ITO Vs Gungun Gold Infra Pvt. Ltd. (ITAT Delhi)
ITAT Delhi held that assessment order suffered from non-application of mind and also overt omission and failure on the part of the assessee to disclose fully and truly all material facts as were necessary for the assessment. Accordingly, reopening of assessment u/s 148 justified.
Facts-
Post investigation, it was observed that the turnover declared by the Assessee was Rs. 500 except with no other expense or income declared. Huge cash deposit during the period between 01.04.2009 to 31.03.2010 in the Assessee’s bank account was found particularly with M/s. Priya Tissues Pvt. Ltd. Accordingly the case of the Assessee was reopened u/s 148 of the Act by obtaining due approval of the competent authority and statutory notice was issued on 31.03.2017. The Assessee submitted the return filed by the Assessee on 26.03.2012 may be treated as return filed in response to notice u/s 148 of the Act. The Assessee had claimed that the scrutiny assessment in his case for Assessment Year 2010-11 has already been passed by DCIT, Central Circle-4, New Delhi already on 22.03.2013 by accepting the returned income of Rs. 500/- and reopening of the assessment u/s 148 cannot be continued. The Assessee also approached the Hon’ble High Court vide writ petition No. 9286/2017 in which ultimately writ petition was dismissed as withdrawn.
Conclusion-
The present case is not a case where the impugned notice and reasons suffers from non application of mind or change of opinion, rather, rightly argued by Ld DR, it is the previous assessment order, which suffered from non application of mind and escapement occasioned by reason, of overt omission and failure on the part of the assessee to disclose fully and truly all material facts as were necessary for the assessment.
Thus, the bench is of considered opinion that the ld CIT(A) had fallen an error in setting aside the assessment order merely by citing jurisdictional defect in recording of reasons and issuance of notice u/s 147/148 of the Act. In fact, in the present facts and circumstances, without going on the merits of the impugned assessment, it was not possible for the first appellate authority to give a finding as to if in the previous assessment proceedings the ld AO was actually having complete and reasonable opportunity to examine the response of assessee and after having honest response of the Assessee, the then assessing officer concluded the assessment proceedings drawing all reasonable inferences. There is no substance in the propositions and submissions casted out by Ld AR and judicial precedents he has relied are distinguishable on facts. Thus, the ground raised by revenue in the present appeal questioning the order the ld First Appellate Authority for deleting the addition merely on the basis of technical ground without discussing the merits of the case deserves to be sustained.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal has been preferred by the revenue against the order dated 26.03.2019 of CIT(A)-08, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. „FAA’) in appeal No. 10391/17-18 arising out of an appeal before it against the order dated 30.12.2017 passed u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as „the Act’) by Assessing Officer, ITO, Ward23(3), New Delhi (hereinafter referred as the Ld. AO).
2. The facts in brief are that as per the revenue the assessment order dated 30.12.2017 was outcome of the return of income of the Assessee dated 26.03.2012 declaring total income of Rs. 500/-. The return was processed u/s 143(1) of the Act on 14.05.2012. However, subsequently, information was received from Investigation Wing, New Delhi vide Dy. Director of Income Tax(Inv), Unit 1(2), New Delhi and also from the office of CBI, New Delhi that Shri Tarun Goyal, M/s. Yogesh Trading Co and others were engaged in purchasing of existing companies and formation of new one. At least 35 companies were found operating on the same address, 13/34 WEA, 4th Floor, Main Arya Samaj Road, Karol Bagh, New Delhi. Mr. Tarun Goyal was suspected to be engaged in depositing of cash in various bank accounts and transactions were finally shown as subscription of equity in companies. The equity was mainly subscribed at high premium. The non group companies were found to be carrying out normal business activities. Some of the companies were found inducting capital/margin money to avail credit facilities from financial institution. In this process tainted money was converted into bonafide investment in equity resulting in evasion of tax. At least 35 companies along with details of 45 bank accounts were taken up by CBI for scrutiny and rest of same banks were found in facilitating money laundering activities. It was further informed that Shri Hari Das Securities and Credit Pvt. Ltd by which the present Assessee was known at that time was having a bank account No. 223010200020332 with Axis Bank Ltd, Karol Bagh, New Delhi wherein, the credit of Rs. 22,70,06,000/- was found. The assessment order mentions that it was noticed that amount either credited in cash or transferred from the entity mentioned in TEP and immediately transferred on the same day or another day to the entity mentioned in TEP.
3. In context to assessee it was observed that the turnover declared by the Assessee was Rs. 500 except with no other expense or income declared. Huge cash deposit during the period between 01.04.2009 to 31.03.2010 in the Assessee‟s bank account was found particularly with M/s. Priya Tissues Pvt. Ltd. Accordingly the case of the Assessee was reopened u/s 148 of the Act by obtaining due approval of the competent authority and statutory notice was issued on 31.03.2017. The Assessee submitted the return filed by the Assessee on 26.03.2012 may be treated as return filed in response to notice u/s 148 of the Act. The Assessee had claimed that the scrutiny assessment in his case for Assessment Year 2010-11 has already been passed by DCIT, Central Circle-4, New Delhi already on 22.03.2013 by accepting the returned income of Rs. 500/- and reopening of the assessment u/s 148 cannot be continued. The Assessee also approached the Hon’ble High Court vide writ petition No. 9286/2017 in which ultimately writ petition was dismissed as withdrawn. The extract of order dated 10.11.2017 of Hon’ble High Court available in the assessment order mentioned that “ld counsel petitioner seeks permission to withdraw the present writ petition and states that he will contest the reassessment proceedings and, if, required, raise contentions in appeal”. The assessment order shows that in compliance to statutory notices u/s 148/143(2)/ 142(1) and detailed questionnaires only objection of the Assessee had taken was in respect to the reopening of the assessment u/s 148.
3.1 Primarily the ld AO had questioned the transaction of the Assessee with M/s. Priya Tissues Pvt. Ltd whose address was also 13/34 WEA, 4th Floor, Main Arya Samaj Road, Karol Bagh, New Delhi where the Assessee company is also situated. However, as no response was received from the Assessee and when the objections of reopening were disposed off by the Ld. AO as per the decision of the Hon’ble Supreme Court in case of M/s. GKA Driveshaft (I) Ltd Vs. ITO (2003) 259 ITR 19 (SC).The ld. AO proceeded to complete the assessment on the basis of information available on record. During the assessment proceeding on 11.12.2017 the ld AR of the Assessee had submitted bank statement revealing an amount of Rs. 21.70 crores has mainly been carried out by M/s. Vertex Drugs Pvt. Ltd and the amount credited in above account of the Assessee has been credited by the company and filed all documentary evidence in this respect. The ld AR of the Assessee was asked to produce the Directors of M/s. Vertex Drugs Pvt. Ltd for verification on next date of hearing. But no such director was produced. The ld AO examined the bank statement of M/s. Vertex Drugs Pvt. Ltd A/c No. 223010200020323/- for the relevant period i.e. 01.04.2009 to 31.03.2010 and concluded that the amount has been received/ credited into the account from Yogesh Trading Company and subsequently transferred into the account of M/s. Shri Hari Das Securities Pvt. Ltd and subsequently into the account of M/s. Priya Tissues Pvt. Ltd i.e. These three entities were found to be situated at the same address. Accordingly, an addition u/s 68 of the Act was made for a sum of Rs. 22,70,06,000/- found credited in the books of account of the Assessee and Rs. 22,70,060/- representing commission paid @1% of the said amount.
4. The Assessee had challenged the assessment before the ld CIT(A) and the ld CIT(A) observed at para 4.3 as under:-
“4.3 I have carefully examined the facts of the case, material on record, submissions of the appellant and the contents of the assessment order. In order to adjudicate the validity of assumption of jurisdiction, it would be appropriate to first examine the reasons recorded by the assessing recorded by the assessing officer. The contentions of the Appellant against assumption of jurisdiction u/s 147 are summarized in Para 3.2 above and are as under:-
