M/s. Sheetal International Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 653/DEL/2013

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9092 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 16-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMEER KUMAR SRIVASTAVA
• Keywords: Question of law; Set aside
• Section: 68

Judgement Text

ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 1 THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G, NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NOS. 569 & 570/DEL/2013 AYS: 2004-05 & 2006-07 SHEETAL INTERNATIONAL PVT. LTD. G-81/A, 2 ND FLOOR, VIJAY CHOWK, LAXMI NAGAR, NEW DELHI. PAN NO. AAACS3368N VS . ACIT CENT. CIRCLE II NEW DELHI. (APPELLANT) (RESPONDENT ITA NOS. 651, 652 & 653 /DEL/2013 AYS: 2007-08, 08-09 & 2009-10 SHEETAL INTERNATIONAL PVT. LTD. G-81/A, 2 ND FLOOR, VIJAY CHOWK, LAXMI NAGAR, NEW DELHI. PAN NO. AAACS3368N VS . ACIT CENT. CIRCLE II ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI. (APPELLANT) (RESPONDENT) & ITA NOS. 928 & 929 /DEL/2013 AYS: 2007-08, 08-09 DCIT CENT. CIRCLE 2, ROOM NO. 323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS . SHEETAL INTERNATIONAL PVT. LTD. G-81/A, 2 ND FLOOR, VIJAY CHOWK, LAXMI NAGAR, NEW DELHI. PAN NO. AAACS3368N (APPELLANT) (RESPONDENT) ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 2 ASSESSEE BY : SHRI ASHU GOEL, CA DEPARTMENT BY : SHRI SAMEER KUMAR SRIVASTAVA, CIT DR DATE OF HEARING : 11/12/2018 DATE OF PRONOUNCEMENT : 13/12/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER THESE ARE GROUP OF APPEALS REMANDED BY HONBLE DELHI HIGH COURT VIDE CONSOLIDATED ORDER DATED 10/07/17 AND 08/09/1 7, WHEREIN, HONBLE COURT AFTER ADMITTING QUESTION OF LAW FRAMED BEING: WHETHER THE ITAT WAS RIGHT IN LAW IN HOLDING THAT THE PROCEEDINGS UNDER SECTION 153C OF THE ACT WERE NOT VALIDLY INITIATED HELD AS UNDER: 5. FROM THE IMPUGNED ORDER DATED 28.10.2016, IT I S SEEN THAT THE SHORT GROUND ON WHICH IT WAS HELD BY THE I TAT THAT THE PROCEEDING WAS NOT VALIDLY INITIATED U/S 1 53C OF THE ACT SINCE THERE WAS NO SATISFACTION NOTE RECORD ED BY THE ASSESSING OFFICER (AO) OF THE SEARCHED PERSON . 6. IN THE PRESENT CASE, THE AO OF THE SEARCHED PER SON AND THE OTHER PERSON (THE ASSESSEE) WAS THE SAME. IN S IMILAR CIRCUMSTANCES, THE COURT HAS RECENTLY IN THE DECISI ON DATED 25 TH MAY, 2017 IN WP(C) NO. 525 OF 2015 ( GANPATI FINCAP SERVICES PVT. LTD. VS. COMMISSIONER OF INCOME TAX ) HELD, INTER ALIA, AS UNDER: (IV) WHERE THE AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS THE SAME, SUCH A SATISFACTION NOTE QUA THE OTHER PERSON HAS TO BE RECORDED BY THE AO OF THE SEARCHED PERSON PRIOR TO THE INITIATION OF THE PROCEEDINGS AGAINST THE OTHER PERSON. THIS IS A SINE DIE NON FOR TRIGGERING THE PROCEEDINGS AGAINST THE OTHER PERSON UNDER SECTION 153C OF THE ACT ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 3 (V) THERE DO NOT HAVE TO BE TWO SEPARATE SATISFACTION NOTES PREPARED BY THE AO OF THE SEARCHED PERSON EVEN WHERE HE IS ALSO THE AO OF THE OTHER PERSON. IN SUCH EVENT, THE AO NEED MAKE ONLY ONE SATISFACTION NOTE. THAT SATISFACTION NOTE IS QUA THE OTHER PERSON. FURTHER, IT IS SUFFICIENT THAT SUCH SATISFACTION NOTE IS PLACED IN THE FILE OF THE OTHER PERSON BY THE AO IN HIS CAPACITY AS THE AO OF SUCH OTHER PERSON. 7. IN THAT VIEW OF THE MATTER, THE IMPUGNED ORDER OF THE ITAT WHICH PROCEEDS TO INVALIDATE THE PROCEEDINGS U /S 153C OF THE ACT ONLY FOR THE REASON THAT THE AO OF THE SEARCHED WHO WAS ALSO THAT OF THE ASSESSEE, DID NOT RECORD A SEPARATE SATISFACTION NOTE CANNOT BE SUSTA INED IN LAW. 8. THE QUESTION FRAMED IS, ACCORDINGLY, ANSWERED I N THE NEGATIVE I.E., IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE IMPUGNED ORDER OF THE ITAT IS HEREBY SET ASIDE. FROM THE ABOVE, HONBLE COURT HAS SET ASIDE APPEALS TO THIS TRIBUNAL TO DECIDE THE ISSUES ON MERITS. IT IS OBS ERVED THAT THERE ARE CROSS APPEALS FOR AY 2007-08 & 2008-09. 2. GROUND NO. 2 AND ADDITIONAL GROUND NO. 12 RAISED BY ASSESSEE IN ITS APPEALS IS IN RESPECT OF ASSUMPTION OF JURISDICTION BY LD.AO UNDER SECTION 153 OF THE ACT, WHICH IS BAR RED BY LIMITATION. IN OUR CONSIDERED OPINION THIS ISSUE AT TAINED FINALITY VIDE HONBLE DELHI HIGH COURT VIDE CONSOLIDATED ORDER DATED 10/07/17 AND 08/09/17. ACCORDINGLY THESE GROUNDS STAND DISMISSED. ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 4 3. NOW COMING TO MERITS OF THE CASE, IT IS OBSERVED FROM ORDER PASSED BY LD.CIT (A) THAT ONLY OBSERVATION MADE IN ORDERS PASSED BY HIM ARE AS UNDER: FOR A.Y:2004-05 ADDITION U/S 68 HAS BEEN CHALLENGED, WHEREIN LD. CI T(A) RECORDED AS UNDER: 6. NOW COMING TO THE MERITS OF ADDITIONS, IT IS SE EN THAT APPELLANT HAD RECEIVED ADVANCES FROM 3 PARTIES AND HE FAILED TO FILE BEFORE THE AO THE REQUISITE INFORMAT ION IN THE FORM OF CONFIRMATION, DETAILS OF INCOME TAX RETURNS AND BALANCE SHEET ETC TO ESTABLISH THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. AS DURING THE APPEL LATE PROCEEDINGS ALSO KNOW REQUISITE DETAILS WERE FILED, IN SPITE OF THE NUMBER OF OPPORTUNITIES GIVEN, HENCE IN THES E CIRCUMSTANCES, I AM CONSTRAINED TO HOLD THAT THE AP PELLANT HAS NOT DISCHARGED ITS ONUS TO SATISFACTORILY EXPLA IN THE SOURCE OF CREDIT, HENCE THE ADDITION MADE BY THE AO IS UPHELD. 4. ON PERUSAL OF THE SAME IT IS OBSERVED THAT LD.CI T (A) WHILE COMING TO SUCH CONCLUSION HAS NOT RELIED UPON ANY MATERIALS/EVIDENCES. MERELY BECAUSE ASSESSEE HAS NO T FILED ANY DETAILS EITHER BEFORE THE LD. CIT (A) OR BEFORE LD. AO THE ADDITION HAS BEEN CONFIRMED. IT IS FURTHER OBSERVED THAT NO DETAILS HAS BEEN FILED BY ASSESSEE BEFORE AUTHORITIES BELOW. 5. UNDER SUCH CIRCUMSTANCES AND IN INTEREST OF NATU RAL JUSTICE TO BOTH SIDES, WE ARE OF OPINION THAT ASSESSEE MUST GET PROPER OPPORTUNITY AS PER LAW TO SUBSTANTIATE ITS CLAIM BY FILING ALL NECESSARY EVIDENCES/MATERIALS IN SUPPORT, WHICH LD. AO CAN VERIFY AND DEAL WITH. WE ARE, THEREFORE, INCLINED T O SET ASIDE THIS APPEAL BACK TO FILE OF LD. AO FOR FRESH CONSIDERATI ON OF ISSUES WITH ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 5 A DIRECTION TO DECIDE BY GIVING PROPER OPPORTUNITY TO ASSESSEE AS PER LAW. ASSESSEE IS THUS DIRECTED TO FILE ALL NEC ESSARY EVIDENCES BEFORE LD.AO TO DISCHARGE ITS ONUS, IN RESPECT OF A DDITION MADE UNDER SECTION 68, BY ESTABLISHING IDENTITY, CREDITW ORTHINESS OF CREDITORS AND MOST IMPORTANTLY GENUINENESS OF TRANS ACTION. LD.AO IS THEN DIRECTED TO PASS ORDER, AFTER VERIFYI NG SUCH DETAILS FILED BY ASSESSEE, BY UNDERTAKING ALL PROCEDURES TH AT WOULD BE NECESSARY IN ORDER TO APPRECIATE SUCH EVIDENCES AS PER LAW. ACCORDINGLY GROUNDS RAISED BY ASSESSEE ON MERITS ST AND ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE FOR AY 2004- 05 STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASSESSMENT YEARS 2006-07 TO 2009-10: 6. IT IS OBSERVED THAT ISSUES FOR THESE ASSESSMENT YEARS INVOLVES ADDITION MADE BY LD.AO ON ACCOUNT OF EXCES S CLAIM UNDER SECTION 86, AS WELL AS ADDITION U/S 68 OF THE ACT. 7. LD.CIT (A) IN ALL THESE ASSESSMENT YEARS RECORDE D THAT DETAILS OF AOPS, IN OF WHICH ASSESSEE WAS A MEMBER WAS NOT PLACED BEFORE AUTHORITIES BELOW ALONG WITH ASSESSEE S RETURN. LD.CIT(A) OBSERVED THAT ON SUBSEQUENT VERIFICATION OF RETURNS FILED BY ASSOCIATION OF PERSONS, THERE WAS NO MENTI ON THAT ASSESSEE WAS HAVING DIFFERENT SHARING VARIOUS PROJE CT CARRIED ON BY AOP. IT WAS ONLY ON THIS PRETEXT THAT ALLEGED EX CESS EXEMPTION CLAIMED UNDER SECTION 86 WAS ADDED TO THE INCOME OF ASSESSEE, AGAINST WHICH ASSESSEE IS IN APPEAL. ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 6 8. ANOTHER ISSUE PERTAINING TO ASSESSMENT YEARS 200 7-08 AND 2008-09 IS IN RESPECT OF DIFFERENCE IN CREDIT APPEA RING IN ASSESSEES BOOKS IN THE NAME OF CREDITOR NAMELY MAY FIELD PROJECT, AN ASSOCIATION OF PERSON OF WHICH ASSESSEE IS A MEM BER. IT HAS BEEN RECORDED BY LD.CIT(A) THAT FROM THE SUBMISSION S FILED BY ASSESSEE, CREDITWORTHINESS AND GENUINENESS OF TRANS ACTION CANNOT BE DOUBTED. IT IS OBSERVED THAT LD. CIT(A) H AS DELETED THIS ADDITION, AGAINST WHICH REVENUE IS IN APPEAL. 9. LD. DR SUBMITTED THAT NO DETAILS HAVE BEEN SENT TO LD. AO, RELIED UPON BY LD.CIT (A), IN IMPUGNED ORDER, FOR A REMAND. HE SUBMITTED THAT ASSESSING OFFICER HAS NOT RECEIVED O PPORTUNITY TO VERIFY THE SAME. HE FURTHER SUBMITTED THAT APART F ROM A REPLY FILED BY ASSESSEE, THERE IS NO MENTION OF ANY EVIDE NCES FILED BY ASSESSEE TO DISCHARGE THE PRIMARY ONUS CAST UPON AS SESSEE TO ESTABLISH IDENTITY, CREDITWORTHINESS OF CREDITORS A ND MOST IMPORTANTLY GENUINENESS OF TRANSACTION. 10. WE HAVE PERUSED RIVAL SUBMISSIONS ADVANCED BY B OTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. IN OUR CONSID ERED OPINION, ISSUES IN ASSESSEES AND REVENUE APPEAL DESERVE TO BE REMANDED BACK TO LD.AO TO PASS DETAILED ORDER, AFTER CALLING FOR RELEVANT INFORMATION IN RESPECT OF CLAIMS MADE BY ASSESSEE. IT IS OBSERVED THAT LD.CIT (A) DECIDED ISSUES REGARDING EXCESS CLA IM MADE BY ASSESSEE U/S 86 AND ADDITION U/S 68, WITHOUT PROPER APPRECIATION OF FACTS AND WITHOUT RELEVANT MATERIAL S BEEN PLACED ON RECORD BY ASSESSEE. IT IS ALSO OBSERVED THAT LD. AO HAS NOT RECEIVED OPPORTUNITY TO VERIFY ANY DETAILS IN RESPE CT OF THESE ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 7 ISSUES, BASED UPON WHICH, LD.CIT(A) UPHELD DENIAL O F EXCESS CLAIM U/S 86 AND DELETED ADDITIONS U/S 68 OF THE AC T. 11. WE ARE, THEREFORE, IN THE INTEREST OF NATURAL J USTICE TO BOTH SIDES, ARE INCLINED TO SET ASIDE THESE ISSUES BACK TO LD.AO FOR FRESH CONSIDERATION. ASSESSEE IS DIRECTED TO FILE ALL RELEVANT DETAILS IN RESPECT OF BOTH THESE ISSUES ITS CLAIM B EFORE LD.AO. LD.AO SHALL THEN VERIFY THE SAME BY FOLLOWING DUE P ROCESS OF LAW. ACCORDINGLY GROUNDS RAISED BY ASSESSEE AS WELL AS R EVENUE ON MERITS STAND ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEALS FILED BY REVENUE STAND ALLOWE D FOR STATISTICAL PURPOSES AND APPEALS FILED BY ASSESSEE STAND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2018 SD/- SD/- (N.S. SAINI) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER DT. 13/12/2018 *KAVITA ARORA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NOS. 569, 570, 651, 652, 653, 928 & 929/DEL/201 3 SHEETAL INTERNATIONAL PVT. LTD. 8 DATE 1. DRAFT DICTATED ON 11/12/2018 13/12/18 2. DRAFT PLACED BEFORE AUTHOR 11/12 13/12 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 13/12 5. APPROVED DRAFT COMES TO THE SR.PS/PS 17/12 6. KEPT FOR PRONOUNCEMENT ON 13/12 7. FILE SENT TO THE BENCH CLERK & UPLOADED ON 17/12 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.