M/s Zurassic Properties Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6398/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3250 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 15-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Assessee Lawyers: ASHOK MALIK
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.6398/DEL/2016 ASSESSMENT YEAR 2006-07 ZURASSIC PROPERTIES PVT. LTD., SHREEKUNJ, OPP. DABAR FARMS, BIJWASAN ROAD, NEW DELHI. PAN: AAACZ 0068J VS. ITO, WARD-18(4), NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : MS. BEDOBANI CHAUDHURI, SR.D.R. ASSESSEE(S) BY : SHRI ASHOK MALIK, ADV. / DATE OF HEARING : 25/04/2017 / DATE OF PRONOUNCEMENT: 28/04/2017 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F LEARNED CIT(A)- 22, NEW DELHI DATED 26.10.2016 FOR THE ASSESSMENT Y EAR 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL . 1. THE C I T (A) HAS GROSSLY ERRED IN LAW IN UPHOLDING THAT RE OPENING OF AS S ESS MENT COMPLETED UNDER SECTION 143(3) AFTER 4 YEAR BY ISSUING NOTI CE U/S 148 READ WITH SECTION 147 IS VALID . 2.T H E CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDIT I ON OF RS 24,03,120/ - B Y THE AD IN THE INCOME OF THE ASSESSEE . , 3. THE CIT (A) HAS ERRED IN LAW IN DISMISSING THE GROU ND NO . 2(B) OF THE GROUNDS OF APPEAL, ON WRONG FACTS AND CONFIRMING TH E ADDITION OF RS . 45,600/- MADE BY THE AO FOR THE FIRST TIME IN THE I NCOME OF THE ASSESSEE ON PRESUMPTION WHILE PASSING THE ORDER U/S 143(3)/147. 4.THE CIT (A) HAS GROSSLY ERRED IN LAW AND ON FACTS OF THE CASE IN DISMISSING THE GROUND NO 2(C) OF THE GROUNDS OF APPEAL AND CON FIRMING THE DISALLOWANCE OF RS.77 , 515/ - AGAINST RS.61 , 580/ - U/S.14A OF THE INCOME TAX ACT 1961 . 5.THE LEARNED CIT (A) HAS . GROSSLY ERRED ON THE FACTS OF THE CASE AND NOT DIRECTING THE AO TO ADJUST THE BROUGHT FORWARD LOSSES AGAINST CURRENT INCOME AS PER LAW. ITA NO.6398/DEL/2016 2 2. THE ASSESSEE IN ITS GROUNDS OF APPEAL APART FROM THE GROUNDS ON MERIT HAS RAISED LEGAL GROUNDS AGAINST THE INITIATION OF PROCEEDINGS U/S.147 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE ARE THAT THE ASSESSING OFFICER WHILE RECORDING THE REASONS HAS NOT APPLIED HIS MIND, THEREFORE, THE ASSESSING OFFICER DOES NOT ACQ UIRE ANY JURISDICTION TO ASSESS/RE-ASSESS U/S.147 OF THE ACT. THE LEGAL GROU ND RAISED BY THE ASSESSEE WAS DISMISSED BY THE LEARNED CIT(A). 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THE REASONS RECORDED AT PAGE 4 OF THE PAPER BOOK AR E REPRODUCED HEREUNDER: MI S Z U RASS IC PR O PERT I ES P. L T D I S ASSESSE D TO TA X WITH WARD-1 8 ( 4 ) . N EW DELHI ENQU IRI ES OF I NVEST I GAT I ON WING DELH I OF THE DEP A RTM EN T H A V E UN E A RT H ED HUGE A C CO M MODA TI O N ENTRY R A CKET BE I N G OPERATED BY ACCOM MO DA TI O N ENTRY OPE R AT O R S H . SURE N D R A K R . J A IN B Y WAY OF M O R E T HA N 10 0 C OMP A NI E S/F I RMS ETC. THE IN VEST I GA TI ON W I N G H AS COMPILED A REPO R T & D A T A OF T H E BENEF I C I A RI ES OF SUCH ENTR I ES . THE NA M E OF THE A SS ESSEE F I GURES IN THE LI ST OF BE N EF I C I AR I ES OF S H A R E C AP I TA L PRE M IUM / LOAN I H AVE GO N E THROU G H T H E REP O R T AND DATA SE NT BY TH E I NV ES TIGAT I ON W I NG. TH E R E P O R T CL EA RLY I N D I CAT E S THAT ACCO M M O DAT I ON ENTR I ES H A V E B EEN T AKEN T O PL O U G H B ACK U NCOUNT E D BLACK MO N E Y FOR THE P UR POSE OF BUS I NES S OR FOR P E R SON AL NE EDS SUCH AS PU R CHASE OF ASSETS E T C . , I N THE FO RM S H ARE APPL I CAT I ON M O N E Y L OANS ETC A ND EV E N DES C R I BES TH E M O D US OPERA N D I OF THIS S C AM . TH E IN VEST IG AT I O N WIN G ' S LIST OF BE NEF I C I A R I ES ( OF S U CH ACCO MMO D AT I O N E NTR I E S ) G I VES _ CO MP RE H E N S IVE DE T A IL S OF B E N EF I C I AR I ES NAME . E NTITY FROM WH E R E ENT R Y RECE IV E D , BA N K , CHE QU E / RT GS , D A T E AND EV E N TH E M I DD L EMA N TH R OUG H WH I CH SUC H ENT R Y I S R E C E IV ED . TH I S LIST C O N T A I NS T HE NAM E O F M/S ZURASS IC P ROPERT I E S P. L TD . WHI C H H AS TAK E N S U C H C C OM M O D A TIO N ENT R I ES . TWO E N TRIES OF R S . 4 . 6 LAK H S E ACH HA VE BE E N R E C EI VED VIDE I NSTR U M E NT N UMBER S 4 8085 & 979 852 ON 5 . 1 2 . 20 0 5 . THE ENTRIES HAVE B E EN R E C E IVE D FR O M M/ S HILRI D GE INVESTMENTS LTD & M/S. PELI CO N F IN AN C E & LEASE LTD. RESPECTIVELY FROM THEIR ACCOUNTS IN B A NK OF IND I A . COPI ES OF HA N DW RI TTEN PAPERS S E I Z ED FROM R ES IDENC E OF SH . S. K. J A IN HA V E ALSO BEEN FORW A RDED ' FROM T H E W I NG . THE MIDD L EMA N INV O LV ED IN HELP I NG THE A S S ESSE E TAKE THESE ENTRI ES H AS BE EN NAM E D AS YKG . TH US , THE AS SE SSEE H AS PLOU G H E D B ACK UNACC O UNTED MONEY OF R S .9 . 2 L AKH S IN ITS BUSINESS T H ROUGH THE CH A NNE L OF ACCOMMO DA TI O N ENTRY . T HE A S S ESSEE H AS ALSO PAID ' C OMMISS ION OF 1 . 7 5 % IN C A SH ON TH E SAM E. TH E R E F O R E, I T I S FAILUR E O N TH E PAR T OF T H E ASSESSEE TO D I SC LO S E FU L LY AND T RULY AL L MA T E R I A L F A CT S NECESSARY ASSES S M E NT , FOR THE ASSESSMENT YEAR 2006-07 AND HAS N OT P A I D TAX O N SUCH AMOU NT T H E UN AC COUNTED MO N E Y S WHICH SHOU L D HAVE B EEN CHARGED TO TAX A RE BE IN G PLOU G H E D BA CK TO BUS I NES S WITH OUT PA YIN G D U ES TA X ON IT . I N V I E W O F T H E A BOVE F ACTS ITA NO.6398/DEL/2016 3 HAVE R E A S ON S TO B E LI E V E T H A T IN COME T O TH E TUN E OF RS . 9 . 2 LAKH S , OF THE A SSESSEE COMPA NY F O R ASSESSMENT YEAR. 2 00 6 - 0 7 H AS ESCAP ED ASSESS MEN T . T H E R E FOR E IN A C CO RDANCE WITH P RO VISIONS OF SECTION 151(2) OF I T A CT , SANCT I O N FOR I SSUE A NOTICE U/ S.148 OF THE ACT IS BEING SOUGHT. 4.1 THE SAID REASONS RECORDED ARE UNDATED AND THE N OTICE ISSUED U/S.148 WAS DATED 26.03.2013. THE ASSESSEE RAISED AN OBJECT ION TO THE SAID REASONS ON WHICH ORDER BY THE ASSESSING OFFICER HAS BEEN PA SSED AND THE SAME IS PLACED AT THE BACK SIDE OF THE PAGE 8 IS AS UNDER: IT WILL NOT BE OUT OF CONTEXT TO MENTION THAT WHAT IS REQUIRED AT THE TIME OF REOPENING OF ASSESSMENT IS MERE REASONS TO BELIE VE AND NOT GENUINER.ESS OF ESCCPEMENT O F INCOME. THE FACT WHETHER INCOME HAS ACTUALLY ESCAPED ASSESSMENT IS A MATTER OF VERIFICA TION & INVESTIGATION WHICH NEEDS TO BE DONE AT THE TIME OF REASSESSMENT. , THE INVESTIGATION REPORT PERMITS THE REOPENING OF THE ASSESSMENT AND IS A STARTING POINT FOR THE ENQUIRY . FURTHER, INVESTIGATION WING IS AN ARM OF DEPARTMENT ITSELF . THE GENUINENESS OF THE INQUIRY SPECIFICALLY CONDUCT ED BY IT CANNOT BE DOUBTED BY THE ASSESSING OFFICER, OTHERWISE IT MAY HAMPER THE EFFICIENT FUNCTIONING OF THE DEPARTMENT ITSELF 4.2 FROM THE DECISION OF THE ASSESSING OFFICER WHIL E DISPOSING OF THE REASONS, THE REPORT OF THE INVESTIGATION WING IS FI NAL FOR INITIATION OF REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT. IT IS EVIDENT THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND INDEPENDENTLY TO T HE FACT OF THE CASE AND IN SUCH CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFIC ER DOES NOT ACQUIRE ANY JURISDICTION TO ASSESS OR REASSESS THE MATTER IN TH E PRESENT CASE. THE RELIANCE IS PLACED UPON THE DECISION OF HONBLE DELHI HIGH C OURT IN THE CASE OF SIGNATURE HOTELS P. LTD. VS. INCOME TAX OFFICER AND ANOTHER, REPORTED IN (2011) 338 ITR 51 (DELHI) WHERE THE RELEVANT DECISI ON IS REPRODUCED HEREINUNDER: HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIREC TOR OF INCOME TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN THE ANNE XURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFI CIARY. THE REASONS DID NOT ITA NO.6398/DEL/2016 4 SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANN EXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE A NNEXURE WAS NOT A POINTER AND DID NOT APPLY HIS OWN MIND TO THE INFORMATION A ND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE T HAT THE COMPANY, S, HAD A PAID UP CAPITAL OF RS.90 LAKHS AND WAS INCORPORATED IN SEPTEMBER, 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO BE QUASHED. 5.1 RELIANCE IS ALSO PLACED UPON THE DECISION OF HO NBLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. P. LTD. VS. ITO, REPORTED IN (2010) 329 ITR 110 (DEL). 6. IN THE CIRCUMSTANCES AND FACTS OF THE PRESENT CA SE AND THE DECISION RELIED UPON HEREINABOVE THE AO DOES NOT ACQUIRE JUR ISDICTION TO ASSESS OR RE- ASSESS THE MATTER IN THE PRESENT CASE AND ACCORDING LY THE ASSESSMENT / RE- ASSESSMENT ARE DIRECTED TO BE QUASHED. 7. IN THE RESULT, THE LEGAL GROUND OF THE ASSESSEE IS ALLOWED. 8. SINCE THE ASSESSEE SUCCEEDS ON LEGAL GROUND, THE REFORE, THE GROUNDS ON MERIT BECOME ACADEMIC IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 28 TH APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 28/04/2017 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSTT. REGISTRAR, ITAT, NEW DELHI