Harjeet Singh Vs ITO (ITAT Delhi)
It can be seen that the Assessing Officer has proceeded on wrong assumption fact. The amount of Rs. 10 lacs is not supported by any cheque number whereas the allegation is that the assessee has received accommodation entry from Sh. Gupta through cheque. In my considered opinion the basis of reopening itself is based on wrong facts, therefore, the same cannot be upheld. I accordingly set aside the notice u/s 148 of the Act the reassessment based on such notice deserves to be quashed. Since the assessment itself has been quashed the other ad-hoc disallowance stand deleted.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is preferred against the order of the CIT(A)-18, New Delhi dated 30.01.2015 pertaining to A. Y. 2005-06.
2. The grievance of the assessee read :-
1. “The Learned CIT(A), New Delhi has erred in not holding the assessment as time barred u/s 153 of the Income Tax Act, 1961.
2. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs. 4,33,654/- on account of Truck Hiring Charges.
3. The Learned CIT (A), New Delhi has erred in upholding the disallowance of Rs.3,90,31 1/- on account of Vehicle Running & Maintenance, Business Promotions and Telephone Expenses.
4. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs. 4,56,770.0 on account of diesel expenses on trucks.
5. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs.3,45, 754/- on account of Salary.
6. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs. 1,61,876/- on account of Purchases.
7. The Learned CIT(A), New Delhi has erred in upholding the disallowance of Rs. 10,00,000/- on account of unexplained deposits in the saving Bank account.”
3. Facts on record show that on the basis of the information received from ACIT, Central Circle-22, New Delhi. The Assessing Officer came to know that the assessee is one of the beneficiaries of accommodation entries provided by S. K. Gupta. On the strength of this information notice u/s 148 was issued and served upon the assessee.
4. The assessee was asked to file the details as per questionnaire and order sheet entry of various dates. The Assessing Officer observed that no information was filed by the assessee though he attended office on various dates.
5. The Assessing Officer accordingly proceeded of making addition of Rs. 10 lacs on the basis of the information received from ACIT, Central Circle-22, New Delhi. The Assessing Officer further disallowed 3,90,31 1/- being 20% of expenses alleging that personal use of these facilities cannot be ruled out. The Assessing Officer further disallowed 10% out of diesel expenses amounting to 4,56,770/- and 10% of truck hiring charges amounting to Rs.4,33,654/- and 10% of incentives paid to employees amounting to Rs.345754/- on 10% of purchase amounting to Rs. 161876/ – the assessment was accordingly completed.
6. The assessee agitated the matter before the CIT(A) but without any success.
7. Before me the counsel for the assessee stated that the reasons for reopening the assessment are on incorrect facts and therefore assessment should be quashed. In so far as disallowance of expenses are concerned the counsel stated that the Assessing Officer has given very general reasons and therefore ad-hoc disallowances should not have been made. Per contra the DR strongly supported the findings of the lower authorities.
8. I have given the careful consideration to the orders of the authorities below. The reasons for reopening the assessment read :-
“PROPOSAL U/S 147 OF THE INCOME TAX ACT-1961 IN THE CASE OF SHRI HARJEET SINGH 11/1. JANGPURA BHOGAL, NEW DELHI-140014- PAN NO. AARPS3442H ASSESSEMENT YEAR 2005-06.
Information has been received from the ACIT Central circle-22, New Delhi Vide F.No. ACIT/CC-22/2011- 12/970 dated 22.03.2012 that a survey u/s 133A eft the Income Tax Act was conducted on 20.11.2007 by ITO (Inv.), Unit Vl(3), New Delhi in the case of Shri Suresh Kumar Gupta at his various business premises, wherein several ledger accounts maintained in tally for the period 2004-05 were found, besides various other docDments/accounts. Shri S.K.Gupta worked as an entry operator and provided accommodation entries to various beneficiaries through a large numbers of proprietary concerns managed by him. Cash was received and deposited in the bank account of these proprietary concerns and through various conduit/intermediary cpmpanies transferred to the bank accounts of the ultimate beneficiaries.
As per the list of beneficiaries^enclosed therewith, the assessee Shri Harjeet Singh, is one of the beneficiaries who reciived accommodation entry from Shri S.K. Gupta through his concerns. Shri Harjeet Singh is the existing assessee of this ward and has’atSt) received accommodation entries as under.
