ITA No. 1643/Del/2008 and C.O. No. 151/Del/2009 (in ITA No. 1643/Del/2008), (Assessment Year: 2003-2004). Case: Income Tax Officer Vs Staunch Marketing Pvt. Ltd.. Delhi DRAT ITAT Cases

Case NumberITA No. 1643/Del/2008 and C.O. No. 151/Del/2009 (in ITA No. 1643/Del/2008), (Assessment Year: 2003-2004)
CounselFor Appellant: Ramesh Chander, CIT (DR) and For Respondentst: Venketsh Mohan Choursia, C.A. and Ved Jain, Adv.
JudgesS.V. Mehrotra, Member (A) and H.S. Sidhu, Member (J)
IssueCode of Civil Procedure, 1908 (CPC) - Order XLI Rule 22; Income Tax Act, 1961 - Sections 10, 124, 124(3), 131, 142, 142(1), 143, 143 (2), 143(2), 143(3), 147, 148, 148(1), 253, 253(4), 292B, 292BB, 43(2), 68
Judgement DateMay 12, 2015
CourtDelhi DRAT ITAT Cases

Order:

S.V. Mehrotra, Member (A), (ITAT Delhi 'G' Bench)

  1. This appeal, by the department and the cross-objection by the assessee, are directed against the order dated 19-2-2008 passed by the ld. CIT(A)-XII, New Delhi in appeal No. 72/06-07 relating to A.Y. 2003-04.

  2. Brief facts of the case are that notice u/s. 148 was issued to assessee company on 19-9-2005 on the basis of information received from CIT, Delhi-XIII, New Delhi vide letter F. No. CIT-XIII/Fraud. Refund/2622 dated 14-3-2005 and from the Addl. CIT, Range-37, New Delhi vide letter F. No. Addl. CIT/Range-37/2004-05/925 dated 18.2.2005, enclosing therewith copy of letter No. ITO, Ward 37(1)/2004-05 dated 9.2.2005 of Shri Krishan, Income-tax Officer, Ward 37(1), New Delhi stating that M/s. Staunch Marketing Pvt. Ltd. had paid incentives to Shri Surender Singh and Shri Ravinder Singh who were assessed with Ward 37(1), New Delhi. In the income-tax return filed in the name of Shri Surender Singh and Shri Ravinder Singh, refund was claimed against TDS certificates issued by this company. On enquiry by the ITO Ward 37(1), New Delhi, it was found that Shri Surender Singh and Shri Ravinder Singh had not filed returns in their names but Shri Hoshiar Singh, who was a director of M/s. Staunch Marketing Pvt. Ltd. had actually filed the income-tax returns in the names of Shri Surender Singh and Shri Ravinder Singh. TDS certificates issued by M/s. Staunch Marketing Pvt. Ltd., showing month wise payment of incentives and tax deducted on it was attached. The incentives allegedly paid to Shri Surender Singh and Shri Ravinder Singh by M/s. Staunch Marketing Pvt. Ltd. were declared as professional receipt at Rs. 17,16,500/- and Rs. 16,48,890/- respectively. Statements were recorded and after coming to the conclusion that bogus returns in the names of different persons were filed by Shri Hoshiar Singh, notice u/s. 148 was issued to the company on 19-9-2005, requiring the company to file the return of income for AY 2003-04. The assessee did not comply with this notice. Therefore, notice u/s. 142(1) was issued to furnish evidence of income-tax return filed by the company, its directors and was also required to furnish tax audit report and other details by 5-12-2005. However, assessee did not respond to the notice. Subsequently, Shri Hoshiar Singh, director of the company was contacted on telephone who then attended the office on 23-1-2006; filed a copy of return of income for AY 2003-04 and claimed that original return was filed on 2-12-2003 vide acknowledgement No. 3680 with Addl. Commissioner of Income-tax, Range-9, New Delhi. However, copy of acknowledgment for filing the return was not filed. The AO, accordingly, issued final show cause notice, which has been reproduced at pages 3 to 5 of the assessment order. In this show cause notice the AO pointed out that in the absence of necessary documents/books of a/c, vouchers, he was left with no other alternative but to complete the assessment ex-parte.

  3. In respect of this notice the AO has observed as under:

    "In response to it, Shri Hoshiar Singh, Director attended the office on 27-1-2006, filed copy of PAN Card and copy of Identity Card issued by Supdt. Of Customs (Police), New Customs House, New Delhi for 'category' 1st H Chance and bearing Sl. No. 393/2005 dated 11/06 with the address R09/02, Ruhela Associates. He sought further adjournment and the case was then adjourned for 31.1.2005.

    An income-tax return form was submitted by the assessee which is placed on record. The statement of income enclosed therein stated as under:--

  4. The AO has further pointed out that after this return was filed no compliance was made to the notice issued u/s. 142(1) and summons u/s. 131. Therefore, the AO in para 4.3 observed that he was left with no other alternative but to complete the assessment ex parte. The assessment was accordingly completed at a total income of Rs. 4,86,08,295/-. Ld. CIT(A) partly allowed the assessee's appeal.

  5. Being aggrieved with the order of ld. CIT(A), the department is in appeal before us and assessee has filed cross objection.

  6. The revenue in its appeal has raised following grounds of appeal:

    "1. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 57,21,746/- (included in the total amount of Rs. 2,67,25,498/-) claimed to have been paid by the assessee as incentives to 19 parties but could not substantiate the same by producing the details i.e. mode of payments and dates of payments etc. and hence failed to discharge its primary onus to vouch the payments."

  7. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 44,500/- (included in the total amount of Rs. 3,44,500/-) made u/s. 68 whereas the assessee could not furnish any documentary evidence to substantiate the issue of shares and raising of share capital."

  8. The assessee in its cross objection has taken following solitary ground:

    "On the facts and circumstances of the case, the order passed by the learned AO is bad in law and is liable to be quashed, as the statutory notice under section 143(2) was not issued to the assessee"

  9. We first take up the cross objection because that goes to the very root of jurisdiction to pass the assessment order.

  10. Ld. counsel for the assessee pointed out that no notice u/s. 143(2) was issued and, therefore, the assessment order passed by AO was illegal. He relied on following case laws:

    - ACIT Vs. Hotel Blue Moon (Civil appeal No. 1198 of 2010 (SC) dated 2-2-2010);

    - Mrs. Mudra G. Nanawati Vs. DCIT (2009) 30 DTR (Mumbai)(Trib)217;

    - Jyoti Pat Ram Vs. ITO 92 ITD 423 (Luck.);

    - ACIT Vs. Smt. Jyoti Devi 84 TTJ (Jai) 689;

    - Ms. C. Malathy Vs. ITO 88 ITD 37 (Chennai);

    - Smt. Amarjeet Kaur Vs. AcIT 17 DTR (Del)(Trib) 127;

    - Aegis Chemical Ind. Ltd. Vs. ITO 65 ITD (Mum) 147;

    - Sat Narain Vs. ITO 94 TTJ (Del) 499;

    - Shringer Verlag GmbH v. DCIT 97 TTJ 269;

    - DCIT Vs. Indian Syntans Investments Pvt. Ltd. 107 ITD 457 (Chennai);

    - ACIT Vs. Santosh Kumar & Ors. 87 ITD 107 (All);

    - CIT Vs. Pawan Gupta & Ors. 22 DTR 291 (Del);

    - CWT Vs. HUF of H.H. Late Shri J.M. Scinida 300 ITR 193."

  11. Ld. CIT(DR) submitted that the provisions of section 292BB makes it clear that where an assessee has appeared in any proceeding or...

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