ACIT, UDAIPUR v. M/s. Asha Fincon Pvt. Ltd., UDAIPUR

ITA 266/JODH/2009 | 2000-2001
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 26623314 RSA 2009
Assessee PAN AABCA2421P
Bench Jodhpur
Appeal Number ITA 266/JODH/2009
Duration Of Justice 4 year(s) 5 month(s) 23 day(s)
Appellant ACIT, UDAIPUR
Respondent M/s. Asha Fincon Pvt. Ltd., UDAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-10-2013
Date Of Final Hearing 24-10-2013
Next Hearing Date 24-10-2013
Assessment Year 2000-2001
Appeal Filed On 08-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K.SAINI ACCOUNTANT MEMBER ITA NOS. 266/JU/2009 A.Y: 2000-01 THE A.C.I.T. VS. M/S ASHA FINCON PVT. LTD . CIRCLE 1 2 ND FLOOR 65 PANCHSHEEL MARG UDAIPUR NEAR TOWN HALL UDAIPUR PAN NO. AABCA 2421 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA DEPARTMENT BY : SHRI N.A. JOSHI DATE OF HEARING : 24.10.2013 DATE OF PRONOUNCEMENT : 31.10.2013 ORDER PER HARI OM MARATHA J.M. THIS APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE CIT(A) UDAIPUR DATED 10. 02.2009 FOR A.Y 2000-01. 2 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY FILED ITS RETURN OF INCOME [ROI] F OR THE A.Y. 2000-01 ON 23.1.2001 SHOWING LOSS OF RS. 13 59 1/-. SUBSEQUENTLY THE CASE WAS REOPENED U/S 147 OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS 'T HE ACT' FOR SHORT] BY ISSUANCE OF NOTICE U/S 148 OF THE ACT . SEARCH AND SEIZURE OPERATIONS U/S 132(1) OF THE ACT WAS CA RRIED OUT IN THE CASE OF GAJENDRA PORWAL GROUP ALLEGED LY ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE N AMES OF UNSECURED LOAN SHARE APPLICATION MONEY SHARE C APITAL SUBSCRIPTION BOGUS BILLING ETC. SHRI GAJENDRA POR WAL WHO IS THE DIRECTOR AND MAIN MIND IN COMPANIES AND ALSO A PROPRIETOR OF VARIOUS OTHER CONCERNS MADE A STATEM ENT U/S 132(4) OF THE ACT ADMITTING SUCH A MODUS OPERAN DI BEING EMPLOYED TO BENEFIT OTHERS FOR EARNING COMMIS SION BETWEEN 0.5% TO 2% IN PROVIDING SUCH INGENUINE ENTR IES ETC. IT WAS STATED THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES WHO RECEIVED ENTRIES AMOUNTING TO RS. 20 LAKHS FROM ONE OF THE CONCERNS OF THIS GROUP NAMEL Y M/S JALKANTA ORGANIC CHEMICALS UDAIPUR IN THE FORM OF 3 PURCHASE OF SHARES BY BOGUS CONCERNS. HE ALSO STATE D TO HAVE RECEIVED RS. 20 LAKHS IN CASH AND THEREAFTER P ROVIDING BOGUS ENTRY IN THE NAME OF PURCHASE OF SHARES. BAS ED ON THIS STATEMENT OF SHRI GAJENDRA PORWAL RECORDED ON 22.5.2005 U/S 132(4) THE A.O. FORMED HIS OPINION T HAT INCOME HAS ESCAPED ASSESSMENT IN THIS ASSESSEES CA SE AND THEREFORE HE REOPENED ASSESSMENT U/S 147 R.W.S 148 OF THE ACT. A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 26.4.2006. THE ASSESSEE RESPONDED TO THIS NOTICE T HROUGH LETTER DATED 22.5.2006 STATING THAT THE RETURN OF I NCOME [ROI] ALREADY FILED FOR THE YEAR MAY BE TREATED AS RETURN FILED IN COMPLIANCE THEREOF. THE ASSESSEE SPECIFIC ALLY MADE A REQUEST FOR SUPPLY OF COPY OF REASONS U/S 14 7 OF THE ACT. AS PER THE A.O. COPY OF THE REASONS RECO RDED WAS SUPPLIED TO THE ASSESSEE. THEREAFTER ADDITION OF RS. 20 LAKHS WAS MADE TO THE RETURNED INCOME OF THE ASS ESSEE AND TOTAL INCOME WAS COMPUTED AT RS. 19 86 409/- AF TER REDUCING THE DECLARED LOSS OF RS. 13 591/-. AGGRIE VED THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) BY TA KING LEGAL AS WELL AS MERITORIOUS GROUNDS. THE LD. CIT( A) HAS 4 QUASHED THE REASSESSMENT PROCEEDINGS AND CONSEQUENT LY THE ASSESSMENT ORDER DATED 24.12.2007 PASSED U/S 14 7 R.W.S 143(3) OF THE ACT ON THE PREMISE THAT A COPY OF REASONS WAS NOT SUPPLIED TO THE ASSESSEE EVEN WHEN A SPECIFIC REQUEST FOR THE SAME WAS MADE AND THEREFOR E THE APPEAL ON LEGAL GROUNDS WAS ALLOWED. THE LD. CIT(A ) ALSO DELETED THE ADDITION OF RS. 20 LAKHS ON MERITS WITH THE REASONING THAT IT IS NOT PROVED FROM THE FACTS THAT THE CASH DEPOSITS MADE IN THE ACCOUNT OF M/S JALKANTA ORGANI C CHEMICALS PVT. LTD WERE OUT OF CASH RECEIVED FROM T HE ASSESSEE. THEREFORE HE ALLOWED THE APPEAL OF THE ASSESSEE BOTH ON LEGAL AS WELL AS ON MERITS. NOW T HE REVENUE IS AGGRIEVED AND HAS CHALLENGED BOTH THE FI NDINGS OF THE LD. CIT(A). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. O N LEGAL ISSUE IT WAS VEHEMENTLY CLAMOURED FROM THE SIDE OF THE ASSESSEE THAT EVEN DESPITE SPECIFICALLY REQUESTING FOR A COPY OF REASONS RECORDED U/S 148 OF THE ACT NO COP Y WAS 5 SUPPLIED TO THE ASSESSEE. ON THE OTHER HAND THE L D. D.R. INVITED OUR ATTENTION TO PAGE 4 OF THE ASSESSMENT O RDER ON WHICH IN THE LAST PARA THE A.O. HAS SPECIFICALLY M ENTIONED THE ASSESSEE ALSO REQUESTED FOR COPY OF REASONS RE CORDED AND AS PER THE REQUEST OF THE ASSESSEE COPY OF REA SONS RECORDED WERE [SIC] WAS SUPPLIED TO THE ASSESSEE. WHEN THE LD. A.R. REPEATEDLY ASSAILED THIS OBSERVATION O F THE A.O. ON VARIOUS DATES OF HEARING SO PROVIDED FOR TH E PURPOSE WE CALLED FOR THE RECORDS OF THIS CASE. W E INSPECTED THE ENTIRE RECORD OF THE ASSESSMENT ORDER AND THE LD. D.R. ALSO FILED COPIES OF THE ORDER-SHEET E NTRIES FOR DATES 10-10-2006 TO 19-12-2007 ARE PLACED ON RECORD . WE HAVE FOUND IT FOR A FACT THAT THE ASSESSEE HAD THR OUGH LETTER DATED 22.5.2006 [A COPY ENCLOSED AT APB 12] MADE A REQUEST FOR SUPPLY OF A COPY OF REASONS BUT IN F ACT NO COPY OF REASONS WAS EVER SUPPLIED TO THE ASSESSEE. THERE IS NO PROOF OF SUPPLY OF COPY OF REASONS RECORDED F ROM THE ENTIRE RECORD OF THE ASSESSMENT. THEREFORE WE CAN SAFELY CONCLUDE IN THE ABSENCE OF ANY OTHER MATERIAL WHI CH COULD NOT BE PRODUCED BEFORE US TO SUPPORT THE IMPU GNED 6 OBSERVATION OF THE A.O. THAT COPY OF REASONS RECORD ED HAD BEEN SUPPLIED TO THE ASSESSEE DESPITE REQUEST WAS M ADE.. THE ASSESSEE MADE REQUEST FOR SUPPLY OF COPY OF REA SONS WHICH IS APPEARING FROM THE ASSESSMENT ORDER AND IS FURTHER SUBSTANTIATED BY THE COPY OF REQUEST SO MAD E WHICH IS ENCLOSED IN THE PAPER BOOK AT PAGE 12. HAV ING COME TO THE ABOVE CONCLUSION THE FINDING OF FACT B Y THE LD. CIT(A) IN THIS REGARD STANDS CONFIRMED BY US. N OW COMING TO THE LEGAL PART IT WAS ARGUED BY SHRI SHR AWAN KUMAR GUPTA THAT THE HONBLE MUMBAI HIGH COURT WHIL E DECIDING THE CASE OF AGARWAL METALS AND ALLOYS VS. ACIT 346 ITR 64 (BOM) WHEREIN IT HAS BEEN HELD THAT IT I S CONDITION PRECEDENT TO PROCEEDING WITH A REASSESSME NT ORDER THAT THE REASONS FOR REOPENING HAVE TO BE COMMUNICATED TO THE ASSESSEE MORE PARTICULARLY WH EN A SPECIFIC DEMAND IS MADE FOR THE SAME FAILING TO DO SO WOULD INVALIDATE THE NOTICE ISSUED U/S 148 OF THE A CT WHICH IS A JURISDICTIONAL NOTICE AND AMOUNTS TO VIO LATION OF NATURAL JUSTICE AND RENDERS THE ASSESSMENT ORDER IN VALID. 7 6. ON THE OTHER HAND THE LD. D.R. HAS INVITED OUR ATTENTION TOWARDS THE DELHI BENCH ORDER RENDERED IN THE CASE OF ITO VS SMT. GURINDER KAUR (2007) 288 ITR (A T) 207 (DEL) IN WHICH IT HAS BEEN HELD THAT FAILURE TO ISS UE NOTICE U/S 148 WOULD NOT INVALIDATE THE PROCEEDINGS WHEN T HE ASSESSEE WAS AWARE OF THE REASONS FOR REASSESSMENT. IN FACT THE FACT OF THAT CASE ARE ENTIRELY DISTINGUIS HABLE. IN THAT CASE THE ASSESSEE WAS QUITE AWARE OF THE REAS ONS FOR REOPENING. MOREOVER WHEN THE TRIBUNAL ORDER WAS RENDERED DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (2003) 259 ITR 19 (SC) (PARAS 1 2 AND 3) WAS NOT CONSIDERED. IN THE DECIS ION OF THE HONBLE MUMBAI HIGH COURT IT HAS BEEN HELD AS U NDER:- THERE WAS A COMPLETE VIOLATION OF THE APPLICABLE PRINCIPLES OF LAW BY THE A.O. HE WAS REQUIRED TO COMMUNICATE THE REASONS FOR REOPENING THE ASSESSMENT WHICH HE HAD FAILED TO DO. HE HAD FAILED TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO SUBMIT HIS OBJECTIONS TO THE REOPENING OF THE ASSESSMENT. THE ARGUMENT THAT THE ASSESSEE WAS WELL AWARE OF THE REASONS FOR THE REOPENING OF THE ASSESSMENT AS 8 THE REASONS WERE ON RECORD FOR THE A.Y. 2007-08 WAS A SPECIOUS EXPLANATION. THERE HAD ADMITTEDLY BEEN NO COMMUNICATION OF REASONS TO THE PETITIONER. THEREFORE ORDER OF ASSESSMENT PASS DIN VIOLATION OF THE GOVERNING PRINCIPLES OF LAW WAS LIABLE TO BE QUASHED AND SET ASIDE. THEREFORE THE DECISION OF THE HONBLE BOMBAY HIGH COURT PASSED BY RELYING ON THE DECISION OF THE HONBLE SU PREME COURT WHICH HAS A BINDING NATURE HAS TO BE FOLLOWE D BY US. SINCE DESPITE BEING SPECIFICALLY REQUESTED BY THE ASSESSEE TO PROVIDE A COPY OF REQUISITE REASONS THE REASSESSMENT ORDER BECOMES INVALID AND IS LIABLE TO BE QUASHED. FAILURE TO SUPPLY A COPY OF REASONS IS NOT A CURABLE MISTAKE UNDER THE PROVISIONS OF EITHER SECT ION 292B OR 292BB OF THE ACT. AS THE ASSESSEE HAS RAISE D THIS VERY ISSUE BEFORE THE COMPLETION OF ASSESSMENT OR REASSESSMENT EVEN IF THE ASSESSEE TOOK PART IN THE PROCEEDINGS. 9 7. IN THE DELHI (AT) DECISION (SUPRA) THE ASSESSEE HAD NOT RAISED ANY OBJECTION REGARDING ISSUANCE OF NOTI CE ETC AND IT WAS RAISED FOR THE FIRST TIME BEFORE THE FIR ST APPELLATE AUTHORITY. ACCORDINGLY WE CONFIRM THE QUASHMENT OF THE REASSESSMENT ORDER AND CANNOT ALLO W GROUND NO. 1 OF THE REVENUES APPEAL. 8. ON MERITS THE FACTS ARE THAT THE ASSESSEE COMPA NY TOOK LOAN OF RS. 25 LAKHS ON 6.9.1995 FROM M/S DH RUVA CAPITAL SERVICES LTD FOR THE PURCHASE OF SHARES. T HE ASSESSEE-COMPANY APPLIED FOR ALLOTMENT OF SHARES VI DE LETTER DATED 6.9.1995 BY DEPOSITING APPLICATION MON EY OF RS. 26 50 000/- VIDE CHEQUE NO. 020909. IN AS MANY AS 260600 SHARES WERE ALLOTTED TO THE ASSESSEE-COMPANY ON 28.11.1995 FOR A PRICE OF RS. 26 60 600/- AND REFUN D OF RS. 44 000/- WAS CREDITED. THE ASSESSEE-COMPANY PAID INTEREST AND MADE TDS ON INTEREST AMOUNT PAID IN VA RIOUS YEARS WHICH FACT IS NOT IN DISPUTE. THE ASSESSEE REPAID PRINCIPAL LOAN AMOUNT RELEVANT TO A.Y. 2000-01 ON 2.11.1999 [RS. 10 LAKHS]; ON 4.12.1999 [RS. 8 LAKHS ] AND ON 10 7.1.2000 [RS. 2 LAKHS]. THIS REPAYMENT WAS ALLEGED LY MADE OUT OF SALE PROCEEDS OF RS. 20 LAKHS RECEIVED FROM M/S JALKANTA ORGANIC CHEMICALS PVT. LTD AS UNDER: 01.11.1999 RS. 5 00 000/- 01.11.1999 RS. 5 00 000/- 04.12.1999 RS. 8 00 000/- 05.01.2000 RS. 2 00 000/- THE A.O. CALLED FOR A COPY OF ABOVE BANK ACCOUNT OF M/S JALKANTA ORGANIC CHEMICALS IN VIJAYA BANK BAPU BAZ AR UDAIPUR FOR THE PERIOD 15.10.1999 TO 30.1.2000. ON THE BASIS OF THE ABOVE FACTS THE A.O. FOUND THE ASSES SEE TO BE A BENEFICIARY OF THE ACCOMMODATION ENTRIES PROVI DED BY THAT GROUP. THE A.O. HAS THUS MADE AN ADDITION OF RS. 20 LAKHS IN THE HANDS OF THE ASSESSEE COMPANY. HOWEVE R THE LD. CIT(A) HAS DELETED THE ENTIRE AMOUNT ON MERITS MAINLY ON THE GROUND THAT THIS ADDITION CANNOT BE MADE UND ER THE PROVISIONS OF SECTION 68 OF THE ACT WHEN THE ASSESS EE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT. 9. BEFORE US BOTH THE PARTIES HAVE REITERATED THEI R EARLIER STANDS. WE HAVE FOUND THAT SHRI GAJENDRA P ORWAL 11 THE MAIN OPERATOR OF THE PORWAL GROUP MADE A STAT EMENT U/S 132(4) OF THE ACT DURING SEARCH IN THAT CASE AN D THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE HIM. THE OUTCOME OF THE STATEMENT OF SHRI GAJENDRA PORWA L IS THAT M/S ASHA FINCON PVT. LTD BELONGS TO SHRI KAILA SH KARNAWAT GROUP AND SHRI GAJENDRA PORWAL DID NOT KNO W ANY DIRECTOR OF M/S ASHA FINCON PVT. LTD. THE TRAN SACTIONS WITH M/S ASHA FINCON PVT. LTD. ARE THROUGH SHRI KAI LASH KARNAWAT. SHRI GAJENDRA PORWAL ACCEPTED THAT HE IS SUED CHEQUES FOR RS. 20 LAKHS OF VIJAYA BANK TO M/S ASHA FINCON PVT. LTD. THROUGH KARNAWAT GROUP WHO HAD DEPOSITED CASH IN HIS BANK ACCOUNT ON VARIOUS DATES. IT HAS COME F ROM HIS STATEMENT THAT CASH WAS DEPOSITED IN BANK ACCOUNT T O PURCHASE SHARES OF M/S DHRUV CAPITAL SERVICES LTD A ND SOLD THE SHARES OF SMT. MEENA KARNAWAT. FROM THESE FACT S IT CANNOT BE PROVED THAT THE CASH DEPOSITS MADE IN THE ACCOUNT OF M/S JALKANTA ORGANIC CHEMICALS WERE FROM OUT OF CASH RECEIVED FROM THE ASSESSEE-COMPANY. ACCORD INGLY IN OUR CONSIDERED OPINION THE LD. CIT(A) HAS WRONG LY DELETED THE IMPUGNED ADDITION FROM THE HANDS OF THE 12 ASSESSEE AND DESERVES TO BE APPROVED BY US. AS A R ESULT WE DISMISS GROUND NO. 2 AS WELL. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 31 ST OCTOBER 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST OCTOBER 2013 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT JODHPUR