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Eeshaan Automation Pvt.Ltd. 89, Rajdeep Industrial Estate Bibi Talav, Vatva Ahmedabad 382440 Vs. DCIT, Circle 11(1) New Delhi
June, 05th 2014
                 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
                                                                  Page 2 of 9

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
                                                                   Page 3 of 9

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
                                                                            Page 4 of 9

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;
                                                                       Page 5 of 9

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:
                                                                       Page 6 of 9

                   "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
                                                                      Page 7 of 9

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.
                                                                      Page 8 of 9

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
                                                               Page 9 of 9

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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