Shri Satnam Singh, Ludhiana V. DCIT, Ludhiana

ITA 144/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9066 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 11-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGENDRA MITTALDR
• Keywords: Reason to believe
• Section: 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO.144/CHD/2016 ASSESSMENT YEAR : 2008-09 SHRI SATNAM SINGH, VS THE DCIT, B-XX-3152, GURDEV NAGAR, CIRCLE-VI, LUDHIANA. LUDHIANA. PAN: ACFPS2754L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI YOGENDRA MITTAL,DR DATE OF HEARING : 21.09.2016 DATE OF PRONOUNCEMENT : 26.09.2016 O R D E R THIS APPEAL BY ASSESSEES HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-3 LUDHIANA DATED 30.12.2015 FOR ASSESSMENT YEAR 2008-09, CHALLENGING THE ORDERS OF AUTHORITIES BELOW IN RE-OPENING THE ASSESSMENT UNDER SECTION 147/148 OF THE INCOME TAX ACT AND ADDITION OF RS. 25,73,900/-. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FILED THE RETURN OF INCOME DECLARING INCOME OF RS. 19,44,200/- WHICH WAS PROCESSED UNDER SECTION 143(1 ) OF THE ACT. SUBSEQUENTLY THE INFORMATION WAS RECEI VED FROM DCIT, CENTRAL CIRCLE-I LUDHIANA VIDE LETTER DA TED 30.09.2011 THAT DURING SEARCH OPERATION UNDER SECTI ON 2 132(1) OF THE INCOME TAX ACT CONDUCTED ON 21.02.200 8 AT THE RESIDENCE OF SHRI SURESH KHANNA AND SHRI RUPINDER DEEP SINGH, DIRECTORS OF M/S BASERA REALTO RS PVT. LTD. AND ALSO OF OTHER PERSONS, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 148 OF THE ACT AND MADE ADDITION OF RS. 25,73,900/- ON THE BASIS OF PHOTO COPY OF UNSIGNED AGREEMENT FOUND DURING THE COURSE OF SEARCH AND TRANSFERRED TO THE ASSESSING OFFICER. 3. THE ASSESSEE CHALLENGED THE RE-OPENING OF THE ASSESSMENT AND ADDITION OF RS. 25,73,900/- BEFORE L D. CIT(APPEALS). IT WAS SUBMITTED THAT RE-OPENING AND ADDITION HAVE BEEN MADE ON ALLEGED UNSIGNED AGREEME NT WHICH WAS WITH THE ASSESSING OFFICER. IT IS ONLY A DRAFT IN THE NAME OF SELLER/PURCHASER AND EVEN WITNESSES HAVE NOT SIGNED THE AGREEMENT, THEREFORE, IT CANNOT BE R ELIED UPON IN EVIDENCE. THE PROPERY IN QUESTION NO. B-21 - 1074/274/I, INDUSTRIAL AREA-B MEASURING 577 SQ.YDS. WAS PURCHASED BY SHRI BHAGVEER SINGH S/O SHRI SATNA M SINGH FOR RS. 36 LACS VIDE REGISTERED SALE DEED DAT ED 21.05.2008. HE IS EXISTING ASSESSEE AND ENTIRE SAL E CONSIDERATION INCLUDING REGISTRATION EXPENSES HAVE BEEN GIVEN BY ASSESSEE ON BEHALF OF HIS SON TO THE SELLE R. IT WAS, THEREFORE, SUBMITTED THAT PHOTO COPY OF UNSIGN ED AGREEMENT IS NOT VALID EVIDENCE AND IS ILLEGAL AND CANNOT BE READ IN EVIDENCE. 3 4. THE LD. CIT(APPEALS) FOUND THAT RETURN WAS EARLI ER PROCESSED UNDER SECTION 143(1) OF THE ACT, THEREFOR E, RELYING UPON DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500 AND THAT ASSESSEE HAS NOT MADE SUBMISSIONS FOR RE- OPENING OF THE ASSESSMENT, CONFIRMED RE-OPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT. THE L D. CIT(APPEALS) ALSO CONFIRMED THE ADDITION ON MERIT. THE LD. CIT(APPEALS) NOTED THAT THE PROPERTY MENTIONED IN THE SEIZED DOCUMENT AND CONTENTS THEREOF WERE FOUND CORRECT AND TRUE AS THE PROPERTY WAS PURCHASED BY S ON OF THE ASSESSEE AND ENTIRE CONSIDERATION HAVE BEEN PAID BY THE ASSESSEE. THE DETAILS OF PROPERTY AND SOME CHEQUES FOUND TALLIED WITH THE SALE DEED AND THE AGREEMENT FOUND DURING THE COURSE OF SEARCH. THE APPEAL OF THE ASSESSEE WAS, ACCORDINGLY, DISMISSED. 5. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 O F THE ACT BY RECORDING THE FOLLOWING REASONS, COPY OF WHICH IS FILED AT PAGE 1 OF THE PAPER BOOK : 1. NAME & ADDRESS OF THE ASSESSEE : SHRI SATNAM SING H S/O SHRI.RANJIT SINGH,B-20/3152, GURDEV NAGAR, LUDHIANA. 2. PERMANENT ACCOUNT NO. : ACFPS2754L 3. STATUS : 01(INDIVIDUAL) 4. ASSESSMENT YEAR : 2008-09 5. DATE : 09.11.2011 4 REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 FOR TH E BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT RETURN DECLARING' INCOME OF RS. 19,44,200/- WAS FILED BY THE ASSESSEE ON 29.09.2008 AND THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 ON 22.03.2010. AS PER INFORMATION WITH THE DEPARTMENT, SH. SATNAM SING H S/O SH. RANJIT SINGH R/O B-20-3152, GURDEV NAGAR, LUDHI ANA PURCHASED PROPERTY NO. B-21-1074/274/1, INDUSTRIAL AREA - B,L UDHIANA MEASURING 577 SQUARE YARDS FROM SH. GURINDERJIT SINGH S/O SH. SURINDER SINGH R/O F-L/5, SOUTH CITY, LUDHIANA (1/3 SHARE), SH. RUPINDERJIT SINGH S/O SURINDER SINGH R/O MARAJ AVEN UE, ONTARIO, N-8- B, 3-X-3, (1/3 SHARE) AND SH. PARMINDERJIT SINGH S/ O SH. SURINDER SINGH R/O 42-B, SARABHA NAGAR, LUDHIANA (1/3 SHARE) , @ RS. 10,700/- PER SQUARE YARD. AS PER AGREEMENT THE ASSES SEE PAID RS. 25,00,000/- TO SELLERS AS BIANA FOR THE SAID TRANSA CTION DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YE AR 2008-09. AS PER AGREEMENT THE BALANCE AMOUNT WAS TO BE PAID AT THE TIME OF REGISTRATION OF THE SAID- PROPERTY, WHICH WAS FIXED TO BE REGISTERED ON OR BEFORE 31.12.2007. THE SOURCE OF INVESTMENT IN TH E SAID PROPERTY INCLUDING BIANA OF RS. 25,00,000/- REMAINED UNEXPLAI NED. THEREFORE, I HAVE REASONS TO BELIEVE THAT THE INCOM E OF RS. 61,73,900/- INCLUDING ADVANCE MONEY OF RS. 25,00,00 0/- HAS ESCAPED ASSESSMENT IN VIEW OF SECTION 147 OF THE INCOME TAX ACT, 1961 WHICH IS REQUIRED TO BE ASSESSED FOR THE ASSESSMENT YEAR 200 8-09. ISSUE NOTICE U/S 1 48 OF THE INCOME TAX ACT, 1961. SD/- (GURMEET SINGH SOHAL) INCOME TAX OFFICER WARD-VI(3), LUDHIANA. 6. IT IS WELL SETTLED LAW THAT VALIDITY OF THE RE-O PENING OF ASSESSMENT SHALL HAVE TO BE DECIDED ON THE BASIS OF THE REASONS RECORDED BY THE ASSESSING OFFICER FOR R E- OPENING OF THE ASSESSMENT. IT IS ADMITTED FACT THA T DURING THE COURSE OF SEARCH CONDUCTED ON 21.02.2008 AT 5 THE RESIDENTIAL PREMISES OF DIRECTORS OF M/S BASERA REALTORS PVT. LTD. AND OTHERS, PHOTO COPY OF THE UNSIGNED AGREEMENT BETWEEN SHRI GURINDERJIT SINGH E TC. AND SHRI SATNAM SINGH (ASSESSEE) WAS FOUND, COPY OF WHICH IS FILED AT PAGE 4-5 OF THE PAPER BOOK AND TRANSLATED COPY AT PAGE 6 OF THE PAPER BOOK. IT IS , THEREFORE, ADMITTED THAT THE SEIZED DOCUMENT IS PHO TO COPY OF UNSIGNED AGREEMENT, THEREFORE, NEITHER THE SELLER NOR THE PURCHASER AND WITNESSES HAVE SIGNED THIS AGREEMENT. NO PERSONS FROM WHOSE POSSESSION THIS UNSIGNED AGREEMENT WAS FOUND HAVE BEEN EXAMINED BY THE INCOME TAX AUTHORITIES. THE AGREEMENT IS NOT F OUND FROM THE EXCLUSIVE POSSESSION OF THE ASSESSEE. HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS KULWANT RAI 291 ITR 36 HELD AS UNDER : HELD, DISMISSING THE APPEAL, (I) THAT, ADMITTEDLY, THE ASSESSEE HAD NOT SIGNED THE AGREEMENT IN QUESTION A ND SINCE HE HAD NOT SIGNED THE AGREEMENT, NO LIABILITY C OULD BE ATTRIBUTED QUA THAT THAT AGREEMENT TOWARDS HIM SINCE HE WAS NOT A PARTY TO THE AGREEMENT TILL HE HAD SIGNED THE AGREEMENT. THE MERE FACT THAT THIS AGREEMENT WAS FOU ND IN THE POSSESSION OF THE ASSESSEE DID NOT LEAD ANYWHER E. THUS, THE ADDITION OF RS. 17,00,892 MADE BY THE ASSESSING OFFICER BY WAY OF HALF SHARE OF THE ASSESSEE IN THE EARNEST MON EY WAS BASED ON SURMISES AND GUESS WORK ONLY AND WAS LIABLE TO BE DELETED. 7. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPO N DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE 6 CASE OF SMT. DARSHAN KAUR VS THE AMRITSAR PRIMARY COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LTD. (201 0) (2) PLR 289 IN WHICH IT WAS HELD THAT PHOTO COPY OF MORTGAGE DEED BROUGHT ON RECORD IS NO PROOF OF EXEC UTION OF DOCUMENT. PHOTO COPY OF DOCUMENT IS NEITHER A PRIMARY NOR SECONDARY EVIDENCE. THIS UNSIGNED AGREEMENT HAVE BEEN FORWARDED BY DCIT, CENTRAL CIRCLE-I LUDHIANA TO THE ASSESSING OFFICER ON THE B ASIS OF WHICH THE AFORESAID REASONS HAVE BEEN RECORDED B Y ASSESSING OFFICER FOR RE-OPENING OF THE ASSESSMENT. SINCE THE SEIZED DOCUMENT IS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE AND ADMITTEDLY THE ASSES SEE HAD NOT SIGNED THE AGREEMENT IN QUESTION AND SINCE HE HAD NOT SIGNED THE AGREEMENT, NO LIABILITY COULD BE ATTRIBUTED QUA THAT AGREEMENT TOWARDS HIM, SINCE HE WAS NOT A PARTY TO THE AGREEMENT TILL HE HAD SIGNED THE AGREEMENT. THE DECISIONS IN THE CASES OF KULWANT R AI (SUPRA) AND SMT. DARSHAN KAUR (SUPRA) SQUARELY APPL Y TO THE FACT OF THE CASE SINCE PHOTO COPY OF UNSIGNE D AGREEMENT WAS FOUND, THEREFORE, IT CANNOT BE READ I N EVIDENCE AGAINST THE ASSESSEE IT IS NOT A VALID DO CUMENT TO BE CONSIDERED ADVERSE IN NATURE AGAINST THE ASSE SSEE, THEREFORE, THERE IS NO REASON TO BELIEVE FOR THE AS SESSING OFFICER TO HAVE ANY INFORMATION THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT. 7(I) THE AUTHORITIES BELOW HAVE BEEN HOLDING THAT THE AGREEMENT IN QUESTION IS ADMISSIBLE AGAINST THE 7 ASSESSEE BECAUSE TWO OF THE CHEQUE AMOUNTS MENTIONE D IN THE AGREEMENT TALLY WITH THE SALE CONSIDERATION MENTIONED IN THE SALE DEED OF SHRI BHAGVEER SINGH D ATED 21.05.2008. THE DATE OF SALE DEED I.E. 21.05.2008 WOULD NOT FALL IN ASSESSMENT YEAR UNDER APPEAL I.E. 2008- 09 AND THERE IS NO EVIDENCE OR MATERIAL AVAILABLE ON R ECORD TO PROVE GENUINENESS OF THE PHOTO COPY OF THE UNSIG NED COPY OF THE AGREEMENT. THEREFORE, MERELY BECAUSE S OME CHEQUE AMOUNT IS SAME IN BOTH THESE DOCUMENTS, WOUL D NOT PROVE THAT ADDITION COULD BE MADE AGAINST THE ASSESSEE ON THE BASIS OF PHOTO COPY OF UNSIGNED AGREEMENT. THEREFORE, THERE WAS NO REASON FOR THE AUTHORITIES BELOW TO HOLD THAT THE CONTENTS GIVEN I N THE PHOTO COPY OF UNSIGNED AGREEMENT ARE CORRECT. SINC E ON THE BASIS OF UNSIGNED AGREEMENT, NO LIABILITY COULD BE ATTACHED TO THE ASSESSEE AND IT IS NOT ADMISSIBLE I N EVIDENCE AGAINST THE ASSESSEE, THEREFORE, THERE IS NO VALID REASON RECORDED BY THE ASSESSING OFFICER FOR THE PURPOSE OF RE-OPENING OF THE ASSESSMENT IN THE MATT ER. THERE IS ALSO NO BASIS FOR MAKING ANY ADDITION ON M ERIT ON THE BASIS OF PHOTO COPY OF UNSIGNED AGREEMENT. 8. IN THIS VIEW OF THE MATTER, I AM OF THE VIEW THA T ASSESSING OFFICER WAS WHOLLY UNJUSTIFIED IN RE-OPEN ING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT AND ALSO IN MAKING ADDITION OF RS. 25,73,900/-. I, THE REFORE, SET ASIDE AND QUASH RE-OPENING OF THE ASSESSMENT UN DER 8 SECTION 147/148 OF THE ACT AND ALSO DELETE THE ADDI TION OF RS. 25,73,900/-. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 26 TH SEPTEMBER, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD