M/s. Eeshaan Automation Pvt. Ltd., Ahmedabad V. DCIT, New Delhi

ITA 6246/DEL/2012

• Counselvise Citation: 624620114 RSA 2012
• Duration Of Justice: 44 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2014
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Reopening of assessment; Income from undisclosed sources; Reason to believe
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI RAJPAL YADAV, JM ITA NOS: 6246 AND 6247/DEL/2012 AY : - 2004-05 AND 2005-06 EESHAAN AUTOMATION PVT.LTD. VS. DCIT, CIRCL E 11(1) 89, RAJDEEP INDUSTRIAL ESTATE NEW DELH I BIBI TALAV, VATVA AHMEDABAD 382440 PAN: AAACE 0220D (APPELLANT) (RESPO NDENT) APPELLANT BY : MR.SUNIL ARORA, F.C.A. MRS.RUCHIKA JAIN, C.A. RESPONDENT BY: MS.NIDHI SRIVASTAVA, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. AS THE ISSUES ARISING IN BOTH THE APPEALS ARE SIMILAR FOR THE SAKE OF CONVEN IENCE, THEY ARE HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDE R. 2. FACTS IN BRIEF:- THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF PROVIDING ENGINEERING AND PROFESSIONAL SERVICES TO M/S KOMORI CORPORATION, JAPAN, SINCE SPETEMBER,1995 IN CONNECTION WITH ERE CTION, COMMISSIONING, TRAINING ETC. FOR EQUIPMENTS SUPPLIED BY THE AFORE SAID COMPANY TO VARIOUS ENTITIES IN INDIA. FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSEE HAS FILED A RETURN OF INCOME ON 28.10.2005 DECLARING AN INCOME OF RS.29,23,020/-. FOR THE ASSESSMENT YEAR 2004-05 THE ASSESSEE COMPANY FILED A RETURN OF INCOME ON PAGE 2 OF 9 28.10.2004 DECLARING TOTAL INCOME OF RS.19,38,640/- . FOR BOTH THE AYS THE RETURNS WERE PROCESSED U/S 143(1) OF THE ACT LATER. THE ASSESSMENTS WERE REOPENED BY THE ISSUE OF NOTICE U/S 148 ON 30.3.201 1. ASSESSMENT ORDER U/S 147 R.W.S. 143(3) WERE PASSED ASSESSING THE TOTAL I NCOME FOR THE ASSESSMENT YEAR 2005-06 AT RS.60,07,060/- AND AT RS.1,13,62,95 0/- FOR THE ASSESSMENT YEAR 2004-05. INTER ALIA HE MADE AN ADDITION ON THE GRO UND THAT THE ASSESSEE HAS INCOME FROM UNDISCLOSED SOURCES. AGGRIEVED THE ASS ESSEE CARRIED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSME NT WAS CHALLENGED BOTH ON THE GROUND OF REOPENING AS WELL AS ON MERITS. THE FIRST APPELLATE AUTHORITY DISMISSED BOTH THE GROUNDS. 3. AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.AO HAS GROSSLY ERRED IN MAKING AN ADDITION OF RS.30,84,043/- TO THE RETU RNED INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES WHICH IS WITHOUT ANY EVIDENCE, ARBITRARY, BASED ON SURMISE AND CONJECTURES, WITHOUT APPLICATI ON OF MIND AND AGAINST THE FACTS OF THE CASE. 2. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO.1, AND UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER U/S 147 PASSED BY THE LD.AO IS INVALID AND BAD AT LAW AS THE REOPENING OF ASSESSME NT IS BASED ON INCOMPLETE AND IMPROPER REASONS TO BELIEVE. 3. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO.1, AND UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER U/S 147 PASSED BY THE LD.AO IS INVALID AND BAD AT LAW AS THE REOPENING OF ASSESSME NT MADE BY THE LD.AO IS WITHOUT APPLICATION OF MIND. 4. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO.1, AND UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER U/S 147 PASSED BY THE LD.AO IS PAGE 3 OF 9 INVALID AND BAD AT LAW AS THE STATUTORY NOTICE REQU IRED TO BE ISSUED U/S 148 OF THE ACT BEFORE MAKING SUCH ASSESSMENT U/S 147 WAS N OT SERVED ON THE ASSESSEE AT ALL. 5. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO.1, AND UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSMENT ORDER U/S 147 PASSED BY THE LD.AO IS INVALID AND BAD AT LAW AS THE STATUTORY PROCEDURE F OR SUCH ASSESSMENT PRESCRIBED IN LAW HAS NOT BEEN FOLLOWED AND THE NECESSARY SANC TIONS FROM LD.JCIT AS PRESCRIBED U/S 151(2) HAVE NOT BEEN OBTAINED BEFORE REOPENING OF ASSESSMENT IN THE CASE OF ASSESSEE. 6. THE APPELLANT CRAVES TO ADD, WITHDRAW, AND REVI SE ANY OR ALL THE ABOVE GROUNDS OF APPEAL, EITHER BEFORE OR DURING THE COUR SE OF HEARING IN THE INTEREST OF JUSTICE. 4. THE LD.COUNSEL FOR THE ASSESSEE MR.SUNIL ARORA SUBMITTED THAT THE REOPENING IS BAD IN LAW. HE REFERRED TO PAGE 12 OF HIS PAPER BOOK RUNNING INTO 57 PAGES, WHICH CONTAINS THE REASONS FOR REOPENING AND SUBMITTED THAT THE REOPENING WAS BASED ON A LETTER RECEIVED FROM ITO, WARD 1, YAVATMAL, MAHARASHTRA ALONG WITH A LETTER BY THE DY.CIT (HQ-I I), NAGPUR. HE SUBMITTED THAT THE LETTER DOES NOT IN ANY WAY CONSTITUTE MATE RIAL TO ALLEGE THAT THERE IS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. H E ARGUED THAT THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OF FICER. HE FURTHER SUBMITTED THAT A NOTICE U/S 148 WAS NOT SERVED ON THE ASSESSE E AND HENCE THE REASSESSMENT IS BAD IN LAW. HE CONTENDED THAT THE ASSESSING OFFICER HAS NOT OBTAINED THE APPROVAL OF THE JCIT AS PRESCRIBED U/S 151(2) OF THE ACT BEFORE THE REOPENING OF ASSESSMENTS. 4.1. ON MERITS HE SUBMITS THAT THE ASSESSEE HAS ACC OUNTED FOR ALL THE RECEIPTS FROM M/S KOMORI CORPORATION, JAPAN AND THAT THERE I S NO UNDISCLOSED INCOME. HE SUBMITS THAT THE ASSESSEE HAS FURNISHED COMPLETE RECORDS BEFORE THE PAGE 4 OF 9 ASSESSING OFFICER. HE SUBMITS THAT THE ONLY INFORM ATION THAT THE ASSESSING OFFICER HAD AGAINST THE ASSESSEE, WAS THE RECEIPT O F TWO AMOUNTS OF JAPANESE YEN 63,54,253/- AND 12,50,028/- FROM M/S KOMORI CO RPORATION DURING THE RELEVANT YEAR, FOR WHICH HE WANTED RECONCILIATION. THE ASSESSEE SUBMITS THAT RECONCILIATION STATEMENTS HAVE BEEN GIVEN AND IT HA S BEEN DEMONSTRATED BEFORE THE ASSESSING AUTHORITY THAT THE AMOUNTS IN QUESTIO N WERE DULY ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. HE FURTHER SUBMITTED THAT THE ASSESSEE WANTED TO KNOW THE SPECIFIC INFORMATION REGARDING THE ALLEGED AMOUNTS, SO THAT HE COULD GIVE EXPLANATION AND HAS MADE VARIOUS EFFO RTS BY FILING REQUEST LETTERS AS WELL AS APPLICATIONS AND APPEALS UNDER THE RTI A CT. BUT DESPITE SPECIFIC ORDERS BY THE APPELLATE AUTHORITIES UNDER THE RTI A CT, NO FURTHER DETAILS/INSTRUCTIONS ABOUT THE ALLEGED FIGURES OF R EMITTANCES FROM M/S KOMORI CORPORATION HAD BEEN PROVIDED TO THE ASSESSEE. TO SUBSTANTIATE THE CLAIM THE ASSESSEE FILED THE FOLLOWING:- I. AFFIDAVIT OF MR.GANGADHAR KAHATE, DIRECTOR OF AP PELLANT COMPANY WITHIN THE TERMS OF RULE 20 OF APPELLATE TRIBUNAL RULES 1963, WHICH IS ENCLOSED ON PAGE NO.13 TO 14 OF THE PAPER BOOK; II. CONFIRMATION FROM M/S KOMORI CORPORATION, JAPA N, JAPAN REGARDING REMITTANCES MADE TO APPELLANT COMPANY. A COPY OF T HE SAME IS ENCLOSED ON PAGE NO.15 OF THE PAPER BOOK. III. STATEMENT SHOWING RECONCILIATION OF RECEIPTS FROM KOMORI CORPORATION, JAPAN AS PER BOOKS OF ACCOUNTS OF APPELLANT WITH THE FIGU RES SPECIFIED IN REASONS TO BELIEVE. THE SAME IS ENCLOSED ON PAGE NO.16 TO 17 OF THE PAPER BOOK; IV. LEDGER A/C OF M/S KOMORI CORPORATION IN THE BO OKS OF THE ASSESSEE FOR THE PERIOD 1.4.2004 TO 31.3.2005. A COPY OF THE SAME I S ENCLOSED ON PAGE NO.18 TO 22 OF THE PAPER BOOK; V. FIRCS IN RESPECT OF REMITTANCES RECEIVED FROM M/S KOMORI CORPORATION DURING THE RELEVANT YEAR. COPIES OF THE SAME ON SAMPLE BA SIS ARE ENCLOSED ON PAGE NO.23 TO 27 OF THE PAPER BOOK; PAGE 5 OF 9 VI. INVOICES ISSUED TO M/S KOMORI CORPORATION DURI NG THE RELEVANT YEAR. COPIES OF THE SAME ON SAMPLE BASIS ARE ENCLOSED ON PAGE NO .28 TO 29 OF THE PAPER BOOK. 4.2. HE ARGUED THAT THE ADDITION U/S 68 IS BAD IN L AW, IF IT IS THE CASE OF THE REVENUE THAT THE AMOUNT IN QUESTION IS NOT CREDITED IN THE BOOKS OF ACCOUNTS. HE POINTED OUT THAT THE ADDITION CAN BE MADE U/S 68 ONLY IF THERE IS A CREDIT IN THE BOOKS OF ACCOUNTS AND THE SAME IS NOT EXPLAINED . HE VEHEMENTLY CONTENDED THAT THE ASSESSEE CANNOT BE ASKED TO EXPLAIN AN ALL EGED RECEIPT, WITHOUT SPECIFICALLY PROVIDING THE ASSESSEE WITH THE DETAIL S. HE PRAYED FOR A RELIEF. 5. MS.NIDHI SRIVASTAVA, THE LD.SR.D.R. ON THE OTHE R HAND RELIED ON THE ORDERS OF THE FIRST APPELLATE AUTHORITY. SHE ARGUE D THAT THE REOPENING WAS MADE ON RECEIPT WITH SPECIFIC INFORMATION FROM ANOTHER A SSESSING OFFICER AND HENCE IS A VALID REOPENING. ON MERITS SHE SUBMITTED THAT TH E ASSESSEE WAS NOT ABLE TO DEMONSTRATE THAT THE AMOUNTS IN QUESTION WERE ACCOU NTED FOR IN ITS BOOKS OF ACCOUNTS AND HENCE THE ADDITION WAS CORRECT. 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF PAPERS ON RECORDS AND ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. 7. THE AYS INVOLVED ARE ASSESSMENT YEAR 2004-05 AND 2005-06. THE NOTICE FOR REOPENING U/S 148 OF THE ACT WAS GIVEN ON 30.3. 2011 THAT IS BEYOND A PERIOD OF 04 YEARS. THE ORIGINAL RETURNS WERE PROCESSED U /S 143(1) OF THE ACT. S.151(2) OF THE ACT READS AS FOLLOWS: PAGE 6 OF 9 IN CASE OTHER THAN A CASE FALLING UNDER SUB SECTIO N (1), NO NOTICE SHALL BE ISSUED U/S 148 BY AN ASSESSING OFFI CER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXP IRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FI T CASE FOR THE ISSUE OF SUCH NOTICE. THE REVENUE HAS NOT DEMONSTRATED THAT THIS PROVISIO N OF LAW HAS BEEN COMPLIED WITH. ON THIS SOLE GROUND THE REOPENING HAS TO BE QUASHED AS BAD IN LAW. THE ASSESSEE SUBMITS THAT THE NOTICE U/S 148 HAS NOT BE EN SERVED ON HIM. A PERUSAL OF THE ASSESSMENT ORDERS DEMONSTRATE THAT THE ASSES SING OFFICER CLAIMS TO HAVE ISSUED THE NOTICE TO THE ASSESSEE THAT THE FACT OF SERVICE IS NOT RECORDED. THE ASSESSEE GROUP PARTICIPATED IN THE REOPENING PROCEE DINGS. UNDER THE CIRCUMSTANCES S.292BB APPLIES AND THIS GROUND OF TH E ASSESSEE IS NOT SUSTAINABLE. 8. THE NEXT ARGUMENT IS THAT THE REOPENING IS BAD I N LAW AS THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OF FICER AND THAT THE REASONS ARE INADEQUATE. THE REASONS FOR REOPENING READS AS FOLLOWS. M/S EESHAAN AUTOMATION PVT.LTD., ASSESSMENT YEAR 20 05-06 REASON FOR NOTICE U/S 148 OF THE IT ACT, 1961 A LETTER HAS BEEN RECEIVED FROM ITO, WARD 1, YAVATM AL, MAHARASHTRA ALONG WITH A LETTER OF DCIT, HQ-II, NAGPUR THAT M/S EESHAAN AUT OMATION PVT.LTD. PAN AAACE 0220D HAS RECEIVED JAPANESE YEN 6254653/- AND 1250928/- FROM KOMORI, AZUMABASHI, SUMIDAKU, TOKYO, JAPAN. THE AS SESSMENT COMPLETED U/S 143(1) OF IT ACT, 1961 IN THIS CASE DATED 5.3.2006 THE ABOVE DISCUSSED ISSUES PAGE 7 OF 9 HAS NOT BROUGHT TO TAX. BASED ON THE ABOVE FACTS, I HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT BECAUSE OF THE FAILURE ON PART OF THE ASSESSEE TO DISCLOSE ITS INCOME FULLY AND TRULY. IF APPROVED A NOTICE U/S 148 OF THE IT ACT MAY BE ISSU ED TO THE ASSESSEE. DT. 30.3.2011 SD/- (MANISHA K BENIWAL)DYCIT CIRCLE 11(1), NEW DELHI A PERUSAL OF THE ABOVE REASONS DEMONSTRATE THAT THE ASSESSING OFFICER HAD INFORMATION FROM ANOTHER ASSESSING OFFICER. HE HAS RECORDED THAT BASED ON THIS INFORMATION HE HAS REASON TO BELIEVE THAT THE INCOM E OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT. WE DO NOT FIND ANY INFIRMITY IN SUCH RECORDING OF THE ASSESSING OFFICER. THE SUFFICIENC Y OR OTHERWISE OF THE REASONS CANNOT BE GONE INTO. THUS THIS GROUND OF THE ASSES SEE IS DISMISSED. 9. ON THE MERITS OF THE CASE WE FIND THAT THE ASSES SEE HAS SUBMITTED: (A) CONFIRMATION LETTERS FROM KOMORI CORPORATION, J APAN REGARDING RECEIPTS MADE TO ASSESSEE COMPANY, (B) STATEMENTS SHOWING RECONCILIATION OF RECEIPTS F ROM KOMORI CORPORATION, JAPAN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, (C ) LEDGER A/CS FROM KOMORI CORPORATION IN THE BOO KS OF THE ASSESSEE, (D) INVOICES ISSUED TO M/S KOMORI CORPORATION AND F OREIGN INWARD REMITTANCE CERTIFICATES FROM THE CITY BANK WITH RESPECT TO THE REMITTANCES RECEIVED FROM KOMORI CORPORATION. PAGE 8 OF 9 10. THE REVENUE HAS NOT BEEN ABLE TO SPECIFICALLY POINT OUT AS TO WHICH IS THE PARTICULAR REMITTANCE MADE BY M/S KOMORI CORPORATI ON, WHICH HAS NOT BEEN ACCOUNTED FOR BY THE ASSESSEE. IN SPITE OF THE RE PEATED ATTEMPTS BY THE ASSESSEE REQUESTING FOR THE DETAILS THE ASSESSEE HA S NOT BEEN FURNISHED WITH THE SAME. IN OUR VIEW THE ASSESSEE HAS DISCHARGED THE ONUS THAT LAY ON IT BY FURNISHING ALL THE NECESSARY DOCUMENTARY EVIDENCES AND WHEREAS THE REVENUE HAS FAILED IN ITS DUTY TO DISCHARGE THE BURDEN THAT LAY ON IT. IN THE RESULT THE ADDITIONS MADE IN BOTH THE AYS ARE HEREBY DELETED. 11. IN THE RESULT THE APPEALS OF THE ASSESSEE FOR B OTH THE AYS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND JUNE, 2014. SD/- SD/- (RAJPAL YADAV) (J .SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 02 ND JUNE, 2014 *MANGA PAGE 9 OF 9 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR