Whirlpac Aids Pvt. Ltd., Ludhiana V. ITO, W-7(2), Ludhiana

ITA 875/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5989 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: VIBHOUR GARG
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 875/CHD/2018 / ASSESSMENT YEAR : 2009-10 M/S WHIRLPAC AIDS PVT LTD., #97, MAYA NAGAR, CIVIL LINES, LUDHIANA VS. THE ITO, WARD-7(2), LUDHIANA ./PAN NO: AAACW2863L / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI VIBHOUR GARG, CA ' ! / REVENUE BY : SH. MANJIT SINGH, CIT DR # $ % /DATE OF HEARING : 22.07.2019 &'() % / DATE OF PRONOUNCEMENT : 01.08 . 2019 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 23.03.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-3, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS & LA W FOR INITIATING & CONCLUDING THE REASSESSMENT U/S 147, 1 48 OF INCOME TAX ACT, 1961. ITA NO. 42-CHD-2019- SHRI PARDEEP KUMAR, KURUKSHETRA 2 2. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS & LA W FOR MAKING AN ADDITION OF RS 14,45,000/- & THE QUANTUM OF ADDI TION IS DISPUTED. 3. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS & LA W FOR UPHOLDING THE ADDITION OF RS 14,16,700/- & THE QUAN TUM OF ADDITION IS DISPUTED. 4. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS & LA W FOR UPHOLDING THE DISALLOWANCE OF MANUFACTURING & P ERSONNEL EXPENSES, ADMINISTRATIVE EXPENSES AND SELLING EXPE NSES ETC. AMOUNTING OF RS 4,77,257/- (10% OF RS. 47,72,576/-) 5. BECAUSE FOR KINDLY GRANTING THE CONSEQUENTIAL R ELIEF AND (OR) LEGAL CLAIM & TO KINDLY ALLOW AMENDMENT, ADDITION, DELETI ON IN THE GROUNDS BEFORE THE DISPOSAL OF THE APPEAL AND WITH A FURTHER PRAYER TO TAKE A DECISION IN ACCORDANCE WITH LAW IN THE INTEREST OF SUBSTANTIAL JUSTICE . 3. GROUND NO.1 : THIS GROUND IS A LEGAL GROUND TAKEN BY THE ASSESSEE AGITATING THE VALIDITY OF THE REOPENING OF THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER U/S 147 READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED MY ATTENTION TO THE REASONS RECORDED BY THE ASSESSING OFFICER DATED NIL FOR REOPENING OF THE ASSESSMENT, COPY OF WHICH IS PLACE D AT PAGE 16 OF THE PAPER BOOK. IN THE REASONS RECORDED BY THE ASSESSI NG OFFICER, THE ONLY FACT THAT HAS BEEN MENTIONED IS THAT THE ASSESSING OFFICER HAD NOTED THAT AS PER INFORMATION RECEIVED FORM DIRECTOR OF INCOME TAX (INTELLIGENCE & CRIMINAL INVESTIGATION, CHANDIGARH ), CERTAIN COMPA NIES HAVE ALLOTTED ITA NO. 42-CHD-2019- SHRI PARDEEP KUMAR, KURUKSHETRA 3 SHARES ON PREMIUM OF 500% OR MORE. ON THE BASIS OF THIS INFORMATION ONLY, THE ASSESSING OFFICER EXAMINED THE RECORDS OF THE ASSESSEE AND FOUND THAT THE ASSESSEE COMPANY HAD RECEIVED SHARE CAPITAL OF RS. 24,45,000/- AT THE PREMIUM OF RS. 90 PER SHARE. ON THE BASIS OF THIS SOLE INFORMATION, THE ASSESSING OFFICER FORMED THE BELIE F THAT THE AFORESAID SHARE PREMIUM RECEIVED BY THE ASSESSEE MIGHT BE UNE XPLAINED INCOME OF THE ASSESSEE INTRODUCING THE ASSESSEE COMPANY BY WA Y OF SALE OF SHARES AT A PREMIUM OF RS. 90/- PER SHARE. THERE IS NO WH ISPER OR ANY OTHER INFORMATION RECEIVED BY THE ASSESSING OFFICER THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WAS OUT OF UNACCOUNT ED INCOME OF THE ASSESSEE. TO JUSTIFY HIS FORMATION OF BELIEF, THE ASSESSIN G OFFICER HAS RELIED UPON CERTAIN CASE LAWS. HOWEVER, IT IS TO BE NOTED THAT IN THESE CASE LAWS THE FACTS WERE DIFFERENT. IN SOME OF THE CASES , EITHER THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR COMPANY COULD NOT BE ESTABLISHED OR IN OTHER CASES THE RECORDS OF THE BROKERS WERE NOT AVAILABLE AND EVEN SHARES REMAINED IN THE NAME OF THAT ASSESSEE EVEN L ONG AFTER SALE OF SHARES. THE COURTS IN THESE CASES HAVE DECIDED THE ISSUES BASED ON THEIR FACTS, HOWEVER, THE DECISION ARRIVED AT IN OTHER C ASES CANNOT BE SAID TO BE FORM THE BASIS TO ASSUME THE FACTS IN THE CASE OF THE ASSESSEE. THERE IS NO COGENT OR CONVINCING INFORMATION AVAILABLE TO THE ASSESSING OFFICER TO FORM THE BELIEF THAT THE INCOME FOR THE YEAR UN DER CONSIDERATION HAD ESCAPED ASSESSMENT. THE HON'BLE SUPREME COURT IN TH E CASE OF CIT VS ITA NO. 42-CHD-2019- SHRI PARDEEP KUMAR, KURUKSHETRA 4 KELVINATOR OF INDIA LTD. 320 ITR 560 HAS HELD THAT SOME TANGIBLE INFORMATION MUST COME TO THE ASSESSING OFFICER FOR FORMATION OF BELIEF THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSM ENT. IN THE CASE IN HAND, NO TANGIBLE INFORMATION HAD COME TO THE POSSE SSION OF THE ASSESSING OFFICER TO FORM THE BELIEF THAT THE INCOM E OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE FACTS OF THE CASE ARE ENTIR ELY DISTINGUISHABLE FROM THE CASE LAWS RELIED UPON BY THE ASSESSING OFF ICER IN THE REASONS RECORDED. IN THE CASE IN HAND, THE INVESTMENT IN TH E COMPANY HAS BEEN MADE BY THE DIRECTOR OF THE COMPANY AND CLOSE FAMIL Y MEMBERS OF THE DIRECTOR. IT IS NOT A CASE WHERE THE SHARE APPLICAT ION MONEY HAS BEEN RECEIVED FROM A THIRD PARTY WHOSE CREDENTIALS WERE DOUBTFUL OR NOT ESTABLISHED. IN VIEW OF THIS, IT IS APPARENT THAT T HE ASSESSING OFFICER FORMED THE BELIEF THAT THE INCOME OF THE ASSESSEE H AD ESCAPED ASSESSMENT ON ASSUMPTION AND PRESUMPTION BASIS WITHOUT ANY TAN GIBLE INFORMATION COMING TO HIS KNOWLEDGE IN THIS RESPECT. THE REOPE NING, THUS, IS BAD IN LAW IN THIS CASE AND THE SAME IS QUASHED. 5. SINCE THE REOPENING AS PER OBSERVATIONS MADE AB OVE HAS BEEN QUASHED, THE CONSEQUENTIAL ADDITIONS MADE BY THE AS SESSING OFFICER ACCORDINGLY HAVE LOST THEIR VALIDITY AND THE SAME A RE ACCORDINGLY ORDERED TO BE DELETED. THE OTHER GROUNDS OF APPEAL ( GROUND NOS. 2 TO 5 ) HAVE BECOME INFRUCTUOUS AT THIS STAGE AND HAVE BEEN REND ERED ACADEMIC IN NATURE. IN VIEW OF THE OBSERVATIONS MADE ABOVE, THE APPEA L OF THE ASSESSEE ITA NO. 42-CHD-2019- SHRI PARDEEP KUMAR, KURUKSHETRA 5 STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.08.2019 SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 01.08.2019 .. '+ ,- .- / 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