Anita Karuturi, Bangalore V. ACIT, Bangalore

ITA 190/BANG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9334 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R V SREENIVASAN JT
• Assessee Lawyers: B K MANJUNATH
• Keywords: Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 143(3); 234B; 147; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.190/BANG/2014 ASSESSMENT YEAR : 2005-06 SMT. ANITA KARUTURI, NO.204, EMBASSY CENTRE, NO.11, CRESCENT ROAD, BANGALORE 560 001. PAN: ABGPR 1575E VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(5), BANGALORE. APPELLANT RESPONDENT ITA NO.213/BANG/2014 ASSESSMENT YEAR : 2005- 06 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(5), BANGALORE. VS. SMT. ANITA KARUTURI, BANGALORE 560 001. PAN: ABGPR 1575E APPELLANT RESPONDENT ASSESSEE BY : SHRI B.K. MANJUNATH, CA REVENUE BY : SHRI A.R.V. SREENIVASAN, JT. CIT(DR) DATE OF HEARING : 01.08.2016 DATE OF PRONOUNCEMENT : 18.10.2016 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF CIT (APPEALS)-I, BANGALORE DAT ED 21.10.2013 FOR THE ASSESSMENT YEAR 2005-06. ITA NOS.190 & 213/BANG/2014 PAGE 2 OF 7 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THAT THE ORDERS OF THE AO/CIT(A) IN SO FAR AS IT IS AGAINST THE APPELLANT IS AGAINST THE LAW, FACTS, CIRCUMSTAN CES, NATURAL JUSTICE, EQUITY, WITHOUT JURISDICTION, BAD IN LAW A ND ALL OTHER KNOWN PRINCIPLES OF LAW. 2. THAT THE TOTAL INCOME AND TOTAL TAX LIABILITY COMPUTED IS HEREBY DISPUTED. 3. THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED FOR A PARTICULAR REASON/ISSUE WHEREAS THE ASSESSMENT HAS BEEN COMPLETED ON DIFFERENT ISSUES/REASONS. 4. THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE REASSESSMENT PROCEEDINGS WHICH WERE ON THE ISSUES O THER THAN WHAT WAS RECORDED IN THE REASONS. 5. THE LEARNED AO/CIT (A) ERRED IN TREATING AGRIC ULTURAL INCOME OF RS. 3,20,000/- AS INCOME U/S 68 OF THE AC T. 6. THE LEARNED AO/CIT(A) ERRED IN UPHOLDING THE ADDI TION MADE WITH RESPECT TO HAND LOAN AMOUNTING TO RS. 10, 00,000, OVERLOOKING THE DETAILS SUBMITTED BY THE APPELLANT. 7. THE LEARNED AO/CIT(A) ERRED IN BRINGING TO TAX CR EDIT CARD PAYMENTS AMOUNTING TO RS. 2,92,313/-. 8. THE APPELLANT DENIES LIABILITY FOR INTEREST U/S 2 34A, 234B AND 234C OF THE ACT. FURTHER, INTEREST IF ANY HAS T O BE LEVIED ONLY ON RETURNED INCOME. 9. WITHOUT PREJUDICE TO THE APPELLANT'S RIGHT OF SEE KING WAIVER BEFORE APPROPRIATE AUTHORITY THE APPELLANT B EGS FOR CONSEQUENTIAL RELIEF IN THE LEVY OF INTEREST U/S. 2 34A, 234B AND 234C OF THE ACT. 10. FOR THE ABOVE AND OTHER GROUNDS AND REASONS WHICH MAY BE SUBMITTED DURING THE COURSE OF HEARING OF THIS A PPEAL, THE ASSESSEE REQUESTS THAT THE APPEAL BE ALLOWED AS PRA YED AND JUSTICE BE RENDERED. ITA NOS.190 & 213/BANG/2014 PAGE 3 OF 7 3. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS OPPO SED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN HOLDING THAT AS THE TRANSA CTION WAS THROUGH CHEQUE AND TRANSFER FROM AN ACCOUNT TO ANOT HER ACCOUNT, THE CASH CREDIT OF RS 10,00,000 DATED 09/03/2005 STANDS EXPLAINED WITHOUT APPRECIATING THAT THE ASSESSEE HA S NEITHER EXPLAINED THE NATURE OF CREDIT EITHER BEFORE THE AO OR THE CIT(A). 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE U RGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RE STORED. 4. THE APPELLATE CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. IT WAS SUBMITTED BY THE LD. AR OF ASSESSEE THAT REOPENING IN THE PRESENT CASE IS BAD IN LAW AND IN SUPPORT OF THIS C ONTENTION, HE PLACED RELIANCE ON THE TRIBUNALS ORDER RENDERED IN THE CA SE OF SHRI ASHWANI KUMAR V. ITO IN ITA NO.129/ASR/2015 DATED 23.2.2016 . HE SUBMITTED A COPY OF THE TRIBUNALS ORDER. IT WAS ALSO SUBMITTE D THAT THE REASONS RECORDED BY THE AO IN THE PRESENT CASE FOR REOPENIN G ARE AVAILABLE AT PAGE 81 OF THE PAPERBOOK (PB). 5. THE LD. DR SUPPORTED THE ASSESSMENT ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE THE REASONS RECORDED BY THE AO FOR REOPEN ING WHICH IS AVAILABLE AT PAGE 81 OF THE PB. THIS IS AS FOLLOWS:- ITA NOS.190 & 213/BANG/2014 PAGE 4 OF 7 AS PER THE DISCUSSION HAD WITH YOUR AUTHORISED REPRESENTATIVE & AS PER YOUR REQUEST THE REASONS RE CORDED FOR THE RE-OPENING OF THE ASSESSMENT U/S 147 FOR THE AY: 20 05-06 IS AS FOLLOWS:- INFORMATION GATHERED IN THIS OFFICE IN THE ABOVE MENTIONED CASE FOR THE FINANCIAL YEAR 1.04.2004 TO 31.03.2005 RELEVANT FOR THE ASSESSMENT YEAR 2005-06 , IS AS UNDER: CREDIT CARD PAYMENT RS.3,54,843/- THE ABOVE MENTIONED PERSON HAS NOT FILED RETURN OF INCOME FOR THE A.Y. 2005-06 RELEVANT TO THE FINANCIAL YEAR 200 4-05. AS SUCH I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE INCOME TAX ACT, 1961. 7. NOW WE REPRODUCE THE RELEVANT PARA NOS.4 AND 7 T O 9 OF THE TRIBUNALS ORDER CITED BEFORE US. THIS IS AS UNDER: - 4. THE AO RECORDED REASONS FOR ISSUANCE OF NOTICE U/S 148 OF THE I. T. ACT, 1961, TO BELIEVE ESCAPEMENT OF INCOM E. THESE REASONS ARE AS FOLLOWS: REASONS FOR ISSUANCE OF NOTICE U/S 148 OF THE I. T . ACT, 1961. AS PER INFORMATION AVAILABLE FROM THE ANNUAL INFORMATI ON RETURN (AIR) RELATING TO THE FINANCIAL YEAR 2004-05 RELEVA NT TO THE ASSESSMENT YEAR 2005-06, THE ABOVE MENTIONED PERSON HAS DEPOSITED RS.11,60,000/- IN CASH IN SB ACCOUNT. HOW EVER, THE AFORESAID PERSON HAS NOT GIVEN PERMANENT ACCOUNT N UMBER (PAN) TO THE AIR FILER AND EVEN THE INFORMATION HA S BEEN RECEIVED AS AIR DATA WITHOUT PAN FROM THE CONCERN ED AIR FILER. IT IS THUS ESTABLISHED THAT THE ABOVE MENTIO NED PERSON IS NOT ASSESSED TO TAX. SINCE, THE AMOUNT OF INVESTMENT EX CEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX, I HA VE REASONS TO BELIEVE THAT THE INCOME TO THE TUNE OF RS.11,60, 000/- HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE ISSUED ITA NOS.190 & 213/BANG/2014 PAGE 5 OF 7 UNDER SUB-SECTION (1) OF SECTION 142 OF THE INCOME TAX ACT, 1961. ACCORDINGLY, I HAVE REASON TO BELIEVE THAT THE INCO ME OF RS.11,60,000/- OF THE ASSESSEE HAS ESCAPED ASSESSME NT, BESIDES ANY OTHER INCOME CHARGEABLE TO TAX WHICH WOULD HAVE ESCAPED ASSESSMENT AND WOULD COME TO NOTICE SUBSEQUENTLY IN THE COURSE OF ASSESSMENT PROCEEDINGS UNDER THIS SECTION, WITHI N THE MEANING OF SECTION 147 OF THE I.T. ACT. SD/- DATED: 20.03.2012 (DR. TARUNDEEP KAUR) ASSTT. COMMR. OF INCOME TAX, CIRCLE-1, BATHINDA. .. .. 7. THE FACTS ARE NOT DISPUTED. A BARE PERUSAL OF THE REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT, SHOWS THAT THE ONLY MATERIAL AVAILABLE BEFORE THE AO WAS THE AIR I NFORMATION OF THE ASSESSEE HAVING DEPOSITED AN AMOUNT OF RS.11 .60 LAKHS IN HIS SAVINGS BANK ACCOUNT. REMARKABLY, THE REASONS R ECORDED DID NOT EVEN MENTION THE BANK IN WHICH SUCH SAVINGS BAN K ACCOUNT WAS MAINTAINED. THE ASSESSEE, AS AVAILABLE FROM THE FIRST PAGE OF THE ASSESSMENT ORDER, WAS ISSUED A NOTICE U/S 148 O F THE ACT, IN PURSUANCE TO THE AFORESAID REASONS. THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT IS DATED 25.03.2013. THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 05.10.2005 AND IT HAD BEEN STATED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT THAT THIS RETURN BE TREATED AS HAVING BEEN FILED IN RESPONSE TO THIS NOTICE. IN BIR BAHADUR SINGH SIJWALI (SUPRA), LIKE IN THE PRESENT CASE, T HE REASONS RECORDED INDICATED THAT CASH DEPOSITS HAD BEEN MADE IN THE BANK ACCOUNT OF THE ASSESSEE. THE TRIBUNAL HELD THAT THE MERE FACT THAT THE DEPOSITS HAVING BEEN MADE IN A BANK ACCOUNT DOE S NOT INDICATE THAT THESE DEPOSITS CONSTITUTE AN INCOME W HICH HAS ESCAPED ASSESSMENT. IT WAS OBSERVED THAT THE REASON S RECORDED DID NOT MAKE OUT A CASE THAT THE ASSESSEE WAS ENGAGED I N SOME BUSINESS AND THE INCOME FROM SUCH A BUSINESS HAD NO T BEEN RETURNED BY THE ASSESSEE. IN THE CASE AT HAND ALSO, THE REASONS RECORDED DO NOT CONTAIN ANY SUCH RECITAL. THE TRIBU NAL HELD THAT THE FACTUM PER SE, OF DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE ITA NOS.190 & 213/BANG/2014 PAGE 6 OF 7 COULD NOT BE MADE THE BASIS FOR HOLDING THE VIEW TH AT INCOME HAD ESCAPED ASSESSMENT, OVER-LOOKING THAT THE SOURCES O F THE DEPOSITS NEED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE; AND THAT AS SUCH, THE REASONS RECORDED WERE NOT SUFFICIENT TO B ELIEVE ESCAPEMENT OF INCOME; THAT RATHER, THEY WERE REASON S TO SUSPECT ESCAPEMENT OF INCOME, WHICH WAS NOT ENOUGH FOR ISSU ANCE OF A NOTICE U/S 148 OF THE ACT. 8. BIR BAHADUR SINGH SIJWALI (SUPRA), AS DISCUS SED, IS CLEARLY APPLICABLE TO THE PRESENT CASE. NO DECISION TO THE CONTRARY HAS BEEN CITED BEFORE ME. 9. IN VIEW OF THE ABOVE, FINDING MERIT IN THE GRI EVANCE RAISED BY THE ASSESSEE BY WAY OF GROUND NO.1, THE REASONS RECORDED BY THE AO FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT AR E HELD TO BE INVALID, BEING REASONS NOT SUFFICIENT TO BELIEVE ES CAPEMENT OF INCOME, BASED ON VAGUE INFORMATION. ALL THE PROCEED INGS PURSUANT THERETO, INCLUDING THE ASSESSMENT ORDER DA TED 25.03.2013 AND THE IMPUGNED ORDER DATED 29.01.2015 ARE THUS ANNULLED AND CANCELLED. ACCORDINGLY, ALL THE OTHER ISSUES ON MERITS ARE RENDERED ACADEMIC AND INFRUCTUOUS. 8. IT IS SEEN THAT IN THAT CASE ALSO, REOPENING WAS ON THE BASIS OF AIR ONLY AND IN THE PRESENT CASE ALSO, THE REOPENING IS MERELY ON THE BASIS OF AIR. IN THAT CASE, IT WAS STATED IN THE REASONS RE CORDED BY THE AO THAT, THAT PERSON IS NOT ASSESSED TO TAX BECAUSE HE HAS N OT QUOTED HIS PAN TO THE AIR FILER. IN THE PRESENT CASE, THE AO SAYS TH AT SINCE THE PRESENT ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE AY 2005-06, HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IN OUR CONSIDERED OPINION, THE FACTS IN THE PRESENT CASE ARE SIMILAR IF NOT IDENTICAL TO THAT CASE, WHEREIN THE TRIBUNAL HELD THAT THE REASONS RECORDED BY THE AO FOR ISSUANCE OF NOTICE U/S. 148 OF THE I.T. ACT ARE NOT VALID BE ING REASONS WERE NOT SUFFICIENT TO BELIEVE ESCAPEMENT OF INCOME. ITA NOS.190 & 213/BANG/2014 PAGE 7 OF 7 9. RESPECTFULLY FOLLOWING THIS TRIBUNALS ORDER, WE HOLD THAT IN THE PRESENT CASE ALSO, THE ASSESSMENT IS NOT VALID BECA USE THE REASONS RECORDED BY THE AO FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT ARE INVALID, BECAUSE THESE REASONS ARE NOT SUFFICIENT TO BELIEVE ESCAPEMENT OF INCOME. HENCE THE PRESENT ASSESSMENT ORDER IS ANNULLED AND CANCELLED. 10. IN VIEW OF OUR DECISION, NO ADJUDICATION IS CAL LED FOR REGARDING THE OTHER GROUNDS RAISED BY THE ASSESSEE AND IN RESPECT OF THE APPEAL FILED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF OCTOBER, 2016. SD/- SD/- (SUNIL KUMAR YADAV ) ( A.K. GAR ODIA ) JUDICIAL MEMBER ACCOUN TANT MEMBER BANGALORE, DATED, THE 18-10-2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.