Yogesh Gupta, New Delhi V. ITO, New Delhi

ITA 6370/DEL/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6440 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-01-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 26-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UMESH CHANDER DUBEY
• Keywords: Gift; Accommodation entries; Competent authority; Reason to believe; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 143(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. SUDHANSHU SRIVASTAVA, JM IT A NO. 6370 /DEL/201 2 : ASSTT. YEAR : 200 2 - 03 YOGESH GUPTA, 46, AJMERI GATE, NEW DELHI - 110006 VS INCOME TAX OFFICE, WARD - 28(4), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A A PG6947G ASSESSEE BY : SH. V. K. TULSIYAN, CA REVENUE BY : SH. UMESH CHANDER DUBEY, SR. DR DATE OF HEARING : 12 .0 1 .201 7 DATE OF PRONOUNCE MENT : 24 .03 .201 7 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 01.11.2012 OF LD. CI T(A ) - XXV , NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER THE LD. CIT(A) WAS JUSTIFIED BY UPHOLDING THE ASSUMPTION OF JURISDICTION EXERCISED U/S 147 BY LD.AO BASED ON REASONS RECORDED DT. 10.03.08 BY SUO - MOTO OBSERVATION THAT T HERE WAS NO GENERAL INFORMATION FOR ROVING ENQUIRY CONTAINED IN THE REASONS. 2. WHETHER THE LD. CIT(A) WAS JUSTIFIED BY UPHOLDING THE LD. AO'S ORDER JUST IN MECHANICAL WAY THAT THE PRELIMINARY OBJECTION DISPOSAL VIDE ORDER DT14.11.11 AND THEREAFTER DT. 5. 12.11 IN ITA NO. 6370/DEL/2012 YOGESH GUPTA 2 PURSUANCE OF OBJECTIONS DT. 26.08.11, 31.10.11, 23.11.11 ARE IN FULL AGREEMENT WITH THE HON'BLE APEX COURT ORDER IN GKN DRIVESHAFT AS WELL AS THE HON'BLE ITAT ORDER DT.23.07.10 IN THE SAME CASE BY WHICH THE MATTER WAS SET ASIDE. 3. WHETHER THE LD . CIT(A) WAS JUSTIFIED BY UPHOLDING JUST IN MECHANICAL WAY THAT THERE IS NO ILLEGALITY/BARRING BY LIMITATION OF THE ORDER PASSED FOR ISSUE OF NOTICE U/S 148 VIDE ORDER DT. 10.03.08 WELL IN TIME AFTER COMPLYING WITH SECTION 149(1) READ WITH SEC. 151(2) DESP ITE THE ADMITTED FACTS ON RECORD THAT APPROVAL OBTAINED ON 13.03.08. 4. WHETHER THE LD. CIT(A) WAS JUSTIFIED BY UPHOLDING THE A.O'S ORDER JUST IN MECHANICAL WAY WHO HAS NOT AFFORDED AN OPPORT UNITY FOR CROSS EXAMINATION OF THE PERSONS, WHO ALLEGED THAT IN TOTO RS.400000/ - IS IN THE NATURE OF ACCOMMODATION ENTRY, DESPITE THE FACT THAT THE APPELLANT DEMANDED CROSS - EXAMINATION AT HIS OWN COST. 5. WHETHER THE LD. CIT(A) WAS JUSTIFIED BY UPHOLDING NOT ONLY THE ALLEGED RS.400000/ - BUT THE ENTIRE ADDITION T O CAPITAL A/C OF RS.2850000/ - U/S 68 WITHOUT CONSIDERING THE EVIDENCE ON RECORD OR BRINGING ANY CONTRARY MATERIAL/REBUTTAL ON RECORD TO DRAW ANY ADVER SE INFERENCE . THAT THE APPELL ANT CRAVES LEAVE TO AMEND, ALTER OR TO RAISE ANY OTHER GROUND AT THE TIME OF HEARING. 3. THE MAIN GRIEVANCE OF THE ASSESSEE RELATES TO THE REOPENING OF THE ASSESSMENT BY EXERCISING THE POWERS U/S ITA NO. 6370/DEL/2012 YOGESH GUPTA 3 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED HIS R ETURN OF INCOME ON 17.09.2002 DECLARING AN INCOME OF RS.2,05,830/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 29.01.2003. THEREAFTER, THE AO RECEIVED THE INFORMATION FROM THE INVESTIGATION WING AND REOPENED THE ASSESSMENT BY ISSUING THE NOTICE U/S 148 OF THE ACT. THE ASSESSEE HAD RECEIVED TWO GIFT CHEQUES OF RS.2,00,000/ - EACH FROM SH. MUKESH KUMAR JINDAL WHO WAS ALLEGED TO HAVE BEEN ENGAGED IN GIVING BOGUS GIFTS, LOANS AND SHARE CAPITAL AFTER TAKING CASH AND ISSUING CHEQUES TO THE BENEFICIARIES. THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT IN THE BANK STATEMENT OF ACCOUNT NO. 16767 MAINTAINED BY THE ASSESSEE WITH ORIENTAL BANK OF COMMERCE, IT WAS FOUND THAT THE CHEQUES AMOUNTING TO RS.28,50,000/ - (INCLUDING CHEQUES OF RS.4,00,000/ - RECE IVED FROM SH. MUKESH KUMAR JINDAL) WERE CREDITED DURING THE YEAR. THE AO HELD THAT THE GENUINENESS OF THE GIFTS AND THE CREDITWORTHINESS OF THE DONORS COULD NOT BE PROVED. HE, THEREFORE, MADE THE ADDITION OF RS.28,50,000/ - . ITA NO. 6370/DEL/2012 YOGESH GUPTA 4 5. A GAINST THE SAID ADDITION TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), AND CHALLENGED THE ACTION OF THE REOPENING THE ASSESSMENT AS WELL. THE LD. CIT(A) CONFIRMED BOTH THE REOPENING OF THE ASSESSMENT AS WELL AS THE ADDITIONS MADE BY THE AO. THE ASSESSEE FURTHER FILED AN AP PEAL BEFORE THE ITAT DELHI BENCH I , NEW DELHI WHEREIN VIDE ORDER DATED 23.07.2010 IN ITA NO. 1553/DEL/2010, THE ISSUE WAS SET ASIDE TO THE FILE OF THE AO . 6. I N COMPLIANCE TO THE SAID DIRECTION THE AO PROCEEDED TO FRAME THE ASSESSMENT. THE ASSESSEE RAIS ED PRELIMINARY OBJECTION OF REOPENING WHICH THE AO DISPOSED OFF VIDE ORDER DATED 05.12.2011. THE AO AGAIN FRAMED THE ASSESSMENT AT AN INCOME OF RS.30,55,830/ - BY REPEATING THE EARLIER ADDITION OF RS.28,50,000/ - . 7 . BEING AGGRIEVED THE ASSESSEE CARRIED T HE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE AO WAS NOT JUSTIFIED TO REOPEN THE ASSESSMENT WITHOUT ANY VALID AND PROPER REASON S . THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND OBSERVED THAT THERE WAS APPARENT LY NO SCRUTINY A SSESSMENT IN THIS CASE AND THE AO WAS WITHIN HIS RIGHT S TO ISSUE NOTICE U/S 148 OF THE ACT ON THE BASIS OF SUFFICIENT INFORMATIONS IN HIS POSSESSION. ITA NO. 6370/DEL/2012 YOGESH GUPTA 5 8 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REOPENING U/S 147 OF THE ACT WAS JUST BASED ON GENERAL INFORMATION FOR ROVING ENQUIRY AND NOTHING MORE AND IF THE AO HAD MADE ANY INQUIRY AT THE INITIAL STAGE THEN HE COULD HAVE APPRISED THAT THE GIFT WAS NOT TAKEN FROM SH. MUKESH KUMAR BUT FROM SH. MUKESH KUMAR JINDAL AND OTHER FROM SH. SHIV KUMAR MITTAL AND THAT ALL THE DOCUMENTARY EVIDENCES WERE ON RECORD. A REFERENCE WAS MADE TO PAGE NOS. 21 TO 41 OF THE ASSESSEE S PAPER BOOK. IT WAS STATED THAT THE REOPENING WAS DONE BY THE AO ONLY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT BUT HE HAD NOT APPLIED HIS OWN MIND. THEREFORE, THE REOPENING WAS NOT VALID. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS SFIL STOCK BROKING LTD. 325 ITR 285 (DEL.) PR. CIT - 4 VS G & G PHARMA LTD. 384 ITR 147 9 . THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE ITAT DELHI BENCH SMC - 2 , NEW DELHI IN ITA NO. 4029/DEL/2015 FOR THE ASSESSMENT YEAR 2004 - 05 IN THE CASE OF MARATHON FINLEASE LTD. VS ITO, WARD - 6(2), NEW DELHI ORDER DATED 19.02.2016 (CO PY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. 10 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE REOPENING OF ASSESSME NT. THEREFORE, THE REOPENING WAS JUSTIFIED. ITA NO. 6370/DEL/2012 YOGESH GUPTA 6 11 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE AO IN THE BODY OF THE ASSESSMENT ORDER DATED 29.12.2011 NOTED AS UNDER: THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 17.09.2002 DECLARING INCOME OF RS.2,05,830/ - FOR THE AY 2002 - 03 WHICH WAS PROCESSED U/S 143(1) ON 29.01.2003. THEREAFTER INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING. ON THE BASIS O F THIS INFORMATION THE CASE OF THE ASSESSEE WAS REOPENED AFTER RECORDING THE REASONS AND NECESSARY PRIOR APPROVAL WAS SOUGHT FROM THE COMPETENT AUTHORITY. NOTICE UNDER SECTION 148 WAS ISSUED AND SERVED UPON THE ASSESSEE. 12. FROM THE ABOVE NOTINGS OF THE AO, IT IS CRYSTAL CLEAR THAT THE REOPENING U/S 147 R.W.S 148 OF THE ACT WAS DONE ONLY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND THE AO DID NOT APPLY HIS INDEPENDENT MIND TO COME TO THE CONCLUSION THAT THE INCOME OF THE ASSES SEE ESCAPED ASSESSMENT. 13 . ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX - 4 VS G & G PHARMA LTD. (SUPRA) VIDE ORDER DATED 08.10.2015 (NOW REPORTED AT 384 ITR 147) HELD AS UNDER: THE BASIC RE QUIREMENT OF LAW FOR REOPENING AN ASSESSMENT IS APPLICATION OF MIND BY THE ASSESSING OFFICER, TO THE MATERIALS PRODUCED PRIOR TO REOPENING THE ASSESSMENT, TO CONCLUDE THAT HE HAS ITA NO. 6370/DEL/2012 YOGESH GUPTA 7 REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURIS DICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT MAKE AN INHERENTLY DEFECTIVE REASSESSMENT ORDER VALID. IT HAS FURTHER BEEN HELD AS UNDER: WITHOUT FORMING A PRIMA FACIE OPINIO N, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR HIM TO HAVE SIMPLY CONCLUDED THAT IT WAS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. THE BASIC JURISDICTIONAL REQUIREMENT WAS APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL PRODUCED BEFORE ISSUING THE NOTICE FOR REASSESSMENT. WITHOUT ANALYSING AND FORMING A PRIMA FACIE OPINION ON THE BASIS OF MATERIAL PRODUCED, IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO CO NCLUDE THAT HE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. 14 . IN THE PRESENT CASE ALSO THE AO SIMPLY ACTED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND DID NOT APPLY HIS OWN MIND. THEREFORE, THE REOPENING U/S 147 BY ISSUI NG THE NOTICE U/S 148 OF THE ACT ONLY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WAS NOT VALID. ACCORDINGLY, THE REASSESSMENT FRAMED BY THE AO IS HELD TO BE INVALID AND QUASHED. ITA NO. 6370/DEL/2012 YOGESH GUPTA 8 15 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED . (O RDER PRONOUNCED IN THE COURT ON 24 /0 3 /2017 ) SD/ - SD/ - (SUDHANSHU SRIVASTAVA ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 /03 /2017 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDEN T 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR