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Income Tax Appellate Tribunal, DELHI BENCHES ‘G’, NEW DELHI
Before: Ms. Sushma ChowlaDr. B. R. R. Kumar
Per Dr. B.R.R. Kumar, Accountant Member:
The present appeal has been filed by the revenue against the order of ld. CIT (A)-XXVI, New Delhi dated 11.07.2016.
2. Following grounds have been raised by the revenue:
1. Whether an assessment framed u/s 148 can be annulled by linking the basis of reopening the case with that of initiation of the proceedings u/s 153C of the I.T. Act, 1961?
Whether adjudication of the case can be done ignoring the findings of the A.O. relating to reopening of the case u/s 147 of the I.T. Act, 1961?
3. Whether on facts and in circumstances of the case, the Ld. CIT(A) was correct in law in ignoring the aforesaid facts in (i) and (ii)?”
Sanjeev Khurana (HUF) 3. A search & seizure action u/s 132 of the Income Tax Act, 1961 was carried out in the case of M/s Thapar Homes Ltd. and its Group on 10.10.2008, which is engaged in the business of construction of designer floors in post localities of South Delhi, managed by Sh. Inder Mohan Thapar and Sh. B. K. Dhingra.
The allegation related to the present case under scrutiny is that Sh. B. K. Dhingra has flouted a number of dummy entities and the assessee firm is amongst one of them. Books of accounts/other documents/cheque books pertaining to these entities were seized/impounded from premises during the course of search, which are related to 136 different entities. The assessee here in question M/s Khurana Textiles Co. Prop. Sanjeev Khurana (HUF), Address – A-1/230, Hastsal Road, Uttam Nagar, New Delhi-110059 is amongst such dummy entities. It is found that Karta of HUF Sh. Sanjeev Khurana (HUF) Prop. Khurana Textiles Co. has the same address, which HUF has Sanjeev Khurana (HUF) Prop. Khurana Textiles Co. has stopped filing of return of income since F.Y. 2009-10 onwards.
The relevant facts are as under: 29.09.2008 – Original return filed u/s 139(1) – Returned income – Rs.134,126/- 31.12.2010 – Assessment order u/s 153C – Assessed income –Rs.8,80,580/- 14.03.2014 – CIT (A) annulled the assessment u/s 153C 17.03.2016 – Assessment order u/s 147
The facts reveal that the Assessing Officer has issued notice u/s 147 after recording the reasons to reopen the case. The reasons recorded are as under: "1. The assessment in this case was completed u/s 153C/143(3) of the IT. Act on 31-12-2010 at Rs. 8,80,580/- by making following addition/ disallowance.
Sanjeev Khurana (HUF) i) Addition to the trading result as in Rs.13,06,243/- the absence of books of accounts not produced by the assessee along with the bills /vouchers and bank a/c, the trading version of the assessee could not be verified. ii) Disallowance @ 100% of the Rs.3,20,796/- expenses claimed in P&L a/c as the assessee was not doing genuine business during the year relevant to A.Y. 2007-2008.
Total addition Rs.16,27,039/-
2. The assessee went in appeal before CIT(A) against the assessment order passed by the ACIT CC-21, New Delhi u/s 153C/143(3) on 31-12-2010 at Rs.8,80,580/- which was rectified u/s 154/153C/143(3) on 25-03-2011 and recomputed assessed income Rs. 17,61,164/- as against the returned income of Rs. 1,34,126/-.
In the appeal the CIT(A) vide her order in appeal no. 740/10-11 dated 14-03- 2014, annulled the impugned assessment order dated 31-12-2010 on technical grounds. However as the impugned assessment dated 31-12-2010 had been made at Rs 8,80,580/- against returned income of Rsl,34,126/- by making aforesaid additions resulting in concealment of Rs. 16,27,039/-. Thus there is still escapement of income of Rs 16,27,039/- in question which has escaped assessment for A.Y 2008-09 by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for her assessment for AY 2008-09 by not producing books of account.
During the assessment proceedings u/s 153C the assessee had not challenged proceeding u/s 153C and the assessment has been annulled by the Hon'ble CIT(A), on technical ground. On merit I have reason to belief that the sum of Rs 16,27,039/- has escaped assessment within the meaning of Sec 147.
4. It is a case where assessment has been completed before four years, but not more than six years have elapsed from the end of the relevant A.Y. i.e. 2008- 09. The income chargeable to tax which has escaped assessment is Rs
Sanjeev Khurana (HUF) 16,27,039/- i.e. more than 1 lakh. Thus it is a fit case to re- open the assessment u/s 147 of the IT Act by issue of notice u/s 148 of the IT Act for AY 2008-09.”
From the reading of the above, the formation of belief by the AO is mainly the “additions made during the proceedings u/s 153C” which has been annulled by the ld. CIT (A).
Thus, we find that fresh proceedings u/s 148 have been initiated in the case of assessee owing to the reason of annulling of the order of the Assessing Officer u/s 153C by the ld. CIT (A).
We have gone through the reasons for annulling the assessment u/s 153C as mentioned by the ld. CIT (A) in the instant case. The ld. CIT (A) held that the assessment u/s 153C has been annulled on the grounds that the assessment u/s 153 has been completed based on the material pertaining to one entity namely, Khurana Textiles India, a unit of Computer Engineering Services Pvt. Ltd. It was clearly held that the Khurana Textiles India and Khurana Textiles Co. (Prop. Sanjeev Khurana, HUF) are two different assessees. Hence, the information and the outcome of the proceedings u/s 153C in the case of Khurana Textiles India cannot be a reason for believing that the income of Khurana Textiles Co. (Prop. Sanjeev Khurana, HUF) has escaped assessment.
Thus, we find that the assessment u/s 153C has been made on a wrong person and so as the reasons recorded and subsequently the assessment u/s 148. Hence, we decline to interfere with the order of the ld. CIT (A) in the instant case.
With regard to the ground no. 1, raised by the revenue, we hold that the assessment u/s 148 was rightly annulled by the ld. CIT (A) since it was linked to the assessment u/s 153C passed on a wrong person and the reasons have been derived from the same order u/s 153C. The Sanjeev Khurana (HUF) revenue has committed similar mistake twice in the entire proceedings. The revenue should have been more careful in reading the reasons for annulment of the order u/s 153C which they grossly failed.
With regard to the ground no. 2 raised by the revenue whether adjudication done by the ld. CIT (A) ignoring the findings of the AO relating to reopening of a case u/s 147 is correct or not? We hold that the ld. CIT (A) has rightly adjudicated the issue and has not ignored the findings of the AO relating to reopening the case and also gave a categorical finding that the reasons recorded for reopening do not pertain to the documents belonging to the assessee and hence rightly held that the notice issued u/s 148 is invalid.
In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 20/04/2020.