DCIT vs. Allied Investments Housing P. Ltd (ITAT Chennai)
S. 14A & Rule 8D: Onus is on AO to show how assessee's claim is incorrect. AO has to show direct nexus between expenditure & exempt income. Disallowance cannot be made on presumptions
In AY 2009-10 the AO made a disallowance of Rs 58 lakhs u/s 14A read with Rule 8D. The assessee claimed that the disallowance was not permissible on the grounds that (i) the AO had not recorded any satisfaction as to the correctness of the assessee's claim that it had not incurred expenditure of more than 2% of the dividend income earned, (ii) it had not made any fresh investment during the year and the dividend was received from an unlisted company out of an investment made in an earlier year & (iii) the AO had not pointed out any direct nexus between the interest expenditure incurred and the exempt income earned during the year. The CIT(A) accepted the claim & restricted the disallowance to Rs 50,000 On appeal by the department to the Tribunal HELD dismissing the appeal:
(i) A disallowance u/s 14A read with Rule 8D cannot be made without recording satisfaction as to how the assessee's calculation of s. 14A disallowance is incorrect. It is a prerequisite that before invoking Rule 8D, the AO must record his satisfaction on how the assessee's calculation is incorrect. The AO cannot apply Rule 8D without pointing out any inaccuracy in the method of apportionment or allocation of expenses. Further, the onus is on the AO to show that expenditure has been incurred by the assessee for earning tax-free income. Without discharging the onus, the AO is not entitled to make an ad hoc disallowance. A clear finding of incurring of expenditure is necessary. No disallowance can be made on the basis of presumptions, (ii) the mere fact that some interest expenses were incurred cannot be the reason for disallowance unless the nexus between the expense and the exempt income is established, (iii) the assessee did not make any fresh investment during the year which could generate exempt income in forthcoming years, (iii) the exempt income earned during the year comprised of dividend received from an investment made in an earlier year, (iv) the interest expenditure of the year is not directly related to the earning of exempt income & (v) the AO has not pointed out any direct nexus between the interest expenditure incurred and the exempt income earned during the year (Hero Cycles Ltd 323 ITR 518 P&H) & Godrej and Boyce 328 ITR 81 (Bom) followed)
No addition u/s 41(1) merely because some liabilities are outstanding at year end
Liabilities are still outstanding in the balance sheet as on the last date of relevant accounting period in the statement of account submitted with the department. There is no material on record to prove that the said liabilities have ceased to exist. The assessee has not written off the said outstanding liability in its books of accounts. In these facts of the case, I hold that the ratio of the decision of the Hon'ble jurisdictional high Court in the case of CIT Vs. Nitin S. Garg (supra) applies to the facts of the case of the assessee, and respectfully following the decision of the Hon'ble jurisdictional High Court, the issue is decided in favour of the assessee, and the addition of Rs. 99,724/- is deleted,
ITAT AHMEDABAD, "SMC" BENCH
BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT
ITA No.3133/Ahd/2011 [Asstt.Year : 2008-2009]
Shri Ahmedabad Flexible Tube Mfg. & Yarn Proc. Co. P. Ltd. Vs. ITO
Date of Pronouncement 13.11.2013
O R D E R
This appeal of the assessee for the assessment year 2008-09 is directed against the order of the CIT(A)-XVI, Ahmedabad dated 18. 10.2011.
2. The ground nos. 1 and 2 of the assessee' s appeal are as under:
1) That the CIT(A) has erred in law and on the facts o the case in confirming the additions of Rs.99, 724/- made by ld.AO u/s.41(1) of the IT Act.
2) Having regard to the peculiar facts and circumstances of the case of the appellant and without properly appreciating the decisions cited by the appellant during the course of appellate proceedings and considering the same, disallowance made by ld. CIT(A) be allowed..
3. The learned counsel for the assessee submitted that the issue of cessation of liability under section 41(1) of the Act is covered in favour of the assessee with the decision of the Hon'ble jurisdictional high Court in CIT Vs. Nitin S. Garg, 71 DTR (Guj) 73. He submitted that the liabilities are still outstanding in the balance sheet, and therefore, it cannot be said that the same has ceased to exist. The learned DR has opposed the submission of the learned counsel of the assessee. He submitted that the assessee could not prove that the liabilities are still outstanding as on the last date of the relevant assessment year. He relied on the orders of the AO and the CIT(A).
4. I have considered rival submissions and perused the orders of the AO and the CIT(A). I find that the liabilities are still outstanding in the balance sheet as on the last date of relevant accounting period in the statement of account submitted with the department. There is no material on record to prove that the said liabilities have ceased to exist. The assessee has not written off the said outstanding liability in its books of accounts. In these facts of the case, I hold that the ratio of the decision of the Hon'ble jurisdictional high Court in the case of CIT Vs. Nitin S. Garg (supra) applies to the facts of the case of the assessee, and respectfully following the decision of the Hon'ble jurisdictional High Court, the issue is decided in favour of the assessee, and the addition of Rs. 99,724/- is deleted, and the ground nos. 1 and 2 are allowed.
5. The ground nos.3 and 4 of the assessee's appeals are as under:
"3. That the ld. CIT(A) has further erred in confirming income shown at Rs. 78,800/- as property income, instead of business income shown by the appellant.
4. Having regard to the facts and circumstances of the case of the appellant the income of Rs. 78,800/- shown by appellant may please be held as business income instead of property income assessed by AO and confirmed by CIT(A)."
6. The learned counsel for the assessee submitted that due to temporary lullness in the textile business of the assessee, the assessee has let out its premises to a lessee. However, no written agreement was entered into with the lessee-party. He submitted that the assessee has not dismantle its business, and still all the equipments and infrastructure is in place at its premises. He referred to the decision of the Hon'ble Supreme Court in Guntur Merchants Cotton Press Co. Ltd. v. Commissioner of Income-tax, 154 ITR 861, and submitted that income from let out of the property due to temporary lullness in the business of the textile should be assessed under the head business income, as shown by the assessee. The learned DR has relied on the orders of the AO and the CIT(A).
7. I have considered rival submissions and perused the orders of the AO and the CIT(A). In reply to a specific query from the Bench, the learned counsel for the assessee submitted that till the date the property is continued to be let out to the lessee and the assessee could not take back its premises or to start its business. In these facts of the case, as the assessee right from the accounting year 2007-2008 till the date, could not start its business and the business premises are continuously let out to third party, as a tenant, it could not be said that it is a case of temporary lullness in the business of the assessee. The CIT(A) has referred number of decisions in support of his conclusion that the income from let out of the business premises was assessable under the head "Income From House Property". The business premises were admittedly let out on rent to the lessee, and the position of let out of the premises continued for the last about six years. The income from exploitation of a property has to be taxed under the head income from house property, and there seems to be no element of business in let out the premises by the assessee on rent in the facts and circumstances of the case of the assessee. In these view of the matter, I hold that no interference in the order of the CIT(A) is called for on this issue, and accordingly, the ground nos.3 and 4 of the assessee are dismissed.
8. In the result, appeal of the assessee is partly allowed.
Order pronounced in Open Court on the date mentioned hereinabove.
No disallowance u/s 43B if amount is deposited within the grace period
Considering the fact that the learned Tribunal has granted relief to the assessee with respect to the amount of provident fund which the assessee deposited with the department within extended grace period under the Provident Fund Act, it cannot be said that the learned Tribunal has committed any error in granting the reliefs, which calls for interference by this Court. Under particular Act or law, in the present case Provident Fund Act, if the assessee was entitled to make payment within the grace period and if within that grace period, its employer contributions have been deposited by the assessee, it cannot be said that the assessee has not deposited the amount with the department within the due date as prescribed under the Provident Fund Act. Under such circumstances, as such no error and/or illegality has been committed by the learned Tribunal in granting deduction to the assessee with respect to the amount deposited with the provident fund department within the extended period / grace period. Under the circumstances, no other issues are required to be considered. No question of law muchless any substantial question of law arises in the present Appeal.
HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 36 of 2008
FOR APPROVAL AND SIGNATURE:
CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 11/11/2013
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH)
[1] Feeling aggrieved and dissatisfied with the order dated 12.01.2007 passed by the Income Tax Appellate Tribunal, Ahmedabad (hereinafter be referred to as "the ITAT") in ITA No.2230/Ahd/2006 for AY 2003-2004, the revenue has preferred the present appeal with the following substantial question of law.
Whether on the facts and circumstances of the case and in law, was the Appellate Tribunal is right in deleting the disallowance of belated payment of PF and ESIC, even though the specific provision in the form of Proviso to Section 43B of the I.T. Act existed in this regard?
[2] Heard Mr.Sudhir Mehta, learned counsel appearing on behalf of the appellant and Mr.S. N. Soparkar, learned senior counsel appearing for the assessee.
[3] At the outset, it is required to be noted that the dispute is whether the amendment brought into force in the FY 2004 in section 43B of the Income Tax Act (hereinafter be referred to as "the Act"), which came into force with effect from 01.04.2004, would be made applicable retrospectively w.e.f. 01.04.1988 or not.
[4] It is required to be noted at this stage that as such it was the case on behalf of assessee that as such their employee's contribution was in fact deposited with the Provident Fund Authority within the grace period permissible under the relevant Provident Fund Act with respect to substantial amount and, therefore, it can be said that the actually the amount has been deposited with the concerned Provident Fund Authority within the stipulated time under the relevant Provident Fund Act. However, in the alternatively, it was submitted that in view of second amendment in section 43B of the Act brought into force by the Financial Act, 2003 which was made applicable from 01.04.2004, as the employer's contribution was deposited with the Provident Fund Authority on behalf of the assessee before the due date of filing the return, they were entitled to deduction under section 43B of the Act. The Assessing Officer did not accept the above and held that as the amendment in section 43B of the Act which is brought into effect by Financial Act, 2003 is made applicable with effect from 01.04.2004, assessee shall not be entitled to benefit of the same and the said provisions cannot be made applicable retrospectively. Consequently, the Assessing Officer did not allow the deduction and added the amount of assessee – employers' contribution into the income of the assessee in particular assessment year. Being aggrieved by the said order, the assessee preferred appeal before the CIT(A) and the learned CIT(A) deleted the addition made by the Assessing Officer and held that the assessee shall be entitled to claim benefit under section 43B of the Act.
[5] Feeling aggrieved and dissatisfied with the order passed by the CIT(A), the revenue preferred the appeal being ITA No.2230 of 2006 before the ITA and by impugned order, learned ITAT has partly allowed the said appeal. However, the learned ITAT has held that the assessee was entitled to the exemption as the amount was paid during grace period permissible / available under the Provident Fund Act and, therefore, the asseessee shall be entitled to exemption / deduction under section 43 to the extent payment was made within the grace period.
[6] Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present appeal.
[7] At the outset it is required to be noted that as such, the assessee shall be entitled to the benefits of the amendment under section 43B amended by the Financial Act, 2003. Even with respect to the amount of provident fund deposited with the appropriate authority prior to date of filing of the return, in view of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd, reported in [2009] 319 ITR 306 (SC). However, as the assessee has not preferred any appeal, we are not concerned with the amount which the assessee deposited with the provident fund authority prior to filing of the return and we are concerned with whether the learned Tribunal is justified in holding that as the assessee has deposited the amount of provident fund within the extended grace period, the assessee would be entitled to deduction under section 43 or not?
[8] Considering the fact that the learned Tribunal has granted relief to the assessee with respect to the amount of provident fund which the assessee deposited with the department within extended grace period under the Provident Fund Act, it cannot be said that the learned Tribunal has committed any error in granting the reliefs, which calls for interference by this Court. Under particular Act or law, in the present case Provident Fund Act, if the assessee was entitled to make payment within the grace period and if within that grace period, its employer contributions have been deposited by the assessee, it cannot be said that the assessee has not deposited the amount with the department within the due date as prescribed under the Provident Fund Act. Under such circumstances, as such no error and/or illegality has been committed by the learned Tribunal in granting deduction to the assessee with respect to the amount deposited with the provident fund department within the extended period / grace period. Under the circumstances, no other issues are required to be considered. No question of law muchless any substantial question of law arises in the present Appeal.
[9] In view of the above, the present appeal deserves to be dismissed and accordingly, the same is dismissed. There shall be no order as to costs. Notice is discharged.
Depreciation @ 40% on vehicles used for running on hire to various parties without agreement allowable
Depreciation @ 40% on vehicles used for running on hire is allowable even in absence of separate agreement with various parties to whom such vehicles are let out on hire
The case of the assessee is that it was giving its trucks and JCBs on hire to various parties and complete details thereof along with names and addresses of the parties from whom the carting income was earned, and details of the trips made by the vehicles, rate at which the income was earned by the assessee, has been recorded in the account book of the assessee, a copy of which has been filed in the compilation before the Tribunal. We find that the Revenue could not controvert the submission of the assessee that it has, in fact, given its vehicles to various parties during the relevant accounting period on hire, and has declared income thereof. Merely because, there was no separate lease agreement with various parties, is not decisive of the issue. The vehicles were given to various parties on per trip basis, and therefore, separate agreement for carting income for each trip with various parties is not practicable to be executed and produced before the Revenue authorities. In these facts of the case, we are of the view that the assessee was entitled to higher depreciation at the rate of 40%, and accordingly, the grounds of the appeal no.3.1 and 3.2 of the assessee are allowed.
ITAT AHMEDABAD, "B" BENCH
BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND
ANIL CHATURVEDI, ACCOUNTANT MEMBER)
ANIL CHATURVEDI, ACCOUNTANT MEMBER)
IT(SS)A No.178 to 182/Ahd/2009
[Asstt.Year : 2003-2004, 2004-2005, 2005-2006, 2006-2007 and 2007-2008]
M/s. Tirupati Construction Company vs. ACIT
IT(SS)A No.73 to 75/Ahd/2010
[Asstt.Year : 2004-2005, 2005-2006 and 2006-2007]
ACIT Vs.M/s. Tirupati Construction Company
Date of Pronouncement: 13/11/2013
O R D E R
PER BENCH: This group of appeals, five by the assessee and three by the Revenue for the different assessment years, are directed against the orders of the CIT(A). These are being disposed of with this consolidated order.
IT(SS)A No.178/Ahd/2009 – Asstt.Year 2003-2004 (Assessee's Appeal)
2. The ground no.1.1 and 1.2 of the appeal of the assessee are as under:
"1.1 The order passed by CIT(A) on 25.9.2009 for A. Y.2003-04 partly confirming the disallowance of interest and depreciation made by AO is wholly illegal, unlawful and against the principles of natural justice.
1.2 The ld.CIT(A) has grievously erred in upholding the impugned disallowances without considering fully and properly the evidence produced as well as explanation offered."
3. These grounds of the appeal being general in nature, needs no adjudication.
4. The ground no.2.1 is as under:
"2.1 The proceedings initiated u/s.153A(b) by AO for A.Y.2002-03 are wholly illegal, unlawful and without jurisdiction."
5. This ground of the appeal is not pressed by the learned counsel for the assessee, and is accordingly dismissed.6. The ground no.3.1 and 3.2 of the assessee' s appeal are as under:
"3.1 The ld. CIT(A) has grievously erred in law and/or on facts in upholding that the vehicle were not used for running them on hire and hence depreciation @ 40% was not admissible.
3.2 That in the facts and circumstances of the case, the ld. CIT(A) ought not to have upheld that the vehicles were not used for running them on hire so that depreciation @ 40% was not admissible"
7. The learned counsel for the assessee submitted that the assessee is entitled to higher rate of depreciation at 40% on its trucks and JCBs, as it was being used for running them on hire also during the dull period of business of road construction of the assessee. He referred to the detailed account of the "carting income" of the assessee, as appearing in its ledger account, wherein the assessee has charged carting income on various trips made by it on behalf of others, and complete details of the parties to whom the vehicles were given on hire has been detailed therein. He submitted that no discrepancy could be pointed out on behalf of the Revenue in the details of carting income account in the ledger of the assessee by the Revenue.
8. The learned DR has opposed the submissions of the learned counsel of the assessee. He submitted that the CIT(A) has passed well reasoned order on this issue. He submitted that although the assessee has earned and declared carting receipt from the said vehicles, but CIT(A) has recorded that the assessee has not specified the vehicles, which were leased out and what were the terms and conditions of the lease agreement. He submitted that in the absence of evidence and details, the AO was justified in refusing to give extra depreciation to the assessee, and normal depreciation was allowed to the assessee. He relied on the decision of the Hon'ble Apex Court in CIT Vs. Gupta Global Exim (P) Ltd., 305 ITR 132 (SC) referred by the CIT(A) in his order.
9. We have considered rival submissions carefully and perused the orders of the AO and the CIT(A) and also the details of account of carting income, as appeared in the ledger account of the assessee. We find that the assessee has declared carting income of Rs.15,66,343/- during the year. The case of the assessee is that it was giving its trucks and JCBs on hire to various parties and complete details thereof along with names and addresses of the parties from whom the carting income was earned, and details of the trips made by the vehicles, rate at which the income was earned by the assessee, has been recorded in the account book of the assessee, a copy of which has been filed in the compilation before the Tribunal. We find that the Revenue could not controvert the submission of the assessee that it has, in fact, given its vehicles to various parties during the relevant accounting period on hire, and has declared income thereof. Merely because, there was no separate lease agreement with various parties, is not decisive of the issue. The vehicles were given to various parties on per trip basis, and therefore, separate agreement for carting income for each trip with various parties is not practicable to be executed and produced before the Revenue authorities. In these facts of the case, we are of the view that the assessee was entitled to higher depreciation at the rate of 40%, and accordingly, the grounds of the appeal no.3.1 and 3.2 of the assessee are allowed.
IT(SS)A No.179/Ahd/2009 – Asstt.Year 2004-2005 (Assessee's Appeal)
10. The ground no.1.1 and 1.2 of the appeal of the assessee are as under:
"1.1 The order passed by CIT(A) on 25.9.2009 for A.Y.2004-05 partly confirming the disallowance of bad debts and addition of rs. 19,42,771/- in respect of seized diary as made by the AO is wholly illegal, unlawful and against the principles of natural justice.
1.2 The ld.CIT(A) has grievously erred in upholding the impugned disallowances/additions without considering fully and properly the evidence produced as well as explanation offered."
11. These grounds of the appeal being general in nature, needs no adjudication.12. The grounds no.2.1 and 2.2 read as under:
"2.1 The ld.CIT(A) has grievously erred in upholding following additions/disallowances.
(a) Bad debts disallowance Rs.13,36,532/-
(b) Undisclosed income (seized Diary Annx – A/1-6) Rs.19,42, 771/-
2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have made above said disallowance/additions.
13. These grounds of the appeal of the assessee consist of two parts. Firstly, the claim of bad debts disallowed by the AO amounting to Rs. 13,36,532/-. The learned counsel for the assessee submitted that the issue is now covered in favour of the assessee with the decision of the Hon'ble Apex Court in the case of T.R.F. Ltd. Vs. CIT, 323 ITR 397 (SC). The learned DR submitted that the assessee has not made this claim at the time of filing of the original return, and has made the claim for the first time after the search was made in the premises of the assessee, and therefore, the claim of the assessee is not entertainable, and rightly rejected by the Revenue authorities.
14. We have considered rival submissions and perused the orders of the AO and the CIT(A). We find that admittedly, this claim was not made by the assessee at the time of original assessment, and therefore, there is no justification for making this claim after the search operation carried out in the business premises of the assessee. Accordingly, the claim of the assessee is rejected, and the ground of the appeal of the assessee on this issue is dismissed.
The other issue is regarding the addition of Rs.19.42 lakhs as undisclosed income on account of seized diary. The learned counsel for the assessee submitted that the peak of credit and debit entries from the seized papers comes to Rs. 14,35,666/- and the CIT(A) has further made addition of net profit at the rate of 5% of the gross receipts in the seized paper, and worked out the addition at Rs. 19,42,771/-. He submitted that there is no justification for addition sustained by the learned CIT(A). The learned DR submitted that whole of the receipts was rightly taxed by the AO, and CIT(A) was not justified in restricting the same to Rs. 19,42,771/-.
15. We have considered rival submissions and perused the orders of the AO and the CIT(A). We find that the peak amount of credit and debit entries on the seized papers amounting to Rs.14,35,666/- could be validity taxed in the hands of the assessee. In our view, there is no justification for further adding net profit at the rate of 5% on the gross receipts on the seized papers of the assessee. There is also no justification for the AO to add the entire receipts side of these seized paper, and not considering the peak of the credit and debit entries. In this view of the matter, we hold that the addition should be sustained to the extent of Rs.14,35,666/- as against Rs.19,42,771/- sustained by the learned CIT(A), and the ground of the appeal of the assessee is partly allowed to this extent.
IT(SS)A No.180/Ahd/2009 – Asstt.Year 2005-2006 (Assessee's Appeal)
16. The ground no.1.1 and 1.2 of the appeal of the assessee are as under:"1.1 The order passed by CIT(A) on 25.9.2009 for A.Y.2005-06 partly confirming the disallowance of depreciation of Rs.2,14,938/- and addition of Rs.12,43,447/- in respect of seized diary as made by AO is wholly illegal, unlawful and against the principles of natural justice.
1.2 The ld.CIT(A) has grievously erred in upholding the impugned disallowances without considering fully and properly the evidence produced as well as explanation offered."
17. These grounds of the appeal being general in nature, needs no adjudication.18. The grounds no.2.1 and 2.2 read as under:
"2.1 The ld.CIT(A) has grievously erred in upholding following additions/disallowances.
(a) Depreciation Rs.2,14,938/-
(b) Undisclosed income (seized Diary Annx – A/1-6) Rs.12,43,447/-
2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have made above said disallowance/additions.
19. These grounds of the appeal of the assessee consists of two parts. First part is regarding claim of higher depreciation of Rs.2,14,938/-. Both parties before us submitted that the issue is identical with the issue in the assessee' s appeal for the earlier assessment year 2003-2004, in IT(SS)A No.178/Ahd/2009. We have considered rival submissions. In view of our decision in the foregoing paras of this order while disposing of the appeal of the asses see IT(S S)A.No.178/Ahd/2009 for the asstt.year 2003-2004, the issue is decided in favour of the assessee and the ground no.2.1 with regard to depreciation claim of Rs.2, 14,938/- is allowed.
20. The second part of this ground of the appeal is regarding the addition of undisclosed income on account of seized diary amounting to Rs. 12,43,447/-. Both the parties before us submitted that the issue in this ground of the appeal is identical with the issue in the ground of the appeal of the assessee for the earlier assessment year 2004-2005 in IT(SS)A.No. 179/Ahd/2009 and peak of debit and credit entries on seized papers comes to Rs.6,70,742/-. We have considered rival submissions. In view of our decision while disposing of this issue in the assessee' s appeal for earlier asstt.year 2004-2005 in IT(SS)A.No. 179/Ahd/2009, we direct to restrict this addition on this count to the peak amount of the debit and credit entries of the seized papers at Rs.6,70,742/- as against Rs.12,43,447/- sustained by the learned CIT(A), and the ground of the appeal of the assessee is partly allowed.
IT(SS)A No.181/Ahd/2009 – Asstt.Year 2006-2007 (Assessee's Appeal)
21. The ground no.1.1 and 1.2 of the appeal of the assessee are as under:"1.1 The order passed by CIT(A) on 25.9.2009 for A.Y.2006-07 partly confirming the disallowance of depreciation of Rs. 1,35,294/- and addition of Rs. 8,51,182/- in respect of seized diary and excess claim of Rs.2,24,982/- as made by AO is wholly illegal, unlawful and against the principles of natural justice.
1.2 The ld.CIT(A) has grievously erred in upholding the impugned disallowances without considering fully and properly the evidence produced as well as explanation offered."
22. These grounds of the appeal being general in nature, needs no adjudication.23. The grounds no.2.1 and 2.2 read as under:
"2.1 The ld.CIT(A) has grievously erred in upholding following additions/disallowances.
| (a) Excess claim of Ujjain division | Rs.2,24,982/- |
| (b) Excess depreciation on vehicles | Rs.1,35,294/- |
| (c ) Unrecorded receipt (seized Diary Annx – A1/-6) | Rs.8,51,182/- |
2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have made above said disallowance/additions.
24. These grounds of the appeal of the assessee consists of three parts. First part is regarding excess claim of Ujjain division of Rs.2,24,982/-. The learned counsel for the assessee submitted that this is the business loss of the assessee, and therefore, allowable. The learned DR has opposed the submissions of the learned counsel for the assessee. He relied on the orders of the AO and the CIT(A). We have considered rival submissions. We find that the assessee has claimed a loss of Rs.13.23 lakhs in its Ujjain division with regard to the work done for road construction, whereas the exact amount of loss determined by the PWD was for Rs.10,98,087/-. The difference was claimed by the assessee as business loss. In our view, the actual loss being Rs.10,98,087/-, the balance loss of Rs.2,24,982/- was rightly disallowed and the issue is accordingly decided against the asses see.
The second issue in this ground is regarding excess depreciation on vehicles. Both parties submitted before us that the issue is identical with the issue in the appeal of the assessee for the earlier assessment year 2003-2004. We have considered rival submissions. In view of our decision in the foregoing paras of this order in IT(SS)A.No. 178/Ahd/2009 for A.Y.2003-2004, the issue is decided in favour of the assessee, and the depreciation on vehicle of Rs.1,35,294/- is allowed.
The third issue is regarding unrecorded receipt found in the seized diaries and the addition made of Rs.8,51,182/-. Both the parties before us submitted that the issue is identical with the issue in the assessee' s appeal for the earlier assessment year 2004-2005. We have considered rival submissions. In view of our decision in the foregoing paras of this order, while disposing of assessee' s appeal for the earlier assessment year 2004-2005 in IT(SS)A.No.179/ahd/2009, the addition is restricted to the admitted figure of peak of credit and debit entries on the seized papers of Rs.5,76,707/- as against Rs.8,51,182/- sustained by the learned CIT(A), and the ground of the appeal of the assessee with regard to this issue is partly allowed.
IT(SS)A No.182/Ahd/2009 – Asstt.Year 2007-2008 (Assessee's Appeal)
25. The ground no.1.1 and 1.2 of the appeal of the assessee are as under:
"1.1 The order passed by CIT(A) on 25.9.2009 for A.Y.2007-08 partly confirming the disallowance of depreciation of Rs.58,033/- and excess claim of Rs.1,25,442/- as made by AO is wholly illegal, unlawful and against the principles of natural justice.
1.2 The ld.CIT(A) has grievously erred in upholding the impugned disallowances without considering fully and properly the evidence produced as well as explanation offered."
26. These grounds of the appeal being general in nature, needs no adjudication.
27. The grounds no.2.1 and 2.2 read as under:
"2.1 The ld.CIT(A) has grievously erred in upholding following additions/disallowances.
(b) Excess depreciation on vehicles Rs.58,033/-
(b) Excess claim of loss Rs.1,25,442/-
2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have made above said disallowance/additions.
28. These grounds of the appeal have two parts. The first is regarding excess claim of depreciation on vehicles of Rs.58,033/- . Both parties submitted before us that the issue is identical with the issue in the appeal of the assessee for the earlier assessment year 2003-2004. We have considered rival submissions. In view of our decision in the foregoing paras of this order in IT(SS)A.No.178/Ahd/2009 for A.Y.2003-2004, the issue is decided in favour of the assessee, and the depreciation on vehicle of Rs.58,033/- is allowed.
The other issue is regarding the claim of the assessee with regard to the excess loss of Rs. 1,25,442/-. We have heard both the parties. We find that the issue is identical with the ground of the appeal of the assessee in the earlier assessment year 2006- 2007. For the reasons recorded while disposing of the appeal of the assessee in the foregoing paras of this order for A.Y.2006- 2007 in IT(SS)A.No.181/Ahd/2009, we find that the loss on account of acceptance of lesser claim by the PWD authorities is not allowable as business loss of the assessee, and accordingly, the loss of Rs.1,25,442/- is not allowed.
IT(SS)A.No.73, 74 and 75/Ahd/2010 for A.Y.2004-2005, 2005- 2006 and 2006-2007 (Revenue's appeals)
29. The learned DR submitted that the grounds of the appeals of the Revenue are identical in all these three years as under:
"i) The ld. CIT(A) has erred in law and facts and circumstances of the case in restricting For A.Y.2004-2005 addition of Rs.19,13,177/- on account of undisclosed income instead of addition made Rs.1,01,42,101/-
For A.Y.2005-2006 addition of Rs.1,27,13,285/- to the extent of Rs.12,43,477/- on account of undisclosed income.
For A. Y.2006-2007 addition of Rs.54,89,466/- to the extent of Rs.8,51,182/- on account of undisclosed income."
30. Both parties before us submitted that the issue of addition on account of entries on seized papers/diary in these appeals of the Revenue is covered and connected with the issue in the assessee' s appeal for the assessment year 2004-2005. We have considered rival submissions. In view of our decision while disposing of the appeal of the assessee in appeal for A.Y.2004- 2005 in IT(SS)A.No.179/Ahd/2009, we hold that the only peak of debit and credit entries of the seized papers/diary could be assessed as undisclosed income in the hands of the assessee, and there was no justification for adding the entire receipt side of the seized papers, and accordingly, there is no merit in the grounds of the appeal of the Revenue with regard to this issue, and are accordingly, dismissed.
31. In the result, all the appeals of the assessee are partly allowed and three appeals of the Revenue are dismissed.
Order pronounced in Open Court on the date mentioned hereinabove.
"India via Cyprus" may continue
Manuj Sabharwal
As a part of one of the measures to check tax avoidance, the Indian Legislature has introduced section 94A in the Income-tax Act, 1961 ('Act') vide Finance Act, 2011, which allows the Government of India ('GoI') to categorize a country as a 'notified jurisdictional area' (or 'NJA') having regard to the lack of effective exchange of information with any country or territory outside India.
Recently, GoI declared Cyprus as an NJA vide notification no. 86/2013 dated November 1, 2013, a move that increased the scrutiny on any business transaction with entities based in Cyprus by Indian Revenue authorities. The same may be on account of the fact that Cyprus has not been effectively exchanging the information in terms of the existing DTAA / tax treaty between India and Cyprus.
Earlier, the rules under section 94A of the Act were notified as per Income-tax (8th Amendment) Rules, 2013, vide S.O. 1856 (E) dated June 26, 2013, by inserting rule 21AC and Form 10FC in the Income-tax Rules, 1962.
The implications of Cyprus being treated as NJA in terms of both the aforesaid notifications are as follows:
- If a taxpayer enters into a transaction any Cyprus based entity, all the parties to the transaction shall be treated as associated enterprises and the said transaction shall be treated as an international transaction, thereby triggering transfer pricing regulations, resulting in compliance and maintenance of onerous documentation.
- No deduction in respect of payment made to any financial institution in Cyprus or in respect of any other expenditure or allowance arising from the transaction with a person located in Cyprus, be allowed unless the taxpayer furnishes an authorization in the prescribed form and/ or maintain the prescribed documentation.
- Where any sum is received or credited from a person located in Cyprus, the onus is on the taxpayer to explain the source of such amount, and in case of his failure to do so, the amount shall be deemed to be the income of the taxpayer.
- Any payment made to a person located in Cyprus shall be liable for withholding tax at 30 per cent or a rate prescribed in Act, whichever is higher.
This has seriously impacted / dented the status of Cyprus as an attractive investment destination on account of its favourable tax regime.
Recently, on the basis of consultations held between Cyprus and India on the issue of effective exchange of information/ renegotiation of DTAA, the Ministry of Finance of Cyprus, on December 3, 2013, has issued a Press release, wherein both the parties to the DTAA has agreed:
- to adopt the provisions of the new Article 26 of the OECD Model Tax Convention (approved by the OECD Council on 17 July 2012) relating to exchange of information in a new DTAA between the two countries
(Article 26 lays down a framework under which a country can seek information from another nation and the rules governing that information);
- to improve the channels of communication and exerting every effort in facilitating each other in processing requests and responses in a swift and effective manner.
Additionally, the parties have also agreed to renegotiate/ finalize a new DTAA. It was further agreed that, once the notification of Cyprus as NJA under section 94A of the Act, is rescinded, it will have retrospective effect from November 1, 2013 (i.e. the date of declaration of Cyprus as NJA).
The new consensus reached between India and Cyprus is sure to alleviate the concerns of Cyprus based businesses / companies (which have routed their investments from Cyprus) as regards potential tax incremental outgo, increased scrutiny and potential international tax disputes which could have arisen on account of unilateral tax treaty override by India. Also, the action of Cyprus in resolving the issue shall be welcomed by community at large as the Cypriot Government has removed short term murkiness in regard to its tax treaty with India. The aforesaid action of Cypriot Government shall help Cyprus to regain the attractiveness as a favourable investment destination from the perspective of entities coming to invest in India from Cyprus.
Assessment completed without issue of notice u/s. 143(2) was invalid
Admittedly the petitioner had filed returns of income pursuant to the notice under section 147/148 by letter dated November 19, 2009 adopting its earlier returns under section 139(1) of the Act and the notice under section 143(2) was issued only on November 23, 2010. The final assessment order had not been passed and only a draft assessment order had been passed. The proviso to section 292BB was applicable. The principle of estoppel under section 292BB would therefore, not apply. In these circumstances, the Assistant Director could not rely upon the main section 292BB and claim that notice under section 143(2) was deemed to be served within the stipulated time. In view of this position, there was no reason why reassessment proceedings should continue as no notice under section 143(2) of the Act was served on the assessee within the stipulated time. The assessment proceedings pursuant to the notices under section 148 of the Act were to be quashed and the Assistant Director was to issue a "no objection certificate" to the petitioner as required by the Reserve Bank of India.
In view of the above, we are of the opinion that on the facts of the assessee's case, the decision of Hon'ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. (supra) and V.R. Educational Trust (supra) would be applicable. Respectfully following the same, we hold that the assessment completed without issue of notice under Section 143(2) of the Act was invalid.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No.3523/Del/2013 – Assessment Year : 1999-2000
Shri Mohinder Kumar Chhabra
Vs.
Income Tax Officer
ORDER
PER G.D.AGRAWAL, VP:
This appeal by the assessee is directed against the order of learned CIT(A)-XVII, New Delhi dated 26th April, 2013 for the AY 1999- 2000.
2. The assessee has raised as many as nine grounds. However, the learned counsel for the assessee stated that first ground No.2 of his appeal should be considered which goes to the root of the matter and is covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court.
3. Ground No.2 of the assessee's appeal reads as under:-
"That the learned CIT(Appeals) erred in upholding the validity of assessment order passed u/s 147/143(3) of the Act, after recording the admission of the AO that no notice u/s 143(2) was issued in the case, ignoring the judgments of the Jurisdictional High Court, copies of which had been filed before him, and thus committing contempt of Court."
4. At the time of hearing before us, it is submitted by the learned counsel that admittedly in this case, no notice under Section 143(2) was served. In the remand report dated 20th March, 2007, the Assessing Officer admitted this fact. He further submitted that the issue relating to validity of assessment order in the absence of notice under Section 143(2) is covered in favour of the assessee by the decisions of Hon'ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. Vs. Director General of Income-tax and Others – [2012] 341 ITR 247 (Delhi) and Director of Income-tax Vs. V.R. Educational Trust – order dated 10th February, 2012 in ITA No.510/2011.
5. Learned DR, on the other hand, relied upon the order of learned CIT(A) and he stated that in this case, notice under Section 142(1) was duly issued, therefore, opportunity of being heard had already been allowed to the assessee. He further stated that the issue is in fact covered in favour of the Revenue by the decision of Hon'ble Jurisdictional High Court in the case of Ashok Chaddha Vs. ITO – [2011] 337 ITR 399 (Delhi). He, therefore, submitted that the order of learned CIT(A) should be sustained and thus, ground No.2 of the assessee's appeal should be rejected.
6. In the rejoinder, it is stated by the learned counsel that the issue before the Hon'ble Jurisdictional High Court in the case of Ashok Chaddha (supra) was with regard to notice under Section 143(2) where the assessment was to be completed under Section 153A of the Income-tax Act. Thus, the issue of notice under Section 143(2) in the case of reassessment under Section 148 was not before the Hon'ble Jurisdictional High Court in the case of Ashok Chaddha (supra) while in the case of V.R. Educational Trust (supra), it was the same issue.
7. We have carefully considered the submissions of both the sides and perused the material placed before us. After considering the arguments of both the sides and the facts of the case, we find the contention of the learned counsel to be justified. The issue before the Hon'ble Jurisdictional High Court in the case of Ashok Chaddha (supra) was whether the issue of notice under Section 143(2) is necessary when the notice has been sent in a search case under Section 153A. Hon'ble Jurisdictional High Court in the said case held as under:-
"Held, dismissing the appeal, that (i) no specific notice was required under section 143(2) of the Act when the notice as required under section 153A(1)(a) of the Act was already given. In addition, the two questionnaires issued to the assessee were sufficient so as to give notice to the assessee, asking him to attend the office of the Assessing Officer in person or through a representative duly authorized in writing or produce or cause to be produced at the given time any documents, accounts, and any other evidence on which he may rely in support of the return filed by him."
8. However, in the case of V.R. Educational Trust (supra), the issue before the Hon'ble Jurisdictional High Court was identical to the issue in the present appeal because there also, the dispute was regard to issue of notice under Section 143(2) where the assessment was reopened under Section 147/148. The contention of the department was that the notice had already been issued under Section 142(1). However, Hon'ble Jurisdictional High Court did not agree with the Revenue's contention and held as under:-
"Even otherwise, it is difficult to accept the contention of the appellant that notice under Section 142(1) can be regarded as a notice issued under Section 143(2) of the Act. This Court in the case ofCommissioner of Income Tax versus Lunar Diamonds Ltd. [20081 281 ITR 1 (Del.) has held that service of notice under Section 143(2) is mandatory. It is not disputed that in respect of the proceedings under Section 147 of the act, notice under Section 143(2) is required and is mandated except in cases covered by the first and second proviso to Section 148 of the Act. The present case is not covered by the exceptions carved out in the two provisos as the return in the present case filed on or after 1st October, 2005. In the case of Assistant Commissioner of Income Tax and Another vs. Hotel Blue Moon (2010) 321 ITR 362 (SC), the Supreme Court had examined the question of mandate and necessity to issue notice under Section 143(2) of the Act, in the case of block assessment proceedings and it was observed as under:–
23. The other important feature that requires to be noticed is that Section 158-BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub-sections which are to be followed by the assessing officer. Had the intention ofthe legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. Areading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158-BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158-BC(b) it has done so specifically. Thus, when Section 158-BC(b) specifically refers to applicability of the proviso thereto cannot be excluded.
24. We may also notice here itself that the clarification given by CBDT in its Circular No.717 dated 14-8-1995, has a binding effect on the Department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158-BC, the provisions of Section 142 and sub¬sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) ofthe Act.
(emphasis supplied)
4. The aforesaid reasoning will equally apply to proceedings initiated under Section 147 of the Act."
9. That even in the case of Alpine Electronics Asia Pte. Ltd. (supra) also, the Hon'ble Jurisdictional High Court quashed the assessment proceedings because of non-issue of notice under Section 143(2) within time. In the said case also, the assessment was reopened under Section 147/148. In the aforesaid case, their Lordships of Hon'ble Jurisdictional High Court held as under:-
"Admittedly the petitioner had filed returns of income pursuant to the notice under section 147/148 by letter dated November 19, 2009 adopting its earlier returns under section 139(1) of the Act and the notice under section 143(2) was issued only on November 23, 2010. The final assessment order had not been passed and only a draft assessment order had been passed. The proviso to section 292BB was applicable. The principle of estoppel under section 292BB would therefore, not apply. In these circumstances, the Assistant Director could not rely upon the main section 292BB and claim that notice under section 143(2) was deemed to be served within the stipulated time. In view of this position, there was no reason why reassessment proceedings should continue as no notice under section 143(2) of the Act was served on the assessee within the stipulated time. The assessment proceedings pursuant to the notices under section 148 of the Act were to be quashed and the Assistant Director was to issue a "no objection certificate" to the petitioner as required by the Reserve Bank of India."
10. In view of the above, we are of the opinion that on the facts of the assessee's case, the decision of Hon'ble Jurisdictional High Court in the case of Alpine Electronics Asia Pte. Ltd. (supra) and V.R. Educational Trust (supra) would be applicable. Respectfully following the same, we hold that the assessment completed without issue of notice under Section 143(2) of the Act was invalid. The same is quashed and consequentially, the assessment order passed in pursuance thereto is also cancelled.
11. Once we have quashed the assessment order, the other grounds raised by the assessee against the addition made by the Assessing Officer in the assessment order do not survive for adjudication. 12. In the result, the appeal of the assessee is allowed.
Decision pronounced in the open Court on 13th December, 2013.
Reopening on the basis of vague / uncertain information on Accommodation Entry not valid
Investigation Wing informed the Assessing Officer of the assessee that they have carried out large scale investigation to unearth a huge racket including accommodation entry providers. Such entry providers found to be involved in giving accommodation entries in the form of bogus gifts/loans/share capital money etc. by cheques/DDs in lieu of cash received from the beneficiaries. The list of beneficiaries who have taken accommodation entries from such person/firm including the name of Bimla Devi. Now, the present assessee is Maya Gupta and not Bimla Devi. Then, in the chart, only the value of entry taken is mentioned but the nature of entry whether it is a bogus gift, loan or share capital money is not mentioned. Moreover, on what basis the above presumption is drawn that the assessee has taken any accommodation entry is also not mentioned. No reference is made to any statement given by any accommodation entry provider or any documentary evidence found from their premises which indicated any accommodation entry being taken by the assessee. Therefore, on these facts, in our opinion, the decision of Hon'ble Jurisdictional High Court in the case of Signature Hotels P.Ltd. (supra) and Insecticides (India) Ltd. (supra) would be squarely applicable because the information on the basis of which the Assessing Officer had initiated proceedings under Section 147 was vague and uncertain. Therefore, we are of the opinion that the learned CIT(A) rightly held that the reopening of assessment was not valid. Accordingly, the Revenue's appeal is dismissed.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No.3435/Del/2013 – Assessment Year : 2003-04
Income Tax Officer,
Vs.
Mrs. Maya Gupta
ORDER
PER G.D.AGRAWAL, VP:
This appeal by the Revenue is directed against the order of learned CIT(A)-XXIV, New Delhi dated 22nd March, 2013 for the AY 2003-04.
2. The Revenue has raised the following grounds of appeal:-
"On the facts and circumstances of the case and in law CIT(A) erred in
1. Invalidating the reopening of the assessment and assumption of jurisdiction by the AO U/s 147/148 of the IT Act in the case by treating the same as bad in law.
2. Quashing the assessment order passed by AO wherein an addition of Rs.35,77,293/- on account of income from unexplained sources u/s 68 ofthe Income Tax Act.
3. The appellant craves the right to add, alter or amend any ground of appeal."
3. We have heard both the sides and perused the material placed before us with regard to ground No.1 of the Revenue's appeal. The reasons for reopening of assessment are reproduced by the Assessing Officer at pages 1 & 2 of his order. The same is reproduced below for ready reference:-
"The Investigation Wing, Delhi conducted large scale investigation to unearth a huge racket involving accommodation entry providers. Such entry providers were found to be involved in giving accommodation entries in form of bogus gifts/loans/share application money/capital gain etc. by cheques/DDs in lieu of cash received from intending beneficiaries. The entry providers operated large number of bank accounts in their own names and also in fictitious names. The list of beneficiaries who had taken accommodation entry from such persons/firms included the name of Bimla Devi.
The detail of accommodation entries taken by the assessee and particulars of entry providers is as under:-
| Beneficiary Bank Name | Beneficiary Bank Branch | Account No. of Beneficiary | Value of Entry Taken | Instrument No. by which entry taken | Date on which entry taken | Name of account holder of entry giving account | Bank from which entry given | Branch of entry giving bank | A/c No. |
| Lord Krishna Bank | Kohat Enclave Pitampura | 250000 | 15- Feb- 03 | Bimla Devi | SBBJ | NRR | 15487 |
In view of the precise information, as discussed above, I have reasons to believe that assessee had obtained accommodation entries worth Rs. 2,50,000/- from the above mentioned person(s) who is/are involved in the business of providing accommodation entries. Such amount represents undisclosed income of the assessee, which has escaped assessment.
A letter was issued to the assessee on 11.03.2010 to find out if return for A.+. 2003-04 was filed and whether the same was scrutinized u/s 143(3). Such letter was served upon the assessee, but assessee failed to respond. Therefore, it is being assumed that return for A.+. 2003-04 has not been scrutinized. There is no information regarding return filed by such assessee, on the AST software. Jurisdiction is being assumed on the basis of address available in the database.
Keeping in view the above facts, it is requested that necessary approval u/s 151(2) may kindly be accorded for initiating proceedings u/s 148 of the I.T. Act in order to book income which had escaped assessment."
4. Learned CIT(A) has held the reopening of assessment to be invalid following the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Supreme Polypropolene (P) Ltd. – ITA No.266/2011 dated 30th October, 2012.
5. The learned DR, at the time of hearing before us, has relied upon the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Nova Promoters & Finlease (P) Ltd. – [2012] 342 ITR 169 (Delhi). 6. Therefore, now the question remains is, that on the facts of the assessee's case, which decision of Hon'ble Jurisdictional High Court is applicable. In the case of Signature Hotels P.Ltd. Vs. ITO – [2011] 338 ITR 0051, Hon'ble Jurisdictional High Court held as under:-
"Held, allowing the petition, that the reassessment proceedings were initiated on the basis of information received from the Director of Income-tax (Investigation) that the petitioner had introduced money amounting to Rs.5 lakhs during financial year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of Rs.90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed."
7. Similar view is reiterated by the Hon'ble Jurisdictional High Court in the subsequent decision in the case of CIT Vs. Insecticides (India) Ltd. – [2013] 357 ITR 330 (Delhi), wherein their Lordships held as under:-
"The information on the basis of which the Assessing Officer had initiated proceedings under section 147 of the Income-tax Act, 1961, was vague and uncertain and could not be construed to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. The notice of reassessment was not valid and was liable to be quashed."
8. That in the case of Nova Promoters & Finlease (P) Ltd. (supra), the issue of reopening of assessment was not before the Hon'ble Jurisdictional High Court. In fact, in that case, the CIT(A) as well as ITAT both have upheld the reopening of assessment but had deleted the addition made under Section 68 of the Income-tax Act. Only the Revenue was in appeal before the Hon'ble Jurisdictional High Court which would be evident from the following substantial questions of law which arose in this appeal :-
"(1) Whether the Tribunal was right in law in confirming the order of the Commissioner of Income-tax (Appeals) deleting the additions of Rs.1,18,50,000 and Rs.2,96,250 both made under section 68 of the Act, on the ground that the identity and creditworthiness ofthe share applicants as well as the genuineness ofthe transactions were proved?
(2) Whether the order of the Tribunal confirming the deletion of the addition of the aforesaid two amounts was perverse having regard to the evidence and the material on record?"
9. Now reverting to the reasons recorded, we find that the Investigation Wing informed the Assessing Officer of the assessee that they have carried out large scale investigation to unearth a huge racket including accommodation entry providers. Such entry providers found to be involved in giving accommodation entries in the form of bogus gifts/loans/share capital money etc. by cheques/DDs in lieu of cash received from the beneficiaries. The list of beneficiaries who have taken accommodation entries from such person/firm including the name of Bimla Devi. Now, the present assessee is Maya Gupta and not Bimla Devi. Then, in the chart, only the value of entry taken is mentioned but the nature of entry whether it is a bogus gift, loan or share capital money is not mentioned. Moreover, on what basis the above presumption is drawn that the assessee has taken any accommodation entry is also not mentioned. No reference is made to any statement given by any accommodation entry provider or any documentary evidence found from their premises which indicated any accommodation entry being taken by the assessee. Therefore, on these facts, in our opinion, the decision of Hon'ble Jurisdictional High Court in the case of Signature Hotels P.Ltd. (supra) and Insecticides (India) Ltd. (supra) would be squarely applicable because the information on the basis of which the Assessing Officer had initiated proceedings under Section 147 was vague and uncertain. Therefore, we are of the opinion that the learned CIT(A) rightly held that the reopening of assessment was not valid. Accordingly, the Revenue's appeal is dismissed.
10. In the result, the appeal of the Revenue is dismissed.
Decision pronounced in the open Court on 13th December, 2013.
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