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Income Tax Appellate Tribunal, DELHI BENCHES “B” : DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
Assessee are directed against the order of the Ld. CIT(A), Faridabad, dated 2011.2015 for the A.Y. 2007-2008.
2 ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad. 2. Briefly, the facts of the case are that the assessee filed return of income under section 139(1) of the I.T. Act on 30th October, 2007 declaring NIL income. A detailed information regarding accommodation entries provided by M/s. Basant Marketing (P) Ltd., and M/s. Empire Commercial Co. (P) Ltd., to various beneficiary companies was received from the Office of the Commissioner of Income Tax (Central), Kolkata with regard to CBI Investigation in the case of Shri Arun Dalmia, Shri Harsh Dalmia and their dummy companies. The relevant extract of the information received from CIT (Central), Kolkata is reproduced in the assessment order. The list was appended to the said letter contains the names of the beneficiaries of the accommodation entries received from the dummy companies. In the said list name of the assessee was mentioned who has obtained accommodation entries in different years including A.Y. 2007-08 under appeal amounting to Rs.2,07,85,000. The A.O. on the basis of the above information, reopened the assessment having reason to believe that income chargeable to tax has escaped assessment to the extent of Rs.2,07,85,000 in the hands of assessee for A.Y. 2007-08 under appeal. Notice under section 148 was issued and the assessee
3 ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad. submitted that the return already filed originally may be treated as return having filed in response to the notice under section 148 of the I.T. Act. The A.O. called for the explanation of assessee. The assessee specifically submitted before A.O. that assessee-company did not have any transaction including purchase and sale of shares etc., with M/s. Basant Marketing (P) Ltd., however, the opening credit balance was outstanding at the end of the year without any transaction.
Confirmation copy of the account of the said party was filed before A.O. for verification. The A.O. also issued notice under section 133(6) to the concerned party in order to verify the fact stated by the assessee. The reply was received in which it was intimated by the concerned party that “We have not entered into any transaction with M/s. VSB Investment Private Limited during F.Y. 2006-2007.” The A.O. therefore, noted that as per the reply and copy of the account filed before him, opening and closing balance of Rs.2,07,85,000 have been shown without any transaction during the F.Y. 2006-07.
Therefore, submission of the assessee was accepted. The A.O. however, proceeded to examine the issue of disallowance under section 14A of the I.T. Act and made the addition of Rs.40,51,979.
4 ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad. 3. The assessee challenged the reopening of the assessment as well as addition made under section 14A before the Ld. CIT(A). it was submitted that the assessment has been reopened on the reason that assessee obtained accommodation entries in assessment year under appeal amounting to Rs.2,07,85,000, however, no such transaction has been conducted in assessment year under appeal.
Therefore, reasons are recorded on incorrect facts. Therefore, there were no justification to reopen the assessment. The assessee relied upon various decisions including the decision of the Hon’ble Punjab and Haryana High Court in the case of CIT vs. Atlas Cycle Industries 180 ITR 319. The Ld. CIT(A) accepted the explanation of assessee because it was apparent that case was reopened by the A.O. on account of bogus share application money, but no addition have been made on account of the same in assessment order. The A.O. made addition on account of disallowance under section 14A of the I.T. Act.
The Ld. CIT(A) following various decisions of the High Court held that if there is no addition in respect of the reasons recorded, no other addition can be made. The Ld. CIT(A) accordingly, held that assessment framed by the A.O. is void because A.O. did not have 5 ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad. jurisdiction to make additions/disallowances to the returned income of the assessee. Once the reasons on which case was reopened under section 147 ceased to exist as admitted by the A.O, reopening of the assessment is bad in law. The appeal of the assessee was accordingly allowed. The Ld. CIT(A) did not decide the issue of disallowance under section 14A of the I.T. Act. The appeal of the assessee is accordingly allowed.
After hearing the rival contentions, we are of the view that no interference is called for in the order of the Ld. CIT(A). It is an admitted fact that reopening of the assessment was made in this case because as per information received from CIT (Central), Kolkata through CBI that assessee received accommodation entry from M/s.
Basant Marketing (P) Ltd., for a sum of Rs.2,07,85,000 in assessment year under appeal. The assessee denied to have received any such accommodation entry in assessment year under appeal which was also confirmed by the concerned party. The contention of the assessee has been accepted by the A.O. Copy of the reasons are also filed on record. It was, therefore, clear that A.O. recorded incorrect and non-existing reasons for reopening of the assessment. Therefore,
6 ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad. on the face of it, the reopening of the assessment is void and bad in law. The case of the assessee is squarely covered by the decision of the Hon’ble Punjab & Haryana High Court in the case of Atlas Cycle Industries (supra). The Ld. CIT(A), therefore, rightly followed various decisions of the High Court and the Tribunal for the purpose of quashing the re-assessment order. No infirmity have been pointed out in the order of the Ld. CIT(A). Therefore, departmental appeal stands dismissed.
In the result, appeal of the Department dismissed.
The Learned Counsel for the Assessee submitted that the cross objection is filed mainly in support of the order of the Ld. CIT(A).
Therefore, the cross objection is dismissed.
In the result, cross objection of the assessee dismissed.
To sum-up, appeal of the department and cross objection of the assessee dismissed.
Order pronounced in the open Court.