ROOP RAJ HOSPITALITY (P) LTD.,NEW DELHI vs. ITO WARD 21(4), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI

BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER

ITA No.8000/Del/2019 Assessment Year: 2011-12

Roop Raj Hospitality (P) Vs. Income Tax Officer, Ltd., Ward-21(4), SB Garg & Co., CAs 20/17, New Delhi Shakti Nagar, New Delhi PAN :AAECR1653H (Appellant) (Respondent)

Appellant by Sh. Sachin Kumar, CA Respondent by Sh. Sanjay Kumar, Sr.DR

Date of hearing 20.06.2022 Date of pronouncement 30.06.2022

ORDER This is an appeal by the assessee against order dated

12.09.2019 of learned Commissioner of Income Tax (Appeals)-7,

New Delhi, for the assessment year 2011-12.

2 ITA No.8000/Del/2019 AY: 2011-12

Without prejudice, even the said purported information was available with the Id. AO on 23-03-2018, whereas the ‘reason to believe’ were recorded on 22-03-2018.Rs. 46,126 1.2 The Id. AO initiated the proceeding u/s 147 mechanically and without application of mind. 1.3 The Id. AO has not provided any logic or basis to conclude that income exceeding Rs. 1 Lakh has escaped assessment. This conclusion is only to meet the requirement of section 149. 1.4 The proceedings under section 147 were initiated only to verify the transaction, which is not permissible by law. 1.5 There is no valid satisfaction of the Pr. CIT, as required by section 151, inter alia, because the satisfaction is (a) based on the opinion and recommendation of the Ld. Addl. CIT, which is extraneous; (b) without recording reasons and (c) without going through any material; (d) without providing any opportunity of hearing.

validity of reopening of assessment under section 147 of the

Income-tax Act, 1961 (for short ‘the Act’) and the assessment order

passed in pursuance thereof.

engaged in the hospitality business. For the assessment year under

dispute, the assessee did not file any return of income under

section 139(1) of the Act. Subsequently, based on information

available in the system of the department, the Assessing Officer

noticed that the assessee during the year had contract receipts of

Rs.5,36,462/- and interest income of Rs.88,000/-. Whereas, the

assesse did not file any return of income for the year under

consideration. Having reason to believe that income has escaped

assessment, the Assessing Officer initiated proceeding under

3 ITA No.8000/Del/2019 AY: 2011-12

section 147 of the Act. In course of assessment proceeding, the

Assessing Officer issued noticed under section 142(1) of the Act on

more than one occasion. However, there was non-compliance from

assessee’s side. Even, the notice issued under section 148 of the

Act remained un-complied. In absence of any cooperation from the

assessee, the Assessing Officer issued notices under section 133(6)

of the Act to the payers who have deducted tax at source on

payments made to the assessee. However, there was no response

to the notices issued under section 133(6) of the Act. Finding no

other alternative, the Assessing Officer proceeded to complete the

assessment to the best of his judgment under section 144 of the

Act, based on materials available on record. Since, the assessee did

not offer the contract receipts and interest income as reflected in

Form 26AS, the Assessing Officer, in absence of any explanation

by the assessee, treated them as income of the assessee and

determined the total income at Rs.6,24,462/-.

appeal before learned Commissioner (Appeals), both, on the issue

of validity of reopening of assessment under section 147 of the Act

as well as on the addition made. In course of appellate proceeding,

learned Commissioner (Appeals) found that as per the profit and

4 ITA No.8000/Del/2019 AY: 2011-12

loss account furnished by the assessee, it had income from

operations amount to Rs.29,85,471/-. Therefore, applying the

provisions of section 44AF of the Act, he estimated profit at 5%. In

the process, he sustained addition to the extent of Rs.1,49,274/-

while deleting the balance amount. Further, learned Commissioner

(Appeals) dismissed the grounds raised by the assessee challenging

the validity of reopening of assessment under section 147 of the

Act.

validity of reopening of assessment under section 147 of the Act

primarily on two reasons; firstly, the approving authority has not

recorded a valid satisfaction for issuance of notice under

section148 of the Act. Secondly, the reasons recorded for reopening

of assessment are based on wrong facts. In this regard, learned

counsel for the assessee submitted, as per Form 26AS, the

assessee had income of Rs.88,000/-, whereas the Assessing Officer

has wrongly taken an amount of Rs.5,36,462/- as contract receipts

subjected to TDS under section 194C of the Act. Whereas, the said

amount actually represents purchases made by the assessee which

have been subjected to TCS. Thus, he submitted, since the

reopening of the assessment has been made by the Assessing

5 ITA No.8000/Del/2019 AY: 2011-12

Officer based on wrong facts, such reopening is invalid. He

submitted, while granting approval under section 151 of the Act,

the approving authority has failed to apply his mind and recorded

his satisfaction in a mechanical manner. Therefore, the reopening

is invalid. In support of such contention, learned counsel for the

assessee relied upon a decision of the Coordinate Bench in case of

Space Chem Engineers Pvt. Ltd. Vs. ITO (ITA No. 1791/Del/2019,

dated 18.03.2021)

the observations of the Assessing Officer and learned

Commissioner (Appeals).

relied upon and perused the materials available on record.

Admittedly, in the present appeal, the assessee has not raised any

ground on merits challenging the addition sustained by learned

Commissioner (Appeals). On a query from the Bench, learned

counsel appearing for the assessee submitted that assessee has

accepted the addition sustained by learned Commissioner

(Appeals). Thus, only issue which arises in the present appeal is

relating to validity of reopening of assessment under section 147 of

the Act. The main plank of assessee’s argument is, while recording

6 ITA No.8000/Del/2019 AY: 2011-12

reasons for reopening of assessment, the Assessing Officer has

relied upon wrong facts. The second line of argument is, approval

under section 151 of the Act has been granted mechanically.

spite of having income from operations to the tune of

Rs.29,85,471/-, as shown in the profit and loss account furnished

before learned Commissioner (Appeals), did not file any return of

income under section 139(1) of the Act. In fact, neither in response

to notice issued under section 148 nor under section 142(1) of the

Act, the assessee filed any return of income for the year under

consideration. Further, the assessee neither complied with any of

the statutory notices issued by the Assessing Officer, nor appeared

in course of assessment proceeding. Therefore, the Assessing

Officer had to complete the assessment ex-parte, to the best of his

judgment under section 144 of the Act. It is evident, the Assessing

Officer had tangible material available with him to indicate that,

though, in the year under consideration, the assessee had earned

income, but it was not offered to tax. Based on such material, the

Assessing Officer has reopened the assessment under section 147

of the Act. Merely because certain purchases made by the assessee

was shown as contractual receipts in the reasons recorded, that by

7 ITA No.8000/Del/2019 AY: 2011-12

itself, will not invalidate the proceeding under section 147 of the

Act. This is so because, the assessee from the very beginning has

not only defaulted in filing the return of income but has remained

non-cooperative. The assessee never appeared before the Assessing

Officer to explain the correct factual position. Therefore, in absence

of any material brought on record by the assessee, the Assessing

Officer had no other option but to proceed based on materials

available on record.

of income for the year under consideration, the reopening of

assessment, based on tangible material available with the

Assessing Officer, in my view, is valid. As regards satisfaction

recorded by the approving authority for issuance of notice under

section 148 of the Act, I do not find any fault therein. When the

assessee has suppressed material facts by not filing return of

income and other details in the course of assessment proceeding,

he cannot challenge the validity of the reassessment proceeding.

More so, when he has accepted the additions sustained by learned

first appellate authority. As regards the decision of the Tribunal in

case of Space Chem Engineers Pvt. Ltd. (supra), on careful

examination, I have found it to be factually distinguishable, hence,

8 ITA No.8000/Del/2019 AY: 2011-12

not applicable to the assessee’s case. Firstly, in case of Space Chem

Engineers Pvt. Ltd. (supra), unlike the present assessee, the

assessee there had filed the return of income voluntarily. Moreover,

in the reasons recorded, the Assessing Officer had mentioned

names of the companies from whom the assessee allegedly

accepted share application money, which are completely different

from the companies mentioned in the assessment order. Whereas,

facts in assessee’s case are completely different.

raised. Accordingly, grounds are dismissed.

Order pronounced in the open court on 30th June, 2022

Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER

Dated: 30th June, 2022. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi