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DCIT, Central Circle-2, New Delhi Versus M/s. A.K. Capital Services Ltd.

2018 (1) TMI 328 - ITAT DELHI

Reopening of assessment - case reopened on the basis of independent information in the form of enquiry report of Investigation Wing - bogus payment - Held that:- From the reasons recorded, we do not find anywhere that these reasons were recorded on the basis of enquiry report of Investigation Wing suggesting that the payment to M/s Maruti Papers Ltd. was bogus. - Though in the assessment order, AO has mentioned the enquiry report of Investigation Wing, Meerut (UP) for making additions, but .....

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8,47,500) has been debited in excess by the assessee. The assessee explained before us that this difference was due to change in accounting of service tax. According to him, the assessee followed inclusive method in respect of the service tax, whereas M/s. Maruti Paper Ltd followed exclusive method of service tax and therefore, said party has not shown amount of service tax in the profit & loss account. CIT(DR) could not controvert this fact that said information was already available with the A .....

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SHUKLA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER Appellant by : Sh. Aparna Karan, CIT(DR) Respondent by : Sh. Ved Jain, Adv. ORDER PER O.P. KANT, A. M. This appeal by the Revenue is directed against order dated 11/07/2014 passed by the learned Commissioner of Income-tax (Appeals)-III, New Delhi [in short the Ld. CIT-(A) ] for assessment year 2007-08 raising following grounds: 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding re- .....

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are that the assessee filed regular return of income on 30/11/2007 declaring total income of ₹ 12,14,30,611/-. Consequent to the search and seizure action under section 132 of the Income-tax Act, 1961 (in short the Act ), assessment under section 153A/143(3) of the Act was completed on 26/12/2009 assessing total income at ₹ 14,16,64,407/-. In the assessment order, the Assessing Officer made one of the disallowance amounting to ₹ 97,15,872/-for bogus sub-arranger fee against fol .....

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deleted the additions including the addition for bogus sub arranger fee. 4. Subsequent to that, case of the assessee was reopened under section 147 of the Act after recording reasons to believe that income escaped assessment and notice under section 148 of the Act was issued on 28/03/2012 and served upon the assessee. In response, the assessee filed return of income on 25/04/2012. Thereafter, notices under section 143(2) and 142(1) of the Act were issued by the Assessing Officer. The case was th .....

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account of the assessee company was a sort of accommodation entry just to reduce the profit. The Ld. Assessing Officer brought to the notice of the assessee enquiries carried out by the Investigation Wing of Income Tax Department, Meerut (UP) and statement of director/authorised signatory of M/s Maruti Papers Ltd. The assessee furnished details of transaction, copies of invoice, copies of mandate and other documents related to the transaction and submitted that the arranger fee paid to M/s. Mar .....

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servations, the Assessing Officer made disallowance of ₹ 68,99,954/-. 4.1 Before the Ld. CIT-(A), the assessee challenged the validity of the reassessment proceedings and submitted that issue of sub-arranger fee was already examined in earlier assessment proceedings u/s 153A/143(3) of the Act and reopening was based only on the mere change of opinion . The assessee submitted before the Ld. CIT-(A) that in assessment year 2006-07, the assessment was reopened on the basis of the reconciliati .....

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dity of the reassessment is reproduced as under: ………………………………………………………………………… Since in the year under consideration also the same facts are there are same submissions have been made as were made during the appellate proceedings for assessment year 2006-07 therefore, relying on my order dated 11.06.2014 .....

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humbly submitted that following decisions may kindly be considered: 1. R.K. Malhotra ITO Vs Kasturbhai Lalbhai, Supreme Court, 1977, 109 ITR 537 (SC) The intimation which the Income-tax Officer received from the audit department would constitute "information" within the meaning of section 147(b). 2. Devi Electronics Pvt Ltd Vs ITO, Bombay High Court, 2016, 2017-TIOL-92-HC-MUM-IT The likelihood of a different view when materials exist of forming a reasonable belief of escaped income, w .....

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e received by DRI from CCE which was passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings. 5. Ankit Financial Services Ltd. Vs DCIT, Gujarat High Court, 2016, 78 taxmann.com 58 Where material recovered in search of another person indicated that assessee had received bogus share applications through accommodation entries, since assessee was beneficiary, initiation of re-opening was justified. 6. Aaspas Multimedia Ltd. Vs DCIT, .....

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ax (Appeals) holding that assessment was reopened only on the mere change of opinion. He referred to the reasons recorded for the year under consideration, available on page 186 to 187 of the paper book and submitted that reasons recorded in the year under consideration are identical to the reasons recorded for the assessment year 2006-07. Accordingly, he submitted that appeal of the Revenue might be dismissed. 7. We have heard the rival submission and perused the relevant material on record. Th .....

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53A/143(3) of I.T. Act, 1961 was completed on 26.12.2009 at an total income of ₹ 14,16,64,407/- as against returned income of ₹ 12,14,30,611/- filed on 13.11.2007. The assessee company M/s. A.K. Capital Serviced Ltd. has debited a sum of ₹ 7,21,42,282/- on account of Sub- arrangers fees/commission in his books of account for the period 01.04.2006 to 31.03.2007 relevant to the A.Y. 2007-08 out of which a sum of ₹ 68,99,954/- relates to M/s. Maruti Papers Ltd. whereas the s .....

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8377; 52,454/- (Rs.68,99,954 - 68,47,500) of sub-arrangers/commission during the period of 1.4.2006 to 31.3.2007 relevant to A.Y. 2007-08/ In view of the above, I have reason to believe that the income of ₹ 52,454/- on account of excess amount of sub-arrangers fees/commission debited in assessee s books of account has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Statement on oath of Shri Rajesh .....

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making additions, but it has not been made basis for reopening of the assessment and the assessment has been reopened merely on account of the difference of the amount recorded in the books of accounts of the assessee as well as in books of accounts of the M/s Maruti Papers Ltd. only. The assessee in its books of accounts recorded arranger fee of ₹ 68,99,954/- whereas M/s. Maruti Papers Ltd. credited an amount of ₹ 68,47,500/-. According to the Assessing Officer this amount of ͅ .....

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tion to page 52 to 68 of the paper book and submitted that all information in respect of sub-arranger fee, including the fee paid to M/s Maruti Papers Ltd. was already submitted before the Assessing Officer in proceedings under section 153A/143(3) of the Act and no adverse inference was drawn in respect of M/s Maruti Papers Ltd. The Ld. CIT(DR) could not controvert this fact that said information was already available with the Assessing Officer. In our opinion, when the information was already a .....

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nal (supra) in assessment year 2006-07 has already held the reassessment proceeding as invalid. The relevant finding of the Tribunal is reproduced as under 6. We have considered the rival arguments made by both the sides, perused the orders of the AO and Ld. CIT(A) and the paperbook filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the original return in the instant case was filed on 22.11.2006 which was processed u/s 143(1) accepting the ret .....

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details filed by the assessee, the AO had also issued notice u/s 133(6) to various parties to whom the sub arranger fee was paid. We find after considering the reply received from the various parties the AO had made addition of ₹ 1,75,68,084/- on account of sub arranger fee paid to four parties. We find from the various details furnished by the assessee that M/s Maruti Paper Ltd., had issued the following invoices to the assessee which was available before the AO, a fact recorded by La. C .....

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AO shows that the difference of ₹ 11,69,481/- has been paid in excess which has escaped assessment whereas the difference is nothing but service tax charged by M/s Maruti Paper Ltd. Even though these details were available before the AO, we find the AO without applying his mind properly has reopened the assessment by recording reasons. We therefore, find no infirmity in the order of the CIT(A) in holding that the assessee had disclosed all the facts in the original assessment and AO canno .....

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