Sh. Prem Pal, Ludhiana V. Income Tax Officer, Ludhiana

ITA 257/CHANDI/2003

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6707 (ITAT-CHANDIGARH)
• Duration Of Justice: 14 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-02-2017
• Assessment Year: 1998-1999
• Appeal Filed On: 05-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained investment; Onus to prove; Reassessment proceedings
• Section: 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, B CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 251/CHD/2003 ASSESSMENT YEAR: 1998-99 SH. PREM PAL, PROPRIETOR, VS. ITO, WARD-11(3), M/S KING STAR FASHION GARMENTS, (NOW RANGE-II), LU DHIANA LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMITOZ SINGH KAMBOJ RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 29.08.2017 DATE OF PRONOUNCEMENT : 31.10.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 [HEREINAFTER REFERRED TO AS CIT(A)], LUDHIANA DATED 19.02.2003. 2. EARLIER, THE APPEAL OF THE ASSESSEE WAS ALLOWED BY THE TRIBUNAL VIDE ORDER DATED 31.5.2007 AGAINST WHICH THE REVENUE PRE FERRED APPEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. THE HON'BL E HIGH COURT VIDE ORDER DATED 14.12.2010 HAS SET ASIDE THE ORDER OF T HE TRIBUNAL DATED 31.5.2007 AND REMANDED BACK THE MATTER FOR ADJUDICA TION AFRESH. 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE, AN IND IVIDUAL, FILED DECLARATION ON 31.12.1997 BEFORE THE COMMISSIONER UNDER THE VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 (VDIS) DECLARING THAT HE HAD ASSETS IN THE FORM OF GOLD AND DIAMOND JEWELLERY ACQUIRED MUC H EARLIER. HOWEVER, TAX HAVING NOT BEEN PAID AS PER THE DECLARATION BY VIRTUE OF SECTION 67(1) OF THE SCHEME, THE DECLARATION WAS TREATED TO HAVE NEVER BEEN MADE. SINCE FROM THE DECLARATION, THE ASSESSEE WAS FOUND TO BE OWNER OF THE UNEXPLAINED INVESTMENT IN JEWELLERY, THE ASSESSING OFFICER INVOKED SECTION 69A RAISING STATUTORY REBUTTABLE PRESUMPTIO N IN FAVOUR OF UNEXPLAINED INVESTMENT TO BE IN THE YEAR IN WHICH I T IS FOUND AND ISSUED NOTICE FOR REASSESSMENT UNDER SECTION 148 AND PROCE EDED TO MAKE ASSESSMENT, THEREBY MAKING ADDITION EQUAL TO THE VA LUE OF UNEXPLAINED ASSETS. ON APPEAL, THE CIT(A) UPHELD THE ADDITION B UT THE TRIBUNAL SET ASIDE THE INITIATION OF REASSESSMENT PROCEEDINGS HO LDING THAT SINCE AS PER DECLARATION, UNDISCLOSED INCOME WAS OF THE FINANCIA L YEARS 1985-86 AND 1986-87 AND THE AO HAD NO OTHER MATERIAL, THE SAID DECLARATION COULD NOT BE THE BASIS FOR RE-ASSESSMENT FOR THE ASSESSMENT Y EAR 1998-99. 4. THE REVENUE PREFERRED APPEAL BEFORE THE HON'BLE HIGH COURT. THE HON'BLE HIGH COURT HELD THAT THERE IS A STATUTORY P RESUMPTION US 69A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') THAT ANY UNDISCLOSED INCOME OR VALUABLES FOUND WITH THE ASSESSEE CAN BE ADDED TO T HE INCOME OF THE YEAR IN WHICH THE SAME ARE FOUND. HOWEVER, THIS PRESUMPTION BEING REBUTTABLE, IF THE ASSESSEE GIVES AN ACCEPTABLE EXPLANATION, PRESU MPTION CAN STAND REBUTTED. THE BURDEN IS ON THE ASSESSEE TO SHOW THA T INCOME DID NOT RELATE TO THE YEAR IN WHICH IT WAS FOUND. A DECLARATION WH ICH IS NOT VALID FOR THE PURPOSE OF THE SCHEME (VDIS) CAN CONSTITUTE MATERIA L FOR RE-ASSESSMENT U/S 3 148 OF THE ACT AND IF IT IS FOUND THAT IN ACCORDANC E WITH SUCH DECLARATION, THE ASSESSEE HAD THE JEWELLERY OR VALUABLES, THE SA ME CAN BE DEEMED TO BE INCOME FOR THE FINANCIAL YEAR IN WHICH THE VALUABLE S ARE FOUND WITH THE ASSESSEE, UNLESS THE ASSESSEE OFFERS ACCEPTABLE EXP LANATION ABOUT NATURE AND SOURCE OF ACQUISITION THEREOF TO REBUT THE STAT UTORY PRESUMPTION. THE HON'BLE HIGH COURT, THEREFORE, HELD THAT IN THE PRE SENT CASE DECLARATION WAS MADE ON 31.12.1997 I.E. IN THE FINANCIAL YEAR 1997- 98 RELEVANT TO THE ASSESSMENT YEAR 1998-99. THE ASSESSING OFFICER WAS , THUS, JUSTIFIED IN INITIATING PROCEEDINGS FOR REASSESSMENT UNDER SECTI ON 148 OF THE ACT. THE ADDITION COULD BE SET ASIDE IF THE EXPLANATION OF T HE ASSESSEE WAS FOUND TO BE ACCEPTABLE. IT COULD NOT HAVE BEEN SAID THAT NO RE-ASSESSMENT COULD AT ALL BE MADE ON THE BASIS OF DECLARATION SHOWING THE ASSESSEE THE OWNER OF THE VALUABLES IN THE FINANCIAL YEAR MERELY BECAUSE THE DECLARATION STATED THAT ACQUISITION OF VALUABLES WAS MUCH EARLIER. SUC H DECLARATION BY ITSELF WAS NOT ENOUGH TO REBUT THE STATUTORY PRESUMPTION U NDER SECTION 69A UNLESS THE ASSESSEE SUBSTANTIATED THE SAME. THE HO N'BLE HIGH COURT ACCORDINGLY HELD THAT THE REOPENING OF THE ASSESSME NT BY THE ASSESSING OFFICER CANNOT BE SAID TO BE WITHOUT JURISDICTION A ND ACCORDINGLY REMANDED THE MATTER TO THIS TRIBUNAL FOR DECISION AFRESH. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITE D OUR ATTENTION TO THE ASSESSMENT ORDER DATED 15.3.2002 AND HAS SUBMITTED THAT THE ASSESSING OFFICER NEVER DOUBTED THE DATE OF ACQUISITION OF TH E JEWELLERY. THE ASSESSEE IN THIS RESPECT HAD RELIED UPON THE PURCHASE VOUCHE RS, COPIES OF WHICH HAVE BEEN PLACED AT PAGES 9 & 10 OF THE PAPER BOOK. AS P ER THE SAID PURCHASE VOUCHERS, THE ASSESSEE HAD PURCHASED 776 GMS OF GOL D JEWELLERY VIDE 4 INVOICE DATED 4.11.1985 FOR RS. 1,51,877/- AND PURC HASE TWO SETS OF DIAMONDS JEWELLERY FOR RS. 72,251/- ON 25.10.1986. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NEITHER HAS DOUBTED THE AFO RESAID PURCHASE BILLS NOR HAS MADE ANY COMMENT ABOUT THE GENUINENESS OR AUTHE NTICITY OF THE SAID PURCHASE BILLS, RATHER, THE ASSESSING OFFICER HAS R ELIED UPON THE SAID BILLS BY STATING THAT ASSESSEE HAS STRENGTHEN THE BELIEF OF THE DEPARTMENT BY FURNISHING PHOTOCOPIES OF THE PURCHASE VOUCHERS. T HE BASIS OF THE ASSESSING OFFICER FOR ADDITION FOR THE ABOVE STATED INVESTMENTS IN JEWELLERY IN THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEA R 1998-99 IS THAT AFTER DECLARING SOME INVESTMENT BEFORE THE DEPARTMENT, TH E ASSESSEE CANNOT ESCAPE THE LIABILITY TO PAY TAX BY SIMPLY ESTABLISH ING THE FACT THAT SINCE LIMITATION TO REOPEN THE PROCEEDINGS HAS LAPSED, A ND THAT THE DEPARTMENT CANNOT LET GO THE ASSESSEE IN RESPECT OF THOSE ASSE SSMENT YEARS WITHOUT TAKING THE AMOUNT UTILIZED BY THE ASSESSEE IN PURCH ASE OF THOSE ASSETS. THE RELEVANT PART OF THE ORDER OF THE ASSESSING OFFICER FOR READY REFERENCE IS REPRODUCED AS UNDER:- NOW, THE ASSESSEE WAS FOUND TO BE THE OWNER OF THE GOLD JEWELLERY AND DIAMOND JEWELLERY IN THE FINANCIAL YE AR 1997-98 RELEVANT TO ASSESSMENT YEAR 1998-99. THE ASSESSEE HAS STRENGTHENED THE BELIEF OF THE DEPARTM ENT BY FURNISHING PHOTOCOPIES OF THE PURCHASE VOUCHERS. IT CANNOT BE SO THAT AFTER DECLARING SOME INVESTMENT B EFORE THE DEPARTMENT, THE ASSESSEE CAN ESCAPE BY SIMPLY ESTABLISHING THE FACT THAT SINCE THE LIMITATION TO RE-OPEN THE PROCEEDINGS HAS LAPSED, THE DEPARTMENT SHOULD L ET GO THE ASSESSEE IN RESPECT OF THREE ASSESSMENT YEARS W ITHOUT TAXING THE AMOUNT UTILIZED BY THE ASSESSEE IN PURCH ASING THOSE ASSETS. THE PROVISIONS OF SECTION 69A HAVE BE EN INCORPORATED IN THE ACT IN ORDER TO ASSESS ANY SUCH 5 INVESTMENT BY TREATING THE SAME AS INCOME OF THE AS SESSEE FOR THE FINANCIAL YEAR IN WHICH THE INFORMATION COM ES TO THE POSSESSION OF THE DEPARTMENT. AS PER THE PROVI SIONS OF SECTION 69A OF THE ACT, THE INVESTMENT MADE BY T HE ASSESSEE IS INCOME OF THE ASSESSEE ASSESSABLE IN TH E ASSESSMENT YEAR 1998-99. 6. AS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA HIGH COURT THAT THE DECLARATION MADE BY THE ASSESSEE IN THE VDIS CAN CONSTITUTE AN INFORMATION BASED ON WHICH THE AS SESSING OFFICER CAN REOPEN THE ASSESSMENT OF THE ASSESSEE U/S 147 OF TH E ACT. IT HAS BEEN FURTHER HELD BY THE HON'BLE SUPREME COURT THAT U/S 69A OF THE ACT, THERE IS A PRESUMPTION THAT THE UNDISCLOSED INCOME OR VALUAB LES CAN BE DEEMED TO BE THE INCOME FOR THE ASSESSMENT YEAR IN WHICH THE UNDISCLOSED INCOME OR VALUABLES ARE FOUND WITH THE ASSESSEE. HOWEVER, SUC H PRESUMPTION IS A REBUTTABLE PRESUMPTION. THE BURDEN IS ON THE ASSESS EE TO PROVE THAT SUCH INVESTMENTS FROM UNDISCLOSED INCOME WERE NOT MADE I N THE YEAR IN WHICH THE SAME WERE FOUND WITH THE ASSESSEE BUT IN SOME E ARLIER YEAR. THE ASSESSEE TO REBUT THIS PRESUMPTION, PRODUCED THE CO PIES OF THE PURCHASE VOUCHERS DATED 4.11.1985 AND DATED 25.10.1986. THE DESCRIPTION OF THE JEWELLERY MENTIONED IN THE BILLS MATCHES WITH THE DECLARATION MADE BY THE ASSESSEE UNDER THE VDIS WHICH WAS TREATED AS INVALI D BECAUSE OF THE NON- PAYMENT OF TAXES THEREUPON AS PER THE SCHEME. BY P RODUCING THE AFORESAID VOUCHERS, THE ASSESSEE DISCHARGED THE INITIAL BURDE N UPON HIM. NOW, IT WAS FOR THE ASSESSING OFFICER EITHER TO ACCEPT THE EVID ENCES GIVEN BY THE ASSESSEE OR TO REJECT THE SAME WITH A PLAUSIBLE REA SONING OR IN THE LIGHT OF ANY OTHER CONTRARY EVIDENCE. HOWEVER, THE ASSESSING OFFICER NEITHER RAISED ANY DOUBT ABOUT THE GENUINENESS OF THE PURCHASE VOU CHERS NOR HAS REBUTTED OR REJECTED THE SAID EVIDENCE PRODUCED BY THE ASSES SEE TO PROVE THE FACT 6 THAT THE JEWELLERY AND THE VALUABLE IN QUESTION WER E NOT ACQUIRED IN THE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSMENT YEAR 1998-99, RATHER, THE SAME WERE PURCHASED IN THE YEARS 1985 AND 1986. I N VIEW OF THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE REGARDING THE ACQ UISITION OF THE JEWELLERY AND THE SAME BEING FOUND ACCEPTED BY THE ASSESSING OFFICER, THE ASSESSEE CAN BE SAID TO HAVE SAFELY DISCHARGED THE BURDEN TO PROVE THAT THE JEWELLERY IN QUESTION WAS NOT ACQUIRED IN THE YEAR UNDER CONSIDERATION. 7. IN VIEW OF THIS, THE ADDITIONS CANNOT BE MADE IN THE YEAR UNDER CONSIDERATION IN RESPECT OF THE JEWELLERY. THE ASS ESSEE HAVING REBUTTED THE PRESUMPTION OF SECTION 69A OF THE ACT, THERE WAS NO JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING OR CONFIRMI NG THE IMPUGNED ADDITIONS FOR THE YEAR UNDER CONSIDERATION AND THE SAME ARE ACCORDINGLY ORDERED TO BE DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2017 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST OCT., 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR