Anil Kumar Jain, Delhi V. ITO, New Delhi

ITA 2130/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2995 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHOUDHARY
• Assessee Lawyers: V K TULSIYAN
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Source of fund; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , DELHI SMC BENCH , NEW DELHI BEFORE SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO S . 2130 & 2131 /DEL /201 7 [ ASSESSMENT YEAR: 20 0 4 - 0 5 ] SHRI ANIL KUMAR JAIN 2234, DHARAMPURA, DELHI (PAN: A AIPJ 7088 D ) VS. THE I . T . O WARD 52(3) N EW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI V.K. TULSIYAN, CA REVENUE BY: MS. BEDOBANI CHOUDHARY , SR. DR DATE OF HEARING : 11 .0 5 .2017 DATE OF PRONOUNCEMENT : 31 .0 5 .2017 ORDER TH E ABOVE TWO APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDE R S DATED 3.2.2017 AND 10.03.2017 OF THE LD. CIT(A) - 16 , NEW DELHI RELATING TO A.Y. 200 4 - 0 5 . WHIL E ITA NO. 5130/DEL/2017 RELATES TO THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF RS. 5,51,000/ - AS UNEXPLAINED CREDIT MADE BY THE ASSESSING OFFICER , ITA NO. 2131/DEL/2017 RELATES TO THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE LEVY OF PENALTY OF RS. 1,64,907/ - U/S 271(1)(C) OF THE I.T. ACT, 1961 . BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 2130 & 2131/DEL/2017 ITA NO. 2130 /DEL /2017 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND FILED H IS RETURN OF INCOME ON 0 1 . 11 .20 0 4 DECLARING TOTAL INCOME OF RS. 3 , 3 1 , 178 / - . THE A.O COMPLETED THE ASSESSMENT U/S 143(3)/147 OF THE INCOME - TAX ACT, 1961 ON 23 . 12 .201 5 DETERMINING THE TOTAL INCOME AT RS. 8,8 0 , 87 0/ - . IN THE SAID ORDER, THE A.O HAD MADE ADDITION OF RS. 5 , 51 , 00 0/ - AS INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT ON ACCOUNT OF ALLEGED GIFT FROM SHRI BRIJESH KUMAR JAIN AND ADDITION OF RS. 27,500/ - TOWARDS COMMISSION PAID @ 5% OF THE ABOVE GIFT. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WH O UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. ON FURTHER APPEAL BY THE ASSESSEE, THE TRIBUNAL, VIDE ORDER DATED 8.8.2014 SET ASIDE THE ORDER TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. 3. THE ASSESSING OFFICER, THEREAFTER, ISSUED STATUTORY NOTICES TO THE ASSESSEE. AFTER CONSIDERING THE ARGU MENTS ADVANCED BY THE ASSESSEE, THE ASSESSING OFFICER AGAIN MADE ADDITION OF RS. 5,51,000/ - BY TREATING THE GIFT AS NON - GENUINE. HE ALSO MADE ADDITION OF RS. 27,500/ - AS EXPENDITURE INCURRED FOR ARRANGING THE ACCOMMODATION ENTRY. 3 ITA NOS. 2130 & 2131/DEL/2017 4. IN APPEAL, THE ASSES SEE, APART FROM CHALLENGING THE ADDITION ON MERIT, ALSO CHALLENGED THE VALIDITY OF REASSESSMENT PROCEEDINGS. HOWEVER, THE LD. CIT(A) DID NOT ACCEPT ARGUMENTS ADVANCED BY THE ASSESSEE AND DISMISSED THE APPEAL FILED BY HIM, BOTH ON MERIT AS WELL AS LEGAL IS SUE. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: 1.1 WHETHER THE LD. CIT (A) WAS JUSTIFIED IN LAW AND FACTS BY HOLDING THAT THE JURISDICTION U/S 147/148 HAS RIGHTLY BEEN EXERCISED BY THE ASSESSING OFFICER AFTER RECORDING THE REASONS AND PROPER APPROVAL OBTAINED AS PER SECTION 151(2). 1.2 WHETHER THE LD. CIT (A) WAS JUSTIFIED BY HOLDING THAT SECTION 147/148, WAS NOT WRONGLY INVOKED, AND IT IS BASED ON COMPLETE INFORMATI ON AND THE REASONS WERE RECORDED AND APPROVAL OBTAINED AS PER THE LAW AS WELL AS BY HOLDING THAT THE EXERCISE OF JURISDICTION ARE NOT FOR ROVING AND FISHING ENQUIRY. 1.3 WHETHER THE LD. CIT (A) WAS JUSTIFIED BY UPHOLDING AN IMPUGNED ASSESSMENT ORDER I S JUSTIFIED AND VALID BECAUSE THE ASSUMPTION OF JURISDICTION IS NOT BASED UPON THE PIECE OF INFORMATION AND NO REQUIREMENT OF ANY TANGIBLE MATERIAL TO BE BROUGHT UPON RECORD. 2. WHETHER THE LD. CIT (A) WAS JUSTIFIED BY UPHOLDING THE ORDER OF LD. A.O. EVE N WITHOUT APPRECIATING THE WRITTEN SUBMISSION, GROUND WISE DISCUSSION IN THE LIGHT OF PAPER BOOK FILED ON 07.09.2016 AS WELL AS VARIOUS CITATION. 4 ITA NOS. 2130 & 2131/DEL/2017 3. WHETHER THE LD. CIT (A) IS JUSTIFIED BY NOT PROPERLY APPRECIATING THE TRUE MEANING OF REMANDED ORDER BY HON'BLE TRIBUNAL AND THEREFORE OBSERVATION OF BOTH THE SUBORDINATE AUTHORITY IS LIABLE TO BE QUASHED. 4. WHETHER THE LD. CIT(A) WAS JUSTIFIED IN LAW A ND FACTS BY HOLDING THAT THE A.O. MADE THE ADDITION OF RS. 5,51,000/ - AS UNEXPLAINED CREDIT BASED ON THE REASONS BUT THE LD. CIT (A) AS WELL AS THE LD. A.O. HAS NOT DISPUTED THE EVIDENCE PLACED ON THE RECORDS IN SUPPORT OF THE TRANSACTION BY WAY OF GIFT DU LY ACKNOWLEDGED. 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRADDHA JAIN VIDE ITA NO. 3280/DE L /2015 ORDER DATED 24.02.2016 AND SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES, THE ADDITION MA DE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) HAS BEEN DELE TED BOTH ON MERIT AS WELL AS ON LEGAL ASPECT. HE, ACCORDINGLY, SUBMITTED THAT THIS BEING A COVERED MATTER, THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED AND ADDITION MADE BY T HE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A) SHOULD BE DELETED. 7 . THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT(A). SHE SUBMITTED THAT THE ASSESSEE HAS RECEIVED A GIFT OF RS. 5,51,000 / - FROM SHRI BRIJESH KUMAR JAIN. THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE CREDIT WORTHINESS OF SHRI BRIJESH KUMAR JAIN AND GENUINENESS OF THE TRANSACTIONS. T HEREFORE, THE ASSESSING OFFICE R HAD RIGHTLY 5 ITA NOS. 2130 & 2131/DEL/2017 MADE THE ADDITION OF RS. 5,51,000/ - AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ALSO MADE ADDITION OF RS. 27,550/ - AS EXPENDITURE INCURRED TOWARDS ARRANGING SUCH ENTRY. THE LD. CIT(A) IS FULLY JUSTIFIED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER. 8. THE LD. COUNSEL FOR THE ASSESSEE, IN HIS REJOINDER, SUBMITTED THAT THE ASSESSEE HAS FILED FULL DETAILS , SUCH AS COPY OF CONFIRMATION OF GIFT DEED, AFFIDAVIT OF DONOR, COPY OF INCOME - TAX RETURN, PAN, BALANCE SHEET, RATION CARD AND COPY OF CONFIRMATION O F THE SOURCE OF FUND OF THE DONOR. THE ASSESSEE ALSO FILED AFFIDAVIT OF THE DONE. HE SUBMITTED THAT SINCE THE ASSESSEE HAS ALREADY FULFILLED NECESSARY INGREDIENTS REQUIRED FOR FULL FILLING CONDITIONS O F SECTION 68 OF THE ACT, THE REFORE, NO ADDITION IS CALLED FOR. 9 . I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME BY BOTH THE SIDES. I FIND THE ONLY ISSUE TO BE DECIDED IN THE IMPUGNED APPEAL IS RE GARD ING TO THE ADDITION OF RS. 5,51,000/ - BEING UNEXPLAINED CASH CREDIT ON ACCOUNT OF GIFT RECEIVED AND THE AMOUNT OF RS. 27,550/ - BEING EXPENDITURE INCURRED FOR ARRANGING SUCH GIFT. I FIND THE ASSESSEE, IN THE INSTANT CASE, IS SHOWN TO HAVE RECEIVED A GIFT OF RS. 5,51,000/ - FROM SHRI BRIJESH KUMAR JAIN WHICH WAS DISBELIEVED BY THE ASSESSING OFFICER AS NON GENUINE. THE ASSESSING OFFICER, ALSO MADE ADDITION OF RS. 27,550/ - BEING 6 ITA NOS. 2130 & 2131/DEL/2017 EXPENDITURE INCURRED FOR ARRANGING SUCH GIFT, WHICH HAS BEEN UPHELD BY THE LD. CIT(A). IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES, THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SH RADDHA JAIN [SUPRA] HAS DELETED SUCH ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A). 10. I FIND MERIT IN THE ABOVE ARGUMENTS ADVANCES BY THE LD. COUNSEL FOR THE ASSESSEE. ON PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER, COPY OF WHICH IS PLACED AT PAGE 15 OF THE PAPER BOOK, I FIND THE ASSESSING OFFICER HAS RECORDED THE FOLLOWING REASONS FOR ASSUMING JURISDICTION U/S 148 OF THE ACT: S.NO. NAME OF THE ENTRY GIVER VALUE OF ENTRY DATE OF ENTRY 01. SHRI BRIJESH KUMAR JAIN RS. 5, 5 1,000/ - 11 . 10 .200 3 THE ABOVE MENTIONED PERSON HENCEFORTH REFERRED TO AS ASSESSEE ALSO APPEAR IN THE LIST OF SUCH BENEFICIARIES OF HAVING CHANNELIZED HIS UNDISCLOSED INCOME IN THE GARB OF GIFT/FAKE TRANSACTIONS FRO M THE ABOVE MENTIONED PERSON TO THE TUNE OF RS. 5, 5 1,000/ - FOR THE FINANCIAL YEAR 2003 - 04 RELEVANT TO ASSESSMENT YEAR 2004 - 05. THE MODUS OPERANDI IS THAT THE ASSESSEE ACTUALLY PAID AN AMOUNT EQUIVALENT TO THE AMOUNT OF DRAFT/CHEQUE RECEIVED IN THE FORM OF GIFT, FROM THE ABOVE MENTIONED PERSON. SO, IN VIEW OF THE ABOVE I HAVE REASON TO BELIEVE THAT THE SAID INCOME OF RS. 5,01,000/ - CHARGEABLE TO TAX HAD ESCAPED THE ASSESSMENT FOR 7 ITA NOS. 2130 & 2131/DEL/2017 THE RELEVANT ASSESSMENT YEAR, AND IT IS A FIT CASE TO ISSUE NOTICE U/S 148. NOTICE U/S 148 IS, THEREFORE, BEING ISSUED IN THIS CASE. DATED 20.3.2008 SD/ - (K.A.KURIAN) INCOME TAX O FFICER WARD 20(2), NEW DELHI' 11. I FIND, AFTER CONSIDERING THE RIVAL ARGUMENTS MADE BY THE BOTH THE SIDES, THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRADDHA JAIN [SUPRA] HAS HELD THE REASSES SMENT PROCEEDINGS AS NOT SUSTAINABLE AND HA S QUASHED SUCH REASSESSMENT PROCEEDINGS. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL FROM PARA 6 OF THE ORDER READS AS UNDER: ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS OF BOTH THE SIDES AT THE OUTSET WE FIND IT APPROPRIATE TO REPRODUCE THE REASONS RECORDED BY THE AO ON 20.3.2005, FOR SAKE OF COMPLETENESS, WHICH IS AS UNDER : - 'SMT. SHARDHA JAIN, 2234, DHARAMPURA, DELHI. 110 006. (ASSTT. YEAR 2004 - 05) AS PER THE SUPPLEMENTARY LIST OF BENEFICIARIES PROVIDED/ RECEIVED FROM DCIT CENTRAL CIRCLE - III, VIDE F. NO. DCIT/CENTRAL CIRCLE - III/05 - 06 DATED 27.01.2006 AND 4/7.3.2005 THE ABOVE MENTIONED ASSESSEE IS A BENEFICIARIES OF ENTRY OPERATOR AS DETAILS GIVEN BEL OW: S.NO. NAME OF THE ENTRY GIVER VALUE OF ENTRY DATE OF ENTRY 01. MS. SITA DEVI 5,01,000/ - 24.01.2004 8 ITA NOS. 2130 & 2131/DEL/2017 THE ABOVE MENTIONED PERSON HENCEFORTH REFERRED TO AS ASSESSEE ALSO APPEAR IN THE LIST OF SUC H BENEFICIARIES OF HAVING CHANNELIZED HIS UNDISCLOSED INCOME IN THE GARB OF GIFT/FAKE TRANSACTIONS FROM THE ABOVE MENTIONED PERSON TO THE TUNE OF RS. 5,01,000/ - FOR THE FINANCIAL YEAR 2003 - 04 RELEVANT TO ASSESSMENT YEAR 2004 - 05. THE MODUS OPERANDI IS THAT THE ASSESSEE ACTUALLY PAID AN AMOUNT EQUIVALENT TO THE AMOUNT OF DRAFT/CHEQUE RECEIVED IN THE FORM OF GIFT, FROM THE ABOVE MENTIONED PERSON. SO, IN VIEW OF THE ABOVE I HAVE REASON TO BELIEVE THAT THE SAID INCOME OF RS. 5,01,000/ - CHARGEABLE TO TAX HAD ESCA PED THE ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, AND IT IS A FIT CASE TO ISSUE NOTICE U/S 148. NOTICE U/S 148 IS, THEREFORE, BEING ISSUED IN THIS CASE. DATED 20.3.2008 SD/ - (K.A.KURIAN) INCOME TAX OFFICER WARD 20(2), NEW DELHI' 12. SINCE THE FACTS OF THE INSTANT CAS E ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN THE CASE OF THE SHRADDHA JAIN, THEREFORE , IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO MY NOTICE, I HOLD THE REASSESSMENT PROCEEDINGS AS INVALID . ACCORDINGLY, I HOLD THAT THE ORDER PASS ED U/S 143(3) R.W.S 14 7 OF THE ACT IS NOT SUSTAINABLE AND THE SAME IS LIABLE TO BE QUASHED. I HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 9 ITA NOS. 2130 & 2131/DEL/2017 ITA NO. 2131 /DEL /2017 13. THE ASSESSEE, IN THE GROUNDS OF APPEAL, HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN SUSTAINING PENALTY OF RS. 1,64,907/ - LEVIED U/S 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. 14. IN THE PRECEDING PARAS, WHILE DECIDING THE QUANTUM APPEAL IN ITA NO. 2130/DEL/2017, I HAVE ALREADY DELETED THE ADD ITION SUSTAINED BY THE LD. CIT(A) HOLDING THAT THE ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT IS LIABLE TO BE QUASHED. SINCE THE VERY BASIS ON WHICH THE PENALTY WAS LEVIED DOES NOT SURVIVE, THE PENALTY HAS NO LEGS TO STAND . ACCORDINGLY, PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IS DIRECTED TO BE DELETED. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 15 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCE D IN THE OPEN COURT ON 3 1 .0 5 .2017. SD/ - (R.K. PANDA) ACCOUNTANT MEMB E R DATED: 3 1 . 0 5 .2017 V. LAKSHMI COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR 10 ITA NOS. 2130 & 2131/DEL/2017 DATE DRAFT DICTATED ON 11 .0 5 .2017 DRAFT PLACED BEFORE AUTHOR 11 .0 5 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .0 5 .2017 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.