Deepa Agarwal , Kolkata V. ITO, Ward - 22(4), , Kolkata

ITA 2141/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2261 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CIT SR DR R
• Keywords: Reopening of assessment; Search and seizure; Question of law; Reason to believe
• Section: 143(1); 250; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER] I.T.A. NO. 2141/KOL/2018 ASSESSMENT YEAR: 2011-12 DEEPA AGARWAL............APPELLANT AB-46/1, SALT LAKE CITY BIDHANNAGAR CC BLOCK SECTOR-1 KOLKATA 700 064 [PAN : AJSPS 5648 D] INCOME TAX OFFICER, WARD -22(4), KOLKATA........................................................RESPONDENT APPEARANCES BY: SHRI SUNIL SURANA, FCA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOUDHURY, ADDL. CIT SR. D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JUNE 13 TH , 2019 DATE OF PRONOUNCING THE ORDER : JUNE 21 ST , 2019 O R D E R PER J. SUDHAKAR REDDY :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 13, KOLKATA, (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 14/08/2018, FOR THE ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HER RETURN OF INCOME ON 27/02/2012 FOR THE ASSESSMENT YEAR 2011-12. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 16/03/2012. THEREAFTER THE CASE WAS REOPENED U/S 147 OF THE ACT. THE ASSESSEE IN THIS CASE CHALLENGES THE VALIDITY OF THE REOPENING. 3. I HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, I HOLD AS FOLLOWS:- 4. THE REASONS FOR REOPENING ARE AS FOLLOWS:- THE ASSESSEE FILED HER RETURN OF INCOME SHOWING A TOTAL INCOME OF RS.4,31,410/-. ON PERUSAL OF THE INFORMATION RECEIVED IN RESPECT OF PENNY STOCK FIND IN THE LIST FROM THE ITS, EFS THAT THE ASSESSEE DURING THE PREVIOUS YEAR BOUGHT 2500 PENNY STOCK S SHARES OF UNNO INDUSTRIES AT RS.20,775/- AND SOLD 34,000 PENNY STOCK 2 I.T.A. NO. 2141/KOL/2018 ASSESSMENT YEAR: 2011-12 DEEPA AGARWAL SHARES OF PARICHAY INV. AT RS. 17,04,152/-. CONSIDERING THE ITR FILED BY THE ASSESSEE LTCG/LTCL SEEMS TO HAVE BEEN BOGUS AND THUS HAS ESCAPED ASSESSMENT. 4.1. ON A CAREFUL READING OF THE REASONS RECORDED, I FIND THAT THE ASSESSING OFFICER HAS RECORDED THE REASONS FOR REOPENING BASED ON A GENERAL INFORMATION. THE REASONS RECORDED ARE VAGUE AS IT IS EVIDENT THAT THE ASSESSING OFFICER WAS NOT SURE AS TO WHETHER THERE WAS A LONG TERM CAPITAL GAIN OR A LONG TERM CAPITAL LOSS CLAIMED IN THIS CASE. TWO DIFFERENT SCRIPS HAVE BEEN MENTIONED IN THE REASONS FOR ONE FOR PURCHASE AND SALE I.E., THE ASSESSING OFFICER STATES THAT THE ASSESSEE PURCHASED 2500 SHARES OF UNNO INDUSTRIES AND SOLD 34,000 SHARES OF M/S PARICHAY INV.. THIS SHOWS NON-APPLICATION OF MIND BY THE ASSESSING OFFICER. THIS SHOWS THAT THE PURCHASED SCRIP IS NOT ALLEGED TO HAVE BEEN SOLD THIS YEAR AND VICE VERSA. THERE WAS NO VERIFICATION OF INFORMATION RECEIVED BY THE ASSESSING OFFICER, BEFORE REOPENING THE ASSESSMENT. WHAT IS THE INFORMATION RECEIVED, IS ALSO NOT CLEAR. NO LIVE LINK OR DIRECT NEXUS IS DEMONSTRATED BETWEEN THE INFORMATION OBTAINED AND THE REASONS RECORDED FOR THE REOPENING OF ASSESSMENT. SUSPICION CANNOT TAKE PLACE OF EVIDENCE AND CANNOT BE THE BASIS OF REOPENING OF ASSESSMENT. THIS PROPOSITION WAS LAID DOWN BY COURTS IN A NUMBER OF JUDGMENTS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CORONATION AGRO INDUSTRIES VS. DCIT IN W.P. NO. 2627 OF 2016, PRONOUNCE ON 23 RD NOVEMBER 2016, HELD AS FOLLOWS:- WE NOTE THAT THE REASONS IN SUPPORT OF THE IMPUGNED NOTICE ACCEPT THE FACT THAT AS A MATTER OF REGULAR BUSINESS PRACTICE, A BROKER IN THE STOCK EXCHANGE MAKES MODIFICATIONS IN THE CLIENT CODE ON SALE AND / OR PURCHASE OF ANY SECURITIES, AFTER THE TRADING IS OVER SO AS TO RECTIFY ANY ERROR WHICH MAY HAVE OCCURRED WHILE PUNCHING THE ORDERS. THE REASONS DO NOT INDICATE THE BASIS FOR THE ASSESSING OFFICER TO COME TO REASONABLE BELIEF THAT THERE HAS BEEN ANY ESCAPEMENT OF INCOME ON THE GROUND THAT THE MODIFICATIONS DONE IN THE CLIENT CODE WAS NOT ON ACCOUNT OF A GENUINE ERROR, ORIGINALLY OCCURRED WHILE PUNCHING THE TRADE. THE MATERIAL AVAILABLE IS THAT THERE IS A CLIENT CODE MODIFICATION DONE BY THE ASSESSEE'S BROKER BUT THERE IS NO LINK FROM THERE TO CONCLUDE THAT IT WAS DONE TO ESCAPE ASSESSMENT OF A PART OF ITS INCOME. PRIMA FACIE, THIS APPEARS TO BE A CASE OF REASON TO SUSPECT AND NOT REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 4.2. THE HONBLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH VS. APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN [1971] 82 ITR 147 (SC) , WHEREIN THE REASON RECORDED WERE IT APPEARS THAT THESE PERSONS ARE NAME LENDERS AND TRANSACTIONS ARE BOGUS, IT WAS HELD THAT THIS IS NOT ENOUGH FOR THE PURPOSE OF INITIATING PROCEEDINGS U/S 147 WHICH CAN BE CALLED AS A VAGUE FEELINGS OF THE ASSESSING OFFICER. 3 I.T.A. NO. 2141/KOL/2018 ASSESSMENT YEAR: 2011-12 DEEPA AGARWAL 4.3. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INSECTICIDES (INDIA) LTD. REPORTED IN [2013] 357 ITR 330 (DELHI) HELD AS FOLLOWS:- SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS [SHARE APPLICATION MONEY] - ASSESSMENT YEARS 2002-03 TO 2003-04 - ASSESSING OFFICER REOPENED ASSESSMENT OF ASSESSEE ON GROUND THAT ASSESSEE WAS INVOLVED IN BOGUS ENTRIES AND ALLEGED SHARE APPLICATION MONEY REPRESENTED INCOME OF ASSESSEE FROM UNDISCLOSED SOURCE - TRIBUNAL FOUND THAT IN REASONS RECORDED BY ASSESSING OFFICER IT WAS NOWHERE MENTIONED AS TO WHO HAD GIVEN BOGUS ENTRIES/TRANSACTIONS TO ASSESSEE OR TO WHOM ASSESSEE HAD GIVEN BOGUS ENTRIES OR TRANSACTIONS - ACCORDINGLY, TRIBUNAL HELD THAT REASSESSMENT UNDER SECTION 147 WAS NOT SUSTAINABLE IN LAW AS REASON RECORDED BY ASSESSING OFFICER WERE TOTALLY SILENT WITH REGARD TO AMOUNT, NATURE OF BOGUS ENTRIES AND TRANSACTION AND PERSON WITH WHOM TRANSACTION HAD TAKEN PLACE - WHETHER ON FACTS, THERE WAS NO REASON TO DIFFER WITH VIEW EXPRESSED BY TRIBUNAL - HELD, YES [PARA 9] [IN FAVOUR OF ASSESSEE] 4.4. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SFIL STOCK BROKING LTD. REPORTED IN [2010] 325 ITR 285 (DELHI) HELD AS FOLLOWS:- 9. IN THE PRESENT CASE, WE FIND THAT THE FIRST SENTENCE OF THE SO-CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SAME DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISES OF A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX TO INITIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. THESE THREE SENTENCES ARE FOLLOWED BY THE FOLLOWING SENTENCE, WHICH IS THE CONCLUDING PORTION OF THE SO-CALLED REASONS : 'THUS, I HAVE SUFFICIENT INFORMATION IN MY POSSESSION TO ISSUE NOTICE UNDER SECTION 148 IN THE CASE OF M/S. SFIL STOCK BROKING LTD. ON THE BASIS OF REASONS RECORDED AS ABOVE.' 10. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS 'REASONS' ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148. WE ARE AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF THE BEGINNING PARAGRAPH OF THE SO-CALLED REASONS ARE MERE DIRECTIONS. FROM THE SO- CALLED REASONS, IT IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECT CONCLUSION ON THE FACTS. THE LAW IS WELL SETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR OUR CONSIDERATION. 5. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE REFERRED CASE-LAW, TO THE FACTS OF THIS CASE I QUASH THIS REOPENING AS BAD IN LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 21 ST DAY OF JUNE, 2019. SD/- [ J. SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 21.06.2019 {SC SPS} 4 I.T.A. NO. 2141/KOL/2018 ASSESSMENT YEAR: 2011-12 DEEPA AGARWAL COPY OF THE ORDER FORWARDED TO: 1. DEEPA AGARWAL AB-46/1, SALT LAKE CITY BIDHANNAGAR CC BLOCK SECTOR-1 KOLKATA 700 064 2. INCOME TAX OFFICER, WARD -22(4), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES