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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: MS. DIVA SINGH
Appellant by Sh. Jaspal Singh Sethu, Advocate Respondent by Sh. T. Vasanthan, Sr. D.R. Date of hearing 24-08-2017 Date of pronouncement 050050 20.10.20170500 O R D E R PER DIVA SINGH, J.M. : The present appeal has been filed by the assessee assailing the correctness of the order dated 2.2.2017 of CIT(A)-17, New Delhi pertaining to 2007-08 assessment year. Following grounds are reproduced hereunder:- “That the appellate order as passed is against law and facts of the case. That the learned Commissioner of Income Tax (Appeals) has erred in rejecting the additional ground of appeal moved by the appellant challenging the issuance of notice u/s 148 of the I.T. Act. The case law used by the learned Commissioner of Income Tax (Appeals) as against the appellant has no bearing of the facts of this case. That the learned Commissioner of Income Tax (Appeals) has erred in upholding addition of Rs. 6,44,986/- by ignoring the fact that no evidence of any payment having been made by the appellant firm to its buyers. Further, there is no finding of any such payment made by the appellant firm to its buyer even by the Directorate of Revenue Intelligence Department of Customs. That the appellate order as passed is not sustainable on the facts and circumstances of the case.
2. The learned AR appearing on behalf of the appellant submitted that the issue is covered in favour of the assessee by virtue of the order dated 23.6.2017 to ITAT in assessee’s case pertaining to 2005-06 and 2006-07 assessment year. Copy of the aforesaid order in and ITA No. 5637/Del/2013 filed was relied upon. The said submission was made on 22nd August, 2016 and copy of the order had been filed. Time had been given to the Revenue to go through the said order. On the next date when the appeal come up for hearing the learned AR inviting attention to the record submitted that the assessment order dated 18.3.2015 under Sections 148 / 143(3) was passed on the basis of the following facts as recorded in the order itself ; “During the year, assessee firm has made imports of Opal ware, melamine ware and plastic goods'. An information was received from Investigation Wing vide letter F. No. DDT(Inv)/Unit- IV(3)/DRI/07/08/158 dated 14.01.2008 of DDIT(Inv), Unit IV(3), New Delhi, showing that Directorate of Revenue Intelligence (DRI) had carried out search operation at the business premises of M/s. K.P. International and M/s. Talwar Agencies P Ltd. on 14.10.2006 and 16.10.2006 on the charges that the assessee firm was engaged in very substantial under valuation of their imports of Melamine-ware, Opal- ware and glassware and had made payments of differential amounts to overseas suppliers over and above the values declared to Indian Customs. During search operation, the DRI found and seized certain incriminating documents consisting of (i) actual invoices showing correct value and the corresponding parallel invoices showing undervalued price for Customs declaration purposes (ii) evidence containing price of quotations (iii) e-mails between the foreign suppliers and the applicants confirming receipt of amounts by the foreign suppliers from assessee firm other than the amounts sent through Bank had emerged.
2.1. Inviting attention to the aforesaid orders of the ITAT, it was submitted that the jurisdiction which has been challenged in the present proceedings had been challenged before the ITAT in the aforesaid order and a perusal of the same would show that identical reasons for the belief that the income has been accepted had been taken note of the ITAT in para 14 concluded as under:
The Hon'ble Delhi High Court in the case of C1T Vs Atul Jan & Sml Vaniti Jain [2008] 299ITR 383(Delhi) 13.1 held as under:- "Held, dismissing the appeals, that the only information was that the assessee had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque for that amount. The information did not indicate the source of the capital gains which in this ease were shares. There was no information which shares had been transferred and with whom the transaction had taken place. The Assessing Officer did not verify the correctness of the information received, by him but merely accepted the n uth of the vague information in a mechanical manner The Assessing Officer had not even recorded his satisfaction about the correctness or otherwise of the in formation for issuing a notice under section 148. What had been recorded by the Assessing Officer as his "reasons to believe" was nothing more than a report given by him to the Commissioner. The submission of the report was not the same as recording of reasons to believe for issuing a notice. The Assessing Officer had clearlv substituted form for substance and therefore the action of the Assessing Officer was not sustainable." The Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Smt. Parantjil Kaur [2009] 311 ITR 38 held as under:-
"Held, that the Assessing Officer had not examined the information received from the survey circle before recording his own satisfaction of escaped income and initialing reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it could not be said that it was based on belief dial the income chargeable to tax had escaped income. The Assessing Officer had to act on the basis of "reasons to believe" and not on "reasons to suspect". The Tribunal rightly concluded that the Assessing Officer had faded to incorporate the material and his satisfaction for reopening the assessment and therefore the issuance, of notice under section 148 of the Act for reassessment proceedings was not valid” 13.3 The. Hon'ble Delhi High Court in the case of CIT Vs: Sfil Stock Broking Limited [2010] 323 ITR 285 (Delhi) held as under "Held dismissing the appeal, that the first sentence of the reasons recorded by the Assessing Officer was mere information received from the Deputy Director of Income-tax (Investigation). The second sentence was a direction given by the same Deputy Director of Income-tax investigation) to issue a notice under section 148 and the third sentence again comprised a direction given by the. Additional Commissioner of Income-tax to initiate proceedings under section 148 in respect of cases pertaining to the relevant ward The Assessing Officer referred to the information and the two directions as reasons on the basis of which he was proceeding to issue notice under section 148 These could not be the reasons for proceeding under section 147/148 of the Act. As the first part was only an information and the second and the third parts of the reasons were mere directions, it was not at all discernible as lo whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that on the basis of the material which he had before him, income had escaped assessment. There was no substantial question of law for consideration. 13.6. The Hon’ble Gujarat High Court in the case of Sagar Enterprises vs. Assistant Commissioner in [2002] 257 ITR 335 (Gujarat/ held as under:- "Held, that it was apparent that the fact of non- filing of the return for the assessment year 1991- 92 had weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income However, the material on record showed that the return had been fled. In such circumstances, it could not be said with certainty as to which fact would have neighed with the officer concerned and once it was shown that an irrelevant fact had been taken into consideration, to what extent the decision was vitiated would be difficult to say. Moreover the Income-tax Officer had stated that the payment which was slated to be. undisclosed income relevant for the assessment year 1991-92 could have been made during the financial year 1990-91 relevant to the assessment year 1991-92 and hence, "to cover up that probability, protective addition was made in the assessment year 1992-93” The first appellate authority decided the appeal for the assessment year 1992-93 on January, 1996. and the reasons had been recorded thereafter on August 18. 1997 The nonce of reassessment was not valid and was liable to be quashed”. 13.7 The Hon'ble Punjab & Haryana High Court in the case o f C I T Ks. Atlas Cycles Lid. [1989] 180 ITR 319 (P&H) has held as under:- "Held, (i) that the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not found to exist, and. therefore, the Income-tax Officer did not get jurisdiction to make a reassessment."
Considering the facts and circumstances of the case and in the light of the above discussion and die case laws referred to above we are of the view that the reopening of the assessment is not valid in this case. We accordingly set aside the orders of the authorities below and quash the proceedings u/s. 148 of the LT. Act. In die result all the additions made in the re-assessment order are deleted. Since we have quashed the reopening of the assessee u/s 148 of the LT Act. We do not propose to decide the issue on the merit because it is left for academic discussion only 15. In the result appeal of the assessee is allowed”
Inviting attention to the arguments recorded in para 4 of the aforesaid decision, it was submitted that reliance had been placed on the decision of Hon’ble Delhi High Court in the case of Signature Hotels P. Ltd vs. Income Tax Officer and Another, reported in (2011) 338 ITR 51 (Delhi). Reliance is also placed upon the decision of the Hon’ble Delhi High Court in the case of Sarthak Securities Co. P. Ltd. vs. ITO, reported in (2010) 329 ITR 110 (Del.). Further reliance is also placed in the upon the decision of Hon’ble High Court of Delhi in the case of PCIT vs. G & G Pharma Ltd. in and the decision of ITAT Chandigarh Bench in ITA No. 849/CHD/2011 dated 05.01.2017 had also been considered. Considering the facts and details the ITAT had concluded that the Assessing Officer did not acquire any jurisdiction and the assessment / reassessment was directed to be quashed. The said view had been followed in the appeal for 2006-07 assessment year. Accordingly it was his prayer that the impugned order is covered in favour of the assessee. The learned Sr. DR relied upon the impugned order however the fact that on identical reasoning for two consecutive assessment years, the coordinate Benchs had quashed the proceedings was not disputed by the learned Sr. DR. In the aforementioned peculiar facts and circumstances, no distinction or facts circumstances or position of law having been pointed out following the precedent assessment is directed to be quashed. The order is pronounced in the open court at the time of hearing itself.
In the result, the appeal of the assessee is allowed. (Order Pronounced in the Open Court on 20/10/2017).