOWEVER, EXPLN. 3 DOES NO T AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CON DITIONS SET OUT IN THE SUBSTANTIVE PART OF S. 147 AO HAS TO ASSESS OR REASSESS THE INCOME (SUCH INCOME) WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHI CH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DU RING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUIN G A NOTICE I.T.A. NO.572/LKW/2017 ASSESSMENT YEAR:2013-14 6 UNDER S. 148, HE ACCEPTED THE CONTENTION OF THE ASS ESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM TO INDEPE NDENTLY ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER S. 148 WOULD BE NECESSARY, THE LEGALITY OF WH ICH WOULD BE TESTED IN THE EVENT OF CHALLENGE BY THE ASSESSEE . 9. THEREFORE, WE FIND THAT THE ORDER OF LD. CIT(A) IS IN CONFORMITY WITH THE ORDER OF HON'BLE BOMBAY HIGH COURT IN THE CASE CIT VS. JET AIRWAYS (I) LTD. (SUPRA). THEREFORE, THE FIRST GROUND OF APPE AL, WHICH IS ON LEGAL ISSUE, IS DISMISSED. 10. THE OTHER GROUNDS OF APPEAL ARE ON MERITS OF TH E CASE WHICH, IN VIEW OF DECISION ON GROUND NO. 1, DO NOT REQUIRE ANY ADJ UDICATION AS THESE HAVE BECOME ACADEMIC IN NATURE. THEREFORE, THESE GROUND S STAND DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:29/03/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR