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Income Tax Appellate Tribunal, DELHI BENCH “SMC-2”, NEW DELHI
Before: SHRI H.S. SIDHU
Date of Hearing : 03-08-2015 Date of Order : 24-09-2015 ORDER PER H.S. SIDHU : JM These are two Appeals are filed by different assesses which is against the separate orders of the Ld. CIT(A)’s both dated 25.6.2014 for the same asstt. year i.e. 2004-05. Since the issues involved in both the appeals are identical and common, hence, these appeals are being consolidated by this common order for the sake of convenience, by dealing with (AY 2004-05).
The following grounds have been raised in the Assessee’s Appeal No. 4444/Del/2014 (AY 2004-05). “1. That on the facts and circumstances of the case and the provision of law the Ld CIT(Appeal) has failed to appreciate that the notice uls 148 is illegal, bad in law and without jurisdiction and as such the assessment order passed uls 148 is illegal and bad in law.
2. That on the facts and circumstances of the case and the provision of law the Ld CIT(Appeal) has failed to appreciate that the initiation of reassessment proceeding uls 147 is illegal and bad in law.
3. That on the facts and circumstances of the case and the provision of law the Ld CIT(Appeal) has failed to appreciate that the impugned assessment order passed by the Ld. AO is bad in law, illegal and wrong on facts.
4. That on the facts and circumstances of the case and the provision of law the Ld CIT(Appeal) has failed to appreciate that the impugned assessment order passed by the Ld. AO is against the principles of natural justice and has been passed without affording reasonable opportunity of being heard.
5. That on the facts and, on the circumstances of the case and the provision of law the Ld CIT Appeal has erred in sustaining an addition of Rs.5,00,000/- as unexplained cash credit uls 68 of the Income Tax Act, 1961.
6. That the Appellant craves the right to amend, append, delete any or all grounds of appeal.”
3. The brief facts of the case are that a search and seizure action u/s. 132 of the I.T. Act, 1961 was carried out in Wings Pharmaceuticals group of cases on 14.2.2008 and the assessee was also covered under search. Subsequent to centralization of the case, proceedings u/s. 153A of the I.T. Act, 1961 had been initiated. A notice u/s. 153A was issued on 15.1.2009. In response thereof, the assessee filed its return of income for AY 2004-05 on 30.1.2009, declaring income of Rs. 3,74,526/-. Thereafter, assessment in this case was completed u/s. 143(3)/153A of the I.T. Act, 1961 vide order dated 24.12.2009 at an income of Rs. 3,74,526/-. Subsequently, a letter dated 25.3.2011 was received from the CIT(A), Delhi (Central)- III, New Delhi forwarding therewith copy of letter of the ACIT, CC-19, New Delhi containing therewith list of beneficiaries of accommodation entries provided by Sh. Suresh Kumar Gupta for AY 2004-05. After perusing the list enclosed with the letter of the ACIT, CC-19, New Delhi, AO reveals that M/s RK Arora & Sons (HUF), who is assessed to tax is one of the beneficiaries and has received accommodation entries from Anjali Gupta. In view of the facts and circumstances of the case, the case of the assessee was reopened u/s. 147 of the I.T. Act, 1961 after obtaining approval of the Ld. CIT, Delhi (Central)-III, New Delhi vide his office letter dated 30.3.2011 and a notice u/s. 148 of the I.T. Act, 1961 was issued to the assessee on 30.3.2011 which was sent through speed post. A copy of the notice was also served upon the assessee by hand on 31.3.2011. In response to the notice u/s. 148 r.w. Section 147 of the I.T. Act, 1961, the assessee vide letter dated NIL has submitted on 2.5.2011 a copy of return of income and also requested for the copy of the reasons recorded before initiating the reassessment proceedings. A notice u/s. 143(2) of the I.T. Act, 1961 was issued on 17.10.2011 and served upon the assessee through speed post, fixing the case for hearing on 25.10.2011. In response thereof, neither anybody 3 attended, nor any reply has been filed by the assessee. Subsequently, a notice u/s. 142(1) of the I.T. Act, 1961 alongwith questionnaire was issued to the assessee on 4.11.2011 and served upon him through speed post. In response thereto, the assessee on 11.11.2011 has filed a letter and requested for copy of reasons recorded before initiating the proceeding u/s. 148 for the AY 2004- 05. The same was sent to the assessee on 8.12.2011 and assessee submitted vide his letter dated 13.12.2011 his reply. AO observed that the assessee has not submitted any documentary evidence i.e. any bank statement etc., in support of its contention. Hence, in the absence of any documentary evidence, the cash credits received by the assessee remained unverifiable. Thereafter, the assessment was made u/s. 147 by order dated 20.12.2011 assessing the income at Rs. 8,74,530/- passed u/s. 143(3)/148 of the Income Tax Act, 1961.
4. Aggrieved with the aforesaid assessment order dated 20.12.2008, Assessee was in appeal before the Ld. CIT(A), who vide impugned order dated 25.6.2014 has dismissed the appeal of the assessee.
5. Against the aforesaid order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
Ld. Counsel of the assessee reiterated the contention raised in the Grounds of Appeal. He further submitted that the AO has mechanically issued the notice on the basis of letter received from the office of the CIT Central-3. There is no live link in the reasons recorded between the information obtained and the belief formed by the AO. Only the value of entry taken is mentioned but the nature of entry whether it is, bogus gift, loan or share capital money is not mentioned. Moreover, on what basis the above presumption is drawn that the assesssee has taken any accommodation entry is also not mentioned. No reference is made to any tangible material statement or annexure in support of the information receive on the basis of which reasons have been recorded. From the reasons it is also not clear whether any statement of Smt. Anjali Gupta/ Sh. Suresh Kumar Gupta has been recorded or not. Even in the reasons recorded, Pay Order no. mentioned is wrong meaning thereby that the AO has not bothered to even verify the information received with the assessment folder wherein the confirmation/copy of Pay order has already been filed at the time of original assessment u/s 153A. It indicates that the AO has mechanically recorded the reasons and issued the notice without applying his own mind. Therefore, on these facts, the decisions of Hon'ble Jurisdictional High Court in the case Signature Hotels Pvt. Ltd. (supra), 338 ITR 51, Insectici (India) Ltd. (supra), 357 ITR 330 and ClT vs. Atul Jain and Vin Jain, 299 ITR 383 would be squarely applicable because the information on the basis of which the AO had initiated proceedings under section 147 was vague and uncertain as may be evidenced from the relevant para of these judgments. Hence, he requested that the reassessment proceedings may be quashed.
On the other hand, Ld. DR relied upon the orders passed by the lower authorities on the issue in dispute.
I have heard both the parties and perused the records. I find that the AO has recorded the reasons for belief that income has escaped assessment as under. The same is reproduced in the impugned order. “Reasons to believe for reopening u/s. 147 MIs R.K. Arora & Sons HUF, 8-4/48, Paschim Vihar, New Delhi (A.Y. 2004-05)
A search & seizure action u/s 132 was carried out in Wings Group of cases on 14.02.2008. The case was centralized with Central Circle-2 vide order uls 127 by CIT-IX, New Delhi on 24.10.2008.
2. The assessrnept in the case of M/s R.K. Arora/& Sons (HUF) was completed vide order u/s 143(3)/153A of the Act. 1961 dated 24.12.2009 at the returned income of Rs.3,74,526/-.
A letter F.No. CIT(C)-1I1/2010-11/2334,. dated 25.03.2011 has been received from the CIT(Central)-III, New Delhi forwarding therewith copy of letter of the ACIT, Central Circle- H). New Delhi containing therewith list of beneficiaries of accommodation entries provided by Sh. Suresh Kumar Gupta for A.Y. 2004- 05.
A perusal of the list enclosed with the letter of the ACIT, CC-19, New Delhi reveals that M/s R.K. Arora & Sons HUF, who is assessed to tax with this Circle, is one of the beneficiaries and has received accommodation entries from Anjali Gupta, as per details given below:
Mediatory Actual Date Ch. No. Amount Beneficiary PO No. Deepak R.K. Arora & 11.3.2004 060927 Rs. 5,00,000 Jain sons (HUF)
In view of this. I am satisfied that the income to the tune of RS.5,00,OOOI- has escaped assessment by reason of the failure on the part of the assessee and to disclose fully and truly all material facts necessary for his assessment for that assessment year