Sh. Jasvir Singh, Ludhiana V. ITO, W-II, Ludhiana

ITA 1566/CHANDI/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7980 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-08-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B, CHANDIGARH BEFORE: SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 1566 & 1567/CHD/2018 / ASSESSMENT YEARS: 2007-08 & 2008-09 SHRI JASVIR SINGH, VPO MANAK MAJRA, TEHSIL-KHANNA, DISTT. LUDHIANA INCOME TAX OFFICER, WARD-II, KHANNA. ./ PAN NO : BDVPS7623C / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, CA ! / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT ' #$ / DATE OF HEARING : 05.08.2021 %&'($ / DATE OF PRONOUNCEMENT : 27.08.2021 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : BOTH THE APPEALS RELATE TO THE SAME ASSESSEE FOR DIFFERENT ASSESSMENT YEARS AND HAVE BEEN FILED AGAI NST SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOM E TAX (APPEALS)-2, LUDHIANA[IN SHORT REFERRED TO AS CIT( A)] BOTH DATED 05-10-2018U/S 250(6) OF THE INCOME TAX ACT,19 61 (HEREINAFTER REFERRED TO AS ACT). ITA NOS. 1566&1567/CHD/2018 JASVIR SINGH V.ITO, KHANNA 2 IT WAS COMMON GROUND THAT THE ISSUES INVOLVED IN BO TH THE APPEALS WERE IDENTICAL ARISING IN THE BACKDROP OF IDENTICAL FACTS. THEY WERE BOTH TAKEN UP FOR HEARING TOGETHER . 2. THE FACTS LEADING TO THE PRESENT APPEALS ARE THA T ASSESSMENT IN BOTH THE CASES WAS FRAMED U/S 147 O F THE ACT AFTER REOPENING THE CASE OF THE ASSESSEE BY ISSUING NOTICE U/S 148 OF THE ACT AND ADDITION MADE OF RS.11,32,438/- , & RS. 70,13,995/- RESPECTIVELY BEING 1% OF THE TOTAL SALE S DECLARED IN AN ALLEGED PROPRIETARY CONCERN OF THE ASSESSEE M/S M.K. STEEL PRODUCTS. THE APPEAL AGAINST THE ORDER SO FRA MED WAS DISMISSED BY THE LD. CIT(A). AGGRIEVED BY WHICH THE ASSESSEE COME UP IN APPEAL BEFORE US, CHALLENGING T HE ORDER OF THE LD.CIT(A) ON MERITS. THE ASSESSEE HAS ALSO FIL ED AN APPLICATION IN BOTH THE CASES UNDER RULE 11 OF THE ITAT RULES, 1963, DATED 02-08-2021, SEEKING ADMISSION OF AN ADD ITIONAL GROUND CHALLENGING THE VALIDITY OF THE ASSESSMENT F RAMED U/S 147 OF THE ACT READING AS UNDER: 5. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, LD. AO HAS ERRED IN INITIATING, CONTINUING AND THEN CONCLUDING THE IMPUGNED ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT AND HENCE THE IMPUGNED ASSESSMENT DESERVES TO BE QUASHED. 3. THE ASSESSEE HAS SOUGHT ADMISSION OF THE SAID GR OUND BEING A LEGAL GROUND REQUIRING NO FURTHER FACTS TO BE GONE INTO AND RELYING UPON THE DECISION OF THE APEX COURT IN THE CASE OF ITA NOS. 1566&1567/CHD/2018 JASVIR SINGH V.ITO, KHANNA 3 NATIONAL THERMAL POWER CORPORATION LTD. V. CIT (229 ITR 283) (1998). 4. CONSIDERING THE SAME THE ADDITIONAL GROUND WAS ADMITTED FOR ADJUDICATION IN THE LIGHT OF THE DECIS ION OF THE APEX COURT IN THE CASE OF NTPC LTD.(SUPRA) HOLDING THAT PURELY LEGAL GROUNDS REQUIRING NO FURTHER INQUIRY I NTO THE FACTS CAN BE RAISED AT ANY STAGE BY THE ASSESSEES F OR ADJUDICATION. SINCE THE LEGAL GROUND CHALLENGES THE VALIDITY OF T HE ASSESSMENT FRAMED ITSELF, WE SHALL FIRST BE DEALING WITH THE SAME. 5. WE HAVE HEARD BOTH THE PARTIES. THE CHALLENGE TO THE ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT IN BO TH THE CASES IS ON THE GROUND THAT THE INFORMATION WITH TH E ASSESSING OFFICER(AO) COULD NOT HAVE LED TO THE FOR MATION OF BELIEF OF ESCAPEMENT OF THE INCOME IN THE HANDS OF THE ASSESSEE AT ALL. 6. THE FACTS ON FILE REVEAL THAT THE CASE OF THE AS SESSEE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED BY TH E AO OF THE ASSESSEE FROM ITO, WARD-1, MANDI GOVINDGARH REGARDI NG IMPOSITION OF PENALTY OF RS.6,20,000/- BY THE ASSIS TANT EXCISE & TAXATION COMMISSIONER CUM DEPUTY DIRECTOR (INV.), PATIALA ITA NOS. 1566&1567/CHD/2018 JASVIR SINGH V.ITO, KHANNA 4 VIDE ORDER U/S 51(7)(B) OF THE PUNJAB VAT ACT, 2005 DATED 07.08.2006 IN THE CASE OF M/S M.K. STEEL PRODUCTS, MANDI GOVINDGARH , APPARENTLY A PROPRIETARY CONCERN OF SH . JASVIR SINGH. AS THE ASSESSEE DID NOT DISCLOSE ANY INCOME FROM THIS PROPRIETARY CONCERN, THE ASSESSING OFFICER RECORDED REASONS FOR ESCAPEMENT OF INCOME AND REOPENED THE CASE OF T HE ASSESSEE.THE REOPENING THEREFORE WAS BASED ON THE O RDER OF THE ASSISTANT EXCISE & TAXATION COMMISSIONER CUM DE PUTY DIRECTOR (INV.), PATIALA DATED 07.08.2006 IN THE CA SE OF M/S M.K. STEEL PRODUCTS. 7. WE HAVE PERUSED THE CONTENTS OF THE SAID ORDER W HICH WAS PLACED BEFORE US IN THE PAPER BOOK AT PAGE NO. 27 TO 32 AND WE FIND THAT THE SAID ORDER, AFTER DETAILED INV ESTIGATION MADE, FOUND THAT SH. JASVIR SINGH, THE ASSESSEE BEF ORE US, WAS FRAUDULENTLY STATED TO BE THE PROPRIETOR OF THE CONCERN BY ONE SH. VARINDER KUMAR WHO WAS ACTUALLY RUNNING TH E BUSINESS IN THE SAID CONCERN. THE ORDER, WE NOTE, G OES ON TO STATE THAT SH. VARINDER KUMAR HAD SO FRAUDULENTLY C REATED OTHER CONCERNS ALSO AND WAS CONDUCTING INGENUINE BU SINESS WITH THE OBJECTIVE TO EVADE TAX BY AVAILING BOGUS I TC. PARAGRAPHS 6 TO 8 OF THE SAID ORDER BRING OUT THE A BOVE FACTS AND FINDINGS OF THE VAT AUTHORITIES AND PARAGRAPH 1 0 GOES TO STATE THAT MENSREA IS ESTABLISHED AGAINST SH. VARIN DER KUMAR WHICH IS EVIDENT FROM THE FACT OF OBTAINING RC IN THE NAME OF ITA NOS. 1566&1567/CHD/2018 JASVIR SINGH V.ITO, KHANNA 5 HIS DRIVER SH. JASVIR SINGH WITH A VIEW TO AVAIL AN IN ADMISSIBLE ITC INTENTIONALLY BY ADOPTING THE MODUS OPERANDI AS DISCUSSED ABOVE. THE ORDER FURTHER RECORDS SH. VARINDER KUMAR ,AS THE DEALER OF THE CONCERN AT PARA 11.FURT HER, WE HAVE NOTED THAT THE BODY OF THE ORDER MENTIONS PRES ENT DURING ASSESSMENT OF M/S M.K. STEEL PRODUCTS, SH. JASVIR S INGH PROPRIETOR OF THE FIRM AS PROJECTED BY SH. VARINDE R KUMAR. THE VAT ORDER THEREFORE CLEARLY BRINGS OUT THE FACT THAT THE BUSINESS WHATSOEVER DONE IN THE PROPRIETORSHIP CONC ERN M/S M.K. STEEL PRODUCTS WAS FRAUDULENTLY BEING CARRIED OUT IN THE NAME OF SH. JASVIR SINGH AND ACTUALLY RELATED TO ON E SH. VARINDER KUMAR. THIS INFORMATION CLEARLY COULD NOT HAVE LEAD TO THE FORMATION OF BELIEF OF ESCAPEMENT OF INCOME IN THE HANDS OF JASVIR SINGH, THE ASSESSEE BEFORE US. 8. FOR THIS REASON ALONE THE JURISDICTION ASSUMED T O FRAME ASSESSMENT ON SH. JASVIR SINGH, WE HOLD IS NOT IN A CCORDANCE WITH THE LAW AND THE ORDER, THEREFORE PASSED U/S 14 7 OF THE ACT IS NOT LEGALLY SUSTAINABLE. THE ORDER PASSED BY THE AO IN BOTH THE CASES IS THEREFORE SET ASIDE. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSES SEE IN BOTH THE APPEALS IS THEREFORE ALLOWED. 9. THE OTHER GROUNDS RAISED BY THE ASSESSEE RELATE TO THE MERITS OF THE CASE AND SINCE WE HAVE HELD THE ORDER PASSED BY ITA NOS. 1566&1567/CHD/2018 JASVIR SINGH V.ITO, KHANNA 6 THE ASSESSING OFFICER TO BE INVALID, THE REMAINING GROUNDS ARE RENDERED ACADEMIC IN NATURE AND ARE THEREFORE NOT B EING DEALT WITH BY US. 10. BOTH THE APPEALS OF THE ASSESSEE THEREFORE STA ND ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2021. SD/- SD/- (SATBEER SINGH GODARA) (ANNAPURNA GUPTA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /DATED: 27 AUGUST, 2021 GP/SR.PS &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, ! / ASSISTANT REGISTRAR ITA NOS. 1566&1567/CHD/2018 JASVIR SINGH V.ITO, KHANNA 7