Sukhwinder Singh & Sons (HUF), Lehragagga V. ITO, Ward, Sunam HQ, Sangrur

ITA 1205/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2949 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 10-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SAKET SINGLA
• Keywords: Accommodation entries; Reason to believe
• Section: 143(1); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, SMC, CHANDIGARH .. , BEFORE SHRI N.K.SAINI, VICE PRESIDENT ./ ITA NO. 1205/CHD/2018 / ASSESSMENT YEAR : 2003-04 SH. SUKHWINDER SINGH AND SONS (HUF), C/O NARINDER SINGHA AND ASSOCIATES, SINGLA ENCLAVE, CLUB ROAD, NEAR TELEPHONE EXCHANGE, SANGRUR VS. THE ITO, WARD 6 (4), MOHALI ./PAN NO: AAFHS3617E / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. SAKET SINGLA, ADVOCATE ' ! / REVENUE BY : SH. MANJIT SINGH, SR. DR # $ % /DATE OF HEARING : 06.03.2019 &'() % / DATE OF PRONOUNCEMENT : 06.03.2019 !'/ ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 18.6.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS), PATIA LA. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPE AL RELATES TO SUSTENANCE OF ADDITION OF RS. 2 LACS RECEIVED FROM SHRI SURAT SINGH S/O SHRI NIRANJAN SINGH MADE BY THE ASSESSING OFFICER B Y TREATING IT AS AN ACCOMMODATION ENTRY. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 14.7.2003 DECLARING AN INCOME OF RS. 1,26 ,310/- WHICH WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 ( IN SHORT 'THE ACT'). THE ASSESSING OFFICER RECEIVED AN INFORMATION FORM DIT (INV.), DELHI ITA NO. 1205-CHD-2018- SH. SUKHWINDER SINGH & SONS (HUF), LEHRAGAGA, SANG RUR 2 THAT THE ASSESSEE HAD RECEIVED AN ENTRY OF RS. 2 LA CS ON 3.12.2010 FROM M/S KANODIA AGENCY, BUT HE HAD NOT DISCLOSED THE SA ID AMOUNT IN HIS INCOME TAX RETURN. HE, THEREFORE, REOPENED THE ASSE SSMENT U/S 147 READ WITH SECTION 148 OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CREDITED RS. 2 LACS IN HIS CAPITAL ACC OUNT. HE ASKED THE ASSESSEE TO INTIMATE THE NATURE OF RECEIPTS AND AS TO WHY THE SAID AMOUNT BE NOT TAKEN AS HIS TAXABLE INCOME. IN REPL Y, THE ASSESSEE SUBMITTED THAT HE HAD RECEIVED RS. 2 LACS FROM SHRI SURAT SINGH S/O SHRI NIRANJAN SINGH R/O WZ-1528, RANI BAGH, NEW DEL HI THROUGH DD NO. 137408 ON 3.12.2010. THE ASSESSEE ALSO FURNISHE D THE COPY OF THE RETURN OF SHRI SURAT SINGH, HIS PAN ALLOTMENT LETTE R, COPY OF COMPUTATION OF WEALTH, COPY OF RATION CARD AND BANK STATEMENT FROM STATE BANK OF BIKANER AND JAIPUR WHEREIN RS. 2,00,4 00/- HAD BEEN WITHDRAWN BY CHEQUE ON 3.12.2002. THE ASSESSING OFF ICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE A ND MADE THE ADDITION OF RS. 2 LACS. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED AS UNDER:- IT IS A REPLY IN ADDITION TO REPLY ALREADY FILED ON 29/08/2011. THE ASSESSEE HAS APPLIED ON 15/12/2010 FOR THE SUPPLY OF COPY OF REASONS FOR ISSUE OF A NOTICE U/S 148. THEREAFTER REASONS WERE SUPPLIED BY THE ITO AN D OBJECTIONS TO THE REASONS WERE FILED. WITHIN A PERIOD OF 13 DAYS, ASSESSMENT ORDER W AS PASSED BY THE ITO ON 28/12/2010 WITHOUT CONSIDERING THE OBJECTIONS TO THE REASONS FILED BY THE ASSESSEE . IN THE OBJECTIONS FILED BY THE ASSESSEE IT WAS DEARLY STATED THAT THE ASSESSEE HAS NO RELATION WHATSOEVER WITH T HE FIRM M/S KANODIA AGENCIES OR MR. MAHESH GARG (MANAGING PARTNER) OF THIS FIRM ON THE STATEMENT OF ITA NO. 1205-CHD-2018- SH. SUKHWINDER SINGH & SONS (HUF), LEHRAGAGA, SANG RUR 3 WHICH NOTICE WAS ISSUED U/S 148. WHAT TO TALK OF DISPOSING OF OBJECTIONS BY PASSING A SPEAKING ORDER , A SIMPLE ORDER HAS NOT BEEN PASSED BY THE ITO TO REBU T THE OBJECTIONS FILED BY THE ASSESSEE. IN THE GKN DR IVE SHAFTS INDIA LTD. VS. ITO & OTHERS (2003) 179 CTR ( SC) II, THE HON'BLE SUPREME COURT HAS HELD THAT IF THE ASSESSEE DESIRES AND SEEKS FOR REASONS FOR RE-OPENI NG, THE A.O IS BOUND TO FURNISH THE REASONS WITHIN A REASONABLE TIME AND ON RECEIPT OF THE REASONS, THE ASSESSES IS ENTITLED TO FILE OBJECTIONS FOR ISSUANC E OF NOTICE AND THE A. O IS BOUND TO DISPOSE OF THE SAME BYPASSING A SPEAKING ORDER. THE ITO HAS NOT APPLIED HER MIND WHILE ISSUING A NO TICE U/S 148. WHILE ISSUING A NOTICE U/S 148, THE ITO MU ST HAVE REASON TO BELIEVE'. HERE THE ITO SOLELY BASED HER BELIEVE ON THE INFORMATION SUPPLIED BY DIRECTORATE OF INCOME TAX (INVESTIGATION WING)WITHOUT APPLYING HER MIND. THE HON'BLE SUPREME COURT IN THE CASE OF ASSISTANT CIT VS. DHARIYA CONSTRUCTION COMPANY (201 0) 236 CTR SC 226 HAS HELD THAT OPTION GIVEN BY THE DV O IS NOT PER SE INFORMATION FOR THE PURPOSE OF REOPEN ING ASSESSMENT ORDER U/S147. SOLELY RELYING UPON AND/OR ON THE BASIS OF THE INFORMATION IN THE FORM OF DVO'S R EPORT THE AO IS NOT JUSTIFIED IN REOPENING THE SCRUTINY ASSESSMENT U/S 143(3). THE SAME VIEW WAS ALSO TAKEN RECENTLY BY H.C. OF GUJARAT IN THE CASE OF AKSHAR INFRASTRUCTURE PVT LTD VS ITO (2017) 299 CTR 507 AN D H.C. OF CHATTISGARH IN THE CASE OF SMT. KAMLA OJHA VS. ITO & OTHERS (2017) 299 CTR 507. FROM THE FACTS STATED ABOVE IT IS CLEAR THAT THE ITO HAS PASSED HE R ORDER IN HASTE AND BEFORE THE TIME WAS OVER TO FINA LIZE THE SCRUTINY. 5. THE LD. CIT(A), HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND DISMISSED THE APPEAL BY OBSERVING AS UNDER:- THE LD. AR HAS CITED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS INDIA LTD VS. ITO; HOWEVER, FROM THE RECORDS AND THE ASSESSMENT ORDER IT IS CLEAR THAT THE COPY OF THE REASONS FOR REOPENING WERE PROVIDED TO THE APPELLAN T AND THE APPELLANT CLAIM ON THIS GROUND IS UNFOUNDED . THE OTHER SUBMISSION OF THE APPELLANT IS THAT THE L D AO HAS NOT APPLIED HER OWN MIND AND RELIED ONLY ON THE REPORT FROM THE INVESTIGATION WING; THE LD AR H AS ITA NO. 1205-CHD-2018- SH. SUKHWINDER SINGH & SONS (HUF), LEHRAGAGA, SANG RUR 4 ALSO CITED ASSISTANT CIT VS. DHARIYA CONSTRUCTION COMPANY (2010) 236 CTR SC 226ANDOTHER DECISIONS. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS AND THE CASE LAWS CITED, THE FINDINGS O F THE LD AO AND CONTEXTUALIZED THESE TO THE FACTS OF THE CASE. I FIND NO MERIT IN THE SUBMISSIONS OF THE LD AR ON THIS GROUND OF APPEAL. THE LD AO IN THE RECORDIN G THE REASONS HAS CLEARLY BROUGHT ON RECORD THE INFORMATION THAT WAS RECEIVED FROM THE INVESTIGATIO N WING REGARDING RECEIPT OF ADJUSTMENT ENTRIES GIVING DETAILS OF THE MODUS-OPERANDI OF THE ENTRY OPERATOR , THE DETAILS OF STATEMENTS RECORDED; THEIR LACK OF N ET- WORTH/ MEANS ETC. THEREAFTER THE LD. AO FURTHER HAS BROUGHT ON RECORD HOW THIS INFORMATION HAS LED TO T HE FORMATION OF THE REASON TO BELIEVE THAT THE APPELLA NT WHILE CREDITING THE RECEIPT TO HIS CAPITAL ACCOUNT HAS FAILED TO OFFER THE RECEIPT AS HIS INCOME THEREBY ESTABLISHING THAT INCOME HAS ESCAPED ASSESSMENT. TH E BELIEF IS CLEARLY OF THE LD AO AND IS IN LINE WITH WHATEVER A PRUDENT PERSON WOULD INFER FROM THE TRANSACTION. (COPY OF REASONS FOR INITIATING PROCEEDINGS U/S 148 ARE REPRODUCED AT ANNEXURE A). THEREFORE FIND NO MERIT IN THE SUBMISSION OF THE LD AR WITH REGARDS TO THE REOPENING U/S 148 R/W 147 OF THE ACT. APPEAL ON THIS GROUND OF APPEAL IS DISMISSED. 6. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE DREW MY ATTENTION TOWARDS PAGE NO. 22 OF THE ASSESS EES PAPER BOOK WHICH IS COPY OF THE REASONS RECORDED BY THE ASSESS ING OFFICER FOR REOPENING THE ASSESSMENT, WHICH READS AS UNDER:- AS PER LIST SUPPLIED BY THE DIRECTORATE SHRI SUKHVINDER KUMAR & SONS (HUF) I.E. THE ASSESSEE HAD ALSO RECEIVED AN ENTRY OF RS. 2 LAC FROM M/S KANODIA AGENCIES DURING THE F.Y. 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04. STATEMENT OF SHRI MAHESH GARG MANAGING PARTNER OF M/S KANODIA AGENCIES WAS RECORDED BY THE INVESTIGATION WING. SH. MAHESH GARG IN HIS STATEMENT ADMITTED THAT THE DRAFT GIVEN WERE ACCOMMODATION ENTRIES ONLY WHICH WERE GOT ISSUED AFTER RECEIVING CASH FROM THE BENEFICIARIES. THE ASSESSEE RECEIVED RS. 2,00,000/- DURING THE F.Y. 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04. ITA NO. 1205-CHD-2018- SH. SUKHWINDER SINGH & SONS (HUF), LEHRAGAGA, SANG RUR 5 THIS AMOUNT HAS BEEN CREDITED TO CAPITAL ACCOUNT ON 3.12.2002 WITH THE ABREVIATION DD NO. 137408. HOWEVER, THIS AMOUNT HAS NOT BEEN OFFERED FOR TAXATION BY THE ASSESSEE. THUS, IT WAS THE INCOME O F THE ASSESSEE WHICH WAS CREDITED TO THE CAPITAL ACCOUNT THROUGH ACCOMMODATION ENTRY. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E REASONS RECORDED FOR REOPENING OF THE ASSESSMENT BY THE ASSESSING OF FICER WERE THAT THE ASSESSEE RECEIVED AN ENTRY FROM M/S KANODIA AGENCY, HOWEVER, THE ASSESSEE HAD NOT RECEIVED ANY SUCH ENTRY RATHER THE AMOUNT OF RS. 2 LACS WAS RECEIVED FROM SHRI SURAT SINGH AND ALL TH E INFORMATIONS RELATING TO THE RECEIPT OF THE SAID AMOUNT WAS FURN ISHED BEFORE THE ASSESSING OFFICER. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUS TIFIED AND EVEN THE REOPENING WAS NOT VALID AS THE REASONS RECORDED WER E NOT IN EXISTENCE AS THE ASSESSEE HAD NOT RECEIVED ANY LOAN OR ENTRY FROM M/S KANODIA AGENCY. RELIANCE WAS PLACED ON THE JUDGEMENT OF TH E HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ATLAS CYCLES INDUSTRIES, [1989] 180 ITR 319 . 7. IN HER RIVAL SUBMISSIONS, THE SR. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSING OFFICER REOPENE D THE ASSESSMENT U/S 147 READ WITH SECTION 148 OF THE ACT BY RECORDING T HE REASONS THAT THE ASSESSEE HAD RECEIVED A SUM OF RS. 2 LACS FROM M/S KANODIA AGENCY WHICH IS EVIDENT FROM THE COPY OF THE REASONS RECO RDED PLACED AT PAGE ITA NO. 1205-CHD-2018- SH. SUKHWINDER SINGH & SONS (HUF), LEHRAGAGA, SANG RUR 6 NO.22 OF THE ASSESSEES PAPER BOOK. HOWEVER, THE S AID REASONS WERE IN NOT IN EXISTENCE AS THE ASSESSEE HAD NOT RECEIVED A NY LOAN OR ENTRY FROM M/S KANODIA AGENCY RATHER THE AMOUNT WAS RECEIVED F ROM SHRI SURAT SINGH AND THE ASSESSEE FURNISHED ALL THE RELEVANT D OCUMENTS RELATING TO THE RECEIPT OF LOAN OF RS. 2 LACS TO PROVE THE IDEN TITY, CREDITWORTHINESS OF SHRI SURAT SINGH AND GENUINENESS OF THE TRANSACT IONS. ON THE SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. ATLAS CYCLES LTD (SUPRA) HELD AS UNDER:- THAT THE TRIBUNAL WAS RIGHT IN CANCELLING THE REASSESSMENT AS BOTH THE GROUNDS ON WHICH THE REASSESSMENT NOTICE WAS ISSUED WERE NOT FOUND TO EXIST, AND THEREFORE, THE INCOMETAX OFFICER DID NOT GET JURISDICTION TO MAKE A REASSESSMENT. 9. IN THE PRESENT CASE ALSO, THE RE-ASSESSMENT NOT ICE WAS ISSUED ON THE GROUND WHICH WAS NOT FOUND TO EXIST, THEREFORE, THE ASSESSING OFFICER DID NOT GET THE JURISDICTION TO MAKE THE RE -ASSESSMENT. ACCORDINGLY THE SAME IS QUASHED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 06/03/2019) . SD/- ( .. / N.K. SAINI) / VICE PRESIDENT DATED : 06 .03.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE ITA NO. 1205-CHD-2018- SH. SUKHWINDER SINGH & SONS (HUF), LEHRAGAGA, SANG RUR 7 '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR