Mr. Chandra Prakash, Ghaziabad V. ITO, New Delhi

ITA 1505/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6484 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE
• Assessee Lawyers: SANJEEV BINDAL
• Keywords: Reopening of assessment; Income from undisclosed sources; Additional evidence; Assessment record
• Section: 133(6); 68; 69; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI A.T.VARKEY , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO . 1505/DEL/2015 (ASSESSMENT YEAR: 2005 - 06 ) ITA NO.1506/DEL/2015 (ASSESSMENT YEAR: 2006 - 07) ITA NO.3456/DEL/2015 (ASSESSMENT YEAR: 2007 - 08) CHANDRA PRAKASH , 201, GOLD ROYAL LEGACY, SECTOR - 18, VASUNDHRA, GHAZIABAD PAN:AAIPP6433A VS. ITO, WARD - 4(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJEEV BINDAL, CA RE VENUE BY: SH . SUSAN GEORGE, SR. DR DATE OF HEARING 14 /01/2016 DATE OF PRONOUNCEMENT 11 / 03 /2016 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . TH ESE THREE APPEALS FOR ASSESSMENT YEAR 2005 - 06, 2006 - 07 AND 2007 - 08 ARE PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 15.12.2014 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 2, NEW DELHI. 2 . FOR AY 2005 - 06 THE FIRST GROUND OF APPEAL AGAINS T THE REOPENING OF ASSESSMENT , SECOND GROUND WAS AGAINST THE ADDITION OF RS 107 LAKHS U/S 68 OF THE ACT BEING CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE WHICH COULD NOT BE EXPLAINED BEFORE LOWER AUTHORITIES AND THIRD GROUND IS AGAINST THE ADDITION U/S 69 OF THE PAGE 2 OF 9 ACT OF RS 25000/ - BEING AMOUNT DEPOSITED WITH HDFC STANDARD LIFE INSURANCE CO LIMITED. GROUND NO 1 AND 2 ARE SIMILAR IN APPEAL OF THE ASSESSEE FOR SUBSEQUENT YEARS, THEREFORE FOR THE SAKE OF BREVITY FACTS ARE DISCUSSED IN THIS APPEAL. 3 . ASSESSEE DID NOT PRESS GROUND NO 3 OF THE APPEAL AND THEREFORE SAME IS DISMISSED. 4 . REGARDING GROUND NO 1 AND 2, BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL . HE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06 DECLARED AN INCOME OF RS.273220/ - ON 1 2 TH MAY 2005. BASED ON THE INFORMATION RECEIVED FROM DCIT, CIRCLE - PELAMPUR, HIMACHAL PRADESH VIDE LETTER DATED 01.05.2009 THAT THERE WAS HUGE CASH DEPOSIT IN THE BANK ACCOUNT NO. CA/01/ 071372 WITH CORPORATION BANK, VIVEK VIHAR, NEW DELHI IN HIS PROPRIETOR Y CONCERN OF M/S. KUMAR RAJENDRA & COMPANY. ACCORDING TO THE LETTER IT WAS INFORMED THAT IN FY 2004 - 05 APPROXIMATELY RS.1 , 07 , 64 , 950/ - WERE DEPOSITED IN THIS BANK ACCOUNT IN CASH. THE L E TTER ALSO CONTAIN ED COPIES OF BANK STATEMENT OF THE ASSESSEE. ON RECEI PT OF THIS INFORMATION AFTER VERIFICATION THE LD AO HAS RECORDED THE REASONS THAT INCOME OF RS.1 , 07 , 64 , 950/ - CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06. BASED ON THESE REASONS A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 12.06.2009. IN RESPONSE TO THAT NOTICE ASSESSEE SUBMITTED THAT THE RETURN ALREADY FILED ON 12.05.2005 BY THE ASSESSEE MAY BE TREATED AS RETURN FILED U/S 148 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE SOURCE OF THE FUNDS DEPOSITED IN THE BANK ACCOUNT WHICH COULD NOT BE EXPLAINED BY THE ASSESSEE AND T HEREFORE THE CREDIT ENTRY AMOUNTING TO PAGE 3 OF 9 RS.1 , 07 , 64 , 950/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. ALONG WITH THIS SUM A FURTHER ADDITION OF RS.2,50,000/ - WAS ALSO MADE U/S 69 OF THE ACT WHICH WAS INVESTED BY THE ASSESSEE IN HDFC STANDARD LIFE INSURANCE. 5 . AGAINST THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) THE ASSESSEE CHALLENGED THE REOPENING U/S 148 OF THE ACT WHO REJECTED THE CONTENTION OF THE ASSESSEE. REGARDING THE ADDITION OF RS. 1 , 07 , 64 , 950/ - U/S 68 OF THE ACT THE ASSESSEE SUBMITTED THE DETAIL S BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). THE ADDITIONAL EVIDENCE U/S 46 A OF THE ACT WAS ALSO FURNISHED. AGAINST THIS THE LD AO WAS ASKED TO FILE THE REMAND REPORT WHICH WAS OBTAINE D . A FTER THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) UPHELD THE ADDITION OF RS.1 , 07 , 64 , 950/ - . THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE THAT THIS SUM WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE WHICH WAS RECEIVED FROM HIS BROTHER IN LAW SHRI DINESH PRASAD, WHO USED TO COLLECT SUM FROM DIFFERENT PERSONS FOR MAKING INVESTMENT IN EQUITY SHARES OF THE COMPANY. IT WAS CONTENDED BY THE ASSESSEE THAT AS PER ARRANGEMENT BETWEEN HIS BROTHER IN LAW AND HIM THE ASSESSEE WILL GET COMMISSION @1% AS ENTRY OPERATOR. HOWEVER, SHRI DINESH PRASAD PASSED AWAY IN SPITE OF THIS THE ASSESSEE SUBMITTED THE DETAILS OF PERSON S WHO USED TO LEND CASH TO MR. DINESH PRASAD AN D WHICH WAS HANDED OVER TO THE ASSESSEE, APPELLANT DEPOSIT ED THIS IN HIS BANK ACCOUNT AND SUBSEQUENT ISSUE TO CHEQUES TO VARIOUS PERSONS ON INSTRUCTIONS OF DINESH PRASAD. TO ALL THOSE PERSONS NAMED BY ASSESSEE AO DURING THE REMAND PROCEEDINGS SEND ENQUI RY LETTERS. HOWEVER MANY OF THEM DID NOT RESPOND. SOME OF THE ENQUIRY PAGE 4 OF 9 LETTERS RETURNED BACK UNSERVED AND SOME OF THEM REPLIED. THE BRIEF RESULT OF SUCH ENQUIRY SHOWS THAT IN ALL 281 ENQUIRY LETTERS WERE ISSUED AND OUT OF THAT 84 PERSON S CATEGORICALLY DENIE D HAVING ENTERED IN TO TRANSACTIONS WITH THE ASSESSEE. MANY OF THE PERSONS WHO RESPONDED ALSO REQUESTED FOR INFORMATION FROM AO THAT HOW THEIR NAME APPEAR S IN THE ENQUIRY LIST. AGAINST THE CONFIRMATION OF THE ADDITION THE ASSESSEE IS IN APPEAL BEFORE US. 6 . BEFORE US THE LD AR FILED A PAPER BOOK CONTAINING THE FOLLOWING: - A . HE CONTESTED THAT REOPENING IS BAD IN LAW BECAUSE OF THE REASON THAT THE INFORMATION FROM DEPUTY COMMISSIONER OF INCOME TAX, PELAMPUR, HIMACHAL PRADESH RECEIVED REFERENCE TO THE ASSESSMENT PROCEEDINGS IN THE CASE OF HIS OWN ASSESSEE, SHRI GURM IT T SINGH MAAN AND BY CROSS EXAMINATION OF THE DETAILS OF BANK ACCOUNT BEFORE THE AO IT WAS NOTICED THAT THE BANK ACCOUNT OF ASSESSEE HAS HUGE CASH DEPOSIT AND THEREFORE SECTION 148 HAS BEEN INVOKED. HE SUBMITTED THAT THERE ARE NO TRANSACTIONS WITH THE PERSON IN WHOSE ASSESSMENT INQUIRY IS MADE BY AO OF THE BANK ACCOUNT OF THE ASSESSEE. HE SUBMITTED THAT ON RECEIPT OF THE INFORMATION OF BANK ACCOUNT THE LD AO ISSUED NOTICE U/S 148 OF THE ACT BY HOL DING THAT THE ASSESSEE HAS UN ACCOUNTED INCOME WITHOUT MAKING ANY INQUIRY. HE FURTHER SUBMITTED THAT THE ASSESSMENT OF SHRI MANN AND THE ASSESSEE HAS NO LINKAGE AND THERE IS NO ADVERSE INFERENCE IN THE ASSESSMENT OF SHRI M ANN AS NOTHING COMES OUT OF TH E ORDER OF ASSESSEE OR REASONS RECORDED. THEREFORE IT WAS SUBMITTED THAT MERELY ON RECEIPT OF INFORMATION BY PAGE 5 OF 9 THE AO WITHOUT APPLICATION OF MIND THE ASSESSMENT HAS BEEN REOPENED. HE ARGUED THAT THERE IS NO LIVE LINK BETWEEN INFORMATION RECEIVED AND REASONS RECORDED BY THE ASSESSEE. B . HE FURTHER SUBMITTED THAT IN THE REMAND REPORT ITSELF IN PARA 14 AO WAS OF THE VIEW THAT FROM THE ENQUIRIES CARRIED OUT BY THE AO AND STATEMENT RECORDED IT IS QUITE CLEAR THAT THE ASSESSEE IS NOT A PERSON OF SUFFICIENT MEANS WH O WOULD HAVE PLOU GHED BACK UN ACCOUNTED MONEY BY DEPOSIT ING OF CASH OF RS. 5 , 12 , 05 , 350 / - IN HIS BANK ACCOUNT FOR THREE ASSESSMENT YEARS. IT WAS FURTHER HELD BY AO THAT THE ASSESSEE DOES NOT HAVE ANY SOURCE OF EARNING SUCH A LARGE SUM OF MONEY AS HE IS ONLY ENGAGED IN SERVICE AS A N A CCOUNTANT AND HIS PER YEAR EARNED SALARY IS OF RS. 361400 / - FOR ASSESSMENT YEAR 2005 - 06 , RS. 306000 / - FOR ASSESSMENT YEAR 2006 - 07 AND RS. 451000 / - FOR ASSESSMENT YEAR 2007 - 08 . THEREFORE IN VIEW OF FINDING OF THE AO HIMSELF IN REMAND REPORT THE ADDITION MADE CANNOT BE SUSTAINED. 7 . THE LD DR RELIED ON THE ORDER OF THE AO, CIT(A) AND ALSO REMAND REPORT OF AO. HIS MAIN ARGUMENT IS THAT IT IS RESPONSIBILITY OF THE ASSESSEE TO EXPLAIN THE DEPOSIT OF CASH IN HIS BANK ACCOUNT CONTI NUOUSLY FOR THREE YEARS AND IN ABSENCE OF ANY SUCH EXPLANATION THE AMOUNT IS RIGHTLY ADDED U/S 69 OF THE ACT TO THE INCOME OF THE ASSESSEE . THEREFORE HE SUBMITTED THAT THE ORDER OF AO AS WELL AS CIT(A) MAY BE UPHELD. PAGE 6 OF 9 8 . WE HAVE CAREFULLY CONSIDERED THE RIVA L CONTENTION . I T IS APPARENT THAT SUBSTANTIAL SUM OF MONEY HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND THE PRIME RESPONSIBILITY IS OF THE ASSESSEE TO EXPLAIN THE SOURCE OF THE DEPOSIT OF SUCH S UM IN HIS BANK ACCOUNT. THE ASSESSEE HAS EXPLAINED THAT HE IS ONLY ACTING ON BEHALF OF HIS BROTHER IN LAW WHO USED TO COLLECT MONEY FROM VARIOUS PERSONS AND IN TURN THIS MONEY WAS HANDED OVER TO THE ASSESSEE WHO IN TURN USED TO DEPOSIT THIS SUM IN HIS BANK A CCOUNT AND FROM HIS BANK ACCOUNT THE AMOUNT IS GIVEN TO VARIOUS COMPANIES. THE REOPENING U/S 148 OF THE ACT HAS BEEN INITIATED ON THE BASIS OF INFORMATION RECEIVED FRO M ANOTHER AO. THE INFORMATION CONTAINED THE SPECIFIC ACCOUNT NUMBER , THE AMOUNT DEPOSITED IN THOSE BANK ACCOUNT S . FURTHER LOOKING TO THE ASSESSMENT RECORDS OF THE ASSSESSEE WHO IS MERELY AN ACCOUNTANT EARNING MEAGER SALARY. HENCE IT IS REASONABLE BELIEF THE AO HOLD THAT THE AMOUNT DEPOSITED IN HIS BANK ACCOUNT IS HIS UNACCOUNTED INCOME. THERE FORE IN OUR VIEW THIS INFORMATION IS VERY SPECIFIC AND WE FAILED TO UNDERSTAND WHAT MORE INFORMATION IS REQUIRED FOR REOPENING OF THE CASE. CONSEQUENTLY IT CANNOT BE SAID THAT THERE IS NO LIVE LINK OF THE INFORMATION RECEIVED WHICH IS ALONG WITH COPIES OF THE BANK STATEMENT OF THE ASSESSEE. IF ANYBODY LOOK AT THE BANK STATEMENT OF THE ASSESSEE HE WILL COME TO KNOW IMMEDIATELY THE NATURE OF TRANSACTION S CONTAINED THEREIN AND HOW IT HAS BEEN CONDUCTED. THE TRANSACTION OF THAT BANK ACCOUNT SHOWS A MEAGER BALA NCE OF RS.1350 THROUGHOUT THE YEAR. FURTHER THE TRANSACTION S ENTERED INTO IN BANK ACCOUNT ARE ALMOST OF RS. 1 0 7 LACS FOR THIS YEAR. THE MODUS OPERANDI OF THE TRANSACTION IS THAT THE MOMENT THE CASH IS DEPOSIT ED IMMEDIATELY THE CHEQUE S ARE ISSUED IN FAVOUR OF THE SOMEBODY. MOSTLY THE NAME APPEARS OF MILAP AUTOMOTIVE PVT. PAGE 7 OF 9 LTD. THEREFORE WE REJECT THE CONTENTION OF THE ASSESSEE THAT THERE IS NO LIVE LINK BETWEEN THE REASONS AND THE INFORMATION RE CEIVED.. THE ASSERTION OF ASSESSEE THAT ON REC EI PT OF THE INFORMATION FROM ANOTHER AO, AO HAS SIMPLY JUMP ED TO THE CONCLUSION THAT THE DEPOSIT TOTALING TO RS.10764950/ - IS UNACCOUNTED INCOME OF THE ASSESSEE. FOR THIS OUR VIEW IS THAT THE MOMENT ANY PERSON OF LITTLE BIT OF COMMON SENSE LOOKS AT THIS A CCOUNT WITH THE INCOME EARNING EMPLOYMENT OF THE ASSESSEE HE WILL JUMP TO SAME CONCLUSION. THEREFORE WE UPHELD THAT REOPENING OF ASSESSMENT IS VALIDLY INITIATED . THEREFORE GROUND NO 1 OF THE APPEAL IS DISMISSED. 9 . REGARDING THE SECOND ARGUMENT OF THE A SSESSEE THAT AS THE AO HAS HIMSELF STATED IN PARA NO.14 OF THE REMAND REPORT DATED 25.05.2012 THAT ASSESSEE IS A PERSON OF NO M EANS WHO COULD NOT HAVE DEPOSITED SUCH A HUGE SUM. IT IS AN ADMITTED FACTS THAT THE AMOUNT OF INVESTMENTS IN VARIOUS COMPANIES HA VE BEEN MADE THROUGH THIS BANK ACCOUNT OF THE ASSESSEE AND MONEY IS DEPOSITED IN VARIOUS CONCERNS. THEREFORE IT IS ALSO REQUIRED TO BE ESTABLISHED THAT WHO OWNS THOSE INVESTMENTS AND WHO ARE THE REAL BENEFICIARIES OF SUCH INVESTMENTS, IT CAN BE EITHER TH E INVESTOR OR INVESTEE. THEREFORE IN THESE CIRCUMSTANCES, THOROUGH EXAMINATION OF THE TRANSACTION NEEDS TO BE CARRIED OUT. FURTHER ASSESSEE HAS SUBMITTED LIST OF THE PERSONS NAMELY 96 PERSON FOR ASSESSMENT YEAR 2005 - 06, 292 PERSONS FOR 2006 - 07 AND 12 P ERSONS FOR ASSESSMENT YEAR 2007 - 08. THE LIST CONTAINS THE NAME OF THOSE PERSONS ADDRESS PERMANENT ACCOUNT NO AND AMOUNT DEPOSIT ED BY THEM. AS IT IS EVIDENT THAT 133(6) LETTERS HAVE BEEN ISSUED BY THE AO TO THEM AND OUT OF THEM FEW RESPONDED. THIS MIGHT H AVE HAPPENED BECAUSE OF SHORT TIME AVAILABLE DURING THE REMAND PROCEEDINGS AND DEATH OF SHRI PAGE 8 OF 9 DINESH PRASAD WHO WAS THE MAIN PERSON COLLECTING MONEY FROM OTHER PARTIES. AS THE AO HIMSELF H AS STATED THAT THE ASSESSEE MAY NOT BE THE REAL OWNER OF THE SUM SO DEPOSIT ED THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE ALL THREE APPEALS BACK TO THE FILE OF AO FOR VERIFICATION OF THE DETAIL S FILED AND ALSO TO ENQUIRE FROM THE BENEFICIARIES OF THE SUM RECEIVED FROM THE BANK ACCOUNT OF THE ASSESSEE. V ERIFICATIO N FROM THE BANK ALSO MAY BE CONDUCTED FOR THE COMPANIES IN WHICH THE ASSESSEE HAS MADE INVESTMENT. IN VIEW OF THIS ALL THE THREE APPEALS ARE SET ASIDE TO THE FILE OF AO TO MAKE ASSESSMENT DE NOVO . IT IS CLARIFIED THAT SCOPE OF THE INQUIRY MAY NOT BE LIMI TED TO THE ABOVE DIRECTION BUT IT MAY CARRIED OUT THOROUGHLY ON EXAMINATION OF BENEFICIARIES OF SUCH SUMS, BANKERS, DEPOSITORS AND ASSESSEE HIMSELF. NEEDLESS TO SAY THAT THE ONUS OF PROVING THE SOURCES OF DEPOSIT LIES ON THE ASSESSEE. 10 . IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11 . AS THE FACTS OF THE SUBSEQUENT YEARS ARE ALSO SAME WITH RESPECT TO REOPENING OF ASSESSMENT AND AMOUNT DEPOSITED IN THE ABOVE SAID BANK ACCOUNT OF THE ASSESSEE FROM WHERE INVESTMENTS HAVE B EEN MADE. 12 . WE DISMISS GROUND NO 1 OF BOTH THE APPEAL FOR AY 2006 - 07 AND 2007 - 08 AGAINST THE REOPENING OF ASSESSMENT BASED ON THE REASON GIVEN BY IS APPEAL OF ASSESSEE FOR AY 2005 - 06 WHILE DISPOSING GROUND NO 1 OF THAT APPEAL. 13 . REGARDING AMOUNT OF CASH DEP OSITED IN THE BANK ACCOUNT OF THE ASSESSEE WHICH IS CONTESTED BY GROUND O 2 OF THESE APPEAL FOR AY 2006 - 07 AND 2007 - 08, WE HAVE ALREADY DISCUSSED THE FACTS AND GIVEN OUR FINDING WHILE DECIDING GROUND NO 2 OF THE APPEAL OF THE ASSESSEE FOR AY 2005 - 06. T HEREFORE WE ALSO SET ASIDE GROUND PAGE 9 OF 9 NO 2 OF THE APPEAL OF BOTH THE YEARS I.E. AY 2006 - 07 AND 2007 - 08 TO THE FILE OF THE ASSESSING OFFICER I WITH SIMILAR DIRECTION AS WE HAVE GIVEN IN APPEAL FOR A.Y. 2005 - 06 . 14 . IN THE RESULT ALL THE THREE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 / 0 3 /2016 . - S D / - - S D / - ( A.T.VARKEY ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 / 03 /2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI