M/s. Paramount Intercontinental Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 6135/DEL/2013

• Counselvise Citation: 613520114 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 08-09-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 14-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMAN KANT GARG
• Assessee Lawyers: GURMEET SINGH
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Accommodation entries; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-II : NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.6135/DEL/2013 ASSESSMENT YEAR : 2001-02 PARAMOUNT INTERCONTINENTAL PVT. LTD., ED BLOCK, FLAT NO.55, PITAMPURA, DELHI. PAN: AABCP7313F VS. ITO, WARD-14(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GURMEET SINGH, CA DEPARTMENT BY : SHRI RAMAN KANT GARG, SR. DR DATE OF HEARING : 08. 09.2015 DATE OF PRONOUNCEMENT : 04.11.2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A)-XVII, NEW DELHI, DATED 21.08.2013 FOR THE AS SESSMENT YEAR 2001-02. ITA NO.6135/DEL/2013 2 2. THE FACTS IN BRIEF ARE THAT THE ORIGINAL ASSESSM ENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 14.2.2003 AT AN INCOME OF R S.56,025/-. THE AO RECORDED REASONS FOR REOPENING AND ISSUED NOTICE U/ S 148 DATED 26.3.2008. THE ASSESSEE REPLIED STATING THAT THE RETURN ORIGIN ALLY FILED ON 3.10.2001 MAY BE TREATED AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S 148. HE ALSO SOUGHT REASONS FOR REOPENING, WHICH THE AO FURNISHE D, VIDE LETTER DATED 14.11.2008. THE ASSESSEE OBJECTED TO THE INITIATIO N OF THE ASSESSMENT PROCEEDINGS, VIDE LETTER DATED 24.11.2008 THE AO D ISPOSED OF THESE OBJECTIONS VIDE ORDER DATED 8.12.2008. THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S 147 READ WITH SECTION 148 ON 26.12.20 08 DETERMINING THE TOTAL INCOME AT RS.10,81,025/-, INTER ALIA, MAKING AN ADDITION OF RS.10 LAC U/S 68 OF THE ACT. ON APPEAL, THE FIRST APPELLATE AUTHORITY CONFIRMED THE ADDITION. AGGRIEVED, THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS:- 1. BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS AND LAW FOR THE INITIATION, CONTINUATION AND CONCLUSION OF THE REASSESSMENT PROCEEDINGS U/S 147 R.W. 148 OF THE AC T, SINCE EVEN OTHERWISE IT IS A CASE OF CHANGE OF OPINION WHILE SCRUTINY ASSESSMENT COMPLETED U/S 143(3) THROUGH ORDER DT. 1 4.02.2003. 2. BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS AND LAW UPHOLDING THE ADDITION OF RS.10,25,000/-, NEVERTHEL ESS THE IDENTITY, EXISTENCE OF THE PAYER IS AN ACCEPTED FAC T, WHEREBY THE ITA NO.6135/DEL/2013 3 APPEARANCE U/S 131 CANNOT BE READ WITHIN SECTION 68 FOR DECLINING THE RELIEF PRAYED FOR VACATING THE ADDITI ONS. 3. THE LD. COUNSEL FOR THE ASSESSEE, SHRI GURMEET SINGH SUBMITTED THAT THE REOPENING IS BAD IN LAW FOR THE REASON THAT: A) THE REASONS RECORDED ARE VAGUE AND THE NAME OF THE ENTRY OPERATOR HAS NOT BEEN SPECIFIED; B) THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO WHICH IS EVIDENT FROM THE REASONS RECORDED; C) THERE IS NO TANGIBLE MATERIAL; AND D) NOTICE HAS BEEN ISSUED BASED ON THE INFORMATION REC EIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. 4. HE RELIED ON THE FOLLOWING CASE LAWS:- I) 85CCH 040 (DELHI HIGH COURT); II) 357 ITR 24 (DEL); AND III) 365 ITR 447 (DEL) 5. ON MERITS, NO ARGUMENT WAS SPECIFICALLY RAISED B Y THE LD. COUNSEL FOR THE ASSESSEE. ITA NO.6135/DEL/2013 4 6. THE LD. DR, SHRI RAMAN KANT GARG, ON THE OTHER H AND, RELIED ON PAGE 9, PARA 6 OF THE LD.CIT(A)S ORDER AND SUBMITT ED THAT THE AO, ON RECEIPT OF TANGIBLE MATERIAL FROM THE INVESTIGATION WING, HAS INDEPENDENTLY EXAMINED THE SAME AND, AFTER APPLICAT ION OF MIND, ARRIVED AT A CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. THUS, HE SUBMITS THAT THE REOPENING IS VALID IN LAW. HE RELIED ON T HE FOLLOWING CASE LAWS:- I) 236 ITR 34; II) 161 TAXMANN 316. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND CONSIDER ING THE PAPERS ON RECORD, I HOLD AS FOLLOWS. THE REASONS RECORDED FOR ISSUING NOTICE U/S 148 READ AS FOLLOWS:- REASONS FOR ISSUING NOTICE U/S 148 OF THE ACT IN T HE CASE OF M/S PARAMOUNT INTERCONTINENTAL (P) LTD., FOR THE A.Y. 2 001-02 REG. IN THIS CASE, ASSESSMENT WAS COMPLETED U/S 143(3)(II) ON 14.02.2003 ACCEPTING THE RETURNED INCOME OF RS.56,025/-. INFORMATION HAS BEEN RECEIVED FROM THE INVE STIGATION WING OF THE INCOME TAX DEPARTMENT THAT THE ABOVE NAMED ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM CERTAIN ESTABLI SHED ENTRY OPERATORS IDENTIFIED BY THE WING DURING THE PERIOD RELEVANT T O AY 2001-02. A COMPREHENSIVE INVESTIGATION WAS CARRIED OUT BY THE INVESTIGATION WING FOR IDENTIFICATION OF ENTRY OPERATORS ENGAGED IN TH E BUSINESS OF MONEY LAUNDERING FOR THE BENEFICIARIES AND ON THE BASIS O F INVESTIGATION CARRIED OUT AND EVIDENCES COLLECTED, A REPORT HAS BEEN FORW ARDED. I HAVE PERUSED ITA NO.6135/DEL/2013 5 THE INFORMATION CONTAINED IN THE REPORT AND THE EVI DENCES GATHERED . THE REPORT PROVIDES DETAILS OF THE MODUS OPERANDI OF TH E MONEY LAUNDERING SCAM AND EXPLAIN HOW THE UNACCOUNTED MONEY OF THE BENEFICIARIES ARE PLOUGHED BACK IN ITS BOOKS OF ACCOUNT IN THE FORM O F BOGUS SHARE CAPITAL/CAPITAL GAINS, ETC., AFTER ROUTING THE SAME THORUGH THE BANK ACCOUNT(S) OF THE ENTRY OPERATORS. ENTRY OPERATORS WERE IDENTIFIED AFTER THROUGH INVESTIGATION ON THE BASIS OF DEFINITIVE AN ALYSIS OF THEIR IDENTITY, CREDIT WORTHINESS AND THE SOURCE OF THE MONEY ULTIM ATELY RECEIVED BY THE BENEFICIARIES. THESE ENTRY OPERATORS ARE FOUND TO BE MOSTLY ABSCONDING AFTER THE UNEARTHING OF THE MONEY LAUNDERING SCAM LEAVING THE SAID MONEY AT THE DISPOSAL OF THE BENEFICIARIES WITHOUT ANY ASSOCIATED COST OR LIABILITY. IN THE INSTANT CASE, THE ASSESSEE IS FO UND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATORS AS PE R THE FOLLOWING SPECIFIC DETAILS OF TRANSACTION :- ENTRY OPERATOR BENEFICIARYS (ASSESSEES) BANK & ACCOUNT NO. DATE OF ENTRY TAKEN AMOUNT (RS.) ENTRY GIVING BANK & ACCOUNT NO. OF ENTRY OPERATORS 1. 2. 3 4 5 DUPAS LEASING & FINANCE CO. LTD. SBI WAZIRPUR 08.04.00 500000 UCO BANK, MODEL TOWN. 1077 ETISHA FINANCE & INVESTMENT -DO - - DO- 500000 UCO BANK, MODEL TOWN 1485 TOTAL 1000000 THE ASSESSEE HAS RECEIVED UNEXPLAINED SUMS F ROM THE ENTRY OPERATORS AS PER THE ABOVE DETAILS AS PER INFORMATION AVAILAB LE WITH THE UNDERSIGNED. AS EXPLAINED ABOVE, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WITH THE PERSONS FOUND TO BE ENTRY OPE RATORS CANNOT BE ESTABLISHED. I, THEREFORE, HAVE REASONS TO BELIEVE THAT ON ACCOUNT OF FAILURE ITA NO.6135/DEL/2013 6 ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND F ULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR ABOVE ASSESSMENT YEAR, THE INCOME CHARGEABLE TO TAX TO THE EXTENT OF ACCOMMODATION EN TRY MENTIONED ABOVE, HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147 OF THE ACT . SINCE FOUR YEARS HAS SINCE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, AND THE SCRUTINY ASSESSMENT WAS CO MPLETED U/S 143(3) IN THIS CASE FOR THE SAID ASSESSMENT YEAR, THE REASONS RECORDED ABOVE FOR THE PURPOSE OF REOPENING OF ASSESSMENT IS PUT UP FOR KI ND SATISFACTION OF CIT, DELHI-V, NEW DELHI IN TERMS OF THE PROVISO TO SECTI ON 151(1) OF THE ACT. ( EMPHASIS SUPPLIED ) SD/- (ABHAY KANT DAS) INCOME TAX OFFICER, WARD-14(1), ROOM NO.209, CR BUILDING, NEW DELHI-2. 8. A PERUSAL OF THE REASONS DEMONSTRATES THAT THE A O RECORDS THAT HE HAS PERUSED THE INFORMATION CONTAINED IN THE REPORT AND EVIDENCES GATHERED. THE NAME OF THE ENTRY OPERATORS WERE GIV EN AS DUPAS LEASING & FINANCE CO. LTD. AND ETISHA FINANCE & INVESTMENT. THE ASSESSEE ADMITTEDLY RECEIVED SHARE APPLICATION MONEY OF RS.5 LAC EACH THROUGH CHEQUE FROM THE ABOVE TWO COMPANIES. ON THESE FACT S, THE SUBMISSIONS OF THE ASSESSEE THAT: A) THERE IS NO TANGIBLE MATERIAL; ITA NO.6135/DEL/2013 7 B) THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO ON THIS MATERIAL AND IN COMING TO A CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT; AND C) THAT ALL MATERIAL FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE AND, HENCE, REOPENING IS BAD IN LAW, IS WITHOUT ANY MERI T. 9. THE ASSESSEE RELIED ON THE DECISION OF THE E B ENCH OF THE TRIBUNAL IN THE CASE OF MINI LEISURE CITY PVT. LTD. VS. ITO IN ITA NO.6153/DEL/2012 VIDE ORDER DATED 28 TH NOVEMBER, 2014, WHERE A REFERENCE HAS BEEN MADE TO THE DECISIONS OF THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF SIGNATURES HOTELS PVT. LTD. VS. ITO AND ANOTHER (2011) 338 ITR 51 (DEL), CIT VS. INSECTICIDES (INDIA) LTD. (20 13) 357 ITR 330 AND OTHER DECISIONS. IN MY VIEW, THE REASONS RECORDED BY THE AO IN THE CASE OF MINI LEISURE CITY PVT. LTD (SUPRA) ARE MATERIAL LY DIFFERENT FROM THE REASONS RECORDED BY THE AO IN THE INSTANT CASE. IN THE INSTANT CASE, THE AO RECORDS THAT HE HAS PERUSED THE INFORMATION CONT AINED IN THE REPORT AND THE EVIDENCES. THE AO ALSO RECORDS THAT THE EN TRY OPERATORS WERE FOUND ABSCONDING. THUS, THE RATIO LAID DOWN IN MIN I LEISURE CITY PVT. LTD. (SUPRA) WILL NOT APPLY TO THE FACTS OF THE INS TANT CASE. THE LD. COUNSEL ITA NO.6135/DEL/2013 8 ALSO RELIED ON THE DECISION OF THE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. SUREN INTERNATIONAL PVT. LTD., 357 ITR 24. IN THAT CASE, THE COURT GAVE A FINDING THAT THE AO IN THE REASONS RECORDED HAS NOT ALLEGED THAT THE ASSESSEE HAD FAILED TO TRULY DISCLOSE ANY MATERIAL FACTS AT THE TIME OF ASSESSMENT. IN THE CASE IN OUR HAND, THE AO HAS SP ECIFICALLY RECORDED SUCH A FINDING. IN THAT CASE, IT WAS FOUND THAT TH E SAME ENTRIES HAD BEEN REPEATED SIX TIMES AND CLEARLY INDICATED THE CALLOU S MANNER IN WHICH THE REASONS FOR INITIATING RE-ASSESSMENT PROCEEDINGS WE RE RECORDED. THUS, THIS CASE DOES NOT COME TO THE HELP OF THE ASSESSEE . IN THE DECISION IN THE CASE RASALIKA TRADING AND INVESTMENT CO. PVT. LTD. VS. DCIT, 365 ITR 447 (DEL) RELIED UPON BY THE LD. COUNSEL FOR THE AS SESSEE, THE COURT CAME TO A CONCLUSION THAT THE NOTICE ISSUED WAS BASED ON STALE INFORMATION WHICH WAS AVAILABLE AT THE TIME OF ORIGINAL ASSESSM ENT. HENCE, IT CAME TO THE CONCLUSION THAT REOPENING WAS DONE ON A MERE CH ANGE OF OPINION. HENCE, THE CASE WAS DISTINGUISHABLE ON FACTS. 10. IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE FINDING OF THE LD.CIT(A) ON THE ISSUE OF REOPENING, THOUGH FOR DIF FERENT REASONS. ITA NO.6135/DEL/2013 9 11. IN THE RESULT, GROUND NO.1 OF THE ASSESSEE IS D ISMISSED. 12. AS NO ARGUMENTS WERE ADVANCED ON GROUND NO.2, I DISMISS THE SAME. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.11.201 5. SD/- [J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED, 04 TH NOVEMBER, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.