Shri Jashwantlal N. Shah, V. The Income tax Officer, Ward-5(2),

ITA 1785/AHD/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9008 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-02-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 26-05-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C M MISHRA
• Keywords: Reopening of assessment; Cost of acquisition; Valuation report; Reason to believe
• Section: 234B; 143(2); 69A; 147; 69; 148

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI T.K. SHARMA, JM AND D.C.AGRAWAL, AM SHRI JASHVANT N. SHAH, E-44-15, KANAKNIDHI COMPLEX, TIMALIAWAD, NANPURA, SURAT. V/S . INCOME-TAX OFFICER, WD 5(2), AAYAKAR BHAVAN, MAJURA GATE, SURAT. PAN NO.AFDPS2624G (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RAJESH M. UPADHYAY, AR RESPONDENT BY:- SHRI C. M. MISHRA, SR.DR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 29.03.2004 RAISING FOLLOWING GROUNDS:- 1. LD. ITOHAS ERRED IN LAW AND ON FACTS TO INITIATE PR OCEEDINGS U/S 147 OF IT ACT, 1961 WITHOUT ANY EVIDENCE OF INCOME BEING CONCEALED FROM ASSESSMENT OR UNDER ASSESSMENT. LD. CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS TO CONFIRM ITOS ACTION. 2. LD. ITO HAS ERRED IN LAW AND ON FACTS TO ADD AN AMO UNT OF RS.12,31,243/- HAS AN INCOME U/S 69 A OF THE ACT. L D. CIT(A) HAS SUSTAINED ADDITION OF RS.3,31,243/- AND I.E. 3, 31,243/- BREAK UP OF WHICH AS HEREUNDER : ITA NO.1785/AHD/2004 ASST. YEAR :1998-99 2 (I) GOLD AND DIAMOND JEWELLERY RS.2,97,043/- (II) SILVER ARTICLES AND UTENSILS RS.9,200/- (III) CASH RS.25,000/- ----------------------- RS.3,31,243/- 3. LD. ITO HAS ERRED IN LAW AND ON FACTS TO CHARGE INT EREST U/S 234B & 234C. LD. CIT(A) HAS ALSO ERRED IN CONFIRMIN G ACTION OF ITO 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT REOPENING OF ASSESSMENT UNDER SECTION 147. THE FACTS OF THE CASE ARE THAT AO FOUND DURING FINANCIAL YEAR 1997-98 RELEVANT TO ASST. YEA R 1998-99 THAT ASSESSEE HAD MADE DECLARATION UNDER VDIS 1997 IN RE SPECT OF FOLLOWING ITEMS:- SL.NO. DESCRIPTION OF ASSETS VALUE DECLARED 1. GOLD & DIAMOND JEWELLERY RS.2,97,043/- 2. SILVER ARTICLES RS.9,200/- 3. CASH RS.25,000/- 4. LAND & BUILDING RS.9,00,000/- THE ASSESSEE FAILED TO PAY TAXES IN RESPECT OF THE ASSETS DECLARED UNDER VDIS, 1997 AND ACCORDINGLY HIS DECLARATION WAS NOT ACCEPTED BY THE CIT. THE AO THEREAFTER ISSUED A NOTICE U/S 148 ON 14.03. 2002. IN RESPONSE TO NOTICE U/S 143(2) THE ASSESSEE FURNISHED FOLLOWING SUBMISSIONS :_ (I) ALL THE ASSETS AS PER DECLARATION WERE ACQUIRED DUR ING THE YEAR MENTIONED THEREIN AND NO AMOUNT WAS INVESTED DURING THE PREVIOUS YEAR 1997-98. (II) THAT THE NOTICE U/S 148 OF THE ACT IS NULL AND VOID , SINCE THE SAME WAS ISSUED WITHOUT ANY INFORMATION, WHICH JUST IFY REASONABLE BELIEF AS TO ANY INCOME IS ESCAPED. 3 (III) DURING THE DISCUSSION, HE WAS NOT INFORMED THAT WHI CH RECEIPT/AMOUNT WAS EARNED BY OUR CLIENT. (IV) THAT HE WAS INFORMED ABOUT FORM FILED UNDER VDIS, 1 997, SUCH DECLARATION WILL NOT BE ADMISSIBLE AS EVIDENCE AGAI NST DECLARATION AND IN THAT DECLARATION ALSO THERE IS N O SUCH INCOME WHICH RELATES TO ASST. YEAR 1998-99. (V) THE ASSESSEE HAS NO SOURCE OF INCOME DURING THE SAI D ASSESSMENT YEAR AND HAS NOT MENTIONED ANY BOOKS OF ACCOUNTS AND DISCLOSED INCOME U/S 44AD. (VI) HE QUOTED TWO FOLLOWING CASE LAWS FOR REFERENCE. (A) SUNILKUMAR MALHOTRARA VS. CIT (1995) 215 ITR 0586 ( ALL) (B) HARLAL MANNULAL VS. CIT (1984) 147 ITR (MP) 3. THE AO REJECTED THIS SUBMISSION AND HELD THAT AS SESSEE IS FOUND OWNER OF THE JEWELLERY DURING FY 1997-98, THEREFORE , PROVISIONS OF SECTION 69A WOULD BE APPLICABLE AND ACCORDINGLY ASS ESSMENT WAS RIGHTLY REOPENED. SINCE ACCORDING TO AO, ASSESSEE HIMSELF H AS DECLARED THE ASSETS IN FY 1997-98 AND HE WAS FOUND TO BE OWNER IN FY 19 97-98, THEY HAVE TO BE TREATED AS UNEXPLAINED IN FY 1997-98. ACCORDINGL Y THE AO PROCEEDED TO TAX THE ASSETS DECLARED IN VDIS AS UNDISCLOSED I NCOME FOR ASST. YEAR 1998-99. THE LD. CIT(A) CONFIRMED THE REOPENING OF ASSESSMENT ON THE SAME REASONS. IN THIS REGARD HIS OBSERVATIONS ARE A S UNDER :- 3. I AGREE WITH THE CONTENTION OF THE AO THAT THE SUBMISSION MADE BY THE APPELLANT IS TOTALLY WRONG. A DECLARATION WHICH ENJOYS IMMUNITY HAS TO BE A VALID DECLARATION. IN THIS CASE, THE APPELL ANT HAD MADE A DECLARATION UNDER THE SCHEME WHEREBY ON ITS OWN IT STATED THAT THERE WERE SEVERAL ITEMS OF WEALTH (JEWELLERY & LAND) WHICH WE RE UNDISCLOSED AND THE DECLARANT WANTED IMMUNITY FROM THE IMPOSITION O F PENALTY AND PROSECUTION. IF THE DECLARATION WAS VALID, THE BOAR DS CIRCULAR WOULD HAVE BEEN DEFINITELY GIVEN THE IMMUNITY FROM THE IM POSITION OF PENALTY AND PROSECUTION IN THE CIRCULAR. THE CIRCULAR HAS N OWHERE STATED THAT 4 EVEN IF THE DECLARATION IS INVALID, THE MATTER CONT AINED IN THE DECLARATION WOULD NOT BE USED AGAINST THE ASSESSEE FOR REOPENIN G ANY ASSESSMENT. THE APPELLANT HAS TRIED TO STRETCH AND DISTORT THE MEAN ING OF THE CIRCULAR TO SUIT ITS PURPOSE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED AND IT IS DECLARED THAT THE ASSESSMENT HAS BEEN VALIDLY REOPE NED U/S 147 AND THE NOTICE U/S 148 HAS BEEN CORRECTLY ISSUED. THIS GROU ND OF APPEAL, THEREFORE, IS DISMISSED. 4. AGAINST THE REOPENING OF ASSESSMENT LD. AR FOR T HE ASSESSEE SUBMITTED THAT THERE COULD NOT BE ANY INFORMATION W ITH THE AO THAT ASSESSEE HAD ACQUIRED THE ASSETS IN 1997-98 THEREFO RE, THERE CANNOT BE ANY REASON TO BELIEVE TO REOPEN THE ASSESSMENT FOR ASST . YEAR 1998-99. THE ONLY INFORMATION AVAILABLE IN VDIS FORM WAS THAT TH E ASSETS WERE ACQUIRED IN THE EARLIER YEARS. IN THIS REGARD HE RE FERRED TO THE DETAILS OF THE YEAR OF ACQUISITION IN RESPECT OF DIFFERENT ASSETS AS GIVEN IN THE VDIS DECLARATION FORM AS UNDER :- SL. NO ASSETS YEAR OF ACQUISITION COST OF ACQUISITION (RS) VALUE AS ON 1.4.1997 FOR THE PURPOSE OF DISCLOSURE (RS) WEIGHT 1 JEWELLERY 1982-83 196,000 297,043 632.700 GMS 2 SILVER ARTICLES & UTENSILS 1969-70 9,200 9,200 18.250 KGS. 3 CASH 1992-93 TO 1995-96 25,000 25,000 - 4. LAND & BUILDING CONSTRUCT- ION ON KAILASH NAGAR, SURAT 1991-92 TO 1995-96 9,00,000 9,00,000 - LD. AR FURTHER SUBMITTED THAT ON SIMILAR SET OF FAC TS THE TRIBUNAL HAS ALLOWED THE APPEAL OF ASSESSEE IN SEVERAL CASES. TH EY ARE - 5 (I) SMT. KAMINI HANSKAMAL GROVER, SURAT VS. ITO, WD-3(3 ), SURAT (ITA NO.4236/AHD/2003 ORDER DATED 24.01.2005, (II) ITO VS. SMT. PAYAL GUPTA (2008) 114 TTJ (CHD-TRIB) 426 (III) INDER KUMAR BACHANI (HUF) VS. ITO (2006) 101 TTJ (L UCK) 450 (IV) SHANKAR R. MHATRE VS. ACIT (2008) 306 ITR 402 (MUM. TRIB) 5. AGAINST THIS, LD. DR SUBMITTED THAT IN FACT VALU ATION REPORT OF THE VALUER OF THE JEWELLERY ALONG WITH VDIS FORM WAS TH ERE. IT WAS NOT THE CASE IN ANY OF THE CASES REFERRED TO BY THE ASSESSE E. THUS THERE WAS ADDITIONAL INFORMATION AVAILABLE TO THE AO SHOWING THAT ASSETS WERE FOR THE FIRST TIME PRESENTED TO THE VALUER FOR VALUATIO N OF THE SAME AND, THEREFORE, ONCE ASSETS HAVE COME IN THE SURFACE FOR THE FIRST TIME IN FY 1997-98 THEN IT IS SUFFICIENT FOR THE AO TO FORM A BELIEVE THAT THEY WERE ACQUIRED BY THE ASSESSEE IN FY 1997-98 AND ACCORDIN GLY REOPENING IS JUSTIFIED. THE YEAR OF ACQUISITION GIVEN BY THE ASS ESSEE IN VDIS DECLARATION IS ONLY SELF-SERVICE STATEMENT AND CANN OT OVER RIDE THE PROVISIONS OF SECTION 69A, ACCORDING TO WHICH IF AS SESSEE IS FOUND TO BE OWNER OF ANY GOLD ORNAMENTS, BULLION, JEWELLERY IN A PARTICULAR YEAR THEN IN ABSENCE OF ANY SATISFACTORY EXPLANATION HE WOULD BE DEEMED TO BE OWNER OF THOSE ASSETS. SELF-SERVING YEAR OF ACQUISI TION AS GIVEN IN THE VDIS FORM CANNOT BE SAID TO BE A SATISFACTORY EXPLA NATION. IN ANY CASE SUFFICIENCY OF MATERIAL IS NOT REQUIRED FOR JUSTIFY ING THE REOPENING OF THE ASSESSMENT. 6. LD. DR SUBMITTED SELF-SERVING STATEMENT LIKE THI S CANNOT BECOME A PROOF IN RESPECT OF ACQUISITION OF ASSETS AND, THER EFORE, SHOULD NOT BE TREATED AS AN INFORMATION OF ACQUISITION OF ASSETS IN THOSE YEARS. ONCE THIS IS NOT THE INFORMATION THEN SHOWING THE POSSESSION OF THE ASSETS TO THE VALUATION OFFICER WOULD BE MORE CREDIBLE INFORMATIO N AND, THEREFORE, ACQUISITION OF ASSETS SHOULD BE TREATED AS ONLY IN FY 1997-98 AND NOT IN THE YEARS AS STATED IN THE DECLARATION FORM OF VDIS . FURTHER, LD. DR 6 SUBMITTED VDIS IS A SPECIAL ACT AND WHATEVER IS DEC LARED THEREIN INCLUDING THE DATE OF ACQUISITION IS ACCEPTED BY TH E DEPARTMENT WITHOUT QUESTIONING IF OTHER FORMALITIES INCLUDING PAYMENT OF TAXES ARE MADE BY THE ASSESSEE. IT IS BY VIRTUE OF VOLUNTARY DISCLOSU RE SCHEME, THE STATEMENT ABOUT YEAR OF ACQUISITION IS ACCEPTED AS TRUE BUT W HERE TAXES ARE NOT PAID SUCH STATEMENT CANNOT BE TREATED AS AN EVIDENCE IN RESPECT OF ACQUISITION OF ASSETS. IT BECOMES MERELY A SELF-SERVING STATEME NT IF PROVISIONS OF VDIS ARE NOT APPLIED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THE ISS UE IS PRIMARILY COVERED IN FAVOUR OF ASSESSEE BY THE DECISIONS OF THE TRIBU NAL REFERRED TO BY THE LD. AR, BUT WE AGREE WITH THE LD. DR THAT IN THOSE CASES VALUATION REPORT OF APPROVED VALUER WAS NOT REFERRED IN THE REASONS RECORDED BUT IN THE PRESENT CASE VALUERS REPORT IS AVAILABLE SHOWING T HAT IT IS FOR THE FIRST TIME THAT ASSESSEE HAS BROUGHT ON SURFACE THE JEWELLERY AND, THEREFORE, HE IS TREATED AS DEEMED OWNER OF THE JEWELLERY IN FY 1997 -98. IN ANY CASE IT IS REQUIRED TO BE VERIFIED WHETHER AO HAS CONSIDERED T HE VALUERS REPORT WHILE RECORDING THE REASONS. IF HE HAS CONSIDERED T HE VALUERS REPORT IN THE REASONS RECORDED AND ON THAT BASIS HE HAS ARRIVED A T THE SATISFACTION OF ESCAPEMENT OF INCOME THEN REOPENING OF ASSESSMENT W OULD BE VALID BUT WHERE THE AO HAS NOT CONSIDERED THE VALUATION REPOR T WHILE RECORDING THE REASONS AND THERE IS NO MENTION OF SUCH VALUATION R EPORT IN THE REASONS RECORDED THEN THE AUTHORITIES RELIED ON BY THE LD. AR WOULD BE APPLICABLE. FOR THIS LIMITED PURPOSE OF VERIFICATION WE RESTORE THE MATTER TO THE FILE OF LD. CIT(A) WHO WILL CALL FOR THE RECORD AND EXAMINE THE REASONS RECORDED AND ACCORDINGLY PASS AN APPROPRIATE ORDER IN ACCORD ANCE WITH THE OBSERVATIONS MADE ABOVE. 7 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 5/2/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ORDER PRONOUNCED IN OPEN COURT ON 5/2/2010