ITO, Bulandshahr V. Sh. Brij Mohan, Bulandshahr

ITA 1527/DEL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53492 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-11-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 16-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Gift; Question of law; Difference of opinion; Change of opinion; Borrowed satisfaction
• Section: 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NOS. 1527/DEL/2009 ASSTT. YR. 1999-2000 INCOME-TAX OFFICER VS. SH. BRIJ MOHAN S/O SH. KAL LU MAL WARD-1, BULANDSHAHR. C/O M/S MOHAN DAIRY, SIYANA ROAD, DISTT. BULANDSHAHR (U.P) PAN/GIR NO. AATPM4603J (APPELLANT) ( RESPONDENT ) APPELLANT BY : MS. Y. KAKKAR SR. DR RESPONDENT BY : SHRI RAJ KUMAR GUPTA CA O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DAT ED 4-2-2009 RELATING TO A.Y. 1999-2000. EFFECTIVE GROUNDS RAIS ED ARE AS UNDER: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(APPEALS) HAS ERRED IN NOT CONSIDERING THE MERIT S OF THE CASE AND HOLDING THAT INITIATION OF PROCEEDINGS U/S 147 ARE INVALID. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(APPEALS) HAS ERRED IN HOLDING THAT THE INFORMAT ION ABOUT THE BOGUS NATURE OF A PARTICULAR GIFT, FURNISHED BY THE DONORS ITO, WOULD NOT CONSTITUTE A VALID BASIS FOR FORMAT ION OF BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. 2. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET CONTENDS THAT ON SIMILAR FACTS AND CIRCUMSTANCES, IN THE CASE OF ASSESSEES BROTHER SHRI VIJENDRA KUMAR THE ITAT DELHI BENCH I VIDE ORDER DATED 19- 8-2011 RENDERED IN ITA NO. 1202/DEL/09 HAS UPHELD THE ORDER OF CIT(A) AND REJECTED REVENUES APPEAL, HOLDING THAT 147/148 PROCEEDINGS WERE BAD I N LAW BY FOLLOWING OBSERVATIONS: ITA 1527/DEL/09 BRIJ MOHAN 2 10.1. ON CONSIDERATION OF THE FACTS AND ARGUMENTS THEREON ALONGWITH THE LEGAL PRINCIPLES CANVASSED BEFORE US BY THE PARTIES BEFORE THE BENCH THE UNDISPUTED FACTS WHICH REMAIN ON RECORD ARE THAT THE INFORMATION OF ITO AGRA WARD 4( 1) WAS RECEIVED BY FAX BY THE CONCERNED ASSESSING OFFICER ON THE VERY DAY ON WHICH HE RECORDED HIS REASONS, OBTAINED THE NECESSARY APPROVALS AND ISSUED NOTICE. IT IS ALSO AN UNDISPUT ED FACT ON RECORD THAT THE REASONS RECORDED ARE VERBATIM WITH THE FAXED INFORMATION. IT IS ALSO A MATTER OF RECORD THAT NON E OF THE DONOR TRUSTS ARE THE TRUST FROM WHOM THE ASSESSEE HAS REC EIVED GIFTS. IT IS ALSO A MATTER OF RECORD THAT QUA THE INFORMATION RECEIVED AND REASONS RECORDED THE GIFTS WERE ALLEGEDLY OF RS. 20 LAKHS WHEREAS THE ASSESSMENT ORDER WOULD SHOW THAT THEY A RE OF RS. 15 LAKH. THESE ARE SOME OF THE FACTS ON THE BASIS O F WHICH IT HAS BEEN CANVASSED THAT THE REASONS RECORDED ARE BASED ON BORROWED SATISFACTION, THE AO HAS PROCEEDED IN HAST E AND ACTED MECHANICALLY AS ADMITTEDLY THE SPECIFIC FACTS NAMEL Y DONOR TRUSTS, AMOUNTS, WERE ALL WRONG. IT IS SEEN THAT ON FACTS THE DEPARTMENT HAS NOT REBUTTED THE ASSESSEES STAND. T HE DEPARTMENT HAS RELIED UPON CASE LAW TO CANVASS THAT ONCE THE REASONS ARE RECORDED ON THE INFORMATION RECEIVED, T HE ACTION OF RE-OPENING IS JUSTIFIED. NO DOUBT SUFFICIENCY OF RE ASON CANNOT BE AGITATED HOWEVER THE FIRST HURDLE THAT THE FORMA TION OF BELIEF IS OF THE CONCERNED AO AND NOT OF SOME OTHER AO HAS TO BE MET. THE BLIND ACCEPTANCE IN HASTE THE VIEW OF ANOT HER AO HAS NOT BEEN REBUTTED BY ANY COGENT FACT OR ARGUMENT AN D TO OUR MIND CASE LAW CANNOT ADDRESS THE ISSUE. A PERUSAL O F THE FINDING OF THE CIT(A) REPRODUCED IN THE EARLIER PART OF THI S ORDER WOULD SHOW THAT APPELLATE AUTHORITY HAS HELD THAT THE REA SONS RECORDED IS NOTHING BUT A COPY OF INFORMATION AS RE CEIVED FROM ITO 4(1) AGRA WHO WAS OF THE OPINION THAT THE TRANSACTION IS NON- GENUINE. THE CIT(A) HAS COME TO THE CONCLUS ION THAT THE AO HAS PROCEEDED ON BORROWED SATISFACTION. TH E AO HAS BEEN HELD TO HAVE PROCEEDED IN ISSUING NOTICE ACCEP TING THE REPORT OF ITO 4 (1) AS GOSPEL TRUTH WITHOUT VERIFYI NG THE CORRECTNESS OF THE INFORMATION RECEIVED. THE CIT(A) HAS FURTHER TAKEN INTO CONSIDERATION THE ORDER DATED 23 MAY, 20 08 IN ITA NO. 171TO 175 / AGRA / 2006 ALONGWITH CO. NO. 24 / 25 / AND 50 ITA 1527/DEL/09 BRIJ MOHAN 3 THE AGRA /2008 SO AS TO CONCLUDE THAT THE ISSUE IS COVERED. A PERUSAL OF THE ABOVE MENTIONED ORDER DATED 23 MAY, 2008 PLACED AT PAGES 2 TO 10 OF THE PAPER BOOK SHOWS THA T THE CO- ORDINATE BENCH CONSIDERED THE CASES OF THREE DIFFER ENT ASSESSEES NAMELY VIPIN KUMAR AGGARWAL, SUNIL KUMAR AGGARWAL A ND ANIL KUMAR AGGARWAL WHEREIN THE ISSUE FOR CONSIDERA TION WAS THE SATISFACTION OF THE AO BASED ON INFORMATION FRO M AO AGRA OF BOGUS GIFTS FOR TRUSTS CREATED BY SHRI D.K. AGAR WAL ON THE BASIS OF SURVEY U/S 133A CONDUCTED ON 22.4.2001 AT THE PREMISES OF SHRI P.K. AGGARWAL. THE CO-ORDINATE BEN CH DISMISSED THE DEPARTMENTAL APPEAL WHEREIN THE ADDIT ION HAD BEEN DELETED ON MERIT AND CONSIDERING THE ASSESSEE S CROSS OBJECTION WHEREIN THE CIT(A) HAD UPHELD THE PROCEED INGS U/S 14] THE COORDINATE BENCH RELYING UPON CIT VS. ANITA JAM AND VINITA JAMS CASE REPORTED IN 299 ITR 383 HELD THAT THE ISSUE IS COVERED BY THE PRINCIPLE SET DOWN IN THE SAID JUDGM ENT IN AS MUCH THE AO ACCEPTED WITHOUT VERIFYING THE CORRECTN ESS OF THE INFORMATION RECEIVED BY HIM IN A MECHANICAL MANNER. THE CO- ORDIANTE BENCH HAS ALSO RELIED UPON INDRA PRASTHA C HEMICALS (P) LTD. VS. CIT 271 ITR 113 (ALL). IN VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES AS THEY STAND WE ARE OF THE CONSI DERED VIEW THAT THE DEPARTMENTAL APPEAL DOES NOT HAVE ANY MERI T. BEING SATISFIED WITH THE REASONING AND CONCLUSION ARRIVED AT BY THE CIT(A) AND CONSIDERING THE SAME IN THE LIGHT OF THE SETTLED LEGAL PRINCIPLE THE SAME IS UPHELD. IN THE FACTS OF THE P RESENT CASE THE ASSESSEE HAS FURTHER FORTIFIED THE FINDING ARRIVED AT IN THE IMPUGNED ORDER BY THE UNREBUTTED ARGUMENTS ADVANCED NAMELY THAT THE AO HAS MECHANICALLY PROCEEDED WITHOUT VERI FYING THE CORRECTNESS OF THE INFORMATION GIVEN AS NOT ONLY TH E NAME OF THE DONORS AS PER THE REASONS RECORDED BASED ON THE INF ORMATION GIVEN IS INCORRECT BUT EVEN THE AMOUNTS QUA THE FAC TS IN THE ASSESSEES ORDER WHEN COMPARED WITH THE REASONS REC ORDED IS COMPLETELY WRONG. . 10.8. RELIANCE HAS ALSO BEEN PLACED ON ACIT VS. RAJ ESH JHAVERI STOCK BROKERS (P) LTD. WHEREIN IT WAS CANVASSED THA T IT WAS A CHANGE OF OPINION. IN VIEW OF THE FACT THAT INTIMAT ION U/S 143(1)(A) WAS CONSIDERED TO BE NOT AN ASSESSMENT AN D WAS ITA 1527/DEL/09 BRIJ MOHAN 4 DEEMED TO BE A NOTICE OF DEMAND U/S 156. THEIR LORD SHIPS HELD THAT THERE BEING NO ASSESSMENT QUESTION OF CHANGE O F OPINION DOES NOT ARISE. AS SUCH THE PRINCIPLE LAID DOWN THE REIN DOES NOT ADVANCE THE CASE OF THE REVENUE. IN THE PRESENT CAS E THE IMPUGNED ORDER HAS QUASHED THE RE-ASSESSMENT NOT ON THE GROUND OF CHANGE OF OPINION BUT ON THE GROUND THAT THE CONCERNED AO HAS PROCEEDED ON BORROWED SATISFACTION , NON- APPLICATION OF MIND AND POWER OF REOPENING EXERCISE EXERCISING MECHANICALLY AMONGST OTHERS. 10.9 THE FACT THAT NOTICE WAS NOT SERVED ON THE COR RECT PERSON AND THE FACT THAT NOTICE BY POST WAS NOT SENT TO TH E CORRECT ADDRESS ALSO REMAINING UNREBUTTED ON RECORD. FATUOU S ARGUMENT ADVANCED BY THE SR. DR THAT AT THE ADDRESS AS PER R ETURN THE ONLY LIKELY OCCUPANTS WOULD BE COWS AND BUFFALOES A S SUCH IS OF HELP TO THE DEPARTMENT AS IT MERELY ADDRESSES THE F ACT THAT NO ATTEMPT WAS MADE TO SERVE NOTICE TO THE ADDRESS AVA ILABLE ON THE RETURN. SIMILARLY THE ARGUMENT THAT NOTICE WOULD HA VE BEEN RECEIVED DESPITE A WRONG ADDRESS IN A SMALL PLACE L IKE BULANDSHAHAR ALSO DOES NOT INSPIRE ANY CONFIDENCE A ND IT DEFINITELY CANNOT BE SAID TO BE A REBUTTAL OF THE C ONSISTENT UNREBUTTED STAND OF THE ASSESSEE THAT THE NOTICE WA S NEVER SERVED UPON THE ASSESSEE. IN REGARD TO NOTICE ON SO ME MINAKSHI AGARWAL AGAIN IN THE FACE OF CONSISTENT STAND OF TH E ASSESSEE RIGHT FROM THE STAGE OF AO THAT HE HAS NOT RECEIVED THE NOTICE AND SHE WAS NOT THE AUTHORI2ED PERSON OF THE ASSESS EE A REBUTTAL BY THE DEPARTMENT ON RECORD IS NOT AVAILABLE. THE C ASE LAW RELIED UPON THE ASSESSEE ON THE ISSUE NAMELY CIT V. RAJESH KUMAR SHARMA 311 ITR 235 (DELHI) AND CIT V. LAXMI N ARAIN 168 TAXMAN 128 (P&H) FURTHER FORTIFY THE ACTION OF THE CIT(A) THOUGH ON A DIFFERENT GROUND. 11. ACCORDINGLY FOR THE REASONS GIVEN HEREINABOVE T HE DEPARTMENTAL APPEAL IS DISMISSED. 2.1. LEARNED COUNSEL CONTENDS, IN ASSESSEES CASE A LSO THE PROCEEDINGS U/S 147/148 WERE TAKEN UP ON SIMILAR BORROWED SATISFACT ION AND BY SAME TYPE OF INVALID SERVICE OF NOTICE. THE FACTS AND CIRCUMSTAN CES BEING SIMILAR, THE ORDER OF CIT(A) MAY BE UPHELD. ITA 1527/DEL/09 BRIJ MOHAN 5 3. LEARNED DR, ON THE OTHER HAND VEHEMENTLY ARGUES THAT THE ISSUE IN QUESTION IS NOT COVERED BY THE CASE LAW OF VIJENDRA KUMAR, BROTHER OF THE ASSESSEE AS IN THIS CASE THE AO HAS CATEGORICALLY R ECORDED REASONS FOR REOPENING OF THE ASSESSMENT. THE REASONS FOR REOPE NING ARE NEITHER MECHANICAL NOR BORROWED AS BEING CONTENDED BY LEARN ED COUNSEL FOR THE ASSESSEE. IN THE CASE OF VIJENDRA KUMAR ITATS REL IANCE ON HONBLE MADRA HIGH COURT IN THE CASE OF STERLING INDUSTRIES 302 I TR 375 WAS NOT PROPER. HONBLE DELHI HIGH COURT IN THE CASE OF JAGJIT PAL SINGH 320 ITR 106 (DEL.) LAYS DOWN THE CORRECT LAW, WHICH HAS NOT BEEN APPLI ED BY ITAT. 3.1. LEARNED DR THEN RELIES ON THE JUDGMENTS IN THE CASES OF: (1) DESH RAJ UDYOG VS. CIT 318 ITR 6 (ALL.) (2) CIT VS. HIGH GAINFININVST 304 ITR 325 (DEL.); (3) AGR INVESTMENTS 333 ITR 146 (DEL.) (4) PHOOLCHAND BAJRANG LAL 203 ITR 456 (SC) (5) RAYMOND WOOLLEN MILLS 236 ITR 34 (SC). (6) MTNL VS. CIT 246 ITR 153 (DEL.) (7) ITO VS. GURINDER KAUR 217 ITR 597 (SC). 3.2. IT IS FURTHER PLEADED THAT THE ITAT ORDER IS U NSUSTAINABLE AS: (A) IT HAS NOT CONSIDERED THESE CASE LAWS. (B) SERVICE OF NOTICE IS PROPER IN THIS CASE. (C) ITAT CANNOT GO INTO THE SUFFICIENCY OF REASONS. 3.3. LEARNED DR HAS FILED WRITTEN SUBMISSIONS CITIN G VARIOUS CASE LAWS, WHICH, ACCORDING TO HER, OUGHT TO HAVE BEEN CONSIDE RED BY THE ITAT. IN ALTERNATE IT IS PLEADED THAT ALL THE DECISIONS RELI ED ON BY THE TRIBUNAL IN THE CASE OF VIJENDRA KUMAR ARE DISTINGUISHABLE ON LAW A ND FACTS. THIS CASE RAISES SUBSTANTIAL QUESTION OF LAW ABOUT INTERPRETA TION OF EXPLANATION TO SEC. 147 AND IN RESPECT OF REASONS FOR REOPENING, THERE FORE, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE REFERRED TO SPECIAL BEN CH. ITA 1527/DEL/09 BRIJ MOHAN 6 4. LEARNED COUNSEL FOR THE ASSESSEE IN REPLY CONTEN DS THAT THE ISSUE IN QUESTION IS FULLY COVERED BY THE ITAT JUDGMENT AS THE REASONS FOR REOPENING AND AOS ORDER IS SAME. LEARNED COUNSEL REFERS TO THE ITAT OPENING PARA IN THE CASE OF VIJENDRA KUMAR WHICH IS AS UNDER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED BN4-2-2009 OF CIT MEERUT PERTAINING TO 1999-2000 AS STT. YEAR. 4.1. REFERENCE IS MADE TO IMPUGNED FIRST APPELLATE ORDER WHICH IS PASSED BY THE SAME CIT(A) I.E. CIT(A), MEERUT ON 4-2-2009. ORDER OF CIT(A) IN THE CASE OF VIJENDRA KUMAR IS ALSO PLACED ON RECORD , PARA NOS. 66, 67 & 68 OF THE ORDER OF CIT(A) IN ASSESSEES CASE ARE EXACT LY IDENTICAL WITH PARAS 72, 73 & 74 IN THE CASE OF VIJENDRA KUMAR. THE SOURCE O F INFORMATION AND REASONS OF REOPENING IN THE CASE OF BOTH THE BROTHE RS I.E. BRIJ MOHAN AND VIJENDRA KUMAR ARE SAME. AO AND CIT(A) IN BOTH THE CASES HAVING PASSED THE ORDERS ON THE SAME FACTS AND DATE, IT CANNOT BE HELD THAT THE ASSESSEES CASE IS NOT COVERED BY THE CASE OF HIS BROTHER VIJE NDREA KUMAR. LEARNED COUNSEL HAS ALSO FILED WRITTEN SUBMISSIONS RAISING VARIOUS ISSUES ON THE BORROWED SATISFACTION AND SERVICE OF NOTICE. GROUND S OF APPEALS IN BOTH THE APPEALS, OF BROTHERS, ARE IDENTICAL. 4.2. ASSESSEES WRITTEN SUBMISSIONS CONTEND THAT NO NOTICE WAS SERVED U/S 148 ON THE ASSESSEE. BESIDES, THE INITIATION OF THE PROCEEDINGS WAS ON THE BASIS OF A FAX LETTER RECEIVED FROM ITO AGRA WITHOU T APPLYING INDEPENDENT MIND. ON THE SIMILAR TYPE OF INFORMATION THE ITAT A GRA AND DELHI BENCHES IN RESPECT OF SAME SOURCE OF INFORMATION HAVE QUAS HED 147/148 PROCEEDINGS IN ALL OTHER CASES. FURTHER RELIANCE IS PLACED ON: ITA 1527/DEL/09 BRIJ MOHAN 7 - CIT VS. SFIL STOCK BROKING LTD. 233 CTR (DEL) 69. - SARTHAK SECURITIS CO. (P) LTD. 329 ITR 110 (DEL.) - TEJ PRATAP SINGH 116 ITD 388 (DEL.) - CIT VS. SMT. PARAMJIT KAUR 311 ITR 38 (P&H) - ITO VS. TAKSHILA DISTRIBUTORS PVT. LTD. (2009) 20 D TR (DEL) (TRIB) 156. - CIT VS. ATUL JAIN & ANOTHER 99 ITR 383 (DEL.) WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH TH E ENTIRE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW, SAME SOURCE AND T YPE OF INFORMATION EMANATED FROM ITO AGRA IN VARIOUS CASES, HAVE BEE N DECIDED BY ITAT AGRA BENCH, MANY OF THEM HAVE BEEN FOLLOWED BY ITA T DELHI IN ASSESSEES BROTHERS CASE (SUPRA). IN VARIOUS CASES DECIDED BY AGRA BENCH AND ASSESSEES BROTHER VIJENDRA KUMARS CASE, IT HAS BE EN HELD THAT 148 PROCEEDINGS IN QUESTION WERE ON THE BASIS OF BORROW ED SATISFACTION AND NOT THE INDEPENDENT SATISFACTION OF THE AO. BESIDES, IN THE CASE OF BOTH BROTHERS THE ISSUE OF NON-SERVICE OF MANDATORY VALID NOTICE U/S 148 ARE INVOLVED. 5. WE ARE UNABLE TO ACCEDE TO THE REQUEST OF LEARNE D DR THAT ASSESSEES CASE IS DISTINGUISHABLE FROM THE CASE OF THE BROTHE R. IT IS EVIDENT FROM THE ORDER OF AO AND CIT(A) THAT SOURCE OF INFORMATION O N THE BASIS OF WHICH ASSESSMENTS WERE REOPENED IN THE CASE OF BOTH I.E. THE ASSESSEE AND THE BROTHER WAS SAME. THE REASONS RECORDED ARE SAME AND FACTS ABOUT INVALID SERVICE OF NOTICE U/S 148 ARE SAME. THE ORDERS OF A O AND CIT(A) IN BOTH THE CASES IS PARI-MATERIA. IN VIEW THEREOF, WE ARE UNAB LE TO HOLD THAT ASSESSEES CASE IS DISTINGUISHABLE. 6. SINCE BOTH THE CASES ARE IDENTICAL AND ITAT HAS ALREADY TAKEN A CONSIDERED VIEW IN BROTHERS CASE IN BROTHERS CASE ; THE SPECIAL BENCH CANNOT BE CONSTITUTED IN ASSESSEES CASE, WHICH IS BASED ON SAME SET OF FACTS AND CIRCUMSTANCES, ON THE PLEA THAT THE ITAT HAS NO T CONSIDERED THE ISSUE ITA 1527/DEL/09 BRIJ MOHAN 8 PROPERLY OR THE JUDGMENTS HAVE BEEN MISAPPLIED. IN OUR VIEW, WE CANNOT GO INTO THESE ARGUMENTS AND REVIEW THE ORDER OF A COOR DINATE BENCH. THERE IS NO DOUBT THAT THE CASE OF THE ASSESSEE AND BROTHER ON BORROWED SATISFACTION AND INVALID SERVICE OF 148 NOTICE ARE IDENTICAL AND WE CANNOT HAVE A DIFFERENT OPINION THAN WHAT THE COORDINATE BENCH HELD IN THE CASE OF ASSESSEES BROTHER. WE DO NOT SEE ANY JUSTIFICATION TO REFER T HE CASE FOR CONSTITUTION OF SPECIAL BENCH AS THESE FACTS AND ISSUES ARE ALREADY DECIDED. IN VIEW THEREOF, WE DISMISS THE REVENUES APPEAL. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16-12-2011. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16-12-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 1527/DEL/09 BRIJ MOHAN 9