Dhanvidhya Impex Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(4), Ahmedabad

ITA 970/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6534 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI SR DSR
• Assessee Lawyers: A L THAKKAR
• Section: 143(3); 147; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.970/AHD/2017 / ASSTT. YEAR: 2005-06 DHANVIDHYA IMPEX P.LTD. F/2, TUSHAR CENTRE STATDIUM CIRCLE NAVRANGPURA AHMEDABAD 380 009. PAN : AAACD 7729 E VS. ITO, WARD-1(4) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI A.L. THAKKAR, AR REVENUE BY : RICHA RASTOGI, SR.DSR ! / DATE OF HEARING : 04/04/2019 '#$ ! / DATE OF PRONOUNCEMENT: 30/04/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-1, AHMEDABAD DATED 23.2.2017 PASSED FOR T HE ASSTT.YEAR 2005-06. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN REOPENING OF THE ASSESSM ENT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCO ME AT RS.2,44,890/-. AN ORDER WAS PASSED UNDER SECTION 1 43(3) ON 27.12.2006 ACCEPTING THE RETURNED INCOME. THE AO T HEREAFTER ITA NO.970 /AHD/2017 2 ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX A CT ON 29.3.2012. HE HAS RECORDED THE FOLLOWING REASONS F OR REOPENING OF THE ASSESSMENT: TO, THE PRINCIPAL OFFICER, M/S. DHANVIDHYA IMPEX PVT. LTD., F-2, TUSHAR CENTRE, STADIUM CIRCLE, NAVRANGPURA, AHMEDABAD-380009 SIR, SUB: NOTICE U/S. 148 OF THE I.T. ACT, 1961 ASSESSME NT YEAR 2005-06 - PLEASE REFER TO YOUR LETTER DATED NIL RECEIVED BY T HIS OFFICE ERA 21/12/2012 ON THE SUBJECT MENTIONED ABOVE. AS DESIRED, THE REASON RECORDED FOR REOPENING THE A SSESSMENT IS GIVEN HEREUNDER : IN THIS CASE ASSESSMENT U/S.143(3) WAS PASSED ON 2 7/12/2006 DETERMINING THE INCOME AT RS.2,44,890/-BEING THE IN COME RETURNED. 2. INFORMATION HAS BEEN RECEIVED FROM THE ITO, WD 8 (3), AHMEDABAD THAT DURING THE COURSE OF ASSESSMENT PROCEEDING IN THE CASE OF SHANTISURI SECURITIES PVT. LTD, (SSPL) FOR A.Y.2005 0-06 IT WAS FOUND THAT SAID COMPANY HAD RECEIVED RS.4,06,95,000/- AS SHARE CAPITAL FROM VARIOUS ENTITIES DURING PREVIOUS YEAR RELEVANT TO A .Y.2005-06. DURING THE COURSE OF ASSESSMENT PROCEEDING, A DETAILED INQ UIRY HAD ALSO BEEN CARRIED OUT AS A RESULT OF WHICH IT WAS REVEALED TH AT THE SOURCE COMPANIES WERE MERE PAPER COMPANIES, HAVING NO REAL BUSINESS OR PROFESSION. THE CONCERNS HAD BEEN MERELY FLOATED AN D CHANNELIZE THE INTRODUCTION OF UNACCOUNTED CASH INTO BOOKS OF VARI OUS BENEFIT SEEKERS. FURTHER, THE STATEMENT ON OATH OF ONE OF THE DIRECT OR OF SHANTISURI SECURITIES PVT. LTD. WAS ALSO RECORDED DURING THE A SSESSMENT PROCEEDINGS WHEREIN HE ADMITTED TO THE EFFECT THAT THE PARTIES WHO HAD ALLEGEDLY CONTRIBUTED TO THE SHARE CAPITAL OF THE C OMPANY WERE EITHER BOGUS OR WERE ENTRY GIVERS ONLY. IN HIS STATEMENT H E FURTHER DISCLOSED MODUS OPERANDI OF SUCH ENTRIES GIVING BY STATING TH AT WHEN SUCH ENTRY SEEKERS APPROACHED HIM TO PROVIDE ACCOMMODATION ENT RIES TO THEM EITHER IN THE FORM OF SHARE CAPITAL OR AS LOANS AND ADVANCES FOR A FIXED PERCENTAGE OF COMMISSION. SINCE HE DID NOT HAVE THE CASH TO PROVIDE THE SAME, HE ACCEPTED CASH FROM THESE PARTIES AND H ANDED OVER TO THE VARIOUS PARTIES WHO HAD DEPOSITED THE CASH IN THEIR OWN COMPANIES AND IN TURN INVESTED IN HIS COMPANY AS SHARE CAPITAL TH IS MONEY WAS FORWARDED BY SHANTISURI SECURITIES PVT. LTD. (SSPL) AS LOANS AND ADVANCES TO VARIOUS PARTIES WHO HAD GIVEN HIM CASH IN THE FIRST PLACE. ITA NO.970 /AHD/2017 3 THROUGH ABOVE MODUS OPERANDI, DHANVIDYA IMPEX PVT. LTD- PAN~AAACI)7706R HAD MADE INVESTMENT OF RS.5,00,000/ - AS SHARE CAPITAL OF SHANTISURI SECURITIES PVT. LTD. IN A.Y. 2005-06. 3. ON THE BASIS OF RETURN OF INCOME SO FILED, IT IS FOUND THAT THE ASSESSES COMPANY HAS DECLARED SAID INVESTMENT OF RS .500000/- MADE IN ACQUIRING SHARE OF SSPL IN ITS BALANCE SHEET. HO WEVER, CONSIDERING THE DEPOSITION OF THE DIRECTOR OF SHANTISURI SECURI TIES PVT. LTD. AS DISCUSSED ABOVE, THE SOURCE OF INVESTMENT OF RS.500 000/- MADE IN ACQUIRING SHARES OF SAID COMPANY REQUIRES TO BE VER IFIED IN THE CASE OF DHANVIDYA IMPEX PVT. LTD. FOR AY 2005-06.- 4. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPI NION THAT THE INCOME OF RS.500000/- HAS ESCAPED ASSESSMENT BY THE ASSESSEE COMPANY AND HAS NOT DISCLOSED FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR ASSESSMENT YEAR 20 05-06, AND THE CASE IS THEREFORE, REQUIRED TO BE REOPENED U/S.147 OF THE LT. ACT BY WAY OF ISSUING NOTICE U/S.148 OF THE IT ACT.' PLEASE NOTE THAT THE NOTICE U/S.148 HAS BEEN ISSUED WITHIN THE PRESCRIBED TIME LIMIT WITH THE PREVIOUS APPROVAL OF THE CONCERNED HIGHER AUTHORITY, AND THEREFORE, IT IS PERFECTLY IN ORDER. YOURS FAITHFULLY, SD/- (UMESH PATHAK) INCOME-TAX OFFICER WARD-1(4), AHMEDABAD. 4. THE ASSESSEE OBJECTED TO THE REOPENING ON THE BA SIS OF THE ABOVE REASONS. BUT THE LD.AO DID NOT ACCEPT THE OBJ ECTIONS OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) HAS UPHELD THE REOPENING. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT A PERUSAL OF THE REASON WOULD INDICATE THAT THE AO NO WHERE POINTED OUT AS TO HOW THE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSURE ALL THE MATER IAL FACTS FULLY AND TRULY. IN SUPPORT OF HIS CONTENTIONS HE RELIED UPO N THE FOLLOWING DECISIONS: I) PR.CIT VS. MANZIL DINESH KUMAR SHAH, 101 TAXMANN.COM 259 (SC); II) SUNRISE EDUCATION TRUST VS. ITO (EXEMPTION) 92 TAXMANN.COM 74 (GUJ); III) KRUPESH GHANSHYAMBHAI THAKKAR VS. DCIT, 77 TAXMANN.COM 293 (GUJ) ITA NO.970 /AHD/2017 4 IV) HARIKISHAN SUNDERLAL VIRMAN VS. DCIT, 394 ITR 146 (GUJ) 5. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ERS OF THE REVENUE AUTHORITIES. HE POINTED OUT THAT AFTER CON CLUSION OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE FRESH MATERIAL WAS FOUND INDICATING THAT SOME OF THE CLAIMS MADE B Y THE ASSESSEE WERE INCORRECT WHICH AMOUNTS TO NON-DISCLO SURE OF FACTS FULLY AND TRULY. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. ADMITTEDLY, A SCRUTINY ASSES SMENT ORDER WAS PASSED IN THE CASE OF ASSESSEE ON 27.12.2006. THE NOTICE UNDER SECTION 148 HAS BEEN ISSUED ON 29.3.2012. THE ASSE SSMENT YEAR INVOLVED THEREIN IS ASSTT.YEAR 2005-06. FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR WOULD END ON 31.3.2010 WHERE AS THE NOTICE HAS BEEN ISSUED ON 29.3.2012. IT MEANS THAT NOTICE UNDER SECTION 148 HAS BEEN ISSUED AFTER EXPIRY OF FOUR YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THIS FACTU AL BACKGROUND LET US EXAMINE SECTION 147 OF THE INCOME TAX ACT. THE PROVISO APPENDED TO THIS SECTION PUTS AN EMBARGO UPON THE P OWER OF THE AO TO REOPEN ANY ASSESSMENT ORDER WHERE ORIGINAL AS SESSMENT ORDER WAS PASSED UNDER SECTION 143(3) AND FOUR YEAR S HAVE EXPIRED FROM THE END OF THE RELEVANT ASSESSMENT YEA R. IN SUCH CASES UNLESS IT IS SHOWN THAT HE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE A LL MATERIAL FACTS FULLY AND TRULY, THE AO CANNOT REOPEN THE ASSESSMEN T. A PERUSAL OF THE REASONS WOULD INDICATE THAT THE ASSESSEE HAS DECLARED THE SAID INVESTMENT OF RS.5.00 LAKHS IN SHANTISURI SECU RITIES P.LTD. THIS WAS SUBJECT TO SCRUTINY IN THE ORIGINAL ASSESS MENT ORDER. ITA NO.970 /AHD/2017 5 FROM THE ACCOUNTS OF THE ASSESSEE OR FROM ANY OTHER MATERIAL, IT HAS NOT BEEN DEMONSTRATED THAT WHICH MATERIAL FACTS WAS NOT FULLY AND TRULY DISCLOSED BY THE ASSESSEE. THE AO IN THE REASON HAS OBSERVED THAT SOURCE OF RS.5.00 LAKHS INVESTED IN S HANTISURI SECURITIES P.LTD. WAS REQUIRED TO BE INQUIRED INTO. NOW THIS IS NOT SOMETHING WHICH REVEALED DURING THE ASSESSMENT PROC EEDINGS OF SHANTISURI SECURITIES P.LTD. THE ASSESSEE ITSELF D ISCLOSED THE INVESTMENT AND ITS SOURCE, WHICH OUGHT TO HAVE BEEN INQUIRED WHEN SCRUTINY ASSESSMENT WAS UNDERTAKEN IN THE CASE OF ASSESSEE. THERE IS NOTHING NEW POSSESSED BY THE AO WHICH CAN DEMONSTRATE THE FACT ABOUT THE INVESTMENT SO DISCLO SED BY THE ASSESSEE WAS NOT MADE. IF THE SOURCE OF SUCH INVES TMENT REQUIRES TO BE INVESTIGATED, IT COULD BE EXAMINED IN THE SCR UTINY ASSESSMENT. THE MANIPULATION AT THE END OF SHANTIS URI SECURITIES P.LTD. WOULD NOT BRAND THE INVESTMENT OF THE ASSESS EE AS BOGUS OR NON-GENUINE AND THEREFORE, IT IS REQUIRED TO BE INV ESTIGATED. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE AO FAILED TO DEMONSTRATE ANY FACT THAT ASSESSEE HAS NOT DISCLOSED ALL MATERIAL PARTICULARS OF ITS INCOME FU LLY AND TRULY. THEREFORE, THE REASSESSMENT ORDER UNDER SECTION 147 IS BAD IN LAW. IT IS QUASHED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 30 TH APRIL, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 30/04/2019