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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: SH. N. K. BILLAIYA
ORDER PER N. K. BILLAIYA, AM:
This appeal by the assessee is preferred against the order of the CIT(A)-18, New Delhi dated 30.01.2015 pertaining to A. Y. 2005-06.
The grievance of the assessee read :-
“The Learned CIT(A), New Delhi has erred in not holding the assessment as time barred u/s 153 of the Income Tax Act, 1961.
2. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs.4,33,654/- on account of Truck Hiring Charges.
3. The Learned CIT (A), New Delhi has erred in upholding the disallowance of Rs.3,90,311/- on account of Vehicle Running & Maintenance, Business Promotions and Telephone Expenses.
4. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs.4,56,770.0 on account of diesel expenses on trucks. 5. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs.3,45,754/- on account of Salary. 6. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs.1,61,876/- on account of Purchases. 7. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs.10,00,000/- on account of unexplained deposits in the saving Bank account.”
Facts on record show that on the basis of the information received from ACIT, Central Circle-22, New Delhi. The Assessing Officer came to know that the assessee is one of the beneficiaries of accommodation entries provided by S. K. Gupta. On the strength of this information notice u/s 148 was issued and served upon the assessee.
The assessee was asked to file the details as per questionnaire and order sheet entry of various dates. The Assessing Officer observed that no information was filed by the assessee though he attended office on various dates.
5. The Assessing Officer accordingly proceeded of making addition of Rs.10 lacs on the basis of the information received from ACIT, Central Circle-22, New Delhi. The Assessing Officer further disallowed Rs.3,90,311/- being 20% of expenses alleging that personal use of these facilities cannot be ruled out. The Assessing Officer further disallowed 10% out of diesel expenses amounting to 4,56,770/- and 10% of truck hiring charges amounting to Rs.4,33,654/- and 10% of incentives paid to employees amounting to Rs.345754/- on 10% of purchase amounting to Rs.161876/- the assessment was accordingly completed.
The assessee agitated the matter before the CIT(A) but without any success.
Before me the counsel for the assessee stated that the reasons for reopening the assessment are on incorrect facts and therefore assessment should be quashed. In so far as disallowance of expenses are concerned the counsel stated that the Assessing Officer has given very general reasons and therefore ad-hoc disallowances should not have been made. Per contra the DR strongly supported the findings of the lower authorities.
I have given the careful consideration to the orders of the authorities below. The reasons for reopening the assessment read :-
“PROPOSAL U/S 147 OF THE INCOME TAX ACT-1961 IN THE CASE OF SHRI HARJEET SINGH 11/1. JANGPURA BHOGAL, NEW DELHI-140014- PAN NO. AARPS3442H ASSESSEMENT YEAR 2005-06.
Information has been received from the ACIT Central circle-22, New Delhi Vide F.No. ACIT/CC-22/2011- 12/970 dated 22.03.2012 that a survey u/s 133A eft the Income Tax Act was conducted on 20.11.2007 by ITO (Inv.), Unit Vl(3), New Delhi in the case of Shri Suresh Kumar Gupta at his various business premises, wherein several ledger accounts maintained in tally for the period 2004-05 were found, besides various other docDments/accounts. Shri S.K.Gupta worked as an entry operator and provided accommodation entries to various beneficiaries through a large numbers of proprietary concerns managed by him. Cash was received and deposited in the bank account of these proprietary concerns and through various conduit/intermediary cpmpanies transferred to the bank accounts of the ultimate beneficiaries. As per the list of beneficiaries^enclosed therewith, the assessee Shri Harjeet Singh, is one of the beneficiaries who reciived accommodation entry from Shri S.K. Gupta through his concerns. Shri Harjeet Singh is the existing assessee of this ward and has'atSt) received accommodation entries as under.
Deposits in proprietors accounts Transfer to 1st intermediatory company Date Particulars Amount Bank Ch.No. Date Intermediate Amount 18-09-04 200)300 Federal 763281 08/09/04 Fenderal Chandrabrabha Fin. Cash 200000 deposit Transfer by cheque to Actual beneficiary MEDIATORY SOURCE OF EXTRA FUND IF INTERMIDIATORY COMPANY Date Amount Address PAN No. Mediatory Address PAN 400000 Actual Cash deposit beneficia Mahalaxmi ry Finance co. 09/09/04 1000000 Harjeet AARPS3442 Aneja Ji AAEPA5548H 400000 11/01, Gurudwara 5C/13, New Rohtak Road, Karol Cash deposit H bagh, New Delhi Road, Jangpura, Mahalaxmi Finance co. .Bhogal, new delhi- 110014.
The above entries are nothing but undisclosed income of the assessee which has been brought out by taking the accommodation entries from Shri S.K.Gupta. This amount of accommodation entries amounting to Rs. 10,00,000/-, which is the undisclosed income of the assessee, is to be brought to tax as per the provisions of Income Tax Act-1961. In view of the above, I have reason to believe that income to the extent of Rs. 10,00,000/- has escaped assessment in the Financial Year 2004-05 relevant to the assessment year 2005-06, hence it is a fit case for issuing of notice u/s 148 of the Income Tax Act-1961. If approved, notice under section 148 of the Income Tax Act-1961 for the assessment year 2005-06 may be issued.
ITO,Ward 32(1), New Delhi.”
As per the chart at page 6 of the paper book there is a noting at Sr. No. 10 which is as under :-
S. No. Date Ch. No. Amount Actual beneficiary Actual Beneficiary Name as per PAN Address PAN No. Lies in circle 1 09.09.04 1000000 Harjeet Harjeet Singh 11/1, Gurudwara Road Bhogal, Jangpura AARPS3442H Ward-32(1)
It can be seen from the above that there is no mention of any cheque number and amount shows is Rs.10 lacs. As per bank statement which is at page 36 of the paper book on 09.09.2004 there is a cheque entry of Rs. 1 lacs cheque number is 00884535/-. It can be seen that the Assessing Officer has proceeded on wrong assumption fact. The amount of Rs. 10 lacs is not supported by any cheque number whereas the allegation is that the assessee has received accommodation entry from Sh. Gupta through cheque. In my considered opinion the basis of reopening itself is based on wrong facts therefore, the same cannot be upheld. I accordingly set aside the notice u/s 148 of the Act the reassessment based on such notice deserves to be quashed. Since the assessment itself has been quashed the other ad-hoc disallowance stand deleted.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 12.11.2018.