Pranati Ghosh, Jalpaiguri V. ITO, Ward - 1(2), Siliguri, Siliguri

ITA 1086/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54629 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-06-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Keywords: Unexplained cash credit; Gift; Reason to believe; Reassessment proceedings

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . , '# ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NOS. 1086&1087/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEARS : 2002-03 & 2003-04 PRANATI GHOSH VS. INCOME-TAX OFFICER, WD-1(2), SILIGURI (PAN-ADCPG 1827 G) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI SUBASH AGARWAL FOR THE RESPONDENT: SHRI S. K. ROY DATE OF HEARING: 28.10.2011 DATE OF PRONOUNCEMENT: 28.10.2011 '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THESE APPEALS BY ASSESSEE ARE ARISING OUT OF COMMON ORDER OF CIT(A), SILIGURI IN APPEAL NOS. 340&341/CIT(A)/SLG/06-07 DATED 08.03.2010. AS SESSMENTS WERE FRAMED BY ITO, W- 1(2), MATIGARA, SILIGURI U/S. 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2002-03 AND 2003 -04 VIDE HIS SEPARATE ORDERS DATED 26.12.2006. 2. THE FIRST LEGAL ISSUE IN THESE TWO APPEALS OF A SSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN HOLDI NG THAT THE REASONS RECORDED ARE VALID AND PROPER. ACCORDING TO ASSESSEE, REASONS RECORDED DO NOT INDICATE THAT THE ASSESSEES INCOME HAS ESCAPED ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR S. FOR THIS ASSESSEE RAISED FOLLOWING EFFECTIVE GROUND, WHICH IS COMMON IN BOTH YEARS:- 2. WITHOUT PREJUDICE TO GROUND NO.1 STATED ABOVE, THE RECORDED REASONS ARE INVALID AND IMPROPER AND AS SUCH, THE ASSESSMENT FRAMED VIDE OR DER DATED 26.12.2006 IS BAD IN THE EYE OF LAW. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT RETURN S OF INCOME FOR AY 2002-03 AND 2003-04 WERE FILED ON 24.10.2002 AND 28.11.2003 WITH ITO, W D. 3(1), SILIGURI AND THESE RETURNS WERE PROCESSED U/S. 143(1) OF THE ACT. THE AO AFTER GOI NG THROUGH AUDITED BALANCE SHEET FILED ALONG WITH RETURN OF INCOME NOTICED THAT THE ASSESSEE HAS SHOWN TO RECEIVED GIFTS OF RS.7,60,000/- IN ASSESSMENT YEAR 2002-03 AND RS.8,50,000/- IN ASSESS MENT YEAR 2003-04 AS PER HER CAPITAL ACCOUNT AS PER SCHEDULE X FROM DIFFERENT PERSONS I. E. NINE PERSONS IN AY 2002-03 AND 14 PERSONS IN AY 2003-04. THE ASSESSING OFFICER NOTED THAT NO CONFIRMATION OR SUPPORTING 2 ITA 1086-1087/K/2010 PRANATI GHOSH A.Y. 02-03 & 03-04 DOCUMENTS WERE FOUND TO HAVE BEEN ENCLOSED ALONG WI TH THE RETURNS OF INCOME TO SUPPORT GENUINENESS OF RECEIPT OF CASH GIFTS AND ACCORDINGL Y, HE REOPENED THESE TWO ASSESSMENTS BY RECORDING THE FOLLOWING REASONS, WHICH ARE COMMON I N BOTH THE YEARS, EXCEPT NUMBER OF PERSONS AND AMOUNT INVOLVED, HENCE, WE WILL TAKE UP THE REASONS FROM AY 2002-03, WHICH READS AS UNDER: THE ASSESSEE FILED HER RETURN OF INCOME FOR THE A. Y. 2002-03 ON 24.10.2002. ON CLOSE EXAMINATION OF AUDITED BALANCE SHEET FILED ALONGWITH THE RETURN OF INCOME IT IS REVEALED THAT THE ASSESSEE HAD SHOWN IN HER CAPI TAL ACCOUNT AS PER SCHEDULE X RECEIPT OF CASH GIFT OF RS.7,60,000/- FROM NINE DI FFERENT PERSONS AS FOLLOWS: 1. HIRANMOY GHOSH RS. 90,000/- 2. BHASKAR GHOSH RS. 80,000/- 3. HINDAL GHOSH RS. 80,000/- 4. RUPAM GHOSH RS. 75,000/- 5. BHARATI GHOSH RS.1,10,000/- 6. KUHELIKA GHOSH RS.1,10,000/- 7. AMITABH BOSE RS. 85,000/- 8. TAPATI BOSE RS. 80,000/- 9. S. DUTTA RS. 50,000/- NO CONFIRMATION OR SUPPORTING DOCUMENT WHATSOEVER H AVE FOUND TO HAVE ENCLOSED IN THE RETURN OF INCOME TO SUPPORT GENUINENESS OF RECE IPT OF CASH GIFTS AS ABOVE. I HAVE, THEREFORE, REASON TO BELIEVE THAT THE ASSES SEE HAD INCORPORATED HER UNDISCLOSED INCOME IN THE FORM OF CASH GIFT RECEIPT, WHICH HAS ESCAPED ASSESSMENT. IN VIEW OF ABOVE FACTS, NOTICE U/S. 148 OF THE I. T . ACT, 1961 IS BEING ISSUED TO THE ASSESSEE WITHIN THE MEANING OF SECTION 147 OF I. T. ACT, 1961 FOR THE RELEVANT A.Y. 2002-03. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSED THESE GIFTS AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT FOR WANT OF DUE EXPLANATI ON THEREOF BY THE ASSESSEE EVEN AFTER AMPLE OPPORTUNITY GIVEN TO EXPLAIN THE SAME. IN APPEAL BE FORE CIT(A), THE ASSESSEE STATED THAT BEFORE THE ASSESSING OFFICER, IN CONNECTION WITH ASSESSMEN T YEARS 2002-03 AND 2003-04, SHE PRODUCED FIVE DONORS FOR EXAMINATION ON 7.11.2006 A ND THE ASSESSING OFFICER COULD EXAMINE THREE OF THEM AND RECORDED THEIR STATEMENTS ON OATH U/S. 131 OF THE ACT BUT DUE TO LACK OF TIME, HE COULD NOT EXAMINE OTHER TWO DONORS. ACCORDING TO ASSESSEE, THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON IN HIS ORDER THAT WHY THE GIFTS RE CEIVED BY ASSESSEE FROM THOSE THREE PERSONS WERE NOT ACCEPTABLE IN TERMS OF PROVISIONS OF SECTI ON 68 OF THE ACT. SHE ALSO STATED THAT IN THE COMPUTATION OF INCOME IN THE ORDER OF ASSESSING OFF ICER, HE ONLY MENTIONED GIFT RECEIPTS TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I . T. ACT, 1961 IN WANT OF DUE EXPLANATION THEREOF BY THE ASSESSEE EVEN AFTER AMPLE OPPORTUNIT Y GIVEN TO EXPLAIN THE SAME. ACCORDING TO HER, IT SHOWS THAT THE ASSESSING OFFICER HAS PASSED THE ORDER IN A PREDETERMINED MANNER. ASSESSING OFFICER ALSO NOT GIVEN ANY REASON FOR NOT ACCEPTANCE OF THE DOCUMENTS PRODUCED 3 ITA 1086-1087/K/2010 PRANATI GHOSH A.Y. 02-03 & 03-04 BEFORE HIM. NO SPEAKING ORDER HAS BEEN PASSED BY A SSESSING OFFICER IN TREATING THE GIFTS RECEIVED BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT S. THE CIT(A) AFTER CONSIDERING THE GIFT IN THE CIRCUMSTANCES OF THE CASE OBSERVED THAT THE ASS ESSEE TO PROVE THE IDENTITY OF THE DONOR, THE FINANCIAL CAPACITY TO MAKE THE GIFT, HUMAN PROBABIL ITIES, THE RELATIONSHIP BETWEEN THE DONOR AND THE DONE, THE OCCASION FOR MAKING GIFT, THE EXISTEN CE OF RECIPROCITY AND OTHER RELEVANT FACTS. IN OTHER WORDS, THE GIFT SHOULD BE CREDIBLE. THE CIT( A) RELYING ON THE DECISION OF HONBLE SUPREME COURT IN CIT VS. P. MOHANAKLA (2007) 291 IT R 278 HAS TAKEN SUCH A VIEW. IN VIEW OF THE ABOVE, HE CONFIRMED THE ACTION OF ASSESSING OFFICER. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ARGUMENT OF LD. COUNSEL THAT THE R EASONS RECORDED HAS NO REASONABLE BELIEF OF THE AO HAVING NEXUS WITH THE MATERIAL ON RECORD THA T INCOME HAS ESCAPED ASSESSMENT IN THESE TWO ASSESSMENT YEARS IN THE CASE OF THE PRESENT ASS ESSEE. WE HAVE GONE THROUGH THE REASONS RECORDED AND NOTED THAT THE AO HAS RECORDED THE REA SON THAT ON CLOSE EXAMINATION OF BALANCE SHEET FILED ALONGWITH THE RETURN OF INCOME REVEALED THAT THE ASSESSEE HAS SHOWN IN HER CAPITAL ACCOUNT CASH GIFT OF RS.7.60 LACS IN ASSESSMENT YEA R 2002-03 AND RS.8.50 LACS IN ASSESSMENT YEAR 2003-04 AS PER SCHEDULE X FROM DIFFERENT PERSO NS. BUT THESE ARE NOT SUPPORTED BY ANY CONFIRMATION OR SUPPORTING DOCUMENTS HAVING ENCLOSE D IN THE RETURN OF INCOME TO SUPPORT THE GENUINENESS OF CASH GIFTS OF THAT MAGNITUDE. AFTER GOING THROUGH THE PROVISIONS OF SECTION 148(2) OF THE ACT, WE ARE OF THE VIEW THAT THE ESSE NTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDINGS UNDER THESE PROVISIONS IS THAT THE ASSE SSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR. ANOTHER REQUIREMENT WHICH IS NECESSARY FOR ASSUMING JURISDI CTION UNDER SECTION 147 OF THE ACT IS THAT THE ASSESSING OFFICER SHALL RECORD HIS REASONS FOR ISSUING NOTICE AS MANDATED BY SECTION 148(2) OF THE ACT. THIS REQUIREMENT NECESSARILY POSTULATES THAT BEFORE THE ASSESSING OFFICER IS SATISFIED TO ACT UNDER SECTION 147 READ WITH SECTION 148 OF T HE ACT, HE MUST PUT IN WRITING AS TO WHY IN HIS OPINION OR WHY HE HOLDS THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. WHY FOR HOLDING SUCH BELIEF MUST BE REFLECTED FROM THE RECORD OF RE ASONS MADE BY THE ASSESSING OFFICER AND IN CASE WHERE THE ASSESSING OFFICER HOLDS THE OPINION THAT BECAUSE OF CASH RECEIPTS OF GIFTS THE INCOME HAS ESCAPED ASSESSMENT, THE REASONS RECORDED BY THE ASSESSING OFFICER MUST DISCLOSE BY WHAT PROCESS OF REASONING HE HOLDS SUCH BELIEF THAT CASH GIFTS HAVE WRONGLY BEEN ALLOWED WITHOUT ANY BASIS IN THE ORIGINAL ASSESSMENT. MEREL Y SAYING THAT IT IS REVEALED FROM THE BALANCE SHEET THAT AS PER CAPITAL ACCOUNT CASH GIFTS FROM D IFFERENT PERSONS IS NOT SUPPORTED BY EITHER ANY CONFIRMATION OR SUPPORTING DOCUMENT TO SUPPORT GENU INENESS AND WITHOUT DISCLOSING THE REASONS WHICH LAID THE ASSESSING OFFICER TO HOLD SU CH BELIEF, DOES NOT CONFER JURISDICTION ON THE 4 ITA 1086-1087/K/2010 PRANATI GHOSH A.Y. 02-03 & 03-04 ASSESSING OFFICER TO TAKE ACTION UNDER SECTIONS 147 R.W.S. 148 OF THE ACT. EVEN OTHERWISE, VALIDITY OR OTHERWISE OF THE REASONS FOR INITIATION OF REASSESSMENT PROCEEDINGS SHOULD BE GONE INTO ON THE BASIS OF THE FACTS MENTIONED AND THE RE ASONS RECORDED PRIOR TO SUCH INITIATION. IT IS NOT OPEN TO THE REVENUE TO JUSTIFY SUCH INITIATION ON THE BASIS OF FURTHER REASONS TO BE SUPPLIED IN THE FORM OF SUBMISSIONS, WHATSOEVER. THUS, WHER E THE REASONS RECORDED DO NOT BRING OUT ANY GROUND, MAKING OUT AN OBJECTIVE SATISFACTION ARRIVE D AT BY THE OFFICER, NO REASON OTHER THAN THOSE RECORDED BY THE OFFICER CAN POSSIBLY BE URGED TO SUSTAIN SUCH INITIATION. THIS VIEW OF OURS IS SUPPORTED BY HONBLE GUJARAT HIGH COURT IN THE C ASE OF SARADBHAI M. LAKHANI V. ITO (1998) 213 ITR 779, 783, 785 (GUJ). THE POWER CONFERRED U/ S. 147 OF THE ACT IS NO DOUBT VERY WIDE BUT AT THE SAME TIME IT CANNOT BE STATED TO BE A PL ENARY POWER. THE ASSUMPTION JURISDICTION U/S. 147 OF THE ACT, THEREFORE, MUST BE ON THE BASIS OF EXISTENCE OF MATERIALS BEFORE THE AUTHORITY AND NOT MERELY ON WHIMS AND FANCY OF THE AO. THE EXIST ENCE OF MATERIALS MUST BE REAL AND THE THERE MUST BE NEXUS BETWEEN THE MATERIAL AS WELL AS THE BELIEF OR THE REASONS RECORDED THAT INCOME HAS ESCAPED ASSESSMENT. THE EXERCISE OF ASS UMPTION OF JURISDICTION FOR REASSESSMENT MUST CONTAIN A DEFINITE APPLICATION OF MIND BY THE AO TO REACH AN INFERENCE BASED ON MATERIAL JUSTIFYING THE ACTION ON THE BASIS THAT THE INCOME HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE BEFORE US, THERE IS NO BELIEF FORMED BY AO AT THE T IME OF RECORDING OF REASON THAT INCOME HAS ESCAPED ASSESSMENT AND WHAT IS THE BASIS FOR THAT. ACCORDINGLY, WE QUASH THE ASSUMPTION OF JURISDICTION U/S. 147 OF THE ACT BY AO AS REASONS R ECORDED HAVE NO NEXUS BETWEEN THE MATERIAL AS WELL AS THE BELIEF THAT INCOME HAS ESCAPED ASSES SMENT. ACCORDINGLY, THIS COMMON ISSUE OF ASSESSEES APPEALS IS ALLOWED. 5. IN RESPECT TO OTHER ISSUES, WE ARE OF THE VIEW T HAT ONCE WE HAVE ADJUDICATED THE ISSUE ON ASSUMPTION OF JURISDICTION IN FAVOUR OF ASSESSEE, T HE ISSUES ON MERITS NEED NO ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 7. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . ! ! ! ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 28 TH OCTOBER, 2011 /0 %12 3 JD.(SR.P.S.) 5 ITA 1086-1087/K/2010 PRANATI GHOSH A.Y. 02-03 & 03-04 '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SMT. PRANATI GHOSH, C/O FULWARI SERVICE STATION, P.O. FULWARI HAT, DIST. JALPAIGURI. 2 ,-*+ / RESPONDENT, ITO, WARD-1(2), SILIGURI. 3 . .% ( )/ THE CIT(A), SILIGURI 4. .% / CIT, SILIGURI 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, 2 /ASSTT. REGISTRAR .