HNV PRINTPACK LLP, Delhi V. ITO Ward 59(3), New Delhi

ITA 838/DEL/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1427 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-06-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 21-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Set aside
• Section: 147; 68; 148; 144; 139; 13; 22

Judgement Text

1 ITA no. 838/Del/2024 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. 838/DEL/2024 Assessment Year: 2011-12 HNV Printpack LLP, 72, First Floor, Defence Enclave, New Delhi-110092. PAN- AAJFH 5307 A Vs Income-tax Officer, Ward-59(3), New Delhi. APPELLANT RESPONDENT Assessee represented by Shri Saubhagya Aggarwal, Adv. Department represented by Shri Om Parkash, Sr. DR Date of hearing 03.06.2024 Date of pronouncement 27.06.2024 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 03.01.2024, pertaining to the assessment year 2011-12. The assessee has raised following grounds of appeal: 2 ITA no. 838/Del/2024 “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.30,45,000/-made by the ITO. 2. The CIT(A) has erred in facts and in law in upholding the reopening on assessment even though the jurisdictional preconditions for reopening of assessment were not met. 3. The CIT(A) has erred in facts and in law in upholding the reopening on assessment even though the reasons for reopening were not provided to the Appellant before disposing of its objections to reopening of assessment in violation of the decision of the Delhi High Court in Sabh Infrastructure Ltd. v. ACIT. 4. That the CIT(A) has erred in law and on facts by failing to appreciate that the reopening of assessment u/s 148 of the Act was based on factually incorrect information since the alleged cash credit of Rs. 30,00,000/- was not received in the year under appeal. 5. That the CIT(A) has erred in rejecting the Appellant's ground regarding reopening of assessment merely by relying on the order of the A.O. disposing of the objections. 6. The CIT(A) has erred in law in not appreciating that failure of the A.O. to grant cross examination of parties on whose statement the additions were made is fatal to the case of revenue. 7. The CIT(A) has erred in facts and in law in upholding the addition of Rs. 30,45,000/- which had been made without application of mind by placing reliance solely on the report of the Investigation Wing without confronting the Appellant with any material information pointing towards receipt of the alleged amount during the year. 8. That on facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the addition of Rs. 30,00,000/- as unexplained cash credit even though the same has not been received in the year under appeal. 9. The CIT(A) has erred in facts and in law in upholding the addition of Rs. 30,00,000/- without appreciating the fact that the same has already been added to the income of the Appellant in the subsequent year, i.e., 2012-13, during which the amount was received, thereby resulting in double addition. 3 ITA no. 838/Del/2024 10. That on facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the addition of Rs. 45,000/- as notional commission paid on cash credit even though the amount of Rs. 30,00,000/- was not received during the year. 11. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 2. Facts giving rise to the present appeal are that the Assessing Officer (‘AO’) was having information about accommodation entry amounting to Rs. 30,00,000/- obtained by the assessee from Himanshu Verma Group Companies. Therefore, to verify the correctness and genuineness of the transaction, case of the assessee was reopened u/s 147 of the Income-tax Act, 1961 (the “Act”). A notice u/s 148 of the Act was issued on 29.03.2018 by the Assessing Officer. In response thereof the assessee stated that return already filed u/s 139 be also treated as the return filed u/s 148. Thus, the assessee had filed return of income declaring income at Nil. Thereafter, statutory notices were issued and after considering the material on record the AO made addition of 30,00,000/- being the amount received by the assessee u/s 68 of the Act and also made addition of Rs. 45,000/- being the commission paid for such accommodation entry. Aggrieved against this assessee preferred appeal before learned CIT(Appeals), who also sustained the addition and dismissed the appeal of the assessee. Now the assessee is in appeal before this Tribunal. 4 ITA no. 838/Del/2024 3. Against the addition of Rs. 30,45,000/- the assessee has taken multiple grounds. In ground nos. 2 to 6 the assessee the assessee has challenged the validity of reopening of the assessment. Learned counsel for the assessee also filed written submissions and reiterated the submissions made therein. For the sake of clarity the written submissions on behalf of the assessee are reproduced as under: “The Appellant is a limited liability partnership firm. In the year under appeal, the assessment of the Appellant was reopened by issue of notice u/s 148 of the Income Tax Act, 1961 ("the Act") dated 29.03.2018. As a consequence of the reopening of assessment, an addition of Rs. 30,00,000/- was made on the ground that an accommodation entry was received by the Appellant in the form of share capital and share premium from M/s White Collar Management Private Limited (refer para 5.1 of the Asssessment Order). The addition was made as the AO was of the opinion that the increase in share capital was not commensurate with the Appellant's financials and that the genuineness, creditworthiness and identity of the share applicant were not established. Cross examination of the persons on whose statements the addition was made was sought but not granted by the Assessing Officer. The Assessing Officer passed an order dated 28.12.2018 u/s 147 r/w s. 144 of the Act by making an addition of Rs. 30,00,000/- on account of being an accommodation entry (AO Order Para 8.2) and an addition of Rs. 45,000/- as commission (@ 1.5% for availing the accommodation entry (AO Para 8.3) An appeal was filed on 25.01.2019. In the appeal, apart from the legal grounds challenging the reopening of assessment, a factual ground was also raised on the basis that the amount added in the year under appeal had not been received in the said year, but was received in the subsequent year AY 2012-13 (Refer PB Page 1 Para 2). All relevant documents, including the objections to the reopening of assessment were filed before the CIT(A). The CIT(A) was also apprised that the amount of Rs. 30,00,000/- received from M/s White Collar Management Private Limited by the Appellant was added back in AY 2012-13 and brought to tax (Refer PB Page 24) which is evident 5 ITA no. 838/Del/2024 from the Assessment order for AY 2012-13, for which a demand of Rs. 2,49,79,130/- was raised as evident from the demand notice u/s 156 of the Act (Refer PB Page 37). The CIT(A) disposed off the appeal of the Appellant vide the impugned order dated 03.01.2024. The CIT(A) dismissed all legal grounds to the reopening of assessment as also the factual ground raised, that the amount was not received in the year at all, but was received in the subsequent year, AY 2012-12. The CIT(A) also failed to give relief to the Appellant even though the Appellant opted for the VSV Scheme and settled the demand of Rs. 2,49,79,130/- which included the amount of Rs. 30,00,000/- received from M/s White Collar Management Private Limited wrongly brought to tax in the year under appeal (Refer PB Page 38-39 Form-3 under VSVS and Page 40, Form-5 under VSVS) It is submitted that the amount of Rs. 30,00,000/- added in the year under appeal, AY 2011-12 should be deleted as the amount has been received in the subsequent year, AY 2012-13. Reliance is placed on the following documents in the paper book filed before this Hon'ble Court: i. Written submissions before CTT(A) @ Page 1. Para 2 stating that the amount was received from M/s White Collar Management Private Limited in subsequent year AY 2012-13 ii. Bank statement for FY 2011-12 for AY 2012-13 showing that the amount was received from Mis White Collar Management Private Limited on 20.03.2012, in AY 2012-13 Page 16 iii. Bank Ledger account showing receipt of amount from M/s White Collar Management Private Limited on 20.03.2012 @ Page 21 iv. Share Premium account for the period 1.4.2009 to 31.03.2011 relevant for AY 2011- 12 which does not contain any receipt from M/s White Collar Management Private Limited @ Page 22 v. Share Premium account for the period 1.04.2011 to 31.03.2012 relevant for AY 2012- 13 which shows the receipt from M/s White Collar Management Private Limited @ Page 23 vi. Assessment order for AY 2012-13 which shows addition was made in AY 2012-13 for the amount received from M/s White Collar Management Private Limited @ Page 24 & 30 vii. .Demand notice u/s 156 of the Act showing demand of Rs. 2,49,79,130 @ Page 37 viii. Form 3 under VSVS for AY 2012-13 showing tax arrear of Rs. 2.49.79.130/- @ Page 38-39 6 ITA no. 838/Del/2024 ix. Form 5 under VSVS for AY 2012-13 showing final settlement of tax arrear of Rs. 2,49,79,130-@ Page Based on the aforesaid documents, it is evident that the addition of Rs. 30,00,000/-on account of share capital received from M/s White Collar Management Private Limited in the year under appeal cannot be sustained as it was not received in the year under appeal and should be deleted. The consequential addition of Rs. 45,000/- allegedly paid for availing the aforesaid accommodation entry should also be deleted.” 4. The submissions of the assessee during the previous year relevant to the assessment year 2011-12 the assessee had taken accommodation entry of Rs. 30,00,000/- from M/s White Collar Management Private Limited, a company controlled and managed by Shri Himanshu Verma, the accommodation entry provider. It was contended before the learned CIT(Appeals) that the said information was actually erroneous as the amount of Rs. 30,00,000/- was received in the succeeding year. Therefore, the lower authorities failed to apply their mind and failed to record correct facts. He submitted that, therefore, the reopening of the assessment on the basis of amount which was received in subsequent year, cannot be sustained. 5. On the other hand, learned DR supported the orders of authorities below. 6. I have heard rival submissions and perused the material available on record. The contention of the assessee against sustaining of the impugned additions are that, firstly, the alleged accommodation entry was not received during the year 7 ITA no. 838/Del/2024 under appeal. It was received in the subsequent year. The AO recorded incorrect findings and without applying his mind proceeded to reopen the assessment for the year under appeal. As per assessment order it is recorded that the AO was having information that during the period relevant to the assessment year 2011-12 assessee had taken accommodation entry amounting to Rs. 30,00,000/- . I find that there is no mention of the date by the assessing authority as to when such amount was received and in what mode it was received. The basis of reopening is stated to be the information about one Shri Himanshu Verma who happened to be the accommodation entry provider. The AO should have narrated the correct facts so that it could be construed as to what was the date of receipt of such accommodation entry and the mode of such receipt. In the absence of such material information, the findings made by the lower authorities cannot be sustained. I, therefore, in the totality of facts and more particularly the assessment was made u/s 144 read with section 147 of the Act, set aside the impugned order and restore the assessment to the file of the AO to make assessment afresh after verifying the correctness of claim of the assessee that the amount was received in subsequent year. If the claim is found correct the AO would delete the addition in this year and take necessary steps as provided under law. Grounds are allowed for statistical purposes. 8 ITA no. 838/Del/2024 7. Appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 27 th June, 2024. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI