Lamba Bricks Pvt. Ltd., Bhiwani V. ACIT, Bhiwani

ITA 707/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2932 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K JAIN MS NATASHA
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 133A; 133(6); 147; 148; 139

Judgement Text

PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH - SMC NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NOS. 706, 707,7 08/DEL/2017 ASSESSMENT YEARS : 2009-10,2010-11 ,2011-12 LAMBA BRICKS PVT. LTD. H.NO. 1751 HUDA, SECTOR 13, BHIWANI 127021 PAN AABCL0419J VS. ACIT SCO 222, OFFICE OF INCOME TAX, HUDA CITY CENTER BHIWANI 127021 (APPELLANT) (RESPONDENT) PER BHAVNESH SAINI, JUDICIAL MEMBER ORDER ALL THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST DI FFERENT ORDERS OF LD. CIT(A) ROHTAK DATED 25 TH NOVEMBER, 2016 FOR ASSTT. YEARS 2009- 10, 2010-11, 2011-12. 2. LD. REPRESENTATIVES OF BOTH THE PARTIES MAINLY A RGUED IN ASSESSMENT YEAR 2009-10 AND SUBMITTED THAT ISSUES A RE SAME IN THE REMAINING APPEALS. THEREFORE, ORDER FOR ASSTT. YEAR 2009-10 MAY BE FOLLOWED IN OTHER YEARS. ASSESSEE BY : SHRI N.K. JAIN, ADVOCATE MS. NATASHA, ADVOCATE DEPARTMENT BY: MS.BEDOBANI, SR. DR DATE OF HEARING 24/05/2017 DATE OF PRONOUNCEMENT 07 /06/2017 ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 2 3. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. FOR THE PURPOSE OF DISPOSAL OF ALL THE APPEALS, THE APPEAL FOR ASSTT. YEAR 2009-10 IS DECIDED AS UN DER :- ASSESSMENT YEAR- 2009-10 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT RETURN D ECLARING OF INCOME OF RS. 1,99,990/- WAS FILED ON 14 TH SEPTEMBER, 2009, SAME WAS PROCESSED U/S 143(1). IN THE RETURN OF INCOME ,ALL THE COLUMN S OF THE BALANCE SHEET AS WELL AS PROFIT AND LOSS ACCOUNT HAVE BEEN FILLED , THE GROSS RECEIPTS HAVE BEEN SHOWN AT RS. 69,67,218/- FROM WHERE NET P ROFITS OF RS. 1,99,990/- HAVE BEEN DECLARED. IN THE COMPUTATION O F INCOME, ASSESSEE HAS NOT SHOWN INCOME UNDER OTHER HEADS. A SURVEY U/ S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSES SEE ON 21 ST MARCH, 2012. THEREAFTER REASONS U/S 147 OF THE I.T. ACT WE RE RECORDED BY THE AO AND NOTICE U/S 148 OF THE I.T. ACT WAS ISSUED O N 17 TH FEBRUARY, 2014 WHICH WAS SERVED UPON ASSESSEE. THE ASSESSEE STATED THAT RETURN ALREADY FILED U/S 139 (1) MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE I.T. ACT. THE OBJECTIONS OF T HE ASSESSEE REGARDING ISSUANCE OF NOTICE U/S 148 WERE REJECTED. THE AO AC CORDINGLY FRAMED THE REASSESSMENT ORDER U/S 143 (3) /147 OF THE I.T. AC T VIDE ORDER DATED 30 TH MARCH, 2015 WHEREBY THE RETURNED INCOME DECLARED I N A SUM OF RS. 1,99,990/- WAS ACCEPTED AND FURTHER ADDITIONS WERE MADE ON ACCOUNT OF DISALLOWANCE OF RENT AND ELECTRICITY CHARGES FOR A SUM OF RS.30,000/- AND ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 3 RS.36,294/-. FURTHER ADDITION WAS MADE ON ACCOUNT O F UNEXPLAINED SHARE APPLICATION MONEY FOR A SUM OF RS. 14,50,000/- U/S 68 OF THE I.T. ACT. 5. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASS ESSMENT AND ADDITIONS ON MERIT HOWEVER APPEAL OF ASSESSEE HAS BEEN DISMISSED. 6. THE ASSESSEE IN THE PRESENT APPEAL CHALLENGED TH E ASSUMPTION OF JURISDICTION U/S 147 / 148 OF THE I.T. ACT AS WELL AS ABOVE ADDITIONS ON MERITS. 7. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT AO HAS R ECORDED REASONS ON 13 TH FEBRUARY 2014 COPY OF WHICH IS FILED AT PAGE 1 OF THE PAPER BOOK IN WHICH AO RECORDED THE REASONS FOR ESCAPEMEN T OF INCOME ON ACCOUNT OF LOWER NET PROFIT DECLARED BY THE ASSESSE IN A SUM OF RS. 59,725/- HOWEVER THIS ADDITION WAS NOT MADE IN THE REASSESSMENT ORDER. AO DID NOT RECORD IN THE REASONS ABOUT DISALLOWANCE OF THE EXPENSES ON ACCOUNT OF RENT AND ELECTRICITY AND ADDITION ON ACC OUNT OF UNEXPLAINED SHARE APPLICATION MONEY. THEREFORE THE AO ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME ON WHICH HE HAS INITIALLY FORMED A BELIEF HAD ESCAPED ASSESSMENT, HAS AS A MATTER O F FACT HAS NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM TO INDEP ENDENTLY ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE U/S 148 SHOULD BE NECESSARILY ISSUED. HE HAS RELIED UPON DE CISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) L TD. 239 CTR 183 AND ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 4 DECISION OF DELHI HIGH COURT IN THE CASE OF ORIENTA L BANK OF COMMERCE VS. ADDL. CIT 272 CTR 56. HE HAS THEREFORE SUBMITTE D THAT REASSESSMENT PROCEEDINGS MAY BE QUASHED. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT REASSESSMENT PROCEEDINGS WERE INITIATED AFTER SURVEY WAS CONDUCT ED IN THE PREMISES OF THE ASSESSEE WHERE NO BOOKS OF ACCOUNTS WERE FOUND AND PRODUCED. THE OBJECTIONS OF THE ASSESSEE AGAINST REOPENING OF ASS ESSMENT HAS BEEN REJECTED. THERE WERE DISCREPANCY IN THE BOOKS OF AC COUNTS. THEREFORE PRIMA FACIE CASE WAS MADE OUT FOR REOPENING OF THE ASSESSMENT. LD. DR SUBMITTED THAT ON MAKING THE ABOVE ADDITIONS THE PR OFIT OF THE ASSESSEE HAS INCREASED. THEREFORE, THERE IS NO ILLEGALITY IN INITIATION OF THE REASSESSMENT PROCEEDINGS. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS W ELL SETTLED LAW THAT VALIDITY OF THE REASSESSMENT PROCEEDINGS HAVE TO BE DETERMINED WITH REFERENCE TO THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. COPY OF WHICH IS FILED AT PAGE 1 OF THE PAPER BOOK WHICH READS AS UNDER :- M/S. LAMBA BRICKS CO. PVT. LTD. H. NO. 1751, SEC-13, BHIWANI A.Y. 2009-10 PAN-AABCL0419J REASONS FOR RE-OPENING THE CASE U/S 148 READ WITH S ECTION 147 OF THE INCOME-TAX ACT, 1961. RETURN DECLARING AN INCOME OF RS. 1,99,990/- FILED ON 14.09.2009 AND SAME WAS PROCESSED U/S 143(1). THE ASSESSEE DER IEVES INCOME FROM RUNNING OF BKO. ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 5 SUBSEQUENTLY SURVEY OPERATION U/S 133A OF THE INCO ME-TAX ACT, 1961 WAS CARRYOUT ON 21.3.2012 AT THE BUSINESS PREM ISES OF M/S. LAMBA BRICKS CO. PVT. LTD. NO BOOKS OF A/CS AND ANY OTHER DOCUMENTS FOUNDED BELONGING TO THE ASSESSEE M/S. LAMBA BRICKS CO. PVT . LTD. THE ASSESSEE STATED ABOUT BELOW BANKS A/CS NUMBERS IN HIS STATEM ENT DURING SURVEY OPERATION. LATER ON, THE INFORMATION WAS CALLED FOR U/S 133(6) OF THE INCOME-TAX ACT, 1961 FROM THE BANK IS AS UNDER :- SR. NO. NAME OF BANK ACCOUNT NO. AMT. DEPOSITED (RS.) 1. INDIAN BANK, BHIWANI 52710 3076 70,000/ - 2. AXIS BANK, BHIWAN I 40201200001878 86,16,110/ - GRAND TOTAL RS. 86,86,110/ - THE ASSESSEE HAS FILED HIS RETURN FOR A.Y. 2009-10 IN WHICH GROSS TURNOVER HAS SHOWN AT RS. 66,91,608/- WITH NET PROF IT DECLARED AT RS. 1,99,990/-. AS PER BANKS STATEMENTS TOTAL TURNOVER WORKS OUT AT RS. 86,86,110/-. AS PER RETURN OF INCOME FOR A.Y. 2009- 10, NET PROFIT RATE OF THE ASSESSEES COMPANY WORKS OUT AT @2.99% BY APPLY ING THE SAME RATE. INCOME OF THE ASSESSEE FOR THE A.Y. 2009-10 W ORKS OUT AT RS. 2,59,715/-. ADDING DISALLOWANCE OF RS. 59,725/- AND TOTAL INCOME IS WORKS OUT AT RS. 2,59,715/-. I HAVE THEREFORE REASONS TO BELIEVE THAT INCOME OF RS. 59,725/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE A. Y. 2009-10 AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO THE NOTICE OF THE AO SUBSEQUENTL Y IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION. NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 196 1 ISSUED. DATE 13.2.2014 (JITENDER SINGH) ASSTT. COMMISSIONER OF INCOME-TAX BHIWANI 8.1 IT IS ADMITTED FACT THAT THE ASSESSEE FILED RET URN OF INCOME DECLARING INCOME OF RS. 1,99,990/-. THE AO WHILE PA SSING THE REASSESSMENT ORDER ACCEPTED THE RETURNED INCOME BUT MADE OTHER INDEPENDENT ADDITIONS ON ACCOUNT OF DISALLOWANCE OF RENT AND ELECTRICITY CHARGES AND ADDITION MADE ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 6 MONEY. THE AO HOWEVER IN THE REASONS RECORDED FOR R EOPENING OF THE ASSESSMENT FORMED HIS BELIEF ON SOLE REASON THAT AS SESSEE HAS SHOWN THE LESSOR NET PROFIT IN THE RETURN OF INCOME, IN A SUM OF RS. 59,725/- . THE AO HOWEVER IN THE REASSESSMENT ORDER DID NOT MA KE ANY ADDITION OF RS. 59,725/- AND ACCEPTED THE RETURNED INCOME OF RS . 1,99,990/- .HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. J ET AIRWAYS (I) LTD. 239 CTR 183 HELD AS UNDER :- CONCLUSION : AO MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS THOUGH THE REASONS FOR SUCH ISSUE W ERE NOT INCLUDED IN THE NOTICE ; HOWEVER, IF AFTER ISSUING A NOTICE UNDER S. 148, THE AO ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REA SON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NO T ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESSEE SOME OTHER INCOME. 9. HONBLE DELHI HIGH COURT IN THE CASE OF ORIENTAL BANK OF COMMERCE VS. ACIT 272 CTR 56 HELD AS UNDER :- CONCLUSION : IF NO ADDITIONS WERE MADE IN RESPECT OF THE REASONS (A) AND/OR (B) IT WAS NOT OPEN TO THE AO TO MAKE ADDITIONS ON SOME OTHER GROUND SUCH AS THE DISALLOW ANCE OF THE DEDUCTION UNDER SECTION 36(1) (VIIA) WITHOUT FIRST ISSUING A NOTE UNDER SECTION 148. 10. HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORY PVT. LTD. VS. CIT 336 ITR 136 SIMILARLY HELD THAT ITEMS OF INCOME SAID TO HAVE ESCAPED ASSESSMENT ON WHICH REASSESSMENT PROPO SED NOT ADDED BUT OTHER DEDUCTIONS REDUCED NOT PERMISSIBLE. 11. CONSIDERING THE ABOVE DISCUSSION, IN THE LIGHT OF THE REASONS RECORDED FOR REOPENING OF ASSESSMENT AND IN THE LIG HT OF ABOVE ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 7 DECISIONS, IT IS CLEAR THAT THE VERY BASIS OF INITI ATION OF REASSESSMENT PROCEEDINGS FOR WHICH REASONS TO BELIEVE WERE RECOR DED WERE INCOME ESCAPING ASSESSMENT IN RESPECT OF LOWER NET PROFIT, THE SAME HAVING NOT BEEN ESCAPED, THE AO PROCEEDED TO MAKE ADDITIONS ON ACCOUNT OF DISALLOWANCE OF RENT AND ELECTRICITY CHARGES AND AD DITIONS MADE ON ACCOUNT OF SHARE APPLICATION MONEY WHICH AS PER THE ABOVE DECISIONS WAS NOT PERMISSIBLE U/S 148 OF THE I.T. ACT. IN MY HUMBLE VIEW IF NO ADDITIONS WERE MADE IN RESPECT OF THE REASONS I.E. LOWER NET PROFIT, IT WAS NOT OPEN TO THE AO TO MAKE ADDITIONS ON OTHER G ROUNDS SUCH AS DISALLOWANCE OF EXPENSES AND ADDITION ON ACCOUNT OF SHARE CAPITAL MONEY WITHOUT FIRST ISSUE A NOTICE 148 OF THE I.T. ACT. THE AO WAS THEREFORE NOT JUSTIFIED IN REOPENING OF THE ASSESSM ENT WHEN THE REASONS FOR THE INITIATION OF REASSESSMENT PROCEEDINGS CEAS ED TO SURVIVE/EXIST. 12. IN VIEW OF THE ABOVE DISCUSSION AND REASONS GIV EN ABOVE, THE REASSESSMENT ORDER AND THE RESULTANT PROCEEDINGS TO THE NOTICES U/S 148 CAN NOT BE SUSTAINED. I ACCORDINGLY SET ASIDE AND Q UASH THE REASSESSMENT PROCEEDINGS. RESULTANTLY ALL ADDITION S STAND DELETED. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. ASSESSMENT YEAR : 2010-11 ASSESSMENT YEAR : 2011-12 13. IN THESE APPEALS SAME ISSUE ARISES. THEREFORE F OLLOWING THE REASONS FOR DECISIONS FOR ASSTT. YEAR 2009-10, I SE T ASIDE AND QUASH THE ITA NOS. 706,707,708/DEL/2017 LAMBA BRICKS PVT. LTD. VS. ACIT 8 REOPENING OF THE ASSESSMENT U/S 147 / 148 OF THE I. T. ACT AND DELETE THE ENTIRE ADDITIONS. BOTH APPEALS OF ASSESSEE ARE ALLO WED. 14. IN THE RESULT APPEALS OF ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT. SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER DATED: 7 TH JUNE, 2017 *VEENA* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. PRINCIPAL CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR