Asstt.Commissioner of Income Tax-6, Kanpur V. M/s. Specialities Aluminium Grills Pvt. Ltd., Kanpur

ITA 62/LKW/2013

• Counselvise Citation: 6223714 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-07-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VINOD KUMAR RASTOGI
• Keywords: Tangible material; Accommodation entries
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 62/LKW/2013 ASSESSMENT YEAR: 1999 - 2000 ACIT - 6 KANPUR V. M/S SPECIALITIES ALUMINIUM GRI LLS PVT. LTD. 10, CHRIST CHURCH MARKET KANPUR PAN/GIR:20 - 037 - CY - 9554 (APP ELL ANT) (RESPONDENT) C.O.NO.7/LKW/2014 [ IN ITA NO. 62/LKW/2013] ASSESSMENT YEAR: 1999 - 2000 M/S SPECIALITIES ALUMINIUM GRILLS PVT. LTD. 10, CHRIST CHURCH MARKET KANPUR V. A CIT - 6 KANPUR ( CROSS OBJECTOR ) (RESPONDENT) DEPARTMENT BY: SHRI. AMIT NIGAM, D.R. ASSESSEE BY: SHRI. VINOD KUMAR RASTOGI, ADVOCATE DATE OF HEARING: 23 0 7 2014 DATE OF PRONOUNCEMENT: 08 0 8 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1 . THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT FRAMED BY IGNORING THE FACT THAT DEFINITE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : INFORMATION WAS AVAILABLE TO THE A O ON THE BASIS OF WHICH HE FORMED A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. 2 . THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT WHEREAS ON SIMILAR FACTS IN THE CASE OF ITO - 5(4), NEW DELHI VS MUKUT FINVEST & PROPERTIES PVT. LTD. IN I . T APPEAL NO.23 1 (DELHI) THE HON'BLE ITAT, NEW DELHI BENCH HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3 . THAT THE LD. CIT(A) HAS ERRED IN LAW IN NOT PROPERLY APPRECIATING THAT THE REASONS RECORDED FOR EXERCISING POWERS U/S 147/148 BY THE AO WERE I N CONFORMITY WITH THE LAW AND CLEARLY DISCLOSED REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND IT WAS NOT INCUMBENT ON THE AO TO ADOPT A FORMULAIC WORDING FOR VALIDLY INITIATING ACTION. 4 . THAT THE ORDER OF THE ID. COMMISSIONER OF INCOME TAX (APPEA LS) BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND ALSO QUESTIONING THE ADDITIONS MADE ON MERIT. 3 . THE APPEAL AND CROSS OBJECTION WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 4 . THOUGH VARIOUS GROUNDS ARE RAISED BY THE REVENUE IN ITS APPEAL, BUT THEY ALL RELATE TO THE VALIDITY OF REOPENING OF THE ASSESSMENT. 5 . THE FACTS IN BRIEF CULLED OUT FROM THE ORDER OF THE LD. CIT(A) ARE THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED BY DDIT (INVESTIGATION), VARANASI AND ALSO DDIT (INVESTIGATION), KANPUR. THE ASSESSING OFFICER HAS SIMPLY RECORDED THE INFORMATION AND REOPENED THE ASSESSMENT WITHOUT APPLYING HIS MIND. THE REOPENING WAS CHALLENGED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) WAS OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : THE VIEW THAT REOPENING WAS DONE SIMPLY ON THE BASIS OF THE INFORMATION RECEIVED , WITHOUT APPLYING HIS MIN D FOR FORMING A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE LD. CIT(A) ACCORDINGLY HELD THAT IN THE ABSENCE OF ANY OTHER MATERIAL OR STATEMENT, THAT FACT ALONE CANNOT BE HELD TO BE A TANGIBLE AND RELEVANT MATERIAL TO REOPEN THE CASE O N THE GROUND THAT SUCH LOANS WERE MERE ACCOMMODATION ENTRIES. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 3.2.3 O N PERUSAL OF THESE REASONS, IT IS SEEN THAT THE REASONS FOR WHICH THE CASE HAS BEEN REOPE NED ARE VERY SCANTY. NO DETAILS OF INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING IN THIS REGARD HAVE BEEN GIVEN. I FAIL TO UNDERSTAND AS TO ON WHAT BASIS THE AO WAS ABLE TO FORM THE BELIEF THAT THE LOANS TAKEN FROM ONE M/S SRG INFOTECH LTD. WERE ACCO MMODATION ENTRIES. IT IS A TRITE LAW THAT FOR REOPENING A CASE, THE BELIEF SHOULD BE THAT OF THE A.O AND THE AO ALONE. IN THIS CASE, IT APPEARS FROM THE REASONS RECORDED THAT THE A.O. HAD FORMED HIS BELIEF MERELY ON THE SAY OF THE INVESTIGATION WING, WITH OUT BRINGING ANY TANGIBLE MATERIAL ON RECORD. FURTHER, ON PERUSAL OF THE ASSTT. ORDER ALSO, I FIND THAT EXCEPT FOR GIVING DETAILS OF CERTAIN BANK ACCOUNTS FROM WHICH THE CHEQUES HAD COME TO THE ACCOUNT OF M/S SRG INFOTECH, THERE IS NOTHING EVEN IN THE ASST T, ORDER TO INDICATE THAT THE IMPUGNED LOANS GIVEN BY M/S SRG TO THE ASSESSEE COMPANY WERE MERE ACCOMMODATION ENTRIES. THERE IS ALSO NO MENTION OF ANY STATEMENT GIVEN BY ANY ONE TO THE EFFECT THAT SUCH LOANS WERE ACCOMMODATION ENTRIES, IT IS AN ACCEPTED LE GAL POSITION THAT THE ASSESSEE IS NOT EXPECTED TO GIVE DETAILS OF SOURCE OF SOURCE. EVEN WHEN THE CHEQUES TO M/S SRG INFOTECH LTD HAD COME FROM SOME BANK ACCOUNT AFTER DEPOSITING CASH IN THOSE BANK ACCOUNTS, IN ABSENCE OF ANY OTHER MATERIAL OR STATEMENT, T HAT FACT ALONE CANNOT BE HELD TO BE A TANGIBLE & RELEVANT MATERIAL TO REOPEN THE CASE ON THE GROUND THAT SUCH LOANS WERE MERE ACCOMMODATION ENTRIES. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : SECTIO N 147 CANNOT BE INVOKED ON MERE SUSPICION/ PRESUMPTION/ SURMISES OR FOR MAKING ROVING ENQUIRIES. REFE RENCE MAY BE MADE TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH [(82 ITR 147 (SC)]. SECTION 147 CAN BE INVOKED ONLY WHEN THE A.O. FORMS A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT AND SUCH BELIEF HAS TO BE BASED ON SOME TANGIB LE MATERIAL. REFERENCE IS MADE TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GANGA SARAN & SONS [(130 ITR (SC)], IN THIS CASE, THERE IS COMPLETE ABSENCE OF RELEVANT AND TANGIBLE MATERIAL WHICH COULD LEAD TO FORMATION OF REASONABLE BELIEF OF I NCOME ESCAPING ASSESSMENT. IN THIS VIEW OF THE MATTER, I HAVE NO RECITATION IN HOLDING THAT WHILE ISSUING THE NOTICE U/S 148 OF THE I.T. ACT, THE A.O. HAD ACTED WITHOUT JURISDICTION AND ACCORDINGLY ASSESSMENT FRAMED IN PURSUANT TO SUCH INVALID/ILLEGAL ASSU MPTION OF JURISDICTION, IS LIABLE TO BE ANNULLED AND IS ACCORDINGLY ANNULLED. 6 . AGGRIEVED , THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE ASSESSING OFFICER HAS SUFFICIENT MATERIAL TO FORM A BELIEF THAT THE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN ANNULLING THE ASSESSMENT ON THE GROUND THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT WITHOUT HAVING TANGIBLE MATERIAL FOR FORMING A BELIEF THAT INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT . 7 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS INVITED OUR ATTENTION TO THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT EXCEPT THE INFO RMATION RECEIVED FROM THE DDIT, THE ASSESSING OFFICER HAS NOT MENTIONED ANYTHING WHEREFROM IT IS DISCERNIBLE THAT THE ASSESSING OFFICER HAS EVER APPLIED HIS MIND TO THE INFORMATION RECEIVED AND TO MAKE FUR THER VERIFICATION FOR FORMING A BELIEF THAT THE INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE, THE LD. CIT(A) HAS RIGHTLY ANNULLED THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : ASSESSMENT HAVING HELD THAT THE REOPENING IS NOT VALID, AS IT WAS DONE WITHOUT ANY TANGIBLE MATERIAL. 8 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUB MISSIONS AND FROM A CAREFUL PERUSAL OF RECORD , WE FIND THAT THE ASSESSING OFFICER HAS RECEIVED INFORMATION FROM THE DDIT (INVESTIGATION), VARANASI AND DDIT(INVESTIGATION), KANPUR. HE SIMPLY RECORDED THE INFORMATION RECEIVED FROM THE DDIT AND REOPENED THE ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 'RETURN DISCLOSING NIL INCOME WAS FILED ON 30.12.99 AND WAS PROCESSED IN THE RETURN INCOME ON 25.7.2000. INFACT, AS PER THE COMPUTATION FILED ALO NG WITH THE RETURN THE TAXABLE PROFIT WORKED AMOUNT TO RS.15,03,795/ - WHICH WAS SET OFF AGAINST THE BUSINESS LOSS PERTAINING TO ASSESSMENT YEAR 1991 - 92 AND 1992 - 93 ARE RS.2,97,135/ - & RS.12,06,660/ - RESPECTIVELY. SUBSEQUENTLY, IT HAS BEEN GATHERED IN THE C OURSE OF INVESTIGATION CARRIED OUT BY THE DDIT (INV) VARANASI AS ALSO BY THE DOIT (INV) UNIT II KANPUR, THE ABOVE NAMED ASSESSEE COMPANY HAD OBTAINED ACCOMMODATION ENTRIES FOR THE AMOUNT AGGREGATING TO RS.16,50,000/ - FROM M/S SRG INFOFECH INDIA LTD. NEW DEL HI DURING THE ACCOUNTING PERIOD RELEVANT TO ASSESSMENT YEAR REFERRED TO ABOVE. AS THE AMOUNT INVOLVED IN THE ACCOMMODATION OF ENTRIES REPRESENTED THE UNEXPLAINED INCOME OF THE ASSESSEE COMPANY WHICH WAS INTRODUCED IN ITS BOOKS OF ACCOUNT. IN THE GUISE OF A CCOMMODATION ENTRIES AND THE SAME WAS NOT DISCLOSED IN THE RETURN OF INCOME FILED, THE INCOME TO THE LIKE EXTENT HAS ESCAPED ASSESSMENT. ISSUE NOTICE U/S 148 OF THE INCOME TAX ACT' 9 . IN THE ENTIRE REASONS, NOTHING HAS BEEN MENTIONED BY THE ASSESSING OFFICER HOW HE HAS APPLIED HIS MIND ON THE INFORMATION RECEIVED F OR FORM ING A BELIEF THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HE HAS SIMPLY REOPENED THE ASSESSMENT ON THE BASIS OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : INFORMATION RECEIVED FROM THE DDIT. AS PER PROVISIONS OF SEC TION 147 OF THE ACT, THE ASSESSING OFFICER IS REQUIRED TO FORM A BELIEF ON THE TANGIBLE / VALUABLE MATERIAL AVAILABLE BEFORE HIM. THE REOPENING CANNOT BE DONE ON THE BASIS OF THE INFORMATION RECEIVED FROM A THIRD AGENCY. T HE ASSESSING OFFICER IS REQUIRED T O APPLY HIS MIND ON WHATEVER INFORMATION RECEIVED FROM THE THIRD AGENCY AND TO VERIFY THE FACTS WITH THE RETURN OF INCOME OF THE ASSESSEE IN ORDER TO FORM A BELIEF THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. BUT IN THE INSTANT CASE, THE ASSE SSING OFFICER HAS NOT APPLIED HIS MIND AND ON THE BASIS OF THE INFORMATION RECEIVED, HE REOPENED THE ASSESSMENT WHICH IS NOT PROPER IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE LD. CIT(A). WE, THER EFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). 10 . NO ARGUMENT WAS ADVANCED ON VARIOUS GROUNDS RAISED IN THE CROSS OBJECTION. SINCE THE ASSESSMENT HAS BEEN ANNULLED BY THE LD. CIT(A) WHICH WAS CONFIRMED BY US, IN THE FOREGOING APPEAL, NO PURPOSE WOU LD BE SERVED TO ADJUDICATE THE GROUNDS RAISED IN THE CROSS OBJECTION. ACCORDINGLY, THE CROSS OBJECTION IS ALSO DISMISSED BEING INFRUCTUOUS. 11 . IN THE RESULT, APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8.8.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH AUGUST , 2014 JJ: 3007 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )