Shri Andaleeb Sehgal, New Delhi V. ACIT, New Delhi

ITA 2482/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3341 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-05-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 23-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADAM SINGH SENIOR
• Assessee Lawyers: MADHAV KHURANA
• Keywords: Business income; Reason to believe
• Section: 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2482/DEL./2012 (ASSESSMENT YEAR : 2001-02) SHRI ANDALEEB SEHGAL, VS. ACIT, CC 5, C 119, 1 ST FLOOR, DEFENCE COLONY, NEW DELHI. NEW DELHI 110 024. (PAN : ATUPS7229L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MADHAV KHURANA, ADVOCATE REVENUE BY : SHRI PADAM SINGH, SENIOR DR DATE OF HEARING : 27.02.2018 DATE OF ORDER : 09.03.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI ANDALEEB SEHGAL (HEREINAFTER RE FERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SO UGHT TO SET ASIDE THE IMPUGNED ORDER DATED 23.03.2012 PASSED BY LD. C IT(APPEALS)- XXXI, NEW DELHI QUA THE ASSESSMENT YEAR 2001-02 ON THE GROUNDS INTER ALIA THAT :- 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE PETITIONER'S CASE, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THAT THE NOTICE DA TED ITA NO.2482/DEL./2012 2 26.03.2008 ISSUED BY THE ASSESSING OFFICER UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 IS VALID. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E PETITIONER'S CASE, THE COMMISSIONER OF INCOME-TAX (APPEALS) IS WRONG IN UPHOLDING THE ADDITION OF US $ 62,000 EQUIVALENT TO RS.28,86,720 MADE BY THE ASSESSING OFFICER 3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E PETITIONER'S CASE, THE COMMISSIONER OF INCOME-TAX (APPEALS) IS WRONG IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST AGGREGATING TO RS.11,75,094 UNDER SECTION 234A (RS.2,37,014) AND 234B (RS.9,38,080) OF THE INCOME-TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER ON RECE IPT OF REFERENCE MADE BY INVESTIGATION WING OF INCOME-TAX THAT AN AM OUNT OF US $ 62,000 HAS BEEN PAID BY MASEFIELD AG TO THE ACCOUNT OF ASSESSEE ON 05.03.2001 IN JORDAN NATIONAL BANK, RECORDED THE REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT AND AFTER OBTAINING PERMISSION ISSUED NOTICE TO THE ASSESSEE, SUPPLIED REASONS, ISSUED NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 196 1 (FOR SHORT THE ACT) VIDE LETTER DATED 10.07.2008. AO, AFTER REJECTING THE OBJECTIONS RAISED BY THE ASSESSEE, CAME TO THE CONC LUSION THAT THE INCOME TO THE EXTENT OF US $ 62,000 HAS ESCAPED ASS ESSMENT AND THEREBY ASSESSED INCOME OF US $ 62,000 IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME FOR AY 2001-02. ITA NO.2482/DEL./2012 3 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ASSESSMENT OR DER BY DISMISSING THE APPEAL. FEELING AGGRIEVED, THE ASSE SSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUNDS NO.1 & 2 5. AO PROCEEDED TO ISSUE NOTICE U/S 148 OF THE ACT BY RECORDING REASONS AS UNDER :- RETURN HAS BEEN FILED ON 31.03.2003 DECLARING NET INCOME OF RS.43130/- WHICH WAS PROCESSED U/S 143(1) ON THE SAME INCOME. THE ASSESSEE IS INVOLVED IN THE UN OIL FOR FOOD PROGRAMME WHEREIN HE EXECUTED TWO OIL CONTRACTS WITH SOMO OF IRAQ. ADDL.DIT, INVESTIGATI ON UNIT -1, HAS STATED VIDE LETTER DATED 7.3.2008 AS U NDER : AS THE FIRST CONTRACT WAS SIGNED ON 11 TH FEBRUARY 2001 AND INITIAL AMOUNT OF 62,000/- USD WAS PAID BY MASEFIELD AG TO THE ACCOUNT OF SH. ANDLEEB SEHGAL O N 5 TH MARCH 2001 IN JORDAN NATIONAL BANK, JORDAN. 6. IT IS NOT IN DISPUTE THAT THE AO HAS MERELY PROC EEDED TO ISSUE THE NOTICE U/S 148 OF THE ACT ON THE BASIS OF A REF ERENCE RECEIVED FROM INVESTIGATION WING OF THE INCOME-TAX TO WHICH THE ASSESSEE HAS RAISED NUMEROUS OBJECTIONS VIDE LETTER DATED 21 .04.2008. ASSESSEE ALSO RAISED SPECIFIC OBJECTION THAT HE HAS NOT BEEN ITA NO.2482/DEL./2012 4 SUPPLIED WITH THE SET OF DOCUMENTS / MATERIAL ON TH E BASIS OF WHICH AO ARRIVED AT SATISFACTION THAT THE ALLEGED AMOUNT OF US $ 62,000 HAS BEEN RECEIVED BY THE ASSESSEE FROM MASEFIELD AG AND TERMED THE CONTENTS OF THE SHOW-CAUSE NOTICE AS ABSOLUTELY FALSE AND BASELESS. 7. LD. DR FOR THE REVENUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. THE FIRST CONTENTION RAISED BY THE LD. AR FOR TH E ASSESSEE THAT THE AO HAS NOT SUPPLIED ANY DOCUMENT / MATERIAL TO SUBSTANTIATE HIS (AOS) SATISFACTION, OWNERSHIP / OPERATION OF THE S AID BANK ACCOUNT TO PROVE THE ALLEGED RECEIPT OF US $ 62,000. 9. THERE IS NOT AN IOTA OF DOCUMENT ON THE FILE TO SHOW IF THE ASSESSEE IS OPERATING ALLEGED ACCOUNT IN WHICH AMOU NT OF US $ 62,000 WAS ALLEGEDLY CREDITED. EVEN, IN THE REASON S RECORDED, FATHERS NAME AND ADDRESS OF ASSESSEE HAS NOT BEEN MENTIONED NOR THERE IS ANY ACCOUNT STATEMENT SHOWING CREDIT AND D EBIT ENTRY OF THE AMOUNT IN QUESTION. AO HAS MERELY EMBARKED UPON TH E REPORT SENT BY ENFORCEMENT DIRECTORATE. 10. WHEN WE PERUSE PARA 6.2 OF THE IMPUGNED ORDER P ASSED BY LD. CIT (A) WHEREIN IT IS MENTIONED THAT, AN ACCOUNT WAS OPENED IN THE NAME OF M/S. HAMDAAN EXPORTS LTD. AT JORDAN NATIONAL BANK AT LIMASSOL, CYPRUS (ACCOUNT NO.12367) AND ANO THER ACCOUNT ITA NO.2482/DEL./2012 5 NO.123459 WAS OPENED IN THE NAME OF SH. ANDALEEB SE HGAL. THE OPENING AND MAINTENANCE OF THESE ACCOUNTS HAVE BEEN CONFIRMED BY THE JORDAN NATIONAL BANK. ON 5.3.2001, AN AMOUN T OF US $ 62,000 WAS CREDITED TO THE ACCOUNT NO.123459 OF SH. ANDALEEB SEHGAL AND OUT OF THIS, A SUM OF US $ 60,000 WAS SU BSEQUENTLY TRANSFERRED PERHAPS AS BRIBE TO ACCOUNT NO.5003202 OF THE IRAQI REGIME IN JORDAN NATIONAL BANK, JORDAN. THUS, IT B ECOMES CLEAR FROM THESE DOCUMENTS AND STATEMENTS OBTAINED AND RE CORDED BY THE ENFORCEMENT DIRECTORATE THAT SH. ANDALEEB SEHGAL RE CEIVED A SUM OF US $ 62,000 ON 5.3.2001 ON ACCOUNT OF COMMISSION FOR SALE OF IRAQI OIL TO MASEFIELD AG. HOWEVER, NO SUCH DOCUMENTS HAVE SEEN THE LIGHT OF THE DAY. THOSE DOCUMENTS MIGHT B E PERUSED BY THE AO/CIT (A) BUT NEITHER THOSE DOCUMENTS WERE REF ERRED IN THE IMPUGNED ORDER NOR GIVEN TO THE ASSESSEE NOR BROUGH T BEFORE THE BENCH TO SUBSTANTIATE THE FINDINGS RETURNED BY AO A S WELL AS LD. CIT (A). 11. IF ANY SUCH DOCUMENTS HAVE BEEN PERUSED BY ENFO RCEMENT DIRECTORATE, IT WAS THE DUTY OF THE AO TO COLLECT T HOSE DOCUMENTS DURING HIS OWN INVESTIGATION OR THE LD. CIT (A) SHO ULD HAVE BROUGHT ON RECORD THE SET OF THOSE DOCUMENTS DURING APPELLATE PROCEEDINGS BUT BOTH HAVE PROCEEDED MERELY ON THE B ASIS OF ITA NO.2482/DEL./2012 6 REFERENCE SENT BY ENFORCEMENT DIRECTORATE AND BASED THEIR FINDINGS MERELY ON ASSUMPTIONS. 12. THE NEXT CONTENTION RAISED BY LD. AR FOR THE AS SESSEE THAT THE ADJUDICATION PROCEEDINGS BEFORE ENFORCEMENT DIRECTO RATE ARE STILL PENDING AND AO HAS NOT CONDUCTED INDEPENDENT ENQUIR Y BUT BASED HIS FINDINGS ON THE MATERIAL COLLECTED BY THE ENFOR CEMENT DIRECTORATE ONLY. WHEN NO SUCH DOCUMENT HAS BEEN P LACED BEFORE THE BENCH, IT IS PROVED THAT THE AO HAS NOT MADE AN Y INDEPENDENT ENQUIRY BY COLLECTING NECESSARY DOCUMENTS BUT MEREL Y BASED HIS FINDINGS ON THE BASIS OF LETTER RECEIVED FROM ENFOR CEMENT DIRECTORATE. 13. NOT ONLY THIS, ASSESSEE EVEN FILED A WRIT PETIT ION NO.13559 OF 2009 IN THE HONBLE HIGH COURT OF DELHI, COPY OF ORDER AVAILABLE AT PAGES 33 TO 39 OF THE PAPER BOOK, SEEK ING DIRECTION TO THE DIRECTORATE OF INCOME-TAX TO SUPPLY COPIES OF D OCUMENTS PERTAINING TO THE ALLEGED TRANSFER OF US $ 62,000 I N THE ACCOUNT OF ASSESSEE BEFORE PROCEEDING FURTHER. DECIDING THE W RIT PETITION IN FAVOUR OF THE ASSESSEE, THE HONBLE HIGH COURT DIRE CTED THE DEPARTMENT TO FURNISH THE COPIES OF THE DOCUMENTS R ELIED UPON. BUT THOSE DOCUMENTS HAVE NOT BEEN SEEN BY AO NOR CI T (A), NOR THE SAME HAVE BEEN SUPPLIED TO THE ASSESSEE, BUT AO ON THE BASIS OF ITA NO.2482/DEL./2012 7 ASSUMPTION HAS TAKEN THE LETTER RECEIVED FROM ENFOR CEMENT DIRECTORATE AS A GOSPEL TRUTH AND MADE ADDITION THE REOF. 14. AO ON THE BASIS OF SURMISES EVEN STATED THAT, IT IS UNDERSTANDABLE BECAUSE THE FACTS SUGGEST THAT IN TH E INSTANT CASE, ONLY THE NAME OF HAMDAAN EXPORTS WAS USED BY SH. AN DLEEB SEHGAL BUT THE MONEY WAS ACTUALLY POCKETED BY HIM. FURTHER MORE, IT IS SEEN THAT SH. ANDALEEB SEHGAL PAID A SUM OF U S $ 60,000 FROM HIS ACCOUNT TO THE IRAQI REGIME. THESE FINDINGS GO TO PROVE THAT WITHOUT AN IOTA OF EVIDENCE, ADDITION HAS BEEN MADE BY THE AO AND CONFIRMED BY LD. CIT (A). 15. HONBLE HIGH COURT OF DELHI IN CASE OF KROWN AGRO FOODS PVT. LTD. VS. ACIT 2015 SCC ONLINE DEL 8395 WHILE DECIDING THE IDENTICAL ISSUE AS TO THE CASE BASED ON BORROWE D INVESTIGATION HAS HELD AS UNDER :- 14. THE WORDS 'REASON TO BELIEVE' INDICATE THAT TH E BELIEF MUST BE THAT OF A REASONABLE PERSON BASED ON REASONABLE GROUNDS EMERGING FROM DIRECT OR CIRCUMSTANTIAL EVIDENCE AND NOT ON MERE SUSPICION, GOSSIP OR RUMOUR. THE 'REASON TO BELIEVE' RECORDED IN THE CASE DO NOT REFER TO ANY MATERIAL THAT CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER WHEREBY IT CAN B E INFERRED THAT THE ASSESSING OFFICER COULD HAVE FORM ED A REASONABLE BELIEF THAT THE SAID AMOUNT HAD ESCAPED ASSESSMENT. THE PURPORTED BELIEF THAT INCOME HAS ESCAPED ASSESSMENT IS NOT BASED ON ANY DIRECT OR CIRCUMSTANTIAL EVIDENCE AND IS IN THE REALM OF MERE SUSPICION. THE REQUIREMENT OF LAW IS REASON TO BELIEVE' AND NOT REASON TO SUSPECT'. IN THE PRESEN T ITA NO.2482/DEL./2012 8 CASE, SINCE THE PURPORTED REASONS TO BELIEVE RECORD ED INDICATE THAT THE ASSESSING OFFICER HAS ACTED ON ME RE SURMISE, WITHOUT ANY RATIONAL BASIS, THE ACTION OF REOPENING OF THE ASSESSMENT IS THUS CLEARLY CONTRAR Y TO LAW AND IS UNSUSTAINABLE. 16. HONBLE HIGH COURT OF DELHI IN CASE CITED AS PR. CIT-6 VS. MEENAKSHI OVERSEAS PVT. LTD. 2017 SCC ONLINE DEL 8691 HELD THAT WHEN REOPENING OF THE ASSESSMENT IS MERELY ON THE BASIS OF INFORMATION RECEIVED FROM DIT (INV.) AND AO HAS JUM PED TO THE CONCLUSION THAT THE SAID TABULATED INSTRUMENT ARE I N THE NATURE OF ACCOMMODATION ENTRY, IT MEANS THAT AO BEING QUASI J UDICIAL HAS NOT APPLIED HIS MIND. 17. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE ENTIRE CASE IS BASED UPON BORROWED INVESTIGATION STATED TO HAVE BEEN CONDUCTED BY ENFO RCEMENT DIRECTORATE AND NO EVIDENCE HAS BEEN BROUGHT ON REC ORD TO CONNECT ASSESSEE WITH THE AMOUNT OF US $ 62,000, RATHER IT IS A CASE OF ZERO INVESTIGATION. 18. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE AO AN D CONFIRMED BY THE LD. CIT (A) IS NOT SUSTAINABLE IN THE EYES O F LAW AS REOPENING ITSELF WAS BAD IN LAW, HENCE QUASHED, CONSEQUENTLY THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO.2482/DEL./2012 9 GROUND NO.3 19. GROUND NO.3 BEING CONSEQUENTIAL IN NATURE NEEDS NO SPECIFIC FINDINGS. 20. RESULTANTLY, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF MARCH, 2018. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF MARCH, 2018/ TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXXI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.