Pinki Mittal, Uttar Pradesh V. CIT, Meerut

ITA 2350/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52473 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-07-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDESH GARG CIRDR
• Assessee Lawyers: R JAIN
• Keywords: Gift; Accommodation entries; Assessment record
• Section: 143(3); 142(1); 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 2350/DEL/2011 ASSESSMENT YEAR: 2002-03 PINKI MITTAL, VS. COMMISSIONER OF INCOME-TAX, 7, PANCHSHEEL COLONY, MEERUT. BULANDSHAHR. (PAN: AIYPM3781E) (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VED JAIN , FCA & SMT. R JAIN, CA RESPONDENT BY: MS. SUDESH GARG, CIR(DR) ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 24.03.2011 PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 FOR ASSESSMENT YEAR 2002-03. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE I TAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF, THE GRIEVANCE OF ASSESSEE IS THAT LEARNED COMMISSIONER HAS ERRED IN TAKING COGNI ZANCE UNDER SEC. 263 AND SETTING ASIDE THE ASSESSMENT ORDER DATED 14.11. 2008 PASSED UNDER SEC. 147 READ WITH SECTION 143(3) AND DIRECTING THE ASSE SSING OFFICER TO MAKE AN ADDITION OF RS. 1 LAC IN THE INCOME OF THE ASSESSEE AND ALSO INITIATING THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT . 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED HER RETURN OF INCOME ON 31.3.2003 DECLARING AN INCOME OF RS.98,61 0. ON 27.2.2008, ASSESSING OFFICER HAS RECORDED REASONS FOR ISSUANCE OF A NOTICE UNDER SEC. 148 OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, HE HAS CERTAIN INFORMATION IN HIS POSSESSION WHICH INDICATES THAT DURING THE FINANCIAL YEAR 2001-02, ASSESSEE HAD RECEIVED GIFT OF RS.1 LAC VID E DD NO.150316 DATED 31.11.2008 FROM ONE SHRI DEEPAK GUPTA. THIS TRANSAC TION HAD BEEN MADE THROUGH THE BANK ACCOUNT OF SHRI DEEPAK GUPTA WHO W AS MAINTAINING HIS BANK A/C. NO.15942 WITH LAXMI CO-OPERATIVE BANK, FA THEPURI, DELHI. SHRI DEEPAK GUPTA IS ENGAGED IN THE BUSINESS OF PROVIDIN G ACCOMMODATION ENTRIES UNDER THE GARB OF LOAN AND GIFTS IN LIEU OF CASH AND COMMISSION. THIS VERY GIFT OF RS.1 LAC IS ALSO ONE OF THE FAKE GIFT GIVEN BY SHRI DEEPAK GUPTA. THIS GIFT HAS BEEN REFLECTED IN THE NAME OF SHRI VI PIN KUMAR IN THE RETURN OF INCOME OF THE ASSESSEE FOR THE RELEVANT PERIOD. ON THE BASIS OF THIS REASON, HE ISSUED A SHOW-CAUSE NOTICE UNDER SEC. 148 ON 29.2.2 008. ASSESSING OFFICER HAD CONDUCTED DETAILED INQUIRY AND PASSED THE ASSES SMENT ORDER ON 14.11.2008. HE MADE AN ADDITION OF RS.1 LAC. THE FI NDING RECORDED ON THE ISSUE OF GIFT READS AS UNDER:- GIFTS:- DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA D RECEIVED TWO GIFTS AMOUNTING TO RS.1,00,000/- EACH. DETAILS OF THESE GIFTS ARE AS UNDER:- 3 1. RS.1,00,000/- FROM SHRI VIPIN KUMAR S/O SHRI RAMESH CHAND, R/O 2250, NAYA BAZAR, DELHI-6, VIDE DD NO.624907 DATED 31.12.2001, DRAWN ON JAI LAKSHMI COOPERATIVE BANK, FATEHPURI, D ELHI. 2. SHIV KUMAR MITTAL S/O SHRI G.L. MITTAL, GALI NO.4, DABUR FINANCE LTD.BLOCKF, SONIA VIHAR, NEW DELHI VIDE DD NO.91134 8 DATED 01.10.2001 DRAWN ON PNB SADAR BAZAR, DELHI. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN THE WAKE OF ENQUIRY GIFT OF RS.1,00,000/- TAKEN FROM SHRI VIPIN KUMAR S/O SH RI RAMESH CHAND, R/O 2250, NAYA BAZAR, DELHI-6, VIDE DD NO.624907F D ATED 31.12.2001, DRAWN ON JAI LAKSHMI CO-OPERATIVE BANK, FATEHPURI, DELHI WAS NOT FOUND GENUINE. ALBEIT THIS VERY GIFT WAS FOUND BOG US. IN THIS WAY THE ASSESSEE HAS INTRODUCED HER OWN MONEY THROUGH ARRAN GEMENTS IN THE GARB OF GIFT. THIS GIFT IS WHOLLY INCREDIBLE, INSIDIOUS AND NOT GENUINE AND RECEIVED THROUGH CHANNELZING HER OWN MONEY THROUGH BANK ACCOUNTS OF DONOR IN THE SHAPE OF GIFT. HENCE, THE SAME DESERV ES TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HENCE, IN VIEW OF TH IS FACT OF THIS CASE WHEN THE ASSESSEE BELEAGUERED SQUARELY, THE ASSESSE E HAS VIDE LETTER OF SURRENDER DATED 14.11.2008, VOLUNTARILY OFFERED THE INCOME OF RS.1,00,000/- AND GIVEN HER CONSENT FOR AN ADDITION OF RS.1,00,000/- INTO HER TOTAL INCOME, SUBJECT TO NO PENAL ACTION. ACCO RDINGLY, AN ADDITION OF RS.1,00,000/- IS BEING HEREBY MADE TO THE TOTAL INC OME OF THE ASSESSEE. (ADDITION: RS.1,00,000/-) 3. ON PERUSAL OF ASSESSMENT RECORD, LEARNED CIT IS OF THE OPINION THAT ASSESSING OFFICER HAS ACCEPTED THE GIFT OF RS. 1 LA C RECEIVED FROM SHRI SHIV 4 KUMAR MITTAL WITHOUT CONDUCTING ANY PROPER INQUIRY, THEREFORE, SHE ASSUMED JURISDICTION UNDER SEC. 263 AND ISSUED SHOW-CAUSE N OTICE TO THE ASSESSEE. IN RESPONSE TO THE SHOW-CAUSE NOTICE, ASSESSEE HAS SUB MITTED HER WRITTEN SUBMISSIONS. LEARNED COMMISSIONER TOOK INTO CONSIDE RATION THE SUBMISSIONS MADE BY THE ASSESSEE AND OBSERVED THAT HON'BLE DELH I HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS. ADDITIONAL CIT REPO RTED IN 99 ITR 375 HAS CONSIDERED THE ROLE OF THE ASSESSING OFFICER. IN TH E OPINION OF THE LEARNED COMMISSIONER, ASSESSING OFFICER HAS NOT CONDUCTED T HE PROPER INQUIRY, THEREFORE, HIS ORDER IS TO BE TERMED AS ERRONEOUS W HICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DESERVES TO BE SET ASID E. LEARNED COMMISSIONER FURTHER MADE A REFERENCE OF LARGE NUMBER OF JUDGMEN T ON PAGE 4 OF THE IMPUGNED ORDER. ACCORDINGLY, SHE SET ASIDE THE ORDE R AND MADE AN ADDITION OF RS. 1 LAC. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF LEARNED COMMISSIONER TOOK US THROUGH THE QUESTIONNA IRE ISSUED BY THE ASSESSING OFFICER UNDER SEC. 142(1) ON 11.4.2008 WH ICH IS AVAILABLE ON PAGE NOS. 6 OF THE PAPER BOOK. HE ALSO MADE A REFERENCE TO THE REPLIES SUBMITTED BY THE ASSESSEE. HE POINTED OUT THAT ASSESSING OFFI CER HAS CALLED FOR NUMBER OF DOCUMENTS ON THE ISSUE OF GIFTS. FOR BUTTRESSING HIS CONTENTIONS, HE TOOK 5 US THROUGH PAGE NO. 7 OF THE PAPER BOOK. THE ASSESS EE HAS SUBMITTED REPLY ON 31.10.2008 TO THE SHOW-CAUSE NOTICE OF ASSESSING OFFICER DATED 10.10.2008. THE ASSESSEE HAS FURTHER SUBMITTED A RE PLY ON 11.11.2008. SHE CONTENDED THAT ASSESSING OFFICER HAS INQUIRED ABOUT THE GIFTS OF RS. 3 LACS ALLEGED TO HAVE BEEN RECEIVED FROM DEEPAK GUPTA, SH IV KUMAR MITTAL AND SHRI VIPIN KUMAR. SHE POINTED OUT THAT SHE HAS RECE IVED GIFT OF RS. 2 LACS ONLY WHICH CAN BE VERIFIED FROM HER CAPITAL ACCOUNT FILED ALONG WITH THE RETURN. ONE GIFT HAS BEEN RECEIVED FROM SHRI VIPIN KUMAR AND THE OTHER FROM SHRI SHIV KUMAR MITTAL. SHRI SHIV KUMAR MITTAL IS THE ELDER BROTHER OF HER FATHER-IN-LAW. HE HAS GIVEN THE GIFT OF RS. 1 L AC ON THE BIRTHDAY OF HER DAUGHTER SALONI MITTAL. SHE FILED A CONFIRMATION FR OM SHRI MITTAL & THE BANK DETAILS. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS DULY TAKEN COGNIZANCE OF THIS GIFT IN T HE ASSESSMENT ORDER AND ACCEPTED THE GENUINENESS. IT CANNOT BE SAID THAT HE HAS NOT MADE INQUIRY. LEARNED COMMISSIONER CANNOT SUBSTITUTE HIS OPINION OVER THE JUDGEMENT OF THE ASSESSING OFFICER WHICH IS PERMISSIBLE IN LAW. HE FURTHER SUBMITTED THAT THE GRIEVANCE OF THE LEARNED COMMISSIONER MAY RELAT E TO QUALITY OF INQUIRY BUT SHE CANNOT SAY THAT NO INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER. SHRI SHIV KUMAR MITTAL, IS THE ELDER BROTHER OF THE ASSESSEES FATHER-IN-LAW, THUS, IN A WAY RELATED TO THE ASSESSEE. HIS IDENTIT Y IS NOT IN DOUBT. HIS 6 CREDITWORTHINESS IS NOT IN DOUBT. HE HAS CONFIRMED THE TRANSACTION. IT IS THROUGH BANKING CHANNEL, THEREFORE, EVEN OTHERWISE ALSO ADDITION ON MERIT COULD NOT BE MADE. 5. ON THE OTHER HAND, LEARNED DR RELIED UPON THE OR DER OF THE LEARNED COMMISSIONER. HE POINTED OUT THAT ASSESSING OFFICER HAS MENTIONED THE GIFT RECEIVED FROM SHRI SHIV KUMAR MITTAL BUT THAT DOES NOT SUGGEST THAT HE HAS CONDUCTED THE INQUIRY. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ITAT IN THE CASE OF MRS. KHA TIZA S. OOMERBHOY VS. ITO,MUMBAI REPORTED IN 101 TTJ 1095, ANALYZED IN DE TAIL VARIOUS AUTHORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES 243 ITR 83 AS WELL AS HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GABRIEL I NDIA LTD. REPORTED IN 203 ITR 108, HAS PROPOUNDED THE FOLLOWING BROADER PRINCIPLE TO JUDGE THE ACTION OF CIT TAKEN UNDER SECTION 263. THE FUNDAMENTAL PRINCIPLE WHICH EMERGE FROM THE A BOVE CASES MAY BE SUMMARIZED BELOW (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDE R OF THE A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BO TH THE CONDITIONS MUST BE FULFILLED. 7 (II) SEC. 263 CANNOT BE INVOKED TO CORRECT EACH AN D EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE A,O AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCOR RECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION O F MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE AND IF THE A.O HAS ADOPTED ONE OF TH E COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE A.O HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT B E TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE A.O I S UNSUSTAINABLE UNDER LAW. (VI) IF WHILE MAKING THE ASSESSMENT, THE A.O EXAMI NES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME, THE CIT, WHILE EXERC ISING HIS POWER UNDER S. 263 IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE A.O. (VII) THE A.O EXERCISES QUASI-JUDICIAL POWER VEST ED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARR IVES AT A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SI MPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER S. 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE A.O HAS MADE ENQUIRIES DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITING AND THE A.O ALLO WS THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE A.O CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HI S ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 7. BEFORE EMBARKING UPON AN INQUIRY ABOUT THE FACTS OF THE PRESENT CASE AND HOW THOSE FACTS HAVE BEEN CONSIDERED BY THE LEA RNED REVENUE 8 AUTHORITIES BELOW, WE DEEM IT APPROPRIATE TO MAKE A REFERENCE OF THE OBSERVATIONS OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF VEE GEE ENTERPRISES WHEREIN HON'BLE HIGH COURT HAS EXPOUNDE D THE APPROACH OF THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER. TH E OBSERVATIONS OF THE HON'BLE HIGH COURT READ AS UNDER:- IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCELING THE ASSESSMENT ORDER OF THE INCOME-TAX OF FICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHER INQ UIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME-TAX OFFICER IS VERY DIFF ERENT FROM THAT OF A CIVIL COURT. THE STATEMENT MADE IN A PLEADING PROVED BY THE MINI MUM AMOUNT OF EVIDENCE MAY BE ADOPTED BY A CIVIL COURT IN THE ABSENCE OF A NY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF T HE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF THE RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMST ANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT O N THE ITO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES W OULD MADE SUCH AN INQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 IN CLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUC H AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH T HE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 8. IN THE LIGHT OF ABOVE, LET US EXAMINE THE FACTS OF THE PRESENT CASE. THE ASSESSMENT HAS BEEN REOPENED SOLELY FOR THE PURPOSE OF VERIFYING THE GIFTS RECEIVED BY THE ASSESSEE. ASSESSING OFFICER HAD ISS UED A DETAILED SHOW-CAUSE 9 NOTICE. HE WAS UNDER THE IMPRESSION THAT GIFTS OF R S. 3 LACS FROM THREE PERSONS I.E. RS. 1 LAC EACH HAS BEEN RECEIVED BY TH E ASSESSEE BUT ASSESSEE HAS POINTED OUT THAT SHE HAS RECEIVED ONLY RS. 2 LACS O F RUPEES AS A GIFT FROM TWO PERSONS. ASSESSING OFFICER HAS DIRECTED THE ASSESSE E TO GIVE NAME AND COMPLETE ADDRESS OF THE DONOR, THEIR SOURCE OF INCO ME, INSTRUMENT OF GIFT IF ANY, BANK PASS BOOK, ASSESSMENT PARTICULARS OF DONO R, NAME AND ADDRESS OF SONS AND DAUGHTERS OF DONORS, DETAILS OF ANY GIFT E VER HAVE BEEN GIVEN TO OTHER RELATIVES IS SONS AND DAUGHTER OF THE DONORS BY THE DONOR HIMSELF. THIS SUGGESTS THAT HE HAS CALLED FOR LARGE NUMBER OF DOC UMENTS FROM THE ASSESSEE. SHE HAS SUBMITTED THE DETAILS AND POINTED OUT THAT SHE RECEIVED GIFT FROM TWO PERSONS ONLY, ONE OF THEM HAPPENS TO BE ELDER BROTH ER OF HER FATHER-IN-LAW. ASSESSING OFFICER HAS ACCEPTED THE GENUINENESS OF T HIS GIFT AND MADE THE ADDITION OF THE OTHER ONE. THIS INDICATES THAT HE H AS APPLIED HIS MIND BEFORE ADJUDICATING THE ISSUE. HE HAS INVESTIGATED THE ISS UE IN ACCORDANCE WITH LAW. HIS CONCLUSION NO DOUBT DOES NOT MATCH WITH THE CON CLUSION EXPECTED BY THE LEARNED COMMISSIONER BUT THAT CANNOT BE A GROUND FO R TREATING HIS ORDER AS ERRONEOUS. THE VIEW TAKEN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW IN THE LAW. THE LEARNED COMMISSIONER WHILE EXERCISING POWE RS UNDER SEC. 263 IS NOT PERMITTED TO SUBSTITUTE HIS VIEW IN RESPECT OF THE GENUINENESS OF THE GIFTS. TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMS TANCES, WE ARE OF THE VIEW 10 THAT ASSESSING OFFICER HAS CONDUCTED THE PROPER INQ UIRY BEFORE ACCEPTING ONE GIFT AS A GENUINE AND MAKING ADDITION OF RS. 1 LAC IN RESPECT OF THE GIFTS RECEIVED FROM SHRI VIPIN KUMAR. LEARNED COMMISSIONE R IS NOT JUSTIFIED IN EXERCISING THE POWERS UNDER SEC. 263 OF THE ACT ON THE ALLEGATION THAT NO INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER. WE ALLOW THE APPEAL OF THE ASSESSEE AND QUASH THE ORDER PASSED BY THE LEARNED COMMISSIONER DATED 24.3.2011 UNDER SEC. 263 OF THE ACT. DECISION PRONOUNCED IN THE OPEN COURT ON 12.08.201 1 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 /08/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR