PRAGATI FINSEC LTD., NEW DELHI V. ITO, WARD -20(1), NEW DELHI

ITA 634/DEL/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5663 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2002-2003
• Appeal Filed On: 29-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R MISHRA
• Assessee Lawyers: MAYANK JAIN
• Keywords: Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , DELHI BENCH SMC, NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO. 634/DE L./2018 ASSESSMENT YEAR : 2002-03 M/S. PRAGATI FINSEC LTD. 204, TRIVENI PLAZA, 17A/56 KAROL BAGH, NEW DELHI- 110008 PAN : AAACP4524B VS ITO, WARD 20(1), OLD WARD 14(3) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. MAYANK JAIN, ADV. REVENUE BY : SH. B.R.MISHRA, SR. DR DATE OF HEARING :19.06.2018 DATE OF PRONOUNCEMENT : 20.06.2018 ORDER PER R.S.SYAL, VICE PRESIDENT : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE LD. CIT(A) ON 11.12.2017 IN RELATION TO THE ASSESSMENT YEAR 2002-03. ITA NO. 634/DEL/2018 2 2. THE ONLY GRIEVANCE RAISED THROUGH VARIOUS GROUND S IS AGAINST THE CONFIRMATION OF ADDITION OF RS. 25,06,400/-. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT SO ME INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM DIRECTORATE OF INVESTIGATION THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY AMOUN TING TO RS.5,25,000/- FROM M/S. SUMA FINANCE AND INVESTMEN T LIMITED. NOTICE U/S 148 WAS ISSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FURTHER FOUND THAT THE ASSESSEE H AD DEPOSITED CASH OF RS.25,06,400/- IN CORPORATION BANK, KAROL BAGH, NEW DELHI. NOT CONVINCED WITH THE ASSESSEES EXPLANATION, THE ASSE SSING OFFICER MADE ADDITION OF RS.25,06,400/-, APART FROM THE ADDITION OF RS.5,25,000/- FOR WHICH REASSESSMENT PROCEEDINGS WERE INITIATED. THE LD. CIT(A) GOT CONVINCED WITH THE ASSESSEES EXPLANATION ABOUT THE GENUINENESS OF TRANSACTION OF RS.5,25,000/-. HE, THEREFORE, DELET ED SUCH ADDITION. THE OTHER ADDITION OF RS.25,06,400/- WAS SUSTAINED AGAI NST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 634/DEL/2018 3 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. IT CAN BE SEEN FROM THE DISCUSSION MADE SUPRA THAT THE AO RESORTED TO THE RE-ASSESSMENT ON ACCOUNT OF ONE REA SON. THE ADDITION SO CONSEQUENTLY MADE STOOD DELETED IN THE FIRST APPEAL . NO MATERIAL HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT THE REVENUE H AS PREFERRED ANY APPEAL AGAINST THE IMPUGNED ORDER DELETING THE ADDI TION OF RS.5,25,000/-. SECTION 147 PROVIDES THAT: IF THE ASSESSING OFFICE R HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION. A BARE PERUSAL OF THE ABOVE PROVISION MANIFESTS THAT THE AO IS FULLY EMPOWERED TO BRING TO TAX ANY OTHER INCOME WHICH HA S ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF PROCEEDINGS U/S 147, APART FROM THE INCOME ESCAPING ASSESSMENT ON WHICH THE AO FORMED REASON TO BELIEVE ABOUT THE ESCAPEMEN T OF INCOME AND ITA NO. 634/DEL/2018 4 ISSUED NOTICE U/S 148. THE USE OF WORDS AND BETWEEN THE INCOME ESCAPING ASSESSMENT FORMING REASONS TO BELIEVE FOR ISSUING NOTICE U/S 148 AND OTHER INCOME CHARGEABLE TO TAX WHICH ESCAPED AS SESSMENT AND COMES TO THE NOTICE OF THE AO IN THE COURSE OF THE PROCEE DING, AMPLY SHOWS THAT THE EXISTENCE OF THE FORMER IS A PRE-CONDITION FOR TAXING THE LATTER. TO PUT IT SIMPLY, IF THE GROUNDS SET OUT IN THE RE-ASSESSM ENT NOTICE ARE NON- EXISTENT, I.E., EITHER NO ADDITION IS MADE ON SUCH GROUNDS OR THE ADDITION SO MADE DOES NOT PASS THE SCRUTINY BY THE APPELLATE FO RUMS, THEN, OBVIOUSLY, NO FURTHER ADDITION CAN BE MADE FOR INCOME WHICH CO MES TO THE NOTICE OF THE AO DURING THE COURSE OF PROCEEDINGS U/S 147. W ITHOUT THERE BEING SUCH A DETERRENT, THE AO WOULD ACQUIRE AN UNHINDERE D POWER TO INITIATE RE- ASSESSMENT AT THE DROP OF A HAT WITHOUT ANY LEGALLY SUSTAINABLE REASONS AND THEN MAKE OTHER ADDITIONS RESULTING IN MULTIPLI CITY OF PROCEEDINGS, WHICH THE LEGISLATURE HAS SOUGHT TO CURB. ANY LAW FUL JURISDICTION TO MAKE ADDITION ON ACCOUNT OF OTHER INCOMES COMING TO THE NOTICE OF THE AO DURING THE COURSE OF PROCEEDINGS U/S 147 CAN BE ACQ UIRED ONLY ON THE FOUNDATION OF A VALIDLY ACQUIRED JURISDICTION ON LE GALLY SUSTAINABLE ITEMS OF INCOME ESCAPING ASSESSMENT FORMING REASONS FOR I SSUING NOTICE U/S 148. ITA NO. 634/DEL/2018 5 IN OTHER WORDS, IF THE AO FAILS TO ACQUIRE A VALID JURISDICTION TO MAKE RE- ASSESSMENT ON THE BASIS OF HIS REASONS, THEN, HE IS ALSO DEBARRED FROM MAKING ADDITIONS FOR OTHER INCOMES CHARGEABLE TO TA X WHICH ESCAPED ASSESSMENT AND COME TO HIS NOTICE SUBSEQUENTLY IN T HE COURSE OF PROCEEDINGS U/S 147. THE HONBLE JURISDICTIONAL HI GH COURT IN CIT VS. CHIEL COMMUNICATIONS INDIA PVT. LTD. (2013) 354 ITR 549 (DEL) AND CIT VS. ADHUNIK NIRYAT ISPAT LTD. (2011) 63 DTR 0212 (D EL) HAS HELD TO THIS EXTENT. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. JET AIRWAYS (I) LTD. (2011) 331 ITR 236 (BO M) . WHEN I TEST THE FACTS OF THE INSTANT CASE ON THE TOUCHSTONE OF THE PRINCIPLE AS DISCUSSED HEREINABOVE, IT TURNS OUT THAT THE SOLITARY REASON TAKEN NOTE OF BY THE AO BEFORE ISSUING NOTICE U/S 148 IS NON-EXISTENT AND, RESULTANTLY, THERE IS NO QUESTION OF MAKING ANY OTHER ADDITION. I, THEREFOR E, SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO U/S 147 READ WITH SECTION 143(3) OF THE ACT. AS SUCH, THERE IS NO NEED TO DISCUSS THE MERITS OF THE OTHER ADDITION IMPUGNED IN THIS APPEAL MADE BY THE AO WHI CH HAS BEEN UPHELD IN THE FIRST APPEAL. AS THE AO IS NOT COMPETENT TO MAKE ANY OTHER ITA NO. 634/DEL/2018 6 ADDITION IN THE INSTANT CASE, THE OTHER ADDITION OF RS.25,06,400/- SO MADE IS LIABLE TO BE AND HEREBY DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20/0 6/2018) SD/- (R.S. SYAL) VICE PRESIDENT DATED: 20/06/2018 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 634/DEL/2018 7 DATE OF DICTATION 1 9 .06.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 9 .06.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 1 9 .06.2018 DATE ON WHICH THE APPROVED DRAFT COM ES TO THE SR. PS/PS 20 .06.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 20 .06.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 20 .06.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT .06.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .06.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER **