Kela Devi Agarwal, Mathura V. A.C.I.T.-3, Mathura

ITA 226/AGR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1961 (ITAT-AGRA)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 24-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BELU SINHA
• Assessee Lawyers: M M AGARWAL
• Keywords: Income from undisclosed sources; Period of limitation; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 234B; 147; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC AGRA BEFORE SH RI J.S. REDDY , ACCOUNTANT MEMBER ITA NO. 226 / AG RA /201 3 ASSESSMENT YEAR : 1998 - 99 KELA DEVI AGRAWAL, VS. ASSTT. COMMISSIONER OF INCOME TAX - 3, 16, JAGANNATH PURI, MATHURA. (U.P.) MATHURA 281 001 (U.P.) (PAN: A AOPA 7979 A ) . (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI M.M. AGARWAL, C.A. RE SPONDENT BY : SMT. BELU SINHA, SR. D.R. DATE OF HEARING : 04 .07. 201 6 DATE OF PRONOUNCEMENT : 06 . 07.201 6 ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A) - I , AGRA DATED 28.01.2013 FOR THE A SSESSMENT YEAR 1998 - 99 , ON THE FOLLOWING GROUNDS : - 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH O N FACTS AND IN LAW IN UPHOLDING THE INITIATION OF REASSESSMENT PROCEEDINGS, INITIATED BY THE LEARNED ACIT - 3, MATHURA BY TAKING RECOURSE TO THE PROVISION OF SECTION 147/148 OF THE ACT, DESPITE THE FACT THAT, THERE EXISTED NO MATERIAL ON HIS RECORD FOR HIS R EASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. 1.1 THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN FAILING TO APPRECIATE THAT, THE REASSESSMENT PROCEEDINGS AS INITIATED ARE LIABLE TO BE QUASHED, IN AS MUCH AS, THE SAME HAVE BEEN INITIATED WITHOUT SATISFYING THE MANDATORY PRECONDITIONS FOR INITIATION OF THE VALID PROCEEDINGS UNDER SECTION 147 OF THE ACT. 1.2 THAT THE LEARNED CIT(A) HAS FAILED TO COMPREHEND THAT, NO VALID REASSESSMENT PROCEEDINGS COULD BE INITIATED A GAINST AN ASSESSEE, UNLESS THE ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 2 ASSESSING OFFICER HAS MATERIAL BEFORE HIM, WHICH MAY INDUCE HIM TO FORM A REASON TO BELIEVE THAT, THERE HAS BEEN AN ESCAPEMENT OF INCOME OF THE ASSESSEE. 1.3 THAT THE LEARNED CIT(A) HAS OVERLOOKED THE FACT THAT THE LEARNED ACIT - 3, MATHURA HAD NO ANY MATERIAL, EVEN AS ALLEGED, IN THE SHAPE OF THE PURPORTED INFORMATION ALLEGED TO HAVE BEEN RECEIVED FROM ADDL. DIRECTOR OF INCOME TAX (INVESTIGATION) AGRA, THROUGH THE ADDL. CIT, RANGE - 3, MATHURA ON 29.03.2005. THE LEARNED CIT(A ) HAS THUS GROSSLY ERRED IN UPHOLDING THE INITIATION OF PROCEEDINGS WHICH PROCEEDINGS. 1.4 THAT IN FACT, THE LEARNED CIT(A) HAS COMPLETELY OVERLOOKED, WHEN HE FAILED TO APPRECIATE THAT, WHAT WAS ALLEGEDLY AVAILABLE WITH LEARNED ACIT - 3 ON 29.03.2005, (TH E DATE WHEN HE HAD FORMED HIS REASONS TO BELIEVE TO INITIATE PROCEEDINGS U/S 147 OF THE ACT), WAS MERELY A LIST OF ALLEGED BENEFICIARIES (WHICH LIST CONTAINED ONLY THE NAME OF THE ASSESSEE ALONG WITH THE DATE AND AMOUNT CREDITED IN HIS BANK ACCOUNT) AND TH US ON THE BASIS OF SUCH A MATERIAL (ALONE AND NO MORE), THE LEARNED ACIT - 3, MATHURA, COULD NOT HAVE FORMED ANY BELIEF MUCH LESS A REASONABLE BELIEF THAT THERE WAS AN ESCAPEMENT OF INCOME AND THE AMOUNT CREDITED REPRESENTED BOGUS ENTRIES, UNLESS THERE EXIS TED SOME TANGIBLE MATERIAL DULY SUPPORTED BY THE STATEMENT OF M/S YADAV & COMPANY ALLEGING THAT THE CREDIT REPRESENTS BOGUS ENTRIES AND DID NOT REPRESENT SALE CONSIDERATION OF THE SHARES HELD AND OWNED BY THE ASSESSEE AND IS STATED IN THE REASONS TO BELIEV E, FOR INITIATING THE PROCEEDINGS. 1.5 THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT, IN ANY CASE AND WITHOUT PREJUDICE, IN THE INSTANT CASE THE PROCEEDINGS WERE INITIATED BEYOND FOUR YEARS WHICH WAS NOT IN ACCORDANCE WITH LAW, IN AS MUCH THERE I S NEITHER ANY ALLEGATION NOR IS THERE ANY WHISPER IN THE BODY OF REASONS RECORDED, THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE, THAT SHE HAD FAILED TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY AND THUS NO VALID PROCEEDINGS COULD HAVE BEEN IN ITIATED BY THE LEARNED ACIT, AFTER A PERIOD OF FOUR YEAR, EVEN ON THE ASSUMPTION, THERE WAS ESCAPEMENT OF INCOME. 2. THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE REASSESSMENT PROCEEDINGS AS INITIATED ARE WHOLLY UNSUSTAINABLE IN AS MUCH AS TH E SAME HAVE BEEN INITIATED FOR COLLATERAL PURPOSE I.E. TO MAKE ROVING AND FISHING ENQUIRY, AS THERE WAS NO MATERIAL ON RECORD TO EVEN PRIMA - FACIE CONCLUDE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 2.1 THAT THE LEARNED CIT(A) HAS FAILED TO AP PRECIATE THAT THE LEARNED ACIT - 3, MATHURA HAS INITIATED THE PROCEEDINGS U/S 147 OF THE ACT ON THE BASIS OF AN ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 3 NONEXISTENT ALLEGED MATERIAL INFORMATION ALLEGEDLY RECEIVED FROM ADIT (INVESTIGATION) DESPITE THE FACT THAT NO SUCH MATERIAL EXISTED ON HIS RECOR D IN SUPPORT THEREOF. IN FACT THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE INITIATED MECHANICALLY AND WITHOUT INDEPENDENT APPLICATION OF HIS MIND, WHICH IS A CONDITION PRECEDENT FOR VALID INITIATION OF PROCEEDINGS. 2.2 THAT THE LEARNED CIT(A) HAS FA ILED TO APPRECIATE THAT THE REASONS RECORDED ARE REASONS WHICH ARE REASONS TO SUSPECT AND WERE TO MAKE FISHING AND ROVING ENQUIRIES, SINCE NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX BEFORE ISSUING SUCH NOTICE U /S 148 OF THE ACT AND AS SUCH THE PROCEEDING INITIATED U/S 148 OF THE ACT IS IN THE NATURE OF MERE PRETENCE. 2.3 THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT IN ABSENCE OF ANY STAY OF PROCEEDINGS BY THE HIGH COURT, THE ASSESSMENT FRAMED IS BEYON D THE PERIOD OF LIMITATION AND THUS COULD NOT HAVE BEEN UPHELD. IN FACT, SUCH AN ORDER OUGHT TO HAVE BEEN SERVED BY 31.03.2006 AND AS THE ORDER FRAMED WAS NOT SUSTAINABLE. 2.4 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN FAILING TO APPRECIATE THAT SHRI OM PRAKASH YADAV IN HIS STATEMENT RECORDED BY THE INVESTIGATION WING ON 7.03.2002 HAD NO WHERE STATED THAT HE PROVIDED ANY ACCOMMODATION ENTRY TO THE APPELLANT, AS SUCH, BEFORE THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT, THERE BEING NO EVIDENCE OR MATE RIAL WITH THE LEARNED ACIT - 3, MATHURA TO FORM A REASON TO BELIEVE THAT, SHARES SOLD BY THE ASSESSEE REPRESENTED BOGUS ENTRIES. THUS THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT IS UNSUSTAINABLE. 2.5 THAT, WITHOUT PREJUDICE AND IN THE ALTERNATIVE, TH E REASSESSMENT PROCEEDINGS AS INITIATED ARE BAD IN LAW AS THE SAME HAVE BEEN INITIATED BEYOND THE PERIOD OF LIMITATION AS PROVIDED IN THE PROVISO TO SECTION 147 OF THE ACT, SINCE COPY OF THE REASONS RECORDED WERE NOT FORWARDED ALONGWITH THE NOTICE ISSUED U NDER SECTION 148 OF THE ACT. 3. THAT THE ORDER OF THE CIT(A) IS VITIATED BOTH IN LAW AND ON THE FACTS, AS HE HAS GROSSLY ERRED IN FAILING TO APPRECIATE THAT: ( A ) THAT THE A.O. RELIED UPON MATERIAL, ANNEXED WITH THE ORDER OF ASSESSMENT, WITHOUT HAVING CONFRONT ED THE SAME TO THE ASSESSEE, IN THE COURSE OF ASSESSMENT PROCEEDINGS; ( B ) ADMITTED FRESH EVIDENCE FURNISHED BY THE A.O. IN THE APPELLATE PROCEEDINGS; ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 4 ( C ) RELYING ON EXTRANEOUS MATERIAL NOT RELEVANT TO THE APPEAL OF THE ASSESSEE. 4. THAT THE ORDER OF THE LEARNED CIT(A) IS OTHERWISE ARBITRARY AS THE SAME IS BASED ON PRE - DETERMINED OPINION AND IS WITHOUT APPRECIATING THE FACTS OF THE INSTANT CASE. 5. THAT THE ADDITION SO SUSTAINED IS UNTENABLE SINCE THE LEARNED CIT(A) HIMSELF HAVING REDUCED THE SAID ADDITION BY RS. 84,945/ - BEING THE COST OF SHARES SOLD COULD NOT HAVE HELD THAT THE CREDITS APPEARING REPRESENTED BOGUS ENTRIES AND DID NOT EMANATE FROM THE PROCEEDS OF SALE OF SHARES. THAT THE LEARNED CIT(A) THUS HAVING REDUCED THE ADDITION FROM THE COST OF THE SHARES S OLD, HAS THUS CONTRADICTED HIMSELF WHEN HE SUSTAINED THE ADDITION OF RS. 9,04,552/ - , WHEN SUCH A SUM OF ADDITION HAD BEEN MADE ON THE BASIS THAT THE CREDITS APPEARING REPRESENTED ALLEGED BOGUS ENTRIES AND DID NOT REPRESENT SALE PROCEEDS OF THE SHARES, HELD AND SOLD BY THE ASSESSEE. 6. THAT THE LEARNED CIT(A) HAS FURTHER ERRED IN SUSTAINING IN PART, THE ADDITION MADE BY THE A.O. OF RS. 9,04,552/ - . 7. THE LEARNED CIT(A) HAS FURTHER ERRED IN SUSTAINING THE ADDITION OF RS. 13,568/ - ON ACCOUNT OF THE ALLEGED PREMIUM ALLEGED TO HAVE BEEN PAID. IN SUSTAINING THE SAID ADDITION, CIT(A) HAS FAILED TO APPRECIATE THAT, THERE WAS NO MATERIAL WHATSOEVER FOR CONCLUDING THAT THE ASSESSEE HAS INCURRED ANY SUCH EXPENDITURE AND AS SUCH THE ADDITION SUSTAINED IS WHOLLY ERRON EOUS. 8. THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE LEVY OF INTEREST UNDER THE PROVISIONS OF SECTION 234A, SECTION 234B AND SECTION 234C OF THE ACT. IT IS THEREFORE PRAYED THAT INITIATION OF PROCEEDINGS U/S 147 /148 OF T HE INCOME TAX ACT, 1961 BE HELD AS NOT VALIDLY INITIATED AND ASSESSMENT FRAMED IN CONSEQUENCE THEREOF IS UNSUSTAINABLE IN LAW. IT IS FURTHER PRAYED THAT ADDITIONS AND DISALLOWANCES MADE TO THE RETURNED INCOME BE DELETED, AND INTEREST LEVIED U/S 234A, SECTI ON 234B AND SECTION 234C OF THE ACT, BE DELETED. 2. I HAVE HEARD SHRI M.M. AGARWAL, LEARNED COUNSEL FOR THE ASSESSEE AND SMT. BELU SINHA, LEARNED SR. DEPARTMENTAL REPRESENTATIVE ON BEHALF OF REVENUE . ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 5 3. THE SOLE ISSUE CHALLENGED BEFORE ME IS THE VALIDIT Y OF THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). THE REASONS FOR REOPENING READ AS UNDER : - INFORMATION HAS BEEN RECEIVED FROM ADDL . DIRECTOR OF I NCOME T AX (INV), AGRA THROUGH THE ADDL . COMMISSIONER OF I NCOME T AX , R ANGE - 3, MATHURA THAT ONE M/S YADAV & CO., MOHAMMADPUR , NEW DELHI HAS PROVIDED BOGUS ENTRIES OF SALE PROCEED OF SHARES TO THE ASSESS E E THROUGH BANK ACCOUNT MAINTAINED IN UNION BANK O F INDIA, MOTI BAGH, NEW DELHI. THE BEN EFICIARIES HAVE TAKEN ENTRIES BY PAYING IN CASH AN AMOUNT EQUIVALENT TO THE DEMAND DRAFT AMOUNT AND CERTAIN PREMIUM ON THAT. NO ACTUAL SALE/PURCHASE OF SHARES HAS BEEN TAKEN PLACE. IN THIS REGARD ENQUIRIES HAVE BEEN CONDUCTED BY THE DY . DIT ( INV ) , AGRA A ND IT IS FOUND THAT NO GENUINE TRANSACTION IN SALE / PURCHASE OF SHARES HAS TAKEN PLACE THROUGH THESE BANK ACCOUNTS. THE BROKER ON RECEIPT OF CASH FROM THE BENEFICIARIES DEPOSITED THE SAME IN THE BANK ACCOUNT AND THEN ISSUED DEMAND DRAFT TO THE BENEFICIARIE S. THE D Y. DIT ( INV ), AGRA H AS PROVIDED THE LIST OF SUCH BENEFICIARIES. IN THE SAME LIST NAME OF THE ASSESSEE SMT . KELA DEVI AGRAW A L W/O. SHRI DEENA NATH AGRAWAL, 16 , JANPATH PURI, MATHURA APPEARS AT S . N . 10 & 16, OF ANNEXURE RELATING TO M/S. YADAV & CO . HAVE TAKEN BOGUS ENTRIES THROUGH BANK DEMAND DRAFTS ISSUED BY UNION BANK O F INDIA, MOTI BAGH, NEW DELHI AND DEPOSITED IN ACCOUNT MAINTAINED IN BAN K OF BARODA, KOTWALI ROAD, MATHURA, AS UNDER : - S.NO. NAME OF BENEFICIARY A/C NO AMOUNT & DD NO. DATE OF CLEARING DATE 10 SMT. KELA DEVI AGRAWAL 11244 2,68,935/ - 182/2272 6.3.98 ( 2,68,531) 5.3.98 16 - DO - 11244 2,05,185/ - 198/2380 23.3.98 (2,04,875/ - ) 21.3.98 TOTAL 4,74,120/ - (4,73,406/ - ) IN THIS CASE ASSESSEE HAS FILED RETURN OF INCOME ON 01.10.98 SHOWING INCOME OF RS.66,930/ - . ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 8.2.2001 ON TOTAL INCOME OF RS.1,69,130/ - . IN VIEW OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND THE ADVERSE MATERIAL IN POSSESSION OF THE DEPARTMENT AS MENTIONED ABOVE, AMOUNT SHOWN ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 6 FROM SALE OF SHARES I.E. RS.4,74,120/ - IS INCOME FROM UNDISCLOSED SOURCES . THEREFORE I HAVE REASON TO BELIEVE THAT INCOME TO THE TUNE OF RS.4,74,120/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING O F SECTION 147 OF THE I.T. ACT. AS THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3), THE NOTICE IS TO BE ISSUED AFTER GETTING APPROVAL OF THE LD . COMMISSIONER OF INCOME T AX - 1, AGRA UNDER SECTION 151 OF THE I.T. ACT, 1961. PROPOSAL IS BEING SENT IN PRESCRIBED PROFORMA. 4. IN THIS CASE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31.10.1998 FOR THE ASSESSMENT YEAR 1998 - 99 DECLARING TOTAL INCOME AT RS.66,930/ - . THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 08.02.20 0 1 DETERMIN ING TOTAL INCOME AT RS.1,69,130/ - . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO GRANTED RELIEF. AFTER RECORDING REASONS , NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 29.03.2005. THUS , THE REOPEN ING IS BEYOND A PERIOD OF FOUR YEARS AND THE PROVISO TO SECTION 147 COMES INTO PLAY. A PERUSAL OF THE REASONS DEMONSTRATES THAT THERE IS NO ALLEGATION THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT . UNDER THE CIRCUMSTANCES , I HAVE TO HOLD THAT THE REOPENING IS BAD IN LAW BY APPLYING THE JUDGEMENT OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS . MI RZA INTERNATIONAL LIMITED, REPORTED IN (2015) 54 TQAXMANN.COM 217 (ALLAHABAD) WHEREIN IT IS HELD AS FOLLOWS : - SECTION 147 OF THE INCOME TAX ACT, 961 INCOME ESCAPING ASSESSMENT NON - DISCLOSURE OF PRIMARY FACTS (SECTION 143(3) V. SECTION 147) WHETHER WHERE ASSESSING OFFICER HAVING COMPLETED ASSESSMENT UNDER SECTION 143(3), INITIATED REASSESSMENT PROCEEDINGS AFTER EXPIRY OF FOUR YEARS FROM END OF RELEVANT ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 7 ASSESSMENT YEAR, SINCE IT WAS NOT REVENUE S CASE THAT ASSESSEE HAD FAILED TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, IMPUGNED REASSESSMENT PROCEEDINGS DESERVED TO BE SET ASIDE HELD, YES (IN FAVOUR OF ASSESSEE) 5. THE HON BLE DELHI HIGH COURT IN THE CASE OR CIT VS . VINIYAS FINANCE & INVESTMENT (P) LIMITED, REPORTED AS (2013) 357 ITR 646 (DELHI) HELD AS FOLLOWS: - ON GOING THROUGH THE PURPORTED REASONS WE FIND THA T THERE IS NO MENTION OF THE RESPONDENT - ASSESSEE NOT HAVING MADE A FULL AND TRUE DISCLOSURE OF THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. ON THE CONTRARY THE PURPORTED REA S ONS INDICATE THAT THE AMOUNT MENTIONED THEREIN HAD BEEN SHOWN IN THE BOOKS OF ACC OUNTS AS RECEIPTS FROM THE COMPANIES MENTIONED THEREIN. WE ALSO NOTE THAT AT SERIAL NO.5 OF THE LIST OF COMPANIES FROM WHICH AMOUNTS HAVE BE E N ALLEGEDLY RECEIVED, THE NAME OF THE ASSESS E E HAS BEEN SHOWN. THIS MEANS THAT THE ASSESSEE RECEIVED THE MONEY FR OM ITSELF, WHICH CAN HARDLY BE A N ALLEGATION IN THIS CASE. 6. APPLYING THE PROPOSITION LAID DOWN IN THESE CASE LAWS TO THE FACTS OF THE CASE, I HOLD THAT REOPENING OF THE ASSESSMENT IS BAD IN LAW. 7. IN THE RESULT, APPEAL OF THE A S SESS E E IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT ON 6 TH JULY, 2016. SD/ - (J.S. REDDY) ACCOUNTANT MEMBER DATE: 6 TH J U LY , 201 6 PBN/* ITA NO. 226 /AGRA/201 3 A.Y. 1998 - 99 8 COPY OF THE ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5 . D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA