M/s Kapoor Rice & General Mills, Narwana V. ITO, W-2, Jind

ITA 948/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7583 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDERSHAN
• Keywords: Accommodation entries; Reason to believe
• Section: 147; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 948/CHD/2019 / ASSESSMENT YEAR : 2011-12 M/S KAPOOR RICE & GENERAL MILLS, 226/3, TOHANA ROAD, NIRWANA, HARYAN A- 126116 THE ITO, WARD-2, JIND ./PAN NO: AACFK4061F / APPELLANT '# /RESPONDENT $% & ' /ASSESSEE BY : SHRI NIKHIL GOYAL & SHRI ASHOK GOYAL & ' / REVENUE BY : SHRI ARVIND SUDERSHAN, JCIT ( ) & % * /DATE OF HEARING : 12.03.2020 +,- & % * / DATE OF PRONOUNCEMENT : 03.08. 2020 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 30.4.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS), HISAR [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN ISSUING THE NOTICE U/S 148 ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WI THOUT ANY INDEPENDENT APPLICATION OF MIND. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THERE WAS NO REASON TO BELIEVE OR ANY COGENT MATERI AL FOR ARRIVING AT THE CONCLUSION THAT THE RE-OPENING OF T HE CASE U/S 148 WAS VALID. ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 2 3. THAT THE LD. CIT(A) HAS ALSO ERRED IN GIVING HIS FINDINGS AND FURTHER STATING THAT THE OBJECTION RAISED BY TH E APPELLANT AT THIS STAGE REGARDING ISSUE OF NOTICE U/S 148 WERE N OT RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. WITHOUT PREJUDICE TO THE ABOVE SAID FACTS OF THE APPEAL, THE LD. CIT(A) HAS EVEN ERRED IN NOT CONSIDERING THAT P ROPER BOOKS OF ACCOUNT HAVE BEEN MAINTAINED AND THE SAME WERE DULY AUDITED BY CHARTERED ACCOUNTANT AND THE SAME W ERE PRODUCED DURING RE-ASSESSMENT PROCEEDINGS AND THE S AME WERE NOT REJECTED BY THE ASSESSING OFFICER U/S 145( 3) AND NO DEFECTS WERE FOUND AND, AS SUCH, ADDITION MADE WITH OUT REJECTING THE BOOKS IS NOT JUSTIFIED. 5. THAT THE LD. CIT(A) HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT AND CONFIRMING THE ADDITION OF RS.5,8 0,750/- MADE BY THE ASSESSING OFFICER ON VAGUE GROUND AND W ITHOUT ANY MATERIAL ON RECORDS. 6. THAT THE AUTHORITIES BELOW HAVE MERELY RELIED ON THE REPORT OF THE INVESTIGATION WING ABOUT THE STATEMENT OF SH . VIPIN GARG AND OTHERS AT THE BACK OF ASSESSEE AND NO OPPO RTUNITY TO CROSS EXAMINE SH. VIPIN GARG HAVE BEEN GRANTED TO T HE APPELLANT, WHICH IS AGAINST THE PRINCIPLE OF NATURA L JUSTICE AS PER THE JUDGMENT OF APEX COURT IN THE CASE OF M/S A NDAMAN TIMBER INDUSTRIES AS REPORTED IN 127 DTR 241. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 3. THE ASSESSEE IN THIS APPEAL HAS CONTESTED THE RE OPENING OF THE ASSESSMENT U/S 147 & 148 OF THE INCOME TAX ACT, 19 61 (IN SHORT 'THE ACT') AS WELL AS ADDITIONS MADE BY THE ASSESSING OF FICER ON MERITS. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSING OFFICER GOT INFORMATION FROM THE INVESTIGATION WING BASED O N THE STATEMENT OF ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 3 ONE SHRI VIPIN GARG BASED AT ERODE (TAMILNADU), WHE REIN, HE HAD STATED THAT HE HAD USED HIS BANK ACCOUNTS FOR PROVIDING AC COMMODATION ENTRIES. SINCE AN AMOUNT OF RS. 5,75,000/- WAS FOU ND DEPOSITED IN THE ACCOUNTS OF THE ASSESSEE THROUGH THE CONCERN OF SH RI VIPIN GARG, HENCE, THE SAID INFORMATION WAS PASSED ON BY THE IN VESTIGATION WING TO THE ASSESSING OFFICER. THE ASSESSING OFFICER FORMIN G HIS BELIEF ON THE SAID INFORMATION REOPENED THE ASSESSMENT OF THE ASS ESSEE FOR THE YEAR UNDER CONSIDERATION. A COPY OF THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT HAS BEEN PLACED ON PAGE 2 OF THE PAP ER BOOK, CONTENTS OF WHICH FOR THE SAKE OF READY REFERENCE ARE REPRODUCE D AS UNDER:- ANNEURE A NAME OF THE ASSESSEE KAPOOR RICE AND GENERAL MILL ADDRESS OF THE ASSESSEE TOHANA ROAD., NARWANA, JIND PAN OF THE ASSESSEE N.A. ASSESSMENT YEAR 2011 - 12 DETAILS OF THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE INCOME TAX OFFICER, WARD - 2, JIND REASONS FOR REOPENING OF THE ASSESSMENT IN CASE OF KAPPOR RICE AND GENERAL MILLS, JIND FOR THE A.Y. 2011-12 UNDER SECT ION 147 OF THE INCOME TAX ACT. 1961 AS PER THE INFORMATION IN POSSESSION OF THIS OFFICE ,THE ASSESSEE HAS MADE ACCOMMODATION ENTRY THROUGH SHRI VIPIN GAR G R/O CH. DADRI WHO HAVE FLOATED SEVERAL PAPER CONCERNS FOR LAYERI NG AND ENTRY PURPOSES AMOUNTING TO RS. 5.75,000/-. AS PER OFFICE RECORD, THE ASSESSEE. HAS NOT FILED H IS RETURN OF INCOME FOR THE FINANCIAL YEAR 2010-11 RELEVANT TO A .Y. 2011-12. VERIFICATION LETTER WAS ISSUED ON 16.03.2018 REQUIR ING THE ASSESSEE TO EXPLAIN THE TRANSACTIONS MADE WITH SH. VIPIN GARG, AFTER OBTAINING PRIOR ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 4 APPROVAL OF THE PR. COMMISSIONER OF INCOME TAX, HIS AR. IN RESPONSE THERETO THE ASSESSEE HAS NOT FILED HIS REPLY. I HAVE, THEREFORE, REASONS TO BELIEVE THAT THE INCO ME OF RS. 5,75,000/- HAS ESCAPED ASSESSMENT FOR THE ASSESSMEN T YEAR 2011-12 AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. IN THIS CASE, THE ASSESSEE HAS CHOSEN NOT TO FILE R ETURN OF INCOME FOR THE YEAR AND CONSIDERATION ALTHOUGH THE TOTAL I NCOME OF THE ASSESSEE HAD EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT, CHARG EABLE TO TAX AS DISCUSSED ABOVE AND THE ASSESSEE WAS ASSESSABLE UND ER THE INCOME ACT, 1961. IN VIEW OF THE ABOVE, THE PROVISIONS OF CLAUS E (A) OF EXPLANATION 2 OF SECTION 147 ARE APPLICABLE TO FACTS OF THIS CASE AND THE ASSESSMENT YEAR UNDER CONSIDERATE IS DEEMED TO BE A CASE WHERE INCOME CHARGEABLE TO TAX HAS-ESCAPED ASSESSMENT. IN THIS CASE MORE THAN FOUR YEARS HAVE LAPSED FROM THE END OF THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, NECESSA RY SANCTION TO ISSUE NOTICE UNDER SECTION 148 IS BEING OBTAINED SEPARATE LY FROM PR. COMMISSIONER OF INCOME TAX, HISAR AS PER THE PROVIS IONS OF SECTION. 151 OF THE INCOME TAX ACT, 1961. DATED: 23.03.2018 SD/- (S C SHARMA) INCOME TAX OFFICER WARD-2, JIND 5. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HAS SUBMITTED THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND TO THE INFORMATION RECEIVED FROM INVESTIGATION WING. HE DID NOT MAKE A NY INDEPENDENT ENQUIRY TO SATISFY HIMSELF THAT INCOME OF THE ASSES SEE HAD ESCAPED ASSESSMENT. THAT THE ASSESSING OFFICER MERELY ON TH E BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING RE GARDING THE RECEIPT OF AN AMOUNT OF RS. 5,75,000/- FORMED THE OPINION THAT THE SAID AMOUNT WAS THE OWN MONEY OF THE ASSESSEE ROUTED THROUGH SH RI VIPIN GARG. HE DID NOT CHOOSE TO VERIFY THE INCOME TAX RETURN AND OTHER DOCUMENTS ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 5 AND ACCOUNTS OF THE ASSESSEE TO FORM AN INDEPENDENT VIEW THAT THE SAID AMOUNT WAS AN ACCOMMODATION ENTRY AND THAT THE INCO ME OF THE ASSESSEE TO THAT EXTENT HAS ESCAPED ASSESSMENT. THE LD. COUNSEL, AT THIS STAGE, HAS INVITED OUR ATTENTION TO THE INCOME TAX RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N U/S 139 OF THE ACT DATED 24.9.2011, WHEREIN, THE ASSESSEE HAS DECLARED A TOTAL INCOME OF RS. 4,07,796/-. THE LD. COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT THE AFORESAID AMOUNT WAS RECEIVED FROM CONCERN M/S RADH A KRISHNA TRADERS, ERODE (TAMILNADU) ON ACCOUNT OF SALE PRICE AND THAT THE GOODS WERE SUPPLIED TO THE SAID CONCERN IN THEIR OFFICE A T HARYANA. THE ASSESSING OFFICER HAD NOT DOUBTED THE CORRESPONDING PURCHASE OF THE GOODS WHICH WERE SOLD TO THE SAID CONCERN. INVITIN G OUR ATTENTION TO THE REASONS RECODED, THE LD. COUNSEL POINTED OUT THAT T HE ASSESSING OFFICER IN THE REASONS RECORDED HAS MENTIONED THAT THE ASSE SSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WHEREAS, THE ASSESSEE HAD FILED THE RETURN U/S 139 OF THE ACT DATED 24.9.2011. THE LD. COUNSEL HAS FURTHER SUBMITTED T HAT THE ASSESSING OFFICER HAS FAILED TO APPLY HIS MIND TO THE FACTS O F THE CASE AFTER RECEIPT OF THE INFORMATION FROM THE INVESTIGATION WING. HE , FORMED HIS BELIEF OF ESCAPEMENT OF INCOME MERELY ON THE BASIS OF THE SUSPICION, WHEREAS, THE ASSESSEE HAD DULY FILED HIS RETURN OF INCOME A ND HAD ALSO TAKEN INTO ACCOUNT THE SAID AMOUNT RECEIVED FROM M/S RADHA KRI SHNA TRADERS AND CORRESPONDING SALES MADE. THAT THE ACCOUNTS OF THE ASSESSEE WERE DULY ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 6 AUDITED AND THERE WERE NO ALLEGATION OF ANY BOGUS P URCHASES MADE BY THE ASSESSEE IN RESPECT OF WHICH THE SALES IN QUEST ION WERE MADE. 6. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T SINCE THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION E NTRIES FROM ONE SHRI VIPIN GARG AND EVEN THE SAID VIPIN GARG HAD MA DE A STATEMENT IN RELATION TO THE ASSESSMENT OF HIS INCOME THAT HE WA S INVOLVED IN ACCOMMODATION ENTRIES, HENCE, THE ASSESSING OFFICER HAS RIGHTLY FORMED THE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCA PED ASSESSMENT. 7. I HAVE CONSIDERED THE RIVAL SUBMISSION OF THE LD . REPRESENTATIVES OF THE PARTIES. NO DOUBT, THE ASSESSING OFFICER HA D RECEIVED INFORMATION FROM THE INVESTIGATION WING ABOUT CERT AIN ENTRIES MADE / PROVIDED BY ONE SHRI VIPIN GARG, AT TAMILNADU, AS PER THE INFORMATION, THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 5,75,000 /- FROM THE CONCERN BELONGING TO SAID VIPIN GARG. HOWEVER, IN MY VIEW, THE SAID INFORMATION, THOUGH RELEVANT, BUT WAS NEEDED TO BE EXAMINED AND VERIFIED WITH THE ACCOUNTS AS WELL AS THE INCOME-TA X RETURN FILED BY THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER WRONGLY R ECORDED THAT ASSESSEE HAD NOT FILED ANY RETURN OF INCOME. THIS F ACT RECORDED BY THE ASSESSING OFFICER ITSELF SHOWS THAT THE ASSESSING O FFICER HAS NOT CONSULTED THE RELEVANT RECORD PERTAINING TO THE INC OME-TAX RETURN OF THE ASSESSEE AND WITHOUT CONSULTING THE RELEVANT RECORD , THE ASSESSING OFFICER FORMED THE BELIEF ON THE BASIS OF THE INFOR MATION RECEIVED FROM ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 7 THE INVESTIGATION WING. THE SAID INFORMATION, IN MY VIEW, SHOULD HAVE BEEN VERIFIED AFTER CORRELATING WITH THE RECORDS OF THE ASSESSEE AND THEREAFTER THE ASSESSING OFFICER COULD HAVE FORMED THE BELIEF THAT THE SAID AMOUNT SHOWN TO HAVE BEEN RECEIVED BY THE ASSE SSEE FROM A CONCERN OF SHRI VIPIN GARG WAS, IN FACT, AN ACCOMMO DATION ENTRY OR NOT. UNDER THE CIRCUMSTANCES, IT IS APPARENT THAT THE ASSESSING OFFICER HAD FAILED TO PROPERLY APPLY HIS MIND AND THE BELIE F FORMED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME OF THE ASSESSEE WAS BASED ON MERE SUSPICIONS ONLY. THEREFORE, THE REOPE NING OF THE ASSESSMENT WITHOUT A REASONABLE BELIEF FORMED BY TH E ASSESSING OFFICER BY APPLYING HIS MIND, CANNOT BE HELD VALID. THEREFO RE, ASSESSMENT FRAMED U/S 147 OF THE ACT, BEING BAD IN LAW, IS HER EBY QUASHED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. THIS APPEAL COULD NOT BE DECIDED EARLIER DUE TO NON -FUNCTIONING OF THE BENCH ON ACCOUNT OF CURFEW / LOCKDOWN IN THE WA KE OF COVID-19 PANDEMIC. ORDER PRONOUNCED ON 03.08.2020. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 03.08.2020 .. ITA NO. 948-CHD-2019 M/S KAPOOR RICE & GENERAL MILLS, NIRWANA 8 /&' %0121% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. '# / THE RESPONDENT 3. ( 3% / CIT 4. ( 3% ( )/ THE CIT(A) 5. 14 ' % 5 , *5 , 6789 / DR, ITAT, CHANDIGARH 6. 8: ) / GUARD FILE / ( / BY ORDER, ; / ASSISTANT REGISTRAR