Nishit Fincap P. Ltd., Delhi V. ITO ward 18(3), New Delhi

ITA 7646/DEL/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9424 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K GUPTA
• Keywords: Reopening of assessment; Unexplained cash credit; Document seized; Opportunity of being heard; Principle of natural justice; Application of stay; Accommodation entries; Assessment record; Documents seized; Reassessment proceedings
• Section: 143(3); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BEN CH, NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 7646/DEL/2019 [ASSESSMENT YEAR: 2010-11] M/S NISHIT F INCAP P. LTD. B-1/14, RANA PRATAP BAGH, DELHI-110007 INCOME TAX OFFICER, WARD-18(3), C.R. BUILDING, NEW DELHI-110002 PAN - AAACN3687M APPELLANT RESPONDENT SA NO.919/DEL/2019 (ARISING OUT OF ITA NO. 7646/DEL/2019) [ASSESSMENT YEAR: 2010-11] M/S NISHIT FINCAP P. LTD. B-1/14, RANA PRATAP BAGH, DELHI-110007 INCOME TAX OFFICER, WARD-18(3), C.R. BUILDING, NEW DELHI-110002 PAN - AAACN3687M APPELLANT RESPONDENT APPELLANT BY SHRI S. K. GUPTA, CA RESPONDENT BY SHRI RAKHI VIMAL, SR. DR DATE OF HEARING 0 5.01.2021 DATE OF PRONOUNCEMENT 05 .01.2021 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-37, NEW DELHI, DATED 31/07/2019, PERTAINING TO ASSESSMENT Y EAR 2010-11. 2 ITA NO.7646/DEL/2019 SA NO.919/DEL/2019 2. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. THE IMPUGNED ASSESSMENT IS INVALID AND WITHOUT JU RISDICTION AS THE SAID ASSESSMENT IS COMPLETED WITHOUT COMPLYING WITH LEGA L REQUIREMENTS OF THE PROVISIONS OF SECTION 147/148 OF THE INCOME TAX ACT THEREFORE SUCH ASSESSMENT IS VOID AB INITIO AND LIABLE TO BE QUASHED. 2. THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE HAS ERRED IN UPHOLDING THE VALIDITY OF IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3)/147 OF THE ACT AFTER RECORDING THE FACT THAT IN THE SEIZED MAT ERIAL FROM THIRD PARTY, THE NAME OF THE APPELLANT APPEARS BUT THE PROVISION OF SEC I53C OF THE ACT DOES NOT APPLY AS THE DOCUMENT SEIZED DONT BELONG TO THE APPELLANT. THE L D C1T(A) HAS IGNORED THE AMENDMENT TO SEC 153C(1) W.E.F 01.06.2015 WHERE THE SEIZED DOCUMENTS FROM THIRD PARTY RELATING TO THE ASSESSEE RULES OUT ACTION U/S 147 OF THE ACT. 3. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMST ANCES OF THE CASE IN UPHOLDING THE REASSESSMENT PROCEEDINGS INITIATED U/ S 147 OF THE IT ACT IGNORING THE CONTENTION OF APPELLANT THAT THE PROCEEDINGS HAVE B EEN INITIATED BY THE AO WITHOUT APPLICATION OF INDEPENDENT MIND ON THE MATERIAL, IF ANY. PROVIDED BY THE INV. WING OF THE DEPARTMENT. IN VIEW OF THE ABOVE DEFECTS IN THE COMPLIANCES THE RESULTANT REASSESSMENT PROCEEDINGS ARE REQUIRED TO BE SET ASI DE. 3.1. THE ACTION OF THE LD. AO U/S 147/148 SUFFERS F ROM NON-APPLICATION OF MIND IN AS MUCH AS REASON FAILS TO BRING ON RECORD ESSENTIA L DETAILS OF SO CALLED ACCOMMODATION ENTRIES ACCEPTED BY APPELLANT AND IN THE ABSENCE OF THESE DETAILS FORMING PART OF THE REASON, THE REASON RECORDED IS VAGUE AND INCOHERENT. 3.2. THE ACTION OF THE LD. AO U/S 147/148 FURTHER SU FFERS FROM NON-APPLICATION OF MIND AS THE INCOME ESCAPING ASSESSMENT QUANTIFIED B Y THE AO AT RS.L ,40,00,000/- IS FOUND TO BE INCORRECT WHICH IS EVIDENT FROM THE ADDITION OF RS.L,00,00,000/-MADE BY THE AO WHICH SHOW THAT THE PRIMARY INFORMATION/M ATERIAL NOT DISCUSSED IN THE REASON, WAS DEFICIENT AND ACTION OF THE AO WAS BASE D ON MERE SUSPICION AND SURMISE WHICH IS EVIDENT FORM FURTHER ENQUIRY MADE BY THE AO FROM INVESTIGATION WING DURING ASSESSMENT PROCEEDINGS. 3.3. THE ACTION OF THE LD. AO U/S 147/148 ALSO SUFFE RS FROM NON-APPLICTAION OF MIND AND THEREFORE NEED BE QUASHED ON THE GROUND TH AT THE AO HAS RELIED ON CERTAIN OTHER MATERIAL SUBSEQUENTLY WHILE DISPOSING OFF OBJECTION OF APPELLANT, THE MATERIAL WHICH IS NOT DISCUSSED IN THE REASON RECOR DED. THE AO IS NOT ENTITLED TO SUPPORT THE REASON RECORDED ON THE MATERIAL WHICH I S NOT MENTION IN THE REASON ITSELF AND IN THAT CASE THE REASON SUFFERS FROM EITHER ABS ENCE OF RELEVANT MATERIAL AT THE TIME OF RECORDING OF REASON OR REASON NOT BASED ON SUCH MATERIAL. 3.4. THE ACTION OF THE AO U/S 147/148 IS NOT IN ACCO RDANCE WITH THE PROVISIONS OF THE ACT AS THE ACTION HAS BEEN TAKEN BY THE AO TO V ERIFY INFORMATION FROM INVESTIGATION WING WHICH IS EVIDENT FROM THE NOTE O F SATISFACTION GIVEN BY ADDL CIT/PRCIT U/S 151(1) OF THE ACT. 4. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS OF THE CASE IN UPHOLDING THE IMPUGNED REASSESSMENT PROCEEDINGS IGNORING THE FACT THAT THE SANCTION U/S 151 OF IT ACT AS PROVIDED WITH THE COPY OF THE REASON RECOR DED SHOWS MECHANICAL 3 ITA NO.7646/DEL/2019 SA NO.919/DEL/2019 SATISFACTION BY THE PR C1T, DELHI-6, NEW DELHI AND T HE LD. C1T(A) HAVE HELD THAT SUCH MECHANICAL SATISFACTION ARE PROCEDURAL INFIRMI TY WHICH DOES NOT INVALIDATE THE REASSESSMENT PROCEEDINGS 5. THE LD. C1T(A) HAS ERRED BOTH IN LAW AND CIRCUMSTA NCES OF THE CASES IN UPHOLDING THE ADDITION OF RS. 1,00,00,000/- U/S 68 OF THE IT ACT HOLDING THE SHARE CAPITAL RESPECTIVELY AS UNEXPLAINED CASH CREDIT IGN ORING THE FACT THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS U/S 68 OF THE IT ACT EXPLAINING NATURE AND SOURCE OF THE CREDITS BY TILING REQUISITE DOCUMENTS PROVING I DENTITY AND CREDITWORTHINESS OF THE LENDERS AND ALSO TO ESTABLISH GENUINENESS OF THE TR ANSACTION DURING ASSESSMENT PROCEEDINGS. 6. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTA NCES OF THE CASES IN UPHOLDING ACTION OF THE AO, IN MAKING ADDITION U/S 68 OF THE IT ACT OF RS. 1,00,00,000/- IS ERRONEOUS AS THE EVIDENCES FILED B Y THE APPELLANT IN SUPPORT OF ABOVE CASH CREDITS HAVE BEEN REJECTED BY THE AO WIT HOUT CONDUCTING ANY ENQUIRY THEREON IN DISCHARGE OF ONUS SHIFTING ON THE REVENU E AFTER THE INITIAL ONUS DISCHARGED BY THE APPELLANT. 7. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTA NCES OF THE CASES IN RELIANCE ON THE MATERIAL TO TAKE VIEW ADVERSE TO TH E APPELLANT WITHOUT CONFRONTING THE SAME AND THEREFORE ACTION OF THE AO IS IN CONTRAVEN TION OF THE PRINCIPALS OF NATURAL JUSTICE. 8. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND CIRCUMSTA NCES OF THE CASES IN UPHOLDING ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS. 1,75,000/- BEING 1.75% OF THE ALLEGED ACCOMMODATION ENTRIES OF RS. 1,00,00,000/- IS ARBITRARY AND WITHOUT BASIS AND THEREFORE NEED BE QUASHED. 3. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED. WE ALSO HAD THE BENEFIT TO GO TH ROUGH THE ASSESSMENT RECORDS PRODUCED BY THE DR. 4. ON PERUSAL OF THE ASSESSMENT RECORDS, WE FOUND T HAT THE REASONS OF REOPENING OF ASSESSMENT ARE MATERIALLY DIFFERENT FROM THE REASON S EXTRACTED IN THE ASSESSMENT ORDER. IN OUR CONSIDERED VIEW, WHEN AN ASSESSMENT IS REOPE NED AND REASSESSMENT ORDER IS FRAMED, THE ENTIRE QUARREL REVOLVES AROUND THE REAS ONS RECORDED FOR REOPENING THE ASSESSMENT. SINCE, THERE IS DIFFERENCE IN THE REASO NS RECORDED FOR REOPENING THE ASSESSMENT AS FOUND IN THE ASSESSMENT RECORDS FROM THE REASONS EXTRACTED IN THE 4 ITA NO.7646/DEL/2019 SA NO.919/DEL/2019 ASSESSMENT ORDER, NEITHER THE ASSESSEE COULD DEFEND ITS CASE PROPERLY NOR THE APPELLATE AUTHORITIES CAN ADJUDICATE THE MATTER. 5. THE COUNSEL REFERRING TO VARIOUS JUDICIAL DECISI ONS VEHEMENTLY STATED THAT THE ASSESSMENT ORDER FRAMED U/S. 147 R.W.S. 143(3) OF T HE ACT SHOULD BE QUASHED. 6. IN OUR CONSIDERED VIEW ALL THE DECISIONS RELIED UPON BY THE COUNSEL ARE FACTS SPECIFIC. THE PECULIAR FACTS OF THE CASE IN HAND IS THAT THERE IS MATERIAL DIFFERENCE BETWEEN THE REASONS EXTRACTED IN THE ASSESSMENT ORD ER AND THE REASONS RECORDED FOR REOPENING THE ASSESSMENT FOUND IN THE ASSESSMENT RE CORD. IN THE IN THE INTEREST OF THE JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILES OF THE AO. THE AO IS DIRECTED TO FRAME THE ASSESSMENT AS PER REASONS RECORDED FOR RE OPENING THE ASSESSMENT AND SUPPLY THE COPY OF THE SAME REASONS TO THE ASSESSEE , SO THAT THE ASSESSEE CAN DEFEND ITSELF. 7. WITH THESE DIRECTIONS, THE LEGAL GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. COMING TO THE MERITS OF THE APPEAL, WE FIND THAT THE APPELLANT HAS FURNISHED PLETHORA OF EVIDENCES WHICH HAVE NOT BEEN CONSIDERE D BY THE AO. WE FIND THAT THERE IS NOT EVEN A WHISPER OF THE EVIDENCES FILED BY THE AS SESSEE DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS, NEITHER IN THE ASSESSMENT ORDER NOR IN THE ORDER OF THE FIRST APPELLATE AUTHORITY. THEREFORE, AGAIN IN THE INTERE ST OF JUSTICE AND FAIR PLAY WE RESTORE THIS ISSUE TO THE FILES OF THE AO. THE AO IS DIRECTED TO EXAMINE AND VERIFY ALL THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD. NEEDLESS TO MENTION, THE AO SHALL ALSO SUPPLY 5 ITA NO.7646/DEL/2019 SA NO.919/DEL/2019 THE MATERIALS COLLECTED DURING SOME SEARCH PROCEEDI NGS WHICH HAVE BEEN USED AGAINST THE ASSESSEE AND ALSO ANY STATEMENT RECORDED BEHIND THE BACK OF THE ASSESSEE. 9. WITH THESE DIRECTIONS, THE GROUNDS ON MERIT ARE ALSO SET-ASIDE TO THE FILES OF THE AO AND ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 11. STAY APPLICATION IS ACCORDINGLY DISPOSED OF. DECISIONS ANNOUNCED IN THE OPEN COURT IN THE PRESEN CE OF REPRESENTATIVES OF BOTH THE SIDES ON 05/01/2021. SD/- SD/- [SUDHANSHU SRIVASTAVA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 06/01/2021. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI