Nawal Oils and Containers P.Ltd, New Delhi V. ITO, Ward-18(2), New Delhi

ITA 852/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3669 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Accommodation entries; Documents seized; Reassessment proceedings; Borrowed satisfaction
• Section: 69C; 143(3); 133(6); 143(1); 143(2); 13; 153C; 147; 68; 148; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 852/DEL/2019 A.Y. : 2009-10 NAWAL OILS AND CONTAINERS P. LTD., R-35-36, RAMESH PARK, LAXMI NAGAR, NEW DELHI 110 092 (PAN: AAACN454G) VS. ITO, WARD-18(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. P.C. YADAV, ADVOCATE DEPARTMENT BY : SH. PRADEEP SINGH GAUTAM, SR. DR. ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE I MPUGNED ORDER DATED 30.11.2018 OF THE LD. CIT(A)-22, NEW DELHI PERTAINI NG TO ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF CIT (A) IS BAD IN LAW AND ON FACTS . 2. THE CIT(A) LD CIT(A) HAS ERRED IN AFFIRMING TH E JURISDICTION OF THE AO UNDER SECTION 147 OF THE INCOME TAX ACT,1961 (ACT), IGNORING THAT AO HAS ASSUMED THE JURISDICTION OF 14 7 ON THE BASIS OF ALLEGED INCRIMINATING DOCUMENTS FOUND IN S EARCH OF THIRD PARTY. 3. THE CIT(A) HAS ERRED IN AFFIRMING THE JURISDICTI ON OF AO IGNORING THAT PROVISIONS OF SECTION 153C OUGHT TO H AVE BEEN APPLIED BY THE REVENUE INSTEAD OF 147, AS THE FORME R 2 PROVISIONS ARE NON-OBSTANTIVE PROVISIONS AND EXCLUD E THE OPERATIONS OF SECTION 147 OF THE ACT. 4. WITHOUT PREJUDICE TO THE ABOVE THE CIT (A) HAS E RRED IN AFFIRMING THE JURISDICTION OF THE AO UNDER SECTION 147 IGNORING THAT THE AO HAS SOLELY RELIED ON THE FINDINGS OF IN VESTIGATION WING AND THERE WAS NO LIVE LINK BETWEEN THE REASONS RECORDED AND BELIEF ENTERTAINED BY THE AO FOR ASSUMING THE J URISDICTION OF 147 OF THE ACT. 5. THE CIT(A) HAS FAILED TO APPRECIATE THAT IT IS A CASE OF BORROWED SATISFACTION, IN AS MUCH AS THE AO HAS SOL ELY RELIED ON THE FINDINGS OF THE INVESTIGATION WING AND HAS N OT APPLIED HIS MIND INDEPENDENTLY TO THE INFORMATION RECEIVED FROM INVESTIGATION WING. 6. WITHOUT PREJUDICE TO THE ABOVE THE ASSUMPTION OF JURISDICTION OF THE AO ULS 147 IS BAD IN LAW AS THE AO HAS NOT F OLLOWED THE PROCEDURE OF 147 AS PROPOUNDED BY THE JURISDICTIONA L HIGH COURT IN THE CASE OF SABH INFRASTRUCTURE REPORTED I N 398 ITR 198(DEL). 7. THE LD CIT(A) HAS ERRED IN AFFIRMING THE ADDITIO N OF RS 25,00,0001- RECEIVED BY THE ASSESSEE AS SHARE APPLI CATION MONEY, IGNORING THAT THE ASSESSEE HAS DULY DISCHARG ED HIS BURDEN BY FILING THE NECESSARY DETAILS OF THE PERSO NS TO WHOM THE SHARES WERE ALREADY ALLOTTED, EVEN BEFORE THE F ILING OF ROI FOR THE IMPUGNED YEAR. 8. THE CIT (A) HAS ERRED IN NOT APPRECIATING THAT T HE PERSONS TO WHOM THE SHARES WERE ALLOTTED HAD DULY FILED THEIR CONFIRMATIONS WITH THE AO IN RESPONSE TO NOTICE OF 133(6) 3 HENCE IT CANNOT BE SAID THAT THE ASSESSEE HAS FAILE D TO DISCHARGE HIS BURDEN OF SECTION 68 OF THE ACT. 9. THE CIT (A) HAS FURTHER ERRED IN NOT APPRECIATIN G THAT THE AO HAS NOT ISSUED ANY SUMMONS TO ENFORCE THE ATTENDANC E OF THE SHARE SUBSCRIBERS WHO HAVE FILED THEIR CONFIRMATION BEFORE THE AO, IN RESPONSE TO NOTICE ULS 133(6) OF THE ACT. 10. THE CIT(A) HAS FURTHER ERRED IN NOT APPRECIATIN G THAT NOTHING INCRIMINATING HAS BEEN FOUND IN THE SEARCH OF 3 RD PARTY WHICH WOULD SHOW THAT THE ALLEGED MONEY TAXED BY THE AO U NDER SECTION 68 IS ACTUALLY EMANATED FROM THE COFFERS OF ASSESSEE. 11. THE CIT(A) HAS FURTHER ERRED IN NOT APPRECIATIN G THAT NOTHING HAS BEEN FOUND IN SEARCH OF PARTY WHICH WOULD PROV E THAT THE CONFIRMATION FILED BY THE DIRECTORS OF THE SHARE SU BSCRIBER COMPANIES IS CONTRARY TO THE RECORDS OF PROCEEDINGS . 12. THE CIT (A ) HAS FURTHER ERRED IN SUSTAINING TH E ADDITION OF RS 50,000/- MADE BY THE AO U/S 69C OF THE ACT, IGNORIN G THAT THERE IS NO EVIDENCE UNEARTHED DURING THE COURSE OF SEARCH OF THIRD PARTY TO CORROBORATE THIS NOTIONAL ADDITION. 13. THE ASSESSEE CRAVES LEAVE TO ADD ALTER MODIFY A ND GROUND OF APPEAL AT THE TIME OF HEARING OF THE APPEAL. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED ITS RETURN OF INCOME ON 30.9.2009 DECLARING INCOME OF RS. 2,73,720/-. THE A O PROCESSED THE SAME U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED AS THE ACT) ON 21.2.2011. ON THE INFORMATION RECEIVED FROM THE OF FICE OF THE DIRECTOR OF INCOME TAX (INVESTIGATION-II), JHANDEWALAN EXTENSION, NEW DELHI DATED 12.3.2013 MENTIONING THEREIN THAT A SEARCH OPERATION WAS CARR IED OUT IN THE CASE OF 4 SURENDRA KUMAR JAIN GROUP OF CASES WHEREIN AFTER SC RUTINY OF THE INCRIMINATING DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND S UBSEQUENTLY POST SEARCH ENQUIRY, IT HAS BEEN NOTICED THAT THE SAID GROUP W AS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO THE PERSONS WHO WERE NAMED IN THE REPORT. THE ASSESSEE WAS ALSO FIGURES IN THE LIST AS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRIES PROVIDED BY THE GROUP. AFTER EXAMINING THE DETAILS AND COPIES OF SEIZED DOCUMENTS, AO IS OF THE VIEW THAT ASSESSEE COMPANY HAS TAKEN THE ACCOMMODATION ENTRIES AMOUNTING TO RS. 25 LACS IN FY 2008-09 FROM S.K. JAIN GROUP OF COMPANIES AND SPECIFICALLY FROM M/S SHALINI HOLDING LTD. IN THE GARB OF SHARE APPLICATION MONEY ON 30.08.2008. ON T HE BASIS OF THIS INFORMATION FOUND DURING THE SEARCH, AO ISSUED NOTICE U/S. 148 OF THE ACT DATED 8.3.2016 AFTER RECORDING THE REASONS IN WRITING AND AFTER OB TAINING SANCTION U/S. 151(1) OF THE ACT FROM PCIT, DELHI-6, NEW DELHI WHICH WAS SER VED UPON THE ASSESSEE ON 10.3.2016 BY SPEED POST. IN RESPONSE TO THE SAME, A SSESSEE FILED A LETTER DATED 06.4.2016 WHEREIN IT WAS SUBMITTED THAT THE ORIGINA L RETURN FILED EARLIER MAY BE TREATED AS RETURNED FILED IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT. THE AO ISSUED NOTICE U/S. 143(2) OF THE ACT AND U/S. 142(1 ) OF THE ACT ALONGWITH QUESTIONNAIRE TO THE ASSESSEE. IN RESPONSE TO THE S AME, ASSESSEE APPEARED AND FILED REQUIRED DOCUMENTARY EVIDENCES AND ANSWER THE QUERY RAISED BY THE AO, BUT THE AO DID NOT AGREE WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND FINALLY MADE THE ADDITION U/S. 68 OF THE ACT OF RS. 25 LACS AS DISCUSSED IN PARA 15 OF THE ASSESSMENT ORDER AND COMPLETED THE ASSESSMENT AT RS . 28,23,720/- U/S. 147/148 READ WITH SECTION 143(3) OF THE ACT VIDE OR DER DATED 15.12.2016. AGAINST THE ASSESSMENT ORDER DATED 15.12.2016, ASSE SSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 30.11 .2018 HAS DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER DATED 30.11.2018 OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL. 5 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE STATED THAT ASSESSEE HAS RAISED AS MANY AS 13 GROUNDS OF APPEAL WHICH IN CLUDES LEGAL AS WELL AS ON MERITS. BUT HE DRAW MY ATTENTION TOWARDS THE GROUN D NO. 3 REGARDING JURISDICTION OF THE AO IGNORING THE PROVISIONS OF SECTION 153C OF THE ACT WHICH OUGHT TO HAVE BEEN APPLIED BY THE REVENUE INSTEAD OF SECTION 147 AS THE FORMER PROVISIONS ARE NON-OBSTANTIVE PROVISIONS AND EXCLUDE THE OPERATION S OF SECTION 147 OF THE ACT. HE DRAW MY ATTENTION TOWARDS A SMALL PAPER BOOK CON TAINING PAGES 1-62 IN WHICH HE HAS ATTACHED VARIOUS DOCUMENTARY EVIDENCES INCLU DING VARIOUS JUDGEMENTS ON THE ISSUE IN DISPUTE AND STATED THAT THE GROUND NO. 3 HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESSEE B Y THE VARIOUS BENCHES OF THE ITAT INCLUDING THE ITAT, SMC, DELHI BENCH DECISION DATED 08.08.2017 PASSED IN ITA NO. 1500 & 1501/DEL/2017 (AY 2007-08) IN THE CA SES OF SUSHIL GAUR VS. ITO, WARD 2(3), GHAZIABAD AND SHELLY AGARWAL. VS. ITO, W ARD 2(3), GHAZIABAD. HE ESPECIALLY DRAW MY ATTENTION TOWARDS THE FACTS OF T HE CASE AND THE DECISIONS MENTIONED IN PARA NO. 8 AT PAGE 7 TO 9 OF THE AFOR ESAID TRIBUNALS ORDER DATED 08.08.2017 AND REQUESTED BY FOLLOWING THE SAME RATI O, THE APPEAL OF THE ASSESSEE MAY BE ALLOWED. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS P ASSED BY THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WELL REASON ED ORDER ON THE GROUND RAISED BY THE ASSESSEE. HE HAS ALSO FILED THE WRI TTEN SUBMISSIONS ON LEGAL AS WELL AS MERITS WITH SUPPORTING VARIOUS DECISIONS RE NDERED BY VARIOUS COURTS. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS AND GONE THROUGH THE ISSUE RAISED BY THE ASSESSEE IN GROUNDS OF APPE AL ALONGWITH ORDERS PASSED BY THE REVENUE AUTHORITIES ESPECIALLY THE IMPUGNED ORDER. NO DOUBT THAT LD. COUNSEL FOR THE ASSESSEE HAS ARGUED ON THE ISSU E IN GROUND NO. 3 AND STATED THAT LD. CIT(A) HAS ERRED IN AFFIRMING THE JURISDIC TION OF THE AO THAT THE PROVISIONS OF SECTION 153C OUGHT TO HAVE BEEN APPLIED BY THE R EVENUE INSTEAD OF 147, AS THE FORMER PROVISIONS ARE NON-OBSTANTIVE PROVISIONS AND EXCLUDE THE OPERATIONS 6 OF SECTION 147 OF THE ACT. ON THIS ISSUE, HE RELIED UPON THE VARIOUS ORDERS PASSED BY THE ITAT, DELHI BENCHES INCLUDING THE ITAT, SMC , DELHI BENCH DECISION DATED 08.08.2017 PASSED IN ITA NO. 1500 & 1501/DEL/ 2017 (AY 2007-08) IN THE CASES OF SUSHIL GAUR VS. ITO, WARD 2(3), GHAZIABAD AND SHELLY AGARWAL. VS. ITO, WARD 2(3), GHAZIABAD, WHICH WAS PASSED BY THE UNDERSIGNED BY RESPECTFULLY FOLLOWING THE VARIOUS ORDERS MENTIONED IN PARA NO. 8 OF THE ORDER AT PAGE NO. 7 TO 9 OF THE ORDER. FOR THE SAKE OF CONV ENIENCE, THE RELEVANT PARA NO. 8 IS REPRODUCED AS UNDER:- 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE PAPER BOOK. ON HAVING GONE THROUGH THE DECISIONS CITED ABOVE ESPEC IALLY THE DECISION OF AMRITSAR BENCH IN THE CASE OF ITO VS. A RUN KUMAR KAPOOR (SUPRA), I FIND THAT IN THAT CASE AS IN THE PRESENT CASE BEFORE ME, REASSESSMENT WAS INITIATED ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN SEARCH OF THIRD PAR TY AND THE VALIDITY OF THE SAME WAS CHALLENGED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) AND THE LEARNED CIT(APPEAL S) VITIATED THE PROCEEDINGS. THE SAME WAS QUESTIONED B Y THE REVENUE BEFORE THE ITAT AND THE ITAT AFTER DISCUSSI NG THE CASES OF THE PARTIES AND THE RELEVANT PROVISIONS IN DETAILS HAS COME TO THE CONCLUSION THAT IN THE ABOVE SITUATION, PROVISIONS OF SEC. 153C WERE APPLICABLE WHICH EXCLUDES THE APP LICATION OF SECTIONS 147 AND 148 OF THE ACT. THE ITAT HELD T HE NOTICE ISSUED UNDER SEC. 148 AND PROCEEDINGS UNDER SEC. 14 7 AS ILLEGAL AND VOID AB INITIO. IT WAS HELD THAT ASSESS ING OFFICER HAVING NOT FOLLOWED PROCEDURE UNDER SEC. 153C, REASSESSMENT ORDER WAS RIGHTLY QUASHED BY THE LEARN ED CIT(APPEALS). I ALSO DRAW MY SUPPORT FROM THE ITAT, NEW 7 DELHI DECISION IN THE CASE OF RAJAT SHUBRA CHATTERJ I VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DATED 20.5.2016, WH EREIN THE REASSESSMENT WAS QUASHED ON THE SIMILAR FACTS A ND CIRCUMSTANCES BY FOLLOWING THE ITAT, AMRITSAR DECI SION IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR (SUPRA). IN THE P RESENT CASE BEFORE ME, IT IS AN ADMITTED FACT, AS ALSO EVI DENT FROM THE REASONS RECORDED AND THE ASSESSMENT ORDER THAT THE INITIATION OF REOPENING PROCEEDINGS WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION AVAILABLE WITH THE AO. I THUS RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE ITAT, AMRITSAR IN THE CASE OF ACIT VS. ARUN KAPUR - 140 TTJ 249 VS. (AMRITSAR) AND THE ITAT, DELHI DECISION IN THE CASE OF RAJAT SHUBRA CHATTERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DATED 20.5.2016 HOLD THAT PROVISIONS OF SEC. 153C OF THE ACT WERE APPLICABLE IN THE PRESENT CASE FOR FRAMING THE ASSESSMENT, IF ANY, WHICH EXCLUDES THE APPLICATION OF SEC. 147 OF THE ~ HENCE, NOTICE ISSUED UNDER SEC . 148 OF THE ACT AND ASSESSMENT FRAMED IN FURTHERANCE THERETO UN DER SEC. 147 READ WITH SECTION 143(3) OF THE ACT ARE VOID AB INITIO. HENCE, THE REASSESSMENT IN QUESTION IS ACCORDINGLY QUASHED. SINCE I HAVE ALREADY QUASHED THE REASSESSMENT, THE RE IS NO NEED TO ADJUDICATE OTHER GROUNDS. 7.1 AFTER GOING THROUGH THE AFORESAID FINDING OF TH E ITAT, SMC, DELHI BENCH DECISION DATED 08.08.2017 PASSED IN ITA NO. 1500 & 1501/DEL/2017 (AY 2007- 08) IN THE CASES OF SUSHIL GAUR VS. ITO, WARD 2(3), GHAZIABAD AND SHELLY AGARWAL VS. ITO, WARD 2(3), GHAZIABAD, I AM OF THE CONSIDERED VIEW THAT GROUND NO. 3 OF THIS APPEAL HAS ALREADY BEEN ADJUD ICATED AND DECIDED BY THE VARIOUS BENCHES OF THE ITAT, WHICH I HAVE MENTIONE D IN THE AFORESAID 8 PARAGRAPHS AND I AM OF THE VIEW THAT THIS ISSUE HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT ON THE BASIS OF INCRIMINATING MATERIAL FOUND, ONCE REASSESSMENT PROCEEDINGS WAS INITIATED ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE SEARCH OF 3 RD PARTY THEN THE PROVISIONS OF SECTION 153C OF THE I.T. ACT WERE APPLICABLE WHIC H EXCLUDE THE APPLICATION OF SECTION 147 AND 148 OF THE I.T. ACT AND NOTICE U/S. 148 OF THE ACT AND PROCEEDING U/S. 147 ARE ILLEGAL AND VOID AB INITIO. THEREFORE , RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL DATED 08.08.2017, THE REASSESSMENT IN QUESTION IS ACCORDINGLY QUASHED. SINCE I HAVE ALREADY QUASHE D THE REASSESSMENT, THERE IS NO NEED TO ADJUDICATE THE OTHER GROUNDS. LD. DR H AS NOT BROUGHT TO MY NOTICE ANY CONTRARY DECISION ON EXACTLY SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE MENTIONED IN PARA NO. 8 OF THE TRIBUNAL ORDER DATE D 08.08.2017, AS REPRODUCED ABOVE. THEREFORE, THERE IS NO HELP CAN BE GIVEN T O THE REVENUE ON THE ISSUES MENTIONED IN THE WRITTEN SUBMISSIONS BY THE LD. D R. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND ALLOWED IN THE AFORESAID MANNER. ORDER PRONOUNCED ON 04/03/2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:- 04/03/2020 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 9