YAQUB ALI, Jaipur V. ITO, Jaipur

ITA 1027/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54144 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRU D K MEENA
• Keywords: Reopening of assessment; Reason to believe; Reassessment proceedings
• Section: 143(3); 148; 154

Judgement Text

1 ITA 1027(4)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 1027 & 1028/JP/2010 ASSTT. YEAR : 2003-04. SHRI YAQUB ALI, PROP. VS. THE INCOME-TAX OFFICER , M/S. JACOB ENTERPRISES, 3407, GALI WARD 5(1), MUSA KHAN, SILWATON KA MOHALLA, JAIPUR. CHOWKRI RAMCHANDRA JI, JAIPUR. ITA NO. 1025 & 1026/JP/2010 ASSTT. YEAR : 2003-04. SHRI ZAHID ALI, PROP. VS. THE INCOME-TAX OFFICER , M/S. ZAM ZAM ENTERPRISES, WARD 5(1), 3407, GALI MUSA KHAN, MOHALLA JAIPUR. SILAWATAN, CHOKRI RAMCHANDRA JI, JAIPUR. (APPELLANTS) (RESPONDENT) APPELLANT BY : SHRI MAHENDRA GARGIEYA RESPONDENT BY : SHRU D.K. MEENA DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 02.09.2011 ORDER DATED : 02/09/2011. PER R.K. GUPTA, J.M. THESE ARE FOUR APPEALS BY TWO DIFFERENT ASSESSEES AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2003-04. 2 2. ONE APPEAL EACH IN CASE THESE ASSESSEES IS AGAIN ST THE ORDER PASSED UNDER SECTION 143(3)/148 AND ONE APPEAL EACH IS AGAINST THE ORDER PASSED BY AO UNDER SECTION 143(3)/154 WHICH HAS BEEN CONFIRMED BY LD. CIT (A). 3. SINCE ISSUES ARE IDENTICAL IN CASE OF BOTH THESE ASSESSEES, THEREFORE, THEY ARE DISPOSED OFF TOGETHER. WE WILL DISCUSS THE FACTS O F THE CASE OF CASE OF SHRI YAQUB ALI AND THE OUTCOME OF THE SAME WILL BE APPLICABLE IN CASE OF SHRI ZAHID ALI AS FACTS ARE IDENTICAL. 4. THE ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(1). THEREAFTER NOTICE UNDER SECTION 148 WAS ISSUED AFTER RECORDING THE REASONS. COPY OF REASONS RECORDED IS PLACED AT PAGES 14 & 15 OF THE PAPER BOOK. IN T HE REASONS, IT HAS BEEN MENTIONED THAT EXAMINATION OF CASH BOOK ENTRIES ON 31.5.2002 SHOW THAT A SUM OF RS. 1,30,000/- WAS WITHDRAWN FROM THE BANK ACCOUNT. HOWEVER, THE BANK STATEMENT SHOWS THAT ON 31.5.2002 A SUM OF RS. 1,33,000/- STANDS TRANSFERRED TO SOMEB ODYS ACCOUNT AND NOT AN WITHDRAWAL BY THE ASSESSEE AS SHOWN IN THE CASH BOOK. SIMILAR LY, THE ASSESSEE INTRODUCED A SUM OF RS. 2,00,000/- ON 17.3.2003 IN CASH BOOK SHOWING WI THDRAWAL FROM THE BANK BUT BANK STATEMENT INDICATES THAT AN AMOUNT OF RS. 2,00,000/ - WAS MADE ON 9.3.2003. THIS SHOWS THAT THE PAYMENT MADE ON 17 TH AND 18 TH MARCH, 2003 AMOUNTING TO RS. 1,50,500/- IS IN EXCESS BY RS. 41,914/- AS THE CASH BALANCE AS ON 16 .3.2003 WAS ONLY RS. 73,586/-. THIS SHOWS THAT THE ASSESSEE HAS MADE EXCESS PAYMENT OF RS. 41,914/- OUT OF HIS CASH BOOK AS THE CASH BALANCE ON 16.3.2003 WAS ONLY RS. 73,586/- . IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE AO NOTED THAT AN INCOME OF RS. 1 ,91,914/- HAS ESCAPED ASSESSMENT, ACCORDINGLY HE ISSUED NOTICE UNDER SECTION 148 AFTE R RECORDING THE REASONS. THEREAFTER ASSESSMENT PROCEEDINGS WERE STARTED AND AO DISCUSSE D THE CASE OF THE ASSESSEE ON THE BASIS OF REGULAR BOOKS OF ACCOUNT AND CONCLUDED THA T ASSESSEE IS NOT DOING ANY BUSINESS 3 ACTIVITY ITSELF BUT DOING THE BUSINESS ON COMMISSIO N BUSINESS. THEREFORE, HE MADE ADDITION OF RS. 5,50,000/- ON ACCOUNT OF COMMISSION AND ALSO MADE FURTHER ADDITION OF RS. 3,41,500/- UNDER SECTION 68. IN THIS WAY, TOTA L INCOME WAS COMPUTED AT RS. 8,66,500/- AGAINST WHICH ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). 4.1. THE VARIOUS GROUNDS WERE TAKEN AGAINST THE ADD ITIONS MADE INCLUDING REOPENING OF ASSESSMENT. REOPENING OF THE ASSESSMENT WAS HELD VALID BY LD. CIT (A). HOWEVER, OTHER ADDITIONS WERE REDUCED BY LD. CIT (A). AGAIN ST PARTLY SUSTAINING THE ADDITIONS, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL NOW. 5. THE LD. COUNSEL OF THE ASSESSEE WHO APPEARED BEF ORE THE TRIBUNAL FIRSTLY RAISED A LEGAL ISSUE THAT THE ASSESSMENT WAS REOPENED ON THE BASIS THAT ASSESSEE HAS SHOWN CASH BALANCE IN THE BOOKS OF ACCOUNT AS WITHDRAWN FROM B ANK WHEREAS AS PER BANK STATEMENT NO CASH WAS WITHDRAWN ON THIS DAY. HOWEVER, NO SUCH ADDITION HAS BEEN MADE IN THE ASSESSMENT ORDER. THEREFORE, IN VIEW OF THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI RAM SINGH, 217 CT R 345 (RAJ.) WHEREIN IT IS HELD THAT ONCE THE AO CAME TO CONCLUSION THAT INCOME WITH RES PECT TO WHICH HE HAD ENTERTAINED REASON TO BELIEVE TO HAVE ESCAPED ASSESSMENT, WAS FOUND TO HAVE BEEN EXPLAINED, HIS ;JURISDICTION CAME TO A STOP AT THAT, AND HE DID NO T CONTINUE TO POSSESS JURISDICTION, TO PUT TO TAX, ANY OTHER INCOME, WHICH SUBSEQUENTLY CAME T O HIS NOTICE, IN THE COURSE OF REASSESSMENT PROCEEDINGS, WHICH WERE FOUND BY HIM, TO HAVE ESCAPED ASSESSMENT. IT WAS FURTHER STATED THAT THIS DECISION HAS BEEN FOLLOWED IN THE CASES OF DOUBLE DOT FINANCE LTD. VS. ACIT, 128 TTJ 514 (MUMBAI), MANOJ SURGICAL INDUSTRIES VS. ACIT, 133 TTJ 79 (INDORE) AND CHHAGAN LAL URF VIDHYA SAGAR GUPTA VS. ITO, 12 DTR 497 (JODHPUR). ACCORDINGLY IT WAS SUBMITTED THAT AS PER REASONS RE CORDED, THE INCOME OF RS. 1,91,914/- 4 WAS STATED TO BE ESCAPED. HOWEVER, NO SUCH ADDITIO N HAS BEEN MADE IN THE ASSESSMENT ORDER. THEREFORE, IN VIEW OF THE VARIOUS DECISIONS CITED ABOVE, IT WAS SUBMITTED THAT OTHER ADDITIONS MADE BY AO WERE NOT JUSTIFIED AND ASSESSM ENT COMPLETED BY THE AO WAS BAD IN LAW. 6. ON THIS POINT, THE LD. D/R PLACED RELIANCE ON TH E ORDER OF LD. CIT (A). 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSE SSEE ARE LIABLE TO BE ACCEPTED. WE HAVE GONE THROUGH THE ORDER OF THE AO AND FOUND THAT AO HAS NOT MADE ANY ADDITION ON THE BASIS OF REASONS RECORDED AS HE HAS MADE THE ASSESS MENT ON THE BASIS OF REGULAR BOOKS OF ACCOUNT AND AFTER EXAMINING THE BOOKS OF ACCOUNT. T HE ASSESSEE HAS NOT INDULGED IN BUSINESS ACTIVITY BUT HAS DONE COMMISSION BASIS. A CCORDINGLY, AN ESTIMATED INCOME OF RS. 5,50,000/- WAS MADE ON ACCOUNT OF COMMISSION AN D A FURTHER ADDITION OF RS.3,41,500/- WAS MADE UNDER SECTION 68. BOTH THES E ADDITIONS DO NOT HAVE ANY LINK WITH THE REASON RECORDED BY WHICH IT IS STATED THAT INCO ME OF RS. 1,91,914/- HAS ESCAPED ASSESSMENT. THEREFORE, IN VIEW OF THE DECISION OF H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI RAM SINGH (SUPRA), NO ADDITION CAN BE MADE IF NO ADDITION HAS BEEN MADE ON THE BASIS OF REASONS RECORDED. UNDISPUTEDL Y, ON THE BASIS OF REASONS RECORDED, NO ADDITION HAS BEEN MADE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT WE HOLD THAT ASSESSMENT C OMPLETED BY THE AO WAS WITHOUT JURISDICTION AND, THEREFORE, THE SAME IS LIABLE TO BE QUASHED. ACCORDINGLY, WE QUASH THE SAME. 8. SINCE WE HAVE QUASHED THE ASSESSMENT COMPLETED U NDER SECTION 143(3) READ WITH 147, THEREFORE, THE ORDER PASSED UNDER SECTION 154 DOES NOT SURVIVE AS THE BASIS ON WHICH 5 THE ORDER UNDER SECTION 154 WAS PASSED DOES NOT SUR VIVE. ACCORDINGLY, BOTH THESE APPEALS IN CASE OF SHRI YAQUB ALI ARE ALLOWED. 9. IDENTICAL FACTS ARE INVOLVED IN THE CASE OF SHRI ZAHID ALI, THEREFORE, ON THE SAME REASONING AS IN CASE OF SHRI YAQUB ALI, WE QUASH T HE ASSESSMENT AS WELL AS ORDER UNDER SECTION 154 IN CASE OF SHRI ZAHID ALI ALSO. THEREF ORE, BOTH THE APPEALS ARE ALLOWED. 10. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02 .09.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- SHRI YAQUB ALI, JAIPUR. SHRI ZAHID ALI, JAIPUR. THE ITO WARD 5(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1027(4)/JP/2010) BY ORDER, AR ITAT JAIPUR.