M/S MODINAGAR ROLLS LTD.,MODINAGAR V. DCIT, GHAZIABAD

ITA 3455/DEL/2017

AI Insights

The case involves M/s. Modinagar Rolls Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), Ghaziabad, sustaining the reassessment proceedings under section 143(3)/147 read with section 144 of the Income-tax Act, 1961. The primary contention was the legality of the second reopening of the assessment beyond four years, which the assessee argued was not in accordance with the law. Additionally, the assessee challenged the additions made under section 68 and the treatment of sundry creditors, which were dismissed by the CIT(A) without a speaking order. The Tribunal, after examining the reasons recorded for reopening, found them insufficient to justify the reassessment and quashed the reopening.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473557 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Other Referred Cases: Hindustan Liver Ltd. Vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: K. SAMPATH
• Keywords: Reassessment proceedings; Accommodation entries
• Section: 147; 148; 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.3455/Del/2017 Assessment Year: 2009-10 M/s. Modinagar Rolls Ltd., Major Asha Ram, Tyagi Road, Modinagar Vs. DCIT, Circle-1, Ghaziabad PAN :AABCM0137C (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2009-10, arises against the Commissioner of Income Tax (Appeals) [in short, the “CIT(A)”], Ghaziabad’s order dated 31.03.2017 passed in case no. 251/2015-16/GZB involving proceedings under section 143(3)/147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Assessee by Sh. K. Sampath, Adv. Sh. Rajkumar, Adv. Department by Sh. Dheeraj Kumar Jain, Sr. DR Date of hearing 20.01.2025 Date of pronouncement 20.01.2025 ITA No.3455/Del/2017 2 | P a g e 2. Heard both the parties at length. Case file perused. 3. The assessee pleads the following substantive grounds in the instant appeal: 1. That the L'd Commissioner of Income Tax (Appeals) has erred on facts and law in sustaining the reassessment proceedings U/S 147 initiated second time beyond four years. She has further failed to appreciate the Jurisdictional High Court's latest view and has bypassed the law on the subject very discreetly. 2. That the L'd Commissioner of Income Tax (Appeals) has misunderstood the ground of appeal challenging addition of Rs 2,30,00,000/- and has without a speaking order dismissed the ground as non-maintainable, thereby sustaining the aforesaid addition U/S 68 which too is illegal and against the facts and circumstances of the case. 3. The L'd Commissioner of Income Tax (Appeals) has failed to appreciate the underlying facts in respect of Sundry Creditor M/S Rahul Traders and has, therefore, illegally sustained the addition of Rs 21,04,058/- . She has however, dismissed the ground of appeal in this regard with a non-speaking order holding the ground to be not maintainable which course is apparently illegal. 4. That on the facts and circumstances of the case, the L'd Commissioner of Income Tax (Appeals) failed to appreciate that the appellant was not given sufficient opportunity by the AO to explain his case and still, without a speaking order, the said ground has been held to be not maintainable at her stage and has thus been dismissed, which is apparently illegal. 4. We advert to the assessee’s first and foremost legal ground challenging the validity of the impugned reopening. There is hardly any dispute between the parties that learned Assessing Officer had framed his regular section 143(3) assessment on 15.11.2010 in its case which followed his first and foremost section 148 notice issued ITA No.3455/Del/2017 3 | P a g e on 25th March, 2013, inter alia, setting into motion section 148/147 reopening which culminated in the reassessment framed on 28th February, 2014 (at pages 6 to 13). And that the learned Assessing Officer thereafter initiated yet another reopening in assessee’s case on 12th February, 2015 after having recorded the corresponding reasons to believe that the assessee’s taxable income liable to be assessed as escaped assessment. 5. It is in this factual drop that Mr. Sampat has invited our attention to the learned Assessing Officer’s reopening reasons recorded at page 30 of the paper-book reading as under: “REASONS FOR ISSUE OF NOTICE U/S 148 IN THE CASE OF M/S MODINAGAR ROLLS LIMITED, MAJOR ASHA-RAM TYAGI ROAD, MODINNAGAR, PAN AABCM0137C FOR ASSESSMENT YEAR 2009- 10- The asssessee is a limited company specializing in the line of manufacturing rolls for various industries. In this case, an information had received from DIT(Inv.)- 11. ARA Centre Jhandewalan Extn. New Delhi regarding accommodation entries provided by Shri Surendra Kumar Jain, Group of cases to beneficiary companies and thers. The assessee M/s Modinagar Rolls Ltd. had taken an entry of Rs. 2,30,00,000/- from VIP Leasing & Finance Pvt. Ltd. and Shalini Holdings Ltd. by cheque through Avis Bank. The case was selected for deep scrutiny after issuing notice u/s 148 of 1.T. Act. 1961. Accordingly, case was completed u/s 147/143(3) by making an addition of Rs. 2.30.00,000/-. The appeal filed before Ld. CIT(A), Ghaziabad is dismissed on 13.11.2014 and the addition of Rs. 2,30,00,000/- was confirmed by the Ld. CIT(A), Ghaziabad. Further, during the assessment proceedings for the assessment year 2010-11, it was found that opening balance of Rs. 11,23,133/- was ITA No.3455/Del/2017 4 | P a g e shown in the confirmation of creditors M/s Rahul Traders, Prop. Rahul. Accordingly, an addition of Rs. 11,23,133/- was made in the assessment year 2010-11. During the course of appellate proceedings for the assessment year 2010-11, Ld. CIT(A), Ghaziabad vide its order dated 13.11.2014 held that the copy of account of M/s Rahul Traders shows the opening balance as on 01.04.2009 at Rs. 11,23,133/- and from the ledger account, it is also seen that assessee had purchased raw material at Rs. 21,04,058/- and a payment of Rs. 9,80,925/- was also made by the assessee to M/s Rahul Traders, thus the amount of Rs. 11,23,133/- pertains to A.Y. 2009-10.. On the basis of decision of Ld. CIT(A), Ghaziabad, I have reason to believe that the amount of Rs. 21,04,058/- for the assessment year 2009-10 has escaped income within the meaning of provisions of section 147 of 1.T.Act, 1961, which needs deep scrutiny. In order to assess the above escaped income, proceedings u/s 147 of the I.T.Act, 1961 are being initiated and notice u/s 148 is being issued.” 6. We duly confronted the above recorded reasons to the Revenue which could not pinpoint any specific material holding the assessee to have failed in disclosing “fully” and “truly” all the relevant facts in the earlier round(s) of the original return and scrutiny thereafter; as the case may be. 7. Faced with this situation, we quote Hindustan Liver Ltd. Vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.) that such reopening reasons do not have any scope for any improvement, amendment, or substitution therein as they have to be read on standalone basis as are recorded by the learned Assessing Officer, and, quash the impugned reopening itself as being violative of section 147 1st proviso in very terms. Ordered accordingly. 8. All other pleadings on merits herein stand rendered academic. ITA No.3455/Del/2017 5 | P a g e 9. This assessee’s appeal is allowed. Order pronounced in the open court on 20th January, 2025 Sd/- Sd/- (S. RIFAUR RAHMAN) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 20th January, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "