Mr. Abad Hasan Khan, Aligarh V. I.T.O., Ward-1, Aligarh

ITA 118/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0715 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-07-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 18-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: P K SEHGAL; UTSAV SEHGAL
• Keywords: Unexplained investment; Opportunity of being heard; Period of limitation; Reason to believe; Reassessment proceedings; Set aside
• Section: 147; 69; 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (SMC)AGRA BENCH, AGRA BEFORE: SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 118 AG/ 2013 ASSTT. YEAR: 2002-03 MR. ABAD HASAN KHAN VS. ITO WARD-4, ALIGARH ALIGARH. (PAN AMHPS 7743 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.K.SEHGAL, ADVOCATE & SHRI UTSAV SEHGAL, C.A. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 29.07.2013 DATE OF PRONOUNCEMENT : 31.07.2013 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) MUZAFFARNAGAR DATED 07.02.2013 FOR A.Y. 2002-03. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF CERTAIN PROCEEDINGS BEFORE ADDITIONAL CIT, RANGE-1, ALIGARH , INFORMATION WAS RECEIVED THAT THE ASSESSEE HAD DEPOSITED RS.1,00,000/- AS FE E TO OBTAIN THE LIFE MEMBERSHIP ITA NO.118/AG/2013 A.Y. 2002-03 2 OF JAMIA URDU, ALIGARH ON 01.05.2001, THE ASSESSEE DID NOT FILE RETURN OF INCOME FOR A.Y. 2002-03 UNDER APPEAL. SINCE THE AMOUNT OF INVESTMENT MADE BY THE ASSESSEE EXCEEDED THE MAXIMUM LIMIT CHARGEABLE TO I NCOME TAX, ACTION UNDER SECTION 147 OF THE I.T. ACT WAS INITIATED FOR WHICH THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED UPON ASSESSEE ON 20.0 6.2007. THE ASSESSEE DID NOT MAKE COMPLIANCE TO STATUTORY NOTICE. THE ASSESSEE W AS REQUIRED TO FURNISH SOURCE OF INCOME FOR MAKING THE INVESTMENT. THE ASSESSEE F ILED REPLY AND STATED THAT THE INCOME OF THE ASSESSEE WAS BELOW TAXABLE LIMIT, THE REFORE, NO RETURN OF INCOME WAS FILED. IT WAS STATED THAT ASSESSEE DOING PRIVAT E TUITION AND TAKING COACHING CLASSES, THEREFORE, AMOUNT WAS DEPOSITED WITH JAMIA URDU, ALIGARH FOR TAKING LIFE MEMBERSHIP ON 01.05.2001. THE REPLY OF THE ASSESSEE WAS NOT CONSIDERED FAVORABLY IN THE ABSENCE OF ANY EVIDENCE, THEREFORE , ADDITION OF RS.1,00,000/- WAS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER SEC TION 69 OF THE ACT. THE A.O. MADE FURTHER ADDITION OF RS.60,000/- ON ACCOUN T OF UNEXPLAINED HOUSEHOLD EXPENSES. THE ASSESSEE HAS CHALLENGED BOTH THE ADDI TION BEFORE LD. CIT(A) AND INITIATION OF REASSESSMENT PROCEEDING ALSO. THE REM AND REPORT FROM THE A.O. WAS CALLED FOR ON THE SUBMISSIONS OF THE ASSESSEE. THE LD. CIT(A) FOUND THAT THE ASSESSEE INSTEAD OF RAISING OBJECTION TO THE ISSUE OF THE NOTICE UNDER SECTION 148 OF THE ACT, HAS MADE COMPLIANCE AND ADMITTED TO HAV E DEPOSIT RS.1,00,000/- ON ITA NO.118/AG/2013 A.Y. 2002-03 3 01.05.2001 FOR LIFE MEMBERSHIP OF JAMIA URDU, ALIGA RH (LETTER FILED BEFORE LD. CIT(A)). LD. CIT(A), THEREFORE, FOUND THAT AO WAS J USTIFIED IN REOPENING OF THE ASSESSMENT, THEREFORE, THE GROUND FOR CHALLENGING R EOPENING OF THE ASSESSMENT WAS REJECTED. LD. CIT(A) ALSO FOUND THAT THE ASSESS EE HAS FAILED TO FURNISH EVIDENCE TO EXPLAIN THE SOURCE OF INVESTMENT, THERE FORE, IN PRINCIPLE THE A.OS. ACTION WAS FOUND JUSTIFIED IN MAKING THE ADDITION. HOWEVER, THE RECEIPT OF AMOUNT OF RS.1,00,000/- DEPOSITED WITH JAMIA URDU W AS FOUND DATED 05.01.2001 WHICH IS SUPPORTED BY AFFIDAVIT, THEREFORE, IT WAS FOUND THAT DEPOSIT PERTAIN TO PRECEDING A.Y. 2001-02. THEREFORE, NO ADDITION COUL D BE MADE IN ASSESSMENT YEAR UNDER APPEAL I.E. 2002-03. THE LD. CIT(A) DIRE CTED TO DELETE THE ADDITION OF RS.1,00,000/-. HOWEVER, LD. CIT(A) DIRECTED THE A.O . TO TAKE REMEDIAL ACTION UNDER SECTION 147 OF THE ACT IN A.Y. 2001-02 TREATI NG THE AMOUNT OF RS.1,00,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE . THE LD. CIT(A) ALSO DELETED THE ADDITION OF RS.60,000/- ON ACCOUNT OF UNEXPLAIN ED HOUSE HOLD EXPENSES. THE ASSESSEE IN HIS APPEAL CHALLENGED THE INITIATION OF THE REASSESSMENT PROCEEDING AS WELL AS DIRECTION ISSUED BY LD. CIT(A) TO THE A.O. FOR TAKING REMEDIAL ACTION IN PRECEDING A.Y. 2001-02. ITA NO.118/AG/2013 A.Y. 2002-03 4 3. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAIL ABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE FILED COPY OF THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT AT PAGE NO.5 OF THE PAPER BOOK WHICH READS AS UNDER :- REASONS FOR ISSUANCE OF NOTICE U/S 148 18.06.2007 SHRI ABAD HASAN KHAN S/O LATE SHRI MUKHTAR HASAN KHAN, RESIDENT OF FIRDAUS COLONY, HAMDARD NAGAR, AL IGARH HAS DEPOSITED RS.ONE LAC ON 01.05.2004 TO OBTAIN LIFE M EMBERSHIP IN JAMIA URDU, ALIGARH. SHRI ABAD HASAN KHAN HAS STATE D THAT HE IS NOT ASSESSED TO TAX FOR F.Y. 2001-02. ACCORDINGLY, I HAVE REASON TO BELIEVER THAT INCOME OF RS.ONE LAC FOR A.Y. 2002-03 HAS ESCAPED ASSESSMENT ISSUE NOTICE U/S 148. (ASHISH SHUKLA) INCOME TAX OFFICER WARD-4, ALIGARH 4. LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITT ED THAT ONCE THE A.O. NOTED THAT DEPOSIT WAS MADE OF RS.1,00,000/-WITH JAMIA UR DU, ALIGARH ON 01.05.2004, THE REASON WAS INCORRECT AND WOULD NOT DISCLOSE THA T ANY INCOME ESCAPED ASSESSMENT IN ASSESSMENT YEAR UNDER APPEAL I.E. 200 2-03. HE HAS ALSO REFERRED TO P.B.4, WHICH IS RECEIPT OF JAMIA URDU, ALIGARH DATE D 05.01.2001 TO PROVE THAT ASSESSEE MADE DEPOSIT OF RS.1,00,000/- WITH JAMIA U RDU ON 05.01.2001, WHICH WOULD FALL IN PRECEDING A.Y. 2001-02. ITA NO.118/AG/2013 A.Y. 2002-03 5 5. ON CONSIDERATION OF ABOVE FACTS, IN THE LIGHT OF THE REASONS FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 18.06.200 7, I AM OF THE VIEW THAT INITIATION OF THE REASSESSMENT PRECEDING IN ASSESSM ENT YEAR UNDER APPEAL IS BAD IN LAW AND AGAINST THE PROVISIONS OF LAW. THE A.O. NOT ED IN THE REASON THAT ASSESSEE MADE DEPOSIT OF RS.1,00,000/- WITH JAMIA URDU, ALIG ARH ON 01.05.2004, THEREFORE, THERE IS NO QUESTION OF A.O HAVING REASO N TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN A.Y. 20 02-03 UNDER APPEAL. FURTHER, THE RECEIPT OF THE DEPOSIT WAS ADMITTEDLY TO BE ON 05.01.2001 OF WHICH THE LD. CIT(A) ALSO DELETED THE ADDITION IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, IT IS CLEAR FROM THESE FACTS THAT THERE WAS NO DEPOSIT MA DE BY THE ASSESSEE WITH JAMIA URDU IN ASSESSMENT YEAR UNDER APPEAL, THEREFORE, TH E REASONS RECORDED BY THE A.O. FOR REOPENING OF THE ASSESSMENT ARE INCORRECT AND DO NOT EXIST FOR REOPENING OF THE ASSESSMENT, IN A.Y. 2002-03 WHICH WOULD PROV E THAT THE A.O. WITHOUT VERIFYING THE SOURCE OF INFORMATION AND THE DETAILS OF ESCAPEMENT OF INCOME AND WITHOUT ANY BASIS, RECORDED THE REASONS FOR REOPENI NG OF THE ASSESSMENT. IT WAS, THEREFORE, MERE SUSPICION, GOSSIP OR RUMOUR OF THE A.O. TO SAY THAT THERE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT IN THE ASSESSM ENT YEAR UNDER APPEAL. THE A.O., THEREFORE, DID NOT HAVE ANY REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN ASSESSMENT YEAR UNDER APP EAL I.E. 2002-03. ITA NO.118/AG/2013 A.Y. 2002-03 6 5.1 HONBLE THE SUPREME COURT IN THE CASE OF SHEO N ATH SINGH VS. APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX (CENTRAL), CAL CUTTA, AND OTHERS, (1971) 82 ITR 147 HELD :- THE WORDS REASON TO BELIVE SUGGEST THAT THE BELI EF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THAT THE INCOME-TAX OFFICER MAY ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOUR. THE INCOME-TAX OFFICER WOULD BE ACTING WITHOUT JURI SDICTION IF THE REASON FOR HIS BELIEF THAT THE CONDITIONS ARE SATIS FIED DOES NOT EXIST OR IS NOT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. THE COURT CAN ALWAYS EXAMINE THIS ASPECT THOUGH THE DEC LARATION OR SUFFICIENCY OF THE REASONS FOR THE BELIEF CANNOT BE INVESTIGATED BY THE COURT. 5.2 HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF COMMISSIONER OF INCOME-TAX VS. ATLAS CYCLE INDUSTRIES, (1989) 18 0 ITR 319 HELD :- HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN CANCELING THE REASSESSMENT AS BOTH THE GROUNDS ON WHICH THE REASS ESSMENT NOTICE WAS ISSUED WERE NOT FOUND TO EXIST, AND, THEREFORE, THE INCOME-TAX OFFICER DID NOT GET JURISDICTION TO MAKE A REASSESS MENT. 6. CONSIDERING THE ABOVE DISCUSSION, I AM OF THE VI EW THAT THE A.O. DID NOT HAVE ANY JURISDICTION TO PROCEED UNDER SECTION 148 OF THE ACT AGAINST THE ASSESSEE, IN ASSESSMENT YEAR UNDER APPEAL. THEREFOR E, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW WITH REGARD TO INITIATION OF THE REASSESSMENT PROCEEDING UNDER SECTION 147/148 OF THE ACT. RESULT ANTLY, THE PROCEEDINGS UNDER SECTION 147/148 ARE QUASHED. ITA NO.118/AG/2013 A.Y. 2002-03 7 7. IN VIEW OF THE ABOVE FINDINGS, THERE IS NO NEED TO CONSIDER WHETHER THERE WAS ANY PROPER SERVICE OF NOTICE UNDER SECTIO N 148 OF THE ACT UPON THE ASSESSEE. GROUND NOS. 1 & 2 OF THE APPEAL OF THE AS SESSEE ARE ACCORDINGLY ALLOWED. 8. NOW I TAKE UP THE ISSUE OF DIRECTION ISSUED BY L D. CIT(A) TO THE A.O. FOR TAKING REMEDIAL ACTION AGAINST THE ASSESSEE IN PRECEDING A.Y. 2001-02. LD. COUNSEL FOR THE ASSESSEE REFERRED TO SECTION 15 0 OF THE ACT AND SUBMITTED THAT THE CRUCIAL DATE WOULD BE DATE OF RE ASSESSMENT ORDER AND SINCE REASSESSMENT ORDER ITSELF WAS TIME BARRED, THEREFOR E, CIT(A) EXCEEDED JURISDICTION TO ISSUE DIRECTION TO THE A.O. HE HAS RELIED UPON ORDER OF ITAT COCHIN BENCH IN THE CASE OF VAIKUNDAM RUBBER CO. LT D. VS. ASSISTANT COMMISSIONER OF INCOME-TAX, [1997] 63 ITD 56 (COCH. ). 9. ON CONSIDERATION OF THE ABOVE SUBMISSION, I DO N OT FIND ANY ERROR IN THE ORDER OF LD. CIT(A) IN ISSUING THE DIRECTION FO R TAKING REMEDIAL ACTION AGAINST THE ASSESSEE IN PRECEDING ASSESSMENT YEAR. HOWEVER, I WOULD MODIFY THE DIRECTION ISSUED BY THE LD. CIT(A) IN THIS REGA RD. SECTION 150 OF THE ACT AS UNDER :- 150. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 149, THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF ITA NO.118/AG/2013 A.Y. 2002-03 8 MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATI ON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROCEEDI NG UNDER THIS ACT BY WAY OF APPEAL, REFERENCE OR REVISION [OR BY A CO URT IN ANY PROCEEDING UNDER ANY OTHER LAW]. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY IN ANY CASE WHERE ANY SUCH ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS IS REFERRED TO IN THAT SUB-SECTION RELATES TO AN ASSESSMENT YEAR I N RESPECT OF WHICH AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WHICH WAS THE SUBJECT-MA TTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE TA KEN. 10. IN THIS CASE, THE A.O. INITIATED THE REASSESSME NT PROCEEDING ON THE BASIS OF INFORMATION RECEIVED ON ACCOUNT OF SOME PR OCEEDING GOING ON BEFORE ADDITIONAL CIT RANGE-1, ALIGARH. I DID NOT F IND IT TO BE PROPER FOR INITIATING REASSESSMENT PROCEEDING UNDER SECTIONS 1 47/148 OF THE ACT AND ACCORDINGLY REASSESSMENT PROCEEDING HAVE BEEN QUASH ED IN THE ORDER. THEREFORE, IT IS NOT A CASE OF INITIATING THE REASS ESSMENT PROCEEDING AGAINST THE ASSESSEE ON THE BASIS OF GIVING ANY FINDING OR DIRECTION PASSED BY THE APPELLATE OR REVISIONAL AUTHORITIES OR BY THE COURT . THEREFORE, PROVISION OF SECTION 150 WOULD NOT APPLY IN THIS CASE. FURTHER W HEN THE REASSESSMENT PROCEEDINGS HAVE BEEN QUASHED, IT IS NOT RELEVANT, WHETHER IT WAS UNDISCLOSED INCOME OF THE ASSESSEE. THE DECISION OF ITAT, COCHIN BENCH IN ITA NO.118/AG/2013 A.Y. 2002-03 9 THE CASE OF VAIKUNDAM RUBBER (SUPRA) WOULD NOT APPL Y IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE A.O. IN THIS CASE RE OPENED THE ASSESSMENT ON RECORDING THE REASONS ON 18.06.2007 AND SUCH NOTICE WAS SERVED UPON ASSESSEE ON 20.06.2007. THE ASSESSMENT YEAR UNDER A PPEAL IS 2002-03 THEREFORE, ACCORDING TO SECTION 149(1)(B) OF THE AC T THE REOPENING OF THE ASSESSMENT IS WITHIN THE PERIOD OF LIMITATION. ALL THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE ARE ACCORDINGLY REJECTED. HOWEVER, CONSIDERING THE EVIDENCE AND MATERIAL ON RECORD, IT IS CLEAR THAT T HE ASSESSEE MADE DEPOSIT OF RS.1,00,000/- WITH JAMIA URDU, ALIGARH ON 05.01.200 1, THE SAME WOULD THEREFORE, FALL IN PRECEDING A.Y. 2001-02. THEREFOR E, LD CIT(A) WAS JUSTIFIED IN DIRECTING TO TAKE REMEDIAL ACTION IN SUCH ASSESS MENT YEAR. BUT, LD. CIT(A) HAS NO OCCASION TO DIRECT TO A.O. TO TREAT THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE IN A.Y. 2001-02 BECAUSE THE ASSESSEE W OULD GET OPPORTUNITY AT REASSESSMENT STAGE TO DISPROVE THE CONTENTION OF TH E A.O. THAT IT WAS NOT A UNDISCLOSED INCOME. THE RIGHT OF THE ASSESSEE THUS COULD NOT BE PREJUDICED PRIOR TO GIVE OPPORTUNITY OF BEING HEARD TO HIM. TH E LD. CIT(A) SHOULD NOT DECIDE SUCH ISSUE BEFORE INITIATION OF THE PROCEEDI NG UNDER SECTION 148 OF THE ACT IN A.Y. 2001-02. THEREFORE, THE DIRECTION O F THE LD. CIT(A) IS PARTLY SET ASIDE, TO TREAT THE AMOUNT OF RS.1,00,000/- AS UNDISCLOSED INCOME. IT IS ITA NO.118/AG/2013 A.Y. 2002-03 10 PREROGATIVE OF A.O. TO INITIATE PROCEEDINGS UNDER S ECTION 148 OF I.T. ACT. THE A.O. IS, THEREFORE, AT LIBERTY TO TAKE REMEDIAL ACT ION UNDER SECTION 148 OF THE ACT AGAINST THE ASSESSEE IN A.Y. 2001-02 IN ACCORDA NCE WITH LAW. TO THAT EXTENT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- (BHAVNESH SAINI) JUDIC IAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY