RAJDHANI REALCON PVT. LTD.,NEW DELHI vs. ITO, WARD- 21(1), NEW DELHI

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ITA 5287/DEL/2018Status: DisposedITAT Delhi15 March 2019AY 2009-105 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition was not justified because the CIT(A) confirmed the addition based on information not present in the AO's reasons for reopening. Furthermore, the amount in question pertained to a different assessment year.

What were the facts?

The assessee company received Rs. 7 lakhs via cheque, which the AO treated as an accommodation entry and added to income. The assessee claimed the amount belonged to a different assessment year and was from a different entity than what the CIT(A) confirmed.

What were the issues?

Whether the addition made under Section 68 was justified when the CIT(A) relied on incorrect information and the amount belonged to a different assessment year. Whether reassessment proceedings were void ab initio due to mechanical approval and incorrect reasons.

Which sections of the Income-tax Act were involved?

Section 68,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI

Before: SHRI R.K. PANDA

For Appellant: Shri Rakesh Jain, Advocate &, Shri Gurjeet Singh, CA
For Respondent: Shri S.L. Anuragi, Sr.DR
Hearing: 20.02.2019Pronounced: 15.03.2019

BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2009-10 Rajdhani Realcon Pvt. Ltd., Vs. ITO, 2612/13, 2nd Floor, Ward-21(1), Naya Bazar, New Delhi. New Delhi. PAN: AADRC3963P (Appellant) (Respondent) Assessee by : Shri Rakesh Jain, Advocate & Shri Gurjeet Singh, CA Revenue by : Shri S.L. Anuragi, Sr.DR Date of Hearing : 20.02.2019 Date of Pronouncement : 15.03.2019 ORDER

This appeal filed by the assessee is directed against the order dated 1st June, 2018 of the CIT(A)-7, New Delhi for assessment year 2009-10.

2.

Facts of the case, in brief, are that the assessee is a private limited company and filed its return of income on 16th December, 2009 declaring nil income. The return was processed u/s 143(1) of the Act. Subsequently, information was received from the Investigation Wing, Jhandewalan Extension, New Delhi, dated 12th March, 2013, mentioning therein that during the course of search operation carried out in the case of Shri Surendra Kumar Jain group of cases it was observed that the same group is involved in providing accommodation entries to different persons who were named in the report. The name of the assessee also figures in the list as one of the beneficiaries of the accommodation entries. The AO, after recording reasons and after obtaining the approval of the Addl. CIT and the Principal CIT, issued notices u/s 148 of the IT Act.

During the course of assessment proceedings, the AO observed that the assessee has received an amount of Rs.7 lakhs from Mega Top Promoters Pvt. Ltd. Vide cheque No.99732 dated 15th September, 2009 through Axis Bank. He asked the assessee to substantiate the identity and credit worthiness of the said party and the genuineness of the transaction. Since there was no proper compliance to the said query, the AO made addition of Rs.7 lakhs to the total income of the assessee u/s 68 of the IT Act.

3. In appeal, the ld.CIT(A) upheld the action of the AO both on merit as well as on the validity of the reassessment proceedings.

4. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:-

1. That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs700000 /- made by the AO by ignoring the facts of the case, submissions made by the AR and the settled law .

2. That on the facts and in the circumstances of the case, the Ld. CIT (A) was erred in ignoring the settled propositions of law regarding the importance of application of mind while recorded reasons, approval of the reasons and additions made beyond the reasons recorded by the AO and upholding the unlawful and void ab initio assessment on the basis of remand report submitted by the AO.

3.

That the reopening was bad in law and void ab initio as notice u/s 143(2) was never served on the Assessee.

4.

That on the facts and in the circumstances of the case the reopening was bad in law and void ab initio, as the reasons lack proper application of mind by the Ld AO as the reasons are factually incorrect.

5.

That on the facts and in the circumstances of the case the reassessment proceedings are void ab initio as the approval by the higher officials was accorded in a mechanical manner, without appreciating the facts and figures as the fact itself reveals the wrongfulness in the reason recorded and can be noticed with a small eye to the reasons. However the higher authorities failed to do so while according approval.

6.

That the whole addition was made by the Ld AO on the basis of preconceived notions , ignoring the submissions and evidences ,ignoring the law and facts of the case, without making proper enquiries and investigations, without providing reasonable opportunity and without application of mind. 7. That Your Petitioner craves leave to amend, modify and/or alter grounds and/or to adduce and rely upon such further evidence and /or to adduce and rely upon such further evidence and /or documents as may be required at any time before and during the time of hearing.”

5. I have considered the rival arguments made by both the sides and perused the material on record and the orders of the authorities below. I find the AO, in the instant case, made addition of Rs.7 lakhs to the total income of the assessee on the ground that the assessee has received the amount of Rs.7 lakhs from M/s Mega Top Promoters Pvt. Ltd., vide cheque No. No.99732 dated 15th September, 2009. A perusal of the reasons recorded also show the same thing. I find although the case was not represented before the AO by the assessee, however, before the CIT(A) it was categorically stated that the said amount relates to AY 2010-11 and not 2009-10 since the cheque is dated 15th September, 2009. However, a perusal of the order of the CIT(A) shows that he has confirmed the addition on the ground that an amount of Rs.7 lakhs issued on 4th June, 2008 vide cheque No.252429 from M/s Shalini Holding Ltd., is the subject matter of addition in the instant case. The reasons recorded by the AO, copy of which has been placed in the paper book does not show that the assessee in the instant case has received any amount from M/s Shalini Holdings Ltd. The approving authorities in a mechanical manner have approved the reasons recorded by the AO that the assessee has received an amount of Rs.7 lakhs from M/s Mega Top Promoters Pvt. Ltd., on 15th September, 2009. Therefore, the various decisions relied on by the ld. Counsel for the assessee to the effect that when the approval has been given in a mechanical manner without due application of mind, such reassessment proceedings are void ab initio is applicable to the facts of the present case. In any case, when the basis of reopening of the assessment was on account of receipt of accommodation entry of Rs.7 lakhs from M/s Mega Top Promoters Pvt. Ltd., vide cheque No.099732 dated 15th September, 2009 and when the above amount has already been added in the AY 2010-11 as this amount does not belong to the AY 2009-10 and, therefore, the addition made by the AO and sustained by the CIT(A) is not justified. So far as the finding given by the CIT(A) that entry of Rs.7 lakhs on 4th June, 2008 vide cheque No.252429 from M/s Shalini Holding Ltd., is concerned, it is not understood as to from where he has got this figure since the reason does not mention so, nor the assessment order speaks of the same. In this view of the matter, I am of the considered opinion that the addition made by the AO and sustained by the CIT(A) is not justified. Accordingly, the addition is directed to be deleted.

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