PV Corporate Advisory Services Pvt Ltd, New Delhi V. ITO WARD - 19(2), New Delhi

ITA 8027/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1265 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Accommodation entries; Reassessment proceedings
• Section: 143(1); 64; 22; 147; 68; 148

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SM C - 1 : NEW DELHI (THROUGH VIRTUAL HEARING) BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO. 8027 /DEL/201 9 ASSESSMENT YEAR : 20 1 1 - 1 2 PV CORPORATE ADVISORY SERVICES PVT. LTD., C/O ROHIT TIWARI, 8024, ATS GREENS PARADISO, CHI IV, NOIDA. PAN: AA DCP7328L VS. ITO, WARD - 19(3), NEW DELHI. (APP ELL A NT ) (RESPONDENT) A SSESSEE BY : SHRI ROHIT TIWARI, ADVOCATE RE VENUE BY : SHRI R.K. GUPTA, SR. DR DATE OF HEARING : 22 . 0 6 . 20 2 1 DATE OF PRONOUNCEMENT : 07 . 0 7 . 20 2 1 ORDER TH IS APPEAL FILED BY THE ASSESSEE I S DIRECTED AGAINST THE ORDER DATED 30 TH MAY, 2019 OF THE CIT(A) - 7 , NEW DELHI RELATING TO ASSESSMENT YEAR 20 11 - 12 . 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDE R: - 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS WRONG AND BAD IN LAW. 2. THAT THE LD. CIT (A) AND LD. AO ERRED BOTH ON FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW IN MAKING ADDITION OF RS. 3,05,400/ - UNDER SECTION 68 BY TREATING LOAN TAKEN BY COMPANY AS UNEXPLAINED CASH CREDIT. THE ADDITIONS HAS BEEN MADE ON SURMISES AND CONJECTURES REJECTING ITA NO. 8027 /DEL/201 9 2 DOCUMENTARY EVIDENCES AND EXPLANATIONS FILED BEFORE LD. AO A ND LD CIT(A). THUS THE ADDITIONS MADE BY AO ARE ERRONEOUS AND BAD IN LAW. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER ( LD. AO ) OF PASSING ORDER U/S 147 INCOME T AX ACT, 1961 ( THE ACT ). THE SAID ORDER PASSED BY THE LD AO IS VOID AB - INITIO ON, INTER ALIA, THE GROUNDS THAT: A) THAT THE REASONS RECORDED BY THE LD. AO ARE NOT VALID; B) THE NOTICE UNDER SECTION 148 WAS NOT SERVED ON THE ASSESSEE AND C) IT IS BASED O N FACTUALLY ERRONEOUS PREMISES AND BUILT UPON SURMISES AND CONJECTURES. THAT THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3 . FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY AND HAD FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER, 2011 DECLARING A LOSS OF RS.3,91,500/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ACCEPTING THE RETURN OF INCOME. SUBSEQUENTLY, INFORMATION WAS OBTAINED FROM THE DDIT (INV.) - III, GURUGRAM VIDE LETTER NO.F.NO.ADIT (INV.)III/GURUGRAM/2017 - 18/1428 DATED 19.03.2018 ACCORDING TO WHICH SHRI ANIRUDH JOSHI HAD USED SEVEN NON - GENUINE CONCERNS FOR PROVIDI NG ACCOMMODATION ENTRIES WHICH WERE CONTROLLED AND MANAGED BY HIM. OUT OF SEVEN NON - GENUINE FIRMS/CONCERNS, K RAC SECURITIES PVT. LTD. WAS ONE OF THE NON - GENUINE FIRMS/CONCERNS WHICH HAD GIVEN ACCOMMODATION ENTRY OF RS.3 LAKH ON 14 TH FEBRUARY, 2011 TO M/S PV CORPORATE ADVISORY SERVICES PVT. LTD., I.E., THE ASSESSEE DURING THE FINANCIAL YEAR 2010 - 11. ON THE BASIS OF THE INFORMATION SO RECEIVED, THE AO, AFTER RECORDING REASONS, REOPENED THE CASE U/S 147 OF THE ACT AND NOTICE U/S 148 WAS ISSUED TO THE ASSESS EE ON 31.03.2018. THE ASSESSEE, IN RESPONSE ITA NO. 8027 /DEL/201 9 3 TO THE SAME, FILED THE RETURN OF INCOME ON 10 TH AUGUST, 2018 DECLARING LOSS OF RS.3,91,500/ - WHICH WAS RETURNED EARLIER . THE ASSESSEE ASKED FOR THE REASONS WHICH WERE DULY PROVIDED TO THE ASSESSEE. 4. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO EXPLAIN THE ACCOMMODATION ENTRY OF RS.3 LAKH FROM THE SAID CONCERNS. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND OBSERVING THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTR Y OF RS.3 LAKH FROM A NON - GENUINE FIRM/CONCERN, HE MADE ADDITION OF RS.3 LAKH TO THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY, THE AO ALSO MADE ADDITION OF RS.5,400/ - TO THE TOTAL INCOME OF THE ASSESSEE BEING THE ALLEGED COMMISSION @ 1.8% OF SUCH ACCOMMODA TION ENTRY. THUS, THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.3,05,400/ - . 5. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF THE REASSESSMENT PROCEEDINGS AS WELL AS THE ADDITION ON MERIT. HOWEVER, THE LD.CIT(A) WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND DISMISSED THE APPEAL FILED BY THE ASSESSEE ON BOTH THE ISSUES, I.E., VALIDITY OF THE REASSESSMENT PROCEEDINGS AS WELL AS THE ADDITION ON MERIT. 6 . AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 7. THE LD. COUNSEL FOR THE ASSESSEE, REFERRING TO THE SUBMISSIONS MADE BEFORE THE AO AS WELL AS BEFORE THE CIT(A), SUBMITTED THAT THE ASSESSEE HAD TAKEN THE LOAN ITA NO. 8027 /DEL/201 9 4 FROM KRAC SECURITIES ON 14 TH FEBRUARY, 2011 FOR MEET ING CERTAIN MONTHLY EXPENSES LIKE RENT, SALARY, TELEPHONE EXPENSES AND MISCELLANEOUS EXPENSES OF THE COMPANY. THE LOAN WAS REPAID ON 31 ST MARCH, 2010 ITSELF VIDE CHEQUE NO.122961 DRAWN ON STATE BANK OF PATIALA ( NOW STATE BANK OF INDIA ) TO KRAC SECURITIES PVT. LTD. HOWEVER, THE CHEQUE WAS CLEARED FROM THE SAID BANK ON 19 TH APRIL, 2011. REFERRING TO THE NOTICE ISSUED U/S 147 OF THE ACT, HE SUBMITTED THAT THE INFORMATION RECEIVED FROM THE ADIT (INV.) CLEARLY DIRECTED THE AO TO INITIATE THE PROCEEDINGS U/S 147 OF THE A CT. A PERUSAL OF THE REASONS SO RECORDED BY THE AO CLEARLY INDICATES THAT HE HAS BLINDLY RELIED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT, TREATING THE SAME AS GOSPEL TRUTH WITHOUT MAKING ANY EFFORT TO CORRELATE THE SAME WI TH THE RETURN OF INCOME FILED BY THE ASSESSEE WHICH WAS ALREADY FILED ON 30 TH SEPTEMBER, 2011. THEREFORE, THE REASONS RECORDED WITHOUT INDEPENDENT APPLICATION OF MIND BY THE AO TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING SHOWS THAT THE SAME AR E WITHOUT PROPER SATISFACTION ON THE PART OF THE AO. THE REASONS RECORDED HAS TO INDICATE IN WHAT MANNER THE SATISFACTION WAS RECORDED WITH REGARD TO ESCAPEMENT OF INCOME AS THERE WERE NO SPECIFIC DETAILS OF ALLEGED ACCOMMODATION ENTRIES OF RS.3 LAKHS. H E SUBMITTED THAT THE REASONS RECORDED BY THE AO ARE UNDATED AND THERE IS NO EVIDENCE THAT THE SAME WERE RECORDED BEFORE THE ISSUANCE OF NOTICE U/S 148 OF THE ACT. RELYING ON VARIOUS DECISIONS, HE SUBMITTED THAT WHEN THE REASONS RECORDED BY THE AO DO NOT R EVEAL ANY EFFORT ON HIS PART WITH REGARD TO INDEPENDENT VERIFICATION OF THE INFORMATION WITH THE RECORD AVAILABLE WITH HIM OR ANY INDEPENDENT ENQUIRIES ITA NO. 8027 /DEL/201 9 5 MADE BEFORE HIM TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT, THEN, SUCH REOPENING HAS BEEN HELD TO BE INVALID. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE FOLLOWING DECISIONS: - 1. SABH INFRASTRUCTURE LTD. VS. ACIT OF HON BLE DELHI HIGH COURT 2. MEENAKSHI OVERSEAS VS. PCIT 82 TAXMANN.COM 300 3. SIGNATURE HOTELS (P) L TD. VS. ITO OF HO N BLE DELHI HIGH COURT REPORTED IN 338 ITR 51 4. CIT VS. INSECTICIDES INDIA LTD. OF HON BLE DELHI HIGH COURT REPORTED IN 357 ITR 330 5. P CIT VS. G&G PHARMA INDIA LTD. OF HON BLE DELHI HIGH COURT (2017) 81 TAXMANN.COM 109 (DELHI) 6. NEELKANTH PLYWOOD LTD. VS . ITO (ITA NO.6702/DEL/2018) 7. ACIT VS. DHARIYA CONSTRUCTION CO. (2011) 197 TAXMAN 202 (SC) 8. CHARANJIV LAL AGGARWAL VS. ITO (2017) 88 TAXMANN.COM 845 (AMRITSAR TRIBUNAL) 9. CIT VS. INDO ARAB AIR SERVICES (2015) 64 TAXMANN.COM 257 (DELHI) 8. SO FAR AS T HE MERIT OF THE CASE IS CONCERNED, HE SUBMITTED THAT TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITOR AND GENUINENESS OF THE TRANSACTION, THE ASSESSEE HAS FILED THE REQUISITE DETAILS AND THE ONUS HAS BEEN DISCHARGED. THEREFORE, NO ADDITION IS CALLED FOR BOTH LEGALLY AND FACTUALLY. 9. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE CIT(A). SO FAR AS THE VALIDITY OF THE RE - ASSESSMENT PROCEEDING IS CONCERNED, THE LD. DR, RELYING ON VARIOUS DECISIONS SUBMITTED THAT THE LD.CI T(A) WHILE DISCUSSING THE VALIDITY OF THE REASSESSMENT PROCEEDINGS HAS PASSED A REASONED ORDER. THEREFORE, THE SAME ITA NO. 8027 /DEL/201 9 6 SHOULD BE UPHELD. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, HE SUBMITTED THAT IT WAS CLEARLY PROVED BY THE INVESTIGATION WING THAT SHR I ANIRUDH JOSHI HAD USED SEVEN NON - GENUINE CONCERNS FOR PROVIDING ACCOMMODATION ENTRIES WHICH WERE CONTROLLED AND MANAGED BY HIM. ONE OF SUCH NON - GENUINE CONCERN WAS KRAC SECURITIES PVT. LTD. WHICH HAS GIVEN ACCOMMODATION ENTRY OF RS.3 LAKH TO THE ASSESS EE ON 14 TH FEBRUARY, 2011. THEREFORE, THE LD.CIT(A) WAS FULLY JUSTIFIED IN SUSTAINING THE ADDITION ON MERIT INCLUDING THE COMMISSION OF RS.5,400/ - . HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHO ULD BE DISMISSED. 1 0 . I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES , PERUSED THE ORDERS OF THE ASSESSING OFFICER AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME . A PERUSAL OF THE REASONS FOR REOPENING OF THE CASE FOR THE IMPUGNED ASSESSMENT YEAR, COPY OF WHICH IS PLACED AT PAGE 1 - 3 OF THE PAPER BOOK, SHOWS THAT THE REOPENING WAS MADE ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING AND THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO FOR THE REOPENING. THE HON BLE HIGH COURT IN A NUMBER OF CASES HAVE HELD THAT THE REOPENING ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING WITHOUT INDEPENDENT APPLICATION OF MIND BY THE AO IS NOT VALID. ACCORDINGLY, TH E REASSESSMENT PROCEEDINGS WHICH W ERE BASED ON THE REPORT OF THE INVESTIGATION WING AND WITHOUT INDEPENDENT APPLICATION OF MIND BY THE AO HAVE BEEN HELD TO BE ILLEGAL. SINCE THE AO, IN THE INSTANT CASE, HAS ITA NO. 8027 /DEL/201 9 7 REOPENED THE ASSESSMENT ON THE BASIS OF REPORT O F THE INVESTIGATION WING AND THERE APPEARS TO BE NO INDEPENDENT APPLICATION OF MIND BY THE AO FOR REOPENING OF THE CASE, THEREFORE, THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO IN THE INSTANT CASE, IN OUR OPINION, IS NOT PROPER. I, THEREFORE, HOLD THA T THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO IS ILLEGAL AND ACCORDINGLY SUBSEQUENT PROCEEDINGS ALSO BECOME ILLEGAL AND VOID. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUND, THEREFORE, THE GROUND CHALLENGING THE ADDITION OF RS.3,05,400/ - ON MERIT B ECOMES ACADEMIC IN NATURE AND, THEREFORE, THE SAME IS NOT BEING ADJUDICATED. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 1 1 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS A LLOWED . THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 07 .0 7 .2 0 21 . SD/ - ( R. K. PANDA ) ACCOUNTANT MEMBER DATED: 07 TH J U LY , 2021. DK COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI