IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "B" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, AM
AND SHRI RAJPAL YADAV, JM
ITA Nos: 6246 and 6247/Del/2012
AY : - 2004-05 and 2005-06
Eeshaan Automation Pvt.Ltd. vs. DCIT, Circle 11(1)
89, Rajdeep Industrial Estate New Delhi
Bibi Talav, Vatva
Ahmedabad 382440
PAN: AAACE 0220D
(Appellant) (Respondent)
Appellant by : Mr.Sunil Arora, F.C.A.
Mrs.Ruchika Jain, C.A.
Respondent by: Ms.Nidhi Srivastava, Sr.D.R.
ORDER
PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
Both these appeals are filed by the assessee. As the issues arising in
both the appeals are similar for the sake of convenience, they are heard
together and disposed of by way of this common order.
2. Facts in brief:- The assessee is a company and is in the business of
providing engineering and professional services to M/s Komori Corporation,
Japan, since Spetember,1995 in connection with erection, commissioning,
training etc. for equipments supplied by the aforesaid company to various
entities in India. For the Assessment Year 2005-06 the assessee has filed a
return of income on 28.10.2005 declaring an income of Rs.29,23,020/-. For the
Assessment Year 2004-05 the assessee company filed a return of income on
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28.10.2004 declaring total income of Rs.19,38,640/-. For both the AYs the
returns were processed u/s 143(1) of the Act later. The assessments were
reopened by the issue of notice u/s 148 on 30.3.2011. Assessment order u/s
147 r.w.s. 143(3) were passed assessing the total income for the Assessment
Year 2005-06 at Rs.60,07,060/- and at Rs.1,13,62,950/- for the Assessment Year
2004-05. Inter alia he made an addition on the ground that the assessee has
income from undisclosed sources. Aggrieved the assessee carried the matter
before the First Appellate Authority. The assessment was challenged both on
the ground of reopening as well as on merits. The First Appellate Authority
dismissed both the grounds.
3. Aggrieved the assessee filed this appeal before us on the following
grounds.
"1. Under the facts and circumstances of the case, the Ld.AO has grossly erred
in making an addition of Rs.30,84,043/- to the returned income of the assessee
as income from undisclosed sources which is without any evidence, arbitrary,
based on surmise and conjectures, without application of mind and against the
facts of the case.
2. Without prejudice to the ground of appeal no.1, and under the facts and
circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is
invalid and bad at law as the reopening of assessment is based on incomplete
and improper reasons to believe.
3. Without prejudice to the ground of appeal no.1, and under the facts and
circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is
invalid and bad at law as the reopening of assessment made by the Ld.AO is
without application of mind.
4. Without prejudice to the ground of appeal no.1, and under the facts and
circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is
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invalid and bad at law as the statutory notice required to be issued u/s 148 of
the Act before making such assessment u/s 147 was not served on the assessee
at all.
5. Without prejudice to the ground of appeal no.1, and under the facts and
circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is
invalid and bad at law as the statutory procedure for such assessment prescribed
in law has not been followed and the necessary sanctions from Ld.JCIT as
prescribed u/s 151(2) have not been obtained before reopening of assessment in
the case of assessee.
6. The appellant craves to add, withdraw, and revise any or all the above
grounds of appeal, either before or during the course of hearing in the interest
of justice."
4. The Ld.Counsel for the assessee Mr.Sunil Arora submitted that the
reopening is bad in law. He referred to page 12 of his paper book running into
57 pages, which contains the reasons for reopening and submitted that the
reopening was based on a letter received from ITO, Ward 1, Yavatmal,
Maharashtra along with a letter by the Dy.CIT (Hq-II), Nagpur. He submitted
that the letter does not in any way constitute material to allege that there is
undisclosed income in the hands of the assessee. He argued that there is no
independent application of mind by the Assessing Officer. He further submitted
that a notice u/s 148 was not served on the assessee and hence the
reassessment is bad in law. He contended that the Assessing Officer has not
obtained the approval of the JCIT as prescribed u/s 151(2) of the Act before the
reopening of assessments.
4.1. On merits he submits that the assessee has accounted for all the receipts
from M/s Komori Corporation, Japan and that there is no undisclosed income.
He submits that the assessee has furnished complete records before the
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Assessing Officer. He submits that the only information that the Assessing
Officer had against the assessee, was the receipt of two amounts of Japanese
Yen 63,54,253/- and 12,50,028/- from M/s Komori Corporation during the
relevant year, for which he wanted reconciliation. The assessee submits that
reconciliation statements have been given and it has been demonstrated before
the assessing authority that the amounts in question were duly accounted for by
the assessee in its books of accounts. He further submitted that the assessee
wanted to know the specific information regarding the alleged amounts, so that
he could give explanation and has made various efforts by filing request letters
as well as applications and appeals under the RTI Act. But despite specific
orders by the appellate authorities under the RTI Act, no further
details/instructions about the alleged figures of remittances from M/s Komori
Corporation had been provided to the assessee. To substantiate the claim the
assessee filed the following:-
i. Affidavit of Mr.Gangadhar Kahate, Director of appellant company within the
terms of Rule 20 of Appellate Tribunal Rules 1963, which is enclosed on page
no.13 to 14 of the paper book;
ii. Confirmation from M/s Komori Corporation, Japan, Japan regarding
remittances made to appellant company. A copy of the same is enclosed on
page no.15 of the paper book.
iii. Statement showing reconciliation of receipts from Komori Corporation, Japan
as per books of accounts of appellant with the figures specified in reasons to
believe. The same is enclosed on page no.16 to 17 of the paper book;
iv. Ledger a/c of M/s Komori Corporation in the books of the assessee for the
period 1.4.2004 to 31.3.2005. A copy of the same is enclosed on page no.18 to
22 of the paper book;
v. FIRC's in respect of remittances received from M/s Komori Corporation during
the relevant year. Copies of the same on sample basis are enclosed on page
no.23 to 27 of the paper book;
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vi. Invoices issued to M/s Komori Corporation during the relevant year. Copies
of the same on sample basis are enclosed on page no.28 to 29 of the paper
book.
4.2. He argued that the addition u/s 68 is bad in law, if it is the case of the
Revenue that the amount in question is not credited in the books of accounts.
He pointed out that the addition can be made u/s 68 only if there is a credit in
the books of accounts and the same is not explained. He vehemently contended
that the assessee cannot be asked to explain an alleged receipt, without
specifically providing the assessee with the details. He prayed for a relief.
5. Ms.Nidhi Srivastava, the Ld.Sr.D.R. on the other hand relied on the
orders of the First Appellate Authority. She argued that the reopening was made
on receipt with specific information from another Assessing Officer and hence is
a valid reopening. On merits she submitted that the assessee was not able to
demonstrate that the amounts in question were accounted for in its books of
accounts and hence the addition was correct.
6. Rival contentions heard. On a careful consideration of the facts and
circumstances of the case and on perusal of papers on records and orders of the
authorities below, we hold as follows.
7. The AYs involved are Assessment Year 2004-05 and 2005-06. The notice
for reopening u/s 148 of the Act was given on 30.3.2011 that is beyond a period
of 04 years. The original returns were processed u/s 143(1) of the Act.
S.151(2) of the Act reads as follows:
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"In case other than a case falling under sub section (1), no
notice shall be issued u/s 148 by an Assessing Officer, who is
below the rank of Joint Commissioner, after the expiry of
four years from the end of the relevant Assessment Year,
unless the Joint Commissioner is satisfied, on the reasons
recorded by such Assessing Officer, that it is a fit case for the
issue of such notice."
The Revenue has not demonstrated that this provision of law has been complied
with. On this sole ground the reopening has to be quashed as bad in law. The
assessee submits that the notice u/s 148 has not been served on him. A perusal
of the assessment orders demonstrate that the Assessing Officer claims to have
issued the notice to the assessee that the fact of service is not recorded. The
assessee group participated in the reopening proceedings. Under the
circumstances S.292BB applies and this ground of the assessee is not
sustainable.
8. The next argument is that the reopening is bad in law as there is no
independent application of mind by the Assessing Officer and that the reasons
are inadequate. The reasons for reopening reads as follows.
"M/s Eeshaan Automation Pvt.Ltd., Assessment Year 2005-06
Reason for notice u/s 148 of the IT Act, 1961
A letter has been received from ITO, Ward 1, Yavatmal, Maharashtra along with
a letter of DCIT, Hq-II, Nagpur that M/s Eeshaan Automation Pvt.Ltd. PAN
AAACE 0220D has received Japanese Yen 6254653/- and 1250928/- from
Komori, Azumabashi, Sumidaku, Tokyo, Japan. The assessment completed u/s
143(1) of IT Act, 1961 in this case dated 5.3.2006 the above discussed issues
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has not brought to tax. Based on the above facts, I have reasons to believe that
the income of the assessee chargeable to tax has escaped assessment because
of the failure on part of the assessee to disclose its income fully and truly. If
approved a notice u/s 148 of the IT Act may be issued to the assessee.
Dt. 30.3.2011
Sd/- (Manisha K Beniwal)DyCIT
Circle 11(1), New Delhi"
A perusal of the above reasons demonstrate that the Assessing Officer had
information from another Assessing Officer. He has recorded that based on this
information he has reason to believe that the income of the assessee chargeable
to tax has escaped the assessment. We do not find any infirmity in such
recording of the Assessing Officer. The sufficiency or otherwise of the reasons
cannot be gone into. Thus this ground of the assessee is dismissed.
9. On the merits of the case we find that the assessee has submitted:
(a) confirmation letters from Komori Corporation, Japan regarding receipts made
to assessee company,
(b) Statements showing reconciliation of receipts from Komori Corporation,
Japan in the books of accounts of the assessee,
(c ) ledger a/cs from Komori Corporation in the books of the assessee,
(d) Invoices issued to M/s Komori Corporation and foreign inward remittance
certificates from the City Bank with respect to the remittances received from
Komori Corporation.
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10. The Revenue has not been able to specifically point out as to which is the
particular remittance made by M/s Komori Corporation, which has not been
accounted for by the assessee. In spite of the repeated attempts by the
assessee requesting for the details the assessee has not been furnished with the
same. In our view the assessee has discharged the onus that lay on it by
furnishing all the necessary documentary evidences and whereas the Revenue
has failed in its duty to discharge the burden that lay on it. In the result the
additions made in both the AYs are hereby deleted.
11. In the result the appeals of the assessee for both the AYs are allowed.
Order pronounced in the Open Court on 02nd June, 2014.
Sd/- Sd/-
(RAJPAL YADAV) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 02nd June, 2014
*manga
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Copy of the Order forwarded to:
1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File
By Order
Asst. Registrar
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