Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

ACIT, Circle-9 (1) , New Delhi Versus M/s. SNG Developers Ltd. (Earlier Known as SN Jee Developers) and Vica-Versa

2016 (9) TMI 212 - ITAT DELHI

Reopening of assessment - investigation by Directorate of Income Tax (Investigation), New Delhi - accommodation entries provided - Held that:- Directorate of Income Tax (Investigation), New Delhi, has carried out enquiries in respect of the persons/companies engaged in the business of providing accommodation entries to various companies and these persons used to issue cheques in lieu of cash received after deducting their commission and the cheques were generally issued as share application mone .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntry operators was provided by the Assessing Officer. Further, from the table of the accommodations entries, which the assessee is said to have received, reproduced in the assessment order, we find that there are five instances, where the entries have been repeated. - Assessing Officer has not applied his independent mind while recording the reasons in this case and, therefore, proceedings under section 147 of the Act initiated by way of issue of notice under section 148 of the Act are quas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e in ITA No. 735/Del/2012 are as under: i. The learned Commissioner of Income Tax(Appeals) erred in law and on the facts and circumstances of the case in quashing the proceedings initiated u/s 147 of the I.T. Act. ii. The learned Commissioner of Income Tax (Appeals) erred in law and on the facts and circumstances of the case in deleting the addition of ₹ 95,65,510/- made by the Assessing Officer on account of accommodation entries received during the year. iii. The appellant craves to amen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the learned Commissioner of Income Tax (Appeal) is contrary to the judicial pronouncements in the case of Indian Tube Co. Ltd. Vs. Income Tax Officer (2005) 272 ITR 439 (Cal.), Sukhlal Ice & Cold Storage Co. Vs. Income Tax Officer (1993) 199 ITR 129 (All.) and Ashok Kumar Dixit Vs. Income Tax Officer (1992) 198 ITR 669 (All.) ii. That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeal) erred in law and on facts by not giving any finding on the case law .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

parties, a list of which was supplied to the Assessing Officer by the Investigation Wing, the Assessing Officer ( AO') issued notice under section 148 of the Income tax Act, 1961 (in short the Act ) on 31/3/2010. The copy of reasons for reopening the case were duly communicated to the assessee 10/09/2010 and preliminary objections to the reopening proceedings were rejected by the AO through an order dated 24/09/2010. Thereafter, notice under section 143(2) and 142(1) of the Act were issued, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e impugned order, the Revenue is in appeal before us and the assessee has filed cross objections to it. 4. At the time of hearing, it was observed that there was delay in filing appeal by the Revenue, therefore, an application condonation of the delay has been filed by the Assessing Officer. It was submitted by the learned Sr. Departmental Representative that limitation for filing appeal in this case was expired on 18/11/2011, whereas the appeal has been filed on 13/02/2012. The Registry has als .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er hand, learned Authorized Representative opposed the condonation of the delay, 4.2 We have heard the rival arguments on the issue of the condonation of the delay. We find that the delay was due to reasonable cause and bonafide mistake and the appeal has been filed as soon as the mistake has been detected. In view of the facts and in the interest of justice, we condone the delay in filing the appeal and admit the same. 5. First, we take up the cross objection raised by the assessee challenging .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/03/2010, the AO issued another notice, dated 31/03/2010, which was served on the assessee on 02/04/2010. The learned Authorized Representative accordingly submitted that proceeding of Sec. 148 of the Act through notice dated 31/03/2010 were not validly initiated and deserves to be quashed on this ground . 5.2 On the contrary, the learned Sr. Departmental Representative referring to page 20 of the assessee s paper book submitted that the second notice under section 148 dated 31/03/2010 was issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection, therefore, the same is treated as withdrawn and dismissed. 6. Now, we take up the appeal of the Revenue. In ground No. 1, the Revenue has challenged quashing of proceedings initiated under section 147 of the Act 6.1 The learned Sr. Departmental Representative (DR) supporting the order of the Assessing Officer submitted that the reasons were recorded after receipt of information from the Investigation Wing that the assessee obtained accommodation entry of ₹ 95,65,510/- from differen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er relying on the judgment of the Apex Court in the case of Raymond Woollen Mills, reported in 236 ITR 34, submitted that at the stage of issuing notice under section 148 of the Act, sufficiency of reasons was not to be examined. She also relied on the judgment in the case of S. Narayan Appa, reported in 63 ITR 219. Further, relying on the judgment in the case of the Parfful Chunnilal reported in 236 ITR 832 submitted that no court can sit on the judgment of the AO of sufficiency of reason to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.2 The learned Authorized Representative (AR) of the assessee on the contrary, relying on the finding of the learned Commissioner of Income-tax (Appeals) submitted that the Assessing Officer has merely referred to the information received from the Investigation Wing and recorded reasons without applying his mind. The learned Authorized Representative submitted that there was repetition of entries in the reasons recorded by the AO, which shows that, he did not take due care in recording reasons. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Tribunal considered the judgment of the Hon ble Jurisdictional High Court in the case of Signature Hotels Private Limited (supra) and other decisions. The learned Commissioner of Income-tax (Appeals) has also relied on the judgments of the Hon ble High Court in the case of Signature Hotels Private Limited and others judgments and then arrived at a conclusion that the Assessing Officer did not apply mind independently while reopening the assessment. The relevant part of the decision in the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

prima facie in nature but even for arriving at this prima facie belief, he has to apply his mind to arrive at a satisfaction to that effect. Even in this decision of Hon'ble Delhi High Court in the case of CIT vs. India Terminal Connector System Ltd. (supra) relied upon by the learned Senior DR, the decision in the case of Rajat Exports Import India Pvt. Ltd. vs. ITO - W.P.(C) No. 8341/2011 dated 18.1.2012 has been referred wherein the contention of the assessee has not been disputed that t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g reasons for the reopening to form a prima facie view that income chargeable to tax has escaped assessment. In the case of Sarthak Security Co. (P) Ltd. vs. ITO (supra) relied upon by the Learned AR, Assessing Officer was made aware of the situation by the Investigation Wing and there was no mention that the company who had invested shares in petitioner company were fictitious. What were mentioned was that these companies were used as conduits. Assessee in his objection had clearly stated that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

quashed. In the case of CIT vs. India Terminal Connector System Ltd. (supra) relied upon by the learned Senior DR, the decision in the case of Sarthak Security Co. Pvt. Ltd. (supra) has been distinguished on the facts of these two cases before the Hon'ble High Court. In that case, the Hon'ble High Court has observed that at that stage, it is not necessary to have the established fact of escapement of income but what is necessary is that there is relevant material on which a reasonable p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d was that these companies were used as conduits. The assessee on the other hand in his objection had clearly stated that the companies had bank accounts and payments were made to the assessee company through banking channel. The identity of the companies was not disputed. Again in the case of Signature Hotels (P) Ltd. vs. ITO (supra) before the Hon'ble High Court of Delhi, the first sentence of the reasons stated that information had been received from Director of Income-tax (Inv.) that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Hon ble Court held that the reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-tax (Inv.) and arrive at a belief whether or not any income had escaped assessment. The writ petition was accordingly allowed by the Hon'ble High Court and proceed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts unableness to countenance that any belief based on such statement can ever be arrived at. The Hon'ble High Court has been pleased to hold that the reasons have been recorded without any application of mind and thus no belief that income had escaped assessment can be stated to have been formed based on such reasons as recorded. 11. When we examine the facts of the present case to find out as to whether the Assessing Officer while recording his satisfaction to initiate reopening proceedings .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere has been a systematic plan by unscrupulous persons/entities in which the cash is given to the entry providers who in turn issues the cheques of the equal amount to the beneficiaries. In the reasons recorded though the Assessing Officer has written that he had examined the investigation carried out and the data of such beneficiaries as compiled by the Directorate of Investigation but he has not mentioned about such examination nor the outcome thereof. The assessee filed his objection on 21.7. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

st of entry operators, copy of their statement and other evidences provided by the investigation wing of the department. It was contended further that the Assessing Officer failed to provide the opportunity to cross examine the entry operators and the share applicants. It was submitted that all the share applicants are in existence having PAN and they are assessed to income tax, they had also filed their confirmation with other supported evidences and all the share application money was received .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing of reasons to belief that a chargeable income has escaped assessment is a precautionary measure that an assessee should not go through the entire gamut of reassessment proceedings on the basis of casual and routine approach of the Assessing Officer to justify the initiation of reopening. We thus respectfully following the ratio laid down in the above cited decisions of the Hon ble jurisdictional High Court of Delhi hold that neither the reasons in the initial notice nor the communication pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ating proceedings were recorded. The Tribunal has already summarized the findings in the case of various High Court judgments including judgments in the case of Signature Hotels Private Limited (supra). 6.5 When we examine the facts in the present case, it is relevant to refer the pages 36 to 37 of the assessee s paper book containing the reasons recorded by the Assessing Officer for reopening of the assessment, which are reproduced as under: Return of income in this case was filed on 25/11/2003 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the activity of providing accommodation entries to other concerns. These persons used to issue cheques in lieu of cash received after deducting their commission and these cheques were generally issued as share application money/unsecured loans. As per the information received, the above named assessee M/s. SNG Developer Ltd. (Earlier known as S N JEE Developers (P) Ltd.) has also received the accommodation entries during the F.Y. 2002-03 as per annexure -B attached. These accommodation entries .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Income Tax, Range-9, New Delhi for consideration and necessary approval in accordance with the provisions of section 151(2) of the IT Act, 1961 for issuance of notice u/s 148 of the I.T. Act. 6.6 We find from the above that the Assessing Officer has mentioned that the Directorate of Income Tax (Investigation), New Delhi, has carried out enquiries in respect of the persons/companies engaged in the business of providing accommodation entries to various companies and these persons used to issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs in respect of the entries related to the assessee. It was submitted by the assessee that no opportunity to cross-examine the entry operators was provided by the Assessing Officer. Further, from the table of the accommodations entries, which the assessee is said to have received, reproduced in the assessment order, we find that there are five instances, where the entries have been repeated. We find that, the Tribunal in the case of GN International Private Limited (supra) also observed similar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version