Smt. Chander Kanta, Samana V. ITO, Patiala

ITA 1255/CHANDI/2010

• Counselvise Citation: 125521514 RSA 2010
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 03-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: D K GOYAL
• Keywords: Accommodation entries; Reason to believe; Borrowed satisfaction
• Section: 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1255/CHD/2010 ASSESSMENT YEAR: 2002-03 SMT.CHANDER KANTA V ITO, WARD 3, C/O RAJINDER PAL PREM PAL, PATIALA. NEAR POST OFFICE, SAMANA (PUNJAB). PAN: AFFPK-2966M & ITA NO. 1257/CHD/2010 ASSESSMENT YEAR: 2002-03 SMT.SHAMA RANI, V ITO, WARD 3, C/O RAJINDER PAL PREM PAL, PATIALA. NEAR POST OFFICE, SAMANA (PUNJAB). PAN: ABNPD-1389F (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI D.K.GOYAL DEPARTMENT BY: SMT.JAISHREE SHARMA DATE OF HEARING : 10.10.2011 DATE OF PRONOUNCEMENT : 19.10.2011 ORDER PER MEHAR SINGH, AM BOTH THE PRESENT APPEALS FILED BY THE ASSESSEES ARE DIRECTED AGAINST THE ORDER DATED 24.08.2010 OF THE LD. CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). THE GROUNDS OF APPEAL ARE ALSO SIMILAR IN BOTH THESE AP PEALS, HENCE 2 SUCH GROUNDS OF APPEAL AS RAISED IN THE CASE OF SMT .CHANDER KANTA ARE LISTED HEREUNDER : 1. BECAUSE THE ORDERS ARE UNDER CHALLENGE ON FACTS AND LAW FOR UPHOLDING THE INITIATION AND CONCLUSION OF THE RE-ASSESSMENT PROCEEDINGS AT AN AMOUNT OF RS.6,88,608/- MAKING AN ADDITION FOR RS.5,50,000/- WHEREBY THE JURISDICTIONAL ASPECT IS UNDER CHALLENG E. 2. BECAUSE THE REASONS TO BELIEVE AND REASONS TO SUSPECT ARE DISCERNIBLE FROM EACH OTHER ALONGWITH THE CHALLENGE CONTAINING BREACH TO THE PRINCIPLES OF LA W REGARDING CROSS EXAMINATION OPPORTUNITY, MERITS OF THE ADDITIONS AND THE RETURN OF THE PREVIOUS YEARS BEIN G THE EXISTING MATERIAL ON RECORD. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE , THE QUANTUM OF ADDITION FOR RS.5,50,000/- IS BEING CHALLENGED ON FACTS AND LAW. 4. BECAUSE THE TELESCOPING OF THE FUNDS AVAILABLE A S PER THE RETURN OF INCOME AVAILABLE ON RECORD IS BEI NG PRAYED FOR VACATION OF THE ADDITION TO THAT EXTENT. 2. BOTH AR AND DR STATED THAT THESE CASES ARE C OVERED AGAINST THE ASSESSEE. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. AR FILED A COPY OF THE ORDER OF THE TRIBUNAL SMC BENCH CHA NDIGARH IN ITA NO.1261/CHD/2010 (ASSESSMENT YEAR 2002-03) DATE D 12.01.2011 IN THE CASE OF JASBIR SINGH (HUF) V ITO AND OTHERS. THE RELEVANT PORTION OF THE IMPUGNED ORDER IS AS UN DER FOR READY REFERENCE : 12. I HAVE PERUSED THE ASSESSMENT ORDER, THE APPEL LATE ORDER PASSED BY THE LD. CIT(A), THE MATERIALS AVAIL ABLE ON RECORD AND ALSO CAREFULLY CONSIDERED THE SUBMISSION S MADE 3 ON BEHALF OF BOTH THE PARTIES INCLUDING ALL THE AUT HORITIES REFERRED TO BY THEM. THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 139 WAS PROCESSED U/S 143(1) AND NOT SUBJECTED TO SCRUTINY ASSESSMENT. THE IMPUGNED NOTI CE HAS BEEN ISSUED BY THE ASSESSING OFFICER WITHIN SIX YEA RS FROM THE END OF THE ASSESSMENT YEAR UNDER APPEAL. THEREF ORE, THE VALIDITY OF IMPUGNED NOTICE HAS TO BE CONSIDERED IN THE LIGHT OF THE MAIN PROVISIONS OF SECTION 147 AND NOT IN TH E LIGHT OF THE PROVISO TO SEC 147. IN ORDER TO VALIDLY INITIAT E THE PROCEEDINGS UNDER THE MAIN PROVISIONS OF SECTION 14 7, THE AO MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEAB LE TO INCOME-TAX HAS ESCAPED ASSESSMENT. HE IS NOT REQUIR ED TO SATISFY ANY OTHER CONDITION. IF THE AO FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT, IT CONFERS JURISDICTION UPON HIM TO INVOKE THE MAIN PROVISIONS OF SECTION 147. 13. AS HELD IN SEVERAL JUDGMENTS, NOTABLY, ACIT V. RAJESH JHAVERI STOCK BROKERS P. LTD., 291 ITR 500 (SC) REF ERRED TO BY THE LEARNED CIT(A), THE EXPRESSION REASON TO BE LIEVE IN SECTION 147 WOULD MEAN CAUSE OR JUSTIFICATION. IF T HE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE CAN BE SAID TO HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TA X HAD ESCAPED ASSESSMENT. IT HAS BEEN FURTHER HELD IN THE SAID JUDGMENT THAT AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION TO BE CONSIDERED IS WHETHER THERE WAS RELE VANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FO RMED THE REQUISITE BELIEF CONTEMPLATED BY THE MAIN PROVI SIONS OF SECTION 147. 14. TURNING TO THE FACTS OF THE CASE UNDER APPEAL, IT IS SEEN THAT THE AO HAS INDEED RECEIVED REFERENCE FROM THE DGIT(INV.) THROUGH OFFICIAL CHANNELS TO THE EFFECT THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRY. IT CANNO T THEREFORE BE SAID THAT THE AO HAD NO MATERIAL IN HI S POSSESSION TO FORM THE REQUISITE BELIEF. IT CAN NEI THER BE SAID 4 NOR IS THERE ANY MATERIAL BEFORE ME TO SAY THAT THE INFORMATION RECEIVED BY THE AO FROM THE DIRECTOR GE NERAL (INVESTIGATION) THROUGH OFFICIAL CHANNELS WAS VAGUE OR IRRELEVANT. THE INFORMATION RECEIVED BY THE AO FROM HIM WAS NOT ONLY RELEVANT BUT ALSO SPECIFIC AND DEFINITE. T HERE WAS THUS A LIVE LINK BETWEEN THE MATERIAL IN THE POSSES SION OF THE AO AND THE FORMATION OF HIS BELIEF IN TERMS OF THE MAIN PROVISIONS OF SECTION 147. WHAT WAS REQUIRED AT THE STAGE OF FORMATION OF BELIEF WAS PRIMA FACIE SATISFACTION ON THE PART OF THE AO THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT AND NOT THE ESTABLISHED FACT OF ESCAPEME NT OF INCOME. IN THE BACKGROUND OF FACTS AVAILABLE ON REC ORD, I HOLD THAT THE AO HAS RIGHTLY FORMED A PRIMA FACIE B ELIEF IN THE MATTER UNDER APPEAL THAT INCOME CHARGEABLE TO T AX HAS ESCAPED ASSESSMENT AND THUS RIGHTLY ASSUMED THE JURISDICTION U/S 147/148. 15. THE MERE FACT THAT THE AO HAS SIMPLY REFERRED T O THE INFORMATION AVAILABLE ON RECORD FOR FORMATION OF TH E BELIEF IN THE REASONS RECORDED BY HIM INSTEAD OF REFERRING SP ECIFICALLY TO THE LETTER RECEIVED BY HIM FROM THE DIRECTOR GEN ERAL (INVESTIGATION), WOULD MAKE NO DIFFERENCE TO THE VA LIDITY OF INITIATION OF PROCEEDINGS U/S 147/148. IT IS NOT TH E CASE OF THE ASSESSEE THAT THE ASSESSING OFFICER DID NOT HAV E THE LETTER OF DGIT(INV.) IN HIS POSSESSION AT THE TIME OF FORMATION OF BELIEF. SECONDLY, THE FORMATION OF BEL IEF BY THE ASSESSING OFFICER ON THE BASIS OF SPECIFIC INFORMAT ION CONTAINED IN THE LETTER RECEIVED BY HIM FROM THE DG IT(INV.) CANNOT BE SAID TO BE BASED ON BORROWED SATISFACTION ; RATHER, IT IS A CASE WHERE THE AO HAS FORMED THE REQUISITE BELIEF ON THE BASIS OF DEFINITE, RELIABLE AND RELEVANT INFORM ATION RECEIVED BY HIM FROM THE DIRECTOR-GENERAL (INVESTIG ATION) THROUGH OFFICIAL CHANNELS. IN THIS VIEW OF THE MATT ER, IT CANNOT BE SAID THAT THE PROCEEDINGS INITIATED BY TH E ASSESSING OFFICER ARE VITIATED, AS CONTENDED ON BEH ALF OF THE ASSESSEE, BY NON-APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. FOR SIMILAR REASONS, IT ALSO CAN NOT BE SAID 5 THAT THE ASSESSING OFFICER HAS ACTED ON BORROWED SATISFACTION. IT IS, THEREFORE, NEITHER THE CASE OF NON APPLICATION OF MIND ON THE PART OF THE AO NOR HIS A CTING UNDER THE BORROWED SATISFACTION OF SOMEONE ELSE. BO TH THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE ARE, THE REFORE, REJECTED. 16. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS RECE IVED A SUM OF RS. 2.50 LAKHS THROUGH ACCOMMODATION ENTRY W HICH IS DULY DEPOSITED IN HIS BANK ACCOUNT. IT WAS, THEREFO RE, FOR THE ASSESSEE TO EXPLAIN NOT ONLY THE NATURE AND SOURCE OF THE IMPUGNED SUM BUT ALSO THE GENUINENESS OF THE ENTIRE TRANSACTION. IT IS WELL ESTABLISHED THAT THE ONUS O F PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN REC EIVED BY THE ASSESSEE IS ON HIM. IF HE DISPUTES LIABILITY FOR TAX, IT IS FOR HIM TO SHOW EITHER THAT THE RECEIPT WAS NOT HIS INCOME OR THAT IF IT WAS, IT WAS EXEMPT FROM TAXATION UNDER T HE PROVISIONS OF THE I-T ACT. IN THE ABSENCE OF SUCH P ROOF, THE AO IS ENTITLED TO TREAT IT AS TAXABLE RECEIPT. IN T HE PRESENT CASE, THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS THAT LAY UPON IT. HE HAS NEITHER ESTABLISHED THE CREDITWORTH INESS OF THE CREDITOR NOR THE NATURE AND GENUINENESS OF THE TRANSACTION. HE HAS NOT PRODUCED THE CREDITOR FOR C ROSS- EXAMINATION. HE HAD AMPLE OPPORTUNITY TO DO SO FIRS TLY BEFORE THE AO AND THEREAFTER BEFORE THE CIT(A) BUT HE CHOSE NOT TO DO SO. IN FACT, NO ARGUMENT WAS ADDRESSED BE FORE THE CIT(A). NO ARGUMENT IN THIS BEHALF HAS BEEN ADDRESS ED BEFORE THIS TRIBUNAL ALSO. THE CIRCUMSTANCES UNDER WHICH THE ACCOMMODATION ENTRY HAS BEEN OBTAINED AND THE FAILU RE OF THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TR ANSACTION UNDER WHICH THE ENTRY HAS BEEN OBTAINED ARE, IN MY VIEW, SUFFICIENT NOT ONLY FOR INITIATION OF PROCEEDINGS U /S 147/148 BUT ALSO ORDER FOR MAKING AND SUSTAINING THE IMPUGN ED ADDITION. 17. THE PRINCIPLES EMERGING FROM THE AUTHORITIES RE FERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE HAVE BEE N DULY 6 CONSIDERED. THEY HOWEVER DO NOT APPLY ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 18. IN VIEW OF THE FOREGOING, THE APPEAL FILED BY J ASBIR SINGH, HUF IS DISMISSED. 4. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE FAC TS OF THE PRESENT APPEALS AND THE DECISION OF THE TRIBUNAL TH E FACTS OF BOTH THE CASES ARE IDENTICAL IN NATURE AND CONTENTS . THEREFORE, THE FACTS IN THE CASE OF SMT.CHANDER KANTA (ITA 1255/CHD/2010), BRIEFLY STATED ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 03.06.2002 FOR THE ASSESSMENT Y EAR 2002- 03 DECLARING INCOME OF RS.1,38,608/-. THE SAME WAS PROCESSED ON 16.09.2002 U/S 143(1) OF THE ACT. INFORMATION WA S RECEIVED FROM DIRECTOR GENERAL OF INCOME-TAX (INV), PANCHKUL A VIDE LETTER NO.DGIT/INV/CHD/2005-06/4270 DATED 9.3.2006. NOTIC E U/S 148 OF THE ACT WAS ISSUED ON 26.03.2009 AND SERVED ON THE ASSESSEE ON 28.03.2009. IN RESPONSE TO NOTICE U/S 148 OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON 23.04.2 009, DECLARING INCOME AT RS.1,38,608. THE CIT(A), UPHEL D THE INVOCATION OF PROVISIONS OF SECTION 147 R.W.S. 148 OF THE ACT AND UPHELD THE ADDITION MADE BY THE AO ON ACCOUNT OF ACCOMMODATION ENTRIES, ON MERIT, AS THE ASSESSEE NE ITHER FILED ANY PLAUSIBLE EXPLANATION NOR OPPOSED SUCH ADDITION . THESE FACTS ARE COVERED BY THE DECISION OF THE ITAT REPRO DUCED ABOVE. 5. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS B EFORE THE TRIBUNAL, BOTH LD. AR FOR DR WERE FAIR ENOUGH T O STATE THAT THE ISSUES AS RAISED IN THE GROUNDS OF APPEAL ARE C OVERED AGAINST THE ASSESSEE. LD. AR FILED PHOTO COPY OF THE SMC 7 DECISION OF THE CHANDIGARH BENCH IN ITA NO.1261/CHD /2010 DATED 12.01.2011 (SUPRA). IN VIEW OF THE DECISION OF THE TRIBUNAL IN SIMILAR CIRCUMSTANCES, THE ISSUE IS DEC IDED AGAINST THE ASSESSEE. 6. IN APPEAL NO.1257/CHD/2010 IN THE CASE OF SMT.SH AMA RANI V ITO, SIMILAR FACT SITUATION AND ISSUES ARE I NVOLVED, THEREFORE, THIS APPEAL IS ALSO DISMISSED FOLLOWING THE RATIO OF THE DECISION IN THE SMC BENCH DECISION OF CHANDIGARH BE NCH (SUPRA). 7. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH OCT.,2011 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH