Sushil Gaur, New Delhi V. ITO, Ghaziabad

ITA 1500/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5094 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: CHANDRIMA CHAUDHURY
• Keywords: Principle of natural justice; Period of limitation; Time period of passing order; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147; 148; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 1500/DEL/2017 A.Y. : 2007-08 SUSHIL GAUR, C/O DR. RAVI GUPTA, ADVOCATE, E-6A, LGF, KAILASH COLONY, NEW DELHI 110 048 (PAN: AOZPG7675N) VS. ITO, WARD 2(3), GHAZIABAD AND AND AND AND I.T.A. NO. 1501/DEL/2017 A.Y. : 2007-08 SHELLY AGARWAL, C/O DR. RAVI GUPTA, ADVOCATE, E-6A, LGF, KAILASH COLONY, NEW DELHI 110 048 (PAN: AEFPA3529M) VS. ITO, WARD 2(3), GHAZIABAD (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. RAJESH JAIN, CA & MS. CHANDRIMA CHAUDHURY, ADV. DEPARTMENT BY : SH. T. VASANTHAN, SR. DR ORDER ORDER ORDER ORDER THESE ARE THE APPEALS FILED BY THE SEPARATE ASSESS ES AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A), GHAZIABAD BOTH DATED 23.12.2 016 AND PERTAINS TO ASSESSMENT YEAR 2007-08. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, THE SAME WERE HEARD TO GETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE, BY DEALING WITH ITA NO. 1500/DEL/2017 (AY 2007-08). 2 2. THE GROUNDS RAISED IN THE ASSESSEES APPEAL (ITA NO. 1500/DEL/2017) (AY 2007-08) READ AS UNDER:- 1. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING T HAT THE PROCEEDINGS INITIATED U/S. 147/ 148 ARE INVALID AND ILLEGAL AS THE REASONS RECORDED DO NOT REFLECT ANY TANGIBLE MATERI AL ON THE BASIS OF WHICH THE ASSESSING OFFICER COULD HAVE REASONS TO B ELIEVE THAT ANY INCOME HAS ESCAPED ASSESSMENT. . 2. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE PROCEEDINGS INITIATED U/ S 147/148 ARE INVALID AND IL LEGAL AS THE REASONS RECORDED DO NOT REFLECT ANY SATISFACTION OF THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME BUT ARE BASE D UPON BORROWED SATISFACTION OF THE INVESTIGATION WING OF T HE DEPARTMENT. 3. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE PROCEEDINGS COULD NOT BE AS ASSESSMENT COULD HAVE B EEN MADE ONLY UNDER SECTION 153C ON THE BASIS OF THE DOCUMENTS /IN FORMATION FOUND DURING THE COURSE OF A SEARCH. 4. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSMENT IS INVALID AND ILLEGAL AS IT HAS BEEN MA DE AFTER THE LIMITATION PERIOD. 5. THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT IT WAS THE BURDEN OF THE APPELLANT TO ESTABLISH THAT NO AMOUNT OF CAPITA TION FEES HAS BEEN PAID TO M/S. SANTOSH MEDICAL COLLEGE. 3 6. THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 25,50,000/- ON ACCOUNT OF ALLEGED P AYMENT TO M/S. SANTOSH MEDICAL COLLEGE. 7. THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT ME RELY BECAUSE THE APPELLANT HAS ATTENDED THE ASSESSMENT PROCEEDINGS I T CAN BE PRESUMED THAT THE INFORMATION ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE WAS CONFRONTED TO THE APPELLANT. 8. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSMENT IS INVALID AND ILLEGAL AS THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN COMPLETELY VIOLATED AND NO OPPORTUNITY OF CROS S EXAMINATION WAS PROVIDED TO THE APPELLANT. 9. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, I LLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF C ONTEMPORARY JURISPRUDENCE. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/ ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPE AL. 3. THE GROUNDS RAISED IN THE ASSESSEES APPEAL (ITA NO. 1501/DEL/2017) (AY 2007-08) READ AS UNDER:- 1. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING T HAT THE PROCEEDINGS INITIATED U/S. 147/ 148 ARE INVALID AND ILLEGAL AS THE REASONS RECORDED DO NOT REFLECT ANY TANGIBLE MATERI AL ON THE BASIS OF WHICH THE ASSESSING OFFICER COULD HAVE REASONS TO B ELIEVE THAT ANY INCOME HAS ESCAPED ASSESSMENT. . 4 2. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE PROCEEDINGS INITIATED U/ S 147/148 ARE INVALID AND IL LEGAL AS THE REASONS RECORDED DO NOT REFLECT ANY SATISFACTION OF THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME BUT ARE BASE D UPON BORROWED SATISFACTION OF THE INVESTIGATION WING OF T HE DEPARTMENT. 3. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE PROCEEDINGS COULD NOT BE AS ASSESSMENT COULD HAVE B EEN MADE ONLY UNDER SECTION 153C ON THE BASIS OF THE DOCUMENTS /IN FORMATION FOUND DURING THE COURSE OF A SEARCH. 4. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSMENT IS INVALID AND ILLEGAL AS IT HAS BEEN MA DE AFTER THE LIMITATION PERIOD. 5. THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT IT WAS THE BURDEN OF THE APPELLANT TO ESTABLISH THAT NO AMOUNT OF CAPITA TION FEES HAS BEEN PAID TO M/S. SANTOSH MEDICAL COLLEGE. 6. THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION OF RS. 25,50,000/- ON ACCOUNT OF ALLEGED P AYMENT TO M/S. SANTOSH MEDICAL COLLEGE. 7. THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT ME RELY BECAUSE THE APPELLANT HAS ATTENDED THE ASSESSMENT PROCEEDINGS I T CAN BE PRESUMED THAT THE INFORMATION ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE WAS CONFRONTED TO THE APPELLANT. 5 8. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSMENT IS INVALID AND ILLEGAL AS THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN COMPLETELY VIOLATED AND NO OPPORTUNITY OF CROS S EXAMINATION WAS PROVIDED TO THE APPELLANT. 9. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, I LLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF C ONTEMPORARY JURISPRUDENCE. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/ ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPE AL. 4. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE PROCEEDINGS U/S. 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT ) INITIATED BY THE AO BASED ON THE INFORMATION THAT ASSESSEE HAS INVESTED A SUM O F RS. 25,50,000/- TOWARDS ADMISSION TO MS ENT COURSE DURING THE ASSESSMENT YE AR 2007-08. THE ASSESSEE HAS FURNISHED RETURN OF INCOME IN RESPONSE TO NOTIC E U/S. 148 OF THE ACT DECLARING NIL INCOME. THE ASSESSEE WAS REQUIRED TO FURNISH THE SOURCE OF PAYMENT MADE TO MAHARAJA EDUCATION TRUST FOR THE ABOVE MENTIONED COU RSE. AFTER CONSIDERING THE REPLY OF THE ASSESEE, THE AO MADE AN ADDITION OF RS . 25,50,000/- BEING UNEXPLAINED CASH INVESTED IN PAYMENT OF FEE. THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 25,50,000/- VIDE ORDER DATED 11.03.20 15 PASSED U/S. 147/143(3) OF INCOME TAX ACT, 1961. AGGRIEVED WITH THE ASSESSME NT ORDER DATED 11.3.2015, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HI S IMPUGNED ORDER DATED 23.12.2016 HAS DISMISSED THE APPEAL OF THE ASSESSEE BY CONFIRMING THE ACTION OF THE AO. 6 5. AGGRIEVED WITH THE LD. CIT(A)S ORDER, ASSESSEE AP PEALED BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSE SSEE HAS FILED A PAPER BOOK CONTAINING PAGES 1 TO 22 IN WHICH THE ASSESSEES CO UNSEL HAS ATTACHED THE WRITTEN SUBMISSIONS; COPY OF REASONS RECORDED AND THE COP Y OF THE ORDER OF THE ITAT, NEW DELHI IN THE CASE OF RAJAT SHUBRA CHATTERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DATED 20.5.2016. HE CONTENDED THAT T HE ACTION TAKEN BY THE ASSESSING OFFICER UNDER SEC. 147 IS NOT TENABLE FOR THE SIMPLE REASON THAT PROVISIONS OF SEC. 153 C OF THE ACT ARE APPLICABLE IN THIS CAS E AND NOT THE PROVISIONS LAID DOWN UNDER SEC. 147 OF THE ACT. HE FURTHER SUBMITTED THAT IT IS AN ADMITTED POSITION OF THE FACT AS IT IS ALSO EVIDENT FROM THE ASSESSMENT ORDE R THAT THE ASSESSING OFFICER HAS INITIATED REASSESSMENT PROCEEDINGS IN THE PRESENT C ASE ON THE BASIS OF INFORMATION RECEIVED BASED ON THE MATERIAL FOUND DURING THE COU RSE OF SEARCH FROM THE PREMISES OF SANTOSH MEDICAL COLLEGE RUN BY MAHARAJA EDUCATIO N TRUST. THE LEARNED AR CONTENDED THAT PROVISIONS OF SEC. 153C PROVIDES THA T PERSONS RELATING TO WHOM SOME MATERIAL IS FOUND IN SEARCH OF SOME OTHER PERS ON SHOULD BE ASSESSED UNDER SEC. 153C OF THE ACT. THE PROVISIONS OF SECTION 153~C ARE NON-OBSTANTIVE PROVISIONS AND SPECIALLY EXCLUDES THE OPERATION OF SEC. 147 OF THE ACT, THEREFORE, THE ASSESSING OFFICER IN THE PRESENT CASE HAS ERRED IN INVOKING T HE PROVISIONS OF SEC. 147, INSTEAD OF 153C OF THE ACT. IF ACTION UNDER SEC. 147 IS PERM ITTED ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH, THEN THE PROVISIONS OF SEC. 153 WOULD BE REDUNDANT. IN THIS REGARD, HE PLACED RELIANCE ON THE FOLLOWING DE CISIONS TO SUPPORT HIS ABOVE CONTENTIONS THAT NO ACTION UNDER SEC. 147 IS PERMIS SIBLE ON THE BASIS OF MATERIAL FOUND IN SEARCH: 7 I) ACIT VS. ARUN KAPUR - 140 TTJ 249 (AMRITSAR); II) CARGO CLEARING AGENCY VS. JCIT - 307 ITR I(GUJ.); III) RAJAT SHUBRA CHATTERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DATED 20.5.2016. 7. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW AND HAS TRIED TO JUSTIFY THE ACTION OF THE ASSESSING OF FICER IN INITIATING REOPENING PROCEEDINGS. 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE PAPER BOOK. ON HAVING GONE THROUGH THE DECISIONS CITED ABOVE ESPECIALLY THE DECISION OF AMRITSAR BEN CH IN THE CASE OF ITO VS. ARUN KUMAR KAPOOR (SUPRA), I FIND THAT IN THAT CASE AS IN THE PRESENT CASE BEFORE ME, REASSESSMENT WAS INITIATED ON THE BASIS OF INCRIMIN ATING MATERIAL FOUND IN SEARCH OF THIRD PARTY AND THE VALIDITY OF THE SAME WAS CHALLE NGED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) AND THE LEARNED CIT(APPEALS) VIT IATED THE PROCEEDINGS. THE SAME WAS QUESTIONED BY THE REVENUE BEFORE THE ITAT AN D THE ITAT AFTER DISCUSSING THE CASES OF THE PARTIES AND THE RELEVANT PROVISION S IN DETAILS HAS COME TO THE CONCLUSION THAT IN THE ABOVE SITUATION, PROVISIONS OF SEC. 153C WERE APPLICABLE WHICH EXCLUDES THE APPLICATION OF SECTIONS 147 AND 14 8 OF THE ACT. THE ITAT HELD THE 8 NOTICE ISSUED UNDER SEC. 148 AND PROCEEDINGS UNDER S EC. 147 AS ILLEGAL AND VOID AB INITIO. IT WAS HELD THAT ASSESSING OFFICER HAVING NO T FOLLOWED PROCEDURE UNDER SEC. 153C, REASSESSMENT ORDER WAS RIGHTLY QUASHED BY THE LEARNED CIT(APPEALS). I ALSO DRAW MY SUPPORT FROM THE ITAT, NEW DELHI DECISION IN THE CASE OF RAJAT SHUBRA CHATTERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DAT ED 20.5.2016, WHEREIN THE REASSESSMENT WAS QUASHED ON THE SIMILAR FACTS A ND CIRCUMSTANCES BY FOLLOWING THE ITAT, AMRITSAR DECISION IN THE CASE OF ITO VS. AR UN KUMAR KAPOOR (SUPRA). IN THE PRESENT CASE BEFORE ME, IT IS AN ADMITTED FACT, AS ALSO EVIDENT FROM THE REASONS RECORDED AND THE ASSESSMENT ORDER THAT THE INITIATI ON OF REOPENING PROCEEDINGS WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF INFOR MATION AVAILABLE WITH THE AO. I THUS RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDI NATE BENCH OF THE ITAT, AMRITSAR IN THE CASE OF ACIT VS. ARUN KAPUR - 140 TTJ 249 VS. (AMR ITSAR) AND THE ITAT, DELHI DECISION IN THE CASE OF RAJAT SHUBRA CHATTERJI VS. ACIT, NEW DELHI ITA NO. 2430/DEL/2015 DATED 20.5.2016 HOLD THAT PROVISIONS O F SEC. 153C OF THE ACT WERE APPLICABLE IN THE PRESENT CASE FOR FRAMING THE ASSE SSMENT, IF ANY, WHICH EXCLUDES THE APPLICATION OF SEC. 147 OF THE ~ HENCE, NOTICE I SSUED UNDER SEC. 148 OF THE ACT AND ASSESSMENT FRAMED IN FURTHERANCE THERETO UNDER SEC. 147 READ WITH SECTION 143(3) OF THE ACT ARE VOID AB INITIO. HENCE, THE R EASSESSMENT IN QUESTION IS 9 ACCORDINGLY QUASHED. SINCE I HAVE ALREADY QUASHED T HE REASSESSMENT, THERE IS NO NEED TO ADJUDICATE OTHER GROUNDS. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE DIFF ERENT ASSESSEES STAND ALLOWED IN THE AFORESAID MANNER. ORDER PRONOUNCED IN THE OPEN COURT ON 08/08/2017. S SS SD DD D/ // /- -- - [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE:- 08/08/2017 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES