M/s Santosh Polytubes Pvt. Ltd, Gwalior v. ACIT, Gwalior

ITA 148/AGR/2006 | 1996-1997
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 14820314 RSA 2006
Assessee PAN AADCS2450C
Bench Agra
Appeal Number ITA 148/AGR/2006
Duration Of Justice 3 year(s) 8 month(s) 12 day(s)
Appellant M/s Santosh Polytubes Pvt. Ltd, Gwalior
Respondent ACIT, Gwalior
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 22-01-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 1996-1997
Appeal Filed On 10-05-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH SMC AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.148/AGR/2006 ASST. YEAR: 1996-97 M/S SANTOSH POLYTUBES PVT. LTD. VS. A.C.I.T. RANGE-II GEETA COLONY GWALIOR. DAL BAZAR GWALIOR. (PAN : AADCS 2450 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH ADVOCATE RESPONDENT BY : SHRI R.C. SHARMA JR. D.R. ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 28.12.2005 BY TAKING THE FOLLOWING GROUNDS OF APPEA L :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW IN NOT ADJUDICATING & DECIDING THE FIRST GROUND OF THE APPEAL TAKEN BEFOR E HIM REGARDING THE ADDITION OF RS.540000.00 IN RESPECT OF SHARE APPLICATION MONEY. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAD FAILED TO A DJUDICATE THE GROUND OF APPEAL RAISED BEFORE HIM IN THE COURSE OF APPELLATE PROCEEDINGS CHALLENGING THE VALIDITY OF NOTICE U/S. 148. 2. AT THE TIME OF HEARING THE LD. A.R. POINTED OUT THAT HE HAS SUBMITTED THE REVISED GROUND NO.2 VIDE HIS LETTER DATED 08.12.2009 WHICH READS A S UNDER. THUS THE LD. A.R. REQUESTED THAT GROUND NO.2 BE MODIFIED ACCORDINGLY. 2. IN THE FACTS AND LAW OF THE CASE AND IN ANY VI EW THE PROCEEDINGS U/S 147 AND NOTICE U/S 148 IS INVALID BAD IN LAW MOREOVER THE ISSUE OF RS.5 40 000/- OF SHARE APPLICATION MONEY WAS ALREADY SEEN BY THE A.O . IN THE ORIGINAL ASSESSMENT 2 ORDER U/S 143(3) AND C.I.T. (A) ORDER DT. 23.07.199 9 THUS ON SAME FACTS IT IS MERE CHANGE OF OPINION WHICH IS WRONG ILLEGAL THE PRO CEEDINGS BE QUASHED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY. THE RETURN FOR THE A.Y. 1996-97 WAS FILED ON 29.11.1996 DECLAR ING A LOSS OF RS.2 92 250/-. ASSESSMENT UNDER SECTION 143(3) WAS MADE ON 15.12.1998 AT RS.4 30 774/- MAKING AN ADDITION OF RS.7 23 020/- UNDER SECTION 68 OF THE INCOME-TAX AC T 1961 (THE ACT HEREINAFTER) OUT OF THE TOTAL SHARE CAPITAL OF RS.8 85 020/-. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE A.O. ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF THE SHARE CAPITAL OF RS.8 85 020/- AND SHARE APPLICATION MONEY OF RS.5 40 000/- RECEIVED DURING THE YEAR. THE MATTER WENT BEFORE THE CIT(A). IN THE FIRST ROUND OF THE PROCEEDINGS THE CIT(A) NOTED THAT THE ENTIRE SHARE CAPITAL OF RS.8 85 020/- WAS RECEIVED IN PREVIOUS YEAR RELEVAN T TO THE A.Y. 1995-96 AND THEREFORE THE ADDITION OF RS.7 23 020/- WAS DELETED AND OBSERVED THAT THE ADDITION COULD BE MADE IN THE A.Y. 1995-96 IN WHICH THE MONEY WAS RECEIVED IN CASE THE SHARE CAPITAL WAS NOT FOUND TO BE GENUINE. THE CIT(A) HAS OBSERVED THAT FRESH APPLICATION MONE Y OF RS.5 40 000/- WAS RECEIVED DURING THE A.Y. 1996-97 WHICH SHALL NOT BE EXAMINED BY THE A.O . SUBSEQUENTLY THE CIT(A) ISSUED NOTICE UNDER SECTION 263 OF THE ACT AND DROPPED THE PROCEE DINGS. SUBSEQUENTLY THE A.O. ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 30.03.2003 IN RESPE CT OF THE SHARE APPLICATION MONEY OF RS.5 40 000/-. THE ASSESSEE CONTENDED THAT ALL THE DEBITS ON ACCOUNT OF SHARE APPLICATION MONEY WERE FIELD AND EXAMINED BY THE A.O. AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE AFFIDAVITS OF THE PARTIES WERE DULY FILED. SOME PA RTIES WERE ALSO EXAMINED BY THE A.O. AND AFTER VERIFICATION AND SCRUTINY ADDITION OF RS.7 23 020/ - REPRESENTING THE SHARE CAPITAL WHICH WAS RECEIVED IN THE EARLIER YEAR WAS MADE. THIS WAS DE LETED BY THE CIT(A) VIDE ORDER DATED 23.07.1999. THUS THE PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT ARE NOT THE BONAFIDE ONE AND MUST BE DROPPED. THE A.O. COMPLETED THE AS SESSMENT UNDER SECTION 144 OF THE ACT 3 MAKING AN ADDITION OF RS.5 40 000/-. AS PER THE A. O. SHARE APPLICATION MONEY OF RS.5 40 000/- REMAINED UNVERIFIED AND UNEXPLAINED. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AGAINST THE ADDITION AND ALSO RAISED THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT ILLEGALLY. THE CIT(A) CONFIRMED THE ORDER OF THE A.O. BOTH ON LEGALITY AS WELL AS ON MERIT. 4. LD. A.R. BEFORE ME VEHEMENTLY CONTENDED THAT THE REASONS RECORDED WERE NOT BONAFIDE. THE A.O. HAS DULY ENQUIRED FROM THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT TO PROVE THE SHARE CAPITAL AND SHARE APPLICATION MONEY RECEI VED DURING THE YEAR. THE ASSESSEE HAS SUBMITTED THE NECESSARY EVIDENCES AND THE DETAILS B EFORE THE A.O. AND THE A.O. DID NOT MAKE ANY ADDITION IN RESPECT OF THE SHARE APPLICATION MONEY AMOUNTING TO RS.5 40 000/- BUT THE ADDITIONS WERE MADE IN RESPECT OF THE SHARE CAPITAL WHICH WAS DELETED BY THE CIT(A). BY REFERRING TO PAGE NO.9 OF THE ASSESSMENT ORDER THAT SUBSEQUENTLY NOTI CE UNDER SECTION 263 WAS ALSO ISSUED BY THE CIT(A) TO THE ASSESSEE ON THE SAME VERY ISSUE BY OB SERVING THAT THE GENUINENESS OF THE INVESTMENT WHICH WAS IN RESPECT OF THE SHARE APPLIC ATION MONEY OF RS.5 40 000/- FROM VARIOUS PERSONS COULD NOT BE EXAMINED BY THE A.O. FOR WANT OF TIME. BUT WHEN THE ASSESSEE REPLIED THAT THE ASSESSEE HAS SUBMITTED THE NECESSARY DETAILS AN D THE A.O. HAD DULY EXAMINED THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE TO THE E XTENT OF RS.5 40 000/- THE CIT(A) DROPPED THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. THE A.O. SUBSEQUENTLY INITIATED PROCEEDINGS UNDER SECTION 148 OF THE ACT BY RECORDING THE REASO NS THAT THE CONCLUSION OF THE ASSESSMENT ORDER PASSED ON 27.03.2003 FOR THE A.Y. 1995-96 REA D WITH SECTION 143(3) NOTHING WAS FURNISHED BY THE DIRECTOR OR BY HIS LD. COUNSEL REG ARDING THE AMOUNT OF RS.5 40 000/- WHILE COMPLETING THE REOPENING PROCEEDINGS IN THE A.Y. 19 95-96 WAS DULY MADE FOR THE SUM OF RS.5 40 000/-. THE ASSESSEE HAS DULY REPLIED THE N OTICE VIDE HIS LETTER DATED 26.03.2004 COPY OF WHICH IS AVAILABLE AT PAGES 3 TO 5 OF THE PAPER BOO K. REFERRING TO THAT LETTER IT WAS POINTED OUT 4 THAT THE ASSESSEE HAS SUBMITTED THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AGAINST WHICH THE ASSESSEE HAS FILED AN APPEAL WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE. SUBSEQUENTLY NOTICE UNDER SECTION 148 OF THE ACT W AS GIVEN AND THE PROCEEDINGS WERE DROPPED BY THE ORDER OF THE LD. D.C.I.T. IT WAS POINTED OU T THAT IN THIS NOTICE UNDER SECTION 263 WAS ALSO SERVED ON SIMILAR GROUNDS AS RECORDED IN THE REOPEN ING OF THE CASE UNDER SECTION 148. NOTICE UNDER SECTION 148 CANNOT BE ISSUED IN A ROUTINE AND CASUAL MANNER WITHOUT MATERIAL GATHERED AND ON THE BASIS OF THE MATERIAL ON RECORD THAT THE INC OME HAS ESCAPED THE ASSESSMENT OR FAILURE ON THE PART OF THE ASSESSEE. THE ASSESSEE HAS DULY DI SCLOSED THE PRIMARY FACTS NECESSARY FOR THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. THE A SSESSEE REQUESTED TO DROP THE PROCEEDINGS UNDER SECTION 148. THE ASSESSEE HAS ALSO DRAWN MY ATTENTION TOWARDS THE EARLIER REPLY IN RESPECT OF THE EARLIER NOTICE ISSUED UNDER SECTION 148 COP Y OF WHICH DATED 27.01.2004 IS AVAILABLE AT PAGE 7 OF THE PAPER BOOK. COPY OF THE REASONS WHIC H WAS RECEIVED ON 19.03.2004 IS AVAILABLE AT PAGE 8 OF THE PAPER BOOK. THUS IT WAS CONTENDED T HAT THE PROCEEDINGS U/S. 147 ARE BAD IN LAW AND THE ASSESSMENT PASSED IN CONSEQUENCE THEREOF MU ST BE CANCELLED. 5. AFTER HEARING THE RIVAL SUBMISSIONS I HAVE ACCE PTED THE MODIFIED GROUND OF APPEAL. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE MATERIAL ON RECORD ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. FROM THE FACTS NARRATED HEREINABOVE I AM OF THE OPINION THAT IT IS A CASE WHERE THE REASONS HAV E NOT BEEN BONAFIDELY RECORDED AS IS APPARENT FROM THE COPY OF THE REASONS WHICH READ AS UNDER :- WHILE COMPLETING THE REOPENING PROCEEDINGS IN AY 1 995-96 ENQUIRIES OF RS.5 40 000/- (RECEIVED BY THE ASSESSEE COMPANY TOW ARDS SHARE APPLICATION MONEY IN A.Y. 96-97) WAS MADE AND VIDE ORDERSHEET N OTING DATED 20.03.2003 THE DIRECTOR WAS ASKED TO GIVE DETAILS OF THE SAME. 5 HOWEVER TILL THE CONCLUSION OF THESE PROCEEDINGS ( ORDER PASSED ON 27.03.2003 FOR AY 95-96 U/S 147 READ WITH 143(3)) N OTHING WAS FURNISHED BY THE DIRECTOR OR BY HIS LD. COUNSEL REGARDING THIS AMOUN T OF RS.5 40 000/-. IT WAS NOTED FROM THE RECORDS THAT ONLY SHARE ALLOTMENT LE TTERS ARE KEPT ON RECORD. NO CONFIRMATION . ETC. WERE GIVEN EVEN DURING THE OR IGINAL ASSESSMENT PROCEEDINGS AS WELL. THE FACTS HAVE BEEN VERIFIED FROM THE RECORDS AND THEREFORE I HAVE REASON TO BELIEVE THAT INCOME TO THE TUNE OF RS.5 40 000/- HAS ESCAPED ASSESSMENT FOR A.Y. 1996-97. 7. FROM THESE REASONS IT IS APPARENT THAT THE A.O. HAS OBSERVED THAT PROCEEDINGS FOR THE A.Y. 1996-97 HAS BEEN REOPENED AS THE ASSESSEE HAS NOT FURNISHED ANY INFORMATION IN RESPECT OF AMOUNT OF RS.5 40 000/- TILL THE ORDER FOR THE A.Y. 1995-96 WAS PASSED ON 27.03.2003 UNDER SECTION 143(3) READ WITH SECTION 147. IN MY OPINIO N THE BASIS OF THE REASONS ITSELF IS WRONG AS THE A.O. CANNOT MAKE THE ENQUIRY IN THE REOPEN PROC EEDINGS FOR THE A.Y. 1995-96 IN RESPECT OF THE A.Y. 1996-97. OTHERWISE ALSO I NOTED THAT THE A.O. HAS DULY ENQUIRED OF ABOUT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE DURING T HE A.Y. 1996-97 DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE A.O. DECIDE D IN THE ORIGINAL ASSESSMENT PROCEEDINGS NOT TO MAKE ANY ADDITION IN RESPECT OF THE SHARE APPLIC ATION MONEY AMOUNTING TO RS.5 40 000/- BUT HE MADE THE ADDITION IN RESPECT OF THE SHARE CAPITA L AMOUNTING TO RS.7 23 020/-. THE PROCEEDINGS UNDER SECTION 263 WAS ALSO INITIATED BY THE CIT(A) WHICH WERE ALSO DROPPED BY THE CIT(A) AND SUBSEQUENTLY THE A.O. AGAIN ISSUED NOTIC E UNDER SECTION 147 AFTER RECORDING THE REASONS UNDER SECTION 148. THE REASONS ITSELF DENO TES THERE WAS NO NEW MATERIAL SUBSEQUENT TO THE ASSESSMENT IN THE POSSESSION OF THE A.O. THE A .O. MERELY WANTS TO REVIEW THE MATERIAL WHICH WAS IN HIS POSSESSION ON WHICH HE HAS TAKEN A DECISION NOT TO MAKE ANY ADDITION. SECTION 147 DOES NOT EMPOWER THE A.O. TO REVIEW ITS OWN JUD GEMENT. EVEN THE CIT(A) SINCE HAS DROPPED THE PROCEEDINGS UNDER SECTION 263 THEREFO RE IT CANNOT BE SAID THAT IT IS NOT A CASE WHERE THE A.O. HAS NOT AT ALL EXAMINED THE ISSUE DURING T HE COURSE OF THE ORIGINAL ASSESSMENT. THUS I 6 AM OF THE OPINION THAT THE REASONS TO BELIEVE ARE N OT BONAFIDE AND THE NOTICE ISSUED ON THE BASIS OF THESE REASONS CANNOT BE REGARDED TO BE THE VALID ONE. CONSEQUENTLY THE ASSESSMENT FRAMED IS INVALID. I THEREFORE CANCEL THE SAME. MY AFORES AID VIEW IS DULY SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT & ANOTHER VS. FORAMER FRANCE 264 ITR 556 IN WHICH THE HONBLE SUPREME COURT HAS CONFIRMED THE ORDER O F THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FORAMER VS. CIT & ANOTHER 247 ITR 436 (ALL D.) IN WHICH IT WAS HELD THAT THE NOTICE ISSUED FOR THE REASSESSMENT ON THE BASIS OF MERE CH ANGE OF OPINION WOULD NOT BE VALID. MY AFORESAID VIEW IS ALSO SUPPORTED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIKHIL K. KOTAK VS. MAHESH KUMAR 319 ITR 445 (GUJ. ) AND THAT OF GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. VS. DCIT 319 ITR 120 (GUJ.). THUS GROUND NO.2 STANDS ALLOWED. 8. SINCE WE HAVE ALREADY ANNULLED THE ASSESSMENT T HE GROUND RELATING TO THE ADDITION OF RS.5 40 000/- DOES NOT REQUIRE ANY ADJUDICATION ON MERIT. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE OPEN COURT ON 22.01.2010) SD/- (P.K. BANSAL) ACCOUNTANT MEMBER PLACE: AGRA DATE: 22 ND JANUARY 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL AGRA TRUE COPY