Shri Anil Kumar Saraf, HUF, HANUMANGARH TOWN V. Pr. CIT, BIKANER

ITA 118/JODH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4813 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALKA R JAIN
• Assessee Lawyers: R N JANGID
• Keywords: Bogus purchase; Principle of natural justice; Accommodation entries; Reassessment proceedings
• Section: 143(3); 147; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SHRI B.P JAIN ACCOUNTANT MEMBER AND SHRI PARTHA SAR A THI CHAUDHURY JUDICIAL MEMBER ITA NO.118/JODH/2016 ASSESSMENT YEAR:2009 - 10 SHRI. ANIL KUMAR SARAF, HUF VS. THE PR. CIT PROP. M/S. PUSHPA STEELS BIKANER NEAR CHANDI STUDIO HANUMANGARH TOWN PAN NO. AAEHA5243B (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.N. JANGID RESPONDENT BY : SMT. ALKA R. JAIN DATE OF HEARING : 22/11/2016 DATE OF PRONOUNCEMENT : 23/11/2016 OR DER PER PARTHA SAR A THI CHAUDHURY , JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PRINCIPAL CIT DT.26/02/2016 PASSED UNDER SECTION 263 OF THE ACT ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. PR. CIT HAS LEGALLY ERRED IN ARRIVING AT THE CONCLUSION THAT ASSESSMENT ORDER DATED 27/03/2014 PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREBY SETTING ASIDE THE ORDER WITH DIRECTION TO FRAMED ASSESS MENT DENOVO. 2. THE ASSESSEE SEEKS PERMISSION TO ALTER, SUBSTITUTE OR WITHDRAW ANY GROUND BEFORE US AT THE TIME OF HEARING OF APPEAL. 2 2. THE BRIEF FACTS APPEARING IN THIS CASE ARE THAT THE RETURN OF INCOME FOR THE A.Y. 2010 - 11 WAS FILED BY THE ASSESSEE ON 16/03/2010 DECLARING TOTAL INCOME OF RS. 11,250/ - . IT IS SEEN THAT THE RETURN OF INCOME WAS ACCEPTED BY THE DEPARTMENT AS NO SCRUTINY UNDER SECTION 143(3) OF THE ACT WAS MADE. SUBSEQUENTLY, PROCEEDINGS UNDER SECTION 147 R.W.S 148 OF THE ACT WERE INITIATED AND NOTICE DATED 22/03/2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. THEREAFTER, ASSESSMENT UNDER SECTION 147/143(3) CAME TO BE MADE IN TERMS OF ORDER DATED 27/03/2014 WHEREIN THE TOTAL INCOME WAS ASSESSED AT RS. 31,250/ - AS AGAINST RETURNED INCOME OF RS. 11,250/ - . THAT SUBSEQUENTLY RECORDS OF THE ORDER PASSED BY THE DEPARTMENT UNDER SECTION 147/143(3) DATED 27/03/2014 WAS EXAMINED BY THE LD. PR. CIT. 3. THAT, THE GROUND NO. 2 OF THE GROUNDS OF APPEAL IS GENERAL IN NATURE. 4. THE MAIN GRIEVANCE OF THE AS SESSEE BEFORE US WHETHER THE ORDER PASSED BY THE LD. PR. CIT UNDER SECTION 263 OF THE ACT IS SUSTAINABLE. 5. THAT, THE LD. PR. CIT IN HIS ORDER DATED 26/02/2016 PASSED UNDER SECTION 263 OF THE ACT HAVE SPECIFICALLY MENTIONED THEREIN THAT IN THE GIVEN FINDI NGS THE AO IS IN POSSESSION OF VOLUMINOUS INCRIMINATING MATERIALS PROVIDED TO HIM APART FROM OTHERS THE CBDT, NEW DELHI THAT IS THE APEX BODY UNDER THE INCOME TAX LAW. LD. PR. CIT FURTHER STATED HOWEVER THE AO DID NOT CONSIDER IT APPROPRIATE AND NECESSARY TO EITHER EXAMINE THESE INCRIMINATING MATERIAL OR CONFRONT THE SAME WITH THE ASSESSEE HEREIN. THUS THE QUESTION ARISE WHETHER THE ASSESSMENT COMPLETED BY THE AO WITHOUT MAKING PROPER INVESTIGATION AND WITHOUT APPLYING PRINCIPLE OF NATURAL JUSTICE CAN BE TE RMED AS A VALID ASSESSMENT SUSTAINABLE IN LAW. THE PR. CIT IN HIS ELABORATED ORDER HAVE SPECIFICALLY POINTED OUT THAT THE AO WAS AWARE OF THE FACT THAT THE DETAILED DEEP INVESTIGATION WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT AS A RESULT OF SUCH INVESTIGATION VOLUMINOUS INCRIMINATING MATERIAL HAS COME TO THE POSSESSION OF THE DEPARTMENT. THAT ALSO VIDE OFFICE LETTER NO. 446 2 DT. 23/03/2015, THE ISSUE OF 3 EXISTENCE OF INCREMENTING MATERIAL IN THE PRESENT CASE WAS BROUGHT TO THE NOTICE OF THE A SSESSEE. IN RESPONSE TO THAT THE ASSESSEE MADE REQUEST FOR PROVIDING COPY OF INCRIMINATING MATERIAL. THE ASSESSEE FURTHER ADMITTED THAT THE FACTUM OF EXISTENCE OF INCRIMINATING MATERIAL PERTAINING TO THE ASSESSEE WAS NOT DISCLOSED BY THE LD. OFFICER DURING THE COURSE OF REASSESSMENT PROCEEDING. THUS, THERE EXISTS A SITUATION WHERE EVEN THE EXISTENCE OF INCRIMINATING MATERIAL WITH THE ASSESSING OFFICER DOES NOT FIND PLACE IN THE ENTIRE REASSESSMENT PROCEEDINGS. IT IS ALSO UNDISPUTED FACT THAT NEITHER THE INC RIMINATING MATERIAL PROVIDED BY THE INVESTIGATION WING WAS EXAMINED BY THE AO HIMSELF NOR THE SAME WAS PROVIDED WITH THE ASSESSEE. NOR THE SAME WAS UTILIZED FOR THE PURPOSE OF ASSESSMENT. 6. THAT, THEREAFTER THE LD. PR.CIT HELD THAT THE ASSESSMENT ORDER I S ERRONEOUS BECAUSE THE PRINCIPLE OF NATURAL JUSTICE HAVE NOT BEEN OBSERVED AND THE AO HAS NOT APPLIED HIS MIND TO THE INCRIMINATING MATERIAL WHICH WAS IN HIS POSSESSION OR WHICH COULD HAVE COME TO HIS POSSESSION HAD HE EXERCISED DUE DILIGENCE DURING THE A SSESSMENT PROCEEDING. THE LD. PR. CIT FURTHER HELD THAT ASSESSMENT ORDER IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT THERE HAS BEEN HUGE AMOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 1,62,59,798 / - IN THE NAME OF CERTAIN ENTITIES WHICH HAD BEEN FOUND INDULGING IN PROVIDING BOGUS ACCOMMODATION ENTRIES. THE AO WAS UNDER LEGAL OBLIGATION TO EXAMINE THE INCRIMINATING MATERIAL AND THEREAFTER BEFORE COMING TO THE CONCLUSION SHOULD HAVE BEEN CONFRONTED THAT MATERIAL WITH THE ASSESSEE. 7. THAT, THEREFO RE THE LD. PR. CIT ACCORDINGLY SET ASIDE THE IMPUGNED ASSESSMENT ORDER AND HAD RESTORED THE SAME TO THE AO WITH DIRECTION TO DO ASSESSMENT DENOVO AFTER GIVING OPPORTUNITY TO THE ASSESSEE AND NOT ONLY BEING HEARD BUT ALSO TO OFFER HIS COMMENTS WITH REGARD T O THE INCRIMINATING MATERIAL AVAILABLE BEFORE THE AO. 8. THAT, BEING AGGRIEVED THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE US. 4 9. THE LD. AR SUBMITTED THAT ALL THE RELEVANT MATERIAL WERE PLACED BEFORE THE AO AND THAT THERE WAS NO NEW MATERIAL WITH WHICH H E WAS NOT CONFRONTED WITH AND REITERATED THE SUBMISSIONS MADE BEFORE SUBORDINATE AUTHORITIES. 10. LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. PR. CIT. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSED THE CASE RECORDS AND FACTS AND CIRC UMSTANCES OF THE CASE AND WE ARRIVE AT OUR CONSIDERED VIEW THAT TO JUSTIFY THE ORDER UNDER SECTION 263 OF THE ACT, THE ASSESSMENT ORDER PASSED SHOULD BE ERRONEOUS AND ALSO IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. 12. THAT, IT IS ON RECORD THAT A DETAILED DEEP INVESTIGATION WAS CONDUCTED BY THE INVESTIGATION WING AND LOTS OF INCRIMINATING MATERIAL HAD COME TO THE POSSESSION OF THE DEPARTMENT THAT AS A QUASI JUDICIAL AUTHORITY AND ALSO AS A INVESTIGATING OFFICER OF THE DEPARTMENT, THE AO SHOU LD HAVE PROPERLY ENQUIRED ABOUT THESE INCRIMINATING MATERIALS VIS - - VIS THE ASSESSEE AND SHOULD HAVE CONFRONTED AND ACCEPTED EXPLANATION OF THE ASSESSEE REGARDING THESE INCRIMINATING MATERIAL FOUND AGAINST THE ASSESSEE. 13. THAT, THESE EXERCISE WERE NOT C OMPLIED BY THE AO THAT IT IS ALSO IN RECORD THAT THE ASSESSEE HAS BROUGHT IN HUGE AMOUNT OF BOGUS PURCHASES IN THE NAME OF CERTAIN ENTITIES WHICH HAD BEEN FOUND TO BE INDULGING IN PROVIDING BOGUS ACCOMMODATION ENTRIES. 14. THAT, THE AO HAS GOT THE HUGE MA CHINERY IN THE FORM OF INCOME TAX DEPARTMENT TO CARRY OUT NECESSARY INQUIRY AND EXAMINATION INTO THE NATURE OF PURCHASES DONE BY THE ASSESSEE AND THIS WAS NOT CONDUCTED BY THE AO WHICH IN EFFECT SURELY PROVES TO BE PREJUDICIAL TO THE INTEREST OF THE REVENU E. IT IS ALSO SETTLED POSITION OF LAW THAT WHILE EXERCISING QUASI JUDICIAL POWER A REVENUE OFFICER CANNOT BE ONLY A BLINKER AND IGNORE THE INCRIMINATING MATERIAL. HE IS NOT SIMPLY ADJUDICATOR BUT HE ALSO ACTS AS AN INVESTIGATOR. 5 15. THAT, IN THE GIVEN FACT S AND CIRCUMSTANCES WE UPHOLD THE ORDER OF THE LD. PR. CIT AND WE ARRIVED AT OUR CONSIDERED VIEW THAT THE LD. PR. CIT WAS CORRECT IN EXERCISING HIS STATUTORY JURISDICTION UNDER SECTION 263 OF THE ACT, THEREFORE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 16 . IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT . SD/ - SD/ - (B.P. JAIN) ( PARTHA SAR A THI CHAUDHURY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23/11/2016 AG CO PY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT(A), THE DR