M/s. Arvind Nath Seth & Sons (HUF), Meerut V. ITO, Meerut

ITA 1660/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6343 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHARAT BHUSHAN GARG
• Keywords: Reopening of assessment; Search and seizure; Reason to believe
• Section: 234B; 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI (CIRCUIT BENCH AT MEERUT) BEFORE : SHRI . I.C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1660/DEL/2015 (ASSTT. YEAR: 2008 - 09 ) ARVIND NATH SETH & SONGS (HUF) 101, SHANTI NIKETAN, SHIVAJI ROAD, CIVIL LINES, MEERUT PAN:AABHA8387F VS. ITO, WARD - 1(1), MEERUT (APPELLANT) (RESPONDENT) DATE OF HEARING 18 /12/2015 DATE OF PRONOUNCEMENT / 03 /2016 ASSESSEE BY: SH. C.S. ANAND, ADV REVENUE BY: SH. BHARAT BHUSHAN GARG, SR. DR O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF 05.02.2015 PASSED BY LD CIT(A), MEERUT FOR THE ASSESSMENT YEAR 2008 - 09. IN THIS APPEAL THE ASSESSEE HAS RAISED THE CONCISE GROUNDS OF APPEAL AS UNDER: - 1. THAT THE ID. AO HAD ILLEGALLY ASSUMED JURISDICTION U/S 147. 2. THAT THE ID CIT(A) HAD ERRED ON FACTS AND UNDER LAW, IN NOT HOLDING THAT THE ASSUMPTION OF JURISDICTION BY THE ID AO U/S 147 WAS IMPROPER AND ILLEGAL. 3. THAT THE ADDITION OF RS.33,85,000/ - IS LIABLE TO DELETED ON VARIOUS FACTUAL & LEGAL GROUNDS. 4. THAT THE ADDITION OF RS.11,935/ - (MADE TOWARDS INCOME FROM HOUSE PROPERTY) IS LIABLE TO BE DELETED ON VARIOUS FACTUAL & LEGAL GROUNDS. 5. THAT CHARGING OF INTEREST U/S 234 - B AT RS. 8,12,210/ - IS ARBITRARY, UNJUST AND ILLEGAL. PAGE 2 OF 6 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN HUF EARNING INCOME FROM HOUSE PROPERTY AND INTEREST INCOME, FILED ITS RETURN OF INCOME ON 31ST JULY 2008 SHOWING INCOME OF RS. 772830/ - . LATER ON ID. AO RECEIVED INFORMATION FROM INVESTIGATION WI NG OF INCOME TAX DEPARTMENT ABOUT ASSESSEE THAT UNACCOUNTED CASH PAYMENT OF RS. 33,85,800/ - HAS BEEN MADE FOR PURCHASE OF PROPERTY AT GHAZIABAD I N ADDITION TO PAYMENT OF RS. 25 65 , 0 0 0 / - THROUGH CHEQUE. THEREFORE, NOTICE U/S 148 WAS ISSUED ON 10.01.2013. ON 17.01.2013 ASSESSEE SUBMITTED THAT ORIGINAL RETURN FILED ON 31ST JULY 2008 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. ON 04.02.2014, ASSESSEE WAS PROVIDED WITH COPY OF REASONS RECORDED AND ON 15.02.2013 THE ASSESSEE SUBMITTED OBJECTIONS AGAINST THE REOPENING OF ASSESSMENT. ON 12.04.2013 AO REJECTED THE OBJECTIONS FILED BY THE ASSESSEE BY PASSING A SPEAKING ORDER AND PROCEEDED TO MAKE AN ASSESSMENT. ON MERITS THE ASSESSEE SUBMITTED THAT IT HAS NOT MADE ANY PAYMENT OTHER THAN BY CHEQUE PAYMENT FOR PURCHASE OF UNIT NO.UG - 1 0 B TO AEZ GROUP FOR AEZ, VAISHALI PROJECT. FOR THIS THE ASSESSEE SUBMITTED A COPY OF ITS STATEMENT OF ACCOUNT FROM THE BUYER AND COPY OF PURCHASE DEED WHERE THE PURCHASE CONSIDERATION IS STATED TO BE RS. 25,65, 0 0 0 / - ONLY. HOWEVER ID. AO REJECTED THE ARGUMENT OF THE ASSESSEE AND MADE AN ADDITION OF RS.33,85,800/ - BECAUSE ACCORDING TO HIM THE RECORDS MAINTAINED BY BUILDER DEVELOPER SHOWS THAT THE ASSESSEE HAS MADE A CASH PAYMENT OF RS. 33,85,800/ - OVER AND ABOVE CHE QUE PAYMENT. HENCE AN ADDITION U/S 69 OF THE ACT OF RS.3385800/ - WAS MADE. ASSESSEE CARRIED MATTER BEFORE ID CIT(A), WHO CONFIRMED REOPENING OF ASSESSMENT AS WELL AS THE ADDITION ON MERITS AND THEREFORE THE ASSESSEE IS IN APPEAL BEFORE US. 3 . GROUND NO.L, 2 AND 3 OF THE APPEAL ARE ON ISSUE OF REOPENING AND CONSEQUENT ADDITION OF RS.3385800/ - OF UNACCOUNTED PAY MENT ALLEGEDLY MADE BY THE ASSESSEE FOR PURCHASE OF PROPERTY. 4 . GROUND NO.4 OF THE APPEAL IS AGAINST THE ADDITION OF RS.11935 TOWARDS INCOME FROM HOUSE PROPERTY. PAGE 3 OF 6 5 . ON GROUND NO 1 TO 3, ID AR SUBMITTED THAT THERE IS NO CASH PAYMENT MADE BY THE ASSESSEE TO THE BUILDER. HE FURTHER SUBMITTED THAT REASSESSMENT IS ALSO INVALID. ON THE ISSUE OF REOPENING HE SUBMITTED THAT THE REASONS RECORDED BY THE AO ARE BASED ON INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH AND SEIZURE ON 17.08.2011 IN CASE OF AEZ GROUP. IT WAS FURTHER RECORDED THAT DURING THE COURSE OF SEARCH ON V ARIOUS INVESTORS OF THIS GROUP IT WAS FOUND THAT INVESTORS HAVE MADE UNACCOUNTED CASH FOR THE VAISHALI PROJECT IN ADDITION TO PAYMENT MADE THROUGH CHEQUES. IT WAS ALSO RECORDED IN REASONS THAT INVESTIGATION WING HAVE INFORMED TO AO THAT THE ASSESSEE IS ONE SUCH INVESTORS WHO HAS MADE A PAYMENT OF RS. 25,65,000/ - THROUGH CHEQUE AND RS. 33,85,800/ - IN CASH ON 31ST MAY 2007 FOR INVESTMENT IN UNIT NO.UG - LOB. ON THE BASIS OF ABOVE INFORMATION AO HAS REASON TO BELIEVE THAT THE ASSESSEE HAS MADE UNDISCLOSED INCOME OF RS.3385000/ - THEREFORE HE SUBMITTED THAT ASSESSMENT HAS BEEN REOPENING MERELY ON THE REPORT FROM THE INVESTIGATION WING OF THE REVENUE. IT WAS FURTHER SUBMITTED THAT AO HAS NOT EXAMINED ANY EVIDENCE AFTER E INFORMATION RECEIVED FROM INVESTIGATION WING A ND REOPEN THE ASSESSMENT. HE SUBMITTED THAT SUCH A CASE OF REOPENING IS NOT VALID IN VIEW OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SIGNATURE HOTELS PVT LTD VS. ITO [338 ITR 51 (DEL]] AND ALSO PRINCIPAL COMMISSIONER OF INCOME TAX VS. G &G PHARMA INDIA LTD. IN ITA NO.545/2015 DATED 8 TH OCTOBER 2015. HE FURTHER SUBMITTED THAT INFORMATION RECEIVED BY THE AO ARE EXTREMELY SCANTY AND THERE IS NO REFERENCE OF ANY DOCUMENTS, OR STATEMENTS OR MATERIAL OR EVIDENCE THAT PRIMA FACE PROVES UNACCOUNT ED INVESTMENT MADE BY THE ASSESSEE OR ESCAPEMENT OF INCOME. ON THE MERITS OF THE ADDITION HE SUBMITTED THAT COPY OF ACCOUNT AS WELL AS THE AGREEMENT FOR THE PURCHASE OF THE PROPERTY WHICH CORROBORATES WITH THE ACCOUNTING TRANSACTIONS ENTERED INTO BY THE AS SESSEE. IT WAS HIS CONTENTION THAT THERE IS NO INFORMATION AVAILABLE SUPPORTED BY ANY MATERIAL, STATEMENT OF THE BROKER, AS WELL AS THE PAGE 4 OF 6 BUILDER WHICH SPEAKS THAT ASSESSEE HAS MADE CASH PAYMENT. THEREFORE HE SUBMITTED THAT TH E ADDITION OF RS. 33,85,800/ - ON MERITS ALSO CANNOT SURVIVE. HE FURTHER ARGUED THAT PROVISION OF SECTION 69 CANNOT BE APPLIED TO THE FACTS OF THE CASE AS ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNTS. 6 . AGAINST THIS THE ID DR SUBMITTED THAT THE INFORMATIO N IS VERY SPECIFIC AND WITH DATES HENCE INFORMATION CANNOT BE SAID TO BE VAGUE AND SCANTY. HE FURTHER SUBMITTED THAT ON RECEIPT OF THE INFORMATION ID. AO VERIFIED THE DETAIL WITH THE RETURN OF INCOME FILED BY THE ASSESSEE AS STATED IN THE REASONS RECORDED THEREFORE IT CANNOT BE SAID THAT AO HAS NOT APPLIED HIS MIND. HE FURTHER RELIED ON THE PARA NO.4 OF THE ORDER OF ID CIT(A) ON MERITS OF THE ADDITION. 7 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO THE PAPER BOOK FILED BY THE ASSESSEE CONTAININ G 36 PAGES. THE REASONS RECORDED BY THE AO ARE AT PAGE 2 WHEREIN ON 10.01.2013, THE AO HAS RECORDED REASONS AS UNDER: - I N THIS CASE, THE INFORMATION WAS RECEIVED FROM ASSTT. DIRECTOR OF INCOME TAX (INV.) UNIT - 111(3), NEW DELHI. AS PER THIS INFORMATION DURI NG THE SEARCH & SEIZURE OPERATION ON 1 7. 08.201 1 IN THE CASE OFAEZ GROUP (PART OF 'AERENS CROUP) AND THEREAFTER DURING SEARCHES CONDUCTED ON VARIOUS INVESTORS OF THIS GROUP THEY FOUND THAT THE INVESTORS HAVE MADE UNACCOUNTED CASH FOR AEZ VAISHAII PROJECT IN ADDITION TO PAYMENTS MADE THROUGH CHEQUES. THEY HAVE FURTHER INFORMED THAT THE ASSESSEE M/S ARVINDNATH SETH & SONS (HUF), 101, SHANTI NIKETAN, SHIVAJI ROOD, CIVIL LINES, MEERUT IS ONE OF SUCH INVESTORS AND IT HAS MADE PAYMENT OF RS. 25,65,000 / - THROUGH CHEQUE AND RS. 33,85,800 / - IN CASH ON 31.05.2007 RELEVANT TO A.Y. 2008 - 9 FOR INVESTMENT IN UNIT NO UG - IOB. I HAVE PERUSED THE INFORMATION AS WELL AS RETURN FILED BY THE ASSESSEE. I T HAS SHOWN TOTAL INCOME AT RS. 7,72,830 / - FROM HOUSE PROPERTY. ON THE BASI S OF PERUSAL I HAVE REASON TO BELIEVE THAT CASH PAYMENT OFRS. 33,85,0007 - HAS BEEN MADE OUT OF UNDISCLOSED INCOME AND THEREFORE, INCOME OF RS. 33,85,0007 - HAS ESCAPED ASSESSMENT FOR A.Y. 2008 - 09 WITHIN THE MEAN ING OF SECTION 147 OF I.T. ACT, 1961,' 8 . FURTHE RMORE A CHART IS ALSO PLACED WHICH IS ANNEXURE A - 7 WHICH SHOWS AT SI NO. 65, ESTABLISHMENT NO.UG - LOB OF DEAL DATED 31ST MAY 2007 THAT PROPERTY IS SOLD TO ASSESSEE ADMEASURING 570 SQ .FT . AREA AND SUPER BUILD UP SQ.FT AREA 855 SQ FT AREA. IN THE SAME CHART THE SALE CONSIDERATION IS MENTIONED AT RS. 5950800/ - BIFURCATED IN TO CHEQUE RS.2565000/ - AND CASH OF RS.3385800/ - RESULTED INTO RATE OF RS. 6960/ - PER SQ FT. AGAINST THE AMOUNT RECEIVED THE SAME AMOUNT SHOWING CHEQUE AND CASH COMPONENT IS PAGE 5 OF 6 ALSO DISCLOSED A ND BALANCE OUTSTANDING IN CASH AND CHEQUE IS ALSO SHOWN TO BE NIL. IN THE END A BROKER NAME 'SG' IS ALSO MENTIONED. THIS STATEMENT IS REPRODUCTION OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, NEW DELHI. THERE IS NO MENTION OF THIS ANNEXURE OR REF ERENCE TO ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OR ANY STATEMENT RECORDED OF THE SELLER OR THE BROKER IN REASONS RECORDED BY AO FOR REOPENING OF ASSESSMENT IT IS ALSO NOT MENTIONED THAT ON WHICH DATE THE ALLEGED CASH HAVE BEEN PAID BY THE ASS ESSEE AND TO WHOM. IT IS ALSO NOT AVAILABLE THAT FROM WHOSE POSSESSION THIS INFORMATION WAS FOUND AND WHAT HE HAD TO SAY ON THESE DETAILS. LD. AO ACCORDING TO MATERIAL AVAILABLE BEFORE US SHOWS THAT BASED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING NOTICE U/S 148 HAS BEEN ISSUED. ACCORDING TO US THE AFORESAID REASONS DO NOT SATISFY THE REQUIREMENT OF SECTION 147 OF THE ACT AS INFORMATION REFERRED TO IS VERY VAGUE AND WITHOUT REFERENCE TO ANY DOCUMENTS OR STATEMENT. EVEN THE ANNEXURE WHICH HAS B EEN REPRODUCED IS NOT MENTIONED IN THE REASONS, EVEN OTHERWISE THIS ANNEXURE CANNOT BE CONSIDERED AS A MATERIAL OR EVIDENCE WITH PRIMA FACIE SHOWS OR ESTABLISHES A NEXUS WHICH SHOWS ESCAPEMENT OF INCOME. FURTHER IT IS APPARENT THAT THE AO DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINED EITHER THE BUILDER OR THE BROKER ON THE ALLEGED CASH PAYMENT BUT ACCEPTED THE INFORMATION IN A MECHANICAL MANNER. IN VIEW OF THESE FACTS THE REOPENING OF ASSESSMENT U/S 147 CANNOT BE UPHELD. HON'BLE DELHI HIGH COUR T IN CASE OF SIGNATURE HOTELS PVT. LTD. VS. ITO [SUPRA] AND IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. G&G PHARMA LTD SUPPORTS THE VIEW CANVASSED BY THE ASSESSEE WHERE IN PROCEEDINGS U/S 147 OF THE ACT HAS BEEN QUASHED. IN VIEW OF THE FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF HONOURABLE DELHI HIGH COURT IN ABOVE MENTIONED CASES, WE ALLOW HOLDING THAT REOPENING IS IMPROPER AND ILLEGAL AND THEREFORE CANNOT SURVIVE. HENCE GROUND NO. 1 AND 2 OF THE APPEAL IS ALLOWED AND THE DECIS ION OF CIT (A) IS REVERSED. PAGE 6 OF 6 9 . THE GROUND NO. 3 OF THE APPEAL WHICH IS AGAINST CONFIRMATION OF ADDITION OF RS 33,85,800/ - U/S 69 OF THE ACT. AS WE HAVE ALREADY QUASHED REOPENING OF ASSESSMENT THIS GROUND OF APPEAL IS ALSO ALLOWED FIRSTLY ON THE GROUN D OF IMPROPER REOPENING AND SECONDLY ADDITION IS MADE WITHOUT ANY MATERIAL EVIDENCE AGAINST THE ASSESSEE. GROUND NO 3 OF THE APPEAL IS ALLOWED. 10 . GROUND NO.4 WAS NOT PRESSED AND GROUND NO.5 OF THE APPEAL IS AGAINST THE INTEREST U/S 234B OF THE ACT WH ICH IS CONSEQUENTIAL. HENCE BOTH THE GROUNDS NOS.4 AND 5 ARE DISMISSED. 11 . I N THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 12 . ORDER PRONOUNCED IN THE OPEN COURT ON 1 5 .03.2016. ORDER PRONOUNCED IN THE OPEN COURT ON 1 5 . 03 .2016 . - S D / - - S D / - ( I.C. SUDHIR ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 5 .03.2016 * AJAY KUMAR KEOT COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT (A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI