Case Number: ITA 1472/DEL/2019
Appellant: Gautam Bhalla, Gurgaon
Respondent: ACIT, Central Circle-8, New Delhi
Assessment Year: 2011-12
Result: 2011-12
Case Filed on: 2019-02-22
Order Type: Final Tribunal Order
Date of Order: 2019-09-03
Pronounced on: 2019-09-03
These two appeals by the Revenue are directed against two separate orders, both dated 14/01/2019 passed by the Ld. Commissioner of Income-tax (Appeals)-24, New Delhi [in short ‘the Ld. CIT(A)’] for assessment years 2010-11 and 2011-12 respectively. As identical grounds have been raised in same set of circumstances in both these appeals, they were heard together and disposed of by way of this consolidated order for sake of convenience.
Date of Hearing: 19.08.2019
Date of Pronouncement: 03.09.2019
PER O.P. KANT, A.M.:
These two appeals by the Revenue are directed against two separate orders, both dated 14/01/2019 passed by the Ld. Commissioner of Income-tax (Appeals)-24, New Delhi [in short ‘the Ld. CIT(A)’] for assessment years 2010-11 and 2011-12 respectively. As identical grounds have been raised in same set of circumstances in both these appeals, they were heard together and disposed of by way of this consolidated order for sake of convenience.
The assessee, an individual, filed its original return of income for the year under consideration on 27/07/2010, declaring total income of Rs.93,09,220/-. Subsequently, a search and seizure action under section 132(1) of the Income-tax Act, 1961 (in short ‘the Act’) was carried out on 16/01/2013 at the premises of the assessee along with the search action at the premise of ‘Vatika’ group. Consequent to search action, in response to notice under section 153A of the Act, the assessee again filed return of income and assessment was completed on 30/03/2015 under section 153A read with section 143(3) of the Act at total income of Rs.5,18,09,223/- after making addition of Rs.4,95,00,000/- as unexplained credit under section 68 of the Act.
The assessee filed appeal before the learned First Appellate Authority against the assessment order and filed confirmation letter from M/s Stanford Hospitality (India) Private Limited (in short the ‘Stanford Hospitality’) in respect of the loan received of Rs.4,95,00,000/- as an additional evidence. The Ld. CIT(A) asked for a remand report from the Assessing Officer with the direction to conduct an enquiry regarding the loan received.
During remand proceeding, the Assessing Officer issued summons under section 131 of the Act to the assessee for producing the Principal Officer of ‘Stanford Hospitality’. The Assessing Officer also issued summons directly to the ‘Stanford Hospitality’ but no compliance was made either by the assessee or ‘Stanford Hospitality’. In the spot enquiry made by the Income-Tax Inspector of the office of the Assessing Officer, it was found that no entity was in existence at the address provided in the confirmation letter of ‘Stanford Hospitality’. The Assessing Officer submitted a remand report to the learned First Appellate Authority.
The learned First Appellate Authority vide order dated 07/03/2017 deleted the addition of Rs.4,95,00,000/- relying on the ratio of the Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawala (2015) taxmann.com 412 observing that there was no reference to any document seized during the search or any incriminating material which was utilized for making the addition. The learned First Appellate Authority, however, advised the Assessing Officer for reopening the assessment of the year under consideration using the information gathered during remand proceeding.
After considering the observation of the learned First Appellate Authority, the Assessing Officer recorded reasons for reopening the assessment and issued notice under section 148 of the Act on 29/03/2017. The assessee filed return of income in response to the notice under section 148 of the Act on 05/05/2017. The assessee was supplied a copy of reasons recorded for reopening the assessment on 28/08/2017. The objections filed by the assessee on 20/11/2017 challenging the reassessment proceeding were disposed off by the Assessing Officer on 18/12/2017 and the reassessment under section 147 was completed on 28/12/2017 at total income of Rs.5,88,09,223/-, inter alia, making addition of Rs.4,95,00,000/-.
During reassessment proceeding, the Assessing Officer again issued summons under section 131 to the assessee requiring to produce Principal Officer of ‘Stanford Hospitality’ along with relevant documents, however, the assessee failed to do so. The Assessing Officer further observed from the assessment order dated 28/03/2013 in the case of ‘Stanford Hospitality’ for the year under consideration that the name of the assessee was not appearing in the loans of Rs.1,04,95,500/- provided by said identity during the year under consideration. The assessee for the first time claimed that a part of the unexplained credit of Rs.4,95,00,000/- was received from some other entities also. In view of the facts, the Assessing Officer concluded that the assessee failed to satisfy the ingredient of section 68 of the Act and accordingly, made the addition of Rs.4,95,00,000/-.
The Ld. CIT(A) upheld the legality of initiating reassessment proceeding challenged by the assessee and also upheld the merit of the addition. Aggrieved with the impugned order of the Ld. CIT(A), the assessee is in appeal before the Tribunal raising the grounds as reproduced above challenging the legality of the reassessment proceeding as well as merit of the addition.
The grounds raised in the instant assessment year are identical to the grounds raised in assessment year 2010-11. The facts and circumstances of the case are also identical to the facts and circumstances of assessment year 2010-11. The only change is in respect of the amount of unexplained cash credit made under section 68 of the Act, which in the instant year, is of Rs.4,62,94,000/-. A copy of reasons recorded for reopening the assessment for the year under consideration, is available on page 124 of the paper book filed by the assessee, are reproduced as under:
The case of the assessee was completed u/s 153A r.w.s 143(3) of the Income Tax Act. 1961 vide assessment order dated 30.03.2015 and the income was assessed at Rs.5,43,83,644/- after making an addition of Rs.4,62,94,000/- on account of unexplained credit u/s 68 of the Income Tax Act, 1961. The Ld. CIT(A) vide its order dated 08.03.2017 has deleted the additions made by the assessing officer relying upon Hon’ble Delhi High Court order in the case of Kabul Chawla. The addition was deleted on technical ground that no incriminating material was found during the search action conducted upon the assessee from which it can be established that the loan received from M/s. Stanford Hospitality (I) P. Ltd. are not genuine and are bogus. The Id. CIT(A) has not given any comment regarding the merits of the case. During the remand report proceeding of the case, it was noticed that the party named M/s. Standard Hospitality does not exist. This party had filed confirmation letter dated 23.12.2016 regarding the loan transaction before the Ld. CIT(A). But, when the enquiries were conducted by the inspector in this matter, it was found that the address given by it in its confirmation letter during the appellate proceeding, i.e., T-5B, Windsor Court, DLF City Phase-IV, Gurgaon, is a residential complex. The said flat is in the possession of Miss Anushka and she does not even know M/s. ‘Stanford Hospitality (India) Pvt. Ltd. (Inspector report is enclosed with this proposal as per annexure ‘X’.) Further, the summon u/s 131 of the I.T. Act, 1961 was issued to the assessee with a direction to produce the party ‘M/s. Stanford Hospitality (India) Pvt. Ltd’, before the undersigned on 13.03.2017. But the assessee failed to produce the party. Hence, it is evident that the loan which has been shown by the assessee in its books as received from M/s. Stanford . Hospitality (1) P. Ltd. are not genuine -and are bogus credits in the assessee’s books. The fact of non-existence of alleged lender was not known during assessment proceedings and the addition has been deleted by the C1T(A) on technical grounds, without considering above fact noted during remand proceeding. Thus at this stage, the income of Rs.4,62,94,000/- stands escaped assessment, which should be charged in the hands of the assessee. Therefore, the case of Sh. Guatam Bhalla is required to be reopened for the A.Y. 2011-12. From the facts and discussion above, it is clear that the escapement of tax in the case is only due to the incomplete and partial disclosure of facts by the assessee during the assessment proceedings as well as appellate proceedings. Hence, I am satisfied that this is the lit case for issuance of notice under section 148 of the Act. In view of above facts, I have reasons to believe that income of Rs.4,62,94,000/- which should be charged to tax in the hands of Sh. Gautam Bhalla has escaped from being taxed for A.Y. 2011-12. Hence, I am satisfied that it is a fit case for issuance of notice u/s 148 of the Income Tax Act, 1961.
In view of the clear provisions, we are of the considered opinion that Assessing Officer was not justified in reopening the assessment for assessing the income which was subject matter of the appeal before the Tribunal. Accordingly, we hold the reassessment in the instant case as void-ab-initio thus, the reassessment proceeding are accordingly quashed. As we have already quashed the reassessment proceeding, the other arguments of the Ld. Senior Counsel challenging the reassessment proceeding and the merit of the addition are rendered merely academic and, therefore, we are not adjudicating upon those arguments. The appeal of the assessee is accordingly allowed. In the result, both the appeals of the assessee are allowed.
Order is pronounced in the open court on 3rd September, 2019.
Sd/- Sd/- [BHAVNESH SAINI] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 3rd September, 2019. RK/-[d.t.d.s] Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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