Sh. Ramji Gupta, Jhansi V. I.T.O.-6(2), Jhansi

ITA 190/AGR/2014

• Counselvise Citation: 19020314 RSA 2014
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 17-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT SHUK LA
• Assessee Lawyers: R C THOMAR
• Keywords: Reopening of assessment; Gift; Additional evidence; Reassessment proceedings
• Section: 148; 144

Judgement Text

I.T.A. NO.190/AGRA/2014 ASSESSMENT YEAR 2003-04 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA [CORAM: PRAMOD KUMAR AM] ITA NO.190/AGRA/2014 ASSESSMENT YEAR: 2003-04 RAMJI GUPTA, .......................APPEL LANT 151, TANDON ROAD, SIPRI BAZAR, JHANI (U.P.) [PAN: AGFPG 2158 N] VS. INCOME TAX OFFICER 6(2), ......RESPO NDENT JHANSI. APPEARANCES BY: R.C. THOMAR, FOR THE APPELLANT AMIT SHUKLA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 16 TH JUNE, 2015 DATE OF PRONOUNCING THE ORDER : 24 TH JUNE, 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE CIT(A)S ORDER DATED 18 TH FEBRUARY 2014, IN THE MATTER OF ASSESSMENT UNDER S ECTION 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) , FOR THE ASSESSMENT YEAR 2003-04, ON THE FOLLOWING GROUNDS : - 1. THAT REOPENING OF ASSESSMENT UNDER SECTION 148/ 147 AFTER A LAPSE OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR BY THE A.O. AND SUSTAINED BY THE CIT(A) IS BAD IN LAW. 2. THAT THE ASSUMPTION OF FACTS MADE IN THE NOTICE UNDER SECTION 148/147 READ WITH REASONS RECORDED WAS ERRONEOUS AN D PROCEEDINGS INITIATED ARE AB-INITIO VOID. 3. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW T O APPRECIATE THAT THE MATERIAL ALLEGING THAT ASSESSEE HAD RECEIVED GIFT O F RS.501000/- FROM SHRI SUBHASH GUPTA HAD NO RATIONAL CONNECTION OR ANY LIV E LINK FOR THE FORMATION OF REQUISITE BELIEF. I.T.A. NO.190/AGRA/2014 ASSESSMENT YEAR 2003-04 PAGE 2 OF 6 4. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW TO NOT CONSIDER THE RELEVANT EVIDENCE, WHICH GOES TO PROVE THAT THE ASS UMPTION OF FACTS MADE IN THE NOTICE WAS ERRONEOUS, ON THE GROUND THAT IT WAS AN ADDITIONAL EVIDENCE NOT TO BE ADMITTED UNDER RULE 46(A). 5. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING AN ADDITION OF RS.500000/- ON THE BASIS OF ALLEGED INF ORMATION OF TRANSACTION APPEARING IN THE NAME OF SUBHASH GUPTA TO WHICH APP ELLANT WAS NOT A PARTY. 6. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING AN ADDITION OF RS.75000/- MADE ON PRESUMPTION BY THE A O. 2. I WILL FIRST TAKE UP THE ISSUE REGARDING VALIDIT Y OF THE REASSESSMENT PROCEEDINGS. 3. TO ADJUDICATE ON THIS ISSUE, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT. THE REASONS OF R EOPENING THE ASSESSMENT, AT PAGE 1 AND 2 OF THE ASSESSMENT ORDER, ARE AS FOLLOWS :- REASON RECORDED FOR BELIEF THAT INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF SHRI RAMJI GUPTA, 151, TONDAN ROAD A.Y. 200 3-04. THE INFORMATION HAS BEEN RECEIVED REGARDING ACCOMMO DATION ENTRIES VIDE F.NO. LIST OF BENEFICIARIES/ADDEL.CIT/R-6/JHS/2007- 08/414 DATED 18.01.08 FROM ADDL. COMMISSIONER OF INCOME TAX, RANGE-6, JHA NSI ENCLOSING THEREWITH LIST OF CASES. AS PER THIS INFORMATION S HRI RAMJI GUPTA, 151, TONDAN ROAD, JHANSI HAD RECEIVED ACCOMMODATION ENTR Y DURING THE FINANCIAL YEAR 2002-03 THE DETAILS ARE GIVEN AS UND ER:- S.NO. BENEFICIARYS NAME BENEFICIARYS BANK NAME BENEFICIARYS BANK BRANCH VALUE OF ENTRY TAKEN 18 RAMJI GUPTA ----- JHANSI 5,01,000/- INSTRUMENT NO. BY WHICH ENTRY TAKEN PO/DD NUMBER DATE ON WHICH ENTRY TAKEN NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT BANK FROM WHICH ENTRY GIVEN DD ---- 1.02.03 SUBHASH GUPTA STATE BANK OF BIKANER & JAIPUR BRANCH OF ENTRY GIVING BANK A/C. NO. ENTRY GIVING A CCOUNT FAIZ ROAD 21960 I.T.A. NO.190/AGRA/2014 ASSESSMENT YEAR 2003-04 PAGE 3 OF 6 THE ASSESSEE WAS ASKED VIDE THIS OFFICE LETTER F.NO .ITO- 6(20/ADMN.EANTRTIES/2009-10 DATED 17.04.09 TO FURNI SH COPY OF RETURN FILED ALREADY IF ANY ALONG WITH ITS ANNEXURE TO KNOW THAT HOW THE ABOVE ENTRY HAS BEEN REFLECTED IN YOUR RETURN/BOOKS OF ACCOUNTS FOR THE RELEVANT YEAR. THE ASSESSEE HAS NEITHER REPLIED NOR FILED ANY ADJOURNM ENT APPLICATION. IT IS CLEAR FROM THE ABOVE FACTS THAT ASSESSEE DID NOT HAVE ANY SUCH TRANSACTION IN REAL SENSE BUT HAS INTRODUCED HIS UN ACCOUNTED MONEY THROUGH THIS ENTRY. I AM OF THE OPINION THAT THE I NCOME OF R.5,01,000/- HA ESCAPED THE SAME FROM THE ASSESSMENT WITHIN THE MEA NING OF SECTION 147 OF THE I.T. ACT 1961 IN THE HANDS OF THE ASSESSEE. KEEPING IN VIEW THE FACTS & CIRCUMSTANCE OF THE MAT TER, THE CASE IS PROPOSED FOR ASSESSMENT U/S 147 OF THE INCOME TAX A CT 1961. SINCE FOUR YEARS FROM THE END OF THE RELEVANT A.Y. (2003-04) H AVE PASSED & ESCAPED INCOME IS MORE THAN RS.1,00,000/-, THE KIND APPROVA L OF THE ADDL. CIT, RANGE-6, JHANSI IS SOLICITED FOR ISSUING NOTICE U/S 148. 4. THERE IS NO DISPUTE THAT, CONTRARY TO WHAT HAS B EEN NOTED ABOVE, THE ASSESSEE HAS NOT RECEIVED ANY AMOUNT FROM ONE SHRI SUBHASH GUPTA . HE HAS A RECEIVED A GIFT OF RS.5,00,000/- FROM MAHESH GARG BUT THEN THE REASONS RECORDED ABOVE DO NOT DEAL WITH THE SAME. YET, WHEN ASSESSEE CHALLENGED VALIDITY O F REOPENING THE ASSESSMENT BEFORE THE CIT(A), THE ISSUE WAS DECIDED AGAINST THE ASSES SEE ON THE BASIS OF THE FOLLOWING REASONS:- 5.2 AS FAR AS THE GROUNDS TAKEN BY THE ASSESSEE (A PPELLANT) TO CHALLENGE THE VALIDITY OF REOPENING OF THE ASSESSMENT PROCEED INGS U/ 147 I CONCERNED AS TAKEN UP IN GROUND NUMBER 1 TO GROUND NUMBER 4, I HAVE EXAMINED THE ARGUMENT OF THE LD. AR PUT UP IN HI WRITTEN SUBMISS ION FILED ON 11.02.2014 STATING THAT NO SUCH AMOUNT OF RS.5,00,000/- WAS RE CEIVED BY THE ASSESSEE FROM SHRI SUBHASH GUPA AS RECORDED IN THE REASON T O BELIEVE BY THE AO AND HENCE, THE REASONS RECORDED BY THE AO IS MERELY ON PRESUMPTION. I HAVE EXAMINED HIS OBJECTION OF THE LD. AR AND AFTER GOIN G THROUGH THE REASONS RECORDED BY THE AO IN THE ASSESSMENT ORDER, I FIND THAT THE REASON HAVE NOT BEEN RECORDED BY THE AO MERELY ON PRESUMPTION BUT I T HAS BEEN RECORDED AFTER RECEIVING INFORMATION FROM THE ADDL. CIT, R-6 , JHANSI GIVING A LIST OF BENEFICIARIES WHO HAD RECEIVED THE ACCOMMODATION EN TRIES AND IN THIS LIST OF BENEFICIARIES, NAME OF THE ASSESSEE WAS ALSO MENTIO NED, STATING THAT THE ASSESSEE HAS RECEIVED AN ACCOMMODATION ENTRY OF RS. 5,00,000/-. THOUGH THE ASSESSEE HAS DISPUTED THE NAME OF THE PERSON GIVING THE ACCOMMODATION ENTRY AS MENTIONED IN THE REASONS RECORDED BUT THE FACT REMAINED THAT THE ASSESSEE HAD RECEIVED THE AMOUNT OF RS.5,00,000/- A ND THE SAME WAS DEPOSITED IN HIS BANK ACCOUNT ON 04.02.2003 WHICH P ERTAINS TO THE I.T.A. NO.190/AGRA/2014 ASSESSMENT YEAR 2003-04 PAGE 4 OF 6 ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, TH E FACTS RECORDED BY THE AO IN THE REASONS TO BELIEVE HAS BEEN FOUND TO BE C ORRECT AS FAR AS THE AMOUNT RECEIVED BY THE ASSESSEE BEING AN ACCOMMODAT ION ENTRY IS CONCERNED BECAUSE THE SAME COULD NOT BE EXPLAINED B Y THE ASSESSEE AS A GENUINE GIFT AND HENCE, ITS NATURE BEING ACCOMMODAT ION ENTRY HAS BEEN FOUND TO BE CORRECT AS PER THE INFORMATION RECEIVED BY THE AO. THERE IS ONLY DISPUTE IN THE NAME OF THE PERSON WHO GAVE THIS ACC OMMODATION ENTRY. THIS REASON WAS SUPPLIED TO THE ASSESSEE DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS AND IF THERE WAS ANY DISPUTE ON THE NAM E OF THE PERSON WHO HAD GIVEN THIS AMOUNT, THE SAME COULD HAVE BEEN EXP LAINED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND IT COULD HAVE BEEN ESTABLISHED DURING THE BASEMENT PROCEEDINGS THAT THE AMOUNT OF RS.5,00,000/- RECEIVED BY THE ASSESSEE IS NOT ACCOMMODATION ENTRY BUT A GE NUINE GIFT GIVEN BY A GENUINE PERSON SATISFYING THE INGREDIENTS OF A GENU INE GIFT MEANING THEREBY THE ASSESSEE COULD HAVE ESTABLISHED THE EXISTENCE O F DONOR AND HIS RELATIONSHIP WITH THE ASSESSEE AS WELL AS THE OCCAS ION ON WHICH THE ASSESSEE HAS RECEIVED THE GIFT AND THE CREDITWORTHINESS OF T HE DONOR BUT NO SUCH COMPLIANCE HAS BEEN MADE BY THE ASSESSEE (APPELLANT ) DURING THE ASSESSMENT PROCEEDINGS DESPITE ISSUING OF REPEATED NOTICE AND EVEN AFTER ISSUING OF HOW CAUSE NOTICE U/S. 147/144. DURING T HE COURSE OF THE APPEAL PROCEEDINGS ALSO, THE GENUINENESS OF THE GIFT CLAIM ED TO HAVE BEEN RECEIVED FROM SHRI MAHESH GARG COULD NOT BE ESTABLISHED THER EFORE THE FACTS REMAINED THAT THE AMOUNT OF RS.5,00,000/- CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE DATED 05.02.2003 IS STILL UNEXPLAINED AND SUCH UNEXPLAINED DEPOSIT IN A BANK ACCOUNT CAN BE VERY WELL REGARDED A ACCOMMODATION ENTRY ABOUT WHICH THE INFORMATION WAS RECEIVED BY T HE AO, THEREFORE, THE LETTER SENT BY THE ADDL. CIT, R-6, JHANSI HAS PROVI DED RELEVANT INFORMATION ABOUT RECEIVING OF ACCOMMODATION ENTRY BY THE ASSES SEE AND HENCE, THE REASONS TO BELIEVE RECORDED ON THE BASIS OF SUCH IN FORMATION TO REOPEN THE ASSESSMENT PROCEEDING U/S .147 AND ISSUANCE OF NOTI CE U/S. 148 IS LEGALLY VALID IN VIEW OF THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF RAMOND WOOLEN MILLS LTD V. ITO (1999) 236 ITR 34 (S C) . IN THIS CASE LAW, IT HAS BEEN HELD THAT :- WE HAVE ONLY TO SEE WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MA TERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. WE ARE OF THE VIEW THAT THE COURT CANNOT STRIKE DOWN THE REOPENING OF THE C ASE IN THE FACTS OF THIS CASE. IT WILL BE OPEN TO THE ASSESSE E TO PROVE THAT THE ASSUMPTION OF FACTS MADE IN THE NOTICE WAS ERRO NEOUS. IN THE PRESENT CASE THE INFORMATION RECEIVED BY THE AO ABOUT PAYMENT OF AN AMOUNT OF RS.5,00,000/- TO THE ASSESSEE BEING ACCOM MODATION ENTRY, HAS BEEN FOUND TO BE QUITE RELEVANT BECAUSE NEITHER DU RING THE COURSE OF THE ASSESSMENT PROCEEDINGS NOR DURING THE COURSE OF THE APPEAL PROCEEDINGS, THE ASSESSEE COULD ESTABLISH THAT RS.5,00,000/- REC EIVED BY HIM AS DEPOSITED I.T.A. NO.190/AGRA/2014 ASSESSMENT YEAR 2003-04 PAGE 5 OF 6 IN HIS BANK ACCOUNT ON 04.02.2003 WAS A GENUINE GIF T AS CLAIMED BY HIM OR FROM ANY GENUINE EXPLAINED SOURCE. THEREFORE, THE ASSESSEE FAILED TO PROVE THAT THE ASSUMPTION OF FACTS MADE BY THE AO WHILE R ECORDING THE REASONS WAS ERRONEOUS. THEREFORE, THE FACTS AS GIVEN IN T HE LETTER OF THE ADDL. CIT, R- 6, JHANSI ABOUT THIS AMOUNT BEING ACCOMMODATION ENT RY AND UNEXPLAINED ENTRY IS PROVED FOR WHICH, THE ASSESSMENT PROCEEDIN GS WAS INITIATED. THEREFORE, I FIND THAT THE LD. AR IS NOT CORRECT IN HIS ARGUMENTS THAT THE ASSESSMENT PROCEEDINGS WAS INITIATED U/S 147 ON MER E PRESUMPTION AND I HOLD THAT THE AO HAS INITIATED PROCEEDING U/S. 147 ON THE BASIS OF A DEFINITE INFORMATION ABOUT RECEIPT OF ACCOMMODATION ENTRY OF RS.5,00,000/- BY THE ASSESSEE AND HENCE, THE INITIATION OF PROCEEDINGS U /S.147 IS VALID AS PER LAW AND ACCORDINGLY, NOTICE ISSUED U/S. 148 IS ALSO LEG ALLY VALID AND CONSEQUENTLY ORDER PASS3D U/S. 147 READ WITH SECTION 144 IS ALSO LEGALLY VALID ORDER, THEREFORE, ALL THE GROUNDS TAKEN FROM GROUND NUMBER 1 TO 4 ARE DISMISSED. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL B EFORE ME. 6. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, I FIND THAT THE ASSESSEE INDEED DESERVES TO SUCCEED, IN HIS CHALLENGE TO VALIDITY OF REASSESSMENT PROCEEDING, FOR THE ELEMENTARY REASON THAT THE REASONS ARE INCORRECT INASMUCH AS ADMITTEDLY THE ASSESSEE DID NOT RECEIVE ANY ACCOMMODATION ENTRY, OR FOR THAT PURPOSE, HAD NO DEALINGS WITH SUBHASH GUPTA. AS IS THE SETTLED LEGAL POSITION, IN THE LIGHT OF LAW LAID DOWN BY THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF HINDUSTAN LEVER LIMITED VS. R.B. WADKAR (268 ITR 332), THE REASONS FOR REOPENING THE ASSESSMENT IS TO BE EXAMINED ON STANDALONE BASIS AND NOTHING CAN BE ADDED THERETO OR SUBSTITUTED THEREFROM, BUT THEN THESE REASONS ARE ADMITTEDLY IN CORRECT. I, THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. AS REASSESSMENT ITSELF I S QUASHED, THERE IS NO NEED TO DEAL WITH THE MERIT. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 24 TH JUNE, 2015. SD/- PRAMOD KUMAR (ACCOUNTAN T MEMBER) AGRA, THE 24 TH JUNE, 2015 I.T.A. NO.190/AGRA/2014 ASSESSMENT YEAR 2003-04 PAGE 6 OF 6 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA