BOMBAY ALUMINIUM P.LTD, MUMBAI V. ITO 8(1)(2), MUMBAI

ITA 7024/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2927 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Search and seizure; Reassessment proceedings
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , ! '#, $ , % BEFORE SHRI B.R.BASKARAN, AM AND SHRI AMARJIT SINGH , JM / I.T.A. NO.7024/M/13 ( $ & '& / ASSESSMENT YEAR: 2007-08) BOMBAY ALUMINIUM PVT. LTD. MR. R.R.BANDEKAR (CHARTERED ACCOUNTANT) B- 8, SAARTHAK, AAREY ROAD, GOREGAON (EAST), MUMBAI - 400063 / VS. INCOME TAX OFFICER 8(1)(2) AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AACCB7407P ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 13.05.2016 !' /DATE OF PRONOUNCEMENT: 24.06.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01.03.2013 PASSED BY THE COMMISSIONER OF INCOME TA X (APPEALS)- 12, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ] RELEVANT TO THE A.Y.2009-10. ASSESSEE BY: SHRI M. SUBRAMANIAN DEPARTMENT BY: SHRI MAHENDRA BHISHMI ITA NO.7024/MUM/13 A.Y.2007-08 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D THE RETURN OF INCOME ON 19.10.2007 DECLARING TOTAL INCOME TO THE TUNE OF RS.1,55,546/-. THE ASSESSMENT U/S.143(3) OF THE IN COME TAX ACT, 1961 ( IN SHORT THE ACT) WAS PASSED ON 31.08.20 09 ACCEPTING THE SAME INCOME. THEREAFTER THE ASSESSMENT WAS REOPENE D U/S.147 OF THE ACT. AFTER RECORDING THE REASON FOR REOPENING THE ASSESSMENT, THE NOTICE U/S.148 OF THE ACT DATED 26.07.2012 WAS ISSU ED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE REQUES TED TO PROVIDE THE REASONS FOR THE REOPENING OF THE ASSESSMENT U/S.147 OF THE ACT. THE REASONS FOR REOPENING THE ASSESSMENT U/S.147 OF TH E ACT WAS GIVEN BY THE AUTHORITY WHICH IS HEREBY MENTIONED BELOW:- INFORMATION IN THIS CASE IS RECEIVED FROM THE AD DL. D.I.T. UNIT-I, MUMBAI, VIDE LETTER DATED 12.09.2011 , STATING THAT A SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T.ACT, 1961 WAS CONDUCTED IN THE CASE OF M/S. MAHASAGAR SECURITIES P. LTD. (NOW KNOWN AS M/S. ALAG SECURITIES P. LTD. AND ITS GROUP COMPANIES. ON THE DATE OF SEARCH, IT WAS DISCOVERE D THAT SHRI MUKESH M. CHOKSI, A CHARTERED ACCOUNTANT BY PROFESS ION HAD FLOATED SOME 36 COMPANIES FROM HIS OFFICE AT SHREE SADASHIV CHS, SANTACRUZ (EAST), MUMBAI. TWO OF THESE COMPAN IES M/S. TALENT INFOWAY LIMITED (AACCT9444L) AND M/S.BUNIYAD CHEMICALS LTD.(AABCB6954G) WERE COMPANIES LISTED ON THE AHMEDABAD AND PUNE STOCK EXCHANGES RESPECTIVELY. T HERE ITA NO.7024/MUM/13 A.Y.2007-08 3 WAS NO GENUINE BUSINESS BEING CARRIED ON BY ANY OF THESE CONCERNS AND THEY WERE ALL ENGAGED IN THE BUSINESS OF ISSUING BOGUS BILLS FOR PROVIDING LONG TERM CAPITAL GAINS / LOSS, SPECULATION PROFIT OR LOSS. IN ADDITION, SOME OF T HE COMPANIES (IN RETURN FOR CASH) AND YET OTHER CONCERNS LIKE M/ S.MIHIR AGENCIES P. LTD. AND M/S. VIJAYLAXMI CORPORATION WE RE ENGAGED IN ISSUING BOGUS SALE BILLS TO VARIOUS ENTI TIES. THE COMPANIES RUN BY SHRI MUKESH CHOKSI WERE RECEIVING COMMISSION FOR ALL THESE ACTIVITIES. AS PER THE INFORMATION AND ENCLOSED LIST (ANNEXURE B) RECEIVED FROM THE INVESTIGATION DIRECTORATE, DURING THE PREV IOUS YEAR 2006-07 RELEVANT TO A.Y.2007-08 THE ASSESSEE COMPAN Y HAD PROVIDED ACCOMMODATION ENTRY TO M/S. TALENT INFOWAY LTD. FOR AN AMOUNT OF RS.28,00,000/-. THE ASSESSEE COMPANY DID NOT PROVIDE WITH ANY DETAILS BEFORE THE INVESTIGATION W ING REGARDING THE SAID TRANSACTION. ON PERUSAL OF THE BALANCE SHEET IT IS NOTICED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS I SSUED 800 EQUITY SHARES OF RS.8,00,000/- (800 SHARES X RS.100 0/- EACH SHARE) AT A PREMIUM OF RS.20,00,000 (800 SHARE X RS .2,500/- EACH SHARE). IN VIEW OF THE SPECIFIC INFORMATION R ECEIVED FROM INVESTIGATION REGARDING BOGUS SHARE TRANSACTION, I HAVE REASON ITA NO.7024/MUM/13 A.Y.2007-08 4 TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D FOR A.Y.2007-08. HENCE NOTICE U/S.148 IS SOUGHT TO BE ISSUED THE ASSESSEE OBJECTED TO REOPEN THE ASSESSMENT ON T HE GROUND OF THAT THE ASSESSEE DISCLOSED FULLY AND TRULY ALL THE MATE RIAL FACTS AND THEREAFTER THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT, THEREFORE, THE QUESTION OF INITIATING THE PROCEEDIN GS U/S.147 OF THE ACT AND ISSUANCE OF NOTICE U/S.148 OF THE ACT DOES NOT ARISE. THE ASSESSEE CONTESTED THE MATTER BY RELYING UPON NUMBER OF JUDG MENTS BUT THE ASSESSING OFFICER DECLINED THE CONTENTIONS OF THE A SSESSEE AND COMPLETED THE ASSESSMENT BY DETERMINING THE TOTAL I NCOME TO THE TUNE OF RS.29,55,550/-. THEREAFTER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE. T HEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND BEF ORE US:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE REASSESSMENT PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE U/S.148 OF THE INCOME TAX ACT , 1961 IS INVALID AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ASSESSMENT PASSED U/S.144 R.W.S. 14 7 OF THE INCOME TAX ACT, 1961 IS INVALID AND BAD IN LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICE AND DETERMINING THE INCOME AT RS.29,55,546/- AS AGAINST THE RETURNE D INCOME OF RS.1,55,546/- ITA NO.7024/MUM/13 A.Y.2007-08 5 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER BY MAKING AN ADDITION OF RS.28,00,000/- AS DISALLOWANCE U/S.68. ISSUE NO.1 & 2:- 4. ISSUE NO.1 AND ISSUE NO.2 ARE INTERCONNECTED THE REFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE IS SUES THE ASSESSEE CHALLENGED THE NOTICE U/S148 OF THE ACT AND ASSESSM ENT U/S.144 R.W.S 147 OF THE ACT. IT IS ARGUED BY THE LEARNED REPRES ENTATIVE OF THE ASSESSEE THAT NOTICE HAS BEEN ISSUED BY THE ASSESSI NG OFFICER AFTER THE EXPIRY OF FOUR YEARS AND THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSED ANY MATERIAL FACTS NECESSARY FOR ASSES SMENT, THEREFORE NOTICE U/S.148 OF THE ACT AS WELL AS ASSESSMENT UND ER THE PROVISION OF SECTION 147 OF THE ACT ARE AGAINST LAW AND FACTS AN D ARE LIABLE TO BE SET ASIDE. IN SUPPORT OF THESE CONTENTIONS THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE ON THE LAW SETTLED BY HONBLE BOMBAY HIGH COURT IN CASE TITLED AS GODREJ INDUSTRIES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ORS. (2015) 126 DTR (B OM) 417 AND TALATI AND PANTHAKY ASSOCIATED P. LTD. VS. DEPUTY C OMMISSIONER OF INCOME TAX & ORS. (2014) 362 ITR 326 (BOM). 4.1 ON THE OTHER HAND LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS PLACED RELIANCE UPON THE ORDER PASSED BY THE LEARNE D CIT(A) IN QUESTION. KEEPING IN VIEW AND ARGUMENTS ADVANCED B Y THE LEARNED ITA NO.7024/MUM/13 A.Y.2007-08 6 REPRESENTATIVE OF THE PARTIES AND PERUSING THE MATE RIAL ON RECORD, IT CAME INTO NOTICE THAT THE ASSESSMENT OF THE ASSESSE E WAS COMPLETED U/S.143(3) OF THE ACT ACCEPTING THE INCOME TO THE T UNE OF RS.1,55,546/-. THE PRESENT ASSESSMENT WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE ADDL. DIT, MUMBAI VID E WHICH IT WAS DISCLOSED THAT THE ASSESSEE COMPANY HAD PROVIDED AC COMMODATION ENTRY TO M/S.TALENT INFOWAY LTD. FOR AN AMOUNT OF R S.28,00,000/- FOR THE A.Y.2007-08. THEREAFTER, IT WAS NOTICED THAT U NDER THE YEAR CONSIDERATION, THE ASSESSEE COMPANY HAD ISSUED 800 EQUITY SHARES OF RS.8,00,000/-(800 SHARES X RS.1000/- EACH SHARE) AT PREMIUM OF RS.20,00,000/- (800/- SHARES X RS.2500/- EACH SHARE ). THEREFORE, IT WAS THE REASON TO ARRIVE AT THIS CONCLUSION THAT TH E INCOME CHARGEABLE TO TAX IS THE ESCAPED INCOME FOR THE A.Y.2007-08, T HEREFORE THE NOTICE U/S.148 OF THE ACT WAS ISSUED. THE ASSESSMENT YEAR IS OF 2007-08 AND THE NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASS ESSEE ON 26.07.2012 WHICH WAS SERVED UPON THE ASSESSEE ON 27.07.2012. UNDOUBTEDLY, THE NOTICE WAS ISSUED AFTER EXPIRY OF FOUR YEARS, THERE FORE THE CASE OF THE ASSESSEE IS TO BE SEEN IN VIEW OF THE PROVISION OF SECTION 147 OF THE ACT. IN VIEW OF THE SAID PROVISION THE ASSESSMENT CAN ONLY BE REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF T HE FAILURE ON THE PART OF THE ASSESSEE TO MAKE RETURN U/S.139 OF THE ACT OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION 1 OF SECTION 142 OR SECTION 148 OR TO ITA NO.7024/MUM/13 A.Y.2007-08 7 DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESS ARY FOR HIS ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. 4.2 IN THE INSTANT CASE THE ASSESSEE HAS SHOWN THE TRANSACTION IN HIS RETURN. THE ASSESSMENT OF THE ASSESSEE WAS COMPLET ED U/S.143(3) OF THE ACT. THERE IS NO FAILURE ON THE PART OF THE AS SESSEE TO DISCLOSE ANY DESIRED INFORMATION. THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF THE STATEMENT OF SHRI MUKESH CHOKSHI. ASS ESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE SHRI MUKE SH CHOKSHI. THE STATEMENT OF SHRI MUKESH CHOKSHI IS NOT ITSELF SUFFICIENT TO FALSIFY THE TRANSACTION OF ASSESSEE WHICH HAS BEEN SHOWN WHILE COMPLETING HIS ASSESSMENT U/S.143(3) OF THE ACT. TH ERE IS NO OTHER RECORD ON THE FILE TO FALSIFY THE TRANSACTION SHOWN BY THE ASSESSEE IN HIS RETURN. THERE IS NO CONCEALMENT OF ANY TRANSA CTION ON THE PART OF ASSESSEE. NO DOUBT, IN THE SAID CIRCUMSTANCES THE ASSESSMENT UNDER PROVISO OF SECTION 147 OF THE ACT IS NOT JUSTIFIABL E IN VIEW OF THE LAW SETTLED IN GODREJ & TALATHI (SUPRA) & TALATI AND PA NTHAKY ASSOCIATED P. LTD.(SUPRA) THE REASONS FOR REOPENING HAS ALREAD Y MENTIONED ABOVE, THEREFORE, THERE IS NO NEED TO REPEAT THE SA ME BUT THE REASONS NOWHERE SHOWS ANY FAILURE ON THE PART OF THE ASSESS EE. HOWEVER THE ASSESSEE HAD SHOWN THE DETAILS OF TRANSACTION IN HI S RETURN IN ACCORDANCE WITH LAW. IN VIEW OF THE SAID DISCUSSI ON AND IN VIEW OF THE LAW SETTLED IN I.E. GODREJ INDUSTRIES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ORS. (2015) 126 DTR (BOM) 417 AND T ALATI AND ITA NO.7024/MUM/13 A.Y.2007-08 8 PANTHAKY ASSOCIATED P. LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ORS. (2014) 362 ITR 326 (BOM). WE ARE OF THE VIEW THAT THE ASSESSMENT MADE IN VIEW OF THE PROVISION U/S.147 OF THE ACT IS WRONG AGAINST LAW AND FACTS, THEREFORE THE SAME IS HEREB Y ORDERED TO BE SET ASIDE. HENCE THIS ISSUE IS DECIDED IN FAVOUR OF TH E ASSESSEE AGAINST THE REVENUE. 5. WHILE DECIDING THE ISSUE NO.1 &2, THE ASSESSMENT ORDER UNDER CHALLENGE HAS BEEN ORDER TO BE SET ASIDE, THEREFOR E DECIDING THIS ISSUE WOULD MERELY BE AN ACADEMIC NATURE. 6. ACCORDINGLY THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE , 2016. SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 24 TH JUNE, 2016 MP MP MP MP ) * +$!', -,'! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ) / BY ORDER, - & //TRUE COPY// ./# /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI