M/s Ridhi Industries Pvt. Ltd., Mandi Gobindgarh V. ITO, W-2, Mandi Gobindgarh

ITA 777/CHANDI/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1097 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 17-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJEEV DUTTA
• Keywords: Revision of order; Reason to believe
• Section: 143(3); 147; 148; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 777 & 778/CHD/2019 / ASSESSMENT YEARS : 2010-11 & 2011-12 M/S RIDHI INDUSTRIES PRIVATE LIMITED, H.NO. 44,SECTOR 4-C, SHASTRI NAGAR, ]MANDI GOBINDGARH THE ITO, WARD-2, MANDI GOBINDGARH, ./PAN NO: AAACH9435M / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI RAJEEV DUTTA, CA ' ! / REVENUE BY : SHRI MANOJ MISHRA, CIT DR # $ % /DATE OF HEARING : 25.11. 2019 &'() % / DATE OF PRONOUNCEMENT : 25.11.2019 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE FOR DIFFERENT ASSESSMENT YEARS AGAINST THE SEPARATE ORD ERS DATED 31.01.2019 OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, PATIAL A [HEREINAFTER REFERRED TO AS PCIT]. ] AGITATING THE ACTION OF T HE PCIT IN PASSING THE IMPUGNED ORDERS U/S 263 OF THE I.T. ACT EXERCISING HIS REVISION JURISDICTION AND THEREBY SETTING ASIDE THE ORDERS O F THE ASSESSING OFFICER. ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 2 2. SINCE THE FACTS AND ISSUE INVOLVED IN BOTH THE A PPEALS ARE IDENTICAL, HENCE, THESE HAVE BEEN HEARD TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO. 777/CHD/2019, IS TAKEN AS A LEAD CASE FOR N ARRATION OF FACTS. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE IMPUGNED ORDER OF THE LD. PCIT TO SUBMIT TH AT THE LD. PCIT HAS EXERCISED HIS REVISION JURISDICTION U/S 263 OF THE ACT ON THE GROUND THAT THE ASSESSING OFFICER HAD NOT CONDUCTED THE ENQUIRI ES TO VERIFY THE SOURCE OF RS. 3 CRORES ADVANCED BY THE COMPANY TO M /S MIRAGE INFRA LTD. THE LD. COUNSEL IN THIS RESPECT HAS INVITED O UR ATTENTION TO THE COPY OF THE ASSESSMENT ORDER DATED 29.12.2017 PASSE D U/S 143(3) READ WITH SECTION 148 OF THE ACT TO SUBMIT THAT THE ASSE SSMENT WAS REOPENED BY THE ASSESSING OFFICER FOR EXAMINATION OF THIS SO LE ISSUE I.E. FOR EXAMINATION OF SOURCE OF AMOUNT OF RS. 3 CRORES ADV ANCED BY THE ASSESSEE TO M/S MIRAGE INFRA LTD. THE LD. COUNSEL HAS FURTHER INVITED OUR ATTENTION T O THE OBSERVATION MADE BY THE ASSESSING OFFICER, WHEREIN , HE HAS MENTIONED THAT THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDIN GS FROM TIME TO TIME. NECESSARY DETAILS WERE SUBMITTED AND THE EVIDENCES AS CALLED FOR WERE FILED BY THE ASSESSEE WHICH WERE EXAMINED AND THE A SSESSING OFFICER ACCEPTED THE REPLY AND EXPLANATION OF THE ASSESSEE. FURTHER, THE LD. ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 3 COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO PARA 3 OF THE IMPUGNED ORDER WHEREIN THE ASSESSEE HAS GIVEN DETAI LED REPLY IN RESPONSE TO THE SHOW CAUSE NOTICE TO THE LD. PCIT AS TO WHY THE REVISION JURISDICTION BE NOT EXERCISED U/S 263 OF T HE ACT IN THE CASE OF THE ASSESSEE. THE REPLY OF THE ASSESSEE FOR THE SAK E OF READY REFERENCE IS REPRODUCED AS UNDER:- 3. IN RESPONSE TO THE AFORESAID NOTICE DATED 22.0 3.2018, THE ASSESSEE FILED REPLY. THE RELEVANT SUBMISSIONS OF T HE REPLY ARE AS UNDER:- '2. THE ASSESSMENT FOR THE YEAR WAS FRAMED U/S 143( 3)/153C VIDE ORDER DATED 26.03.2014 AFTER MAKING AN ADDITIO N OF RS. 11,03,000/-. THE SAID ADDITION HAS BEEN DELETED BY THE HON'BLE ITAT, CHANDIGARH VIDE ORDER DT. 31.10.2017, COPY EN CLOSED FOR REFERENCE. THE ASSESSMENT IN THIS CASE WAS RE-OPENED U/S 148 V IDE NOTICE DT. 29.03.2017. THE FACTS RECORDED IN THE REASONS F OR RE- OPENING WERE TOTALLY IRRELEVANT. THE RELIANCE BY TH E LD. A.O. FOR RE-OPENING WAS MISCONCEIVED AS THERE WAS NOT EV EN AN IOTA OF EVIDENCE THAT THE FUNDS OF M/S MIRAJ INFRA LTD W ERE ROUTED THROUGH THE ASSESSEE COMPANY. IN FACT THE FUNDS WER E INITIALLY RECEIVED FROM M/S BHAWANI INDUSTRIES (P) LTD., WHIC H WAS ALSO SUBJECT TO SEARCH AND THE ASSESSMENT IN THEIR CASE FOR A.Y. 2011-12 WAS ALSO FRAMED U/S 143(3)/153A. BOTH THE ASSESSMENTS I.E. OF THE ASSESSEE AND M/S BHAWANI IN DUSTRIES (P) LTD. WERE FRAMED BY THE DCIT, CENTRAL CIRCLE, PATIA LA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS SOURCE OF CRED IT WAS CLEARLY EXPLAINED AND RELEVANT DOCUMENTS AND EVIDEN CE OF THE SOURCE OF INVESTMENT WAS PRODUCED BEFORE THE LD. A. O., CENTRAL CIRCLE. 3. DURING RE-ASSESSMENT PROCEEDINGS CONSEQUENT TO R E- OPENING U/S 148, THE ASSESSEE FILED A LETTER EXPLAI NING THE SOURCE OF RS.3.00 CRORES AND MODE OF FURTHER INVEST MENT. THE COPY OF THE LETTER IS ENCLOSED. THE ASSESSEE HAS RE CEIVED CREDIT ALONGWITH INTEREST OF RS.13,33,165/- FROM M/S. INVE NT ASSETS SECURITIZATION & RECONSTRUCTION (P) LTD., TO WHOM I T HAD GIVEN ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 4 EARLIER AGAINST AMOUNT RECEIVED FROM M/S BHAWANI IN DUSTRIES PRIVATE LIMITED. COPY OF ACCOUNT ENCLOSED AND ADVAN CED MONEY RECEIVED FROM THAT SOURCE ALONGWITH RS.25,00, 000/- RECEIVED FROM SH. BHARAT BHUSHAN GOYAL FOR ADVANCIN G RS.3,00,00,000/- TO M/S MIRAJ INFRA LTD. THE TRANSA CTION HAS DULY BEEN VERIFIED BY THE DCIT CENTRAL CIRCLE, PATI ALA DURING THE ASSESSMENT PROCEEDINGS OF THE M/S BHAWANI INDUS TRIES PRIVATE LIMITED AND M/S RIDHI INDUSTRIES (P) LTD. A S BOTH CENTRALIZED, AFTER SEARCH IN THE YEAR 2011, AT PATI ALA. THE ASSESSMENT WAS FRAMED AFTER DUE VERIFICATION WITH T HE APPROVAL OF JCIT, CENTRAL CIRCLE, LUDHIANA, COPY OF THE ORDE R ENCLOSED. THE ASSESSMENT FOR A. Y. 2010-11 WAS RE-OPENED BY T HE A.O. SIRHIND AS STATED ABOVE, AS PER THE INFORMATION REC EIVED BY THE DEPARTMENT. THE ASSESSMENT HAS BEEN RE-FRAMED AFTER EXAMINATION BY THE LD. A.O., WHERE THE FACTS WERE E XPLAINED BY THE ASSESSEE AND BROUGHT TO HIS NOTICE THE MATERIAL ALREADY PLACED ON RECORD DURING ORIGINAL ASSESSMENT PROCEED ING U/S 143(3) READ WITH SECTION 153C BEFORE THE DCIT, CENT RAL CIRCLE, PATIALA. THE COPIES OF THE RELEVANT DOCUMENTS/STATE MENTS FILED BEFORE THE A.O. ARE ENCLOSED FOR YOUR PERUSAL. YOUR HONOUR, ASSESSMENT FRAMED CAN ONLY BE CANCELLE D IF IT IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IN THE PRESENT CASE, IT IS NOT ERRONEOUS AS THE SOURCE OF INVESTMENT IS ALREADY ON RECORD. IT IS NOT PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE ASSESSEE HAS NOT ACTED IN DETERMENT TO HIS OWNED FUNDS. HE HAS NEITHER EARNED ANY INCOME WHICH HE HA S FORGONE NOR HAS ANY INCOME ACCRUED TO HIM. NO ADDITION OF A NY INCOME COULD HAVE BEEN MADE IN HIS HANDS. WHEN NO ADDITION OF ANY INCOME COULD BE MADE, THERE IS NO QUESTION OF ASSES SMENT PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE DRAW YOUR HONOUR'S ATTENTION TO THE FOLLOWING JUDGMENTS OF TH E JURISDICTIONAL HIGH COURT IN SUPPORT OF OUR CASE:- CIT VS. R.K. METAL WORKS 112ITR 445(P&H) HELD THAT IN PASSING AN ORDER OF REVISION U/S 263 O F THE INCOME TAX ACT,1961. IT IS NECESSARY FOR THE COMMISSIONER TO STATE IN WHAT MANNER HE CONSIDERED, THAT HIS ORDER OF ASSESS ING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST TO TH E REVENUE AND THE BASIS FOR SUCH A CONCLUSION. ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 5 MALABAR INDUSTRIES COMPANY LIMITED VS. CIT 243 ITR 83(SC) ERRONEOUS AND PREJUDICIAL- MUST BE READ IN CONJECTU RE WITH AN ERRONEOUS ORDER. THE ORDER MUST BE BOTH PREJUDICIAL AND ERRONEOUS FOR CIT TO ACT. IN VIEW OF THE ABOVE EXPLANATIONS AND EVIDENCE ON R ECORD, THERE IS NOTHING ON RECORD TO EVEN REMOTELY LINK THE HOLDING THE SOURCE OF INVESTMENT HAVING BEEN FROM THE FUNDS OF M/S. MIRAJ INFRA LTD. IT IS, THEREFORE, PRAYED THAT THE PROCEEDINGS BE KINDLY DR OPPED.' 3. A PERUSAL OF THE ABOVE REPLY SUBMITTED BY THE AS SESSEE REVEALED THAT THE ASSESSEE DULY EXPLAINED TO THE LD. PCIT THAT DUE AND PROPER ENQUIRIES WERE CONDUCTED IN THE CASE OF THE ASSESSE E. THAT EVEN THE ORIGINAL ASSESSMENT IN THE CASE OF THE ASSESSEE WAS MADE U/S 143(3) READ WITH SECTION 153C OF THE ACT VIDE ORDER DATED 26.3.2015, WHEREIN, THE ADDITION OF RS. 11,0,3000/- WAS MADE BY THE ASS ESSING OFFICER. THE MATTER TRAVELLED UPTO THE LEVEL OF THE TRIBUNAL AND THE SAID ADDITION WAS DELETED BY THE TRIBUNAL VIDE ORDER DATED 31.10.2017 . SUBSEQUENT TO THAT, ASSESSMENT OF THE ASSESSEE WAS REOPENED U/S 147 RE AD WITH SECTION 148 OF THE ACT TO ENQUIRE SPECIFICALLY THE SOURCE OF CR EDIT OF RS. 3 CRORES MADE BY THE ASSESSEE TO M/S MIRAJ INFRA LIMITED. THE ASSESSEE DULY EXPLAINED IN THE REOPENED ASSESSMENT PROCEEDINGS AB OUT THE SOURCE OF THE SAID AMOUNT. FURTHER, THE ASSESSEE ALSO EXPLAIN ED BEFORE THE LD. PCIT THE SOURCE OF INVESTMENT AND ALSO EXPLAINED T HAT NECESSARY INQUIRIES WERE MADE ALSO IN THE CASE DURING THE ASS ESSMENT PROCEEDINGS OF M/S BHAWANI INDUSTRIES PRIVATE LIMITED AND M/S R IDHI INDUSTRIES (P) ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 6 LTD. AS THE CASE OF THESE TWO ENTITIES WERE ALSO C ENTRALIZED ALONGWITH THE CASE OF THE ASSESSEE. 4. IN VIEW OF THE ABOVE DETAILS SUBMITTED BY THE AS SESSEE, WE FIND THAT THE LD. PCIT HAS NOT MENTIONED AS TO WHAT MOR E OR FURTHER ENQUIRIES WERE REQUIRED TO BE MADE BY THE ASSESSING OFFICER. WHAT WERE THE DISCREPANCIES OR DOUBTS IN THE EXPLANATION SUBMITTED BY THE ASSESSEE? HOW THE LD. PCIT FOUND THAT THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS OR PREJUDICIAL TO THE INTERES T OF REVENUE FROM THE DETAILS SUBMITTED BY THE ASSESSEE? IT IS NOT THE ME RE WHIM AND WISH OF THE LD. PCIT TO SAY THAT THE ASSESSING OFFICER SH OULD MAKE MORE OR FURTHER ENQUIRIES AS PER THE PROVISIONS OF THE ACT. A DUTY IS CAST UPON THE LD. PCIT TO EXAMINE THE REPLY OF THE ASSESSEE FILED IN RESPONSE TO THE SHOW CAUSE NOTICE, EXAMINE THE DETAILS FURNISHE D BY THE ASSESSEE AND THEN TO MAKE OR CAUSE TO MAKE NECESSARY INQUIRIES A ND IF THE LD. PCIT EVEN THEN IS NOT SATISFIED, THEN HE SHOULD POINT OU T AS TO ON WHAT GROUND HE HAS REASON TO BELIEVE OR HE IS OF THE VIEW THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS OR PREJUDICIAL TO TH E INTEREST OF THE REVENUE. IT IS NOT THE CASE WHERE THE ASSESSING OFF ICER HAS NOT MADE ANY ENQUIRES, RATHER, IT IS A CASE WHERE THE REOPE NING OF THE ASSESSMENT WAS MADE ON THAT SPECIFIC ISSUE WHICH WAS THOROUGHL Y EXAMINED BY THE ASSESSING OFFICER. UNDER THE CIRCUMSTANCES, THE LD. PCIT MUST POINT OUT AS TO WHAT MISTAKE OR ERROR HAS BEEN COMMITTED BY THE ASSESSING OFFICER IN VERIFYING / EXAMINING THE DETAILS FURNI SHED BY THE ASSESSEE ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 7 MAKING THE ORDER OF ASSESSMENT ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. NONE OF THE INGREDIENTS ARE TH ERE IN THE IMPUGNED ORDER OF THE LD. PCIT. MERELY OBSERVING THAT THE A SSESSING OFFICER SHOULD HAVE MADE DEEPER ENQUIRIES IS NOT A JUSTIFIE D GROUND FOR EXERCISE OF JURISDICTION U/S 263 OF THE ACT. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE ACTION THE LD. PCIT IN INVOKING THE REVISION JURISDICTION. THE ORDER OF THE LD. PCIT U/S 263 OF THE ACT IS HEREBY QUASHED. THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO. 778/CHD/2019 6. SINCE THE FACTS AND ISSUE INVOLVED IN THIS APPEA L IS IDENTICAL TO THAT HAS BEEN RAISED IN ITA NO. 777/CHD/2019, HENCE, IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE ORDER PASSED BY THE LD. PCIT IN TH IS APPEAL U/S 263 OF THE ACT IS ALSO QUASHED. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMM EDIATELY ON COMPLETION OF HEARING ON 25.11.2019. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 25.11.2019 .. ITA NOS. 777 & 778/CHD/2019- M/S RIDHI INDUSTRIES PRIVATE LIMITED, PATIALA 8 '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR