Jaswinder Kaur, New Delhi V. ITO, New Delhi

ITA 1511/DEL/2011

• Counselvise Citation: 151120114 RSA 2011
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 28-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKARDR
• Assessee Lawyers: SALIL AGGARWALAR
• Keywords: Reopening of assessment; Gift; Income from undisclosed sources; Search and seizure; Question of law; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI D BENC H BEFORE SHRI C.L. SETHI, JM & SHRI A.N. PAHUJA, AM ITA NO.1511/DEL/2011 ITA NO.1511/DEL/2011 ITA NO.1511/DEL/2011 ITA NO.1511/DEL/2011 ASSESSMENT YEAR:2002-03 SMT.JASWINDER KAUR 103, GUJRANWALA TOWN-II, NEW DELHI-9 V/S V/S V/S V/S. INCOME TAX OFFICER, WARD 20(3), NEW DELHI [PAN:AAKPK 2463 P] [PAN:AAKPK 2463 P] [PAN:AAKPK 2463 P] [PAN:AAKPK 2463 P] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SALIL AGGARWAL,AR REVENUE BY SMT.Y.S. KAKKAR,DR DATE OF HEARING 30-09-2011 DATE OF PRONOUNCEMENT 07-10- 2011 O R D E R O R D E R O R D E R O R D E R A.N.PAHUJA: A.N.PAHUJA: A.N.PAHUJA: A.N.PAHUJA:- -- -THIS APPEAL FILED ON 28.3.2011 BY THE ASSESSEE AGAINST AN ORDER DATED 22 ND DECEMBER, 2010 OF THE LD. CIT(A)-XXII, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE LEARNED CIT(A) IS BAD IN LA W AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT NOTICE U/S 148 OF THE ACT WAS ISSUED WITHOUT APPLICATION OF MIND AS THE SAME HAD NOT BEEN BASED ON ANY MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE VALIDI TY OF REASSESSMENT PROCEEDINGS INITIATED U/S 147 OF THE INCOME-TAX ACT, 1961, (THE ACT) BY THE ASSESSING OFFICER ARBITRARILY WITHOUT ASSUMING PROPER JURISDICTI ON UNDER THE PROVISIONS OF THE ACT. THE AUTHORITIES BELO W HAVE COMMITTED SERIOUS JURISDICTIONAL ERRORS. ITA NO.1511/DEL/2011 2 4. THAT THE AUTHORITIES BELOW HAVE COMMITTED SERIOUS E RROR IN NOT SUPPLYING THE APPELLANT WITH THE REASONS FOR INITIATION OF PROCEEDINGS WITHIN THE PRESCRIBED MANDATORY STATUTORY TIME LIMIT. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE VALIDIT Y OF THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT DESPITE THE FACT THAT THE OBJECTIONS WERE RAISED BY TH E APPELLANT AGAINST THE ISSUANCE OF NOTICE FOR REOPENING OF THE CASE WHICH WAS NOT DISPOSED OFF BY THE ASSESSING OFFICER THEREBY NOT FOLLOWING THE PROCEDURE LAID DO WN BY THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS VS. INCOME TAX OFFICER 259 ITR 19. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITI ON MADE ON ACCOUNT OF UNEXPLAINED GIFTS ALLEGED TO BE O F ` 17,00,000 AND BY IGNORING THE EVIDENCE ADDUCED BY T HE APPELLANT IN SUPPORT OF THE ALLEGED UNEXPLAINED TRANSACTION. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITI ON OF `34,000/- MADE ARBITRARILY BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED COMMISSION PAID. 8. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE A DDITIONS OF `17,00,000 AND ` 34,000 STATED IN GROUND NO. 5 & 6 ABOVE, RELYING ON EVIDENCE GATHERED AT THE BACK OF THE APPELLANT WITHOUT AFFORDING ANY OPPORTUNITY OF CROSS EXAMINING THE EVIDENCE. 9. THAT THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJ UDICE TO ONE ANOTHER. 10. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND THE ABOVE GROUNDS OF APPEAL. 2. ADVERTING FIRST TO GROUND NOS.1 TO 5 IN THE APPEAL RELATING TO VALIDITY OF REOPENING OF THE ASSESSMENT, FACTS, IN BRIEF , AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF ` 98,326/- FILED ON 29.7.2002 WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER ITA NO.1511/DEL/2011 3 REFERRED TO AS THE ACT). SUBSEQUENTLY, THE ASSESSING O FFICER (A.O. IN SHORT) REOPENED THE ASSESSMENT U/S 147 OF THE ACT AFTER R ECORDING THE FOLLOWING REASONS, AS CONVEYED TO THE ASSESSEE IN LETTER DATED14.12.2009 OF THE CONCERNED ITO[PG. 12 OF THE PAPER BOOK]:- THERE IS AN INFORMATION THAT SHRIMATI JASWINDER KAUR , 103, GUJRANWALA TOWN, PART-II, NEW DELHJI-9 HAS RECEIVED TWO MANAGERS CHEQUES ISSUED BY HDFC BANK, PUSA ROAD, OLD RAJINDER NAGAR, NEW DELHI NO.072676 DATED 25.2.2002 AND NO.072688 DATED 26.2.2002 FOR RS.5,00,000/- EACH. BASED ON THE ABOVE FACTS, THE AMOUNT TAKEN BY THE ASSESSEE AS MANAGERS CHEQUE FROM SH. HARISH PAWAR IS IN FACT ACCOMMODATION ENTRIES AND FORMED PART OF INCOME OF THE ASSESSEE, WHICH HAS ESCAPED ASSESSMENT FOR THE FINANCIAL YEAR 2001-02 RELEVANT TO ASSESSMENT YEAR 2002 - 03. IN THE LIGHT OF ABOVE FACTS, I HAVE REASON TO BELIEVE THAT MANAGERS CHEQUES OF RS.`5,00,000/- EACH HAVE ESCAPED ASSESSMENT DURING THE ASSESSMENT YEAR 2002-03. 2.1 ACCORDINGLY, A NOTICE U/S 148 OF THE ACT WAS SERVE D UPON THE ASSESSEE ON 31.03.2009. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO NOTICED THAT APART FROM AN AMOUN T OF RS.10 LCS RECEIVED FROM SHRI HARISH PAWAR, PROPRIETOR OF AMRIT IMPEX(INDIA), THE ASSESSEE RECEIVED A GIFT OF `7 LACS VIDE CHEQUE NO.01846 8 DATED 12.09.2001 FROM MRS. SUSHAM SHARMA, B-121, KARAM PURA , DELHI. ON INQUIRY, THE AO FOUND THAT NO SUCH PERSON EXISTED AT THE SAID ADDRESS AND INSTEAD, A FIRM M/S SOMEN WAS FUNCTIONING FROM THE SAID ADDRESS. TO A QUERY BY THE AO AS TO WHY AN AMOUNT OF `17,00,0 00/- ALONG WITH COMMISSION PAID BY THE ASSESSEE FOR OBTAINING ACCOMMODATI ON ENTRIES , BE NOT TREATED AS INCOME FROM UNDISCLOSED SOURCES FOR THE AY 2002- 03, THE ASSESSEE REPLIED THAT RECEIPT OF MANAGERS CHEQ UES DID NOT SUGGEST IT WAS AN ACCOMMODATION ENTRY, FORMING PART OF INCOME ESCAPING ASSESSMENT. THE ASSESSEE SUBMITTED THAT SHE RECEIVED AN AMOUNT OF 10,00,000/- FROM SHRI HARISH PAWAR, PROPRI ETOR OF M/S AMRIT ITA NO.1511/DEL/2011 4 IMPEX (INDIA) AND RS.7 LACS FROM MS. SUSHAM SHARMA BY WAY OF GIFTS AS DETAILED HEREUNDER:- 1. 072688 DATED 25.2.2002 OF `5 LAKHS FROM HARISH PA WAR 2. 072676 DATED 25.2.2002 OF `5 LAKHS FROM HARISH PAW AR 3. 018468 DATED 12.09.2001 OF `7 LAKHS FROM MS. SUSHAM SHARMA THROUGH UNION BANK OF INDIA. 2.2 THE ASSESSEE FURTHER SUBMITTED COPIES OF GIFT DEE DS AND AFFIDAVITS ,IN ORIGINAL, OF THE DONORS BUT DID NOT P RODUCE THE DONORS BEFORE THE AO. ACCORDING TO THE AO, THE AFORESAID PE RSONS WERE ENTRY PROVIDERS AND THE ASSESSEE HAD GIVEN UNACCOUNTED CASH AND RECEIVED THE AFORESAID CHEQUES. SINCE THE ASSESSEE ADMITTED THAT BANK ACCOUNT OF M/S AMRIT IMPEX(INDIA) HAS BEEN USED FOR PROVIDING ACCOMMODATION ENTRIES WHILE SHRI HARISH PAWAR WAS NOT FILING ANY RETU RN NOR HAD ANY MOVABLE OR IMMOVABLE ASSETS AND THE ASSESSEE FAILED TO SUBM IT ANY CONFIRMATION OF THE AFORESAID PERSONS NOR ESTABLISHED TH EIR CREDITWORTHINESS, THE AO ADDED THE AMOUNT OF `17 LAKH S BESIDES COMMISSION @2% FOR THESE ENTRIES, RESULTING IN ADDITION OF RS.17,34,000/-. 3. ON APPEAL, THE ASSESSEE QUESTIONED THE VALIDITY OF R EOPENING OF THE ASSESSMENT ON THE GROUND THAT NOTICE DATED 31 ST MARCH, 2009 WAS ISSUED WITHOUT JURISDICTION, THE ASSESSEE HAVING ALREADY F ILED RETURN ON 29 TH JULY, 2002 WHILE THE AO DID NOT SUPPLY THE REASONS FO R REOPENING OF THE ASSESSMENT NOR OBTAINED APPROVAL FROM THE CONCERNED ADDL. CIT BEFORE REOPENING THE ASSESSMENT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) CONCLUDED ON THE I SSUE OF VALIDITY OF REOPENING OF THE ASSESSMENT AS UNDER:- THE VARIOUS ARGUMENTS PLACED BY THE APPELLANT WERE FORWARDED TO THE ASSESSING OFFICER FOR HER REPORT. THE ASSESSING OFFICERS REPORT DATED 27.9.2010, AND THE APPELLANTS REJOINDER FILED ON 12.11.2010, HAVE BEEN CAREFULLY CONSIDERED. THE ASSESSING OFFICER HAS STATED TH AT AT THE TIME OF ISSUE OF NOTICE U/S 148 DATED 31.3.2009 , THE ITA NO.1511/DEL/2011 5 PAN OF THE APPELLANT WAS IN THE JURISDICTION OF THE I NCOME TAX OFFICER, WARD-48(2). THE APPELLANT HAS ARGUED, HOWEVER, THAT THE INCOME TAX OFFICER, WARD 48(2) HA S JURISDICTION OVER SALARY CASES, WHEREAS THE INCOME OF TH E APPELLANT WAS FROM BUSINESS. MOREOVER, SHE WAS REGULARLY FILING HER INCOME TAX RETURN IN WARD 20(3). IT IS SE EN THAT THE APPELLANT HAS NOT DENIED THAT HER PAN WAS ISSUED IN THE JURISDICTION OF THE INCOME TAX OFFICER, WARD-48( 2). SHE HAS CLAIMED TO BE REGULARLY ASSESSED IN WARD-20(3), BUT HAS FILED ONLY COPY OF ACKNOWLEDGEMENT OF FILING OF RETURN OF ASSESSMENT YEAR 2002-03 IN SUPPORT THEREOF. IT IS AL SO SEEN THAT THE APPELLANT SOUGHT THE REASONS FOR REOPENIN G THE ASSESSMENT VIDE HER LETTER DATED 16.11.2009, WHICH HAS BEEN PROVIDED IN THE LETTER OF THE ASSESSING OFFICER DATED 01.12.2009. THE LAW DOES NOT REQUIRE PROVIDIN G THE APPELLANT WITH COPY OF THE FORM FOR OBTAINING PRIOR APPROVAL OF THE ADDL. CIT CONCERNED. I ALSO FIND THE RELIANCE ON THE JUDGMENT OF THE APEX COURT IN GKN DRIVESHAFTS TO BE MISPLACED. IN THAT CASE, THE APPELLANTS WRIT PETITION CHALLENGING THE VALIDITY O F NOTICES ISSUED U/S 148 WAS DISMISSED, ON THE GROUNDS THAT THE APPELLANT COULD HAVE TAKEN ALL THE OBJECTIONS IN ITS REPLY TO THE NOTICES. THE HONBLE COURT HELD THAT, IN THE IN STANT CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, THE ASSESSING OFFICER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFO RE PROCEEDING WITH THE ASSESSMENT . THE DIRECTIONS OF TH E APEX COURT WERE DELIVERED IN THE SPECIFIC CONTEXT OF THE APPELLANT FILING ITS OBJECTIONS BEFORE THE COURT, INST EAD OF BEFORE THE ASSESSING OFFICER. IN THE PRESENT CASE, IT IS SEEN THAT THE APPELLANT, AS STATED IN HER LETTER DATED 16.11.2009,ADDRESSED TO ITO ,WARD-48(2),HAD FILED A R ETURN OF INCOME ON 20.4.2009 IN RESPONSE TO THE NOTICE U/S 1 48. AFTER BEING PROVIDED THE REASONS FOR REOPENING THE ASSESSMENT, VIDE LETTER OF THE INCOME TAX OFFICER, WARD - 20(3) DATED 01.12.2009, THE APPELLANT FILED OBJECTI ONS TO THE ISSUANCE OF NOTICE VIDE LETTER OF 17.12.2009. UNDOUBTEDLY, THE ASSESSING OFFICER SHOULD HAVE DEALT WIT H THE OBJECTIONS OF THE APPELLANT BEFORE COMPLETING TH E REASSESSMENT ON 29.12.2009. HOWEVER, THE FAILURE OF TH E ASSESSING OFFICER TO CONSIDER OBJECTIONS TO THE NOTICE U/ S 148 RENDERED THE ASSESSMENT ORDER NOT VOID BUT IRREGULA R, AS HELD BY THE MADRAS HIGH COURT IN THE CASE OF AREVA T&D INDIA LTD. VS. ACIT, 294 ITR 233. IT SHOULD BE NOTED THAT THE MADRAS HIGH COURT JUDGMENT WAS RENDERED AFTER ITA NO.1511/DEL/2011 6 CONSIDERING THE SUPREME COURT JUDGMENT IN GKN DRIVESHAFTS. THE HONBLE HIGH COURT HELD THAT THE ASSESSING OFFICER HAD NOT FOLLOWED THE RULE PRESCRIBED A S WELL AS THERE WAS FAILURE TO CONSIDER THE OBJECTIONS, W HICH AMOUNTED TO NOTHING BUT PROCEDURAL IRREGULARITIES, A ND HENCE THE SAME WOULD NOT MAKE THE REASSESSMENT A NULLITY IN LAW. IN THAT CASE, THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. THE OBJECTIONS OF THE APPELLANT HAVE BEEN DEALT WITH IN THIS APPEAL, AS DISCUSSED IN THE PRECEDING PARAGRAPHS. THE GROUNDS OF APPEAL REGARDING VALIDITY OF THE PROCEEDI NGS U/S 147 ARE THEREFORE DISMISSED. 4. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORESAID FIN DINGS OF THE LD. CIT(A). THE LEARNED AR ON BEHALF OF THE ASSE SSEE WHILE INVITING OUR ATTENTION TO PAGE 12 OF THE PAPER BOOK CONTENDE D THAT THE REASONS RECORDED BY THE AO DO NOT REVEAL ANY ESCAPEMENT OF I NCOME AND, THEREFORE, THE ASSESSMENT ORDER SHOULD BE QUASHED. ON TH E OTHER HAND, LEARNED DR RELIED UPON THE DECISIONS OF HONBLE APEX COURT IN PHOOL CHAND BAJRANG LAL AND ANOTHER. VS INCOME-TAX O FFICER AND ANOTHER,203 ITR 456; RAYMOND WOOLLEN MILLS LIMITED. VS INCOME-TAX OFFICER AND OTHERS,236 ITR 34 AND ASSISTANT COMMISSIONER OF INCOME- TAX.VS RAJESH JHAVERI STOCK BROKERS P. LIMITED.,291 I TR 500 AND SUPPORTED THE FINDINGS OF LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE AS ALSO THE AFORESAID REASONS RECORDED BY THE AO BEFORE REOPENING THE ASSESSMENT. AS IS APPARENT, IN THIS CASE, RET URN DECLARING INCOME OF ` 98,326/- WAS FILED ON 29.7.2002. IT WAS ONLY ON 31.3.2009 THAT A NOTICE U/S 148 OF THE ACT WAS ISSUED AFTER RECORDING REASONS MENTIONED IN PARA 2 ABOVE. IN ORDER TO REOPEN THE ASSESSMENT , THE AO SHOULD HAVE VALID REASONS TO DOUBT THE CORREC TNESS OF THE RETURN FILED BY THE ASSESSEE. IN OTHER WORDS, REASONS ARE REQUIRED TO BE RECORDED BY THE AO ON VALID MATERIAL AND ASSESSMENT CAN NOT BE ITA NO.1511/DEL/2011 7 REOPENED ON MERE ASSUMPTIONS. AS OBSERVED IN ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/ 161 TAXMAN 316 (SC), ALL THAT IS REQUIRED FOR THE REVENUE TO ASSUME A VALID JURISDICTION UNDER SECTION 148, IS THE EXISTENCE OF COGENT MATERIAL THAT WOULD LEAD A PERSON OF NORMAL PRUDENCE, ACTING REASONABLY, TO A HONEST BELIEF AS TO THE ESCAPEMENT OF INCOME FROM ASSESSMENT, AND NOTHING MORE .IN SMT. MANIBEN LALJI SHAH, 283 ITR 453, THE HONBLE B OMBAY HIGH COURT HAD TAKEN INTO CONSIDERATION THE PRINCIPLE LAID DOWN BY THE APEX COURT IN THE CASE OF GANGA SARAN & SONS P. LTD., VS. ITO, 13 0 ITR 1 TO HOLD THAT AT THE TIME OF ISSUANCE OF NOTICE THE AO SHOULD H AVE PROPER BASIS TO ENTERTAIN A BELIEF THAT ANY PART OF THE INCOME O F THE ASSESSEE HAS ESCAPED ASSESSMENT AND REOPENING CANNOT BE MADE MERELY T O COLLECT FURTHER DETAILS. THE APEX COURT, IN TURN, OBSERVED TH AT THE BELIEF ENTERTAINED BY AN AO MUST NOT BE ARBITRARY OR IRRATI ONAL AND IT MUST BE REASONABLE; IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF, THE CONCLUSION WOULD BE INESCAP ABLE THAT THE AO COULD NOT HAVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT, IN WHICH EVENT NOTICE ISSUED BY THE AO WOULD BE LIABLE TO BE STRUCK-DOWN AS INVALID. IN T HE LIGHT OF VIEW TAKEN IN THESE DECISIONS, WE ARE OF THE OPINION THAT T HE REASONS WHICH ARE RECORDED BY THE AO FOR REOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN THE FORMATION OF THE BELIEF IS IMPUGNED. IT IS ON THE BASIS OF THE REASONS RECORDED ALO NE THAT THE VALIDITY OF THE ORDER, REOPENING THE ASSESSMENT IS TO BE DECIDED. THE PRINCIPLE OF LAW, THEREFORE, IS WELL SETTLED THAT THE QUESTION AS TO WHETHER THERE WAS REASON TO BELIEVE, WITHIN THE MEANI NG OF SECTION 147 THAT INCOME HAS ESCAPED ASSESSMENT, MUST BE DETERMINED WITH REFERENCE TO THE REASONS RECORDED BY THE AO. 5.1 BEFORE PROCEEDING FURTHER, WE HAVE A LOOK AT THE DECISIONS RELIED UPON BY THE LD. DR. AS REGARDS RELIANCE BY THE LD. DR ON DECISION IN ITA NO.1511/DEL/2011 8 PHOOL CHAND BAJRANG LAL AND ANOTHER(SUPRA) IS CONCERN ED, THE FACTS & CIRCUMSTANCES IN THE CITED DECISION WERE ALTOGETHER DI FFERENT. IN THAT DECISION, ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND ISSUE RELATED TO FAILURE TO DISCLOSE FULLY AND TRULY MA TERIAL DURING THE ASSESSMENT, WHEN CASH LOAN CLAIMED TO BE TAKEN BY ASSESSEE F ROM COMPANY WAS ACCEPTED AS GENUINE AND ORIGINAL ASSESSMENT W AS MADE ALLOWING INTEREST THEREON AS DEDUCTION .SUBSEQUENT INF ORMATION FROM THE ITO, ASSESSING COMPANY THAT ITS MANAGING DIRECTOR HA D CONFESSED THAT COMPANY HAD NOT ADVANCED ANY LOAN TO ANY PERSON DURING PERIOD COVERING DATE OF CASH LOAN, FORMED THE BASIS FOR REOPE NING OF THE ASSESSMENT. IN THESE CIRCUMSTANCES, BELIEF OF ITO THAT INC OME HAD ESCAPED ASSESSMENT WAS BASED ON SUBSEQUENT INFORMATION DEFIN ITE, SPECIFIC AND RELIABLE. ACCORDINGLY, THE HONBLE APEX COURT HELD THAT NOTICE U/S 148 WAS NOT ISSUED MERELY ON CHANGE OF OPINI ON AND ACCORDINGLY, NOTICE FOR REASSESSMENT WAS VALID. BUT SUCH ARE NOT THE FACTS AND CIRCUMSTANCES IN THE CASE BEFORE US. NOT EVEN A WHISPER HAS BEEN MADE IN THE REASONS AS TO HOW MANAGERS CHEQUE FR OM SH. HARISH PAWAR WAS IN FACT ACCOMMODATION ENTRY. THERE I S NOTHING TO SUGGEST AS TO HOW THE INFORMATION MENTIONED IN THE R EASONS IS SPECIFIC ,DEFINITE OR RELIABLE. THEREFORE, RELIANCE ON THE AFORESAID DECISION IS MISPLACED. 5.2 IN RAYMOND WOOLLEN MILLS LIMITED. (SUPRA) RELI ED UPON BY THE LD. DR, THE ASSESSEE WAS CHARGING TO ITS PROFIT AND LOSS ACCOUN T, FISCAL DUTIES PAID DURING THE YEAR AS WELL AS LABOUR CHARGES, POWER, FUEL, WAGES, CHEMICALS, ETC. HOWEVER, WHILE VALUING ITS CLOSI NG STOCK, THE ELEMENTS OF FISCAL DUTY AND THE OTHER DIRECT MANUFACT URING COSTS WERE NOT INCLUDED. THIS RESULTED IN UNDERVALUATION OF INVE NTORIES AND UNDERSTATEMENT OF PROFITS. THIS INFORMATION WAS OBTAINE D BY THE REVENUE IN A SUBSEQUENT YEAR'S ASSESSMENT PROCEEDINGS. IN THESE CIRCUMSTANCES, HONBLE APEX COURT OBSERVED THAT WE HAV E ONLY TO SEE ITA NO.1511/DEL/2011 9 WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BA SIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. IN THE INSTANT CASE , NO SUCH PRIMA FACIE MATERIAL IS EVIDENT FROM THE REASONS RECORDED BY THE AO NOR THE REASONS LEAD TO ESCAPEMENT OF ANY INCOME.THUS ,RELIANCE ON THE SAID DECISION IS ALSO MISPLACED. 5.3 AS REGARDS RELIANCE ON DECISION IN RAJESH JHAV ERI STOCK BROKERS P. LIMITED.(SUPRA), WE HAVE ALREADY OBSERVED THAT THI S DECISION SUPPORTS THE CASE OF THE ASSESSEE SINCE NO COGENT ,SPECIFIC ,DEFINITE OR RELIABLE MATERIAL HAS BEEN MENTIONED IN THE REASONS. 5.4 HERE, WE MAY REFER TO THE FOLLOWING OBSER VATIONS OF THE HONBLE BOMBAY HIGH COURT IN HINDUSTAN LEVER LTD. V. R.B. WADKAR [2004] 268 ITR 332 (BOM.), WHEN THEY MENTIONED AB OUT THE NEXUS BETWEEN REASONS RECORDED AND EVIDENCE FORMING THE BASI S OF THOSE REASONS: '. . . THE REASONS ARE REQUIRED TO BE READ AS THEY WER E RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERM ISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CA N BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH RE ASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASONS. ... IT IS FOR THE ASSESSING OFFICER TO FORM HIS OPINION. IT IS FOR HIM TO PUT HIS OPINION ON RECORD IN BLACK AND WHITE. THE REASONS REC ORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM AN Y VAGUENESS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. REA SONS ARE THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND SHOULD NOT KEE P THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROVIDE THE LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICER, IN THE EVENT O F CHALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. HE MUST DISCLOSE IN THE REASONS AS T O WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TR ULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDEN CE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF T HE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER CANNOT ITA NO.1511/DEL/2011 10 BE SUPPLEMENTED BY FILING AN AFFIDAVIT OR MAKING AN ORAL SUBMISSION, OTHERWISE, THE REASONS WHICH WERE LACKING IN THE MATER IAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE M ATTER REACHES TO THE COURT, ON THE STRENGTH OF AFFIDAVIT OR ORAL SU BMISSIONS ADVANCED.' [EMPHASIS SUPPLIED] 5.5. LIKEWISE, HONBLE JURISDICTIONAL HIGH COURT IN IN IN IN CIT V. SFIL STOCK BROKING LTD. [2010] 325 ITR 285 WHILE DEALING WITH THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT AND REFERRIN G TO DECISIONS IN CIT V. ATUL JAIN [2008] 299 ITR 383 (DELHI), RAJESH JHA VERI STOCK BROKERS (P.) LTD.S CASE (SUPRA), JAY BHARAT MARUTI LTD. V. C IT [2009] 180 TAXMAN 192 (DELHI) AND CIT V. BATRA BHATTA CO. [200 8] 174 TAXMAN 444 (DELHI), HELD AS UNDER: : '9. IN THE PRESENT CASE, WE FIND THAT THE FIRST SENTENC E OF THE SO- CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF IN COME-TAX (INVESTIGATION). THE SECOND SENTENCE IS A DIRECTION GIV EN BY THE VERY SAME DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRI SES OF A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INC OME-TAX TO INITIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF C ASES PERTAINING TO THE RELEVANT WARD. THESE THREE SENTENCES ARE FOLLOW ED BY THE FOLLOWING SENTENCE, WHICH IS THE CONCLUDING PORTION O F THE SO-CALLED REASONS : 'THUS, I HAVE SUFFICIENT INFORMATION IN MY POSSESSION TO ISSUE NOTICE UNDER SECTION 148 IN THE CASE OF M/S. SFIL STOCK BROKING LTD. ON THE BASIS OF REASONS RECORDED AS ABOVE.' 10. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFIC ER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 1 48. WE ARE AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF THE BEGINNING P ARAGRAPH OF THE SO-CALLED REASONS ARE MERE DIRECTIONS. FROM THE SO-CALLED REASONS, IT IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATERIA L WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECT CONCLUSI ON ON FACTS. THE ITA NO.1511/DEL/2011 11 LAW IS WELL-SETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR OUR CONSIDERATION.' [EMPHASIS SUPPLIED] 5.6. NOW IN THE PRESENT CASE, THE REASON FOR R EOPENING THE ASSESSMENT WAS THAT TWO MANAGERS CHEQUES ISSUED BY HDFC BAN K, PUSA ROAD, OLD RAJINDER NAGAR, NEW DELHI NO.072676 D ATED 25.2.2002 AND NO.072688 DATED 26.2.2002 FOR RS.5,00,000/- FROM SH. HARISH PAWAR WERE IN FACT ACCOMMODATION ENTRIES. THE FIRST SE NTENCE IN THE AFORESAID REASONS IS ABOUT INFORMATION REGARDING REC EIPT OF TWO MANAGERS CHEQUES BY THE ASSESSEE AND SECOND SENTENCE HOLDS THESE CHEQUES RECEIVED FROM SHRI HARISH PAWAR TO BE ACCOMMO DATION ENTRIES . THE BASIS FOR HOLDING THE AMOUNT OF RS. 10 LACS AS ACC OMMODATION ENTRY IS NOWHERE EVIDENT FROM THESE RECORDED REASONS NO T THERE IS ANY MATERIAL THAT THE AMOUNT WAS ESCAPED INCOME. NOT EVE N A WHISPER HAS BEEN MADE IN THE REASONS REGARDING BASIS OR MATERIA L FOR MENTIONING THE AMOUNT OF AFORESAID TWO MANAGERS CHEQ UES AS ACCOMMODATION ENTRIES. THE AFORESAID REASONS RECORDED ARE NOT AT ALL SELF-EXPLANATORY AND KEEP ANY REASONABLE PERSON GUESSIN G AS TO HOW THE RECEIPT OF TWO CHEQUES BECOME ACCOMMODATION ENT RIES. THEREFORE, IT APPEARS FROM THE REASONS THAT THE AO WIT HOUT APPLYING HIS MIND PROPERLY, ISSUED NOTICE U/S 148 OF THE ACT. THE V ERY BASIS FOR REOPENING OF ASSESSMENT IS MERE ASSUMPTION OF THE AO AND T HE REOPENING CANNOT BE SUSTAINED ON THE ASSUMPTIONS AND SURM ISES AND HE NEVER CARED TO VERIFY THE FACTUAL POSITION CORREC TLY. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE VIEW TAKEN IN THE AFORESAID JUDICIAL PRECEDENTS, WE HOLD T HAT THE REOPENING OF ASSESSMENT MADE BY THE AO IS INVALID AND LIABLE TO B E QUASHED. THUS, GROUND NOS. 1 TO 5 IN THE APPEAL ARE ALLOWED. ITA NO.1511/DEL/2011 12 6. AS A COROLLARY, THE OTHER GROUND NOS. 6 TO 8 RE LATING TO ADDITIONS OF RS. 17 LACS IN THE APPEAL OF THE ASSESSEE, DO NOT SURVIVE FOR OUR ADJUDICATION AND ARE , THEREFORE, TREATED AS INFRUCT UOUS. 7. GROUND NO. 9 BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAV ING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO..10 IN THE A PPEAL, ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 8. IN RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (C.L. SETHI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. JASWINDER KAUR, 103, GUJRANWALA TOWN-II, NEW DEL HI. 2. INCOME TAX OFFICER, WARD 20(3) NEW DELHI. 3. CIT (APPEALS)-XXII, NEW DELHI 4. THE CIT CONCERNED. 5. THE DR, ITAT,D BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY/ // /ASSTT.REGISTRAR ITAT, DELHI