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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-II : NEW DELHI
Before: SHRI J. SUDHAKAR REDDY
ORDER This is an appeal by the assessee directed against the order of the CIT(A)-XVII, New Delhi, dated 21.08.2013 for the assessment year 2001-02.
The facts in brief are that the original assessment in this case was completed u/s 143(3) on 14.2.2003 at an income of Rs.56,025/-. The AO recorded reasons for reopening and issued notice u/s 148 dated 26.3.2008.
The assessee replied stating that the return originally filed on 3.10.2001 may be treated as a return filed in response to the notice u/s 148. He also sought reasons for reopening, which the AO furnished, vide letter dated 14.11.2008. The assessee objected to the initiation of the assessment proceedings, vide letter dated 24.11.2008 The AO disposed of these objections vide order dated 8.12.2008. Thereafter, the assessment was completed u/s 147 read with section 148 on 26.12.2008 determining the total income at Rs.10,81,025/-, inter alia, making an addition of Rs.10 lac u/s 68 of the Act. On appeal, the first appellate authority confirmed the addition. Aggrieved, the assessee is before us on the following grounds:-
“1. Because the action is being challenged on facts and law for the initiation, continuation and conclusion of the reassessment proceedings u/s 147 r.w. 148 of the Act, since even otherwise it is a case of ‘change of opinion’ while scrutiny assessment completed u/s 143(3) through order dt. 14.02.2003. 2. Because the action is being challenged on facts and law upholding the addition of Rs.10,25,000/-, nevertheless the identity, existence of the payer is an accepted fact, whereby the 2 appearance u/s 131 cannot be read within Section 68 for declining the relief prayed for vacating the additions.”
The ld. counsel for the assessee, Shri Gurmeet Singh submitted that the reopening is bad in law for the reason that:
a) The reasons recorded are vague and the name of the entry operator has not been specified; b) There is no independent application of mind by the AO which is evident from the reasons recorded; c) There is no tangible material; and d) Notice has been issued based on the information received from the Investigation Wing of the Department.
He relied on the following case laws:-
i) 85CCH 040 (Delhi High Court); ii) 357 ITR 24 (Del); and iii) 365 ITR 447 (Del)
On merits, no argument was specifically raised by the ld. counsel for the assessee.
The ld. DR, Shri Raman Kant Garg, on the other hand, relied on page 9, para 6 of the ld.CIT(A)’s order and submitted that the AO, on receipt of tangible material from the Investigation Wing, has independently examined the same and, after application of mind, arrived at a conclusion that income has escaped assessment. Thus, he submits that the reopening is valid in law. He relied on the following case laws:-
i) 236 ITR 34; ii) 161 Taxmann 316.
After hearing the rival submissions and considering the papers on record, I hold as follows. The reasons recorded for issuing notice u/s 148 read as follows:-
“Reasons for issuing notice u/s 148 of the Act in the case of M/s Paramount Intercontinental (P) Ltd., for the A.Y. 2001-02 – reg. In this case, assessment was completed u/s 143(3)(ii) on 14.02.2003 accepting the returned income of Rs.56,025/-. Information has been received from the Investigation Wing of the Income Tax Department that the above named assessee is a beneficiary of accommodation entries received from certain established entry operators identified by the Wing during the period relevant to AY 2001-02. A comprehensive investigation was carried out by the Investigation Wing for identification of entry operators engaged in the business of money laundering for the beneficiaries and on the basis of investigation carried out and evidences collected, a report has been forwarded. I have perused 4 the information contained in the report and the evidences gathered. The report provides details of the modus operandi of the ‘money laundering scam’ and explain how the unaccounted money of the beneficiaries are ploughed back in its books of account in the form of bogus share capital/capital gains, etc., after routing the same thorugh the bank account(s) of the entry operators. Entry operators were identified after through investigation on the basis of definitive analysis of their identity, credit worthiness and the source of the money ultimately received by the beneficiaries. These entry operators are found to be mostly absconding after the unearthing of the ‘Money Laundering Scam’ leaving the said money at the disposal of the beneficiaries without any associated cost or liability. In the instant case, the assessee is found to be the beneficiary of accommodation entry from such entry operators as per the following specific details of transaction:- Entry Operator Beneficiary’s Date of Amount Entry (Assessee’s) entry taken (Rs.) giving Bank & Bank & Account No. Account No. of entry operators 1. 2. 3 4 5 DUPAS LEASING SBI Wazirpur 08.04.00 500000 UCO & FINANCE CO. Bank, LTD. Model Town. 1077 ETISHA -Do - - Do- 500000 UCO FINANCE & Bank, INVESTMENT Model Town 1485 Total 1000000
The assessee has received unexplained sums from the entry operators as per the above details as per information available with the undersigned. As explained above, the identity, creditworthiness and genuineness of transactions with the persons found to be entry operators cannot be established. I, therefore, have reasons to believe that on account of failure 5 on the part of the assessee to disclose truly and fully all material facts necessary for assessment for above assessment year, the income chargeable to tax to the extent of accommodation entry mentioned above, has escaped assessment within the meaning of Section 147 of the Act. Since four years has since expired from the end of the relevant assessment year, and the scrutiny assessment was completed u/s 143(3) in this case for the said assessment year, the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of CIT, Delhi-V, New Delhi in terms of the proviso to Section 151(1) of the Act. (Emphasis supplied) Sd/- (ABHAY KANT DAS) Income Tax Officer, Ward-14(1), Room No.209, CR Building, New Delhi-2.”
A perusal of the reasons demonstrates that the AO records that he has perused the information contained in the report and evidences gathered. The name of the entry operators were given as Dupas Leasing & Finance Co. Ltd. and Etisha Finance & Investment. The assessee admittedly received share application money of Rs.5 lac each through cheque from the above two companies. On these facts, the submissions of the assessee that:
a) There is no tangible material; b) There is no independent application of mind by the AO on this material and in coming to a conclusion that income has escaped assessment; and c) That all material facts have been disclosed by the assessee and, hence, reopening is bad in law, is without any merit.
The assessee relied on the decision of the ‘E’ Bench of the Tribunal in the case of Mini Leisure City Pvt. Ltd. vs. ITO in vide order dated 28th November, 2014, where a reference has been made to the decisions of the jurisdictional High Court in the case of Signatures Hotels Pvt. Ltd. vs. ITO and Another (2011) 338 ITR 51 (Del), CIT vs. Insecticides (India) Ltd. (2013) 357 ITR 330 and other decisions. In my view, the reasons recorded by the AO in the case of Mini Leisure City Pvt. Ltd (supra) are materially different from the reasons recorded by the AO in the instant case. In the instant case, the AO records that he has perused the information contained in the report and the evidences. The AO also records that the entry operators were found absconding. Thus, the ratio laid down in Mini Leisure City Pvt. Ltd. (supra) will not apply to the facts of the instant case. The ld. counsel 7 also relied on the decision of the jurisdictional High Court in the case of CIT vs. Suren International Pvt. Ltd., 357 ITR 24. In that case, the court gave a finding that the AO in the reasons recorded has not alleged that the assessee had failed to truly disclose any material facts at the time of assessment. In the case in our hand, the AO has specifically recorded such a finding. In that case, it was found that the same entries had been repeated six times and clearly indicated the callous manner in which the reasons for initiating re-assessment proceedings were recorded. Thus, this case does not come to the help of the assessee. In the decision in the case Rasalika Trading and Investment Co. Pvt. Ltd. vs. DCIT, 365 ITR 447 (Del) relied upon by the ld. counsel for the assessee, the court came to a conclusion that the notice issued was based on stale information which was available at the time of original assessment. Hence, it came to the conclusion that reopening was done on a mere change of opinion.
Hence, the case was distinguishable on facts.
In view of the above discussion, we uphold the finding of the ld.CIT(A) on the issue of reopening, though for different reasons.
In the result, Ground No.1 of the assessee is dismissed.
As no arguments were advanced on ground No.2, I dismiss the same.
In the result, the appeal of the assessee is dismissed.
The order pronounced in the open court on 04.11.2015.