M/s. Veer Vardhman Finance Investment Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 2042/DEL/2017 | 2006-2007
Pronouncement Date: 27-11-2017 | Result: Allowed

Appeal Details

RSA Number 204220114 RSA 2017
Assessee PAN AAACV3894N
Bench Delhi
Appeal Number ITA 2042/DEL/2017
Duration Of Justice 7 month(s) 21 day(s)
Appellant M/s. Veer Vardhman Finance Investment Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 27-11-2017
Assessment Year 2006-2007
Appeal Filed On 06-04-2017
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER I.T.A.NO. 2042 /DEL/20 17 AY: 200 6 - 0 7 M/S VEER VARDHMAN FINANCE INVESTMENT PVT. LTD. 47/21 OLD RAJINDER NAGAR NEW DELHI 110 060 (PAN: AAACV3894N) VS. DCIT CIRCLE - 17(1) NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. SALIL AGGARWAL ADV. & SH. MADHUR AGGARWAL ADV. DEPARTMENT BY : MS. ASHNA PAUL SR. DR ORDER ORDER ORDER ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 30.1.2017 OF THE LD. CIT(A)-9 NEW DELHI PERTAINING TO ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN ORDER OF ASSESSMENT UNDER SECTION 143(3)/147 OF THE ACT AT AN INCOME OF 2 RS.9 59 516/- AS AGAINST RETURNED INCOME OF RS. 4 43 410/-. 2 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN SUSTA INING THE INITIATION PROCEEDINGS UNDER SECTION 147 OF THE ACT AND FURTHER COMPLETION OF ASSESSMENT UNDER SECTION 143(3)/147 OF THE ACT WITHOUT SATISFYING THE STATUT ORY PRE-CONDITIONS FOR INITIATION OF THE PROCEEDINGS AN D COMPLETION OF ASSESSMENT UNDER THE ACT. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OTHERWISE ALSO FAILED TO APPRECIATE T HAT THERE WAS NO MATERIAL ON RECORD ON THE BASIS OF WHI CH IT COULD BE HELD THAT THERE WAS 'REASON TO BELIEVE ' THAT INCOME OF THE APPELLANT COMPANY HAD ESCAPED ASSESSMENT AND IN VIEW THEREOF THE PROCEEDINGS INITIATED ARE ILLEGAL UNTENABLE AND THEREFORE UNSUSTAINABLE. 2.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN INITIATI NG PROCEEDINGS U/S 147 OF THE ACT ON THE BASIS OF 3 INFORMATION RECEIVED FROM OIT (INVESTIGATION) MECHANICALLY AND WITHOUT INDEPENDENT APPLICATION OF MIND. IN DOING SO HE OVERLOOKED THE FACT THAT THE RE WAS NO BASIS TO ALLEGE OR ASSUME THAT ASSESSEE COMPANY RECEIVED ACCOMMODATION ENTRIES AND AS SUCH NOTICE ISSUE U/S 148 OF THE ACT IS ENTIRELY MISCONCEIVED MISPLACED AND UNSUSTAINABLE. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE FACT THAT THE REASONS RECORDE D WERE MERE REASONS TO SUSPECT AND WERE JUST TO MAKE FISHING AND ROVING ENQUIRIES AS NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER BEFO RE ISSUING SUCH NOTICE UNDER SECTION 148 AND AS SUCH T HE PROCEEDING INITIATED UNDER SECTION 148 WAS A MERE PRETENCE. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACT S IN SUSTAINING AN ADDITION OF RS. 4 98 750/- COMPRISING OF AMOUNT RECEIVED FROM M/S MITSU SECURITIES MANAGEMENT PVT. LTD. AS SHARE APPLICATION MONEY 4 AND HELD TO BE UNEXPLAINED CASH CREDIT U/S 68 OF TH E ACT. 3.1 THAT IN DOING SO THE LEARNED CIT (A) HAS FAIL ED TO APPRECIATE THE FACT THAT REQUISITE DOCUMENTS/EVIDENCES WERE FILED AND EXPLANATION WERE TENDERED BY THE ASSESSEE - APPELLANT WITH REGARDS TO THE SAID TRANSACTION AND BOTH LEARNED AO AND CIT (A) HAVE BASED THEIR DECISION ON SUSPICION AND SURMISES WITHOUT CONDUCTING ANY ENQUIRY OF THEIR OW N OR REBUTTING THE DOCUMENTS SO TENDERED BY ASSESSEE :- APPELLANT EVEN NO OPPORTUNITY TO CROSS - EXAMINE T HE ALLEGED ENTRY OPERATOR WAS PROVIDED TO THE ASSESSEE - APPELLANT AND AS SUCH THE ADDITION NEEDS TO BE DELETED. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER GROSSLY ERRED IN LAW AND ON FACTS IN SUSTAINING AN ADDITION OF RS. 17 456/- ON ACCOUNT O F COMMISSION PAID WHICH ADDITION IS MERELY BASED ON CONJECTURES SURMISES AND SUSPICION. 5 2. THE BRIEF FACTS OF THE CASE ARE THAT INFORMATIO N HAS BEEN RECEIVED FROM THE OFFICE OF THE DDIT(INV.) UNIT-VI(2) E-2 2 ND FLOOR ARA CENTRE JHANDEWALAN EXTN. NEW DELHI THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM SH. SK GUPTA WORKED AS AN ENTRY OPERA TOR AND PROVIDED ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES THRO UGH A LARGE NUMBER OF SHELL COMPANIES MANAGED BY HIM. CASH WAS RECEIVED AND DE POSITED IN THE BANK ACCOUNT OF THESE SHELL COMPANIES AND THROUGH VARIOU S CONDUITS TRANSFERRED TO THE BANK ACCOUNTS OF THE ULTIMATE BENEFICIARIES. IN THE INSTANT CASE THE ASSESSEE IS FOUND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATOR AMOUNTING TO RS. 4 98 750/-. AO OBSERVED THAT ASSES SEE HAS RECEIVED UNEXPLAINED SUMS FROM THE ENTRY OPERATOR AND THE ID ENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WITH THE PERSON FOUND T O BE ENTRY OPERATOR CANNOT BE ESTABLISHED AND IT IS CLEAR THAT THE ASSESSEE HA S INTRODUCED HIS OWN UNDISCLOSED INCOME IN THE GARB OF SHARE APPLICATION MONEY / GIFTS/ UNSECURED LOANS/ UNACCOUNTED PURCHASES AND SALES THROUGH M/S MITSU. HENCE THE AO OBSERVED THAT THE ASSESSEE HAS DELIBERATELY FURNISH ED WRONG FACTS AT THE TIME OF FILING OF RETURN. ACCORDINGLY NOTICE U/S. 148 OF THE ACT WITHIN THE MEANING OF SECTION 147 OF THE ACT WAS ISSUED ON 30.3.2013 IN C OMPLIANCE THERETO THE ASSESSEE COMPANY FILED WRITTEN REPLY ON 01.05.2013 STATING THEREIN THAT WE ARE IN RECEIPT OF NOTICE U/S. 148 OF THE INCOME TAX ACT 1961 RECEIVED ON 3.4.2013. 6 THIS IS TO BRING TO YOUR KIND NOTICE THAT THE ASSES SMENT HAS BEEN REOPENED AFTER THE EXPIRY OF 6 TH YEAR. AS THE NOTICE WAS ISSUED AND DISPATCHED ON 1.4.2013 AT 6.40 PM. COPY OF THE SPEED POST TRACT RESULT OF ACK NOWLEDGEMENT NO. ED8804605351N IS ENCLOSED HEREWITH. AS THE NOTICE H AS BEEN ISSUED AFTER THE EXPIRY OF TIME LIMIT PRESCRIBED IN SECTION 149 OF THE INCOME TAX ACT 1961 THE ISSUE OF NOTICE IS TIME BARRED . AO HELD THAT THIS CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE BECAUSE THE NOTICE WAS DISPATCHED ON 30. 3.2013 WHICH WAS SERVED. ACCORDINGLY NOTICE U/S. 143(2) AND 142(1) ON 23.7.2013 ISSUED AND SERVED UPON THE ASSESSEE. DURING THE ASSESSMENT PRO CEEDINGS THE ASSESSEE HAS NOT FILED ANY RETURN IN RESPONSE TO THE NOTICE U/S. 148 DESPITE SEVERAL OPPORTUNITY THEREFORE THE ORIGINAL RETURN FILED B Y THE ASSESSEE WAS TREATED AND IN RESPONSE THE A.R. OF THE ASSESSEE ATTENDED THE P ROCEEDINGS AND HAS FILED THE SUBMISSIONS FROM TIME TO TIME AND VIDE LETTER DATE D 10.3.2014 HAS SUBMITTED AS UNDER:- THIS MATTER WAS EXAMINED BY THE LD. ITO 17(2) NE W DELHI. YOU ARE REQUESTED TO KINDLY DROP THE PROCEEDING AS THERE IS NO FRESH MATERIAL AVAILABLE WITH THE DEPARTMENT WHI CH SUGGEST THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. I CANN OT ATTEND TODAYS PROCEEDING ON ACCOUNT OF ILLNESS. YOU ARE R EQUESTED 7 TO KINDLY ADJOURN THE SAID PROCEEDING FOR SOME OTHE R DATE CONVENIENCE TO YOUR GOOD SELF. THEREAFTER THE AO OBSERVED THAT THE OBJECTION OF THE ASSESSEE IS DULY CONSIDERED. HOWEVER THE SAME IS NOT ACCEPTABLE. AO FURTHER OBSERVED THAT SINCE NO FORMAL OBJECTIONS HAVE BEEN FURNISHED BY I T CHALLENGING THE REOPENING PROCEEDINGS AND BY RELYING UPON VARIOUS CASE LAWS M ENTIONED IN THE ASSESSMENT ORDER HE HELD THAT THE OBJECTION OF THE ASSESSEE T HAT THE PROCEEDINGS MAY BE DROPPED ARE NOT ACCEPTED. IN THE ASSESSMENT ORDER THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF PROVIN G THE IDENTITY AND CREDITWORTHINESS OF CONCERNED PARTY AND GENUINENES S OF TRANSACTIONS IN TERMS OF PROVISIONS OF SECTION 68 OF THE ACT. THE AMOUNT OF RS. 4 98 750/- RECEIVED FROM THE ABOVE ENTRY OPERATOR REPRESENTS THE CREDIT E NTRY WHOSE NATURE AND SOURCE COULD NOT BE SATISFACTORILY PROVED BY THE ASSESSEE AND HENCE IT IS COVERED WITHIN THE MISCHIEF OF SECTION 68 OF THE I.T. ACT AND MADE THE ADDITIONS AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 9 59 516/- U/S. 1 43(3)/147 OF THE I.T. ACT 1961 VIDE ORDER DATED 27.3.2014. 3. AGAINST THE ASSESSMENT ORDER THE ASSESSEE APP EALED BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 30.1.2017 HAS DIS MISSED THE APPEAL OF THE ASSESSEE ON THE LEGAL GROUND AND ON OTHER GROUND ON MERITS AS WELL. AGGRIEVED WITH THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8 4. DURING THE HEARING LEARNED COUNSEL OF ASSESSEE SH. SALIL AGGARWAL ADVOCATE APPEARED AND ARGUED THAT NON DISPOSAL OF OBJECTIONS THROUGH A SEPARATE SPEAKING ORDER IS AN ILLEGALITY IN LAW AND IS AGAINST THE MANDATE OF JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF GKN D RIVESHAFTS VS ITO REPORTED IN 259 ITR 19 AND FOR THE AFORESAID PROPOSITION HE SOUGHT RELIANCE ON FOLLOWING DECISIONS OF THE TRIBUNAL BY WHICH THE ISSUE IN DI SPUTE IS SQUARELY COVERED. I) ITO VS M/S M.L. CREATIONS (ITAT DELHI) IN ITA N O. 4009/DEI/2016 (AY 2009-10) II) SHYAMAL MUKHERJEE VS ITO (ITAT DELHI) IN ITA NO. 4141/DEL/2016); AND III) KHUSRO IRSHAD VS. ITO (ITAT DELHI) IN ITA NO. 2115/DEL/2016 (AY 20078-08) 5. ON THE CONTRARY THE LEARNED SR. DR MS. ASHNA PAUL OBJECTED TO THE ABOVE ARGUMENT OF ASSESSEES COUNSEL AND RELIED UPO N THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. I FIND THAT ASSESS EE HAS SPECIFICALLY CHALLENGED THE PROCEEDINGS SO INITIATED UNDER SECTION 147 OF T HE ACT AND MORE SO THE NON 9 DISPOSAL OF OBJECTIONS BY THE AO THROUGH A SEPARATE SPEAKING ORDER. SINCE THE SAID GROUND IS A LEGAL IN NATURE THEREFORE THE SAME SHOULD BE DECIDED FIRST. 6.1 THAT AFTER GOING THROUGH THE PAPER BOOK FILED BY ASSESSEE AND ASSESSMENT ORDER PASSED BY AO IT IS APPARENT THAT ASSESSEE F ILED OBJECTIONS TO REOPENING OF ASSESSMENT VIDE REPLY 10.3.2014 (AT PAGE 31 OF P APER BOOK FILED BY ASSESSEE) AND ADMITTEDLY AO HAS NOT PASSED ANY SPEAKING ORDER AGAINST THE SAID OBJECTIONS SO FILED BY ASSESSEE WHICH IS A MANDATO RY REQUIREMENT AS HAS BEEN HELD BY HON'BLE APEX COURT IN THE CASE OF M/S GKN D RIVESHAFTS (INDIA) LTD VS ITO REPORTED IN 259 ITR 19. I FURTHER FIND THAT THE SAID LEGAL ISSUE IN DISPUTE IS NO MORE RES INTEGRA AS THE ITAT SMC-3 NEW DELHI IN THE CASE OF ITO VS M/S M.L. CREATIONS HAS QUASHED THE REOPENING OF ASSESSEE ON ACCOUNT OF NON DISPOSAL OF OBJECTIONS BY AO AND IN THE PROCESS THE ITAT HAS C ONSIDERED ALL THE JUDGMENTS SO CITED BY THE LEARNED COUNSEL OF ASSESSEE. THE RE LEVANT FINDINGS RECORDED BY ITAT IN THE AFORESAID CASE IS AS UNDER: '6.1 ON GOING THROUGH THE AFORESAID FINDING OF THE LD. CIT(A) ON THE LEGAL ISSUE. I FIND THAT LD. CLT(A) BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT I.E. IN THE C ASE OF GKN DRIVESHAFTS INDIA LTD. 259 ITR 19 (SC) AND FURTHER FOLLOWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF ARVIND MILLS LTD. VS. ACWT (2004) 270 ITR 469 (GUJ.) AND H AS RIGHTLY OBSERVED THAT AO HAS NOT PASSED THE SPEAKING ORDER IN DISPOSING OF THE ASSESSEE'S OBJECTIONS AGAINST THE NOTICE ULS. 1 48 OF THE I. T. ACT BEFORE PROCEEDING WITH THE ASSESSMENT HENCE HE HE LD THAT THE SUBSEQUENT ASSESSMENT ORDER IS BAD IN LAW AND DESER VING OF BEING QUASHED. 10 6.2 ON GOING THROUGH THE AFORESAID DECISIONS I A M OF THE CONSIDERED VIEW THAT THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED BY T HE AFORESAID DECISIONS/JUDGMENTS HENCE RESPECTFULLY FOLLOWING THE JUDGMENTS OF HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS INDIA LTD REPORTED IN 259 ITR 19; ITAT DELHI DECISION IN THE CASE OF ITO VS M/S M.L. CREATIONS (ITAT DELHI) IN ITA NO. 4009/DEI/2016 AND ITAT DELHI DECISION IN ITA N O. 2115/DEL/2016 (AY 2007-08) IN THE CASE OF SH. KHUSRO IRSHAD VS. ITO I QUASH THE ASSESSMENT ORDER DATED 27.3.2014 PASSED BY AO ON ACCOUNT OF NO N DISPOSAL OF OBJECTION UNDER SECTION 147 OF THE ACT. SINCE I HAVE ALREADY QUASHED THE ASSESSMENT ORDER AS AFORESAID HENCE IT IS NOT NECESSARY TO ADJUDICATE UPON THE GROUNDS ON MERITS. 7. IN RESULT THE APPEAL FILED BY ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON 27/11/2017. SD/ SD/ SD/ SD/- -- - [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE: 27/11/2017 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR 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 ASSISTANT REGISTRAR ITAT DELHI BENCHES