SMT. ANJANA SHARMA, JAIPUR V. ITO, WARD-2(2), JAIPUR

ITA 1214/JPR/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7656 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Invalid notice; Opportunity of being heard; Additional evidence; Reassessment proceedings; Borrowed satisfaction
• Section: 147; 68; 148; 143(2)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “B”, JAIPUR Jh lanhi x®lkÃa] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1214/JP/2019 fu/kZkj.k o"kZ@Assessment Year :2013-14 Smt. Anjana Sharma, M-115-B, Plot No. F-115, Mahesh Colony, J.P. Underpass, Tonk Road, Jaipur. cuke Vs. I.T.O., Ward 2(2), Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BGDPS 5144 R vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Ashok Kumar Gupta (Adv) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 22/09/2021 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25/11/2021 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of the ld. CIT(A)-1, Jaipur dated 19/08/2019 for the A.Y. 2013-14, wherein the assessee has raised following grounds of appeal: “1. Not a valid reason for re-opening the assessment and not self satisfaction of CIT on record; The Ld. CIT(A) has grossly erred in law & facts in confirming the assessment order of the Ld. AO in issuing notice u/s 148 on the basis of information provided by DIT(I and CI)Jaipur and without verifying the correctness of the information and therefore reassessment proceedings are absolutely bad in law and without jurisdiction and further Ld. AO not recorded his satisfaction. 2. Notice u/s 148 not served in due time; ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 2 The Ld. CIT(A) has grossly erred in law & facts in confirming the re- assessment proceedings without appreciating the facts that notice u/s 148 could not have been served upon assessee. 3. Addition made of Rs. 9,00,000/- by treating it as unexplained source. The Ld. CIT(A) has grossly erred in law & facts in confirming the addition up to Rs. 9,00,000/- by deleting only Rs. 2,00,000/- in place of Rs. 11,00,000/- treating as unexplained source while fully explained by the assessee appellant with full evidences before authorities below. 4. Addition made without providing show cause notice; The Ld. CIT(A) has grossly erred in law & facts in confirming the addition as made by Ld. AO without substantiating the ground that addition is made without giving the show cause notice. 5. Not providing proper and sufficient opportunity of being heard; The Ld. CIT(A) has grossly erred in law & facts in confirming the addition without appreciating the facts that addition was made, without providing proper and sufficient opportunity of being heard. 7. The Ld. CIT(A) has grossly erred in law & facts in confirming the provision u/s 115BBE of Income Tax Act 1961. 7. The Ld. CIT(A) has grossly erred in law & facts in confirming the assessment order of Ld. AO in which he wrongly stated that no one was attended on 09.11.2017 while it can be verified by the records that AR was attended and discussed the case with the learned AO and demanded some more time and the same is given by learned AO. 8. The Ld. CIT(A) has grossly erred in law and facts in rejecting the affidavits as provided by the assesse and her spouse in support of investment made in flat of Rs. 11,00,000/-. 9. That the appellant reserves his right to add, amend or alter and withdraw any grounds of appeal on or before the date of hearing of appeal.” The assessee has also taken additional grounds of appeal as under: 1. Time Barred Notice u/s 143(2); ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 3 The learned AO has erred in law and facts in issuing notice u/s 143(2) on 11.10.2017 whereas Income Tax Return in compliance of Notice u/s 148 issued on 26.09.2016 was filed on 17.11.2016 and therefore Notice under section 143(2) can be issued on or before 30.09.2017, hence impugned notice is time barred, without jurisdiction and illegal. May kindly refer Hotel blue moon (SC) 2. Re-assessment is based on borrowed satisfaction; That Ld. AO has grossly erred in law and facts in issuing notice u/s 148 without having personal satisfaction in respect of escaped Income. Satisfaction of DDIT(I&CI), Jaipur is called as borrowed satisfaction. CIT Vs. Shree Rajasthan Syntex Ltd. (2009) 313 ITR 231 (Raj) SLP dismissed; (2009) 313 ITR (St 27 (SC) Sun Pharmaceutical Industries Ltd. Vs. Dy. CIT (2016) 287 CTR (Del) 621.” 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. At the outset, the ld AR appearing on behalf of the assessee has stated at bar the additional grounds taken by the assessee are legal grounds and necessary for deciding the appeals on merits. The ld. DR has raised objection about admission of additional grounds at this stage. Considering the totality of facts and circumstances and in the interest of justice, the additional grounds being the legal grounds, we admit the same for adjudication. 4. The brief facts of the case are that a report had received from the DIT(I&CI), Jaipur that during the year under consideration, the assessee ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 4 had purchased a flat at F-115B, Mahesh Colony, Tonk Road, Jaipur for a consideration of Rs. 16,07,295/- including registration charges. The assessee had paid consideration by cheque of Rs. 4,00,000/- and cash of Rs. 11,00,000/- On being asked to explain the source of the purchase consideration, the assessee had not explained the source of payment for purchase of plot. Thereafter, necessary notices were issued and finally the assessment was completed U/s 147/143(3) of the Income Tax Act, 1961 (in short the Act) determining total income of the assessee at Rs. 13,24,200/- by making addition U/s 68 of the Act. 5. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of the parties and material placed on record, upheld the action taken by the A.O. 6. Against the order passed by the ld. CIT(A), the assessee has preferred the present appeal on the grounds mentioned above. 7. Firstly we take legal grounds of appeal being grounds No. 1 and 2 and additional grounds of appeal No. 1 and 2 respectively. In this regard, the ld. AR has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the ld. CIT(A). 8. On the other hand, the ld. DR has vehemently supported the orders of the lower authorities. ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 5 9. We have considered the rival contentions and carefully perused the material placed on record. From perusal of the record, we observed that in this case notice U/s 148 of the Act has been issued on 26/09/2016 and in response thereof, the assessee firstly has filed a letter dated 17/11/2016 enclosing the copy of IT Return with computation filed originally on dated 12/07/2013. However, the A.O. had asked the assesse through letter dated 18/09/2017 to file the return in compliance to notice U/s 148 of the Act. Thereafter the assessee has filed return of income on 09/10/2017. Thereafter, the A.O. had issued notice U/s 143(2) of the Act on 11/10/2017, thus, in our view, notice U/s 143(2) of the Act issued timely. 10. From perusal of the record, we observed that the ld. CIT(A) has dealt with the issue in para 3.1.2 of his order and the same is reproduced below: “3.1.2 Determination: (i) From the facts of the case, it is seen that the appellant has purchased a flat situated at F-115B, Mahesh Colony, Tonk Road, Jaipur for a consideration of Rs. 15,00,000/- and registration charges of Rs. 1,07,295/- was paid. The AO on the basis of information received from DIT (I&CI) reopened the case of the appellant by issuing notice u/s 148 of the Act. As the source of investment regarding purchase of the property was not disclosed, the AO reached to the conclusion that the income charging to tax has escaped assessment. The AO has reopened the case after recording the reasons and following due ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 6 procedure of law. The relevant portion of the assessment order is reproduced as below: "In case of assessee report has received from the DIT(18,0), Jaipur that during the year under consideration the assessee had purchased a Fiat at F-1 158, Mahesh colony, Tonk Road, Jaipur for a consideration of Rs. 16,07,295/-including registration charges. The assessee has paid consideration by cheque of Rs. 4,00,000 and cash Rs. 11,00,000/-. The assessee was asked to explain the source of the above purchase consideration. The assessee stated that she managed the aforesaid funds for the transaction from her own sources and loan from her husband. However, no proof in this regard has been submitted. The source of the payment for purchase of plot is not explained. Therefore, notice u/s 148 was issued on 26.09.2016 after recording reasons and taking prior approval from the Addl. Commissioner of Income Tax, Range-2, Jaipur. Further, notice u/s 142(1) alongwith query letter was issued on 11.08.2017. The case was fixed for hearing on 22.08.2017. The assessee has requested for adjournment on 22.08.2017 and 29.08.2017. The case adjourned for 01.09.2017. Vide letter dated 18.09.2017 the assessee was advised to file the return in compliance to notice issued u/s 148. The assessee has filed her return of income in compliance to the notice u/s 148 on 09.10.2017 declaring total income of Rs. 2,24,200/- and furnished a copy of same in this office on 11.10.2017. Notice u/s 143(2) was issued on 11.10.2017. In compliance to the notices Shri Ashok Kumar Gupta, CA and AR of the assessee attended the proceedings and filed written reply. The case is discussed with him." (ii) During the appellate proceedings, the appellant raised the ground that notice u/s 148 of the Act has been issued on borrowed satisfaction and notice has not been served on the appellant. (iii) I have duly considered the submissions of the appellant, assessment order and the material placed on record. The reopening was done after properly recording the reasons and following the due procedure of law. While examining the reasons for reopening, it is important to see the nature of information rather than the source of information. Similar issue ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 7 has been decided by the various judicial authorities in following cases: * In the case of M/s Amit Polyprints (P.) Ltd. Vs DCIT 94 taxmann.com 393 [2018] (Gujarat), it was held by the Hon'ble High Court of Gujarat that: "Where reassessment proceedings were initiated on basis of information received from Investigation wing that assessee had received certain amount from shell companies working as an accommodation entry provider, reassessment could not be held unjustified" * In the case of M/s Jayant Security & Finance Ltd 91 taxmann.com 181 [2018] (Gujarat), it was held by the Hon'ble High Court of Gujarat that: “Initiation of reassessment proceedings on basis of information received from Investigation wing that assessee had received certain amount as a loan from a company, working as entry operator and earning bogus funds to provide advances to various person, was justified'' * In the case of Rakesh Gupta Vs CIT 93 taxmann.com 271 [2018] (Punjab & Haryana), it was held by the Hon'ble High Court of Punjab & Haryana that: "Where Assessing Officer received information from Principle Director of Income Tax (Investigation) that assessee had received bogus loss from his broker by client code modification, reassessment on basis of said information was justified" * In the case of R.K. Malhotra ITO Vs Kasturbhai Lalbhai [1977] 109 ITR 537 (SC), it was held by the Hon'ble Apex Court that: "The intimation which the Income-tax Officer received from the audit department would constitute "information" within the meaning of section 147(b)" ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 8 (iv) Therefore, the Hon'ble Courts have held that the reassessment made on the basis of information received is within the scope of section 147 of the Act. The appellant is also challenging the sufficiency of the reasons recorded which cannot be entertained. (v) It may be mentioned that the Courts cannot look into the sufficiency of the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. Reliance is placed on the decision of Hon' ble Apex Court in the case of Raymond Woollen Mills Ltd. Vs ITO [1999] 236 ITR 34 (SC), wherein it was held by their lordship that: "In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. Vie are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open . to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed." (vi) The appellant has also raised the ground that notice was not served on him. It was submitted that notice was issued on old address which has been left by the appellant. It is noted from the record that the appellant never informed the AO regarding change of address. The appellant filed the return of income in compliance to notice issued u/s 148 of the Act and also participated in the assessment proceedings. This itself indicates that the notice was received by the appellant. The appellant never raised this issued before the AO during the assessment proceedings. As the ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 9 appellant has participated in the proceedings, no prejudice has been caused to the appellant and therefore, this ground cannot be entertained and dismissed. (vii) To sum up, it is held that the AO was justified in reopening the case of the appellant for the year under consideration u/s 147 of the Act and was having reason to believe that income had escaped assessment. It is also held that notice was received by the appellant and he has availed full opportunity to represent his case before the AO. Hence, the technical grounds raised by the appellant regarding reopening and service of notice are dismissed. 11. We observed from perusal of the record that the AO on the basis of information received from DIT (I&CI) reopened the case of the assessee by issuing notice u/s 148 of the Act. As the source of investment regarding purchase of the property was not disclosed, the AO reached to the conclusion that the income charging to tax has escaped assessment. The AO has reopened the case after recording the reasons and following due procedure of law. During the appellate proceedings, the assessee raised the ground that notice u/s 148 of the Act has been issued on borrowed satisfaction and notice has not been served on the assessee, therefore, in our view the reopening was done after properly recording the reasons and following the due procedure of law. While examining the reasons for reopening, it is important to see ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 10 the nature of information rather than the source of information. The assessee has raised the issue that notice was not served on him. It was submitted that notice was issued on old address which has been left by the assessee. We observed from the record that the assessee never informed the AO regarding change of address. The assessee filed the return of income in compliance to notice issued u/s 148 of the Act and also participated in the assessment proceedings. This itself indicates that the notice was received by the assessee. Therefore, considering the totality of the facts and circumstances, we are of the view that the ld. CIT(A) and passed a speaking order discussing all the facts and circumstances of the case, therefore, we do not find any reason to interfere into or deviate from the findings so recorded by the ld. CIT(A). Hence, we uphold the proceedings with regard to initiation of proceeding U/s 147 of the Act. Accordingly, grounds No. 1 and 2 and additional grounds No. 1 and 2 are dismissed. 12. Grounds No. 3 to 8 of the appeal raised by the assessee are interrelated and interconnected and relates to confirming the addition of Rs. 9,00,000/- out of Rs. 11,00,000/- made by the AO on account of unexplained cash credit U/s 68 of the Act for purchase of property. ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 11 13. Having considered the rival contentions and carefully perused the material placed on record. As per the facts of the present case, we observed that the assessee is a regular income tax assessee and filing her return of income. The A.O. had issued notice U/s 148 of the Act on the reason that assessee had purchased a Flat at 115B, Mahesh colony, Tonk Road Jaipur for a consideration of Rs. 16,07,295 (including registration charges). The assessee had paid consideration by Cheque of Rs. 4,00,000/- and by cash of Rs. 11,00,000/-. On being asked the source for purchase consideration, the assessee stated that the same has been paid from her own source and loan from her husband. During the course of hearing, the assessee also furnished cash flow statement which is at Page No. 2 and 3 of assessment order. The assessee also explained the source of Rs. 4,00,000/- paid from her joint bank account with husband, Rs. 8,50,000/- received from her husband and Rs. 3,57,295/- from own source and loan received from various persons. However, the A.O. has not satisfied with the above explanation of the assessee and stated that assessee has taken loan of Rs. 8,50,000/- from her Husband Shri Naveen Sharma and other persons, the date of receiving is not mentioned in such chart. The assessee’s husband had shown opening cash balances, however no evidences of such opening cash balance are produced. Hence the AO asked the assessee that the cash flow chart is not ascertained on what date cash was received by assessee ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 12 from her husband and it could not be ascertained that on which date cash was available with her husband, no date of receipts of cash and payment in cash flow statement of her Husband’s cash flow was mentioned. Since, as per of the assessment order, the assessee had not filed any reply, therefore, addition of Rs. 11,00,000/- U/s 68 of the Act was made by the A.O. on account of cash paid for purchase of property and he also invoked Section 115BBE of the Act. 14. We observed from the facts of the case that in the first appeal, the assesse had filed detailed WS reproduced at page 16 to 20 of the CIT’s order and WS at Page 8 to 12 filed before CIT (A), the Ld. AR had also filed additional evidences, which were sent by the Ld. CIT(A) to the AO for his comments. Thereafter the AO had called the assessee for additional evidences examination proceedings where the assessee had also filed further details as required by the AO. Thereafter the AO send his remand report to the Ld. CIT (A) dated 05/07/2019 which are available at PB 184- 185, In response to the said remand report, the assessee filed his comments which are available at PB 186-193. On this report, ld. CIT(A) recorded his observation that the assessee submitted copy of agreement dated 28/08/2018 where property was agreed to be purchased for Rs. 15,00,000/- by Shri Naveen Sharma husband of the assessee wherein Rs. 4,00,000/- were paid by Cheque and Rs. 5,00,00/- by cash on 15/10/2012 ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 13 thus in this way till this agreement Rs. 9,00,000/- were paid and Rs. 6,00,000/- were pending. Subsequently, this Property was finally purchased through registered deed by the assessee on 07/11/2012. In the registered documents, earlier payment of Rs. 9,00,000/- were recorded and further payment of Rs. 6,00,000/- paid in cash on 07/11/2012 was also recorded. As per above two documents Rs. 11,00,000/- were paid in cash, Rs. 5,00,000/- on 15/10/2012 and Rs. 6,00,000/- on 07/11/2012. For explaining the source of cash payment of Rs. 11,00,000/-, the assessee filed cash flow statement of self and her husband Shri Naveen Sharma where the assessee has shown Rs. 2,50,000/- paid by Smt. Anjana Sharma on 07/11/2012 while Rs. 5,00,000/- and Rs. 3,50,000/- were paid by Shri Naveen Sharma on 15/10/2012 and 07/11/2012 respectively. In the revised cash flow statement filed during the appellate proceedings we noticed that opening cash balance of Rs. 5,91,156 has been disclosed and a large number of loans below Rs. 20,000/- has been shown in the above cash flow statement. In the cash flow of Shri Naveen Sharma (the husband of the assessee) again the opening cash of Rs. 5,35,192/- has been disclosed besides number of cash loans below 20,000/-. 15. After looking and considering all the above facts and details, we have observed and found that from starting the assessee has explained the source of cash Rs. 11,00,000/- from her husband Shri Naveen Sharma of ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 14 Rs. 8,50,000/- and Rs. 2,50,000/- from her own. As we have noted that the assessee and her husband are regular income tax assessee and filing their return of income since AY 2005-06. As per record available before us and as per returns of the assessee, the assessee has shown income of Rs. 12.30 lacs and if it is presumed that a female can easily save 50% of her income and 50% can be treated for drawings. According to that she can have source to the extent of Rs. 6.15 lacs thus the source of amount shown by the assessee of purchase of property can be treated explained. Further the husband of the assessee Shri Naveen Sharma who has given cash of Rs. 8.50 Lacs to the assessee (wife) for purchasing of the property in question. As Naveen Sharma since starting accepting and confirming that he had given cash of Rs. 8.50 lacs to her wife for purchasing of the property even before the issuance of notice U/s 148 of the Act. During the enquiry U/s 133(6) vide letter dated 14/08/2014, PB-35 to the ITO, Intelligence-II, Jaipur also filed the balance sheet of Naveen Sharma which is at page No. 37 of the paper book. Further the assessee has also filed copy of affidavits and their identifications (PB 112-144) of the persons from whom they have taken cash loans. Thus the assessee has fully explained the source of Rs. 11,00,000/- with the evidences filed before them and discharged the onus lay upon her. Thus, in our view, no additions can be made until and unless the evidences filed by the assessee were rebutted and discarded and by ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 15 bringing any contrary evidences and materials and no addition can be made on the basis of assumption/ presumptions and guess work. Further when the husband of the assessee from the starting has confirmed of giving cash of Rs. 8.50 lacs as he is a regular income tax assessee and all the data given by him were very well available before the AO. Therefore, on the basis of the documents, no addition could be made. If the A.O. was having any doubt regarding the source of cash of Rs. 8.50 lacs by the Shri Naveen Sharma (Husband of the assessee) he could have made the addition in his hands but not in the hands of the assessee. Thus, in view of the above discussion as well as material placed on record, we found merit in the contention of the ld. AR and hence we directed to delete the addition of Rs. 9,00,000/- sustained by the Ld. CIT (A). We order accordingly. 16. In the result, this appeal of the assessee is partly allowed. Order pronounced in the open court on 25 th November, 2021. Sd/- Sd/- ¼foØe flag ;kno½ ¼lanhi x®lkÃa½ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25/11/2021 *Ranjan vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Smt. Anjana Sharma, Jaipur. 2. izR;FkhZ@ The Respondent- The I.T.O., Ward 2(2), Jaipur. ITA 1214/JP/2019_ Smt. Anjana Sharma Vs ITO 16 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr¼vihy½@The CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1214/JP/2019) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar