M/s Jawahar Lal Jain (HUF), Chandigarh V. DCIT, Chandigarh

ITA 1132/CHANDI/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5184 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Unexplained cash credit; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 153A; 147; 68; 148; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHES A, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R.KUMAR, ACCOUNTANT MEMBER ITA NO. 1132/CHD/2016 ASSESSMENT YEAR: 2007-08 M/S JAWAHAR LAL JAIN (HUF) VS. THE DCIT SCF 18, SECTOR 22-DEDUCTION CENTRAL CIRCLE-1 CHANDIGARH CHANDIGARH PAN : AABHJ6142D (A PPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL RESPONDENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 12.12.2017 DATE OF PRONOUNCEMENT : 05/03/2018 ORDER PER DR. B.R.R.KUMAR, AM: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-3 GURGAON DT. 22/08/2016. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE IMPUGNED ORDER IS AGAINST FACTS AND LAW. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTH CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. A O, WHEREIN THE LD. AO HAS INITIATED, AND CONCLUDED THE RE-ASSESSMENT U/S 147 R.W.S. 148 OF THE INCOME TAX ACT, 1961 EVEN WHEN THE ORIGINAL ASSESSMENT WAS CON CLUDED U/S 153A R.W.S. 143(3) AND THE REOPENING WAS INITIATED AT FAG END O F 6 TH YEAR FROM THE END OF ASSESSMENT YEAR EVEN WHEN THE CASE DID NOT DESERVE TO BE RE-ASSESSED. 3. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTH CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. A O, WHEREIN THE LD. AO HAS MADE AN ADDITION OF RS. 5,51,755/- BY ERRONEOUSLY HOLDIN G THAT VARIOUS ADVANCES RECEIVED FROM CUSTOMERS ARE UNEXPLAINED CASH CREDIT S TAXABLE U/S 68 OF THE ACT. 4. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTH CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. A O, WHEREIN THE LD. AO HAS ERRED IN PASSING THE IMPUGNED RE-ASSESSMENT ORDER U/S 147 OF THE ACT WITHOUT OBTAINING STATUTORY APPROVAL OF JCIT U/S 153D OF THE ACT EVEN WHEN THE ORIGINAL ASSESSMENT WAS FRAMED U/S 153A OF THE ACT AFTER TAKING NECESSA RY APPROVAL OF JCIT U/S 153D. 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HUF REPRESENTED BY ITS KARTA SH. JAWAHAR LAL JAIN. THE ASSESSEE IS PROPRIE TOR OF M/S NIKKA MAI BABU RAM JEWELLERS AND IS RUNNING RETAIL BUSINESS OF JEWELLE RY. A SEARCH ACTION WAS CONDUCTED AT THE PREMISES OF THE APPELLANT ON 27.10 .2006. IN RESPONSE TO NOTICE U/S 153A OF THE ACT, THE ASSESSMENT WAS COMPLETED U /S 153A FOR AYS 2001-02 TO A.Y. 2007-08. 4. THE LD. AO ISSUED NOTICE U/S 148 OF THE ACT FOR AY 2007-08 AFTER RECORDING REASONS ON 28-03-2014 THE MOOT REASON FOR RE-OPENIN G IS THAT THE ADVANCES FROM CUSTOMERS HAVE NOT BEEN INVESTIGATED. THE REASONS R ECORDED ARE AS UNDER: A.Y. 2007-08 28.03.2014 : THE ASSESSMENT IN THE CASE OF THE ASSE SSEE WAS COMPLETED U/S 143(3) OF THE IT. ACT, 1961 FOR THE A.Y. 2008-09 AT A TOTA L INCOME OF RS.92,95,327/-. IN THE IMPUGNED ASSESSMENT ORDER AN ADDITION OF RS.92,95,3 27/- WAS MADE ON ACCOUNT OF UNEXPLAINED ADVANCES RECEIVED FROM THE CUSTOMERS . THE CIT (A) VIDE HER ORDER APPEAL NO.01/413/CIT(A)(C)/GGN/2010-11 DATED 19.09. 2013 UPHELD THE ADDITION OF RS.82,50,250/- OUT OF TOTAL ADDITION RS.92,95,32 7/-HOLDING THAT ONLY THE AMOUNT ACCEPTED DURING THE YEAR I.E. 2007-08 CAN BE TREATE D AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND THE AMOUNTS BROUGHT F ORWARD FROM PREVIOUS YEARS CAN NOT BE ADDED IN INCOME OF THE YEAR I.E. 2007-08 . THE UNEXPLAINED ADVANCES OF RS. 10,45,077/- PERTAINS TO A.Y. 2007-08. THE ASSESSMENT OF THE ASSESSEE FOR A.Y. 2007-08 HAS BEEN COMPLETED U/S 153A R.W.S. 143(3) AT A TOTAL INCOME OF RS.3,07,70,530/- . THE UNEXPLAINED CASH CREDIT OF RS. 10,45,077/-WAS NOT CONSIDERED AT THE TIME OF OR IGINAL ASSESSMENT SINCE THE INFORMATION WAS NOT IN POSSESSION OF THE DEPARTMENT . IT IS THEREFORE, APPARENT FROM THE RECORD THAT INCOME TO THE EXTENT OF RS. 10 ,45,077/- HAS ESCAPED ASSESSMENT IN A.Y. 2007-08. THEREFORE, IN VIEW OF THE ABOVE, I HAVE REASON TO B ELIEVE THAT THE INCOME OF RS. 10,45,077/- HAS ESCAPED ASSESSMENT WITHIN THE MEANI NG OF SECTION 147 OF THE INCOME TAX ACT, 1961 NOTICE U/S 148 OF THE IT. ACT, 1961 ISSUED THUS IT CAN BE OBSERVED THAT THE ORIGINAL ASSESSMEN T WAS CONCLUDED U/S 153A AND THE REOPENING IS IN 6 TH YEAR FROM END OF ASSESSMENT YEAR AFTER THE FINDING OF THE LD. CIT(A) THAT CERTAIN ADDITIONS MADE IN THE A .Y. 2008-09 PERTAINS TO THE A.Y. 2007-08. DURING ASSESSMENT UNDER SECTION 148, THE L D. AO, MADE THE IMPUGNED ADDITION OF RS. 5,51,755/- CONSISTING OF THE ADVANC E RECEIVED OF RS. 4,50,000/- FROM ONE MR. RAVISH GOEL AND THE REMAINING AMOUNTS ARE OF PETTY AMOUNTS. THE 3 LD. CIT(A) HAS CONFIRMED THE ADDITION ON THE GROUND S THAT THE ASSESSEE COULD ONLY PROVE THE IDENTITY BUT COULD NOT PROVE THE CRE DIT WORTHINESS OF THE CREDITOR. 5. AGGRIEVED THE ASSESSEE FILED THE APPEAL BEFORE US. 6. THE LD. AR DREW OUR ATTENTION TO THE FOLLOWING D ETAILS FLED BEFORE THE LOWER AUTHORITIES : 2. COPIES OF LEDGER ACCOUNT OF ABOVE REFERRED ADVANCES FOR THE YEAR IN QUESTION I.E. A Y 2007-08 ARE ENCLOSED. 3. IT IS EVIDENT FROM LIST REFERRED AT (2) ABOVE AND L EDGER ACCOUNTS REFERRED AT (3) ABOVE THAT OUT OF AGGREGATE ADVANCES OF RS. 10, 45,077/-, ADVANCES AGGREGATING TO RS. 4,93,322/- WERE EVEN BROUGHT FOR WARD FROM PRECEDING YEARS AND BALANCE ADVANCES- AGGREGATING TO RS. 5,51,755/- WERE IN RESPECT OF TRANSACTIONS EXECUTED DURING THE YEAR IN QUESTION. 5. THE QUESTION INVOLVED IN THE PRESENT CASE IS THE TA XABILITY OF THESE ADVANCES AGGREGATING TO RS. 10,45,077/- U/S 68 IN R E-ASSESSMENT FOR AY 2007-08. OUT OF THESE ADVANCES, ADVANCES OF RS. 4,93,322/- A RE OLD AND HENCE THE SAME CAN NOT BE ADDED IN ASSESSMENT FOR THE YEAR IN QUES TION AS RIGHTLY HELD BY HON'BLE CIT(A) IN THE CASE OF ASSESSEE ITSELF FOR A Y 2008-09 THAT ONLY ADVANCES RECEIVED DURING THE RELEVANT YEAR CAN AT MAXIMUM BE ADDED IN ASSESSMENT FOR THAT YEAR 6. AS REGARDS ADVANCES AGGREGATING TO RS. 5,51,755/- W HICH ARE IN RESPECT OF TRANSACTIONS EXECUTED DURING THE YEAR IN QUESTION, IT IS SUBMITTED THAT MOST OF THESE. ADVANCES WERE PETTY AMOUNTS, WERE RECEIVED F ROM CUSTOMERS AGAINST FUTURE SALES AND WERE SETTLED IN SUBSEQUENT PERIODS . HENCE, THE SAME MAY NOT PLEASE BE ADDED U/S 68 OF THE ACT. ONE OF THE ADVAN CE OUT OF THIS LIST IS RS. 4,50.000/- FROM SH. RAVISH GOYAL. IN REGARD TO THIS ADVANCE, WE HAVE TO SUBMIT AS UNDER: A. SH. RAVISH GOYAL IS THE SON-IN-LAW OF KARTA OF A SSESSEE HUF. B. COPY OF AFFIDAVIT OF SH. RAVISH GOYAL CONFIRMING THE PAYMENT OF ADVANCE TO THE ASSESSEE FROM HIS BANK ACCOUNT IS ENCLOSED. C. COPY OF PAN CARD OF SH. RAVISH GOYAL IS ENCLOSED . D. COPY OF BANK STATEMENT OF SH. RAVISH GOYAL FOR T HE YEAR IN QUESTION DULY MARKING THE PAYMENT OF RELEVANT ADVANCE TO THE ASSE SSEE IS ENCLOSED. E. THE ABOVE REFERRED ADVANCE OF RS. 4,50,000/- ALO NGWITH ADVANCE OF RS. 4,00,000/- ACCEPTED DURING SUCCEEDING FY 2007-08 WA S REPAID AS RS. 8,50,000/- IN FY 2011-12. COPY OF RELEVANT PAGE OF BANK STATEM ENT OF SH. RAVISH GOYAL FOR FY 2011-12 DULY MARKING THE REPAYMENT BY ASSESSEE I S ENCLOSED. F. IT IS EVIDENT FROM ABOVE FACTS THAT THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE CREDITOR. FURTHER, SINCE THE CREDIT OR WAS SON-IN-LAW OF THE ASSESSEE AND INTENDED TO BUY SOME GOLD, THE GENUINENESS OF T HE TRANSACTION CANNOT BE DOUBTED. FURTHER-MORE, SINCE THE AMOUNT WAS PAID FR OM REGULAR BANK ACCOUNT OF THE CREDITOR AND HE IS A REGULAR INCOME TAX ASSESSE E, THE CREDIT-WORTHINESS OF THE CREDITOR CANNOT BE DOUBTED. ABOVE ALL, THE ADVANCES FROM CUSTOMERS FOR SALE OF GOODS CANNOT BE ADDED U/S 68 OF THE ACT. HENCE, THI S ADVANCE CANNOT BE HELD AS UNEXPLAINED CASH CREDIT AND THEREFORE THE SAME M AY NOT PLEASE BE ADDED U/S 68 OF THE ACT. 4 IT WAS FURTHER SUBMITTED THAT THE ASSESSMENT FOR SU CCEEDING A.Y. 2008-09 WAS ALSO COMPLETED U/S 143(3) WHEREIN ONE OF THE ADDITI ON WAS FOR RS. 92,95,327/- MADE U/S 68 ON ACCOUNT OF ALLEGED UNEXPLAINED ADVAN CES FROM CUSTOMERS. IN APPEAL BEFORE THE HON'BLE CIT(A) ON THIS ISSUE, SHE DELETED ADDITION TO THE EXTENT OF RS. 10,45,077/- BY HOLDING THAT THESE AMO UNTS CANNOT BE ADDED IN A.Y. 2008-09 AS THE SAME HAS BEEN BROUGHT FORWARD FROM A .Y. 2007-08. BY NOTICING THIS OBSERVATION FROM THE ORDER OF HON'BLE CIT(A) F OR A.Y. 2008-09, RE-OPENING HAS BEEN DONE FOR THE A.Y. 2007-08. IT WAS FURTHER ARGUED BY THE LD. AR THAT THE YEAR I N QUESTION IS A.Y. 2007-08 AND THE REASONS HAVE BEEN RECORDED ON 28.03.2014 AND TH EREFORE THE REASONS HAVE BEEN RECORDED IN THE 6 TH YEAR FROM THE END OF THE A.Y. IN QUESTION. THE ASSESSMENT HAVING BEEN COMPLETED U/S 143(3), THEREF ORE 1 ST PROVISO TO S. 147 IS RELEVANT AND IMPORTANT. 7. IT WAS ARGUED THAT IN THE PRESENT CASE, THE ITR U/S 139 HAS BEEN DULY FILED AND THEREFORE THE PROVISION IS NOT APPLICABLE. REGA RDING THE 2 ND LIMB THAT THERE IS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS NECESSARY FOR THE ASSESSMENT, THE LD. AR ARGUED THAT ALL MATERIAL FACTS HAVE BEE N DULY DISCLOSED. HE FURTHER RELIED ON THE FOLLOWING JUDGMENTS: I) THE FIGURE OF ADVANCE FROM CUSTOMERS FINDS DULY MENTIONED IN THE AUDITED BALANCE SHEET AND THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THIS ASSESSMENT. WHEN THE ASSESSEE HAD DISCLOSED COMPLETE FACTS, RE-OPENING B EYOND 4 YEARS WAS IMPRESSIBLE. FOR THIS PROPOSITION, WE RELY UPON RAT IO OF JUDGEMENTS IN : A. JASHAN TEXTILES MILLS P. LTD. VS. DCIT (2006) 284 I TR 542 (BOM) B. GERMAN REMEDIES LTD VS. DCIT (2006) 287 ITR 494 (BO M) C. CIT VS. FORAMER FINANCE (2003) 264 ITR 566 (SC) THE REASONS RECORDED DO NOT MENTION AT ALL OR ALLEG E THAT ESCAPEMENT OF INCOME IS DUE TO THE FAILURE TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR THIS ASSESSMENT. IN THE ABSENCE OF THIS MENTION IN THE R EASONS, THE RE-OPENING CANNOT 5 BE SUSTAINED. FOR THIS PROPOSITION, WE RELY UPON TH E RATIO OF JUDGMENT IN SOUND CASTING (P) LTD V. DY.CIT (2012) 250 CTR 119 (BOM.) THE ALLEGATION IN THE REASONS IS THAT THE ALLEGED U NEXPLAINED CASH CREDIT OF RS. 10,45,077/- WAS NOT CONSIDERED AT THE TIME OF ORIGI NAL ASSESSMENT SINCE THE INFORMATION WAS NOT IN POSSESSION OF DEPARTMENT. EV EN THIS ALLEGATION IS FACTUALLY INCORRECT. INFORMATION ABOUT ADVANCE FROM CUSTOMERS WAS PART OF AUDITED BALANCE SHEET. THEREFORE, RE-OPENING OF AN ASSESSME NT CONCLUDED U/S 143(3), AFTER 4 YEARS FROM END OF RELEVANT ASSESSMENT YEAR, IS NOT SUSTAINABLE SINCE THE ALLEGATION IN THE REASONS IS BASED ON INCORRECT FAC TS. WHEN THE FACTS STATED IN THE REASONS ARE THEMSELVES INCORRECT, RE-OPENING IS IMP RESSIBLE. FOR THIS PROPOSITION, WE RELY UPON RATIO OF JUDGEMENT IN WEI INTERTRADE (P) LTD & ANR VS. ITO (2009) 308 ITR 22 (DEL). IT IS FURTHER SUBMITTED THAT EVEN DURING ORIGINAL A SSESSMENT PROCEEDINGS COMPLETED U/S 143(3), A SPECIFIC QUERY WAS RAISED C ALLING FOR DETAILS OF ADVANCES RECEIVED FROM CUSTOMERS. THE SAME WAS DULY REPLIED. A COPY OF RELEVANT QUESTIONNAIRE AND REPLY OF THE ASSESSEE IS ENCLOSED . IT IS THEREFORE EVIDENT THAT THE ISSUE IN PRESENT REASSESSMENT PROCEEDINGS WAS ENQUI RED AND EXAMINED AND AFTER APPRAISING THE SAME, NO ADDITION WAS MADE. THEREFOR E, RE-OPENING THE SAME ISSUE AMOUNTS TO CHANGE OF OPINION, WHICH IS IMPRES SIBLE IN LAW AND THEREFORE THE RE-OPENING DESERVES TO BE QUASHED. FOR THIS PROPOSI TION, WE RELY UPON RATIO OF JUDGEMENT IN CIT VS. KELVINATOR OF INDIA 320 ITR 561 (SC). 8. THE LD. DR RELIED ON THE REASONS OF REOPENING ON THE ORDER OF THE LD. CIT(A). 9. WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND FIND THAT THE ASSESSMENT HAS BEEN REOPENED AFTER FOUR YEARS. THE RELEVANT PROVISIONS OF THE ACT ARE AS UNDER: 'PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT, F OR THAT ASSESSMENT YEAR' IT IS EVIDENT FROM ABOVE EXTRACT THAT RE-OPENING IS PERMISSIBLE AFTER THE 4 TH YEAR BUT BEFORE END OF 6 TH YEAR ONLY IF THE ASSESSEE FAILED TO FILE RETURN U/ S 139/143(1)/148 OR TO DISCLOSE FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR THIS ASSESSMENT. 10. ON GOING THROUGH THE RECORD IT IS FOUND THAT IN THE SATISFACTION THE ASSESSING OFFICER HAS NOWHERE MENTIONED ABOUT THE D EFAULT ON THE PART OF THE ASSESSEE TO FURNISH COMPLETE AND FULL DETAILS. NOTW ITHSTANDING, THERE WAS NO NEW 6 MATERIAL AVAILABLE BEFORE THE ASSESSING OFFICER AS MENTIONED IN THE REASONS FOR REOPENING AS THE ADVANCES STATED TO BE ENQUIRED INT O ARE ALREADY BEEN BEFORE THE ASSESSING OFFICER. DURING THE PROCEEDING CONDUC TED UNDER SECTION 153A. THE RELEVANT REPLY OF THE ASSESSEE ALONG WITH DEPI CTING OF THE ADVANCES IN THE BALANCE SHEET IS AS UNDER: THESE ADVANCES HAVE ALREADY BEEN ENQUIRED DURING TH E PROCEEDINGS FOR THE AY 2008-09. THE ASSESSEE HAS FILED RETURN UNDER SECTI ON 139, HENCE AS PER THE FIRST PROVISO OF SECTION 147 THE ASSESSEE CANNOT BE SAI D TO BE IN DEFAULT. 11. KEEPING IN VIEW THAT THE ADVANCES HAVE ALREADY BEEN ENQUIRED INTO DURING THE PROCEEDING UNDER SECTION 153A FOR THE AY 2008-09, AND KEEPING IN VIEW THE FACT THAT THE ASSESSEE HAS ALREADY DISCLO SED IN THE BALANCE SHEET AND 7 ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT HAV E ALREADY BEEN DISCLOSED AND NO NEW MATERIAL HAS BEEN BROUGHT TO THE NOTICE OF T HE ASSESSING OFFICER, THE NOTICE ISSUED UNDER SECTION 148 DO NOT STAND THE TE ST OF LEGALITY AND HENCE THE ASSESSMENT STANDS ANNULLED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR.B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR