M/s. IME International Pvt. Ltd., Delhi v. ITO, New Delhi

CO 298/DEL/2010 | 2001-2002
Pronouncement Date: 30-09-2010 | Result: Allowed

Appeal Details

RSA Number 29820123 RSA 2010
Bench Delhi
Appeal Number CO 298/DEL/2010
Duration Of Justice 27 day(s)
Appellant M/s. IME International Pvt. Ltd., Delhi
Respondent ITO, New Delhi
Appeal Type Cross Objection
Pronouncement Date 30-09-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 30-09-2010
Date Of Final Hearing 22-09-2010
Next Hearing Date 22-09-2010
Assessment Year 2001-2002
Appeal Filed On 03-09-2010
Judgment Text
ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 3483/DEL/2010 A.Y. : 2001-02 INCOME TAX OFFICER WARD 11(3) ROOM NO. 374-A C.R. BUILDING I.P. ESTATE NEW DELHI VS. M/S IME INTERNATIONAL PVT. LTD. 211 NEW DELHI HOUSE 27 BARAKHAMBA ROAD NEW DELHI 110 001 (PAN: AAAC18126Q) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) C.O. NO. 298/DEL/2010 (IN ITA NO. 3483/DEL/2010) A.Y. : 2001-02 M/S IME INTERNATIONAL PVT. LTD. VS. INCOME TAX OF FICER 211 NEW DELHI HOUSE WARD 11(3) ROOM NO. 374-A 27 BARAKHAMBA ROAD C.R. BUILDING I.P. ESTATE NEW DELHI 110 001 NEW DELHI (PAN: AAAC18126Q) ASSESSEE BY : SH. RANJAN CHOPRA CA DEPARTMENT BY : SMT. MONA MOHANTY SR. D.R. PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE EMANATE OUT OF ORDER OF LD. COMMISSIONER OF INCOME T AX (APPEALS) DATED 10.5.2010 PERTAINING TO ASSESSMENT YEAR 2001-0 2. 2. IN THE C.O. ASSESSEE HAS AGITATED AGAINST THE ASSUMPTION OF JURISDICTION HENCE WE TAKE UP THE C.O. FIRST. ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 2 3. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN CONFIRMING THE ASSESSING OFFICER S ACTION OF FRAMING THE ASSESSMENT U/S 147 OF THE IT ACT. MORE SO W HEN NECESSARY INGREDIENTS OF THAT SECTION ARE MISSING. 4. THE ASSESSEE IN THIS CASE FILED RETURN OF INCOME ON 30.10.2001 DECLARING A LOSS OF ` 15381/-. THE SCRUTINY U/S 14 3(3) WAS COMPLETED ON 27.11.2003 ON NIL INCOME. THEREAFTER THE ASSE SSING OFFICER NOTED THAT INFORMATION IN THAT CASE HAS BEEN RECEIVED F ROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESS EE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES OF ` 4 LACS VIDE CHEQ UE NO. 916372 AND 916373 DATED 28.3.2001 AMOUNTING TO ` 2 LACS FRO M EACH M/S MAA SHAKUMBHARI STONE CRUSHERS PVT. LTD. IN ITS ACCOUNT W ITH KARUR VAISYA BANK KAROL BAGH NEW DELHI. THEREAFTER ASSESSING O FFICER NOTED THAT NOTICE U/S 148 WAS ISSUED AFTER DULY RECORDED THE R EASONS IN THE CASE AND AFTER TAKING APPROVAL OF COMMISSIONER OF INCOME TAX DELHI-IV NEW DELHI U/S 151 OF THE IT ACT ON 29.3.2007. THEREA FTER THE ASSESSING OFFICER PROCEEDED TO CONSIDER THE MERITS OF THE CASE AND HELD THAT A SUM OF ` 16 LACS RECEIVED FROM COMPANIES MENTIONED T HEREIN ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM WAS BOGUS AND HENCE ADDED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE IT ACT. ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 3 5. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE AT THE THRESHOLD AGITATED AGAINST THE JURISDICTION OF THE RE-ASSESSMENT. IT WAS FURTHER SUBMITTED THAT REASSESSMENT PROCEEDINGS AND THE REASSESSMENT ORDER IS LIABLE TO BE QUASHED ON THE GROUND THAT NO REASON TO BELIEVE WITHIN THE MEANING OF SECTION 147 /148 EXIST FOR INITIATING THE PROCEEDINGS UNDER THE SAID PROVISION OF THE ACT. IT WAS FURTHER SUBMITTED THAT ON THE BASIS OF INFORMATION / DIRECTION OF THE INVESTIGATION WING THE ASSESSING OFFICER INITIA TED THE PROCEEDINGS U/S 148 OF THE IT ACT WHICH IS CLEARLY AGAINST THE SPIRIT OF THE SECTION. HENCE IT IS A CLEAR CASE OF CHANGE OF OPINION WHI CH CANNOT FORM THE BASIS OF REOPENING OF COMPLETED ASSESSMENT. THE A SSESSEE IN THIS REGARD FURTHER REFERRED TO THE CBDT CIRCULAR NO. 54 9 DATED 31.10.1989 WHICH ALSO CAME UP FOR CONSIDERATION BEFORE THE FU LL BENCH OF THE HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. KELVINATOR INDIA LTD. REPORTED IN 256 ITR 1 WHEREIN IT WAS HELD ON PAGE 18 OF THE REPORT THAT THE SAID CIRCULAR HAVING BEEN ISSUED U/S 119 IS BIN DING ON THE REVENUE. HENCE ASSESSEE SUBMITTED THAT CHANGE OF OPINION CANN OT FORM THE BASIS OF REOPENING OF COMPLETED ASSESSMENT. IT WAS FURTHER SUBMITTED THAT AS PER THE SAID CIRCULAR WHAT IS THE REQUIREME NT FOR LAW FOR REOPENING OF COMPLETED ASSESSMENT IS THAT REASONS TO BELIEVE OF THE ASSESSING OFFICER THAT INCOME HAS ESCAPED ASSESSME NT BASED ON ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 4 MATERIAL ON RECORD WHICH HAS LEAD TO THE FORMATION O F BELIEF AND NOT OPINION OF THE ASSESSING OFFICER . IN THIS CASE THE ASSESSING OFFICER HAD NO MATERIAL BEFORE HIM. ON THE BASIS OF WHICH HE COULD FORM THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT IN HIS OP INION. IT WAS FURTHER SUBMITTED THAT ASSESSEE FOR REOPENING OF COMP LETED ASSESSMENT OPINION OF THE ASSESSING OFFICER HAS N O MEANING AS HELD BY THE DELHI HIGH COURT IN THE CASE OF KELVINATOR I NDIA LTD. (SUPRA). ASSESSEE FURTHER MADE SUBMISSIONS ON THE MERITS OF THE CASE ALSO. 5.1 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THERE IS NO DISPUTE THAT ASSESSING OFFICE R ACTED ON THE BASIS OF THE SPECIFIC INFORMATION AS SUCH THERE WAS VALID GROUND FOR THE ASSESSING OFFICER TO ACT ON THE SAME. HE FURTHER NOTED THAT ASSESSING OFFICER HAD OBTAINED THE APPROVAL OF ACIT RANGE-1 1 NEW DELHI AND AS SUCH JURISDICTION WAS ASSUMED AFTER CAREFUL CONSIDE RATION OF THE FACTS AND MATERIAL ON RECORD. HE HELD THAT IN HIS OPINION THERE WAS A PRIMA- FACIE CASE TO ASSUME THE JURISDICTION U/S 148. THE R EOPENING WAS NOT MERELY ON THE BASIS OF DIRECTION OF ANY HIGHER AUTH ORITIES BUT ON THE BASIS OF INFORMATION TO THE ASSESSING OFFICER FOR FURTHER ACTION. AS PER LAW LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDE D THAT REOPENING WAS AFTER APPLICATION OF MIND AS SUCH THE RE WAS ADEQUATE MATERIAL ASSUMING JURISDICTION U/S 148. HENCE HE HELD THAT THE LEGAL ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 5 GROUND OF THE ASSESSEE IS DISMISSED. HOWEVER ON MER ITS OF THE CASE HE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY H OLDING THAT HE WAS INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES P ROVIDED BY THE ASSESSEE TO SUBSTANTIATE THAT THE SHARE CAPITAL MON EY AND LOAN RECEIVED BY IT WERE GENUINE TRANSACTIONS AND THE SA ME WERE ACCOMMODATION ENTRIES. ACCORDINGLY IT IS DIRECTED THAT THE ADDITION OF ` 16 00 000/- MAY BE DELETED. 5.2 AGAINST THIS ORDER BOTH THE REVENUE AND ASSESSE E ARE IN APPEAL BEFORE US. WHILE THE REVENUE HAS APPEALED AGAINST T HE DECISION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE MERI TS OF THE CASE THE ASSESSEE IN THE CROSS OBJECTION HAS URGED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ASSESSING OFFICER S ACTION OF FRAMING THE ASSESSMENT U/S 147 OF THE IT ACT. 5.3 ON THE ISSUE OF JURISDICTION WE HAVE HEARD BOT H THE COUNSELS AND PERUSED THE RECORDS. IN THIS CASE THE REASONS R ECORDED AS SUPPLIED TO THE ASSESSEE FOR REOPENING THE ASSESSMENT U/S 147 DATED 16.7.2007 READS AS UNDER:- THE CASE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTORATE OF INVESTIGATION WING DELHI THA T YOUR COMPANY HAS RECEIVED ACCOMMODATION ENTRIES OF ` 4 LA CS VIDE ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 6 CHEQUE NO. 916372 AND 916373 DATED 28.3.2001 AMOUTNI NG TO ` 2 LACS EACH FROM M/S MAA SHAKUMBHARI STONE CRUSHERS PVT . LTD. IN ITS BANK ACCOUNT WITH KARUR VAISYA BANK KAROL BAGH NEW DELHI IN THE YEAR CONCERNED. 5.4 LD. COUNSEL OF THE ASSESSEE IN THIS REGARD REI TERATED THE SUBMISSIONS REFERRED BEFORE THE ASSESSING OFFICER AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HE FURTHER PLACED RELIANCE UPON THE DECISION OF THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. VS. C.I.T. AND ANR. : 308 ITR 38. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SU PPORTED THE ORDERS OF AUTHORITIES BELOW. 5.5 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. IT WILL BE APT TO REFER TO THE PROVISION OF SECTION 147 HERE. THE PROVISIONS OF SECTION 147 READ AS UNDER:- 'IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER I NCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PRO CEEDINGS UNDER THIS ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 7 SECTION OR RECOMPUTED THE LOSS OR THE DEPRECIATION A LLOWANCE OR ANY OTHER ALLOWANCE AS THE CASE MAY BE FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO A THE RELEVANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION(3 ) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER TH E EXPIRY OF FOUR YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR U NLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT F OR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION(1) OF SECTION 142 OR SECTION 148 O R TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT ASSESSMENT YEAR.' 5.6 IN THE CASE OF HARYANA ACRYLIC MANUFACTURER CO. CITED ABOVE ASSESSEE FILED ITS INCOME DECLARING NIL INCOME FOR THE ASSESSMENT YEAR 1998-99. THE ASSESSMENT U/S 143(3) WAS COMPLETED AT NIL INCOME. NOTICE U/S 148 ISSUED BEYOND 4 YEARS FROM THE END OF THE ASSESSMENT YEAR 1998-99 STATING THAT THE ASSESSEE HAD TAKEN AC COMMODATION ENTRIES FROM ONE OF THE COMPANIES. ASSESSEE HAD S UBMITTED BEFORE ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 8 THE ASSESSING OFFICER THAT ASSESSMENT WAS COMPLETE D U/S 143(3) AND IN THE COURSE OF ASSESSMENT PROCEEDINGS OF THE RELE VANT DOCUMENTS SHARE APPLICATION MONEY CONFIRMATION FROM THE APPELLA NT AND BANK STATEMENT WERE SUBMITTED BEFORE THE ASSESSING OFFICE R. IN THESE FACTS HONBLE JURISDICTIONAL HIGH COURT HELD THAT ACTION UNDER SECTION 147 OF THE INCOME TAX ACT 1961 CAN BE TAKEN AFT ER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR O NLY IF ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESS EE (A) TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR (II) TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR TH AT ASSESSMENT YEAR. THE PROVISO TO SECTION 147 CARVED OUT AN EXCEPTION FROM THE MAIN PROVISIONS OF SECTION 147. IF A CASE WERE TO FALL WITHIN THE PROVISO WHETHER OR NOT IT WAS COVERED UNDER THE MAIN PROVISI ONS OF SECTION 147 WOULD NOT BE MATERIAL. ONCE THE EXCEPTION CARVED OU T BY THE PROVISO CAME INTO0 PLAY THE CASE WOULD FALL OUTSIDE THE AMB IT OF SECTION 147. HOWEVER NO ACTION CAN BE TAKEN UNDER SECTION 147 A FTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IF THE CONDITIONS THAT (A) AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OF THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASS ESSMENT YEAR AND ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 9 (B) UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE : (I) TO MAKE A RETURN UNDER SECTION 139 O R IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR (II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR ARE SATISFIED . MERELY HAVING REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE PERIOD OF FOUR YEA RS. THE ESCAPEMENT OF INCOME MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FUL LY AND TRULY. THIS IS A NECESSARY CONDITIONS FOR OVERCOMING THE BAR SET BY T HE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED THE BAR WOULD OPERATE AND NO ACTION UNDER SECTION 147 COULD BE TAKEN. 5.7 IN THE PRESENT CASE BEFORE US ASSESSEE HAD FIL ED THE RETURN OF INCOME FOR A.Y. 2001-02 ON 30.10.02. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 27.11.2003. THEREAFTER NOTICE U/S 148 W AS ISSUED ON 29.3.2007. HENCE WE FIND THAT NOTICE U/S 148 WAS ISSUED AFTER THE EXPIRY OF THE 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 10 5.8 NOW WE FIND THAT IN THIS CASE AS PER THE REASON S RECORDED ON THE BASIS OF INFORMATION /DIRECTION RECEIVED FROM THE IN VESTIGATION WING ASSESSING OFFICER INITIATED THE PROCEEDINGS U/S 14 8. THUS CLEARLY THERE WAS NO STATEMENT BY THE ASSESSING OFFICER IN THE REASONS RECORDED THAT IT WAS HIS OWN OPINION THAT THERE WAS ESCAPEMENT OF INCOME DUE TO THE FAILURE OF THE ASSESSEE TO DISCLO SE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IN THE PRESE NT CASE ASSESSING OFFICER HAS NOT NOTED THAT RE-ASSESSMENT WAS OCCAS IONED DUE TO THE FAILURE OF ASSESSEE TO FURNISH FULLY AND TRULY ANY MATERIAL FACT. THE REOPENING WAS SOLELY BASED UPON INFORMATION/DIRECTIO N OF THE INVESTIGATION WING. UNDER THESE CIRCUMSTANCES IN OUR CONSIDERED OPINION ON THE ANVIL OF THE JURISDICTIONAL HIGH CO URT DECISION CITED ABOVE THE REASSESSMENT CANNOT BE SUSTAINED AS ORIG INAL ASSESSMENT WAS DONE U/S 143(3) AND 4 YEARS THEREAFTER REOPENIN G WAS DONE ON THE BASIS OF INFORMATION / DIRECTION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. ASSESSING OFFICER NOT HAVING HI MSELF FORMED A BELIEF THAT THERE IS ESCAPEMENT OF INCOME IN THE R EASONS RECORDED THE REOPENING CANNOT BE JUSTIFIED. ACCORDINGLY IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE ALLOW TH E CROSS OBJECTION FILED BY THE ASSESSEE AND HOLD THAT THE ASSESSMENT WAS DEVOID OF JURISDICTION. ITA NO. 3483/DEL/2010 & CO NO. 298/DEL/2010 A.Y. 2001-02 11 6. SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT ON JURISDICTION THE ADJUDICATION ON MERITS OF THE CASE ARE ACADEMIC. HENCE THE APPEAL BY THE REVENUE IS TREATED AS INFRUCTUOUS. 7. IN THE RESULT THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. AND APPEAL FILED BY THE REVENUE IS DISMISSED BEING I NFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2010. SD/- SD/- [ [[ [C.L. C.L. C.L. C.L. SETHI SETHI SETHI SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 30/09/2010 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES