Deepak Bajaj, Ludhiana V. DCIT, Ludhiana

ITA 1244/CHANDI/2010

• Counselvise Citation: 124421514 RSA 2010
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-11-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 02-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Reopening of assessment; Unexplained cash credit; Invalid notice; Opportunity of being heard; Peak credit; Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1244/CHD/2010 ASSESSMENT YEAR: 2001-02 SHRI DEEPAK BAJAJ, VS THE DCIT, LUDHIANA CIRCLE VI, LUDHIANA PAN NO. AACHD 0029 G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL GOEL RESPONDENT BY : SMT. JAI SHREE SHARMA DATE OF HEARING : 02.11.2011 DATE OF PRONOUNCEMENT : 03.11.2011 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-II, LUDHIANA DATED 16.8.2010 RELATING TO ASS ESSMENT YEAR 2001-02. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT QUASHING THE ASSESSMEN T / RE-ASSESSMENT ORDER PASSED BY LD. ASSESSING OFFICER FOR LACK OF REASONS TO BELIEVE AS STATUTORILY REQUIRED FOR VALID REOPENING U/S 148 OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT QUASHING THE ASSESSMEN T / RE-ASSESSMENT ORDER PASSED BY LD. ASSESSING OFFICER FOR 2 LACK OF VALID SANCTION U/S 151 OF THE ACT AS REQUIR ED FOR REOPENING U/S 148 OF THE ACT. 3. THAT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT DELETING THE ADDITION OF RS. 1,50,000/- SAME BEING AGAINST THE PROVISIONS OF THE ACT AND TOTALLY UNTENABLE AT LAW, AS ALSO THE ORDER OF LD. CIT(A) IS TOTALLY PERVERSE AND MECHANICALLY PASSED. 3. FIRSTLY, WE WILL DISPOSE OF GROUND NOS. 1 & 2 OF THE APPEAL BECAUSE THEY PERTAIN TO THE LEGAL ISSUE. 4. IN THIS CASE, ASSESSMENT WAS REOPENED U/S 147 / 148 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') ON THE GROUND TH AT AN INFORMATION WAS RECEIVED FROM DDI (INV), NEW DELHI THROUGH CIT THAT CERTAIN PERSONS AND COMPANIES OF LUDHIANA HAVE RECEIVED ACCOMMODATION E NTRIES FROM DELHI BASED PERSONS AND COMPANIES. DURING INVESTIGATION, IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED BOGUS ACCOMMODATION ENTRIES F OR A SUM OF RS. 1,50,000/- ON 14.5.2010. IN THAT VIEW OF THE MATT ER, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 27.3.20 08. THIS NOTICE WAS SERVED UPON ON 28.3.2008. COPY OF REASONS RECORDED BY THE ASSESSING OFFICER WAS SUPPLIED TO THE ASSESSEE ON 16.4.2008. IN RESPONSE TO THIS NOTICE, ASSESSEE FILED LETTER ON 16.4.2008 STATING THEREIN THAT RETURN ALREADY FILED VIDE RECEIPT NO. 502565 DATED 30.7.20 01 IN WARD-II(10) MAY BE TREATED AS HAVING FILED IN RESPONSE TO NOTICE U/ S 148. THE ASSESSING OFFICER OBSERVED THAT AS PER COMPUTERIZED DATA AVAI LABLE WITH THE DEPARTMENT, NO RETURN WAS FILED OR AVAILABLE. CO PY OF REASONS RECORDED BY THE ASSESSING OFFICER WAS SUPPLIED TO THE ASSESS EE. IN RESPONSE TO THIS, THE ASSESSEE FILED SOME OBJECTIONS REGARDING REOPENING OF THE CASE U/S 147 OF THE ACT. THESE OBJECTIONS WERE CONSIDER ED AND WERE REJECTED 3 BY PASSING SPEAKING ORDER U/S 147 OF THE ACT ON 19. 12.2008. SUBSEQUENTLY, NOTICE U/S 143(2) DATED 19.12.2008 WA S ISSUED TO THE ASSESSEE. HOWEVER, THERE WAS NO COMPLIANCE TO THIS NOTICE. THE ASSESSING OFFICER ALSO OBSERVED THAT A DETAILED REP ORT FROM THE INVESTIGATION WING WAS RECEIVED ON 16.6.2006. THE EXTRACT OF THIS REPORT REGARDING MODUS OPERANDI IS REPRODUCED BY THE ASSES SING OFFICER AT PAGES 2 & 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFIC ER OBSERVED THAT THE ASSESSEE AS PER HIS SUBMISSIONS MADE VIDE LETTER DA TED 5.12.2008 CLAIMED THAT A DD NO. 279325 DATED 14.5.2000 WAS NOT RECEIV ED FROM MUKESH GUPTA BUT FROM SHRI RAJAN JASSAL AS LOAN AS PER PHO TOCOPY OF THE AGREEMENT DATED 14.5.2000. THE ASSESSEE ALSO FILE D PAN, COPY OF SAVING ACCOUNTS, COPY OF ITR AND COPY OF THE STATEMENT OF AFFAIRS AS ON 31.3.1999 OF SHRI RAJAN JASSAL. THE ASSESSING OFF ICER REJECTED THE ABOVE EXPLANATION OF THE ASSESSEE STATING THAT COPY OF TH E STATEMENT OF AFFAIRS IS FILED FOR THE ASSESSMENT YEAR 1999-2000 WHEREAS THE YEAR UNDER CONSIDERATION IS 2001-02. THE ASSESSING OFFICER O BSERVED THAT PERUSAL OF BANK ACCOUNT SHOWED THAT THE ACCOUNT BELONG TO SHRI RAJAN JASSAL AND NOT SHRI MUKESH GUPTA ACCOUNT NO. 8701. FURTHER, THE B ANK ACCOUNT GIVEN IS OF 8702 AND IN THIS ACCOUNT DD ISSUED IS FOR RS. 1, 50,450/- BEARING CHEQUE NO. 843039. THE ASSESSING OFFICER HAS OBSER VED THAT AS PER INFORMATION RECEIVED FROM CORPORATION BANK, PASHIM VIHAR, NEW DELHI THREE DDS WERE ISSUED AGAINST CHEQUE NO. 900630. THESE THREE DDS BEARS NUMBERS WHICH ARE AS UNDER:- AMOUNT D.D.NO. (1) NIRMAL BAJAJ RS.1,50,000/- 279373 (2) DEEPAK BAJAJ RS. 1,50,000/- 279374 (3)DEEPAK BAJAJ (HUF) RS. 1,50,000/- 279375 4 5. FROM THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT DD NO. 279375 WAS ISSUED FROM ACCOUNT OF SHRI RAJAN JASSAL AND THE ASSESSEE HAS FRAUDULENTLY FILED LOAN AGREEMENT OF SHRI RAJAN JAS SAL AND HIS BANK ACCOUNT. HE FURTHER OBSERVED THAT COPY OF THE ITR HAS ALSO BEEN FILED FOR THE ASSESSMENT YEAR 1999-2000 BUT THE YEAR UNDER CO NSIDERATION IS 2001- 02. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES , THE ASSESSING OFFICER OBSERVED THAT THE WHOLE ARRANGEMENT OF PRESENTING D OCUMENTS I.E. COPY OF LOAN AGREEMENT, COPY OF ITR AND COPY OF STATEMENT O F AFFAIRS AS ON 31.3.1999 WHICH WAS NOT RELEVANT IN WHICH NO LOAN E NTRY HAS BEEN SHOWN, WAS A PART OF WELL PLANNED SCHEME. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT SHRI RAJAN JASSAL IS NOT ANY OTHER PERSON BUT CLOSELY RELATED TO SHIR MUKESH GUPTA WHO IS THE MA IN ACCUSED FOUND FOR PROVIDING ACCOMMODATION ENTRY BY DIT (INV.) WING, N EW DELHI. ACCORDING TO ASSESSING OFFICER IT IS COLORFUL DEVIC E AND THERE IS A CAMOUFLAGE IN THE TRANSACTIONS TO EVADE TAX. THE A SSESSING OFFICER HAS ALSO OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE SHRI RAJAN JASSAL FOR EXAMINATION BUT COUNSEL OF THE ASSESSEE STATED HIS INABILITY TO PRO DUCE SHRI RAJAN JASSAL AS THE ASSESSEE WAS OUT OF STATION. ACCORDING TO ASSES SING OFFICER, MERE FURNISHING OF CONFIRMATORY LETTER, PAN, COPY OF ITR WHICH ARE NOT RELEVANT WOULD NOT ESTABLISH THE GENUINENESS OF CAS H CREDITS. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE STATEM ENT OF SHRI RAJAN JASSAL DOES NOT SHOW THAT HE HAS GIVEN ANY LOAN TO SHRI DEEPAK BAJAJ (HUF) EVEN THAT RELATES TO ASSESSMENT YEAR 1999-200 0. CONSEQUENTLY, THE AMOUNT OF RS. 1,50,000/- WAS ADDED IN THE HANDS OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 5 6. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. THAT THE ORDER OF LD. ASSESSING OFFICER IS BAD IN L AW ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE . 2. THAT LD. ASSESSING OFFICER HAS ERRED IN LAW AND FAC TS OF THE CASE IN NOT DISPOSING OFF ALL THE OBJECTIONS RAISED BY THE ASSESSEE AS PER LAW LAID DOWN BY HON'BLE APEX COURT IN CASE GKN DRIVESHAFTS (INDIA) LTD V ITO (2003) 259 ITR 19, IGNORING THE ISSUES RAISED IN OBJECTIONS TO ISSUE OF NOTICE U/S 148 AND AS SUCH THE INITIATION OF ASSESSMENT PROCEEDINGS WITHO UT DISPOSING OFF ALL THE OBJECTIONS IS INVALID. 3. THAT THE ASSESSMENT ORDER ON THE BASIS OF INVALID NOTICE AND INVALID ASSESSMENT PROCEEDINGS IS ILLEGA L AND VOID. THEREFORE, IT IS BOUND TO BE SET ASIDE. 4. THAT ASSESSMENT FRAMED WITHOUT FOLLOWING THE LAW LA ID BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF HOUSING DEVELOPMENT FINANCE CORP LTD V DCIT & ANR (2007) 208 CTR (BOM), IS ILLEGAL AND VOID. THEREFORE, IT I S BOUND TO BE SET ASIDE. 5. THAT THE ASSESSMENT HAS BEEN FRAMED WITHOUT FOLLOWING SETTLED PRINCIPLE OF LAW AS LAID DOWN IN THE CASE OF KALWA DEVADATTAM V UOI (1963) 49 ITR 165, 174 (SC), CIT V DURGA PRASAD MORE (1971) 82 ITR 540 (SC) AND CIT V DAULATRAM RAWATMULL (1973) 87 ITR 349, 360-1 (SC)W LAYING DOWN THAT WHEN THE DEPARTMENT SEEKS TO ALLEGE THAT ANY ENTRY TAKEN BY THE ASSESSEE IS ACCOMMODATION ENTRY, DEPARTMENT HAS TO PROVE THE SAME BY LAYING POSITIVE, COGENT, SPECIFIC AND RELIABLE EVIDENCE ABOUT IT. THEREFORE, IT IS BOUND TO BE SET ASIDE. 6 6. THAT THE ASSESSMENT HAVING BEEN FRAMED WITHOUT PROVIDING THE ASSESSEE WITH OPPORTUNITY TO CROSS EXAMINE MUKESH GUPTA, IGNORING THE ASSESSEES REQUEST IN THIS REGARD, IS BOUND TO BE SET ASIDE 7. THAT THE LD. ASSESSING OFFICER HAS ERRED IN LAW AND FACTS OF THE CASE BY NOT ALLOWING CREDIT FOR ADVANC E TAX ALREADY PAID AND BY CHARGING INTEREST U/S 234A AND EXCESSIVE INTEREST U/S 234B. 7. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE OBSERVING AS UNDER:- 9 . I HAVE CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 VIDE WHIC H THE APPELLANT HAS TO FURNISH ANY RETURN OF INCOME WITH 30 DAYS FROM THE DATE OF RECEIPT OF NOTICE. INSTEAD O F FILING RETURN THE APPELLANT REPLIED THAT THE RETURN ALREAD Y FILED BE TREATED AS HAVING BEEN FILED IN RESPONSE TO THE NOTICE. THE CASE WAS RE-OPENED AFTER RECEIVING THE INFORMAT ION. I AM IN AGREEMENT WITH THE OBSERVATIONS OF THE ASSE SSING OFFICER THAT THE APPELLANT HAS FAILED TO COMPLY WIT H THE PROVISIONS OF SECTION 148. AS THE APPELLANT HAS F AILED TO FURNISH THE SOURCES OF PEAK CREDITS IN HIS BANK ACCOUNT, THEREFORE, ADDITION OF RS. 1,50,000/- IS SUSTAINABLE. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AGAINST THE ABOVE ORDER OF CIT(A). 9. AT THE VERY OUTSET, SHRI KAPIL GOEL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAS NOT CONSIDERED AN D DECIDED GROUND NOS. 3, 4, 5 & 6 OF THE APPEAL. SHRI KAPIL GOEL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT VIDE GROUND NO.3, THE ASSESSEE HAS C HALLENGED THE VALIDITY 7 OF REOPENING OF ASSESSMENT U/S 147 /148 OF THE ACT . SHRI KAPIL GOEL, LD. COUNSEL FOR THE ASSESSEE ALSO INVITED OUR ATTENTION TO THE WRITTEN SUBMISSIONS DATED 27.4.2010 FILED BEFORE THE CIT( A) WHICH ARE AVAILABLE AT PAGES 1 TO 11 OF ASSESSEES PAPER BOOK. THE CI T(A) HAS NOT TAKEN INTO CONSIDERATION THE WRITTEN SUBMISSIONS WHILE DECIDIN G THE APPEAL OF THE ASSESSEE. SHRI KAPIL GOEL, LD. COUNSEL FOR THE AS SESSEE ALSO SUBMITTED THAT THE ORDER OF THE CIT(A) IS PERFUNCTORY, NON-SP EAKING AND ARBITRARILY PASSED IN A HURRIED MANNER. HE, THEREFORE, SUBMITT ED THAT THE ORDER OF CIT(A) MAY BE SET ASIDE IN TOTO AND THE MATTER BE R EMANDED TO CIT(A) WITH A DIRECTION TO DECIDE ALL THE GROUNDS OF APPEA L AND ANY OTHER LEGAL GROUND WHICH MAY BE RAISED BY THE ASSESSEE IN THE C OURSE OF APPELLATE PROCEEDINGS AFRESH IN ACCORDANCE WITH LAW. 10. SMT. JAI SHREE SHARMA, LD. DR STRONGLY OBJECTED TO THE ABOVE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND SUBSTANCE I N THE ABOVE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. WE FI ND THAT THE CIT(A) HAS NOT CONSIDERED AND DECIDED GROUND NOS. 3 TO 6 OF TH E APPEAL. FURTHERMORE, THE DETAILED WRITTEN SUBMISSIONS DATED 27.4.2010 FILED BY THE ASSESSEE BEFORE CIT(A) HAVE NOT BEEN TAKEN INTO CONSIDERATION. IN FACT, THE CIT(A) HAS NOT COMMENTED UPON THE WRITTEN SUBMISSIONS SUBMITTED BY THE ASSESSEE. WE ALSO OBSERVE THAT TH E ORDER PASSED BY CIT(A) IS NON-SPEAKING AND HENCE NOT TENABLE IN LAW . THE CIT(A) HAS OBSERVED THAT I AM IN AGREEMENT WITH THE OBSERVATIO NS OF THE ASSESSING OFFICER THAT THE APPELLANT HAS FAILED TO COMPLY WIT H THE PROVISIONS OF SECTION 148. IN OUR CONSIDERED VIEW, THE ABOVE OBS ERVATION OF THE CIT(A) 8 IS UNWARRANTED PARTICULARLY WHEN HE HAS NOT PIN-POI NTED AS TO HOW THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SE CTION 148 OF THE ACT. THE CIT(A) HAS ALSO OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH THE SOURCES OF PEAK CREDITS IN HIS BANK ACCOUNT, THEREF ORE, ADDITION OF RS. 1,50,000/- IS ALSO SUSTAINABLE. THIS OBSERVATION OF THE CIT(A) IS ALSO OUT OF CONTEXT. THUS, CONSIDERING THE ENTIRE FACTS AN D CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ORDER OF CIT(A) DESERVES TO BE SET ASIDE IN TOTO AND WE HOLD ACCORDINGLY AND REMAN D THE MATTER TO THE FILE OF CIT(A) WITH THE DIRECTION THAT THE CIT(A) WILL D ECIDE ALL THE ISSUES AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE A ND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . WE ALS O DIRECT THE CIT(A) TO DECIDE THE APPEAL PREFERABLY WITHIN THREE MONTHS FR OM THE DATE OF RECEIPT OF ORDER. 12. SINCE WE HAVE SET ASIDE THE ORDER OF CIT(A) IN TOTO, THEREFORE, WE DO NOT FIND IT NECESSARY TO GIVE COMMENTS ON GROUND NO.3 OF THE APPEAL. 13. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF NOVEMBER, 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 3 RD NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR 9