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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI AMARJIT SINGH, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax-31, Mumbai [hereinafter in short “Ld.Pr.CIT”] dated 30.03.2019 for the 2014-15.
(A.Y: 2014-15) Praham India LLP 2. There is a delay of 65 days in filling the appeal and assessee has filed affidavit in this regard and Ld.DR objected for the condonation of delay. After considering the affidavit, we condone the delay.
Brief facts of the case are, Ld. Pr.CIT while examining the records of the Assessment Order passed u/s. 143(3) of Income-tax Act, 1961 (in short “Act”), he observed that certain informations was received from Pr.DIT (Kolkata) that some of the Kolkata based companies were providing accommodation entries and giving bogus bills for availing Income-tax benefits. The assessee is one of the beneficiary in respect of the above accommodation entries to the tune of ₹.58,00,000/- in respect of transaction with M/s. silverpoint Infratech Ltd., which is one of the shell company engaged in providing accommodation entries. Accordingly, Ld.Pr.CIT issued notice u/s. 263 of the Act dated 05.03.2019 to the assessee. In response assessee filed reply dated 13.03.2019 stating that, the only income source is interest income, dividend income and profits from sale of shares and fixed assets. Assessee also filed financial statements accompanying above reply and it was stated that no purchases have been debited to the Profit and Loss Account and the proceedings may therefore dropped. Ld. Pr.CIT after considering the reply of the assessee and assessment records, he observed that the information
(A.Y: 2014-15) Praham India LLP received regarding provision of accommodation entries in the form of bogus share capital, unsecured loans etc., has been received subsequent to the completion of the assessment proceedings. The Assessment Order passed does not contain the finding with respect to the information received. Hence, the Assessment Order passed by the Assessing Officer for the A.Y. 2014-15 is considered as erroneous and prejudicial to the interest of the Revenue in view of the clause (a) to explanation 2 of sub-section (1) of section 263(1) of the Act. Accordingly, he exercises the power u/s. 263 of the Act and accordingly, the order is set-aside with a direction to the Assessing Officer to redo the assessment by examining the facts and evidences.
Aggrieved assessee is in appeal before us raising following grounds in its appeal: -
1. on the facts and circumstances of the case and in law, the order of the learned PCIT is bad in law. 2. on the facts and circumstances of the case and in law, the allegations of the learned PCIT in the notice dated 05.03.2019, that the assessee is in receipt of accommodation entries/bogus bills is factually incorrect.”
At the time of hearing, Ld. AR brought to our notice Page No. 7 of the Paper Book to draw our attention, the notice issued u/s. 263(1) of the Act to show that the notice was issued on the basis of information that (A.Y: 2014-15) Praham India LLP assessee is one of the beneficiary in respect of bogus bills to the tune of ₹.58,00,000/-, the same was mentioned in Para No.2 of the Ld. Pr.CIT order. He submitted that the Ld. Pr.CIT finding in order passed u/s. 263 of the Act completely different to the notice issued u/s. 263 of the Act. Further, he submitted that before passing the above said order Ld. Pr.CIT has not given further opportunity to the assessee to explain and submit their further argument. Further, he brought to our notice Page No. 23 of the Paper Book which is the notice issued by the Assessing Officer to initiate the proceedings consequent to the order passed u/s. 263 of the Act. He brought to our notice Para No. 3 of the above said notice that the Assessing Officer records that the information relating to penny stock was received from DGIT (Investigation) Kolkata related to scrip M/s. Silverpoint Infratech Ltd., on the subject information regarding Penny scrip. He submitted that issue raised by the Ld. Pr.CIT in notice and order passed u/s. 263 of the Act are different than the issue raised by the Assessing Officer in show cause issued in this regard.
In this regard he relied on the following case laws filed in Paper Book: - (i). The Tata Power co. Ltd., vs. Pr.cit in ITA.No. 3534/Mum/2016 dated 03.09.2019
(A.Y: 2014-15) Praham India LLP (ii). M/s. True Value Steels v. ITO in ITA.No. 998/Mum/2019 dated 26.06.2019
(iii). Damadar Valley Corporation v. DCIT in ITA.No. 1458/Kol/2015 dated 15.07.2016.
On the other hand, Ld.DR brought to our notice, show cause notice u/s. 263 of the Act and he submitted that the issue involved is accommodation entries and accommodation entry is a wider term it could be anything not just relating to purchases. In this regard he relied on the decision of Vedanta Ltd. v. CIT [2021] 124 taxmann.com 435 (Bombay).
Considered the rival submissions and material placed on record, we observed that Ld. Pr.CIT initiated proceedings u/s. 263 of the Act by issue of notice u/s. 263(1) of the Act that he has received information from Investigation wing Kolkata that assessee is involved in taking accommodation entries from the concern M/s. Silverpoint Infratech Ltd., to the extent of ₹.58,00,000/-. It is brought to our notice by the assessee that assessee is not involved in any way relating to trading activity by bringing the information contained in financial statements. Further, we observed that the Ld. Pr.CIT accepted the contention of the assessee that assessee is not involved in any trading activity, however, he proceeded to (A.Y: 2014-15) Praham India LLP quash the Assessment Order with the observation that information received regarding provision of accommodation entries in the form of bogus share capital, unsecured loans etc. has been received subsequent to completion of the assessment proceedings. The Assessment Order passed does not contain the finding with respect to the information received.
On a careful analysis, we observed that the information received by the revenue subsequent to the passing of the Assessment Order as observed by the Ld. Pr.CIT in his order. Therefore, when the information itself is received by the revenue subsequent to the passing of the Assessment Order, how on earth the Assessment Order passed by the Assessing Officer is erroneous. Further, we observed that the proceedings u/s. 263 of the Act initiated with the reasons recorded are completely different than the conclusion reached by the Ld. Pr.CIT. Further, we observed that the Assessing Officer initiated the re-assessment proceedings subsequent to u/s. 263 order in a completely different reasons. After considering the overall facts on record we observed that in case the information is received by the revenue subsequent to the passing of the Assessment Order the assessment order cannot be held to be erroneous if at all revenue intend to initiate proceedings they can
(A.Y: 2014-15) Praham India LLP initiate on reopening of assessment or any other method but not under section 263 of the Act. Therefore, in our view the order passed u/s.263 of the Act is beyond jurisdiction. Accordingly, appeal filed by the assessee is allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 27.04.2022.