2015 (7) TMI 1361 - AT - Income Tax

Tribunal upholds CIT(A)'s decision, dismisses Revenue's appeal on accommodation entry issue

ACIT, Circle-29 (1), New Delhi Versus Raj Kumar Jalan

The Tribunal dismissed the Revenue's appeal and upheld the decision of the CIT(A) to delete the addition made by the AO concerning an accommodation entry ... Block assessment u/s 158BD - whether the assessee has right to file an application under Rule 27 of the ITAT Rules? - HELD THAT:- As relying on SMT. GURINDER KAUR. [2006 (6) TMI 144 - ITAT DELHI-A] we admit this application under Rule 27 of the ITAT Rules as the assessee has raised a ground before the ld CIT(A) and the ld CIT(A) discussed the issue but had not given a decision on the same. Whether notice barred by limitation ? - “immediate” or immediately proximate - HELD THAT:- On merits we find that the block assessment in the case of M/s Bemco Jewellers P Ltd was completed on 29.08.2002 u/s 158BD consequent to search conducted on 03.08.2000. Notice u/s 158BD was issued to the assessee on 10.02.2006. Thus the period of more than three years has elapsed since the completion of the assessment in the case of M/s. Bemco Jewellers Pvt. Ltd. As relying on Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] we hold that the period of above three years cannot be considered as “immediate” or “immediately proximate” in point of time to the completion of the block assessment u/s 158BD. In consequently we hold that the assessment itself is bad in law. Thus this application under Rule 27 of the ITAT Rules is allowed. Appeal of the revenue is dismissed. Issues:- Validity of addition of accommodation entry received by the assessee based on bogus sale of jewellery- Maintainability of application under Rule 27 of ITAT Rules by the assesseeAnalysis:1. The appeal was filed by the Revenue against the order of Ld.CIT(A)-XXX, New Delhi regarding the addition of an accommodation entry received by the assessee on the basis of a bogus sale of jewellery for the Assessment Year 2007-08. The main contention was whether the ld CIT(A) erred in deleting the addition of a specific amount made by the AO.2. The assessee raised a ground before the ld CIT(A) challenging the initiation of proceedings by the AO under section 158BD after a significant delay from the completion of the block assessment in the case of a related entity. The ld counsel for the assessee argued for the admission of an application under Rule 27 of the ITAT Rules to contest this issue.3. The validity of the application under Rule 27 of the ITAT Rules was disputed by the ld DR, contending that such an application can only be filed in support of the order of the ld CIT(A). The DR argued that since the first appellate authority did not adjudicate on the matter, it cannot be presumed that the decision was against the assessee.4. The assessee relied on the Tribunal's decision in a similar case to support the application under Rule 27, emphasizing that if the appellate authority does not adjudicate on an issue, it can be presumed to be decided against the assessee. Additionally, the assessee cited judgments of the Hon'ble Delhi High Court to support the contention that a significant delay in issuing notices under section 158BD renders the assessment invalid.5. The Tribunal considered the grounds raised by the assessee before the ld CIT(A) regarding the initiation of proceedings under section 158BD and the delay in issuing notices. The Tribunal analyzed the relevant case laws and held that the delay of over three years from the completion of the block assessment cannot be considered immediate or immediately proximate in point of time, rendering the assessment itself as bad in law.6. Citing the judgments of the Hon'ble Delhi High Court and the Supreme Court, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the ld CIT(A) to delete the addition made by the AO. The Tribunal allowed the application under Rule 27 of the ITAT Rules filed by the assessee, based on the grounds raised and discussed by the first appellate authority.7. The Tribunal pronounced the order on 8th July 2015, dismissing the appeal of the revenue and affirming the decision of the ld CIT(A) regarding the addition made by the AO.