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M/s. Shanker Gas and Mfg. Co. Pvt. Ltd. Versus Income Tax Officer, Ward No. 15 (4) , New Delhi

2016 (5) TMI 1223 - ITAT DELHI

Reopening of assessment - accommodation entries receipt - Held that:- No addition has been made in respect of the accommodation entry from M/s. Zigma Telecom Private Limited and the additions made are in respect of the parties, which are not mentioned in reasons recorded by the Assessing Officer. Thus, respectfully following the ratio of the judgment of the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd (2011 (6) TMI 4 - DELHI HIGH COURT ), we are of the opinion that the reasse .....

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17th May, 2013 of ld. Commissioner of Income-tax(Appeals)-XVIII, New Delhi, for assessment year 2004-05, raising following grounds of appeal: 1. On the facts and in the circumstances of the case, the CIT (A)- XVIII, New Deihi has erred both on facts and ;n law, in upholding the illegal order passed by the Respondent without jurisdiction, violative of natural justice, without application of fair and objective mind to facts of the case and the law applicable and hence liable to be set aside and qu .....

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aw. 3. On the facts and in the circumstances of the case, the CIT (A)- XVIII, New Delhi has erred both on facts and in law, in upholding assumption of jurisdiction in spite of the fact that the case is of after four year and the AO not recorded any satisfaction that there was escapement of any income by reason of failure on the part of the assessee that too without issue/served notice u/s 148 is void-ab-initio, illegal and unauthorized by law. 4. The order of Re-assessment having been passed in .....

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hence, the impugned order ought to have been set aside by the CIT (A) and failure to do so have vitiated the impugned order. 5. That under the facts and circumstances of the case and in law, the respondent has not discharged its onus of proof in any manner and has chosen to make illegal addition perversely and all the additions therefore ought to be set aside by ld. CIT(A) and failure to do so has vitiated the impugned order. 6. The Respondent has not replied to the objection specifically raise .....

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proceed of stock/shares as unexplained income ignoring the records and documents already filed before the ITO which were properly verified and accepted by him as no further explanation was sought by the AO nor submission made by the assessee was disproved by him. Hence the order of CIT(A) may be set aside. 8. The authorities below have erred in not following the binding decisions of Courts and Tribunals relied upon by the appellant for the fact that nothing was added out of reasons recorded and .....

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the appeal and prays for the appeal to be allowed after hearing both side. 2. The facts in brief are that return declaring income of ₹ 1,810/- was filed by M/s Roopin Capital Private Limited (in short the Company ) on 19th of August 2004. This company now stands merged with the assessee company, so hereinafter the company is addressed as assessee. The return of income filed by the Company was processed under section 143(1) of the Income-tax Act, 1961 (for short the Act ) on 04/01/2005. Sub .....

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see. However, on 20/10/2011, the assessee submitted that no notice under section 148 of the Act was received and hence the proceeding might be withdrawn. The Assessing Officer sent reply to the assessee vide letter dated 22.11.2011 and 14/12/2011. Looking to the non-compliance, the re-assessment was completed by the Assessing Officer on 27/12/2011 making addition of ₹ 30 lakh, which was subsequently rectified to ₹ 7.5 lakh. Aggrieved, the assessee filed appeal before the learned Comm .....

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jurisdiction assumed by the Assessing Officer in reopening the assessment through issue of notice under section 148 of the Act. 4. Before us, the learned Authorized Representative (AR) of the assessee submitted that no notice under section 148 dated 30/03/2011 was received by the assessee and therefore the proceedings are invalid and void-ab-initio. Further, the learned AR submitted that reasons recorded were containing duplicate entries and therefore Assessing Officer has not applied his mind .....

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in the assessment order, are altogether different from the party for which reasons were recorded and, therefore, if no addition is made in respect of the reasons recorded, then no other additions could be made in the reassessment proceedings. In support of the proposition, the assessee relied on the judgment of the Hon ble jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. versus Commissioner of Income Tax reported in (2011) 336 ITR 136 (Del). On merit of the addition, the ld. AR .....

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ld. Departmental Representative (DR) relying on the order of the authorities below submitted that the assessee received accommodation entry from Mr. Mukesh Gupta, who is a known entry provider and the information received was specific to the assessee, the AO after verification, reopened the relevant assessment year and therefore it cannot be said that the AO has not applied his mind while reopening the assessment. She further submitted that sufficiency or adequacy of reasons cannot be examined a .....

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t, enclosed by the assessee in the paper book at pages 20 to 21 , are reproduced as under: 1 1 . Reasons for the belief that income has escaped assessment: The assessee filed return of income for the A.Y. 2004-05 on 30.06.2004, declaring income of ₹ 1,508/-. The return was processed u/s 143(1) on 19.08.2004. DIT(Inv.) during the course of investigation in the, case of Mukesh Gupta group along with its close confidants Shri Rajan Jassal and Shri Surinder Pal Singh found that the group have .....

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operator) and hand over cash (plus commission) and take cheques/DDs/Pos. The cash is deposited by the entry operator in a bank account either in his own name or in the name of relative/friends or other person hired by him, for the purpose of opening bank account. The entry operator thereafter issues cheques/DD/PO in the name of beneficiary from the same account (in which the cash is deposited) or another account in which funds are transferred through clearing in two or more stages. The beneficia .....

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facts narrated above it is clear that the assessee has not disclosed fully and truly all material facts necessary for its assessment for that assessment year. I have therefore, reason to believe that the sum of ₹ 15,00,000/- chargeable to tax has escaped assessment. Thus, the same is to be brought to tax 'under section 147/148 of the I.T. Act 1961. Notice u/s 148 may be issued, if approved. 7. Thus, we find that according to the reasons recorded by the Assessing Officer, the assessee r .....

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M/s. Maple Sales Pvt. Ltd. - ₹ 3,00,000/- iii. M/s. Milansaar Impex & Traders Pvt. Ltd. - ₹ 5,00,000/- iv. M/s. Acoot India P. Ltd. - ₹ 5,00,000/- v. M/s. Bilz. Metals P. Ltd. - Rs, 5,00,000/- 8. In view of the above facts, we are in agreement with the contention of the learned AR that no addition has been made by the AO in respect of the reasons recorded for income escaped. 9. In the case of Ranbaxy laboratories Ltd versus Commissioner of Income Tax (supra), the Hon ble De .....

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ere initiated especially when the reasons for the latter ceased to survive ?" 10. The question of law in cited case was decided against the Revenue. The relevant para of the judgment is reproduced as under: 18. We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of Jaganmohan Rao (supra) [sic-Jet Airways (I) Ltd. (supra)]. We may also note that the heading of s. 147 is "Income escaping assessment" and that of s. 148 "Issue of .....

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the escaped income chargeable to tax. As per Expln. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the AO that on assuming jurisdiction under s .....

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s noted above, the AO was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under ss. 80HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under ss. 80HH and 80-I and accordingly reduced the cl .....

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