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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI
Before: SHRI H.S. SIDHU
The Assessee has filed these Appeals against the separate Orders dated 23.9.2014 & 29.9.2014 of the Ld. CIT(A)-IX, New Delhi pertaining to assessment year 2003-04.
The grounds raised in read as under:-
Validity of service of notice by substituted mode / affixture etc.
That on the facts and in the circumstances of the case and in law, ld. CIT(A) erred in not appreciating that service of notice by substituted
process (through affixture) in instant case is totally invalid and further there is no valid service of jurisdictional reopening notice so as to confer jurisdiction u/s. 148 of the Act.
Validity of reopening and reasons recorded U/S 148 of the Act
2. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in not quashing the instant reopening action of Ld AO'
which is made on basis of vague and scanty reasons in abrupt manner without tangible material on record and lacking rational connection which is must for any valid reopening action.
3. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in not quashing the instant impetuous reopening action of Ld AO where
in reasons (refer Statement of facts before CIT-A) figure of Rs 10,75,000 is mentioned as income escaping assessment where as in underlying orders three different figures of Rs 15,75,000 and Rs
21,75,000 and Rs 2168500 is mentioned which reflects total non application of mind at all stages as four different figures are mentioned for income to be assessed. (refer pages 9 to 11,24 of CIT-A order).
(This is glossed over and ignored by Ld CIT-A to suit his predetermined opinion. )
That on the facts and in the circumstances of the case and in law, learned CIT-A erred in not quashing the instant impetuous reopening action of Ld AO where
nothing is stated for distinctive nature of transaction till end as transaction for sale of shares are confluence with transaction of share application money and there is no adversarial statement/ incriminating material brought on record at any stage to connect the same to assessee's case .
(refer AO’s & CIT-A's order).
Addition of Rs. 21,68,500 confirmed on basis of conjectures and surmises Without independent meaningful enquiry
5. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the addition of Rs. 21,68,500 (Rs 40000
on a/ c of sale of shares to one M/ s Arun Finvest
(P) Ltd and rest from share application money recd from other parties) on basis of perverse findings
(neither the case of Ld AO in impugned order nor the case of Ld AO in remand report reproduced in CIT-A order) in glaring non appreciation of the fact that there is no meaningful enquiry at any stage by Ld AO.
6. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the addition of Rs 21,68,500 on basis of meretricious findings which are strongly contested and repudiated at para 7.3.1,
7.3.2,7.3.3 and 7.3.5 .
7. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in upholding the addition of Rs 21,68,500 on basis of unconfronted and unfounded new reasoning which is not borne out from records in strangulation of principles of natural justice.
Alternate claim of set off of brought forward business loss against business income assessed
8. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in not directing the Ld AO to verify from records and a fortiori, allow the carry forward business loss
against assessed business income.
That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal.
The grounds raised in read as under:-
Confirmation of penalty u/s. 271(1)(c) of the Act on non appearance / exparte basis (Rs. 800,219/-)
1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in confirming the penalty levied by AO u/s. 271(1)(c) of the Act, at para 5.3.2, 5.3.3.
(page 5, 6) without looking to the skeleton penalty order which is not sustainable in the eyes of law.
2. That on the facts and in the circumstances of the case and in Law, Ld. CIT(A) erred in confirming the penalty levied by AO in gross
non appreciation of i) ambivalent / non specific penalty charge (ii) vague penalty notices (iii) mere assessment and addition is basis of penalty u/s. 271(1)(c) of the Act (iv) there is valid defense available to appellant etc.
That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal.
4. The brief facts of the case are that in this case that assessment was made u/s. 144/147 of the I.T. Act, 1961 on 18.12.2007. An information in this case was available that certain persons are engaged in providing accommodation entries to the various persons. Following this the statement of such persons providing accommodation entries has been recorded on oath by the Investigation Wing of the Income Tax Department, New Delhi. The Investigation Wing after completing the investigation analyzed the information collected by them from various sources including banks and such entry operators. In the light of these observations the case of M/s Meenakshi Overseas Pvt. Ltd. was reopened and notice u/s. 148 was issued to the assessee for AY 2003-04 after recording the reasons. The assessee company is engaged in the business of investment. The return of income for the AY 2003-04 was filed on 12.11.2003 declaring an income of Rs. 3,140/-. The same was processed u/s. 143(1) of the Act. The assessment was reopened u/s. 147 of the Act on the basis of information received from Investigation Wing of the Department that the appellant received entries of Rs. 21,75,000/-. The assessee did not comply with the statutory notices. The AO made the necessary enquiry u/s. 133(6) of the Act. On the basis of information available the AO completed assessment on 18.12.2007 u/s. 144/147 of the Act with an addition of Rs. 21,75,000/- u/s. 68 of the Act. Subsequently, the Ld. CIT(A) dismissed the appeal fo the assessee as exparte vide order dated 11.2.2009 in due to non-appearance. On an appeal against the order of the CIT(A), ITAT vide order dated 10.9.2009 in set aside the order of the Ld. CIT(A) and restored the entire matter back to the file of the CIT(A) for a fresh decision on this issue. Accordingly, notice was issued to the assessee by the Ld. CIT(A) on 20.3.2013. In response thereto assessee’s AR appeared and made written and verbal submissions. Ld. CIT(A) sent the documents submitted by the assessee for seeking remand report and AO vide his order dated 28.2.2014 submitted his remand report and copy thereof was sent to the assessee alongwith the notice dated 5.3.2014, but no compliance was made by the assessee. Another notice was sent on 19.3.2014 and in response thereto adjournment application was filed on behalf of the assessee. But again on the adjourned date no compliance was made. Another notice was issued on 3.7.2014 giving final opportunity of hearing on 18.7.2014. There was no compliance to this notice as well. Thereafter, the AR Sh.
Mukesh Kumar Bansal was contacted over phone who submitted a letter on 19.9.2014 stating that his firm is no more legal counsel for the assesseee. In this scenario the Ld. CIT(A) observed that he has no option but to decide the case on merit and accordingly, the Ld. CIT(A) observed that the assessee claimed that the share application money received is for 19,650 shares at a value of Rs. 17,68,500/-. It is claimed that the amount of Rs. 4,00,000/- is received from M/s Arun Finvest Pvt. Ltd. as sale of shares. However, considering the cash introduced in the bank account of M/s Arun Finvest Pvt. Ltd. before issuing the cheque to the assessee, the claim of assessee cannot be accepted. Thus, the total amount of addition u/s. 68 remains Rs. 21,68,500/- and added back to the income of the assessee and accordingly, the appeal of the assessee was dismissed vide order dated 23.9.2014.
Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in Appeal before the Tribunal for challenging the legal issue raised vide ground no.1 & 2, as aforesaid.
At the time of hearing Ld. Counsel of the assessee has stated that although the assessee has raised so many grounds but he has only pressed the ground no. 2 i.e. legal ground which is squarely covered in favour of the assessee by the ITAT decision dated 09.01.2015 in the case of G&G Pharma India Limited vs. ITO passed in (AY 2003-04) in which the Judicial Member is the Author. He further stated that the above decision of the ITAT dated 09.01.2015 has been upheld by the Hon’ble Jurisdictional High Court in its Decision dated 08.10.2015 in ITA No. 545/2015 in the case of Pr. CIT-4 vs. G&G Pharma India Ltd. In this regard, he filed the copies of the aforesaid decisions before the Tribunal. In view of the above, he requested that by following the aforesaid precedents the reassessment proceedings of the AO may be quashed by accepting the Appeal filed by the Assessee.
On the contrary, Ld. DR relied upon the order passed by the authorities below and stated that the AO has properly recorded the reasons for reopening by due application of mind, hence, the appeal of the Assessee may be dismissed.
I have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities and the case law cited by the assessee’s counsel on the issue in dispute. I am of the view, it is very much necessary to reproduce the reasons recorded by the AO before issue of Notice to the Assessee u/s. 148 of the I.T. Act, 1961 which is reproduced hereunder:-
“The Director of Income (Investigation), New Delhi, had sent a report in the case of beneficiaries and operation of accommodation entries in Delhi, the CIT, Delhi-II had enclosed the CD received from CCIT-II, New Delhi, containing supplementary list of beneficiaries and operators of accommodation entries in Delhi. The letter was accompanied with a detailed report. The perusal of the report shows as per annexure enclosed.
On going through the information received from DIT Investigation being it has been seen that Meenakshi Overseas Pvt. Ltd. has taken accommodation entry of Rs. 10,75,000/- through as per list enclosed.
In view of the above credible information received from the DIT (Inv.), New Delhi, I have reasons to believe that the income to the extent of Rs. 10,75,000/- has escaped as assessments as per the provision of section 147 of the Income tax Act, 196.
I am also satisfied that the case of assessee for the AY 2003-04 is a fit case for issue of notice u/s. 148 of the Income tax Act, 1961.
If approved notice u/s. 148 of the Income Tax Act,
1961 may be issued.