Asstt.Commissioner of Income Tax, Patiala V. Raja Malvinder Singh, Patiala

ITA 16/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0070 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 12-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: K P BAJAJ
• Keywords: Principle of natural justice; Question of law; Reassessment proceedings
• Section: 143(3); 147; 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.16 /CHD/2016 (ASSESSMENT YEAR : 2005-06) THE A.C.I.T., VS. RAJA MALVINDER SINGH, CIRCLE PATIALA. LEELA BHAWAN, URBAN ESTATE, PATIALA. PATIALA. PAN: AFKPS9801A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL RESPONDENT BY : SHRI K.P. BAJAJ DATE OF HEARING : 02.05.2016 DATE OF PRONOUNCEMENT : 05.05.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 29.10.2015, RELATING TO ASSESSMENT YEAR 2005-06, PASSED UNDER SECTION 250(6 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT MADE AS ON 30.11.2007 WAS REOPENED BY THE ASSESSING OFF ICER 2 AFTER HAVING RECEIVED INFORMATION FROM THE INVESTIG ATION WING WITH REGARD TO DEPOSITS FROM SHRI CHETAL GUPTA AND INTEREST THEREON. THE REPLY OF THE ASSESSEE WAS TH AT NO SUCH DEPOSIT WAS MADE AND NO INTEREST WAS EARNED THEREON. THE ASSESSEE ALSO STATED THAT HE DID NOT KNOW ANY SUCH PERSON NAMED CHETAN GUPTA. AT THE SAME TI ME HE DEMANDED THE MATERIAL USED AGAINST HIM BY THE ASSESSING OFFICER. SUMMONS UNDER SECTION 131 OF TH E ACT WERE ISSUED TO SHRI CHETAN GUPTA BUT HE DID NOT APP EAR. THE ASSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF THE DEPOSIT AND INTEREST THEREON. 3. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE MADE DETAILED SUBMISSIONS WHICH WERE MAINLY ON THE ISSUE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF STATEMENTS REC ORDED AT THE BACK OF THE ASSESSEE AND USED AGAINST HIM WI THOUT ALLOWING HIM THE RIGHT TO CROSS EXAMINE. RELIANCE WAS ALSO PLACED ON A NUMBER OF JUDGMENTS. FURTHER, IT WAS CONTENDED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF I.T.A.T., CHANDIGARH BENCH IN THE CASE OF MAHARAJA AMRINDER SINGH VS. ACIT IN ITA NO.505/CHD/2009 DATED 30.6.2010. RELYING ON THE AB OVE- SAID ORDER, THE LEARNED CIT (APPEALS) ALLOWED THE A PPEAL OF THE ASSESSEE. 4. AGGRIEVED, THE DEPARTMENT HAS COME UP IN APPEAL, RAISING THE FOLLOWING GROUNDS OF APPEAL : 3 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED .CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF I.59,00,000/- MADE ON ACCOUNT OF UNACCOUNTED SUM OF I.50,00,000/- DEPOSITED WITH SHRI CHETAN GU PTA AND I.9,00,000/- INTEREST EARNED THEREON. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE I. CIT(A)HASERRED IN DELETING THE ADDITION OF I.59,00,000/- WITHOUT APPRECIATING THE FACT THAT TH E ADDITION WAS MADE ON THE BASIS OF INFORMATION RECEIV ED FROM THE INVESTIGATION WING. 3. IT IS PRAYED THAT THE ORDER OF I. CIT(A) BE SET A SIDE AND THAT OF THE I RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DI SPOSED OF. 5. THE LEARNED D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED COUNSEL FOR TH E ASSESSEE AGAIN PLACED RELIANCE ON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF MAHARAJA AMRINDER S INGH (SUPRA). 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF MAHARAJA AMRINDER SINGH (SUPRA), WE OBSERVE THAT THE RELEVANT FINDING ARE AS FOLLOWS : 14. CONSIDERING THE AFORESAID FACTUAL MATRIX, IN OUR CONSIDERED OPINION, IT DOES NOT STAND ESTABLISHED THAT THE ASSESSEE HAS MADE THE 4 IMPUGNED INVESTMENT. WE SAY SO FOR THE REASON THAT THE BURDEN TO ESTABLISH THE EXISTENCE OF IMPUGNED INVESTMENT WAS ON THE REVENUE, WHICH, IN THE PRESENT CASE HAS NOT BEEN DISCHARGED. FIRSTLY, ASSESSEE DENIED THE IMPUGNED TRANSACTION. SECONDLY, THE CLAIM OF THE ASSESSING OFFICER IS BASED ON THE ALLEGED EVIDENCE FOUND ON SHRI CHETAN GUPTA, AND QUITE CLEARLY, SAID WITNESS HAS NOT BEEN CONFRONTED TO THE ASSESSEE AT ANY STAGE DURING THE COURSE OF ASSESSMENT, ALTHOUGH THE SAME WAS SPECIFICALLY PLEADED BY THE ASSESSEE. THE SAID PERSON IS THE WITNESS OF THE REVENUE, BECAUSE IT IS ON THE BASIS OF HIS TESTIMONY, IT HAS BEEN HELD THAT THE ASSESSEE MADE THE IMPUGNED INVESTMENT. THEREFORE, NON-AFFORDING OF CROSS- EXAMINATION MAKES THE USE OF SUCH EVIDENCE BY THE REVENUE, AS UNTENABLE. IN THIS CONNECTION, WE MAY REFER TO THE JUDGEMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS ASHWANI GUPTA, 322 ITR 396 (DEL), WHICH FOLLOWED ITS EARLIER DECISION IN THE CASE OF SMC SHARE BROKERS LTD. (SUPRA). AS PER THE HON'BLE HIGH COURT, ONCE THERE WAS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, IN AS MUCH AS SEIZED MATERIAL WAS NOT PROVIDED TO AN ASSESSEE NOR WAS CROSS-EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER RELIED UPON GRANTED, THEN SUCH DEFICIENCIES WOULD AMOUNT TO DENIAL OF OPPORTUNITY AND WOULD BE FATAL TO THE PROCEEDINGS. THIRDLY, IN THIS CASE, SHRI CHETAN GUPTA HAS DENIED RECOVERY OF THE PEN-DRIVE AND ALSO THE IMPUGNED TRANSACTIONS IN THE STATEMENT RECORDED BY THE ASSESSING OFFICER ON 16.11.2009, SO HOWEVER, EVEN IF IT IS ACCEPTED THAT THE PEN-DRIVE WAS RECOVERED FROM SHRI CHETAN GUPTA, THEN, IT ONLY AMOUNTS TO A THIRD-PARTY EVIDENCE AND COULD NOT BE STRAIGHTAWAY RELIED UPON, WITHOUT BEING 5 TESTED IN CROSS-EXAMINATION OR ON THE BASIS OF ANY CORROBORATIVE EVIDENCE. FOR THE AFORESAID PROPOSITION, WE ARE FORTIFIED BY THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF KISAN CHAND CHELLA RAM (SUPRA), THAT OF THE HON'BLE DELHI HIGH COURT IN SMC SHARE BROKERS LTD. (SUPRA) AND S.M.AGGARWAL (SUPRA); AND, ALSO OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CHIRANJI LAL STEEL ROLLING MILLS (SUPRA). THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM HIS INVESTIGATION WING, AT BEST, BE REGARDED AS A PRIMA-FACIE MATERIAL, BUT COULD NOT BE CONSTRUED AS CONCLUSIVE FOR USE AGAINST THE ASSESSEE TO FASTEN ANY TAX LIABILITY, BECAUSE THE SAME WAS REQUIRED TO BE CORROBORATED BY CREDIBLE AND INDEPENDENT EVIDENCE OR WAS REQUIRED TO BE TESTED IN CROSS- EXAMINATION BY THE ASSESSEE, QUITE CLEARLY NONE OF THESE ASPECTS HAVE DONE BY THE REVENUE IN THIS CASE. THEREFORE, IT IS UNDER THESE CIRCUMSTANCES, THAT WE HAVE OBSERVED EARLIER THAT THE REVENUE HAS NOT PROVED THAT THE IMPUGNED INVESTMENT HAS BEEN MADE BY THE ASSESSEE. IN THE LIGHT OF ABOVE, THE ESSENTIAL PRE-REQUISITE OF SECTION 69 OF THE AC T IS NOT SATISFIED IN THIS CASE. 15. AT THIS POINT, WE MAY ALSO REFER TO ANOTHER ARGUMENT SET UP BY THE APPELLANT. AS PER THE APPELLANT, IN SIMILAR CIRCUMSTANCES, ADDITION WAS ALSO MADE IN THE HANDS OF SHRI RANINDER SINGH, ASSESSEE'S SON, FOR THE ASSESSMENT YEAR 2001-02, VIDE ORDER DATED 11.12.2008 PASSED BY INCOME TAX OFFICER, WARD 31(4), NEW DELHI UNDER SECTION 143(3) R.W.S. 147, A COPY OF THE SAME IS PLACED AT PAGES 175-176 OF THE PAPER BOOK. THE ADDITION WAS MADE BY I.T.O., WARD 31(4), NEW DELHI BASED ON THE INFORMATION CONTAINED IN THE STATED PEN- DRIVE SEIZED FROM SHRI CHETAN GUPTA AND THE INFORMATION SUPPLIED BY ADIT (INVESTIGATION), UNIT- 6 VI(1), NEW DELHI, WHICH WAS IN-TURN BASED ON THE REPORT OF VIGILANCE BUREAU, LUDHIANA (PUNJAB). THE SAID ADDITION WAS DELETED BY CIT(APPEALS)- XXVI, NEW DELHI VIDE HIS ORDER DATED 28.04.2009, A COPY OF WHICH IS PLACED AT PAGES 148 TO 174 OF THE PAPER BOOK. THE AFORESAID ORDER OF THE CIT(APPEALS) HAS SINCE BEEN AFFIRMED BY THE DELHI BENCH F OF THE TRIBUNAL IN ITA NOS. 2965 & 3196/DEL/2009 VIDE ORDER DATED 23.12.2009, A COPY OF WHICH HAS BEEN PLACED ON RECORD. IT IS CONTENDED BY THE LEARNED COUNSEL FOR THE APPELLANT THAT HAVING REGARD TO THE AFORESAID PRECEDENT, WHICH HAS BEEN RENDERED IN IDENTICAL CIRCUMSTANCES, THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER IS LIABLE TO BE DELETED. ON THIS ASPECT, THOUGH THE LEARNED DR HAS NOT CONTROVERTED THE FACTUAL MATRIX BROUGHT OUT BY THE COUNSEL FOR THE APPELLANT, SHE HAS DEFENDED THE ADDITION ON THE BASIS OF THE ORDERS OF THE AUTHORITIES BELOW. 16. WE HAVE PERUSED THE (I) ORDER DATED 11.12.2008 PASSED BY I.T.O., WARD 31(4), NEW DELHI, (II) ORDER DATED 28.04.2009 PASSED BY CIT(A)-XXVI, NEW DELHI AND, (III) ORDER DATED 23.12.2009 PASSED BY DELHI BENCH OF THE TRIBUNAL, ARISING IN THE CASE OF SHRI RANINDER SINGH FOR THE ASSESSMENT YEAR 2001-02. IN THE CASE OF RANINDER SINGH, AN ADDITION OF RS.76,45,000/- WAS MADE SOLELY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, NEW DELHI PER THE OPERATION CARRIED OUT BY VIGILANCE BUREAU, LUDHIANA (PUNJAB). SIMILAR IS THE FACT SITUATION I N THE INSTANT CASE. THE TRIBUNAL IN THE CASE OF SHRI RANINDER SINGH (SUPRA) AFFIRMED THE ORDER OF CIT(APPEALS) DELETING THE ADDITION, BY OBSERVING THAT THE REVENUE AUTHORITIES HAVE FAILED TO PROVE BY ANY CORROBORATIVE EVIDENCE THAT THE ASSESSEE 7 EVER PAID CASH TO SHRI CHETAN GUPTA. THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE ARE IDENTICAL, AND THEREFORE, IN THE FACE OF THE DECISI ON OF THE TRIBUNAL IN THE CASE OF RANINDER SINGH (SUPRA) ALSO, THE IMPUGNED ADDITION IS LIABLE TO BE DELETED. 17. BEFORE PARTING, WE MAY ALSO NOTE AN ARGUMENT SET-UP BY THE REVENUE BEFORE THE CIT(APPEALS) IN THE REMAND REPORT DATED 25.02.2009 AND ALSO RAISED BY THE LEARNED DR BEFORE US IN ORDER TO JUSTIFY THE IMPUGNED ADDITION . AS PER THE REVENUE, THE INVESTIGATION BY THE VIGILANCE BUREAU, LUDHIANA (PUNJAB) IN THE CRIMINAL CASE IS STILL ON AND HAS NOT ATTAINED FINALITY AND THEREFORE, IT CANNOT BE CONCLUDED THAT THERE WAS NOTHING AGAINST THE ASSESSEE TO TAX THE IMPUGNED INCOME. IN THE REMAND REPORT TO THE CIT(APPEALS), IT HAS BEEN STATED AS UNDER : IT IS ALSO MENTION-WORTHY THAT THE INVESTIGATION IN THE CRIMINAL CASE BY THE STATE POLICE DEPARTMENT IS STILL ON AND HAS NOT ATTAINED THE FINALITY OF THE CASE. THEREFORE, IT CANNOT BE CONCLUDED THAT THERE WAS NOTHING AGAINST THE ASSESSEE TO REOPEN HIS CASE AND TO TAX THE INCOME ESCAPED ASSESSMENT. THEREFORE, IT IS HUMBLY REQUESTED THAT THE PROCEEDINGS U/S 147 AS WELL AS THE ASSESSMENT PROCEEDINGS COMPLETED IN THE CASE OF THE ASSESSEE MAY KINDLY BE HELD AS VALID AND ADDITION MADE THEREBY BE SUSTAINED. 18. LEARNED COUNSEL FOR THE APPELLANT HAS OPPOSED THE PLEA OF THE REVENUE, BY SUBMITTING THAT THE IMPUGNED PROCEEDINGS HAVE TO BE INDEPENDENTLY FINALIZED. 8 19. WE HAVE CAREFULLY EXAMINED THE AFORESAID PLEA RAISED BY THE REVENUE. IN THIS CONNECTION, A REFERENCE MAY BE MADE TO THE JUDGEMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-I VS M/S ARORA ALLOYS LTD. (ITA NO. 461 OF 2009 DATED 23.10.2009). IN THE CASE BEFORE THE HON'BLE HIGH COURT, THE ASSESSING OFFICER HAD INITIATED REASSESSMENT PROCEEDINGS AND MADE CERTAIN ADDITIONS ON THE BASIS OF THE PROCEEDINGS UNDER THE CENTRAL EXCISE ACT SHOWING CLANDESTINE REMOVAL OF STOCKS, OUTSIDE THE BOOKS OF ACCOUNT. THE CIT(APPEALS) DELETED THE ADDITION TAKING INTO ACCOUNT THE FINDING OF HIGHER AUTHORITY IN PROCEEDING UNDER THE CENTRAL EXCISE ACT. ON AN APPEAL BY THE ASSESSING OFFICER AGAINST THE ORDER OF CIT(APPEALS), THE ITAT DIRECTED FRAMING OF FRESH ASSESSMENT AFTER THE DECISION OF THE EXCISE TRIBUNAL. THIS DECISION OF THE ITAT WAS QUESTIONED BY THE REVENUE IN APPEAL BEFORE THE HON'BLE HIGH COURT, WHEREIN THE HON'BLE COURT HAS OBSERVED AS UNDER : THE ASSESSING AUTHORITY COULD NOT BE REQUIRED TO WAIT TILL DECISION OF THE EXCISE TRIBUNAL, BY WHICH TIME PROCEEDINGS MAY BECOME TIME BARRED. PROCEEDINGS UNDER THE CENTRAL EXCISE ACT HAD RELEVANCE ONLY FOR FORMATION OF OPINION OF ESCAPEMENT OF INCOME AND THEREAFTER, THE AUTHORITIES HAD TO INDEPENDENTLY FINALISE RE-ASSESSMENT IRRESPECTIVE OF FINAL VIEW IN EXCISE PROCEEDINGS. LEARNED COUNSEL FOR THE ASSESSEE IS NOT ABLE TO REBUT THE SUBMISSIONS AND IN A WAY SUPPORTS THE VIEW THAT MATTER SHOULD HAVE BEEN FINALIZED ON MERITS. QUESTION OF LAW IS ANSWERED ACCORDINGLY BY HOLDING THAT THE TRIBUNAL WAS NOT JUSTIFIED IN 9 DIRECTING THAT THE MATTER BE KEPT PENDING TILL THE DECISION OF THE TRIBUNAL. ACCORDINGLY, THIS APPEAL IS ALLOWED, IMPUGNED ORDER OF THE TRIBUNAL IS SET ASIDE AND THE MATTER IS REMANDED TO THE TRIBUNAL FOR FRESH DECISION ON MERITS IN ACCORDANCE WITH LAW. 20. A PERUSAL OF THE AFORESAID REVEALS THAT AS PER THE HON'BLE HIGH COURT, THE INCOME-TAX ASSESSING AUTHORITY COULD NOT BE REQUIRED TO WAIT TILL THE DECISION OF THE EXCISE TRIBUNAL AND FURTHER THAT TH E INCOME-TAX AUTHORITIES HAD TO INDEPENDENTLY FINALIZE THE RE-ASSESSMENT BECAUSE THE PROCEEDINGS UNDER THE CENTRAL EXCISE ACT HAD RELEVANCE ONLY FOR FORMATION OF OPINION OF ESCAPEMENT OF INCOME AND NOT FOR THE FINAL VIEW. ACCORDINGLY, THE MATTER WAS REMANDED BACK TO THE TRIBUNAL FOR DECISION ON MERITS. IN VIEW OF THE PARITY OF REASONING LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ARORA ALLOYS LTD. ,(SUPRA), IN OUR HUMBLE OPINION, THE CAPTIONED APPEAL IS TO BE DISPOSED OFF ON THE BASIS OF THE MATERIAL ON RECORD INDEPENDENT OF THE NON- FINALITY OF PROCEEDINGS INITIATED BY THE VIGILANCE BUREAU, LUDHIANA (PUNJAB). 21. IN THE RESULT , ON THE BASIS OF THE EVIDENCE, MATERIAL AND PRECEDENT IN THE CASE OF RANINDER SINGH (SUPRA) ON RECORD, WE HOLD THAT THE REVENUE HAS FAILED TO DISCHARGE THE BURDEN OF PROVING THAT THE ASSESSEE HAS MADE THE IMPUGNED INVESTMENTS WITH SHRI CHETAN GUPTA AND EARNED INTEREST THEREON, THEREFORE THE INVOKING OF SECTION 69 OF TH E ACT BY THE ASSESSING OFFICER HAS TO FAIL. WE HOLD SO. ACCORDINGLY, THE ADDITION OF RS.8,12,000/- MADE BY THE ASSESSING OFFICER IS UNSUSTAINABLE. WE HEREBY SET ASIDE THE ORDER OF THE CIT(APPEALS) 10 AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. THUS, ON GROUND NOS. II & III, ASSESSEE SUCCEEDS. 7. AFTER PERUSING THE SAME, WE FIND THAT THE FACTS OF THE CASE ARE IDENTICAL WITH THE FACTS OF THE PRE SENT CASE. NO DISTINGUISHING FACTS WERE BROUGHT TO OUR NOTICE. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH IN THE CASE OF MAHARAJA AMRINDER SINGH (SUPRA), WE DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MAY, 2016. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 5 TH MAY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH