SH. SUKHRAJ SINGH S/O. SH. GURBACHAN SINGH, BATHINDA V. INCOME TAX OFFICER WARD-2(1), BATHINDA

ITA 203/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8676 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice
• Section: 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 202/Asr/2019 Assessment Year: 2009-10 Sh. Jagsir Singh S/o Sukhmander Singh Vill. Bibiwala (Bathinda) [PAN: CYOPS 8179Q] Vs. Income Tax Officer, Ward-2(1), Bathinda (Appellant) (Respondent) I.T.A. No. 203/Asr/2019 Assessment Year: 2009-10 Sh. Sukhraj Singh S/o Gurbachan Singh Vill. Bibiwala (Bathinda) [PAN: DCCPS 2317K] Vs. Income Tax Officer, Ward-2(1), Bathinda (Appellant) (Respondent) Appellant by : Sh. Sudhir Sehgal, P.N. Arora, Adv. & Sh. P. K. Singla, Adv. Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 07.07.2022 Date of Pronouncement: 10.08.2022 ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 2 ORDER Per Anikesh Banerjee, JM: These two instant appeals were filed by the two different assessees against the order passed by the Ld. Commissioner of Income Tax (Appeals), Bathinda [in brevity the CIT(A)] are identical and having combined orders passed u/s 250(6) of the Income Tax Act, 1961 [in brevity the Act], bearing Appeal Nos. 311 & 312-I T/16-17 dated 18.01.2019 in respect of Assessment Year 2009-10. 2. The respective assessment order was passed by the ld. Income Tax Officer, Ward-2(1), Bathinda (in brevity the AO) passed u/s 143(3)/147 of the Act dated 21.12.2016 and both the orders are passed by the ld. Assessing Officer in same date and same section. Here we are taking in ITA No. 202/Asr/2019 as the lead case. 3. Tersely, we advert the brief fact of the case. The assessment was reopened u/s 147 of the Act. As per the information available with the person, the assessee had deposited Rs.89,60,400/- in the bank a/c in different dates. The assessee is an agriculturist and non filer of Income Tax return. The ld. AO prior to issue of notice u/s 148 issued notice, dated 19.08.2014 to assessee asking for a copy of Bank statement and source of deposit in the bank account. The assessee had replied the same. The assessee filed that the amount was deposited from agreement to sale of ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 3 land belonging to him, his sister and mother which was measuring 67 canals situated in village Bibiwala Tehsil & Distt. Bathinda. The ld. Assessing Officer considering the fact added back an amount of Rs.89,60,400/- as an unexplained deposit and added back with the total income of the assessee with the interest from bank a/c amount to Rs.1085/-. Aggrieved, the assessee filed an appeal before the ld. CIT(A) and agitated both the technical ground and legal ground related to issuance of notice u/s 148 of the Act. The ld. CIT(A) adjudicated both the issues in favour of the Revenue. Being aggrieved, the assessee filed an appeal before us. 4. The ld. counsel of the assessee Mr. Sudhir Sehgal vehemently argued and first agitated the ground related to issuance of notice u/s 148. The ld. counsel filed a paper book and brief synopsis before the bench which are kept in the record. The argument of the assessee is extracted from his paper book to ascertain the correct fact which is as follows:- “1. We have already submitted the ‘Brief Synopsis’ in the above said case on 18.05.2022 and in continuation of that, further submissions may, please, be taken into consideration: - (i) We have already submitted that an ‘affidavit’ was filed before the Tehsildar on 02.09.2009 and date of execution of sale deed was 01.09.2009, as mentioned in the affidavit, placed at page 13 of Paper Book-I and English translation at page 14, which is dated 02.09.2009 and in that affidavit, it has been stated that the date of registration was fixed for 01.09.2009 as per the agreement placed at pages 1 to 6 and English translation at pages 7 to 9 of the Paper Book-I. ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 4 (ii) It was further stated that since on 01.09.2009 was a non working day as mentioned at pages 11 & 12 and, therefore, the seller of the land appeared before the Tehsildar to mark their presence as per application, dated 02.09.2009, placed at pages 11 & 12 of the Paper Book-I. Both the applications have been witnessed by Nambardar of the Vilalge to which the land in question belonged, Sh. Mehar Singh and further, as per Exchange Deed, placed at page 21, (English translation) , the witness is again Sh. Mehar Singh Nambardar of the Village, thus, our agreement gets authenticated by Sh. Mehar Singh Nambardar, witness to both the documents. iii) Further, the contention of the assessee is liable to accepted that there was a valid agreement, which was entered into with the party concerned because as per Exchange Deed, placed at pages 18 to 21 (English translation, it has been mentioned as under: - “If previously any deed had been executed between the parties, the same may be treated as cancelled. So this exchange deed has been written by the parties at home with their consent and concurrence so as remain on record date 25.12.2010. (iv) The above said language clearly proves the case of the assessee that there is a specific mention of the earlier agreement between the parties and that earlier agreement, between the parties should be treated as cancelled. This was mentioned, because there was an earlier agreement and, thus, it cannot be said that no earlier agreement was there. Then, the same Nambardar was there in the exchange deed with the purchasers of the assessee’s land by ‘Silver Oaks Township’ proves that validity of earlier agreement. (v) Thus, from the above said facts and circumstances, it is conclusively proved that the deposits in the bank account were out of amount received on account of execution of agreement for sale of land, which was later on exchanged with the buyer and the fact that the assessee did not have any business income or any other resources, since he had only 6-7 acres of agricultural land from where, such huge funds could have never been available with the assessee and thus, the judgment of Hon’ble Supreme Court in the case of P.K. Noorjahan as reported in 237 ITR 570, (Placed in Paper Book at pages 150 to 153) is very much applicable to the facts and circumstances of the case and, whatever, agricultural income was shown by the assessee at Rs. 1,05,000/- has been accepted by the Assessing Officer and no other addition except the deposits in the bank have been made, proves the bonafide contention of the assessee.” 5. During hearing, Mr. Sehgal further argued that the sanction of the Pr. CIT related to issuance of notice u/s 148 was made mechanically which is violated ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 5 section 151 of the Act, the sanction is in mechanical manner. He draws our attention in the recorded reasons which is enclosed in APB pg. 58 (volume-2), is extracted as follows: “Reasons under section 147 of the Income Tax Act, 1961 This office is in possession of certain information that during the year under consideration, the assessee has made a cash deposit of Rs.89.60,400/- into his saving bank account maintained with State Bank of Patiala. The query letters issued to the assessee by this office time to time. The assessee has not furnished any reply/explanation on verification from record of this office. It is noticed that the assessee has not filed his H R for the A.Y 2009-10. 1 have reasons to believe that the income of Rs. 89,60.400 - chargeable to tax for the Assessment year 2009-10: and any other income which comes to the notice subsequently has escaped assessment.” 6. We heard the rival submissions and relied on the documents available in the record. The assessee deposited cash in different dates on the basis of the agreement of sale which is annexed in APB pg. nos. 46 to 51 with English translation. The payment was made in the following manner in relation to agreement and the bank statement, copy was annexed APB pg. nos. 24 to 31. The amounts are deposited in following manners: a. On 01.09.2008, Rs. 2,00,000/- has been received (refer Page 3 of the agreement in Punjabi and Page 7 in English Version) out of this Rs.1,90,000/- deposited in the bank on 03.09.2008 (refer Page 24 of the paper book). b. On 17.09.2008 a sum of Rs.33,00,000/- has been received (refer Page 6 of the agreement in Punjabi and Page 9 in English) and deposited in the bank on 17.09.2008 (refer Page 25 of the paper book) ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 6 c. On 30.12.2008 a sum of Rs. 45,00,000/- has been received (refer Page 2 of the agreement in Punjabi and Page 9 in English) and deposited in the bank on 02.01.2009 (refer Page 28 of the paper book). Before proceedings u/s 148 during the verification of financial transaction, the assessee filed a written submission which is kept in APB volume 2 pg. no. 43 to 45 and clearly mentioned that the total amount was received through agreement amount of Rs. 80 lacs. But the ld. AO without verification of the fact and without application of mind passed the order by addition of Rs.89,60,400/-. 6.1. Factually it is proved that the assessee had received the fund under gone the transaction with “Silver Oaks Township”. The affidavit was also filed by the assessee to establish the fact. The assessee was able to prove the coherent relations in between the transfer agreement and cash deposit in the bank account before the revenue authorities & before the ITAT. Factually, it is proved that the assessee had gone through an agreement and the deed of exchange with the parties for transfer his agricultural land. The technical defect in the agreement cannot be criteria for rejection of the entire cash deposit related to transfer of agricultural land. The assessee was able to prove the source of deposit during financial year. 7. Further, related to agreement of sale, the ld. AO recorded the statements of Sh. Rakesh Kumar, Sunil Singla and Nitin Singla, during the course of assessment proceedings. The copy of the recorded statements is annexed in APB pg. nos. 52 ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 7 to 57. The ld. counsel further argued that all the recorded statements are not supplied to the assessee by the ld. AO. The reasonable opportunity was denied for suppression of fact & denial of cross verification of the evidences which are formed opinion related to addition of amount. The ld. counsel also respectfully referred the judgment of Hon’able Supreme Court in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II, CIVIL APPEAL NO. 4228 OF 2006, Date of Order 02/09/2015. We find the gross violation of the natural justice during completion of the assessment order. The ld. AO without the reasons to believe and proper verification has passed the order u/s 148 of the Act. Considering the above submission, the notice u/s 148 is violation of legal statute and liable to be quashed. 8. We have heard the rival submissions and perused the material on record. We note that the impugned addition was made by the AO purely on suspicion and there was no effective material available on record to justify the same. The assessee cannot be kept in the dark. Adverse statements or materials cannot be kept away from his eyes. If the AO intends to use it to draw adverse inference/finding, the assessee should be provided the adverse material/statements in order to rebut/cross examine the provider/maker of the adverse material. Failure to do so is a serious flaw which renders the assessment a nullity. The addition was made purely on ITA Nos. 202&203/Asr/2019 Jagsir Singh & Ors v. ITO 8 conjecture. The impugned addition is therefore being set aside and is hence deleted. This ground stands allowed. 9. In the result the appeals bearing ITA No. 202/Asr/2019 & 203/Asr/2019 are allowed. Order pronounced in the open court on 10.08.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order