Krish Impex Pvt. Ltd., Delhi V. ITO ward-14(4), New Delhi

ITA 7610/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3846 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Document seized; Tangible material; Accommodation entries; Assessment record; Reason to believe; Documents seized; Reassessment proceedings
• Section: 139(1); 147; 68; 69; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2 NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER THROUGH VIDEO CONFERENCING I.T.A. NO.7610/DEL/2019 ASSESSMENT YEAR 2010-11 KRISH IMPEX PVT. LTD., L-7A (LGF), SOUTH EXTENSION PART-2, NEW DELHI. V. ITO, WARD-14(4), NEW DELHI. TAN/PAN: AACCK9108Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJ KUMAR, CA RESPONDENT BY: SHRI R. K. GUPTA, SR.D.R. DATE OF HEARING: 27 10 2020 DATE OF PRONOUNCEMENT: 29 10 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 27.06.2019, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-V, NEW DELHI F OR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3)/147 FOR THE ASSESSMENT YEAR 2010-11. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE REOPENING OF ASSTT. U/S. 147 / 148 IS ILLEGAL, WITH OUT JURISDICTION, MECHANICAL AND UNSUSTAINABLE IN LAW A S WELL AS ON MERITS. I.T.A. NO.7610 /DEL/2019 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE APPR OVAL U/S. 151 IS MECHANICAL AND WITHOUT APPLICATION OF M IND ON THE BASIS OF WHICH, THE ASSUMPTION OF JURISDICTION BY THE AO TO PROCEED U/S. 147 / 148 IS ILLEGAL AND INVALID IN LAW. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION IN LAW AS WELL AS ON MERITS IN MAKING ADDITION OF RS. 5,00,000.00 U/S. 68 FOR ALLEGED ACCOMMODATIO N ENTRY RECEIVED FROM MEGA TOP PROMOTERS (P) LTD. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION IN LAW AS WELL AS ON MERITS IN MAKING ADDITION OF RS. 10,00,000.00 U/S. 68 FOR ALLEGED ACCOMMODATI ON ENTRY RECEIVED FROM VICTORYY SOFTWARE (P) LTD. 5. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. AO ERRED IN ASSUMING COMMISSION EXPENSES @ 1.8% ON ALL EGED ACCOMMODATION ENTRY OF RS. 15,00,000.00 CONSEQUENTL Y ERRED IN MAKING AN ADDITION OF RS. 27,000.00. WITHO UT PREJUDICE, IN ANY CASE, IT IS NOT A CASE OF UNEXPLA INED INVESTMENT U/S. 69 B. 2. THE FACTS IN BRIEF QUA THE ISSUE OF VALIDITY OF INITIATION OF PROCEEDINGS U/S.147 AS ARGUED BY THE LD. COUNSEL FO R THE ASSESSEE ARE THAT, NOTICE U/S.148 WAS ISSUED ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF DIRECTOR OF INCOME TAX (INVESTIGATION-II), NEW DELHI STATING THAT DURING T HE COURSE OF SEARCH OPERATION CARRIED OUT IN THE CASE OF SHRI SU RENDRA KUMAR JAIN GROUP OF CASES WHEREIN EXTENSIVE INQUIRY AND DOCUMENT SEIZED WERE MADE, IT WAS FOUND THAT SHRI S .K. JAIN I.T.A. NO.7610 /DEL/2019 3 GROUP AND VARIOUS ENTITIES WERE INVOLVED IN PROVIDI NG ACCOMMODATION ENTRIES. THE ASSESSEE COMPANY WAS ALS O FOUND TO BE BENEFICIARY OF THE ACCOMMODATION ENTRY IN THE DOCUMENTS SEIZED. THE REASONS RECORDED BY ASSESSING OFFICER HAVE BEEN ENCLOSED IN THE PAPER BOOK WHICH IS VERY EXHAUSTIVE RUNNING INTO SEVERAL PAGES. ONE OF THE C ORE REASONS FOR ENTERTAINING THE REASON TO BELIEVE BY T HE ASSESSING OFFICER WAS THAT, NO RETURN OF INCOME WAS AVAILABLE IN THE RECORD OR IN THE ITD SYSTEM FOR ASSESSMENT Y EAR 2010- 11. HE MENTIONED IN HIS REASONS THAT FROM THE PERUS AL OF THE INCOME TAX RETURN FOR THE ASSESSMENT YEARS 2009-10 AND 2011-12, IT IS OBSERVED THAT ASSESSEE COMPANYS AUT HORIZED CAPITAL HAS RISEN FROM RS.1 LAC IN ASSESSMENT YEAR 2009-10 TO RS.30 LAC IN ASSESSMENT YEAR 2011-12 AND ACCORDINGL Y NOTICE U/S.148 WAS ISSUED ON 11.03.2016. THE LD. ASSESSING OFFICER ON THE BASIS OF MATERIAL FOUND/ INFORMATION RECEIVE D DURING THE COURSE OF SEARCH IN THE PREMISES OF JAIN BROTHE RS CAME TO THE CONCLUSION THAT ASSESSEE HAS TAKEN ACCOMMODATIO N ENTRY TO RS.15 LAC FROM THE FOLLOWING TWO PARTIES THROUGH S.K. JAIN GROUP. CHEQUE BOOK DATE FROM COMPANY NAME TO COMPAN Y BAN K CHEQUE/ RTGS/PO NO. AMOUNT (RS.) MIDDLEMAN/MEDIAT OR ANNEXUR E PAG E NO. 23.07.200 9 MEGA TOP PROMOTER S P. LTD KRISH IMPEX P. LTD AXI S RTGS 5,00,000/- PARMJEET MEERUT A-21 41 19.08.200 9 VICTORY SOFTWARE P. LTD. KRISH IMPEX P. LTD AXI S PO NO.02917 3 10,00,000 /- PARMJEET MEERUT A-20 36 3. AFTER DISCUSSING MODUS OPERANDI AND THE METHODS I.T.A. NO.7610 /DEL/2019 4 ADOPTED BY THE VARIOUS CONCERNS OF S.K. JAIN AND OT HERS, HE HELD THAT THE SHARE CAPITAL RECEIVED BY THE ASSESSE E FOR SUMS AGGREGATING TO RS.15 LACS IS A BOGUS ACCOMMODATION ENTRY AND UNEXPLAINED CASH CREDIT WHICH IS TO BE ADDED U/ S.68 AND HAS ALSO ADDED NOTIONAL COMMISSION OF RS.27,000/-; AND AMOUNT OF RS.36,000/- ON ACCOUNT OF PAYMENT OF AUTH ORIZED CAPITAL TREATING TO BE A CAPITAL EXPENSES. 4. ONE OF THE MAIN CONTENTIONS OF THE LD. COUNSEL F OR THE ASSESSEE BEFORE US IS THAT, THE ASSESSING OFFICER H AS RECORDED THE REASON OR ENTERTAINED REASON TO BELIEVE ON A WR ONG PRESUMPTION OF FACT THAT ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11. THIS ALLEGA TION OF THE ASSESSING OFFICER IS ABSOLUTELY INCORRECT AND T HIS FACT WAS SPECIFICALLY BROUGHT TO THE NOTICE OF LD. CIT (A) A ND WAS CHALLENGED). LD. CIT (A) ORDERED FOR THE REMAND REP ORT BY THE ASSESSING OFFICER ON THIS POINT AND AFTER VERIFICAT ION WHICH ASSESSING OFFICER HAD ADMITTED THAT RETURN OF INCOM E WAS FILED AND AVAILABLE ON RECORD. THE RELEVANT OBSERVATION O N THIS ISSUE AS INCORPORATED IN THE APPELLATE ORDER READS AS UNDER: 4.2 A LETTER WAS SENT TO THE ASSESSING OFFICER BY THE THEN CIT(A)-5, ASKING TO CLARIFY/COMMENT REGARDING FILIN G OF ORIGINAL RETURN OF INCOME. AS PER THE REASONS RECORDED FOR R EOPENING, IT IS MENTIONED THAT NO RETURN HAS BEEN FILED BY THE A PPELLANT FOR THE YEAR UNDER CONSIDERATION, WHEREAS IN THE SUBMIS SION BY APPELLANT, IT IS STATED THAT THE RETURN OF INCOME F OR THE YEAR UNDER CONSIDERATION WAS ORIGINALLY SUBMITTED ON 12. 08.2010. THE ASSESSING OFFICER WAS ASKED TO COMMENT ON THIS FACTUAL I.T.A. NO.7610 /DEL/2019 5 INFIRMITY IN THE REASONS RECORDED. 4.3 IN HIS REPLY, THE ASSESSING OFFICER I.E. ITO WA RD-14(4), NEW DELHI STATED VIDE LETTER DATED 29.01.2019:- IN THIS CONNECTION, IT IS SUBMITTED THAT AS PER TH E ITBA/ITD SYSTEM THE ASSESSEE COMPANY HAS SUBMITTED ITS RETUR N OF INCOME FOR A.Y. 2010-11 ITR-6 ON 12.08.2010 U/S.139 (1) OF THE IT ACT WITH ACKNOWLEDGMENT NO.148710680120810 A ND STATUS OF THE COMPANY IS ALSO SHOWING AS PROCESSED. HOWEVER, AT THE TIME OF REOPENING OF CASE THE ITD SYSTEM WAS SHOWING NO RETURN FILED BY THE ASSESSEE COMPANY (COPY ENCLO SED), THEREFORE IN THE REASONS RECORDED FOR REOPENING OF CASE AND PROFORMA FOR APPROVAL COLUMN NO.7 (A) HAS BEEN MENT IONED THAT NO RETURN HAS BEEN FILED. I AM ENCLOSING BOTH THE PRINT OUT OF ITR SYSTEM IS ENCLOSED. 5. HE THUS SUBMITTED THAT, THE ENTIRE BASIS AND PRESUMPTION FOR REOPENING IS INCORRECT FACTS AND IS ERRONEOUS, I.E., THE ASSESSING OFFICER HAS FAILED TO EVEN VERI FY THE RETURN OF INCOME FILED U/S. 139(1) ON 12.08.2010 WHICH HAD ATTAINED FINALITY. EVEN THE APPROVAL U/S.151 MENTIONS THAT N O RETURN HAS BEEN FILED WHICH IS APPEARING IN THE PAPER BOOK AT PAGE 20. IN SUPPORT OF HIS CONTENTION, HE STRONGLY RELIE D UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. RMG POLYVINYAL (I) LTD., 396 ITR 5 (DEL) AND JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE O F VIJAY HAISHCHANDRA PATEL VS. ITO AS REPORTED IN 400 ITR 167 (GUJ.) ; AND S.N.G. DEVELOPERS LTD., 404 ITR 312 (DEL) AND CATENA OF OTHER JUDGMENTS. I.T.A. NO.7610 /DEL/2019 6 6. ON THE OTHER HAND, LD. DR SUBMITTED THAT IN THE ITD SYSTEM RETURN FILED, RETURN OF INCOME FILED BY THE ASSESSEE WAS NOT REFLECTED AND THE ASSESSING OFFICER COULD HAVE ONLY VERIFIED BY THE ITD SYSTEM. OTHERWISE ALSO, FROM TH E PERUSAL OF THE REASONS RECORDED IT CAN BE SEEN THAT THE ASSESS ING OFFICER HAS DISCUSSED THE ENTIRE MATERIAL HAVING LIVE LINK NEXUS TO THE INCOME ESCAPING ASSESSMENT WITH REGARD TO BOGUS ACCOMMODATION ENTRY OF SHARE APPLICATION MONEY FROM THESE TWO COMPANIES AND ASSESSEE WAS FOUND TO BE BENEFICI ARY OF SUCH ACCOMMODATION ENTRY, THEREFORE, THE REASONS RE CORDED ARE VALID TO ASSUME PROPER JURISDICTION. HE STRONGL Y RELIED UPON THE OBSERVATION OF THE LD. CIT (A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON P ERUSAL OF THE MATERIAL ON RECORD SPECIFICALLY WITH REGARD TO VALIDITY OF PROCEEDINGS U/S.147 AS ARGUED BEFORE US, IT IS SEEN THAT THE ASSESSING OFFICER IN THE REASONS HAS CATEGORICALLY MENTIONED THAT NO RETURN OF INCOME WAS FILED FOR ASSESSMENT Y EAR 2010- 11. IT IS FROM THE PERUSAL OF RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 AND 2011-12, HE HAS DRAWN A PRESUMPTIO N THAT SINCE AUTHORIZED SHARE CAPITAL HAS BEEN INCREASED F ROM RS.1 LAC IN ASSESSMENT YEAR 2009-10 TO RS.30 LAC IN ASSE SSMENT YEAR 2011-12. HE HAS NO INFORMATION OR RECORD REGAR DING ASSESSMENT YEAR 2010-11, WHETHER ASSESSEE HAD RECEI VED ANY SHARE CAPITAL OR NOT OR ANY RETURN OF INCOME WAS FI LED OR NOT. EVEN AT THE TIME OF SEEKING APPROVAL U/S.151, IT HA S BEEN CATEGORICALLY MENTION THAT IN ITEM NO.8 THAT ITR HA S NOT BEEN FILED. BASED ON THIS RECOMMENDATION AND ASSESSING O FFICERS I.T.A. NO.7610 /DEL/2019 7 SATISFACTION, APPROVAL HAS BEEN GRANTED THAT IT IS A FIT CASE FOR ISSUING NOTICE U/S.148, WHEREAS THE FACT OF THE MAT TER IS THAT INCOME TAX RETURN FOR ASSESSMENT YEAR 2010-11 WAS D ULY FILED IN TIME ON 12.08.2010 U/S. 139 (1) AND SAME WAS AVA ILABLE ON ITD SYSTEM WHICH IS ALSO EVIDENT FROM THE COMMENTS OF THE ASSESSING OFFICER FILED BEFORE THE LD. CIT (A) AS I NCORPORATED ABOVE. THUS, THE VERY PREMISE FOR REOPENING WAS THA T THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME WHICH H AS BEEN FOUND TO BE FACTUALLY INCORRECT. EVEN THOUGH THERE WAS A TANGIBLE MATERIAL OR INFORMATION COMING FROM THE IN VESTIGATION WING, BUT ASSESSING OFFICER ON THE SAID MATERIAL/ I NFORMATION RECEIVED HAS TO APPLY HIS MIND AFTER VERIFYING THE ASSESSMENT RECORDS AND AFTER DUE APPLICATION OF MIND, HE HAS T O SATISFY HIMSELF AND REACHED TO REASON TO BELIEVE THAT INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SUCH OMIS SION OF VITAL FACT OF FILING OF RETURN OF INCOME HAS BEEN F ROWNED UPON BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. RMG POLYVINYAL (I) LTD. 396 ITR 5 (DEL.) IN THIS CASE, THE A.O. REOPENED THE CASE ON THE PREMISES THAT THE RETURN W AS NOT FILED AS PER DATABASE OF DEPTT., ALTHOUGH IT WAS AL READY FILED. HELD (FROM HEAD NOTE) THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WAS NOT TANGIBLE MATERIAL PER SE WITHOUT A FURTHER ENQUIRY HAVING BEEN UNDERTAKEN BY THE AO, W HO HAD DEPRIVED HIMSELF OF THAT OPPORTUNITY THAT PROCEEDIN G ON ERRONEOUS PREMISE THAT THE ASSESSEE HAD NOT FILED A RETURN FOR THE A. Y.2004-05, WHEN IN FACT IT HAD. SIMILAR VIEW WAS TAKEN BY THE HONBLE GUJARAT HIGH C OURT IN I.T.A. NO.7610 /DEL/2019 8 THE CASE OF VIJAY HAISHCHANDRA PATEL VS. ITO 400 ITR 167 (GUJ.) AND COORDINATE BENCH OF THE ITAT DELHI IN THE CASE OF SHREE BALKISHAN AGARWAL GLASS INDUSTRIES LTD. (ITA NO.5798/DEL/2016 , ORDER DATED 21.09.2020), WHEREIN IT WAS OBSERVED THAT, THUS IT IS SEEN THAT THE A.O. HAD NO OCCASION TO GO THROUGH THE RETURN FILED BY THE ASSE SSEE ALONG WITH THE AUDITED A/E BEFORE RECORDING REASONS AND H AS MENTIONED THAT NO RETURN HAS BEEN FILER WHILE REOPE NING THE ASSESSMENT AND THE LD. ADD!. CIT, WITHOUT APPLICATI ON OF MIND HAS SIMPLY MENTIONED I AM SATISFIED THAT THIS IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148' 27 - THUS, WE AGREE WITH THE ARGUMENT OF THE LD. COUNSE L FOR THE ASSESSEE THAT THE REASON TO BELIEVE THAT IN COME HAS ESCAPED ASSESSMENT IS NOT BASED ALL CORRECT FACTS A ND THE APPROVAL HAS BEEN GIVEN IN A MECHANICAL MANNER, AND THEREFORE, SUCH NOTICE BASED ON WRONG FACTS AND APP ROVAL GIVEN IN A MECHANICAL MANNER MAKES THE REASSESSMENT PROCEEDINGS INVALID BEING NOT IN ACCORDANCE WITH LA W ACCORDINGLY WE HOLD THAT THE REASSESSMENT PROCEEDIN GS INITIATED BY THE A.O. IS NOT VALID IN THE EYES OF L AW.' 8. THUS, ON THIS GROUND ALONE, WE HOLD THAT REASONS RECORDED IS BASED ON COMPLETE NON APPLICATION OF MI ND BY THE ASSESSING OFFICER, THEREFORE, SAME ARE BAD IN LAW A ND DOES NOT CONFER ANY JURISDICTION UPON THE ASSESSING OFFICER T O REOPEN THE CASE U/S.147 AND ACCORDINGLY THE PROCEEDINGS U/ S.147 ARE QUASHED. I.T.A. NO.7610 /DEL/2019 9 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. OTHER GROUNDS RAISED BY THE ASSESSEE HAVE BEEN REND ERED INFRUCTUOUS IN VIEW OF THE FINDING GIVEN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2020. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: OCTOBER, 2020 PKK: