Income Tax Appellate Tribunal - Delhi
Om Fincap Pvt. Ltd., New Delhi vs Department Of Income Tax on 23 April, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'E' NEW DELHI)
BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A. No.3449/Del/2010
Assessment year : 2001-02
ITO, M/s Om Fincap Pvt. Ltd.,
Ward-13 (4), A-172, sarita Vihar,
New Delhi. V. New Delhi.
(Appellant) (Respondent)
PAN /GIR/No.AAACC
/GIR/No.AAACC-
AAACC-5334-
5334-L
Appellant by : Shri Pradep Kumar Meet, Sr. DR.
Respondent by : Shri Pratap Gupta, C.A.
ORDER
PER TS KAPOOR, AM:
This is an appeal filed by the revenue against the order of ld CIT(A) dated 23.4.2010. From the grounds of appeals filed by the revenue, it appears that there are two grievances of the revenue. Ground No.1 relates to the fact that assessee had accepted `.11,00,000/- as share capital money from one of the companies which was found by Investigation Wing of the Department to be an entry provider. Despite various directions by the Assessing Officer, the assessee could not produce the applicant physically before him and therefore he made the addition u/s 68. Ld CIT(A) deleted the addition applying the case law of Lovely Exports Pvt. Ltd. as decided by the Hon'ble Supreme court. The second grievance of revenue is regarding holding of Ld CIT(A) that reopening u/s 147/148 after the expiry of four years was bad.
2 ITA No3449/Del/2010
2. The brief facts of the case are that the case of the assessee was reopened on the informationn of Investigation Wing that assessee had accepted an amount of `.11,00,000/- as share application money from one company M/s Landmark Communication Pvt. Ltd. The Assessing Officer during the re-assessment proceedings on the basis of investigation into the bank statement of M/s Landmark Communication Pvt. Ltd. arrived at the conclusion that volume and value of transactions suggested that company was involved in providing accommodation entries especially in view of the fact that the balance in account remained very low. In view of the above fact summons u/s 131 were issued wherein the alleged entry provider was asked to submit certain documents and the Inspector of ward was also deputed to serve the summon personally on the assessee and Inspector after visiting filed her report whereby she informed that the company does not exist at that address. Therefore, the assessee was required to produce principal officer of the said company to ascertain the creditworthiness of share applicant. However, despite various opportunities given to the Ld AR Principal Officer/Directors were not produced and instead the Ld AR of the assessee submitted that shares were allotted to share applicant the payment of which was received through Account payee cheque and relying upon various case laws it was submitted that the assessee had discharged its onus. On receipt of this reply, the Assessing Officer wanted to confirm whether the share applicant still was shareholder of the company or not and in reply it was informed that the shares had already been transferred in the name of other persons. However, the consideration was not intimated to the Assessing Officer as it was claimed that transfer deed of shares was not available. Therefore, the Assessing Officer held that genuineness, existence and creditworthiness of applicant was not proved. Therefore, he made an addition of `.11,00,000/-.
3 ITA No3449/Del/2010
3. Dissatisfied with this order, the assessee filed appeal before Ld CIT(A). The Ld CIT(A) after going through various submissions of assessee held that reopening was not justified. In view of the fact that assessment was completed u/s 143(3) of the Act and all information regarding share application money was provided to the Assessing Officer and therefore as per his opinion the reopening could not have been done after the expiry of four years as there was no failure on the part of assessee.
4. As regards merits of the case, the Ld CIT(A) after relying upon various case laws and on the case law decided by Hon'ble Apex Court in CIT v. Lovely Export Pvt. Ltd. 216 CTR 195 deleted the addition made by the Assessing Officer.
5. Aggrieved, the revenue is in appeal before us.
6. At the outset, the Ld DR narrated the facts of the case and submitted that against the reopening the reasons recorded were provided to assessee and its objections were dealt with. He further argued that the case of the assessee was reopened on a specific information from Investigation Wing of the Department and reopening was justified and legal as the information was not available at the time of original assessment. Reliance in this regard was placed on the case law of CIT v. India Terminal Container Ltd. decided by Hon'ble Delhi High Court reported in 21 Taxman 69. Our attention was invited to the head notes wherein under similar circumstances where assessment was completed u/s 143(3) and on the basis of report from Investigation Wing, the case was reopened and addition was made and Hon'ble High Court had held the case in favour of revenue. Regarding merits, the Ld DR submitted that assessee did not produce the Director/Principal 4 ITA No3449/Del/2010 officer of the company and the Assessing Officer took every step including issuing of summons to get their presence. He further argued that sale consideration of shares by applicant company was not told to Assessing Officer and therefore Assessing Officer rightly made the addition.
7. The Ld AR, on the other hand, submitted that the case of the assessee was selected for scrutiny for enquiries regarding increase in share capital and in this respect our attention was invited to page 27 of the Ld CIT(A)'s order. Vide para 5.2. the ld CIT(A) has incorporated the noting from the file because of which the case was selected for scrutiny. He further argued that the entire information as asked for was provided by the assessee and assessment was completed on 26.12.2003. Therefore, there was no failure on the part of assessee to furnish information/document and hence reopening after the period of four years was not justified. Reliance in this respect was placed in the case of case law in CIT v. Viniyas Finance & Investment (P) Ltd decided by the Hon'ble Delhi High Court reported in I.T.A. No.271/2012 on on dated 11.2.2013. .
8. In his rejoinder, the Ld DR submitted that case is fully covered by the decision of Hon'ble Delhi High Court in India Terminal Container Ltd. (supra) and argued that information from Investigation Wing was a new information which led to the reopening of the case.
9. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that the assessment was completed u/s 143(3) and order was passed on 26.12.2003 and notice u/s 148 was issued after a period of four years from the end of relevant assessment year. Though assessment order was passed u/s 143(3) but the order consists of one and half page wherein the Assessing Officer did not discuss anything about the 5 ITA No3449/Del/2010 enquiries or investigation conducted for the purpose of assessment. He has simply concluded as follows:-
"In compliance to the questionnaire dated 17.12.2002, the assessee has furnished details of all expenses claimed in the P&L Account under various heads, details of bank statement, fixed assets with documentary evidences, opening and closing stock, unsecured loans of `.3,80,000/-, shareholders and share application money, purchase and sale of shares etc.
10. Proviso to section 147 states that where assessment has been completed u/s 143(3) no action under this section can be taken after a period of four years from the end of relevant assessment year unless any income chargeable to tax has escaped assessment by reason of failure on the part of assessee to disclose fully and truly all material facts necessary for his assessment. The Explanation-1 to proviso to section 147 states as under:-
Explanation-1:
"Production before the Assessing Officer of account books or other evidences from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the forgoing proviso."
11. The above explanation read with proviso to section 147 means that merely production of account books before Assessing Officer during assessment proceedings u/s 143(3) do not necessarily amount to disclosure as required under the proviso to section 147 of the Act. In the present case, the assessment has been completed on 1½ page in a summary manner without discussion of any investigation carried 6 ITA No3449/Del/2010 out by the Assessing Officer. Therefore, in the present case Explanation-1 to proviso to section 147 can be applicable as Assessing Officer though completed assessment u/s 143(3) did not seem to have carried out any significant investigations. Moreover, paper book page 1 is a copy of letter written by M/s Landmark Communication Pvt. Ltd. in response to information required u/s 133(6) of the Act whereby it has confirmed to have made an investment of `.6,00,000/- in the assessee company whereas the Investigation Wing of the Department has revealed investment o `.11,00,000/- made into the assessee company. Therefore, it cannot be said that assessee had truly and fully disclosed the entire information as assessee did not file any evidence before Assessing Officer or Ld CIT(A) or before us to substantiate that full and true disclosures were made during original assessment proceedings. Moreover, in the case law of India Terminal Container Ltd. (supra) relied upon by the Ld DR, the Assessing Officer had completed assessment u/s 143(3) of the Act and on the basis of report from Director Investigation the case of the assessee was reopened and Hon'ble Court had held that information provided by the Director Investigation was not available with the Assessing Officer during the course of original assessment proceedings and therefore the said information constituted new and fresh evidence on which the Assessing Officer could have drawn inference and formed a prima facie opinion as to whether or not to initiate re-assessment proceedings. The facts and circumstances of the present case are similar to the case law relied upon by the Ld DR. The case law relied upon by Ld AR also decided by Hon'ble Delhi High Court was decided in favour of assessee on the basis that in the reasons recorded there was no mention of the respondent assessee of not having made a full and true disclosure of all material facts necessary for assessment . These findings are contained in para 7 & 8 of the said order. However, in the present 7 ITA No3449/Del/2010 case, the reasons recorded clearly states that the income has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for assessment and assessee did not rebutt the reasons recorded with evidence before Assessing Officer. Therefore, the case law relied upon by Ld AR is not similar to the facts and circumstances of the present case. Therefore, relying upon the case law of India Terminal Container Ltd. we are of the opinion that the case of the assessee was rightly reopened as the report of Investigation Wing was new information and moreover as mentioned earlier in the order, the assessee had not disclosed all facts fully and truly as there is a difference in amount of investment stated by Landmark Communications Ltd. and as intimated by Investigation Wing and assessee had not filed any evidence to substantiate that it had disclosed full and true material, therefore, we allow ground No.3 of the appeal.
12. As regards merits of the case, we observe that despite Assessing Officer's best efforts the assessee did not cooperate in producing applicant nor the applicant appeared before the Assessing Officer to explain the investment in assessee company and rather submitted that shares has already been transferred by applicant company in the names of Shri RK Bansal and Shri Sanjeev Aggarwal but did not disclose the sale consideration. Therefore, keeping in view the facts and circumstances of the present case, we set aside the order of ld CIT(A) and restore the file to the office of Assessing Officer to re- adjudicate the entire case. The Assessing Officer should also record statements of Shri RK Bansal and Shri Sanjeev Agarwal who had purchased the shares from M/s Landmark Communication Pvt. Ltd. to ascertain the sale consideration. The sale consideration can itself indicate the credentials of original applicant.
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13. In view of the above, the appeal filed by the revenue is allowed for statistical purposes.
14. Order pronounced in the open court on 14th day of June, 2013.
Sd/- Sd/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dt. 14.6.2013. HMS Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.
By Order (ITAT, New Delhi).
Date of hearing 23.4.2013 Date of Dictation 7.6.2013 Date of Typing 10.6.2013 Date of order signed by 14.6.2013 both the Members & pronouncement. Date of order uploaded on net & sent to the Bench concerned.