IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2 , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. No. 6299/DEL/2015 A.Y. : 2005-06 M/S HASANPUR COLD STORAGE DCIT, CIRCLE 12(1), PVT. LTD., VS. NEW DELHI 306, RG COMPLEX, SECTOR-8, ROHINI, DELHI 110 085 (PAN:AABCH0861N) (APPELLANT) (RESPONDENT) Assessee by : Shri Ved Jain, Adv. & Sh. Pranjal Srivastav, Adv. Department by : None 18- 2016 Date of Hearing : 18-08-2016 05-10-2016 Date of Order : 05-10-2016 ORDER This appeal is filed by Assessee aggrieved with order of Ld. CIT(A) 28.9.2015 for asstt. year 2005-06 on following grounds :- 1. On facts and circumstances of case, order passed by learned Commissioner of Income Tax [CIT(A)] is bad, both in eye of law and on facts. 2. On facts and circumstances of case, learned CIT(A) has erred, both on facts and in law, in confirming proceedings under Section 147, read with Section 148, ignoring fact that same was bad in eye of law as condition and 1 procedure prescribed under statute have not been satisfied and complied with. 3. On facts and circumstances of case, CIT(A) has erred both on facts and In law, in confirming order passed by A.O as reassessment proceedings initiated by learned A.O. are bad in eye of law as reasons recorded for issue of notice under Section 148 are bad in eye of law and are contrary to facts. 4. On facts and circumstances of case, learned CIT(A) has erred, both on facts and in law, in confirming proceedings under Section 147, read with Section 148, ignoring fact that notice issued under Section 148 of Act is bad in eye of law. 5. On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in confirming order of AO rejecting contention of assessee that reason recorded for reopening of assessment are bad in law and as such reopening of assessment is illegal and liable to be quashed so. 7. On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in rejecting contention of assessee that re-assessment order passed by AO under section 147 is bad in eyes of law as same has been passed without service of notice uls 148 of Act. 8. On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in rejecting contention of 2 assessee that order under section 147/144 of Income Tax Act, 1961 has been passed without giving assessee opportunity of being heard which is clear violation of principle of natural justice. 8. (i) On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in confirming addition made by AO on account of share Application money received from MIs Taurus Iron & Steel Co. Pvt. Ltd. amounting Rs 10,00,000/- u/s 68 of Income Tax Act. (ii), That above said addition has been confirmed despite fact that assessee brought all material evidences on record to prove identity and credit worthiness of shareholders and genuineness of transaction. (iii) That learned CIT(A) has erred both on facts and in law in confirming said addition having been made without there being any adverse material against assessee. 9. On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in confirming addition of RS.2,36,026 on account of agricultural expense. 10. (i) On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in enhancing addition to Rs.3,80,2401- from Rs.2,36,026/- made by AO on account of expenditure incurred toward agriculture expense. 3 (ii) That above said enhancement has been made arbitrarily rejecting detailed explanations and submissions submitted by assessee. 11. (i) On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in enhancing income assessed by AO. (ii) That enhancement order passed by learned CIT(A) is without following statutory provisions of Act is bad in law and liable to be questioned. (iii) On facts and circumstances of case, learned CIT(A) has erred both on facts and in law in going beyond scope of his power of enhancement u/s 251 of Income Tax Act. 12. appellant craves leave to add, amend or alter any of grounds of appeal. 2. brief facts of case are that assessee filed its return of income on 29.10.2005 declaring income NIL and same was processed u/s. 143(1) of I.T. Act, 1961. Subsequently, proceedings u/s. 147 of I.T. Act were initiated by recording reasons on basis of information received from Investigation Wing of Department vide letter dated 31.3.2009 from Addl. DIT (Inv.) Unit-IV, New Delhi that assessee is also beneficiary of taking accommodation entry of Rs. 10,00,000/- in garb of share application money/share capital/share premium from M/s Taurus Iron & Steel Co. Pvt. Ltd., entity of Shrl Tarun Goyal, entry provider as unveiled by Investigation Wing of Department. Consequently, notice u/s 148 was issued by AO on 26.03.2012 after recording reasons u/s 147 of Act. However, no return 4 of income was filed by assessee in response to said notice. Therefore, notices u/s 142(1) dated 17.09.2012 & 11.10.2012 were issued and served upon assessee which remained un-complied with. final show cause notice/questionnaire u/s 142(1) dated 04.02.2013 was issued to assessee by speed post and in response to which, AR of assessee attended assessment proceedings. Consequently, details were filed by assessee raising many objections in connection with validity of issuance and service of notices and also reassessment proceedings. However, AO considered submissions of assessee along with details filed and completed assessment by making various additions. 3. Aggrieved with same, assessee filed Appeal before Ld. CIT(A) who vide impugned order dated 28.9.2015 partly allowed appeal of assessee. 4. Against order of Ld. CIT(A) dated 28.9.2015, assessee is in appeal before Tribunal. 5. Ld. Counsel of assessee reiterated contention raised in its Appeal wherein he stated that Ld. CIT(A) erred in confirming proceedings u/s. 147 r.w.s. 148, ignoring fact that same was bad in eye of law as condition and procedure prescribed under statute have not been satisfied and complied with. He further submitted that Ld. CIT(A) has also erred in confirming order of AO rejecting contention of assessee that reason recorded for reopening of assessment are bad in law and as such reopening of assessment is illegal and liable to be quashed so; order u/s. 147 is bad in eyes of law as same has been passed without service of notice u/s. 148 of Act; order passed by authorities below is passed without appreciation of information already on record, reasons of satisfaction 5 recorded for reopening, and reassessment order passed by A.O. are all not connected with each other. He further submitted that assessee had discharged obligations and filed all necessary documents, confirmations at time of original assessment sufficient to meet satisfaction under section 148 proceedings when assessing officer having accepted those confirmation and information in original assessment proceedings. To support his contention, he referred various case laws of Delhi High Court by which present case of assessee is covered including case of Signature Hotel Pvt. Ltd. (2011) 338 ITR 51. He further relied upon ITAT, C Bench, Delhi in which on similar facts and circumstances issue in dispute has been dealt by Tribunal in case of Shri Govind Kripa Builders and Promoters vs. ITO passed in ITA No. 304/Del/2013 (AY 2008-09) vide order dated 19.12.2014 in which Hotel Signatures Pvt. Ltd. decision (supra) was followed. Later Department went in Appeal before Delhi High Court, in ITA No. 486/2015 in case of Pr. CIT vs. Sh. Govind Kripa Builders Pvt. Ltd. which was dismissed on 4.8.2015 by Hon ble High Court of Delhi. Hence, he requested that reassessment proceedings may be quashed. 6. In this case, Notice of hearing was sent to both parties, in spite of same, none appeared on behalf of Revenue nor filed any application for adjournment. Keeping in view facts and circumstances of present case and issue involved in present Appeal, I am of view that no useful purpose would be served to issue notice again and again to Revenue, therefore, I am deciding present appeal exparte qua Revenue, after hearing Ld. AR and perusing records. 6 7. I have heard Ld. Counsel of assessee and perused records. I find that AO has recorded reasons for belief that income has escaped assessment as under, same is attached with Paper Book filed by assessee at page no. 17 & 18. 2005- M/s Hasanpur Cold Storage Pvt Ltd. AY 2005-06 search u/s. 132 of I.T. Act was conducted at office premises of Sh. Tarun Goyal, CA. Addl. DIT(Inv.) Unit-IV after conducting detailed enquiries and analyzing bank account and various documents seized from premises has reported to CIT, Delhi IV vide its letter No. Addl. DIT (Inv.)/Unit-IV/Beneficiaries /2008-09/392 dated 31.3.2009. report is annexed as Annexure B. main gist report are as under:- 1. Sh. Tarun Goyal has formed certain firms/ companies for providing accommodation entries. All these companies are operating from 13/34 WEA Karol Bagh or 203, Dhaka Chamber Naiwala, Karol Bagh. 2. Various bank a/c has been opened in name of these companies with authorized signatories which are employees of Sh. Tarun Goyal. 3. Huge cash was found deposited in these bank accounts. 4. Sh. Tarun Goyal is using such concerns for giving accommodation entries to various beneficiaries after receiving cash from such beneficiaries in lieu of certain commission. 7 5. During course of search operations on 15.9.2008, Sh. Tarun Goyal in his statement has accepted all facts mentioned above. 6. M/s Tarun Iron & Steel Company Pvt. Ltd. is one of such concern used by Sh. Tarun Goyal for providing accommodation entry. Addl. DIT (Inv.) has also forwarded detailed list of beneficiaries who has received accommodation entry during FY 03-04 to 2008- 09. M/s Hasanpur Cold Storage Pvt. Ltd. (AABCH0861N) is one such concern who has received Rs. 10,00,000/- from entry provider M/s Taurus Iron & Steel Company Pvt. Ltd. In view of findings of Investigation Report, lenders in these cases have been proved to be men/parties of no creditworthiness. statements on oath and letters of admission clearly show that these transactions are non genuine. Therefore aforesaid credit entries are squarely hit by section 68 of I.T. Act. Credit of Rs. 10,00,000/- is appearing in books of assessee. low cost duty on assesse to prove genuineness of transaction and creditworthiness of party giving such credit of Rs. 10,00,000/-. Though assessee has not provided details of persons who has given this share capital/ share premium / share application money in its return of income, but entry providers has categorically stated that they had provided share capital/ share premium/ share application 8 money after receiving cash from beneficiaries. categorical admission of entry provider as well as finance statement of assessee clearly points out fact that transactions entered by assessee are not genuine. I, therefore, have reasons to believe that this amount of Rs. 10,00,000/- represents income of assessee chargeable to tax which has escaped assessment for AY 2005-06. necessary approval u/s. 151(2) may kindly be accorded for issue u/s. 148 of Income Tax Act, 1961 for AY 05-06. 16.1 I find considerable cogency in submissions of Ld. Counsel of assessee that facts and circumstances of present case are similar and identical to that of case of Shri Govind Kripa Builders and Promoters vs. ITO, decided by C Bench, ITAT, New Delhi in ITA No. 304/Del/2013 (AY 2008-09) vide order dated 19.12.2014 (in which one of Judicial Member was Party), wherein Hotel Signatures Pvt. Ltd. (Supra) decision of Delhi High Court was followed. Against order dated 19.12.2014 of Tribunal, Department went in Appeal before Hon ble Delhi High Court, in ITA No. 486/2015 in case of Pr. CIT vs. Sh. Govind Kripa Builders Pvt. Ltd. and Hon ble High Court of Delhi vide its order dated 04.8.2015 has observed as under:- 3. It is seen that ITAT has in impugned order dated 19th December, 2014 passed in ITA No. 304/Del/2013 for Assessment Year 2008-09 relied upon judgment of this Court in Signature Hotels P. Ltd., vs. ITO [2011] 338 ITR 51 9 (Delhi) and come to conclusion that AO did not apply his own mind to information and materials forming basis of information. 4. Court finds no legal error whatsoever in ITAT coming to above conclusion. In facts and circumstances of present case, no substantial question of law arises for determination by Court. 16.2 I also find that these reasons merely based on investigation wing information without surveillance of substantiation and without any statement being mentioned therein and without nature of transaction being narrated therein and without tangible material, and further without application of mind on amount of income escaping assessment, shows that reopening is bad in law and needs to be quashed. 16.3 In background of aforesaid discussions, I am of considered view that only effective ground in this appeal is reassessment proceedings u/s. 148 of I.T. Act, Assessee has reiterated that reassessment proceedings are illegal and without jurisdiction in absence of any tangible evidence or material in respect of any undisclosed income and recording of requisite satisfaction in respect of any such undisclosed income. After hearing Ld. Counsel of assessee on issue in dispute as well as after going through orders passed by Revenue Authorities alongwith order dated 21.7.2011 passed by Hon ble Jurisdictional High Court in case of Signature Hotels P. Ltd. vs. Income Tax Officer [2011] 338 ITR 0051 wherein Hon ble High Court has held matter as under:- 10 Held, allowing petition, that reassessment proceeding were initiated on basis of information received from Director of Income Tax (Investigation) that petitioner had introduced money amounting to Rs. 5 lacs during financial year 2002-03 as stated in Annexure. According to information, amount received from company, S, was nothing but accommodation entry and assesee was beneficiary. reasons did not satisfy requirements of Section 147 of Act. There was no reference to any document or statement, except annexure. annexure could not be regarded as material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. annexure was not pointer and did not indicate escapement of income. Further, Assessing Officer did not apply his own mind to information and examine basis and material of information. There was no dispute that company, S, had paid-up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted permanent account number in September, 2001. Thus, it could not be held to be fictitious person. reassessment proceedings were not valid and were liable to be quashed. 17. In view of above, I am of considered view that above issue is exactly similar to issue involved in present appeal and is squarely covered by aforesaid decision of Hon ble High Court of Delhi delivered in Hotel Signatures Ltd. (Supra). Hence, respectfully following above precedent, I 11 decide legal issue in dispute in favour of Assessee and against Revenue and accordingly quash reassessment proceedings. other issues are not dealt with as same have become academic in nature. 18. In result, Assessee s Appeal stands allowed. Order pronounced in Open Court on 05/10/2016 SD/- [H.S. SIDHU] SIDHU] JUDICIAL MEMBER Date 05/10/2016 SRBHATNAGAR Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Benches 12 M/s. Hasanpur Cold Storeage Pvt. Ltd. v. DCIT, Circle 12(1), New Delhi