ACIT, CENTRAL CIRCLE- 16, NEW DELHI vs. YORK HOTELS PVT. LTD., NEW DELHI
आयकर अपीलीय अिधकरण
िदʟी पीठ “एस एम सी”, िदʟी
ŵी िवकास अव̾थी, Ɋाियक सद˟
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “SMC”, DELHI
BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER
आअसं.3943/िदʟी/2017 (िन.व. 2008-09)
Assistant Commissioner of Income Tax,
Central Circle-16, R.No. 344, E-2, ARA Centre,
Jhandewalan Ext. New Delhi 110055
...... अपीलाथᱮ/Appellant
बनाम Vs.
M/s. York Hotels P. Ltd.,
Rectangle-I, D-4, Saket District Centre,
Saket, New Delhi
PAN: AAACY-0345-F
..... ᮧितवादी/Respondent
अपीलाथŎ Ȫारा/ Appellant by : None
ŮितवादीȪारा/Respondent by : Shri Sanjay Kumar, Sr. DR
सुनवाई कᳱ ितिथ/ Date of hearing
:
04/02/2025
घोषणा कᳱ ितिथ/ Date of pronouncement :
:
29/04/2025
आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-XXVI, New Delhi (hereinafter referred to as 'the CIT(A)') dated
31.03.2017, for assessment year 2008-09. 2. This appeal was filed by the Revenue in the year 2017. Since, the time this appeal has been listed for hearing none has appeared to represent the assessee/respondent. Repeated notices were to the assessee through RPAD on the address provided in Form No. 36. The notices sent to the assessee/respondent through RPAD have been received back unserved from postal authorities with remarks ‘Refused’. Finally, the notice was sent to the respondent through the office
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of DR. The office of DR has served the assessee through affixture. The ld. DR has placed a service report on record. It seems that the assessee is not keen to pursue the appeal, hence, this appeal is taken up for hearing with the assistance of ld. DR and the documents already available on record.
3. The Revenue in appeal has assailed the order of CIT(A) in holding reopening of assessment u/s. 147 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) as bad in law.
4. Shri Sanjay Kumar, representing the department has vehemently defended the assessment order dated 21.03.2016 passed u/s. 147 r.w.s. 153C of the Act. The ld. DR submitted that the assessee company is engaged in Development of Residential and Commercial Projects. The assessee is a group company of ABW
Group of Companies; the entire group is involved in suppressing of business income by adopting dubious method of first entering into an agreement to sale of lands at lower rate and then cancelling the same at a very higher rate. This has resulted into huge reduction in profits of the company, thereby reducing tax liability. Initially, assessment was completed in the case of assessee u/s. 153C r.w.s. 153A of the Act on 31.03.2014 determining total income of the assessee at NIL. Subsequently, on the basis of information received from SFIO, Ministry of Corporate Affairs, the assessment was reopened. The Assessing Officer (AO) has passed a detailed order explaining the modus operandi and the specific instances where the assessee company is involved in entering into dubious transactions resulting in suppression of income and tax liability. The AO in detailed order has made addition of Rs.45,25,000/- u/s. 68 of the Act. The CIT(A) without appreciating facts of the case has erred in coming to conclusion that reopening of assessment is bad in law.
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5. Submissions made by ld. DR heard, orders of the authorities below examined. The assessee in appeal before the CIT(A), as inter alia assailed reopening of assessment which is undoubtedly beyond four years. The CIT(A) vide impugned order has held the reopening of assessment as bad in law as the AO in reasons recorded for reopening has not pointed as to which income chargeable to tax has escaped assessment because of failure on the part of assessee to disclose fully and truly all material facts, necessary for the assessment.
6. Before proceeding further it would be imperative to examine the reasons for reopening recorded by the Assessing Officer. For the sake of completeness reasons for re-opening are reproduced herein below:
“1. Assessment in this case was completed u/s 153C r.w.s. 153A of I.T. Act, 1961
on 31-03-2014 determining the total income of the assessee at Rs.NIL/- as against returned income of Rs. NIL/-filed u/s 153C). Later on, an information has been received from SFIO, Ministry of Corporate affairs, New Delhi vide their letter dated
24-03-2015 according to which during the F.Y. 2007-08 the concerns of ABW group had adopted the modus operandi to increase its cost of sale of land where ever it arrived at huge profits on sale of these lands by resorting to agreement to sale at lower rate and then cancellation of the same at a very high rate. This resulted into huge reduction in the profit of the company and consequent reduction in the tax liability of the assessee company. Therefore, in these circumstances I have reason to believe that the income of assessee to a large extent running into several lacs has escaped assessment.
2. It is a case where assessments u/s 153C/143(3) 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 more than Rs.1 lakh. Therefore notice u/s 148 r.w.s. 147 can be issued.”
7. A bare reading of the reasons would show that the assessment has been reopened after four years on the basis of information received from SFIO, Ministry of Corporate Affairs, New Delhi. Nowhere in the reasons specific allegations have 4
been leveled against the assessee that the assessee has failed to disclose fully and truly all material facts necessary for its assessment. A reading of reasons also show that the allegation is against ABW Group of Companies and not the assessee in specific. Thus, by way of reopening of assessment the Assessing Officer wanted to make a roving enquiry which is not permissible under law.
8. The first proviso to section 147 of the Act mandates that no action u/s. 147
can be initiated after the expiry of four years from the end of relevant assessment year, unless, any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts. The reasons recorded for reopening are absolutely silent in this regard. The reasons only record the alleged modus operandi of ABW group to reduce the profits of the company and consequent reduction in the tax liability. Moreover, the reasons for reopening stem from the information received from SFIO, Ministry of Corporate Affairs and not ‘reasons to believe’ of the AO. The reasons lack mandate of section 147 of the Act. Reopening of assessment after four years on such reasons is unsustainable. I find no infirmity in the impugned order.
Hence, the same is upheld and appeal of the Revenue is dismissed being devoid of any merit.
Order pronounced in the open court on Tue ay the 29th day of April, 2025. /-
(VIKAS AWASTHY)
᭠याियक सद᭭य/JUDICIAL MEMBER
िदʟी/Delhi, ᳰदनांक/Dated 29.04.2025
NV/-
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ᮧितिलिप अᮕेिषतCopy of the Order forwarded to :
1. अपीलाथᱮ/The Appellant ,
2. ᮧितवादी/ The Respondent.
3. The PCIT/CIT(A)
4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी
5. गाडᭅ फाइल/Guard file.
BY ORDER,
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(Dy./Asstt.