INCOME
TAX APPELLATE TRIBUNAL - DELHI
M/S. VSB INVESTMENT PVT. LTD., ...
VS DCIT, FARIDABAD ON 8 DECEMBER, 2017
Summarised Judgement (Scroll for Complete Judgement)
Introduction:
The
Departmental appeal as well as Cross-Objection by Assessee are directed against
the order of the Ld. CIT(A), Faridabad, dated 2011.2015 for the A.Y. 2007-2008.
ITA.No.468/Del./2016
& CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad.
Facts of the Case:
Briefly, the facts of
the case are that the assessee filed return of income under section 139(1) of
the I.T. Act on 30th October, 2007 declaring NIL income. A detailed information
regarding accommodation entries provided by M/s. Basant Marketing (P) Ltd., and
M/s. Empire Commercial Co. (P) Ltd., to various beneficiary companies was
received from the Office of the Commissioner of Income Tax (Central), Kolkata
with regard to CBI Investigation in the case of Shri Arun Dalmia, Shri Harsh
Dalmia and their dummy companies. The relevant extract of the information
received from CIT (Central), Kolkata is reproduced in the assessment order.
The list was appended
to the said letter contains the names of the beneficiaries of the accommodation
entries received from the dummy companies. In the said list name of the
assessee was mentioned who has obtained accommodation entries in different
years including A.Y. 2007-08 under appeal amounting to Rs.2,07,85,000. The A.O.
on the basis of the above information, reopened the assessment having reason to
believe that income chargeable to tax has escaped assessment to the extent of
Rs.2,07,85,000 in the hands of assessee for A.Y. 2007-08 under appeal. Notice
under section 148 was issued and the assessee ITA.No.468/Del./2016 &
CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad.
Observation of Court:
After hearing the rival
contentions, we are of the view that no interference is called for in the order
of the Ld. CIT(A). It is an admitted fact that reopening of the assessment was
made in this case because as per information received from CIT (Central),
Kolkata through CBI that assessee received accommodation entry from M/s. Basant
Marketing (P) Ltd., for a sum of Rs.2,07,85,000 in assessment year under
appeal. The assessee denied to have received any such accommodation entry in
assessment year under appeal which was also confirmed by the concerned party.
The contention of the assessee has been accepted by the A.O. Copy of the
reasons are also filed on record. It was, therefore, clear that A.O. recorded
incorrect and non-existing reasons for reopening of the assessment. Therefore,
M/s. VSB Investment Pvt. Ltd., Faridabad. on the face of it, the reopening of
the assessment is void and bad in law. The case of the assessee is squarely
covered by the decision of the Hon'ble Punjab & Haryana High Court in the
case of Atlas Cycle Industries (supra).
Judgement:
The Ld. CIT(A),
therefore, rightly followed various decisions of the High Court and the
Tribunal for the purpose of quashing the re-assessment order. No infirmity have
been pointed out in the order of the Ld. CIT(A).
Therefore, the cross
objection is dismissed.
In the result, cross
objection of the assessee dismissed.
================================================
Complete Judgement
INCOME TAX APPELLATE TRIBUNAL - DELHI
M/S. VSB INVESTMENT PVT. LTD., VS
DCIT, FARIDABAD ON 8 DECEMBER, 2017
IN
THE INCOME TAX APPELLATE TRIBUNAL
DELHI
BENCHES "B": DELHI
BEFORE
SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI
PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA.No.468/Del./2016
Assessment
Year 2007-2008
M/s.
VSB Investment Pvt. Ltd.,
DCIT,
Circle-II, Block-B, CGO
B-400,
3rd Floor, Nehru Ground,
Complex,
NH-IV, Faridabad.
VS
NIT, Faridabad.PAN AABCV7492B
C.O.No.139/Del./2016
Arising
out of
ITA.No.468/Del./2016
- Assessment Year 2007-2008
M/s.
VSB Investment Pvt. Ltd.,
B-400,
3rd Floor, Nehru DCIT,
Circle-II, Block-B, CGO
Ground,
NIT, Faridabad.PAN vs. Complex, NH-IV, Faridabad.
AABCV7492B
(Cross
Objector)
(Respondent)
For
Revenue : Ms. Ashima Neb, Sr. D.R.
For
Cross Objector : Dr. Rakesh Gupta, Advocate
Date
of Hearing : 05.12.2017
Date
of Pronouncement : 08.12.2017
ORDER
PER
BHAVNESH SAINI, J.M.
The Departmental appeal
as well as Cross-Objection by Assessee are directed against the order of the
Ld. CIT(A), Faridabad, dated 2011.2015 for the A.Y. 2007-2008.
ITA.No.468/Del./2016
& CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad.
2. Briefly, the facts
of the case are that the assessee filed return of income under section 139(1)
of the I.T. Act on 30th October, 2007 declaring NIL income. A detailed
information regarding accommodation entries provided by M/s. Basant Marketing
(P) Ltd., and M/s. Empire Commercial Co. (P) Ltd., to various beneficiary
companies was received from the Office of the Commissioner of Income Tax
(Central), Kolkata with regard to CBI Investigation in the case of Shri Arun
Dalmia, Shri Harsh Dalmia and their dummy companies. The relevant extract of
the information received from CIT (Central), Kolkata is reproduced in the
assessment order. The list was appended to the said letter contains the names
of the beneficiaries of the accommodation entries received from the dummy
companies. In the said list name of the assessee was mentioned who has obtained
accommodation entries in different years including A.Y. 2007-08 under appeal
amounting to Rs.2,07,85,000. The A.O. on the basis of the above information,
reopened the assessment having reason to believe that income chargeable to tax
has escaped assessment to the extent of Rs.2,07,85,000 in the hands of assessee
for A.Y. 2007-08 under appeal. Notice under section 148 was issued and the
assessee ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment
Pvt. Ltd., Faridabad.
submitted that the
return already filed originally may be treated as return having filed in
response to the notice under section 148 of the I.T. Act. The A.O. called for
the explanation of assessee. The assessee specifically submitted before A.O.
that assessee-company did not have any transaction including purchase and sale
of shares etc., with M/s. Basant Marketing (P) Ltd., however, the opening
credit balance was outstanding at the end of the year without any transaction.
Confirmation copy of the account of the said party was filed before A.O. for
verification. The A.O. also issued notice under section 133(6) to the concerned
party in order to verify the fact stated by the assessee. The reply was
received in which it was intimated by the concerned party that "We have
not entered into any transaction with M/s. VSB Investment Private Limited
during F.Y. 2006-2007." The A.O. therefore, noted that as per the reply
and copy of the account filed before him, opening and closing balance of
Rs.2,07,85,000 have been shown without any transaction during the F.Y. 2006-07.
Therefore, submission of the assessee was accepted. The A.O. however, proceeded
to examine the issue of disallowance under section 14A of the I.T. Act and made
the addition of Rs.40,51,979.
3. The assessee
challenged the reopening of the assessment as well as addition made under
section 14A before the Ld. CIT(A). it was submitted that the assessment has
been reopened on the reason that assessee obtained accommodation entries in
assessment year under appeal amounting to Rs.2,07,85,000, however, no such
transaction has been conducted in assessment year under appeal. Therefore,
reasons are recorded on incorrect facts. Therefore, there were no justification
to reopen the assessment. The assessee relied upon various decisions including
the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT
vs. Atlas Cycle Industries 180 ITR 319. The Ld. CIT(A) accepted the explanation
of assessee because it was apparent that case was reopened by the A.O. on
account of bogus share application money, but no addition have been made on
account of the same in assessment order. The A.O. made addition on account of
disallowance under section 14A of the I.T. Act. The Ld. CIT(A) following
various decisions of the High Court held that if there is no addition in
respect of the reasons recorded, no other addition can be made. The Ld. CIT(A)
accordingly, held that assessment framed by the A.O. is void because A.O. did
not have ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment
Pvt. Ltd., Faridabad jurisdiction to make additions/disallowances to the
returned income of the assessee. Once the reasons on which case was reopened
under section 147 ceased to exist as admitted by the A.O, reopening of the
assessment is bad in law. The appeal of the assessee was accordingly allowed.
The Ld. CIT(A) did not decide the issue of disallowance under section 14A of
the I.T. Act. The appeal of the assessee is accordingly allowed.
4. After hearing the
rival contentions, we are of the view that no interference is called for in the
order of the Ld. CIT(A). It is an admitted fact that reopening of the
assessment was made in this case because as per information received from CIT
(Central), Kolkata through CBI that assessee received accommodation entry from
M/s. Basant Marketing (P) Ltd., for a sum of Rs.2,07,85,000 in assessment year
under appeal. The assessee denied to have received any such accommodation entry
in assessment year under appeal which was also confirmed by the concerned
party. The contention of the assessee has been accepted by the A.O. Copy of the
reasons are also filed on record. It was, therefore, clear that A.O. recorded
incorrect and non-existing reasons for reopening of the assessment. Therefore,
ITA.No.468/Del./2016 & CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd.,
Faridabad.
on the face of it, the
reopening of the assessment is void and bad in law. The case of the assessee is
squarely covered by the decision of the Hon'ble Punjab & Haryana High Court
in the case of Atlas Cycle Industries (supra). The Ld. CIT(A), therefore,
rightly followed various decisions of the High Court and the Tribunal for the
purpose of quashing the re-assessment order. No infirmity have been pointed out
in the order of the Ld. CIT(A). Therefore, departmental appeal stands
dismissed.
5. In the result,
appeal of the Department dismissed.
6. The Learned Counsel
for the Assessee submitted that the cross objection is filed mainly in support
of the order of the Ld. CIT(A). Therefore, the cross objection is dismissed.
7. In the result, cross
objection of the assessee dismissed.
8. To sum-up, appeal of
the department and cross objection of the assessee dismissed.
Order pronounced in the
open Court.
Sd/-
Sd/-
(PRASHANT
MAHARISHI)
(BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL
MEMBER
Delhi, Dated 08th
December, 2017
VBP/-
ITA.No.468/Del./2016
& CO.No.139/Del./2016 M/s. VSB Investment Pvt. Ltd., Faridabad.
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT 'B' Bench,
Delhi
6. Guard File.
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