Ashok Mahindru, V. ITO, Ward-3,

ITA 2233/DEL/2004

• Counselvise Citation: 223320114 RSA 2004
• Duration Of Justice: 10 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 07-05-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Salary income; Reason to believe
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .272/DEL/2010 & 2233/DEL/2004 272/DEL/2010 & 2233/DEL/2004 272/DEL/2010 & 2233/DEL/2004 272/DEL/2010 & 2233/DEL/2004 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 1999 1999 1999 1999- -- -2000 2000 2000 2000 SHRI ASHOK MAHINDRU, SHRI ASHOK MAHINDRU, SHRI ASHOK MAHINDRU, SHRI ASHOK MAHINDRU, 511/2/1, RAJOKRI, 511/2/1, RAJOKRI, 511/2/1, RAJOKRI, 511/2/1, RAJOKRI, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 038. 110 038. 110 038. 110 038. PAN : PAN : PAN : PAN : ABHPM8364M. ABHPM8364M. ABHPM8364M. ABHPM8364M. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -3, 3,3, 3, GURGAON. GURGAON. GURGAON. GURGAON. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO.326/DEL/2010 .326/DEL/2010 .326/DEL/2010 .326/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 1999 1999 1999 1999- -- -2000 2000 2000 2000 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(2), 2(2), 2(2), 2(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI ASHOK MAHINDRU, SHRI ASHOK MAHINDRU, SHRI ASHOK MAHINDRU, SHRI ASHOK MAHINDRU, 351/15, JACUB 351/15, JACUB 351/15, JACUB 351/15, JACUBPURA, PURA, PURA, PURA, GURGAON, GURGAON, GURGAON, GURGAON, HARYANA. HARYANA. HARYANA. HARYANA. PAN : ABHPM8364M. PAN : ABHPM8364M. PAN : ABHPM8364M. PAN : ABHPM8364M. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.B. BHAGAT, ADVOCATE. REVENUE BY : MS. Y. KAKKAR, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : : : : ITA NO.2233/DEL/2004 ITA NO.2233/DEL/2004 ITA NO.2233/DEL/2004 ITA NO.2233/DEL/2004 ASSESSEES APPEAL : ASSESSEES APPEAL : ASSESSEES APPEAL : ASSESSEES APPEAL :- -- - THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A), PANCHKULA DATED 24 TH MARCH, 2004 FOR THE AY 1999- 2000. 2. SINCE THE GROUNDS OF APPEAL RAISED BY THE ASSESS EE WERE ARGUMENTATIVE, THE ASSESSEE FILED CONCISE GROUNDS O F APPEAL. 3. GROUND NO.1 OF THE CONCISE GROUNDS OF APPEAL REA DS AS UNDER:- ITA-272/D/2010, 2233/D/2004 & 326/D/2010 2 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LE ARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT NOTICE ISSUE D U/S 148 WAS A VALID NOTICE. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED RELEVANT MATERIAL PLACED BEFORE US. THE REASONS RE CORDED FOR REOPENING OF ASSESSMENT READ AS UNDER:- REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT IN THE CASE OF SHRI ASHOK MAHENDRU, 351/15, JACUBPURA, GUR GAON ASSTT. YEAR 1999-2000 1. COMPUTATION OF ASSESSABLE INCOME AS ON 31.3.1999 AS WORKED OUT BY THE ASSESSEE IS AS UNDER:- INCOME FROM SALARY : REMUNERATION INCOME FROM : ADVANCE FINVEST (P) LTD. 75,000.00 ADVANCE DETERGENTS LTD. 75,000.00 ADVANCE COAL MGNT. & MKT. LTD. 75,000.00 ADVANCE DESIGN & ENGG.LTD. 75,000.00 3,00, 000.00 LESS : STANDARD DEDUCTION 20,000.00 2,80, 000.00 INCOME FROM BUSINESS : COMMISSION RECD. INTEREST RECD. FROM : ADVANCE ENTERTAINMENT NETWORK LTD. 1,23,006.00 ADVANCE COAL MGMT. & MKT.LTD. 6,600.00 AUREOLA CHEMICALS LTD. 7,39,703.00 ADVANCE DETERGENTS LTD. 1,07,685.00 ADVANCE FINVEST (P) LTD. 5,96,574.00 BANK INTEREST 2,993.24 15,76,561.24 33,79,021.24 LESS : INTEREST PAID TO DEPOSITORS 32,44,070.5 0 GROSS TOTAL INCOME 1,34,950.74 LESS : DEDUCTION UNDER 80-L 2,993.24 NET ASSESSABLE INCOME 1,31,957.50 ROUNDED OFF TO RS. 1,31,960.00 ITA-272/D/2010, 2233/D/2004 & 326/D/2010 3 GROSS TAX DUE 15,392.00 LESS : TAX REBATE U/S 88 20% OF LIP OF RS.27106.10 5,421.00 NET TAX DUE 9,971.00 LESS : TDS PAID 1,57,355.00 REFUND DUE 1,47,384.00 2. IT HAS BEEN NOTICED THAT BESIDES THE ABOVE, THE ASSESSEE HAS DIVIDEND INCOME OF RS.17,62,200/- WHICH HAS BEEN CL AIMED EXEMPT U/S 10(33) OF THE ACT. A FURTHER PERUSAL OF THE OPENIN G ACCOUNT REVEALS THAT THE AMOUNTS INVESTED IN THE SHARES OF VARIOUS COMPANIES FROM WHICH DIVIDEND INCOME OF RS.17,62,200/- HAS BEEN SH OWN IS OF THE ORDER OF RS.2 CRORE I.E. TO BE EXACT RS.1,97,95,340 /-. 3. FROM THE COMPUTATION OF INCOME, IT IS NOTICED TH AT THE ASSESSEE HAS CLAIMED TO HAVE PAID AN INTEREST OF RS.32,44,07 0/- TO HIS CREDITORS. IT IS FURTHER NOTICED THAT THE MAJOR PORTION OF THE INTEREST HAS BEEN PAID ON THE UNSECURED LOANS RAISED FOR MAKING INVESTMENT IN THE PURCHASE OF SHARES. IF THIS IS PROPERLY EXAMINED, I AM OF T HE VIEW THAT THE INTEREST ATTRIBUTABLE TO THE INVESTMENT IN SHARES W HICH HAS RESULTED IN EXEMPTED INCOME OF RS.17,62,200/- WILL BE MUCH HIGH ER THAN THE INCOME DECLARED ON ACCOUNT OF DIVIDEND. THE POSSIB ILITY OF THERE BEING A NET LOSS OF A FEW LACS UNDER THE HEAD DIVIDEND IS NOT RULED OUT. AS THE DIVIDEND INCOME BEING EXEMPT IS NOT INCLUDIBLE IN THE TOTAL INCOME, SIMILARLY THE LOSS ARISING THEREFROM CANNOT ALSO BE SET OFF AGAINST THE INCOME UNDER THE HEADS SALARY, COMMISSION, INTEREST ETC. DIVIDEND INCOME BEING EXEMPTED U/S 10(33) OF THE INCOME TAX ACT WITH EFFECT FROM ASSTT. YEAR 1998-99, NEITHER ANY INCOME FROM D IVIDENDS CAN BE INCLUDED IN THE TOTAL INCOME NOR ANY LOSS THEREFROM CAN BE ADJUSTED OR SET OFF OR CARRY FORWARD AGAINST ANY INCOME UNDER A NY HEADS OF INCOME. 4. DURING THE YEAR THE ASSESSEE HAS ALSO SOLD JEWEL LERY WORTH RS.62,09,189/- ON WHICH LONG TERM CAPITAL LOSS OF R S.8,18,972/- HAS BEEN CLAIMED. THE GENUINENESS OF THIS LOSS ALSO NE EDS TO BE EXAMINED. MOREOVER, THE JEWELLERY SEEMS TO BE DECL ARED UNDER VDIS 1997. HE IS ALSO HAVING A PLOT WORTH RS.2 LACS. T HE ABOVE FACTS CREATE A SUSPICION THAT A MAN WHO EARNS AN INCOME OF RS.92 ,26,329/- IS SPENDING A SUM OF RS.6,950/- AS HIS PERSONAL EXPENS ES AND HE IS ALSO ITA-272/D/2010, 2233/D/2004 & 326/D/2010 4 NOT REPAYING BACK THE UNSECURED LOANS. THE HOUSEHO LD EXPENSES ARE SO LOW THAT IT REQUIRES VERIFICATION/SCRUTINY. SD/- (R.A. MITTAL) INCOME TAX OFFICER WARD-1, GURGAON. 5. FROM A PERUSAL OF THE ABOVE REASONS, IT IS EVIDE NT THAT PARAGRAPH 1 IS ONLY THE REPRODUCTION OF THE COMPUTATION OF AS SESSABLE INCOME FURNISHED BY THE ASSESSEE. IN PARAGRAPH 2 & 3, THE ASSESSING OFFICER HAS POINTED OUT THAT SINCE THE DIVIDEND INCOME IS E XEMPT UNDER SECTION 10(33), THE PROPER WORKING OF DIVIDEND INCO ME IS REQUIRED AND POSSIBILITY OF THERE BEING NET LOSS UNDER THE HEAD DIVIDEND IS NOT RULED OUT. SUCH LOSS CANNOT BE ADJUSTED AGAINST THE OTHE R INCOME BECAUSE DIVIDEND INCOME IS EXEMPT. IN PARAGRAPH 4, THE ASS ESSING OFFICER OBSERVED THAT THE LONG TERM CAPITAL GAINS SHOWN BY THE ASSESSEE REQUIRE VERIFICATION AND THE HOUSEHOLD EXPENSES DIS CLOSED BY THE ASSESSEE ALSO REQUIRE VERIFICATION. THAT THE PRELI MINARY REQUIREMENT FOR REOPENING UNDER SECTION 147 IS THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ESCAPEMENT OF INCOME CHARGEA BLE TO TAX. IN THE REASONS RECORDED, EXCEPT IN THE HEADING MENTIONING THAT THE REASON FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT, THERE IS NO FINDING IN THE REASONS RECORDED FOR ESCAPEMENT OF INCOME. THE ENTIRE FINDING IS WITH REGARD TO REQUIREMENT OF VERIFICATION AND R EWORKING OF DIVIDEND INCOME, VERIFICATION AND REWORKING OF CAPITAL LOSS AND THE VERIFICATION OF HOUSEHOLD EXPENSES. IN OUR OPINION, SECTION 148 CA NNOT BE INVOKED ONLY FOR THE PURPOSE OF VERIFICATION OF CERTAIN INC OME OR EXPENSES. SECTION 143(2) READS AS UNDER:- [(2) WHERE A RETURN HAS BEEN FURNISHED UNDER SECTI ON 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, THE ASSESSING OFFICER SHALL, (I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN T HE ITA-272/D/2010, 2233/D/2004 & 326/D/2010 5 RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOT ICE SPECIFYING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMP TION, DEDUCTION, ALLOWANCE OR RELIEF AND REQUIRE HIM, ON A DATE TO BE SPECIFIED THEREIN TO PRODUCE, OR CAUSE TO BE PRO DUCED, ANY EVIDENCE OR PARTICULARS SPECIFIED THEREIN OR ON WHICH THE ASSESSEE MAY RELY, IN SUPPORT OF SUCH CLAIM: [PROVIDED PROVIDED PROVIDED PROVIDED THAT NO NOTICE UNDER THIS CLAUSE SHALL BE SERVED ON THE ASSESSEE ON OR AFTER THE 1ST DAY OF JUNE, 20 03;] (II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (I), IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER-PAID THE T AX IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRIN G HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENC E ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETUR N: [PROVIDED PROVIDED PROVIDED PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM TH E END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED .]]. 6. FROM THE ABOVE, IT IS EVIDENT THAT THE INCOME-TA X ACT EMPOWERS THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 143(2) TO VERIFY THE CORRECTNESS OF THE INCOME OR LOSS DISCLOSED BY THE ASSESSEE. THE ASSESSING OFFICER HAS TO ISSUE THE NOTICE UNDER SEC TION 143(2) WITHIN THE TIME LIMIT SPECIFIED IN THE SAID SECTION. IF T HE ASSESSING OFFICER FAILED TO ISSUE THE NOTICE UNDER SECTION 143(2) WIT HIN THE TIME LIMIT SPECIFIED IN THAT SECTION, HE CANNOT ISSUE THE NOTI CE UNDER SECTION 148 JUST FOR THE PURPOSE OF ENSURING THE CORRECTNESS OF THE INCOME DISCLOSED OR THE LOSS DISCLOSED OR TO SCRUTINIZE CE RTAIN INCOME OR EXPENSES. IN VIEW OF THE ABOVE, WE ARE OF THE OPIN ION THAT REOPENING OF ASSESSMENT BY THE ASSESSING OFFICER FOR THE PURP OSE OF SCRUTINY OF DIVIDEND INCOME, CAPITAL LOSS OR HOUSEHOLD EXPENSES IS NOT PERMISSIBLE. THEREFORE, THE NOTICE ISSUED UNDER SECTION 148 IS Q UASHED AND CONSEQUENTIALLY, THE ASSESSMENT ORDER FRAMED IN PUR SUANCE TO THE NOTICE UNDER SECTION 148 IS ALSO QUASHED. ITA-272/D/2010, 2233/D/2004 & 326/D/2010 6 7. SINCE WE HAVE QUASHED THE IMPUGNED ASSESSMENT OR DER, THE OTHER GROUNDS OF APPEAL WHICH ARE WITH REGARD TO AD DITIONS MADE UNDER VARIOUS HEADS DO NOT SURVIVE AND THEREFORE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION. ITA NOS.326/DEL/2010 & 272/DEL/2010 : ITA NOS.326/DEL/2010 & 272/DEL/2010 : ITA NOS.326/DEL/2010 & 272/DEL/2010 : ITA NOS.326/DEL/2010 & 272/DEL/2010 :- -- - 8. THESE CROSS APPEALS ARE AGAINST THE LEVY OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS PARTLY SUSTA INED BY THE LEARNED CIT(A). THE ASSESSEE IS IN APPEAL AGAINST THE PENA LTY SUSTAINED WHILE THE REVENUE IS IN APPEAL AGAINST THE RELIEF ALLOWED BY THE LEARNED CIT(A). 9. SINCE, WHILE DECIDING THE ASSESSEES APPEAL IN I TA NO.2233/DEL/2004, WE HAVE QUASHED THE ASSESSMENT OR DER DATED 31 ST MARCH, 2003 PASSED UNDER SECTION 143(3)/148, ANY PE NALTY LEVIED ON THE BASIS OF THE ADDITION MADE IN THAT ASSESSMENT O RDER DOES NOT SURVIVE BECAUSE THE ADDITION ITSELF DOES NOT SURVIV E. THEREFORE, THE ASSESSEES APPEAL AGAINST THE PENALTY SUSTAINED BY THE CIT(A) IS ALLOWED AND REVENUES APPEAL AGAINST THE PENALTY DE LETED BY THE CIT(A) IS DISMISSED. 10. IN THE RESULT, ASSESSEES APPEALS VIDE ITA NO.2 233/DEL/2004 & 272/DEL/2010 ARE ALLOWED AND REVENUES APPEAL VIDE ITA NO.326/DEL/2010 IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 22 ND AUGUST, 2014. SD/- SD/- ( (( (ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 22.08.2014 VK. ITA-272/D/2010, 2233/D/2004 & 326/D/2010 7 COPY FORWARDED TO: - 1. APPELLANT : SHR SHR SHR SHRI ASHOK MAHINDRU, I ASHOK MAHINDRU, I ASHOK MAHINDRU, I ASHOK MAHINDRU, 351/15, JACUBPURA, 351/15, JACUBPURA, 351/15, JACUBPURA, 351/15, JACUBPURA, GURGAON, HARYANA. GURGAON, HARYANA. GURGAON, HARYANA. GURGAON, HARYANA. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -2(2), NEW DELHI. 2(2), NEW DELHI. 2(2), NEW DELHI. 2(2), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR