Ishwar Chand Mittal, New Delhi V. ACIT Central Circle-25, New Delhi

ITA 8706/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7907 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BARNWAL
• Keywords: Earning of tax free income; Accommodation entries; Reassessment proceedings; Borrowed satisfaction; Capital Gains
• Section: 153A; 153; 147; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELH I BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.8706/DEL/2019 [A.Y 2011-12] ISHWAR CHAND MITTAL VS. ACIT 139, DEEPALI ENCLAVE, PITAMPURA CENTRAL CIRCLE-25 NEW DELHI NEW DELHI PAN NO.AANPC8865A [APPELLANT] [RESPONDENT] APPELLANT BY : SH. GAUTAM JAIN, ADVOCATE RESPONDENT BY : SH. M. BARNWAL, SR. DR DATE OF HEARING : 20.08.2020 DATE OF PRONOUNCEMENT : 25. 08.2020 ORDER PER N. K. BILLAIYA , AM : 1. WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE CIT(A)-29, NEW DELHI DATED 04.01.2 019 PERTAINING TO A.Y. 2011-12. 2. VIDE GROUND NO. 1 TO 1.4 THE ASSESSEE HAS CHALLENGE D THE JURISDICTION OF THE AO IN INITIATING THE PROCEEDING S U/S.147 OF THE ACT CLAIMING THAT THE REOPENING OF THE ASSESSMENT W AS BAD IN LAW. 3. VIDE GROUND NO. 2 TO 10 THE ASSESSEE HAS CHALLENGED THE ADDITIONS MADE U/S. 68 OF THE ACT ON MERITS. 4. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LEN GTH CASE RECORD CAREFULLY PERUSED WITH THE ASSISTANCE OF THE COUNSEL WE HAVE CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCE B ROUGHT ON RECORD. 5. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE FILED ORIGINAL RETURN OF INCOME ON 27.07.2011. A SEARCH CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 22.03.2012 AND THE ASSESSMENT WAS FRAMED U/S. 153 A OF THE ACT VIDE ORDER DATED 2 8.02.2014. 6. ON 31.03.2016 NOTICE U/.S. 148 OF THE ACT WAS ISSUE D AND SERVED UPON THE ASSESSEE. THE REASONS FOR REOPENING THE A SSESSMENT READ AS UNDER:- 7. A PERUSAL OF THE ABOVE SHOW THAT THE COMPLETED ASSE SSMENT WAS REOPENED ON THE BASIS OF THE INFORMATION RECEIVED F ROM THE INVESTIGATION WING, KOLKATA BY WHICH THE AO CAME TO KNOW THAT SOME BROKERS HAVE AFFIRMED THAT THEY WERE PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF LONG TERM CAPI TAL GAIN AND ONE OF THE SUCH SCRIP WAS NOUVEA MULTIMEDIA. THE A O WAS OF THE OPINION THAT SINCE THE ASSESSEE HAS ALSO DEALT IN T HE SAID COMPANY THE LTCG OF RS. 76.73 LACS IS NOTHING BUT ACCOMMODA TION ENTRY RECEIVED BY THE ASSESSEE IN LIEU OF HIS UNACCOUNTED CASH INTRODUCED IN HIS ACCOUNTS AS LTCG. 8. ON THE STRENGTH OF THIS INFORMATION THE AO REOPENED THE ASSESSMENT AND COMPLETED PROCEEDINGS BY MAKING ADDI TION OF RS.76.73 LACS. 9. AT THE VERY OUTSET AND AS MENTIONED ELSEWHERE WE HA VE TO STATE THAT A SEARCH WAS CONTENDED AT THE PREMISES OF THE ASSESSEE ON 22.03.2012 AND PURSUANT TO THE NOTICE U/S. 153 A OF THE ACT. THE ASSESSEE FILED HIS RETURN OF INCOME ALONGWITH RETUR N OF INCOME A COMPUTATION OF INCOME WAS ALSO FILED WHICH CLEARLY SHOW UNDER THE HEAD DPS OF EXEMPT INCOME CAPITAL GAINS U/S. 10 (30)OF THE ACT. 10. IT IS THUS APPARENTLY A CASE WHERE ACTION HAS BEEN INITIATED ON THE BASIS OF SEARCH U/S. 132 (4) OF THE ACT IN T HE CASE OF THE ASSESSEE. NO INCRIMINATING MATERIAL WAS FOUND IN T HE SEARCH OF PROCEEDINGS. 11. IT IS NOT THE FIRST TIME THAT ASSESSEE HAS FILED TH E RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153A OF THE ACT, P RIOR TO THIS THE ASSESSEE HAD FILED A RETURN OF INCOME OF RS. 25 .16 LACS WHICH WAS ALSO ACCOMPANIED BY THE SAME COMPUTATION OF INC OME WHICH WERE FILED WITH THE RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S. 153 A OF THE ACT. 12. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER FRAM ED U/S. 153 A OF THE ACT AND WE FIND THAT NO ADVERSE I NFERENCE WAS MADE TO THE RETURNED INCOME OF THE ASSESSEE WHEN TH E AO WAS FULLY AWARE OF THE LONG TERM CAPITAL GAINS CLAIMED AS EXEMPT FROM TAX. 13. IN OUR CONSIDERED VIEW WHILE ASSUMING JURISDICTION U/S. 147 OF THE ACT THE AO MERELY ACTED ON SUSPICION AND WE CANNOT SAY THAT HE HAD REASONS TO BELIEVE. 14. IN THE GARB OF REASSESSMENT PROCEEDINGS THE AO SOUG HT TO VERIFY THE SAME DETAILS ON THE STRENGTH OF MATERIAL WHICH WAS ALREADY AVAILABLE ON RECORD. DULY CONSIDERED AND V ERIFIED IN THE COURSE OF PROCEEDINGS U/S. 153 A OF THE ACT. JUDGM ENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CLEARING CARGO AGENCY VS. JCIT 307 ITR 1 (PAGES 31-52) IS APT ON THE FACT S DISCUSSED HERE IN ABOVE AND THE SAME READ AS UNDER: 15. COMING BACK TO THE FACTS OF THE CASE, IN THE REASON S RECORDED MENTIONED ELSEWHERE THE AO OBSERVED THAT I NCOME OF RS. 76.33 LACS HAS NOT BEEN OFFERED TO TAX IN THE R ETURN OF INCOME FOR A. Y.2011-12 WHEREAS AS MENTIONED ELSEWHERE IN ALL HIS RETURN OF INCOME WHICH CLEARLY MENTIONED INCOME CLA IMED TO BE EXEMPT U/S. 10 (38) AS MENTIONED ELSEWHERE THE SAME WAS THOROUGHLY EXAMINED AFTER SEARCH OPERATIONS AT THE PREMISES OF THE ASSESSEE AND AFTER THOROUGH EXAMINATION THE ASS ESSMENT WAS FRAMED U/S. 153 A OF THE ACT, THEREFORE, IN THE LIG HT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT REOPENING OF THE ASSESSMENT WH ICH WAS FRAMED U/S. 153 A OF THE ACT IS BAD IN LAW. 16. AT PARA -11 OF HIS ASSESSMENT ORDER THE AO CONCLUDE D AS UNDER :- IN VIEW OF THE ABOVE DISCUSSION IT CAN BE CONCLUDE D THAT THE ASSESSEE HAS NOT DISCLOSED LTCG MADE THROU GH PENNY STOCK AMOUNTING TO RS. 76.70 LACS FOR THE YEA R UNDER CONSIDERATION. ACCORDINGLY IN LTCG OF RS. 76 .73 LACS IS ADDED TO THE INCOME OF THE ASSESSEE. 17. THIS OBSERVATION OF THE AO CLEARLY SHOW THAT THERE WAS NO APPLICATION OF MIND WHILE ISSUING OF NOTICE U/S. 14 8 OF THE ACT IN AS MUCH AS HAD HE GONE THROUGH THE ASSESSMENT RECOR DS OF THE ASSESSEE HE WOULD HAVE SEEN THE COMPUTATION OF INCO ME FILED WITH ORIGINAL RETURN INCOME AND ALSO WITH THE RETUR N OF INCOME TAX IN RESPONSE TO NOTICE U/S. 153 A OF THE ACT. I F HE HAD DONE THIS EXERCISE HE WOULD HAVE KNOWN THAT LTCG HAS NOT ONLY BEEN DISCLOSED IN THE RETURN OF INCOME BUT THE SAME WAS ALSO CLAIMED TO BE EXEMPT. 18. IN OUR CONSIDERED VIEW THE PROCEEDINGS HAS BEEN INI TIATED ON THE BASIS OF NO MATERIAL LESS ANY TANGIBLE AND R ELEVANT MATERIAL AND AS SUCH REASONS RECORDED DO NOT CONSTI TUTE VALID REASONS. MOREOVER THE REOPENING IS ONLY ON THE BAS IS OF BORROWED SATISFACTION AND AS MENTIONED ELSEWHERE REASONS ARE FACTUALLY INCORRECT AND THE CONCLUSION DRAWN BY THE AO IN THE ASSESSMENT IS CONTRADICTORY. 19. CONSIDERING THE FACTS OF THE CASE DISCUSSED ELSEWHE RE IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH C OURT WE HOLD THAT THE ASSUMPTION OF JURISDICTION BY THE ISSUE OF NOTICE U/S. 148 OF THE ACT IS BAD IN LAW WHICH IS QUASHED AND ACCOR DINGLY THE ASSESSMENT SO FRAMED IS ALSO QUASHED. 20. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER ITSELF W E DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF T HE ADDITION GROUND NO. 1 TO 1.4 ARE ALLOWED. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.08.2020. SD/- SD/- [SUCHITRA KAMBLE] [ N. K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25.08.2020 *NEHA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT, NEW DELHI DATE OF DICTATION 21.08.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.08.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 25.08.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 25.08.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 25.08.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 25.08.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 25.08.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.08.2020 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRA R FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER