Sh. Jas Ram Singh Besoya, New Delhi V. ITO, New Delhi

ITA 207/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5249 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Documents seized
• Section: 69C; 234B; 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.207/DEL./2017 ASSESSMENT YEAR 2007-2008 SH JAS RAM SINGH BESOYA 85, GARHI PRAKASH MOHALLA EAST OF KAILASH, NEW DELHI. PAN AATPB7885M VS. THE INCOME TAX OFFICER, WARD-30(5), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SURESH KUMAR GUPTA, C.A. FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. DATE OF HEARING : 07.07.2017 DATE OF PRONOUNCEMENT : 11.08.2017 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-10, NEW DELHI DATED 19 TH AUGUST, 2016 FOR THE A.Y. 2007-2008, CHALLENGING THE RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE I.T. ACT, 1961, ADDITION OF RS.16,00,500 ON ACCOUNT OF EXPENDITURE INCURRED ON ADMISSION OF HIS SON IN MEDI CAL COLLEGE AND CHARGING OF INTEREST UNDER SECTION 234B OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME AT RS.2,32,548. AN INFORMATION IN THIS CASE WAS RECEIVED FROM DDIT (INV.), NEW DELHI THAT SHRI KAMALJEET SINGH SON OF SHRI JASRAM SINGH (ASSESSEE) HAS PAID CASH DONATION/CAPITATION FE E OF RS.16 LAKHS ON 14 TH JULY, 2006 DURING F.Y. 2006-07 RELEVANT TO ASSESSMEN T YEAR UNDER APPEAL. THEREFORE, PROCEEDINGS WERE INITIATED U NDER SECTIONS 147/148 OF THE I.T. ACT AFTER GETTING NECESSARY APPROVAL . THE NOTICE UNDER SECTION 148 WAS ISSUED ON 27 TH MARCH, 2014 AND DULY SERVED UPON THE ASSESSEE. THE ASSESSEE IN REPLY BEFORE A.O. SUBMITTED THAT 2 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. RETURN ALREADY FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. ACT. 2.1. DURING THE ASSESSMENT PROCEEDINGS, A COPY OF THE LEDGER ACCOUNT OF PAGE NOS. 19 AND 20 (PAPER BOOK PAGE NOS. 6 AND 7) OF ANNEXURE-1 WAS PROVIDED TO THE ASSESSEE WHICH WAS SEI ZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE I.T. ACT ON 27 TH JUNE, 2013 IN SANTOSH GROUP OF INSTITUTIONS AND DR. MAHA LINGAM. THIS ANNEXURE WAS SEIZED FROM ADMINISTRATIVE BLOCK OF THE COLLEGE WHICH REVEAL RECEIPT OF DONATION/CAPITATION F EES OVER AND ABOVE THE REGULAR COURSE FEES PAID IN CASH BY PARENTS OF THE STUDENTS TAKING ADMISSION IN VARIOUS MEDICAL COURSES. IN THIS ANNEXU RE, IT IS CLEARLY WRITTEN THAT SHRI KAMALJEET SINGH SON OF SHRI JASRAM SIN GH, NEW DELHI HAS PAID RS.13,99,500 (RS.12,78,000 BY D.D. + RS.1,21,500 IN CASH) AND FURTHER PAID RS.16,00,500 IN CASH. DR. MAH ALINGAM, CHAIRMAN OF THE TRUST HAS ALREADY CATEGORICALLY ADMIT TED OF ACCEPTING THE DONATION/CAPITATION FEES PAID IN CASH AND OFFERED THE UNACCOUNTED MONEY SO RECEIVED IN THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE SUBMITTED BEFORE A.O. THAT ASSESSEE HAS MADE TOTAL PAYMEN T OF RS.13,99,500 ONLY TO MAHARAJI EDUCATION TRUST, GHAZIAB AD AND NO OTHER AMOUNT HAS BEEN PAID BY THE ASSESSEE AS IS ALLE GED IN THE SHOW CAUSE NOTICE. THE STATEMENT OF ASSESSEE WAS RECORDED ON OATH UNDER SECTION 131(1) OF THE I.T. ACT AT THE ASSESSMENT STAGE A ND COPY OF THE SAME SEIZED PAPER WERE PROVIDED TO ASSESSEE TO EXPLA IN SOURCE OF RS.16,00,500 PAID IN CASH. THE ASSESSEE AGAIN REITE RATED THAT HE HAS NOT PAID ANY AMOUNT OTHER THAN RS.13,99,500. ASSESSEE DENIED KNOWLEDGE OF ANY SUCH ANNEXURE-1. THE A.O. HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION OF RS.16,00,500 UNDER SECTION 69C OF THE I.T. ACT. 3 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. 2.2. ASSESSEE CHALLENGED THE REOPENING OF THE ASSESS MENT AND ADDITION ON MERIT BEFORE LD. CIT(A). THE WRITTEN STATEM ENT OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER. THE L D. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT DR. MAHALINGAM IN HIS STATEMENT RECORDED BY THE INVESTIGATIO N WING ADMITTED TO HAVE RECEIVED UNACCOUNTED CASH FROM THE STUD ENT AND REFERRED TO QUESTION NOS.56, 57 AND 58 OF THE STATEMEN T AND IN HIS CONCLUSION IN QUESTION NO.66, DR. MAHALINGAM FURNISH ED THE DETAILS OF TOTAL UNACCOUNTED RECEIPTS FALLING IN DIFFERENT FINANCIA L YEARS AND AS PER DETAILS DURING F.Y. 2006-07 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, THERE WAS UNACCOUNTED RECEIPTS TO THE TUNE OF RS.1760.48 (IN LAKHS) ON THE BASIS OF DIFFERENT RECE IPTS, REGISTERS FOUND AT THE PREMISES OF THE COLLEGE. THE TOTAL UNACCOUNTED REC EIPTS WERE FOUND TO THE TUNE OF RS.11738.08 (IN LAKHS). THE LD. CIT(A) THEREFORE, NOTED THAT SANTOSH GROUP OF INSTITUTIONS AND DR. MAHALIN GAM WERE ENGAGED IN RECEIVING UNACCOUNTED MONEY OVER AND ABOV E THE REGULAR COURSE FEES. THE DOCUMENTS WERE SEIZED DURING THE CO URSE OF SEARCH WHICH PROVES THAT ASSESSEE PAID AN AMOUNT OF RS.16,00, 500 IN CASH OVER AND ABOVE THE AMOUNT OF RS.13,99,500 TO M/S. SANTO SH GROUP OF INSTITUTIONS AND DR. MAHALINGAM TOWARDS ADMISSION OF HIS SON SHRI KAMALJEET SINGH IN MBBS COURSE. LD. CIT(A) THEREFORE, CONFIRMED THE ADDITION ON MERIT. FURTHER, AS REGARDS THE INITIATION OF RE-ASSESSMENT PROCEEDINGS IS CONCERNED, THE LD. CIT(A) NOTED THAT AT TH E TIME OF INITIATING THE RE-ASSESSMENT PROCEEDINGS THE A.O. IS R EQUIRED TO RECORD PRIMA FACIE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND RELIED UPON THE DECISIONS OF H ONBLE DELHI HIGH COURT IN THE CASE OF RAJAT EXPORT IMPORT INDIA P. L TD., VS. ITO 341 ITR 135 (DEL.) AND M/S. PRATIBHA FINVEST P. LTD., VS. ITO (2013) 215 TAXMANN 470 (DEL.) IN WHICH IT WAS HELD THAT REOP ENING OF ASSESSMENT ON THE BASIS OF INVESTIGATION REPORT WAS JUSTI FIED. THE LD. 4 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. CIT(A) ALSO RELIED UPON THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS LTD., VS. ITO (1999 ) 236 ITR 34 (SC) IN WHICH IT WAS HELD THAT IN DETERMINING WHETHER COMMEN CEMENT OF RE-ASSESSMENT PROCEEDINGS WAS VALID, IT IS ONLY TO BE SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH DEPARTMENT COULD REOPEN THE CASE. THE LD. CIT(A) ACCORDINGLY CO NFIRMED THE REOPENING OF THE ASSESSMENT BECAUSE SUFFICIENT MATERI AL WAS AVAILABLE ON RECORD AGAINST ASSESSEE. THE LD. CIT(A) ACCORDING LY, DISMISSED THE APPEAL OF ASSESSEE ON BOTH THESE ISSUES. 3. I HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS WELL SETTLED LAW THAT VALIDITY OF RE-ASSESSMENT PROCEEDINGS SHALL HAVE TO BE DETERMI NED ON THE BASIS OF THE REASONS RECORDED UNDER SECTION 147 OF THE I.T. ACT. THE ASSESSEE HAS FILED COPY OF THE SAME AT PAGE 5 OF THE PAPER BOO K WHICH READS AS UNDER : SHRI JASRAM SINGH 226-B-5 KISHROI LAL PLAZA PRAKASH MOHALLA, GARHI EAST OF KAILASH, NEW DELHI 110 065 A.Y. 2007-08 INFORMATION IN THIS CASE WAS RECEIVED FROM DY. DIRE CTOR OF INCOME TAX (INV.) UNIT-V(1), NEW DELHI THAT SHRI KAMALJEET SINGH S/O. SHRI JASRAM SINGH, FATHER OF SHRI KAMALJEET SINGH, R/O. 226-B-5, KISHROI LAL PLAZA, PRAKASH MOHALLA, GARHI, EAST OF KAILASH, NEW DELHI 110 065 HAS PAID CASH DONATION/CAPITATION FEE OF RS.16,00,0 00 DATED 14.07.2006 DURING FY 2006-07 RELEVANT TO A.Y. 2007- 08. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BELIE VE THAT INCOME OF RS.16,00,000 HAS ESCAPED ASSESSMENT, WITHIN THE MEANING OF PROVISIONS OF SECTION 147 OF THE I.T. ACT, 1961 FOR THE A.Y. 2007-08. ACCORDINGLY, NECESSARY APPROVAL UNDER SECTION 151 O F THE I.T. ACT, 1961 IS SOLICITED TO ISSUE NOTICE U/S. 148 OF THE I.T. A CT TO REOPEN THE ASSESSMENT U/S.147 OF THE I.T. ACT, 1961. SD/-SUNIL SHARMA INCOME TAX OFFICER WARD-22(1), NEW DELHI. 5 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. 3.1. LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PAPER BOOK PAGES 6 AND 7 OF ANNEXURE-1 WHICH ARE SEIZED P APER FOUND DURING THE COURSE OF SEARCH IN THE CASE OF M/S. SANT OSH GROUP OF INSTITUTIONS AND DR. MAHALINGAM SHOWING ALLEGED PAYM ENT OF RS.16,00,500 BY THE ASSESSEE IN CASH. LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT A.O. MERELY ACTED UPON REPORT O F INVESTIGATION AND DID NOT APPLY HIS MIND AND ACTION IS ONLY TAKEN ON THE REPORT OF DDIT (INV.). HE HAS SUBMITTED THAT A.O. DID NOT APPLY HIS MIND TO INFORMATION AND DID NOT EXAMINE IT. REASSESSMEN T IS DONE ONLY ON SUSPICION. HE HAS RELIED UPON CASE LAW AS F ILED IN PAPER BOOK IN SUPPORT OF HIS CONTENTION. THEREFORE, INITIATION OF RE-ASSESSMENT PROCEEDINGS ARE BAD IN LAW. 4. ON THE OTHER HAND, THE LD. D.R. RELIED UPON ORDERS OF AUTHORITIES BELOW. 5. I DO NOT AGREE WITH THE CONTENTION OF THE LEARNED CO UNSEL FOR THE ASSESSEE. THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH IN THE CASE OF M/S. SANTOSH GROUP OF INSTITUTION S AND DR. MAHALINGAM HAVE SEIZED PAGES 19 AND 20 OF ANNEXURE- 1 WHICH SHOWS THAT ASSESSEE HAS PAID CASH OVER AND ABOVE THE REGULAR FEES PAID FOR ADMISSION OF HIS SON TO MBBS COURSE. THE STATEMENT OF D R. MAHALINGAM WAS ALSO RECORDED BY INVESTIGATION WING IN WHICH HE HAS ADMITTED TO HAVE RECEIVED THE AMOUNT OVER AND ABOVE THE R EGULAR FEES PAID BY THE PARENTS OF THE STUDENTS WHICH HAVE BEEN DEC LARED AS UNACCOUNTED INCOME DURING THE FINANCIAL YEAR 2012-201 3. THE REPORT OF DDIT, INVESTIGATION IS ALSO FILED AT PAGE-8 OF THE PAPER BOOK WHICH PROVIDES SPECIFIC MATERIAL AND INFORMATION TO THE A.O . THAT ASSESSEE PAID THE AMOUNT IN QUESTION FOR ADMISSION OF HIS SON WHICH IS UNDISCLOSED INCOME OF THE ASSESSEE. THE A.O. THEREFOR E, ON THE BASIS OF EXAMINING THE SPECIFIC SEIZED MATERIAL, REPORT OF IN VESTIGATION WING AND 6 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. STATEMENT OF DR. MAHALINGAM APPLIED HIS MIND TO SUCH M ATERIAL AND RIGHTLY CAME TO THE CONCLUSION THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THUS, A PRIMA FACIE CASE IS MADE OUT FOR REOPENING OF THE ASSESSMENT. THEREFORE, LD. CIT(A) WA S JUSTIFIED IN CONFIRMING THE INITIATION OF RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE I.T. ACT. I, THEREFORE, FIND NO JUSTIFICATIO N TO QUASH REOPENING OF THE ASSESSMENT IN THE MATTER. THIS GROUND OF IS DIS MISSED. 6. HOWEVER, AS REGARDS THE ADDITION ON MERIT IS CONCE RNED, THE LD. CIT(A) WHILE CONFIRMING THE ADDITION ON MERIT R EFERRED TO THE STATEMENT OF DR. P. MAHALINGAM RECORDED BY INVESTIGATIO N WING AND REFERRED TO QUESTION NOS. 56, 57 AND 58 OF HIS STATEME NT AND CONCLUSION IN QUESTION NO.66 IN WHICH DR. MAHALINGAM HAS ADMITTED TO HAVE RECEIVED UNACCOUNTED MONEY FROM THE PARENTS OF THE STUDENTS AND IN THE CONCLUSION AGREED TO SURRENDER THE UNACCOUN TED MONEY IN F.Y. 2012-2013. THERE IS NO SPECIFIC QUESTION PUT TO D R. P. MAHALINGAM WITH REGARD TO ANNEXURE-1, PAGES 19 AND 20 OF THE ANNEXURE. HE HAS NOT MADE ANY SPECIFIC STATEMENT AGAINS T THE INTEREST OF ASSESSEE IF ASSESSEE PAID THE AMOUNT IN QUESTION TO HIM IN CASH. THE COPY OF THE SEIZED PAPER OF ANNEXURE-1, PAGE NO S. 19 AND 20 ARE FILED AT PAGE NOS.6 AND 7 OF THE PAPER BOOK WHICH ARE IN THE NAME OF SON OF THE ASSESSEE BUT THESE ARE NOT SIGNED BY THE ASSE SSEE AND ARE ALSO NOT IN THE HANDWRITING OF THE ASSESSEE. THESE SE IZED PAPERS WERE NOT RECOVERED FROM THE POSSESSION OF THE ASSESSEE. THE REFORE, IF THE A.O. WANTED TO MAKE ANY ADDITION ON THE BASIS OF THESE S EIZED PAPER, IT IS FOR THE A.O. TO BRING SPECIFIC EVIDENCE ON RECOR D TO PROVE THAT ASSESSEE PAID UNACCOUNTED CASH TO M/S. SANTOSH GROUP OF INSTITUTIONS OR DR. P. MAHALINGAM. THE A.O. HOWEVER, DID NOT BRING ANY DOCUMENTS ON RECORD TO CONNECT THE ASSESSEE WITH THE SEIZED DOCUMENTS. THE ASSESSEE IN HIS INITIAL STATEMENT DENIED TO HAVE MADE 7 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. ANY PAYMENT OF THE AMOUNT IN QUESTION IN CASH TO THE ABOV E INSTITUTIONS FOR GETTING THE ADMISSION OF HIS SON IN MB BS COURSE. DR. MAHALINGAM IN HIS STATEMENT THOUGH ADMITTED RECEIPT OF UNA CCOUNTED MONEY FROM VARIOUS PERSONS BUT HE HAS SURRENDERED THE AMOUNT IN F.Y. 2012-2013. THEREFORE, IN SUCH CIRCUMSTANCES, ON US WOULD UPON THE A.O. TO PROVE THAT ASSESSEE HAS PAID THE AMOUNT IN QU ESTION TO M/S. SANTOSH GROUP OF INSTITUTIONS OR MR. P. MAHALING AM IN CASH. OTHERWISE, IN THE ABSENCE OF ANY COGENT AND RELIABLE EVIDENCE AGAINST THE ASSESSEE, IT IS DIFFICULT TO SUSTAIN THE ADDITION OF RS.16,00,500. ASSESSEE CANNOT BE DIRECTED TO PROVE NEGATIVE FACT. SI NCE, ASSESSEE WAS NOT AUTHOR OF SEIZED DOCUMENTS AND NO SUCH DOCUMEN T HAS BEEN RECOVERED FROM HIS POSSESSION, THEREFORE, ASSESSEE C ANNOT BE DIRECTED TO PROVE THE CASE OF REVENUE. IN THE ABSENCE OF ANY C OGENT AND RELEVANT EVIDENCE ON RECORD TO CONNECT THE ASSESSEE WI TH THE SEIZED DOCUMENTS OR PAYMENT OF UNACCOUNTED CASH TO THE ABOVE I NSTITUTION, I DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION ON MERIT. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BE LOW AND DELETE THE ADDITION OF RS.16,00,500. THIS GROUND IS ALLOWED. 6. THE OTHER ISSUE WITH REGARD TO CHARGING OF INTEREST UNDER SECTION 234B IS CONSEQUENTIAL IN NATURE AND NEED NO IN TERFERENCE. FURTHER, NO ARGUMENTS HAVE BEEN MADE BY THE LEARNED CO UNSEL FOR THE ASSESSEE FOR THIS ISSUE. THIS GROUND IS THEREFORE , DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 11 TH AUGUST, 2017 VBP/- 8 ITA.NO.207/DEL./2017 SHRI JASRAM SINGH BESOYA, NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR ITAT : DELHI BENCHES : DELHI.