Income Tax Appellate Tribunal - Delhi
Golden Job Finder P.Ltd, New Delhi vs Ito, Ward-11(4), New Delhi on 29 July, 2021
1
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'C' BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI K.N. CHARY, JUDICIAL MEMBER
ITA No. 2830/DEL/2018 [A.Y 2009-10]
Golden Job Finder Pvt Ltd Vs. The I.T.O
B - 44, Somdutt Chamber -2 Ward - 11(4)
9, Bhikaji Cama Place, New Delhi New Delhi
PAN: AACCG 4539 K
[Appellant] [Respondent]
Assessee by : Shri S.K. Tulsian , Adv
Ms. Abha Agarwal, Adv
Ms. Bhoomija Verma, Ad
Ms. A. Nancy Rathi, Adv
Shri Ashwani Kumar, CA
Revenue by : Shri S.N.A Nazmi, Sr. DR
Date of Hearing : 29.07.2021
Date of Pronouncement : 29.07.2021
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the CIT(A) - 35, New Delhi, dated 02.01.2018 pertaining to A.Y 2009-10. 2
2. The grievances of the assessee read as under:
1. That the order dated 02-01-2018 passed u/s 250 of the Income-tax Act, 1961 (hereinafter called "the Act") by the Learned Commissioner of Income-Tax (Appeals) 35 New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Income Tax Officer, Ward -
11(4), New Delhi in passing the order u/s 148 of the Act.
2. That theorder dated 02-01-2018 passed u/s 250 of the Act by the Learned Commissioner of Income-Tax (Appeals) -35 New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Income Tax Officer, Ward -11(4), New Delhi in adding back a sum of Rs. 40,00,000/- as share capital, Rs. 19,60,00,000/- as share premium and Rs. 4,20,00,000/- as share application money received (aggregating to Rs. 24,20,00,000/-) by resorting to the provisions of Section 68 of the Act and holding that the onus as cast upon the Appellant Company by the said Section had not been discharged.
3. That the order dated 02-01-2018 passed u/s 250 of the Act by the Learned Commissioner of Income-Tax (Appeals) -35 New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Income Tax Officer, Ward -11(4), New Delhi in adding back a sum of Rs. 48,40,000/- on the ground that commission @ 2% has allegedly been paid by the Appellant Company for procuring the accommodation entries by treating the same as being undisclosed sources." 3
3. The representatives of both the sides were heard at length. Case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules. Judicial decisions relied upon have been carefully considered.
4. Briefly stated, the facts of the case are that the assessee filed its return of income on 30.09.2009 wherein income of Rs. 26,31,781/- was declared. Vide notice dated 31.03.2016, the Assessing Officer assumed jurisdiction for reopening assessment and reassessment proceedings were initiated. The reasons for reopening the case recorded by the Assessing Officer read as under:
"Reasons for reopening the case of M/s Golden Job Finder Pvt. Ltd. AY 2009- 10, u/s 147/148 of the Income Tax Act. 1961.
The assessee has filed its return of income for A.Y. 2009-10 on 30.09.2009 declaring an income T 26,31,781/-. Thereafter, an information was received in this office, on 30.03.2016 from Dy. Director of Income Tax (Inv.), Unit-4(3), Kolkata as follows:4
S. Jur isdictio
N Beneficiar ies PAN Cir cle / n Building Amt
o. Compa nies Ward Nam e Name i
Room No.
Juliet Ward 324, C.R . C.R.
7 25
1. AAACJ3702F 13(3), Building, Building,
Appar els Ltd. Lacs
•v. Delhi I,P. Delhi
Estate,
Room
New No.
Matchless Cir cle 308, C.R . C.R,
AAECM 5742 7 90
2, Infrastructure J 16(2) Building, Building,
Lacs
Pvt. Ltd. Delhi I.P. Delhi,
Estate,
. New
Room No.
Ward 374 C.R. C.R.
Golden Job 7 95
3. AACC G4539K 10(2), Building, . Building,
Finder Pvt. Ltd. Delhi Lacs
Delhi . I.P.
Estate,
New No.
Room
Celebr ation Ward 229B, C.R. C.R.
715
4. Infrabuild Pvt. AADCG255 7J 5(4), Building, Building, Lacs,
Ltd. Delhi . I.P. Delhi
Estate,
New
The above mentioned company is assessed, with you. Credible information in respect of him has been received by this unit on 09,12.2009. The main allegations are as follows:
There are 6 proprietors namely, Akshay Traders - ANBPP1358A, Ambika Udyog - A10PD7042D, Durga Udyog - AIOPD7042D, Karuna Securities - BBXPS5166C, Mahendra Suppliers - BCAPS29/41F, Shree Hari Suppliers - BCAPS2941F.
Durga Udyog - PAN AIOPD7042D, opened an account in DCB Bank in 11th May, 2006 Gariahat Branch, Kolkata. In this account there was direct cash deposit of huge amount totaling around 125 Crore in 2008 to 03.09.2009. 5 Shree Hari Suppliers - PAN: BCAPS2941F, opened an account in DCB Bank in 10th May, 2006 GariahatBranch, Kolkata. In this account there was direct cash deposit of huge amount totaling around 82.93 Crore in 2008 to 03.09.2009.
Karuna Securities PAN - BBXPS5166C opened an account in DCB Bank in 26 Itfurch, 2009 in Gariahat Branch, Kolkata. In this account amount totaling around x 143 Cr. High value transfer from two propertors, Mahendra Suppliers, Ambika Udyog and total amount transfer to S S Securities through RTGS.
Akshay Traders - PAN: ANBPP1358A opened an account in DCB Bank in 20 April, 2009 Kalbadevi Branch, Mumbai. In this account amount deposit around 26 Crore and total transfer to Karuna Securities, Durga Udyog, Shree Hari Suppliers, Karuna Securities, Akshay Traders transfer the amount to Ganpati Securities, S S Securities around x 207 Crore and X 152 Crore respectively.
Ganpati Securities PAN: BBXPS5166C and S S Securities PAN: BFSPS6626A transfer this amount to fourth layer companies. Mainly S S Securities transfer the high value fund to beneficiaries companies. Fourth layer companies transfer the fund to beneficiaries companies. List of beneficiaries companies are attached.
Bank statements and KYC documents have been requisitioned from DCB Bank., Further from KYC documents, it is gathered that the assessee has accounts in ICICI Bank, Yes Bank and RBS Bank also. The same were requisitioned by 6 issuing summons u/s 131 of the l.T. Act, 1961 which were duly verified and analyzed.
Thereafter, Summons u/s 131 of the l.T. Act, 1961 was issued to Anand Singh, Lokesh Dubey and Subir Saha on 23.11.2015for his personal attendance for recording of statement and submission of various papers/documents as mentioned in the summons. There was no one resident at their given address. The all proprietor has been used for layering of funds. The fund was transfer to the various beneficiary companies. The undersigned is providing a cash trail of beneficiary company is layering under your jurisdiction.
The following bank accounts of proprietors:
S. No. Name of Account Holder Bank & Branch A/c No. 00221300000532
01. Mahendra Suppliers DCB Bank, Kalbadevi Branch, Mumbai
02. Ambika Udyog DCB Bank, Kalbadevi 0022130000050 *' Branch, Mumbai
03. Karuna Securities DCB Bank, Kalbadevi 00221300000569 Branch, Mumbai
04. Akshay Traders 00221300000578 DCB Bank, Kalbadevi Branch, Mumbai
05. Shree Hari Suppliers DCB Bank, Garihat Branch, i 08721200000046 Kolkata Durga Udyog DCB Bank, Garihat 08721200000064
06.
Branch, Kolkata In view of the above, as the allegations mentioned in the above have already been comprehensively examined and verified, further investigation does not need necessary at this end.
7As the jurisdiction over the assessee lies with you. I am forwarding herewith the above information to you for taking necessary action as per the provisions of the I.T. Act, 1961. If deemed fit, in cash, if jurisdiction has been changed, the same may be transferred to the concerned AO under intimation to this office.
The DDIT(Inv.) has also forwarded a Cash Trail of these companies and on perusal of the same it is noticed that the assessee company M/s. Golden Job Finder Pvt. Ltd. has received Rs. 95,00,000/- from these entities. However, nature of transaction is not clearly mentioned in the letter of DDIT whether it is accommodation entry in the garb of share application/share premium or sale/purchase transactions.
Further on perusal of return for A.Y. 2009-10 in the case of M/s. Golden Job Finder Pvt. Ltd. , the assessee has shown Authorised Capital at T 5,50,00,000/-, Issued/Subscribed and Paid up Capital at T 5,33,50,000/-, Share Application Money at T 4,20,00,000/- and Securities Premium Account at T 26,39,50,000/-. Apart from the assessee has shown Long Term Investments totaling to T 36,09,04,095/-. From the facts given in the report of the DDIT and details from the balance sheet, I, therefore have reasons to believe that income to the extent of T 95,00,000/- (as per above information) has escaped assessment in this case of M/s. Golden Job Finder Pvt. LtcjL for the A.Y 2009-10 within the meaning of Section 147/148 of Income-tax Act, 1961.
4. Since more than 4 years of the relevant years have passed and the information available amount to non disclosure of material facts pertaining to such transactions which has not been disclosed by the assessee in its 8 return for A.Y. 2009-10. Thus, specific condition for reopening is hereby fulfilled in the instant case as assessee has failed to disclose such material facts on its own. The case is squarely covered under provisions of section 147 of income- tax Act, 1961.
Moreover, as the case pertains to a period beyond four years from the end of relevant assessment years at the time of issue of notice, necessary sanction has to be obtained from Pr. Chief Commissioner of Income Tax or Pr. Commissioner of Income Tax or Commissioner of Income Tax, in view of the amended provision of section 151 w.e.f 01.06.2015, The necessary sanction in this regard is being obtained separately from Pr. Commissioner of Income Tax- 04, Delhi before the issue of notice u/s/148 for reopening of assessment under section 147 in the case of assessee company.
Income Tax Officer, Ward-10(2), New Delhi Submitted for kind approval please."
5. A perusal of the reasons recorded, extracted hereinabove, for reopening the assessment clearly show that the Assessing Officer had reasons to believe that income to the extent of Rs. 95 lakhs as per information mentioned in the reasons has escaped assessment in the case of the assessee for A.Y 2009-10.
9
6. Strictly keeping in mind the reasons for reopening the assessment mentioned hereinabove, let us now see how the assessment order dated 28.12.2016 framed u/s 147 r.w.s 143(3) of the Act was completed:
Income as above Rs. 26,31,781/-
Additions
Disallowance u/s 68 of the Act Rs. 24,20,00,000/-
On account of commission Rs. 48,40,000/-
paid
Total Rs. 24,94,71,781/-
7. A perusal of the assessment order shows that the two additions made by the Assessing Officer while completing assessment order were on the basis of the detailed investigations carried out by the Investigation Wing which came to the notice of the Assessing Officer during scrutiny assessment proceedings. It can be seen that the computation of assessed income is totally devoid of any addition which was the basis for the Assessing Officer to believe that income has escaped assessment i.e. Rs. 95 lakhs.
10
8. In our considered view, the Assessing Officer has drawn support from Explanation 3 to section 147 of the Act which was inserted by the Finance [No. 2] Act, 2009 w.r.e. 01.04.1989 and the same reads as under:
"For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148."
9. This insertion of Explanation 3 to Section 147 of the Act has been examined and interpreted by the Hon'ble High Court of Bombay in the case of CIT Vs. Jet Airways [I] Ltd 331 ITR 236. The relevant part of the judgment is extracted as under:
"5. The condition precedent to the exercise of the jurisdiction under section 147 is the formation of a reason to believe by the Assessing Officer that any income chargeable to tax has escaped assessment. Upon the formation or a reason to believe, the Assessing Officer, before making the assessment, reassessment or recomputation under section 147 has to serve on the assessee a 11 notice requiring him to furnish a return of his income. Upon the formation of the reason to believe that income chargeable to tax has escaped assessment, the Assessing Officer is empowered to assess or reassess such income "and also" any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under section 147.
6. The effect of Explanation 3 which was inserted by the Finance (No. 2) Act of 2009 is that even though the notice that has been issued under section 148 containing the reasons for reopening the assessment does not contain a reference to a particular issue with reference to which income has escaped assessment, the Assessing Officer may assess or reassess the income in respect of any issue which has escaped assessment, when such issue comes to his notice subsequently in the course of the proceedings. The reasons for the insertion of Explanation 3 are to be found in the Memorandum explaining the provisions of Finance (No. 2)Bill of 2009. The Memorandum treats the amendment to be clarificatory and contains the following Explanation :
"Some courts have held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which the reasons have been recorded for reopening the assessment. He is not empowered to touch upon any other issue for which no reasons have been recorded. The above interpretation is contrary to the legislative intent.12
With a view to further clarifying the legislative intent, it is proposed to insert an Explanation in section147 to provide that the Assessing Officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reason for such issue has not been included in the reasons recorded under sub-section (2) of section 148."
7. In order to appreciate the reasons for the amendment inserting Explanation 3, it would be necessary to advert to some of the judgments of the High Courts, prior to the amendment. The Punjab and Haryana High Court, in its decision, in Vipan Khanna v. Asstt. CIT [2002] 255 ITR 2201dealt with the question as to whether, after initiating proceedings under section 147 on the ground that the petitioner had claimed depreciation at a higher rate, the Assessing Officer would be justified in launching an inquiry into issues which were not connected with the claim of depreciation. This question was answered in the negative. A Division Bench of the Kerala High Court held in Travancore Cements Ltd. v. CIT [2008] 305 ITR 1701 ,that upon the issuance of a notice under section 148(2), when proceedings were initiated by the Assessing Officer on issues in respect of which he had formed a reason to believe that income had escaped assessment, it was not open to the Assessing Officer to carry out an assessment, or reassessment in respect of other issues which were totally unconnected with the proceedings that were already initiated and 13 which came to his knowledge during the course of the proceedings. The Division Bench held that in respect of an issue which is totally unconnected to the basis on which the Assessing Officer formed a reason to believe that income escaped assessment and issued a notice under section 148, it was open to him to issue a fresh notice by following sub-section (2) of section 148 with regard to the escaped income which came to his knowledge during the course of the proceedings. The Kerala High Court held as follows :
". . .The Assessing Officer gets jurisdiction under section 148 to assess or reassess the income which has escaped assessment only after sub-section (2) of section 148 is complied with. The question is whether sub-section (2) of section 148 has to be complied with if any other income chargeable to tax has escaped assessment, or which comes to his knowledge subsequently in the course of the proceedings. In other words, when proceedings are already on in respect of one item in respect of the income for which he had already recorded reasons is it necessary that he should record reasons for assessing or reassessing any of the items which are totally unconnected with the proceedings already initiated. Suppose under two heads income has escaped assessment and those two heads are inter-linked and connected, the proceedings initiated or notice already issued under sub-section (2) of section 148 would be sufficient if the escaped income on the second head comes to the knowledge of the officer in the course of the proceedings. But if both the items are unconnected and totally alien then the assessing authority has to follow sub-section (2)of section 148 with regard 14 to the escaped income which comes to his knowledge during the course of the proceedings."
Hence, the view of the Punjab and Haryana High Court and the Kerala High Court was that, once the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment and proceeds to issue a notice under section 148, it is not open to him to assess or, as the case may be, reassess the income under an independent or unconnected issue, which was not the basis of the notice for reopening the assessment.
8. Parliament stepped in to correct what it regarded as an incorrect interpretation of the provisions of section147. The Memorandum explain-ing the provisions of Finance (No. 2) Bill of 2009 states in this background that some courts had held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which reasons have been recorded for reopening the assessment and that it was not open to him to touch upon any other issue for which no reasons have been recorded. This interpretation was regarded by Parliament as being contrary to legislative intent. Hence, Explanation 3 came to be inserted to provide that the Assessing Officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under section 147 though the reasons for such issue were not included in the reasons recorded in the notice under section 148(2).
15
9. The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows : (i) The Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) Upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the Assessing Officer has to serve on the assessee a notice undersub- section (1) of section 148; (iii) The Assessing Officer may assess or reassess such income, which he has reason to believe, has escaped assessment and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section and (iv) Though the notice under section 148(2) does not include a particular issue with respect to which income has escaped assessment, he may nonetheless, assess or reassess the income in respect of any issue which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section.
10. XXX
11. The rival submissions which have been urged on behalf of the revenue and the assessee can be dealt with ,both as a matter of first principle, interpreting the section as it stands and on the basis of precedents on the subject. Interpreting the provision as it stands and without adding or deducting from the words used by Parliament, it is clear that upon the formation of a reason to believe under section 147 and following the issuance of a notice under section 148, the Assessing Officer has the power to assess 16 or reassess the income, which he has reason to believe had escaped assessment and also any other income chargeable to tax. The words "and also" cannot be ignored. The interpretation which the Court places on the provision should not result in diluting the effect of these words or rendering any part of the language used by Parliament otiose .Parliament having used the words "assess or reassess such income and also any other income chargeable totax which has escaped assessment", the words "and also" cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It isof some significance that Parliament has not used the word "or". The Legislature did not rest content by merely using the word "and". The words "and", as well as "also" have been used together and in conjunction.
The Shorter Oxford Dictionary defines the expression "also" to mean 'further, in addition, besides, too'. The word has been treated as being relative and conjunctive. Evidently, therefore, what Parliament intends by useof the words "and also" is that the Assessing Officer, upon the formation of a reason to believe under section147 and the issuance of a notice under section 148(2) must assess or reassess: (i) 'such income'; and also (ii)any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. The words 'such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language which has been used 17 by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the season to believe isnot assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of section 147 with effect from 1-4-1989 clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment of the former, he cannot independently assess the latter.
10. If the above judgment is applied on the facts of the case in hand, we find that the Assessing Officer has accepted the objections of the assessee, and has not assessed or reassessed the income, which was 18 the basis of the notice. Therefore, in light of the judgment of the Hon'ble High Court of Bombay [supra] it would not be open to the Assessing Officer to assess income under some other issue independently.
11. Considering the facts of the case in totality, in light of the judgment of the Hon'ble High Court of Bombay [supra] we quash the assessment order dated 28.12.2016 framed u/s 147 r.w.s 143(3) of the Act. Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case.
12. In the result, the appeal of the assessee in ITA No. 2830/DEL/2018 is allowed.
The order is pronounced in the open court in the presence of both the rival representative on 29.07.2021.
Sd/- Sd/-
[K.N. CHARY] [N.K. BILLAIYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 29th July, 2021
19
VL/
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
Date of dictation
ate on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order