Shri Jaspal Singh, Kurukshetra V. Income Tax Officer, Ward 1, Kurukshetra

ITA 219/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7145 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-03-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Capital asset; Set aside
• Section: 142(1); 143(2); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 219/CHD/2019 / ASSESSMENT YEAR : 2010-11 SHRI JASPAL SINGH, S/O SHRI JARNAIL SINGH, VILLAGE-GUMTHALA GARHU, TEHSIL-PEHOWA, DISTT.-KURUKSHETRA. THE ITO, WARD 1, KURUKSHETRA. ./ PAN NO: CLYPS1438M / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE ! / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT ' # $/ DATE OF HEARING : 25.03.2021 %&'( $/ D ATE OF PRONOUNCEMENT : 06.04.2021 HEARING CONDUCTED VIA WEBEX $%/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 24.01.2019 OF CIT(A) , KARNAL PERTAINING TO 2010-11 ASSESSMENT YEAR IS ASSAILED O N VARIOUS GROUNDS ON MERIT INCLUDING GROUND NO. 1 WHEREIN CHA LLENGE IS POSED ON THE ASSUMPTION OF JURISDICTION ITSELF. TH E GROUND READS AS UNDER : THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE AC TION OF THE ASSESSING OFFICER WITH REGARD TO REOPENING OF THE CASE U/S 148 AND AL SO THERE WERE NO REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. ITA 219/CHD/2019 A.Y. 2010-11 PAGE 2 OF 7 2. AT THE TIME OF HEARING, LD. AR INVITED ATTENTION TO THE AFORESAID GROUND AND SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE, THE JURISDICTION ASSUMED BY THE AO WAS NOT VA LID AND HENCE UNSUSTAINABLE IN LAW. IN THE FACTS OF THE PRESENT CASE, IT WAS SUBMITTED THAT IT WAS PATENTLY A CASE OF NON APPLIC ATION OF MIND EVIDENT FROM THE REASONS RECORDED ITSELF. THIS FAC T, IT WAS SUBMITTED, WOULD BE EVIDENT FROM PAGE 1 PARA 2 OF T HE ASSESSMENT ORDER READ ALONGWITH PAGE 2 PARA 2 OF THE PAPER BOO K WHEREIN REASONS FOR RE-OPENING THE ASSESSMENT ARE FOUND REC ORDED. THE MISTAKE AND NON-APPLICATION OF MIND IS EVIDENT ON T HE RECORD ITSELF. ACCORDINGLY, IT WAS HIS SUBMISSION THAT IN TERMS OF THE JUDICIAL PRECEDENT AS SETTLED AND ACCEPTED BY THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF MONIKA RANI VS ITO ITO NO. 582/ CHD/2019 PLACED AT PAPER BOOK PAGE 1 TO 11, THE APPEAL OF TH E ASSESSEE DESERVES TO BE ALLOWED ON THIS GROUND ITSELF. REFE RRING TO THE PRINCIPLE FOLLOWED BY THE CO-ORDINATE BENCH IN THE AFORESAID DECISION, IT WAS SUBMITTED THAT DECISIONS OF GUJRAT HIGH COURT AND VARIOUS OTHER ORDERS OF THE CHANDIGARH, MUMBAI AND JAIPUR BENCHES ETC. OF THE TRIBUNAL HAD BEEN RELIED UPON A ND WERE REFERRED TO. SPECIFIC ATTENTION WAS INVITED TO PARA S 10.1 TO 10.6 OF THE AFORESAID ORDER. 3. THE LD. SR.DR ON THE OTHER HAND REFERRING TO PAR A 3.2 SUBMITTED THAT THE LD. COMMISSIONER HAS ADDRESSED T HIS GROUND OF ITA 219/CHD/2019 A.Y. 2010-11 PAGE 3 OF 7 THE ASSESSEE AND TAKEN NOTE OF THE FACT THAT NO OBJ ECTION WAS RAISED DURING THE ASSESSMENT PROCEEDINGS BY THE ASSESSEE. 4. THE RELEVANT FACTS OF THE CASE AS FOUND RECORDED ARE THAT THE ASSESSEE WAS REQUIRED TO EXPLAIN CERTAIN AMOUNTS FO UND DEPOSITED IN HIS BANK ACCOUNT. THE ASSESSEE EXPLAINED THAT T HE AMOUNTS WERE ON ACCOUNT OF THE TRANSFER OF MONEY FROM HIS B ROTHER-IN-LAW IN LIEU OF TRANSFER OF LAND BY THE ASSESSEE. A FAMILY DOCUMENT DESCRIBED AS DASBARDARNAMA AND UNREGISTERED RELEA SE DEED WAS RELIED UPON IN SUPPORT OF THE EXPLANATION. BOTH TH E ASSESSEE AND HIS BROTHER-IN-LAW SHRI SURINDER APPEARED BEFORE TH E AO AND CONFIRMED THE TRANSACTION AND THE SOURCE. HOWEVER, IN VIEW OF UNREGISTERED DOCUMENTARY EVIDENCES, THE AO PROCEEDE D TO MAKE THE ADDITION. APART FROM THAT, CERTAIN ADDITIONS WERE ALSO MADE ON ACCOUNT OF DAIRY AND THE ACTIVITY OF RUNNING A COMB INED HARVESTER ETC. TO THE RETURNED INCOME OF RS. 2,95,000/- (+) R S. 3,00,000/- AGRICULTURE INCOME. AS A RESULT OF THE ADDITIONS, T OTAL TAXABLE INCOME OF RS. 46,70,654/- WAS ASSESSED. 5. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE CIT(A) BOTH ON MERITS AS WELL AS CHALLENGING THE ACTION ON ASSUMPTION OF JURISDICTION ALSO. THE JURISDICTIONAL ISSUE WAS DE CIDED AGAINST THE ASSESSEE ON WHICH LD. DR HAS PLACED RELIANCE. THE RELEVANT FINDING IS EXTRACTED HEREUNDER FOR THE SAKE OF CONVENIENCE : 3.2 I HAVE EXAMINED THE FACTS OF THE CASE AND THE MATERIALS ON RECORD. AS FAR AS THE ISSUE OF NON-SERVICE OF NOTICE U/S 148 OF TH E IT ACT, 1961 IS CONCERNED, THE ITA 219/CHD/2019 A.Y. 2010-11 PAGE 4 OF 7 NOTICE HAS BEEN ISSUED AS PER THE PROCEDURE LAID DO WN AND THERE IS NOTHING ON RECORD TO SHOW THAT IT REMAINED UNSERVED. NO OBJECT ION WAS RAISED DURING ASSESSMENT PROCEEDINGS BY THE APPELLANT. HENCE, THE PROCEEDINGS ARE PERFECTLY LEGAL AND THE APPEAL ON THIS ISSUE IS REJECTED. 6. IN THE SAID BACKGROUND, ADDRESSING THE ARGUMENT ADVANCED BY THE PARTIES, IT IS SEEN THAT WHILE RECORDING THE RE ASONS, THE AO HAS GIVEN THE FOLLOWING SPECIFIC REASON: HOWEVER, AS PER THE RECORD OF THIS OFFICE, THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME. (EMPHASIS SUPPLIED) 7. CONSIDERING THE FACT THAT THE RE-OPENING WAS DON E IN THE FACTS OF THE PRESENT CASE RECORDING THAT NO RETURN WAS FI LED, IT IS SEEN THAT THE REASON RECORDED RUN FOUL OF PARA 2 OF THE ASSESSMENT ORDER DATED 27.12.2017 ITSELF. PARA 2 OF THE RELEVANT EXT RACT FROM THE ASSESSMENT ORDER IS REPRODUCED HEREUNDER FOR GREATE R CLARITY : 2. THEREAFTER ASSESSEE WAS AGAIN ISSUED NOTICE U /S 142(1) ALONGWITH FINAL SHOW NOTICE. IN RESPONSE TO THIS NOTICE ASSESSEE AT TENDED THE ASSESSMENT PROCEEDINGS AND STATED THAT HE HAS ALREADY FILED HIS RETURN OF INCOME FOR A.Y 2010-11 ON 18-05-2010 AND SUBMITTED THAT SAME MAY B E TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 ISSUED ON 25.03.2017 . NOTICE U/S 143(2) ISSUED. (BOLD TEXT FOR EMPHASIS) 8. THE SAID REASON IS PATENTLY CONTRADICTORY TO THE FACTS RECORDED IN THE ASSESSMENT ORDER ITSELF. THE LANGUAGE RECOR DED IN THE REASONS RECORDED GIVES CREDENCE AND STRENGTH TO THE ALLEGATION RAISED ON BEHALF OF THE ASSESSEE THAT IT IS A MECHA NICAL EXERCISE OF POWER WHEREIN NON-APPLICATION OF MIND IS CLEARLY EV IDENT AS NO EFFORT WAS MADE TO SEE WHETHER ANY RETURN HAD BEEN FILED OR NOT BY THE ASSESSEE. HAD SUCH AN EXERCISE BEEN ATTEMPTED, THE RETURN ITA 219/CHD/2019 A.Y. 2010-11 PAGE 5 OF 7 FILED WOULD HAVE BEEN NOTICED AND APPLICATION OF MI ND WOULD HAVE BEEN BASED ON COGENT FACTS. IN THE FACTS AS THEY S TAND, THE FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSM ENT IS PLAINLY A MECHANICAL EXERCISE LOOKING OF NON-APPLICATION OF M IND. ONCE THE RETURN FILED IN DUE COURSE ITSELF REMAINS IGNORED, THE MECHANICAL EXERCISE OF POWER BECOMES THE INESCAPABLE CONCLUSIO N. THUS, THE POSITION OF LAW AS CONSIDERED BY THE CO-ORDINATE BE NCH IN THE CASE OF MONIKA RANI V ITO (SUPRA) COMES INTO PLAY. IN S IMILAR FACTS AND CIRCUMSTANCES, THE CO-ORDINATE BENCH WAS PLEASED TO HOLD AS UNDER: 10.1 FROM THE AFORESAID REASONS IT IS CLEAR TH AT THE A.O. ISSUED THE NOTICE UNDER SECTION 148 OF THE ACT, FOR THE REASONS THAT THE AS SESSEE HAD NOT FILED HER RETURN OF INCOME AND THAT THE ASSESSEE HAD PURCHASED A PROPER TY AMOUNTING TO RS. 1,49,02,500/- DURING THE F.Y. 2009-]0. HOWEVER, THE SAID REASONS GIVEN BY THE A.O. FOR REOPENING THE ASSESSMENT ARE NOT CORRECT SINCE THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 30/03/2011, COPY OF WHICH IS PLACED AT PAGE NO. 1 OF THE ASSESSEE'S COMPILATION. THE ASSESSEE HAD ALSO SHOWN THE INVEST MENT IN AGRICULTURAL LAND AMOUNTING TO RS. 52,20,000/- IN HER BALANCE SHEET A S ON 31/03/2010, COPY OF WHICH IS PLACED AT PAGE NO. 2 OF THE ASSESSEE'S COMPILATI ON THEREFORE BOTH THE REASONS GIVEN BY THE A.O. I.E; THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME AND INVESTED IN THE PROPERTY AMOUNTING TO RS. 1,49,02,500/-WERE WRONG. 8.1 WHILE COMING TO THE AFORESAID CONCLUSIONS, THE FOLLOWING DECISIONS OF THE ITAT AND THE GUJRAT HIGH COURT WER E RELIED UPON: 10.2 ON A SIMILAR ISSUE THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAGAR ENTERPRISES VS. ACIT (SUPRA) HELD AS UNDER: ' THAT IT WAS APPARENT THAT THE FACT OF NON-FILING OF THE RETURN FOR THE ASSESSMENT YEAR 1991-92 HAD WEIGHTED WITH THE RESPONDENT FOR A RRIVING AT THE SATISFACTION ABOUT THE FAILURE ON THE PART OF THE ASSESSEE AND E SCAPEMENT OF ASSESSMENT OF INCOME. HOWEVER, THE MATERIAL ON RECORD SHOWED THAT THE RETURN HAD BEEN FILED. IN SUCH CIRCUMSTANCES, IT COULD NOT BE SAID WITH CE RTAINTY AS TO WHICH FACT WOULD HAVE WEIGHED WITH THE OFFICER CONCERNED AND ONCE IT WAS SHOWN THAT AN IRRELEVANT FACT HAD BEEN TAKEN INTO CONSIDERATION, TO WHAT EXTENT THE DECISION WAS VITIATED WOULOD BE DIFFICULT TO SAY. MOREOVER T HE INCOME-TAX OFFICER HAD STATED THAT THE PAYMENT WHICH WAS STATED TO BE UNDI SCLOSED INCOME RELEVANT FOR THE ASSESSMENT YEAR I99J-92 COULD HAVE BEEN MADE DU RING THE FINANCIAL YEAR 1990-91 RELEVANT TO THE ASSESSMENT YEAR 1991-92 AND HENCE, 'TO COVER UP THAT ITA 219/CHD/2019 A.Y. 2010-11 PAGE 6 OF 7 PROBABILITY, PROTECTIVE ADDITION WAS MADE IN THE AS SESSMENT YEAR 1992-93.' THE FIRST APPELLATE AUTHORITY DECIDED THE APPEAL FOR TH E ASSESSMENT YEAR 1992-93 ON JANUARY, J996, AND THE REASON HAD BEEN RECORDED THE REAFTER ON AUGUST 18, 1997. THE NOTICE OF REASSESSMENT WAS NOT VALID AND WAS LI ABLE TO BE QUASHED.'' 10.3 A SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT, CH ANDIGARH 'SMC BENCH IN THE CASE OF BABA KARTAR SINGH DUKKI EDUCATIONAL TRU ST VS. ITO (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: HEAD NOTE: ' WHERE ASSESSING OFFICER PROCESSED UNDER SECTION 1 43(1 J RETURNS OF INCOME FILED BY ASSESSEE FOR ASSESSMENT YEARS 2001-02 TO 2 003-04 AND SUBSEQUENTLY HE REOPENED SAID ASSESSMENTS ON SOLE BASIS THAT ASS ESSEE HAD NOT FILED RETURNS FOR YEARS PRECEDING TO ASSESSMENT YEAR 2004 -05 AND, THEREFORE, ITS INCOME HAVING ESCAPED ASSESSMENT, REOPENING OF ASSE SSMENT WAS ON BASIS OF SUSPICION AND NON-EXISTENT AND INCORRECT FACTS AND IT WAS INVALID' 10.4 SIMILARLY THE ITAT 'L' BENCH, MUMBAI QUASHED THE REOPENING OF THE ASSESSMENT WHICH WAS BASED ON INCORRECT FACTS VIDE ORDER DT. 28/02/2018 IN THE CASE OF VAN OORD DREDGING AND MARINE CONTRACTOR S BV VS. ADIT (SUPRA) BY OBSERVING AS UNDER: ' IN AY 2005-06, THE A.O. HAS REOPENED THE ASSESSME NT ON INCORRECT FACTS AND FURTHER THE ASSESSING OFFICER HAS FAILED TO DEM ONSTRATE THAT THERE WAS FAILURE ON THE PART OF HT ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS DURING THE COURSE OF ORIGINAL ASSESSMENT PROC EEDINGS. HENCE THE REOPENING OF ASSESSMENT OF AY 2005-06 IS LIABLE TO BE QUASHED ON THESE TWO GROUNDS A/SO. ACCORDINGLY WE SET ASIDE THE ORDE R PASSED BY LD. CIT(A) ON THIS ISSUE AND HOLD THAT THE REOPENING OF ASSESSMENTS OF BOTH THE YEARS ARE NOT IN ACCORDANCE WITH THE LAW AND ACCORD INGLY QUASH THE ASSESSMENT ORDERS PASSED FOR BOTH THE YEARS UNDER C ONSIDERATION.' 10.5 SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT JAIPU R BENCH IN CASE OF SHRI RAM MOHAN RAWAT VS. ITO(SUPRA) VIDE ORDER DT. 10/10 /2019 THE RELEVANT FINDINGS GIVEN THEREIN READ AS UNDER: 'THUS THE REASONS RECORDED BY THE AO FOR FORMATION OF BELIEF THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT ARE BASED ON TWO COUNTS. ONE, THE ASSESSEE HAS MADE BOGUS PURCHASES AND THE SECOND, T HAT THE PURCHASES ARE NOT VERIFIABLE AS THE ASSESSEE HAS NOT FILED THE RE TURN OF INCOME. THUS THE FORMATION OF BELIEF IS BASED ON THESE TWO FACTUAL A SPECTS THAT THE ASSESSEE HAS MADE BOGUS PURCHASES WHICH ARE NOT VERIFIABLE A S ASSESSEE HAS NOT FILED THE RETURN OF INCOME. THE REASONS FOR NONVERI FIABLE OF THE PURCHASES MADE BY THE ASSESSEE DUE TO NON FILING OF THE RETUR N OF INCOME AS STATED BY THE AO IS ABSOLUTELY INCORRECT AND WRONG AND CONTRA RY TO THE RECORD WHEN THE ASSESSEE HAS FILED THE RETURN OF INCOME ELECTRO NICALLY ON 29.10.2007. THIS FACT WAS ALSO SUBSEQUENTLY ACCEPTED BY THE AO THAT THE ASSESSEE FILED THE RETURN OF INCOME UNDER SECTION 139(1). THE SECO ND ASPECT OF THE REASONS THAT THE ASSESSEE HAS MADE BOGUS PURCHASES IS ALSO NOT BASED ON ANY ENQUIRY OR VERIFICATION OF RECORD BY THE AO BUT THI S IS SIMPLY REPRODUCTION OF INFORMATION RECEIVED FROM THE INVESTIGATION WING . THE SAID INFORMATION IS ALSO INCOMPLETE AS REGARDS THE DETAILS OF THE PU RCHASES AND THE PARTIES FROM WHOM SUCH PURCHASES WERE MADE BY THE ASSESSEE. THUS THE REASONS RECORDED BY THE AO MANIFEST THAT THERE IS NO APPLIC ATION OF MIND AND THE AVERMENTS AS RECORDED IN THE REASONS ARE VERY VAGUE AND GENERAL AND RATHER INCONSISTENT WITH THE FACTS AVAILABLE ON REC ORD SO FAR AS THE FILING OF RETURN OF INCOME BY THE ASSESSEE. THE FORMATION OF BELIEF ON SUCH INCORRECT AND VAGUE REASONS WOULD LEAD THE REOPENING OF THE A SSESSMENT AS INVALID.' ITA 219/CHD/2019 A.Y. 2010-11 PAGE 7 OF 7 8.2 CONSIDERING THE LEGAL POSITION AND SIMILAR SET OF FACTS, THE POSITION OF LAW AS SUMMED UP HAS BEEN RELIED UPON : 10.6 IN THE PRESENT CASE ALSO THE A.O. REOPENED THE ASSESSMENT ON THE BASIS OF WRONG FACTS, SO RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASES, I AM OF THE VIEW THAT THE REOPENING OF THE ASSESSMENT IN THE PRESENT CASE WAS NOT VALID, ACCOR DINGLY, THE SAME IS QUASHED. SINCE THE APPEAL OF THE ASSESSEE IS DECIDE D ON THE LEGAL ISSUE, THEREFORE NO FINDINGS ARE BEING GIVEN ON THE MERIT OF THE CASE RELATING TO THE QUANTUM OF ADDITION. 9. SINCE THERE IS NO CHANGE IN THE FACTS AND CIRCUM STANCES, THE APPEAL FILED BY THE ASSESSEE SUCCEEDS ON THE JURISD ICTION GROUND ITSELF. THE IMPUGNED ORDER IS SET ASIDE AND THE AS SESSMENT ORDER ACCORDINGLY IS QUASHED. SAID ORDER WAS PRONOUNCED A T THE TIME OF VIRTUAL HEARING ITSELF IN THE PRESENCE OF THE PARTI ES VIA WEBEX. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 6 TH APRIL,2021. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER ' ( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR